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WTO Slashes Trade Forecast To 0.8% Amid Downturn In Global Manufacturing

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The WTO economists have pulled back their predictions for growth in global merchandise trade in 2023 in response to a persistent downturn that started in the fourth quarter of 2022

 

The World Trade Organisation (WTO) lowered its trade growth forecast to 0.8 per cent in 2023 due to a downturn in global manufacturing on Thursday. The volume of global merchandise trade is now expected to grow by 0.8 per cent this year, less than half the 1.7 per cent increase forecasted in April.

The report added that consistent GDP growth of 2.5 per cent will lead to trade to grow to 3.3 per cent in 2024 – roughly unchanged from the prior projection of 3.2 per cent in April. Relatively high proportion of investment that is business cycle sensitive and durable products in trade compared to GDP, trade is predicted to increase slower than GDP this year but faster next.

In response to a persistent downturn that started in the fourth quarter of 2022, the WTO economists have pulled back their predictions for growth in global merchandise trade in 2023. India showed stronger growth in service exports by 23 per cent year on year in 2023. Whereas, India’s imports were up by 8 per cent in the Q1 2023.

As the consequences of stricter monetary policy were felt in the United States, the European Union and other places, global trade and output dramatically fell in the Q4 of 2022. However, dropping energy prices and the lifting of Chinese economic restrictions fueled prospects of a swift recovery, the report highlighted.

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India’s Manufacturing PMI Dips To Five-month Low In September

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The Manufacturing Purchasing Managers’ Index fell to 57.5, its lowest in five months, missing forecasts

Manufacturing operations in India reached a five-month low in September as new orders increased more slowly than expected, which restrained production growth, S&P Global PMI Index showed.

The Manufacturing Purchasing Managers’ Index, compiled by S&P Global, cited that manufacturing demand has fallen to 57.5 in September from 58.6 in August. The PMI level has remained above the 50-level mark for 27 months in a row.

“India’s manufacturing industry showed mild signs of a slowdown in September, primarily due to a slight increase in the new orders which tweaked production growth,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.

“Nevertheless, both demand and output saw significant progress and firms also noted profits in new business from clients across Asia, Europe, North America and the Middle East,” De Lima added. Despite a slight decrease in the sub-indexes from August, there has been a significant rise in the number of new orders and production. 

This growth is attributed to a strong demand from both domestic and international markets, with international demand expanding for the 18th consecutive month. This boost in demand depicts a positive outlook among businesses, leading to the highest level of business confidence in nine months.

Furthermore, it also encouraged companies to recruit more employees, with the employment index reaching its highest point since November. Although the expansion rate remained moderate, the employment index has been above 50 for six consecutive months.

Input costs rose mildly in September at the weakest pace in over three years as participants saw lower prices for aluminium and oil.

Strong demand has spurred companies to raise their selling prices. The output charges index rose, driven by higher labour costs and the rate of increase was above its long-run average, highlighting more inflationary troubles.

“The robust increase in output charges highlighted by the PMI data, which occurred in spite of a notable retreat in cost pressures, could restrict sales in the coming months,” added De Lima.

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Samsung Plans Rs 400 Cr Investment In Tamil Nadu Unit

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Samsung is the latest global gear maker to come on board the government’s telecom equipment production-linked incentive (PLI) scheme. After, Reliance Jio Infocomm and Bharti Airtel rolled out 5G networks the demand for 5G equipment has surged

Samsung is planning to make an investment of 400 crore rupee to begin the manufacturing of 5G and 4G radio equipment at its facility in Tamil Nadu, reported a media house.

It is the latest global gear maker to come on board the government’s telecom equipment production-linked incentive (PLI) scheme. For the first time, such investment into telecom gear manufacturing will happen in India. It will be joined by global peers Nokia and Jabil (Ericsson) to make the 5G equipment locally.

After, Reliance Jio Infocomm and Bharti Airtel rolled out 5G networks the demand for 5G equipment has surged. The South Korean conglomerate too has bagged deals to supply 5G radios for select circles, from both Jio and Airtel.

Samsung is entering the ‘12,195-crore telecom equipment PLI scheme after missing it last year due to lack of opportunities in the equipment supply space. IT was due to Jio being only customer for 4G and 5G rollouts had not happened last year.

Along with the two major telcos rolling out 5G networks, it however has bagged deals from both. Samsung received the approval as a ‘trusted’ source from the National Security Council Secretariat (NSCS), earlier during this year. In order to get selected by telecom operators to install equipment on their network, getting such an approval is mandatory.

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Manufacturing Sector Likely To Grow At Slower Pace By 2.8%: Report

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For services, a revival in pent-up demand is expected to boost the hospitality sector, resulting in much higher growth in trade, hotel transport and communication sector

The Bank of Baroda in a report on Thursday said that the manufacturing sector will grow at a much slower pace by 2.8 per cent against the 4.8 per cent in quarter one of the financial year (FY) 2023. 

The manufacturing sector is expected to be hit with indicators such as net sales and profit of industries such as textile, iron, plastic and other metallic product registering negative growth in the Q2FY23, the report said.

For services, on the other hand, a revival in pent-up demand is expected to boost the hospitality sector, resulting in much higher growth in trade, hotel transport and communication sector. 

Earnings reports for the following sectors namely telecom, education, retail and trading are mirroring a similar sentiment. 

Talking about the outlook for FY23, the report mentioned that the high-frequency indicator for Q2FY23 has been impacted by the back-of-base effect and hence needs to be read with caution when compared with previous quarters.

Indicators such as tractor and two-wheeler sales have registered some moderation in Q2FY23, however, on the back of the festive demand, a pickup is likely in the coming quarters which will lift growth. 

For October 2022, passenger sales have already begun to show early signs of recovery. 

For industrial sector, while the sale of some durable and non –durable goods has been hit due to inflation in the past. 

The recent trend of cool-off in prices is likely to reverse the dip seen previously in the sector. Some of the earnings report have also been signalling the same (FMCG sector), the report stated.

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No Plans To begin Production In India: Intel

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The remarks follow earlier today’s announcement by India’s transport minister that the chipmaker will establish a semiconductor manufacturing factory in the nation

Intel Corp said in a statement on Wednesday that it currently has no intentions to develop a manufacturing site in India.

The remarks follow earlier today’s announcement by India’s transport minister that the chipmaker will establish a semiconductor manufacturing factory in the nation.

The American multinational business and technology giant Intel Corporation, more frequently referred to as Intel, has its headquarters in Santa Clara, California.

It is one of the creators of the x86 family of instruction sets, which are the ones used in the majority of personal computers, and the largest maker of semiconductor chips in the world by revenue (PCs). 

For nearly ten consecutive years, from the 2007 to 2016 fiscal years, Intel, a Delaware corporation, was placed No. 45 on the 2020 Fortune 500 ranking of the biggest American firms by total revenue.

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India to be a USD 300 bn electronics manufacturing industry by 2025-26: Rajeev Chandrasekhar

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Ambassador (ret.), Atul Keshap, USIBC President said “We are now at a moment when geostrategic and geoeconomic convergence will shape much of the near future. This demands that the US and India embrace closer economic partnership and literally deliver the goods for their people. I am delighted that we have put the pandemic behind us and are able to focus on driving the strategic narrative between India and the US. This augurs well for both nations”

The U.S. Chamber of Commerce’s U.S.-India Business Council (USIBC)’s India Ideas Summit 2022 saw Rajeev Chandrasekhar, India’s Minister of State for Electronics and IT participate in a panel discussion on data governance and advanced manufacturing.

Speaking at a panel discussion, the Minister said “Our ambition is to build a USD 300bn electronics manufacturing industry in India by 2025-26. Electronics manufacturing, currently at USD 75 bn, will form an important component of the USD 1 trillion economy for India. India’s manufacturing capabilities have really strengthened during COVID-19 landscape making us a preferred partner in the supply chains across the world”.

He further added “Our approach is focused on expanding India’s innovation ecosystem and the internet and technology are going to be big enablers in the continued expansion of our economy. We also have a comprehensive approach and will enact a new legislative framework that addresses the digital space and acts as a catalyst for the Indian economy by enabling more innovation, more start-ups and at the same time also protecting the citizens of India in terms of safety and trust and accountability. On the data protection side, we have approached the parliament with a comprehensive framework of laws which includes the Digital Data Protection Law which will address the data protection concerns of the digital economy. Additionally, we have the National Data Governance Framework Policy which addresses the non- personalized data and the anonymous data, among others. We will have new rules, regulations and laws rolled out for in the next 3-4 months and this will be done with consideration to all the involved stakeholders and countries. Our focus is to build good legislation, rules and framework and build an enabling ecosystem which will ensure India’s success in the coming decade”.

Earlier in the day, Gautam Adani, Founder & Chairman, Adani Group was recognised with the USIBC Global Leadership Award 2022. Ambassador (ret.), Atul Keshap, USIBC President said “We are now at a moment when geostrategic and geoeconomic convergence will shape much of the near future. This demands that the US and India embrace closer economic partnership and literally deliver the goods for their people. I am delighted that we have put the pandemic behind us and are able to focus on driving the strategic narrative between India and the US. This augurs well for both nations”

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Government May Launch PLI Scheme For Furniture Sector

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A Production Linked Incentive (PLI) scheme is being considered by the government for certain types of furniture to ramp up domestic manufacturing, exports, and job creation in the sector, as per government officials

A Production Linked Incentive (PLI) scheme is being considered by the government for certain types of furniture to ramp up domestic manufacturing, exports, and job creation in the sector, as per government officials. The scheme was already rolled out by the government with an outlay of about Rs 2 lakh crore for around 14 sectors. The scheme aims to make domestic manufacturing globally competitive and for the creation of manufacturing global champions.

Additionally, an extension of the scheme has also been requested by the industry of toy for the promotion of local manufacturing and job-creation. Estimates suggest that the export of furniture is at about USD 400 million per year. The global furniture exports have a current standing of USD 264 billion. Reports suggest that China, Germany, Poland, Italy and Vietnam dominate half of the market share, as on date.

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Qualcomm, GlobalFoundries Sign Pact To Double Chip Manufacturing

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Under a multi-billion dollar revenue agreement, the chips will be produced in GlobalFoundries’ factories in the United States, Germany, Singapore and France

Qualcomm and GlobalFoundries signed an agreement on Monday to more than double their existing long-term manufacturing agreement for chips used in 5G transceivers, Wi-Fi, automotive and Internet of Things (IoT) connectivity.

Under a multi-billion dollar revenue agreement, the chips will be produced in GlobalFoundries’ factories in the United States, Germany, Singapore and France.

The companies committed to support US-based manufacturing by expanding capacity at GlobalFoundries’ most advanced semiconductor manufacturing facility, in Malta, New York.

US chipmaker Qualcomm was one of GlobalFoundries’ first customers to sign a long-term agreement in 2021 to cover multiple geographies and technologies.

GlobalFoundries Chief Executive Thomas Caulfield said in a statement that having Qualcomm as a long-term customer of its upstate New York factory through 2028 would help, along with federal and state funding, to expand the company’s U.S. manufacturing footprint.

The US Senate last month passed sweeping legislation to subsidise the domestic semiconductor industry, providing about USD 52 billion in government subsidies for semiconductor production and an investment tax credit for chip plants estimated to be worth USD 24 billion. 

“With major new federal incentives for microchip manufacturing in the United States, I look forward to many more announcements like this to come,” said Senate Majority Leader Chuck Schumer.

The European Union has also eased funding rules for innovative semiconductor plants to boost its chip industry and cut dependence on US and Asian suppliers.

Intel and GlobalFoundries have announced expansion plans on both continents to benefit from the subsidies, with GlobalFoundries partnering with STMicroelectronics to build a USD 5.7 billion semiconductor factory in France.

(Reuters)

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MSME Manufacturing Output At 35.98% In 2020-21: MoS Verma

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MoS Verma also said that the Ministry of MSME has taken several initiatives to provide an impetus to promote creativity, innovation and entrepreneurship

The share of micro, small and medium enterprises (MSME) manufacturing output in all of India’s manufacturing output witnessed a slight dip at 35.98 per cent in 2020-21 as compared to 36.68 per cent in 2019-20, as per the Ministry of Statistics and Programme Implementation. 

The Minister of State for MSME, Bhanu Pratap Singh Verma in a written reply to the Lok Sabha said that (MSMEs) play an important role in the manufacturing sector of the country. Meanwhile, MoS Verma also said that the Ministry of MSME has taken several initiatives to provide an impetus to promote creativity, innovation and entrepreneurship. 

Verma said that financial assistance is being provided for innovation, design and protection of Intellectual Property Rights (IPR) in the MSME sector under the MSME innovative component of the MSME Champions Scheme launched on 10 March 2022. During the current financial year 2022-23, 257 ideas under MSME Idea Hackathon 2022, reimbursement of 1196 Trademarks, 186 Patents, 53 Design and 11 Geographical Indication (GI) have been approved for providing financial assistance with an estimated cost of Rs 34.00 Crore, he said. 

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Oppo India Evaded Customs Duty Worth Rs 4,389 Cr: DRI

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Oppo India is engaged in the business of manufacturing, assembling, wholesale trading and distributing of mobile handsets and accessories thereof, across India

The Ministry of Finance on Wednesday said that during an investigation, the Directorate of Revenue Intelligence (DRI) detected customs duty evasion of around Rs 4,389 crore by Oppo India.  The ministry in a statement said that in an investigation pertaining to M/s Oppo Mobiles India (Oppo India), a subsidiary company of Guangdong Oppo Mobile Telecommunications, China, the Directorate of Revenue Intelligence (DRI) has detected customs duty evasion of around Rs 4,389 crore.  “During the course of the investigation, searches were conducted by DRI at the office premises of Oppo India and residences of its key management employees, which led to the recovery of incriminating evidence indicating wilful misdeclaration in the description of certain items imported by Oppo India for use in the manufacture of mobile phones,” it said. 

The statement added that this misdeclaration resulted in wrongful availment of ineligible duty exemption benefits by Oppo India amounting to Rs 2,981 crore. “Among others, senior management employees and domestic suppliers of Oppo India were questioned, who in their voluntary statements accepted the submission of wrongful description before the customs authorities at the time of import,” as per the statement. The investigation also revealed that Oppo India had remitted and made provisions for payment of ‘Royalty’ and ‘Licence Fee’ to various multinational companies, including those based in China, in lieu of the use of proprietary technology, brand, IPR license etc. 

“The said ‘Royalty’ and ‘Licence Fees’ paid by Oppo India were not being added in the transaction value of the goods imported by them, in violation of Section 14 of the Customs Act, 1962, read with Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules 2007. The alleged duty evasion by M/s Oppo India on this account is Rs. 1,408 crore,” it said. Also, a sum of Rs 450 crore has been voluntarily deposited by Oppo India, as partial differential customs duty short paid by them. Meanwhile, a show-cause notice has been issued to Oppo India demanding customs duty amounting to Rs. 4,389 crore. The said notice also proposes relevant penalties on Oppo India, its employees and Oppo China, under the provisions of the Customs Act, 1962.

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