Govt looks to scale up MSME exports

Source: LiveMint.com, Oct 28, 2020

Boosting the share of small businesses in the economy is a priority and scaling up exports and lowering costs are essential to help them recover quickly, Union minister Nitin Gadkari said on Tuesday.

He said the Centre has set a target of adding 50 million jobs for micro, small and medium enterprises (MSMEs). The sector currently accounts for about 110 million jobs and 30% of India’s gross domestic product (GDP).

It is extremely important to raise MSMEs’ share in exports, the minister for MSMEs and transport said during a webinar hosted by Walmart on a roadmap to train small firms to participate in the global supply chain. Gadkari said the goal was to scale up the contribution of MSMEs from 30% of GDP to 50% of GDP.

“For the quick revival of the MSME sector, we now need special focus on boosting exports and reducing overall costs. MSMEs need to adopt necessary practices, too, and reduce power and logistics costs,” he said.

Gadkari urged the Walmart management to guide and train the handicraft, khadi and village industries. It will give the online retailing platform more business opportunities, while creating more jobs in India, he said.

The retail giant has rolled out a scheme, Walmart Vriddhi supplier development programme, to train and mentor small businesses. It offers small firms the tools to adopt new technologies for expanding business, the company said.

The programme seeks to “empower 50,000 MSMEs to Make in India for domestic and global supply chains”, it said.

“Walmart Vriddhi opens up opportunities for MSMEs to sell into Walmart’s supply chains or the open marketplace,” Walmart said, quoting Judith McKenna, president and chief executive officer, Walmart International.

Walmart Vriddhi’s first all-digital e-institute will be open to MSMEs located in Panipat, Sonipat and Kundli, an area that is a hub of textile, steel and kitchenware production with a strong entrepreneurial heritage and a skilled workforce, the company said. Eligible companies can access digital training through a mobile application in English and Hindi, it added. “Our mission is to encourage exports from MSMEs. Indian MSMEs must become part of global supply chain,” Gadkari said, adding that the liquidity shortage faced by small businesses has been resolved to a great extent.

As demand picks steam in Sep, Indian economy’s animal spirits soar

Source: Business Standard, Oct 28, 2020

India’s economy picked up speed in September as a revival in demand and business activity helped drive the South Asian nation toward recovery from the pandemic-induced slump.

Five of the eight high-frequency indicators, including exports, tracked by Bloomberg News improved last month, while three were steady. That helped move the needle on a dial measuring the so-called ‘Animal Spirits’ to 5 from 4 in August — a level arrived at by using the three-month weighted average to smooth out volatility in the single-month readings.

Economists, including those at the Reserve Bank of India, attributed the recovery to pent-up demand after a strict lockdown imposed in March to contain the coronavirus outbreak hit the consumption of goods and services. While inventory re-stocking will underpin business activity in the coming months, the improvement might still not be enough to prevent Asia’s third-largest economy from contracting in the financial year to March 2021.

Business Activity

Activity in India’s dominant services sector continued to recover, with the main index rising to 49.8 in September from 41.8 in August. While that’s a marked improvement from April’s record low of 5.4, a number below 50 suggests it’s still in contraction territory and will probably be a drag on overall growth in the July-September quarter.

Manufacturing activity was a bright spot, with the purchasing managers index rising to 56.8 — the highest reading since January 2012 — on the back of a sharp expansion in new work orders, according to IHS Markit. This helped the composite index back into expansion territory — at 54.6 — after five months of contraction.

Exports

Exports returned to positive territory with shipments rising 6% in September from a year earlier. Farm exports and shipments of drugs and pharmaceuticals helped the recovery, with engineering goods and chemicals also adding to the rise. A contraction in imports moderated, resulting in a narrowing of the trade deficit.

Consumer Activity

Passenger vehicle sales, a key indicator of demand, rose 26.5% in September from a year ago. Retail sales too showed signs of stabilizing, even though it was nearly 70% below the year-ago level, according to ShopperTrak. That was mainly because consumer confidence remained in the dumps, an RBI survey showed, with respondents worried about jobs, loss of income and stubbornly high inflation.

Demand for loans also remained sluggish. Central bank data showed credit grew 5.2% in September from a year earlier, slightly lower than 5.5% in the previous month, and nearly half of the growth rates seen a year ago. Tighter liquidity conditions prevailed in September, although there were signs of slight easing toward the end of the month.

Industrial Activity

Industrial production fell 8% in August from a year earlier, shallower than July’s revised 10.8% contraction. Capital goods output — another key indicator of demand in the economy — dropped 15.8% from a year earlier, although that’s milder than the 22.8% drop seen a month earlier. Output at infrastructure industries shrank 8.5% in August from a year ago and was slightly worse than the revised 8% decline in July. The sector, which makes up 40% of the industrial production index, had contracted by a record 37.9% in April. Both data are published with a one-month lag.

Cochin Shipyard, Italy’s Fincantieri sign deal for business development

Source: Business Standard, Oct 27, 2020

Chennai: Cochin Shipyard Limited and Fincantieri of Italy have signed an agreement to cooperate in shipbuilding, repairs and training, said the companies on Tuesday.

Bejoy Bhasker, director (technical) of Cochin Shipyard, and Achille Fulfaro, senior vice president (sales) of Fincantieri, Naval Vessel Business Unit, signed the agreement.

Cochin Shipyard, with facilities on the East and West coasts of India, is a leader in commercial and defence shipbuilding and repairs. Fincantieri is one of the world’s largest shipbuilders, by virtue of building more than 7,000 vessels and operating 18 shipyards in four continents. The agreement between the two organisations sets the ground for a partnership aimed at business development and cooperation in line with Indian government’s plan to promote domestic manufacturing.

Centre amends law to establish J&K Industrial Development Corporation

Source: Business Standard, Oct 27, 2020

Jammu: The Centre on Tuesday amended the Jammu and Kashmir Development Act, 1970 for setting up an industrial development corporation for rapid establishment, growth and development of industries in the union territory.

The amendment to the Act was made through a notification issued by the Ministry of Home Affairs, which inserted a new chapter in the law for setting up the Jammu and Kashmir Industrial Development Corporation.

According to the notification, the Jammu and Kashmir Industrial Development Corporation will be set up for the purposes of securing and assisting in the rapid and orderly establishment, and organisation of industries in industrial areas and industrial estates in the union territory.

It will also help in establishing commercial centres in connection with the establishment and organisation of such industries.

The corporation shall acquire and hold such property, both movable and immovable, for the performance of any of its activities, and to lease, sell, exchange or otherwise transfer any property held by it on such conditions as may be deemed proper, the notification stated. It will establish and manage industrial estates, develop industrial areas and make them available for undertakings to establish themselves.

India Post, US Postal Service sign pact for electronic exchange of customs data

Source: The Economic Times, Oct 27, 2020

The Department of Posts and United States Postal Service on Tuesday signed an agreement for electronic exchange of customs data related to postal shipments between the two countries, an official statement said. The agreement was signed by Department of Posts Deputy Director General (international relations and global business) Prannoy Sharma and United States Postal Service’s Global Business Managing Director Robert H Raines Jr.

“The agreement will make it possible to transmit and receive electronic data of international postal items prior to their physical arrival at the destination and would enable customs clearance of postal items in advance in line with the evolving global postal framework. This will also improve the performance of postal services in terms of reliability, visibility and security,” the statement said.

The US is the top export destination for India, with around 17 per cent share, which is also reflected in exchange of goods through postal channels. “In 2019, around 20 per cent of outbound EMS (Express Mail Service) and 30 per cent of letters and small packets transmitted by India Post were destined to the USA whereas 60 per cent of the parcels received by India Post originated from the USA,” the statement said.

The primary objective that will be served by this agreement is to facilitate ‘ease of exports’ for small and large exporters through postal channels from different parts of the country and will contribute towards making India an export hub for the world, it added.

Exchange of Electronic Advance Data (EAD) as per the agreement will be a key driver towards promoting mutual trade with emphasis on the exports from different parts of India to the US through the postal channel. The US is a major destination of MSME products, gems and jewellery, pharmaceuticals and other local products from India, the statement said.

Investors now can’t seem to get enough of fresh food startups

Source: ETRetail.com, Oct 27, 2020

There’s been a spike in sales and investor interest for businesses in the fresh food space such as FreshToHome, Country Delight, Gourmet Garden, and Licious, which focus on superior quality produce at source and customise their supply chain operations.

What’s luring investors is the intellectual property these companies have created in their sourcing and production methods, supply prediction algorithms and high repeats of the top 1% customers, leading to both social impact and better business economics. The pandemic has led Indian consumers to opt for better quality and safer food products.

“Fresh foods, milk and meats are a large market with very little segmentation on quality and price. Hence, there is an opportunity to have different product quality and price segments,” said Anup Jain, a partner at Orios Venture Partners. “There is also an increased realisation in the Indian urban consumers esp in the the top tier cities where affordability is higher, that products they consume daily are not ” fresh and pure” as they claim to be,” he said.

Country Delight, which sells milk, is in talks to raise $18 million led by Elevation Capital (formerly known as SAIF Partners), according to people familiar with the matter. The business focuses on superior quality milk by working directly with dairy farmers. At a scale of about Rs 32 crore a month, it operates at 45% gross margins. Akshayakalpa Organic Milk is growing 6-8% every month and became operationally profitable after closing Rs 60 crore in its top line last year.

FreshToHome has grown over fourfold in the past 12 months, generating 1.5 million orders per month, while Licious said it delivers 1 million orders a month with an average basket size of Rs 700, a 30% jump over the pre-Covid-19 era. Gourmet Garden said over 70% of its revenue comes from 17,000 households that are repeat customers every month.

“While most organised plays in F&V have gone after ‘making supply chain efficient’ by cutting through several middlemen to go as directly to the farmer as possible, the core customer need of quality and safety is still not addressed,” said Arjun Balaji, cofounder of Gourmet Garden.

Gourmet Garden has invested in research to develop soil-less, zero-pesticide farming – what it calls its naturoponic technique – as the answer to growing perishable veggies sustainably and get better quality produce at source. The company also has a local farm model that allows harvesting on the day orders are received.

Consumer needs have shifted dramatically in the past decade with them now demanding fresher, traceably safer, and nutritious produce. “The pandemic propelled the demand for high quality, safe, hygienic meat. All our product categories have seen growth. For example, the ready to cook segment like kebabs and pre-marinated meats and seafood saw a 3X in sales volume,” said Vivek Gupta, cofounder of Licious.

These businesses are also investing heavily in technology and supply chain capability to get products across to consumers faster than traditional channels.

Shan Kadavil, CEO at FreshToHome, explained that a typical fish supply chain in India has over three middlemen and it takes 3-4 days to reach the customer.

“Our platform ensures that the sellers are able to source without middlemen and the product reaches the end consumer within 24-36 hours,” said Kadavil. The platform’s wastage is 1.5%, while traditional grocery in fish and meat has wastage of about 15%. ET reported that FreshToHome is in talks to raise about $130 million.

Each of these businesses is investing to ensure quality produce. Akshayakalpa, based in Tiptur, Karnataka, has invested in automatic milking systems, a biogas plant, a bio-digester, fodder choppers and a chilling unit among other facilities that ensure quality and enhance productivity. Country Delight and Parag Milk Foods also follow similar models of pasteurising, testing and delivering milk.

Pompeo, Esper land, all eyes on key defence pact

Source: LiveMint.com, Oct 27, 2020

India and the US will sign a Basic Exchange and Cooperation Agreement for Geo-Spatial Cooperation (Beca), the two sides said, setting the stage for a successful round of 2+2 talks between their defence and foreign ministers on Tuesday.

The pact represents a deepening of military ties, a testament to the rapid warming of bilateral relations in a span of two decades.

The agreement is expected to give India access to crucial information that will have implications in any potential military conflict, said analysts. These include access to a range of topographical, nautical and aeronautical data considered key to map hostile movements and precise and real-time information on enemy positions accessed from US military satellites during any potential border conflict, said former foreign secretary Kanwal Sibal.

Coming as it does in the middle of tensions between India and China along the Line of Actual Control (LAC), the implications of Beca are not expected to be lost on Beijing, which has long been suspicious of the growing closeness between New Delhi and Washington.

The 2+2 talks on Tuesday are seen as the last major engagement in Washington’s diplomatic calendar before the US presidential election on 3 November.

Secretary of state Mike Pompeo and secretary of defence Mark Esper arrived in New Delhi on Monday. Soon after their separate arrivals, they went into bilateral discussions with their counterparts—foreign minister S. Jaishankar and defence minister Rajnath Singh. Later, the ministers hosted their counterparts to dinner, a person privy to the schedules said.

“This is the third meeting of the 2+2 held regularly since 2018. The fact that it is being held in person and just a week before the US elections shows both countries attach value to the talks. It also shows bipartisan support for the India-US ties and convergence of political, diplomatic and security dimensions of the cooperation,” said former Indian ambassador to the US, Arun Singh.

“Historically, the India-US relationship has been affected by the prevailing global trends. In this case, the rise of China is giving the necessary tailwind. This has gained further impetus with China’s aggressive posturing in the South China Sea, against Taiwan, along LAC and the East China Sea, besides its Wolf Warrior diplomacy,” he added.

A statement from India’s defence ministry said Singh and Esper “reviewed bilateral defence cooperation spanning military to military cooperation, secure communication systems and information sharing, defence trade and industrial issues and also discussed ways to take bilateral cooperation forward.”

While expressing satisfaction at the “close engagements between the respective armed forces”, they also explored “potential new areas of cooperation,” it said.

“Both ministers expressed satisfaction that agreement of Beca will be signed during the visit. US secretary of defence welcomed Australia’s participation in the exercise Malabar 2020,” it said. The second was a reference to Australia joining the naval exercises that so far included the US, India and Japan. It adds a naval dimension to the “Quad”—comprising India, Japan, US and Australia, a grouping that China has been deeply suspicious of.

The talks between Pompeo and Jaishankar were “warm and productive”, a person privy to the talks said.

There was a review of “bilateral ties over the last four years,” under the Trump administration with both sides “satisfied that they have grown in virtually every domain including trade, energy, defence and education.”

Jaishankar raised the issue of tightening rules for those applying for H-1B visas, stressing on “the uniqueness of our technology and talent flow connects”.

After the “2+2″ talks, Pompeo and Esper will call on Prime Minister Narendra Modi. Though India has been circumspect about issues on the table, the border row with China is expected to figure in the talks. Speaking to reporters last week, Pompeo said: “I’m also sure my meetings will include talls on how free nations can work together to thwart the threats posed by the Chinese Communist Party.”

Exporters raise concerns over rising freight charges, container shortage

Source: Financial Express, Oct 26, 2020

Exporters on Monday expressed concerns over rising freight charges and shortage of containers as it would impact the country’s outbound shipments, and sought Commerce Ministry’s intervention in the matter. During a meeting with Commerce and Industry Minister Piyush Goyal, the exporters raised these issues along with others. Representatives of different export promotion councils participated in the deliberations.

Federation of Indian Export Organisations (FIEO) President S K Saraf said freight charges have increased significantly by about 30-50 per cent depending upon the destinations. He said protests by farmers in states like Punjab have impacted movement of containers which are used to ship goods.

“We raised these issues in the meeting. These are big challenges for exporters,” he said. He added that about 10,000 containers are being held up and it has created a mismatch for export and import purposes.

The other issues raised by exporters were about MEIS (Merchandise Exports from India Scheme) funds and faceless assessment by customs authorities.

Indian Oilseeds and Produce Export Promotion Council (IOPEPC) Chairman Khushwant Jain said agri products should be included in Remission of Duties or Taxes on Export Product (RoDTEP). During April-September 2020 period, India’s exports declined 16.66 per cent to USD 221.86 billion, while imports fell 35.43 per cent to USD 204.12 billion over the same period last year.

Consumer goods makers get festive booster shot

Source: The Economic Times, Oct 27, 2020

NEW DELHI: The festive season has provided some much-needed cheer to the corona-hit consumer goods industry, with retail sales in the 10-day Navratri to Dussehra period not only topping last year’s numbers but registering strong double-digit growth — signs that seem to indicate the beginning of a revival in the economy and consumer confidence.

Companies such as Maruti, Hyundai, Samsung, LG, Sony and even luxury retailers like Mercedes-Benz and Dyson hold out hope that the positive start to “one of the most critical sales periods” would strengthen further as the country now moves towards Diwali.

There have been festive offers and new launches galore from companies that are now left with low inventory in many cases. Pent-up demand with weak sales in the preceding months has also added to the rush. “In TVs, we were actually stocked out for large screen-sized panels,” Ravinder Zutshi, senior director at LG India, told TOI.

The demand was most palpable in the automobile industry, which had contracted 18% last fiscal. Maruti, which controls nearly half of the market, is understood to have retailed a massive 95,000 units in the 10-day period, not only creating a record during such troubled times but even registering over 20% growth over last year. The company’s strong line-up of hatchbacks and entry-level cars contributed most of the volumes, with personal mobility getting a leg-up owing to wariness — and restrictions — about public transport.

Maruti’s rivals such as Hyundai and Kia – the Korean duo who are part of the same business group – also saw equally strong demand. While numbers for Kia Motors were exceptionally high (over 200% at retail of over 11,000 units) as it added a new model to its line-up recently (the Sonet mini SUV), Hyundai too retailed over 28,000 units on strong demand for its set of Creta and Venue off-roaders.

But if entry-level cars provided the volumes, there were equally enthusiastic buyers when it came to the luxury segment. Mercedes-Benz, which tops the luxury car market in India, retailed over 550 cars across the country, again posting double-digit growth over the same Navratri-Dussehra period of last year.

“Strong customer demand is witnessed across key markets like Delhi-NCR, Mumbai and Gujarat which saw a resurgence in customer demand, owing to the return of normalcy and stabilization of businesses and the wish to unlock aspirations… The festive season has begun on a very strong note… and this (consumer) trust becomes even more pronounced in the context of today’s market conditions, which faces multiple challenges,” Martin Schwenk, MD & CEO of Mercedes-Benz India, said.

Two-wheeler companies such as Hero Moto and Honda Motorcycles and Scooter India also saw strong demand, though the companies are still to share actual volumes and growth rates.

On the consumer electronics side, smartphones – generally the strongest category in the segment – continued to witness strong numbers with new launches and heavy competition between players such as Samsung, Apple, One Plus, Xiaomi and Oppo.

Enabled by online channels, Samsung’s smartphone volumes were 50% more than what it sold in the Navratri-Dussehra period last year.

On the TV side, it was not just LG that saw a strong traction in demand. Samsung, Sony and Philips all had double-digit growth in demand, especially for the large screen sizes.

“The auspicious period of Navratri-Dussehra has turned out to be very favourable for TVs and soundbar sales with an exceptional growth in the 55-inch and above segment… we are hoping this momentum will continue until the Diwali festival,” Sunil Nayyar, MD of Sony India, said.

“We expect at least 20% more sales this festive season over last year… This is largely because of pent-up demand and higher screen time as people spend more time at home,” an official for Philips TVs said.

Panasonic said that sales of end-of-season ACs were up 33%, while growth in refrigerators was 71%.

Even hitherto weak segments such as dishwashers, vacuum cleaners, and high-end cameras were in strong demand.XXXXXXX

Manufacturing growth puts India among top three emerging economies

Source: The Hindu Business Line, Oct 21, 2020

A steady recovery in the manufacturing sector helped India climb two notches to the third position among key emerging markets in September. Only China and Brazil rank better, shows the latest update of Mint’s emerging markets tracker.

The manufacturing growth reflected in the first year-on-year rise in exports in seven months, and the highest reading of the purchasing managers’ index in over eight years. In September, India’s merchandise exports rose 6% on-year to $27.6 billion.

Exports had last shown a year-on-year rise in February, even before the World Health Organization declared covid-19 a pandemic. In April, the first full lockdown month, exports fell 60%, but the contraction had been easing since.

However, the growth in September should be taken with a pinch of salt, given a low base.

Among the other emerging markets that have reported their exports data for September, only China (10% growth) fared better than India. Latest available data for all other emerging markets show exports were still below last year’s levels.

Mint’s Emerging Markets Tracker, launched in September last year, takes into account seven high-frequency indicators across 10 large emerging markets to help us make sense of India’s relative position in the league table. The seven indicators in the tracker encompass both real activity indicators, such as the manufacturing purchasing managers’ index (PMI) and real GDP growth, and financial metrics, such as exchange rate movements and changes in stock market capitalization. The final rankings are based on a composite score that gives equal weightage to each indicator.

The rise in exports lifted India’s manufacturing PMI, which had already returned to the expansion path in August. The reading improved further to 56.8 in September, the highest since early 2012.

Only Brazil, with a PMI reading of 64.9, performed better. A reading above 50 denotes expansion.

Other real activity data, too, such as automobile sales and railway freight loading, point towards recovering economic activity in India. These improvements have likely been driven by further easing of localized pandemic-related restrictions, slower spread of the coronavirus, and the onset of the festive season in India.

The weekly Business Resumption Index, compiled by Japanese brokerage Nomura, shows the progress broadly continued into October. But this was largely due to sharply rising workplace mobility, one of the indicators in the index. The other data points, such as power demand and labour force participation, have been sluggish.

Nomura warned that the improvement might signal just a “faux recovery” limited to festive consumption. The brokerage firm also fears coronavirus picking up again during festivals could undo the gains made.

Meanwhile, retail inflation, a concern for the last few months, may have peaked in September, economists suggest. India’s consumer price index-based inflation rate, which breached the central bank’s upper limit of 6% in April, rose to 7.3% in September. Only Turkey’s inflation rate of over 11% was higher among emerging markets.

Inflation could start softening after December with a decline in vegetable prices, easing of supply chain disruptions, weak demand and a favourable base effect, ICICI Securities Primary Dealership said in a report.

The Reserve Bank of India, too, expects inflation to return to its target range in the ongoing quarter, and further decline to 4.5% in January-March 2021.

The RBI also expects India’s economy to start posting growth again by the last quarter of the financial year. However, the deeper-than-expected GDP contraction in the first quarter could weigh down the full-year growth rate: the RBI expects GDP to contract 9.5% in 2020-21, while the International Monetary Fund projects a 10.3% contraction, the worst among EM peers.

There are other financial metrics that India has done relatively better on.

Stock market capitalization rose 2.5% sequentially in September, the highest among the EM economies considered in the tracker. The growth came despite net capital outflows during the month.

The positive performance of the markets can partly be attributed to increased activity among domestic investors, both retail as well as high-net-worth-individuals (HNIs), in the last few months. Going forward, the financial markets could experience volatility due to the US presidential elections and a second wave of coronavirus in Europe.

The Indian rupee also appreciated 1.5% against the US dollar in September. The Mexican peso (2.4%) and Chinese yuan (1.7%) were the only two emerging market currencies in the tracker that outperformed the Indian rupee. With India’s coronavirus situation now improving and mobility returning to pre-pandemic levels, the focus has shifted to pacing up economic recovery. India’s relative performance against other emerging economies will depend on its ability to sustain domestic demand, as well as the gains made against the virus, even after the festive season has passed by.