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India among top three emerging markets globally
For the first time since covid-19 was declared a global pandemic in March, India found itself among the top three emerging markets in July, the latest update to Mint’s emerging markets tracker shows. After lingering near the bottom of the emerging market rankings for three months, India moved up three notches to the middle of the league tables in June. In July, it moved up two notches further to the third spot, just behind China and Brazil, driven by a booming stock market and an outperforming currency.
India’s average market capitalization increased 7.7% to $1.9 trillion in July from $1.7 trillion in June as foreign investors poured in $1.2 billion into local equities in July. The gush of foreign inflows, which continues in August also boosted the local currency at a time when other emerging market currencies depreciated against the dollar.
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Graphic: Mint
For the first time since covid-19 was declared a global pandemic in March, India found itself among the top three emerging markets in July, the latest update to Mint’s emerging markets tracker shows. After lingering near the bottom of the emerging market rankings for three months, India moved up three notches to the middle of the league tables in June. In July, it moved up two notches further to the third spot, just behind China and Brazil, driven by a booming stock market and an outperforming currency.
India’s average market capitalization increased 7.7% to $1.9 trillion in July from $1.7 trillion in June as foreign investors poured in $1.2 billion into local equities in July. The gush of foreign inflows, which continues in August also boosted the local currency at a time when other emerging market currencies depreciated against the dollar.
Mint’s Emerging Markets Tracker, launched in September last year, takes into account seven high-frequency indicators across ten large emerging markets to help us make sense of India’s relative position in the emerging markets league table. The seven indicators considered in the tracker encompass both real activity indicators, such as the manufacturing purchasing managers’ index (PMI) and real GDP growth, and financial metrics, such as exchange rate movements and changes in stock market capitalization. The final rankings are based on a composite score that gives equal weightage to each indicator.
The improvement in India’s financial metrics come at a time when India’s real sector metrics have yet to recover fully. Corporate earnings in the June-ended quarter touched multi-year lows.
India’s Purchasing Managers’ Index (PMI) for manufacturing slipped in July (46.0) after a rebound in June (47.2), showing the impact of localised lockdowns on manufacturing activity in the country. Even as India’s manufacturing contracted last month, other large emerging markets such as Brazil (58.2), Turkey (56.9) and China (51.1) reported an expansion. India’s PMI reading was better than that of only two emerging markets considered in the tracker: Thailand (45.9) and Mexico (40.4).
After reporting a trade surplus in June, India’s trade balance slipped back to deficit in July as gold imports shot up. India’s export performance appears better than that of many other emerging markets so far but it is worth noting that export data for July is available only for India, and two other countries: China and Brazil. Both reported better exports than India did last month.
India’s GDP growth in the March ended quarter (3.1%) was higher than most peers and has helped India’s overall ranking. But it is likely that the June quarter will be far worse for India than some other countries, given the relatively higher stringency of lockdown in the country for most of the June quarter.
Meanwhile, retail inflation in India increased to 6.9% in July, way higher than Reserve Bank of India’s upper tolerance level of 6%, due to supply disruptions. At 6.9%, retail inflation was higher than all emerging market peers barring Turkey, where inflation is running at double digits.
The expectation of sharp contraction in India’s GDP along with rising inflation may have raised the spectre of stagflation but the weakness in domestic demand suggests that inflationary pressures may be transient.
The growth challenge is more significant. It remains to be seen how far the pick-up in real economic activity justifies the optimism shown by the financial markets. Even though mobility levels remain below pre-pandemic levels, they have been rising over the past few weeks, a 17 August report by Sonal Verma and Aurodeep Nandi of Nomura noted. Nonetheless, the recovery is uneven, and there is a risk of ‘reversal in momentum’ from a second wave of COVID-19 cases, the economists warned.
The pace of recovery in economic activity will depend to a large extent on India’s ability to contain the pandemic. As Mint’s State Economy Tracker for July showed, states which have been able to contain the pandemic better have also witnessed a sharper economic recovery.
www.livemint.com
For the first time since covid-19 was declared a global pandemic in March, India found itself among the top three emerging markets in July, the latest update to Mint’s emerging markets tracker shows. After lingering near the bottom of the emerging market rankings for three months, India moved up three notches to the middle of the league tables in June. In July, it moved up two notches further to the third spot, just behind China and Brazil, driven by a booming stock market and an outperforming currency.
India’s average market capitalization increased 7.7% to $1.9 trillion in July from $1.7 trillion in June as foreign investors poured in $1.2 billion into local equities in July. The gush of foreign inflows, which continues in August also boosted the local currency at a time when other emerging market currencies depreciated against the dollar.
View Full Image
Graphic: Mint
For the first time since covid-19 was declared a global pandemic in March, India found itself among the top three emerging markets in July, the latest update to Mint’s emerging markets tracker shows. After lingering near the bottom of the emerging market rankings for three months, India moved up three notches to the middle of the league tables in June. In July, it moved up two notches further to the third spot, just behind China and Brazil, driven by a booming stock market and an outperforming currency.
India’s average market capitalization increased 7.7% to $1.9 trillion in July from $1.7 trillion in June as foreign investors poured in $1.2 billion into local equities in July. The gush of foreign inflows, which continues in August also boosted the local currency at a time when other emerging market currencies depreciated against the dollar.
Mint’s Emerging Markets Tracker, launched in September last year, takes into account seven high-frequency indicators across ten large emerging markets to help us make sense of India’s relative position in the emerging markets league table. The seven indicators considered in the tracker encompass both real activity indicators, such as the manufacturing purchasing managers’ index (PMI) and real GDP growth, and financial metrics, such as exchange rate movements and changes in stock market capitalization. The final rankings are based on a composite score that gives equal weightage to each indicator.
The improvement in India’s financial metrics come at a time when India’s real sector metrics have yet to recover fully. Corporate earnings in the June-ended quarter touched multi-year lows.
India’s Purchasing Managers’ Index (PMI) for manufacturing slipped in July (46.0) after a rebound in June (47.2), showing the impact of localised lockdowns on manufacturing activity in the country. Even as India’s manufacturing contracted last month, other large emerging markets such as Brazil (58.2), Turkey (56.9) and China (51.1) reported an expansion. India’s PMI reading was better than that of only two emerging markets considered in the tracker: Thailand (45.9) and Mexico (40.4).
After reporting a trade surplus in June, India’s trade balance slipped back to deficit in July as gold imports shot up. India’s export performance appears better than that of many other emerging markets so far but it is worth noting that export data for July is available only for India, and two other countries: China and Brazil. Both reported better exports than India did last month.
India’s GDP growth in the March ended quarter (3.1%) was higher than most peers and has helped India’s overall ranking. But it is likely that the June quarter will be far worse for India than some other countries, given the relatively higher stringency of lockdown in the country for most of the June quarter.
Meanwhile, retail inflation in India increased to 6.9% in July, way higher than Reserve Bank of India’s upper tolerance level of 6%, due to supply disruptions. At 6.9%, retail inflation was higher than all emerging market peers barring Turkey, where inflation is running at double digits.
The expectation of sharp contraction in India’s GDP along with rising inflation may have raised the spectre of stagflation but the weakness in domestic demand suggests that inflationary pressures may be transient.
The growth challenge is more significant. It remains to be seen how far the pick-up in real economic activity justifies the optimism shown by the financial markets. Even though mobility levels remain below pre-pandemic levels, they have been rising over the past few weeks, a 17 August report by Sonal Verma and Aurodeep Nandi of Nomura noted. Nonetheless, the recovery is uneven, and there is a risk of ‘reversal in momentum’ from a second wave of COVID-19 cases, the economists warned.
The pace of recovery in economic activity will depend to a large extent on India’s ability to contain the pandemic. As Mint’s State Economy Tracker for July showed, states which have been able to contain the pandemic better have also witnessed a sharper economic recovery.
India among top three emerging markets globally
India’s rise in ranks is powered by the surge in financial flows to the country. It remains to be seen whether real economic activity picks up to justify that optimism
www.livemint.com
RINL, Posco form joint working group under pact to build 5-MTPA greenfield steel plant in Vizag
By: Surya Sarathi Ray | Published: August 19, 2020 5:00 AM
The PMO had earlier instructed the steel ministry to “hold discussions with the concerned ministries/parties to facilitate domestic manufacturing of high-grade steel with the help of Japanese and Korean companies”.
In the preliminary discussions, the ministry gave the delegation assurance of uninterrupted supply of iron ore, a key raw material in steel-making and the required land for the proposed unit, being envisaged in line with the PM’s ‘Make in India’ programme.
State-run Rashtriya Ispat Nigam Limited(RINL) and Korean steel major Posco have set up a joint working group (JWG) to facilitate the implementation of the initial pact signed between the two for a 5 million tonne per annum (MTPA) greenfield steel plant in Vizag with an estimated investment of Rs 35,000 crore. Representatives of the two companies on July 23 discussed through a video conference the way forward for the proposed greenfield plant. The steel ministry facilitated the meeting.
“During the meeting, it was agreed to set up a JWG consisting of representatives from Posco and RINL to facilitate the implementation of the MoU signed between the two companies regarding investment on land owned by RINL. The JWG would meet regularly to expedite the implementation of the MoU,” a steel ministry note said. RINL chairman and MD PK Rath said both sides will have one representative each in the JWG.
Posco representatives have already made a number of visits to the RINL’s lone steel-making facility in Vizag to get a first-hand experience of the existing facility, where RINL operates a 6.3 MPTA unit, and explore the means and ways to execute the proposed steel unit.
Prodded by the Prime Minister’s Office (PMO), the steel ministry has been talking with the Korean steel mills to set up a 5-mtpa steel plant through a joint venture, which is proposed to produce high-end steel meant for automotive and other sectors, aimed at imports substitution. In the preliminary discussions, the ministry gave the delegation assurance of uninterrupted supply of iron ore, a key raw material in steel-making and the required land for the proposed unit, being envisaged in line with the PM’s ‘Make in India’ programme.
The PMO had earlier instructed the steel ministry to “hold discussions with the concerned ministries/parties to facilitate domestic manufacturing of high-grade steel with the help of Japanese and Korean companies”.
Apart from their rich experience in the manufacturing of value-added steel, the particular reference to the Japanese and Korean firms in the PMO directive may have stemmed from the fact that India is a regular exporter of iron ore to the Japanese steel mills (since 1963) and Posco, South Korea (since 1973). As part of India’s bilateral relations, India exports iron ore to Korean Posco and some Japanese steel mills. However, the quantity of exports is small. At the same time, India imports value-added steel from these countries. The steel ministry thinks that the plant will be a win-win for both the parties.
The proposed venture will add muscle to India’s capacity augmentation effort, under which the government has targeted to jack up the domestic installed steel-making capacity to 300 MPTA by 2030-31 from around 142 MPTA now.
South Korean major Posco has been trying hard to enter the Indian steel-making space since long. It signed a pact with the Odisha government way back in 2005 for a 12 MPTA plant, but subsequently scrapped the plan. In 2007, it had signed an initial pact with state-run Steel Authority of India to form a JV in India, but that too did not succeed.
www.financialexpress.com
By: Surya Sarathi Ray | Published: August 19, 2020 5:00 AM
The PMO had earlier instructed the steel ministry to “hold discussions with the concerned ministries/parties to facilitate domestic manufacturing of high-grade steel with the help of Japanese and Korean companies”.
In the preliminary discussions, the ministry gave the delegation assurance of uninterrupted supply of iron ore, a key raw material in steel-making and the required land for the proposed unit, being envisaged in line with the PM’s ‘Make in India’ programme.
State-run Rashtriya Ispat Nigam Limited(RINL) and Korean steel major Posco have set up a joint working group (JWG) to facilitate the implementation of the initial pact signed between the two for a 5 million tonne per annum (MTPA) greenfield steel plant in Vizag with an estimated investment of Rs 35,000 crore. Representatives of the two companies on July 23 discussed through a video conference the way forward for the proposed greenfield plant. The steel ministry facilitated the meeting.
“During the meeting, it was agreed to set up a JWG consisting of representatives from Posco and RINL to facilitate the implementation of the MoU signed between the two companies regarding investment on land owned by RINL. The JWG would meet regularly to expedite the implementation of the MoU,” a steel ministry note said. RINL chairman and MD PK Rath said both sides will have one representative each in the JWG.
Posco representatives have already made a number of visits to the RINL’s lone steel-making facility in Vizag to get a first-hand experience of the existing facility, where RINL operates a 6.3 MPTA unit, and explore the means and ways to execute the proposed steel unit.
Prodded by the Prime Minister’s Office (PMO), the steel ministry has been talking with the Korean steel mills to set up a 5-mtpa steel plant through a joint venture, which is proposed to produce high-end steel meant for automotive and other sectors, aimed at imports substitution. In the preliminary discussions, the ministry gave the delegation assurance of uninterrupted supply of iron ore, a key raw material in steel-making and the required land for the proposed unit, being envisaged in line with the PM’s ‘Make in India’ programme.
The PMO had earlier instructed the steel ministry to “hold discussions with the concerned ministries/parties to facilitate domestic manufacturing of high-grade steel with the help of Japanese and Korean companies”.
Apart from their rich experience in the manufacturing of value-added steel, the particular reference to the Japanese and Korean firms in the PMO directive may have stemmed from the fact that India is a regular exporter of iron ore to the Japanese steel mills (since 1963) and Posco, South Korea (since 1973). As part of India’s bilateral relations, India exports iron ore to Korean Posco and some Japanese steel mills. However, the quantity of exports is small. At the same time, India imports value-added steel from these countries. The steel ministry thinks that the plant will be a win-win for both the parties.
The proposed venture will add muscle to India’s capacity augmentation effort, under which the government has targeted to jack up the domestic installed steel-making capacity to 300 MPTA by 2030-31 from around 142 MPTA now.
South Korean major Posco has been trying hard to enter the Indian steel-making space since long. It signed a pact with the Odisha government way back in 2005 for a 12 MPTA plant, but subsequently scrapped the plan. In 2007, it had signed an initial pact with state-run Steel Authority of India to form a JV in India, but that too did not succeed.
RINL, Posco form joint working group under pact to build 5-MTPA greenfield steel plant in Vizag
The PMO had earlier instructed the steel ministry to “hold discussions with the concerned ministries/parties to facilitate domestic manufacturing of high-grade steel with the help of Japanese and Korean companies”.
www.financialexpress.com
Gujarat government approves construction of 70-floors or more high rise buildings
The Gujarat government has decided to approve the construction of buildings of 70 floors or more in five cities including Ahmedabad, Vadodara, Surat, Rajkot, and Gandhinagar.
Present rules allow for the construction of 23 floors for tall buildings.
The state government has decided to amend the Common GDCR (general development control regulations) to allow construction of high-rise structures of 70 or more floors in, an official release said.
The new rules regarding tall buildings approved by the government will be applicable to structures that are over 100 metres in height. A special technical committee will be set up to give approval to such projects, the release said.
The decision will demonstrate the state’s mettle in terms of its infrastructure capacity. With the construction of the skyscrapers, the state’s urban infrastructure will be able to accommodate the rising population and generate more employment for the dwellers, a government statement said.
This decision aims to put Gujarat on the global map along with UAE and Singapore, countries that are known for skyscrapers.
These buildings can be used for residential, commercial, and recreational purposes or a combination of the same.
Gujarat’s tallest buildings are currently located in GIFT City, Gandhinagar.
The plot size to construct a skyscraper having a height between 100 to 150 metres must be 2,500 sqm, and 3,500 sqm if the proposed height is above 150 metres.
Under the new rules, a disaster management plan has been made mandatory. This also includes a wind tunnel test of the model structure and an electric charging facility in the parking zone of these buildings.
The chief minister of Gujarat Vijay Rupani has said that the new rules will ensure optimum utilisation of land and eventually help lower property prices.
Credai-National welcomed the decision. “Gujarat has witnessed close to 50 percent urban growth. The population of Ahmedabad is around 8 million and the other four cities it is around 4 million. Migration is on the rise and land prices have been increasing. Gujarat has all along been deprived of a skyline like other big cities. This move will reduce pressure on land and ensure efficient use of resources,” said Jaxay Shah, chairman, Credai National, and managing director of Savvy Group.
Real estate consultants, however, said that the cost of high rises is steep and locations where real estate values are not high, the cost of construction itself may render the concept unfeasible.
They cautioned that the five cities of Gujarat need to be careful before indulging in the rate race to go higher and engage in proper town- planning prior to sanctioning high-rise projects to ensure that they don’t meet the same fate as Mumbai.
“Skyscrapers are considered to be a sign of prosperity and hence many communities put up high rises as landmarks for their cities. However, high rises come at a steep cost, and locations where real estate values are not high enough the cost of construction itself may render the concept unfeasible,” said Gulam Zia Executive Director - Valuation & Advisory Retail & Hospitality Knight Frank India.
There are cities or localities that are landlocked and have no other alternative but to go vertical.
Finally, vertical development also puts immense pressure on the physical infrastructure of the locality which includes roads, transportation, water supply, waste disposal, he said.
A city needs to first plan and execute the public infrastructure before allowing vertical edifices. Mumbai is a case in point where such high rises were created before putting up the right infrastructure which has created unprecedented pressure on infrastructure including roads, drainage systems. The five cities of Gujarat, therefore, need to be cautious before indulging in the rate race to go higher and engage in proper town- planning prior to sanctioning high – rise projects, Zia added.
www.moneycontrol.com
The Gujarat government has decided to approve the construction of buildings of 70 floors or more in five cities including Ahmedabad, Vadodara, Surat, Rajkot, and Gandhinagar.
Present rules allow for the construction of 23 floors for tall buildings.
The state government has decided to amend the Common GDCR (general development control regulations) to allow construction of high-rise structures of 70 or more floors in, an official release said.
The new rules regarding tall buildings approved by the government will be applicable to structures that are over 100 metres in height. A special technical committee will be set up to give approval to such projects, the release said.
The decision will demonstrate the state’s mettle in terms of its infrastructure capacity. With the construction of the skyscrapers, the state’s urban infrastructure will be able to accommodate the rising population and generate more employment for the dwellers, a government statement said.
This decision aims to put Gujarat on the global map along with UAE and Singapore, countries that are known for skyscrapers.
These buildings can be used for residential, commercial, and recreational purposes or a combination of the same.
Gujarat’s tallest buildings are currently located in GIFT City, Gandhinagar.
The plot size to construct a skyscraper having a height between 100 to 150 metres must be 2,500 sqm, and 3,500 sqm if the proposed height is above 150 metres.
Under the new rules, a disaster management plan has been made mandatory. This also includes a wind tunnel test of the model structure and an electric charging facility in the parking zone of these buildings.
The chief minister of Gujarat Vijay Rupani has said that the new rules will ensure optimum utilisation of land and eventually help lower property prices.
Credai-National welcomed the decision. “Gujarat has witnessed close to 50 percent urban growth. The population of Ahmedabad is around 8 million and the other four cities it is around 4 million. Migration is on the rise and land prices have been increasing. Gujarat has all along been deprived of a skyline like other big cities. This move will reduce pressure on land and ensure efficient use of resources,” said Jaxay Shah, chairman, Credai National, and managing director of Savvy Group.
Real estate consultants, however, said that the cost of high rises is steep and locations where real estate values are not high, the cost of construction itself may render the concept unfeasible.
They cautioned that the five cities of Gujarat need to be careful before indulging in the rate race to go higher and engage in proper town- planning prior to sanctioning high-rise projects to ensure that they don’t meet the same fate as Mumbai.
“Skyscrapers are considered to be a sign of prosperity and hence many communities put up high rises as landmarks for their cities. However, high rises come at a steep cost, and locations where real estate values are not high enough the cost of construction itself may render the concept unfeasible,” said Gulam Zia Executive Director - Valuation & Advisory Retail & Hospitality Knight Frank India.
There are cities or localities that are landlocked and have no other alternative but to go vertical.
Finally, vertical development also puts immense pressure on the physical infrastructure of the locality which includes roads, transportation, water supply, waste disposal, he said.
A city needs to first plan and execute the public infrastructure before allowing vertical edifices. Mumbai is a case in point where such high rises were created before putting up the right infrastructure which has created unprecedented pressure on infrastructure including roads, drainage systems. The five cities of Gujarat, therefore, need to be cautious before indulging in the rate race to go higher and engage in proper town- planning prior to sanctioning high – rise projects, Zia added.
Gujarat government approves construction of 70-floors or more high rise buildings
State government approves construction of tall buildings in Ahmedabad, Vadodara, Surat, Rajkot and Gandhinagar; experts say planning and execution of public infrastructure must before allowing vertical edifices
Mukesh Ambani’s Jio, Amazon gear up for an for an epic India fight
Updated: 19 Aug 2020, 03:35 PM IST
By Saritha Rai, Bloomberg
Amazon has begun making forays into everything from grocery delivery and insurance to drugs in India, setting up a monumental clash with Mukesh Ambani’s hard-charging Jio Platforms
Jeff Bezos regards India as a key frontier for Amazon, particularly after failing to break into China. Photo: Reliance Industries Chairman Mukesh Ambani and Amazon CEO Jeff Bezos.
Amazon.com Inc. has begun making forays into everything from grocery delivery and insurance to drugs in India, setting up a monumental clash with Mukesh Ambani’s hard-charging Jio Platforms.
The US giant is fanning out at a pace not seen elsewhere in the world. Amazon is now delivering prescription and over-the-counter medicines and herbal remedies in Bangalore. It started last month selling car and motorbike insurance -- a first for the Seattle-based online giant -- claiming to finalize policies in under two minutes without paperwork. It piloted a restaurant delivery service to Prime subscribers in parts of Bangalore last year. And it’s even reportedly unveiling wealth management services this year.
Those eclectic choices coincide with a similarly rapid-fire expansion by Jio’s parent, Reliance Industries Ltd. The energy-to-retail conglomerate run by Ambani, one of the world’s wealthiest men, scored more than $20 billion of investment in just months from backers including Facebook Inc. and Alphabet Inc.’s Google to create an Indian internet behemoth. On Wednesday, Reliance’s retail unit announced it had acquired a majority stake in a top e-pharmacy Netmeds. And it’s preparing to add a suite of financial products and services including insurance, brokering and mutual funds.
“This is going to be one fierce battle," said Satish Meena, senior forecast analyst at Forrester Research Inc. “Amazon and Reliance want to meet a person’s every need from online retail to financial services to entertainment. It’s a fight for the household’s spending."
Jeff Bezos regards India as a key frontier for Amazon, particularly after failing to break into China. Now he faces a homegrown champion backed by some of his fiercest US rivals.
The most savage fight will be in groceries, which accounts for 55% of all Indian retail sales, according to Forrester. While it’s still early days, Amazon has been steadily pushing groceries through Amazon Pantry and produce via Amazon Fresh. Reliance only recently launched competitor JioMart in 200 cities, and it’s averaged 250,000 orders a day within weeks. Both are also tussling over one of India’s largest grocery chains, Future Retail, which controls Big Bazaar stores. Reliance is negotiating an acquisition but Amazon, which holds a minority stake, may be unwilling to allow its rival to gain control.
Amazon’s now testing farm-to-doorstep fruit and vegetable deliveries in the western city of Pune -- another world first. It’s a direct assault on Jio: Ambani recently said four-fifths of the fruits and vegetables sold on JioMart or through its retail outlets were sourced directly from farmers.
“The toughest battle between the two is going to be fought in grocery retail," said Meena. “Grocery is Reliance’s strength and they will assert their pricing power by combining their offline muscle."
www.livemint.com
Updated: 19 Aug 2020, 03:35 PM IST
By Saritha Rai, Bloomberg
Amazon has begun making forays into everything from grocery delivery and insurance to drugs in India, setting up a monumental clash with Mukesh Ambani’s hard-charging Jio Platforms
Jeff Bezos regards India as a key frontier for Amazon, particularly after failing to break into China. Photo: Reliance Industries Chairman Mukesh Ambani and Amazon CEO Jeff Bezos.
Amazon.com Inc. has begun making forays into everything from grocery delivery and insurance to drugs in India, setting up a monumental clash with Mukesh Ambani’s hard-charging Jio Platforms.
The US giant is fanning out at a pace not seen elsewhere in the world. Amazon is now delivering prescription and over-the-counter medicines and herbal remedies in Bangalore. It started last month selling car and motorbike insurance -- a first for the Seattle-based online giant -- claiming to finalize policies in under two minutes without paperwork. It piloted a restaurant delivery service to Prime subscribers in parts of Bangalore last year. And it’s even reportedly unveiling wealth management services this year.
Those eclectic choices coincide with a similarly rapid-fire expansion by Jio’s parent, Reliance Industries Ltd. The energy-to-retail conglomerate run by Ambani, one of the world’s wealthiest men, scored more than $20 billion of investment in just months from backers including Facebook Inc. and Alphabet Inc.’s Google to create an Indian internet behemoth. On Wednesday, Reliance’s retail unit announced it had acquired a majority stake in a top e-pharmacy Netmeds. And it’s preparing to add a suite of financial products and services including insurance, brokering and mutual funds.
“This is going to be one fierce battle," said Satish Meena, senior forecast analyst at Forrester Research Inc. “Amazon and Reliance want to meet a person’s every need from online retail to financial services to entertainment. It’s a fight for the household’s spending."
Jeff Bezos regards India as a key frontier for Amazon, particularly after failing to break into China. Now he faces a homegrown champion backed by some of his fiercest US rivals.
The most savage fight will be in groceries, which accounts for 55% of all Indian retail sales, according to Forrester. While it’s still early days, Amazon has been steadily pushing groceries through Amazon Pantry and produce via Amazon Fresh. Reliance only recently launched competitor JioMart in 200 cities, and it’s averaged 250,000 orders a day within weeks. Both are also tussling over one of India’s largest grocery chains, Future Retail, which controls Big Bazaar stores. Reliance is negotiating an acquisition but Amazon, which holds a minority stake, may be unwilling to allow its rival to gain control.
Amazon’s now testing farm-to-doorstep fruit and vegetable deliveries in the western city of Pune -- another world first. It’s a direct assault on Jio: Ambani recently said four-fifths of the fruits and vegetables sold on JioMart or through its retail outlets were sourced directly from farmers.
“The toughest battle between the two is going to be fought in grocery retail," said Meena. “Grocery is Reliance’s strength and they will assert their pricing power by combining their offline muscle."
Mukesh Ambani’s jio, Amazon gear up for an for an epic India fight
Amazon has begun making forays into everything from grocery delivery and insurance to drugs in India, setting up a monumental clash with Mukesh Ambani’s hard-charging Jio Platforms
www.livemint.com
Have the markets topped out? Here's what leading brokerages think
After a near 50 per cent jump in the frontline indices – the S&P BSE Sensex and the Nifty 50 – from their respective lows in March 2020, the markets have been consolidating and waiting for fresh triggers since the past few weeks. That said, the optimism has now moved to the broader markets with the mid-and small-caps outperforming their large-cap peers thus far in August.
But, will the optimism sustain? Have the markets factored in most positives post the resumption in economic activity after a stringent lockdown to battle the Covid-19 pandemic?
Though most analysts expect the global central banks to keep the liquidity tap open that should keep the markets supported, valuations of the Indian markets, they say, are beginning to look stretched. In this backdrop, they remain cautious with some even expecting a minor correction from here on.
Credit Suisse Wealth Management
After the sharp rally in the Indian equity market, valuations have become expensive, even for mid-caps. The Nifty Index is valued at 12-month forward PE of 21.2, which is more than two standard deviations above its 10-year mean, while the Nifty Midcap 50 Index trades at 20.6, one standard deviation above its 10-year average. Given earnings surprises and the unprecedented support from global central banks, the confidence is back in equity markets. Additionally, corporates in India have seen massive amount of capital raise in several sectors suggesting foreign equity capital is freely flowing into India. These factors combined with low interest rate environment globally will likely keep the valuation elevated, in our view.
JP Morgan
A decline in potential growth and economic transition would pressure India equity multiples. We advise minimal or reducing exposure to sectors linked to growth / investment cyclicals like financials, materials and energy (ex-Reliance Industries). We recommend focusing on consumer, services and healthcare-oriented companies from a long-term perspective.
ICICI Securities
The index captures a large part of economic recovery optimism and would recommend being more stock specific, which illustrates quality of earnings, sustainability of growth prospects and possesses fundamental moat. We remain positive on rural economy and resilient sectors like information technology (IT), pharma and private banks.
Dolat Capital
We downgrade our stand on the Indian equity markets to negative after the stupendous rally from the March lows. The Nifty is now less than 9 per cent from its all-time high, and this for one of the worst earnings / GDP readings seem surreal to us. We expect a reality check to set in sooner than later and lead to normalisation of valuations. While we are not calling for any specific levels or time frames at this juncture because there will be too many variables at work here. What is more pertinent aspect that we want to call out for a correction is to let the markets digest the barrage of new aspects of businesses that will emerge – and for some of the heavy weights like financials, consumer, discretionary, manufacturing and many others.
Equinomics Research
Some correction in the global equity markets starting from the US markets is inevitable. In 2000 and 2007, the ratio of US Market cap to GDP crossed 100 per cent and then the US markets fell quite badly. Now the ratio stands at a record high of 177 per cent. As worldwide a large number of jobs are lost, it is quite logical that many investors would start booking profits at some point in time in the short-term itself. Hence, in our view, the same could lead to around 5 per cent correction in the global indices in the short-term.
www.business-standard.com
After a near 50 per cent jump in the frontline indices – the S&P BSE Sensex and the Nifty 50 – from their respective lows in March 2020, the markets have been consolidating and waiting for fresh triggers since the past few weeks. That said, the optimism has now moved to the broader markets with the mid-and small-caps outperforming their large-cap peers thus far in August.
But, will the optimism sustain? Have the markets factored in most positives post the resumption in economic activity after a stringent lockdown to battle the Covid-19 pandemic?
Though most analysts expect the global central banks to keep the liquidity tap open that should keep the markets supported, valuations of the Indian markets, they say, are beginning to look stretched. In this backdrop, they remain cautious with some even expecting a minor correction from here on.
Credit Suisse Wealth Management
After the sharp rally in the Indian equity market, valuations have become expensive, even for mid-caps. The Nifty Index is valued at 12-month forward PE of 21.2, which is more than two standard deviations above its 10-year mean, while the Nifty Midcap 50 Index trades at 20.6, one standard deviation above its 10-year average. Given earnings surprises and the unprecedented support from global central banks, the confidence is back in equity markets. Additionally, corporates in India have seen massive amount of capital raise in several sectors suggesting foreign equity capital is freely flowing into India. These factors combined with low interest rate environment globally will likely keep the valuation elevated, in our view.
JP Morgan
A decline in potential growth and economic transition would pressure India equity multiples. We advise minimal or reducing exposure to sectors linked to growth / investment cyclicals like financials, materials and energy (ex-Reliance Industries). We recommend focusing on consumer, services and healthcare-oriented companies from a long-term perspective.
ICICI Securities
The index captures a large part of economic recovery optimism and would recommend being more stock specific, which illustrates quality of earnings, sustainability of growth prospects and possesses fundamental moat. We remain positive on rural economy and resilient sectors like information technology (IT), pharma and private banks.
Dolat Capital
We downgrade our stand on the Indian equity markets to negative after the stupendous rally from the March lows. The Nifty is now less than 9 per cent from its all-time high, and this for one of the worst earnings / GDP readings seem surreal to us. We expect a reality check to set in sooner than later and lead to normalisation of valuations. While we are not calling for any specific levels or time frames at this juncture because there will be too many variables at work here. What is more pertinent aspect that we want to call out for a correction is to let the markets digest the barrage of new aspects of businesses that will emerge – and for some of the heavy weights like financials, consumer, discretionary, manufacturing and many others.
Equinomics Research
Some correction in the global equity markets starting from the US markets is inevitable. In 2000 and 2007, the ratio of US Market cap to GDP crossed 100 per cent and then the US markets fell quite badly. Now the ratio stands at a record high of 177 per cent. As worldwide a large number of jobs are lost, it is quite logical that many investors would start booking profits at some point in time in the short-term itself. Hence, in our view, the same could lead to around 5 per cent correction in the global indices in the short-term.
Have the markets topped out? Here's what leading brokerages think
Though most analysts expect the global central banks to keep the liquidity tap open that should keep the markets supported, valuations of the Indian markets, they say, are beginning to look stretched
Boost To Make In India: Govt Plans To Offer Incentives To BHEL, L&T And Others For Manufacturing Import Substitutes
by IANS
Aug 19, 2020 03:21 PM
BHEL logo (Wikipedia)
The government proposes to incentivise operations of domestic equipment manufacturers such as BHEL, L&T, and Bharat Forge that results in manufacture of equipment that is currently being imported, particularly from countries such as China. Official sources said that a productivity-linked incentive (PLI) scheme involving phased manufacturing programme is being finalised for certain equipment used by the power sector. Once implemented, this would provide incentives to domestic companies on sales of equipment manufactured by them that is currently being imported.
In the electronics sector, the government already has a PLI scheme that extends an incentive of 4 to 6 per cent on incremental sales (over base year) of goods manufactured in India and covered under target segments.
Companies like BHEL have been identified for manufacture of equipment such as silicon solar wafers required for making solar cells that is largely imported in the country from China. Also, the company would scale up production of cold rolled grain oriented silicon (CRGO) steel, which is also largely imported from countries such as China, Korea and Japan. CRGO steel is used to manufacture the core of generators and transformers – a key power component that converts mechanical energy into electrical energy.
Similarly, new manufacturing lines of L&T based on import substitution would also be incentivised and so for other domestic equipment makers.
On its part, ministry of power proposes EA to support import substitution plan by creating a dedicated wing that will solely look at areas where domestic manufacturing needs to be stepped up as part of localisation of items currently being imported.
In the power sector, imports constitute 604 items, 392 of which are also made locally. Of the balance, local alternatives are available for 102 items, leaving 101 items that need to be made locally. It is for manufacture of these items, that the government would incentivise operations of Indian companies, companies registered in India and having majority beneficial ownership of an Indian or run by an Indian CEO.
In 2018-19, India’s total imports in conventional power sector were to the tune of Rs 75,000 crore out of which imports from China stood at over Rs 21,000 crore. In renewable segment, imports stood at $2.9 billion in FY19 with close to 70 per cent from China.
Along with import substitution for main power equipment, the PLI scheme for power sector is also expected to cover manufacture of solar cells and modules, 75 per cent of which are currently imported from China.
The PLIs for several sectors would be ready before the end of the 2020. The existing PLI for mobile manufacturing offers incentives to the tune of 4-6 per cent for incremental investment and sales over a period of five years to companies. Similar schemes could be worked out for new sectors but the quantum of benefit would depend on capital intensity of an industry.
by IANS
Aug 19, 2020 03:21 PM
BHEL logo (Wikipedia)
The government proposes to incentivise operations of domestic equipment manufacturers such as BHEL, L&T, and Bharat Forge that results in manufacture of equipment that is currently being imported, particularly from countries such as China. Official sources said that a productivity-linked incentive (PLI) scheme involving phased manufacturing programme is being finalised for certain equipment used by the power sector. Once implemented, this would provide incentives to domestic companies on sales of equipment manufactured by them that is currently being imported.
In the electronics sector, the government already has a PLI scheme that extends an incentive of 4 to 6 per cent on incremental sales (over base year) of goods manufactured in India and covered under target segments.
Companies like BHEL have been identified for manufacture of equipment such as silicon solar wafers required for making solar cells that is largely imported in the country from China. Also, the company would scale up production of cold rolled grain oriented silicon (CRGO) steel, which is also largely imported from countries such as China, Korea and Japan. CRGO steel is used to manufacture the core of generators and transformers – a key power component that converts mechanical energy into electrical energy.
Similarly, new manufacturing lines of L&T based on import substitution would also be incentivised and so for other domestic equipment makers.
On its part, ministry of power proposes EA to support import substitution plan by creating a dedicated wing that will solely look at areas where domestic manufacturing needs to be stepped up as part of localisation of items currently being imported.
In the power sector, imports constitute 604 items, 392 of which are also made locally. Of the balance, local alternatives are available for 102 items, leaving 101 items that need to be made locally. It is for manufacture of these items, that the government would incentivise operations of Indian companies, companies registered in India and having majority beneficial ownership of an Indian or run by an Indian CEO.
In 2018-19, India’s total imports in conventional power sector were to the tune of Rs 75,000 crore out of which imports from China stood at over Rs 21,000 crore. In renewable segment, imports stood at $2.9 billion in FY19 with close to 70 per cent from China.
Along with import substitution for main power equipment, the PLI scheme for power sector is also expected to cover manufacture of solar cells and modules, 75 per cent of which are currently imported from China.
The PLIs for several sectors would be ready before the end of the 2020. The existing PLI for mobile manufacturing offers incentives to the tune of 4-6 per cent for incremental investment and sales over a period of five years to companies. Similar schemes could be worked out for new sectors but the quantum of benefit would depend on capital intensity of an industry.
Boost To Make In India: Govt Plans To Offer Incentives To BHEL, L&T And Others For Manufacturing Import Substitutes
The government proposes to incentivise operations of domestic equipment manufacturers such as BHEL, L&T, and Bharat Forge that results in manufacture of equipment that is currently being imported, particularly from countries such as China
swarajyamag.com
Why worry Modi ji has made sure his cronies will survive through loan restructuring.India ranks 5th in list of countries with highest NPA levels
The only countries ranked higher than India on the list are Greece, Italy, Portugal, and Ireland, all of who have been rattled by debt crises in recent years.
India has the highest level of non-performing assets (NPA) among BRICS countries and is ranked fifth on a list of countries with the highest levels of NPAs, a report by CARE Ratings revealed.
The only countries ranked higher than India on the list are Greece, Italy, Portugal, and Ireland. All these countries, along with Spain, are commonly referred to as PIIGS, and have been victims of sovereign debt crises in recent years.
Spain is the only PIIGS country ranked lower than India on the list, with an NPA ratio of 5.28 percent. At 9.85 percent, India’s NPA ratio is over 400 basis points higher.
In its report, CARE Ratings said that ‘the seriousness of the NPA problem can be gauged by the absolute level of impaired assets in the system. Ever since the RBI had spoken of asset quality recognition (AQR) in 2015, there was an increase in the pace of recognizing these assets’.
The rating agency also said that cleaning up bad loans from the system would be completed by March 2018 and any further rise in NPAs after that could be stemming from factors other than the ones identified by banks.
The report classified countries into four categories – those having very low levels of NPAs, those with low levels of NPAs, those with medium levels of NPAs and countries with high levels of NPAs.
Australia, Canada, Hong Kong, Republic of Korea and the United Kingdom were all found to have an NPA ratio of less than 1 percent and were classified in the first category.
The second category was largely made up of major economies from around the world like China, Germany, Japan, and the USA, all of who have NPA ratios of less than 2 percent.
The third category consisted of a few developed European countries but was largely constituted of fast-growing developing countries like Brazil, Indonesia, Thailand, South Africa and Turkey.
India ranks 5th in list of countries with highest NPA levels
The dates from 2017 . Having said that, thanks to the Chinese virus & it's fallout, it's bound to get worse. Who would you then blame for it & why?
I would blame it squarely on Neoliberal policies. article below completely summaries my views on what happening not just in India but globally since 70s. sooner or later chicken will come home to roost.
Rebooting Economy IX: Why is private sector dependent on public money in times of crisis?
Contrary to popular belief, private sector efficiency vis-a-vis public sector is a neoliberal construct for which there is little evidence or lived experience but is pushed, nevertheless, for private gains
The report is from 2017 and data from 2016-2017 when that traitor Raghuram Rajan changed the rules about classifying NPAs and overnight the NPAs shot up from 4.5 lakh crore to over 9 lakh crores. If you may recall, I had a long debate on this with @hellfire.
I will ignore the political angle as that's not my favorite discussion subject on this forum.
Coming onto the thread & topic on hand, highlighted points in the quoted article:-
"India has the highest level of non-performing assets (NPA) among BRICS countries and is ranked fifth on a list of countries with the highest levels of NPAs, a report by CARE Ratings revealed.
The only countries ranked higher than India on the list are Greece, Italy, Portugal, and Ireland. All these countries, along with Spain, are commonly referred to as PIIGS, and have been victims of sovereign debt crises in recent years.
Spain is the only PIIGS country ranked lower than India on the list, with an NPA ratio of 5.28 percent. At 9.85 percent, India’s NPA ratio is over 400 basis points higher.
In its report, CARE Ratings said that ‘the seriousness of the NPA problem can be gauged by the absolute level of impaired assets in the system. Ever since the RBI had spoken of asset quality recognition (AQR) in 2015, there was an increase in the pace of recognizing these assets’.
The rating agency also said that cleaning up bad loans from the system would be completed by March 2018 and any further rise in NPAs after that could be stemming from factors other than the ones identified by banks.
The report classified countries into four categories – those having very low levels of NPAs, those with low levels of NPAs, those with medium levels of NPAs and countries with high levels of NPAs.
Australia, Canada, Hong Kong, Republic of Korea and the United Kingdom were all found to have an NPA ratio of less than 1 percent and were classified in the first category.
The second category was largely made up of major economies from around the world like China, Germany, Japan, and the USA, all of who have NPA ratios of less than 2 percent.
The third category consisted of a few developed European countries but was largely constituted of fast-growing developing countries like Brazil, Indonesia, Thailand, South Africa and Turkey. "
Interesting arguments against the RCEP from an Indian blog. The pics are rather low resolution:
Dumping RCEP is turning out to be a boon. India is slowly bridging trade deficit with China and Southeast Asia
by Mahima Kalra
22 August 2020
A few months ago, India refused to sign Regional Comprehensive Economic Partnership (RCEP), due to which the social media suddenly flooded with trade experts who argued that it was a big mistake as India is set to lose the biggest common market in creation. These social media experts, whose fields of interest changes with every passing day, were criticizing the Modi government for not allowing India to become part of the China-led common market.
However, the way relationships with China emerged since the outbreak of Coronavirus disease, one can argue that it was a sound decision strategically and economically. As per a data from the Ministry of Commerce and Industry, India is fast bridging the trade deficit with China and Southeast Asia. Between April-July this year, exports to China jumped by 31 per cent despite the lockdown. Similarly, India’s exports to Southeast Asian countries like Malaysia and Vietnam also registered exponential growth during this period.
For the first time in the last many years, India enjoyed a quarterly trade surplus. The total trade surplus between April to June was 14 billion dollars as imports declined 40 per cent compared to 22 per cent downfall in exports. Services remain India’s area of performance as most IT companies and other service sectors in which India is a major exporter like pharmaceutical continued to function during the lockdown, and this resulted in service sector surplus of 28 billion dollars while commodities sector registered a trade deficit of 14 billion dollars.
As per the analysis by Credit Rating agency Crisil, India’s trade deficit with China has narrowed continuously in the last few months as exports have risen. The imports have remained benign as demand is weak in the Indian economy due to spread of the Coronavirus disease.
Crisil analyzed the data till June and found that India’s exports to East Asian and Southeast Asian economies have increased in the June quarter while that to Western countries like the United States, United Kingdom has declined.
Growth in exports to countries like China, Malaysia, Singapore, Vietnam, South Korea and Japan and contraction in exports to the UAE, the UK, Germany, the US, and Brazil show that not signing RCEP is proving to be a wise decision because otherwise, India would not have been able to throw Chinese companies out of the Indian supply chain.
Almost 9 months ago, in November 2019, India refused to join Regional Comprehensive Economic Partnership (RCEP), a free trade agreement led by China which includes ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and 6 Asia-Pacific countries (Australia, China, India, Japan, South Korea and New Zealand).
India had its reasons to dump the RCEP, primarily- protection of domestic agriculture and allied activities from the competition of Australian industry and fear of becoming a dumping ground for cheap Chinese products. Had India signed RCEP, China would have continued to flood the Indian market with its cheap low-quality goods and Indian government could not have increased tariff on these given the binding of low tariff due to the deal.
Moreover, not signing RCEP is helping to bring foreign companies to India as these companies want a share in Indian market which now they cannot cater from China given high tariffs and various other restrictions placed on Chinese imports.
If the Modi government can bring the manufacturing activity in India, this would help the Indian economy to attain a sustainable double-digit growth, and make the country a manufacturing powerhouse just like China is now. And not signing RCEP would prove a big fortune for the Indian government.
tfipost.com
Dumping RCEP is turning out to be a boon. India is slowly bridging trade deficit with China and Southeast Asia
by Mahima Kalra
22 August 2020
A few months ago, India refused to sign Regional Comprehensive Economic Partnership (RCEP), due to which the social media suddenly flooded with trade experts who argued that it was a big mistake as India is set to lose the biggest common market in creation. These social media experts, whose fields of interest changes with every passing day, were criticizing the Modi government for not allowing India to become part of the China-led common market.
However, the way relationships with China emerged since the outbreak of Coronavirus disease, one can argue that it was a sound decision strategically and economically. As per a data from the Ministry of Commerce and Industry, India is fast bridging the trade deficit with China and Southeast Asia. Between April-July this year, exports to China jumped by 31 per cent despite the lockdown. Similarly, India’s exports to Southeast Asian countries like Malaysia and Vietnam also registered exponential growth during this period.
For the first time in the last many years, India enjoyed a quarterly trade surplus. The total trade surplus between April to June was 14 billion dollars as imports declined 40 per cent compared to 22 per cent downfall in exports. Services remain India’s area of performance as most IT companies and other service sectors in which India is a major exporter like pharmaceutical continued to function during the lockdown, and this resulted in service sector surplus of 28 billion dollars while commodities sector registered a trade deficit of 14 billion dollars.
As per the analysis by Credit Rating agency Crisil, India’s trade deficit with China has narrowed continuously in the last few months as exports have risen. The imports have remained benign as demand is weak in the Indian economy due to spread of the Coronavirus disease.
Crisil analyzed the data till June and found that India’s exports to East Asian and Southeast Asian economies have increased in the June quarter while that to Western countries like the United States, United Kingdom has declined.
Growth in exports to countries like China, Malaysia, Singapore, Vietnam, South Korea and Japan and contraction in exports to the UAE, the UK, Germany, the US, and Brazil show that not signing RCEP is proving to be a wise decision because otherwise, India would not have been able to throw Chinese companies out of the Indian supply chain.
Almost 9 months ago, in November 2019, India refused to join Regional Comprehensive Economic Partnership (RCEP), a free trade agreement led by China which includes ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and 6 Asia-Pacific countries (Australia, China, India, Japan, South Korea and New Zealand).
India had its reasons to dump the RCEP, primarily- protection of domestic agriculture and allied activities from the competition of Australian industry and fear of becoming a dumping ground for cheap Chinese products. Had India signed RCEP, China would have continued to flood the Indian market with its cheap low-quality goods and Indian government could not have increased tariff on these given the binding of low tariff due to the deal.
Moreover, not signing RCEP is helping to bring foreign companies to India as these companies want a share in Indian market which now they cannot cater from China given high tariffs and various other restrictions placed on Chinese imports.
If the Modi government can bring the manufacturing activity in India, this would help the Indian economy to attain a sustainable double-digit growth, and make the country a manufacturing powerhouse just like China is now. And not signing RCEP would prove a big fortune for the Indian government.
Dumping RCEP is turning out to be a boon. India is slowly bridging trade deficit with China and Southeast Asia
Not signing RCEP is helping to bring foreign companies to India as these companies want a share in Indian market which now they cannot cater from China
tfipost.com
how can you compare a pandemic hit numbers with normal days !.Every current trade numbers are irrelevant including the CAD surplus (First since 20007-08). These numbers are a sign of weak domestic demand instead of improvement in our position on trade.
Interesting arguments against the RCEP from an Indian blog. The pics are rather low resolution:
Dumping RCEP is turning out to be a boon. India is slowly bridging trade deficit with China and Southeast Asia
by Mahima Kalra
22 August 2020
A few months ago, India refused to sign Regional Comprehensive Economic Partnership (RCEP), due to which the social media suddenly flooded with trade experts who argued that it was a big mistake as India is set to lose the biggest common market in creation. These social media experts, whose fields of interest changes with every passing day, were criticizing the Modi government for not allowing India to become part of the China-led common market.
However, the way relationships with China emerged since the outbreak of Coronavirus disease, one can argue that it was a sound decision strategically and economically. As per a data from the Ministry of Commerce and Industry, India is fast bridging the trade deficit with China and Southeast Asia. Between April-July this year, exports to China jumped by 31 per cent despite the lockdown. Similarly, India’s exports to Southeast Asian countries like Malaysia and Vietnam also registered exponential growth during this period.
View attachment 17382
For the first time in the last many years, India enjoyed a quarterly trade surplus. The total trade surplus between April to June was 14 billion dollars as imports declined 40 per cent compared to 22 per cent downfall in exports. Services remain India’s area of performance as most IT companies and other service sectors in which India is a major exporter like pharmaceutical continued to function during the lockdown, and this resulted in service sector surplus of 28 billion dollars while commodities sector registered a trade deficit of 14 billion dollars.
View attachment 17381
As per the analysis by Credit Rating agency Crisil, India’s trade deficit with China has narrowed continuously in the last few months as exports have risen. The imports have remained benign as demand is weak in the Indian economy due to spread of the Coronavirus disease.
View attachment 17380
Crisil analyzed the data till June and found that India’s exports to East Asian and Southeast Asian economies have increased in the June quarter while that to Western countries like the United States, United Kingdom has declined.
Growth in exports to countries like China, Malaysia, Singapore, Vietnam, South Korea and Japan and contraction in exports to the UAE, the UK, Germany, the US, and Brazil show that not signing RCEP is proving to be a wise decision because otherwise, India would not have been able to throw Chinese companies out of the Indian supply chain.
Almost 9 months ago, in November 2019, India refused to join Regional Comprehensive Economic Partnership (RCEP), a free trade agreement led by China which includes ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and 6 Asia-Pacific countries (Australia, China, India, Japan, South Korea and New Zealand).
India had its reasons to dump the RCEP, primarily- protection of domestic agriculture and allied activities from the competition of Australian industry and fear of becoming a dumping ground for cheap Chinese products. Had India signed RCEP, China would have continued to flood the Indian market with its cheap low-quality goods and Indian government could not have increased tariff on these given the binding of low tariff due to the deal.
Moreover, not signing RCEP is helping to bring foreign companies to India as these companies want a share in Indian market which now they cannot cater from China given high tariffs and various other restrictions placed on Chinese imports.
If the Modi government can bring the manufacturing activity in India, this would help the Indian economy to attain a sustainable double-digit growth, and make the country a manufacturing powerhouse just like China is now. And not signing RCEP would prove a big fortune for the Indian government.
Dumping RCEP is turning out to be a boon. India is slowly bridging trade deficit with China and Southeast Asia
Not signing RCEP is helping to bring foreign companies to India as these companies want a share in Indian market which now they cannot cater from China
Our imports from China are down because our consumption is down. Our exports to China are up because their consumption has resumed. I don't think it's good news for us.