Weekly News 25 - 29 March 2024

Monday, 25 March 2024 (Financial Express) Govt EV push may deepen reliance on Chinese parts

The renewed policy push to establish India as an e-vehicle manufacturing hub through short-term customs duty reliefs could result in increased dependence on auto component imports from China, according to a report by a trade policy think tank. With China already accounting for 30% of India’s $20.3 billion auto-components imports in 2022-23, the rise of EVs further amplifies this dependency, given China’s dominant position in global supply chains for EV components, including batteries. Chinese automotive industry advancements in EV technology, backed by substantial state support, position it as a leading exporter of EVs and related components. As India opens its doors to Chinese car makers and reduces import tariffs on EVs, benefiting from concessional duties, Chinese manufacturers stand to gain directly or indirectly, with plans to increase their presence in both passenger and commercial vehicle segments.

The new policy’s provision for concessional duties on fully built electric vehicles, contingent upon investment commitments and domestic value addition targets, incentivizes Chinese manufacturers to enter the Indian market. Companies like SAIC Motor Corporation, BYD, Changan Automobile, and others eyeing Indian market entry are expected to rely heavily on supplies from China. Despite China’s declining exports to the European Union and the United States due to trade restrictions, the Indian market offers a significant opportunity for Chinese firms. However, with increasing scrutiny on Chinese investments since 2020, India must navigate the balance between fostering EV penetration and managing its dependency on China-dominated ventures.

Tuesday, 26 March 2024 (The Times of India) Government to replace minimum wage with living wage by 2025

The Indian government aims to replace the minimum wage with a living wage by 2025, seeking technical assistance from the International Labour Organization (ILO) for capacity building and demonstrating economic impacts. Living wages, endorsed by the ILO, are defined as incomes sufficient for basic needs like housing, food, and healthcare, surpassing current minimum wage levels. With over 500 million workers, most in the unorganized sector, India faces challenges in enforcing a national wage floor, prompting the proposal of a universal wage under the Code on Wages. This shift aligns with India’s commitment to sustainable development goals and is seen as a strategy to accelerate poverty alleviation efforts.

Officials have approached the International Labour Organization (ILO) for technical assistance in transitioning from minimum to living wages by 2025. Living wages, essential for basic needs, will exceed current minimum wage levels, addressing discrepancies in wage payments across states. With the Code on Wages pending implementation, India aims to enforce a universal wage floor, reflecting its commitment to sustainable development goals and poverty alleviation efforts. Labour Secretary Sumita Dawra underscores the importance of considering health, education, and standard of living in defining living wages, emphasizing a comprehensive assessment approach incorporating economic, social, and demographic factors.

Wednesday, 27 March 2024 (Financial Express) Engineering exports get boost from trade pacts

Engineering goods exports have seen a positive trajectory this year, bolstered by free trade agreements (FTAs) with the UAE and Australia, and shifts in trade dynamics due to geopolitical realignments. Notably, exports to the UAE surged by 16% year-on-year to $5.22 billion, while shipments to Australia increased by 5% to $1.30 billion. Russia emerged as a significant trading partner, with engineering exports doubling to $1.2 billion from April to February, driven by petroleum crude imports. Despite a 7% decline in exports to the US, which remains the largest market, India’s engineering goods exports overall showed a 1.23% growth, reaching $98.03 billion by February, fueled by increasing shares in West Asia and North Africa.

Chairman Arun Kumar Garodia of the Engineering Export Promotion Council attributed the positive performance to effective FTAs with the UAE and ongoing negotiations with the GCC, highlighting the sector’s resilience amidst global trade challenges. Optimism surrounds potential FTAs with the UK, Oman, and the EU, expected to further boost India’s engineering sector’s global market share. Engineering exports accounted for 24.01% of India’s total merchandise exports in February 2024, rising from 23.75% in January 2024, with a cumulative share of 24.82% during April-February. While most engineering panels witnessed year-on-year growth in February 2024, certain sectors like zinc and nickel products experienced declines, signalling mixed performance across subcategories.

Thursday, 28 March 2024 (Financial Express) Amul to start fresh milk sales in more countries

After successfully launching locally sourced “fresh milk” in the US, the Gujarat Cooperative Milk Marketing Federation (GCMMF), known for its ‘Amul’ brand, is planning to expand this business to several other countries. Managing Director Jayen Mehta stated that the federation is exploring opportunities in markets where direct reach is challenging, with an announcement expected in the next few months. Amul products, including paneer, curd, flavoured milk, ice creams, and chocolates, are already exported to over 50 countries, primarily serving the large Indian diaspora in Asia, the Gulf, and Africa.

In collaboration with the Michigan Milk Producers Association (MMPA), GCMMF will introduce “fresh milk” under the Amul brand in the US East Coast and Midwest markets initially, with plans for expansion to major cities. While MMPA handles milk collection and processing, GCMMF oversees marketing and branding. Mehta disclosed that Amul would launch four milk variants targeting the Indian diaspora and Asian population. Despite increasing dairy exports, domestic business growth remains significant, contributing around 2% to the total sales turnover of approximately ₹72,000 crore ($9 billion) in FY23. With a comfortable supply situation, Mehta assured that milk prices are unlikely to rise in the coming months. With 18 district unions and over 3.6 million dairy farmer members, GCMMF ranks as the eighth-largest dairy organization globally, with a daily milk procurement of 35 million litres, primarily from Gujarat.

Friday, 29 March 2024 (The Indian Express) India to send teams to Chile for lithium

India is intensifying its search for lithium and copper resources, sending two delegations to Chile next month, a government source revealed. With a focus on securing critical minerals essential for electric vehicle batteries and renewable energy systems, Chile emerges as a prime target due to its status as the world’s largest copper supplier and second-largest lithium producer. State-owned firms, including National Aluminium Company, Hindustan Copper, and Mineral Exploration and Consultancy, have formed Khanij Bidesh India (KABIL) to explore overseas mineral assets. KABIL plans to acquire assets in Chile, with a delegation scheduled to visit in April to facilitate private and government-owned companies in this endeavour.

India’s push for energy transition aligns with its commitment to achieve net-zero carbon emissions by 2070 and increase the share of renewables to 50% in its energy mix by 2030. In January, KABIL secured a ₹200 crore lithium exploration pact in Argentina, highlighting its strategic approach to securing critical minerals worldwide. Despite the Ministry of Mines and KABIL not responding to comments, India’s proactive stance underscores its determination to meet its energy and climate goals through strategic resource acquisitions.