Weekly News 15 - 19 April 2024

Monday, 15 April 2024 (Financial Express) Easier domestic sales, exit for SEZs under new Bill

The Modi government is considering new support measures for special economic zones (SEZs) as part of its initial agenda for a potential third term. These measures include easing rules for domestic sales by SEZ manufacturing units and providing a smoother exit route for developers and units. A pending bill to amend the SEZ Act 2005 will be presented in the upcoming parliamentary session. Although SEZs have requested parity with imports from countries under bilateral free trade agreements, the government is hesitant, citing concerns about creating an uneven playing field for domestic tariff area (DTA) producers.

The proposed amendments aim to provide flexibility for SEZs to sell products in the domestic market and simplify management procedures. SEZs believe that improved access to DTA will enhance their operational viability. Despite their performance being comparable to DTA units in terms of boosting foreign exchange inflows, SEZ exports have faced challenges, with goods exports falling 5% and services exports down 2% in April-December 2023. To support SEZs, the government has extended benefits such as the Remission of Duties and Taxes on Exported Products (RoDTEP) and is considering further measures to facilitate domestic sales. Amendments also aim to streamline denotification norms and approval processes for SEZ units.

Tuesday, 16 April 2024 (Financial Express) Steps soon to mitigate export impact of W Asia conflict

The Indian government is closely monitoring the evolving situation in West Asia and stands ready to implement any necessary measures to address potential impacts on India's exports. Commerce Secretary Sunil Barthwal emphasized that policy interventions will be based on understanding the challenges faced by traders, with remedial steps tailored to the situation. Past conflicts such as the Ukraine and Red Sea crises have prompted India to diversify its products and markets, mitigating the impact on exports.

While the ongoing conflict in West Asia poses uncertainty for strategic initiatives like the India-Middle East-Europe Economic Corridor (IMEC), efforts are underway to maintain stability and connectivity. However, regional tensions, especially involving key players like Saudi Arabia, may hinder progress on such projects, according to Ajay Srivastava from the Global Trade Research Initiative. India remains in close coordination with relevant stakeholders to assess the situation and implement necessary measures to safeguard its exports.

Wednesday, 17 April 2024 (Business Standard) Uttar Pradesh govt eyeing investment of Rs 32K cr in hospitality sector

The Uttar Pradesh government is targeting investments worth Rs 32,000 crore in the hospitality and tourism sector, aiming to accommodate the estimated 850 million annual tourists by 2028. This initiative aims to create 80,000 additional accommodation units, including hotels, resorts, and homestays, particularly in tourism hotspots like Varanasi, Ayodhya, Prayagraj, and Agra. The government is encouraging homeowners to list their properties for homestays and inviting owners of heritage properties to convert them into heritage hotels, catering to a diverse range of tourists.

Furthermore, the state is developing multi-experience circuits, enhancing connectivity to Buddhist destinations, and diversifying tourism experiences through adventure tourism, MICE, wellness, and ecotourism. With over 500 tourism projects underway, including infrastructural developments in key locations, the state anticipates creating over 250,000 job opportunities across sectors. The recent inauguration of the Lord Ram temple in Ayodhya has further boosted religious tourism, with Ayodhya expected to generate significant annual tourism revenue of Rs 55,000 crore in its initial years.

Thursday, 18 April 2024 (Financial Express) Need to focus on improving human capital: Rajan

Former Reserve Bank of India governor Raghuram Rajan highlighted the underutilization of India's demographic dividend, noting that the country is not reaping its benefits due to insufficient job creation and a mismatch between skill sets and available jobs. Rajan stressed the importance of enhancing human capital and transforming the nature of available jobs, advocating for initiatives like apprenticeships to bridge the gap. He criticized excessive investment in sectors like chip manufacturing while neglecting job-intensive industries like leather, suggesting a need for targeted intervention to address job shortages in key sectors.

Rajan also addressed the trend of Indian innovators seeking opportunities abroad, attributing it to easier access to global markets. Despite challenges, he expressed optimism about India's entrepreneurial spirit, noting a desire among young Indians to compete globally. Rajan highlighted India's employment challenges, including high unemployment rates, disguised unemployment, and low female labour force participation, emphasizing the need for comprehensive reforms to address these issues and harness India's demographic potential.

Friday, 19 April 2024 (mint) Raw materials, minerals prop up India’s exports to China

India's trade with China saw a notable increase in exports by 8.74% to $16.67 billion in FY24, while imports rose by 3.29% to $101.75 billion, resulting in a significant trade deficit. Ajay Srivastava from GTRI expressed concern over India's reliance on China, noting that the trade deficit has totalled over $387 billion in the past five years. This dependency is expected to grow due to increasing imports of materials for solar energy, electronics, and electric vehicles, along with the preferences of Chinese companies in India to source supplies from China.

Meanwhile, China's economy faces challenges, including declining property investment and weak consumption growth, with merchandise exports contracting for the first time since 2016. Despite efforts to diversify trade away from China, negotiations for free trade agreements with other major economies are underway. India's initiatives such as the production-linked incentive schemes aim to boost domestic manufacturing and reduce import dependence. In FY24, merchandise exports reached $437.06 billion, with notable contributions from electronic goods, pharmaceuticals, engineering goods, and iron ore, while imports decreased to $677.24 billion, signalling ongoing efforts to strengthen India's trade position.