INTERNATIONAL
Prime Minister Narendra Modi-led cabinet today(11/11/2020) announced Rs 2 lakh crore of production linked incentives for 10 major manufacturing areas ahead of Diwali. The government said that the move will help increasing production, exports, and employment in the country, giving support to the Atmanirbhar Bharat. Union Minister Prakash Javadekar said that while foreign mobile makers have come to manufacture in India, domestic companies like Lava, Micromax, Karbonn, etc will also be benefitted from the scheme. He added the government aims to prepare global champions.
The ten select areas are Advance Chemistry Cell Battery; Electronic/Technology Products; Automobiles & Auto Components; Pharmaceuticals drugs; Telecom & Networking Products; Textile Products; Food Products; High-Efficiency Solar PV Modules; White Goods (ACs & LED); and Speciality Steel. The government said that the final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet. Savings, if any, from one PLI scheme of an approved sector can be utilized to fund that of another approved sector while any new sector for PLI will require fresh approval of the Cabinet.
The cabinet said that the PLI scheme across these 10 key specific sectors will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology. It added that the move will also ensure efficiencies; create economies of scale; enhance exports; and make India an integral part of the global supply chain. Meanwhile, the government said that India is expected to have a $1 trillion digital economy by 2025.
While the government’s push for data localization, the Internet of Things market in India, and projects such as Smart City and Digital India are expected to increase the demand for electronic products, the PLI scheme will boost the production of electronic products in India, it underlined. Finance Minister Nirmala Sitharaman once again clarified that Atmanirbhar Bharat doesn’t mean inward-looking as the government wants to make India a manufacturing hub.
SOURCE: The Financial Express
Signifying a new policy paradigm where global-sized players are unapologetically celebrated and promoted through incentives, the Cabinet on Wednesday approved an umbrella production-linked incentive (PLI ) scheme for 10 high-potential sectors, including auto, battery cell, pharma, telecom networking, food and textiles.
The scheme, estimated to cost of Rs 1.46 lakh crore over a five-year period, will set high bars for businesses to avail the incentives, such as exacting standards of incremental annual production and exports.
It also marks a renewed focus on Make in India and shift away from a long-standing MSME bias; while local manufacturing is the ostensible objective, there will be implicit impetus for large-scale exports.
Together with the Rs 51,311 crore allocated for three PLI schemes (in electronics/mobile phones, active pharma ingredients and medical devices ) announced in the aftermath of the Covid-19 outbreak, the cost to the exchequer will be close to Rs 2 lakh crore over five years.
Briefing reporters after a Cabinet meeting, finance minister Nirmala Sitharaman said, the schemes will make manufacturers globally competitive, attract investments in key sectors, increase exports, promote self-reliance and boost jobs. The move will also create economies of scale and make India an integral part of the global supply chain.
The move will also create economies of scale and make India an integral part of the global supply chain.
The decisions will also help improve the share of manufacturing, which has been languishing at 16-17% of GDP for about three decades now, to the targeted level of 25%.
Prime Minister Narendra Modi tweeted: “Cabinet decision of PLI scheme for 10 sectors will boost manufacturing, give opportunities to youth while making India a preferred investment destination. This is an important step towards improving our competitiveness & realising an Aatmanirbhar Bharat.”
While the details of the new scheme for each sector will be finalised soon, these are expected to be tailor-made to suit exports as well, without contravening the WTO rules that usually prohibit export subsidies. For instance, in the case of the already-announced PLI scheme for mobile phones, the Rs 40,000-crore incentive over five years is to be given only for phones whose ex-factory price is $200 or above.
On October 6, 16 proposals entailing investment of Rs 11,000 crore were approved under the PLI scheme for mobile phones; Samsung, Foxconn Hon Hai, Rising Star, Wistron and Pegatron were the beneficiaries. Of the total production worth `10.5 lakh crore to be facilitated over five years, around 60% is seen to be exported.
Industry captains hailed the latest move. Adi Godrej, chairman of Godrej Group, said, “Bringing food processing under the PLI scheme would revolutionise the sector. While India is world’s leading producer of fruits, vegetables and milk but the percentage of processing is much below the global average. We process only 7% of the total farm produce. The scheme would help attract more investment.”
Tata Steel managing director TV Narendran, who is also CII’s president-designate, said: “The robust performance of the steel industry has a multiplier effect on other industries as well….this scheme will prove to be a gamechanger.”
CII president Uday Kotak called the decision “futuristic and progressive”. “It identifies the right sectors and products across core industries, labour-intensive manufacturing, and export-oriented sectors as well as advanced technology products,” Kotak said.
Baba Kalyani, chairman of Bharat Forge, said, “The inclusion of high-demand high-technology items such as semi-conductor fab, IoT devices and ACC batteries in the newly-announced PLI scheme will greatly boost India’s manufacturing ….”
Sharad Kumar Saraf, president of exporters’ body FIEO, said, “By helping the manufacturing sector to ensure economies of scale with modern and high-end technology, the scheme will boost investment, attract FDI, scale up domestic capacity and enhance exports in a big way.”
As part of the decision, the government will allocate, over five years, as much as Rs 57,042 crore for auto & auto components, Rs 18,100 crore for advance chemistry cell battery, Rs 15, 000 crore for pharmaceuticals, Rs 12,195 crore for telecom networking products, Rs 10,900 crore for food products, Rs 10,683 crore for technical textiles, Rs 6,322 crore for speciality steel, Rs 6,238 crore for white goods such as Acs, Rs 5,000 crore for electronic products and Rs 4,500 crore for solar PV modules.
The PLI scheme will be implemented by the ministries/departments concerned and will be within the overall financial limits prescribed. The final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet, espected to be over within a month.
“Savings, if any, from one PLI scheme of an approved sector can be utilized to fund that of another approved sector by the empowered group of secretaries. Any new sector for PLI will require fresh approval of the Cabinet,” according to an official release.
As FE had reported earlier, NITI Aayog had favoured the launch of PLI in these 10 sectors. Funds for PLI schemes, which must be operational for a maximum of 5 years, can be hiked at 10% a year, it had suggested.
NITI Aayog chief executive Amitabh Kant said, “Promotion of the manufacturing sector and creation of a conducive manufacturing ecosystem will not only enable integration with global supply chains but also establish backward linkages with the MSME sector.”
“We welcome the move to extending PLI scheme to specialty steel products. This will enable the steel industry to attract fresh investment and state of the art technology that would make India self-reliant in producing value-added specialty steel products,” said Seshagiri Rao, joint MD and Group CFO, JSW Steel.
SOURCE: The Financial Express
The Indian rupee is set to recover by March to levels seen before the coronavirus pandemic, thanks to a rare current account surplus and expectations that the central bank may be more tolerant of a stronger currency, according to Nomura Holdings Inc. Nomura expects the rupee to bounce back to 72 per dollar by end-March, a level last seen in February. It sees sluggish oil prices to act as a tailwind for the net oil importing nation, setting it on course to record its first current-account surplus since 2004. “We see the rupee as an outperformer versus other high yielders,” said Dushyant Padmanabhan, strategist at Nomura Holdings in Singapore. The rupee is “placed quite well – the balance of payment improvement has been quite dramatic, and continues to benefit from the recent drop in oil prices.”
India’s currency rose from a two-month low last week ahead of U.S. election results to 74.3725 per dollar on Wednesday. The rupee is Asia’s worst performer with a year-to-date loss of 4%. Traders have blamed heavy currency intervention by the Reserve Bank of India, though the nation’s economic outlook has also been blighted by the region’s biggest virus outbreak. Padmanabhan sees the central bank changing its approach, especially as the broader risk-on sentiment after the U.S. election helps. “There are some reasons to expect the RBI to taper intervention – such as the already-elevated reserves and focus on transmission,” he said.
Signs of an economic recovery are also supporting the case for the rupee’s appreciation. The manufacturing purchasing managers index rose to its highest in about a decade last month, while foreign-direct investments surged 13% in the April-August period from a year ago. Not everybody shares Nomura’s optimism. ICICI Bank Ltd.’s sees the rupee closer to 74 per dollar by fiscal year-end.
“The rupee remains overvalued in terms of RBI’s real effective exchange rate (REER) by more than 17%,” B. Prasanna, head of global markets, sales, trading and research said. That’s partly due to higher domestic inflation, and the RBI intervention is to manage this overvaluation, he added.
SOURCE: Bloomberg
The government on Wednesday said it has set up a 22-member inter-ministerial committee for strengthening India’s capital goods sector through interventions that help it in contributing more actively towards achieving the target of a USD 5 trillion economy and a USD 1 trillion manufacturing sector.
The committee will look into issues pertaining to the capital goods (CG) sector, including technology development, mother technology development, global value chains, testing, skill training, global standards, reciprocity issues, and custom duties to make the sector globally competitive and to become the manufacturing hub for the world, an official statement said.
“Initiatives in the capital goods sector require in-depth consultations and deliberations with all concerned Ministries/Departments on regular basis.
“It is in this light proposed an inter-ministerial committee (IMC) is being constituted with representation from all the concerned Ministries/Departments dealing with the CG sector and using CG machinery to regularly meet and deliberate to address the issues and bottleneck pertaining to the sector,” the statement said.
Any other relevant issue pertaining to the sector may also be brought before the committee with the prior approval of the chairman, it added.
Minister for Heavy Industries and Public Enterprises Prakash Javadekar, in a tweet, said that the committee will work out ways and means to make the capital goods sector globally competitive.
The panel will help the Department of Heavy Industries in taking a holistic view of all the issues pertaining to the sector.
The IMC under the chairmanship of Secretary, Department of Heavy Industries with the representation of sufficiently senior-level officers from the concerned Ministries/Departments will meet quarterly.
Any other Department or expert as required may be invited by the chair, the statement said.
SOURCE: The Financial Express
The production-linked incentive (PLI) scheme, announced for 10 key sectors including textile and automobiles, would help India become self-reliant, boost manufacturing as well as enhance exports, Commerce, and Industry Minister Piyush Goyal said on Wednesday.
The government on Wednesday approved the scheme for 10 sectors, taking the total outlay for such incentives to nearly Rs 2 lakh crore over a five-year period.
Goyal said the government will do the hand-holding for these sectors over the next five years.
“The PLIs announced earlier for the telecom, APIs and medical devices have got encouraging responses. The incentives will help India become strong, self-sufficient, self-reliant, and meeting our domestic needs as well as for exporting,” he said.
He also said the viability gap funding scheme for the social sectors will bring in private investment in the social sectors like drinking water, health and education, and help in meeting the needs of the people.
Meanwhile, speaking at a webinar, he invited the global investors to invest in India by taking benefit of the huge domestic market, and conducive business environment in the country.
Goyal said the Indian economy is coming out of the impact of the COVID-19 pandemic, and several data sets indicate that the country is returning back to business.
“Indian exports were up by 5 percent in September. After a small dip in October, the exports in the first week of November have also shown 22 percent growth. Imports are also picking up, showing that economic activity is normalising,” the minister added.
“We have liberalised several sectors including defence, agriculture, coal, mining, and space technology. More private investment is welcome in these sectors,” he said adding that the government should be out of consumer-oriented businesses and non-core sectors.
Further, the industry and exporters hailed the extension of the PLI scheme to ten sectors, stating that it would help in boosting manufacturing.
Deloitte India Partner Anand Ramanathan said the scheme would help in localising manufacturing and promoting greater levels of indigenisation from a supply chain standpoint.
“The announcements will help attract greater investments in the food industry which is a critical driver of employment and will also have a cascading impact on agriculture and allied sectors,” he said.
Sharing similar views, Shardul Amarchand Mangaldas & Co Partner Arvind Sharma said the scheme will boost production, exports, foreign exchange earnings and employment.
Federation of Indian Export Organisations (FIEO) President Sharad Kumar Saraf said it will further felicitate the vision of Make in India and Aatmanirbhar Bharat, “thereby not only making our products but also making brand India globally competitive”.
The inclusion of 10 sectors will reduce import dependence on these products providing a level playing field to the domestic sector.
The sectors are related to advance chemistry cell battery, electronic/technology products, automobile, pharmaceutical, telecom and networking products, textiles products, food products, high-efficiency solar PV modules, white goods (ACs and LED), and specialty steel.
SOURCE: The Financial Express
INTERNATIONAL
Myanmar exported US$4.28 billion worth of apparel under the cut-make-pack (CMP) system between October 1 and August 31 in fiscal 2019-20. According to data from Myanmar’s ministry of commerce. Amid the COVID-19 pandemic, some CMP garment factories have shut down due to the absence of raw materials, with thousands of garment workers jobless.
The CMP garment sector contributes 30% to Myanmar’s export sector, is facing a downward trend due to order cancellation from European countries and the suspension of trade by western countries amid the pandemic.
In recent years, the export value of CMP garments has tripled over the last two fiscals. It was only $850 million in fiscal 2015-16. In 2016-17, about $2 billion was earned from such exports.
The figure grew an estimated $2.5 billion in 2017-18Y and $2.2 billion in the 2018 mini-budget period (from April to September). It tremendously grew to $4.6 billion in fiscal 2018-2019, the ministry said.
SOURCE: Textile Today
The United Kingdom (UK) said imports from 47 of the world’s least developed countries, including Bangladesh, will not face any tariffs – supporting their economic development through business and trade.
Low-income and lower-middle-income countries will benefit from lower tariffs compared to the UK Global Tariff, according to Department for International Trade, Foreign, Commonwealth & Development Office.
The trade preference scheme will cover any eligible countries that do not have their existing trade agreements transitioned into a new agreement with the UK.
The UK imported approximately £8 billion-worth of textiles and apparel products from eligible countries last year.
The UK government is planning on improving the scheme to better support developing countries – more details will be announced in 2021.
British importers will continue to pay zero or reduced tariffs on everyday goods such as clothing and vegetables from the world’s poorest countries now the UK has left the EU, Liz Truss announced on Tuesday.
The UK’s Generalised Scheme of Preferences (GSP) will cover all the same countries that are currently eligible for trade preferences under the EU’s GSP, allowing businesses to trade as they do now without disruption.
In 2019, the UK imported approximately £8 billion-worth of textiles and apparel products from countries that are part of the EU GSP.
This accounted for 30 per cent of all textile and apparel imports into the UK. "We also imported approximately £1billion-worth of vegetables from eligible countries, accounting for around 8.0 per cent of all vegetable imports."
International Trade Secretary Liz Truss said free trade helps businesses to grow, boosts the economy and creates new jobs.
"We are making sure that the world’s poorest countries can continue to take advantage of the opportunities that free trade offers them by allowing them to export their products to the UK at preferential rates."
This will help developing economies establish strong industries, creating jobs and helping them reduce their reliance on overseas aid in the long term, she said.
The scheme will also help British businesses continue trading seamlessly after "we leave the EU", as well as giving British consumers continued access to some of their favourite products at affordable prices.
The UK’s GSP will also help make products from developing countries more attractive to UK importers, enabling businesses in developing countries to grow and prosper and supporting jobs in those economies.
Foreign Secretary Dominic Raab said Global Britain is a partner of choice for developing countries. "We take a liberal approach to trade, recognising that many developing countries want to trade their way to greater prosperity."
Raab said they back that up with the integrity of the investments UK businesses make, and their commitment to be a force for good in their communities through our support for green jobs, climate change mitigation and programs to deliver girls education, reports UNB.
SOURCE: The Financial Express, Bangladesh
Oil prices rose in early trade on Thursday, taking the week's gains to more than 12% on growing hopes that the world's major producers will hold off on a planned supply increase as soaring cases of COVID-19 dent fuel demand.
Algeria's energy minister said on Wednesday that OPEC+ - grouping the Organization of the Petroleum Exporting Countries (OPEC) and other suppliers including Russia - could extend current production cuts of 7.7 million barrels per day (bpd) into 2021, or deepen them further if needed.
The weakening outlook has piled pressure on OPEC+ to delay a supply increase of 2 million bpd scheduled for January, which the market is now pricing in, analysts said.
U.S. West Texas Intermediate (WTI) crude futures climbed 35 cents, or 0.8%, to $41.80 a barrel at 0130 GMT, while Brent crude futures rose 31 cents, or 0.7%, to $44.11 a barrel.
Both Brent and WTI have soared this week, lifted by hopes that the global coronarivus pandemic can be brought under control after initial trial data showed an experimental COVID-19 vaccine being developed by Pfizer Inc and Germany's BioNTech was 90% effective.
"It's great news, no question about that ... But it will take time for vaccines to be rolled out, and therefore it will take time for demand to be positively impacted by that," said Lachlan Shaw, National Australia Bank's head of commodity research.
In the meantime, fuel demand is under pressure from rising infections in Europe, the United States and Latin America. As a result, OPEC has said demand will rebound more slowly in 2021 than previously thought.
"In many ways the market is looking forward into 2021, to a time when we do have vaccines rolling out, and to a time where OPEC and allies have held back some of those scheduled supply increases," National Australia Bank's Shaw said.
SOURCE: The Business Standard
