Govt Eyes Steps To Contain CAD

'The situation globally is quite challenging, but we have the confidence and courage of conviction that we will come out winners even in this challenging time.'

Commerce and Industry Minister Piyush Goyal on Thursday said the government is monitoring the external situation and several steps are under consideration to contain the current account deficit (CAD).

"We are monitoring the situation. Various arms of the government are working as a team. Several steps are under consideration.

"The situation globally is quite challenging, but we have the confidence and courage of conviction that we will come out winners even in this challenging time," Goyal told reporterson the sidelines of an event organised by the American Chamber of Commerce.

No Curbs On Imports Yet

However, Goyal said the government has no plans to cut non-essential imports into India as of now.

"But we have of course, made an appeal to all the citizens of India to be more conscious about their spending on products which are import-dependent," Goyal added.

Economists expect India's CAD could widen markedly in the current financial year as the West Asia conflict lifts crude prices, squeezes remittances and weakens export growth.

Data shows India's merchandise imports surged to a six-month high of $71.94 billion in April.

Last week, India raised import duty on gold and silver and announced curbs on the import of the metals to save the foreign exchange reserves, which have depleted by over 4 per cent from the record-high of $728.49 billion before the onset of the US-Iran war on February 28.

Rupee Under Pressure

Meanwhile, the Indian rupee has depreciated over 5 per cent against the dollar since the conflict in West Asia began.

The rupee recovered 63 paise on Thursday to end at 96.23 per dollar, compared to a record-low closing of 96.86 per dollar on Wednesday.

MSME Payments In Focus

Amid the economic uncertainties arising from the conflict in West Asia, the minister asked Indian industry to be prompt in clearing payments for supplies from Micro Small and Medium Enterprises (MSMEs) to maintain the flow of liquidity.

"One small request I would like to make of the larger companies...

"Technically, we have decided that in 45 days, we have to compulsorily pay all the MSME suppliers.

"If each of you decides to pay your MSME suppliers seven days after the goods are approved, your MSME supplier will have faster cash flow, and it can grow faster and serve you better," Goyal said.

At the same time, the MSME ministry and the department for promotion of industry and internal trade have been working to make a collective conjoined programme for technology upgrade and skill development in the MSME sector, the minister said.

• ALSO READ: 'Biggest Single Danger Is If Remittances Come Down'

India-US Trade Talks Advance

Talking about India's engagements on trade deals, Goyal mentioned that a delegation of officials from the US is likely to visit New Delhi next month for trade deal negotiations.

"India and America are truly working as natural partners," Goyal said.

"In the past six months, if I look back at the various commitments that we have seen from the American industry, probably the number will be upwards of $60 billion."

In October last year, Google announced that it would invest $15 billion over the next five years in setting up an AI hub in India, which would include the country's largest data centre in partnership with Adani Group.

Similarly, last month, Amazon India said it plans to invest over Rs 2,800 crore to strengthen associate safety, health and financial well-being measures, and to boost its operations network across the country.

The latest investment is part of the company's stated commitment to infuse more than $35 billion in India by 2030.

Feature Presentation: Ashish Narsale/Rediff