UAE and Indian to promote Fintech and Trade

As one of the largest retailers, currently UAE-based retail giant Lulu Group International imports close to ₹80 billion worth of food and non-food products from India for their 247 hypermarkets and supermarkets in the region. They partnered with FICCI by signing an MoU which will further push the trade volume as well as enhance the CEPA initiatives. Efficient and cost-effective cross-border monetary transactions is the main objective of both CBUAE and RBI. Both these parties signed an MoU to promote the enhancement of inter-operability between e-Rupee and e-Dirham. Such encouragement of Fintech products and services is necessary especially when trade worth ₹80 billion occurs between these two nations.

Conclusion

Such encouragement ofusing Fintechproducts andservices is vital especiallywhenhigh-worth trades happen among any two nations. In this innovation encouraging decade, these bilateral moves will help the countries to escape the dependence on any third fiat currency that is used as medium-of-exchange and terminates the possibility of any conversion loss due to the depreciating factor of a currency and saves the excess disbursement and avoids inflation. India is the pioneer to begin the bilateral monetary transactions. Established the first vostro account in Russia to meet the mutual interests, after US started campaigns to isolate Russia. Then other countries also started doing it to reduce the demand of US dollar as many local currencies were depreciating. Digital currency is the future of multilateral cross-border settlements. It’s currently in the pilot stage in most of the countries and establishing this will eradicate the requirement of any third currency from global transactions.

References

• https://thewire.in/economy/global-settlement-does-the-rupee-have-the-potential-to-dethrone-the-dollar

• https://timesofindia.indiatimes.com/business/india-business/can-the-indian-rupee-replace-the-dollar-as-an-internationalcurrency/articleshow.cms

• https://www.washingtonpost.com/business/energy/the-dollar-will-vanquish-pretenders-to-its-throne/2023/01/26.html

• https://www.cfr.org/backgrounder/dollar-worlds-currency

• https://www.globaltimes.cn/page/202210/1276580.shtml

• https://indianexpress.com/article/business/market/rupee-falls-below-80-against-dollar-raises-worries-over-imported-inflation8039926/

• https://www.reuters.com/markets/currencies/indian-govt-not-averse-weaker-rupee-vs-dollar-source-2022-09-22/

• https://theprint.in/campus-voice/fall-of-rupee-is-good-for-economy-more-jobs-can-be-created-through-foreign-investmentexports/1164341/

• https://timesofindia.indiatimes.com/business/india-business/explained-what-a-falling-rupee-means-for-indias-economy-andyour-finances.cms

• https://www.compareremit.com/money-transfer-tips/the-rise-and-fall-of-the-dollar-vs-rupee-since-1947/

• https://www.indiatoday.in/business/story/rupee-to-dollar-all-time-low-depreciation-inr-to-usd-1968498-2022-06-30

• https://www.firstpost.com/world/rupee-closer-to-replacing-dollar-as-18-nations-agree-to-trade-in-inr-12295932.html

• https://www.firstpost.com/world/india-bangladesh-chuck-the-dollar-to-settle-trade-in-rupee-taka-12248812.html

• https://www.firstpost.com/world/indian-rupee-could-be-the-new-dollar-says-doctor-doom-nouriel-roubini-12188032.html

• https://www.livemint.com/news/world/lulu-group-and-ficci-sign-mou-to-boost-exports-from-india-to-the-uae11676736995716.html

• https://newsonair.com/2023/03/17/india-uae-inked-an-mou-to-promote-collaboration-in-the-fintech-industry/

Green Hydrogen: The Renewable Energy Source That Could Supercharge India's Economy

~Neel Savla (NMIMS Mumbai)

On 22nd March 2021, Nitin Gadkari, the Minister of Road Transport and Highways of India, made a surprising entrance to the parliament in a Toyota Mirai, a hydrogen fuel cell vehicle, bringing attention to the growing interest in green hydrogen as a potential replacement for traditional fossil fuels in India. In this article, we will assess the financial and economic impact of green hydrogen on India’s economy and determine its long-term feasibility.

Source: Byjus

Grey, blue, and turquoise hydrogen rely on fossil fuels, while green hydrogen is produced through electrolysis of water using renewable energy sources such as wind, solar, or hydroelectricpower.This process produces hydrogenandoxygen,with noemissions otherthan water vapor. Therefore, the viability of green hydrogen production depends entirely on the availability and efficiency of these renewable energy sources.

Let's take a look at the viability of these renewable resources with some numbers:

• The cost of producing 1 MWh of electricity from coal remained steady between 2009 and 2019, with only a 2% decrease.

• The cost of nuclear energy has increased by 26%.

• Technological advancements have led to a drastic 70% reduction in the cost of onshore wind energy.

• Solar energy has shown tremendous potential, with the amount required to produce 1 MWh of electricity reduced by 89%.

Forecasts for renewable energy resources

Renewable energy sources are becoming increasingly viable, which makes green hydrogen a strongcandidatetopowerIndia.Let'stakeacloserlookathowitcouldimpactIndia'seconomy:

Transportation:

Whileelectricvehiclesaresuitableforcars,theirrangeandweight-carrying capacitylimitthem for extensive commercial use. Hydrogen car fuel cells, on the other hand, occupy 50% less space than electric batteries for the same range. While a Tesla Model S can give you a 400km range in half an hour of charging, and with a regular AC charger taking more than 4 hours, a Hyundai hydrogen truck with a payload of 34 tonnes can give you the same 400 km range in just 8 minutes. Moreover, while electric vehicle batteries cannot carry a load beyond a certain point, hydrogencan even powertrains.Thus,hydrogenhas thepotentialtorevolutionizeIndia's transportation industry.

Steel Industry:

1. Reduction of carbon emissions: The steel industry is a significant contributor to carbon emissions due to its reliance on coal for energy. Green hydrogen can be used as a clean alternative to coal, which can help reduce the industry's carbon footprint. By using green hydrogen in the steel-making process, the industry can significantly reduce its carbon emissions and contribute towards achieving India's climate goals.

2. Cost-effectiveness: Green hydrogen can be produced using renewable energy sources like solar and wind power, which can help reduce the cost of hydrogen production. In addition, the use of green hydrogen can also reduce the cost of steel production by eliminating the need for coking coal, which is expensive and subject to price fluctuations.

3. Improved efficiency: The use of green hydrogen in the steel-making process can also help improve the process's efficiency. Hydrogen can be used to reduce iron ore, which can result in a reduction of energy consumption and an increase in the process's efficiency. This can help reduce costs and increase the industry's productivity.

Chemical Industry

The use of green hydrogen can help improve the efficiency of chemical production. Hydrogen can be used as a feedstock or energy source in a wide range of chemical processes, including methanol production and ammonia synthesis.

How Green hydrogen can help counter the implications of Carbon Border Tax

The basic idea of a carbon border tax is to place a tax on imported goods that have a high carbon footprint. The tax would be based on the amount of carbon emissions generated during the production of the goods, with the goal of making the cost of imported goods more reflective of their true environmental impact. This would create an incentive for countries to reduce their carbon emissions and encourage the adoption of cleaner production methods.

The European Union has been a leader in the development of a carbon border tax, with plans to introduce a CBAM in 2023. Other countries, including Canada and Japan, have also expressed interest in implementing similar policies.

The implementation of green hydrogen has the potential to assist Indian exporters in evading carbon border taxes entirely. Provided that Indian companies are able to create goods utilizing green hydrogen and prove that their merchandise has a low carbon footprint, they might be exempt from carbon border taxes in countries that have such rules in place.

In addition, the use of green hydrogen can aid Indian exporters in remaining competitive in a world that is progressively focused on decreasing carbon emissions. As more nations adopt carbon border taxes and other measures aimed at reducing carbon emissions, the demand for low-carbon goods is expected to rise. By adopting green hydrogen, Indian exporters can establish themselves as pioneers in the production of low-carbon goods, which may assist them in avoiding carbon border taxes and maintaining a competitive edge in the global market.

Job Opportunities

The Green Hydrogen Mission of India has the potential to create a significant number of job opportunities across various sectors, including manufacturing, research and development, construction, and maintenance of hydrogen infrastructure. A report by The Energy and Resources Institute (TERI) suggests that the green hydrogen industry could create up to 4 million jobs in India by 2050. The majority of jobs will be in the construction and installation of electrolysers and hydrogen infrastructure, as well as in the manufacturing of electrolysis equipment and fuel cells. The report also suggests that the transition to green hydrogen can create job opportunities in industries that rely on fossil fuels.

Assessment of financial implications

At present, India's energy imports cost more than $160 billion in foreign exchange each year. It is projected that these imports will increase twofold within the next 15 years if corrective measures are not implemented. The adoption of green hydrogen has the potential to result in significant savings on energy imports for India, with estimated savings ranging from $246 billion to $358 billion over the same time period. In addition to the financial benefits, the use of green hydrogen can enhance energy security and reduce price volatility for Indian industries, ultimately strengthening India's foreign exchange position in the long term. India is not only targeting personal consumption but also focussing on green hydrogen exports helping India’s allies to decarbonise.

Conclusion

Green hydrogen has emerged as a critical element in India's energy transition plan, with potential benefits such as enhancing industrial competitiveness, reducing reliance on energy imports, creating exports, reducing CO2 emissions and improving public health and quality of life. The use of hydrogen can significantly reduce emissions in hard-to-abate sectors, thus complementing other energy-efficient measures. However, several challenges must be addressed, including high production costs, expensive transportation and storage, unclear regulations, and financing issues.

Policymakers, industry players, and financial institutions must take decisive actions to enable the development of a hydrogen economy in India. With appropriate policy support, industry action, and market generation and acceptance, coupled with growing investor interest, India has the potential to become a global leader in the hydrogen energy ecosystem. This would not only facilitate economic development but also job creation and improved public health, aligning with India's goals for sustainable growth.

References: https://www.abc.net.au/news/science/2021-01-23/green-hydrogen-renewable-energy-climateemissions-explainer/13081872 https://rameznaam.com/2020/05/14/solars-future-is-insanely-cheap-2020/ https://www.iea.org/reports/india-energy-outlook-2021