Welcome to Daily Banking Digest, your premier source for the latest news and insights on March 04, 2024, focusing on banking, the economy, and finance. Our platform offers a comprehensive overview of the day’s most critical financial stories, market trends, and economic developments. Whether you’re a professional in the financial sector, an investor monitoring market movement, or someone interested in staying informed about the economic landscape, Daily Banking Digest provides reliable, up-to-date information.
Join our Telegram Channel for Daily PDF in your Inbox – Click Here
Table of Contents
As cotton prices surge, SIMA urges spinning mills not to panic
The Southern India Mills’ Association (SIMA) has expressed concern over a recent surge in cotton prices, which has caused panic in the textile industry. SIMA advises spinning mills to avoid panic purchases and highlights that the supply position is comfortable. The association also urges the government to exempt cotton imports from duty to maintain price stability and boost exports.
Key Points:
Cotton Price Increase: – Cotton prices have increased by 10-12% in the past fortnight, triggering panic in the textile value chain.
Crop Estimates: – The Committee on Cotton Production and Consumption (CCPC) estimates a cotton crop of 316.57 lakh bales, imports of 12 lakh bales, consumption of 310 lakh bales, exports of 25 lakh bales, and ending stocks of 57.65 lakh bales for the 2023-24 season.
Capacity Utilization: – Spinning mill capacity utilization has increased to 80-90% from 70-75%, and 20 lakh bales have been contracted for exports.
Cotton Availability: – About 215 lakh bales of cotton have arrived in markets till February 2024, with daily arrivals exceeding one lakh bales.
Post-July Scenario: – Cotton availability in the global market is expected to increase after July due to higher production in Australia, Brazil, and other countries.
Spinning Mill Caution: – SIMA advises spinning mills to avoid panic purchases as the supply position is comfortable.
Cotton Corporation of India (CCI) Policy: – SIMA urges the Union Textile Minister to advise CCI to adopt a policy of releasing cotton when domestic prices exceed international prices and suspending sales when local prices fall below international prices.
Duty Exemption Plea: – SIMA appeals to the government to exempt all cotton varieties from the 11% import duty during April-October to prevent import parity pricing and boost export competitiveness.
Administrator likely to be appointed at Paytm Payments Bank after March 15
Paytm Payments Bank faces the risk of license revocation by the Reserve Bank of India (RBI) due to failed due diligence and inadequate KYC compliance. The bank’s operations are set to wind down on March 15, 2024, and depositors’ funds will be transferred to an unclaimed deposits account.
Key Points:
Failed Transactions: – Paytm Payments Bank has faced multiple instances of failed due diligence during takeover negotiations. – Interested banks have withdrawn due to concerns over inadequate KYC compliance.
License Revocation Likely: – RBI may revoke Paytm Payments Bank’s license after March 15 due to compliance issues. – An administrator may be appointed to oversee unclaimed deposits.
Next Steps: – RBI has prohibited credits and fresh deposits to Paytm Payments Bank after March 15. – Depositors’ funds will be transferred to an unclaimed deposits account under the DEA Fund Scheme.
Vijay Shekhar Sharma’s Stake: – Sharma holds a 51% stake in Paytm Payments Bank, while One97 Communications holds the remaining 49%.
TERI unveils new tech to ensure zero liquid discharge by CETP
The Energy and Resources Institute (TERI) has developed an innovative technology called TADOX® to treat industrial wastewater, ensuring compliance with Zero Liquid Discharge (ZLD) regulations. The technology is affordable, reduces key pollutants, and minimizes sludge production. It can be integrated with renewable energy sources to further reduce costs and environmental impact.
Key Points
1. Affordable ZLD Compliance – TADOX® technology treats effluents at a cost of ₹175-200 per 1,000 liters, compared to ₹300-450 under current practices.
2. Pollutant Reduction – TADOX® significantly reduces key pollutants, including color, COD, and BOD, ensuring compliance with environmental norms.
3. Sludge Minimization – The technology uses formulations that reduce sludge production to 0.5 kg per cubic meter and make it non-toxic.
4. Retrofittable and Integrated Solution – TADOX® can be retrofitted into existing CETPs and is suitable for treating various industrial effluents, including textile, tannery, and chemical.
5. Integration with Solar PV – Integrating TADOX® with solar PV can reduce operational expenses by 40% and contribute to net zero emission targets.
6. Patent Pending – TERI has filed for a patent for the TADOX® technology.
Indian government allows derivatives trading in skimmed milk powder, apples, bamboo and 8 other commodities
The Indian government has expanded the list of commodities eligible for derivatives trading to 104, including skimmed milk powder, cement, apple, bamboo, and timber. This move aims to enhance price discovery and support economic growth. However, the actual commencement of trading in these commodities depends on market demand and regulatory approvals.
Key Points:
1. Expansion of Derivatives Trading: – 11 new commodities added to the list, including skimmed milk powder, cement, and apple. – Total number of commodities eligible for derivatives trading now stands at 104.
2. Regulatory Approval: – Commodities added under the Securities Contracts (Regulation) Act, 1956. – Derivatives trading in these commodities permitted with immediate effect.
3. Recommendation from SEBI: – Securities and Exchange Board of India (SEBI) recommended the inclusion of these commodities based on their wide trading volume.
4. Market Demand and Exchange Approval: – Exchanges must assess market potential and apply to SEBI for approval. – Trading will commence only if there is sufficient demand.
5. Market Participant Concerns: – Some physical market participants express discomfort with online derivatives trading. – Concerns about price manipulation and lack of success in recent launches.
6. Inflation Concerns: – Government acknowledges concerns about inflation related to derivatives trading in certain commodities. – Ban on derivatives trading in seven key agricultural commodities remains in place.
7. Policy Certainty: – Hedgers and investors seek clarity on derivatives trading policies in agricultural commodities.
8. Government’s Aim: – Notifications are part of ongoing efforts to strengthen financial and commodity markets. – Aim to ensure competitiveness, resilience, and support for economic growth.
BPO employees face maximum risk of getting replaced by AI pretty quickly: Nasscom chairman
Nasscom Chairman Rajesh Nambiar warns that workers in the business process outsourcing (BPO) sector face a high risk of job displacement due to the rise of generative artificial intelligence (AI). While software services industry professionals are less at risk, those who do not incorporate AI into their work may face replacement. Generative AI is expected to impact white-collar jobs more significantly than previous technological advancements, potentially affecting roles such as equity analysts and statisticians. Nambiar emphasizes the importance of integrating AI with existing systems and leveraging human capabilities to maximize its impact.
Key Points:
1. BPO Sector at High Risk: – Workers in the BPO sector are most vulnerable to job displacement by generative AI.
2. Software Services Industry Less Impacted: – Professionals in the software services industry who use AI are less at risk of replacement.
3. AI Integration Crucial: – Professionals who do not use AI in their work may face replacement by those who do.
4. Generative AI Impacts White-Collar Jobs: – Generative AI will have a greater impact on white-collar jobs than previous technological advancements.
5. Human Capabilities Remain Essential: – The real impact of AI occurs when it is integrated with existing systems or directed to solve problems.
6. Short-Term Overhype, Long-Term Underestimation: – Generative AI’s impact is overhyped in the short term but underestimated in the long term.
7. AI as an Equalizer: – Benefits from deploying AI are higher when human capabilities are lower.
EU Carbon Tax: Indian exporters to report emissions based on new default values
The EU’s default values for carbon emissions could significantly impact Indian steel and cement exports under the proposed Carbon Border Adjustment Mechanism (CBAM). Exporters must report embedded carbon emissions quarterly, starting from Q4 2023, even if using default values. The industry anticipates a substantial hit on exports due to carbon-intensive manufacturing processes and reliance on thermal power. The EU’s country-specific default emission numbers for India are expected to be higher than current default values, raising concerns about potential tax liabilities.
Key Points
Default Values – EU has released default values for 120-130 items, including steel and cement. – Default values represent a world average, weighted by production volumes. – From 2026, default values will be based on the average emission intensity of each exporting country.
Tax Incidence – Tax levy under CBAM is still under calculation. – All exporters across steel, iron, and cement segments will be impacted. – Emissions embedded in Indian exports are higher than EU default values, leading to concerns about higher tax liabilities.
Reporting Requirements – Exporters must report embedded carbon emissions quarterly, starting from Q4 2023. – Default values can be used for reporting until Q2 2024. – From Q3 2024, estimations can be used for complex goods, with a limit of 20% of total emissions.
Industry Concerns – Carbon-intensive manufacturing processes and reliance on thermal power raise concerns about export competitiveness. – Industry stakeholders are seeking consultations with relevant ministries to determine carbon numbers and compare them with EU parameters.
Asian Development Bank Study – Asian subregions with higher carbon-intensive exports to Europe, including India, are more negatively affected by CBAM. – India’s trade-weighted import tax rate equivalent under CBAM is estimated at 36.9%.
FM Sitharaman to inaugurate conference of GST enforcement chiefs on Monday
Finance Minister Nirmala Sitharaman will inaugurate a conference of GST enforcement chiefs to address tax evasion. The conference will focus on combating GST evasion, sharing best practices, and leveraging technology. It will also balance ease of doing business with effective enforcement measures.
Key Points:
Conference Inauguration: – Finance Minister Nirmala Sitharaman will inaugurate the conference on March 4.
Conference Objectives: – Combat GST evasion – Examine current challenges – Share successful enforcement methods – Strategize on combating fake invoicing – Foster synergy and leverage technology
Conference Focus: – Balance ease of doing business with effective enforcement – Facilitate a smooth business environment – Implement deterrent enforcement measures
Conference Participants: – Enforcement chiefs of all State and Central GST officers
Tech industry to push back against the new AI rule requiring govt approvals
The Indian government’s directive requiring tech companies to seek government approval before launching AI products has faced criticism from industry experts and legal professionals. The advisory, which lacks legal basis, raises concerns about unnecessary interference and impracticality.
Key Points:
Legal Basis: – The advisory is not legally binding and lacks a clear legal basis in the IT rules.
Government Approval: – AI platforms must seek government approval before deploying “under-testing” or “unreliable” AI models.
User Consent: – Explicit user consent is required before exposing users to such AI models.
Lack of Clarity: – The advisory lacks clarity on the testing threshold for AI firms, leaving room for subjective interpretations.
Overreach: – The government is overreaching with its regulations, as the industry is still understanding the nuances of AI bias and accountability.
Legal Basis for Advisory: – Some legal experts believe there is a nebulous legal basis for the advisory, as it could be enforced through amendments or blocking orders under the IT Act.
Share of term deposits in banks’ total deposits up at 60.3% in Dec 2023: RBI
The share of term deposits in scheduled commercial banks (SCBs) has increased significantly, driven by rising interest rates. Depositors are shifting their funds to higher-yielding term deposits, leading to a decline in the share of current account and savings account (CASA) deposits. Rural and semi-urban branches have contributed significantly to CASA deposit growth, while female customers have played a major role in overall deposit accretion.
Key Points:
1. Increase in Term Deposit Share: – Term deposits now account for 60.3% of total SCB deposits, up from 57.2% in March 2023.
2. Rising Interest Rates: – Weighted average domestic term deposit rate (WADTDR) has increased by 246 basis points on fresh deposits and 180 basis points on outstanding deposits since May 2022.
3. Shift to Higher Interest Rate Buckets: – Deposits are moving to higher interest rate buckets, with the share of term deposits bearing over 7% interest rate rising to 61.4%.
4. CASA Deposit Growth in Rural and Semi-Urban Areas: – Rural and semi-urban branches accounted for 67.2% of incremental CASA deposits during April-December 2023.
5. Contribution of Female Customers: – Female customers contributed significantly to deposit growth, with a 63.4% share in incremental CASA deposits and a 40.1% share in total deposits.
LIC Housing Finance plans to raise funds via green bonds in next financial year
LIC Housing Finance plans to issue green bonds in the upcoming financial year to fund environmentally sustainable housing projects. The company aims to achieve a net profit of ₹5,000 crore by the end of the current financial year, driven by strong loan demand and expansion in non-core businesses.
Key Points:
Green Financing: – LIC Housing Finance plans to mobilize funds through green bonds to finance environmentally sustainable housing projects.
Borrowing Plan: – The company’s board will consider and approve the borrowing plan for 2024-2025 on March 7.
Net Profit Target: – LIC Housing Finance aims to achieve a net profit of ₹5,000 crore by the end of the current financial year.
Non-Core Businesses: – The company’s non-core businesses, including Loan Against Property (LAP) and affordable housing finance, have contributed to its growth.
Affordable Housing: – The affordable housing segment remains strong in tier-2 and tier-3 markets, providing opportunities for aspiring homeowners.
Digital Transformation: – LIC Housing Finance is focused on improving service standards through ongoing digital transformation of its processes.
Financial Performance: – The company earned a net profit of ₹3,675 crore in the first three quarters of the current financial year. – Net Interest Margin (NIM) for the quarter ended December 2023 was 3%.
Charting the global economy: India is chipping away at China’s dominance in electronics.
Inflation remains elevated in the US and eurozone, prompting central banks to maintain interest rates. China’s factory activity continues to decline, indicating weak demand. Elsewhere, geopolitical tensions and economic challenges persist, including Russia’s diesel export reduction, India’s rise in electronics exports, South Korea’s record-low fertility rate, and North Korea’s support for Russia’s war effort.
Key Points:
US: – Core personal consumption expenditures price index rose 0.4% in January, the most in a year. – Consumer spending declined for the first time in five months. – Consumer sentiment deteriorated in late February.
Europe: – Eurozone inflation eased less than anticipated in February. – Russia plans to reduce diesel exports by 11% in March.
Asia: – China’s manufacturing activity shrank for the fifth consecutive month. – India is gaining market share in electronics exports. – South Korea’s fertility rate reached a record low. – North Korea has shipped artillery shells to Russia.
Emerging Markets: – Indonesia plans to propose a wider budget deficit.
World: – The threshold for entering the top 1% of wealth in the US has increased to $5.8 million. – Israel’s central bank maintained interest rates due to inflation concerns. – Nigeria’s central bank raised rates significantly to combat inflation. – Hungary cut rates at a faster pace after inflation slowed. – New Zealand and the Dominican Republic left rates unchanged.
Healthcare, education, fintech to be key beneficiaries of India-UAE pact: CII President
The India-UAE Comprehensive Economic Partnership Agreement (CEPA) has significantly boosted bilateral trade and is expected to attract investments in sectors such as healthcare, education, and fintech. The agreement has led to increased exports from India to the UAE and has facilitated duty-free trade for various products.
Key Points:
Benefits for Key Sectors: – Healthcare, education, and fintech will particularly benefit from the CEPA and attract investments.
Bilateral Investment: – India and the UAE have a Bilateral Investment Treaty in place, making India a safe investment destination.
Investment Expansion: – Both countries are expanding investment plans in priority sectors like digital infrastructure, fintech, infrastructure, manufacturing, energy, and energy transition.
UAE’s Investment in India: – The UAE was the fourth largest investor in India in 2022-23, with investments of $3.35 billion.
Trade Surge: – Trade between India and the UAE surged to $84.5 billion after the CEPA came into force, marking a 16% year-on-year increase.
Tariff Elimination: – The agreement promotes duty-free trade by eliminating tariffs on 1,089 products over five years.
Key Sectors Benefiting from Tariff Elimination: – Mineral fuels, electrical machinery, gems & jewellery, automobiles, essential oils, perfumes, and cosmetics.
Preferential Market Access: – India benefits from preferential market access provided by the UAE in over 97% of its tariff lines, accounting for 99% of Indian exports to the UAE in value terms.
Labor-Intensive Sectors Benefiting: – Gems and jewellery, textiles, leather, engineering products, pharmaceuticals, and automobiles are among the labor-intensive sectors benefiting from the CEPA.
Diamond cos tread on rule minefield; face compliance burden under new sanctions regime
The diamond industry in India is facing new compliance challenges due to sanctions imposed by the G7 nations to block Russian gems from Western markets. Diamond firms must maintain meticulous records and self-declarations to demonstrate that their stones are not of Russian origin. Failure to comply could result in scrutiny and potential penalties.
Key Points:
Sanctions on Russian Diamonds: – G7 nations have imposed import restrictions on Russian diamonds mined, processed, or produced in Russia. – The sanctions extend to diamonds processed in third countries, including India.
Compliance Requirements: – Diamond firms must maintain a chain of documents and declarations to prove that their stones are not from Russia. – Self-declarations must be shared with buyers in the US and EU to avoid trouble. – Meticulous records of import, purchase, and other documents must be kept for potential audits.
G7 Certification: – From September 1, 2024, a traceability-based G7 certification may be mandatory for importing diamonds into the EU. – The certification would be based on a blockchain-based G7 ledger accessible to customs authorities.
Impact on the Diamond Industry: – The new regulations pose hurdles for the diamond trade, which is already facing competition from lab-grown diamonds. – Compliance costs and turnaround times may increase, leading to a shift towards lab-grown diamonds.
Government Response: – The Indian government and diamond industry are engaging with G7 delegations to make the regulations more practical and trade-friendly.
ARCIL buys Saraswat’s NPAs at 86% haircut
ARCIL, an Asset Reconstruction Company backed by US-based Avenue Capital, has acquired approximately ₹400 crore worth of bad loans from Saraswat Bank at an 86% haircut. The sale, which included retail and MSME loans, was part of Saraswat Bank’s efforts to clean up its loan portfolio for future growth.
Key Points:
Sale of Bad Loans: – ARCIL purchased nearly ₹400 crore worth of bad loans from Saraswat Bank. – The loans comprised retail and MSME loans.
Haircut: – The sale was made at an 86% haircut, meaning Saraswat Bank recovered only 14% of the original debt value.
Reason for Sale: – Saraswat Bank sold the NPA portfolio to clean up its loan book and raise capital for future growth.
Process Advisor: – BOB Capital Markets acted as the process advisor for the sale.
Competition: – Several ARCs and NBFCs were interested in the loan portfolio, but ARCIL’s bid was uncontested in the Swiss auction.
Security: – The loans on sale were backed by security, which increased the chances of recovery.
NCLT approves Aditya Birla group plan to merge NBFCs: Sources
Aditya Birla Group is consolidating its non-banking finance companies (NBFCs) into Birla Group Holdings Pvt Ltd (BGHPL) to enhance synergies, optimize resource utilization, and achieve economies of scale. The merger, approved by the National Company Law Tribunal (NCLT), aims to streamline the group’s organizational structure and facilitate efficient capital utilization for business growth.
Key Points:
1. Merger of NBFCs: – Aditya Birla Group is merging six companies, including Umang Commercial Company Pvt Ltd and Birla Family Investments Pvt Ltd, into BGHPL.
2. Enhanced Synergies: – The consolidation aims to create better synergies among the NBFCs, ensuring optimal resource utilization and greater economies of scale.
3. Efficient Capital Utilization: – The merger will enable efficient capital utilization for the consolidated business, including the NBFC operations, which remain the core business.
4. Streamlined Organizational Structure: – The group seeks to simplify its organizational structure by reducing the layers of companies within the group.
5. NBFC Consolidation: – The amalgamation of NBFCs into BGHPL is seen as an effort to consolidate the Birla family’s NBFC business.
6. Benefits of Amalgamation: – The merger offers benefits such as a larger capital pool, ease in fundraising, and greater possibilities for business expansion.
7. BGHPL’s Holdings: – BGHPL holds equity in several listed group companies, including Hindalco Industries and Aditya Birla Capital, as well as stakes in unlisted group companies.
GMR Highways raises Rs 700 cr debt to prepay Yes Bank
GMR Highways has secured ₹700 crore in debt from foreign portfolio investors to prepay loans from Yes Bank. The bonds, issued at 14% per annum, have a maturity date of February 2028 and are backed by a pledge of 100% of GMR Highways’ equity shares and a corporate guarantee from GMR Power & Urban Infra. The move aims to release share pledges of GMR Airport and GMR Energy, which were pledged as collateral for the previous loan from Yes Bank.
Key Points:
Debt Raised: – GMR Highways raised ₹700 crore from Zeal Global Opportunities Fund and Nova Global Opportunities Fund.
Bond Details: – Secured, unlisted, and unrated bonds maturing on February 20, 2028. – Issued at 14% per annum for 48 months. – 100% of equity shares pledged as collateral. – Corporate guarantee provided by GMR Power & Urban Infra.
Loan Prepayment: – The debt will be used to prepay loans raised from Yes Bank. – Share pledges of GMR Airport and GMR Energy will be released upon loan repayment.
Yes Bank Loan Details: – Eight-year term loan raised in 2018-19. – 23.5% stake in GMR Airports and 20% of GMR Energy pledged as collateral. – Unconditional guarantee provided by GMR Infrastructure. – Outstanding balance of ₹624 crore as of March 31, 2023.
GMR Group Strategy: – Release share pledge of GMR Airport to ring-fence the airport business from EPC operations.
GMR Highways Operations: – Completed nine highway projects. – Currently operates four operational road projects spanning 1,824 km. – Plans to bid for new road projects to scale up operations.
Majority of users to stop using UPI if it attracts transaction fee: Survey
An online survey by LocalCircles reveals that a majority of UPI users (73%) would discontinue using the platform if transaction fees were implemented. However, a significant number of respondents (37%) reported experiencing transaction fees on UPI payments within the past year.
Key Points:
Survey Findings:
- 73% of UPI users would stop using the platform if transaction fees were introduced.
- Only 23% of UPI users are willing to pay transaction fees.
- 1 in 2 UPI users conduct over 10 transactions per month.
Transaction Fees:
- RBI proposed a tiered structure charge on UPI payments in August 2022.
- Finance ministry clarified that there is no current proposal to levy charges on UPI transactions.
User Experience:
- 37% of UPI users have experienced transaction fees on their payments within the past year.
PM chairs Council of Ministers’ meet, brainstorm over Viksit Bharat vision
Prime Minister Narendra Modi led a meeting of his Council of Ministers to discuss the vision document for “Viksit Bharat: 2047” and an action plan for the next five years. The roadmap for “Viksit Bharat” is the result of extensive consultations and involves a “whole of government” approach. The meeting also deliberated on a 100-day agenda for immediate implementation after the formation of a new government in May.
Key Points:
Vision Document for “Viksit Bharat: 2047”
- Comprehensive blueprint with national vision, aspirations, goals, and action points
- Goals include economic growth, Sustainable Development Goals (SDGs), ease of living, ease of doing business, infrastructure, and social welfare
Preparation and Consultation
- Over two years of intensive preparation
- “Whole of government” approach involving all ministries
- Wide-ranging consultations with state governments, academia, industry bodies, civil society, scientific organizations, and youths
- Over 2,700 meetings, workshops, and seminars held
- Suggestions from over 20 lakh youths received
100-Day Agenda
- Agenda for immediate steps to be taken after the formation of a new government in May
- Deliberated upon for quick implementation.
Nearly 66% greenfield units under PLI scheme for bulk drugs completed.
The Production-Linked Incentive (PLI) scheme for bulk drugs and medical devices has seen significant progress, with two-thirds of the planned greenfield plants now completed. The remaining plants are expected to be operational within the next two years.
Key Points:
- Completion of Greenfield Plants: Two-thirds of the greenfield plants planned under the PLI scheme for bulk drugs and medical devices have been completed.
- Inauguration of 40 Facilities: Union Minister Mansukh Mandaviya inaugurated 40 greenfield facilities, including 27 bulk drug parks and 13 medical device manufacturing plants.
- Timeline for Remaining Plants: The remaining 30-40 plants are scheduled to start manufacturing within the next two years.
- Scheme Launch: The PLI scheme was launched three years ago.
- Impact of the Scheme: The scheme has contributed to the establishment of new manufacturing facilities for bulk drugs and medical devices in India.
Battle for short term money likely to turn more intense in March
Banks are intensifying their competition for short-term funds to meet year-end targets and tax payments. The mobilization of funds through certificates of deposit (CDs) and commercial paper has surged, leading to an increase in interest rates. The RBI is expected to provide substantial liquidity support in March to ease the pressure.
Key Points:
1. Surge in Fund Mobilization: – Certificates of deposit mobilization has increased threefold to over Rs 60,000 crore in February 2024. – Commercial paper fundraising has also grown significantly.
2. Liquidity Pressure: – Banks have scaled up fundraising due to persistent liquidity constraints. – The average system liquidity deficit remains high at Rs 1.9 trillion.
3. Interest Rate Increase: – Interest rates for CDs have risen to reflect the increased demand for funds.
4. RBI’s Response: – The RBI is likely to provide substantial liquidity support in March. – The system liquidity is expected to remain tight in the medium term.
EAM S Jaishankar’s Japan, Korea visits to focus on semiconductor push
External Affairs Minister S Jaishankar’s visit to South Korea and Japan aims to strengthen the semiconductor supply chain and promote India as a viable destination for chip manufacturing. The focus is on collaborating with South Korea, a major player in semiconductor production, and exploring a partnership similar to the one established with Japan. India’s growing presence in semiconductor design and potential in assembly, test, and packaging will also be discussed.
Key Points:
Semiconductor Supply Chain:
- India aims to strengthen the semiconductor supply chain with South Korea and Japan.
- A partnership similar to the one signed with Japan in July 2023 is being considered.
India’s Semiconductor Manufacturing Potential:
- India has approved $10 billion in incentives to build the semiconductor ecosystem.
- The government is eyeing South Korea for collaboration due to its dominance in certain chip categories.
- India has a strong presence in semiconductor design, with 20% of the global workforce.
- The country has the potential to expand in assembly, test, and packaging.
South Korea’s Semiconductor Dominance:
- South Korea has a 17.7% share of the global semiconductor market.
- It ranks No. 2 in the world for 10 consecutive years.
- South Korea accounts for 60.5% of the global memory semiconductor market.
Japan Visit:
- Semiconductors will be discussed during the 16th India-Japan Foreign Ministers Strategic Dialogue.
- Other topics include defence, digital technologies, clean energy, and connectivity.
- Jaishankar will participate in the first Raisina Roundtable in Tokyo.
PM Narendra Modi flags off first crude oil tanker from ONGC’s KG project
Prime Minister Narendra Modi inaugurated the first tanker carrying crude oil from ONGC’s Krishna Godavari deepwater block. The project, developed with an investment of over Rs 41,000 crore, is expected to significantly boost India’s oil and gas production, reducing its dependency on imports.
Key Points:
Project Details: – Developed with an investment of over Rs 41,000 crore – Located in the Krishna Godavari Basin – Considered one of the most technologically complex projects in India’s oil and gas industry
Production Capacity: – Peak gas production: 10 Million Metric Standard Cubic Meters per Day (MMSCMD) – Peak oil production: 45,000 barrels per day
Project Impact: – Will add 30.5 Billion Cubic Meters of Gas and 14.24 Million Metric Tonnes of oil to India’s domestic production – Key step in reducing India’s dependency on crude and Liquified Natural Gas imports
Floating Production: – Oil produced by the Floating Production Storage and Offloading (FPSO) unit Armada Sterling V – FPSO located offshore the Godavari River delta in the Bay of Bengal – Largest floating installation ever deployed in the Indian subcontinent
Other Inaugurations: – Mumbai High North Oil Field Redevelopment Phase IV – Heera Redevelopment Phase-III – Krishna Godavari Nagayalanka Block Phase-II development
Punjab’s GST mop-up increases by 16% to over Rs 19,000 crore till February
Punjab’s Goods and Services Tax (GST) and excise revenue have witnessed significant growth in the current financial year, reflecting the state’s economic resilience and the government’s commitment to sound financial management.
Key Points:
GST Collection:
- GST collection increased by 15.69% to Rs 19,222 crore in the current financial year.
- Net GST collection up to February stood at Rs 19,222.5 crore, up from Rs 16,615.52 crore in the previous year.
Excise Revenue:
- Excise revenue rose by 11.71% to Rs 8,093.59 crore.
- Overall collection of Rs 8,093.59 crore, compared to Rs 7,244.87 crore in the same period last year.
Fiscal Trajectory:
- Punjab has seen a shift in its fiscal trajectory since the AAP government took office in March 2022.
- Net tax revenue growth of 13.85% recorded, surpassing Rs 34,158 crore.
Technology-Driven Solutions:
- Launch of State Intelligence and Preventive Unit (SIPU) and GST Prime portal has enhanced efficiency and compliance.
Economic Resilience:
- Unprecedented growth in GST and excise collections is a testament to Punjab’s economic resilience.
Government Commitment:
- Punjab government is committed to using revenue responsibly for public services, infrastructure development, and social welfare programs.
Decoded: Differences remain amid some headway at WTO ministerial conference
The 13th Ministerial Conference (MC13) of the World Trade Organization (WTO) concluded without any significant outcomes due to persistent disagreements on key issues. India’s primary demand for a permanent solution to public stockholding for food security remained unresolved. However, countries agreed to establish a fully functioning dispute settlement system by the end of 2024.
Key Points:
Agriculture:
- India sought a permanent solution to public stockholding for food security.
- No agreement was reached due to differences among countries.
- India faces no immediate threat due to the ‘peace clause’ protecting developing countries from legal challenges.
Fisheries Subsidies:
- India acknowledged the negative impact of subsidies but emphasized the need to protect small-scale fishers.
- No outcome document was produced, and the ministerial declaration did not mention fisheries subsidies.
- India retains full policy space for the benefit of its farmers.
E-Commerce:
- India opposed the continued exemption of Customs duties on e-commerce.
- WTO nations agreed to maintain the current practice until the next ministerial conference or March 31, 2026.
- India expressed disappointment, stating that the extension of tax breaks for Big Tech denies developing countries much-needed tax revenue.
Other Issues:
- An agreement on services domestic regulation was adopted.
- A similar pact on Investment Promotion for Development was blocked by India and South Africa.
- India has concerns about new issues entering the WTO agenda through joint statement initiatives.
- Countries resolved to establish a fully functioning dispute settlement system by the end of 2024.
National pension system added 21.5% fewer corporate subscribers in 2023
The National Pension System (NPS) witnessed a 21.5% decline in new corporate subscribers in 2023 compared to 2022. This drop is attributed to the increased income tax exemption limit of Rs 7 lakh, which reduced the incentive for employees to opt for NPS for tax-saving purposes.
Key Points:
Corporate Segment Decline:
- 21.5% fewer new subscribers in the corporate segment in 2023 compared to 2022.
- Corporate component of NPS is voluntary and mainly comprises employees in public sector, public sector banks, and private limited companies.
Reason for Decline:
- Increased income tax exemption limit of Rs 7 lakh announced in Budget 2023.
- Employees earning less than Rs 7 lakh annually no longer need to invest in NPS for tax savings.
Impact of Tax Exemption:
- People enrolled in NPS under the corporate component primarily used it as a tax-saving instrument.
- Increased exemption limit reduced the incentive for enrollment.
Government Sector Growth:
- Fresh subscribers in the government sector (central and state) increased in 2023.
- Central government subscribers grew by 58% to 186,805.
- State government subscribers increased by 17% to 526,893.
NPS Awareness and Positioning:
- Lack of awareness among employees and poor product placement in the market contribute to NPS’s challenges.
- NPS needs to be positioned differently, beyond a tax-saving instrument.
Green energy push: India’s companies charge up on power policy shift
The commercial and industrial (C&I) segment in India is experiencing a surge in investment in green energy due to policy amendments and corporate interest in sustainability. New regulations have eased the process of setting up group captive power plants and procuring renewable energy through open access, making it more lucrative for C&I consumers to source green power outside the grid.
Key Points:
Policy Amendments:
- Amendment to group captive power regulations: Captive power users must hold a minimum of 26% stake in the plant.
- Amendment to green open access rules: Consumers with a load of 100 Kw are eligible for open access, and multiple connections can pool their demand for green energy sources.
Corporate Interest:
- Companies like Tata Power and JSW Energy are expanding their green energy capacities to cater to the growing demand from C&I consumers.
- Conglomerates such as Aditya Birla Group are acquiring small-ticket green energy projects.
Benefits for C&I Consumers:
- Reduced costs compared to grid power.
- Sustainable and reliable power supply.
- Compliance with renewable energy obligations.
Captive Power Plants:
- Set up by C&I users for their own electricity usage.
- Amended rules allow companies to set up group captive plants through subsidiaries, avoiding charges levied by discoms.
Green Push:
- Government initiatives to increase the absorption of renewable energy.
- Companies are investing in pumped hydro storage to provide 24/7 renewable power.
