Archive for July, 2020

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23/07/2020

India to offer production linked incentives to boost manufacturing

NEW DELHI (Reuters) – India is working on offering production linked incentives for up to five sectors to boost domestic manufacturing, a top finance ministry official said on Thursday, bolstering efforts to attract new investments in the coronavirus-stricken economy.

FILE PHOTO: Labourers work at the manufacturing plant of Oppo, which is under construction, in Greater Noida, India, October 22, 2018. REUTERS/Anushree Fadnavis

Asia’s third-largest economy is expected to contract by as much as 10% in the current fiscal year beginning April, some private economists’ estimate, after the outbreak crippled business and consumer activity since late March, compared to government’s earlier target of about 6% growth.

The government has announced a raft of measures including direct food subsidy to nearly 810 million people and credit guarantees of 3 trillion rupees (31.59 billion pounds) on loans to small businesses.

Tarun Bajaj, economic affairs secretary at the Ministry of Finance, told a virtual conference that incentives would be offered to sectors to push manufacturing and help struggling industries.

Bajaj didn’t specify the sectors that may be eligible for incentives.

The government earlier announced production linked incentives for large scale electronic goods makers for five years, to attract investments in mobile phone manufacturing and electronic component units.

Incentives have also been announced for pharmaceutical companies for production of bulk drugs and on medical devices.

Speaking at a virtual conference organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) on Thursday, finance ministry official said the government was expecting a “V” shape economic recovery beginning next fiscal year.

Reuters earlier reported that India is drawing up an incentive scheme for the autos sector aimed at doubling exports of vehicles and components in the next five years.

Industry and government sources said sectors such as textile and food processing manufacturers could be offered production linked incentives.

The latest data on 14-15 economic indicators including railway freight and tax collections showed a pick up in economic activities, Bajaj said, adding the government was open to borrow more from the market to meet spending targets for infrastructure projects.

Source: Reuters

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22/07/2020

Pompeo: China’s behaviour was unacceptable in border clash with India

Foreign Minister Jeppe Kofod and U.S. Secretary of State Mike Pompeo hold a press conference in Eigtved’s Warehouse, in the garden of Marienborg Castle north of Copenhagen, Denmark, July 22, 2020. Mads Claus Rasmussen/Ritzau Scanpix/via REUTERS ATTENTION EDITORS – THIS IMAGE WAS PROVIDED BY A THIRD PARTY. DENMARK OUT. NO COMMERCIAL OR EDITORIAL SALES IN DENMARK.

NEW DELHI (Reuters) – India’s recent border clash with China was the latest example of the Chinese Communist Party’s “unacceptable behaviour,” U.S. Secretary of State Mike Pompeo said on Wednesday.

He made the comment at the U.S.-India Business Council’s India Ideas Summit, being conducted on line, adding: “I am confident that with our concerted efforts, we can protect our interest.”

India’s relations with China have been strained after last month’s deadly clash in the Himalayas, prompting calls in India for closer security ties with the United States and its allies including Japan.

Source: Reuters

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21/07/2020

Pompeo to discuss tackling China with PM Johnson after Huawei ban

FILE PHOTO: U.S. Secretary of State Mike Pompeo steps from his plane upon arrival in London, Britain, July 20, 2020. REUTERS/Hannah McKay/Pool/File Photo

LONDON (Reuters) – U.S. Secretary of State Mike Pompeo will discuss ways to tackle the growing might of China when he meets Britain’s Prime Minister Boris Johnson on Tuesday, just a week after London ordered a purge of Huawei gear from the 5G network.

President Donald Trump lauded Johnson’s ban on Huawei, though he also claimed he had forced London’s hand due to concern over China, which he considers to be the United States’ main geopolitical rival of the 21st century.

As Britain toughens its stance on China due to its handling of the novel coronavirus and a crackdown in Hong Kong, Pompeo’s visit is an attempt to stiffen Johnson’s resolve and dangle the potential reward of a post-Brexit free trade deal, diplomats say.

“We welcome news that the UK will  prohibit new purchases of 5G equipment from Huawei and  phase out existing Huawei equipment from its 5G telecommunications networks,” the U.S. State Department said in a statement about the trip.

“The UK made this important decision to protect its national security interests, just as countries around the world are doing,” it said.

China says the West – and Washington in particular – is gripped by a mixture of anti-Chinese hysteria and colonial thinking about the communist state as it only seeks to bring prosperity to its 1.4 billion people.

China in 1979 had an economy that was smaller than Italy’s, but after opening to foreign investment and introducing market reforms it has become the world’s second largest economy.

China, whose $15 trillion (11.83 trillion pounds) economy is five times the size of the United Kingdom’s, has warned London that its Huawei ban would hurt investment as Chinese companies had watched as London “dumped” the national telecoms champion.

Pompeo will discuss with Johnson so far vague intentions to create an alternative to Huawei. He is also due to meet Hong Kong democracy activist Nathan Law and the last British governor of Hong Kong Chris Patten.

Source: Reuters

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19/07/2020

China raises flood alert levels along Huai River

BEIJING (Reuters) – Beijing will lower the emergency response level of the coronavirus outbreak in the Chinese capital to Level III from level II starting on July 20, a municipal government official said on Sunday.

The city issued the second level response on June 16 after a cluster of new coronavirus cases was found to be linked to Xinfadi, a major wholesale food market in a southwestern district of Beijing.

Since June 11, Beijing has recorded a total of 335 cases linked to Xinfadi, but no new cases have been reported in the past two weeks.

“Overall, the risks of getting coronavirus infection in Beijing…and exporting to other regions are low, and the general situation of tackling the pandemic is under control,” said Liu Bei, vice secretary of the Beijing Municipal government, told a news conference.

After lowering the coronavirus response, Beijing will reopen parks, tourism sites, gyms, libraries and museums, but will cap the number of visitors at 50% of capacity.

Conferences with no more than 500 participants will be allowed, while exhibitions, sports matches and cinemas are also expected to reopen gradually, Liu said.

Meanwhile, underground spaces with poor ventilation will be banned from being used for business while wholesale markets, restaurants, construction sites and factories will continue to be strictly monitored for the coronavirus.

Source: Reuters

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18/07/2020

Heavy monsoon rains speed up crop planting in India

NEW DELHI (Reuters) – Indian farmers have planted 69.2 million hectares with summer crops, up 21.2% from this time a year earlier, according to the Ministry of Agriculture & Farmers’ Welfare, boosted by bountiful monsoon rains that spurred sowing in most parts of the country.

FILE PHOTO: A farmer gathers saplings to be planted at a paddy field in a village in Nagaon district, in the northeastern state of Assam, India, July 3, 2018. Picture taken July 3, 2018. REUTERS/Anuwar Hazarika

Farmers typically start planting their summer-sown crops June 1, when monsoon rains usually reach India. Planting usually continues until the end of July or early August.

Planting of rice, the key summer crop, was at 16.8 million hectares as of July 17 versus 14.2 million hectares in the previous year, the ministry said.

The area planted with cotton was at 11.3 million hectares versus 9.6 million hectares the prior year.

Planting of overall oilseeds, including soybean – the main summer oilseed crop – was at 15.5 million hectares, up from 11 million hectares from the previous year.

Soybean sowing in India, the world’s biggest buyer of cooking oils, looks likely to jump by at least 15% in 2020.

Sugarcane sowing in the world’s biggest sugar producer reached 5.1 million hectares compared with 5 million hectares last year.

The figures are provisional and subject to revision as updates arrive with the progress of the June-September monsoon season.

The world’s leading producer of most farm goods has received 10% above average rainfall since June 1.

India’s state-run weather office defines average, or normal, rainfall as between 96% and 104% of a 50-year average of 88 cm for the entire four-month season.

Water levels in India’s main reservoirs are substantially higher thanks to higher-than-average rains so far in the season, according to the latest government data.

Source: Reuters

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17/07/2020

India says needs to verify troop disengagement with China

NEW DELHI (Reuters) – India and China are making progress on ending a months-long military faceoff at their disputed Himalayan border but it is a complicated process and needs verification on the ground, the Indian army said on Thursday.

FILE PHOTO: An Indian Army convoy moves along a highway leading to Ladakh, at Gagangeer in Kashmir’s Ganderbal district on June 18, 2020. REUTERS/Danish Ismail/File Photo

India says Chinese troops have breached the Line of Actual Control, the poorly defined border in the western Himalayas, and set up defence structures. China says it is operating on its side of the de facto border.

Last month, a clash erupted in the high altitude Galwan Valley in the Ladakh region in which 20 Indian soldiers were killed and China took an unspecified number of casualties, prompting top level diplomatic and military talks to defuse the crisis.

China has since thinned out from the Galwan Valley and on Tuesday top military commanders on both sides discussed the next steps in the pullback, the Indian army said.

“The Senior Commanders reviewed the progress on implementation of the first phase of disengagement and discussed further steps to ensure complete disengagement,” said army spokesman Colonel Aman Anand.

“The two sides remain committed to the objective of complete disengagement. This process is intricate and requires constant verification,” he said.

China’s foreign ministry said on Wednesday there had been progress in defusing the border crisis and urged the Indian side to maintain peace.

China has previously blamed frontline Indian troops for provoking the June 15 clash, the most serious in 53 years.

Source: Reuters

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16/07/2020

Indian stocks to lag rivals as stimulus falls short

BENGALURU (Reuters) – Foreign investors have begun to price in a slower rebound for Indian stocks this year on concerns that the relatively meagre stimulus the government has delivered for businesses and consumers will leave the economy trailing its main rivals.

FILE PHOTO: A man wearing a protective mask walks past the Bombay Stock Exchange (BSE) building in Mumbai, India, March 13, 2020. REUTERS/Francis Mascarenhas/File Photo

Mumbai’s equity indices have bounced about 43% since crashing to a four-year low in March, as the huge flows of cheap capital provided by global central banks when COVID-19 struck made heavily-discounted stocks attractive.

Despite pouring about $1.98 billion into Indian stocks since late March, foreign investors are still net sellers this year with outflows of $2.75 billion. In March alone, they pulled out $8.35 billion, according to stock exchange data.

“There are a lot of macro issues that make India a little less of an easy story,” said Rashmi Gupta, emerging markets (EM) portfolio manager at JP Morgan Private Bank in New York.

“It has to walk a fine line as it has a higher debt-to-GDP (gross domestic product) ratio and doesn’t have much room compared to some other EM economies in terms of its ability to provide fiscal stimulus,” she said.

At the heart of the problem for any economic recovery, investors say, is the pain felt by India’s poor since lockdowns in March stranded millions of migrant workers, or left them to walk home from major cities.

“People who need the help aren’t the ones getting the help,” said Sailesh Lad, head of active emerging markets fixed income at AXA Investment Managers in London.

“A lot of people in India live hand-to-mouth. If you don’t know when the next salary is coming, then your consumption spending reduces.”

While India presented a monetary and fiscal stimulus package of $266 billion, or 10% of GDP, economists say new spending commitments will only come to about 1% of national output, or roughly $20 a head, on top of its original 2020 budget.

At the same time, China is pumping more than 4% of its GDP into the economy with its coronavirus rescue packages.

Analysts say India is constrained by its public debt-to-GDP ratio, which stood at 71% early in 2020, second only to Brazil in the BRICS group of major emerging markets and ahead of South Africa, China and Russia.

It was also above levels the International Monetary Fund recommended for developing economies exposed to swings in growth and currencies.

Market participants now predict further cuts in India’s official interest rate but the weakness of the rupee, down 9% in the past year, may also give policymakers pause.

And few expect Prime Minister Narendra Modi to deliver much more.

“With the fiscal deficit threatening to cross 6% even in the absence of larger stimulus, and individual states also having to borrow more, it’s not possible to issue a larger package,” said Abheek Barua, chief economist at HDFC Bank in New Delhi.

With India’s COVID-19 outbreak now the third worst globally after the United States and Brazil, Mumbai’s main indexes are down about 11% since the start of the year compared with 3.5% for emerging markets as a whole.

By contrast, markets in mainland China, where the authorities are pumping funds through the financial system at a record pace, have recovered all their pandemic losses to trade 13% higher so far this year.

Manishi Raychaudhuri, head of Asia-Pacific equity research at BNP Paribas in Hong Kong, said he had a 2020 target of 35,000 for India’s S&P BSE Sensex, implying a fall of 4.6% from current levels.

“In view of the continuing decline in corporate earnings estimates, we think the market could go down before it goes up,” Raychaudhuri said.

Source: Reuters

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15/07/2020

Organiser of Hong Kong pro-democracy primaries steps down amid Beijing pressure

HONG KONG (Reuters) – A key organiser of primary elections for Hong Kong’s pro-democracy camp said on Wednesday he was stepping down after Beijing said the vote may violate the new national security law and could amount to subversion.

FILE PHOTO: Newly-elected lawmaker Au Nok-hin walks after swearing in at the Legislative Council in Hong Kong, China March 21, 2018. REUTERS/Bobby Yip

Former democracy lawmaker Au Nok-hin helped organise the weekend poll that saw more than 610,000 people vote in what was widely seen as a symbolic protest against the sweeping legislation imposed on the city by Beijing.

“Withdrawal is the only choice (I have, to) … protect myself and others,” Au said in a Facebook post.

The primary polls were aimed at selecting democracy candidates to stand in September elections for the Legislative Council, Hong Kong’s governing body.

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However, the primaries could violate the new national security law, said Beijing’s top office in the city, the Hong Kong Liaison Office, the Chinese government agency Hong Kong and Macau Affairs Office, and the city’s leader Carrie Lam.

“For those who do not recognise democracy, or do not agree with democratic values, it is difficult to understand the meaning of the primary election,” said Benny Tai, another organiser of the pro-democracy polls.

The new security law punishes what Beijing broadly defines as secession, subversion, terrorism and collusion with foreign forces with up to life in prison and sees Chinese intelligence agents operating officially in the city for the first time.

Critics of the law fear it will crush wide-ranging freedoms promised to Hong Kong when it returned to Chinese rule in 1997, while supporters say it will bring stability to the city after a year of sometimes violent anti-government protests.

The primaries saw a group of young democrats, or “localists” perform strongly, reflecting a potential change of guard to a more radical grouping likely to rile authorities in Beijing.

Hong Kong police on Wednesday arrested the vice chairman of the city’s Democratic Party, Lo Kin-hei, on charges of unlawful assembly related to anti-government protests in November, he wrote on his Facebook page. He was released on bail.

Hong Kong police said it charged five males aged 21 to 70 with unlawful assembly, without giving names and they will be mentioned in court on Aug. 21.

The moves come as U.S. President Donald Trump on Tuesday ordered an end to Hong Kong’s special status under U.S. law to punish China for what he called “oppressive actions” against the former British colony.

“Hong Kong will now be treated the same as mainland China,” Trump said.

China said on Wednesday it would impose retaliatory sanctions on U.S. individuals and entities after Trump signed a law penalising banks doing business with Chinese officials who implement the new Hong Kong national security law.

In another blow to the city’s international status, the New York Times said it would shift part of its Hong Kong office to Seoul, as worries grow that security law would curb media and other freedoms in the city.

Source: Reuters

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14/07/2020

India’s auto sales volume will take 3-4 years to recover: industry body

FILE PHOTO: Cars are seen parked at Maruti Suzuki’s plant at Manesar, in the northern state of Haryana, India, August 11, 2019. Picture taken August 11, 2019. REUTERS/Anushree Fadnavis/File Photo

BENGALURU (Reuters) – India’s auto sales volume will take another 3-4 years to reach 2018 levels, an industry body executive said on Tuesday, as the coronavirus-induced lockdown hurt monthly revenue and increased pressure on a sector already reeling from poor demand.

The pandemic-related disruption to the supply chain comes at a time when India’s auto industry was already facing a slowdown in demand and government rules to adopt tougher emission standards forced carmakers to hike prices, driving customers away.

India’s passenger vehicle sales rose 3% to 3.37 million units in fiscal 2018-19, but fell by 18% a year later due to weak demand and the onset of the pandemic.

The Society of Indian Automobile Manufacturers (SIAM), an industry body, said domestic car and SUV sales slumped 50% in June from last year, while sales of two wheelers – widely seen as an indicator of the health of the rural economy – fell 39%.

The rapid spread of the coronavirus and subsequent nationwide lockdown forced several automakers to suspend manufacturing and report zero sales in April, worsening the situation for the sector.

“Production has been slow to pick up due to supply chain disruption and weak demand,” said Rajan Wadhera, president, SIAM.

Maruti Suzuki India (MRTI.NS), which sells one in every two cars in India, sold 51,274 passenger vehicles in June, down 50% from a year ago, while Hyundai Motor India posted a 49% slump, according to SIAM data.

India, the world’s second-most populous country, is slowly limping out of the lockdown while COVID-19 cases continue to rise while some cities are being sent back indoors.

The country’s Nifty auto index .NIFTYAUTO, which tumbled nearly 11% in 2019, crashed over 31% in March as India entered a lockdown. The sub-index was trading 2.25% lower on Tuesday, amid a 1.5% fall in Indian equities.

Source: Reuters

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13/07/2020

BT warns UK that banning Huawei too fast could cause outages

FILE PHOTO: Huawei’s new flagship store is seen ahead of tomorrow’s official opening in Shanghai, following the coronavirus disease (COVID-19) outbreak, China June 23, 2020. REUTERS/Aly Song/File Photo

LONDON (Reuters) – BT (BT.L) CEO Philip Jansen urged the British government on Monday not to move too fast to ban China’s Huawei from the 5G network, cautioning that there could be outages and even security issues if it did.

Prime Minister Boris Johnson is due to decide this week whether to impose tougher restrictions on Huawei, after intense pressure from the United States to ban the Chinese telecoms behemoth from Western 5G networks.

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Johnson in January defied President Donald Trump and granted Huawei a limited role in the 5G network, but the perception that China did not tell the whole truth over the coronavirus crisis and a row over Hong Kong has changed the mood in London.

“If you are to try not to have Huawei at all, ideally we would want seven years and we could probably do it in five,” Jansen told BBC radio.

Asked what the risks would be if telecoms operators were told to do it in less than five years, Jansen said: “We need to make sure that any change of direction does not lead to more risk in the short term.”

“If we get to a situation where things need to go very, very fast, then you are into a situation where potentially service for 24 million BT Group mobile customers is put into question – outages,” he said.

In what some have compared to the Cold War antagonism with the Soviet Union, the United States is worried that 5G dominance is a milestone towards Chinese technological supremacy that could define the geopolitics of the 21st century.

The United States says Huawei is an agent of the Chinese Communist State and cannot be trusted.

Huawei, the world’s biggest producer of telecoms equipment, has said the United States wants to frustrate its growth because no U.S. company could offer the same range of technology at a competitive price.

Source: Reuters

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