Weekly News 3 - 7 June 2024
Monday, 3 June 2024 (mint) Incentives to push India’s blue economy
India's government is planning to boost its blue economy and establish the country as a hub for ship manufacturing through new incentives, including financial support under the viability gap funding (VGF) route. The Ministry of Ports, Shipping and Waterways is developing various schemes to support ship manufacturing, including increasing financial aid under the existing Ship Building Financial Assistance (SBFA) scheme. A significant 75,000-crore package is being formulated under a new VGF scheme to promote the construction of inland vessels, with plans to later extend this to manufacturers of sea-bound vessels, such as cruise ships.
The SBFA scheme, which provides financial assistance to domestic shipyards, is proposed to be extended until 2036, in alignment with India's Maritime India Vision 2030 and The Amrit Kaal Vision 2047. The support rate, initially set to decrease over time, may be reinstated to 20% for an additional four years. Moreover, specialized vessels, including those powered by green and electric fuels, are eligible for higher financial assistance. These measures, combined with a potential production-linked incentive scheme and increased tariffs on imported ship components, aim to enhance local production and quality, positioning India as a global leader in ship manufacturing.
Tuesday, 4 June 2024 (mint) Centre plans ₹50 lakh grants for technical-textile startups
The Union textiles ministry of India plans to grant up to ₹50 lakh each to 150 startups focused on manufacturing technical textiles such as Kevlar and Spandex. This initiative is part of the ₹375 crore allocation for FY25 from the National Technical Textiles Mission (NTTM). The funding aims to bolster the sector, which includes applications in aerospace, defense, automobiles, healthcare, construction, and agriculture. Importantly, the government will not seek any share of the profits from the businesses it funds. This support aligns with the broader governmental goals of fostering innovation and entrepreneurship within the country.
India's technical textiles market, the fifth largest globally, was valued at $21.95 billion in 2021-22 and has been growing at 8-10% annually over the past five years. The government aims to accelerate this growth to 15-20% annually over the next five years. The NTTM, launched in 2020, aims to position India as a global leader in this field through research, innovation, and industry promotion. Additionally, the government has relaxed the royalty cap for this scheme, making it easier for startups to grow. Interested startups will need to deposit 10% of the total fund allocation in advance.
Wednesday, 5 June 2024 (The Economic Times) New Govt likely to Vote for Populism in Budget
With the Lok Sabha election results indicating a coalition government at the Centre, economists predict the upcoming Budget will likely emphasize populist welfare and support schemes. NR Bhanumurthy, economist and vice-chancellor of BR Ambedkar School of Economics University, suggests that larger coalitions tend to focus more on welfare programs, which could negatively impact economic growth if it includes extensive freebies like free electricity and loan waivers. Instead, he advises scaling up existing schemes such as the rural employment guarantee scheme (MGNREGA), along with irrigation and energy-related programs in rural areas.
Major parties have already promised several populist schemes in their manifestos, including Congress' cash transfers to women, student loan waivers, and increased minimum selling prices for farmers, while the BJP has pledged to expand the Ayushman Yojana health insurance scheme. Economists like Devendra Kumar Pant of India Ratings and Research emphasize the need for targeted interventions to address rural distress caused by high inflation and poor monsoon impacts on agriculture. While such interventions are necessary, Pant warns that a significant increase could hinder fiscal consolidation and growth prospects. The government aims for a fiscal deficit target of 5.1% of GDP for FY25, with growth projections of 7% from the Reserve Bank of India and 6.8% from the International Monetary Fund.
Thursday, 6 June 2024 (The Indian Express) India’s tech manufacturing map may get a makeover with TDP as key NDA player
N. Chandrababu Naidu and his Telugu Desam Party (TDP) could significantly influence the technology landscape in Andhra Pradesh if they secure a role in the new central government. With the BJP-led NDA needing TDP's support to form the government, Naidu is pushing for a TDP MP to potentially lead the IT Ministry. This could attract centrally subsidized manufacturing projects to Andhra Pradesh, transforming it into a tech production hub. Naidu, known for his tech-focused leadership, previously turned Hyderabad into a major IT center and aims to replicate this success in Andhra Pradesh, particularly in Amravati and the Visakhapatnam-Chennai Industrial Corridor.
Naidu's vision includes developing Amravati as the capital, despite opposition from the YSR Congress Party, and attracting investments in semiconductor assembly, laptop, and mobile manufacturing facilities. His strategy also involves creating employment zones and incentivizing small and medium enterprises to generate jobs. The TDP’s focus on tech and manufacturing, combined with Naidu’s track record, positions Andhra Pradesh for significant economic development, potentially altering the state's political and economic dynamics.
Friday, 7 June 2024 (mint) India has scope for clean energy investment of $500 bn by 2030
India has identified substantial investment opportunities amounting to over $500 billion by 2030, especially in the clean energy sector, encompassing renewables, green hydrogen, electric vehicles (EVs), and infrastructure transition, according to Commerce Secretary Sunil Barthwal. Speaking at the Indo-Pacific Economic Framework for Prosperity (IPEF) Clean Economy Investor Forum in Singapore, Barthwal emphasized India's potential in these sectors. Although 13 IPEF members signed fair and clean economy agreements, India did not sign as domestic approval processes are still pending but are expected to be completed after the new government is formed.
The IPEF bloc, launched in May 2022, includes countries such as the US, Japan, Australia, and India, representing 40% of global economic output and 28% of trade. The framework is divided into four pillars: trade, supply chains, clean economy, and fair economy, with India participating in all except trade. The forum saw Indian companies like ReNew Power and Avaada Energy shortlisted to pitch sustainable infrastructure projects to global investors. The clean economy agreement aims to boost energy security, climate resilience, and greenhouse gas emissions reduction, promoting technical cooperation and research collaborations among IPEF partners.
