Current Affairs for Online Crash Course for SSC CGL Exam : Economy

Current Affairs for Online Crash Course for SSC CGL (Tier - 1) Exam

:: Economy ::

Australia wants India to become major buyer of its cotton

  • Australia, the fifth-largest exporter of cotton, is looking at India to emerge as a consistent and major buyer of the commodity.
  • An eight-member delegation representing the Australian Cotton Shippers’ Association held meetings in Ludhiana, Mumbai, and Coimbatore between February 27 and March 3.
  • Australia has close to 1,200 cotton growers and can supply even small quantities to India. China purchased more than 30% of Australia’s cotton production last year. However, this was lower than its usual purchase.
  • Indian textile mills can use Australian cotton as a blend to produce high-value garments. The area under cotton production was increasing in Australia, Mr. McIntyre said.
  • Australia’s output was limited until last year. India is the largest producer and consumer of cotton globally.

Services sector saw expansion in Feb

  • The services sector expanded in February recovering from demonetisation-related disruption, according to a private survey.
  • The Nikkei India Services Purchasing Managers’ Index (PMI) rose to 50.7 in February from 49.4 in January. A reading above 50 denotes an expansion in business activity while one below 50 implies a contraction.
  • The upturn in services activity follows news from the sister PMI survey showing factory production growing for the second straight month in February.
  • With demand conditions strengthening in India, new business inflows rose in both sectors, leading to the first increases in private sector new work and output since October 2016. Nevertheless, growth rates were mild at best and far from their historical averages.
  • The Nikkei India Services Business Activity Index signalled growth in February as businesses recovered from the demonetisation-related disruptions seen in each of the previous three months,” according to the report.
  • The index fell to 46.7 in November, the month demonetisation was announced, the lowest it had been in almost three years. The index posted a tad higher reading of 46.8 in December but was still firmly depicting a contraction in business activity.
  • This improvement in business activity and order inflows was mostly driven by the ‘Financial Intermediation’ and ‘Other Services’ category, according to the report with most of the other major heads seeing a decline.
  • However, the report noted that the rate of contraction softened in all cases.
  • Looking at employment levels in the services sector, IHS Markit said the rate of job losses in February was only fractional. However, staffing levels decreased in the manufacturing sector, in comparison, it noted.

e-commerce faces too many policy challenges

  • Exporters face restrictions in the form of poor incentives and debilitating fees, made worse by surging global competition.
  • India had woken up to huge potential of e-commerce exports when the Centre decided to provide incentives in the Foreign Trade Policy 2015-20 to promote exports of goods hosted on a website and dispatched through courier or postal mode.
  • However, exporters have now identified several ‘restrictions’ under the FTP and related norms as ‘challenges’ that are preventing them from maximising the potential of e-commerce exports.
  • The payment for goods purchased on e-commerce platform shall be done through international credit or debit cards and as per the Reserve Bank of India norms.
  • There are more than 25,000 Indian companies, small and medium firms and entrepreneurs present on the American multinational e-commerce company eBay alone, exporting their items directly to the consumers across the world.
  • It is estimated that there are more than two lakh such Indian business-to-consumer (B2C) exporters making use of their own websites or other e-commerce platforms and social media sites.
  • There is intense competition in the e-commerce exports space, and several countries are actively promoting e-commerce exports.
  • For instance, the U.K. government’s Department for International Trade (DIT) has an ‘E-Exporting Programme’ to help U.K. companies sell their products or services overseas through e-commerce.
  • India’s e-commerce retail exporters are also facing major competition from their counterparts in China and South Asia. According to the World Trade Organisation, in 2015.
  • e-commerce in goods and services was worth about $22 trillion globally, and has grown the fastest in emerging economies.
  • As per India’s FTP 2015-20, the incentives for e-commerce exports are under the Merchandise Export from India Scheme (MEIS).
  • The rewards are in the form of freely transferable duty credit scrips (that gives duty benefits for imports of inputs / import of goods including capital goods / domestic procurement of inputs and goods including capital goods, etc).
  • The list of items for incentives should be expanded to include jewellery, which is among the biggest finished product exports from India, as well as health & beauty items, auto spare parts and musical instruments.
  • A major disincentive is that currently, when a buyer sends an item back to an e-commerce exporter, import duty is charged.
  • However, in the case of exports other than through the e-commerce route, customs duties are exempted on return of exported goods.
  • Another difficulty being faced by e-commerce exporters is that such exports through India Post or via the commercial courier mode are ticked as “samples” or “gifts” and not as ‘Commercial Shipment’.
  • Sellers need to sign and attach multiple physical documents and pay a commercial clearance charge of Rs. 1,000 to Rs. 1200 for every shipment.
  • A single-product shipment via private courier requires seven copies of invoices (self-declaration), while India Post requires three copies of invoices (self-declaration).

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