Monthly Archives: April 2023

FTP 2023 is a dynamic and open ended Policy that will accommodate the emerging needs: Sh. Piyush Goyal

PM Modi has given the vision to increase exports manifold: Sh Goyal

FTP seeks to take India’s exports to 2 trillion dollars by 2030: Sh Goyal

4 pillars of FTP 2023: Incentive to Remission, Export promotion through collaboration, Ease of doing business and Emerging Areas

Posted On: 31 MAR 2023 5:13PM by PIB Delhi

Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Shri Piyush Goyal today launched the Foreign Trade Policy 2023 saying that it is dynamic and has been kept open ended to accommodate the emerging needs of the time. He stated that the policy had been under discussion for a long time and has been formulated after multiple stakeholder consultations. India’s overall exports, including services and merchandise exports, has already crossed US$ 750 Billion and is expected to cross US$ 760 Billion this year, he said.

The Minister referred to the interaction that Prime Minister, Shri Narendra Modi with the exporters on 06th August, 2021 and encouraged them to increase exports and get more deeply involved in the global value chain. He lauded the vision and guidance of the Prime Minister who believed that given the size of the Indian economy and manufacturing & service sector base, the potential for the country to grow is manifold. He said that this vision is at the core of the policy.

The Minister noted that the remarkable achievement in the overall export figure of crossing US$ 760 Billion in these challenging times across the world has been the result of enthusiasm and encouragement pumped in by the Prime Minister. He said that this achievement is in sync with the target set in the roadmap in 2021 after the interaction with the Prime Minister.

He stressed that every opportunity for export must be captured and utilised effectively. He also mentioned that in the next 5 months during India’s G20 presidency there should be a massive concentrated outreach with the world both sector-wise and country-wise.

The release of the policy was also attended by Union Minister of State for Commerce & Industry, Smt. Anupriya Patel, Commerce Secretary, Shri Sunil Barthwal and Member Customs, Central Board of Indirect Taxes and Customs, Shri Rajiv Talwar. Director General of Foreign Trade, Shri Santosh Kumar Sarangi gave a detailed presentation on the policy.

The Key Approach to the policy is based on these 4 pillars: (i) Incentive to Remission,  (ii) Export promotion through collaboration – Exporters, States, Districts, Indian Missions, (iii) Ease of doing business, reduction in transaction cost and e-initiatives and (iv) Emerging Areas – E-Commerce Developing Districts as Export Hubs and streamlining SCOMET policy.

Foreign Trade Policy (2023) is a policy document which is based on continuity of time-tested schemes facilitating exports as well as a document which is nimble and responsive to the requirements of trade. It is based on principles of ‘trust’ and ‘partnership’ with exporters. In the FTP 2015-20, changes were done subsequent to the initial release even without announcement of a new FTP responding dynamically to the emerging situations. Hereafter, the revisions of the FTP shall be done as and when required. Incorporating feedback from Trade and Industry would also be continuous to streamline processes and update FTP, from time to time.

The FTP 2023 aims at process re-engineering and automation to facilitate ease of doing business for exporters. It also focuses on emerging areas like dual use high end technology items under SCOMET, facilitating e-commerce export, collaborating with States and Districts for export promotion.

The new FTP is introducing a one-time Amnesty Scheme for exporters to close the old pending authorizations and start afresh.

The FTP 2023 encourages recognition of new towns through “Towns of Export Excellence Scheme” and exporters through “Status Holder Scheme”. The FTP 2023 is facilitating exports by streamlining the popular Advance Authorization and EPCG schemes, and enabling merchanting trade from India.

Process Re-Engineering and Automation

Greater faith is being reposed on exporters through automated IT systems with risk management system for various approvals in the new FTP. The policy emphasizes export promotion and development, moving away from an incentive regime to a regime which is facilitating, based on technology interface and principles of collaboration. Considering the effectiveness of some of the ongoing schemes like Advance Authorisation, EPCG etc. under FTP 2015-20, they will be continued along with substantial process re-engineering and technology enablement for facilitating the exporters. FTP 2023 codifies implementation mechanisms in a paperless, online environment, building on earlier ‘ease of doing business’ initiatives. Reduction in fee structures and IT-based schemes will make it easier for MSMEs and others to access export benefits.

Duty exemption schemes for export production will now be implemented through Regional Offices in a rule-based IT system environment, eliminating the need for manual interface. During the FY23-24, all processes under the Advance and EPCG Schemes, including issue, re-validation, and EO extension, will be covered in a phased manner. Cases identified under risk management framework will be scrutinized manually, while majority of the applicants are expected to be covered under the ‘automatic’ route initially.

Towns of Export Excellence

Four new towns, namely Faridabad, Mirzapur, Moradabad, and Varanasi, have been designated as Towns of Export Excellence (TEE) in addition to the existing 39 towns. The TEEs will have priority access to export promotion funds under the MAI scheme and will be able to avail Common Service Provider (CSP) benefits for export fulfillment under the EPCG Scheme. This addition is expected to boost the exports of handlooms, handicrafts, and carpets.

Recognition of Exporters

Exporter firms recognized with ‘status’ based on export performance will now be partners in capacity-building initiatives on a best-endeavor basis. Similar to the ‘each one teach one’ initiative, 2-star and above status holders would be encouraged to provide trade-related training based on a model curriculum to interested individuals. This will help India build a skilled manpower pool capable of servicing a $5 Trillion economy before 2030. Status recognition norms have been re-calibrated to enable more exporting firms to achieve 4 and 5-star ratings, leading to better branding opportunities in export markets.

Promoting export from the districts

The FTP aims at building partnerships with State governments and taking forward the Districts as Export Hubs (DEH) initiative to promote exports at the district level and accelerate the development of grassroots trade ecosystem. Efforts to identify export worthy products & services and resolve concerns at the district level will be madethrough an institutional mechanism – State Export Promotion Committee and District Export Promotion Committee at the State and District level, respectively.District specific export action plans to be prepared for each district outlining the district specific strategy to promote export of identified products and services.

Streamlining SCOMET Policy

India is placing more emphasis on the “export control” regime as its integration with export control regime countries strengthens. There is a wider outreach and understanding of SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) among stakeholders, and the policy regime is being made more robust to implement international treaties and agreements entered into by India.A robust export control system in India would provide access of dual-use High end goods and technologies to Indian exporters while facilitating exports of controlled items/technologies under SCOMET from India.

Facilitating E-Commerce Exports

E-commerce exports are a promising category that requires distinct policy interventions from traditional offline trade. Various estimates suggest e-commerce export potential in the range of $200 to $300 billion by 2030. FTP 2023 outlines the intent and roadmap for establishing e-commerce hubs and related elements such as payment reconciliation, book-keeping, returns policy, and export entitlements. As a starting point, the consignment wise cap on E-Commerce exports through courier has been raised from ₹5Lakh to ₹10 Lakh in the FTP 2023. Depending on the feedback of exporters, this cap will be further revised or eventually removed. Integration of Courier and Postal exports with ICEGATE will enable exporters to claim benefits under FTP. The comprehensive e-commerce policy addressing the export/import ecosystem would be elaborated soon, based on the recommendations of the working committee on e-commerce exports and inter-ministerial deliberations. Extensive outreach and training activities will be taken up to build capacity of artisans, weavers, garment manufacturers, gems and jewellery designers to on board them on E-Commerce platforms and facilitate higher exports.

Facilitation under Export Promotion of Capital Goods (EPCG) Scheme

The EPCG Scheme, which allows import of capital goods at zero Customs duty for export production, is being further rationalized. Some key changes being added are:

Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) scheme has been added as an additional scheme eligible to claim benefits under CSP(Common Service Provider) Scheme of Export Promotion capital Goods Scheme(EPCG).

Dairy sector to be exempted from maintaining Average Export Obligation – to support dairy sector to upgrade the technology.

Battery Electric Vehicles (BEV) of all types, Vertical Farming equipment, Wastewater Treatment and Recycling, Rainwater harvesting system and Rainwater Filters, and Green Hydrogen are added to Green Technology products – will now be eligible for reduced Export Obligation requirement under EPCG Scheme

Facilitation under Advance authorization Scheme

Advance authorisation Scheme accessed by DTA units provides duty-free import of raw materials for manufacturing export items and is placed at a similar footing to EOU and SEZ Scheme. However, the DTA unit has the flexibility to work both for domestic as well as export production. Based on interactions with industry and Export Promotion councils, certain facilitation provisions have been added in the present FTP such as

Special Advance Authorisation Scheme extended to export of Apparel and Clothing sector under para 4.07 of HBP on self-declaration basis to facilitate prompt execution of export orders – Norms would be fixed within fixed timeframe.

Benefits of Self-Ratification Scheme for fixation of Input-Output Norms extended to 2 star and above status holders in addition to Authorised Economic Operators at present.

Merchanting trade

To develop India into a merchanting trade hub, the FTP 2023 has introduced provisions for merchanting trade. Merchanting trade of restricted and prohibited items under export policy would now be possible. Merchanting trade involves shipment of goods from one foreign country to another foreign country without touching Indian ports, involving an Indian intermediary. This will be subject to compliance with RBI guidelines, and won’t be applicable for goods/items classified in the CITES and SCOMET list. In course of time, this will allow Indian entrepreneurs to convert certain places like GIFT city etc. into major merchanting hubs as seen in places like Dubai, Singapore and Hong Kong.

Amnesty Scheme

Finally, the government is strongly committed to reducing litigation and fostering trust-based relationships to help alleviate the issues faced by exporters. In line with “Vivaad se Vishwaas” initiative, which sought to settle tax disputes amicably, the government is introducing a special one-time Amnesty Scheme under the FTP 2023to address default on Export Obligations. This scheme is intended to provide relief to exporters who have been unable to meet their obligations under EPCG and Advance Authorizations, and who are burdened by high duty and interest costs associated with pending cases. All pending cases of the default in meeting Export Obligation (EO) of authorizations mentioned can be regularized on payment of all customs duties that were exempted in proportion to unfulfilled Export Obligation. The interest payable is capped at 100% of these exempted duties under this scheme.  However, no interest is payable on the portion of Additional Customs Duty and Special Additional Customs Duty and this is likely to provide relief to exporters as interest burden will come down substantially. It is hoped that this amnesty will give these exporters a fresh start and an opportunity to come into compliance.

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A very good evening to all of you. It is indeed a pleasure to be here and participate in the 31st annual management convention of Thrissur Management Association.

As Socrates once said, “The only true wisdom is in knowing you know nothing.” Little did we know, three years back, that we would face one of the greatest challenges of our lifetime – a pandemic that would upend our daily lives and force us to navigate through unknown, unforeseen, and unanticipated turbulences. As we complete a tad over three years after the onset of the pandemic it might be an opportune moment to reminisce about the challenges and responses to the COVID times as well as stocktake some of the lessons learnt.

What comes to mind in the first place is that the uncertainty and upheavals seen during the last three years has been a first for this living generation. To dwell on the experiences, challenges and responses, let me begin by focussing on the global economic recovery post pandemic as well as in our country and thereafter, briefly, outline my views on the changes that pandemic brought in the financial world and what this transformation means for the Indian growth story going forward.

Restoration and Revitalization of the Economy

The stress induced by Covid was different from any other stress the world has seen before. The pandemic spread rapidly and affected almost every country in the world. For financial regulators, it was an out-of-syllabus situation as the economic stress this time was not caused by underlying economic imbalances or financial market failures, but by a public health crisis. This made it a unique shock, as it impacted both the supply and demand sides of the economy, affecting both production and consumption. The impact was such that global GDP contracted by 3.5% in 2020. India’s GDP contracted by 5.8% in the financial year 2020-21, making it the worst economic contraction in country’s history. The recession was highly synchronized — more than 90 per cent of economies, even higher than the proportion of about 85 per cent of countries in recession at the height of the Great Depression of 1930-32, witnessed a recession.

The Governments and Central Banks around the world responded with unprecedented fiscal and monetary policy measures, both conventional and unconventional, to support individuals, businesses, and financial markets. This included massive stimulus packages, quantitative easing, and other measures to sustain credit flows and economic activity. As per IMF estimates, by mid-2021, global economic stimulus in response to Covid reached $16 trillion including additional government spending, revenue foregone and liquidity measures, which amounts to close to 20% of global GDP.

To combat the impact of the COVID-19 pandemic and to revive economic growth, India announced a special economic and comprehensive package amounting to about Rs. 27.1 lakh crore – more than 13 per cent of India’s GDP. The Government’s actions were complemented through various measures deployed by the Reserve Bank within days of Covid being declared as a pandemic by WHO. The repo rate was reduced cumulatively by 115 bps (between March and May 2020) and CRR was reduced by 1 percentage point on March 27, 2020, for one year to ease immediate liquidity constraints. To further augment systemic liquidity long-term repo operations (LTROs) and targeted long-term repo operations (TLTROs) were undertaken.

A calibrated set of regulatory measures were also announced to provide relief from the pandemic. These measures included moratorium on term loans for six months, deferment of interest on working capital facilities sanctioned in the form of cash credit/ overdraft, easing of working capital financing, etc.

The measures taken by the Government and the RBI helped cushion the economy from the adverse effects of the pandemic and also demonstrated our commitment to support the businesses and individuals during the turbulence. The RBI’s measures to provide liquidity support to the economy helped ease the funding constraints faced by financial markets and enabled them to continue their operations and meet their financial obligations, thereby supporting economic activity. The government’s push for providing relief to weaker sections and hardest hit sectors of the economy ensured that their immediate concerns were addressed. The following year, i.e., in FY22, the Indian economy started to recover despite the Omicron wave of January 2022. Consequently, output in FY22 went past its pre-pandemic level in FY207, with the Indian economy staging an impressive recovery.

Just as India and the world were expecting to recover from the pandemic, the geo-political upheavals in Europe exacerbated existing pandemic related stress disrupting the commodities markets in particular. The turmoil led to increased prices and volatility in fuel, food grains, fertilizers, natural gas and metal prices, leading to a worldwide surge in inflation. The impact on commodities market can be gauged from the fact that the year-on-year growth in the prices as of March 2022, was 400% for natural gas, 250% for coal, 76% for crude, 30% for food and approximately 120% for fertilizers8. These increased prices led to multi-decade high inflation in many advanced economies. The inflation reached 10% in Euro Area, Germany, and UK In India also, inflation reached 7.8% in April 2022, before easing to 5.7% in December 2022.

Central Banks across economies led by US Fed Reserve responded with synchronised policy rate hikes to curb high inflation. Since May 2022, US has hiked policy rates by 450 bps, while UK and the EU have increased rates by 300 bps.

The conflict in Europe necessitated a revision in expectations for economic growth and inflation in FY23. Despite the downward revision, the growth estimate for FY23 for India is higher than for almost all major economies. IMF estimates India to be one of the top two fast-growing significant economies in 2022. Despite protracted global headwinds and tighter monetary conditions, India is still expected to display a healthy growth and it is a testament to India’s underlying economic resilience and of our ability to recoup, renew and re-energise the growth drivers of the economy.

The first advance estimates (FAE) released by the National Statistical Office (NSO) on January 6, 2023, placed India’s real gross domestic product (GDP) growth at 7.0 per cent year-on-year (y-o-y) for 2022-23, driven by private consumption and investment. Bank credit growth (y-o-y) stood at 16.8 per cent in December 2022 as compared with 8.4 per cent a year ago. Aggregate deposits increased by 10.3 per cent (y-o-y) in December 2022 as compared with 9.6 per cent a year ago, led by 13.2 per cent growth in term deposits. The government has continued on the path of fiscal consolidation in the Union Budget 2023-24 by reprioritising expenditure mix. The fiscal deficit is estimated to be 6.4% for the current fiscal and is likely to fall to 5.9% in the next fiscal. Tax revenues have remained buoyant with monthly GST collections crossing ₹1.5 lakh crore in January 2023.

This makes India the fastest-growing economy in the world and today we are referred to as ‘bright spot on a dark horizon’. To conclude the first part of my talk, I would say that, indeed, amidst the challenges and uncertainties prevailing over the past three years, Indian economy and financial system has shown remarkable resilience and strength.

New horizons, Partnerships and Priorities

Moving on, let me focus on the transformative journey of Indian banking sector during past few years and specially during COVID period and how it is poised for supporting the Indian growth story.

The last decade has witnessed significant penetration of banking in the country. Under Pradhan Mantri Jan Dhan Yojana (PMJDY), 48.20 crore beneficiary accounts have been opened so far with outstanding balance of ₹1.89 lakh crore in these accounts. As of June 2022, there are more than 1.6 lakh bank branches translating to approximately 15 branches per 1 lakh of population. This is further complemented by a network of 2.17 lakh ATMs, out of which 47 per cent are in rural and semi-urban areas. Additionally, there are close to 32 lakh Banking Correspondents (BCs) engaged by banks providing last mile access. As of 2021, 78 per cent of Indian adults (population with 15 years or more of age) had a bank account as compared to 53 per cent in 2014. Banking services have been made accessible to every village within a 5 km radius in 25 states and 7 Union Territories covering 99.94 per cent of villages.

This has been supplemented by a few important developments which got a fillip during covid. The first noteworthy development is the increasing use of technology in finance. Technology in finance has been an important enabler that has empowered us to create a more inclusive and efficient financial ecosystem. Banks have been innovating and enhancing the quality and reach of their services using technological solutions for some time now. However, this got accelerated during the COVID period when mobility became a challenge and technology came to the rescue for fulfilling all our banking needs. The demands placed by the circumstances compelled banks and financial institutions to rethink their business processes and review their strategies. The Reserve Bank also facilitated banks and financial institutions in this journey by issuing appropriate guidelines such as use of Video KYC. However, all this was made possible through the giant strides taken by our country in building a public digital infrastructure with India Stack coupled with JanDhan – Aadhar – Mobile, the so-called JAM trinity, Account Aggregator framework and other digital initiatives, it enabled a decisive entry of the country into a digital finance era. What makes India Stack unique is the scale, public accessibility and the comprehensiveness that has helped in making a building a more inclusive digital economy.

The second important development to my mind during this period was the emergence of new partnerships between FinTech companies and banks. Banks are seen leveraging technological partnerships with FinTechs in various ways to provide better products and better serve their customers. In this partnership, FinTechs can contribute their technology expertise, while banks bring their domain expertise. By leveraging technologies such as chatbots, mobile apps, and personalized digital solutions, banks can provide customers with more convenient and seamless banking experiences. This collaboration allows banks to enhance their digital capabilities and meet the expectations of tech-savvy customers.

All of us have realised or experienced that in the post pandemic world, digital lending has grown exponentially including in India leading to both an increase in scale and velocity of credit. However, at the same time it has also given rise to a host of business conduct issues. This poses a regulatory dilemma as the Regulator then needs to play a balancing act in weighing the benefits brought in by innovative business models on one side and emerging business conduct and regulatory concerns on the other side. An attempt has been made by the Reserve Bank to address this issue through issuing principle-based guidelines on digital lending.

The third important development was the reinforcement of our focus regarding the importance of inclusiveness. The desperate times reminded us that even a small help at an appropriate time could make a world of difference to the person in need. Therefore, the Reserve Bank has accelerated its efforts towards building an inclusive financial system where access to financial services is not limited to a basic bank account, but everyone has access to formal channels of credit and they are able to use their banking account to make digital payments to everyone, everywhere, every time. This audience must be aware about the fact that today India’s payment systems are among the best in the world with our real time fast retail payment system, UPI, enabling transactions of about Rs. 12 lakh crore per month in value and almost 26 crore transactions in daily volume.

The next thing which can revolutionise the credit markets is the credit decisions which are informed by availability of financial as well as alternate data. By leveraging data analytics, financial institutions are able to gain insights into customer behaviour, market trends, and emerging risks, enabling them to make more informed credit decisions. Data-driven finance is not just about collecting and analysing information; it’s about using that information to drive innovation, create value for customers, and build sustainable, resilient financial models to the benefit of the system. To enable responsible use of data, RBI has introduced the Account Aggregator framework which enable customers to control their data and provide permission for it to be shared with third-party service providers, for provision of various financial products and services seamlessly. It is expected that AA framework would accelerate the development of alternative lending models such as cash flow-based lending and marketplace lending or what we popularly known as peer-to-peer lending. This would enable small businesses, including street vendors that may not have traditional collateral, to secure a loan. As technology continues to advance, we expect more innovative models to emerge that leverage data, automation, and artificial intelligence to transform the lending landscape.

A Fourth development post pandemic, is the reminder to us, the regulators, to keep the financial stability as the prime point of focus. The COVID shock, termed as ‘The Great Lockdown’ by the IMF, put all stress testing models and business continuity plans to test. It also reminded us that the financial system is vulnerable to shocks arising in any sector, external as well as internal, and it is an imperative for us to take steps to ensure financial stability. For modern economies, financial stability is not just a goal, it’s a necessity – for when it falters, the ripple effects can bring down even the mightiest to their knees. The 2008 financial crisis was a stark reminder that financial stability isn’t just an ideal, it’s a prerequisite for a well-functioning economy.

Banks are the backbone of the financial system, and they play a significant role in ensuring financial stability. For this reason, the banks are required to comply with the prudential regulations issued by the Reserve Bank and are required to maintain sufficient capital buffers to absorb losses. The other crucial element of financial stability is robust governance. Robust governance is the cornerstone of stability and prosperity of any organisation, safeguarding the integrity and ensuring that all decisions are taken in the best interest of stakeholders.

Recognising this, the Reserve Bank has always placed greater importance on governance and has taken several measures to strengthen the same in banks. The Reserve Bank’s guidelines now require banks to have a diverse and independent board of directors, with a mix of executive and non-executive directors with certain minimum qualifications and experience. The oversight from Board of Directors must be supported by robust risk management, audit and compliance functions.

Future Challenges and Opportunities

Although, we have come a long way in our quest for providing banking for all, there is still a long path to traverse. The huge gap in availability and utilisation of financial services by the urban and rural India is one such challenge. This gives us an immense opportunity as the objective of financial inclusion is not just about giving access to thrift and credit, it’s about empowering individuals to realise their true potential and contribute to a thriving economy.

Financial inclusion needs to be redefined by developing bespoke products and services that are best suited to different strata of the society depending upon their income level. This shall include innovative solutions that make it easier for people to not only access basic but also to use a variety of financial services. Towards this end and to enable easy, adequate, and customized credit, the Reserve Bank has made provisions for differentiated banking license. These are niche banks which can help plug the gap in meeting specialised needs for banking products and services across a wider and diverse spectrum.

Another, critical issue in India’s credit market has been the consistent gap between the demand and supply of credit to Micro Small and Medium Enterprises (MSMEs). The Micro, Small and Medium Enterprises (MSME) sector contributes around 30% to India’s GDP, 45% to its manufacturing output, and 48% to exports. This has to be seen as an area of opportunity by the banks and other financial institutions.

Another emerging area of focus is making finance available for transitioning to a low carbon economy. All of us are now cognisant of the global challenge that climate change poses to our planet and its impact which is reverberating across the world. If we fail to take timely action, the consequences will be irreversible. The Indian Government has already committed to reduce the total projected carbon emissions from now till 2030 by one billion tonnes, reduce carbon intensity of the economy by more than 45 per cent by 2030, and achieve ‘Net Zero’ emissions by the year 2070. As a central bank, we also have a responsibility to promote sustainable economic growth which includes transition to a low-carbon economy.

Banks can play an essential role in financing the transition to a low-carbon economy by channelising finance to sustainable and green projects as well as by developing new financial products that incentivise green initiatives. Our actions will set the course not only for the future of the planet but also determine the kind of environment which we bequeath our future generations.

For a regulator in a developing country, given the high rate of technology adoption, keeping pace with market innovations is always a challenge. Regulating such a dynamic financial sector can be very aptly described as “Just when we thought we knew all the answers, someone changed the questions”. But it is our firm belief that for the customers to enjoy the fruits of financial innovation, it has to be sustainable and within the realm of a sound regulatory framework. Keeping this in mind, we have followed a nuanced and consultative approach with an aim to responsible innovation, while nudging the industry to adopt sustainable business practices.

Concluding thoughts

It is important for us to be cognizant of the fact that the bedrock of a strong and resilient financial system is the trust that the people repose in it. The trust element is not only created just by the individual institutions but by the collective actions of the entities operating in the financial system. We expect firms to be responsible for their actions and of the actions of the service providers engaged by them and demonstrate accountability for same. Compliance with applicable regulations and ensuring customer-centricity are two non-negotiable principles for entities functioning in the financial sector and the same must flow from the top.

To conclude, I would like to emphasize that the banking sector has been instrumental in India’s growth story, and it is crucial that banks continue to innovate and adapt to changing times to meet the evolving needs of the economy. As India continues to march forward, the banking sector must, as hitherto, continue to be a key contributor to the country’s growth story. As always, we at RBI will be working closely to ensure that the banking sector and other stakeholders can help build a stronger, more inclusive, and sustainable future for India.

Thank you.

(Keynote Address by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India – March 22, 2023 – at the 31st Annual Management Convention of Thrissur Management Association)

https://www.rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1359

The second meeting of G20 Finance Ministers and Central Bank Governors (FMCBG) under the Indian G20 Presidency was held on 12-13 April 2023, on the margins of the 2023 Spring Meetings of the International Monetary Fund and the World Bank Group. Union Finance Minister Smt. Nirmala Sitharaman, and Governor, Reserve Bank of India (RBI), Shaktikanta Das jointly chaired the meeting. The meeting saw participation of around 350 delegates from G20 members, 13 invitee countries, and various international and regional organisations.

The meeting was organised in three sessions covering the Global Economy, International Financial Architecture, Sustainable Finance, Financial Sector, Financial Inclusion, and International Taxation. The goal of this FMCBG meeting was to deliberate on the progress made by the various workstreams of the G20 Finance Track on the deliverables that were tasked to them by the Ministers and Governors in the February G20 FMCBG Chair’s Summary and Outcome Document and to seek guidance on the way forward.

During the session on Global Economy and International Financial Architecture, members discussed the key challenges to the global economic outlook, including the war in Ukraine, food and energy insecurity, climate change, and recent risks to financial stability. Members agreed that the G20 can contribute to building a common understanding on fostering a conducive environment for global economic recovery, and ensuring that the most vulnerable countries and sections of the population are adequately protected.

Ministers and Governors also discussed the progress of the implementation of recommendations of the Independent Panel of MDBs’ Capital Adequacy Frameworks (CAF). They also shared their expectations from the recently constituted G20 Expert Group on “Strengthening Multilateral Development Banks (MDBs)”. On the debt agenda, discussions focused on strengthening multilateral coordination towards addressing the increasing debt distress in low-income and vulnerable middle-income countries. Ministers and Governors reiterated the need to swiftly complete the ongoing debt treatments under the Common Framework and beyond. Discussions also covered the impact of climate change-related policies on capital flows, among others.

During the second session on Sustainable Finance, Financial Sector, and Financial Inclusion, discussions focussed on the mobilisation of resources for climate change, the role of the multilateral financial institutions in catalysing private finance flows for Sustainable Development Goals and the role of the G20 in scaling up and encouraging wider adoption of social impact investment instruments. Members also deliberated on the macroeconomic and financial challenges posed by the crypto-assets ecosystem and exchanged views on potential global policy responses to crypto-assets, taking into account the risks, especially to Emerging Markets and Developing Economies (EMDEs). On financial inclusion, discussions focused on leveraging Digital Public Infrastructure (DPI) for financial inclusion and productivity gains. Ministers and Governors also shared perspectives on the development of the 2023 Financial Inclusion Action Plan (FIAP).

The third session on International Taxation discussed the need for coordinated efforts toward effective implementation and wider adoption of the two-pillar international tax package. Ministers shared suggestions on how best G20 can complement global efforts to enhance tax transparency.

On the margins of the G20 FMCBG sessions, high-level side events were also held. A meeting of the Global Sovereign Debt Roundtable (GSDR) was also held on April 12, 2023, which was co-chaired by Hon’ble Finance Minister, IMF MD, and World Bank President. The meeting saw discussions on the current global debt landscape and ways to address existing challenges in debt restructuring. A press statement was released following the meeting and it may be accessed at https://www.imf.org/en/News/Articles/2023/04/12/pr23117-global-sovereign-debt-roundtable-cochairs-press-stmt.

In the run-up to the G20 FMCBG meeting, the G20 Finance and Central Bank Deputies met with the major MDBs on April 12, 2023 to discuss the status of implementation of recommendations of the G20 Independent Panel of MDBs’ CAF. These updates will contribute to the preparation of the G20 Roadmap on CAF which will be one of the key deliverables of the Finance Track under the Indian G20 Presidency.

The progress achieved during the 2nd G20 FMCBG meeting will inform the discussions during the 3rd G20 FMCBG meeting which will be held in July 2023 in Gandhinagar, India, and subsequently the Leaders’ Summit scheduled to be held in New Delhi on September 8-9, 2023.

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https://pib.gov.in/PressReleasePage.aspx?PRID=1916414