The Ministry of Commerce and Industry held discussions last week on export targets for key sectors for 2029-30 (FY30), with representatives from export promotion councils. The meeting, attended by Minister of Commerce and Industry Piyush Goyal, Secretary of the Department for Promotion of Industry and Internal Trade, top officials from the Directorate General of Foreign Trade, and others, focused on achieving $100 billion in exports of electronics and textiles, more than doubling exports in pharmaceuticals and organic/inorganic chemical, and achieving sizeable growth in agriculture and allied products. However, a questionnaire sent to the ministry did not receive any response until the time of going to press. In electronics, now India’s fifth-largest export, discussions with stakeholders aimed to increase exports to $100 billion by FY30, up p from $29.1 billion in 2023-24 (FY24), marking a 23 per cent annual increase. The bulk of current exports are in mobile devices, totalling $15.5 billion last financial year. A senior executive from a mobile phone exporting company believes the $60 billion target for mobile device exports by FY30 is achievable. The India Cellular and Electronics Association is already working on new targets under the revamped electronics policy (replacing the 2019 policy) under the Ministry of Electronics and Information Technology (Meity), aiming for a steeper target of $150 billion in FY30. “With Apple Inc pushing to shift 25 per cent of its global production of iPhones to India by 2025-26 (FY26), it is a distinct possibility that we may surpass the $100 billion target,” he argued. Meity’s vision document from 2022 aimed for $300 billion in electronics manufacturing and $120 billion in exports by FY26, now adjusted to achieve these export targets by FY30. The other big push is in textile exports, which include ready-made garments (RMG), cotton, man-made yarns, fabrics, made-ups, jute manufacturing, carpets, and handicrafts. Discussions were aimed at achieving $100 billion by FY30, up from $34.43 billion in FY24. The target for RMG alone is $43 billion by FY30, compared to $14.53 billion in FY24. Cotton yarn, fabrics, and made-ups aim to increase from $11.68 billion in FY24 to $27 billion by FY30. Pharmaceutical exports are targeted to double to $55 billion by FY30, from $27.84 billion in FY24, focusing on drug formulations and biologicals. In organic and inorganic chemical, the target is $65 billion by FY30, up from $29.38 billion in FY24. The agriculture and allied sector aim for $85 billion in exports by FY30, compared to $50 billion in FY24.
Source: India Shipping News
The Government has reopened the application window for the Production linked Incentive (PLI) scheme for white goods from July 15 to October 12, citing industry appetite to invest more in the scheme originally launched in 2021. The Commerce and Industry Ministry said the fresh window was an “outcome of the growing market and confidence generated due to manufacturing of key components of air conditioners and LED lights in India” under the PLI White Goods (PLIWG) scheme. So far, 66 applicants with committed investment of Rs. 6,962 crore have been selected as beneficiaries under the PLIWG. While the government has retained the terms and conditions for applicants under the new window, it has decided to switch to a quarterly system of incentive payouts from the current annual one. “To maintain liquidity in the business, better working capital management, and enhance operational efficiency of beneficiaries, it has been decided to introduce the system of quarterly claims processing of PLI in place of processing of claims on annual basis,” the ministry said. “In order to avoid any discrimination, both new applicants as well as existing beneficiaries of PLIWG who propose to invest more by way of switching over to higher target segment or their group companies applying under different target segment would be eligible to apply,” it added.
Source: The Hindu
With a new government in Britain, senior officials from India and the UK are set to resume discussions this month on the proposed Free Trade Agreement (FTA), aiming to resolve pending issues and finalize the negotiations. The talks, which started in January 2022, slowed down due to elections in both nations. However, the newly-elected British Prime Minister Keir Starmer has expressed readiness to conclude an FTA that benefits both nations, as he communicated to Prime Minister Narendra Modi. Historical Context and Current Status The bilateral trade between India and the UK saw a significant increase, reaching USD 21.34 billion in 2023-24 from 20.36 billion in the previous fiscal year. The Labour Party, led by Starmer, has made a commitment in its election manifesto to clinch the deal. The new Foreign Secretary, David Lammy, has also emphasized the importance of concluding the FTA, with plans to visit India within his first month in office. The Global Trade Research Initiative (GTRI) has reported that the agreement is nearly finalized, with only a few adjustments needed, such as limiting the number of visas for Indian professionals. The GTRI suggests that India should focus on issues like the Carbon Border Adjustment Measure (CBAM) and non-traditional subjects such as labor, environment, gender, and intellectual property rights in the pact.
Key Issues in Negotiation.
Several critical issues need to be resolved before the FTA can be finalized: India’s Demands: Greater access for skilled professionals in sectors like IT and healthcare, and market access for various goods with zero customs duty.
UK’s Demands: Reduction in import duties on products such as scotch whiskey, electric vehicles, lamb meat, chocolates, and other confectionery items.
Opportunities for UK Services in India: The UK seeks more opportunities in the Indian market for services in telecommunications, legal, and financial sectors (banking and insurance). Bilateral
Investment Treaty (BIT): – The two nations are also negotiating a BIT, with the agreement covering 26 chapters, including goods, services, investments, and intellectual property rights.
Statements from Leaders.
Prime Minister Modi expressed his commitment to deepening the strategic partnership and enhancing economic ties between India and the UK. In a statement, Modi said, “We remain committed to deepening comprehensive strategic partnership and robust India-UK economic ties for the progress and prosperity of our people and global good.” Similarly, Prime Minister Starmer has consistently maintained that he aims to foster strong ties with India, marking a shift from previous Labour Party policies under Jeremy Corbyn. Starmer’s government is keen on promoting people-to-people ties, acknowledging the contributions of the Indian community to the UK’s social, economic, and political landscape. Challenges Ahead Despite the optimism, several challenges remain. Historically, India has resisted incorporating topics like labour and environment into FTAs, as they often require significant domestic policy changes. The GTRI report also highlighted that even if the UK agrees to eliminate tariffs on sectors like textiles, Indian exports might still face stringent UK sustainability requirements, potentially impacting labour-intensive sectors adversely. Moreover, the Labour Party’s need to adjust visa provisions for Indian professionals may also pose a hurdle. As the talks resume, both sides will need to navigate these complex issues to reach a mutually beneficial agreement. With strong political will from both Prime Ministers Modi and Starmer, there is hope for a swift and favourable conclusion to the agreement. The successful finalization of the FTA could pave the way for enhanced bilateral trade, investment, and cooperation in various sectors, contributing to the prosperity of both countries. As PM Modi stated, “We remain committed to deepening comprehensive strategic partnership and robust India-UK economic ties for the progress and prosperity of our people and global good.” This sentiment captures the shared vision of both nations as they work towards a future of greater economic collaboration.
Source: The Hindu
India’s department for promotion of industry and internal trade (DPIIT) recently signed a memorandum of understanding (MoU) in New Delhi with the National Council of Applied Economic Research (NCAER) for developing a framework for assessing logistics costs in the country. This MoU envisages NCAER to conduct a detailed study and submit the report within a year. The key deliverables of the MoU include making a comprehensive study for assessment of logistics costs for fiscal 2023-24; assessing differentials in logistics costs across routes, modes, products and types of cargo and service operations, and identifying major determinants along with influence on logistics in different sectors, an official release said. At the signing event, attendees suggested the government to look into the intangible and indirect elements of logistics costs that also includes the cost of delay. It was also pointed out that the convenience of establishing business may also be considered as an element affecting the cost. The Indian government had launched the National Logistics Policy (NLP) on September 17, 2022. One of its primary objectives was to reduce the percentage of logistics cost to the gross domestic product. The process of assessing logistics costs involves using data of trade flows, product types, industry trends and origin data pairs.
Source: Fibre2fashion
Over the years, the Goods and Services Tax (GST) has continued to remain the focal point in India’s economic discussions. Union Finance Minister Nirmala Sitharaman is expected to consider the GST figures this time as well, as she gears up to table the Union Budget 2024-25 in the Parliament on July 23. The multi-level taxation system has been designed effectively, encompassing the sale of goods and services in the country. Aimed at reducing the cascading effect of several indirect taxes on the economy, the GST has been enforced nationwide in India -- with its framework being introduced by Prime Minister Narendra Modi-led government in July 2017. Since then, it has majorly influenced the Ministry of Finance's Budget allocation. With the GST revenue expected to surpass the Revised Estimate for the current financial year, the central government might consider further increasing the targets outlined in the interim Budget for the next fiscal during the July 23 Budget announcement. While no official statement regarding the same has been made so far, experts believe there is a probability to this looking at the unprecedented collection figures. In April 2024, the GST collection hit a new milestone and reached ₹2.1 lakh crore. The robust collections are said to have eased the burden on government coffers. Aimed at reducing the cascading effect of several indirect taxes on the economy, the GST has been enforced nationwide in India -- with its framework being introduced by Prime Minister Narendra Modi-led government in July 2017. Since then, it has majorly influenced the Ministry of Finance's Budget allocation. With the GST revenue expected to surpass the Revised Estimate for the current financial year, the central government might consider further increasing the targets outlined in the interim Budget for the next fiscal during the July 23 Budget announcement. While no official statement regarding the same has been made so far, experts believe there is a probability to this looking at the unprecedented collection figures.
Source: CNBC
Almost four months into the fiscal 2024-25 (April-March), the Indian textile industry remains hopeful for significant support from the upcoming Union Budget. Scheduled for presentation on July 23 by Finance Minister Nirmala Sitharaman, the budget is eagerly anticipated by industry stakeholders, particularly those in the spinning sector. Key demands include the assurance of fibre supplies such as cotton, polyester, and viscose at internationally competitive prices and global standards. Additionally, the industry is seeking subsidy support to aid in technical upgradation. RK Vij, emeritus president of the Textile Association of India (TAI) and secretary general of the Polyester Textile and Apparel Industry Association (PTAIA), told Fibre2Fashion, “The government should ensure raw material supply at international prices and quality, so our garment industry stays competitive with suppliers from other exporting countries.” He said that the Finance Minister should raise duties on garments to discourage imports of finished products. Vij also said that the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme should be extended beyond September 2024 when it is set to end. He highlighted the problem of the inverted duty structure of GST. Although it will not be part of the Union Budget, he emphasised the need to streamline the tax rates of various textile products. The tax rate should be higher on downstream products. Rakesh Mehra, chairman of The Confederation of Indian Textile Industry (CITI), expects the new government to formulate policies that ensure the availability of raw materials at internationally competitive prices. The industry needs a scheme similar to Technology Upgradation Fund Scheme (TUFS) for the revival of investment. There is significant potential to revive investment in the processing and value-addition stages of the textile sector. Mehra also demanded a second version of the Production Linked Incentive (PLI) scheme for more products. He is also of the opinion that the government should expedite negotiations to conclude free trade agreements (FTAs) with important countries like the UK and the EU. Dr. SK Sundararaman, chairman of The Southern India Mills’ Association (SIMA), said that the Indian textile industry is currently facing unfair disadvantages, particularly in light of preferential trade taxation and tax exemption policies that benefit competitors from other countries. He called for the availability of high-quality cotton at prices 10 per cent lower than the international market. He further added that the government should remove import duty on cotton and allow the free availability of international cotton in the Indian market. Additionally, the government should take steps to double cotton production in the country by boosting the yield per acre, making cotton cultivation more financially rewarding for farmers. Sanjay Garg, President of Northern India Textile Mills’ Association (NITMA), said that the Finance Minister should impose minimum import price (MIP) for all types of fabric in the coming budget. MIP on selected HSN codes has failed to restrict flooding of fabric imports in the country, as it has opened the door to manipulation in declaration and actual imports. Likewise, the implementation of quality control order (QCO) on man-made fibres and polyester yarn has also encouraged flooding of polyester fabric imports. Since there is no QCO on fabric and garments, they are being imported in large quantities. Garg also reiterated the industry’s demand of removal of duty on imported cotton. He said that Indian industry is lagging behind due to costly cotton. The government is increasing minimum support price (MSP), which is raising prices of Indian cotton. Currently, “our cotton is at least 10 per cent costlier than global rates. Earlier, domestic prices were 10 per cent lower than the global market. Therefore, there is no meaning to continue import duty on cotton imports.” Jaikrishna Pathak, President, The Bombay Yarn Merchants Association and Exchange Ltd emphasised on the need to streamline polyester textile value chain. “Costlier fibre and yarn is not good for the downstream industry. The government should restrict imports of fabric to save the domestic industry.” He also demanded reduction of GST on raw material to resolve the problem of inverted duty structure.
Source: Fibre2fashion
Japan and Cambodia recently agreed in principle to strengthen and expand cooperation in infrastructure and maritime security by participating in the design and development of the Sihanoukville Autonomous Port.
Source: Fibre2fashion
Thailand and Bangladesh will begin talks for a free trade agreement (FTA) next month to raise bilateral trade to $2 billion, the former’s ambassador to the latter Makawadee Sumitmor recently said. A high-level Thai trade delegation will visit Bangladesh in August last week to hold talks and explore business potential and investment environment, the envoy told a press conference announcing a four-day Thai food festival this month in Dhaka. Thai investment in Bangladesh will help reduce the bilateral trade gap, she was cited as saying by Bangladesh media reports. Prime Minister Sheikh Hasina had visited Thailand from April 24 to 29 this year and held discussions with her Thai counterpart. She had also attended the 80th Session of the United Nations Economic and Social Commission for Asia and the Pacific. Bangladesh’s exports to Thailand stood at $61 million during the July-May period of fiscal 2023-24, according to data from the Export Promotion Bureau of Bangladesh. Annual bilateral trade stands at $1.2 billion.
Source: Fibre2fashion
