Latest news with #EAC-PM
Mint
4 hours ago
- Business
- Mint
‘India Inc must make fresh investments instead of sitting on cash'
New Delhi: Indian companies need to make fresh investments instead of holding cash, since their profits have improved and have healthy balance sheets, chairman of the economic advisory council to the prime minister (EAC-PM) S. Mahendra Dev said in an interview with Mint. To be sure, private investments are showing early signs of growth, and will likely accelerate once global uncertainties subside, he said, before conceding that government capital expenditure remains central to short-term economic stimulus. He emphasised that investment-led growth is the most effective strategy for India, hoping that rural and urban demand gathering pace will catalyse increased private investments. US president Donald Trump has unleashed a disruptive tariff war against the world, causing a great deal of trade uncertainty and prompting companies to hold off on fresh investments. Dev emphasised that India's economy has the capacity to grow on a sustainable basis at rates needed for becoming a developed-country over the next 25 years—some estimates project a requirement of nominal growth of 11% to 12% and 7% to 8%, adjusted for inflation. However, states have to make more efforts to attract investments, both domestic and foreign, Dev said. India's economy expanded at 6.5% in FY25, with the nation's central bank projecting a same growth rate in FY26. Above-normal monsoon augurs well for higher farm output growth in FY26, Dev said in the email interview. While Central programmes are improving agricultural productivity and cash transfers are helping to raise credit and investment, states should continue reforms in the sector for faster growth and improved farmer incomes, he said. Artificial intelligence use offers both challenges and opportunities but is likely to have an overall positive impact on jobs in India, Dev said, citing studies on the subject. Dev emphasised the point that private investment growth needs to gain momentum given that there is no dearth of capital availability. 'There are some green shoots on private capex. Many state governments are also attracting domestic and foreign private investment. Corporate sector and banks are having more profits now and their balance sheets are in good shape. So, there is no problem of capital availability. Industry is positive about India's growth story. Corporate sector is probably holding investing in capacity expansion due to global uncertainties and overcapacity in some countries like China,' said Dev. 'Increase in rural and urban demand will facilitate more private investment. Many firms turned debt-free and doubled their cash on the books. India Inc has to make new investments instead of keeping the cash,' Dev said. To achieve this, there is a need for more progress on 'ease of doing business' at the state level, Dev added, citing the case for deregulation made in Economic Survey 2024-25. 'Hopefully, private capex will be more once the domestic demand increases further and global uncertainties are reduced. Once the tariff concerns are over, there will be more opportunity for Indian industry to invest. Factors such as ease of doing business, availability of land and other infrastructure, logistics, and needed manpower attract investment to states. States have to make more effort to invite foreign direct investment and domestic private investment,' he said. Dev also called for maintaining the thrust on government's capital expenditure in the meantime. 'It is generally argued that India's growth strategy should be driven by encouraging consumption. However, a study by C. Rangarajan and D.K. Srivastava indicate that an investment-led growth strategy is the best choice and that government expenditure still holds the key for stabilisation or short-term stimulation. Investment-led consumption is more sustainable,' Dev said, quoting from the study published earlier this month in the Economic and Political Weekly. Private final consumption expenditure, or household spending, the biggest component in India's national income, on the other hand, expanded faster at 7.2% in FY25 compared to a 5.6% growth in FY24, Dev said. 'Rural consumption played an important role in this growth. The India Meteorological Department (IMD) expects above normal monsoon this year and it augurs well for higher agricultural growth, rural consumption and lower inflation. Therefore, we can expect that rural economy will do well in FY26 as well,' Dev added. Although there is volatility in agriculture growth, resilience of agriculture to monsoon has increased over time due to increase in irrigation coverage and other measures. Agriculture output grew at an average annual rate of 4.6% during the last eight years--2017-18 to 2024-25, Dev said, adding that FY25 also recorded a growth rate of 4.6%, contributing significantly to gross value added (GVA) growth of 6.4% last fiscal. The Indian economy is resilient and continues to be the fastest-growing country among large economies, Dev said, adding that some estimates have projected a requirement of nominal GDP growth of 11-12% and real growth rates of 7-8% to achieve the goal of becoming a developed country by 2047. 'India has the potential to achieve these growth rates. The country is on its way to becoming the fourth-largest economy in the world at the end of FY26. It has also shown considerable progress towards nearly eliminating extreme poverty and reducing consumption inequality,' added Dev. Some increase in investment rate, including domestic and foreign private investment, efficiency in capital use and enhancement of total factor productivity will boost India's growth, he said. 'Rise in savings in the economy is important for higher investments. Structural transformation of economy in output and employment from agriculture to manufacturing and services is also important for higher growth. India is doing well in service exports. There are significant opportunities for manufacturing exports in spite of global uncertainties on trade. Some other sources of growth are India's fast growing young work force, rise in human capital and technology, fast growing digital technology including artificial intelligence (AI),' Dev said. A youth population with a median age of around 28 years, compared to the ageing population of developed countries, is another key driver of economic growth for India. Increasing urbanisation will need more city infrastructure and it will improve growth. Reduction in global uncertainties in future will add to higher growth. Increasing women empowerment will raise India's GDP. The 2047 goals also include inclusive growth and sustainability objectives,' added Dev. 'In achieving higher growth rate for India, states play an important role. It is a healthy sign that states are competing by announcing goals on GDP and GDP per capita. Many studies have shown that improving 'state capacity' and governance is important in raising incomes of people and delivering public services like education and health. Similarly, decentralization of resources to Panchayats and Municipal Councils is needed, added Dev.
Indian Express
4 days ago
- Business
- Indian Express
India-EU trade deal negotiations: Differences over food safety rules persist, ‘intense work needed' says EU report
India and the European Union (EU) continue to differ on Sanitary and Phytosanitary Measures (SPS), which govern food and animal safety rules and are key to India's agricultural and processed food exports to the EU, according to a status report released by the EU on Thursday. This report follows the 12th round of talks earlier this month. This assumes significance as the EU is India's largest and most premium export destination for agricultural items, particularly coffee, tea, spices and rice. However, India's exports to the EU have seen limited growth over the years, rising from $3.02 billion in FY19 to $4.54 billion in FY25, largely due to the stringent standards imposed by the EU on foreign agricultural products. 'Negotiators made some progress on the articles about listing of establishments, regionalisation and risk assessment. Further intense work will still be required on several pending articles, such as harmonisation, technical consultations or dispute settlement. Work will continue on these provisions inter-sessionally and at the next round with the objective to consolidate the chapter's text,' the EU said on the Sanitary and Phytosanitary Measures (SPS) chapter. One key argument from the Indian side has been the EU's imposition of pesticide residue regulations and other norms that are often stricter than World Health Organization (WHO) standards. The EU regularly rejects Indian shipments, citing differences in standards, including restrictions on the use of methyl bromide fumigation for certain plant products. According to the Economic Advisory Council to the Prime Minister (EAC-PM) report in 2022, the EU enforces stringent aflatoxin limits. Aflatoxins are toxins commonly found on agricultural crops such as peanuts, maize (corn), rice and tree nuts, especially in warm and humid climates. 'For instance, the present EU level of aflatoxin in peanuts for direct human consumption is 2 µg/kg for B1 and 4 µg/kg total aflatoxin, and 8 µg/kg B1 and 15 µg/kg total aflatoxin for further processing. However, Codex (WHO standards) has set the maximum limit at 15 parts per billion (PPB) for peanuts,' the EAC-PM report said. 'Also, in spices, the EU has set a stringent limit for aflatoxin B1 and total aflatoxins at 5 PPB and 10 PPB respectively, applicable to chillies and several other spices. However, the US permits aflatoxin levels (total) of 20 PPB for all spices,' the report said. In the Rules of Origin chapter, the EU report stated that the negotiations cover both procedures and product-specific rules related to agricultural and processed agricultural products, fish products, chemical and petroleum products. Discussions also covered wood and paper products, machinery, and industrial items such as railways, aircraft, ships, and medical devices. 'Discussions focused on both market access (tariff schedules) and the remaining articles of the chapter's text. EU and India explored whether solutions could be found for the pending issues in the text. On market access, detailed discussions continued on both industrial products and the agri-food sector,' the report on the Trade in Goods chapter said.
The Print
5 days ago
- Business
- The Print
India should negotiate trade agreement with US on its own term: EAC-PM chief
'The overall approach of India is negotiating trade agreements with countries on its own terms and keeping in view the national interests. The negotiations are going on and the ultimate decision depends on the mutual interests of both countries,' he told PTI. Dev expressed hope that India will have an advantage over other countries on tariffs once the Free Trade Agreements (FTAs) are signed, and it would boost exports. New Delhi, Jul 17 (PTI) India should negotiate a trade agreement with the US on its own terms, keeping in view the national interest, Economic Advisory Council to the Prime Minister (EAC-PM) Chairman S Mahendra Dev has said. US President Donald Trump has said the proposed trade deal with India would be on the lines of what America has finalised with Indonesia on Tuesday. Under the US-Indonesia trade pact, the Southeast Asian nation will provide complete access to its market to US products, while Indonesian goods would attract a 19 per cent duty in America. In addition, Indonesia has committed to purchasing USD 15 billion in US energy, USD 4.5 billion in American Agricultural Products, and 50 Boeing jets. The Indian team is in Washington for the fifth round of negotiations for the proposed Bilateral Trade Agreement (BTA). India has hardened its position on the US demand for duty concessions on agri and dairy products. New Delhi has, so far, not given any duty concessions to any of its trading partners in a free trade agreement in the dairy sector. India is seeking the removal of this additional tariff (26 per cent). It is also seeking the easing of tariffs on steel and aluminium (50 per cent) and the auto (25 per cent) sectors. Against these, India has reserved its right under the WTO (World Trade Organisation) norms to impose retaliatory duties. Asked should India has a slightly higher inflation target rate for a growth economy, Dev said, 'There is no need to increase inflation target when the present framework is doing well on both inflation and growth objectives.' He noted that there are some suggestions that RBI should use core inflation, excluding food for inflation targeting (IT). 'We will have better inflation data from CPI after the revision of base year to 2024,' the EAC-PM Chairman said. Dev said the experience of (IT) in the last 10 years shows that Inflation stayed within the band of 2 per cent-6 per cent with some exceptions and inflation declined significantly under IT framework. 'It may be noted that higher inflation hurts the poor and middle class mostly. Low inflation is also important for sustainable growth,' he said. Since 2016, India has adopted a flexible inflation targeting (IT) framework where the RBI aims to maintain a specific inflation rate, currently 4 per cent, with a tolerance band of +/- 2 per cent (i.e., between 2 per cent and 6 per cent). Similarly, Dev said the Fiscal Responsibility and Budget Management (FRBM) targets should be continued for sound fiscal management. 'It may be noted that a higher fiscal deficit will increase inflation and hurt growth,' he said, adding that Interest payments will be higher and lower funds will be left for development expenditure. While noting that the government has done well to reduce fiscal deficit from 9.2 per cent in FY21 to 4.8 per cent in FY25 and budgeted 4.4 per cent in FY26, he said the government has been sticking to its fiscal consolidation roadmap despite competing demands for expenditures. On Production Linked Incentive (PLI), he said one should not look at only the direct effect of PLI-linked sectors, as there is significant interlinkage between PLI and non-PLI sectors. 'PLI incentives, along with FTAs with other countries, should attract FDI and enhance exports,' Dev said. He pointed out that studies indicate that the share of Direct Value Addition (DVA) declined for electronics while the share of indirect DVA increased, suggesting linkages with upstream industries. 'Government is working on increasing gross value added, reducing import content and increasing employment for PLI sectors by encouraging local manufacturing capability,' Dev said. The government launched the PLI scheme for 14 sectors to incentivise domestic manufacturing, increase production, create new jobs and boost exports. The thrust of PLI is to make domestic manufacturing globally competitive and reduce imports by increasing domestic value addition. The PLI scheme adopts a sector-specific approach, avoiding a 'one size fits all' methodology. In the electronics sector, PLI aims to scale up assembly processes to encourage the existing domestic manufacturing ecosystem. India is one of the biggest assemblers and exporters of mobile handsets. In FY15, mobile phone imports accounted for 78 per cent of the market in value terms, whereas by FY23 this figure had dropped to just 4 per cent. 'A similar story can be heard for exports. The electronics and renewable energy sectors have attracted higher FDI inflows,' Dev said. PTI BKS BKS DR DR This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
Time of India
5 days ago
- Business
- Time of India
India-US trade deal: India should negotiate agreement on its own term, says EAC-PM chief
Mahendra Dev, chairman EAC-PM (Image credits: X @MahendraDevS) India should negotiate the proposed India-US trade agreement on its own terms, keeping national interest in focus, said S Mahendra Dev, chairman of the economic advisory council to the Prime Minister (EAC-PM). He believes that India stands to benefit from lower tariffs and increased exports once Free Trade Agreements (FTAs) are finalised. "The overall approach of India is negotiating trade agreements with countries on its own terms and keeping in view the national interests. The negotiations are going on and the ultimate decision depends on the mutual interests of both countries," Dev told PTI. His remarks come as India and the US hold the fifth round of talks on a proposed Bilateral Trade Agreement (BTA) in Washington. India has taken a firm stand on the US demand for duty concessions on agricultural and dairy products. So far, India has not given any such concessions in the dairy sector under any FTA. India is also seeking the removal of additional tariffs on its exports, including 26 per cent on certain goods, and easing of high US tariffs on steel and aluminium (50 per cent) and automobiles (25 per cent). India has retained the right to impose retaliatory duties under World Trade Organisation (WTO) norms. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Everyone's Ditching Their Costly ACs for This Simple Gadget AiraBreeze Learn More Undo US President Donald Trump recently said that the proposed deal with India would be similar to the one signed with Indonesia. Under that agreement, Indonesia gave full market access to US goods, while its exports face a 19 per cent duty in America. Indonesia also agreed to purchase $15 billion in US energy, $4.5 billion in agricultural products, and 50 Boeing aircraft. On the economic front, Dev said there is no need to change India's current inflation target as the present system is working well as reported by PTI. Since 2016, India has followed a flexible inflation targeting (IT) framework with the Reserve Bank of India (RBI) aiming to keep inflation at 4 per cent, within a 2–6 per cent band. "It may be noted that higher inflation hurts the poor and middle class mostly. Low inflation is also important for sustainable growth," he said. Dev also supported continuing the Fiscal Responsibility and Budget Management (FRBM) targets to ensure sound fiscal management and warned that a higher fiscal deficit would increase inflation, raise interest payments, and reduce funds for development. "A higher fiscal deficit will increase inflation and hurt growth," reported PTI quoting Dev. He noted that the government has managed to reduce the fiscal deficit from 9.2 per cent of GDP in FY21 to 4.8 per cent in FY25, with a target of 4.4 per cent for FY26, and is sticking to its fiscal consolidation roadmap despite growing demands. PLI driving growth and jobs On the Production Linked Incentive (PLI) scheme, Dev said its full impact goes beyond just the targeted sectors, as it also benefits non-PLI industries due to interlinkages. "PLI incentives, along with FTAs with other countries, should attract FDI and enhance exports," Dev said as quoted by PTI. The chairman further cited studies showing that while direct value addition in electronics declined, indirect value addition rose, reflecting stronger links with upstream industries. The government is now focusing on increasing domestic value addition, cutting import content, and creating more jobs by boosting local manufacturing under the PLI scheme. The government introduced the PLI scheme across 14 sectors to promote domestic manufacturing, ramp up production, generate employment, and boost exports. The core objective of the scheme is to make Indian manufacturing globally competitive by reducing import dependence and increasing local value addition. Instead of a uniform model, the PLI scheme follows a sector-specific strategy tailored to the needs of each industry. Electronics exports and FDI rise In the electronics sector, the focus is on strengthening assembly operations and supporting the domestic manufacturing ecosystem. Today, India ranks among the top assemblers and exporters of mobile phones. Back in FY15, imported mobile phones made up 78 per cent of the market by value, but this dropped sharply to just 4 per cent by FY23. 'A similar trend can be seen in exports, with the electronics and renewable energy sectors witnessing a significant rise in FDI inflows,' Dev noted. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Mint
5 days ago
- Business
- Mint
India should negotiate trade agreement with US on its own term: EAC-PM chief
New Delhi, Jul 17 (PTI) India should negotiate a trade agreement with the US on its own terms, keeping in view the national interest, Economic Advisory Council to the Prime Minister (EAC-PM) Chairman S Mahendra Dev has said. Dev expressed hope that India will have an advantage over other countries on tariffs once the Free Trade Agreements (FTAs) are signed, and it would boost exports. "The overall approach of India is negotiating trade agreements with countries on its own terms and keeping in view the national interests. The negotiations are going on and the ultimate decision depends on the mutual interests of both countries," he told PTI. US President Donald Trump has said the proposed trade deal with India would be on the lines of what America has finalised with Indonesia on Tuesday. Under the US-Indonesia trade pact, the Southeast Asian nation will provide complete access to its market to US products, while Indonesian goods would attract a 19 per cent duty in America. In addition, Indonesia has committed to purchasing USD 15 billion in US energy, USD 4.5 billion in American Agricultural Products, and 50 Boeing jets. The Indian team is in Washington for the fifth round of negotiations for the proposed Bilateral Trade Agreement (BTA). India has hardened its position on the US demand for duty concessions on agri and dairy products. New Delhi has, so far, not given any duty concessions to any of its trading partners in a free trade agreement in the dairy sector. India is seeking the removal of this additional tariff (26 per cent). It is also seeking the easing of tariffs on steel and aluminium (50 per cent) and the auto (25 per cent) sectors. Against these, India has reserved its right under the WTO (World Trade Organisation) norms to impose retaliatory duties. Asked should India has a slightly higher inflation target rate for a growth economy, Dev said, "There is no need to increase inflation target when the present framework is doing well on both inflation and growth objectives." He noted that there are some suggestions that RBI should use core inflation, excluding food for inflation targeting (IT). "We will have better inflation data from CPI after the revision of base year to 2024," the EAC-PM Chairman said. Dev said the experience of (IT) in the last 10 years shows that Inflation stayed within the band of 2 per cent-6 per cent with some exceptions and inflation declined significantly under IT framework. "It may be noted that higher inflation hurts the poor and middle class mostly. Low inflation is also important for sustainable growth," he said. Since 2016, India has adopted a flexible inflation targeting (IT) framework where the RBI aims to maintain a specific inflation rate, currently 4 per cent, with a tolerance band of /- 2 per cent (i.e., between 2 per cent and 6 per cent). Similarly, Dev said the Fiscal Responsibility and Budget Management (FRBM) targets should be continued for sound fiscal management. "It may be noted that a higher fiscal deficit will increase inflation and hurt growth," he said, adding that Interest payments will be higher and lower funds will be left for development expenditure. While noting that the government has done well to reduce fiscal deficit from 9.2 per cent in FY21 to 4.8 per cent in FY25 and budgeted 4.4 per cent in FY26, he said the government has been sticking to its fiscal consolidation roadmap despite competing demands for expenditures. On Production Linked Incentive (PLI), he said one should not look at only the direct effect of PLI-linked sectors, as there is significant interlinkage between PLI and non-PLI sectors. "PLI incentives, along with FTAs with other countries, should attract FDI and enhance exports," Dev said. He pointed out that studies indicate that the share of Direct Value Addition (DVA) declined for electronics while the share of indirect DVA increased, suggesting linkages with upstream industries. "Government is working on increasing gross value added, reducing import content and increasing employment for PLI sectors by encouraging local manufacturing capability," Dev said. The government launched the PLI scheme for 14 sectors to incentivise domestic manufacturing, increase production, create new jobs and boost exports. The thrust of PLI is to make domestic manufacturing globally competitive and reduce imports by increasing domestic value addition. The PLI scheme adopts a sector-specific approach, avoiding a "one size fits all" methodology. In the electronics sector, PLI aims to scale up assembly processes to encourage the existing domestic manufacturing ecosystem. India is one of the biggest assemblers and exporters of mobile handsets. In FY15, mobile phone imports accounted for 78 per cent of the market in value terms, whereas by FY23 this figure had dropped to just 4 per cent. "A similar story can be heard for exports. The electronics and renewable energy sectors have attracted higher FDI inflows," Dev said.
