Winning Bizness Economic Desk
India’s Forex Reserves Rise Steeply by USD 10.8-bn to USD 676.3-bn
India’s foreign exchange reserves climbed up steeply by USD 10.8-billion to reach USD 676.3-billion in the week ended April 4, data from the Reserve Bank of India (RBI) showed.
An important highlight here is that this is the fifth straight week of gains in the country’s foreign exchange reserves.
A major contributor to this increase was the increase in Foreign Currency Assets (FCAs) which expanded by USD 9-billion to USD 574.08-billion.
Gold reserves also witnessed a healthy northward movement of USD 1.5-billion, bringing the total to USD 79.36-billion.
Additionally, Special Drawing Rights (SDRs) increased by USD 186-million to USD 18.36-billion.
In the previous week ending March 28, reserves had already touched a five-month high of USD 665.4-billion after an USD 6.6-billion increase.
Here, it is important to highlight the point that the recent uptrend comes after a period of decline that was attributed to revaluation losses and the Reserve Bank of India (RBI)’s interventions in the forex market to reduce Rupee volatility.
However, the past five weeks have reversed that trend, indicating a stronger external position.
The country’s forex reserves had earlier reached an all-time high of USD 704.89-billion in September 2024. A healthy forex reserve position not only reflects robust economic fundamentals but also strengthens the Rupee against the US dollar.
Besides, it gives the Reserve Bank a greater flexibility to intervene in the forex markets, especially during periods of volatility—by selling dollars to support the domestic currency.
A declining reserve on the other hand, limits the central bank’s capability to stabilise the Rupee in times of stress.
A point that requires highlighting here is that the country’s merchandise trade deficit narrowed to a three-year low of USD 14.05-billion in February, down from USD 22.99-billion in January.
Data from the Ministry of Commerce and Industry showed that the improvement came as exports remained steady while imports declined, signalling resilience in the external sector despite the on-going global economic uncertainties triggered by geo-political tensions.
India’s Auto Components Output to Double by 2030: Niti Aayog Report
The country’s auto component manufacturing would double from USD 70-billion in 2022 to USD 145-billion in 2030, according to a report by the Niti Aayog.
It also sees component exports trebling to USD 60-billion by 2030 from the existing USD 20-billion.
“This growth would position India as a formidable player in global markets, achieving a trade surplus of USD 25-billion and increasing its share in the global value chain of auto components from three-to-eight per cent,” the report said.
To achieve this, the report outlines a comprehensive set of interventions across multiple domains. It recommends fiscal interventions which include operational expenditure support to scale-up manufacturing, with a special focus on capital expenditure assistance for the development of tools, IP transfer and branding support which are crucial for automotive component manufacturing.
The report recommends cluster development to strengthen supply-chains, reduce logistics costs, and establish common R&D and testing facilities, thereby accelerating product development.
The Niti Aayog report also emphasises skill development initiatives to ensure a steady pipeline of talent, which is essential for driving sectoral growth.
On the non-fiscal front, the report suggests interventions such as business improvement support to enhance global competitiveness, encouragement of joint ventures and Free Trade Agreements (FTAs) to foster international collaboration and market access, adoption of Industry 4.0 and enhanced quality standards to improve manufacturing efficiency initiatives.
“These policy measures, if effectively implemented, will be crucial in enabling India to scale-up its automotive component production, increase exports and strengthen its standing in global markets,” the report stated.
India Readying to Ship 40,000-tonnes of Shrimp to US
Seafood exporters in the country are now preparing to ship around 40,000-tonnes of shrimp to the United States (US). This follows the orders for the shrimp remaining stable after the US President Mr Donald Trump paused the 26 per cent reciprocal tariffs that was planned earlier.
An important point to note here is that the duty now stands reduced to ten per cent.
“There is a lot of relief now as we are at par with other exporters to the United States (US). Now the shipments that were held back will be processed,” the Secretary-General of the Seafood Exporters Association of India (SEAI), Mr K N Raghavan was reported in the media as saying.
What needs highlighting here is that about 2,000 containers of shrimp that had been delayed are now being readied for export following Mr Trump’s decision to pause the higher tariffs just a few days after announcing them.
This means that there will continue to remain a 10 per cent blanket tariff on all countries except China, which faces a 145 per cent duty.
Presently, India’s shrimp exports to the US face an effective customs duty of 17.7 per cent, including a 5.7 per cent in countervailing duties and 1.8 per cent in anti-dumping duty.
According to industry sources quoted in the media, Indian exporters typically bear tariff costs under delivery duty-paid arrangements, meaning previously contracted shipments would have faced significant additional expenses under the higher tariff.
The 90-day pause announced by Mr Donald Trump enables the country’s exporters to fulfil their orders without paying anything extra.
The Association reported no drop in orders form the US which remains the country’s largest shrimp market both in volume and value. The country exported shrimp worth USD 2.7-billion to the US in FY 24.
Coffee Board Plans to Expand Cultivation Area by 4-lakh Hectares
The Coffee Board of India has plans to increase the area under coffee plantations in the country.
Researchers, officials and experts working with the Coffee Board have found spaces below areca nut trees also conducive for coffee plantations.
They pointed out that areca nut plantations are increasing not just in south India but even in north-east India where coffee can be grown.
A detailed project proposal has been prepared and placed before the Ministry of Commerce and Industry for its approval. One of the aspects of the plan being prepared is increasing the area of coffee plantations.
The Board is looking at expansion in the north-east, Odisha, Maharashtra, Telangana, Andhra Pradesh (AP) and Karnataka, a leading news publication quoted sources within the Board as saying.
An important point to note here is that in the country 4.4-lakh hectares of land is under coffee plantation and around 50 per cent of that (2.2-lakh hectares) is in the southern state of Karnataka alone.
Though the coffee plantation area is saturated in Karnataka, some new locations have been identified in Mangalore and Puttur in Dakshina Kannada where coffee can be grown.
While coastal regions are not suitable for coffee plantations due to salinity and moisture in the air, these regions have been found towards the Western Ghats, where coffee plantations can be grown, the source pointed out.
A Coffee Board official was quoted as saying that “there is scope to increase coffee cultivation in the country by another 4-lakh hectares. A report on this has been prepared. The Coffee Board is promoting cultivation of Arabica coffee, which is most sought after in the international market, with demand for coffee rising globally.”
Areas at an elevation of 500-800-metres are ideal for Robusta coffee, and those at an elevation of over 800-metres are suitable for Arabica coffee,” the official added.
