India’s Top 500 Value Creators 2023

18 | India’s Top 500 Value Creators 2023 [ INDIAN ECONOMY UPDATE ] potent ial to reach US$ 200-300 billion by 2030. FTP 2023 targets the establishment of e-commerce hubs with elements: payment reconciliation, book-keeping, returns policy & export entitlements. FTP raises consignment- wise cap on e-commerce exports through courier from INR 0.5 mn to INR 1 mn. Depending on exporter feedback, this cap may be further revised or eventually eliminated. Facilitation under Export Promotion of Capital Goods (EPCG) scheme: Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) scheme has been added as an additional scheme eligible to claim benefits under CSP (Common Service Provider) Scheme of EPCG. The dairy sector is exempted from maintaining t he Av g . E x po r t Ob l i ga t i on , facilitating technology upgrades. Green Technology products, including Battery Electric Vehicles, Vertical Farming equipment, Wastewater Treatment and Recycling, Rainwater harvesting system & Rainwater Filters &Green Hydrogen are newly added to EPCG Scheme with a reduced Export Obligation requirement. F a c i l i t a t i o n u n d e r Ad v a n c e Author izat ion Scheme: Special Advance Authorisation Scheme is extended to export of Apparel & Clothing sector on self-declaration basis to facilitate prompt execution of export orders. Benefits of Self- Ratification Scheme for fixation of Input-Output Norms extended to 2 star and above status holders in addition to Authorised Economic Operators at present. Provisions for merchanting trade: Merchanting trade (shipment of goods by an Indian intermediary from one foreign country to another foreign country wi thout touching Indian ports) of restricted and prohibited items under export policy (excluding goods/items classified in the CITES and SCOMET list) would now be possible. This is expected to allow Indian entrepreneurs to convert certain places like GIFT city into major merchanting hubs as seen in places likeDubai, Singapore, andHong Kong. Amnesty scheme: FTP 2023 introduces aone-timeAmnestyScheme toaddress defaults on Export Obligations. This schemeoffers relief toexporters unable to meet obligations under EPCG and Advance Authorizations, burdened by high duty and interest costs in pending cases. Pending cases of default in meeting Export Obligations can be regularized by paying all customs duties proportionate to unfulfilled Export Obligation. RUPEE SKIDS ON FOREIGN FUND OUTFLOWS In FY23, global economic uncertainties and rising FED rates impacted foreign portfolio investments. The net foreign portfolio outflow amounted to US$ 43.9 bn, although it moderated from the FY22 figure of US$ 134.2 bn. Due to geopolitical tensions and international monetary tightening, net FDI inflows to India also moderated, decreasing to US$ 223 bn in FY23 from US$ 308.7 bn in FY22. The trajectory of the Indian rupee in FY23 was largely shaped by factors such as elevated global oil prices and foreign portfolio outflows. In the first half of FY23, the rupee faced significant pressure before rebounding later in the second half, stabilizing within a narrow range. The recovery was driven by softened global oil prices and an improved current account balance. Starting the fiscal at INR 75.55/ US$, the rupee depreciated to touch a low of INR 83.2/US$ in October 2022 but subsequently recovered, closing at INR 82.2/US$ on March 31, 2023. THE WAY AHEAD In FY24, India faces global challenges with slowing growth, credit tightening, China’s slowdown & geopolitical tensions. Despite this, strong private consumption, evidenced by a 5.6% Q1 FY24 growth, offsets government consumpt ion cont ract ion. FY24 anticipates robust investment due to a government-driven capex push, with a 33% increase in the Union budget’s capital expenditure to INR 10 trillion (3.3% of GDP). Transport sector, receives a significant boost with an ~ 33% increase in allocation to INR 5.2 trillion in FY24 from INR 3.9 trillion in FY23, fostering private investment. However, net merchandise exports are projected to hamper GDP growth amid global demand weakness. On the inflation front, CPI averaged 5.4% from Apr-Oct FY24, within the RBI’s 2-6% target range. Despite transient supply disruptions and moderate core inflation, the RBI maintains a 6.5% key policy rate in FY24, anticipating emerging price trends and risks. Project ing CPI inflation at 5.4% for FY24, higher than the 4% target, coupled with incomplete pass-through of earlier rate hikes and a hawkish stance by the US Federal Reserve, suggests the RBI’s likely decision to maintain key rates unchanged for the fiscal year. While the government’s robust capex plan will have a multiplier effect, the key strength of the Indian economy in FY24 lies in the rebound of private consumption demand. Despite short- term turbulence from geopolitical uncertainties, the strong underlying fundamentals position the Indian economy to remain above the pre- pandemic growth trajectory. With the inputs from: Dr. Arun Singh Global Chief Economist Dun & Bradstreet Dun & Bradstreet