- There was a significant recovery in June
- But manufacturing activity has contracted at a faster pace in July
- Main reason: localised lockdowns
- The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) dropped to 46 in July from 47.2 in June.
- Re-acceleration of declines in the key indices of output and new orders
- Contraction in new export orders was seen
- Indicators such as unemployment data that had shown improvement in June were tepid in July due to the re-emergence of lockdowns.
Single Window Clearance
- DPIIT is working on a pan-India single-window clearance system called the Investment Clearance Cell for licences given by both central and state governments to attract investments and improve the ease of doing business.
- Global manufacturers have raised concerns over the process of getting permission for industrial projects in India.
- Multiple clearances and long response times
- Setting up a single window is a huge task.
- Talks are on with five-six states that will be part of the system in the first phase
- The longer it takes for a simpler one-stop shop for approvals to be set up, India will increasingly lose opportunities to attract investment.
- A new investor has to apply to at least 13 departments to get all permissions
- TikTok will see no respite from its ban in India.
- Along with 58 other Chinese-owned apps, TikTok was banned by India in June due to concerns over its alleged data-sharing practices with Chinese authorities.
- Following India’s move, the Donald Trump administration indicated that it might also follow suit, triggering a proposal to sell the company’s operations in the US, Canada, Australia and New Zealand.
- The ongoing negotiations between ByteDance and Microsoft are expected to conclude by September 15
- Microsoft would ensure that all private data of TikTok’s American users is transferred to and remains in the United States.
- Following the ban on the 59 Chinese apps, the union government sent a detailed questionnaire to the companies about their data sharing practices, country of incorporation, advertisers, business structures, taxation practices and privacy policies.
- The government also asked the app companies whether they had faced any investigation in the US, European Union or elsewhere for harvesting user data.
- Indian companies continued to borrow overseas after the Covid-19 outbreak, taking advantage of cheaper finance.
- Lending by local banks shrank
- Some economists have raised their call for interest rates to be lowered further to help revive local demand.
- Lending by domestic banks contracted by ₹1.13 lakh crore in April-June this year.
- Companies raised $3.5 billion (₹26,320 crore) in external commercial borrowings in April-June, as per RBI data.
- This amount was equivalent to almost 30% of ECBs taken in the year-ago period.
- Bank lending suffered even though interest rates declined.
- The central bank lowered rates by 115 basis points between March 27 and May 22 in two tranches in an attempt to revive loan demand.
- The RBI’s Monetary Policy Committee is scheduled to meet from August 4 to 6.
- Economists are making a case for the central bank to further lower repo rates later this week.
- Indian businesses have relied on overseas finance for over a year, even before Covid-19-related disruptions, as most global central banks lowered policy rates.
- The government is working on a policy to enable a microfinance institution to help fund even the smallest of businesses.
- If this happens, then this move will generate employment in the country.
- A social microfinance institution that can finance up to ₹10 lakh.
- Gadkari: we are working on it, we need green signal from FinMin and Cabinet
- The Indian economy is currently facing liquidity issues and the government will need to come up with a response to address the problem.
- Gadkari said the government was working on creating a national land bank which will be a registry of land at state and district levels and can be utilised for various development works, like industrial clusters.
- On the ₹8,000-crore Chambal expressway that was announced recently, Gadkari said he had suggested to the Madhya Pradesh chief minister that companies willing to set up industries in backward areas should be given government land free-of-cost.
- “We need to reduce land cost, logistics cost, and capital cost. Without that we cannot be internationally competitive,” Gadkari said.
FDI in Commercial Mining
- The Centre on Monday clarified that any foreign direct investment (FDI) in commercial coal mining from an entity of a country that shares land border with India will be allowed only after government approval.
- According to the Press Note 3 of 2020, ‘an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route‘, it added.