25/03/2025

BIZ & FINANCE TUESDAY | MAR 25, 2025

/thesuntelegram FOLLOW / Malaysian Paper

ON TELEGRAM m RAM

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India’s US$23b plan to rival China factories to lapse

UK finance minister says govt to slash costs by 15%

LONDON: UK Chancellor of the Exchequer Rachel Reeves said on Sunday she plans to cut the costs of running government by 15% within four years, as she grapples with strained public finances. Her comments came ahead of her crucial Spring Statement tomorrow when she is expected to detail billions of pounds of spending cuts across various government departments. “We are, by the end of this parliament, making a commitment that we will cut the costs of running government by 15%,” she told the BBC. The broadcaster reported that target would translate to annual savings of £2.2 billion (RM12.4 billion) across Britain’s civil service, which employs more than 500,000 people. Reeves said it would be up to individual departments to decide how many civil servants will lose their jobs but added that personnel could be cut by 10,000. “I would rather have people working on the front line in our schools and our hospitals, in our police, rather than in back-office jobs,” she told Sky News. Reeves also insisted that she will stick to her own fiscal rules when she delivers her financial update tomorrow. They are not to borrow to fund day-to-day spending and to see debt fall as a share of the gross domestic product by 2029-2030. Since the finance minister has also committed to not increasing taxes, sticking to the rules raises the prospect of spending cuts to some departments. The Labour government has failed to get Britain’s economy firing since it swept to power last July, a task complicated by Donald Trump’s return to the White House. “The world has changed,” Reeves told Sky. “We can all see that before our eyes, and governments are not inactive in that – we’ll respond to the change and continue to meet our fiscal rules.” Official data released last Friday showed that public sector net borrowing – the difference between spending and tax receipts – grew last month, leaving Reeves with little wiggle room to meet her rules. – AFP Venezuela cuts public sector work week CARACAS: Venezuela will cut the public sector work week to three half-days, the government said on Sunday, after low water levels began to threaten hydroelectric power generation. From yesterday, public sector shifts will be cut to four-and-a-half hours in the mornings from 8am and offices will operate on a three-day week. Citizens have also been urged to save power in their homes. “As a result of the climate emergency that has led to rising temperatures worldwide, we are facing a climatological event that affects the water level of the reservoirs that generate electric energy in the Andean region,” the government statement said. Much of Venezuela’s electricity is produced by hydroelectric plants. Electricity rationing has been common in inland states for 15 years and there have been frequent lengthy blackouts since 2019, which the government has blamed on sabotage. – AFP

compliance of investment thresholds” and companies “not achieving stipulated minimum growth”, according to the analysis. The document did not provide specifics, though it found production in the sector had exceeded targets. Reuters could not determine which companies the analysis referred to. But Delhi had previously acknowledged problems and agreed to extend some deadlines and increase payment frequency after complaints from PLI participants. One of the Indian officials said excessive red tape and bureaucratic caution continued to stymie the scheme’s effectiveness. As an alternative, India is considering supporting certain sectors by partially reimbursing investments made to set up plants, which would allow firms to recover costs faster than having to wait for production and sale, another official said. Trade expert Biswajit Dhar at New Delhi-based Council for Social Development think-tank, who has said the government needs to do more to attract foreign investment, said the country might have missed its moment. The incentives programme was “possibly the last chance we had to revive our manufacturing sector”, he said. “If this kind of mega-scheme fails, do you have any expectation that anything is going to succeed?” – Reuters “There are no concrete orders yet, but we want to be ready,” he said. Trappier said that, if the French government approved, the company would also be “ready to provide its services” to any country reviewing its orders for US-made F-35 combat planes since President Donald Trump took office. Last year, France’s air force had 108 Rafale jets, and the navy had 41. France was due to receive 56 additional aircraft before Macron’s announcement. – AFP

o Mobile phone and pharmaceuticals production are bright spots while other sectors disappoint

NEW DELHI: Indian Prime Minister Narendra Modi’s government has decided to let lapse a US$23 billion (RM102 billion) programme to incentivise domestic manufacturing, just four years after it launched the effort to woo firms away from China, according to four government officials. The scheme will not be expanded beyond the 14 pilot sectors and production deadlines will not be extended despite requests from some participating firms, two of the officials said. Some 750 firms, including Apple supplier Foxconn and Indian conglomerate Reliance Industries, signed up to the Production-Linked Initiative scheme, public records show. Firms were promised cash payouts if they met individual production targets and deadlines. The hope was to raise the share of manufacturing in the economy to 25% by 2025. Instead, many firms that participated in the programme failed to kickstart production, while others that met manufacturing targets found India slow to pay out subsidies, according to government documents and correspondence seen by Reuters.

As of October 2024, participating firms had produced US$151.93 billion worth of goods under the programme, or 37% of the target that Delhi had set, according to an undated analysis of the scheme compiled by the Commerce Ministry. India had issued just US$1.73 billion in incentives – or under 8% of the allocated funds, the document said. Since the plan’s introduction, manufacturing’s share of the economy has decreased from 15.4% to 14.3%. Two of the government officials told Reuters the end of the programme did not mean Delhi had abandoned its manufacturing ambitions and that alternatives were being planned. The government last year defended the scheme’s impact, particularly in pharmaceuticals and mobile phone manufacturing, which have seen explosive growth. Some 94% of the nearly US$620 million in incentives disbursed between April and October 2024 were directed to those two sectors. In some instances, some food-sector companies that applied for subsidies were not issued them due to factors such as “non

France’s Dassault says upping Rafale warplane output PARIS: France’s Dassault Aviation is looking to ramp up production of its Rafale combat planes, its CEO said on Sunday, after President Emmanuel Macron said the country would increase orders. European countries including France have been seeking to boost defence spending and increase weapons production in the face of possible US security disengagement and Russian aggression linked to the war in Ukraine. Macron said on Tuesday that France was going to “increase and accelerate Rafale orders”. Dassault Aviation chief executive Eric Trappier said the company had increased output from one war plane a month in 2020 to more than two per month this year, and was working with suppliers to be able to produce combat planes even faster. “We are planning to deliver three per month next year, and four from 2028-2029,” he told Le Journal du Dimanche newspaper. “We have heard the president’s call and are studying the possibility of ramping up to five Rafale per month.

A Dassault Rafale aircraft parked on the tarmac of the French Air and Space Force Luxeuil-Saint-Sauveur Airbase in France. – AFPPIC