Synopsis The government has eased rules for exporting 36 items, including software and technology, from Indian parent companies to subsidiaries in 41 countries. This new policy for dual-use products covers various technologies and materials. The DGFT has updated the Handbook of Procedures 2023 with these changes taking immediate effect. The government Tuesday notified rules easing the export of 36 items including software and technology from an Indian parent company to its foreign subsidiary in 41 countries, under a policy for dual-use products. Dual use goods are those which have both industrial and military uses and fall in the Special chemicals, organisms, materials, equipment and technologies (SCOMET) category. The countries for which the easing is done includes Russia, the UK and the US. In a public notice, the Directorate General of Foreign Trade (DGFT) that the coverage of items Global Authorization for Intra-Company Transfer (GAICT) under the purview of SCOMET “has been expanded and new items have been brought under the liberalised policy to facilitate the Intra Company Transfer of SCOMET items”. Source code for hybrid integrated systems, certain processing equipment, technology required for the development or production of m gas turbine engine components or systems, Counter Improvised Explosive Device (IED) equipment and related equipment, Towed acoustic hydrophone arrays, Materials specially designed for absorbing electromagnetic radiation, or intrinsically conductive polymers, and certain laminates are part of the revised list. The DGFT said that it has amended the Handbook of Procedures 2023 with immediate effect.
Source: Economic Times
Synopsis The 44th ASEAN summit and the 21st ASEAN-India summit will occur this week in Vientiane. The meetings will focus on connectivity and resilience. Indian Prime Minister will attend various summits, showcasing India's active engagement with ASEAN. The summit aims to strengthen economic cooperation, digital collaboration, and overall partnership, impacting Indo-Pacific stability. The 44th ASEAN summit and the 21st ASEAN-India summit are going to take place this week in Vientiane. Started in 2002 in Cambodia, the ASEAN-India annual summit process has entered into the third decade of partnership. ASEAN-India relations have grown from strength to strength, with rising trade and investment flows, friendshoring, and people-to-people contacts. ASEAN-India relations have been elevated to the Comprehensive Strategic Partnership (CSP) level. Both have agreed to establish the ASEAN-India CSP that is meaningful, substantive, and mutually beneficial. The world is passing through economic and political uncertainties, and countries are, therefore, looking for resilient solutions. The theme of this year’s ASEAN summit is “ASEAN: Enhancing Connectivity and Resilience”. Since 2002, India has not missed a single ASEAN-India summit. The Indian Prime Minister will participate in several key summits, including the East Asia Summit and the 21st India-ASEAN Summit on 10 and 11 October 2024. The Indian PM’s presence underscores the continuity of India’s proactive engagement with ASEAN and the East Asia Summit (EAS). ASEAN-India Regional Engagements ASEAN and India share both land and maritime borders. They are civilizational partners. ASEAN and India together share 7 per cent of the world GDP and 26 per cent of the world population. Their combined strength is, therefore, phenomenal. ASEAN is currently India’s 4th largest trading partner, and India is ASEAN’s 7th largest trade partner. ASEAN has truly become a global economy, where FTAs have been playing a key role in the integration. After Prime Minister Modi was sworn in for the third term in June 2024, he went to Brunei and Singapore. Heads of States of Vietnam and Malaysia visited India in between. The External Affairs Minister (EAM) and minister of states also visited several ASEAN member states in the last one year from September 2023. The Prime Minister Modi also inaugurated the campus of Nalanda University – rebuilt in partnership with several Southeast and East Asian countries. The Indian Defence Minister attended the 10th ASEAN Defence Ministers’ Meeting-Plus (ADMM-Plus) in November 2023. The ASEAN Secretary General visited India in February 2024. The 24th ASEAN-India Joint Cooperation Committee (AIJCC) Meeting was held in March 2024. In May 2024, the 26th ASEAN-India Senior Officials’ Meeting (AISOM) took place. India EAM attended the ASEAN-India Foreign Ministers’ Meeting and the PMC+1 Meeting in July 2024. Indian Commerce and Industry Minister cochaired the 21st ASEAN-India Economic Ministers in September 2024. It has been a very hectic engagement between ASEAN and India since September 2023 despite general elections in India and Indonesia – two largest economies of the region ASEAN and India have been witnessing the best phase of their relations postpandemic. The bilateral trade between them was just US$ 9 when they had the 1st summit way back in 2002, and now the trade is likely to cross the US$ 150 billion mark by the turn of 2024. India and some of the ASEAN member states such as Malaysia have agreed to trade in local currency. More ASEAN member states are likely to follow suit. The GVC networks between India and ASEAN have grown in last one decade along with the rising gross cumulative investment flows between them, which has exceeded US$ 125 billion during 2000-2023. ASEAN and India have started reviewing the AITIGA and they had a couple of rounds of negotiations in recent past including completion of a joint study. To boost India-ASEAN economic relations, the Indian Prime Minister announced the 12-point agenda at Jakarta in 2023. The 12-point agenda covers a wide set of areas crucial for economic engagement, thus reflecting India’s high commitment to ASEAN-India relations. Among the 12-point agenda, digital cooperation has witnessed some progress amid global geoeconomic uncertainties. ASEAN has shown interests in India’s UPI and so also India to ASEAN’s fast payment systems (FPSs). In June 2024, the Reserve Bank of India (RBI) officially joined “Project Nexus”, marking a milestone in India’s integration with ASEAN’s financial infrastructure. The real-time, cross-border linking of India’s Unified Payments Interface (UPI) and Singapore's PayNow has been implemented and both sides are planning to expand the operation. What follows is that the last twenty summits present India’s energetic engagements with ASEAN, which have transformed the relationship into the realm of Indo-Pacific. India and ASEAN advocate a free, open, rules-based and inclusive Indo-Pacific region, and call for peaceful resolution of disputes while respecting the sovereignty and territorial integrity of all nations. Both sides have agreed to continue to work on shared interests and aspirations in ensuring regional peace, security, and stability. Some Critical Trade Issues What are the major critical economic challenges that India faces in ASEAN? First, unlike the EU, ASEAN is not a single market. India faces 10 different economies in market access. Second, trade barriers are very high at borders and NTMs have been complicated and rising. An increase in NTMs could raise trade costs, inhibiting trade expansion and GVCs. Besides, there are restrictions on the movement of professionals, capital, and goods. Well, some of them are not India-specific, but some discriminate against India over ASEAN’s other trade partners. On the other hand, ASEAN too faces several trade and investment barriers in India. Besides, ASEAN also faces rising tariffs and domestic protections. Way Forward ASEAN-India relations have been getting melted into Indo-Pacific partnership. ASEAN and India have mutually agreed to collaborate on the Indo-Pacific. AOIP’s convergence with the Indo-Pacific Oceans Initiative (IPOI) provides a strong basis for the next phase of ASEAN-India cooperation. There are several common areas of cooperation between ASEAN’s AOIP and India’s IPOI. ASEAN and India should continue their commitment to respecting freedom of navigation and overflight, and unimpeded lawful commerce, based on the principles of international law, as reflected notably in the UNCLOS 1982. Today, digital cooperation is the best part of ASEAN-India economic engagements and it will continue to add further momentum. Cross-border ecommerce and Fintech innovations are key sectors where MSMEs are expected to thrive. There are ample opportunities to collaborate. ASEAN and India should also work together to forge green infrastructure and resilient supply chains, explore cooperation on the Single Window platform to enhance trade facilitation and integration and promote the development of MSMEs and start-ups. The areas that offer high prospects are pharmaceuticals, health, digital and e-commerce, financial, and maritime security. Both should collaborate in the areas of emerging technologies such as AI, 5G, quantum computing, cloud computing, Internet of Things among others. The coming summit may offer some lights on this front. Concluding the negotiation of the AITIGA review may take time, but ASEAN and India may intensify their efforts to achieve a substantial conclusion even before the new deadline of 2025. After the completion of the summit meetings, the ASEAN chairmanship will transfer from Lao PDR to Malaysia. To conclude, global uncertainties are looming large where geopolitical rifts continue to aggravate the uncertainties further. The growing differences between countries over trade and investment are undermining growth and trust. In such an unfolding situation, ASEAN and India may further intensify their cooperation to stabilise the global order. The coming 21st ASEAN-India summit is expected to bring significant decisions adding further momentum to ASEAN-India relations and Indo-Pacific. The author is Professor, Research and Information System for Developing Countries (RIS), New Delhi. Views are the author's own.
Source: Economic Times
Moving to stem the slide in ties ever since President Mohamed Muizzu came to power on an anti-India election plank last year, India and Maldives Monday agreed to transform the bilateral relationship to a “Comprehensive Economic and Maritime Security Partnership”. As Prime Minister Narendra Modi met President Muizzu in New Delhi, India decided to extend support in the form of INR 30 billion and USD 400 million as part of a bilateral currency swap agreement, instrumental in tackling the ongoing financial challenges faced by the Maldives. Hoping to revive defence and security cooperation – it came under severe strain after the Muizzu government ordered Indian military personnel out of the island country earlier this year – India decided to refit and repair a Maldivian Coast Guard vessel that it had gifted some years ago. The two sides agreed to launch negotiations for a Free Trade Agreement and signed five pacts including the currency swap agreement, training of judicial officers, prevention of corruption, law enforcement training, sports and youth affairs. The two leaders also launched the Rupay card in the Maldives, while India handed over 700 social housing units and inaugurated a new runway at the Hanimaadhoo international airport. After their bilateral talks, Muizzu said, “Maldives will remain a friend committed to our shared vision of peace and development in our countries and our region.” He invited Modi to visit the Maldives next year to celebrate the 60th anniversary of diplomatic ties. Modi described India as the “first responder” for Maldives in times of crisis – from Covid pandemic to drinking water shortage. Calling the ties as “age-old”, he said the Maldives is India’s “close neighbour” and “friendly country”. As part of India’s “neighbourhood first policy” and the “SAGAR (Security and Growth for All in the Region)” vision, he said India has fulfilled its responsibilities as a neighbour. On the economic help for Maldives, Muizzu said, “I would like to thank Prime Minister Modi, the government and people of India for the generous assistance and cooperation extended to the Maldives over the years, including the recent budgetary support in the form of rollover of the T (treasury) bills. I am thankful for the India government’s decision to provide support in the form of 30 billion Indian rupees, in addition to the 400 million US dollar bilateral currency swap agreement, which will be instrumental in addressing the foreign exchange issues we are facing right now. Our discussions today underscored a shared commitment to remain engaged on further measures that will bolster the Maldives’ economic resilience and stability.” On the FTA, Muizzu said, “We look forward to concluding the free trade agreement with India, which will enable us to harness the full economic potential between our countries and to increase Indian investments in both our tourism and various sectors of development.” The economic assistance is significant since Maldives is looking at a debt default as its foreign exchange reserves have dropped to $440m (£334m), just enough for one-and-ahalf months of imports. Last month, global agency Moody’s downgraded the Maldives’ credit rating, saying that “default risks have risen materially”. It said “(foreign) reserves remain significantly below the government’s external debt service of around $600m in 2025 and over $1bn in 2026”. Apart from economic aid, the pillar of defence and security cooperation got a major fillip during the visit. Soon after coming to power, Muizzu asked India to withdraw its military personnel. The two countries had then agreed that India would pull out its 80-odd military personnel stationed in the Maldives between March 10 and May 10. The Ministry of External Affairs said that two helicopters and a Dornier aircraft in the Maldives would be operated by “competent Indian technical personnel” who would replace the “present personnel”. On Monday, the joint statement titled “India and Maldives: A Vision for Comprehensive Economic and Maritime Security Partnership”, said India and Maldives share “common challenges in the Indian Ocean Region which have multi-dimensional implications for the security and development of both the countries. As natural partners, they resolve to work together in advancing maritime and security cooperation for the benefit of peoples of both India and Maldives as well as for the larger Indian Ocean Region.” “Maldives, with its vast Exclusive Economic Zone, is exposed to traditional and nontraditional maritime challenges including piracy, IUU (illegal, unreported and unregulated) fishing, drug smuggling and terrorism. The two countries agreed that India, as a trusted and dependable partner, will work closely with Maldives in sharing of expertise, augmenting capabilities and undertake joint cooperative measures, as per needs and requirements of Maldives; they also agreed that the ongoing Maldives National Defence Force (MNDF) ‘Ekatha’ harbour project at Uthuru Thila Falhu (UTF) with India’s assistance will significantly contribute towards enhancing MNDF’s operational capabilities, and agreed to extend full support for its timely completion,” it said. In this context, the two sides also agreed: * To support the Maldives with provisioning of defence platforms and assets to augment capabilities of MNDF as well as that of the Government of Maldives in advancing its maritime and security requirements in line with its national priorities; * To support the Maldives in enhancing surveillance and monitoring capability of MNDF with the provisioning of radar systems and other equipment * To support the Maldives on hydrographic matters, including through capacity building and training, as per the requirements of the Government of Maldives; * To strengthen cooperation in the area of disaster response and risk mitigation, including through development of SOPs and exercises to achieve enhanced interoperability; * To assist the Maldives in the domain of information sharing by supporting the development of capabilities through infrastructure, training and sharing of best practices. * To inaugurate at an early date the state-of-the-art Maldivian Ministry of Defence (MoD) building in Male, constructed with India’s assistance, that will augment modern infrastructural capacity of the MoD; * To increase capacity building and training slots for MNDF, Maldives Police Services (MPS), and other security organisations of Maldives under the ITEC programmes and other customised training programmes in India; * To extend financial assistance to develop and upgrade MNDF infrastructure. Muizzu said, “Maldives is important for peace and stability in the Indian Ocean region, and India is an important partner in the maritime security domain.”
Briefing reporters, Foreign Secretary Vikram Misri said defence and security cooperation was “substantively and significantly” discussed during the meeting between the leaders, and there was recognition that both countries share the same “strategic landscape” and face “shared challenges” – terrorism, drug trafficking, piracy among others. Asked if the refitting of the Coast Guard vessel will be carried out by Indian defence personnel in Maldives, he said it will be brought to India for repair and returned. He said the issue of military personnel on the two aviation platforms have been resolved to the satisfaction of both sides.
Asked if China’s activities were discussed, he said the focus was on “bilateral” cooperation. However, he pointed out that close cooperation between India and Maldives has benefited both countries in regional and international fora and amplified each other’s voice on issues of common interest. “With the recent signing of the Charter of the Colombo Security Conclave (CSC), India and Maldives, as founding members of the CSC, further reaffirmed to work closely in advancing their common maritime and security interests with an aim to achieve a safe, secure and peaceful Indian Ocean Region. The two sides also agreed to continue working closely in multilateral fora,” the vision document stated. Asked on the turnaround in ties, Misri said, “Yaarana chalta rahega” (friendship will continue). On tourists from India, Muizzu said, “Our people-to-people connections have long been the foundation relationship between India and Maldives. Many Maldivians travel to India for tourism, for medical purposes, for education and for many other needs. At the same time, the Maldives hosts a large number of teams who contribute to the development of the Maldives. India is one of our largest tourism source markets, and we hope to welcome more Indian tourists to the Maldives, allowing for shared growth and understanding between our peoples.” They also agreed to work “positively towards establishing a consulate of Maldives in Bengaluru and a consulate of India in Addu city, recognizing that these would contribute to expansion of trade and economic cooperation and greater people-to-people contacts”.
Source: Indian Express
The Indian economy is showing signs of slowing down, with high-frequency data released last week suggesting GDP growth could again come below 7 per cent in the Jul-Sep quarter of 2024-25. In Apr-Jun, India’s GDP growth had fallen to a five-quarter low of 6.7 per cent. A series of weak numbers emerged on the last day of September, with the central government's finances showing its capital expenditure was down 30 per cent on-year in August and 19.5 per cent in Apr-Aug. Core sector data, also released on Sep 30, showed output contracted by 1.8 per cent on year in August, the worst performance in 42 months. The numbers have continued to trend downwards: the manufacturing and services Purchasing Managers’ Index for September, while still in expansionary territory, fell to eight and 10-month lows respectively, while Goods and Services Tax collections last month only grew by 6.5 per cent - the weakest pace of expansion since June 2021. On Monday, data from the Federation of Automobile Dealers Associations showed India's overall automobile retail sales declined 9.3 per cent on year in September. “CV (commercial vehicle) sales marked their fourth consecutive fall (the worst in 43 months), air cargo traffic contracted for the second consecutive month, Vaahan registrations fell for the first time in 11 months, and power generation and PV (passenger vehicle) sales saw sluggish growth,” Motilal Oswal Financial Services’ economists Nikhil Gupta and Tanisha Ladha said in a note on Saturday. MOFSL estimates that GDP growth may have fallen further to 6.0-6.5 per cent in Jul-Sep, data for which will be released at the end of November. The Reserve Bank of India has forecast Jul-Sep GDP growth at 7.2 per cent. “Softer growth signals are visible, and this may not be transient,” Nomura economists said in a note last week. “After the weak Apr-Jun GDP, high-frequency data point to a further softening of growth momentum, including the latest data on auto sales, diesel sales, core infrastructure growth, GST collections and exports,” they said. The weakening growth signals in addition to continuing concerns on the geopolitical front have led to some talk of the RBI on Wednesday possibly lowering its FY25 growth forecast by 10-20 basis points from the current 7.2 per cent. The central bank is also expected to lower the Jul-Sept growth forecast. This would come on the back of RBI staff writing in their monthly State of the Economy article that growth in the second quarter is seen at 7.0 per cent, although it pegged the full-year projection at 7.3 per cent, higher than the central bank’s official view. To be sure, even the government has made note of the weakening momentum. In its Monthly Economic Review report for August, released on Sep 26, the finance ministry had written there are “incipient signs of strains in certain sectors” in the form of build-up of passenger vehicle inventory, slowdown in growth of fast-moving consumer goods sales in urban areas, and fall in capital expenditure by states. “While these may turn out to be transient with the onset of the festival season, they warrant monitoring,” the finance ministry had said.
Source: Business Today
Synopsis The commerce department is addressing exporters' credit issues by exploring options like a credit guarantee fund for export finance. Export credit has decreased despite a rise in exports, causing concern. The directorate general of foreign trade is involving EY for analysis. The Export Credit Guarantee Corporation's limited coverage and the need for factoring services are also being reviewed. India's commerce department is working to resolve the credit issues faced by exporters, particularly small businesses, due to a lack of access to finance. Banks and the Reserve Bank ofIndia (RBI) have not been intervening effectively. One idea being discussed is establishing a credit guarantee fund for export finance, similar to the post-Covid loan package, which would eliminate the need for businesses to provide collaterals. Exporters are also dealing with high credit costs, which have become more problematic as freight rates have surged due to geopolitical tensions in West Asia. This has forced ships to take longer, more expensive routes. Data shared with Commerce and Industry Minister Piyush Goyal indicated that outstanding export credit dropped from around Rs 2.3 lakh crore in March 2022 to under Rs 2.2 lakh crore by March 2023, even though exports in rupee terms rose by 15%. Exporters have expressed frustration with the expenditure department for not extending the interest subsidy scheme beyond September and for failing to provide future guidance to help price their products accordingly. These issues have led the Directorate General of Foreign Trade (DGFT) to hire consulting firm EY for an in-depth analysis and to explore multiple solutions. A comprehensive approach is planned to address the financial challenges exporters face. One concern is that the Export Credit Guarantee Corporation (ECGC) does not fully meet the needs of the business and trade sector. The ECGC covers $80-90 billion, but merchandise export coverage needs to be around $450 billion. A policymaker remarked, "Why is it not expanding its footprint, maybe, the time has come to review its monopoly." Factoring services, which allow businesses to sell their account receivables to a third party at a discount to meet cash requirements, are also underutilized and remain on the periphery.
Source: Economic Times
The European Union and India have concluded the ninth round of talks on a proposed free trade agreement (FTA). Although divergences on key issues remain, an FTA is in the interest of both sides. “Trade is one of the core elements of our relations. It is not by chance that we are the strongest trade partner for India,” European Commissioner for Budget and Administration Johannes Hahn told the media during his recent visit to India. “This is why the next step should be done, and it should be a comprehensive FTA, which will be in the interest of both India and Europe,” the Commissioner added, “there is always room for improvement Negotiations on an India-EU FTA were formally relaunched in June 2022, and rapprochement has mainly focused on reaching this deal. Last year, the EU overtook the United States, becoming India’s largest trading partner. These discussions have taken place in the context of the EU-India Trade and Technology Council (TTC), launched in February 2023, aiming to increase bilateral cooperation and boost trade and investment to ensure the parties’ technological and industrial leadership. In a recent interview with Euractiv, the Indian Ambassador to the EU, Saurabh Kumar, described the TTC as an important mechanism of the partnership, with both sides working in areas such as digital transformation, green technologies and trade. FTA, the final goal or the starting point? Despite the strategic partnership gaining momentum and both sides moving towards stronger economic ties, driven by their shared interest (reducing dependency on China), significant challenges remain to be addressed. An analysis published by the Centre for Research on Strategic and Security Issues (NatStrat) identifies the following differences: India’s relatively small share of global manufacturing and trade with the EU, high tariffs in India, European environmental regulations such as the Carbon Border Adjustment Mechanism (CBAM). These core trade issues, coupled with concerns over sustainability measures, have been on the negotiating table between parties, with the Indian side raising concerns about the EU’s move to impose inequitable sustainability regulations, labour standards, deforestation rules and carbon tax. In this respect, the NatStrat analysis highlights the importance of clarifying whether reaching a free trade agreement would be the final goal or the starting point of the new geo-economic relationship between the EU and India. While a fully-fledged deal is farfetched, the analysis concludes that India and Europe must focus on smaller sectoral agreements before pursuing a comprehensive free trade agreement. It also suggests more open diplomatic channels, understanding each other’s political landscapes, and addressing differences, such as India’s ties with Russia, as crucial steps to solidify the partnership. What do the EU and India want? A report of the Global Trade Research Initiative (GTRI) think tank ahead of the ninth round of talks recommends a political push and a pragmatic approach to bridge gaps and ensure that an FTA becomes a cornerstone of the strategic economic partnership. According to the report, a successful FTA would boost trade and investment, create new opportunities for businesses and contribute to economic growth for both sides, especially through tariff reduction and enhanced commitments in services. It would also boost exports from both sides. Major Indian goods exported to the EU, such as ready-made garments, steel, petroleum products, electrical machinery and pharmaceuticals, would become more competitive. Services exports such as telecommunications, business and transportation services would also see substantial growth. On its side, the EU would benefit from the increased export of essential goods from India,
Source: Euractive
Synopsis India and UAE plan to boost investment, potentially reaching $100 billion. This includes sectors like energy, AI, and food processing. A new food corridor aims to bring $2 billion in investments. Significant gains are seen in bilateral trade and FDI under the Comprehensive Economic Partnership Agreement. An Invest India office will open in Dubai, fostering UAE investments in India. India and United Arab Emirates (UAE) agreements to promote investment could potentially lead to a total of about $100 billion investment from UAE to India - including the existing and future investments and projects of UAE entities in sectors such as energy, artificial intelligence, logistics, food and agriculture, Union Minister for Commerce and Industry Piyush Goyal said after the 12th meeting of the India-UAE High-Level Joint Task Force on Investments held in Mumbai on Monday.
Source: Economic Times
India is experiencing macroeconomic conditions that are truly unprecedented. It shines as a beacon of hope in a slowing global economy. According to the IMF, India will contribute 17% of global growth in CY 2024. Increased tax receipts driven by economic formalisation and strategic reductions in revenue expenditure have led to a period of fiscal consolidation. This has enabled retail inflation to fall to ~3.5%. Further, India’s balance of payments continues to improve on the back of higher services exports, foreign flows and remittances, coupled with lower commodity prices. What implications, if any, will these positive macroeconomic developments have on the Indian rupee?
Over the last 20 years, the Indian currency has held a steady depreciation rate of ~3% on an annual basis. However, upon a closer examination of the INR/USD price chart, it becomes evident that the rupee moved downward sharply (10%+ decline) against the dollar in three concentrated periods; with a more sanguine depreciation of 1-2% annually in other times. In 2012-2013, severe weakness in the Indian economy on the back of high inflation and policy paralysis led to a declining rupee relative to all major currencies. It was exacerbated by the effects of the Fed’s move to reduce its QE program, popularly coined the ‘taper tantrum.’ In 2017-2018, the culprits were spiking oil prices, US-China trade tensions and a widening current account deficit driven by cyclical economic weakness. Third, in 2022 the Fed sharply hiked rates (425 bps) in an attempt to battle COVID-induced inflation – causing the rupee to significantly decline as FPIs fled Indian markets to chase higher-yielding treasuries. However, 2022 was different (relative to 2013 and 2018) wherein the Indian currency was either stable or outperforming other major currencies like the British pound, euro and Japanese yen. Therefore, the decline was largely a function of a strengthening U.S. dollar: with the Dollar index (DXY) going from ~95 to a peak of ~113. This increase suggests that the Indian currency should have depreciated more than ~10%. Further, the rupee was roughly flat (down ~0.8%) in 2023 when the Fed continued to hike (an additional 100bps). While the RBI cushioned the decline by selling down their dollar reserves (which were reduced by ~$70bn in 2022), it mainly showed the tremendous resilience of India’s economy. Careful management of government finances during COVID, a robust recovery and strong capital account inflows (FDI + FII) contributed to this. Going forward, we may be entering into a ‘golden period’ for the rupee. Markets have priced in a 25bps reduction in the Fed Funds Rate in September with another ~100bps of cuts over the next 2 years – as evidenced by the 2-year Treasury yield. It will be interesting to see whether the RBI initiates its own rate reduction cycle (per market expectations in December) on the back of positive inflation data. However, the RBI will have to consider a rate cut’s negative impact on banking deposits, which have been growing slowly relative to credit growth. In any case, the higher interest rate differential between the Fed Funds and RBI Repo Rate will be positive for the rupee. However, it is important to note that this story is somewhat complicated by potential global recessionary fears (~35% probability according to JPM) which could cause foreign investors to look for safer havens.
Beyond the favourable rates and macroeconomic outlook, the rupee will also benefit from India’s energy transition and gradual reduction in carbon intensity. According to a UN report, India’s emissions grew at only 4% between 2005 and 2019 while the GDP grew at ~7% in that period. Consequently, there was a ~33% reduction in India’s emission intensity. Going forward, the government has laid out a vision for a 45% reduction by the end of this decade, when compared to the 2005 level. These changes will primarily be driven by substantial investment in renewable energy generation capacity coupled with the electrification of transportation via the flagship FAME scheme. Importantly, this will combine to reduce India’s net oil import bill (as a % of GDP) – which has historically been a drag on India’s currency.
On the whole, demand for the rupee will remain strong as India grows in importance as a key investment destination for foreign portfolios. Further, the RBI’s Forex reserves (now $680bn+) offer an important buffer to the currency. These factors have begun presenting themselves in INR/USD currency markets with record-low FX volatility translating into decade-low hedging costs.
Source: Financial Express
The flexibility shown in the investment treaty opens up the door for signing similar agreements with other countries like the UK and European Union with whom talks are in advanced stages. A revamped India-UAE bilateral investment treaty (BIT), which came into force on August 31, makes conditions for enhanced investment flows from the West Asian kingdom, analysts said. It breaks the template of text of the model treaty by offering protection to portfolio investments, and lets investors seek international arbitration after three years instead of five.
The treaty was signed on February 13 this year replacing the earlier Bilateral Investment Promotion and Protection Agreement (BIPPA) between India and UAE signed in December 2013 and expired on September 12, 2024. “This (treaty) will give a boost to the greater degree of investments that India seeks to receive from the UAE. We discussed several emerging sectors like data centres and artificial intelligence,” commerce and industry minister Piyush Goyal said after the 12th meeting of India UAE High-level Task Force in Investments here on Monday. India’s metro network set to become world’s second-largest, to surpass US metro network in 3-4 years
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Co-investing in renewable energy and transmission infrastructure for solar and wind power in India as well as significant ramp-up of UAE investments both in strategic sectors and core infrastructure opportunities are also envisaged under the new BIT. The Model Text of the Indian Bilateral Investment Treaty was formulated in 2016 in response to several cases filed against India by investors like Vodafone and Cairn. As a result of the growing surge of BIT claims, India unilaterally terminated 68 of the 74 treaties it had signed till 2015 and sought renegotiations on the basis of the revised text. Only seven countries have signed BITs with India under the new model. India’s generic text of model bilateral investment treaty has laid down that international arbitration by investors will only be resorted to after making attempts to sort them through India’s legal system for at least five years. The India-UAE new investment treaty reduces this time period to three years. The UAE treaty also includes portfolio investments which can seek protection under the BIT. Portfolio investments include shares, stocks, units in trusts and other forms of equity participation. It also includes loans, bonds, debentures and other debt instruments. Debt securities and loans to the government or government-owned enterprises are out of the definition of investments for the purposes of the treaty. The model text clearly mentions that portfolio investments by enterprises or in other enterprises and government securities will not be covered in the future bilateral investment treaties that India will sign. The flexibility shown in the investment treaty opens up the door for signing similar agreements with other countries like the UK and European Union with whom talks are in advanced stages. Australia, Switzerland, Oman, Israel, Qatar, Tajikistan, Russia, Saudi Arabia, Mexico, Hong Kong, Mauritius are among a few other countries with whom talks for an investment treaty are in progress. “India-UAE signals a shift towards a more open investment environment at the cost of regulatory sovereignty. While it may attract more UAE investment, it also raises the risk of higher arbitration claims against India. India would soon be approached by other countries to do sign BITs on similar liberal terms,” co-founder of Global Trade Research Initiarive Ajay Srivastava said. The treaty, however, investors cannot claim damages for loss on their investments because of change in taxation policies of enforcement of taxation demand. It also preserves the right of the parties to the agreement to grant compulsory licences on intellectual property in line with the World Trade Organisation (WTO) agreements. Claim of losses due to government procurement and subsidies and grants are also out of the purview of the agreement.
Source: Financial Express
Not to miss the bus to a greener future, the textile industry too is being explored as a candidate for replacing existing material with sustainable alternatives.
Aiming at revolutionizing textiles, researchers from North Carolina State University have brought non-wood cellulose fibres under the spotlight through an innovative research with a focus to explore sustainability in fibre production. Their study is exploring the potential of non-wood feed stocks to produce man-made cellulosic fibres.
Now, this is a sector that is traditionally dominated by wood-derived pulp, while the research is being conducted in the background of rising environmental concerns over synthetic fibres accounting for more than half of the fashion industry’s market share. The NCSU researchers are offering a promising direction with their work on non-wood cellulose-based textiles. As part of these efforts — and the study — the most interesting part is their focus on exploring an emerging method which involves fibre spinning from a hydrogel made of nano or micro fibre suspension. They are exploring the unique potential of this method which they feel can revolutionise the textile industry while providing a more sustainable and efficient way to produce textiles, while reducing the pressures on the conventional means of textile production.
Textile production globally is increasing in tandem with the demand, and this is putting pressure on the resources, which in turn is impacting the environment. The researchers are also highlighting the potential of non-wood sources like dedicated fibre crops and agricultural residues to offer eco-friendly alternatives. Stressing on innovation while focusing on eco-friendly methods, the researchers also highlight various technologies suitable for producing textile-grade fibres from non-wood-based dissolving pulp. But challenges are there: raw material impurities, adaptation to prevailing equipment and integrating non-wood feedstocks into MMCF production. But it’s worth the pursuit.
Source: The New Indian Express
KARACHI: TEXPO 2024, the flagship event for Pakistan’s textile and leather industry, is scheduled to take place from October 23 to 25, 2024, at the Expo Centre in Karachi.
This exhibition will highlight the country’s vibrant textile and leather sectors, bringing together over 250 leading companies from across the industry, according to a statement from the Trade Development Authority of Pakistan (TDAP) released on Tuesday.
The authority said that more than 250 textile and leather companies will display their latest products and innovations, providing a comprehensive overview of the industry’s capabilities. The event will facilitate extensive networking opportunities, enabling B2B connections between Pakistani and international companies. The exhibition aims to develop global trade linkages.
Source: PK News
The LYCRA Company, a global leader in developing innovative and sustainable fiber and technology solutions for the apparel and personal care industries, hosted a denim and casual woven industry trends presentation at the prestigious Home House in London on September 26, 2024. The event highlighted groundbreaking advancements in fabric technology and market insights, attracting key figures from the fashion and textile sectors.
In collaboration with Kantar, the event provided an in-depth analysis of the UK denim and chino market, with a focus on key statistics and emerging consumer trends. Sam Wright, consumer editor at Kantar, explained: “Over the past decade, GB shoppers have embraced a more laid-back style, with casualwear now making up almost a third of market spend. Denim is at a five-year high, driven by double-digit growth in relaxed fits like baggy and boyfriend styles. To win big, brands need to attract more shoppers by focusing on core essentials that blend comfort and everyday style.”
Ebru Ozaydin, global strategic marketing director of Denim and Wovens at The LYCRA Company, took the stage to unveil the company’s latest denim innovations, including the introduction of LYCRA FitSense Denim Technology, which delivers invisible targeted shaping to make every pair of jeans a perfect fit, for all body types and shapes. Additionally, Ozaydin highlighted the ongoing development of bio-derived LYCRA fiber, part of The LYCRA Company’s ongoing partnership with Qore to create a sustainable fiber option made from renewable content. Salli Deighton, CEO of LaundRe, presented a compelling introduction to the launch of LaundRe, a pioneering circular and reshoring denim hub in London. Deighton’s presentation focused on how LaundRe’s innovative services will empower brands to reshape the future of denim through sustainability and creativity. Stay tuned for the upcoming launch of LaundRe. “Sustainability is now a key driver for consumers,” Ozaydin explained. “Four out of five shoppers are willing to pay a premium for sustainably made clothing. Our collaboration with Qore to develop bio-derived LYCRA fiber made with QIRA is just one of the ways The LYCRA Company is focused on reducing our environmental impact and delivering on consumer preference for sustainable options.”
Source: Fibre2fashion
Textile and clothing producers are clutching their heads in disbelief. The EU requires companies to produce sustainably, respect human rights at every stage, use materials and machinery with the most negligible environmental impact, and extend products’ life. How can one meet the legal requirements while maintaining production in Europe, where wages are high, and textile workers are in short supply?
Experts in fabric and clothing production unanimously say that we should automate most of the factory processes or we cannot count on business development and profits. Thus Targi Kielce, one of Poland’s leading organisers of B2B events, created the platform for presenting AI tools for textile production, a showcase for modern textile machines.
- Targi Kielce helps arrange a new textile reality in Poland. (…) My TexStyle exhibitors and representatives of the Polish and foreign textile industries and scientific milieus will present completely new technological solutions. The show is an opportunity for expo visitors to become familiar with innovative devices. Manufacturers find their bearings in a new technological world. – says Henryk Marucha, owner of Victory Sportswear Company.
The International Expo of Textile Machines, Materials and Accessories MyTextile is held from 7 to 9 May 2025 in the Kielce Exhibition and Congress Centre. The event brings together exhibitors from five continents - companies from Italy, Spain, Portugal, Germany, Switzerland, Turkey, Uzbekistan, China, India and Poland present their products.
What makes My Texstyle complete?
The exhibition is divided into 8 thematic zones. Seven intended for the exhibitors of the following industries: machinery, fabrics, accessories, laboratory, textile chemicals, recycling, innovations and Start-ups Zone. The last Knowledge Zone is Future TexStyle Congress, the accompanying event of the fair
My TexStyle participants can see the offers of companies presenting textile machines, sewing machines, cutters, 3D printers, fabrics, knitwear, yarn fibres, laboratory equipment, advanced machines for textile recycling and dyes and a plethora of other products and services.
The three-day Future TexStyle Congress accompanies the exhibition and brings together companies’ CEOs, scientists and environmental activists who meet manufacturers and tell them how to automate production processes and implement the new EU directive provisions. The Green TexStyle conference is a knowledge mine about ecology and sustainable development in textiles and clothing production. The Business TexStyle conference features industry experts sharing tips with aspiring entrepreneurs at presentations and lectures. The last part of the congress, Innovation TexStyle, is devoted to innovative solutions for machines, fabrics, and materials.
The Polish and CEE region market hungry for new technologies
The textile industry, which comprises the textile, clothing, leather and footwear industries, operates one of the most globalised value chains. According to the European Commission data, this industry employs 2.2 million people on the old continent, and 99.5% of companies operating in this ecosystem are small and medium-sized enterprises. These enterprises have the most challenging time competing with Global South factories; the lack of regulation there allows millions of cheap products to be made every day.
According to data from the Polish Textile Industry Association, the Polish textile industry now employs 194,000 people and is one of the largest in the country and the third most promising in Europe. This does not mean, however, that Poland’s industry does not always have to face new challenges.
- Today, we must thoroughly follow new trends and requirements; we are committed to entering a much higher technological and qualitative level. We face the great challenge of transitioning from manual to machine work. Thus, we have fewer and fewer opportunities to educate our staff; people willing to work in our industry are increasingly scarce, and we need to automate specific processes – says Ireneusz Chabrowski, president of the Polish Textile Industry Association.
Using artificial intelligence and machines that could replace people is one of the most effective methods of boosting and enhancing business development and staying afloat. Machines that operate with AI support enable the optimisation of production processes, waste reduction and energy efficiency, to name just a few domains. Furthermore, the latest developments are not on the payroll, and they get fixed monthly salaries.
Several global manufacturers already use cutting-edge solutions, such as artificial intelligence-based textile machines used by Levi Strauss & Co and Adidas, to name a few.
Targi Kielce – the innovations centre in the heart of Europe
For over three decades, the Kielce Exhibition and Congress Centre has been the industry leader - the organiser of business events, conferences and other events. Targi Kielce hosts over 70 trade fairs and nearly 400 conferences every year. Today, the centre has 90,000 square meters of exhibition space, including 36,000 in seven expo halls with all the necessary utilities – all you need for exhibition purposes. A multi-level car park for 480 cars, a congress and banquet hall for 850 people, 19 modern conference rooms and spaces for business meetings in a 57-meter observation tower are at your disposal. Targi Kielce will soon begin construction of the eighth and most advanced expo hall in Poland. The new structure will be approximately 15 metres high, 74 metres wide and 273 metres long; the construction costs are over 100 million PLN. Completion is planned for mid-2026.
Source: Fibre2fashion
