India successfully test fires its heaviest rocket
India on December 18 moved forward in rocket technology with the successful flight testing of its heaviest next generation rocket and the crew module. Precisely at 9.30 a.m., the 630 tonne Geosynchronous Satellite Launch Vehicle-Mark III (GSLV-Mark III) standing 43.43 metre tall freed itself from the second launch pad and with a reverberating deep throated roar, rose into the sky. With a thick orange flame at its tail, the expendable rocket ascended towards the heavens with one way ticket as its design life span is just around five minutes. The Rs.155 crore mission has twin purposes. The main purpose is to test the rocket’s atmospheric flight stability with around four tonne luggage. The second and incidental objective is to study the re-entry characteristics of the crew module-called Crew Module Atmospheric Re-entry Experiment - its aero braking and validation of its end-to-end parachute system. According to an Indian Space Research Organisation (ISRO) official, it will be of the size of a small bedroom and can accommodate two to three people. Just over five minutes into the flight, the rocket spat out the giant cup cake shaped 3.7-tonne crew module at an altitude of 126 km. The crew module then descended towards Earth at a high speed. The speed was moderated remotely manipulating its onboard motors till 80 km above the earth. From here the ballistic re-entry into the atmosphere began while the on-board thrusters were shut down. The crew module’s heat shield was expected to experience a heat of around 1,600 degrees centigrade. At an altitude of around 15 km, the module’s apex cover separated and the parachutes were deployed. The module soft crashed in Bay of Bengal near Andaman and Nicobar Islands. From here, the crew modules multi-modal and multi-state transport journey would begin. A naval ship tracking the signals from the module will pick up the module and deliver it at the Ennore Port near Chennai in Tamil Nadu. From there it will be brought to Sriharikota in Andhra Pradesh and then it will be taken to the Vikram Sarabhai Space Centre, Thiruvanthapuram in Kerala. At the mission control centre there was no control on ISRO’s scientists happiness at the success. Speaking about the mission, ISRO’s Chairman K. Radhakrishan said: “India started development of the rocket a decade ago and today completed the first experimental flight. “The performance of the solid and the liquid engines were as expected,” he said. “The unmanned crew module splashed in Bay of Bengal as expected,” he added. S. Somanath, project director of GSLV Mark III, said: “India now has a new launch vehicle. The payload capability of the Indian rocket has been enhanced significantly.” The Thursday mission success is sweet for the Indian space fraternity as it comes after successful launch of Mars Orbiter last year and older version of GSLV rocket powered by its own cryogenic engine early this year. A cryogenic engine is more efficient as it provides more thrust for every kilogram of propellant burnt. This was the second mission of GSLV rocket during the last four years after two such rockets failed in 2010. The GSLV-Mark III is designed to be a three stage/engine rocket with a lift off weight of 630 tonnes. The first stage comprises two identical S-200 large solid boosters with 200 tonne solid propellant that are strapped on to the second stage, the L110 re-startable liquid stage. The third stage/engine is the cryogenic. For the country ISRO perfecting the cryogenic engine technology is crucial as precious foreign exchange can be saved by launching communication satellites by itself.
Narendra Modi tops global leaders’ list: Harvard Study
Prime minister Narendra Modi is the number one global leader when it comes to citizens approving the development strategy of their respective countries, says a study by Harvard’s Kennedy School of Government. Modi, with 87.8% approval for his policies, comfortably pipped US President Barack Obama who is ranked 20th with 44.8%. The report is based on a survey of citizens across 30 nations on 10 influential leaders having a global impact. When the feedback from all 30 countries is put together, Modi comes number three in handling domestic and international affairs, only behind German Chancellor Angela Merkel and Chinese President Xi Jinping. The popularity of Modi is greater than that of Jinping in 18 of the 30 nations where the survey took place. The study describes Modi as one of the four leaders who enjoy high levels of confidence in handling both domestic and international affairs. The other three on this ‘elite’ list are Merkel, Putin and Xi Jinping.
GDP likely to grow 5.5 percent in 2015: Mid-year review
India’s economy is likely to grow at around 5.5 percent in the current fiscal year, the finance ministry said in mid-year review tabled in parliament on December 19. It projected that a 7-8 percent economic growth was reachable in the coming years and said inflation has fallen dramatically, while declining oil prices will help in containing the current account deficit (CAD) at around 2 percent of GDP. In the first six months of 2014-15, economy grew at an annual 5.5 percent, the report said. “Investment is yet to pick up significantly. But on the upside, inflation has come down dramatically. The year (2014- 15) could end with growth around 5.5 percent,” it added. Based on the trend of receipts and expenditure relative to the budget, the finance ministry said the budget deficit target is in line with estimates. The report added that the government expected no change in interest rates till the fiscal year ends in March. Presenting the report, Finance Minister Arun Jaitley told the Lok Sabha that lower international crude prices will help keep down the current account deficit. Prices have plunged to a five-year low from over $100 a barrel in June to $58. The Indian economy logged 5.3 percent growth in the second quarter of this fiscal, against 5.7 percent in the first quarter. Consumer price index-based inflation, meanwhile, eased to a record low of 4.38 percent during November – from 11.16 percent during the corresponding month last year - on the back of lower food prices. Industry’s pitch for rate cuts and economic reforms has become sharper, with factory output slipping further to log a 4.2 percent drop in October even as retail inflation eased further to a historic low of 4.38 percent in November, official data showed earlier this month. The tax base was weaker than expected due to “unanticipated moderation in inflation” and revenue projections were “over-optimistic”, the report said. According to it, there are stalled projects to the tune of Rs.1.8 million of which an estimated 60 percent are in infrastructure. “In turn, this reflects low and declining corporate profitability. The ripples from the corporate sector have extended to the banking sector where restructured assets are estimated at about 11-12 percent of total assets,” it said. Despite the sprouting of green shoots, a robust recovery has still to fully take hold, it added. The economy expanded at 4.7 percent in the entire 2013-14 financial year, marking a second straight year of below 5 percent growth.
Ease of doing business: India is 93rd on Forbes’ list
Business publication Forbes has ranked India 93rd on its list of Best Countries for Business for 2014, but noted that “investors’ perception” has started to improve this year. Denmark tops the list, followed by Hong Kong. The world’s largest economies saw mixed results - US, France and China fell, while Japan and Germany gained. India’s position at 93 shouldn’t surprise anyone. It is at No. 142 on World Bank’s ease of business list. Prime Minister Narendra Modi wants to bring it into the top 50 by the end of 2016. While Modi works on this plan, other reports and lists have noted an improvement, such as Forbes. Credit rating agency, Standard & Poors recently called India the only bright spot in Asia-Pacific region. However, all reports agree that challenges remain - a high level of domestic debt being one, according to S&P. Forbes has rolled out its own list of reasons, which starts with “traces of its (India’s) past autarkic policies”, and goes on to poverty, corruption, energy deficit, transportation and judicial backlog among others - a long list of familiar problems. But, noted Forbes, “investors’ perceptions of India improved in early 2014, due to a reduction of the current account deficit and expectations of post-election economic reform, resulting in a surge of inbound capital flows and stabilisation of the rupee”. It said India’s growth in 2013 fell to a decade low as its economic leaders “struggled” to improve the country’s wide fiscal and current account deficits. India ranked 122 on the trade freedom index, 135 in monetary freedom, 120 in technology, 122 in tax burden and 128 in red tape. It fared well on market performance index, ranking third, and 7th on investor protection. It ranked 78th on corruption and 55 on property rights. Incidentally, Pakistan was ranked 105. Modi’s attempts to bring investors are being recognised elsewhere also. As one US senator after another did, at a recent Capitol Hill hearing. And the US trade representative ended its out-of-cycle review of India’s trade and patent policies last week noting “useful commitments” given by New Delhi in recent months.
India remains attractive investment destination: Survey
India remains one of the most preferred investment destinations for global investors while domestic companies expect stable economic conditions in the near term, says a survey. Leading consultancy EY said that Indian businesses expect stable economic conditions in the near term, both on the global and domestic front. Such a scenario augurs well for the country’s M&A landscape, it added. The findings are part of EY’s recent Capital Confidence Barometer report, which is based on a survey of more than 1,500 executives worldwide. “India continues to retain its attraction for global investors andremains amongst the top three preferred destinations for investment,” EY said today. According to the report, political stability, positive credit outlook and upbeat expectations on corporate earnings are contributing to a positive outlook for the country’s transactions environment. About 56 per cent of Indian respondents felt that domestic economy was improved while 42 per cent expecting the economy to remain stable. “The government’s focus on reforms to attract enhanced private investment, accelerate GDP growth rate and reduce fiscal deficit, have contributed to creating a positive environment for M&A,” Amit Khandelwal, National Director and Partner.
Global investors buy $2 billion office space in 2014
Foreign investors have bought tenanted office space worth over $2 billion in India in the current calendar, a four-fold rise compared to the previous year in their appetite for rent-yielding commercial assets in Asia’s third largest economy. Data sourced by TOI suggests that $2.23 billion or over Rs 14,000 crore worth of built and tenanted office space has been bought by foreign and, to a small extent, Indian investors across the country’s key metros of NCR, Mumbai, Bengaluru, Pune, Kolkata, Chennai and Kochi. The comparative number during 2013 stood at $570 million, signalling how the office property market has come of age in the current calendar. With a burgeoning middle-class, India’s residential property market has always been the go-to investment destination for bulge-bracket global fund houses and small-fry Indian retail investors. But that’s changing at least for the big global investors who have taken a liking to India’s commercial assets, which is riding on the services economy with stable yields. Two of the world’s largest and prolific real estate investors — New York-based Blackstone Group and Canadian firm. Brookfield Asset Management — alone has bought into buildings with an asset value of almost $2 billion or Rs 12,000 crore. While Brookfield picked up six IT SEZ assets from NCR-based property developer Unitech valued at $850 million, its rival Blackstone bought into office assets worth $870 million. The figures mentioned are the asset value of the acquired properties and not the size of equity cheques cut by them. “This would be a record year for the commercial property market. It also shows that foreign capital was less risk averse and preferred to invest in stable rent-yielding office assets,” said Anshuman Magazine, CMD of property consultancy firm CBRE South Asia. Investor sentiment has also been bolstered by Indian market regulator Sebi issuing guidelines for the listing of real estate investment trusts (REITs) and the Union government’s decision to ease FDI restrictions in real estate. Blackstone-backed Embassy Office Parks, RMZ Offices, in which Qatar Investment Authority is an investor, and K Raheja Corp have all been working on various listing or value unlocking moves, but are waiting for more clarity on the tax implications of an Indian REIT before beginning a formal process. Blackstone’s asset buys in 2014 include the iconic Express Towers in Mumbai ($150 million), the 106-acre Vrindavan Tech Village in Bengaluru along with its southern JV partner Embassy group ($300 million), and Oxygen IT SEZ in Noida ($100 million), among others. Xander, another global fund house, bought the TRIL IT Park in Mumbai from the Tatas, valued at $100 million. There’s more action building up in the new year as private investors, pension funds, Wall Street banks and sovereign wealth managers are deploying more capital to chase Indian commercial real estate. Canadian Pension Plan Investment Board (CPPIB) along with Shapoorji Pallonji and Dutch pension fund APG and GIC of Singapore are among the investors who have committed fresh capital. The Indian economy seems to be the only one among all major emerging economies that is poised for improved growth in the next financial year, said Anuj Puri, chairman and country head of JLL India, adding that “we are definitely going to see some interesting office space action in 2015”. The current weakness in the Indian rupee too provides foreign investors with the opportunity to invest deeply in Indian commercial real estate assets, Puri said. India’s office property market is still minuscule even when compared to the neighbouring South East Asian region, pegged at $125 billion. Reason: Almost 80% of the 400 million sqft A-grade office space in the country is held through strata titles, a form of ownership where each floor of a building is owned by multiple investors.
India exports first warship; delivers patrol vessel to Mauritius
By delivering an offshore patrol vessel to Mauritius, India on December 20 exported its first warship. “This is the first time that the export barrier has been breached. This would be the first among the long line of ships that we hope to export to various parts of the world,” Minister of State for Defence Rao Inderjit Singh said during the warship handing over ceremony. Built by defence PSU Garden Reach Shipbuilders and Engineers Limited ( GRSE) in Kolkata, the $58.5 million ‘CGS Barracuda’ measures 74.10 m in length. It is capable of moving at a maximum speed of 22 knots with an approximate displacement of 1350 tonnes. Describing it as a red-letter day in the history of ship-building in India, Singh said it proves that the industry has come of age. When asked, he said the Goa shipyard has also got orders from Sri Lanka for making offshore patrol vessels. GRSE’s Chairman and Managing Director Rear Admiral A K Verma said they were getting enquires for building similar ships for other friendly nations. They have so far made 92 warships for the Indian Navy and Coast Guard. “After our modernisation we have increased our capacity to meet the requirements of our defence forces withoutoverrun in time and cost,” Verma said.
Germany offers 625 mn euro loan for GEC project
India has signed a 625 million euro loan agreement with Germany for financing the Green Energy Corridors (GEC) project under Indo-German bilateral development cooperation, the union finance ministry said on December 18. “Department of Economic Affairs Joint Secretary Rajesh Khullar signed loan agreements with the German government’s development bank KfW for a loan of 76 million euroto Tamil Nadu and 49 million euro to Rajasthan for intrastate transmission schemes,” a statement said. “The Power Grid Corporation of India signed a loan agreement for 500 million euro with KfW for inter-state transmission schemes,” it added. With this, the total commitment from Germany for the GEC project stands at 750 million euro, while in 2013 the country had committed 250 million euro. The project aims to create transmission infrastructure in states with high renewable energy potential and facilitate its evacuation into the national grid. Agreements were also signed between the Department of Economic Affairs and KfW for a grant of 2 million euro to provide technical assistance to the Himachal Pradesh Forest Ecosystems Climate Proofing project, the statement said.
Dr. Reddy’s acquires nicotine therapy patch Habitrol
Declining prices of vegetables and fuel items pulled down the inflation to zero level in November, the lowest in about five and half years, exerting pressure on RBI to cut rates to boost growth. Dr. Reddy’s Laboratories (DRL) on December 19 said it has completed the acquisition of the brand Habitrol, an over-the-counter nicotine therapy transdermal patch from Novartis Consumer Health. The patch is used to decrease withdrawal symptoms triggered by stopping smoking or chewing tobacco. The acquisition was completed following the US Federal Trade Commission issuing the consent order last month, the company said. DRL had earlier entered into an asset purchase agreement with Novartis to acquire the title and rights of Habitrol brand and to market the product in the US market. With this closure, DRL has assumed responsibility for the product and shipments of the product in the Indian market will commence shortly. Shares of DRL Friday rose by 1.99 percent closing at Rs.3,214.05 in the afternoon trade in the National Stock Exchange.
Retail in India to become $1 trillion in value by 2020: PwC
Retail sector in India is expected to grow by 10 per cent to become USD 1 trillion by 2020, PricewaterhouseCoopers (PwC) said. In a report titled ‘The Future of India: The Winning Leap’ PwC said India’s retail industry (both organised and unorganised) could see a CAGR (compounded annual growth rate) of 10 per cent over 2012-2020, growing from USD 500 million to $ 1 trillion in that time frame. However, report pointed out that 92 per cent of India’s total retail market remains unorganised, dominated by local shops owned by independent private individuals. “Though India is one of the fastest growing retail markets in the world, share of organised retail at per cent is discouraging compared to other countries (US 85 per cent, UK 80 per cent, Thailand 40 per cent, China 20 per cent and South Korea 15 per cent), PwC said. PwC said organised retail is expected to grow 24 per cent year-on-year but it will still account for less than a third of the total retail market by 2024. “We envision India boosting the share of organised retail from 8 per cent of total retail in 2012 to 30 per cent in 2024 and 50 per cent in 2034,” the report by the consultancy firm said. Domestic organised players operating in the retail segment include Future Group, Aditya Birla Group, Bharti Group. Foreign players including Walmart have been advocating for relaxations of norms for FDI in multi-brand retail. At present, FDI in multi-brand retail is capped at 51 per cent.
PM Modi moves in to speed up $300 bn stuck projects
Prime Minister Narendra Modi has taken direct control of a project-monitoring body to fast-track investments worth almost $300 billion and revive manufacturing in the country, two officials with direct knowledge of the matter told Reuters. Pro-business Modi has faced criticism in recent weeks that his ambition to spur investment and re-energise the economy has yet to be realised, more than six months after he won elections with the strongest mandate in three decades. Industrial output contracted in October in its worst performance in three years, jarring with a much-publicised “Make in India” campaign Modi has championed to make the country a manufacturing powerhouse. By taking over the Project Monitoring Group (PMG), which was previously in the Cabinet Secretariat, Modi could help firms planning coal, power, steel and infrastructure projects cut through a maze of up to 180 clearances. “The fact that the prime minister’s office (PMO) will be directly overseeing all the project clearances will impart a greater degree of efficiency and also ensure that clearances are fast tracked at every level,” said one of the officials, declining to be identified ahead of a public announcement. “The PMO’s stamp will make a big difference.” A PMO official said a bureaucrat who had worked closely with Modi when he was chief minister of Gujarat state will head the monitoring group. The senior officer is among a few trusted civil servants with whom the PMO thrashes out key decisions, often at the expense of ministerial authority. Former Prime Minister Manmohan Singh set up the PMG last year to prod ministers and bureaucrats sitting on files, a tendency that came to be known as “policy paralysis” and was blamed for growth of less than 5 percent for two straight years. Since its inception, the PMG has facilitated 197 stalled projects worth about $110 billion. South Korean steel maker POSCO is one of many companies to have approached the PMG. POSCO has waited nine years to get approvals to set up a $12 billion steel plant, which would be India’s biggest foreign direct investment. Tata Power and Adani Power are other top companies awaiting clearances. “Business confidence has certainly improved in the last six to seven months, but this confidence now needs to get translated in the project delivery, kick-starting the investment cycle and boosting consumer demand,” said Sunil Kanoria, president- elect of industry body ASSOCHAM.
Reports predict hike & hiring cheer in ’15 for India
Job scenario in 2015 is set to ring in `acche din’. According to multiple reports, released by human resource consultants, the overall business sentiment continues to be positive and companies are carrying over this positive outlook to 2015 for hiring and salary hikes. While some say that 2015 could be most positive in the past few years, others say India was the most optimistic in 42 countries it surveyed. Recruitment consultant TeamLease Services expects 10-14% increase in hiring activity; with e-commerce industry alone estimated to add nearly 50,000 employees. TeamLease also expects tier II & III cities to benefit as companies look for good talent at lower costs. Ashok Reddy, managing director and co-founder of TeamLease considers the 2015 hiring projections as one of their most positive estimates in the past few years. Reddy said that in the past, while employment outlook was down to single digit in 2009 and 2010 due to the impact of the global recession, it picked up in 2011 and 2012 before it went southward again in 2013. Employment Outlook Survey of Manpower Group indicates that Indian employers anticipate a vigorous hiring pace for the January-March 2015 period with an employment outlook rate of 45%. Additionally, India reported the most optimistic hiring plans among the 42 countries that took part in the research. According to the survey , there is reason to cheer in the southern and western regions of the country which reflected strongest hiring intentions of 46% and 45% respectively . Global management consultant HayGroup says that Indian companies are likely to offer average pay hikes of 10.5% in 2015 which is second best in Asia after Vietnam. HayGroup attributes high pay rises in Asian countries to the talent war in the continent, both for experienced hands and new graduates. However, Hay Group had higher forecast of 10.9% salary hike for 2014. Another global consultant Mercer has forecast an average 11% salary increase, a marginally up from actual salary growth of 10.6% clocked in 2014. Importantly , two thirds (or 64%) of the organizations surveyed by Mercer across industries indicate aggressive recruitment in 2015, both for new positions and attrition backfill. More than half of these companies also stated that salary increase in 2014 was not very different from the previous year due to muted economic sentiment for most part of the year. “Our estimate is arrived after factoring in our clients’ expectations that much of the hiring traction may come in the second half of 2015,” said Namita Bharadwaj, senior associate and cluster leader of automotive, manufacturing & engineering at Mercer. She added that though the hiring plans are definitely positive, companies are waiting for actual business results before finalizingtheir salary hike plans.
NEWS ROUNDUP
Asian business sentiment rebounds in Q4 with India most optimisticBusiness sentiment among Asia’s top companies rebounded in the fourth quarter to the second-highest level in almost three years, a Thomson Reuters/INSEAD survey showed, helped by a stronger U.S. economy and a plunge in oil prices. The result was only slightly below the 74 reading of the second quarter which was the highest since early 2012. A reading above 50 indicates an overall positive outlook. Indian businesses provided the biggest boost to the index, with companies reporting a maximum score of 100 for the third consecutive quarter as they look to new Prime Minister Narendra Modi to speed up economic recovery. Corporations in China, where worries about a slowdown in economic growth persist, were among the least positive with a reading of 50, coming in below Japan, which is stuck in recession, at 56. U.S. unemployment fell to a six-year low in November, a signal that the world’s biggest economy and a key export destination for Asian companies is healthier and its consumers are growing in confidence. “The U.S.’s economic leadership is influencing expectations across the world, and the U.S. is really becoming stronger,” said Antonio Fatas, a Singapore-based economics professor at INSEAD. “Asia is a region where there is not massive uncertainty related to political risk. This is a region that grows with the world.” The rosier picture in the United States coincided with oil prices falling to five-year lows, boosting Asian economies dependent on imports of crude. Fatas cautioned that uncertainty remained, not least in China where investors and companies are “sitting and waiting for data” to indicate how dramatically growth in Asia’s largest economy is slowing. Global economic uncertainty remained the biggest concern for Asian businesses during the quarter, the survey showed, as well as rising costs and other risks such as regulatory change. “I am surprised that the U.S. and oil prices seem to have outweighed concerns about China and Europe. The downside risks to China’s growth are significant, especially related to real estate and shadow banking,” said Dariusz Kowalczyk, a senior economist at Credit Agricole. Companies participating in the survey included Japanese drugs maker Daiichi Sankyo Co Ltd, South Korea’s Hyundai Heavy Industries Co Ltd and Indian real estate developer DLF Ltd. The poll, by Thomson Reuters in association with INSEAD, a global management and business school, was conducted from Dec. 1-13. Of the 116 companies that responded, 51 percent gave a positive outlook, while 42 percent reported a neutral outlook and 7 percent were negative. Oil prices plunged during the quarter as supplies flooded the market while economic growth and energy demand were limited. Frederic Neumann, co-head of Asian economic research at HSBC, said the fall was a “big relief for many Asian manufacturing exporters” and probably helped outweigh continued worries about the global economy. “There are still lingering risks but the risks are probably manageable. Even though global growth is disappointing, businesses are more optimistic because they see moves towards structural reforms,” he said, referring to policy changes in India, Indonesia and China. In Australia – this year’s chair of the Group of 20 major economies – companies were more positive. The country scored 85, up from 75 in the last quarter, while sentiment in Taiwan turned positive, jumping to 71 from 33. The Philippines suffered the steepest decline in optimism, with a drop to 67 from 83, while Japanese sentiment remained poor as respondents worried about the domestic economy. Positive sentiment among building firms was highest, doubling from last quarter to a one-year high of 100. This was followed by property developers with a score of 87 versus 63, and retail, which jumped to 84 from 63 to its best level since the survey began in 2009. Shipping and financial companies were the least positive. INSEAD’s Fatas said the oil price fall was likely still being digested by individual Asian companies and would filter through to more positive outlooks across sectors in coming months. “My expectation is that the next quarter will be better than this one.”
DISCLAIMER
This newsletter is compilation of news articles from various business-e-newspapers and in no way is an endorsement or reflection of Embassy of India, Berne views.
