Indian Economy-News & Updates

[IndoCarib]

India's FII outflows highest among BRIC nations

Even as Foreign Institutional Investors (FIIs) have been selling across markets and pulling out money, their outflow was highest from India in 2011, compared with BRIC peers (Brazil, Russia, India and China) and other emerging markets. According to data compiled by EPFR Global, FIIs withdrew over $4 billion from India in 2011, against an inflow of $1.35 billion in 2010. EPFR Global tracks foreign fund flows across markets and different asset classes.

 

[Tamil Arasan]

Mideast a boon for India IT

Abdul Basit

31 December 2011
DUBAI — The Middle East has become more attractive for India’s exporters of electronic goods, IT and its related services as the sector’s exports increased by 40 per cent to $3 billion to the region during 2010-11 over 2009-10, according to a top official of India’s largest electronics and IT trade facilitation organisation.

The sector contributed more than 26 per cent of the total exports of India across the world. Total exports of the country reached $251 billion during 2010-11 while the sector contributed $66.48 billion in the same fiscal year.

The exports of electronic goods, computer software and services includes IT-enabled services to the Middle East jumped to more than $3 billion in 2010-11, compared to $2.15 billion in the previous year, showing an increase of 39.5 per cent.

Credit goes to Electronics and Computer Software Export Promotion Council, or ESC, as it helps facilitate companies for boosting their exports, Kamal Vachani, honourary regional director of ESC for the UAE and Middle East, told Khaleej Times in an interview.

ESC is an autonomous organisation under Department of Information Technology, Ministry of Communications and Information Technology, Government of India.

Vachani has represented the ESC in the region since 1999. In October, 2011 he had been honoured for his efforts to promote Indo-UAE trade in electronics and information technology during Gitex — one of the important ICT exhibitions in the world. The award was handed over by the Indian Ambassador to the UAE, M.K. Lokesh, who also lauded the efforts made by Vachani in assisting small and medium companies in both the countries to promote trade and cooperation.

Vachani, who is also a director in Dubai-based Al Maya Group, mentioned that ESC members have been participating in Gitex every year. India pavilion has grown from 20 exhibitors to 43 companies at the Gitex 2011.

“Increasing numbers show participants are happy with the show and next year we will be taking more space in the Gitex with more companies,” he said.

He said that the UAE and specially Dubai is a major destination for the exports of software, hardware, services and electronic goods from India. Citing reason, he said a majority of expatriates in the country belongs to India and Indian origin products are very well accepted here.

Software, hardware, services

Export of computer software/services to Middle East countries during 2010-11 registered a growth of 32 per cent over the previous year. In value terms, export of computer software and services to the region is estimated at $1,728 million, up from $1,307 million estimated in 2009-10. The share of export of computer software/services to the region has increased from 2.72 per cent in 2009-10 to 3three per cent during 2010-11

Exports of electronics goods from India to the Middle East increased from $844 million estimated in 2009-10 to $1,274 million in 2010-11 registering a growth of 51 per cent. The region is the third largest destination for India’s electronics hardware export.

It is projected that electronics hardware export will cross the $10 billion mark during 2011-12 and exports of computer software/services will be around $66 billion. He mentioned that there are over 2,500 ESC members and they are complete master in customised software development. US and Europe together account for more than 90 per cent of the software exports from the country, he added.

As far as UAE is concerned a large number of colour TVs are being exported from India including some of the major brands, he said. He said that he would continue to work for the promotion of trade and cooperation between the two countries. In an industry where the degree of technological obsolescence is very high, ESC is striving hard to elevate India’s position in the international trading arena of the electronics and computer software, he said.

ESC’s product profile includes consumer electronics, telecommunication, instrumentation, electrtonic components, computer hardware and peripherals, and computer software and information technology enabled services.

He mentioned that ESC is organizing a three-day annual Indiasoft exhibition, which is scheduled from March 21-23, 2012 in Hyderabad. “We are planning a roadshow for the exhibition in the next two months here [Dubai],” he said, adding that date has not yet decided.

Business : Mideast a boon for India IT

 

[StingRoy]

India lets foreign individuals invest in stock market

NEW DELHI: India will allow individual foreign investors direct access to its stock market from Jan. 15, the government said on Sunday, the latest step to liberalise Asia's third-largest economy after a year of big losses on the benchmark Sensex index.

Previously, foreign nationals were limited to investing in India's equity market through indirect routes such as mutual funds, or through institutional vehicles.

"The central government has decided to allow qualified foreign investors to directly invest in (the) Indian equity market in order to widen the class of investors, attract more foreign funds, and reduce market volatility," the government said in a statement.

Analysts said the decision to allow foreign nationals to invest in Indian equities was a positive move but it was unlikely to result in an increased flow of overseas funds in the near-term due to weak market conditions.

"At a time when the foreign institutions are reducing their exposure to India, it would not be prudent to expect foreign individuals to start investing in our markets," said Jagannadham Thunuguntla, research head at brokerage SMC Global Securities.

"We can see some impact of this decision when the stock market conditions improve," he said.

In the past 20 years India has gradually opened its economy to foreign cash. The economy is now faltering after growing at an annual average of about 8 per cent for several years.

The rupee shed 24 per cent of its value against the dollar last year and the current account deficit is widening.

Many economists predict growth below seven per cent for the fiscal year that ends on March 30.

Indian shares posted their first annual fall in three years in 2011 as a combination of near double-digit inflation, high interest rates, slowing domestic growth and policy inaction turned off investors already shaken by global headwinds.

Foreign fund inflows, a major driver of Indian stocks, dried up with net outflows of about $380 million as of Wednesday, a far cry from record inflows of more than $29 billion in 2010 that had powered a 17 per cent rise in the benchmark index, following an 81 per cent surge in 2009.

 

[IndoCarib]

Is India’s economy on the verge of a mild recovery?

Whew! Finally some good news for the economy, after the relentless gloom of 2011.

On Monday, a widely-tracked gauge of manufacturing activity — the HSBC Markit Purchasing Manager’s Index (PMI) — was reported to have risen to 54.2 in December from 51 in November, a six-month high, on the back of a spike in factory output and new orders from domestic and international firms. It was also the biggest monthly rise since April 2009.

A reading above 50 indicates business expansion, while a reading below indicates contraction. The index came close to suggesting a contraction in September when it slumped to 50.4.

More heartening, the new orders index, a gauge of future output, jumped to 57.9 from 52.8 in November, its biggest jump in two years, indicating factories might be in for better days ahead.

The data becomes even more significant when you consider that manufacturing activity across developed economies continues to shrink. Even in China, factory activity is believed to have contracted in December, after languishing mostly below 50 since July.

Another piece of good news: car sales for December rose 7.2 percent from a year ago, according to Business Standard, indicating a slight revival in demand. Heavy discounts and fears that car prices would be hiked again soon prompted some buyers to hasten their purchases.

Only Maruti Suzuki and Honda Siel suffered a drop in sales. Maruti, the country’s largest car maker, continued to suffer the effects of repeated production disruptions caused by restive labour, while Honda was hit by a supply shortage caused by the floods in Thailand in October.

And finally, in a BBC interview, Reserve Bank of India (RBI) governor D Subbarao reiterated comments made by the central bank last month about a reversal in monetary policy. “From here on, we could expect reversal of monetary policy. But it’s difficult to say when that will take place and in what shape it will roll out,” he told the news channel. The RBI has raised interest rates 13 times since March 2010 in a bid to curb persistent inflation.

Take them all together — better factory activity, improved car sales and a central bank that is set to ease monetary policy — and it feels like the economy might be ready to turn a corner.

Don’t bet on it, though, because it’s much too early to make any predictions: as with all things related to the economy, there are several ‘buts’ attached to the data. Plus, what we have are just two data points.

True, factory orders seem to be gaining traction, but input costs remain relatively high. PMI data showed input prices grew at a slightly slower pace than last month, while the output cost index gained for the second month running. As a Financial Times blog post noted, the news on India’s PMI is “good news, but not good enough”.

High input costs are also troubling car makers, and most have already announced that they will raise car prices in January. How the price hike will affect sales going forward, we’ll have to wait and see. At the moment, even car makers, themselves, aren’t very optimistic about the near-term future. They believe sales will stay muted because of higher prices.

High input costs and a depreciating rupee (which increases the value of imported inputs) will continue to tighten the screws on economic growth (by raising overall prices and curtailing demand), leaving the RBI little room to implement large rate cuts.

But let’s not get too gloomy. After all, the New Year has begun on a slightly positive note, even though it remains to be seen whether the data represents an one-off or the start of a trend. The big question now is: when will the RBI cut rates?

For sure, the global economy remains uncertain as ever but at least domestically, there’s hope that things won’t get much worse.

http://www.firstpost.com/economy/is-indias-economy-on-the-verge-of-a-mild-recovery-170579.html

 

[Splurgenxs]

Food inflation turns negative; drops to (-) 3.36 %

Food inflation turns negative; drops to (-) 3.36 %
PTI, 05 Jan 2012 | 12:19 PM


This is the first time in almost six years, for which data with base year 2004-05 is available, that food inflation has shown a decline on an annual basis.

Food inflation entered the negative zone at (-) 3.36 per cent for the week ended December 24 as prices of essential items like vegetables, onion, potato and wheat declined.

"There has been substantial improvement. Food inflation has turned negative for the first time in recent memory," Finance Minister Pranab Mukherjee told reporters.

This is the first time in almost six years, for which data with base year 2004-05 is available, that food inflation has shown a decline on an annual basis.



Food inflation, as measured by Wholesale Price Index (WPI), stood at 0.42 per cent in the previous week. It was almost 21 per cent in the corresponding week of 2010.

According to the official data released today, onion became cheaper by 73.74 per cent year-on-year during the week under review, while potato prices were down by 34.01 per cent. Prices of wheat also fell by 3.41 per cent.


Overall, vegetables became 50.22 per cent cheaper during the week ended December 24.

The fall in the rate of price rise of food items has been substantial since the first week of November, when it stood at double-digit.




Experts feel that the decline in food inflation will be a major incentive for the Reserve Bank to look at the option of key interest rate cuts at its next quarterly monetary policy review later this month.

However, other food products became more expensive on an annual basis, led by protein-based items.

Pulses were 13.85 per cent costlier during the week under review, while milk turned dearer by 9.49 per cent. Eggs, meat and fish prices were up 13.82 per cent year-on-year.

Fruits also became 10.87 per cent more expensive on an annual basis, while cereal prices were up 1.97 per cent.


Inflation in the overall primary articles category stood at 0.10 per cent during the week ended December 24, as against 2.70 per cent in the previous week. Primary articles have over 20 per cent weight in the wholesale price index.


Inflation in the non-food segment, which includes fibres and oilseeds, was recorded at 0.85 per cent during the week under review, as against 0.28 per cent in the week ended December 17.

Fuel and power inflation stood at 14.60 per cent during the week ended December 24, as against 14.37 per cent in the previous week.

Headline inflation, which also factors in manufactured items, has been above the 9 per cent-mark since December, 2010. It stood at 9.11 per cent in November this year.


The RBI has hiked interest rates 13 times since March,2010, to tame demand and curb inflation.

In its second quarterly review of the monetary policy last month, the central bank had said it expects inflation to remain elevated till December on account of the demand-supply mismatch before moderating to 7 per cent by March, 2012.

 

[Splurgenxs]

hope this doesn't continue for too long...Rbi should strt thinking about some interest rate easing soon.
lets get the economy on the 8%+ track

 

[lamlap]

Food inflation turns negative; drops to (-) 3.36 %

wake up

Food inflation was over 21 per cent in the same period last year.

Food inflation has turned negative on the favourable impact of elevated "base effect".

 

[angeldemon_007]

^^^
The article is not about China...

 

[sputnik]

Food inflation turning Negative has nothing to do with decrease in interest Rates by RBI. the reason is Higher Base effect. and reality is inflation is still high for large part of India.

thts why yesterday when inflation data came and go it fail to cheer stock market.

the thing is worst is yet to come for india specially after march.

 

[Shardul.....the lion]

Moody's upgrades India's short-term foreign currency rating from speculative to investment grade

Moody's upgrades India's short-term foreign currency rating from speculative to investment grade - The Economic Times

NEW DELHI: Global agency Moody's today upgraded India's short-term foreign currency rating from speculative to investment grade, a development which will help domestic companies to raise funds from overseas markets at better rates.

"... there has been another upgrade by Moody's with the short-term country ceiling on foreign currency bank deposit increasing from NP (not prime) to Prime (P-3), suggesting acceptable ability to repay short-term obligations," the Finance Ministry said.

The 'P-3' ratings suggest acceptable ability to repay short-term obligations.

The latest upgrade comes less than a month after Moody's had upgraded the credit rating of Indian government's bonds from speculative to investment grade, a move that was expected to encourage FIIs to increase their exposure in gilts and help companies raise funds from abroad at competitive rates.

On December 20 last year, Moody's had upgraded short term government bonds denominated in domestic currency from NP not prime to P-3.

Moody's had upgraded rating on long-term government bond denominated in domestic currency from Ba1 to Baa3 or from speculative to investment grade.

Besides, the long-term country ceiling on the foreign currency bank deposit was also upgraded from Ba1 to Baa3.

Giving rationale for the upgrade in December, Moody's had at that side said, "Diverse sources of Indian growth have enhanced its resilience to global shocks".

It had added the present slowdown "could reverse sometime in 2012-13, as inflation cools from current 9 per cent levels".

The Finance Ministry had approached the ratings agency seeking clarification regarding the 'short-term country ceiling on foreign currency bank deposit', which had not found mention in the earlier decision by Moody's.

According to the ministry, the ratings firm has sent it a mail affirming an upgrade in that front as well.

"The Department of Economic Affairs (DEA) will continue to engage rating agencies on regular basis to impress upon them the long-term structural strengths and sound fundamentals of the Indian economy," Joint Secretary in the Capital Markets division of (DEA) Thomas Mathew said.

Presently, six sovereign ratings agencies -- Standard & Poor's, Moody's, DBRS, Fitch, Japanese Credit Rating Agency and the Rating and Investment Information Inc -- assigns ratings to India.

 

[karan.1970]

nice.. Whatever happened to Rupee being the worst currency in 2011

 

[StingRoy]

@karan... wet dreams are always short lived.

 

[dearone4u_22]

wake up

Food inflation was over 21 per cent in the same period last year.

Food inflation has turned negative on the favourable impact of elevated "base effect".

If you finished ur laughing now , times to talk exactly whats the situation on street.............

I do sometime talk my mom to market ...and she is never been happy shopping for vegetables although she still complains of pulses being bit costly...

For me she is my home finance minister ... if she says things are costly and PRanab da(FM) says inflation is under control i just
And when she says things are cheap i don't need any GOV minister to tell me things are good

Every FM always says Fundamentals of our Economy is strong.. Could anybody asks what are those fundamentals....
Its a women(mother/wife) in every house who is incharge of budget of home ..... And she was born with profound knowledge of Economics...... Save,,,,,Save,,, Save

 

[StingRoy]

Govt nod for 100% FDI in single brand retail

Notwithstanding its inability to open multi—brand retail for foreign investment, government on Tuesday notified 100 per cent FDI in single—brand retail, paving way for global chains like Adidas, Louis Vuitton and Gucci to have full ownership of their India operations.

“Foreign Direct Investment (FDI), up to 100 per cent , under the government approval route, would be permitted in single brand product retail trading,” a press note by the Department of Industrial Policy and Promotion (DIPP) said.

However, in respect of proposals involving FDI beyond 51 per cent, the mandatory sourcing of at least 30 per cent would have to be done from the domestic small and cottage industries which have a maximum investment in plant and machinery of $1 million (about Rs 5 crore).

“FDI in single brand has led to emergence of some global majors in Indian market...This will provide stimulus to domestic manufacturing value addition and help in technical upgradation of our small industry,” Commerce and Industry Minister Anand Sharma said.

The decision to increase FDI in single—brand retail was taken by the Cabinet on November 24 along with opening the gates for overseas investment in multi—brand retail.

However, the Government was forced to put on hold FDI in multi—brand retail by several political parties, including UPA ally Trinamool Congress.

At present, for single—brand retailers, 51 per cent FDI is permitted. Removal of investment cap would help global fashion brands especially from Italy and France to strengthen their interest in the growing Indian market.

Many big names have already set up their operations in the country by partnering with Indian partners. The new policy would allow them to buy out the domestic partners.

 

[IndoCarib]

Good news for economy: FDI inflow soars; indirect tax kitty up

NEW DELHI: Foreign direct investment (FDI) into India went up by an impressive 56 per cent to $2.53 billion in November 2011, signalling improvement in investor sentiment.

The cumulative flows of $22.83 billion for the April-November period have crossed $19.43 billion which came in the full fiscal of 2010-11, according to officials.

Analysts feel that if the trend continues, the FDI in the current financial year would well cross $30 billion, a development which will have a positive effect on rupee in the foreign exchange market.

Good news for economy: FDI inflow soars; indirect tax kitty up - The Times of India