SGCCI Infozine Newsletter March-2020
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WORLD ECONOMY Volume II | Issue X | 3rd March 2020 From the Desk of President In an age of uncertainty, peering 15 years into the future may seem like hubris. But ignoring long-term trends—demographic, economic, corporate—is an even less attractive option. Understanding the long term future is vital in ensuring that strategies are sustainable, that opportunities are identified at an early stage and that challenges are addressed before they become insurmountable. Exactly how to improve knowledge-work productivity is one of the most Ketan Desai important economic issues of our time. Companies that begin to grapple President with this challenge now will be best placed to seize the opportunities of the future. Editorial Domestic credit conditions remain tight, as market concerns in the shadow banking sector have persisted for too long. Thus, we believe India's growth is set to slow further in Q4, delaying the recovery expected by consensus. We look forward to having your views about the current economy in the upcoming issues of Infozine. Sanjay Punjabi [email protected] Editor CAPSULES 1. Donald Trump India Visit US President Donald Trump, along with his wife Melania, arrived in Delhi after completing their engagements in Ahmedabad and taking a family trip to the Taj Mahal in Agra. Next day, Trump received a ceremonial welcome at the Rashtrapati Bhavan as per the protocol. From there, he went to Rajghat and paid homage to the samadhi of Mahatma Gandhi. He then held a meeting with Prime Minister Narendra Modi. He alsol met President Ram Nath Kovind before leaving for the United States by his special flight at 10 tonight. U.S. President Donald Trump’s first state visit to India signifies the growing strength of the bilateral relationship between Washington and New Delhi, Bharatiya Janata Party’s Ram Madhav told CNBC. One area where India and the U.S. have increased cooperation is defense procurement, which includes recent approval for New Delhi to purchase $2.6 billion worth of helicopters from American defense firm Lockheed Martin. Madhav said defense deals done with the U.S. would not affect India’s pact with Russia, which has been its traditional military supplier. US President Donald Trump on Tuesday said ties between his country and India have never been as good as they are now at a joint press briefing with Prime Minister Narendra Modi. He expressed hope that India and the US could reach a trade deal "that will be of great importance to both countries", and announced agreements for India to purchase more than $3 billion in advanced US military equipment, including Apache and MH60 Romeo choppers. Donald Trump's bungled pronunciation of Indian names did not escape global attention -- the UK's Guardian newspaper devoted a headline to his mention of "Soo-chin" Tendulkar. 2. Coronavirus and Trade Coronavirus has so far infected more than 60,000 people worldwide and claimed the lives of over 1,400 in China—surpassing the toll from the SARS outbreak of 2002-03. The World Health Organisation (WHO) has officially declared it a global health emergency. The virus, which has now infected people in more than 25 countries, has sent alarm bells ringing across global capital markets. As trade gets disrupted and demand for commodities in China turns soft, Indian companies are likely to feel the heat as well. This could also impact the stock markets. At a macro level, the economic consequences of such an outbreak are profound. As per the WTO, China is the biggest exporter and second-biggest importer of merchandise. It plays a crucial role in the global value chain as a hub of both demand and supply. It is also India’s largest trading partner, accounting for the biggest share (14%) of imports. Any long-term disruption in the economic activity in China is bound to keep the markets on tenterhooks. Citi has already downgraded China’s full-year year growth forecast from 5.8% to 5.5%. Some segments may benefit: Falling crude oil prices will benefit manufacturers of paints and plastics, with shares of Asian Paints, Berger Paints, Kansai Nerolac and Supreme Industries likely to benefit. Domestic chemical makers could also gain. China’s Hubei province, at the epicentre of the virus outbreak, boasts a sizeable chemicals industry. Disruption of production in the region may raise the prices for Indian chemical players. “If coronavirus continues to spread, it could impact production and we could produce and we could see dyestuff prices rally,” as per JM Financial. Aarti Industries could be an indirect beneficiary, while large players like UPL and PI Industries may see it as an opportunity to seize the market share and grab the space being vacated by Chinese firms. However, the benefit may not extend to higher exports, feels Kunj Bansal, Partner & CIO, Acepro Advisors. “Chinese manufacturing capacity is too big. Indian manufacturers are not in a position to fill this production gap as their own capacity is constrained.” 3. Three milk unions of Gujarat to become billion-dollar entities Banas Dairy, Amul-Fed Dairy (a GCMMF unit) and Amul Dairy are expected to become billion dollar entities by March 31, this year. The benchmark was hit by the Gujarat Cooperative Milk Marketing Federation (GCMMF) (marketers of brand Amul) 12 years ago. In a report published by The Times of India, both Banas and Amul, who had started operations in Gujarat, have expanded their business in areas outside the state as well. In January this year, the Banas Dairy’s highest collection was of 73.75 lakh litres per day, which is the highest procured milk by any dairy union in Asia. Gujarat Cooperative Milk Marketing Federation managing director RS Sodhi credited growth of the industry to the fact that a good procurement price is paid to the dairy farmers. Furthermore, according to the report Amul’s worth itself is expected to be $ 7.1 billion, while 18 member unions are likely to touch the Rs 50,000 crore mark by the end of the financial year. Gujarat Cooperative Milk Marketing Federation as of now is running 84 dairy processing plants in and outside the state. 4. Innovatively designed diamond packets with better security in the offing This new design is the brainchild of Shree Ramkrishna Exports Surat: This could be a small, but an important discovery to provide better security to the diamonds during trading. Since its inception, the diamond industry has been using traditional packets made out of paper to store the precious stones. Every time, the diamond merchants and manufacturers must fold and unfold the packets during the trading deals to show the diamonds. There are chances of losing a few diamonds during the trading process. After the deal is struck, the diamond packets are destroyed. A De Beers sightholder company, Shree Ramkrishna Exports (SRK) has come up with an innovative design of the diamond packets for better security. These diamond packets are reusable and that the diamonds could be seen from a transparent peep-in window, which gives the diamond owners surety about the physical presence of diamonds in the packet without opening it. Talking with TOI, director of SRK, Shreyans Dholakia said, “We were working on the design of diamond packets for the last three years. The packets called ‘window of hope’ are environment friendly and made out of the high quality reusable paper. Unlike the traditional packets, these packets offer complete security as the owner does have to fold and unfold the packet to see the diamonds.” Dholakia added, “We had applied for the patent for the diamond packets, but later withdrew in the wider interest of the diamond industry.The entire diamond industry will be able to use the innovative diamond packets in the coming days.” According to Dholakia, there are thousands of diamond offices in Surat and Mumbai where lakhs of carats of diamonds are stored traditional packets. Imagine the time consumed in folding and unfolding of the packets and the waste of paper once the diamonds exchange hands. President of the Surat Diamond Association (SDA), Babu Kathiriya said, “Diamond paper packets have been used in the industry for decades. You need to fold and unfold the packets every time you show the diamonds to others. In the process, sometimes, there are chances of losing a few diamonds. A few cases were reported where the conman duped diamond traders with stones in the packet. There is a need to secure the diamonds while trading.” 5. Surat to get 150 buses Surat to get 150 electric buses in one year. Surat Municipal Corporation (SMC) will get subsidy to purchase 150 electric buses in the phased manner during the next one year, for which it has already received Rs 13.5 crore as the first installment from the union government. According to SMC officials, these buses have been sanctioned under Phase-II of Faster Adoption and Manufacturing of Electric Vehicles in India Scheme (FAME India Scheme) of Department of Heavy Industry (Ministry of Heavy Industries and Public Enterprises). With this, the civic body officials expect to run around 75 electric buses on Bus Rapid Transportation System (BRTS) routes in the city from Diwali onwards. This will be a major boost to Surat’s effort for clean mobility in the public transportation system. 6. SMC to Set 27 New Zones for Street Vendors The new vending zones will come up in Rander, Limbayat, Althan, Katargam and Athwa zones of the SMC . According to the SMC officials, at present, there are over 52 existing vending zones in the city, but in many areas, new vending zones are needed to support street vendors.