Indian Economy : News,Discussions & Updates

RISING SUN

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India's electricity supply rises after five straight months of decline
India's electricity supply rose 3.25 percent during the month of January after five straight months of decline, provisional government data showed, in a relief for power producers.

Power supply rose to 106.36 billion units in January, up from 103.01 billion units last year, an analysis of daily load despatch data from state-run Power System Operation Corp Ltd (POSOCO) showed.

India's Central Electricity Authority (CEA), an arm of the federal power ministry, is expected to release official data on power demand later this month. POSOCO releases provisional load despatch data every day.

Higher electricity supply could mean a rise in power demand, as electricity deficit in India is marginal. Electricity demand is seen by economists as an important indicator of industrial output and a deceleration could point to a further slowdown.

However, the potential rise would be from a low base, as electricity demand grew at the slowest pace in January 2019 in nearly two years, CEA data showed.

India's annual electricity demand in 2019 grew at its slowest pace in six years. Electricity supply fell 0.4 percent in December, 4.2 percent in November and 12.8 percent in October, according to the CEA.

Annual consumption of electricity by industry accounts for more than two-fifths of India’s annual electricity consumption, according to government data, with residences accounting for nearly a quarter and commercial establishments for another 8.5 percent.

The country's overall economic growth slowed to 4.5 percent in the July-September quarter, government data in November showed, the weakest pace since 2013 as consumer demand and private investment weakened.

India is expected to grow at the slowest pace since the global financial crisis during the fiscal year 2019/20. India also cut its estimates of growth for 2018/19 and 2017/18 last week.

Slower economic activity has resulted in a fall in sales of everything from cars to cookies, prompting some large scale industries such as the automobile sector to slash jobs.
India's electricity supply rises after five straight months of decline
 

Gautam

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India's January manufacturing activity hits near eight-year high as orders jump

By Kirtika Suneja
Last Updated: Feb 03, 2020, 11.36 AM IST

The IHS Markit India Manufacturing Purchasing Managers' Index jumped to 55.3 in January from 52.7 in December.
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NEW DELHI: India's manufacturing activity expanded at its quickest pace in nearly eight years in January on sharp rises in new business and production, aiding employment to at the quickest rate in close to seven-and-a-half years, a private survey showed on Monday.

The IHS Markit India Manufacturing Purchasing Managers' Index jumped to 55.3 in January from 52.7 in December.

It was the highest reading since February 2012 and above the 50-mark that separates growth from contraction for the 30th straight month.

"The PMI results show that a notable rebound in demand boosted growth of sales, input buying, production and employment as firms focused on rebuilding their inventories and expanding their capacities in anticipation of further increases in new business," said Pollyanna De Lima, principal economist at IHS Markit and author of the report.

The consumer goods sub-sector remained the brightest spot, although growth was sustained in intermediate goods and capital goods moved back into expansion.

The rise in total sales was supported by strengthening demand from external markets, as noted by the fastest increase in new export orders since November 2018. Manufacturers particularly noted higher sales to clients in Asia, Europe and North America, with favourable exchange rates assisting the upturn.

As per the survey report, Indian manufacturers were more upbeat about the year-ahead outlook for production. Optimism stemmed from forecasts of better demand, new client wins, marketing efforts, capacity expansion and new product releases.

India's January manufacturing activity hits near eight-year high as orders jump
 

vstol Jockey

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India's service sector activity growth hits 7-year high in January: PMI - Times of India

Now we see a strong rebound in the services sector. We are now just waiting to see the recovery in real estate. The loan disbursements have already shown an upswing indicating a strong and sustained rebound due to fiscal stimulus and other path breaking policy decisions taken during the downward slide of economy. I still maintain that Q3 GDP growth rate will be close to 5.2-5.5% and we will see full recovery in Q2 of 20-21 fiscal.
 
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RISING SUN

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Privatize the postal service & allow postal service to run alternative small scale business in same building structure. So its duel purpose, like its in many other countries.
15000 Cr loss annual is not worth it to keep it public owned & operated.
And incorporate a barcode end to end tracking system, t
o increase accountability in Private sector. So everyone assured. India already has a robust private courier service, so why not this too.
 

Gautam

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Coronavirus effect: Global buyers turn to India for textiles, ceramics and homeware

By Kirtika Suneja
Last Updated: Feb 08, 2020, 06.38 AM IST

In the past 10 days or so, Indian manufacturers and exporters of such goods have received an increasing number of enquiries — mostly from the US and the European Union — seeking to replace China as a supplier.


Global buyers of textiles, homeware, lifestyle goods, ceramic tiles looking for Indian products.

NEW DELHI: Global buyers are turning to India to source ceramics, homeware, fashion and lifestyle goods, textiles, engineering goods and furniture from the country as China grapples with the deadly coronavirus outbreak.

In the past 10 days or so, Indian manufacturers and exporters of such goods have received an increasing number of enquiries — mostly from the US and the European Union — seeking to replace China as a supplier.

“We have received around 50 new accounts in the past seven days who were earlier sourcing their products from China but now want to source homeware, fashion and lifestyle goods, textiles and furniture from India,” said Rakesh Kumar, director general, Export Promotion Council for Handicrafts.

Similarly, at the ongoing Cevisama 2020 ceramics fair in Spain, some 55 Indian companies have drummed up greater interest from buyers owing to muted competition from China. “We expect to get a head start in ceramics, especially in vitrified tiles, where we compete with China,” said a Delhi-based exporter.

Clients in the US and the EU have also set their sights on India for labour-intensive products such as garments.

“We have received enquiries above Rs 10 crore from the EU and US alone as the level of sensitivity there is higher,” said Sharad Kumar Saraf, chairman, Technocraft Industries (India) Ltd. The company, which has monthly exports of Rs 80-90 crore, manufactures textiles, drum closures, tubes and scaffoldings.

Indian exporters of chemicals, engineering goods and marine products will benefit the most, said Ajay Sahai, director general at the Federation of Indian Export Organisations.

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SOME CONSTRAINTS

However, not all sectors are looking to benefit from China’s inability to trade.

India’s leather sector is worried because it depends on China for components such as soles and ornaments and that supply chain will get hit.

“Also, brands don’t immediately change suppliers or transfer orders. Buyers are watching the situation and most likely will replace China with Cambodia or Vietnam,” said Rafeeque Ahmed, chairman of Chennai-based Farida Group, one of India’s largest shoe manufacturers and exporters.

Saraf said India also has capacity constraints and manufacturers in the country lack the knowhow required to quickly ramp up production. “Almost six months are needed to increase capacity by 25%,” he said.

Industry insiders said Malaysia has reached out to India for 5 million masks, but New Delhi can’t supply them because of a recent ban on their export.

“India can’t supply them masks because of the export ban,” said a trade insider, adding this was an extreme step in the wake of sourcing demands shifting away from China. Last week, India prohibited the export of personal protection equipment such as masks and clothing.

In the food sector, experts said India and China are not comparable and for most commodities, including leguminous vegetables or beans, India buys from whichever country offers buyers good prices.

However, China may step up demand for bovine meat as domestic production declines, said a Delhi-based expert.

New Delhi has been seeking Chinese market access for its bovine meat exports. China had stopped buying from India owing to concerns over foot and mouth disease. Despite India getting clearance from the World Organisation for Animal Health, China has insisted on inspections by its own officials.

Coronavirus effect: Global buyers turn to India for textiles, ceramics and homeware
 

RISING SUN

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How Budget counters ‘origin fraud’ in FTAs
It puts the onus of verifying ‘country of origin’ of goods on importers. Banking on official processes can be a lengthy affair
Free Trade Agreements (FTAs) signed by India with any country or group of countries entitle exports from such countries to India to a preferential customs duty rate, often nil rate. Budget 2020-21 has proposed a change in the Customs Act that places the onus on the importer to verify the origin of goods being imported into India using the FTA route.

Some experts have argued that this is a protectionist measure. Arvind Panagariya, professor of economics at the Columbia University, has equated the proposal with provisions during the licence-permit era. The proposal, however, is a much needed trade defence measure to protect domestic industry against unfair trade practices and origin fraud.

Goods from an FTA partner are eligible for benefits only if it is the country of origin (COO) of such goods. A COO is one in which at least 35 per cent value addition of the good has happened. But it is difficult for India to find out how much of a good coming to Indian shores has been developed in the FTA partner country. This constraint is often exploited to commit origin frauds.

Origin frauds are of two types — transshipment and general assembly. Under transshipment, goods originating from a third country are routed through an FTA partner into India, to take advantage of low duty rates. Under general assembly, parts are separately exported from the third country to the FTA partner, where assembling happens before despatch of the goods to India. In both cases, fraudsters manage to get COO certificates from the FTA partner country.

For instance, the import of stainless steel from Indonesia grew from about 8,000 tonnes in year ending March 2018 to 67,000 tonnes in year ending March 2019: a spike of over 700 per cent in a single year. Indonesia cannot add this much additional production capacity in a single year. The Indian Stainless Steel Development Association (ISSDA) claimed that these goods are of Chinese origin. They were routed through Indonesia because China has an FTA with ASEAN (which includes Indonesia), and ASEAN has an FTA with India. India imposes customs and countervailing duty on direct import of stainless steel from China.

Artificially low prices
Prices of Chinese goods are artificially low, as pointed out by Parliamentary Standing Committee on Commerce of the Rajya Sabha in a report tabled in 2018. The report has pointed out that China has been found guilty of unfair trade practices like export incentives and deep subsidies in contravention of WTO regulations. China has also been long accused of manipulating its currency to maintain export competitiveness. The report mentions that maximum anti-dumping measures world over have been imposed on China.

When cheap goods from China do not face duties, they can flood the Indian market. Dumping of artificially priced goods has a disastrous impact on domestic industry. It leads to under-utilisation of existing capacity and unforeseen crisis for domestic entrepreneurs. Origin frauds circumvent the country’s trade defence measures by routing Chinese goods through India’s FTA partners.

The problem has become especially acute in recent times due to two events: the US-China trade war and the Belt and Road Initiative (BRI) of China.

The US-China trade war started in March 2018 with US imposing tariffs of 25 per cent on import of steel products. Since then, the US has been levying specific tariffs on Chinese exports. This initially led to a surge of transshipment of Chinese goods through Vietnam to the US (in some cases, ‘Made in China’ tags on Chinese goods were replaced by ‘Made in Vietnam’ tags in Vietnam and re-exported, while in some cases assembling of parts happened in Vietnam). But the US and Vietnam together clamped down on the fraud.

The US could influence other countries to go after origin frauds because of its economic might. Now there are exporters in China who are in search of markets to dump the excess production in China. They may try to utilise FTAs to reach out to new markets and dump their goods. The problem assumes alarming proportion for large markets in the vicinity of China.

Secondly, the Belt and Road Initiative gives China logistics access to many countries along the old Silk Route and the so-called maritime Silk Route. Chinese exporters can use the logistics and port infrastructure in any of these countries to export Chinese goods to India. It will be extremely difficult for India to verify the country of origin.

In June 2019, US customs authorities found that Chinese goods were re-routed into the US through the Sihanoukville Special Economic Zone (SEZ) in Cambodia to escape the tariffs imposed on Chinese goods. Sihanoukville SEZ is jointly owned by the government of China and government of Cambodia, and was started as part of BRI. Many countries in the extended neighbourhood of India are part of BRI and house joint venture infrastructure projects — that could be used to re-route artificially priced Chinese goods into India.

Preventing abuse
There is zero deterrence on origin frauds, because India cannot go after foreign suppliers. As per Section 9A of Customs Tariff Act 1975, India can impose anti-circumvention duties on conduit countries. However, investigations by following due process have proved to be quite lengthy. Impact of origin fraud on domestic industry can be dramatic in the short-term. Hence, there is a need to implement anti-abuse checks at the point of entry.

Placing the onus of proof of ‘country of origin’ on the importer is normally not a sensible approach. Buyers and sellers in an open market interact on a contingent basis, and cannot be expected to know each other’s affairs. But this is not an ideal situation, and this is perhaps the best action that can be taken by a destination nation to prevent abuse of free trade agreements.

Further, in contemporary times, production process is highly technology driven. Goods differ widely on technical specifications. Volume importers generally inspect the factories of their suppliers, and appoint sourcing agents for quality control. They would normally be aware of the value addition to their goods in various territories. Placing an onus on importers will deter them from purchasing transshipped goods.
How Budget counters ‘origin fraud’ in FTAs
 

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randomradio

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I hope this goes some way in achieving UP's target of 1trillion USD nominal GDP by 2024-25 which is part of Modi's plan of achieving a 5 trillion USD nominal GDP in the same timeline. As of now, excluding this figure of 80 billion USD, they're some 750 billion USD short of 1 trillion USD. This maybe of interest to you. @randomradio ; @Bali78
Easy for India, requires only a 11% nominal growth rate. Impossible for UP, they need 35%. They will be lucky to reach 30% of that figure.

However since the state is now under BJP, it will do well economically.