Archive for September, 2015

Make in India version 2.0 to be launched to boost manufacturing

September 30, 2015

India is all set to launch version 2.0 of Prime Minister Narendra Modi’s flagship ‘Make in India’ initiative to turn around the nation’s manufacturing sector. While the first level focused on easing processes to help businesses, the next one is aimed at turning it into “a people’s movement”, on the lines of the Swadeshi movement.

“This won’t just be a campaign but a movement of the people of India through initiatives like Skill India, Digital India and another big ticket item, Start-up India. It is now or never for India’s manufacturing story,” asenior government official said. India is trying to upgrade the skills of its workforce.

Taking a cue from countries such as Japan and Germany, known for their top-quality manufacturing, New Delhi is starting an investor-outreach programme with several countries to bring global best practices in India. “We have to improve ourselves considerably if we want to achieve world standards and be a part of the global supply chain,” the official said. The government recently launched Make in India Mittelstand, a business support programme for 30 “high-potential” German companies to invest in India. Meanwhile, on the completion of one year of the ‘Make in India’ programme, Modi will be holding an interactive session with top global CEOs, including of Ford Motor, Lockheed Martin, IBM, PepsiCo, Du Pont, Merck & Co, Qualcommand Abbott in New York on September 24. The idea behind the meeting is to understand and address the concerns of global companies on policy issues .

While the government has already opened up sectors including railways, medical devices, insurance and more for foreign direct investment, going forward it plans to launch initiatives to boost domestic investment through small and medium enterprises.

The action plan for Start-up India, being drawn up by the Department of Industrial Policy and Promotion, will focus in this direction.

Source: Economic Times

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India shining for diamond industry, says De Beers

September 30, 2015

De Beers, the world’s largest diamond miner, sees the industry’s biggest opportunity in India, with its burgeoning economy and emerging middle class.

“Already one of the world’s largest markets for diamond jewellery, the growth of the middle class in India over the next decade is set to make a major contribution to growingdiamond demand,” according to De Beers Group of Companies’ Diamond Insight Report 2015.

The diamond industry fundamentals support the long-term confidence in the sector as India presents further growth opportunity, it said.

“The challenges faced by the sector in 2015 are expected to be short-term and the industry has excellent prospects. The long-term trend for demand has been positive, with consistent growth in demand for diamond jewellery since the 2008/9 financial crisis. There are also further exciting growth opportunities in the main consumer markets and India is a great example of this,” De Beers Group CEO Philippe Mellier said.

As affluence continues to grow, more Indian women will be able to purchase diamonds. As many as 75 million new Indian households are expected to see income rise above $5,000- 6,000 in the decade, contributing to growing diamond demand.

Meanwhile, the number of elite households is expected to triple over the next decade to 12 million, while the super elites are expected to quadruple in size and reach over three million households by 2024, presenting the industry with a further growth opportunity, the report said.

De Beers said global diamond jewellery demand rose 3 per cent to exceed $80 billion for the first time in 2014 – representing the fifth year of consecutive growth since the global recession – while global rough diamond production rose six per cent to $19 billion.

“2014 saw strong levels of consumer demand across all key markets. Rough diamond demand was also strong in 2014, although we have seen more challenges in 2015. Indigestion in the midstream and downstream has impacted rough diamond demand this year, despite consumer demand for diamond jewellery being stable on the levels seen last year,” Mellier said.

Consumer demand in 2014 grew in each of the top five diamond consuming markets – the US, China, Japan, India and the Gulf – which account for 75 per cent of global demand.

Despite the strong performance in 2014, the report noted that the continued strength of the US dollar and lower demand growth in China is likely to mean that global growth in US dollar terms in 2015 will remain stable on 2014 levels.

Source: Business Today

Consequence of Modi’s foreign visit: it’s raining investments

September 30, 2015

It’s been a week when the media has bashed the Prime Minister Modi for spending crore of rupees in his foreign visits. Now there’s some good vibes coming from the same quarters on the same topic.

Ever since Modi started his foreign trips, India has become a hot destination for Foreign Direct Investments (FDI). India has received $19.78 billion (Rs 1.3 lakh crore) in FDI in 2014-15 from a dozen major FDI source countries that Modi has visited since taking over in May last year, says a news report by The Economic Times. This accounts for nearly two-thirds of the $30.93 billion FDI the country received in the fiscal year, which was 27 % more than the year before.

After the Make in India programme was launched in September last year, it’s raining FDI. Data from Department of Industrial Policy and Planning shows the inflows have jumped 48% between October 2014 and April 2015 over the year-earlier period.

“There has been some questions about the Modi government’s performance when it comes to pace of reforms and ease of doing business,” a foreign diplomat in Delhi said. But a government official from Japan, one of the countries that Modi visited and from where he got a huge investment commitment, told the ET there was no major reason to be upset about since Modi became the PM.

Modi has visited 27 countries since last year. Japan has committed to invest about $35 billion in five years and South Korea plans to invest $10 billion. China has assured $20 billion in the next five years, while France has announced $2 billion euros ($2.26 billion). The UAE, which the PM visited last month, has assured to pump in money for India’s $75-billion infrastructure fund. The UK has launched a programme for investments here ahead of Modi’s planned trip in November and Germany is expected to make some announcements related to the Make in India initiative during Chancellor Angela Merkel’s visit to New Delhi in the first week of October.

Source: Business Insider

India-UAE Business Forum, 3rd September 2015, New Delhi

September 30, 2015

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India and Australia signs MoU in Education, Training and Research

September 29, 2015

India and Australia signed a Memorandum of Understanding (MoU) on cooperation in the fields of education, training and research. The MoU was signed by Smt. Smriti Irani, Union Minister of Human Resource Development, Government of India and Mr. Christopher Pyne MP, Minister for Education and Training, Government of Australia after the 3rd meeting of the Australia-India Education Council (AIEC), held in New Delhi.

The MoU will help intensify existing partnerships between India and Australia in higher education & research, including technical and professional education, schools, vocational education and training and will open up new and innovative areas of cooperation.

Both the countries agreed for a total joint financial commitment of up to $ 1.0 million AUD for various activities under Educational Cooperation. Australian Minister also announced Adam Gilchrist as the Australia-India Education Ambassador, who will help project the quality of Australian education and strengthen the bilateral education, training and research relationships.

Source:Indo-Australian Chamber of Commerce

Indian Healthcare To Touch $280 Bn By 2020, To Create 7.4 Million Jobs

September 29, 2015

2020, To Create 7.4 Million Jobs

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Indian Healthcare To Touch $280 Bn By 2020, To Create 7.4 Million Jobs
India’s healthcare industry, which is estimated to grow by at least 16 per cent from $73.92 billion in 2011 to $280 billion in 2020, will see its workforce demand doubling to 7.4 million in the next 6 to 7 years, according to a report released by Federation of Indian Chambers of Commerce and Industry (Ficci) in collaboration with consultancy firm KPMG. The healthcare report titled — Healthcare: The Neglected GDP Driver — also says the medical travel market to triple to $10.6 billion in 2019 from $2.8 billion in 2014, with a 30 per cent increase a year.
“The aim of this report was to highlight that investment in healthcare propels overall economic growth and is more than just social expenditure in India. Improvements in the health of citizens contributes to overall economic prosperity of the nation, says Nilaya Varma, partner and head, Government and Healthcare, at KPMG in India.
According to Varma, healthcare is one of the largest employers in India at present. “The sector has attracted billions of dollars from private ventures, foreign investors and inflow of equity capital through numerous deals in the past year. Additionally, medical tourism is growing well and is contributing significantly to the overall growth in the sector,” he added.
The FICCI-KPMG report also highlights how a robust healthcare system drives the growth of the country’s gross domestic production (GDP) in the presence of adequate investments and an encouraging environment by not only acting as a productivity and employment generator, but also as a magnet to attract foreign exchange earnings and provide opportunities for innovation and entrepreneurship. With Indian healthcare workforce expected to double to 7.4 million in 2022 from 3.6 million in 2013 and the sector’s revenue expected to grow by a robust 16 per cent annual growth to 280 billion in 2020 from $73.92 billion in 2011, Indian healthcare sector has already established itself to be an important contributor to nation’s GDP.
Another important finding of the report is that increasing investments, growing innovation and entrepreneurship are expected to enhance the size of the healthcare market, thereby increasing the contribution of the healthcare sector to India’s GDP. India has received an aggregate of $377.3 billion in foreign direct investment (FDI) from April 2000 to May 2015. Hospitals and diagnostics centres received FDI of $3.1 billion, or about 1.21 per cent of the FDI inflow. The share of healthcare FDI has almost doubled since 2011, highlighting the growing interest of foreign players in the sector.

Source: Business World

India ranks 81 among 141 countries on the Global Innovation Index

September 29, 2015

India ranks 81 out of 141 countries on the Global Innovation Index (GII) 2015, well behind middle income countries such as Brazil, China and South Africa. But, in the Central and Southern Asia region, it retains its top stop in the regional ranking, followed by Kazakhstan and Sri Lanka. Globally, Switzerland, followed by the United Kingdom, Sweden, Netherlands and the US are ranked as the most innovative countries in the world.

The GII 2015, released on Thursday, is calculated on the basis of how a country fares on seven key parameters – institutions, human capital and research, infrastructure, market sophistication, business sophistication, knowledge and technology outputs and creative outputs.

According to the report, top scoring middle income economies, such as China, Brazil and India are closing the gap with the developed world on innovation quality, in large part fuelled by an improvement in the quality of higher education institutions.

India, along with China, Malaysia, Vietnam, Jordan, Kenya and Uganda, is part of a group of countries that are outperforming their economic peers, with India being one of the eight economies that can be signalled as innovation achievers outperforming their peers on overall score.

Despite falling five positions in the overall rankings since 2014, India, along with 10 other developing countries, is now categorised as innovation outperformers. The “relative fall in India’s overall ranking this year is due to availability of old data up-to 2103-14 period, and it does not truly reflect the performance of the economy in last one year” said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII). “The new innovation policies put in place by the new Indian government, which are not yet effectively captured by the data used in the GII”, he added.

India ranks 81 among 141 countries

The report says India’s strength lies in knowledge diffusion (ranked 34th), research & development (44th), general infrastructure (43rd) and investment (42nd). On innovation quality, it ranks 3rd among middle income countries, behind Brazil.

The report notes that this year, the country has made substantial improvements in patents filed.

But despite its notable achievements, the report contends that “India still needs to implement substantial reforms in its innovation policy to further improve its innovation performance.” The country has consistently “performed poorly during the past four years in political stability, ease of starting a business, tertiary inbound mobility and environmental performance” it adds.

India’s poor performance on the ease of doing business is well recorded. The country ranks 142 on the World Bank’s Ease of Doing Business. The revised rankings are likely to be released later this month, which will shed light on the progress made by the country on improving the ease of doing business over the past year.

On the innovation sub-indices, the country performs poorly on institutions (ranked 104th) and infrastructure (87th), with the report noting that its position has deteriorated in human capital and research (103rd), market sophistication (72nd), business sophistication (116th) and creative outputs (95th).

Source: Business Standard

100 Percentage FDI in Private Banks on Cards

September 29, 2015

To increase foreign funds inflows into the country, the government is considering to relax investment norms by increasing foreign direct investment (FDI) limit to 100 per cent for private banks from existing 74 per cent.

According to a Commerce Ministry official, the Department of Industrial Policy and Promotion (DIPP) has sent a proposal to hike the FDI limit in the private banking industry to the Finance Ministry for its views.

At present, only 74 per cent FDI is permitted in the private sector banking, of which up to 49 per cent is allowed under the automatic route and beyond that through the approval of the Foreign Investment Promotion Board (FIPB).

The move will help the existing private sector banks, payments banks and small finance banks tap overseas markets to enhance their capital base.

Earlier, the Reserve Bank of India (RBI) granted in-principle approval to 11 entities to set up payments banks and 10 for small finance banks.

The government has also introduced the concept of composite caps where it removed separate caps for FDI and foreign portfolio investments (FPI) by replacing them with single upper limit in a bid to make foreign investments easier.  But given the sensitivities in the sector, the government has said foreign institutional investors (FIIs) cannot exceed the cap prescribed for portfolio investments in private sector banks. The limit of portfolio investment in banking is capped at 49 per cent

The government is taking several steps to boost FDI and has relaxed FDI norms for sectors such as medical devices, defence and construction activities. During April-June of this fiscal, FDI into the country grew 31 per cent to $9.50 billion.

Source: Indian Express

Narendra Modi government may announce big-ticket investments

September 20, 2015

The government plans to mark the first anniversary of its flagship ‘Make in India’ initiative by launching a digital campaign that will highlight the success of the programme so far. It may also announce some big-ticket investments on the occasion.

Although Make in India was launched on September 25 last year, the Department of Industrial Policy and Promotion(DIPP), which is organising the anniversary celebrations, will not hold be the event until November “due to a packed schedule and paucity of time”, a senior official told ET.

“We are gathering data about all we have achieved so far financially and sector wise. We are hoping that it will be an even bigger gathering than last year,” the official said on condition of anonymity.

The DIPP is also putting together a plan to ease procedures for inflow of foreign direct investment (FDI) in the country. FDI inflows jumped 38 per cent to $24.95 billion between October 2014 and March 2015.

The department is also finalizing its recommendations for enforcement of contracts through improvement in judicial processes for quick resolution of disputes.

While the government has opened sectors like the railways, medical devices, insurance & pension, construction & defence for FDI, it is looking for such opportunities in more sectors. A proposal to allow foreign legal firms to invest in India in partnership companies is also in the works.

The DIPP will also be spearheading the ‘Start-Up India’ mission, work for which has already begun. “We have drafted a proposal from our end. A lot of work still needs to go into it,” the official said. The idea is to boost investments from all sources to create more employment opportunities and make India a manufacturing hub.

While states are being ranked on initiatives taken to bring about ease of doing business, the government will hold workshops for those states that are not performing well on such parameters. Most states have reduced the number of procedural requirements and moved various clearances and processes online to improve their ranking on the ease of doing business index.

Make in India is also going to get a big infrastructure push to improve connectivity and economic growth. Commerce and Industry Minister Nirmala Sitharaman had recently said that infrastructure is the top priority of the government.

In the first year of the Make in India programme, the government has approved 24 new industrial clusters, allocating them Rs 624 crore.

Source: Economic Times

5 reasons why Fed rate hike could be positive for India

September 20, 2015

With the US Fed rate hike around the corner, there has been a lot of volatility in equity markets globally.

The dollar index, which tracks dollar movement against a basket of six major global currencies, has surged to 95 from 90 at the beginning of this calendar year, suggesting that the market is betting big on the revival of the US economy.

However, the IMF’s warning to the Federal Reserve to not raise rates too soon in view of the weak global growth outlook may put the US central bank in a bind when it reviews its monetary policy next week.

“Markets have been very complacent with regard to Fed rate hike. For a long time, they would not show whether we even get a September liftoff,” Peter Dixon, an economist at Commerzbank, said last week.

While it is long believed that any rate hike by the US Fed would hurt liquidity in global equities, the first rate hike in nearly a decade has largely been factored in by the market, say experts.

They believe contrary to fears that a Fed rate hike would spook market sentiments, if the US policymakers go ahead and hike the policy rate next week, it would turn out to be a big positive for domestic equities.

Here’s how:

Ease in volatility:

While the recent devaluation of the yuan and China’s economic slowdown have been seen as major sources of choppiness in global equity markets, one could not underestimate the possible impact of the looming uncertainty over a Fed rate hike ever since the US central bank ended its quantitative easing (QE3) in October 2014.

India has seen FII inflows of Rs 21,453 crore so far this calendar. But over the last one-and-a-half months, it has seen substantial outflows on weak earnings, lack of reforms and China-led volatility. Experts believe that once earnings start heading up, foreign inflows would start coming back irrespective of whether the Fed hikes interest rates or not.

The good thing is that as the dust settles, volatility would ease. “While there could be a knee-jerk selloff across emerging markets, India would likely emerge as a relative value, given the support for equities due to the volatility in China’s equity market and in bonds with the S&P downgrading Brazil to junk,” BofA-ML said in a notre.

High volatility is evident from the fact that the BSE benchmark Sensex has traded in a wide range of 450 points on an average everyday in the past one month. Once clarity emerges on the course of the US interest rate hike, markets are likely to see some stability, which is among the key factors that foreign investors are looking at in emerging market.

India VIX, the fear gauge that suggests the likely volatility in the market over the next 30 calendar days, climbed to 26 level on Tuesday from a low of 14.5 in August.

“We believe the market has more or less discounted a 25 basis points rate increase by the US Fed and once that happens, there could possibly also be a relief rally and then the market will start looking at two other important dates from the Indian context; the most crucial one being September 29, when RBI goes for its bimonthly money policy review. There has been tremendous pressure on the RBI governor because data clearly is supportive of a rate cut, because he himself has said that real interest rate should be in the 1.5-2 per cent corridor,” said Ajay Bodke, Prabhudas Lilladher

Global growth hinges on US economy:

With the world’s number two economy China in deep trouble, growth signals from US can restrict any further weakening of sentiment. A rate hike by the US Federal Reserve would send out clear signals that the US economy is back on track.

Even though there could be a knee-jerk reaction to a rate hike, it is likely that India would be in a relatively better position than its emerging market peers. Take a look at Brazil. The commodity exporter’s rating has been cut to junk by rating agency Standard & Poor’s. China’s troubles have not been hidden from global investors. Being a commodity exporter, Russia may also see some pressure on its markets. What is left? India, on the other hand, being a huge economy and a net importer of commodities, could benefit from lower crude oil and commodity prices.

“We have seen a glimpse of that in the expansion of India Inc’s profit margins for the June quarter. Much more can be expected. A drop in crude prices and further rate cuts can help Indian companies cut debt on their balance sheets. Even if foreigners get disappointed with emerging markets, India is a star there. So, there is not much to worry on that front,” says UR Bhat, Managing Director, Dalton Captial Advisers.

“Nobody is going to cut off investment completely as far as emerging markets are concerned. They will disinvest from some of the emerging markets, which have serious problems, but India could continue to attract reasonable funds as we have seen this year,” he added.

Source: Economic Times