Daily Financial News Analysis – 19th June’20

Table of Contents

API Production

The government plans to tweak its ₹10,000 crore scheme to boost domestic manufacturing of active pharmaceutical ingredients (APIs).
Niti Aayog suggested that the scope should be widened to encourage exports of these bulk drugs.
India is trying to encourage local manufacture of APIs, intermediates and key starting material used in the production of drugs and cut dependence on China.
Earlier, the scheme was meant to cater only to domestic demand and exports were restricted.
Several pharmaceutical lobby groups had also asked for exports of locally made APIs to be allowed.
Pharma lobby groups, state drug controllers and senior officials from the department of pharmaceuticals and India’s drug regulatory authority discussed the matter in an online video conference on June 13.
Niti Aayog is of the view that the move will help generate revenue. However, the thinktank is also of the view that such a step should be taken after making sure that we have enough to satisfy the demands of the country.

Anti-dumping Probes on China Imports

India will respond faster to complaints about dumping of Chinese goods, as the country looks to stimulate local production and reduce dependence on imports.
The commerce and industry ministry plans to reduce the time taken to initiate anti-dumping cases by a few days, from around 30 days now.
Almost half of our anti-dumping cases are against China.
In fact, the average number of days taken to initiate anti-dumping investigations came down to 32 in 2019 from 259 days in 2016.
Directorate General of Trade Remedies (DGTR), which comes under the commerce and industry ministry, is investigating around 35 cases of dumping from China across products including chemicals, steel, polyester yarn, copper and various yarns.
This week, it recommended antidumping duty on organic base aniline and antimicrobial agent ciprofloxacin hydrochloride imported from China.
India conducts anti-dumping probes based on applications filed by domestic manufacturers who show prima facie evidence of dumping of goods in the country, claiming injury.
As of December 31, 2019, there were definitive anti-dumping measures in force against 92 Chinese products.
Industry sources said the government has drawn up a prescriptive list of 300 products on which it can impose restrictions and encourage local manufacturers to begin production.

Great Wall Against Chinese

India is considering multiple, comprehensive measures to curtail the country’s economic reliance on China, targeting trade, investment and project services in the wake of border hostilities.
These are likely to include restrictions on
1. Participation by Chinese companies in government contracts and infrastructure projects,
2. Higher tariffs on imported Chinese finished goods
3. Closer review of free trade agreements that are being used by the country to export goods indirectly into India

On the trade side, there could be tariff as well as non-tariff measures to discourage imports from China that added up to $70 billion in FY19, more than from any other country.
India had a $53 billion trade deficit with China in FY19 and attempts to address it have not made much progress.
Chinese companies have a big share of India’s mobile phone and electronics markets.
The government will consider measures to curb Chinese imports while simultaneously providing an environment for the domestic production of such goods.

PM on Economy

Economic indicators show that India is ready for a swift bounceback as business activity and demand are back to the level seen before the Covid-19 pandemic, Prime Minister Narendra Modi said on Thursday.
Modi expressed his optimism while launching the auction of 41 coal blocks for commercial mining.
PM said that it would be another big leap for the sector, which was once mired in scams, excessive state control and inefficiencies.
The auction is expected to attract ₹33,000 crore investments over 5-7 years.
This auction is taking place at a time when the economic activity is fast returning to normal.
Reforms in coal mining will lead to self-sufficiency in the fuel, ending awkward situation of India being one of the world’s biggest importers of the fuel despite being a leading producer, Modi said.
Consumption and demand are fast attaining the pre-Covid-19 levels.
The PM said the rural economy was also looking up as crop planting is 13% more than last year, while wheat output and procurement are higher, which has given more money to farmers.
“When we increase coal production, then positive impact is also felt on production and processing in steel, aluminium, fertilizers and cement sectors with an increase in power generation,” the prime minister said.
Modi said the government aims to gasify 100 million tonnes coal by 2030 through four projects entitling an investment of ₹20,000 crore.
The blocks being auctioned are spread over five states having total geological mines of 16,979 million tonnes and a cumulative peak capacity of 225 mtpa.
Vedanta Resources chairman Anil Agarwal had said India imported coal worth ₹80,000 crore last financial year.
Even with large mineral deposits, exploration contributes only 2% to the country’s GDP.
He had asked the government to issue clearances to companies based on self-certification for reducing time in processing applications.
The Cabinet Committee on Economic Affairs had on May 20 approved the methodology for auction of coal and lignite mines for sale on revenue-sharing basis and increasing the tenure of coking coal linkage.
Developers will have easy entry and exit options.
Any company registered in India will be eligible to participate in coal auctions and there will be no restrictions on sale or utilisation of coal.

Garib Kalyan Rojgar Abhiyaan

The government will launch a ₹50,000-crore Garib Kalyan Rozgar Abhiyaan to provide livelihood opportunities for migrants returning to their villages and also for people in rural India, finance minister Nirmala Sitharaman announced on Thursday.
The scheme will be launched in six states by Prime Minister Narendra Modi on June 20 and will begin from Khagaria district in Bihar.
It seeks to benefit at least 25,000 migrants in each of the 116 districts of the chosen six states.
The first priority is to provide immediate relief to workers who have gone back to the districts.
Within 125 days, nearly 25 schemes of the government will be brought together for those districts where shramiks have gone back.
Everyone who needs assignments will be given jobs.
The funds have been allocated in the budget under various schemes but will be front-loaded through the campaign, said the finance minister.
The FM said the campaign could be extended beyond the span of 125 days depending on the number of workers choosing to return to cities to resume work and the number continuing to stay back in the villages.
The number of workers can also go up from 25,000 in a district, as some districts have reported more than 100,000 migrants having returned to their villages.