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The U.S. secretary of commerce has pledged to help expand investment in India’s infrastructure and to promote trade.
Penny Pritzker spoke Wednesday to business leaders in the Indian financial capital, Mumbai.
She said two-way trade has lagged in recent years but has still expanded by fivefold to $96 billion a year since 2000.
via US official vows to expand India trade, investment – Businessweek.
The new government will pursue an economic reform agenda that foresees introducing the goods and services tax, encouraging foreign investment and speeding approvals for major business projects, President Pranab Mukherjee said in a parliamentary address on Monday.
Mukherjee also said the focus of the Modi government would be to:
– contain food inflation
– improve supply side of agro-based products
– prepare contingency plans for sub-normal monsoons
– increase public and private investments in agriculture
– address issues in farm pricing and procurement
– set up IITs and IIMs in every state
– have zero tolerance against violence against women and will strengthen criminal justice system
– tackle illegal immigration and infiltration in the north east region
– roll out broadband highways in every village in next five years
– vigorously follow up issue of black money with foreign governments
– focus on social media as a tool for participative governance
– provide predictable, fair and stable policy environment
– make every effort to introduce goods and services tax
– encourage investment through foreign direct investment
– promote labour-intensive manufacturing, tourism for job creation
– move towards a single-window system of clearances to promote manufacturing
– fast-track investment friendly public, private partnership
– liberalise foreign direct investments in defence
– encourage private investments in defence production
– implement reforms in defence procurement
– take up modernisation and revamp of railways on priority
– chalk out infrastructure development programmes for high-speed rails, roads and airports
– launch comprehensive national energy policy and focus on increasing electricity generation
– urgently pursue reforms in coal to attract private investments
– operationalise international civilian nuclear pacts
– ensure every family has good house by 2022
– ensure 24×7 electricity supply by 2022
– follow zero tolerance towards extremism, terrorism and communal violence
– formulate clear rules for allocation of coal, minerals and telecoms spectrum
– work towards putting economy on high growth path
– engage energetically with neighbours, including China
– bring renewed vigour in its engagement with the United States
via India Insight.
Earlier this month, financial analysts from Japan-based Nomura Group (NMR) issued a grim report on China’s housing market: “To us, it is no longer a question of ‘if’ but rather ‘how severe’ the property market correction will be,” the report read.
Nomura—which has historically been bearish on China, as the Wall Street Journal observes—predicted that a downturn in the housing market, caused by oversupply and shrinking developer financing, could sharply impact China’s economy, perhaps even driving GDP growth to less than 6 percent in 2014.
China’s economy is vulnerable because property investment accounts for anywhere from 16 percent to 20 percent of gross domestic product, according to varying analyses.
via Is China’s Housing Bubble Beginning to Burst? – Businessweek.
tesco slough (Photo credit: osde8info)
British supermarket giant Tesco has announced a joint venture in India with a company owned by Tata Group to invest in a chain of grocery stores.
It marks the first multinational entry into India’s vast but underserved retail and supermarket sector since the country allowed such investment in 2012.
Tesco said Friday it would invest 85 million pounds ($140 million) to take a 50 percent share of Tata-owned Trent Hypermarket Ltd, which operates the Star Bazaar chain. It said the chain would operation 12 stores in southern and western India selling food and groceries, home and personal products, plus fashion and accessories.
via UK supermarket giant Tesco announces India entry – Businessweek.
Delhi’s decision to block foreign supermarkets in the capital–one of the few markets that matter in India–is bad for the city and for the country, some analysts said Tuesday.
As India looks to attract more foreign investment, New Delhi’s flip flop on accepting foreign investment in multi-brand retail in the capital sends the wrong signal, the analysts said.
“Delhi is one of the key metro markets, keeping it out of reach of retailers may significantly reduce the attractiveness of an India investment for any major retailer,” said Deep Mukherjee, a director at ratings agency Fitch. “This uncertainty with respect to change of guard at the state level will always be a problem for any long-term investor in the retail space.”
The new Aam Aadmi Party-led government in New Delhi this week asked the Department of Industrial Policy and Promotion to remove Delhi’s name from the list of cities which allow multi-brand retail stores. Multi-brand retail is Indian bureaucratic speak for retail stores that carry more than one brand, such as supermarkets.
Big global brands used to only be able enter India through franchises, wholesale stores or single-brand stores, such as clothing shops. That kept out big supermarkets such as those run by Wal-Mart Stores Inc.
Last year India opened the retail sector to allow foreign retailers to own up to 51% in local supermarkets. It asked the state governments to make the final decisions on allowing multi-brand stores.
Since then, eleven of the country’s 22 states–including Delhi–decided to allow multi-brand retail outlets.
Last month, however, the Aam Aadmi, or common man, Party, took control of Delhi in state elections after promising it would block foreign investment in retail, concerned it would hurt the mom and pop stores that dominate the sector.
Keeping foreign funds and expertise out of the sector will hurt consumers and delay the modernization of India’s outdated supply chains, said some industry groups.
via Kejriwal’s Foreign Shop Ban is Bad for Delhi – India Real Time – WSJ.
English: A speed board to show train speed limits on the QR rail network in Queensland, Australia. The square/boxed limit is for Tilt Trains; the higher limit is because the Tilt Trains are capable of traveling through curved sections of track at faster speeds while maintaining passenger comfort. (Photo credit: Wikipedia)
India will soon invite foreign businesses to help expand its once-mighty but now outdated railways, government sources said, in a move that would mark the opening up of one of the country\’s last great state-controlled industries.
Foreign investors will be allowed to fully own new services in suburban areas, high speed tracks, and connections to ports, mines and power installations, said two senior officials involved in the deliberations.
Existing passenger and freight network operations will not be open to foreign investors under the initiative, which seeks to ease bottlenecks that slow travel on the world\’s fourth-largest rail system.
\”The plan is to allow 100 percent foreign direct investment in suburban corridors, high-speed train systems, freight line projects implemented through public-private partnership,\” said an official at the Department of Industrial Policy & Promotion.
via CORRECTED-India to seek foreign investment in giant, creaking rail network | Reuters.
HAS China arrived at its Rockefeller Centre moment? In the late 1980s as Japan’s miracle economy was soaring, the Mitsubishi Estate Company bought the Rockefeller Centre in Manhattan, a landmark complex built by the eponymous oil and banking clan. Alas, Mitsubishi had to sell, at a big loss, after Japan’s asset bubble popped. Now it is Chinese firms that are seeking such trophies in New York.
Fosun International, a Chinese conglomerate, has just agreed to pay $725m for 1 Chase Manhattan Plaza, a skyscraper near Wall Street, commissioned by David Rockefeller and completed in 1961. This follows a recent investment by Greenland, a Chinese state-owned firm, in Atlantic Yards, a big development in Brooklyn. Earlier this year a consortium involving Zhang Xin, a founder of Soho China, a private property giant, bought a stake in the General Motors Building in Manhattan.
It does not necessarily follow that this assault on New York will also end in tears. Whereas Mitsubishi overpaid, the Chinese investors seem to be negotiating reasonable deals. Michael Cohen of Colliers International, a property-services firm, says that although Fosun must modernise the ageing Chase tower, “The price per square foot appears to be a bargain.”
A shift is under way in China’s overseas direct investment (ODI), which is growing fast but is still dwarfed by foreign investment into China (see chart). The first wave largely involved state-owned firms, and was directed at acquiring energy, minerals and land in poor countries. Resource insecurity lingers—witness the 20% stake taken this week by Chinese state firms in Libra, a giant Brazilian offshore oilfield—but it is no longer the driving force. New motives propel the second wave.
China’s government is keen to boost the miserable yields it gets on its overseas investments, argues Thilo Hanemann of Rhodium Group, a consultant. So it is now encouraging state firms to invest in property in prime locations, and in infrastructure and other assets in mature markets. In Britain, they have invested in Thames Water and Heathrow airport. This week the British government said a consortium involving Chinese state firms could build a nuclear-power station in the west of England.
Private firms seeking brands and technology are also playing a big role in this second wave. Geely, a Chinese carmaker, bought Volvo of Sweden. Dongfeng, another Chinese firm, is said to be considering buying a stake in Peugeot-Citroën, an ailing French carmaker. On October 22nd Alibaba, a Chinese e-commerce giant, said it would open a new division in America to invest exclusively in internet start-ups. And Lenovo, a computer-maker, is preparing a bid for Canada’s BlackBerry.
As a result, the share of Chinese ODI going to rich countries has shot up from just a tenth in 2002 to two-thirds last year. Like Japan before it, China could yet experience a crash. But the shift in investment from free-spending state firms seeking resources to frugal private ones chasing markets and innovation is a positive sign.
via China’s outward investment: The second wave | The Economist.
BBC: “India‘s economy grew at its slowest pace in a decade during the 2012-13 financial year, figures show.
The economy grew by 5% over the year, after having grown at an annual pace of 4.8% in the January-to-March quarter.
India was recording annual growth of 9% until two years ago, but in recent months it has seen a sharp decline blamed on a slowdown in its manufacturing and services sectors.
Foreign investors have also kept away due to delays in key reforms.
One factor is India’s weakening job market.
“Companies now want a perfect candidate. Because of the global recession they are cutting down the job opportunities.”
Falling orders and fewer jobs
According to the latest figures released by the ministry of statistics, India’s manufacturing sector grew at an annual pace of 2.6% during the latest quarter while farm output rose by just 1.4%.
The figures are in line with official estimates. In February, India lowered its growth forecast to 5% for the year, underlining the challenges it faced in reviving the sluggish economy.
Last month, Prime Minister Manmohan Singh said the current downturn was “temporary” and he was confident the country’s economy would bounce back to an “8% growth rate”.
However, the mood has remained pessimistic in the business community with industry leaders worried over high rates of inflation.
The slowing economy has also meant that Indian companies are putting less profit back into their businesses.
Annual capital investment growth slowed to 3.5% in the first three months of 2013, down from 4.5% year-on-year in the previous quarter.
Meanwhile, complex business regulations are often blamed for driving foreign companies away.
Foreign direct investment into India has fallen, while the amount of corporate money leaving the country is on the rise.
“The government needs to go all-out to turn around investment sentiment,” said Yes Bank chief economist Shubhada Rao.
via BBC News – India’s economic growth at slowest rate in a decade.
India cannot make up its mind, it seems, whether to welcome foreign retailers or not.
Hindustan Times: “Swedish retailer IKEA said Friday it was reviewing sweeping curbs imposed on what it can sell at its planned new stores in India that will reportedly prevent it offering its famed meatballs. India’s foreign investment panel has rejected 15 of IKEA’s 30 product lines, a report said on
Friday, underscoring the regulatory hurdles faced by foreign stores who are eyeing the Indian market with renewed interest.
“We are now internally reviewing the details (of the investment board’s decision),” an IKEA spokeswoman told AFP, adding that she could not confirm the curbs as reported by The Economic Times on Friday.
Among the lines IKEA has been told by the Foreign Investment Promotion Board that it cannot sell are gift items, fabrics, books, toys, consumer electronics and food, the newspaper reported.
The group will, however, be allowed to sell furniture — its core business.
The investment panel also reportedly told IKEA it cannot offer customer financing schemes because that would violate banking regulations, or open cafes and food markets because that would break food policy regulations.
IKEA’s entry into India — it has pledged to invest $1.9 billion in the coming years — is being closely watched by competitors as a test case for how a large foreign corporation negotiates India’s byzantine rules and red tape.
India’s government announced a string of pro-market and investor-friendly reforms in September that relaxed or removed barriers preventing foreign retailers from operating in the country.
IKEA hopes to open 25 of its trademark blue-and-yellow stores in India through a 100-percent owned unit, Ingka Holding, as part of a wider push into emerging markets like China and Russia.
The government initially insisted that IKEA obtain 30 percent of its supplies from small Indian manufacturers that the Swedish retailer feared would not be able to keep pace with demand.
Later the government dropped the demand specifying the size of the supplier, but kept the 30 percent local sourcing requirement.”
via No meatballs’ as IKEA hits hurdles in India – Hindustan Times.
It’s a case of “in for a penny in for a pound”. If the Opposition is stirred up already against the opening up of retail business to FDI, why not jump in with insurance and pensions too.
New York Times: “In their second major effort in two months to revive a flagging economy, Indian policy makers on Thursday proposed letting foreign investors take a bigger stake in insurance and pension companies.
The measures, which were approved by the cabinet, will now go to the Parliament, where their passage is far from certain. The national governing coalition led by the Indian National Congress Party does not have a majority in the legislature, and opposition parties and even some of its own allies have said they do not support greater foreign investment.
Still, anticipation of the changes sent the India’s benchmark stock index Sensex up 1 percent to its highest close in more than a year.
The index has rallied about 5 percent since the middle of September, when the government allowed greater foreign investment in retailing and aviation and reduced government energy subsidies.
Under the proposal approved by the cabinet, foreign companies would be allowed to acquire up to 49 percent in Indian insurance and pension firms, a change that both Indian and overseas firms have long lobbied for, saying that the sectors needed more capital to grow.
Foreign companies are now allowed to hold a 26 percent stake in insurance companies but are not allowed to invest in pension firms. India’s insurance premiums total about $40 billion a year and its pension industry has assets of $300 million.
The changes will most likely face stiff opposition in Parliament, which was paralyzed during its last session after the opposition Bharatiya Janata Party repeatedly interrupted proceedings to demand the resignation of the prime minister, Manmohan Singh, in connection with a scandal involving the allocation of coal concessions. The next session of Parliament begins in November.
Opposition officials, who were involved in drafting the proposals at an earlier stage of the lawmaking process, have said that they would not support an increase in foreign investment to 49 percent. Some of the government’s allies have also said they do not support the change.
“Legislation in democracy is a process of negotiation and discussion,” Palaniappan Chidambaram, India’s finance minister, said at a news conference.
“Obviously, we need to talk. We will sit and talk to all parties, especially the principal opposition.””
via India Moves Again to Ease Way for Foreign Investment – NYTimes.com.
continuously updated blog about China & India
continuously updated blog about China & India
continuously updated blog about China & India
CHINDIA ALERT: You'll be living in their world, very soon 