The Aakhya Weekly #35 | En route to a trillion dollars

Feb 17, 2023

The Uttar Pradesh Global Investors Summit concluded on 12 February, with Chief Minister Yogi Adityanath announcing that the State had signed MoUs for investment proposals worth Rs. 33.5 lakh crore – reportedly the highest investment proposal received by any State Government. The Chief Minister also said that the Govt of Uttar Pradesh would direct its focus on translating these investment proposals into avenues for their implementation, adding that they could bring 93 lakh new jobs to the State.

Investment proposals are said to have been received across all 75 districts of the State – a refreshing change from the past, when investments were mostly directed at the National Capital Region. Further, the summit has yielded nearly double the projected target of Rs. 17.3 lakh crore, and well over thrice the initial target of Rs. 10 lakh crore – a phenomenal achievement for Uttar Pradesh, the most populated State that is key to India’s growth story.

Renewable energy dominated as being the most preferred sector for investment proposals, with about Rs. 4.47 lakh crore pledged through 144 letters of intent (LOIs). Electronics manufacturing came in second with 151 LOIs signed. The most number of LOIs, however, were signed in the manufacturing segment - over 7,000 - amounting to Rs. 2 lakh crore. Renewable is clearly the focus for foreign investors, with the Government of India also urging States to push for increased manufacturing capabilities in this direction.

This most recent summit and the push for industrial development in the State of UP is indicative of an ongoing national thrust towards development, spearheaded by the States. Last year, the Government of Rajasthan concluded its investors’ summit, securing LOIs worth Rs. 11 lakh crore and a promise of 9 lakh new jobs in the State. This trend indicates a positive outlook for development in India generally and fosters a healthy competitive spirit between States who are looking to attract the maximum number of investments for their respective districts.

Overall, the State of UP has surpassed all expectations with a successful investors’ summit. It may now be considered on par with the second tier of States - Rajasthan and West Bengal - as a destination for foreign investment. There is the added question of proposals secured at the summit being translated into actual investments, for which the State Government will have to pursue the right policies on a war footing. Although it is a land-locked State, Uttar Pradesh’s territorial proximity with New Delhi is a big factor in its favour. The next target is breaking into the top tier, which is currently dominated by four big States - Maharashtra, Gujarat, Karnataka and Tamil Nadu - a tall order; but which can be accomplished through successful implementation of investment proposals that will in turn generate renewed and increased interest by prospective investors looking to invest in India.

Top Stories of the Week

Lithium deposits found in Jammu and Kashmir

The Geological Survey of India (GSI) announced, on 9th February 2023, that Lithium inferred resources (G3) of 5.9 million tonnes had been found in the Salal-Haimana area of Reasi district of Jammu & Kashmir. If these estimates are accurate, India will be home to one of the largest global deposits of Lithium.

With this announcement, the government has announced progress in geological assessment, as per the United Nations Framework Classification scheme for fossil and mineral resources. At G3, or the preliminary exploration stage, our degree of confidence is more than that of a reconnaissance survey (G4), but less than that of general exploration (G2) or detailed exploration (G1) - which are expected to follow. It is important to note that the framework also has two other axes, one for mineability assessment and one for economic viability, which are yet to be ascertained.

This is not the first time that Reasi - a small district just north of Jammu - has attracted geologists’ attention. In 1999, GSI had pointed out the possibility of Lithium deposits in Reasi.

Currently, the global supply and value chain for Lithium is dominated by China - whose dominance is expected to continue for the foreseeable future. Depending on the mineability assessment and degree of economic viability, the discovery might present India an opportunity to become self-sufficient for a crucial component for the energy transition. However, even if all goes according to plan, commercial mining of Lithium from these reserves is a few years away. Lithium demand, in the meanwhile, will show no sign of stopping, and the government will continue to push for sourcing Lithium from abroad, most notably Australia and Argentina.

India and Nepal agree to boost their economic and development ties

India and Nepal further step up economic and development cooperation as Indian Foreign Secretary, Vinay Mohan Kwatra met his Nepalese counterpart, Bharat Raj Paudial and had a fruitful exchange on strengthening comprehensive bilateral relations on 13th February 2023.

Foreign Secretary Kwatra arrived in Nepal for his two-day official visit and held talks with the country's top political leaders on the full range of multifaceted cooperation between the two countries. The bilateral meeting at the foreign secretary level was attended by seven members each from Nepal and India. During his visit, Kwatra, the former Indian Ambassador to Nepal paid a courtesy call to Nepal's Prime Minister, Pushpakamal Dahal Prachanda, and Foreign Minister, Bimala Rai Paudyal. Kwatra is also expected to discuss with Nepalese interlocutors a possible visit to India by Prime Minister Prachanda.

According to a statement released by Nepal's foreign ministry, the two countries are expected to discuss various issues related to bilateral cooperation such as connectivity, power trade, agriculture, health and culture during the foreign minister's visit. An integral part of India’s “Neighbourhood First” policy, Nepal remains important to India in the context of its overall strategic interests in the region. Known as the age-old “Roti-Beti” relationship, Nepal shares a border of more than 1,850 km with five Indian states - Sikkim, West Bengal, Bihar, Uttar Pradesh, and Uttarakhand. Furthermore, land-locked Nepal relies heavily on India for the transportation of goods and services.

This Week in Policy

Macroeconomics and Taxation

Wholesale inflation in the country cooled to a two-year low of 4.73% in January, down from 4.95% in December - marking the 8th straight month of decline. The low levels of inflation owe themselves partially to a base effect, as January last year had recorded a 13.7% rise in wholesale prices.
India’s Index of Industrial Production lagged at 4.3% in the month of December, dragged down by a tepid performance by the manufacturing sector. 11 of the 23 manufacturing sectors considered registered a contraction in the month.
Indian exports declined by 6.58% in the month of January, to $32.91 billion, compared to $35.23 billion in the same month last year, as per Commerce Ministry data. India’s trade deficit for the month stood at a year-long low of $17.75 billion - a sharp drop, but one prompted by a drop in imports.

Labour

In a first, the state of Rajasthan has set aside INR 200 crore for the welfare of gig workers as part of its budget The state has also introduced the Gig Workers’ Welfare Act, under which a board shall be set up to take measures for the welfare of gig workers.

Agriculture and FMCG

Asian Development Bank approves $130m USD loan to increase agricultural productivity and promote horticulture in Himachal Pradesh - a state where 90% of the population lives in rural areas dependent on agriculture.
Union Cabinet approves signing of MoU between India and Chile for cooperation in agriculture and allied sectors, focusing on development of modern agriculture and development and bilateral trade of organic products, among others.

Healthcare

The DGCI has issued show cause notices to ~20 online pharmacies, alleging a violation of the Drugs and Cosmetics Act, 1940. Reportedly, many such pharmacies fulfil their orders through dark stores, even though the Act only permits the sale of drugs by licensed pharmacies.
The Government has initiated the process of identifying moonshot pharmaceutical research projects that it shall invest in, as part of measures announced in the Union Budget 2023-24.

Foreign affairs

This week, the International Solar Alliance (ISA), the West African Power Pool (WAPP) and the Grid Controller of India Ltd are hosting delegates from the West African Region where 16 WAPP countries are participating.
India is hosting the 12th World Hindi Conference in Fiji this week from 15 to 17 February, as part of its efforts to ensure the rightful place of Hindi at the UN.

Technology, Media and Telecommunications

The Department of Telecommunications is working on freeing up more spectrum for 5G services that may be auctioned from 1 April 2023 onwards.
MeitY’s Bhashini team is looking to create a new WhatsApp-based chatbot (powered by ChatGPT) that could become a major search engine for key government schemes directed at India’s 150 million farmers.
The TRAI will soon release a consultation paper exploring quality of service (QoS) standards for 5G services.

International trade and commerce

India's seafood exports are projected to reach all-time high of US $ 8 billion in FY 2022-23.
India’s commerce secretary Sunil Barthwal has said that the next round of negotiations for the India-UK free trade agreement is scheduled for 20-24 March 2023.

Banking, Finance and Insurance

SEBI proposes to remove some operational responsibilities from Trustees of Mutual Funds and replace them with fiduciary duties. The proposals circulated for public feedback also elaborate on the roles of Asset Management Companies.
SEBI notifies governance norms for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) on the lines of listed companies. In two separate notifications, provisions such as those related to tenure of auditor, computation of leverage and unclaimed or unpaid distribution have been streamlined by the regulator.

Manufacturing

The Ministry of Steel signs agreements with 26 companies for 54 applications under the production linked incentive (PLI) for specialty steel. It is expected to lead to an investment of Rs 30,000 crore, a capacity addition of 26 million tonne and employment generation potential of about 25,000 people.
At the sidelines on Aero India, Defence minister, Rajnath Singh invited global original equipment manufacturers (OEMs) to co-develop, co-produce, integrate and strengthen supply chains, form joint ventures, and set up manufacturing in India.

Retail and e-commerce

After dropping for 3 months in a row, high cereal and protein prices pushed India’s retail inflation beyond RBI’s tolerance zone in January, with the headline Consumer Price Index (CPI) print coming in at 6.5%.
India has pitched for deeper deliberations to take place before the World Trade Organisation (WTO) defines rules in the ongoing discussions on ecommerce trade. This is being done with an aim to promote inclusive and equitable development of the service at a global level.

Logistics and Infrastructure

In a huge push to modernise India’s infrastructure, the first section of a 1,386-kilometer (861 mile) expressway linking New Delhi to Mumbai has been opened to the public. Once complete, the eight-lane carriageway will be the longest, and is expected to reduce travel time between the two cities to 12 hours.
During the second day deliberations of the first G20 Agriculture Deputies Meeting, Civil Aviation Minister, Jyotiraditya Scindia announces the government’s plan to include another 21 airports under its Krishi Udan scheme.

Sustainability

As leading biofuels producers and consumers, India, US, and Brazil to form a Global Biofuels Alliance. The alliance will place emphasis on strengthening markets, facilitating global biofuels trade, development of concrete policy lesson sharing, and provision of technical support for national biofuels programs worldwide.
Tamil Nadu releases new EV policy with a special focus on cell and battery manufacturing to garner investments worth Rs. 50,000 crore in the sector and create 1.5 lakh jobs over a period of five years.

Tracking the G20

In this week’s notable coverage of the G20, Chintan Vaishnav, Mission Director, Atal Innovation Mission, writes about how Startup20 Engagement Group - the only new group at the G20 - is the first step in ‘ambidexterity’ – using the innovating capacity of startups along with stability and scale of corporations. Researchers from KRF Center for Bangladesh and Global Affairs write how Bangladesh, as an emerging voice from the global south, may utilise the G-20 summit to advocate for strategically significant issues like climate change, the Rohingya Refugee crisis, the food and energy crisis.

In operative developments, the 1st meeting of the Digital Economy Working Group concluded in Lucknow, and the first Agriculture Deputies meeting under the Agriculture Working Group concluded in Indore. Next week, we will see the first meeting of the Culture Working Group in Khajuraho, Madhya Pradesh.

In preparation for the G20 summit and associated events, Delhi government agencies are expected to spend more than Rs. 1000 crore on . On a more light hearted note, 34 puppies and 13 trained canines are set to join Delhi police to sniff out any signs of danger during G20 events in the national capital.

Upcoming Events

World Sustainable Development Summit 2023

22-24 February | India Habitat Centre, New Delhi

TERI is hosting the 22nd edition of its annual flagship event, the World Sustainable Development Summit from 22 - 24 February at the India Habitat Centre. The summit deliberations will focus on the umbrella theme of mainstreaming sustainable development and climate resilience for collective action. With the understanding that despite global progress on climate action, most actions are still limited to departmental silos, the summit will focus on innovations to integrate sustainable development in development and economic policies and praxis. The star studded event line up includes Amitabh Kant, Param Iyer, Michael Bloomberg, RK Singh, Suman Berry, among others. More Information | Registration Link

Democracy and Health in India: Is health an electoral priority?

22 February | India International Centre

The Centre for Social and Economic Progress is hosting a discussion on ‘Democracy and Health in India: Is health an electoral priority?’ on February 22 at the India International Centre. India’s voters and its politicians politically underinvest in health. Voters do not typically highlight health as a factor bearing on their voting decisions, nor do most politicians foreground health in their electoral campaigns or priorities in office. The report attempts to uncover the reasons behind this. More Information | Registration Link

India in the New World Order

23 February | India International Center

Policy Circle is organising a series of events on India’s G20 presidency, starting with ‘India in the New World Order’ on February 23 at the India International Center. The event will see panels on themes revolving around challenges to the $10 trillion economy goal as well as foreign policy and strategic imperatives. V Muraleedharan, Minister of State for External Affairs and Arvind Virmani, Member, NITI Aayog will be present among other dignatories. More Information

A Few Good Reads

How did NPCI engineers build a world-beating payments ecosystem? Sujith John explores.
Unlike conventional wisdom in the West suggested, the Russia-Ukraine war has not polarised the world - it has simply created a broken international order where most countries are unaligned, argues Shivshankar Menon. For larger middle powers like India, this is an opportunity; for smaller ones, perhaps, a crisis.
Pranay Kotasthane analyses India’s defence budget and what it tells us about how India sees the China challenge.
From building a career in international relations to the fetishisation of sovereignty in South Asia - Rohan Venkat’s interview of the author and academic, Atul Mishra, is a must-read.
“Scholars - especially those whose work is read by policymakers - should possess two qualities that are often scorned in polite society. They should be annoying, and they should be promiscuous.” A good reminder for policy nerds like ourselves, by Francis J. Gavin.