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The Textiles Ministry is bringing to fore a structure under which the Production Linked Incentive Scheme for technical textiles and manmade fibre segment will be rolled out, Union Minister Smriti Irani said on December 18. She said the new Textile Policy is on the anvil, observing that the previous national Textile Policy was unveiled two decades ago.

"We are currently on the anvil of also bringing to the fore the new Indian textile policy, the last time India had a textile policy was two decades ago," Irani, Minister for Textiles and Women & Child Development, said while virtually addressing Assocham Foundation Week 2020. Highlighting the impact of agricultural reforms on Indian industry, Irani said, "the Government of India in a determined effort has ensured that the MSP operations undergo with the help of technology and those who participate in the MSP operation receive direct benefit transfer of their funds in to their bank accounts.

"In 2013-14, in the cotton segment, the MSP operations were only worth Rs 90 crore while last year, the MSP operations in the cotton segment alone reached a value in total of Rs 28,500 crore. This season, in the cotton segment MSP operations worth Rs 14,659 crore have already been undertaken and 9.63 lakh farmers producing cotton in the country have directly received into their bank accounts an amount of Rs 11,799 crore, this is done in only two months, said the minister.

She said this means when we look at the policy reforms, the idea called Aatmanirbhar Bharat cannot come to a fruition when we work in silos. "So while on one hand the Government of India undertakes agricultural reforms, on the other hand we leverage technology to provide farm support and undertake MSP operations," said the minister.

Besides, Irani said, if you look at extra-long staple cotton, we currently produce only four lakh bales. Looking at the agricultural reforms, if the industry conjoins its efforts with farming community and "we raise the potential growth of production of ELS cotton from four lakh bales to 50 lakh bales, then the impact on the Indian cotton textiles industry will be such that we will increase our businesses from the current USD 18 billion to USD 80 billion, that is the potential that needs to be leveraged and explored", the minister stated.

Talking about agricultural reforms she underlined that when reform takes place in one segment, its impact is determined across the value chain of Indian economy. "When agricultural reforms came into being, it was not a happenstance. It was a contribution of dialogues and deliberations that have been undertaken for 19 years across industries, agriculture sector, farmer organisations and specialists who want to leverage technology in the field of agriculture so that potential benefit is accrued not only by farmers but also industry and citizens at large," Irani said.

The minister also noted that India has become the second largest manufacturer and exporter of personal protective equipment (PPE). "When COVID-19 pandemic hit Indian shores, not many across the globe were confident of India's response, today as Minister of Textiles I can say that one of the greatest examples of Indian resilience was given by the Indian textiles industry in the manufacturing of PPE suits, provision for which was among the consistent demands of frontline workers and the medical community was across the world.

She said that while the textiles industry was not prepared for, but it rose to this challenge. It was an effort which involved almost all ministries and industry segments in support of Indian textiles industry. Assocham President Niranjan Hiranandani assured the industry's support to the government to reach the goals of Atmanirbhar Bharat and a USD 5 trillion economy.

The Centre has launched a Production Linked Incentive Scheme (PLI) worth Rs 1.46 lakh crore for 10 sectors to boost domestic manufacturing, create jobs and reduce dependence on imports. Under the scheme, Rs 10,683 crore have been allocated for textile products – man-made Fibre (MMF) segment and technical textiles segments.

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Exports of sectors such as agriculture and pharmaceuticals have recorded significant growth even during COVID-19 pandemic, and there is a need to sustain this, Commerce Secretary Anup Wadhawan said on Thursday.

He said that all the signs are there which reflects that India will come back to pre-COVID levels.

"As far as exports are concerned, some sectors have done wonderfully well. Even during the slowdown, agriculture exports and pharmaceutical exports went up," he said at an event organised by industry body PHDCCI.

But certain "other sectors have not done so well in the recovery phase and we need to sustain the sectors which have done well in this period," he added.

He added that there is a need to focus on those sectors which have not done well so that they recover at least initially to the pre-COVID levels.

Further he said that there is a need to immediately exploit the short-term opportunities.

"There is a medium to long-term opportunities, where we need to enhance our capacities, create new capacities," he added.

India''s exports dipped 8.74 per cent on a yearly basis in November to USD 23.52 billion on account of contraction in shipments of key sectors like petroleum, engineering, chemicals and gems and jewellery.

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The Finance Ministry has extended the deadline till February 15 for states to implement reforms like one-nation one ration card and those in the power sector to become eligible for additional borrowing in the current fiscal, a release said.

To meet the extra fund requirements of states on account of COVID-19 pandemic, the Centre in May had decided to raise the borrowing limit of the states by 2 percent of their GSDP, over and above the 3 percent limit set under the Fiscal Responsibility and Budget Management (FRBM) Act.

However, states were required to complete four specific reforms -- implementation of one nation one ration card, ease of doing business reform, urban local body/ utility reforms and power sector reforms -- by December 31, 2020, to get the benefits.

Such states would get the facility of additional borrowing equivalent to 0.25 percent of their Gross States Domestic Product (GSDP) for completing each reform. Under this facility, additional borrowing of up to Rs 2.14 lakh crore is available to the states on completion of all the four reforms.

"The Department of Expenditure has extended the deadline for the states to complete citizen centric reforms in various sectors. Now, if the recommendation from the nodal Ministry concerned regarding implementation of the reform is received by February 15, 2021, the state will be eligible for reform-linked benefits," the Finance Ministry said in a statement on Wednesday.

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Chemicals and Fertilisers Minister D V Sadananda Gowda on Tuesday said the demand for chemicals and petrochemicals is expected to rise 9 percent annually, and the size of the industry is likely to grow to $300 billion by 2025.

Addressing a conference organised by industry body Assocham, the minister said the Indian chemical industry, over the last one-and-a-half decade, has transformed from manufacturing principal chemicals in a highly regulated market to being a mature industry in a liberalised economy.

Majority of the chemicals produced in India comprise either upstream products or intermediates, which go into a variety of manufacturing applications including fertilisers, pharmaceuticals, textiles and plastics, agrochemicals, paints and dyes, he said, adding that end-use industries like automotives, electronics, packaged food and textiles are driving Indian specialty chemicals industry.

"Strong domestic demand, coupled with huge investments by domestic and foreign players, is making the industry scale new heights,” Gowda said.

The minister said rising disposable income, median age of population, urbanization and growing penetration, and demand from rural markets are the factors contributing to growth of chemical and petrochemical sector.

"As production and consumption shift towards Asian and Southeast Asian countries, the demand for chemicals and petrochemicals is expected to grow at 9 percent per annum, much faster than the expected GDP growth rate, to reach $300 billion by 2025,” Gowda said.

Gowda said the size of the industry was $163 billion in 2018, contributing 13.4 percent of manufacturing GVA (gross value added) and 2.4 percent of national GVA. The sector employs 2 million people.

He said Indian chemical and petrochemical industry plays an important role in all sectors of the economy.

Stating that successive governments have taken various initiatives to promote this sector, the minister highlighted that licensing requirements, except for hazardous chemicals and a few special drugs, have been removed.

Entrepreneurs are allowed to set up chemical industries following the Industrial Entrepreneurs’ Memorandum (IEM) route and under the automatic route, 100 percent FDI is allowed for all chemicals, except hazardous ones, he said.

Gowda said the peak rate of customs duty on most chemicals has been brought down to 7.5 percent, while the Petroleum Chemical Petrochemical Investment Regions (PCPIR) policy has been introduced to boost the development of chemicals and petrochemicals investment regions.

"I certainly believe that the Indian chemical and petrochemical sector holds a potential to emerge as global manufacturing hub. We are aware of the need to support the cluster based development of the sector through provision of world class infrastructure and logistics. The department is working on it,” he said.

Assocham National President Niranjan Hiranandani spoke about the importance of the sector in Indian economy.

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NITI Aayog CEO Amitabh Kant on Saturday said India's private credit-to-GDP ratio is the lowest among its global peers and the government is in the process of putting in place a framework for a credit push towards untapped segments.

Addressing a virtual event organised by the Global Alliance for Mass Entrepreneurship (GAME), Kant said credit scenario in India in recent years for a greater part has been seen as a drag on the economy.

"India's private credit-to-GDP is the lowest among its global peers. Countries such as China and South Korea have had tremendous growth, massive improvement in their living standard on the back of high leverage.

"Even Vietnam's recent development has been partially a result of growth in its private debt," he said.

Kant also said micro, small and medium enterprises (MSMEs) play a crucial role in providing employment but their credit needs are largely unmet by the formal financial sector.

"The government is in the process of putting frameworks and protocols in place for credit to be pushed to segments that have largely been untapped," he said.

Noting that financial inclusion depends on the regulatory environment, Kant said, "While a new business model will be required to fill the current gap in achieving the necessary credit flow, there is a need to change the regulation as and when required."

The entire process will require bringing all stakeholders such as banking and industry professionals, together, he added.

Kant said the MSME sector will have more credit needs going forward. So, more innovative methods will be the key to meet demands of the sector, he added.

He said MSME's credit gap is currently estimated to be Rs 25 lakh crore.

Kant also said the government has been pushing faster formalisation of the economy and on credit fronts, the government has taken several key steps.

According to Kant, the financial sector is undergoing a massive change and there has been dramatic change in India's credit scenario also.

"Over the past few years, there has been a flood of fintech (financial technology) players, which are bringing transformational change in the way financial services are provided," he said.

Kant also pointed out that the government changed the definition of MSMEs to help the sector.

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The Union Budget 2020-21 is likely to make a one-time provision for the procurement, storage, transportation and distribution of COVID-19 vaccines, and filling certain gaps in India’s public healthcare system which the pandemic has exposed.

A top government official told Moneycontrol that the provisioning could be as high as Rs 80,000 crore. This will just be from the centre, with states and the private sector also budgeting their own expenditure as India prepares for a vaccination drive that could be the largest in the world.

Additionally, the Modi government is learnt to have accepted the recommendations of the Fifteenth Finance Commission (15th FC) on the health sector. The recommendations, which will be made public along with the budget, likely include nearly doubling India’s combined public health expenditure as percentage of GDP, and creating a dedicated central cadre of medical professionals.

Finance Minister Nirmala Sitharaman is expected to present the Union Budget on February 1, 2021.

“There have been discussions over provisioning one-time expenditure in the coming year. We believe a bulk of spending on vaccines, from procuring to storing to transporting, distributing and inoculating, will happen in 2021-22,” said the official, who is aware of deliberations around the budget.

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The Union Cabinet on Wednesday approved Rs 22,810 crore outlay for a new employment scheme that aims at encouraging businesses to do fresh hiring.

Under the Atmanirbhar Bharat Rojgar Yojana, the government will for two years provide employee and employer contribution to the retirement fund for new hires by businesses and entities, Labour Minister Santosh Gangwar said.

The scheme would till 2023 entail an outgo of Rs 22,810 crore and would benefit around 58.5 lakh employees.

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The year 2020 was truly Annus Horribilis for people, governments and budgets. However, defence is probably one sector that didn’t get affected much. Buried in the year’s headlines of COVID-19, several defence deals and developments went unnoticed. Each of these was of long-term global and domestic significance.

Technologically the most important development was when Boeing Australia unveiled its ‘loyal wingman’ attack drone. Unlike current drones which have limited manoeuvrability, this is a full-fledged combat capable beast. Perhaps more importantly it thinks for itself in most situations.

The Achilles heel of the United States (and western) drone complex was that they require humans controlling them from ground stations. The problem with this is, that these drones are linked to their operators through satellite links, consuming huge amounts of incredibly expensive bandwidth for data, but also are highly vulnerable to an emerging generation of anti-satellite weapons.

The loyal wingman concept (and the similar but significantly less advanced Sukhoi S-70 Okhotnik-B) does away with this, accomplishing large parts of its mission autonomously through artificial intelligence, but is also directly controlled by the manned aircraft it flies with, adding significantly to that aircraft’s lethality, while significantly reducing vulnerability. In many ways this concept marks the first significant step towards completely autonomous combat not dependant on humans (leaving aside the moral, legal and technological implications).

Politically, the Turkish order of a second batch of S-400 missile systems from Russia was the highlight of 2020. In a sense this decision is a microcosm of not just the deteriorating quality of decision-making in Ankara, but also the widening rift within NATO over Syria and Mediterranean gas reserves.

The year 2020 was truly Annus Horribilis for people, governments and budgets. However, defence is probably one sector that didn’t get affected much. Buried in the year’s headlines of COVID-19, several defence deals and developments went unnoticed. Each of these was of long-term global and domestic significance.

Technologically the most important development was when Boeing Australia unveiled its ‘loyal wingman’ attack drone. Unlike current drones which have limited manoeuvrability, this is a full-fledged combat capable beast. Perhaps more importantly it thinks for itself in most situations.

The Achilles heel of the United States (and western) drone complex was that they require humans controlling them from ground stations. The problem with this is, that these drones are linked to their operators through satellite links, consuming huge amounts of incredibly expensive bandwidth for data, but also are highly vulnerable to an emerging generation of anti-satellite weapons.

The loyal wingman concept (and the similar but significantly less advanced Sukhoi S-70 Okhotnik-B) does away with this, accomplishing large parts of its mission autonomously through artificial intelligence, but is also directly controlled by the manned aircraft it flies with, adding significantly to that aircraft’s lethality, while significantly reducing vulnerability. In many ways this concept marks the first significant step towards completely autonomous combat not dependant on humans (leaving aside the moral, legal and technological implications).

Politically, the Turkish order of a second batch of S-400 missile systems from Russia was the highlight of 2020. In a sense this decision is a microcosm of not just the deteriorating quality of decision-making in Ankara, but also the widening rift within NATO over Syria and Mediterranean gas reserves.

Azerbaijan showed that the original intended purpose of drone — to attack tanks was still relevant but added a significant new paradigm of modern warfare — that drones operating in co-ordination with brigades of hired international terrorists (rather than against them) was a potent new battlefield equation.

Elsewhere Japan decided to operationalise its momentous decision to convert its ‘helicopter carrier’ into an aircraft carrier armed with F-35 fighters. Given Japan’s deep pockets, tenacity and technology, this will be the critical action that decides the balance of forces against China in this century.

Finally, there was India’s first ever lease of Reaper drones from the US. This marks the first break in the ‘buy foreign or buy Indian, but buy’ mentality of the forces. Taken to its logical conclusion, such leasing, could open up a whole new set of options in fixing India’s disturbingly deteriorating levels of combat equipment.

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Dear Reader,

Did Socrates really say, 'In the face of adversity, we have a choice. We can be bitter, or we can be better'? In his statement on the monetary policy, RBI governor Shaktikanta Das claimed the quote was attributed to Socrates. A quick Google search finds the quote, but no mention of the Greek philosopher ever having said that. But then, who knows, although it’s a bit tricky for an RBI governor to quote a guy whose most famous saying is, ‘All I know is that I know nothing’ or words to that effect.

Das also says, ‘it is never too late to seek a newer world’ and ‘to strive, to seek, to find and not to yield’, borrowing the words, of course, from Tennyson’s Ulysses.

Perhaps taking inspiration from these upbeat words in the governor's statement, the RBI’s Monetary Policy Committee decided to keep its policy rates and liquidity stance unchanged, in spite of revising its inflation projections higher. What’s more, it says, ‘inflation is likely to remain elevated, barring transient relief in the winter months from prices of perishables’. It also improved its growth projections from its earlier estimates. The PMI data for November show precisely this combination -- continuing expansion in both manufacturing and services, but higher inflation.

Other indicators too reflect the improving economy. Our recovery tracker shows a very healthy trend this week, with falling unemployment, higher retail car sales and increased power consumption. Bank lending has picked up sharply. The auto industry is cruising along comfortably, although there could be speed bumps along the way. Lumax Industries will capitalise on that recovery. Indeed, there are signs of a rebound in capital goods companies too, although government support is essential. Good luck with that.

Given the growth revival, we took a look at which mid-cap cement companies could benefit from the increase in infrastructure and housing activity. Railway engineering companies are seeing a sharp rise in business. Engineers India’s fundamentals are improving, as are those of JSW Energy. Laurus Labs’ new lever of growth looks so promising that it merited two stories, here and here. The supply situation has normalised for Sharda Cropchem. Business momentum in Transport Corporation of India looks good, while AU Small Finance Bank’s collection efficiency is now near normal. The icing on the cake is that, contrary to expectations, the smaller FMCG companies have done far better than the bigger ones.

What the RBI is essentially saying is that it will keep monetary policy accommodative as long as necessary – at least during the current financial year and into the next financial year---in spite of higher inflation and the economic recovery.

That is wonderful news for the markets. The party in equities is getting wilder and is fast developing into a first-class binge, aided and abetted by central banks across the world, including the RBI. After all, real bond yields in India are not only negative, but the lowest among major economies. Globally, the prospect of vaccines in a few months has led to, as this FT piece tells us, an ‘everything rally’.

The JP Morgan Global Composite PMI for November indicates that the recovery continues and the latest OECD growth projections show some light in the covid-19 gloom. At 57.5 in November, China’s Composite PMI signalled the steepest increase in total Chinese output since March 2010 -- small wonder that China’s voracious appetite for steel is benefiting India’s steel producers. All these optimistic signals have led Mark Matthews, Research Head (Asia) at Bank Julius Baer & Co Ltd, to predict earnings growth in India to be over 25 percent in the next two years.

Of course, everything is far from being back to normal, which is why the RBI is so keen to push growth, never mind its inflation target. The RBI’s consumer confidence survey in November showed that only 52 percent of respondents believed their employment prospects would improve over the next one year—a third said they expect their job prospects to get worse. Only 51 percent said they expect their income to increase in the next one year. And as for the consumption recovery that everybody is eagerly looking forward to, only 28.7 percent of those surveyed said they would increase discretionary spending in the next one year, while 34 percent said they would curb non-essential spending.

That is why we underlined two reasons why the banking sector is not yet out of trouble. Muthoot Finance’s MD says they will grow more than 15 percent this year, but what do all the gold loans tell us about financial conditions among the masses? And don’t forget that globally, food inflation has reared its ugly head. Add to that the possibility that the farmers’ agitation may stymie a bold attempt at reforms.