Weekly News 13 - 17 May 2024
Monday, 13 May 2024 (The Indian Express) India’s top trade partner: China regains spot on higher imports
In FY24, China reclaimed its position as India's largest trading partner, surpassing the US with bilateral trade reaching $118.4 billion. Imports from China rose by 3.24% to $101.7 billion, and exports increased by 8.7% to $16.67 billion. Over the past five years, while India's exports to China saw a slight decline, imports surged by 44.7%, significantly widening the trade deficit to $85.09 billion. Key imports from China include telecom and smartphone parts, laptops, PCs, and lithium-ion batteries, reflecting India's continued reliance on Chinese technology and components.
In contrast, India's trade with the US in FY24 totalled $118.3 billion, with a decrease in both exports and imports. Despite this dip, trade with the US has shown positive growth over the past five years, with exports increasing by 47.9% and imports by 14.7%, resulting in a substantial trade surplus of $36.74 billion. The GTRI report highlighted India's measures to reduce dependence on China through production-linked incentive schemes, anti-dumping duties, and quality control orders. Additionally, India has seen significant trade growth with Russia and Saudi Arabia, further diversifying its trade partnerships.
Tuesday, 14 May 2024 (Financial Express) India, Iran sign Chabahar deal
India signed a 10-year contract on Monday to operate the strategic Iranian port of Chabahar, aimed at expanding trade with Central Asia. The Chabahar port, located on the Gulf of Oman, offers India a crucial gateway to reach Afghanistan and Central Asia via the International North-South Transport Corridor, circumventing Pakistan. The development of this port, initially proposed in 2003, faced delays due to U.S. sanctions on Iran. The agreement, involving Indian Ports Global (IPGL) and Iran’s Port & Maritime Organization, includes a $120 million investment from IPGL and an additional $250 million raised as debt.
This long-term pact replaces an annual agreement from 2016, allowing India to manage the Shahid Beheshti terminal at Chabahar port. This is India's first management of an overseas port, which is expected to significantly boost trade among India, Iran, and Afghanistan. Notably, Chabahar port facilitated India's aid shipments to Afghanistan and pesticide supplies to Iran in recent years. The new agreement underscores efforts to enhance regional connectivity and trade, with the India Ports Global Chabahar Free Zone (IPGCFZ) playing a pivotal role since facilitating Afghanistan's first exports to India in 2019.
Wednesday, 15 May 2024 (The Indian Express) FM: Unchecked explosion in retail F&O trading a challenge
Finance Minister Nirmala Sitharaman expressed concerns on Tuesday about the rapid growth in retail trading of futures and options (F&O), warning that it could pose significant risks to markets and household finances. Speaking at the BSE, she emphasized the necessity of a stable government for a robust financial market, expressing confidence that Prime Minister Narendra Modi will secure a third term, during which she envisions India becoming the world's third-largest economy. Sitharaman highlighted the shift in household savings towards the stock market, citing an increase in retail demat accounts from 2 crore in 2013 to 15.1 crore currently, as a sign of growing investor confidence driven by improved corporate governance and market transparency.
Sitharaman's comments come amid concerns over retail investors' losses in the F&O segment, with a study showing that 89% of individual traders incurred losses in FY22. She urged BSE and NSE to enhance market stability and reduce systemic risks using technology. The Finance Minister also underscored that domestic savings have been a stabilizing force against volatile foreign portfolio investments, attributing this resilience to increased compliance by listed companies. She stressed the importance of stable governance and predictable policies to ensure a vibrant financial market, advocating for an investment-led growth strategy focused on inclusive development and empowerment of the poor.
Thursday, 16 May 2024 (The Indian Express) Testing of Ethylene Oxide residue in all spice shipments to Singapore, Hong Kong mandatory
India has mandated the testing and sampling of Ethylene Oxide (EtO) residues for all spice shipments to Singapore and Hong Kong starting May 7, following reports of spice product recalls. The Commerce and Industry Ministry stated that this measure was taken after a techno-scientific committee conducted inspections and tests on processing facilities and spice samples. The Spice Board India, in response, organized consultations with stakeholders, including over 130 exporters and relevant associations, to ensure the safety and quality of Indian spice exports. Guidelines for EtO treatment have been reiterated to all exporters.
Despite the recalls, the ministry emphasized that the rejection rate for Indian spices is very low, at less than 1% of the total quantity exported. An official highlighted that the sample failure rate for Indian exports is between 0.1% and 0.2%, compared to 0.73% for imports from other countries. The recent recalls involved small quantities and were considered isolated incidents. Notably, Hong Kong banned four spice products from Indian manufacturers MDH Pvt. and Everest Food Products Pvt. due to the presence of EtO, including various curry and masala powders.
Friday, 17 May 2024 (The Indian Express) Norway excludes Adani Ports from its global fund
Norges Bank, the central bank of Norway, has excluded Adani Ports and Special Economic Zone (APSEZ) from its Government Pension Fund Global (GPFG) due to the "unacceptable risk" of the company contributing to human rights violations in war and conflict zones. This decision, based on a recommendation from the Council on Ethics dated November 21, 2023, reflects concerns over APSEZ's involvement in Myanmar, where serious human rights violations have been reported. Although APSEZ sold its Myanmar operations to Solar Energy Ltd in May 2023, the lack of transparency about the buyer has led to continued ethical concerns. The GPFG, one of the world’s largest funds with stakes in about 9,000 companies, aims to avoid investments in entities posing significant ethical risks.
In addition to APSEZ, the GPFG has also excluded Weichai Power Co Ltd and L3Harris Technologies Inc from its investments. Norges Bank's decision underscores the fund’s commitment to ethical investment principles, considering environmental and social issues alongside financial returns. The exclusion of APSEZ marks the end of its observation period which began in March 2022. Despite this exclusion, Adani Ports' shares saw a slight increase, closing at Rs 1,344.75, up 0.56% on the BSE. The GPFG, established to stabilize Norway's economy against fluctuations in oil revenue, held a 0.24% stake in Adani Ports as of December 2023 and remains invested in other entities within the Adani Group.
