Indian Economy-News & Updates

[TopCat]

Nick, you dont understand India, I bet "cirr" can not find such a proof.
if India predicts their future GDP growths at 5.8%, goodness, you need to knot 2% or 3% off.
they never ever have a number close to a fact.

there is a chart on internet over a year. Typical Indian expected India will catch up soon, in 2011, both will have similar growth, and 2015, India will leave China behind. Indian wont have 5.8% or less in the future.

Indian members expect China growth 8.4% in 2011, actual was 9.2%.
Indian members expect China growth 8.2% in 2011, actual was 6.5%.

Indian members expect China growth 8.7% in 2012, actual will be 8.2%?
Indian members expect China growth 8.3% in 2012, actual will be 5.5%?

Why Indian copy our National Symbol Tiger? They should find flying pig or something like that to fight with Dragon.

 

[Basanti]

Why Indian copy our National Symbol Tiger? They should find flying pig or something like that to fight with Dragon.

Look properly, our national symbol is a Fully grown tiger. Not a cub with a small weenie-weenie.
You are wrong

KthanksBye

 

[IndoCarib]

India car sales jump 8.3 pct, double-digit growth eyed - Economy - Business - Ahram Online

ndia's car sales jumped by 8.3 per cent in June from a year earlier, an auto industry body reported Tuesday, adding it was still hoping for double-digit annual growth despite a flagging economy.

Car sales should rise by nine to 11 per cent for the year thanks to expected interest rate cuts that would reduce vehicle loan costs and spur demand, the Society of Indian Automobile Manufacturers (SIAM) said.

 

[Splurgenxs]

Rupee gains as stocks rally and on dollar sales by exporters

10 Jul, 2012, 06.28PM IST, Reuters

MUMBAI: The rupee rallied on Tuesday, snapping a four-session losing streak, buoyed by strong gains in local stocks and dollar sales by exporters.

Local stocks posted their highest close since mid-March, helped in part by data showing foreign institutional investors were net buyers of 2.5 billion rupees ($44.74 million) in Indian shares on Monday, for a preliminary total of 58.2 billion rupees for the month.

Traders also said heavy dollar sales were spotted from exporters, particularly from software services exporters as well as a large petrochemical company.

The strong recovery in the rupee comes after the rupee fell 2.8 per cent over the previous four sessions as worries about the global economy pummelled risk assets worldwide.

"The stock markets are looking up and exporters came in and sold mid-session," said N.S. Venkatesh, treasury head at IDBI Bank.

He expects the rupee to trade in a 55.25-55.80 band to the dollar for the week.

The partially convertible rupee closed at 55.39/40 as per the SBI closing rate, up nearly 1 per cent from its Monday's close of 55.92/93. Global risk factors will continue to be key for the rupee's outlook.

The euro steadied near a two-year trough against the dollar and hit a five-week low versus the yen on Tuesday after a meeting of finance ministers offered no positive surprises while a German court hearing kept the market nervous.

Domestic data will also be important, in the lead up the Reserve Bank of India's policy decision on July 31. Concerns about India's current account and fiscal deficits and slowing growth had sent the rupee to a record low late last month.

India is set to announce May industrial output on Thursday, with a poll of analysts expecting growth to pick up to 1.8 per cent from 0.1 per cent in April.

The data will be followed by wholesale price inflation on Monday.

The one-month offshore non-deliverable forward contracts were quoted at 55.68 while the three-month were at 56.32. In the currency futures market, the most traded near-month dollar-rupee contract on the National Stock Exchange, the United Stock Exchange and the MCX-SX all ended at around 55.5750. The total volume was at $4.4 billion.

Rupee gains as stocks rally and on dollar sales by exporters - The Economic Times

 

[shuttler]

S&P lowers Tata Power credit rating outlook to 'negative'


S&P lowers Tata Power credit rating outlook to 'negative' - The Economic Times

MUMBAI: Standard & Poor's has downgraded the credit rating outlook for Tata Power to 'negative' from 'stable' because of high debt and rising expenditure at the 4,000 mw ultra mega project at Mundra, triggering a 2% fall in the firm's shares.
The outlook revision reflects our expectation that Tata Power's cash flow and financial risk profile could deteriorate over the next six-to-nine months because the company has breached a debt-to-equity ratio covenant on loans to its Mundra project, S&P credit analyst Rajiv Vishwanathan said.
Tata Power said the breach did not amount to a payment default and that it expected a favourable outcome of its talks with lenders. "To support CGPL's (Coastal Gujarat Power, the Tata Power arm implementing the project) cash flows, the company has been in advanced talks with lenders," S Ramakrishnan, executive director (finance) of Tata Power, said in a statement.
Debt-to-equity ratio worsens
The company has been in advanced discussions with the lenders to finalise structure for transferring coal SPV dividends. The matter is under consideration by the lenders for approving waivers in certain cases, Tata Power's Ramakrishnan said.
Given the technical nature of the covenant breaches comprising mainly noncash entries like impairment and forex costs, we believe our request should get favourable consideration. Further, the covenant breaches do not constitute a payment default, he said.
According to the loan covenant, or the agreement with the banks, Coastal Gujarat Power needs to maintain a debt-toequity ratio of 3:1. However, the ratio has increased sharply in the past few months, breaching the prescribed level. "It is a technical breach of the covenant and we expect the banks would give a waiver to CGPL. Banks continue to allow the company to access funds and that gives us the comfort they would give a waiver," Allan Redimerio, S&P's Asia Pacific director and analytical manager, told ET.
The Mundra project and Reliance Power's proposed ultra mega power plant at Krishnapatnam, Andhra Pradesh, are suffering due to higher cost of imported coal, prompting demands for a tariff revision. Tata Power has already started generation, while Reliance Power is in the midst of a legal dispute with utilities that want to penalise the company for the delay in building the project.
In 2011-12, Tata Power reported a consolidated loss of Rs 1,087.68 crore against a profit of Rs 2,059.60 crore a year ago. It suffered on account of provisions of Rs 1,800 crore for the Mundra project. The high price of imported coal along with the rupee's depreciation has hurt the economics of the project.
S&P affirmed its 'BB-' long-term corporate credit rating on Tata Power and 'BB-' issue rating on the company's senior unsecured notes. A 'BB' rating is less vulnerable in the near term than other lowerrated obligors. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions, which could lead to the obligor's inadequate capacity to meet its financial commitments.
Redimerio said Tata Power was in negotiations with lenders on the technical breach in the loan covenant. "In the absence of the waivers, CGPL will not be able to avail of the loan facility once its drawdown reaches the currently approved level of 83% of the project facility.

 

[Adnan Faruqi]

Audi set to displace BMW as top most in Indian luxury car market


NEW DELHI: The race for the top slot in the Indian luxury car market is hotting up with German maker Audi fast catching up with leader BMW after surpassing compatriot Mercedes Benz in April-June period this year.

According to figures released by Society of Indian Automobile Manufacturers (SIAM), Audi's sales in the first three months of the fiscal have jumped by 52.15 per cent to 1,908 units from 1,254 units in the year-ago period.

On the other hand, sales of market leader BMW declined by 12.16 per cent to 2,088 units as against 2,377 units in the same period last year, it added.

The second largest luxury car maker Mercedes Benz too witnessed 24.41 per cent fall in its sales at 1,257 units compared to 1,663 units in April-June in 2011.

In June, however, Audi's sales surpassed that of BMW by selling 759 vehicles compared to 750 units of the rival.

In the same month last year Audi's sales were at 354 units, while that of BMW were 890 units.

On the other hand, sales of Mercedes Benz stood at 622 units in June this year compared to 566 units in the year-ago month, it added.

Since the second half of last year, the German luxury car makers had not made public their sales in India due to anti-trust issues in Europe. They have resumed submitting their sales data to SIAM from June this year.

Last month, Audi India head Michael Perschke had stated that the company was confident of overtaking BMW as the market leader in India by 2014, a year ahead of the company's original plans.

Audi set to displace BMW as top most in Indian luxury car market? - The Economic Times

 

[shuttler]

Flat sales dip by over 60% in Mumbai

http://content.magicbricks.coml

Mumbai
The city’s real estate market has stagnated with only 45,000 apartments sold in the Mumbai metropolitan region (MMR) during 2011-12, well below the market average of 80,000 units annually.
A Knight Frank research report released on Thursday said the market has an unsold inventory of 80,000 flats valued at Rs 1.05 lakh crore. “Buyers have largely kept away from the market expecting an imminent drop in prices in the near future,” it said.
Sales in the financial year 2012 dropped by more than 60% from its peak in 2007 and 35% from 2011. “This steep drop in absorption levels should have resulted in a similar correction in prices. However, a regulator imposed supply crunch through delay in approvals ensured that market equilibrium was maintained. Thus, an even greater fall in units launched effectively offset the impact of prices,” said the report.
About 55,000 flats were launched in FY 2012, down almost 40% from the 92,000 units launched the previous year. “Supply was also constrained as developers actively delayed project launches and looking to liquidate current inventory before launching any fresh product to ease pressure on prices going forward,” it said.
Increasing costs of land, labour and raw material also constrained developers from cutting prices as they were “already hard-pressed to maintain their current operating margins of 30%-35”.
The largest demand is for flats costing up to Rs 75 lakh and 55% of units under construction are concentrated on northern fringes of the Mumbai market. Samantak Das, Knight Frank director-research & advisory services, said, “Core of the residential market is steadily shifting northward of MMR. People are prepared to move further away from the commercial business districts to find an apartment that fits their budget.”
South and central Mumbai, which only offer premium apartments, are experiencing highest vacancy levels. Navi Mumbai, the peripheral western suburbs and Thane have seen a comparatively higher number of projects launched in the two previous quarters, causing vacancy levels to spike there too. The report observed that the investors’ segment, which makes up 20% of demand, is offloading its real estate holdings.
“Vacancy levels are as high as 48% for units launched in the Rs 2 crore and above price bracket vis-a-vis 37% for the overall Mumbai market,” it added.
The total debt position of five major Mumbai-based developers is about Rs 6,200 crore as on March 2012. “Developers are hard-pressed to deleverage their positions as they are getting bu

 

[Adnan Faruqi]

8 Indian cos in Fortune 500 list


New York: Eight Indian companies have made the cut in the list of world's 500 largest companies compiled by Fortune magazine, with Indian Oil and Reliance Industries finding a place in the top 100.

Out of the eight, five are state-run entities. With an annual revenue of USD 86,016 million, Indian Oil has cornered the 83rd spot up from 98th place last year.

Mukesh Ambani-led Reliance Industries is the first Indian private firm to made into the top 100 list. With an annual revenue of USD 76,119 million, RIL, has improved its ranking to 99 from previous year's 134.

Besides IOC and RIL, the other Indian companies in the list are steel-maker Tata Steel, auto company Tata Motors, oil entities Bharat Petroleum, Hindustan Petroleum and Oil & Natural Gas and public sector bank State Bank of India.

The list also features Citigroup, ArcelorMittal, led by people with Indian roots.

Fortune's global list of world's 500 largest companies for 2012, compiled on the basis of latest annual revenue figures, is topped by Royal Dutch Shell ending the retail major Wal-Mart Stores's two-year winning streak. The energy giant had annual revenues of USD 484,489 million.

At the second place is energy firm Exxon Mobil, followed by Wal-Mart Stores, energy company BP, and oil producer and refiner Sinopec Group.

Bharat Petroleum featured at 225th place, followed by Hindustan Petroleum (267), SBI (285), Tata Motors (314), ONGC (357) and Tata Steel (401).

According to magazine, Bharat Petroleum had the revenues to the tune of USD 44,582 million, followed by Hindustan Petroleum (USD 38,885 million), SBI (36,950 million), Tata Motors (USD 34,575 million), ONGC (30,746 million)and Tata Steel (USD 27,739 million.)

Interestingly, the 2011 list also featured the same eight Indian companies.

Last year, Bharat Petroleum was at the 272nd position, followed by SBI (292), Hindustan Petroleum (336), Tata Motors (359), ONGC (361) and Tata Steel (370).

8 Indian cos in Fortune 500 list

Direct tax collections rise 47% in Apr-Jun

Direct tax collections, net of refunds, increased 47.2 per cent to Rs 84,273 crore during April-June 2012-13, against Rs 57,267 crore in the corresponding period of last financial year.

The sharp rise was on account of higher refunds that pulled down the net collections in the year-ago period. Refunds in April-June this year stood at Rs 26,909 crore, compared with Rs 46,868 crore of tax refund in the corresponding period of 2011-12.


While gross collection of corporate taxes showed an increase of 3.48 per cent to Rs 70,594 crore, against Rs 68,223 crore in April-June last year, personal income tax mop-up was up by 13 per cent to Rs 40,520 crore, compared with Rs 35,858 crore in the same quarter of 2011-12.

Collections from wealth tax showed a dip of 3.03 per cent to Rs 32 crore, against Rs 33 crore in the same period last year.

Reflecting market conditions, collections from levy of securities transaction tax also showed a decline of 0.52 per cent to Rs 952 crore, compared with Rs 957 crore in the year ago period, the Central Board of Direct Taxes said in a press statement issued on Monday.

At Rs 84,273 crore, net direct tax collections are less than 15 per cent of this year’s Budget estimate of Rs 5.7 lakh crore. The target represents an increase of about 25 per cent over the last year’s actual collections.

Refunds to the tune of Rs 98,000 crore in 2011-12 pulled down the direct tax collections during the year to Rs 4.9 lakh crore, against the Budget Estimate of Rs 5.3 lakh crore.

Direct tax collections rise 47% in Apr-Jun

Govt considering Rs 2,000-cr VC fund for pharma sector

Press Trust Of India / Jul 04, 2012, 00:47 IST


The government on Tuesday said it was considering forming a venture capital fund of Rs 2,000 crore to promote research and development in the pharmaceutical sector.

“We are talking with Export Import Bank for this," Commerce Minister Anand Sharma told reporters in New Delhi.

Sharma was reviewing the pharma sector with industry representatives and government secretaries.

In the meeting, the pharma industry representatives raised issues like problems in getting approvals from the health ministry.

Sharma said all the concerns of the industry will be discussed by a committee of secretaries.

Govt considering Rs 2,000-cr VC fund for pharma sector

 

[IndoCarib]

Singapore: Singapore Prime Minister Lee Hsien Loong will make a two-day state visit to India from tomorrow, seeking to boost the already strong and multifaceted bilateral ties which has seen growing trade and investments.

Singapore PM Lee’s India visit to focus on investment, trade | Firstpost

 

[buddyboyyash]

Flat sales dip by over 60% in Mumbai

http://content.magicbricks.coml

Mumbai
The city’s real estate market has stagnated with only 45,000 apartments sold in the Mumbai metropolitan region (MMR) during 2011-12, well below the market average of 80,000 units annually.
A Knight Frank research report released on Thursday said the market has an unsold inventory of 80,000 flats valued at Rs 1.05 lakh crore. “Buyers have largely kept away from the market expecting an imminent drop in prices in the near future,” it said.
Sales in the financial year 2012 dropped by more than 60% from its peak in 2007 and 35% from 2011. “This steep drop in absorption levels should have resulted in a similar correction in prices. However, a regulator imposed supply crunch through delay in approvals ensured that market equilibrium was maintained. Thus, an even greater fall in units launched effectively offset the impact of prices,” said the report.
About 55,000 flats were launched in FY 2012, down almost 40% from the 92,000 units launched the previous year. “Supply was also constrained as developers actively delayed project launches and looking to liquidate current inventory before launching any fresh product to ease pressure on prices going forward,” it said.
Increasing costs of land, labour and raw material also constrained developers from cutting prices as they were “already hard-pressed to maintain their current operating margins of 30%-35”.
The largest demand is for flats costing up to Rs 75 lakh and 55% of units under construction are concentrated on northern fringes of the Mumbai market. Samantak Das, Knight Frank director-research & advisory services, said, “Core of the residential market is steadily shifting northward of MMR. People are prepared to move further away from the commercial business districts to find an apartment that fits their budget.”
South and central Mumbai, which only offer premium apartments, are experiencing highest vacancy levels. Navi Mumbai, the peripheral western suburbs and Thane have seen a comparatively higher number of projects launched in the two previous quarters, causing vacancy levels to spike there too. The report observed that the investors’ segment, which makes up 20% of demand, is offloading its real estate holdings.
“Vacancy levels are as high as 48% for units launched in the Rs 2 crore and above price bracket vis-a-vis 37% for the overall Mumbai market,” it added.
The total debt position of five major Mumbai-based developers is about Rs 6,200 crore as on March 2012. “Developers are hard-pressed to deleverage their positions as they are getting bu

yup...thats true...so??...i dint find anything BAD that ur posting such stuff...

flat sales are bound to dip...m waiting for a massive downfall in real estate to buy a flat in mumbai...the rates are too high right now for no bloody reason

 

[Adnan Faruqi]

IAG to increase presence in India as part of Asia strategy




Singapore PM's India visit to focus on investment

India's cumulative investment in Singapore is $23 bn from 2000-2012, likewise Singapore's is $17 bn: RBI

Press Trust of India / Singapore Jul 10, 2012, 13:06 IST


Singapore Prime Minister Lee Hsien Loong will make a two-day state visit to India from tomorrow, seeking to boost the bilateral ties which has seen growing trade and investments.

Accompanied by his wife, Lee will lead a high-level delegation that includes the Speaker of Singapore Parliament Michael Palmer, Education Minister Heng Swee Keat and senior government officials.

"Prime Minister Lee's visit is very important because it enables the high-level focus of the bilateral relationship," Indian High Commissioner to Singapore T C A Raghavan said.

Lee is making the bilateral visit after Prime Minister Manmohan Singh visited Singapore last November.

"It is very good that we have a return visit immediately thereafter. This gives the high-level political momentum to the bilateral relationship," Raghavan said.

"We have a multi-faceted relationship with Singapore. The different aspects of the relationships are trade and economic cooperation, investment, defence, cultural cooperation, education exchanges and of course a very good political relationship.

"All these aspects will be reviewed during Prime Minister Lee's visit and we expect that some high level inter-governmental agreements and understanding will also be reached," he said.

When Singh visited Singapore in last year, these aspects were discussed in details with focus on investments, cooperation in the area of skill training and cultural cooperation. "I think these aspects will remain under focus. We will see some concrete outcome."

India's cumulative investment in Singapore is $23 billion from 2000-2012, according to data from the RBI. Likewise, Singapore's cumulative investment in India is $17 billion for the same 10-year period.

The Indian investors include Tata Group of Companies, Hindustan Computers and Fortis among others.

"Singapore is a business hub and Indian corporations will use Singapore's connectivity with South East Asia and East Asia," he said in comments on reports that Indian investments were increasing through Singapore into the Asian region.

The Indian and Singapore economies were progressing well despite the global economic gloom, he pointed out, expecting a hefty 30-40% growth in the 2011-2012 bilateral trade.

"The Indian and Singapore bilateral trade for 2011-2012 is expected to reach $23 billion," said Raghavan, citing the strong growth seen since 2005-2006 when the Comprehensive Economic Cooperation Agreement (CECA) effectively began boosting low-tax free trade dealings.

The bilateral trade was $21.8 billion as of fiscal January 2012, up from $8.7 billion in 2005-2006.

"CECA has performed very well and has been very successful, especially with the increase of footprint of Indian companies in Singapore and from Singapore to the Southeast Asian region," Raghavan said.

The bilateral trade would increase significantly when the second CECA review is completed by end of this year and open flexible terms to trade and businesses of the two economies.

An estimated 4,500 Indian companies have set up offices in Singapore to manage global and regional businesses.

"We recognize in India that Singapore is very important for our part of the Look East Policy," said Raghavan.

"Defence cooperation is definitely increasing especially as India is now a member of the East Asia Summit and the ASEAN Plus Defence Ministerial Meeting. There is more interaction between army, navy and airforce," he said.

In May, Defence Minister A K Antony had addressed the Shangri-La Dialogue, a global strategic defence and security forum.

People-to-people interaction between the two countries was also increasing, with more parliamentarians visits and cultural exchanges expected in the future, he stressed.

India's opposition leader Sushma Swaraj made an official visit to Singapore this year.

"A number of Indian states are very actively seeking Singapore's investment cooperation and technology cooperation in fields such as infrastructure development," said Raghavan.

"We have had visits by state governments of Madhya Pradesh, Karnataka and Gujarat this year. These states are trying to use Singapore's capacity and knowledge in the development of new cities and townships," he pointed out.

Kerala state officials would also be making a trade and investment visit to Singapore later this month.

Meanwhile, Singapore Indian Chamber of Commerce and Industry chairman R Narayanamohan said: "Very close and cordial relationship is prevailing between India and Singapore and the trade and investment are growing simultaneously between the two countries."

"The Singapore Prime Minister visit will further strengthen the bilateral relationship and will increase the trade and investment between the two countries," he said.

"An increasing number of Indian companies are making their global investments through Singapore and the number of Indian businesses in the city state are increasing day by day," he said, pointing to some 4,500 Indian entities presence in the city state.

Singapore PM's India visit to focus on investment

 

[shuttler]

IKEA hits snag with India venture

http://www.cnbc.com

India has rebuffed a request by IKEA to relax rules on buying goods locally, a government source said on Friday, raising the prospect of a delay in the world's largest furniture maker entering the Indian retail market,

IKEA, famous for its self-build flatpacks and huge stores,

said last month it would invest $1.5 billion euros ($1.86 billion) and open 25 outlets, throwing a lifeline to the government in India where economic growth has slowed sharply.

But the Swedish company sought a 10-year window to comply with rules that foreign retailers source 30 percent from local small and medium-sized firms, a requirement which overseas companies say discourages investment.

When contacted by Reuters, IKEA said a short delay in its formal application to enter the Indian market would not affect its decision to open stores, and hoped to start operations soon.

The stakes are high for both sides.

India offers IKEA a huge new market while the government is battling heavy criticism over its management of Asia's third-largest economy where growth has slipped to its weakest pace in nine years.

Prime Minister Manmohan Singh said on Friday that IKEA's planned entry was proof that investors still had confidence in India.

A government source involved in formulating retail policy called IKEA's proposed phase-in period "too long".

"They'll rework it, I'm sure," the source said, speaking on condition of anonymity because of the sensitivity of the matter.

An IKEA spokesman said the time period to implement the sourcing rules was "not set in stone".

The requirements underscore the potential pitfalls for foreign retailers as they seek entry to a market of 1.2 billion people with a swelling middle class.

A plan to open India's retail sector to foreign supermarkets such as Wal-Mart stalled last year after a fierce political backlash, although the government is now pushing to revive it.

IKEA announced its plans to invest in India over a period of 15-20 years after the government removed foreign investment caps in single-brand retail in January.

Apart from IKEA, Coca-Cola Co is the only other foreign company to announce big India investments in recent months.

Coke last month announced a further $3 billion in investment in India over the next eight years as the world's biggest soft drinks maker seeks to expand in a country where its flagship brand trails rival Pepsi.

Singh took over the running of the finance ministry in June, raising investor hopes of movement on major policy decisions as he promised to revive the Indian economy's "animal spirit" and end a "climate of pessimism".

The government's requirement that foreign retailers source locally is designed to ensure that domestic manufacturers share the benefit of an influx of foreign capital.

"We will source at least 30 percent of the purchase value of products sold in India from our direct and indirect supply chain comprising Indian small industries," IKEA said in a statement.

"In the longer term however, the mandatory sourcing of 30 percent of the value of goods sold in India from domestic small industries remains a challenge," it said.

 

[buddyboyyash]

IKEA hits snag with India venture

http://www.cnbc.com

India has rebuffed a request by IKEA to relax rules on buying goods locally, a government source said on Friday, raising the prospect of a delay in the world's largest furniture maker entering the Indian retail market,

IKEA, famous for its self-build flatpacks and huge stores,

said last month it would invest $1.5 billion euros ($1.86 billion) and open 25 outlets, throwing a lifeline to the government in India where economic growth has slowed sharply.

But the Swedish company sought a 10-year window to comply with rules that foreign retailers source 30 percent from local small and medium-sized firms, a requirement which overseas companies say discourages investment.

When contacted by Reuters, IKEA said a short delay in its formal application to enter the Indian market would not affect its decision to open stores, and hoped to start operations soon.

The stakes are high for both sides.

India offers IKEA a huge new market while the government is battling heavy criticism over its management of Asia's third-largest economy where growth has slipped to its weakest pace in nine years.

Prime Minister Manmohan Singh said on Friday that IKEA's planned entry was proof that investors still had confidence in India.

A government source involved in formulating retail policy called IKEA's proposed phase-in period "too long".

"They'll rework it, I'm sure," the source said, speaking on condition of anonymity because of the sensitivity of the matter.

An IKEA spokesman said the time period to implement the sourcing rules was "not set in stone".

The requirements underscore the potential pitfalls for foreign retailers as they seek entry to a market of 1.2 billion people with a swelling middle class.

A plan to open India's retail sector to foreign supermarkets such as Wal-Mart stalled last year after a fierce political backlash, although the government is now pushing to revive it.

IKEA announced its plans to invest in India over a period of 15-20 years after the government removed foreign investment caps in single-brand retail in January.

Apart from IKEA, Coca-Cola Co is the only other foreign company to announce big India investments in recent months.

Coke last month announced a further $3 billion in investment in India over the next eight years as the world's biggest soft drinks maker seeks to expand in a country where its flagship brand trails rival Pepsi.

Singh took over the running of the finance ministry in June, raising investor hopes of movement on major policy decisions as he promised to revive the Indian economy's "animal spirit" and end a "climate of pessimism".

The government's requirement that foreign retailers source locally is designed to ensure that domestic manufacturers share the benefit of an influx of foreign capital.

"We will source at least 30 percent of the purchase value of products sold in India from our direct and indirect supply chain comprising Indian small industries," IKEA said in a statement.

"In the longer term however, the mandatory sourcing of 30 percent of the value of goods sold in India from domestic small industries remains a challenge," it said.

good the govt has kept 30 pc domestic industry clause

 

[IndoCarib]

IKEA hits snag with India venture

http://www.cnbc.com

India has rebuffed a request by IKEA to relax rules on buying goods locally, a government source said on Friday, raising the prospect of a delay in the world's largest furniture maker entering the Indian retail market,

IKEA, famous for its self-build flatpacks and huge stores,

said last month it would invest $1.5 billion euros ($1.86 billion) and open 25 outlets, throwing a lifeline to the government in India where economic growth has slowed sharply.

But the Swedish company sought a 10-year window to comply with rules that foreign retailers source 30 percent from local small and medium-sized firms, a requirement which overseas companies say discourages investment.

When contacted by Reuters, IKEA said a short delay in its formal application to enter the Indian market would not affect its decision to open stores, and hoped to start operations soon.

The stakes are high for both sides.

India offers IKEA a huge new market while the government is battling heavy criticism over its management of Asia's third-largest economy where growth has slipped to its weakest pace in nine years.

Prime Minister Manmohan Singh said on Friday that IKEA's planned entry was proof that investors still had confidence in India.

A government source involved in formulating retail policy called IKEA's proposed phase-in period "too long".

"They'll rework it, I'm sure," the source said, speaking on condition of anonymity because of the sensitivity of the matter.

An IKEA spokesman said the time period to implement the sourcing rules was "not set in stone".

The requirements underscore the potential pitfalls for foreign retailers as they seek entry to a market of 1.2 billion people with a swelling middle class.

A plan to open India's retail sector to foreign supermarkets such as Wal-Mart stalled last year after a fierce political backlash, although the government is now pushing to revive it.

IKEA announced its plans to invest in India over a period of 15-20 years after the government removed foreign investment caps in single-brand retail in January.

Apart from IKEA, Coca-Cola Co is the only other foreign company to announce big India investments in recent months.

Coke last month announced a further $3 billion in investment in India over the next eight years as the world's biggest soft drinks maker seeks to expand in a country where its flagship brand trails rival Pepsi.

Singh took over the running of the finance ministry in June, raising investor hopes of movement on major policy decisions as he promised to revive the Indian economy's "animal spirit" and end a "climate of pessimism".

The government's requirement that foreign retailers source locally is designed to ensure that domestic manufacturers share the benefit of an influx of foreign capital.

"We will source at least 30 percent of the purchase value of products sold in India from our direct and indirect supply chain comprising Indian small industries," IKEA said in a statement.

"In the longer term however, the mandatory sourcing of 30 percent of the value of goods sold in India from domestic small industries remains a challenge," it said.

you didnt read the highlighted part !

 

[captainvancouver]

Ikea furniture is complete garbage. Looks ok, but the quality is crap.