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President invites Oman to 'Make in India', seeks deeper trade ties
President Pranab Mukherjee has extended an invitation to public and private companies from Oman to invest in the 'Make in India' programme which offers good returns. This was conveyed by the President when the Commerce and Industry Minister of the Sultanate of Oman, Dr Ali Bin
Masoud Al Sunaidy, called on him on October 28, a Rashtrapati Bhavan spokesperson said. During his meeting, Mukherjee referred to the 'Make in India' campaign and invited Omani companies "to come and invest in Indian infrastructure and other sectors which offer good returns". The President told Al Sunaidy that India's ties with Oman are built on the strong foundation of historical and civilisational linkages and India appreciates and values the strategic partnership, which is reflected in the remarkable overall growth in the bilateral relationship in recent times. "Bilateral trade between India and Oman has increased from $4.6 billion in 2012-13 to $5.77 billion in 2013-14. However, trade remains much below its potential and both sides need to bring it to a higher level commensurate with the depth of the bilateral relationship," remarked the President. He expressed hope that the forthcoming Seventh Joint Commission Meeting between the two countries would be productive and help to further strengthen the economic and trade relations between India and Oman. He also thanked Oman for its support in anti-piracy operations. The Oman minister told Mukherjee that friends like India have fuelled his country's economy and helped its growth. He paid tribute to the Indian community in Oman and to the Indian professionals who are contributing to its economy and said there was a need for the two countries to re-connect keeping in mind the interests of the youth. "They should do things differently so that relations can multiply rapidly on the terms of the youth and taking into account
changes sweeping the world," Sunaidy was quoted as having said by the spokesperson. The 'Make in India' programme is a major national initiative launched by the Narendra Modi government which aims at transforming India into a global manufacturing hub.
India forex reserves up $495.5 million to $314.77 billion
India's foreign reserves shot up by $495.5 million to $314.177 billion in the week to October 24 due to rise in a key constituent of the assets, according to data released by RBI. In the previous week, the reserves had increased by $945.6 million to $313.682 billion. Foreign currency assets (FCAs), a major constituent of overall reserves, increased by $532.2 million to $288.332 billion, RBI said. FCAs, expressed in dollar terms, include the effect of appreciation and depreciation of non-US currencies such as the euro, pound and yen held in reserves. India's gold reserves remained unchanged at $20.013 billion. Special Drawing Rights (SDRs) were down by $27 million to $4.289 billion, while the country's reserve position with the IMF dipped by $9.7 million to $1.542 billion during the week, the RBI data showed.
SoftBank to invest $10 billion in India
Japanese telecommunications company SoftBank Corporation's chairman and chief executive officer Masayoshi Son who met Prime Minister Narendra Modi on October 27 also pledged an investment of $10 billion in India's IT and communications space, an official statement said. "Mr. Son told Telecom Minister Ravi Shankar Prasad the visit of Prime Minister Modi to Japan has created a climate of hope and optimism about greater economic cooperation between India and Japan. Taking this cooperation forward, Mr. Son today assured the minister that SoftBank would like to invest approximately $10 billion in India in the coming years," the statement said. He made the investment proposal to Prasad during a meeting. Earlier in the day, he met Indian Prime Minister Narendra Modi. Modi had visited Japan from August 30 to September 3. The CEO said India is the top most priority for SoftBank. He further expressed immense faith in the great eCommerce potential of India. He estimated it to become a $0.5-trillion business in the next 10 years. With a market cap of $92 billion, SoftBank is one of the biggest telecom and internet corporations of Japan with operations in broadband, fixed line telecom, e-Commerce, finance, media and marketing. SoftBank already has made investments in many Indian companies like InMobi and Hike.
Garment exports up 16% in Sept to $1.3 bn
Garment exports grew by 16% in September to $1.3 billion, helped by rising costs in China and non-compliance issues in Bangladesh. During April-September period, the shipments rose by 17.6% to $8.3 billion. He said policy support from the government may further help India to get more business as overseas buyers are looking at India as safe and reliable option for the sourcing.
India's online retail market to grow at 40-45 percent CAGR: Report
India is among the most swiftly emerging online retail market across Asia Pacific region, with the sector poised to grow at a compound annual growth rate (CAGR) of 40-45 percent during 2014-2018, according to research and consultancy firm RNCOS. "The major reasons for this growth will include the increasing penetration of mobile internet, higher purchases of smartphones, need for ease of shopping, time, convenience, and higher mobility. Heavy discounts offered by online portals will also propel the market growth," said a the 'Indian Online Retail Industry: The War of 'Clicks' report. The report said in the future the trend is expected to continue as the online retail market in India is estimated to touch the mark of $14.5 billion by 2018. In terms of product segments, currently electronic gadgets claim the highest share followed by apparel and books, it said. "The major trends acting as a tailwind for the industry include the increase in number of online buyers, increasing internet penetration, augmented sales of smartphones/tabs, aspirations of tier-II and tier III cities, and the ever changing consumer buying behavior. We believe, online buyers in India will cross 125-million marks by 2018 end," the report said. As of July 2014, the leaders of the online retail space in terms of number of visitors include Flipkart-Myntra combo, closely followed by Jabong. Amazon claimed the third slot. There are several industry players who are speculating big on the Indian online retail industry. For instance, in a recent move, Flipkart raised fresh capital of $1 billion in one of the largest funding rounds, while Amazon quoted that it will invest $2 billion in India. The report said another trend cum driver includes the aspirations of tier 2 and tier 3 cities' young population. It was found that majority of the new online shoppers are youth of small towns and tier II and tier III cities, where broadband connectivity is still very patchy and access to personal computers is limited. Women are also emerging as one of the fastest growing cohorts or online shoppers. Moreover, the number of home makers coming forward for online purchases is also increasing swiftly due to ease of shopping, time, convenience, and more flexibility towards online payment options.
Jaitley expects inflation to dip further; says GDP growth may touch 5.9%
With the softening of international prices of crude oil and food items in the domestic market, Finance Minister Arun Jaitley has expressed hope that inflation will come down in the coming months. Jaitley’s statement comes at a time, when the index for producer prices, better known as wholesale price index (WPI), is down to 2.38 per cent while index for consumer prices or retail inflation is at 6.46 per cent. This makes a strong case for interest rate cut by the Reserve Bank as it aims to achieve retail inflation target of 6 per cent by January 2016. Addressing the first meeting of the Consultative Committee attached to the Finance Ministry, on the topic ‘Sustaining Growth Momentum - The Road Ahead’, Jaitley said he expects growth to be in the range of 5.5-5.9 per cent. He said the priority of his Government is to bring back growth momentum into the economy. “Higher growth leads to more revenue collections, better employment opportunities and increase in Government’s capacity to finance social sector programmes, among others,” he said. The Modi Government got a boost as the GDP registered a growth of 5.7 per cent during first three months (April-June) of the current fiscsal as against 4.7 per cent recorded during corresponding period of the previous fiscal. This also ended two years of below 5 per cent growth. Earlier, in the Economic Survey, the Government had estimated growth to range between 5.4 and 5.9 per cent. Jaitley said the aim of the Government is to revive and sustain higher GDP growth. These include measures to increase savings, fiscal consolidation, keeping the CAD at moderate level, reviving investment cycle, encouraging growth in manufacturing sector, augmenting supply response to contain inflation especially food inflation, boosting infrastructure sector and exports, rationalise subsidies, and reforms in direct and indirect taxes among others.
New GDP data with 2011-12 as base year in January
Seeking to present a more realistic picture of the economy, the government will release a new series of national accounts with 2011-12 as base year for computing the economic growth rate. The Gross Domestic Product (GDP) data based on the new series will be released for three consecutive years from 2011- 12 in January next year. At present, the GDP is computed on 2004-05 base year. “The new series will better reflect the economy as it would include more sectors. However, it would be difficult to say whether there would be any significant change in growth rates for the previous years,” National Statistical Commission Chairman Pronab Sen, who was associated with formulation of the new series, said. He further said that it may take about one year to ascertain about the change in growth rates of different sectors and economy as a whole based on the new series during the previous years. “As per the revision policy of the national accounts, the estimates for the year 2011-12, 2012-13 and 2013-14, due for release in January 2015, would have been the third revised estimates, second revised and first revised estimates, respectively,” as official statement said. Since these estimates have been compiled afresh, these would be referred to as “New Series” Estimates, it added. The government will also be revising the base year for consumer price index (CPI), wholesale price index (WPI) and index of industrial production (IIP). The new series of IIP and WPI are likely to be released by March 2016. The growth in the new series of IIP and WPI would be incorporated in the provisional estimates of 2014-15, to be released in May 2016. The National Statistical Commission has suggested that the base year for computing national account should be revised every five years. The base year of the national accounts is changed periodically to take into account the structural changes which take place in the economy and to depict a true picture of the economy through macro aggregates. The first official estimates of national income were prepared by the Central Statistical Organisation (CSO) with base year 1948-49 for the estimates at constant prices. These estimates at constant (1948-49) prices along with the corresponding estimates at current prices and the accounts of the Public Authorities were published in the publication, ‘Estimates of National Income’ in 1956. With the gradual improvement in the availability of basic data over the years, a comprehensive review of methodology for national accounts statistics has constantly been undertaken with a view to updating the data base and shifting the base year to a more recent year. The base years of the National Accounts Statistics series have been shifted from 1948-49 to 1960-61 in August 1967; from 1960-61 to 1970-71 in January 1978; from 1970-71 to 1980-81 in February 1988; and from 1980-81 to 1993-94 in February 1999. Thereafter it was changed to 2004-05 in 2006.
Moody's cheers govt reform moves
The economic, fiscal and financial measures undertaken by the government and the Reserve Bank of India (RBI), if successfully implemented, are expected to sustain higher growth and tackle constraints on India's sovereign rating, global ratings agency Moody's said. The agency said the measures unveiled are incremental, rather than radical.“However, together, the various measures will harness India's economic advantages of size, diversity and a deep pool of labour and savings,“ Moody's said in its latest report. “They will also improve its investment climate and allow the economy to reap the benefits of lower global commodity prices and international financial flows seeking real investment assets.“ Moody's has a Baa3 rating on India with a stable outlook. This is the lowest investment grade rating. Government officials say the rating agencies must acknowledge the efforts undertaken by the them to shore up governance and revive growth. The agency cited the recent measures, which include labour and investment policies, the “Make in India“ campaign, infrastructure development initiatives, improvements to the monetary policy framework offering clarity on inflation targets, banking sector reforms and the Jan Dhan financial inclusion plan, energy sector reforms and the ordinance that will allow commercial mining of coal by private companies. But the agency cautioned it will take several quarters before the impact of these measures are visible in GDP growth and other macroeconomic parameters. The NDA government has taken steps to boost growth, which has slowed below 5% for two consecutive years. It has been helped by slowing oil and other commodity prices. This has contributed to a significant cooling in inflation but economists say more is needed to steer the economy out of the choppy waters. “Furthermore, by mitigating the risk of the macroeconomic volatility witnessed during the last business cycle, lower fiscal deficits, stable inflation rates and a strengthened banking sector will allow higher growth level to be sustained at around 7.5% over the next 5-10 years. Such a result would be significantly higher than the 5%-6% growth we expect for India in 2015,“ the agency said. It said the effective implementation of all the measures could have further positive sovereign credit implications. “If they demonstrate rising institutional strength or lower vulnerability to even risk, Moody's would revisit its assessment of India's institutional strength if inflation metrics, investment climate, policy predictability and transparency show sustained improvement. Stronger fiscal balance of payments and banking sector metrics would lower the country's vulnerability to event risk.”
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.
