India’s trade deficit and dependence on China
In modern warfare, economics forms as crucial a part as actual fighting. Nowhere is it more visible that in the case of China and the intricate web of dependencies they have created with most countries in the world. In the clamor of #BoycottChineseProducts, Motilal Oswal released a report to show how the trade deficit with China has doubled in the last 10 years to reach an outrageous figure of $48.66 Bn. This figure is lower than the $63.1 Bn we touched in FY18.
In-Depth: A lot of Indian manufacturing depends on China for inputs at various stages. These linkages are particularly critical in case of auto, consumer durables, pharmaceuticals, telecom and renewable energy (solar). In the absence of these partners, there is a dearth of alternate suppliers at the same scale and cost. Fun fact, currently we even import Ganesha idols from China.
What does this mean? While nationalist sentiment is well-served by talking about hastily cutting all Indo-China ties, on-ground it may not be as practical. If it is to be implemented, it will require a long term strategy of finding and developing new supply chains. Although Acuite Ratings & Research suggests that 17.3% or $8.4 Billion of the trade deficit can be substituted by domestic manufacturing over FY20-21.
Indian SpaceX calling…
ISRO chief K. Sivan delivered a video address on Thursday to announce that private firms can now independently build satellites and rockets to launch them from Indian soil. ISRO will move it’s operation satellites, rockets and applications to NSIL or New Space India Ltd. This commercial arm of ISRO will allow private enterprises to use these assets for future R&D.
ISRO does not escape coronavirus impact: Sivan also revealed that as many as 10 missions would be delayed because of the lockdown. Many small and medium companies supplying to the space agency had to pause their operations considering the situation. This includes Gaganyaan, a human space mission targeted for 2022.
Our take: While ISRO has done pioneering work in setting the foundation for space research, opening it up to private enterprise can come with a lot of benefits. As mentioned by Sivan, “an open and inclusive space sector will result in accelerated growth, job creation as well as innovations and will enable the Indian space industry to be a significant player in the global space economy”.
Fair no longer necessary to be Lovely
Call it a colonial hangover but Indians have for long been obsessed with fair skin colour. This mindset is reflected on the store aisles also where skin lightening creams rule the roost. One brand which has led this pack from the front has been HUL’s Fair and Lovely with it’s promise of multi-shade fairer skin. The brand has been making changes since last year when they dropped the shade card and the word “fairness” in the description. Today, this behemoth announced that they are dropping the word Fair to rebrand the cream “Lovely”.
Why the sudden conscience? The US has for the past few weeks been introspecting on the discrimination faced by African Americans in various spheres. The resounding effects first hit home when Johnson & Johnson announced a stop to sales of their Clean & Clear fairness line of products. Emami, a home bred brand will either take action for Fair & Handsome or decide to live with FOMO.
Big Picture: Discrimination is often seated deeper in a society. However, a lot of what we think and feel is fed in through the information we consume. This is a welcome step in the right direction but not a destination in itself.
- IMF downgrades Indian FY21 GDP projection to -4.9%: In it’s latest report titled “A Crisis Like No Other, An Uncertain Recovery” IMF brought down projections for global economic growth. Although risks to outlook are all possible positives like a vaccine, quicker economic recovery or dare we say it, herd immunity by 2021 end.
- Vedanta gets shareholder approval to delist: 84.2% of the shareholders approved the decision to delist Vedanta. The company was the first to initiate a process of taking the company back to private holding, starting a trend of sorts with Adani Power and Hexaware technologies putting out their own offers.
- Extension of tax filing date: All procrastinators rejoice for the date on tax return filing for last year has now been extended to 30th November 2020. You can also now make investments for 80C deductions till 31st July, 2020.
- Marathon vote to allow more terms to Putin: A 7-day voting cycle began in Russia yesterday which could bring about sweeping reforms for the country. The most important is the one allowing Vladmir Putin to run for elections and the country for two more consecutive six-year terms.
- Lufthansa shareholders approve $10 Bn government bailout: This development comes after an initial opposition from their biggest shareholder with 15% stake, businessman Heinz Hermann Thiele. This reinfusion will give the German government a 20% stake in the company.
Indian markets remained volatile to settle a haircut away from yesterday’s closing. Surprisingly, this is good news considering globally equity markets slipped to a week-long low on fears of a second wave of infection and the latest IMF report (more on that further in the newsletter).
Sectorally, FMCG, Healthcare and Banking were in the green while IT, Realty and Oil & Gas balanced out the cheer by being in red.
Some times viral trends go viral for a reason – they are so darn funny! Yesterday, we caught one such video where FilmForFare account slapped on the screechy Salman Khan song Chunari Chunari on to a Korean pop band BTS performance. The result is 44 seconds well spent!