Industry/India/Business news in India

Source: Hindustan Times, Jun 02, 2020

New Delhi: The cabinet on Monday approved the expanded definition of micro, small and medium enterprises (MSMEs) and finalised modalities for the Rs 20,000 crore subordinate debt for stressed units, and Rs 50,000 crore fund to boost growth of the sector—moves that will help more companies benefit from a package announced for small and medium companies, and also relieve the financial stress on them.

The upward revision of MSME definition is broadly on the lines of that detailed in the Rs 21 lakh crore Atmanirbhar Bharat (Self-reliant India Initiative) package announced on May 13, but for one change – the turnover limit of“medium manufacturing and service units have been further raised to Rs 250 crore, according to an official statement.

While announcing the package on May 13, finance minister Nirmala Sitharaman said that the definition of MSMEs is being expanded to accommodate units that have grown bigger than the defined limit. Accordingly, the investment and turnover limits for micro manufacturing and services unit were raised to Rs 1 crore and Rs 5 crore, respectively. The limit of small unit was increased to Rs 10 crore of investment and Rs 50 crore of turnover.

Similarly, the limit of a medium unit was increased to Rs 20 crore of investment and Rs 100 crore of turnover. The last has now been made Rs 250 crore—a move that will help more companies benefit from the package.

MSME minister Nitin Gadkari told reporters that the government has also decided that the turnover with respect to exports will not be counted in the limits of turnover for any category of MSME units whether micro, small or medium.

“This is yet another step towards ease of doing business. This will help in attracting investments and creating more jobs in the MSME sector,” he said.

The cabinet approved Rs 50,000 crore equity infusion for MSMEs through a fund of funds to help them grow, he added. “This will establish a framework to help MSMEs in capacity augmentation. This will also provide an opportunity to get listed in stock exchanges.”

Gadkari said the government has approved the proposal that will have a provisioning of Rs 20,000 crore as subordinate debt to provide equity support to the stressed MSMEs. “This will benefit 2 lakh stressed MSMEs.”

May digital payments see an uptick, indicating revival in economic activity

Source: Business Standard, Jun 02, 2020

Mumbai: Digital payments saw a revival in May, after the government granted some relaxation during the third and fourth phases of the lockdown, leading to a pick-up in economic activity.

April had witnessed a blip in digital payments, following the stringent lockdown.

Data by the National Payments Corporation of India (NPCI) showed the transaction volume and value, on platforms such as United Payment Interface (UPI), Immediate Payment Service (IMPS), National Electronic Toll Collection (NETCC) and Bharat Bill Payment System (BBPS), posting significant growth in May.

Transaction value for UPI, at Rs 2.18 trillion, surpassed that for March at Rs 2.06 trillion, with the volume coming in a little short at 1.23 billion versus 1.25 billion. April had seen the transaction count on UPI plummet to 0.99 billion and value to Rs 1.51 trillion. Thus, May saw a jump of 45 per cent in value and 24 per cent growth in transaction count.

For IMPS, the transaction count jumped 36 per cent to 166.8 million in May, from 122.47 million in April, while the value grew 39 per cent to Rs 1.69 trillion against Rs 1.22 trillion in April. For March, the volume stood at 216.82 million with value at 2.01 trillion.

The transaction limit under IMPS and UPI is capped at Rs 2 lakh per transaction.

BBPS, an online bill payment system, also saw a revival with transaction count growing 30 per cent to 16.54 million in May, from 12.77 million in April. The transaction value grew about 60 per cent to Rs 2,179 crore in May, compared to Rs 1,371 crore in April. Notably, the transaction count and value in May for BBPS was more than the numbers clocked in March, which saw a clampdown in economic activity for almost 10 days. With vehicular activity picking pace in May, toll collection also saw a huge uptick. Fastags posted an impressive jump of more above 400 per cent in transaction count at 55.17 million, and an over-300 per cent jump in value at Rs 1,142 crore.

Despite high consumption, India’s electricity generation fell 14.3% in May

Source: Business Standard, Jun 01, 2020

Chennai: India’s electricity generation in May fell at a slower pace than in April, as higher temperatures lead to greater demand for residential power and the government eased some lockdown restrictions to control the spread of the coronavirus.

Overall electricity generation fell 14.3% in May, a Reuters analysis of provisional government data showed, compared with a decline of 24% in April.

Despite higher consumption by residential consumers, power use was lower as many industries and commercial establishments – which account for over half of India’s annual consumption – were shut or not operating at full capacity.

Electricity generation from coal – India’s primary source of electricity – fell 22%, an analysis of daily load despatch data from POSOCO showed. Coal’s contribution to overall electricity generation in May fell to 64.2%, compared with an average of over 70.7% last year.

India’s electricity demand is likely to fall for the first time in at least four decades this fiscal year, analysts say, adding to the woes of coal-fired utilities, which were already hurting due to a prolonged industrial slowdown.

Thermal coal imports by India – the second-largest consumer, importer and producer of coal and third-largest greenhouse gas emitter – could fall as much as 18% in 2020 due to lower electricity demand, Anurag Sehgal, an analyst at Noble Resources said, a blow to miners in Indonesia and South Africa.

Menwhile, India’s solar power supply grew 12.7% and hydro-powered electricity supply rose 3.6%, while gas-fired power output was 13.8% higher, the data showed. However, wind-powered electricity supply fell 10.8%.

The share of fossil fuels in overall electricity generation in May was 70.71%, compared with 76% the previous year, an analysis of data from POSOCO showed.

Government extends validity of scrips under export incentives schemes for exporters

Source: The Economic Times, Jun 01, 2020

NEW DELHI: The government on Monday extended the validity of scrips or certificates, provided under export incentive schemes, which are expiring between March 1 and June 30 this year till September 30. The Foreign Trade Policy (FTP) provides tax incentives for goods and services under the Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS).

Depending on the nature of services and product, the government gives duty credit scrips or certificates to exporters. These scrips can be transferred or used for payment of a number of duties including the basic customs duty.

“Relaxation has been provided for applicable late cuts for SEIS/MEIS applications and the validity of scrips issued under Chapter 3 of FTP which are expiring between March 1 and June 30 this year has been extended up to September 30 this year,” the Directorate General of Foreign Trade (DGFT) said in a public notice.

In a separate trade notice, the DGFT said that as per a pact signed between India and Mozambique for import of pigeon peas and other pulses grown there, 2 lakh tonnes of pulses will be imported during 2020-21 with certain conditions.

It said import will be allowed only through 5 ports — Mumbai, Tuticorin, Chennai, Kolkata and Hazira — and it will be subject to production of “Certificate of Origin” certified by the authorised signatories in the ICM (Instituto de Cereasi de Mocambique) with stamps provided by the Government of Mozambique, which is being shared with the concerned customs authorities of these ports and the Central Board of Indirect Taxes and Customs.

Although quantitative restrictions has been imposed on import of moong, peas, and toor dal, it has been notified that the restrictions shall not apply to the government’s import commitments under any bilateral or regional agreement or memorandum of understanding.

India overtakes Japan with fifth-largest hydropower capacity in the world

Source: The Economic Times, Jun 01, 2020

India became the nation with the fifth-largest hydropower production capacity in the world surpassing Japan and has total installed base standing at over 50 Gigawatt (GW), behind Canada, US, Brazil and China, according to International Hydropower Association (IHA).

The Hydropower Status Report for 2020 was published in May 2020 along with COVID-19 Policy Paper. According to data in the report, global hydropower installed capacity reached 1,308 GW in 2019, as 50 countries completed greenfield and upgrade projects, including pumped storage.

Although, a total of 15.6 GW in installed capacity was added in 2019, down from 21.8 GW in 2018. This represents a rise of 1.2 per cent, which is below the estimated 2.0 per cent growth rate required for the world to meet Paris Agreement carbon reduction targets. The countries with the highest increases in were Brazil (4.92 GW), China (4.17 GW) and Laos (1.89 GW).

IHA also added that the hydropower’s flexibility services have seen an increase in demand during the COVID-19 crisis, while plant operations have been less affected due to the degree of automation in modern facilities.

The developments in the hydropower have not been immune to economic impacts as the industry faces a widespread uncertainty and liquidity shortages putting financing and refinancing of some projects at risk.

The IHA added that the COVID-19 pandemic has underlined hydropower’s resilience and critical role in delivering clean, reliable and affordable energy.

Medical device industry to get over ₹3,000 crore boost

Source: The Hindu Business Line, May 31, 2020

New Delhi: Domestic medical devices industry is set to receive a booster dose as central government lays out plan to incentivise Indian players with at least ₹3,420 crore, over a period of five years. This incentive would be provided if they were to invest in their set-ups to produce key medical devices.

Officials in Department of Pharmaceuticals (DoP) said that the domestic manufacturing for cancer care and radiotherapy medical devices, radiology and imaging medical devices, anaesthetics and cardio-respiratory medical devices including catheters of this category meant for the heart and, renal care medical devices meant for kidneys, all implants including implantable electronic devices like cochlear implants meant for those with hearing impairment and pacemakers for the heart, will be given priority.

DoP ina notification proposed to pay a production linked incentive (PLI) of five per cent on incremental sales (over base year of 2019-20) of goods manufactured in India covered under target segments to eligible companies for a period of five years (2020-21 to 2025-26).

The notification states that on incremental investment of ₹180 crore over three years, with at least cumulative minimum ₹60 crore investment in first year. And then ₹120 crore in second year and eventual incremental sales of manufactured goods, say for instance, which are ₹120 crore in first year, reaching to ₹240 crore in the second, ₹360 crore in third year, ₹460 crore in the fourth year, reaching up to ₹560 crores in five years. DoP has proposed to dole out through reimbursements, an incentive of five per cent each year on that year’s incremental sales to the medical device companies.

According to data compiled by DoP, India’s medical device market stood at ₹50,026 crore for 2018-19 and is skewed in the favour imports which were to the tune of ₹43,365 crore, while exports were ₹16,300 crore. While both exports and imports grew at 25. 2 and 23.8 per cent as compared to 2017-19, and it is expected to touch ₹86,840 crore in 2021-22, officials said that there is a lack of level playing field in India versus the competing economies.

“India’s share is 1.6 per cent in global market, and it is among the top 20 medical devices market in Asia, and comes after Japan, China, South Korea. Still, Indian industry depends on imports up to an extent of 86 per cent and PLI scheme for medical devices is a financial incentive to boost domestic manufacturing and attract large investments in medical devices sector,” said a DoP official.

“Lack of adequate infrastructure, domestic supply chains, logistics, high cost of finance, limited availability of quality power supply, limited design capabilities, low focus on R&D, and skill development are the main roadblocks,” the official explained. DOP would appoint a nodal agency to act as a Project Management Agency for appraising of applications and verification of eligibility of the company for support under the scheme. An empowered committee consisting of Secretaries of Pharmaceuticals, Commerce, DPIIT, Health and Director General of Foreign Trade will then consider the applications for approval and conduct periodic reviews of eligible companies.

Fiscal deficit for 2019-20 at 4.6%

Source: The Hindu Business Line, May 29, 2020

New Delhi: The Controller General of Accounts (CGA) on Friday reported fiscal deficit for 2019-20 at 4.6 per cent of the GDP as against 3.8 per cent projected in the revised estimate.

Fiscal deficit for the first month of this fiscal (2020-21) has reached 35 per cent of the Budget estimate

Fiscal deficit is difference between income and expenditure of the Government. One of the key sources to bridge the deficit is borrowing. Reasons for the higher deficit include fall in nominal GDP growth rate to 7.2 per cent and decline in not only tax, but also non-tax revenue. As a result, the fiscal deficit was over ₹9.35-lakh crore against the revised Budget estimate of ₹7.66-lakh crore. Higher deficit also reflects much lower revenue from disinvestment and spectrum. At the same time cut in corporate tax mid year has an impact of over ₹1.45 lakh crore.