Daily News - Thursday, 12 December 2024
Raising Tariffs will Affect India's competitiveness, says DPIIT Secy (The Economic Times)
DPIIT Secretary Amardeep Bhatia, speaking at a CII event, questioned India’s competitiveness as industries push for higher tariffs despite the country aligning with global trade through free trade agreements, noting that India’s weighted tariff is near the global average. He emphasized the importance of integrating into global value chains rather than focusing solely on domestic markets, while also highlighting disparities in ease of doing business across states and the need for better implementation of industrial policies and land use. Bhatia praised the growing startup ecosystem, with 45% of startups emerging from non-metro areas, and called for sector-specific interventions to deepen the movement and leverage startups for innovation and outsourcing.
CEA calls for right balance of regulation and growth (mint)
Chief Economic Adviser V. Anantha Nageswaran, addressing the CII Global Economic Policy Forum, urged a balanced regulatory approach to foster growth amid global uncertainties, emphasizing that financial sector regulations must account for systemic risks and potential state bailouts. He highlighted the need to differentiate regulation intensity across financial and non-financial sectors, noting that competition in the latter often mitigates the need for heavy regulation, except in essential utilities protecting consumer interests. Nageswaran called for regulators to focus on optimizing rather than maximizing oversight, stressing that excessive regulation could stifle growth while aiming to ensure that deviant behavior does not undermine systemic stability.
Conflicts fuelling inflation, time for global action: FM (mint)
Finance Minister Nirmala Sitharaman, speaking at the CII Global Economic Policy Forum, highlighted inflation as a pervasive global challenge exacerbated by geopolitical tensions and supply chain disruptions, citing India’s retail inflation at 6.21% in October—a 14-month high—driven by a 10.87% spike in food prices. She emphasized the need for collective action by governments, industries, and citizens to stabilize economies and stressed that restoring global supply chains requires addressing both economic and strategic considerations, particularly in light of ongoing conflicts like the Russia-Ukraine war. On climate change, she called for pragmatic measures, including transitioning from water-intensive crops to coarse grains, to address food security and environmental sustainability while mitigating the economic toll of extreme weather on vulnerable populations.
1-year extension for IT hardware import system (Business Standard)
The Directorate General of Foreign Trade (DGFT) extended the import management system (IMS) for seven IT hardware products, including laptops and servers, until December 2025 to balance domestic production and demand, with importers requiring fresh authorizations starting December 13, 2024. The government aims to boost local manufacturing under the PLI scheme, with two global majors set to begin production in India by April 2025, while closely monitoring compliance with production targets and potentially introducing import curbs later. Despite industry pressure and U.S. concerns, the policy seeks to reduce reliance on China, which accounted for 60% of the $8.7 billion IT hardware imports in FY2023-24, while maintaining domestic supply through controlled imports to prevent disruption.
ADB projects India economy may grow at 6.5% in FY25, 7% in FY26 (Financial Chronicle)
The Asian Development Bank (ADB) has revised India’s GDP growth forecasts for FY25 to 6.5% (down from 7%) and FY26 to 7% (down from 7.2%), citing weaker-than-expected industrial growth of 3.6%, muted public capital spending, and tighter prudential norms affecting unsecured personal loans. Inflation projections remain at 4.7% for FY24 but have been reduced to 4.3% for FY25, while strong agricultural output, resilient services growth of 7.1%, and moderating Brent crude prices are expected to support economic recovery. However, challenges such as geopolitical risks, supply chain disruptions, and adverse weather could hinder momentum, with broader South Asia growth also downgraded to 5.9% for 2024 and 6.3% for 2025, reflecting India’s slower pace.
