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Daily Financial News Analysis – 11th July’20 – Free PDF Download


Boycott China may backfire

  • Chinese aggression in the Galwan valley.
  • It has ignited India’s sense of outrage.
  • Knee-jerk actions are practically useless.
  • US sanctions has created huge damage to Iranian economy.
  • Indian imports from China are less than 5% of total Chinese exports.
  • Indian exports to China constitute a miniscule fraction of total Chinese imports.
  • None of the items exported by India to China is of an essential or strategic nature.
  • China can absorb the effects of any economic weapon employed by India.
  • The big question is that if China can give a tough economic war to USA, then what are our chances?
  • What if China bans its exports to India?
  • China has become an increasingly important trading partner for India.
  • China is now at the top of the list of countries exporting to India.
  • China also occupies the third position in terms of destination for Indian exports.
  • China supplies 70% of our API imports.
  • Any break in the supply of APIs will result in a temporary reduction in the production of a number of essential drugs such as paracetamol and several antibiotics in common use.
  • It will take some time before the supply chain is restored.
  • Price rise will affect large section of the population.
  • A self-reliant economy is protected from any disruptions in supply chains arising out of external threats.
  • If domestic production indeed displaces imports, it also creates jobs and possibly increases national income.
  • That is the rationale for the recent call for “Atmanirbhar Bharat” and the earlier “Make in India” slogan.
  • Goods are normally imported because they are either cheaper than their domestic counterparts or are of superior quality.
  • Self-reliance does not come for free.
  • In practice, complete self-reliance is not even a practical objective for any country.
  • A better option is to build an efficient, globally competitive economy.

PM on Solar energy

  • Prime Minister Narendra Modi  inaugurated Asia’s biggest solar project in Rewa, Madhya Pradesh.
  • The 750 MW plant in Rewa is the first renewable energy project to provide energy outside the state — to Delhi Metro.
  • Modi welcomed foreign investment in the renewable energy sector, calling India the most attractive market for clean energy.
  • PM Modi termed solar energy “sure, pure, and secure“
  • Rewa’s “ultra mega” project will reduce carbon dioxide emissions every year by about 1.5 million tonnes
  • Modi said the government has realised the need for commissioning many such other projects which would manufacture PV cells, batteries and storage equipment.
  • RK Singh: the government plans to levy a basic custom duty of 15-20%, which would rise to 40% in a year’s time, to reduce dependence on China.

Indo-US trade

  • Piyush Goyal and Wilbur Ross to meet via video conference on 14 July.
  • Aim: deepen bilateral trade
  • Few months back both nations announced a limited trade deal.
  • The meeting comes at a crucial time when India is firming up a comprehensive strategy to target “non-essential” and sub-standard imports, particularly from China.
  • The India-US CEOs Forum is also expected to hold a meet on July 14 to further bolster their engagement, said the source.
  • The meeting also comes close on the heels of the US launching a probe against India and nine others, including the EU and the UK, for imposing or considering a 2% digital services tax (equalisation levey) with potential to hurt American companies.
  • India is also finalising a draft e-commerce policy, an area of immense interest to the US.
  • The new draft has talked about periodic audit of the storage.
  • However, e-players will have to build in adequate safeguards at the specified storage locations as well to ensure privacy of the user isn’t compromised.
  • The US had earlier raised concerns over mandatory local storage, among others.
  • The US recently moved to suspend the issuance of new non-immigrant visas, especially for skilled professionals until December 31.
  • The US has been impressing on India to reduce its “high” tariffs on a range of products, including high-end mobiles phones and bikes.
  • It’s seeking greater and easier access to the Indian markets in agricutlure, dairy, medical equipment, among others.
  • For its part, India is pitching for an exemption from the extra duty imposed by the US on steel and aluminium, resumption of duty-free export benefits for some Indian goods under the so-called Generalised System of Preferences (GSP) as well as greater market access for its products in sectors ranging from agriculture, automobile and auto components to engineering.
  • India’s exports to the US, its largest market, touched $52.4 billion in 2018-19, while imports were to the tune of $35.5 billion.
  • Its trade surplus with the US has been shrinking in recent years, as it has stated importing oil and gas from the largest economy, something that India has been highlighting in bilateral talks.
  • New Delhi’s trade surplus with Washington eased to $21.3 billion in 2018 from $22.9 billion in 2017.
  • In contrast, China’s trade surplus with the US widened further to a record $419.2 billion last year from $375.6 billion in 2017, despite the tariff war between the top two economies.



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