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Synopsis: India is at an inection point in its digitisation journey. Over the course of a decade, the country has undergone a digital revolution - from modest beginnings of downloading forms and being able to view the status of an application online to paying taxes online and receiving welfare payments digitally, it said.

BENGALURU: India has undergone a digital revolution in the past decade and is now at an inection point in its digitisation journey, a report said on Friday.

"India is on the cusp of a paradigm shift in the way digital solutions are being deployed for large-scale societal impact; getting the non tech elements right will be critical", it said.

The report by Omidyar Network India, an investment rm focussed on social impact, and consulting rm Boston Consulting Group (BCG) stated that Open Digital Ecosystems (ODEs) are the next frontier for 'DigitalIndia'.

India is at an inection point in its digitisation journey. Over the course of a decade, the country has undergone a digital revolution - from modest beginnings of downloading forms and being able to view the status of an application online to paying taxes online and receiving welfare payments digitally, it said.

"And today, we stand at a new frontier India is leading the world in building shared digital infrastructure that can be leveraged by both government and private sector to unlock new solutions and enhance citizen experience," the report said.

It describes this approach of designing technology infrastructure which can unlock economic and societal value, while minimising risks and possible harms, as ODEs. ODEs are dened as: "open and secure Digital Platforms that enable a Community of actors to unlock transformative solutions for society, based on a robust Governance framework."

It identies three layers to help bring an ODE to life digital platforms comprising technology infrastructure and solutions built on top; community comprising builders, facilitators and end users; and a third layer of governance which consists of laws and rules and the accountable institutions that uphold them.

The ODE approach suggests that the government should focus on creating the digital commons; enable interoperability between siloed systems, so that innovators can build on top, by leveraging open source software, data, standards, licenses and APIs, the report said.

The recently announced National Digital Health Mission by the Prime Minister, which aims to create an integrated interoperable digital health platform for all health related services, was an example of the ODE approach, it said.

Efforts like India Stack, DIKSHA and the National Urban Innovation Stack have also adopted a similar approach in other sectors.

While the report estimates the potential impact of this approach, it also points out signicant risks that may arise, such as the risks of data centralisation, which need to be addressed through a robust governance framework and safeguards that protect the citizens data.

It estimates that by 2030, ten high potential National ODEs (NODEs) in sectors like health, agriculture and justice can collectively create a new economic value of USD 500-plus billion and also generate USD 200-plus billion in savings.

The report builds on the ideas laid out in a whitepaper on NODEs which was published earlier this year for a public consultation, by the union Ministry of Electronics & Information Technology (MEITY).

J Satyanarayana, Advisor, National Digital Health Mission and former chairperson, UIDAI, said "we need to raise the bar" from systems-thinking to ecosystems-thinking.

"Digital ecosystems can evolve faster if we create the right environment, which includes open-standards based architecture, data policies, collaborative design, and innovation. Leveraging legacy systems can help adoption. Wellcrafted ODEs will open up a huge world of opportunities for innovation & value added services", he said.
 
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Newsreel + archive thread for Indian Economy (w.r.t major indicators and developments), discussion is also welcome.
 
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Current state of Indian economy: The good, the bad and the ugly
Indian economy: The ongoing recovery continues to face at least two risks: growing infections across the country and rising stress in state finances.



High frequency indicators suggest that August was the best month for the economy since the imposition of a nation-wide lockdown on March 25. However, these trends should be seen as a sequential improvement rather than a return to pre-pandemic levels of economic activity. The ongoing recovery continues to face at least two risks: growing infections across the country and rising stress in state finances.

Good news: Sequential recovery picks up

Purchasing Managers’ Index (PMI) for manufacturing was recorded at 52 in the month of August. A PMI value above 50 signifies expansion of economic activity. PMI (manufacturing) was in contraction zone between April and July. Maruti Suzuki, India’s largest car maker sold 21.7% more cars in August 2020 than it did in the same month last year. To be sure, these numbers are dispatches to dealers and not retail sales. However, these numbers do suggest that consumer demand is picking up with easing of lockdown restrictions.



Bad news: Economy still far from pre-pandemic levels

The sequential recovery should not create an illusion that the economy has recovered from Covid-19’s disruption. The Nomura India Business Resumption Index (NIBRI) was reported at 75.7 in the week ending August 30. This is better than what it was earlier; but the latest values are 24 percentage points less than pre-pandemic levels compared to a 31 percentage point deficit in July. The report notes that “the recovery is uneven and the recurring weakness in the labour market highlights the fragility of household demand”. It also attributes some of the recovery to post-lockdown pent-up demand.



Ugly part: Growing squeeze on state finances

There is growing consensus that a fiscal stimulus is indispensable for an economic recovery. Gross Value Added (GVA) numbers released on Monday show a contraction in the public administration, defence and other services sub-sector. Central Government Account (CGA) numbers from the ministry of finance show that the centre has spent more on both revenue and capital expenditure heads between April and July than it did last year. This means that the fall in spending must have come from the states. Things could become worse, given the growing crisis in state finances. The states will face a shortfall of Rs 2.35 lakh crore in GST compensation cess payments. They will also suffer because of a shortfall in other central taxes. The centre has mostly kept the windfall tax gains from lower crude prices to itself. A resource crunch for the states will lead to a double whammy -- a pro-cyclical reduction in government spending and a lowering of guard in fighting the pandemic. India can’t afford either.
 

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After sharpest GDP fall, chief economic advisor Subramanian says India witnessing V-shaped recovery

India's growth contracted by 23.9 per cent in the first quarter with only agriculture witnessing positive growth. Two consecutive quarters of negative growth define a period of recession.


GDP numbers are out and they spell trouble for the Indian economy, already reeling under the pressure of the novel coronavirus pandemic and the subsequent nationwide lockdown.

As per the much-awaited data, GDP contracted by 23.9 per cent, the worse ever recorded in India's history.

Recession is defined as a fall in the overall economic activity for two consecutive quarters (six months) accompanied by a decline in income, sales and employment. At -23.9 per cent, India is staring at a recession because the Indian economy has witnessed a contraction in growth for the two consecutive quarters now.

Crucial parameters like manufacturing, construction, trade, hotel industry have seen a decline and slid into negative.

Manufacturing growth saw a decline of 39.3 per cent while mining growth contracted by 23.3 per cent, construction growth by 50 per cent, and trade and hospitality by 47 per cent, one of the worst-hit by the Covid-19 outbreak. Manufacturing, construction, trade, hospitality and transport which account for almost 45 per cent of India's GDP were hit hard by the lockdown and are yet to recover.

The sector which has bucked the trend is agriculture which witnessed a growth of 3.4 per cent.

When compared to global players, the pandemic seems to have affected the Indian economy the most. The UK clocked a decline of 20.4 per cent in growth in the first quarter (April-June) while the United States recorded a decline of 9.5 per cent in growth in the same quarter.

Chief Economic Adviser KV Subramanian, while giving a statement on the latest GDP figures said, "The number is on expected lines, the global economy has taken a hit, India is not isolated. India is seeing a V-shaped recovery, agriculture has seen an uptick and it will continue to do so."


Giving the example of UK, Subramanian said, "United Kingdom's lockdown was less stringent than India. If you use the Oxford University's index, India's lockdown was 15 per cent more stringent than that of UK and it is a country which has the same economic size as India, there was a contraction of 22 per cent in UK's economy, given the high intensity of lockdown here, the number is on expected lines."

Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII) said, "Large contraction in the first quarter GDP print for the current fiscal at -23.9 per cent was widely expected, and it reflects the wide-spread stalling of economic activities due to the stringent lockdown in response to the pandemic."

"We have already started to see a discernible improvement in the many high-frequency indicators, which are expected to pick-up further, going forward. In this context, the localized lockdowns being imposed by state and district administrations may be avoided so that the economic recovery can be kept on track," Banerjee added.

Covid-19 effect

The estimated GDP growth data accounts for the months of April, May and June - when a strict nationwide lockdown was in place across the country to contain the Covid-19 pandemic. The economy is believed to have suffered the most during the June quarter as a result of the lockdown.

Prime Minister Narendra Modi had announced the first nationwide lockdown on March 24 and said that it would be enforced for 21 days. The same was extended by another 19 days.

RBI annual report

In its recently published annual report, the Reserve Bank of India (RBI) refrained from providing a clear number for GDP growth for contraction, but it did state that "an assessment of aggregate demand during the year so far suggests that the shock to consumption is severe and it will take quite some time to mend and regain the pre-Covid momentum".

Reports pointing to contraction

A recent Mc Kinsey global institutes report on India's employment needs stated that India needs to create 90 million non-farming jobs over the next decade and for that, it will have to grow at 8 to 8.5 per cent every year.

Former Chief Statistician of India Pronab Sen has pegged the de-growth estimate for April-June at around -20 per cent.

Meanwhile, Barclays' projection indicates that the Indian economy will contract 25.5 per cent in April-June.

State Bank of India had expected India's GDP to contract 16.5 per cent in the April-June quarter in its earlier Ecowrap report in May.
 

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The numbers are not a surprise for this quarter. Have to watch out for the following 2 quarters to understand how fast the recovery will happen.
 

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Turkey-India Business Council inks goodwill deal to facilitate trade





The Turkey-India Business Council of Turkey’s Foreign Economic Relations Board (DEIK) has signed a goodwill agreement with Dubai-based Emirates NBD Bank in a bid to further facilitate and develop trade and investment relations between the two nations.

DEIK Turkey-India Business Council Chairman Tevfik Dönmez told Anadolu Agency (AA) Tuesday that with this agreement, an important step was taken to strengthen cooperation with NBD Emirates Bank, which has business relations with 15 public and private financial institutions in Turkey and has been conducting commercial banking activities in India’s Mumbai since 2017.

“With the agreement, which is an indicator of goodwill in providing convenience to Turkish companies in many bank transactions, including participation banking, we conveyed to NBD Emirates Bank the necessity of taking many important steps from low-cost letters of guarantee to fast money transfers and adding DEİK members to the distribution list for corporate services provided by NBD Emirates Bank,” he said.

Dönmez explained that they had the opportunity for special cooperation with five bank branches in four states in India and that they also signed a memorandum of understanding (MoU) with the Bank of Bahrain and Kuwait (BBK) through the business council.

Stating that the problems between Turkish and Indian banks were negatively affecting bilateral trade, Dönmez explained that the main issue is that Indian banks do not use their correspondent networks with their Turkish counterparts, therefore disabling direct business.



“When a Turkish company conducting business in India needs bank collateral, a third-country bank with which banks of both countries worked needed to intervene, which increased costs considerably,” he said, highlighting that they have eliminated all these problems by conveying them to the relevant parties.

“I wholeheartedly believe that such cooperation will greatly contribute to bilateral trade figures and pave the way for Turkish businesspeople who want to do business in India,” he stressed.

Bilateral relations below potential

Dönmez said India, with its self-sufficient agriculture-based economy and dynamic, young population, has been undergoing a relatively comfortable transition to the post-COVID-19 period, but due to the severe conditions of the pandemic and the possible costs to the economy, the nation's full opening to foreign countries has been partially delayed.

Reminding that flights with India have recently resumed, Dönmez stressed that they believe with the normalization process, commercial, economic and cultural relations with New Delhi will gain greater momentum. He added that the number of tourists coming to Turkey from that country has reached 300,000 after a 100% increase two years in a row.

Dönmez said that India is among the 17 target countries included in the Export Plan of the Trade Ministry, noting that although bilateral trade and investment relations have trended upward in recent years, they are still below their potential.

“The target in our trade volume, which is currently at $8.5 billion, should be to reach $20 billion,” he said, noting that an approximately 1.3-time increase in Turkey’s machinery, cement and inorganic chemical exports to India was a determinant factor in the overall growth of foreign sales to the country in last five years.

A large portion of the increase can be attributed to energy exports, which jumped from $18 million in 2013 to $120 million. Shipments to India of dried fruits and similar products, aquaculture and animal products, and fresh fruits and vegetables have also been on the rise in recent years, he added.

Stressing that a large part of Turkey's imports from India consists of raw materials, Dönmez said the health, food and construction sectors’ potential is high regarding trade relations with that country.

He noted the DEIK Turkey-India Business Council wants to sustain growth in trade volume by supporting local firms that plan to enter the Indian market and coordinating win-win agreements and projects.
 

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India now in top 50 on global innovation list



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Mumbai: India has been ranked 48th on the Global Innovation Index (GII) 2020 among 131 economies, breaking into the top 50 countries for the first time. Moving up four positions from last year, three ‘clusters’ — Bengaluru, Delhi and Mumbai — feature in the top 100 science & technology hotspots, further endorsing India’s presence in the global innovation economy.


High-income countries Switzerland, Sweden, the US, the UK and the Netherlands lead the innovation ranking, with a second Asian economy — South Korea — joining the top 10 for the first time. Singapore is ranked at the eighth position.

The GII by the World Intellectual Property Organization (WIPO) ranks global economies according to their innovation capabilities, including roughly 80 indicators, grouped into innovation inputs and outputs. Together with three other economies — China, Vietnam and the Philippines — India has made the most significant progress in the GII innovation ranking over time, it said.
 

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Japan to offer incentives to companies shifting base from China to India: Nikkei


Japan has added India and Bangladesh to the list of relocation destinations for companies which shift their manufacturing sites from China to ASEAN countries.

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Tokyo: Japan's Ministry of Economy, Trade and Industry (METI) has added India and Bangladesh to the list of relocation destinations for companies which shift their manufacturing sites from China to ASEAN countries.

By expanding the scope of the subsidy programme, Japan aims to reduce its dependence on a particular region and to build a system which is able to provide a stable supply of medical materials and electronic components even in an emergency, reports Nikkei.

The government has allocated 23.5 billion yen in 2020 supplemental budget for the subsidy to encourage companies to disperse their manufacturing sites across ASEAN region.

In conjunction with the second round of applications which began on September 3, projects that will contribute to the resilience of the ASEAN-Japan supply chain were added to the list, assuming relocation plans to India and Bangladesh.

The second round of application targets feasibility studies on decentralising manufacturing sites, the experimental introduction of facilities and implementation of model projects. The total amount of subsidies which will be provided is reported to reach several billion yen, said Nikkei.

The supply chain of Japanese companies currently heavily relies on China. During the COVID-19 pandemic, the supplies were cut off.

In the first round of application which closed in June, the Japanese government approved 30 manufacturing projects, including Hoya's manufacturing of electronic components project in Vietnam and Laos, and provided subsidies of 10 billion yen.
 

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Indian forex reserves up by over 3 billion USD over past week. Now at record 541.5 billion USD.
 

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Indian forex reserves up by over 3 billion USD over past week. Now at record 541.5 billion USD.

Yes internal depression driven mostly.

There is huge compression in demand for imports basically, much more than the reduction in exports.

It is not good, India has to rebound strongly as soon as possible.
 

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Big booster: Govt panel clears $100-billion mobile export proposals from global manufacturers


Foxconn, Pegatron, Wistron, Samsung, Karbonn, Lava among companies that submitted applications. Apple’s contract manufacturers and Samsung have submitted production estimates of phones worth $50 billion each in the next five years.


New Delhi: Applications by iPhone contract makers Foxconn, Pegatron and Wistron as well as Samsung, Karbonn, Lava and Dixon to export mobile phones worth around $100 billion from India have been cleared by the empowered group, said people with knowledge of the matter.

“The empowered committee has approved all applications estimated to export around $100 billion (Rs 7.3 lakh crore) worth mobile phones under the production linked incentive scheme (PLI) and all the applications will be placed before the cabinet probably this week,” a senior government official told ET.

Members of the empowered committee include the Niti Aayog CEO along with the secretaries of economic affairs, expenditure, revenue, the Ministry of Electronics and Information Technology (MeitY), Department for Promotion of Industry and Internal Trade (DPIIT) and Directorate General of Foreign Trade (DGFT). Five of the applicants are overseas ones, seven are Indian and another six are in the components manufacturing scheme, officials said.

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Apple’s contract manufacturers and Samsung have submitted production estimates of phones worth $50 billion each in the next five years, according to the applications, said people with knowledge of the matter. Exports will be slightly lower in each case.

Scheme was Notified in April
“The extraordinary response to the PLI shows enormous trust of the global community in India’s manufacturing capability and leadership of Prime Minister Narendra Modi,” Communications & IT minister Ravi Shankar Prasad told ET.

The PLI scheme, which aims to make India a manufacturing hub for smartphones, was notified in April. Apple’s contract manufacturers started producing its latest handset models, the iPhone 11 and iPhone SE, shortly after that in India. The scheme is aimed at attracting manufacturers looking to move out of China amid Sino-US trade tensions, and even looks to draw companies from manufacturing hubs such as Vietnam. While Foxconn and Wistron already have plants running in India, Pegatron — Apple's second-largest contract manufacturer — is looking to set up its factory and is talking to states such as Uttar Pradesh, Tamil Nadu, Karnataka and Andhra Pradesh.

Meanwhile, Samsung, which now exports phones worth about $2.5 billion from India, is all set to ramp up its production to handsets worth $50 billion in the next five years. Of this, $40 billion will comprise devices with a factory price of more than $200.

“Samsung exporting $2.5 billion out of India — of this, 97% was in the below $200 segment. By putting this floor price of $200 for eligibility in the PLI scheme, we have incentivised them to make high-value phones in the country and now they will be vacating this space of less than Rs 15,000 factory price for Indian players to occupy,” said the first official cited above. “This is an important stage as it will ensure that Indian players are able to climb up the learning curve and start making world-class smartphones to compete globally.”

The five global applicants are Samsung, two units of Foxconn, Wistron and Pegatron. The domestic ones are Lava, Dixon, Micromax, Padget Electronics, Sojo, Karbonn and Optiemus. According to government data, 22 companies had applied for the Rs 41,000-crore PLI scheme.
 

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As the Covid-19 pandemic spreads and case numbers soar in India, a vaccine is keenly awaited. Serum, an Indian-based company that has made billions of doses of vaccines in the past, is hoping to roll out a vaccine soon, its CEO Adar Poonawalla told the BBC. This video was filmed before the clinical trials for a vaccine developed by AstraZeneca and Oxford University were put on hold. Serum is a partner in mass producing it.
 

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Ashok Gulati, Infosys Chair Professor - Agriculture, ICRIER on the major farm bills cleared by the Parliament, and whether this will lead to better pricing for farmers. He believes that farmers will get a better choice with the new bills, and rise in price realisation will bring efficiencies to the ecosystem. He expects the storage capacities for products to be cleared in hinterlands and saving on the wastage can lower prices for the consumers. He also sees the need to utilise PPP to create infrastructure for farmers.
 

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Govt of India exploring options to buy Embraer's commercial aircraft biz
One of the arrangements the government is considering is a tie-up with a sovereign fund to finance the deal
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Embraer | Modi govt | Aviation sector
Subhomoy Bhattacharjee | New Delhi Last Updated at September 25, 2020 07:07 IST


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The Indian government is keen to buy Embraer’s commercial aircraft division, said a top-ranking government official. “We are very interested. We are exploring alternatives,” the official said, confirming a development reported earlier by Reuters on Brazil’s plans to reach out to India and China as possible new partners.
One of the arrangements the government is considering is a tie-up with a sovereign fund to finance the deal. This is the first time the Indian government has expressed clear willingness to enter the deal. The official said India’s ...

 

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Having a 2+ trillion USD market cap likely helps....but the road ahead is long.



New Delhi [India], October 1 (ANI): After returning to expansion territory in August, India's manufacturing sector growth gathered momentum in September, according to the latest IHS Markit Manufacturing Purchasing Managers' Index (PMI) released on Thursday.The PMI reached its highest mark since January 2012, supported by accelerated increases in new orders and production.

Concurrently, there were renewed expansions in export sales and input stocks as well as an improvement in business confidence. Output prices rose for the first time in six months, reflecting an uptick in input costs.

The headline seasonally adjusted IHS Markit India Manufacturing PMI increased from 52 in August to 56.8 in September, signalling back-to-back improvements in the health of the sector. Moreover, the latest reading was the highest in over eight-and-a-half years.

(more at link)
 
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Follow up happening:



Major iPhone assemblers for Apple Inc. were among 16 companies that won approval to manufacture products in India under a plan aimed at attracting investment of more than 10.5 trillion rupees ($143 billion) for mobile-phone production over the next five years.


Apple’s primary suppliers -- Foxconn Technology Group, Wistron Corp., Pegatron Corp. -- and Samsung Electronics Co. were among a list of global firms that were cleared by India’s Ministry of Electronics and Information Technology, according to statement on Tuesday. About 60% of the total production, or 6.5 trillion rupees, is expected to be exported in the next five years, it said.

(more at link)



Apple's (NASDAQ:AAPL) fortunes in India -- the world's second-largest smartphone market -- have been turning around despite the negative impact of the novel coronavirus pandemic on the country's economic situation.

The iPhone maker recorded a 5% increase in shipments in India in the second quarter of 2020 while the overall market plunged -- an impressive feat considering the premium pricing of Apple devices in the Indian context. Now the smartphone giant seems all set to make further inroads into this market, which has thus far been dominated by Chinese original equipment manufacturers (OEMs), thanks to a couple of favorable developments.

(more at link)
 

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With the second-largest standing army in the world, India is among the top five countries with the highest military spending in 2019.

As per the budget of the country for the financial year 2020-21, the total allocation for defense is about USD 60 billion. Around one forth of this amount is allocated for capital expenditure.

India’s requirements on defence are catered largely by imports. The opening of the Defence sector for private sector participation will help foreign Original Equipment Manufacturers (OEMs) to enter into strategic partnerships with Indian companies. This will enable them to leverage the domestic markets as well as aim at global markets. Besides helping in building domestic capabilities, it will also bolster exports in the long term.

Since 2014 the Ministry of Defence has signed more than 180 contracts with the Indian Industry. As of December 2019, these contracts were valued over USD 25 billion approximately.

Favourable government policy which promotes self-reliance, indigenisation, and technology upgradation. The policies also aim at achieving economies of scale, including the development of capabilities, for exports in the defence sector.

India’s extensive modernisation plans with an increased focus on homeland security and growing attractiveness as a defence sourcing hub.

India’s total expenditure on modernization and equipment in the defence sector in the last three fiscals (till January 2020) was about USD 37 billion.

Around one third of the allocation to defence (excluding defence pensions) in the budget for FY 2020-21 is allocated for capital expenditure.

Total defence budget allocation for the Ministry of Defence is 15.49% of the total Central Government expenditure in 2020-21 Budget. The allocation for Defence in India's budget in 2020-21 is around USD 62.06 billion.

 

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