2Finance minister P Chidambaram said the fiscal and current account deficits are under control and the economy is more stable than it was 18 months ago. “The economy certainly is more stable today than what it was 18 months ago. That is reflected in the strengthening of the rupee, that is reflected in heightened interest of investors, both FDI and FII,” he told reporters after addressing the board of the Reserve Bank of India. Chidambaram, who had taken over as finance minister 18 months ago in August 2012, said the fiscal deficit target for 2013-14 will be met and the current account deficit (CAD) will be contained below USD 40 billion.
“I am glad that the measures taken by the RBI and measures taken by the Government are complementing each other and have delivered substantially the goal of stability that we had set for ourselves 18 months ago,” he added. To a question about the issuance of new bank licences, RBI governor Raghuram Rajan said the central bank would take a decision in the next few weeks, subject to approval of the Election Commission. “My sense is if all goes well, we should be able to do it (issue new licences) in a few weeks,” Rajan said, adding that the RBI would approach the Election Commission to ensure there is no violation of the model code of conduct. He expressed confidence that by “working together” the government and RBI would be able to achieve these targets. Referring to his meeting with the RBI Board, the minister said he was happy that the governor acknowledged that the government through Parliament will set an inflation target and then leave the regulator to find ways and means to achieve it. “I think that is the correct approach. The sovereign has the right to set the target and then the central bank has the mandate to take steps to achieve the target. I think that there is a great degree of convergence on the way to go forward,” Chidambaram added.
To a query on capital infusion in public sector banks, Chidambaram said it is time to “look for new or innovative” ways to raise more capital for the banks. “We are looking at issuing shares to employees. We are looking at rights issue for minority shareholders. There was some discussion about non-voting shares but I think the time has come to look for new or innovative ways to raise more capital for the banks,” he said.
He, however, added that the decision in this regard will be taken by the next Government as “that is the appropriate way to go about it.” Rajan said there is a need to create a process for capital raising and it would be worked out over time
“We have to give them (banks) more confidence that they will give adequate returns. We will work out over time. So it is a process. The Finance Minister mentioned different forms of capital raising so these will be explored,” the Governor said.
FIIs infuse $6 bn in Indian stocks in October-December quarter
Foreign institutional investors (FIIs) were net buyers of stocks, pumping in USD 6 billion during the quarter ended December on expectations of change in Government in the upcoming general elections, says a Bank of America Merrill
Lynch (BofA-ML) report.
It was a nearly 10-fold jump from the inflows of the previous, July-September, quarter.
“During December quarter, FIIs remained positive on Indian markets on expectations of change of Government in the upcoming general elections,” the report noted.
This was the fifth consecutive quarter when the Indian markets have seen positive flows from FIIs. “close to USD 6 billion was pumped in the Indian equity markets by FIIs in the October-December quarter as compared to USD 700 million inflow in the previous quarter,” the report noted.
On the other hand, LIC and domestic mutual funds were net sellers of equities during the quarter under review.
FIIs were bullish on sectors like software, financial, utilities, industrial, auto and energy among others.
Software saw the highest net buying by FIIs with buying into Tech Mahindra worth USD 451 million followed by Infosys (USD 372 million), HCL Tech (USD 257 million) and Wipro (USD 246 million).
“Software is largest underweight sector for the FIIs. Despite heavy buying, relative out performance of IT sector & addition of Tech Mahindra resulted in an increase in its underweight,” the report noted.
Currently, FII holding in Sensex companies is at 8-year high. This is mainly due to consistent buying in index stocks especially, consumers, pharma and private banks.
MPEDA’s co-branding drive for seafood exports
India’s seafood export industry, dominated by small and medium enterprises (SMEs), and growing at 20 per cent a year, will soon get a shot in the arm. In a bid to help entrepreneurs, the Marine Products Export Development Authority (MPEDA) under the ministry of commerce is undertaking a major co-branding drive, which will promote the brand equity of Indian marine products in regulated markets.
Seafood exports from India are expected to touch $4.3 billion in the current fiscal year and $10 billion a year by 2020, according to MPEDA.
A J Tharakan, President, Seafood Exporters Association of India, said there is no large company in this industry, which comprises 400-500 exporters. It consists almost entirely of SMEs, most of them family-run businesses.
There are some 150 major players, with about 100 exporters contributing 70 per cent of total exports. The largest of them have revenues in the region of Rs 100-400 crore. The industry is a 100 per cent net foreign exchange earner.
Leena Nair, chairperson, MPEDA, added that value-added products are gaining momentum. They used to contribute around five per cent of total seafood exports about three years ago, but now contribute around 17 per cent. The target is to increase this first to 30 per cent and then to 50 per cent in the next three to five years.
As market promotion has assumed special significance in view of growing competition and regulation from other seafood exporting countries, MPEDA believes that there is a need to step up promotional programmes in major overseas markets and develop better rapport with the trade and officials in importing countries, said N Ramesh, director - marketing, MPEDA.
He said MPEDA has decided to tie up with established brands for promoting Indian seafood products and, as a preliminary step, it signed a co-branding agreement with Sysco Corporation Inc for the promotion of Indian Black Tiger Shrimp in the United States a few years ago.
MPEDA also signed a similar agreement with Japan’s Aeon supermarket chain recently, and is looking for more such tie ups in European countries. “Over the next few months we want to have at least 10 such-tie-ups with foreign supermarket chains,” said Ramesh.
The MPEDA logo will be awarded to processors who satisfy the standards fixed by MPEDA, he noted.
With more and more companies realising that demand for value-added products is picking up, and the return on investment is also high, there has been a jump in investment, said Ramesh. MPEDA estimates that in the next four to five years, the industry is poised to increase capacity by 50 per cent with an investment of about Rs 3,000 crore, according to Ramesh.
Over the years, the industry has added capacity in order to export value-added products, Tharakan said. So far, India has been exporting the raw material to China and Thailand, where they are converted into products for the ready-to-eat and ready-to-cook segments.
One key concern, he said, is that the industry doesn’t have a coordinated conservation and fisheries policy. The states have different policies and this has an effect on the industry. With the exception of Goa, the State Governments have not put in place any conservation measures.
While conditions are favourable for exports at present, better coordination between ministries will be needed and export procedures speeded up, to help farmers, the MPEDA officials said. The Central and State Governments need to bring in appropriate policies in support of the industry and for the welfare of fishermen in the coastal areas, they added.
The US, the European Union and Japan are the major destinations for Indian seafood exports, while China and South East Asia are also emerging as favourite destinations.
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.
