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Economy India News

India’s exports go down 5.4% in October

India’s merchandise exports in October 2020 fell 5.4 per cent to $24.82 billion, as compared to $26.23 billion in the same month last year as Covid-19 pandemic shrank global demand for oil, resulting in sharp contraction of petroleum products exports from the country.

Exports during April-October 2020-21 also declined 19.05 per cent to $150.07 billion as global economies remain subdued affecting trade.

The value of India’s merchandise imports in October 2020 was $33.6 billion, as compared to $37.99 billion in October 2019, a decline of 11.56 per cent. Merchandise imports during April-October 2020-21 were $182.29 billion, as compared to $286.07 billion during the same period last year, exhibiting a negative growth of 36.28 per cent.

India was, thus, a net importer in October with a trade deficit of $8.78 billion, as compared to trade deficit of $11.76 billion, an improvement by 25.34 per cent, a Commerce Ministry statement said.

As the ministry release, in October, the value of non-petroleum exports stood at $23.21 billion, registering a positive growth of 1.84 per cent over October 2019. The value of non-petroleum and non-gems and jewellery exports in October 2020 was $20.28 billion, as compared to $19.07 billion in October 2019, registering a positive growth of 6.34 per cent.

In October, oil imports were $5.98 billion, as compared to $9.73 billion in October 2019, a decline by 38.52 per cent.

Non-oil imports were estimated at $27.62 billion, as compared to $28.26 billion in October 2019, showing a decline of 2.26 per cent.

Major commodities of export which have recorded positive growth during October 2020 vis-a-vis October 2019 are: cereals (369.30 per cent), Rice (112.15 per cent), oilmeal (76.62 per cent), iron ore (73.89 per cent), oilseeds (54.06 per cent), carpet (37.67 per cent), ceramic products and glassware (34.62 per cent), drugs and pharmaceuticals (21.82 per cent), and spices (21.61 per cent) etc.

But, exports in the month largely remained affected due to negative growth recorded in October by petroleum products (53.30 per cent), cashew (21.57 per cent), gems and jewellery (21.27 per cent), leather and leather manufactures (16.69 per cent), man-made yarn/fabrics/made-ups etc. (12.82 per cent) etc.

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Arab News Economy

India grants 100% Tax Exemption To Abu Dhabi’s SWF

India has granted tax free status to Abu Dhabi’s Sovereign Wealth Fund (SWF) – MIC Redwood 1 RSC Ltd – to expedite foreign investment in the country’s priority areas during the Covid pandemic.

With this, MIC Redwood has become the first foreign SWF that has been notified and granted 100 per cent income tax exemption for long-term investments to be made in the specified priority sectors in India.

A Finance Ministry statement said that India has gradually opened up the economy for FDI, except for a very few sectors, and has also extended a lot of tax concessions for sovereign funds to attract long-term investments in India’s infrastructure sector.

MIC Redwood has been provided 100 per cent income tax exemption to income from interest, dividend and long-term capital gains for its investment in India’s priority sector. This was part of the Finance Act, 2020.

Now with the Central Board of Direct Taxes (CBDT) notification, MIC Redwood became the first notified SWF which will be availing this exemption.

“This 100 per cent income tax exemption facility was well received by the SWFs and Pension Funds across the globe and a large number of SWFs and Pension Funds have shown interest in making investment in India’s infrastructure sector.”

The CBDT issued detailed guidelines on July 22 to facilitate the process of SWFs’ notification. Notified foreign Pension Funds were also granted similar exemption subject to fulfilment of certain prescribed conditions.

An official closely in the know of the matter said that to expedite foreign investment in India’s priority areas during the Covid pandemic time, the process of notification of MIC Redwood 1 RSC Ltd was completed in a record time.

On September 18, MIC Redwood 1 RSC Ltd made the application for seeking tax exemption notification as per the CBDT guidelines. Amidst the challenges of Covid-19, all deliberations and meetings between the applicant and tax authorities were held through video conferencing and communications were made only through emails.

MIC Redwood 1 RSC Ltd submitted its final replies on October 20 and after that the process of notification including consultation with Ministry of Law & Justice for legal vetting of the notification, etc, has been completed in less than two weeks, and with the completion of all legal and other formalities, the notification granting 100 per cent tax-exemption was issued on November 2.

The Indian government, in order to incentivise long-term investment by the SWFs of foreign governments in priority sectors, had granted through the Finance Act, 2020, a 100 per cent income tax exemption to income of a notified SWF in respect of its investment made in the specified infrastructure sectors.

The income tax exemption to SWFs and the Pension Fund is expected to provide foreign funding to the infrastructure sector and to boost the growth in the infrastructure sector.

The government had issued a notification on July 6 to broaden the scope of this exemption and made all sub-sectors of Harmonised Master List of the infrastructure eligible for this income tax exemption.

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Economy India News

Union Govt Set to announce another round of Stimulus

The Finance Ministry will soon come up with a fresh round of economic stimulus, Economic Affairs Secretary Tarun Bajaj said.

Addressing the media at the national capital, he said that the Department of Finance has received suggestions and discussions are on in the ministry regarding the next set of measures amid the pandemic. It will be announced by Finance Minister Nirmala Sitharaman, he said.

Bajaj’s statement comes just over a week after he said that the Centre is open for further measures to boost the economy.

Last month, the Finance Minister had also said that the Centre has not closed the option for another stimulus package.

In May, the government came up with the Rs 20 lakh crore ‘Aatmanirbhar Bharat’ economic package. Both the rounds of stimulus so far have received more flak than appreciation from the industry and experts, as many are of the opinion that they are inadequate, more so in terms of boosting demand.

A recent Moody’s report said that that the second round of fiscal stimulus amounts to just 0.2 per cent of the country’s real GDP forecast for the financial year 2021 and in total, the two rounds of stimulus bring the government’s direct spending on coronavirus-related fiscal support to just around 1.2 per cent of GDP.

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Economy World News

‘World to witness massive infrastructure push’

India is likely to spend around $513 billion on infrastructure by the year 2030 to accommodate its growing population, according to a report by Mace.

A report titled ‘INSIGHTS 2020: Blueprint for Modern Infrastructure Delivery’ said that other large countries will also incur equally large infrastructure spends.

“By 2030, India will be spending $500 billion a year to accommodate its rapidly expanding population, the USA will be spending $665 billion to maintain its status as a global super power, and Peru will be spending $28bn a year to make it more resilient to natural disasters like El Nino,” it said.

During a survey conducted by Mace to find the reasons for impact on projects and programmes across the globe, it found that lack of clarity of outcome when deciding on which schemes to take forward as a major issue. Often decisions are driven by political pressure rather than rigorous cost and benefit analysis, the report said.

“The poor predictive abilities of project teams in their early stages, who are pressured into providing fixed point price estimates and programmes well before accurate predictions are possible or realistic,” it said.

Further, procurements based on ‘cheapest price’ rather than ‘value’ to fit within unrealistic initial budgets. On large and complex projects, ‘cheapest price’ procurement is a false economy, it added.

Jason Millett, CEO for Consultancy at Mace, was of the view that around the world, good infrastructure is vital for socioeconomic prosperity, both directly through investment and jobs, and indirectly through thing like improvements to transport connectivity and access to clean water.

He added that India is no different and, unfortunately, not all infrastructure projects are properly planned and delivered, resulting in delays, cost overruns and under-delivery against expected benefits.

“The negative impact of this is significant, with our calculations showing that, in India, this could result in an additional cost of Rs 10,820 billion by 2030. Globally, the cost could be as much as $900 billion,” Millett said.

This financial burden, combined with a perceived lack of delivery capability due to project delays and mismanagement, risks severely damaging public confidence in the sector, he said.

“With COVID-19 placing greater emphasis on the importance of infrastructure as an economic multiplier, it is more important than ever that we get this right. Our major projects and programmes must have clarity of direction and outcome-focused decision making to ensure they do not become a burden, but rather an enabler for post-pandemic growth,” said Millett.

Commenting on the report, Anuj Puri, Chairman for Anarock Group said: “Construction halt, labour shortage and revocation of toll collection were some of the major challenges India’s infrastructure sector faced due to the COVID-19 lockdown since March.”

He noted that the government’s focus has shifted primarily towards building healthcare infrastructure to accommodate the pandemic’s fallout. “Even now, after a staggered easing of lockdown rules over the last months, major infrastructure work across the country have not resumed usual pace,” Puri added.

“In India, there is a very real need to ensure timely implementation. Many of India’s infrastructure projects were already delayed even before the pandemic,” he said.

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Economy India News

Railways back in action as festive demand steps in

V.K. Yadav, Railway Board Chairman and CEO.

In the view of the festive season, the Indian Railways is witnessing a huge demand for rail tickets as out of the 736 special trains currently in operation, 327 are facing waitlisting, officials said.

Addressing a virtual press conference, Railway Board Chairman and CEO V.K. Yadav said: “We are monitoring these 327 trains on a daily basis. Once we determine the nature of the waitlist — for how many days is the waitlist and how long, we will run clone trains on those routes.”

He said that railways have been saying that it will introduce trains wherever necessary. “But they will be only reserved trains and will follow all coronavirus protocols,” the CEO said.

According to data provided by the Railways, the average occupancy of these special trains is around 92 per cent.

The Railways, which had suspended all passenger train services since the lockdown in March, has so far earned Rs 3,322 crore as revenue from the segment, Yadav said, adding that it is 90 per cent less than what it earned during the same period last year.

According to the Railway Ministry, other than the 736 special trains that are being operated, the Railways is also running 200 services of the Kolkata Metro, 2276 Mumbai suburban services, 20 special clone trains and 436 festival special trains from October 20 to November 30.

Yadav said that while the overall occupancy of the 736 trains is around 92 per cent, 19 trains have occupancy below 30 per cent, 44 have occupancy between 30 per cent to 50 per cent, 83 trains have occupancy between 50 per cent to 75 percent and 327 trains which have waitlisting.

He also said that the Railways is geared to begin suburban services in cities in addition to Mumbai, adding that discussions are underway with the West Bengal and the Tamil Nadu state governments in finalising modalities for the resumption of their suburban services.

While passenger trains have all but stalled, the Railways’ freight business seems to be speeding forward with incremental loading of over 14.32 MT over October 2019.

In October this year, the freight revenue was Rs 869 crore more than last year and it also saw the highest ever automobile loading.

The Railway Board chief said that while 320 rakes of automotives were loaded in October 2020, 162 were loaded in 2019, thus meaning a 97.5 per cent increase.

Over all this year, the cumulative automobile loading surpassed last year with 1,156 rakes as compared to 886 rakes till October 2020 which is a 30.5 percent increase, Yadav added.

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Economy World News

‘World is in a global liquidity trap’

Gita Gopinath, IMF Chief Economist

Gita Gopinath, chief economist of the International Monetary Fund (IMF), has urged policymakers to provide more fiscal stimulus to boost the recovery from the Covid-19 pandemic as the global economy is in a liquidity trap.

“For the first time, in 60 per cent of the global economy — including 97 per cent of advanced economies — central banks have pushed policy interest rates below 1 percent. In one-fifth of the world, they are negative,” Gopinath wrote in an op-ed article in the Financial Times, adding central banks have little room to further cut interest rates if another shock strikes, Xinhua news agency reported.

“It has led to the inescapable conclusion that the world is in a global liquidity trap, where monetary policy has limited effect. We must agree on appropriate policies to climb out,” Gopinath said on Monday, noting fiscal policy must play a leading role in the recovery.

Gopinath suggested that fiscal authorities can actively support demand through cash transfers to support consumption and large-scale investment in medical facilities, digital infrastructure and environment protection.

“These expenditures create jobs, stimulate private investment and lay the foundation for a stronger and greener recovery,” she said.

Gopinath noted that “the importance of fiscal stimulus has probably never been greater” because the spending multiplier, the pay-off in economic growth from an increase in public investment, is much larger in a prolonged liquidity trap.

“Monetary policy has and will remain central to this effort, but with the world in a global liquidity trap it is time for a global synchronised fiscal push to lift up prospects for all,” said the IMF chief economist.

In its World Economic Outlook report released last month, the IMF revised up the 2020 forecast for global economy to a contraction of 4.4 per cent. Despite the upward revision, the IMF said the ascent out of this crisis is likely to be “long, uneven and highly uncertain”.

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Economy India News

Five Coal Mines On Auction Garner Wide Interest

The much-anticipated auctions for commercial mining of coal started on Monday with five coal mines put on the block.

According to the Coal Ministry, the mining blocks put on auction generated wide interest from bidders who had submitted their bids for various blocks on offer.

Hindalco has put the highest bid for Chakla mine in Jharkhand, while Vedanta was the highest bidder for Radhikapur West mine in Odisha.

Aurobindo Realty and Infrastructure was the highest bidder for Takli Jena Bellora North and Takli Jena Bellora South in Maharashtra.

Yazdani International and JMS Mining were the highest bidder for Marki-Mangli II (Maharashtra) and Urtan (Madhya Pradesh) coal blocks, respectively.

A Coal Ministry statement said that first day of auction of coal mines for sale of coal saw strong and healthy competition among the bidders.

The ministry had launched the auction of coal mines for commercial mining on June 18, pursuant to a two stage forward auction process, comprising of initial offer and final offer, wherein the bidders have to bid for the percentage revenue share over the reserve price.

In all the mines auctioned, the final offer received is above 10 per cent signalling strong demand of coal mines in the market, it said.

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Economy India News

Fifteenth finance commission concludes deliberations

15th Finance Commission Chairman N.K. Singh (Photo: IANS/PIB)

The 15th Finance Commission, headed by N.K. Singh, will submit its report for the financial year 2021-22 to 2025-26 to the President on November 9.

In a statement on Friday, the commission said that it has concluded the deliberations on the report.

The report was signed by the Chairman and members of the commission, Ajay Narayan Jha, Anoop Singh, Ashok Lahiri and Ramesh Chand.

“The Commission had sought time to present its Report to the President of India. It has now been communicated by the Office of the President that the report submission will be on 9th November 2020,” it said.

The Commission will also present a copy of the report to the Prime Minister later next month. The report will be tabled in the Parliament by the Union Finance Minister along with an Action Taken Report of the government.

The report contains recommendations pertaining to five financial years, 2021-22 to 2025-26.

The Commission has finalised their Report after wide-ranging consultations with the Union and state governments, local governments at different tiers, Chairmen and Members of previous Finance Commissions, the Advisory Council to the Commission and other domain experts, academic institutions of eminence and multilateral institutions.

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Business Economy India News

‘Need For Personal Mobility Pushing Two Wheeler Demand’

Yadvinder Singh Guleria, Director, Sales and Marketing, HMSI

Having achieved year-on-year sales growth during the Navratri period, two-wheeler major Honda Motorcycle and Scooter India (HMSI) now expects stable demand to last beyond the festive season.

He also consider the rising demand for personal mode of transport as a driving force behind the present hike in sales.

Notably, the two-wheeler major has recorded a YoY sales growth in the nine-day period, which marks the arrival of the festival season in India.

This period is known for higher sales which are supported by new models and discounts.

In an interaction with IANS, Yadvinder Singh Guleria, Director, Sales and Marketing, HMSI, pointed out that sales growth during the start of the festive season has come on the back of many factors.

“There are a number of reasons behind this lower digit sales growth, especially the full unlock process that has taken place in the urban areas. Then, there is the pent up demand, introduction of new models, propensity of more customers to move from the public transport infrastructure to personal mode of mobility,” he said.

“There is now an increasing need of mobility in urban India as offices open up and more and more people venture out,” he added.

According to Guleria, retail finance availability at a lower rate of interest from the bankers has aided in accelerating the sales momentum.

Honda’s newly launched H’ness CB350

“The end of moratorium period from August onwards and the continued low repo rate which has been extended by the RBI to the banks basically to fuel the lending in the market has now started giving results. In September, we have seen a jump of almost 4 per cent in retail finance,” he cited.

Besides, Guleria expects the company to post positive retail sales growth during the festive season. However, the prediction comes with a caveat mandating stable or receding trend of COVID-19 infections.

“There are factors which are not in our control and no one can predict them. If everything continues in the same manner, single digit positive growth can be seen. Diwali is on November 14 and November 12 is Dhanteras, we are still over two weeks away from that. So, what happens in these two weeks simply cannot be predicted.”

Furthermore, Guleria believes the demand momentum will last beyond the festive season but at a slower pace.

“The government’s intention is very clear that economic activity must go on and there are also indications that colleges and schools are also going to open. We have missed the demand for two wheelers from students and the faculty of colleges and universities,” he said.

Traditionally, the two-wheeler industry sees a spike in average demand during July-August every year, as the new academic session begins.

“Additionally, many other industries are slowly limping back. Over a period of time, people employed with these industries will also get back their buying power. So, these factors will surely add some additional demand to the market.

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“There could be some level up going forward. It will not be like the festive season demand spike, but we expect the positivity to continue,” Guleria said.

In September, HMSI reported positive sales growth for the second consecutive month in FY21.

The company’s YoY domestic sales zoomed by double digit to 10 per cent growth to close at 500,887 units compared to 455,896 units sold in September 2019.

It exported 25,978 units and clocked a total sales of 526,865 units in September 2020 compared to 485,663 units sales in September 2019.

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Business Economy

US investors urge SEBI to Effect IPO Reforms

SEBI.

Investors and other market stakeholders from US have asked India’s capital market regulator SEBI to bring in reforms in the regulations for initial public offering (IPO), a statement said on Wednesday.

SEBI Chairman Ajay Tyagi, along with other SEBI officials, had an e-interaction on Tuesday with various stakeholders including industry and investor associations from the US. The interaction was organised by US India Strategic Partnership Forum (USISPF).

In the statement, the SEBI said that the participants also emphasised the need for early finalisation of direct listing proposal, development of the corporate bond market, digitisation of processes, and showed interest in participating in innovative ideas under SEBI’s regulatory sandbox framework.

Various queries raised during the meetings on multiple issues were clarified by the SEBI team, it said.

Tyagi said: “We interacted with various stakeholders including the investors in the Indian capital markets from the US. We briefed them about the key developments of the Indian economy as well as the recent trends in the securities market, especially in this Covid era. The achievements of Indian primary markets, secondary markets and specific products such REITs and InvITs were brought out in the interactions.”

The attractiveness of the Indian markets despite the Covid impact and the recent surge in foreign investment into India through the Foreign Portfolio Investment (FPI) route was also emphasised, he said.

Tyagi was of the view that the increasing number of registrations of FPIs every year and increasing inflows of FPI investment in the Indian equity market signify the sustained interest of the foreign investors in the Indian capital markets.

“Considering that the largest number of FPIs and about one third of the total assets under custody of FPIs are from USA, the importance of US investments into India was emphasized especially taking into account the growing partnership between the two countries,” the SEBI Chairman said.

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