### Summary
India has imposed a 40% custom duty on onion exports as rising prices have led to concerns about further inflation, with data showing a significant increase in the prices of tomatoes, onions, and potatoes since May.
### Facts
- 🧅 India has announced a 40% custom duty on onion exports to combat rising prices and fears of increased inflation.
- 📉 Vegetable prices, including tomatoes, onions, and potatoes, increased by 87.1% month-on-month in July, compared to 16% in June.
- 💰 The price of onions rose from Rs 22.6 per kg to Rs 28.1 per kg between May and August, representing a 24% increase.
- 📊 Wholesale inflation in food articles reached 14.25% in July, while retail food inflation rose to 10.6% in the same month.
- 🚫 In July, the government had already banned the export of non-basmati white rice, sugar, and wheat to control inflation.
India has become an attractive destination for global electronics manufacturers, with companies like Apple, Cisco, and Luxshare setting up manufacturing operations in the country to diversify from China and tap into India's large market, workforce, and vibrant presence of micro, small, and medium enterprises; however, there is a need for policy intervention to ensure growth extends beyond assembly units and focuses on creating an ecosystem for component manufacturing and value-addition to move up the value chain.
India has seen an increase in its tariffs and trade policy measures in recent years, reversing the trend towards liberalization and increasing trade restrictions, which is a global phenomenon as many countries are adopting industrial policies to promote domestic production and exports; however, the effectiveness of these policies and their impact on economic growth and job creation remain to be seen.
China's commodities sector, including coal mining and metals production, is experiencing declining profits due to the worsening property crisis and economic slowdown, with steel producers being the hardest hit. However, there is potential for growth in metals firms linked to the energy transition, particularly in China's green copper consumption driven by electric vehicles and renewable power.
India is positioning itself as an alternative to China in the global supply chain, aiming to become a major manufacturing hub and increase its role in the production of goods, as the world seeks solutions to supply chain disruptions caused by health crises and geopolitical events.
The Indian government's efforts to control food prices, such as imposing taxes and export bans, may help contain inflation domestically but could lead to higher prices globally, particularly for rice, affecting countries that rely on food imports.
India's restrictions on rice exports have caused prices in Asia to soar near the highest level in 15 years, prompting concerns over food security and potential price increases in Thailand and Vietnam.
India is closely monitoring steel imports from China, which reached a five-year high in the first four months of this fiscal year, amid concerns of potential dumping by Chinese sellers and a fall in domestic steel prices due to surplus sales in the local market.
The decline in Chinese imports into the U.S. is impacting steel prices and raising concerns about sourcing steel and other metals.
India has imposed an anti-dumping duty on certain Chinese steel for five years due to concerns over potential dumping by Chinese sellers.
India's industrial output rose 5.7% in July, its fastest pace in five months, driven by strong mining and electricity activity, but high inflation and slowing pent-up demand may hinder future growth.
With the right reforms, India has the potential to become the next engine of global growth, benefiting from major economic re-alignments caused by China's slowdown and the US diversifying its supply chains. Major corporations are already investing in India, recognizing its potential. However, India needs to overcome challenges such as high tariffs, infrastructure improvements, and regional cooperation to fully realize its manufacturing potential and attract foreign investment.
The Indian government is planning to rationalize tariffs on components used for making electronics goods to boost local production and increase competitiveness for exports.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/ZHLGG56HJRIUJJMDMF5UEB3AJQ.jpg)