India offers $250 bn investment opportunity in infrastructureIndia needs $250 billion in next 20 years for basic urban infrastructure and this offers huge investment opportunities to international investors, said country\'s Urban Development Minister M. Venkaiah Naidu. He said the government is committed to promote private domestic and foreign investment in a big way. The minister told XI Metropolis World Congress in Hyderabad on October 7 that the government has decided to allow Foreign Direct Investment (FDI) in infrastructure. \"As per estimates of a high power committee, India needs $250 billion in 20 years to put in place basic urban infrastructure relating to transport, water supply, sanitation and solid waste management alone,\" he said in his speech at the inaugural session of the conference. Over 1,000 participants, including 135 from 40 countries, are attending the five-day conference to discuss and deliberate on various aspects of making urban cities inclusive with the theme for the event being \'Cities for All\'. Telangana and Andhra Pradesh Governor E.S.L. Narasimhan declared open the conference being held in India for the first time by Metropolis, the world association of cities and metropolitan regions with more than a million population. Telangana Chief Minister K. Chandrasekhar Rao also addressed the inaugural session. Stating that more than 50 percent of Indian population will be living in urban areas by 2050, Venkaiah Naidu this is a challenge but the government wants to convert it into a big opportunity. The minister described governance and finance as the two obvious challenges of urbanization in India. He said urban areas are the drivers of economic growth as they contribute 60 percent of Gross Domestic Product (GDP). \"This is expected to go up to 75 percent in 10 to 15 years,\" he said. Naidu said efficient planning and effective urban management are very critical to enable urbanization that is sustainable in social, economic and ecological terms. He told the delegates that Modi government envisaged development of 100 smart cities as satellite towns of larger cities and by modernizing existing mid-size cities. The minister said the central government and states have identified 25 reforms in urban governance to bring transparency and accountability. On Telangana chief minister\'s suggestion to give police powers to urban bodies, Naidu said this is a novel idea but need to be discussed across the country for a consensus.
FIPB to consider 48 FDI proposals on Oct 21
With the Government on a fast-track to lure foreign investments, FIPB will consider as many as 48 FDI proposals, including that of HDFC Bank and about a dozen from the pharma sector, at its meeting on October 21. Pharma proposals, including those of Lupin, Sanofi-Synthelabo and Sun Pharma, will come up for consideration at the meeting to be chaired by the Economic Affairs Secretary. Besides, investment applications of major companies like Holcim, Today Magazines Lifestyle and Montblanc Services will be taken up by the Foreign Investment Promotion Board. The proposals of Punj Lloyd and IdeaForge Technology pertain to FDI in the defence sector, while that of Keppel Puravankara Development is for the real estate space.HDFC Bank’s proposal for increasing the foreign holding in the bank to 67.55 per cent from 49 per cent has been pending before the FIPB since late last year. The Department of Economic Affairs and the Department of Industrial Policy & Promotion are of the view that promoter HDFC Ltd’s 22.56 per cent stake in HDFC Bank is already a foreign investment. Hence, if the proposal of the bank to raise foreign investment to 67.55 per cent is accepted, it would exceed the cap of 74 per cent, after taking into account parent HDFC Ltd’s stake. Foreign entities, including FIIs, hold more than 77.36 per cent in HDFC Ltd, while the foreign holding in a bank cannot exceed 74 per cent as per the existing norms. At the end of June, foreign institutional investment in HDFC Bank was 33.93 per cent, according to BSE data. Further, foreign investors hold another 16.90 per cent shares through ADRs and GDRs. If the promoter’s (HDFC Ltd) stake of 22.56 per cent is deemed to be foreign, then the total of the above mentioned three categories would take the foreign investment to over 74 per cent. FDI, FII, NRI holding, ADR/GDR, convertible preference shares, foreign currency convertible bonds are treated as foreign investment under the FDI policy. Investments by HDFC Ltd and associate companies, in HDFC Bank were made before 2009, when the government came out with norms to calculate the level of foreign investment in companies.
Govt plans a diamond trading hub
The government is discussing a plan to set up a special zone with tax benefits for diamond import and trading in Mumbai, to try and develop the country’s financial capital as a rival to Antwerp and Dubai, which are currently trading hubs for the precious stone. Commerce & industry minister Nirmala Sitharaman held preliminary discussions with commerce secretary Rajeev Kher and revenue secretary Shaktikanta Das last week and asked officials to work out a possible road map, sources familiar with the development told TOI. Gems & Jewelry Export Promotion Council’s (GJEPC) estimates suggest that in volume terms, 85% of the global cutting work takes place in India. At the same time, around 15% rough diamond is imported directly from the producing countries, while a majority is shipped in from the trading hubs. “A trading hub in India will mean that the role of middlemen is limited and the concerns over invoicing, that we often hear from tax authorities, are reduced,” said Parag Parekh, vice-chairman of GJEPC, which is pushing the plan. Parekh said the Bharat Diamond Bourse in Mumbai’s Bandra Kurla Complex has been suggested as a possible option.
India\'s August industrial output grows at 0.4 percent
Industrial activity, measured in terms of the Index of Industrial Production (IIP), grew marginally by 0.4 percent in August over the same month of the previous year, government data released on October 10 showed. The August industrial growth compared unfavourably with the 0.5 percent recorded in the previous month, the Central Statistics Office data showed. The cumulative growth for April-August 2014-15 over the corresponding period of the previous year stands at 2.8 per cent. The Confederation of Indian Industry (CII) said that there is a need for taking cognisance of the slow growth of industrial production and take steps to revive investment and stimulate demand in the economy. \"The IIP data shows that industrial production continues to be in the slowdown phase and a visible turnaround in industrial growth is still not happening. And if we factor in the base effect, the performance of industry shows that demand is yet to show distinct signs of a pick-up,\" said Chandrajit Banerjee, director general, CII. \"What is worrisome is the poor performance of the manufacturing sector which continues to be under stress as new orders are not forthcoming in a big way. The negative growth of the capital and consumer goods sector, especially consumer durables, need interventions.\" On the other hand, Federation of Indian Chambers of Commerce and Industry (FICCI) said that the remedy to slowdown are bold reforms in the regulatory environment. “Negative manufacturing growth reinforces the belief that fall in manufacturing growth has not yet bottomed out. It is more worrisome to see negative growth in consumer and capital goods especially when we were hoping the demand to pick up.” said A. Didar Singh, secretary general, FICCI. ZyFin Research\'s chief economist Debopam Chaudhuri said: “The IIP data is indeed disappointing and we sincerely hope for an upward revision to be announced in coming months. It is really surprising that despite core sector and intermediate sectors of the economy performing reasonably well, the IIP data was this weak.\" The July industrial activity had also gown at a snails pace at 0.5 percent. The cumulative growth for April-July 2014-15 over the corresponding period of the previous year stands at 3.3 percent. The drop in July was mainly attributed to the lower output in consumer goods. The drop in August is mainly due to the downfall in manufacturing and consumer durables like radio, TV, communication equipment, computers and electricity machinery. Consumer durables output contracted by 15 percent year-on-year, while capital goods, fell 11.3 percent and consumer goods output declined by 6.9 percent. Basic goods, however, grew 9.6 percent compared to 0.9 percent month-on-month. While manufacturing activity contracted 1.4 percent, as against a negative growth of 0.2 percent in the previous month, the mining sector recorded 2.6 percent increase versus deceleration of 0.9 percent. The cumulative growth during April-August 2014-15 over the corresponding period of 2013-14 has been 2.5 percent in mining, 1.8 percent in manufacturing and 11.7 percent in electricity. However, eight core industries such as coal, electricity, crude oil, cement and steel, had grown by 5.8 percent in August, compared to 4.7 percent during the corresponding month of last year. Segment-wise growth was witnessed in stainless steel (160.8 percent), sealed compressors (121.1), air conditioners (80.1 percent), scooters and mopeds (32.1 percent), three-wheelers (31.3 percent), and plastic machinery moulding machines (59.4 percent). Segment-wise, high negative growth was reported in boilers(-32 percent), sugar machinery (-33.6 percent), aluminium conductor (-43.2 percent), generators (-51.3 percent), computers (-49.3 percent), steel structures (-22.6 percent) and telephone instruments including mobile phones and accessories(-57.2 percent).
Govt readies plan for over 6% growth
The government is working on a strategy to boost growth to “6% plus” in the short term and authorities are confident that the steps taken so far will help accelerate expansion, officials said. The encouraging April-June quarter GDP data, which showed the economy expanded 5.7% year-on-year after a sustained period of sluggish growth, has given hope that the momentum can be sustained, officials said, adding that political certainty has helped boost confidence. Renewed investor interest after Prime Minister Narendra Modi\'s trips to Japan and the US have added to the optimism.“ Why 6%? It is 6% plus that we are aiming for now,“ said a top government official. He said the steps taken to streamline the decision making process and the surge in investor interest is expected to fuel growth in the months ahead. Economists and multilateral agencies expect the economy to grow in the 6% range in the current financial year and then accelerate to 6.5% next year. While acknowledging that inflation still remains a worry , the official said the steps taken to tackle the problem will yield results in the medium term. Other officials said several positive factors have helped improve the sentiment after two successive years of below 5% growth. The developments on the global front have also augured well for the economy at a time when it is showing signs of a turnaround. Falling global crude oil prices are expected to take the pressure of government finances and help the government in its efforts to tame the yawning fiscal deficit at the targeted 4.1% of gross domestic product (GDP) for the current fiscal.
Investor wealth zooms over Rs 23 lakh crore so far this year
Stock market investors have become richer by over Rs 23.33 lakh crore so far this year, as 25.49 per cent rally in the benchmark Sensex has helped the total valuation of all the BSE listed firms reach close to Rs 94 lakh crore. In contrast, investors\' wealth had surged by over Rs 1 lakh crore to Rs 70,44,431 crore in 2013. At present, the total market capitalization (m-cap) of BSE listed companies stands at Rs 93,77,672 crore, about Rs 6.22 lakh short of the Rs 100 lakh crore milestone. The Sensex has gained 25.49 per cent from December 31 to October 1 and touched its life-time high of 27,319.85 on September 8. Positive investor sentiment following the formation of new government at the Centre and strong foreign fund inflows have been driving the domestic equity markets, experts said. \"The undercurrent of the stock market is bullish although stocks are currently in the consolidation phase and buying may resume in the days to come,\" said an equities expert. Market men have maintained that the surge in investor wealth is also due to continued rise in listed firms. The total number of listed companies stands at 5,485. Sensex blue-chip companies whose market valuation is more than Rs 1 lakh crore include TCS, ONGC, RIL, ITC, Infosys, Coal India, HDFC Bank, SBI, Sun Pharma, ICICI Bank, HDFC, Bharti Airtel, HUL, Wipro, Tata Motors, L&T and NTPC. Outsourcing giant TCS is the most valued Indian company with a market cap of Rs 5,43,684.13 crore. Indian markets have seen smart gains this year helped by robust foreign fund inflows. Since the beginning of this year, foreign investors have infused a net of Rs 83,438 crore ($14 billion) in the stock markets, while they have invested a net of Rs 1.18 lakh crore into the debt market ($19.6 billion).
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.
