Modi-Abe summit: PM says Japan most trusted partner for India’s economic modernisation; key things in focus
Ahead of India-Japan economic summit scheduled to begin tomorrow, PM Narendra Modi said that Japan is India’s most trusted partner in its economic and technological modernisation. Notably, the two-day annual summit with Shinzo Abe is slated to be held on October 28 and 29. In a statement released yesterday, Modi described India and Japan as a “winning combination.” We bring to you key things to know about India and Japan’s economic ties, and what could be in focus in the two-day summit.
Japan has been on the forefront, when it comes to investing in key projects in India. Projects such as Mumbai-Ahmedabad High Speed Rail and Dedicated Freight Corridors reflect the high level of economic engagement between the countries. “Japan is also at the forefront of engaging in our national initiatives, such as ‘Make in India’, ‘Skill India’, ‘Digital India’, ‘Start Up India’… Japanese investors have faith in India’s economic future, which is marked with myriad opportunities,” PM Narendra Modi noted. Japan has invested more than $25 billion in different sectors across the India during the period from 2000-2017. According to a recent FICCI report, these investments are slated to double by 2025. Notably, Japan had recently extended a soft loan worth Rs 88,000 crore at 0.1% for India’s ambitious bullet train project, between Mumbai and Ahmedabad.
Modi’s visit to Japan could be a harbinger of latest technology to India. PM Modi said that India values Japan’s global leadership in innovation, technologies and best practices and during his visit, he will have a chance to see some of Japan’s high-tech capabilities in robotics. “I will have wide-ranging talks with Prime Minister Shinzo Abe and interact with business leaders and captains of industry from both countries. I will also address the Indian community. These interactions will help to further strengthen our trade and investment ties, and cooperation in new areas such as healthcare, digital technologies, agriculture and food processing, disaster risk reduction and disaster resilient infrastructure,” Pm Modi said in the release.
PM Narendra Modi may announce measures to boost MSME sector on November 2
Prime Minister Narendra Modi is likely to announce a host of measures, including enhanced interest subsidy, for the micro, small and medium enterprises on November 2, an official said.
The move would give a boost to the Micro, Small and Medium Enterprise (MSME) sector and help generate more jobs.
Enhanced interest subsidy to increase availability of affordable credit and loan disbursement for MSMEs could be among the measures, the official said.
The Finance Ministry is working on the proposals.
The MSME sector constitutes a vast network of over 63 million units and employs 111 million people, contributing around 30 per cent to the GDP. It accounts for about 45 per cent of manufacturing output and around 40 per cent to total exports.
A major obstacle for growth of MSMEs is their inability to access timely and adequate finance as most of them are in niche segments where credit appraisal is a major challenge.
As per the RBI’s Mint Street Memo report, note ban imposed in November 2016 has led to further decline in the already falling credit to the MSME sector, while GST roll out has not made any significant positive impact on overall credit to the sector but has deeply dented their exports.
About 97 percent of MSMEs operate in the informal sector.
Farm loan waiver no solution to agri sector problems, long term plan needed, says Vice President
Rejecting farm loan waiver as a solution to problems in agriculture sector, Vice President Venkaiah Naidu on Friday said a long-term plan needs to be set up to solve the challenges. The statement comes just a day after Congress once again promised to waive all farm loans if it comes to power next year. Niti Aayog should also put more focus on solving problems of farmers amid climate change challenges and growing food demand, PTI reported citing Venkaiah Naidu.
“We have a clamour to populism to win over people during elections. That is not going to solve the problem (in agriculture sector). We have a clamour for free power. I am not in favour of free power. …We also have the practice of asking for farm loan waiver. This cannot be a permanent solution,” PTI reported him saying at an event.
“Are there banks which lend money and never ask for repayment? …My point is we have to think long term. Loan waiver cannot be a permanent solution. Farmers, scientists and policy makers should think seriously on this matter,” he added.
Earlier this year, Prime Minister Narendra Modi had said his government is working to double farm income by 2022. The government, through an extensive and balanced policy, is aiming to provide inputs like quality seeds, fertilisers, water and electricity as well as markets for increasing farmers’ income, he had said.
PM Narendra Modi bats for new technology in agriculture sector as he inaugurates ‘Krishi Kumbh’ in Lucknow
Prime Minister Narendra Modi Friday expressed confidence that farmers would pave the way for new technology to be imbibed and hoped better opportunities would be created in the agriculture sector.
Addressing the three-day ‘Krishi Kumbh’ on its opening via video conferencing, Modi appreciated the UP government for its efforts in augmenting substantially, the procurement of foodgrains. He asserted that farmers are the ones who take the country forward.
The prime minister reiterated the Centre’s commitment to double the income of farmers by 2022. In this context, he mentioned the series of steps that the government is pursuing to reduce farm input costs and raise profits.
He also mentioned that a large number of solar pumps will be installed in farms across the country in the near future.
“The Government is working to deliver the benefits of science to agriculture,” he said.
Modi also said that the Rice Research Centre being set up in Varanasi, is a step in this direction.
The Prime Minister spoke of the importance of value addition in farming and mentioned the steps being taken in the food processing sector.
He said that after the Green Revolution, emphasis now is on milk production, honey production and also on poultry and fisheries.
The PM called for discussions on matters such as judicious use of water resources, better technology for storage and use of latest technology in farming, during the Krishi Kumbh.
Need to align regulatory standard with best global practices, says Rajiv Kumar
Financial Services Secretary Rajiv Kumar Friday said the government is not seeking relaxation in the RBI’s Prompt Corrective Action (PCA) framework but emphasised the need to align banking regulations with best global practices.
He also said that domestic regulation are more conservative and stringent as compared to international best practices.
“Nobody can stand on its leg if you ease anything…Therefore what is being talked about is that it (our regulations) is aligned to best practices, which exist in the world. Take it from the best, align it to it, and don’t keep it higher than that. So, no relaxation of any norm,” he said when asked if the government has sought relaxation of PCA framework of RBI.
PCA framework puts restrictions on financially weak with the objective to halt the deterioration and reverse the trend.
As many as 11 out of 21 banks are under the RBI’s watchlist. Of these, two banks, Dena Bank and Allahabad Bank, are facing restrictions on business expansion.
Last month, state-run banks had requested the government for relaxation in PCA guidelines as these were indirectly impacting their lending ability.
However, RBI Deputy Governor Viral V Acharya earlier this month said imposition of the PCA was essential for the revival of financially weak banks and deepening reforms in the banking space.
The PCA framework is an essential element for safeguarding overall financial stability, he had said.
Without giving details of discussion with the RBI on the PCA framework, Kumar said, “there is no easing that will be required, there is no case for easing of any norm what is being talked about…what is required is aligning it with best international practices”.
On the issue of liquidity crunch mostly for non-banking finance companies, Kumar said that government is concerned about both liquidity and asset quality concerns.
“Very soon you will be hearing. Something is being worked out,” he said on the sidelines of an event organised by SIDBI.
On the issue of providing capital to state run lenders, Kumar noted that any decision will be taken after the second quarter results.
“We will first assess the results and decide,” he added.
Commerce ministry considering incentives for exporters to boost shipments
The commerce ministry is working on a comprehensive strategy and considering incentives for exporters with a view to boost the country’s outbound shipments, a senior government official said Friday.
Director General of Foreign Trade (DGFT) Alok Chaturvedi said that the exports, which recorded about 10 per cent growth in 2017-18 to over USD 300 billion, is expected to reach USD 330-340 billion this fiscal.
In the first half of the current fiscal, the exports grew by 12.5 per cent to USD 164 billion.
He said the ministry has prepared a matrix of action plans for specific sectors, including engineering, gems and jewellery, chemicals, textiles and pharma, and issues pertaining to these areas are being taken up with the concerned departments.
There are some cross-cutting issues such as withdrawal of amendment in the CGST rules, which is being partially resolved.
“We are thinking of having some kind of incentives, where exporters are at disadvantage with respect to our competing countries where they are having some kind of free trade agreement with common export markets.
“So, we are trying to finalise a scheme…you can provide incentive to partially compensate for that disadvantage, which our exporters are facing,” the DGFT said at CII’s Export Summit.
The ministry is also working on tax rebates, duties and embedded taxes, besides alternative payment mechanism in potential problem countries such as Venezuela, Sudan, Cuba and CIS nations.
He said that it is the right of exporters to get rebate on those levies as “those duties and taxes should not be exported. We are working on a pilot scheme”.
Further, the DGFT said soon the IT system for exporters will be revamped completely and the ministry will float tenders for the same.
Speaking at the summit, Commerce and Industry Minister Suresh Prabhu asked the industry to become more aggressive in exploring export opportunities in new markets such as Africa and latin America.
He said the action plan prepared by the ministry to boost exports will be released soon.
“There are huge opportunities for exports in SAARC and Asean countries,” Prabhu said, adding India is working with the US to resolve all the pending issues to boost bilateral trade.
“The US is raising issues related to data localisation, issues related to duty imposed by Indian on IT products. We are engaged with the discussion (with them),” he added.
Since 2011-12, India’s exports have been hovering at around USD 300 billion. During 2017-18, the shipments grew by about 10 per cent to USD 303 billion.
Promoting exports helps a country to create jobs, boost manufacturing and earn more foreign exchange.
India presents opportunities in oil and gas sector at singapore roadshow
India on Friday presented a wide range of investment opportunities in the upstream oil and gas sector, citing strong interests in the ongoing USD 2.86 billion investment underway to double gas production and drill more than 120 exploration wells over the next four-five years.
A Directorate General of Hydrocarbons (DGH) delegation, led by Director General Dr V P Joy, highlighted in its presentation new improved oil recovery and enhanced oil recovery concepts, introduced earlier this month, which offers flexible terms for exploiting existing discoveries.
“Investments in capital goods for hydrocarbon production is recoverable from earnings,” said Dr Joy while listing out incentives under the new upstream sector policies.
The USD 2 billion investment will nearly double the natural gas production to 60 billon cubic metres (bcm) a year by 2022 from the current 33 bcm a year.
The presentation was for bid round II under the Discovered Small Field Policy (DSF) and Open Acreage Licensing Policy (OLAP).
Fourteen blocks under the OLAP and 25 contract areas covering 59 discovered oil and gas fields under DSF Bid Round II are being offered.
The DSF policy is aligned to Hydrocarbon Exploration and Licensing Policy (HELP), which adopts the revenue sharing model as a step towards improving the ease of doing business in Indian exploration and production (E&P) sector, the DGH said in a press statement.
It comes with attractive fiscal terms like reduced royalty rates and no cess, single license for all hydrocarbons, pricing and marketing freedom, freedom to exploration throughout contract period, no signature bonus and provision for sharing of common facilities, it said.
Over 175 participants from E&P companies, service providers, investors and entrepreneur attended the Singapore roadshow.
The Singapore roadshow was second after the October 4 Russia event and will continue in London and Abu Dhabi.