The Game of Hurdles
The increase in the COVID-19 cases and contraction in the GDP - are not the records India was looking to break this week. With 90,000 new cases, India surpassed Brazil on Saturday as the country with the second-highest recorded cases of Covid-19 after the US. While on the other hand, the Indian GDP contracted by 24% percent in Q1. The IMF also confirmed that the Indian economy saw the steepest contraction in the April-June quarter among G20 countries. China is the only G20 country to report an expansion during this period.
In the coming quarters, exports will play a significant role in reviving the Indian economy and hence, bilateral and regional partnerships with robust policies will help exporters edge in the global supply chain. Commerce Minister Piyush Goyal said a US-India limited trade deal is nearly ready and likely to be announced soon. Additionally, India has asked the ASEAN to review its existing FTA while pitching for stronger rules of origin, removal of non-tariff barriers and better market access within the agreement.
India GDP growth contracts 23.9%: What is the economics behind the math?
Although most people expected India’s GDP to show substantial contraction when the Ministry of Statistics and Programme Implementation (MoSPI) released the data for the first quarter (April, May, June) of the current financial year on Monday, the broad consensus was that the decline would not exceed 20%. As it turns out, the GDP contracted by 24% per cent in Q1. In other words, the total value of goods and services produced in India in April, May and June this year is 24% less than the total value of goods and services produced in India in the same three months last year.
India seeks stronger rules of origin as it urges ASEAN for FTA review
India has pitched for stronger provisions in the rules of origin, removal of non-tariff barriers and better market access in the existing Free-Trade agreement (FTA) with the the Association of Southeast Asian Nations (ASEAN), arguing the changes should kick off sooner rather than later. At the 17th Asean-India Economic Ministers Consultations held virtually on Saturday, Commerce and Industry Minister Piyush Goyal reiterated India’s consistent position that the review of the current FTA, in effect since 2010 has, has been inordinately delayed.
Govt caps MEIS benefits for exporters at Rs 2 cr on shipments between Sep 1 to Dec 31
The government on Tuesday capped export incentives under the scheme, MEIS, at Rs 2 crore per exporter on outbound shipments made during the period from September 1 to December 31, 2020. The move comes after the Department of Revenue asked the commerce ministry to review the coverage of Merchant Export from India Scheme (MEIS) so that the fiscal benefits under the programme can be brought down to Rs 9,000 crore in the current financial year. "A limit on total reward under MEIS has been imposed so that for exports made in the period September 1, 2020 to December 31, 2020, the total reward which can be claimed by an IEC (Import Export Code) holder does not exceed the ceiling of Rs 2 crore," the Directorate General of Foreign Trade (DGFT) said in a notification.
Indo-US limited trade deal nearly ready: Piyush Goyal
A “limited” India-US trade deal that has been in the works for months is “nearly ready” and can be “finalised at any time”, commerce and industry minister Piyush Goyal said on Tuesday. Speaking at a virtual leadership summit of the US-India Starategic Partnership Forum, Goyal said US trade representative Robert Lighthizer and he has agreed that “we can look finalising before the election, but otherwise soon after the election”.
India’s exporters are on the edge
When Sunit Jain heard about a virus ravaging Wuhan in late January, he booked a ticket to see potential clients in the US, Chile and Peru. The Jaipur-based exporter of home linens, garments and paper products sensed an opportunity as Chinese factories closed due to a strict lockdown. “I was hopeful that the pandemic would benefit us in India, but that is not how it panned out," Jain said. He is glad he didn’t go as he would have been stranded in Latin America, but that is the only good fortune his business has had in 2020. US retailers such as Neiman Marcus, Saks Fifth Avenue and Pier 1 Imports have all filed for bankruptcy. Jain’s Ratan Textiles now finds itself competing against deeply discounted prices—set at liquidation sales—of such companies. For Jain, it sometimes feels as if the skies have fallen in. Speaking the day after a huge downpour brought Jaipur to a standstill, he said, “It’s been quite an unfortunate year. My personal goal is to keep the team intact. And to survive till March."
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