Daily Financial News Analysis – 23rd June’20

Table of Contents

Cut Chinese Imports

India is eyeing about 5,000 technical regulations to rein in cheap imports and provide a quality boost to domestically made industrial goods, telecom products, electronics, steel and chemicals.
The commerce and industry ministry has identified the top user ministries that deal with most imported products.
These are the telecom, chemicals, industry and heavy industry departments and the ministries of steel, and electronics and information technology (IT).
Quality control orders and technical regulations are being deliberated for these sectors.
The government is of the view that only stringent standards will be effective in containing cheaper imports.
Official said the exercise already underway will now be speeded up.
India’s FY20 imports amounted to $467.19 billion and its trade deficit was $152.88 billion.
DPIIT has drawn up quality control orders for about 20 products and will cover more items in the next few months.

Chinese Tech Cos

India is trying to identify Chinese technology companies with direct or indirect links to that country’s government or military.
Such companies will face challenges in getting investment approvals, given that this could have national security implications for India.
But private companies that don’t fall under this category, such as smartphone manufacturers Vivo, Xiaomi and Oppo, are unlikely to face any such hurdles to their plans to invest and expand in India.
Nature of ownership of Chinese tech companies will be under immense scrutiny because if the Chinese army or the state is the owner or in any significant way linked to the company, then it is a situation of great discomfort.
Telecom equipment vendors Huawei and ZTE are alleged to have links to the People’s Liberation Army (PLA).
The government is also thinking of persuading private telcos not to buy equipment from the two vendors.
The restrictions bring Delhi closer to Washington.

Moody’s

Global Macro Outlook released by Moody’s Investors Service
Moody’s Investors Service expects India’s economy to contract by 3.1% in 2020 compared with 0.2% growth it projected in April.
The rating company expects a stronger economic rebound for India at 6.9% in 2021, as opposed to 6.2% estimated in April.
China is among the few G20 countries expected to register growth in 2020, according to Moody’s, which maintained its earlier forecast of 1% for the country.
Global economic recovery will likely be prolonged and the second quarter of 2020 “will go down in history as the worst quarter for the global economy since at least World War II,” it said.
Growth estimates for almost all major economies were lowered.
“We have revised our 2020 growth forecast down from our previous projections in April for a number of countries, including Germany, France, Italy, the UK, Canada, Brazil, India, Indonesia, Saudi Arabia and Argentina… The downward revisions for 2020 mostly reflect a reassessment of the effects of the pandemic in the first half of the year, based on incoming data,” the report said.

June Exports

Commerce and industry minister Piyush Goyal said on Monday exports in the first two weeks of this month were more than 80% of the same period last year, and predicted to end the month with only a 10-12% shortfall compared with June 2019.
Exports shrank 36.47% from a year earlier to $19.05 billion in May, after a 60% contraction in April.
In another indicator of revival, he said, railway freight was back on track.
“Yesterday, we moved 95% of the freight that we did on June 21, 2019. Taking June as a whole, from June 1-21, we are down by only 8%,” said Goyal.

Locust Attack

Fresh swarms of locust have entered Rajasthan from Pakistan but the government has also increased measures to counter the threat using various methods including drones.
We are able to kill only 50% of the swarms despite deploying all the resources,” said K L Gurjar, deputy director of Locust Warning Organisation.
Since locust are now pink immature adults, which is the most active stage, they could fly swiftly, escaping the pesticide spray.
The next 15 days would be crucial before they become fully grown adult, which eat less and are more static.
He said Rajasthan has been put on high alert and there was a risk of swarms entering Madhya Pradesh, Uttar Pradesh, Punjab, Haryana and Gujarat.
We have asked Pakistan to kill locust in their side of the border. But nothing much is happening on ground.
Niti Aayog CEO Amitabh Kant said drones were effective.
“Drone operations have given brilliant results. It’s a Make in India initiative benefiting our farmers. FAO has appreciated India for first time usage of drones for locust control,” Kant tweeted.
Drones have definitely enhanced our effectiveness in killing locust by 20%.
We can treat locust spread across 25 hectare area in a day.
The effectiveness can be improved further if we can get soundless drones. The sound of drones drive away locust even before chemicals are sprayed.
The government is also planning to deploy helicopters along with 47 hiend sprayers imported from the UK.