2018-CGS-29: Mains Revision-17: Secondary Sector of Economy

  • When a cash-strapped industry is finding it difficult to invest more than $10 billion a year right now, the policy talks of attracting $100 billion in another four years.
  • The policy is looking at what the government wants to sell spectrum at, not what telcos can afford—a 5G network will require the industry to invest as much as it has till date, but no one has the money to do this.
  • Goals such as the one to ensure 50% of households have access to fixed-line broadband, sound good but serve no real purpose since delivering data on mobile has proven to be far more successful.
  • It is not clear how the government will ensure right-of-way access for laying optic fibre when it has so spectacularly failed so far.
  • It is it not clear what is to be made of the promise to monitor “efficient utilization of spectrum by conducting systematic audits of the spectrum allocated to both commercial and government organizations” when MTNL and BSNL have been squatting on valuable spectrum for years and nothing was done. [Financial Express]
  •  Opportunity for Indian Exports

    The current situation provides a favourable opportunity for an exports rebound in the coming quarters. There are at least four factors that augur well.

    Dollar appreciation

    • Nomura report predicts significant potential for dollar appreciation. This has implications not only for Indo-US trade but also for India’s trade with other countries, as over 88% of Indian exports are invoiced in dollars.
    • Since most exporters set prices in rupee and invoice in dollars, the importers of Indian goods will have to pay less when the rupee weakens against the dollar, further stimulating Indian exports.

    Trade war

    • The inevitable trade war between the US and China offers another opportunity. US President Donald Trump imposed tariffs on $50 billion worth of imports from China, to which China retaliated immediately and equally. US importers from China cannot just shift this entire demand to US manufacturers as the local economy is already operating at close to full employment.
    • Moreover “reshoring” of labour-intensive assembling in the high-wage US will be too expensive. India can take advantage of the situation and further strengthen its trade ties with the US. With factory wages in China escalating to the highest in emerging Asia, India can enjoy an export boom in sectors otherwise dominated by China like electronics and apparel.

    Demand from the European Union

    • Financial crisis and PIIGS (Poland, Italy, Ireland, Greece, Spain) debt crisis broke the back of EU’s economic growth. This led to a decline in demand from EU for Indian exports. Arguably, 2017 marked the onset of growth revival in EU when it grew at 2.5%, the fastest since 2007.
    • The projections for 2018 remain good, according to a European Commission report. With the EU regaining the share in India’s total exports it lost between 2008-09 and 2014-15 (from 21% to 16%), the resurgence in demand from the West will act as a boon for Indian exporters.

    Diversification of China’s manufacturing sector

    • The growth in the manufacturing sector in February was at its lowest in the past 18 months due to a crackdown over pollution in major industrial provinces. Understanding the long-term limitations, China has started diversifying its trading pattern by focusing more on technology-driven sophisticated goods and developing a comparative advantage in this segment.
    • China has already become a major exporter of green tech. This is creating a vacuum in the manufactured goods export segment. Chinese micro, small and medium enterprises, riding on the back of low wages, cost of capital and an undervalued currency, have been eating India’s lunch when it comes to low-end, labour-intensive manufacturing. India should now capitalize on the opportunity.

    Reaping the benefits from these opportunities lies in improving infrastructure, easing land acquisition and boosting human capital. [Mint]

    Merging Of Dumping and Import Safeguards Bodies

    The government has amended the rules on allocation of business, shifting work pertaining to safeguard measures to the commerce ministry. The refurbished Directorate General of Trade Remedies (DGTR) will also bring safeguards (quantitative restrictions) functions of Directorate General of Foreign Trade (DGFT) into its fold.

    Impact of the move

    Merging of anti dumping and import safeguard bodies is a step towards enhancing ease of doing business because

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