Economy to grow much faster in coming quarter: Jaitley
Finance Minister Arun Jaitley said that the economy is expected to grow muchfaster in the coming quarters than the growth of 5.7 percent in gross domesticproduct (GDP) achieved during the first quarter of the current fiscal. “Growthrate of 5.7 percent in first quarter is encouraging. The recent GDP figures showthat the economy is on a recovery path. We expect the economy to grow muchfaster in the coming quarters,” Jaitley said in New Delhi on the occasion of thenew government completing 100 days in office. The Indian economy expandedby 5.7 percent during the first quarter of the current financial year to log thehighest growth yet in nine quarters or over two years. GDP which is theaggregate market value of all the goods and services produced in the country,had expanded by just 4.6 percent in the previous quarter, that is January-March,and by 4.7 percent in the like quarter of last fiscal. The 5.7 percent growth inApril-June quarter is also the highest since the 6 percent increase logged duringOctober- December quarter of 2011-12, as per data compiled by the CentralStatistics Office (CSO). On foreign investment climate, Jaitley said there hasbeen a sea change in investor sentiment as they have shown interest ininvestment opportunities in India. “In terms of investment mood, there is a seachange. We created a special mechanism for resolution of tax disputes. We haveallayed investor fears on retrospective tax,” Jaitley said. In recent times theoverall expectation of a further reform push by the new government and thequick notifications for the hike in foreign direct investment (FDI) limits indefence and railways have led to positive investor sentiments. Jaitley added thecentral government was working towards the administration of the new landacquisition law, but the challenges need to be dealt across the political spectrum.“I am optimistic that as more and more decisions in this direction come, we willbe able to help the economy grow faster,” Jaitley said. “As we started workingin the administration of the new land acquisition law, the states and the centreare realising the challenges. I will discuss this with major political parties,” headded. He said he would discuss with the rural development minister if therecould be “more flexibility”. “When I say more flexibility, I mean slightenlargement of the exemption,” he said. He added that the government is veryclear whether social sector schemes are moving in the right direction.
FDI policies in India with minimal conditionalities: Modi
Prime Minister Narendra Modi spoke to the Japanese media on August 29in New Delhi and stated that FDI (foreign direct investment) influx willhappen on its own, as the foreign capital investment policies are with minimalconditionalities. “I feel that with the right signal of policy stability andgenuineness of intent by the government, FDI influx will happen on its own, asIndia is an excellent investment destination,” Modi replied to a question put tohim regarding his efforts at attracting FDI in India. “We are open to dialogueand will strive to remove all roadblocks to inviting FDI. There are not manysectors left where FDI has restrictions. Review of FDI policy is a continuousexercise. We have recently opened up the railway sector to 100 percent FDIand 49 percent in defence.” On the proposed goods and services tax (GST), thePrime Minister said that its introduction is likely to reduce costs for industry,trade and consumers. “Further, it would lead to widening of tax base and asignificant improvement in tax compliance. We are discussing with states andholding dialogues for assuaging their apprehensions about possible revenue loss,and I am confident that sooner rather than later the states will come on board,”Modi added.
Inward foreign investment $30 bn for 2014, cumulative over $200 bn
Investments by overseas investors in India this year reached $30 billion, whilecumulative total inflows into the country crossed the $200-billion mark. Datafrom November 1992 since foreign institutional investors (FIIs) began investingin Indian markets shows the cumulative figure is made up of about $159billion investments into equities and about $42 billion in debt markets. The netinvestments by foreign investors in Indian debt markets since the beginningof this calendar year have reached $17 billion, or Rs.120,000 crore, while thesame for equities stand at $13 billion, or Rs.78,000 crore, taking the total to $30billion, or Rs.180,000 crore. Foreign Portfolio Investors (FPIs) continued toinvest in the Indian equities market as they bought shares worth $3.87 billionin August, with the trade for the week ended Aug 28 at yet another record high.The foreign institutional investors (FIIs) along with sub-accounts and qualifiedforeign investors have been clubbed together by market regulator Securities andExchange Board of India (SEBI) to create a new investor category called FPIs,who invested $3.87 billion or Rs.23,539.61 crore in the Indian equities marketin August. The FPIs had poured in Rs.13,110.42 crore or $2.18 billion in Indianequities markets in July. Expectations of stable GDP growth figures coupledwith an overall expectation of further reform push by the new government andthe quick notifications for the hike in foreign direct investment (FDI) limits indefence and railways have all led to positive investor sentiments.
FPIs invested $3.87 billion in Indian markets in August
Foreign Portfolio Investors (FPIs) continued to invest in the Indian equitiesmarket as they bought shares worth $3.87 billion in August, with the trade forthe week ended Aug 28 at yet another record high. The foreign institutionalinvestors (FIIs) along with sub-accounts and qualified foreign investors havebeen clubbed together by market regulator Securities and Exchange Boardof India (SEBI)to create a new investor category called FPIs, who invested$3.87 billion or Rs.23,539.61 crore in the Indian equities market in August.The FPIs had poured in Rs.13,110.42 crore or $2.18 billion in to the Indianequities market in July. The Indian markets, which remained closed fortrading on August 29 on account of Ganesh Chaturthi, saw healthy buyingfrom foreign institutional investors on August 28. Data with the NationalSecurities Depository Limited (NSDL) showed that the FPIs had turned netbuyers on August 28 to the tune of $87.97 million, or Rs.531.90 crore. “FIIswere net buyers but buying was subdued over the week. Easing of geo-politicaltensions in Israel-Palestine also helped,” Dipen Shah, head - private clientgroup research, Kotak Securities said. Domestic institutional investors (DIIs),including banks, development finance institutions (DFIs), insurance and mutualfunds, bought net stocks worth Rs.730.43 crore on August 28. The 30-scripSensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), whichopened at 26,620.18 points, closed the day’s trade at 26,638.11 points, up 77.96points or 0.29 percent from the previous day’s close at 26,560.15 points. Itsurpassed the previous high of 26,630.74 points it touched Aug 25. This wasthe seventh consecutive monthly gain of the benchmark index.The wider 50-scrip Nifty of the National Stock Exchange (NSE) closed the day’s trade 18.30points or 0.23 percent up at 7,954.35 points. Expectations of stable GDP growthfigures coupled with an overall expectation of further reform push by the newgovernment and the quick notifications for the hike in foreign direct investment(FDI) limits in defence and railways also led to positive investor sentiments.
Indian exports to ASEAN to touch $280 bn in 10 yrs: StanChart
Indian exports to the 10-nation ASEAN bloc is expected to reach $280 billion inthe next 10 years, says a Standard Chartered research report. According to theglobal financial services major, the India-ASEAN trade corridor, currentlyworth around $80 billion, has been growing fast at a compound annual growthrate of 23% over the past decade. In FY 2013-14, India’s exports to the blocstood at $33.13 billion. In addition, the new Indian government has prioritisedstrengthening ties with the Association of South East Asian Nations. “Weexpect exports to ASEAN to reach $280 billion in 10 years, at which point itwould hold a 15% share in Indian exports,” Standard Chartered said in aresearch report. The report added that this projection is based on the assumptionthat India’s export/GDP ratio will continue to rise as the economy liberalisesand integrates further with the global economy. Several complementaries inIndia-ASEAN exports suggest room for both parties to gain from trade. Indiahas an advantage in pharmaceuticals, gems and jewellery, and iron and steel,while the ASEAN bloc has an advantage in natural resources and electronics.According to the report, there are six areas with export potential -- includePetroleum products, organic chemicals, vehicles (including auto components),pharmaceuticals, gems and jewellery and apparel and clothing accessories.These categories rank among India’s top 10 export items by value. “The firstthree are categories where ASEAN already accounts for a sizeable chunk oftotal Indian exports, and where export growth is high. The last three are areaswhere we feel there is potential for India to increase export growth rates,” thereport said. Standard Chartered further noted that greater physical connectivitywithin the region via the trilateral highway and the Mekong corridor is likely toenhance trade in the India-ASEAN corridor, and should also be a priority forIndia’s new government. In a bid to enhance trade ties, India and ASEAN havealready implemented Free Trade Agreements in goods. For services andinvestments, both sides have concluded negotiations. ASEAN comprisesIndonesia, Malaysia, the Philippines, Singapore, Thailand, Myanmar,Cambodia, Laos, Vietnam and Brunei.
FDI policy for medical devices on the cards
The government is actively considering a proposal to have a separate policy forallowing 100 per cent foreign direct investment (FDI) in the manufacture ofmedical devices, through the automatic route. Consultations between ministries,led by the ministry of commerce, are on. A policy and rules could be framedsoon, a senior official said. The aim is to encourage greater investment fromabroad in the sector. The health care and diagnostic segment is growing rapidly,creating a major potential market for manufacturing of medical equipment andmedical devices in India. According to a recent report from The BostonConsulting Group and Confederation of Indian Industry, the medical technologysector in India was estimated at $6.3 billion in 2013, growing annually at 10-12per cent. The report says the sector is highly under-penetrated, contributingmerely seven to eight per cent of the spending on health care, compared to 18per cent on pharmaceuticals. It says the medical technology sector has thepotential to touch $50 billion by 2025, if it gets ample government support andclarity, in terms of policy and regulation. Currently, medical devices comeunder the purview of the Drugs and Cosmetics Act, and the rules framed underit. FDI in the sector is governed by the same rules as for pharmaceuticals.However, the industry of manufacturing medical devices says this does notmake sense. “It is unfair to club medical devices with drugs. Misclassification ofdevices as drugs leads to operational challenges and delays,” says HimanshuBaid, managing director of Poly Medicure. Also, in the case of drugs, the FDInorms are stricter and also seen to lack clarity. Though the government allows100 FDI in pharma, it differentiates between that for setting up a new facilityand expansion of an existing one. FDI for the former is allowed through theautomatic route; that for the latter has to be approved by the Foreign InvestmentPromotion Board and Competition Commission of India. “Unlike pharma, FDIin medical devices will be essentially in greenfield (new) projects because thereis no question of brownfield (expansion),” the official said, adding there wascomplete understanding on the issue within the government and, therefore, aresolution was on course. Currently, India imports around 70 per cent of themedical devices used here. On the other hand, domestic pharma companies aremajor exporters of essential medicines to the world. The official says thegovernment realises that the medical devices industry has suffered due to lack ofspecific norms and policy. “Investments in greenfield medical devices projectshave been impacted because of clubbing of the industry with drugs. A separatepolicy will certainly boost investment and generate interest in the sector,” headded. Says the report mentioned earlier: “Attracting large global companieswill create a base, which will then build up the components ecosystem. This, inturn, will enhance local capabilities and help local companies build their accessto components, and greatly enhance the manufacturing capability.”
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