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Amazon Collaborates with Government Agencies to Empower MSME Exports in India

Amazon Global Selling, an export platform for small businesses, is collaborating with the Indian government to boost exports from districts with high export potential. The platform aims to educate and support MSMEs in leveraging e-commerce for cross-border sales.

Key Points

Collaboration with Government:

Partnership with the Ministry of Commerce to focus on 75 districts responsible for 80% of exports.
Collaboration with the DGFT for on-the-ground support and tie-ups with local export promotion councils.

Growth Trajectory:

Over 1.25 lakh exporters on the platform since its launch in 2015.
$8 billion in cumulative exports, with a target of $20 billion by 2025.
Accelerated growth in recent years, with the last $3 billion in exports achieved in three and a half years.

Support for MSMEs:

Enables small businesses to export unique products directly to consumers worldwide.
Provides tools for digital marketing, cross-border logistics, and compliance management.
Removes barriers to entry for small businesses in traditional B2B exports.

Revised Flexible Complementing Scheme for Scientific Research

The Indian government has revised the Flexible Complementing Scheme (FCS) for the recruitment and promotion of scientists in central government departments. The revision aims to address advancements in science and technology and meet the requests of various ministries. The revised scheme will be effective from July 1, 2024.

Key Points:

1. Background: – The FCS was modified in 2010 based on recommendations from the 6th Central Pay Commission. – The scheme was not applicable to DRDO, Department of Atomic Energy, and Department of Space.

2. Need for Revision: – Ministries/departments requested enhancements to educational qualifications to recruit scientists based on work function.

3. Revised Scheme: – Incorporates requests from ministries/departments. – Provides for an inter-ministerial committee to address future concerns.

4. Implementation: – Scientific ministries/departments must amend recruitment rules to conform to the revised FCS. – Autonomous organizations under the control of ministries/departments must adopt the scheme.

NPCI Grants Paytm Third-Party App License, Enabling UPI Access for Users Post-March 15

India’s National Payments Corporation of India (NPCI) has approved Paytm’s request to participate in UPI as a Third-Party Application Provider (TPAP). This will allow Paytm to continue facilitating payments through UPI after its banking unit shuts down on March 15.

Key Points:

NPCI Approval: NPCI has approved Paytm’s request to participate in UPI as a TPAP.
Payment System Provider Banks: Axis Bank, HDFC Bank, State Bank of India, and Yes Bank will act as payment system provider banks for Paytm.
Merchant Acquiring Bank: Yes Bank will also act as a merchant acquiring bank for Paytm’s UPI merchants.
Migration: Paytm has been advised to complete the migration of existing handles and mandates to the new payment system provider banks.
UPI Transactions: Paytm processed 1.41 billion UPI transactions worth 1.65 trillion rupees in February.
RBI Request: The approval follows a request from Paytm to the NPCI, which was examined by the RBI.

PSU Banks to Divest Government Stake to Comply with Minimum Public Shareholding Requirements

Five public sector banks (Bank of Maharashtra, IOB, UCO Bank, Central Bank of India, and Punjab & Sind Bank) are planning to reduce government stake to comply with Sebi’s minimum public shareholding (MPS) norms. Currently, only four PSBs meet the MPS requirement of 25%, while the remaining five have laid out plans to meet it by August 2024. The banks have options such as follow-on public offerings or Qualified Institutional Placements to bring down the stake.

Key Points:

Minimum Public Shareholding (MPS) Norms: – All listed companies must maintain an MPS of 25%. – State-owned banks have been given special forbearance until August 2024 to meet this requirement.

Banks Planning to Reduce Government Stake: – Bank of Maharashtra – IOB – UCO Bank – Central Bank of India – Punjab & Sind Bank

Government Stake in Banks: – Punjab & Sind Bank: 98.25% – Indian Overseas Bank: 96.38% – UCO Bank: 95.39% – Central Bank of India: 93.08% – Bank of Maharashtra: 86.46%

Options to Reduce Government Stake: – Follow-on public offering – Qualified Institutional Placement

Gold Loan Portfolio Review: – The finance ministry has directed PSBs to review their gold loan portfolios due to instances of non-compliance with regulatory norms. – Banks are advised to ensure compliance with regulatory requirements and internal policies. – SBI has a gold loan portfolio of Rs 30,881 crore as of December 2023.

DGFT Collaborates with DHL to Empower MSMEs in E-commerce Exporting

The Directorate General of Foreign Trade (DGFT) and DHL have partnered to conduct training sessions and workshops for MSMEs in 76 districts across India. This initiative aims to enhance the capacity of MSMEs to leverage e-commerce for export growth.

Key Points:

1. Training and Capacity Building: – DGFT and DHL will conduct training sessions, workshops, and capacity-building programs for MSMEs.

2. District as Export Hubs Initiative: – The initiative focuses on identifying and developing districts as export hubs, leveraging e-commerce platforms.

3. Collaboration with E-commerce Platforms: – DGFT has partnered with Amazon India and Shiprocket to promote e-commerce exports.

4. Export Readiness for MSMEs: – The collaboration aims to make MSMEs export-ready by providing knowledge and support on digital commerce and logistics.

5. Overcoming Logistics Challenges: – The initiative addresses logistics challenges faced by MSMEs in exporting through e-commerce channels.

6. Alignment with Foreign Trade Policy 2023: – The collaboration aligns with the government’s Foreign Trade Policy 2023, which emphasizes promoting e-commerce exports.

7. Outreach Events and Support: – DGFT-Regional Authorities conduct outreach events to onboard new exporters and support MSME producers in becoming exporters through cross-border e-commerce sales.

Government Allocates Rs 114.8 Crore for MSME Development in Rajasthan

The central government has approved a grant of Rs 114.80 crore for Rajasthan under the Raising and Accelerating MSME Performance (RAMP) program. This funding aims to boost MSME enterprises in the state, enhance their capacity, and support their financial needs.

Key Points:

1. RAMP Program: – The RAMP program is a central government initiative for the MSME sector. – Rajasthan submitted a strategic investment plan to the central government, which has been approved for funding.

2. Funding Amount: – Rajasthan has received an approval of Rs 114.80 crore under the RAMP program.

3. Impact on MSMEs: – The funding will provide impetus to MSME enterprises in Rajasthan. – It will help enhance their capacity and meet their financial needs.

4. Goal Alignment: – The funding aligns with the state and central government’s goals for MSMEs. – It aims to contribute to the development of Rajasthan and India as a whole.

5. Positive Investment Environment: – The RAMP funding is expected to create a positive environment for industrial investment in Rajasthan.

Impact of UK visa rule change on Indian students, workers, and caregivers

The United Kingdom has made significant changes to its visa regulations, affecting international students, caregivers, and skilled workers, particularly Indian nationals. The changes include restrictions on bringing dependents, higher salary thresholds, and increased minimum income for family visas. These changes aim to prevent exploitation and reduce the number of dependents accompanying workers. The UK’s stringent policies contrast with more flexible rules in the USA, Canada, and Australia.

Key Points

UK Visa Rule Changes for International Students
Postgraduate research students are restricted from bringing dependents to the UK, affecting their ability to find skilled jobs with the required minimum salary.
Indian nationals benefit the most from the Graduate Route visa.
UK Visa Rule Changes for Caregivers and Skilled Workers
Caregivers and skilled workers face restrictions on bringing dependents, with higher salary thresholds and removal of discounts for migrant workers in shortage occupations.
The minimum salary for Skilled Worker visa applicants has increased significantly.
Broader Impacts of the New Regulations
Around 300,000 individuals eligible to come to the UK last year will no longer be able to do so, impacting the availability of caregivers and skilled professionals.
The short-term shortage of caregivers may lead to increased salaries and push Indian professionals to consider other countries with more lenient family immigration policies.
Comparison with Other Countries
The UK’s policies are stricter compared to the USA, Canada, and Australia, which offer more flexible rules for family immigration for students and researchers.
Other countries allow international graduates to work post-graduation for a certain period.
Impact on Indian Immigrants
Despite the rule changes, the UK remains attractive due to its educational institutions and lack of language barriers.
Indian professionals are advised to consider countries with easier transitions post-graduation or for those intending to return to India.

Fitch Revises GDP Growth Forecasts Upward for FY24 and FY25, Cautions on Interest Rate Cuts

Fitch has raised its economic growth forecast for India for the current and next fiscal years, citing strong domestic demand and business and consumer confidence. However, it has tempered its view on rate cuts due to the stronger growth outlook.

Key Points:

Economic Growth Forecast: – Fitch expects India’s GDP to grow by 7.0% in fiscal 2025, up from its previous forecast of 6.5%. – The economy grew by 8.4% in the final quarter of 2023, led by manufacturing and construction. – Fitch estimates growth of 7.8% for fiscal 2023/24, above the government’s estimate of 7.6%.

Drivers of Growth: – Domestic demand, particularly investment, will be the main driver of growth. – Business and consumer confidence remain high.

Inflation Outlook: – Fitch expects headline inflation to decline to 4% by the end of 2023.

Monetary Policy: – Fitch has lowered its estimate for RBI rate cuts to 50 bps in the second half of 2023, due to the stronger growth outlook. – The RBI has kept the repo rate unchanged at 6.50% for the past six meetings.

India to Enhance Economic Data and Conduct Long-Awaited Population Census

The Indian government is planning to improve the quality of its economic data by initiating a population census, reviving business surveys, and updating key indicators. The Statistics Ministry has proposed various measures to enhance data accuracy, including conducting a new population census and introducing a uniform base year for economic indicators. The government aims to publish the household consumption survey annually and appoint an advisory panel to recommend changes to economic data methodologies. The business survey will focus on understanding the economy’s transition from agriculture to other sectors to boost manufacturing, which has declined as a percentage of GDP. The government plans to implement these changes after the upcoming elections.

Key Points:

Population Census and Surveys:
The government plans to conduct a new population census and revive business surveys to improve data accuracy.
The household consumption survey will be published annually to reflect changing spending patterns.
Uniform Base Year and Indicator Updates:
Introducing a uniform base year for key economic indicators and updating the basket of goods for inflation calculations.
Adjusting base years for industrial production, GDP data, and consumer inflation to better reflect economic trends.
Advisory Panel and Policy Tailoring:
Appointing an advisory panel to recommend changes to economic data methodologies and revise category weights.
The government aims to tailor policies to boost manufacturing and achieve its GDP share target by 2025.
Consumer Price Basket Revision:
Revising the consumer price basket to reflect changing consumer spending patterns, including digital items and reduced food expenditure.
Economic Data Quality Concerns:
The move comes amid concerns about the quality of India’s economic statistics and the need for updated surveys to avoid policy errors.

Prime Minister Modi Inaugurates Three Semiconductor Manufacturing Facilities in Gujarat and Assam: Essential Details

Prime Minister Narendra Modi inaugurated three semiconductor-related projects in Gujarat and Assam, aiming to establish India as a semiconductor powerhouse. These projects include an Outsourced Semiconductor Assembly and Test (Osat) facility in Sanand, Gujarat, a semiconductor fabrication facility in Dholera, Gujarat, and another Osat facility in Morigaon, Assam. The projects are expected to foster the semiconductor ecosystem in India, create employment opportunities, and contribute to the country’s self-reliance ambitions.

Key Points:

1. Osat Facility in Sanand, Gujarat – Developed by CG Power in collaboration with Japanese and Thailand firms. – Aims to cater to automotive, computing, data storage, wireless communication, 5G, and artificial intelligence needs. – Estimated cost: Rs 7,500 crore.

2. Semiconductor Fabrication Facility in Dholera, Gujarat – Set up by Tata Electronics Private Limited (TEPL). – First commercial semiconductor fab in India. – Total investment: Over Rs. 91,000 crore.

3. Osat Facility in Morigaon, Assam – Also set up by TEPL. – Investment: Rs 27,000 crore.

4. Impact of the Projects – Strengthen the semiconductor ecosystem in India. – Provide employment to thousands of youth. – Catalyze employment generation in related sectors.

5. Importance of Electronic Chips – Prime Minister Modi highlighted the significance of electronic chips in the 21st century. – Projects aim to leverage India’s development and promote self-reliance. – India aims to avoid missing out on the fourth industrial revolution, unlike the first three.

Wholesale Inflation Dips to 0.2% in February, Food Prices Edge Up Slightly

The Wholesale Price Index (WPI)-based inflation in India eased to 0.2% in February 2024, down from 0.27% in January. This marks a slight decline in inflation after it turned positive in November 2023. However, food inflation rose marginally to 6.95% in February, driven by higher prices for vegetables and pulses.

Key Points:

WPI Inflation: Eased to 0.2% in February 2024 from 0.27% in January.
Food Inflation: Increased to 6.95% in February from 6.85% in January.
Vegetable Inflation: Rose to 19.78% in February from 19.71% in January.
Pulses Inflation: Increased to 18.48% in February from 16.06% in January.

ADB and India Collaborate on $23 Million Loan to Enhance Fintech Infrastructure

The Government of India and the Asian Development Bank (ADB) have signed a $23 million loan agreement to establish an International Fintech Institute (IFI) at the Gujarat International Finance Tec-City (GIFT-City). The IFI aims to enhance access to quality fintech education, research, and innovation in India.

Key Points:

Loan Agreement: – $23 million loan agreement signed between the Government of India and ADB.

GIFT City: – Initiative of the Centre and Gujarat State Government to foster India’s financial services and fintech ecosystem.

International Fintech Institute (IFI): – To be established in partnership with globally reputed institutes and universities. – Will offer industry-aligned fintech training programs meeting international standards.

Innovation and Entrepreneurship: – IFI will support start-ups, especially women-led, through incubation and acceleration services. – Collaboration with industry and venture capital funds to support fintech start-up growth.

Research and Development: – ADB program will support research on innovative solutions and technologies in climate fintech, regulatory technology, social inclusion, and gender equality in finance. – Establishment of a state fintech readiness index and development of solutions for emerging technologies.

Employment and Economic Impact: – Enhanced employment opportunities, workforce competitiveness, and productivity in new and green technologies.

RBI Considers Upgrading Certain NBFCs to Top Regulatory Tier

The Reserve Bank of India (RBI) plans to review the categorization of non-banking finance companies (NBFCs) in 2024, two years after implementing scale-based regulations. The review aims to address the significant growth and changes in NBFCs’ business models and operations. Some NBFCs backed by large corporates may be considered for upgradation to the top layer, which could potentially lead to bank licenses being awarded.

Key Points

Basis of Upgradation – Scale and size may not be the sole determining factors. – Parameters include customer grievance handling, technology capabilities, asset granularity, business composition, board quality, and liability management.

Upgradation Process – A nuanced approach will be taken, with candidates reviewed on a case-by-case basis. – Aims to remove the perception among upper-layer NBFCs that they are already functioning like banks.

Current Categorization – Four layers: base, middle, upper, and top. – As of September 2023, NBFCs in the base, middle, and upper layers held 6%, 71%, and 23% of total NBFC assets, respectively. – No NBFCs are currently in the top layer.

List of NBFCs in Upper Layer – LIC Housing Finance – Bajaj Finance – Shriram Finance – Tata Sons Pvt Ltd – L&T Finance – Indiabulls Housing Finance – Piramal Capital & Housing Finance – Cholamandalam Investment and Finance – Shanghvi Finance Pvt Ltd – M&M Financial Services – PNB Housing Finance – Tata Capital Financial Services – Aditya Birla Finance – HDB Financial Services – Muthoot Finance – Bajaj Housing Finance.

ARCs Close to Meeting RBI’s Revised Non-Performing Asset Framework

Most asset reconstruction companies (ARCs) in India are expected to meet the minimum net owned fund (NOF) requirement of ₹200 crore by March 2024. This is due to improved recovery rates from security receipts (SRs). However, some smaller ARCs may face challenges in reaching the threshold, leading to potential consolidation in the industry.

Key Points

Minimum NOF Requirement – ARCs that existed before October 2022 must achieve a minimum NOF of ₹200 crore by March 2024 and ₹300 crore by March 2026. – ARCs registered after October 2022 must maintain a minimum NOF of ₹300 crore.

Current Status – As of December 2023, many ARCs have reached ₹175-180 crore in NOF, close to the target. – Ten ARCs are currently below the NOF threshold.

Recovery Rate of Security Receipts – Crisil Ratings expects the recovery rate of SRs to improve to 55-60% in the next fiscal year. – This is driven by increased cash-based transactions, exposure to retail loans, and faster recovery in recent acquisitions.

Benefits of ARCs – ARCs allow banks to focus on lending by removing stressed assets from their books. – ARCs manage stressed assets and recover funds for lenders through SRs. – ARCs can assist borrowers in reviving their businesses.

Industry Outlook – ARCs’ assets under management are expected to increase to ₹1.50 lakh crore by March 2024. – Consolidation is likely in the industry as smaller ARCs struggle to meet the NOF requirement.

Simplified KYC for All: Streamlining Financial Transactions from Banking to Investments

The Financial Stability and Development Council (FSDC) proposes a uniform KYC system to streamline the KYC process across the financial sector. This system aims to eliminate the need for multiple KYC submissions, reduce paperwork, and enhance security.

Key Points

What is Uniform KYC? – Uniform KYC standardizes the KYC process, eliminating the need for multiple submissions. – It enables interoperability of KYC records across financial institutions.

How Does Centralized KYC Work? – The Central KYC Records Registry (CKYCR) stores KYC records of customers in the financial sector. – Financial intermediaries can retrieve KYC details from CKYCR using a unique CKYC identifier.

How Will Uniform KYC Help Customers? – Eliminates multiple KYC submissions, saving time and effort. – Streamlines the onboarding process, increasing convenience. – Enhances security by reducing the risk of illicit financial activities.

How Will Uniform KYC Help Institutions? – Increases efficiency and cost-effectiveness of customer onboarding. – Reduces operational costs associated with redundant verification processes. – Ensures compliance with regulatory requirements.

Risk-Based KYC – The government aims to implement a risk-based KYC approach. – KYC requirements will vary based on the risk level of the customer. – This approach enhances the interoperability of KYC records across the financial sector.

Government Sets Minimum Export Price for Honey at $2,000 per Tonne Until December

The Indian government has implemented a minimum export price (MEP) of USD 2,000 per tonne on natural honey until December 2024. This measure aims to regulate honey exports and ensure fair pricing.

Key Points:

Minimum Export Price: USD 2,000 per tonne
Effective Date: Immediate
Duration: Until December 31, 2024, or until further orders
Export Restrictions: Exports below the MEP are prohibited
Export Value: USD 153.21 million during April-January 2023-24
Major Export Destinations: US and UAE

Indian Banks Suspend Silver Imports Amidst Duty Disparity Driving Private Trade

India’s banks have halted silver imports due to increased private imports through the India International Bullion Exchange (IIBX), which offers lower import duties. This has led to a drop in demand for silver from banks, who are unable to compete with the discounted prices offered by private traders.

Key Points:

Import Duty: – India imposes a 15% import duty on silver. – The Comprehensive Economic Partnership Agreement between India and the UAE allows private traders to import silver through IIBX at a 9% duty and 3% value addition tax.

IIBX Platform: – IIBX is India’s first international bullion exchange, established in 2022. – Private traders have imported 827 metric tons of silver through IIBX this year.

Impact on Banks: – Banks are unable to offer discounts on silver due to the higher import duty. – This has led to a sharp drop in demand for silver from banks, prompting them to stop importing.

Government Concerns: – The concessions on silver imports for IIBX have raised concerns about potential trade distortions and loss of import duty revenue. – The UAE has become the primary source of silver imports in the last two months.

Electoral Bond Data Released by EC as Per Supreme Court Directive: Comprehensive List Available

The Election Commission has released data on electoral bonds, following a Supreme Court directive. The data includes the names of buyers and redeemers of electoral bonds, including major corporations and political parties. The release of this data is a significant step towards transparency in political funding.

Key Points:

Data Release: – The Election Commission has made electoral bond data public. – The data was shared by the State Bank of India on March 12. – The Supreme Court had ordered the data to be uploaded by March 15.

Buyers of Electoral Bonds: – Grasim Industries – Megha Engineering – Piramal Enterprises – Torrent Power – Bharti Airtel – DLF Commercial Developers – Vedanta Ltd. – Apollo Tyres – Lakshmi Mittal – Edelweiss – PVR – Keventer – Sula Wine – Welspun – Sun Pharma

Redeemers of Electoral Bonds: – BJP – Congress – AIADMK – BRS – Shiv Sena – TDP – YSR Congress – DMK – JDS – NCP – Trinamool Congress – JDU – RJD – AAP – Samajwadi Party

Supreme Court Verdict: – The Supreme Court declared the electoral bond scheme unconstitutional on February 15. – The court ordered the disclosure of donor and recipient information.

Panel Headed by Ex. President Kovind Advocates Synchronized Elections for Enhanced Economic Growth

Summary:

The “One Nation, One Election” panel report suggests that synchronized elections could lead to significant economic benefits, including higher GDP growth, lower inflation, increased investments, and improved expenditure quality. The report cites research indicating a potential 1.5 percentage point increase in GDP growth following synchronized elections.

Key Points:

Economic Benefits:

Higher GDP growth (approximately 1.5 percentage points)
Lower inflation
Higher investments
Improved expenditure quality

GDP Growth:

Comparison of real GDP growth before and after synchronized elections suggests higher growth following synchronized elections.
A 1.5 percent GDP increase equates to INR 4.5 lakh crores, comparable to public spending on health and education.

Inflation:

Annual inflation rate would be lower due to synchronized elections.

Criticisms:

Some economists question the conclusion that synchronized elections would lead to increased GDP growth, suggesting it could be a coincidence.
The report’s findings have been criticized as “politically motivated.”

Other Benefits:

Savings in election costs due to economies of scale.

Regulators Unite: RBI and Sebi Join Forces to Combat Financial Misconduct

The article highlights the recent shift in collaboration among financial sector regulators in India, particularly between the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). This collaboration aims to address wrongdoings and protect investors. The article credits former SEBI chairman Ajay Tyagi for establishing an institutional mechanism for information sharing between the two regulators.

Key Points:

1. Enhanced Collaboration: – Regulators are now more inclined to work together to take action against wrongdoers. – An institutional mechanism has been established to facilitate information sharing between RBI and SEBI.

2. Role of Former SEBI Chairman Ajay Tyagi: – Tyagi implemented the institutional mechanism for information sharing in 2019. – Senior regulatory officials are involved in the mechanism, leading to more serious information sharing and debate.

3. Information Sharing Criteria: – Information sharing depends on the gravity of financial irregularities and their potential impact on the system.

4. Case of JM Financial Group: – SEBI uncovered wrongdoings and passed information to RBI, which led to actions against the group. – SEBI banned the holding company from taking fresh mandates as lead manager for NCDs.

5. International Comparison: – Countries like the UK and Singapore have unified regulatory authorities overseeing the entire financial market.

6. Benefits of Coordination: – Plugs the loophole of regulatory arbitrage. – Assists in achieving investor protection.

RBI Appoints New Committee of Advisors for Abhyudaya Cooperative Bank

The Reserve Bank of India (RBI) has reconstituted the Committee of Advisors for Abhyudaya Cooperative Bank, which was placed under administration in November 2023 due to governance concerns. Devendra Kumar has been appointed as a member of the committee, replacing Mahendra Chhajed who resigned. The committee is tasked with assisting the administrator in managing the bank’s affairs.

Key Points:

Reconstitution of Committee of Advisors:
RBI has reconstituted the Committee of Advisors for Abhyudaya Cooperative Bank.
Devendra Kumar has been appointed as a member, replacing Mahendra Chhajed.

Governance Concerns:Abhyudaya Cooperative Bank was placed under administration in November 2023 due to poor governance standards.
Administrator:Satya Prakash Pathak, former chief general manager of SBI, is the administrator of the bank.
Banking Operations:The bank is allowed to continue its normal banking activities despite being under administration.
Financial Position:At the time of superseding the board, the bank had a deposit base of Rs 10,800 crore and a loan book of Rs 6,400 crore.

Rajasthan Cuts Fuel Taxes, Boosts Employee Salaries

The Rajasthan government has announced a 2% reduction in VAT on petrol and diesel, along with a 4% increase in dearness allowance for employees and pensioners. These decisions aim to address price discrepancies and provide financial relief ahead of the general elections.

Key Points:

VAT Reduction on Petrol and Diesel:

2% reduction in VAT on petrol and diesel
Effective from 6 am on March 15, 2024
Estimated burden of Rs 1500 crore on the state government

Dearness Allowance Hike:

4% increase in dearness allowance for state employees and pensioners
50% dearness allowance payable from January 1, 2024
Benefits approximately 8 lakh employees and 4.40 lakh pensioners
Estimated additional burden of Rs 1,640 crore annually

Fitch Upgrades India’s GDP Growth Projection to 7% for FY25, Citing Robust Domestic Demand

Fitch Ratings has upgraded India’s growth forecast for the next financial year (FY25) to 7% from 6.5%, citing robust domestic demand and sustained business and consumer confidence. The agency also expects growth in the current financial year to reach 7.8%, slightly higher than the government’s estimate of 7.6%.

Key Points:

Growth Forecast: – India’s growth forecast for FY25 raised to 7% from 6.5%. – Growth in the current financial year expected to be 7.8%, higher than the government’s estimate of 7.6%.

Drivers of Growth: – Domestic demand, especially investment, will be the main driver of growth. – Sustained levels of business and consumer confidence will support growth.

Growth Outlook: – Growth will outpace the economy’s estimated potential in the short term. – Growth pace will moderate towards the trend in FY25, with real GDP rising by 6.5% in FY26.

Emerging Markets: – Prospects for emerging markets (excluding China) have brightened, particularly in India.

China’s Outlook: – Fitch trimmed its 2024 growth forecast for China to 4.5% from 4.6%, reflecting a deteriorating property sector outlook and deflationary pressures.

Inflation: – Consumer price inflation picked up in late 2023, driven by food prices. – RBI has maintained a hawkish policy stance to bring inflation down towards its target. – Core inflation measures are declining, indicating that food prices will be key to inflation developments. – Headline inflation expected to decrease to 4% by calendar year-end.

Interest Rates: – Fitch expects the RBI to cut rates only in the second half of 2024 by 50 basis points.

Government and RBI Collaborate to Streamline Fema Regulations for Enhanced E-commerce Exports

The Indian government is collaborating with the Reserve Bank of India (RBI) to simplify e-commerce exports by revising Foreign Exchange Management Act (FEMA) regulations. The goal is to increase e-commerce exports from the current $8-10 billion to $200 billion by 2030.

Key Points:

Liberalization of FEMA Guidelines: – Discussions are underway with RBI to ease FEMA guidelines for e-commerce exports. – RBI is considering extending the payment realization period for business-to-business (B2B) shipments. – Self-declaration basis for Electronic Bank Realization Certificate (e-BRC) is being explored to simplify export realization.

Collaboration with Other Departments: – The commerce department is working with the Department of Revenue and the Department of Post to expedite e-commerce exports. – Designating zones for accountability and fast consignment clearance is crucial. – Sufficient warehousing and meeting consumer demand in real-time are key factors.

Mindset Change for Regulators: – India’s trade laws and regulations were designed for B2B shipments and need to adapt to the changing landscape of e-commerce exports. – Regulators need to understand the unique challenges of e-commerce, such as high return rates and small-value shipments.

Target for E-commerce Exports: – India aims to increase e-commerce exports to $200 billion by 2030. – China currently dominates e-commerce exports with over $300 billion annually.

Partnership with DHL: – DGFT has partnered with DHL to conduct capacity-building sessions and training for Indian MSMEs to enhance their export readiness. – The MoU covers 76 districts in three phases.