Page 14 - Banking Finance January 2022

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strengthening of runways, among components manufacturing and display Overseas workers sending money into
other activities. fabrication (fab) units over the next six India are also losing money. Over the
"Three Public-Private Partnership (PPP) years. past five years, money lost to exchange
airports at Delhi, Hyderabad and This is part of Modi government's bid rate margins on inward remittances
has grown from Rs 4,200 crore to Rs
Bengaluru have undertaken major ex- to make the country a hub for elec-
7,900 crore. Meanwhile, fees paid to
pansion plan to the tune of Rs 30,000 tronics. The nod comes almost a year
transaction costs have grown from Rs
crore by 2025. after the govt sought expressions of
10,200 crore in 2016 to Rs 14,000
interest from companies to this effect.
crore in 2020.
Low duties can boost EV The ministry of electronics & IT
demand: BMW (MeitY) will now work out the granu- India received remittances
lar details and invite applications.
BMW believes that reduction in import worth $87 billion in 2021:
duties on electric vehicles (EV) for a The new semiconductor policy will help
limited time or for a limited number of deepen India's manufacturing base, a World Bank
units will help create demand in order senior government official had told India, the world's largest recipient of
to help manufacturing of such vehicles prior to the approval. remittances, received USD 87 billion in
in India and bring new technologies 2021 with the United States being the
quicker to the country, according to a Indians paid Rs.9,700 crore biggest source, accounting for over 20
senior company official. in hidden forex fees per cent of these funds, according to
The company, which has been manu- Indians paid nearly Rs.9,700 crore in the World Bank.
facturing locally many of its vehicles the form of fees hidden in inflated ex- India is followed by China, Mexico, the
sold in India for the last 15 years, con- change rates while making remit- Philippines, and Egypt, the Washing-
siders creating demand is key to tances in 2020. This is more than a ton-based global lender said in its re-
localisation of manufacturing. third (36%) of the total fees of Rs port released.
"What we always do is we create de- 26,300 crore that Indians paid for send- In India, remittances are projected to
mand for a model and then localise it. ing money across their country's bor- grow three per cent in 2022 to USD
ders.
We believe these new technologies 89.6 billion, reflecting a drop in over-
also have a potential to be localised in The fees reflect a lack of transparency all migrant stock, as a large proportion
future but you need to create a mass and high charges applied by banks on of returnees from the Arab countries
demand for that critical mass (for lo- remittances. Banks have been reduc- await return, it said.
cal manufacturing to be viable)," BMW ing the fees on foreign remittances
"Flows to India (the world's largest
Group India President and CEO Vikram and their income under this head fell
Pawah told. from Rs 15,017 crore in 2016 to Rs recipient of remittances) are expected
to reach USD 87 billion, a gain of 4.6
The only way to do that, according to 12,142 crore in 2019. However, they per cent with the severity of COVID-19
him, is to fast track it, create the de- have protected themselves by recover- caseloads and deaths during the sec-
mand before the infrastructure devel- ing Rs 4,422 crore through exchange ond quarter (well above the global
ops or create the demand which will mark-up in 2020, which was up from Rs average) playing a prominent role in
create the infrastructure. 2,505 crore in 2016.
drawing altruistic flows (including for
These figures were from independent the purchase of oxygen tanks) to the
Govt announces Rs. 76000 research carried out by Capital Eco- country," the World Bank report
crore scheme for chip eco- nomics in August 2021, which aimed to stated.
estimate the scale of foreign exchange
system transaction fees in India. The study Remittances to low- and middle-in-

The Cabinet cleared the Rs 76,000-cr was released by Wise, the technology come countries are projected to
incentive scheme for semiconductors. company that was founded with the have grown a strong 7.3 per cent to
Under this scheme, India will set up objective of reducing cross-border re- reach USD 589 billion in 2021, the bank
more than 20 semiconductor design, mittance costs. said. T

14 | 2022 | JANUARY | BANKING FINANCE