India is a potential superpower and would not rush into closing Free Trade Agreements (FTAs) unless these are on New Delhi’s own terms, said Piyush Goyal, Union Minister of Commerce and Industry, Consumer Affairs and Food & Public Distribution, and Textiles. Responding to a question at The Indian Express’s Idea Exchange (a detailed transcript will be published Monday) on FTA talks between India and the UK, and the failure of the two countries to reach a consensus ahead of 2024 Lok Sabha elections, Goyal said, “India now is not the India of 2009 or 2010… The Modi government goes about FTA negotiations very cautiously, with a great deal of stakeholder consultations, and negotiates very hard from a position of strength. The world today knows that when you negotiate with India, you’re negotiating with a $35 trillion economy, not a $3.5 trillion economy. In an FTA, one has to do crystal gazing and see what is good for the country over the next 20-30-50 years. These are long sustaining agreements and unless we get that on our terms, we don’t rush into closing any FTA negotiation.” Pointing out that negotiations are confidential, Goyal said one small item or many items could hold back an agreement. “But we are okay with it. The country’s farmers, fishermen, MSMEs have to be protected, domestic manufacturing has to have a level playing field, and there has to be transparency on both sides in how countries operate. We have to ensure that we do not allow people to come in from unfriendly countries through the backdoor. So, many significant issues have to be balanced in a larger perspective,” he said. Goyal, who is set to contest the 2024 Lok Sabha elections from Mumbai North constituency, and holding daily meetings in the area, said that he aimed to make the area slum free and significantly enhance the quality of municipal schools. “I’ve been toying for many years with an idea of how to make the country slum-free. And now that I get an opportunity to represent an area, it will be a good ‘laboratory’ for me to see how we can work to make that entire area slum-free. And I think one of the ways will be getting more and more people to work in the spirit of cooperatives, rather than being always dependent on real estate builders, and the big guys to come in and solve this problem.” On public education, he said, “Through digital connect technology, I’ll be able to pick up the entire municipal school infrastructure and bring them to a stage where they also get the same quality of education that a student gets at a private school.”
Source: Indian Express
If Prime Minister Narendra Modi wins a third term in office, investors will be looking at better execution of production-linked incentive (PLI) schemes to make India an exports hub, growth in public capital expenditure (capex), and privatisation of state-owned enterprises (SOEs), the Paris-based bank Societe Generale said in a research report on Tuesday. The seven-phase general elections for Lok Sabha kicked off on April 19. "The consensus of the opinion polls is pointing to a return of the Bharatiya Janata Party (BJP)-led alliance, the National Democratic Alliance (NDA), with a full majority. The market started to price in policy continuity since the victory of the incumbent ruling alliance in state elections in December. A change of guard could lead to a correction in the short term, similar to what we saw in 2004. However, what would matter in the medium term is a stable government," it said. The French banking group said the turnaround in the investment cycle that started from 2018-19 has further gained pace over the last two years after a COVID-led disruption in 2020 and 2021. "An almost 100 per cent increase in capex over the past four years has been the hallmark of the Modi government’s second term. Going forward, the government might have to moderate the rate of growth to move closer to its fiscal deficit target of 3 per cent. However, public capex is key in sustaining the upturn in the investment cycle and supporting private capex recovery. Hence, capex growth would be a factor to watch for sustained support to earnings growth," it added. Societe Generale said almost three years since the launch of the PLI scheme, the offtake as measured by subsidies given has been low. "As per government data, about $100 billion of sales have been generated because of the PLI scheme. That is less than 20 per cent of what was estimated at the launch of the scheme. However, some success with Apple iPhone exports and potential discussions with Tesla are some credible successes on the international front. The continuation of more foreign firms starting to manufacture/base operations in India along with the realisation of PLI goals would be a factor to watch," it added. The Paris-based bank said SOEs have significantly re-rated in the past three years, creating less ambiguity about their valuation in the bid process and, secondly, given the overall increase in public capex, some of these companies are also beneficiaries of this theme which may facilitate their privatisation process. "The government also devised a 'Disinvestment Policy' in 2021, under which it aimed to strategically privatise SOEs or partially reduce its stake in them. However, except for the privatisation of the unlisted airline Air India, the government was unsuccessful on that initiative partly due to the COVID-led disruption and the lack of successful bids," it added.
Source: Business Standard
India’s aim to become the third-largest economy in the next few years is not an ‘arithmetic inevitability’ as claimed by Congress leader P Chidambaram, but requires a lot of efforts and visionary leadership of Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman said on Monday. Addressing Viksit Bharat Ambassador Campus Dialogue at Gitam University in Visakhapatnam, Sitharaman said that “the previous Congress-led government could increase the Indian economy’s ranking just by two places from 12th to 10th in 2004-2014, but it improved to 5th place under Modi’s tenure between 2014-2024.” Recently, former finance minister Chidambaram said no matter who the prime minister is, India’s GDP will become the third largest in the world. “There is no magic in it. It is an arithmetic inevitability given the size of India’s population,” he had said. Sitharaman said that economic growth needed a visionary leader who would ensure that corruption did not eat into the goodwill and earnings of common people. “PM Modi has given a guarantee and with clean and transparent administration, we will make sure India reaches the third rank soon,” she said. “It’s not a mathematical inevitability. You need effort, you need a visionary leader, you need to stop corruption, you need to make sure that skills are available for our students, you need to make sure functions in delivering welfare schemes for common people, you need to make sure that poor get their due and you also need to make sure businesses have an environment to grow,” she said. Except for the global financial crisis in 2008, there were no major problems in those (Congress-led) 10 years while there was a global pandemic in 2020 and despite that India reached the fifth rank from the 10th rank in the last 10 years, she added. According to the International Monetary Fund, Indian economy is projected to have a size of $5.153 trillion in 2027 (FY28), up from $3.386 trillion in 2022 (FY23), which necessitates 52% growth in five years. Though this is not a growth rate that is very high or unprecedented by India’s growth in the recent decades, it would still enable it to overtake both Germany ($4.947 trillion) and Japan ($5.077 trillion), to be on the third slot in the global economic pecking order by 2027, as these economies might continue to grow at anemic rates. Between 2014 and 2027, India will have jumped from 10th to the third rank among national economies. India will likely overtake Japan and Germany to become the world’s third-largest economy with a gross domestic product (GDP) of $7.3 trillion by 2030, S&P Global Market Intelligence said recently. Responding to a question, the finance minister said sunrise sectors including renewables, advanced chemistry, green hydrogen, artificial intelligence, agro-processing and fintech have huge potential for growth in India. Finance Ministry’s economists led by Chief Economic Adviser V. Anantha Nageswaran recently said the India will become the third largest economy in the next three years with a $5 trillion GDP.
Source: Financial Express
India and Nigeria have agreed to an early conclusion of a local currency settlement system agreement to further strengthen economic ties between the two countries. According to the department of commerce, a seven-member delegation from India led by Additional Secretary in the commerce ministry Amardeep Singh Bhatia visited Abuja, Nigeria for the second session of India-Nigeria Joint Trade Committee (JTC) on April 29-30. It was held after a gap of five years. Both sides have identified several focus areas to enhance bilateral trade and mutually beneficial investments. The sectors include crude oil, natural gas, pharmaceuticals, unified payments interface (UPI), local currency settlement system, power and renewable energy, agriculture and food processing, education, transport, railway, aviation, and MSMEs development. "Both sides agreed to the early conclusion of a local currency settlement system agreement to further strengthen bilateral economic ties," the department has said on social media platform X (formerly Twitter). A local currency settlement system between the two countries would help in promoting the use of Indian Rupee and Nigerian Naira for cross-border There are several Indian companies present in Nigeria in telecom, hydrocarbons, textiles, chemicals, electrical equipment, pharmaceuticals, plastics, IT and auto sectors. Indian automobile companies have a significant presence in Nigeria. India's main exports to Nigeria include machinery and instruments, drugs, pharma and fine chemicals, transport equipment, electronic goods, and manufacture of metals. Imports mainly include petroleum, crude and products, non-ferrous metals, wood and wood products, and cashew nuts. The bilateral trade stood at USD 11.85 billion (exports USD 5.2 billion and imports USD 6.7 billion) in 2022-23. The trade was about USD 15 billion in 2021-22. Further, a senior commerce ministry official delegation also visited Australia and New Zealand.
Source: The Economic Times
The growth in factory output, as measured by the Index of Industrial Production (IIP), is likely to slow down to around 4.7% in FY25 from an estimated 6.1% in FY24, in the backdrop of the statistical effect of a high base and fading away of pent-up demand, say economists. In April-February FY24, IIP growth has averaged 6%. An expectation of a slower IIP growth would also mean GDP growth in FY25 may end up lower than 7.5% projected by the National Statistical Office for FY24. The Centre for Monitoring Indian Economy (CMIE) expects all three sectors – ‘mining & quarrying’, ‘manufacturing’, and ‘electricity’ to register a slower growth in the current fiscal year as compared to FY24. ‘Mining & quarrying’ is likely to grow at 4.8% in FY25, down from 8.8% in FY24, and ‘manufacturing’ growth is seen slowing to 4.5% from 5.6%. ‘Electricity’ output growth is also likely to slow down to 5.8% in FY25 from 7.2% in FY24. Within manufacturing – which accounts for about 78% of the IIP – the output of coke and refined petroleum products, food, beverages and textiles is likely to grow at a faster pace in FY25 as against FY24. CMIE expects coke and refined petroleum products to drive much of manufacturing and IIP growth this year, as major capacity additions are planned this year. The sub-segment carries a weight of 14% in the manufacturing group. As per CMIE’s Capex database, six projects belonging to the refinery industry worth Rs.31,630 crore are expected to be completed during FY25. Of these, two projects from Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation Ltd (IOCL) are expected to add capacity of 16.2 million tonnes (MT) on petroleum products. Within the use-based category, the output of consumer durables and non-durables goods are likely to witness an accelerated growth due to low base and revival in rural demand; while the growth of capital goods is likely to ease, along with intermediate and infrastructure goods. “While we do expect some revival in private capex, it may come later in the year supported by revamped PLI and improving capacity utilisation,” said Anitha Rangan, economist, Equirus Securities. “Therefore overall, capital goods could be the slowest in growth.” Both consumer durables and non-durables recorded a growth of 3.3% and 4.2%, respectively, in the first eleven months of FY24. This is only likely to grow forward, thereby helping push up the IIP growth. “Consumption growth in FY25 will be led by rural demand with monsoon expected to be better, supported by La Nina conditions. In FY24 rural demand has been weak as crop output was impacted by uneven monsoon,” said Gaura Sen Gupta, economist, IDFC FIRST Bank. Sen Gupta sees GDP growing at 6.5% in the current fiscal – largely due to rise in input costs and increase in GDP deflator (growth in y-o-y terms). In FY24, a GDP deflator of 1.5% y-o-y likely boosted real GDP growth, but this year the deflator is expected to be much higher with increase in WPI inflation.
Source: Financial Express
The leading economic index (LEI) for India saw a decline of 0.6 per cent in March 2024, settling at 157.1, according to a recent update from The Conference Board (TCB). This downturn follows a consistent upward trend over the previous seven months. Despite the recent dip, the LEI has still managed a growth of 2.5 per cent over the six months spanning from September 2023 to March 2024. This rate, however, is slower compared to the 3 per cent increase observed in the preceding six months. The coincident economic index (CEI) for India, which measures current economic activity, significantly fell by 4.2 per cent in March 2024 to 145.3. This drop partially reverses the substantial gains seen in the first two months of the year. Overall, the CEI grew by a marginal 0.3 per cent over the same six-month period, a stark deceleration from the 3.5 per cent growth recorded in the prior six months, as per TCB. Despite the mixed performance of these economic indicators, The Conference Board remains optimistic about India's economic prospects. India is projected to retain its status as the fastest growing major economy in 2024, with an expected growth rate of 7.1 per cent, slightly down from the 7.7 per cent growth achieved in the previous year. “The LEI for India fell in March,” said Ian Hu, economic research associate, at The Conference Board. “A substantial decrease in merchandise exports, as well as much smaller negative contributions from cargo handled and exchange rates, fuelled the decline in the LEI. Despite this, the level of each component of the LEI remains higher than six months ago. Additionally, semi-annual and annual changes continue to show positive growth, indicating that the ongoing economic expansion is likely to be sustained throughout 2024."
Source: Indian Express
Indian equity markets are affected more by the changes in the market’s expectations of future monetary policy than the policy rate surprise on the day the Reserve Bank of India announces the policy, according to a working paper released by the RBI. This is in agreement with the conventional thinking that equity markets are forwardlooking, the paper said. “We also find that volatility in equity markets is affected by both target factor (announcement of the policy) and path factor (expectations about the policy) as markets digest the policy announcements and traders adjust their portfolios throughout the day,” the RBI analysis prepared by RBI officials said. “Using an alternative specification to examine the potential asymmetric impact, we find an increased negative sensitivity of equity returns with respect to the path factor when repo rate is altered vis-à-vis when the rate is left unaltered,” the RBI paper said. For volatility, the sensitivity to the path factor continues to be significant, it said. According to the paper, while the intraday analysis with narrow windows of 30 and 60 minutes is aimed at controlling for other potential drivers of equity prices, it may be noted that the monetary policy announcements are accompanied by regulatory and developmental measures which can also impact markets. “The sparse trading on occasions in the OIS (overnight indexed swap) markets as well as other domestic and global developments during the narrow window can also impact the analysis,” it said As per the regression analysis, Repo rate surprises, as captured by the target factor, have almost no effect on equity returns. “The market’s expectations of the future path of monetary policy, as captured by the path factor, however, remain significant. This corroborates the conventional thinking that markets are forward-looking, and the expected path of monetary policy could have implications for the cost of capital for corporates, affecting future earnings, and hence, equity returns,” the RBI analysis said. Further, equity markets’ volatility is affected by both the target and path factors, as markets digest the policy announcements throughout the day and traders adjust their portfolios. Stock prices react differently when policy rates are altered compared with when policy rates are left unchanged, the paper said. For returns, an increased negative asset price sensitivity with respect to the path factor is observed when the repo rate is altered. For volatility, the sensitivity to the path factor continues to be significant, however, target factor is found to be insignificant, it said. The RBI analysis covers the period starting with the implicit adoption of a flexible inflation targeting regime in India — from January 2014 to July 2022. Overnight Indexed Swap (OIS) is an interest rate swap where the floating leg of the swap is linked to an overnight index (MIBOR in case of India), compounded every day over the payment period.
Source: Indian Express
The Finance Ministry is studying the recent Bombay High Court order banning public sector banks from seeking the issuance of look out circulars, or LOCs, against wilful defaulters, sources said. Quashing the powers granted by the Union government to public sector banks (PSBs) to act against wilful defaulters, the High Court said it is arbitrary and violative of a person's fundamental rights. The finance ministry is aware of the April 26 judgement and will make a detailed assessment of the order, sources said, adding that the next course of action will be decided after studying the order. A division bench of Justice Gautam Patel and Justice Madhav Jamdar had on April 23 held as unconstitutional the clause of an office memorandum issued by the central government empowering the Chairman, Managing Directors and Chief Executive Officers of public sector banks to seek issuance of LOCs against default borrowers or even persons who stood guarantee for such borrowers. In its 289-page judgement made available on April 26, the bench said an executive function cannot substitute a statute and the executive cannot in any event contravene the Constitution. Commenting on the Bombay High Court order, former Financial Services Secretary D K Mittal said it is not proper on behalf of banks to seek issuance of LOC against a defaulter as it is not done after thorough investigation and that is why the High Court has termed it arbitrary. However, he said, investigative agencies like the Central Bureau Investigation (CBI) do it after proper investigation in any matter. Default by a borrower can take place due to various reasons, including business failure, economic condition turning adverse, global factors, etc, he said, adding that there are only a few wilful borrowers whose intension is not to pay. Additionally, he said, banks often hastily label borrowers as willful defaulters without thorough investigation, severely impacting their future business prospects. Without mediation, companies are forced into bankruptcy, sold at reduced values, leading to losses for shareholders, banks, and promoters. The recent recommendation by an expert committee for a voluntary mediation framework under the Insolvency and Bankruptcy Code (IBC) is timely. An expert panel set up by the Insolvency and Bankruptcy Board of India (IBBI) made such recommendation of introduction of voluntary mediation as a complementary mechanism for the resolution of disputes. It has recommended a phased introduction of voluntary mediation as a dispute resolution mechanism under the Code while maintaining the sanctity of the timelines for various existing insolvency resolution processes. The core essence of the framework is its independence and flexibility to provide room for quick incorporation of implementational learning. It has suggested establishment of a dedicated and specialised NCLT-annexed insolvency mediation cell with an independent secretariat to administer, oversee, and manage the conduct of insolvency mediations under the Code.
Source: Live Mint
Exporters who witnessed a 3.1% annual decline in shipments last fiscal are again upbeat as order inflows have seen a significant rise in April, the first month of new fiscal year. Orders have risen across key sectors in April as compared to March and April of last year, sources said. The sectors like textiles and apparel and leather are reporting an increase in orders which points to a healthy first quarter, director general and chief executive officer of Federation of Indian Export Organisations (FIEO) said Ajay Sahai. Another factor that will help in coming months is the shipments of orders that were booked in March but could not leave Indian shores on time as the Red Sea crisis and other developments in the Middle East have disrupted global shipping. Earnings from these orders will be reflected in the early months of 2024-25. Key reason for disruption in shipping is that after Houthi rebels of Yemen started attacking merchant ships the cargo vessels started avoiding the Suez Canal and detouring around the Cape of Good Hope. Transit times have increased by 30% and container shipping capacity has dropped by 9% as ships spend more time at sea. The experience of exporters aligns with the forecasts of revival in world trade by World Trade Organisation (WTO) and United Nations Conference on Trade and Development (UNCTAD). WTO expected world trade volumes to expand 2.6% in 2024 after a contraction of 1.2% in 2023. In value terms the world merchandise trade had fallen 5%. India too had recorded a 3.1% decline in exports to $ 437 billion in FY 24. In the last financial year the April-June quarter was the toughest when exports had declined 6.3%. So this year the low base would also help the numbers look good. The engineering sector that contributes 25% to total exports is also reporting order inflows at above the last year’s level. “April is traditionally a slow month after a rush in March and order flow is by and large at the sustaining at least year’s pace,” chairman of Engineering Export Promotion Council (EEPC) Arun Kumar Garidia said. Engineering exports struggled in the early part of FY 24 but made a sharp rebound in the second half to close the year with a 2.1% growth to $ 109.32 billion. The sector also increased its share in India’s exports to 5.01% from 23.74% in FY 23. The export sector has weathered the global headwinds from macroeconomic factors and geopolitical tensions well in FY 24 but fears of an escalation remain. Sahai said if the Middle East situation deteriorates it will pose a challenge.
Source: Financial Express
Bangladesh’s textile industry stands at the brink of a transformative period, with the potential to double its manmade fibre (MMF) or non-cotton garment shipment within the coming years. Media reports underlined this adding, industry insiders have emphasised that unlocking this potential requires crucial policy support and the resolution of existing bottlenecks. However, a comprehensive study has shed light on various policy issues and constraints hindering the industry’s growth. Among these are challenges such as limited access to duty-free raw materials, import duties on MMFs contrasting with cotton’s duty-free status, and cumbersome customs clearance procedures. The study titled ‘Upscaling the RMG Sector’ by the Research and Policy Integration for Development (RAPID) forecasts a substantial rise in MMF export earnings, estimating a potential increase of $12.5 billion to $19 billion within a decade if Bangladesh achieves its projected market shares for 20 key products. While cotton-based apparel dominates exports, there has been steady progress in MMF apparel over the past two decades, albeit from a smaller base. Import data further reflects the growing significance of MMF in Bangladesh’s garment manufacturing. Notably, imports of polyester staple fibre and synthetic filament yarn have seen significant increases in recent quarters, indicating a shift towards non-cotton fibres. Despite its strong foothold in the cotton market, Bangladesh has ample room for expansion in MMF and blended apparel. Currently holding a 5.6 per cent global market share, the country trails behind major players like China and Vietnam even as the global apparel export landscape has witnessed significant changes, with MMF and blended apparel surpassing cotton in value now. Dr. MA Razzaque, chairman of RAPID, underscored the rising global demand for MMF based garments, driven by consumer preferences for adaptable, sustainable clothing options while also suggesting that Bangladesh could potentially earn up to $19 billion from MMF garment exports within the next decade with concerted efforts to address existing challenges. Meanwhile, Fazlee Ehsan Shamim, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), stressed the need for supportive policy measures to encourage entrepreneurs to explore non-cotton segments and attract investment.
Source: Fibre2fashion
Universal Fibers is all set to make an impact at this year’s Clerkenwell Design Week. Building upon the success of previous installations, the company unveils its latest brand activation, 'ReFigure’ to illustrate their commitment to harnessing innovation to drive positive change. Drawing inspiration from their dedication to sustainability, 'ReFigure' transforms elements from the 2023 installation, ‘Promenade’ into a series of colourful and creative resting spaces, inviting visitors to engage with the space in a new way. Located in Clerkenwell Close, this innovative outdoor space breathes new life into materials and concepts, symbolising Universal Fibers' journey towards carbon-negative fiber production. In addition to the physical brand activation, Universal Fibers incorporates interactive elements and sustainable products into their exhibit in Design Fields (booth DF9). Jennifer Roundtree, Universal Fibers' global brand and marketing director, explains, "Our booth is designed to radiate positivity and inspiration, reflecting our commitment to making a difference in our industry and beyond." Visitors can explore the latest products while taking an 'impact quiz' to discover their unique ability to enact positive change. Universal Fibers has built a reputation for making a positive impact through its people, products, and partnerships. By fostering a culture of collaboration, creativity, and responsibility, they empower individuals to drive positive change both within the organization and beyond. Innovations like Thrive matter, the world's first carbon-negative fibre demonstrates their dedication to redefining what's possible. Collaboration is key to achieving meaningful impact at scale, and Universal Fibers has amplified its efforts through strategic partnerships with suppliers, customers, and industry organizations. Their new 'impact quiz' is designed to ignite the same passion in visitors and partners alike. Anna Plumb, VP of Sales and Marketing for Europe, adds " We love the vibrant atmosphere of Clerkenwell Design Week. Our ‘impact quiz’ is a fun and engaging way to discover how we can all make a difference - just like the redesign of our outdoor installation Refigure, which represents our journey of creativity and sustainability”. Join Universal Fibers in celebrating their journey and discovering how you can make a positive impact for a sustainable future at Clerkenwell Design Week, May 21-23, 2024. Visit Design Fields, Booth DF9, to explore their latest innovations and experience the redesigned outdoor installation on Clerkenwell Close.
Source: Fibre2fashion
The US and Taiwan are set to engage in another round of in-person trade negotiations in Taipei, beginning April 29, 2024, as part of the ongoing US-Taiwan Initiative on 21st Century Trade. The discussions, facilitated by the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office in the US (TECRO), aim to further enhance trade relations between the two economies. The US delegation, led by the Office of the US Trade Representative (USTR) and specifically by Assistant US Trade Representative for China, Mongolia, and Taiwan Affairs, Terry McCartin, will include representatives from various US government agencies. This delegation underscores the significant US commitment to deepening economic ties with Taiwan through detailed and comprehensive negotiations, USTR said in a press release. This upcoming round follows the successful conclusion of an initial agreement under the same initiative, which was signed on June 1, 2023. The prior agreement covered crucial areas such as customs administration and trade facilitation, good regulatory practices, services domestic regulation, anti-corruption, and support for small- and medium-sized enterprises (SMEs). These measures have already begun to facilitate smoother trade and investment between the US and Taiwan, offering US businesses greater access to the Taiwanese market, enhancing transparency, and creating a more streamlined regulatory environment. The negotiators will discuss several key trade areas outlined in the initiative’s mandate, building on the foundation laid by the first agreement to further integrate and optimize bilateral trade and economic interactions. These negotiations are conducted within the framework of the US' one China policy, adhering to the principles of the Taiwan Relations Act, the three US-China Joint Communiques, and the Six Assurances, ensuring that diplomatic protocols are maintained while striving for economic benefits for both nations.
Source: Reuters
