Indian Economy-News & Updates

[Shaurya]

S&P - India Rating may shift towards negative

MUMBAI: India is facing challenges to keep its stable rating outlook with high inflation, weak fiscal position and slower economic growth weighing, according to Standard & Poor’s rating service.

“The balance of risk factors for the sovereign credit rating may be shifting slightly toward the negative,” S&P, which has an investment grade BBB rating with a stable outlook on India, said in a report. – Reuters

S&P: India faces rating challenges

^^ good joke...

---------- Post added at 10:46 PM ---------- Previous post was at 10:44 PM ----------

Government plans five more National Manufacturing Investment Zones: Talleen Kumar

New Delhi: Government will facilitate towards making India as the world’s manufacturing hub by shortly notifying the National Manufacturing Investment Zone, said Mr Talleen Kumar, Joint Secretary, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Government of India at the 4th Learning Convention of Visionary Leaders for Manufacturing(VLFM) organised by Confederation of Indian Industry jointly with National Manufacturing Competitiveness Council, government of India and VLFM and JICA.

“Seven such NMIZs are ready for implementation in the Delhi Mumbai Industrial Corridor and five more are proposed in different parts of the country,” Mr Talleen Kumar said.

National Manufacturing Investment Zones will be spread over 5,000 hectares each with world class infrastructure and clean technologies and skill development institutes. In dynamic global environment, India suffers from power and transport infrastructure gaps, making its products less competitive and these zones will help overcome these shortcomings, Talleen Kumar said.

Visionary Leader For Manufacturing (VLFM) along with government can play a key role in taking India to the next growth cycle. By looking at the fragile economic environment globally, companies will need to be continuously innovating, Mr Tallen Kumar said.

”The government has set a target of 25% share of GDP growth from manufacturing by 2022 and 100 million additional jobs to make growth inclusive,” he said referring to manufacturing being made the engine of growth.

Speaking at the CII’s VLFM session, Mr Tamaki Tsukada, Minister (Economic Development)

Embassy of Japan in India, said VLFM launched in 2006, has gone a long way with support and sponsorship of the government of Japan. On this strength of higher trust between two countries, VLFM will continue to evolve and succeed, Mr Tsukada said.

“Official support from government of Japan is technically set to end by March 2013. Meanwhile we know there is a strong request from India side to continue with JICA support. We will consider how best government of Japan can play a role that will stand us in good stead in the post 2013 phase,” Mr Tsukada said.

Stating that India and Japan have declared themselves as strategic partner, Mr Tsukada said “India is the only country with which Japan exchanges annual mutual visits of the two Prime Ministers.”

Setting the tone, Mr Jamshyd N Godrej, Chairman, VLFM & Chairman & Managing Director, Godrej & Boyce Manufacturing Company Ltd expressed his gratitude for the highest level of commitment demonstrated by Professor Shoji Shiba for relentlessly striving for India’s manufacturing excellence.

Expressing CII’s gratitude to the Prime Minister of Japan and Embassy of Japan, Mr Godrej explained the objective of VLFM towards building a strong community and fostering innovative learning which will create ideas and project which will benefit the community at large.

In recent India visit by Japan’s Prime Minister Noda at the invitation of Indian Prime Minister, the visiting Prime Minister had said, “Professor Shiba played a leadership role from the planning stage in the program (VLFM) aimed at fostering senior managers in the Indian manufacturing sector.”

Professor Shiba, who was recently conferred with Padma Shri awards by the Indian government, believes in working not just for personal gain or for the profit of one company, but rather for the greater cause of society as whole. The professor made this belief a framework for the VLFM program.

Government plans five more National Manufacturing Investment Zones: Talleen Kumar, Orissa Business News

---------- Post added at 10:48 PM ---------- Previous post was at 10:46 PM ----------

Ssangyong may make India manufacturing base

Ssangyong Motor Company, now owned by Mahindra and Mahindra, is considering making India a manufacturing base for its vehicles. It is planning to invest USD 1.2 billion into four new products (including variants) that will launch over the next five years.

It is especially interested in the sub-continent as a manufacturing hub for smaller vehicles, namely the subcompact SUV segment which seems to be the next frontier for a whole lot of manufacturers, including Ford with its EcoSport and Maruti Suzuki, who also showcased its XA-Alpha concept at the 2012 Delhi Auto Expo just like Ford did. The new, smaller, SUVs are being developed jointly with Mahindra so it will make sense to set up a manufacturing base here.

Other Korean manufacturers like Hyundai use India as a manufacturing and exporting base with great success, so it is certainly a good idea to set up a manufacturing base in the country. There are just two questions that arise about this move, however: where will the manufacturing base be set up? Mahindra has just invested in a new plant in Tamil Nadu after the Maharashtra government suddenly did an about-face and refused to refund the taxes it was supposed to as an incentive for the manufacturer to set up in the state. The lion's share of its car

manufacturing still occurs in Nashik, so it is unclear as to where it will set up its base. The other concern is of quality: even Hyundai exports only small cars from India as it is difficult to get world-class quality from an Indian manufacturing base.

Mahindra has already started talks with Indian vendors to manufacture some parts for the Korando C and Rexton, which will launch sometime this year. If they manage to match the required quality, we don't see why Ssangyong shouldn't use India as a low-cost manufacturing base for its small vehicles.

Ssangyong may make India manufacturing base | Latest Autos & Car News | OnCars.in

 

[Dance]

India forecasts lowest economic growth in 3 years

Feb 7 (Reuters) - India's economic growth may dip below 7 percent in the current fiscal year, the slowest pace since the 2008 financial crisis, restrained by the central bank's inflation-fighting campaign and government gridlock.

The government forecast 6.9 percent annual growth for the fiscal year that ends in March, a tad below the 7 percent to 7.5 percent growth predicted by several government officials.

It would mark a sharp decline from the prior year's 8.4 percent growth rate, and a reversal of fortune for a country that until recently aspired to double-digit growth like China.

The Indian economy has slowed as the euro zone crisis combined with tight monetary policy and political paralysis at home have discouraged investment.

There is little hope for a quick turnaround. Although the Reserve Bank of India is widely expected to begin cutting interest rates after an aggressive 18-month tightening campaign came to an end in October, domestic growth still looks shaky and the global outlook uncertain.

Inflation also remains elevated, making it tougher for the central bank to prop up growth.

"We are not expecting any sudden reversal in economic growth. Global growth remains weak. Things on the domestic front have not improved either," said Indranil Pan, chief economist at Kotak Mahindra Bank, who expects the economy to grow 6.7 percent this fiscal year and 6.6 percent in the following year.

Unlike most of its Asian peers, India runs fiscal and current account deficits, leaving it reliant on notoriously fickle foreign investors for financing. Investment has been flowing back into India so far in 2012, after outflows in 2011, but that could change if the euro zone crisis deteriorates.

The government's advance estimate for the fiscal year 2011/12 shows that farm output is expected to grow 2.5 percent, while the manufacturing sector is likely to grow 3.9 percent.

Indian shares and bonds remained unchanged following the release of the growth estimate.

The RBI last month cut the current fiscal year growth forecast to 7 percent from 7.6 percent and warned of rising risks to economic growth.

"From the monetary policy point of view, signals are very clear that policy will remain accommodative," said Sujan Hajra, chief economist at Anand Rathi Securities

He predicted the central bank would cut both interest rates and banks' reserve requirements by as much as one full percentage point by October.

With inflation showing signs of finally easing and risks to growth on the rise the RBI is widely expected to cut interest rates by the end of June, if not sooner. It has already signalled it is finished raising rates after 13 increases between March 2010 and October 2011.

Headline inflation slowed down to a two-year low of 7.47 percent in December, but that was due almost entirely to a drop in food inflation that is widely seen as unsustainable.

Also, non-food manufactured inflation at 7.7 percent in December remained way above the central bank's comfort zone. The next monetary policy review is due on March 15.

"We don't think the RBI will cut rates in March. They will wait for the federal budget that is scheduled in mid-March," said Pan, who expects a 25 basis point rate cut in April.

In his January policy review, the RBI governor flagged the inflationary risks stemming from the government's failure to contain its fiscal deficit and had said a lack of credible fiscal consolidation would constrain him from lowering rates.

He had urged the government to use the March budget to signal fiscal consolidation.

UPDATE 2-India forecasts lowest economic growth in 3 years | Reuters

 

[russellpeters]

self delete..

 

[Shaurya]

Automotive Research Association of India (ARAI) ties up with companies in South Korea and China

In a bid to expand operations, the Automotive Research Association of India(ARAI) has entered into an agreement with companies in South Korean and Chinese markets for additional technical support. Vehicle manufacturers and component producers based in these countries can avail of the expertise and knowledge from ARAI.
Though no names were revealed, ARAI will be providing services such as R&D, testing facilities, safety standards homologation and certification to comply with vehicle rules and regulations prevalent in India.
It is a well known fact that Chinese and Korean auto companies are entering the Indian auto scene in a big way and ARAI have taken it upon themselves to offer these companies information on entering into India. This will equip the companies from China and South Korea with the rules, regulations and stipulations required to cater to the Indian auto sector.
ARAI has its headquarters in Pune and have a host of facilities specially catering to tyre testing, emission testing and crash testing and the like. It is the only one of its kind besides Central Institute of Road transport to offer such facilities in the country.

Automotive Research Association of India (ARAI) ties up with companies in South Korea and China | Rush Lane

---------- Post added at 01:29 AM ---------- Previous post was at 01:27 AM ----------

India's new money drives luxury car boom Mercedes, BMW expand in a growing upper-class market

From farmers who swapped fields for cash to twentysomething CEOs who inherited the family business, hot new money is flooding India's luxury car market as roaring sports car engines announce the country's growing wealth on its roads.

growing wealth on its roads. No senior Indian executive feels complete without his sleek German-made sedan, while Italian sports cars are the new calling cards for the country's rich young things at exclusive nightclubs that screen guests at the main gate, not at the door.

"There is a rush to luxury," says Mohan Mariwala, managing director of Auto Hangar, surrounded by gleaming Mercedes-Benz sports cars in one of his four Mumbai showrooms for luxury cars.

"Farmers, tiny industrial families, the younger generation with different value systems. . You can't imagine the kind of people who invest in extremely exotic cars today."

Headline growth in Asia's third-largest economy may be stuttering, but decades of growth has spawned an upper class with global tastes and aspirations that is driving a $1 billion US luxury car market expanding at 40 per cent annually, say industry analysts and research firms.

Five years ago, Daimler AG's Mercedes-Benz was the only established luxury carmaker in India and sightings of sports cars on the dusty and poorly maintained roads were rare. Today, crowds gather along Mumbai's famous seafront to catch a glimpse of supercar parades, while a Facebook group for luxury car sightings explodes with excited chatter over a blurry photo of an Aston Mar-tin Rapide, a car that costs more than $300,600 in a country where more than 500 million people live on less than $1.25 a day.

"The new Indian luxury consumer is pursuing a lifestyle where owning exclusive items and owning them first is a clear sign of wealth and power," Andrea Baldi, Southeast Asia and Pacific sales manager for Lamborghini, told Reuters.

Lamborghini, told Reuters. Growth in overall car sales will likely be flat in the financial year that ends in March, India's auto industry association has said.

association has said. Luxury automakers, however, are rushing to set up shop.

Britain's Aston Martin, famously James Bond's car of choice, and Fiat's Italian brands Ferrari and Maserati all opened showrooms in India in 2011, joining established brands such as Volkswagen AG's Audi and BMW.

Lamborghini introduced its Aven-tador LP 700-4 in the country in November, priced at 36.9 million rupees ($693,000). It has taken orders from India for more than 20 Aventadors and buyers must wait 18 months for delivery.

months for delivery. Not long ago, a Honda Accord or Toyota Camry was considered a luxury car in India, where small, cheap cars predominate and the bestselling model is Maruti Suzuki's Alto, which starts at 232,247 rupees ($4,725).

"There is a distinctive shift happening. People are jumping segments . from a Honda Civic into a Mercedes-Benz E-Class," said Mariwala, who sells around 100 Mercedes vehicles a month from his four Mumbai show-rooms.

Harsh Punjabi, 46, who lives in Gurgaon, a booming modern suburb of Delhi, owns a Mercedes ML350 sport utility vehicle, a BMW 740 Li, and a Porsche 911 Carrera. Punjabi, who exports home furnishings to the United States, said expensive cars have become commonplace in his neighbourhood.

"If five years ago you bought a BMW or a Mercedes, people still looked at it. Today if you buy a BMW, Audi or Mercedes it's not as big a head-turner," he said.

Spending on luxury cars in India grew 36 per cent in 2009-10 to $1 billion, according to a recently released report by AT Kearney, out-stripping growth in jewelry, electronics and watches.

Demand for high-end cars goes beyond India's biggest cities.

While BMW sells 70 per cent of its cars in Delhi and Mumbai, most of the 36 new showrooms it plans over the next four years will be in smaller cities. India has around two million households with annual incomes of more than $36,000, a number set to swell to around eight to 10 million households by 2015 if the country's economic growth stays on track, ac-cording to global research firm McKinsey and Co.

BMW won India's luxury sales race in the year to March 2011, selling 7,079 vehicles compared to 6,670 for Mercedes. Both are on track to meet targeted sales of 10,000 cars this fiscal year.

Despite its fast growth, India's luxury car market lags far behind China, where Mercedes and BMW sold a combined 320,000 vehicles in the first nine months of 2011.

Taxes of up to 110 per cent levied by the government on imported luxury goods mean supercars bought in Mumbai are far more expensive than those bought in Monaco. As demand increases, manufacturers can reduce levies to 40 per cent on models assembled domestically, a tactic al-ready employed by BMW, Mercedes and India's Tata Motors, which owns Jaguar and Land Rover.

India's new money drives luxury car boom

 

[Shaurya]

Govt to create electronics dev fund of Rs 10,000 crore: Sibal

Indian Government embraces multi-pronged approach to promote Indian Electronic Systems Design and Manufacturing (ESDM) industry assured Kapil Sibal, Minister of HRD and Communication and Information Technology, Government of India at Indian Semiconductor Association (ISA) Vision Summit 2012 held in Bangalore on February 6th, 2012. The six approaches listed by Sibal comprise – one is, government plans to create electronics development fund of about Rs 10,000 crore to support R&D, innovation, IPR development, technology transfer of IT and nanoelectronics.

Two is, by establishing a semiconductor Wafer labs; on April 20th, 2011 cabinet set a committee to set up Wafer lab in India. Three is, the clearance of Preferential Market Access on February 2nd, 2012, Government has announced a procurement policy. Four is, setting up a National Electronics Mission (NEM) which strives to achieve a turnover of USD 400 billion in next 10 years. NEM would be implemented by autonomous electronics commission.

Five is, providing subsidies for modified chips and to identify various verticals of ESDM sector. Incentives would be extended for an investment made within a period of 10 years from the date of approval; this scheme would be available for three years from the date of notification. Six is, setting up an Electronics Manufacturing Cluster (EMC); it would be implemented through special purpose vehicle. EMC units ought to hold at least 51% of the stake capital of SVP and single unit should hold 25%. Financial assistance would be extended – assistance for green field would be restricted to 50% of the project cost subject to a ceiling of Rs 50 crore for every 100 acres of land; for brown field it would be restricted to 75% of the project cost subject to a ceiling of Rs 50 crore.

Referring to Aakash tablet, he said, they would be launching Aakash 2 which is a much better, faster and more efficient version of the Aakash that was launched. The current cost of Aakash is Rs 2,276 – that is for one lakh pieces. The cost would come down to Rs 1,500 once the numbers increase to one million. Sibal said that half of the cost would be subsidized by the Government of India (GOI) and the remaining Rs 750 would be funded by educational institutions; and it would be offered free for students. He also added that they are now going to diversify the production base and indigenize Aakash.

Speaking about the significance of developing ESDM industry in India he said, electronics is one of the fastest growing industry in the world, the industry is set to accelerate to 2.4 trillion by 2020 from its present growth of 1.75 trillion. ESDM industry in India needs strong attention – no country can afford to have an import bill of nearly $300B which would further increase in the coming years. Two, electronic is a metal resource that boosts other sectors which has high dependency on semi-con such as airline, automotive, etc. Three, semiconductor is at the heart of every device. India has around 120 semiconductor design companies and we develop nearly 2000 chips and more then 20,000 engineers are engaged in chip designing. Annually India is contributing $2B in the chip designing. Hence we need to leverage this opportunity to ensure the development of semiconductor manufacturing sector in India.

Kapil Sibal remarked that the industry needs a stable policy. “We need to re-position mobile as a powerful tool of empowerment. Mobile could be a proof of identity, it can enhance secure financial transactional capability and to offer multi-lingual services for communities which is peculiar to India,” he added. He reiterated that a country ought to leapfrog with the tremendous opportunities thrown open to India in a new world of technology. Country ought to avail ICT capabilities to enhance ability and competitiveness.

With Aadhar and the national e-governance plan applications, mobile will be used for re-authentication and availing large number of government services without having to visit government offices. This will not only improve the efficiency and effectiveness of public services but will also help reduce corruption in public life, he said.

He stated that government has come up with a combination of 3 interdependent and synergistic policies – telecom, IT and electronics manufacturing. These three policies together drive the national agenda for ICT and to foster health, rural, e-governance, banking services through technology.

He made a closing remark by emphasizing on electronics manufacturing policy which aims to create employment opportunities of USD 28 million by 2020, to create 200 electronics hub and to achieve a turnover of USD 55 billion in the chip design and embedded software industry. He said this domain is an ideal investment opportunity for business and entrepreneurs.

Govt to create electronics dev fund of Rs 10,000 crore: Sibal

 

[Americanpeacebomber]

self delete.

 

[davidson]

India GDP growth to slow at 6.9% for 2011

7, Feb, 2012

NEW DELHI -- India’s gross domestic product or GDP growth is expected to be lower than 7% at 6.9 per cent, according to advance estimates for the year ending March 2012.

India’s government predicted the weakest economic expansion this year since 2009, the Central Statistical Office said in a statement in New Delhi today. This is the slowest growth after 2008-09 when India registered a growth rate of 6.7 per cent.

In December, Goldman Sachs' Jim O'Neill called India the most disappointing of the BRICS countries, and warned of a risk of a balance of payments crisis if policymakers were not careful.

The rupee, Asia’s worst performer last year with a 16 percent slide against the dollar, strengthened 0.4 percent to 48.9375 per dollar as of 11:01 a.m. local time.


GDP Growth Fiscal year

(2011) = FY 12: 6.9% ( Advance Estimate )

(2010) = FY 11: 8.4%

(2009) = FY 10: 8.4%

(2008) = FY 09: 6.7%


India GDP growth to slow at 6.9% for 2011-12

India Predicts Slowest Growth Since ’09, Adding to Rate-Cut Case - Businessweek

Key political risks to watch in India - Reuters -

good luck India

 

[davidson]

Feb 8, 2012

India # Rank 15 of Emerging Markets

- (No. 1) China’s Low debt (only 16%), Low inflation, High trade Surplus

- (No. 2) Thailand scored well

- (No. 3) Indonesia

- (No. 4) Vietnam

- (No. 8) Russia

- (No. 15) India High Debt, High inflation, High trade Deficit, High fiscal deficit

- The other three so-called BRIC countries -- Brazil, Russia and India -- didn’t fare as well. Russia ranked No. 8, while India and Brazil failed to make the top 10. (among emerging Markets)

China will expand at an average pace of 9.4 percent from 2012 to 2016, the IMF forecast in September. That outpaces any other country in the ranking.

China Lone BRIC Among Top Emerging Markets With Thailand No. 2

China Lone BRIC Among Top Emerging Markets - Bloomberg

 

[Shaurya]

Feb 8, 2012

India # Rank 15 of Emerging Markets

- (No. 1) China’s Low debt (only 16%), Low inflation, High trade Surplus

- (No. 2) Thailand scored well

- (No. 3) Indonesia

- (No. 4) Vietnam

- (No. 8) Russia

- (No. 15) India High Debt, High inflation, High trade Deficit, High fiscal deficit

- The other three so-called BRIC countries -- Brazil, Russia and India -- didn’t fare as well. Russia ranked No. 8, while India and Brazil failed to make the top 10. (among emerging Markets)

China will expand at an average pace of 9.4 percent from 2012 to 2016, the IMF forecast in September. That outpaces any other country in the ranking.

China Lone BRIC Among Top Emerging Markets With Thailand No. 2

China Lone BRIC Among Top Emerging Markets - Bloomberg

We have a new troll here.... lol

---------- Post added at 07:56 PM ---------- Previous post was at 07:56 PM ----------

Analysis - Exuberant Indian markets gloss over economic reality

(Reuters) - Surging capital inflows, booming stock markets and a fast-appreciating currency suggest the India story is again shining after a dismal 2011.

Dig a little deeper, and problems afflicting Asia's third-largest economy remain largely unabated and unaddressed. Inflationary risks remain and a political logjam continues to hem in reforms, clouding the economic outlook.

"Nothing has happened on the policy front to justify this mood," said Andrew Kenningham, an economist at Capital Economics in London. "Growth prospects are not looking good by historical standards."

New Delhi on Tuesday cut the growth estimate for the current fiscal year that ends in March to 6.9 percent from a revised forecast of around 7.5 percent issued in December, sharply below the 8.4 percent growth of the last fiscal year.

Still, the benchmark stock index is up nearly 15 percent this year while the rupee has risen about 8 percent from its 2011 close, with both clocking the sharpest gains in more than a decade.

An improved global funding environment, relatively attractive valuations of Indian equities and hopes for rate cuts by the central bank have lured foreign institutions. They are net buyers of $3.2 billion (2 billion pounds) Indian equities this year after having sold $357 million last year.

"The rally at this stage may be more a reflection of foreign portfolio flows and an appreciation of the rupee," said Sanjay Sinha, a veteran fund manager who founded Citrus Advisors, an investment advisory firm.

"This in itself may be in an anticipation that the twin factors of a rate cut from April and bold economic policies may actually herald the resurgence of the economy. Therefore, data may follow but the markets may have rallied ahead of them."

Valuations at the end of 2011 were 12-13 times estimated earnings for the fiscal year that ends in March 2013, compared with a 10-year average of 15, said Rakesh Arora, managing director at Macquarie Equities Research in Mumbai.

The Reserve Bank of India (RBI) has signalled that it is finished raising interest rates after 13 increases between March 2010 and October 2011, to the relief of companies and banks. A rate cut is widely expected by the end of June, if not sooner.

The rupee's recovery has been fuelled in part by measures the central bank took to stabilize the exchange rate.

"It is a feel-good rally," said Jagannadham Thunuguntla, head of research at SMC Investments and Advisors Ltd.

Macroeconomic indicators are recently looking better.

Industrial output has recovered from a record slump and the manufacturing and services sectors continue to pick up pace. Inflation slipped below 8 percent for the first time in two years in December and is on track to fall to the central bank's 7 percent target by the end of the fiscal year.

PREMATURE

Many India-watchers warn the euphoria is premature.

Inflation is indeed down smartly, falling to a two-year low of 7.47 percent, but that is due almost entirely to a drop in food inflation that is widely seen as unsustainable.

Non-food manufactured inflation eased by just 0.2 percentage points from 7.9 percent in November to 7.7 percent in December.

All of this means that the RBI may not be in a hurry to slash interest rates.

"We don't expect the RBI to be aggressive in easing rates as inflation worries are still not completely mitigated. We expect it to be cautious in easing interest rates," said Siddhartha Sanyal, an economist at Barclays Capital in Mumbai.

Meanwhile, the policy environment in New Delhi remains muddled, with the Congress party government of Prime Minister Manmohan Singh weakened by corruption scandals and facing a tough election in Uttar Pradesh, India's most populous state.

A negative outcome for Congress next month in the election could further weaken it and exacerbate political gridlock that has already stalled reforms including a goods and services tax (GST) and foreign direct investment in multi-brand retail.

Before the global financial crisis of 2008, India's growth capacity was estimated at around 8.5 percent. Sluggish capital investment since then means India can now sustain just 7 or 7.5 percent growth without overheating, economists say.

"From the last quarter, there has been no push in terms of policies to help get investments moving on the ground," said M.S. Unnikrishnan, managing director at Thermax Ltd, which makes and installs heating and pollution control gear.

"Share market prices and the movement in the rupee are no indication of what is happening on the ground," he added.

FISCAL FISSURES

Public finances remain strained. RBI Governor Duvvuri Subbarao last month urged New Delhi to adopt greater fiscal discipline, saying a lack of credible fiscal consolidation would constrain it from lowering rates.

The global picture remains mixed. While improving prospects in the United States have driven optimism, most recently in a better-than-expected jobs report, the ongoing euro zone debt crisis weighs on sentiment and puts pressure on India's exports, and in turn its current account deficit.

Morgan Stanley wrote in a Monday note that ongoing fiscal and current account deficits will continue to pressure the rupee against the dollar over the long term.

"As the economy undergoes an extensive deleveraging process, we expect Indian equities and credits to underperform against their regional and emerging market peers during 2012," it said.

YEAR TO FORGET

Calendar 2011 was a year policymakers would rather forget.

Inflation stayed stubbornly high, prompting rate hikes that mainly served to dampen growth. As the economy lost steam, public finances weakened. New Delhi is on track to fall short of its aim to trim the fiscal deficit to 4.6 percent of GDP.

Political gridlock after a wave of scandals means investment bottlenecks persist, dampening investor sentiment and eroding asset quality in the infrastructure sector as projects stall.

Shares plunged, ending the year with their first annual fall in three years. A record sell-off in equity markets hammered the Indian rupee, which lost nearly 16 percent against the U.S. dollar, rendering it the worst performer in Asia.

"Foreign inflows are coming in on the fact that the interest rate cycle has peaked in India and economic situation has reached a trough," said Sinha of Citrus Advisors.

"To sustain them from here on requires action on policy reforms. If hopes of economic reforms don't materialize, there are good chances of these inflows drying up," he said.

Analysis - Exuberant Indian markets gloss over economic reality | Reuters

 

[ironwarrier]

Indo-US trade set to cross $100 billion: Nancy Powell - The Economic Times

Indo-US trade set to cross $100 billion: Nancy Powell


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WASHINGTON: Recognising India's emergence as an economic powerhouse, US Ambassador-designate Nancy Powell has said the bilateral goods and services trade is expected to cross a record USD 100 billion this year, an "astounding quadrupling" since 2000.

"Today I see an India that has revolutionized itself onto the global stage. India is becoming an economic powerhouse, having averaged seven per cent annual economic growth over the last decade, lifting tens of millions of its citizens out of poverty," 64-year-old Powell said at her confirmation hearing before the Senate Foreign Relations Committee yesterday.

She said bolstering bilateral trade and investment and increase in US exports to India would be among her top priorities. "If confirmed, I look forward to participating in and advancing the US-India Strategic Dialogue, as well as the substantive exchanges on more than 20 distinct policy areas, including education, energy, agriculture, and development," Powell said.

She said the US export to India is well on its mark to achieve the goal of President Barack Obama to double it in five years. India, with its population of 1.2 billion and a large and balanced consumer economy, represents a huge, fast growing market for US manufactured goods, and American exports are growing at nearly over 17 per cent a year.

"At this rate, exports from the United States to India are expected to nearly double in the five years from 2009 to 2014," Powell said.

"We have made unprecedented progress in expanding our economic relations with India. Our bilateral goods and services trade will top USD 100 billion in 2012. This represents an astounding quadrupling of trade since 2000, moving India up from our 25th largest trading partner to our 12th," Powell said.

"I look forward to working with a wide inter-agency team and with our Indian counterparts to reduce barriers, including through negotiation of a Bilateral Investment Treaty, and to expand the areas where we do business," she said.

On the Indo-US civil nuclear deal, she said: "I am eager to support the efforts to ensure full implementation of the Civil Nuclear Cooperation Agreement, including ensuring a level-playing field for American companies in the commercial applications of nuclear energy."

 

[Shaurya]

Daikin India to begin room AC production in June

AHMEDABAD, FEB. 8:
Daikin Air-conditioning India Pvt Ltd, a 100 per cent subsidiary of the $14-billion Daikin Industries Ltd, will begin commercial production of residential air-conditioners at its integrated air-conditioner manufacturing plant at Neemrana in Rajasthan in June this year.

Until now, these air-conditioners were being imported from the company's three plants in Thailand, Mr Kanwaljeet Jawa, Managing Director, said here on Wednesday.

Daikin India set up its Neemrana plant in 2009 with an initial investment of Rs 210 crore and invested another Rs 250 crore last year on expansion of its India operations. Mr Jawa indicated that the company could set up new plants in other States as well, but declined to elaborate at this stage.

Unlike its competitors, Daikin does not make window air-conditioners and focuses on manufacturing split ACs from 0.75 tonne capacity, priced at Rs 22,500 apiece, to 2,700-tonne chillers which come at Rs 27,000 per tonne.

At present, Daikin India, which reported a 300 per cent growth last year, has a 12 per cent market share in room ACs, over 50 per cent in variable refrigerant volumes (VRVs) and 15 per cent in chillers, which it expects to grow substantially in the coming summer with the launch of a new range of energy-efficient air-conditioning solutions for residential, light commercial and commercial segments.

BEEFING UP DISTRIBUTION

In an aggressive marketing drive, the company is doubling its distribution base with a 2,000-strong dealer network and is setting up 100 Daikin exclusive Solutions Plazas across India over the next 12 months with a focus on Tier-II and III as growth hotspots, Mr Jawa said.

While the air-conditioning industry witnessed dull growth in 2011, Daikin grew multi-fold despite the higher prices of its products since they were found to be energy-efficient, he said. India's air-conditioning market is expected to grow at a CAGR of 20 per cent over the next five years, he added.

In the commercial segment, Daikin's VRV brand is expected to garner a 65 per cent market share in India over the next three years, compared to 50 per cent last year. The company also expects to attain a 15 per cent share in chillers by leveraging local manufacturing at Neemrana.

Business Line : Industry & Economy / Marketing : Daikin India to begin room AC production in June

 

[Shaurya]

An interview on solar power in India

Manufacturing cost

Aninda Moitra, MD of Applied Materials, world's largest maker of equipment for semiconductor manufacturing, tells Forbes India that incremental changes in technology can counter the volatility in the solar industry
Aninda Moitra
Age: 38 years
Designation: President & managing director, Applied Materials India; Vice President, Applied Materials
Career: Joined Applied Materials after college and has been with the company for the past 16 years in various positions
Education: MBA, Columbia Business School, New York; Bachelor of Science, chemical engineering, University of Minnesota
Interests: Loves the outdoors and sports; cricket is a big hobby, keeps abreast of tournaments even while in the US. Plays tennis, badminton and golf as often as he can


Q. The solar sector has become very unpredictable; you had to shut down the thin film line. How do you see the impact on manufacturing in India?
We stopped the thin film line, but we are still the largest equipment maker for crystalline [solar] cells. If you look at what happened during Batch II closure [of projects in the National Solar Mission], no Indian manufacturer was there; it was driven by the cost of capital. This is the reality. In solar manufacturing, you can drive cost down either through scale or by using financial instruments like you know [what China uses]. India, for valid reasons, cannot pull these two levers easily. I think at the end of it, the only way to bring down the cost is technology differentiation.

Q. Is that why you have invested over $12 million in IIT Bombay and are now involved with the new Pan-IIT solar R&D programme where you intend to donate more equipment?
In the short-term you have to pull one of the two levers or else it's going to be very painful. The question is, do you withdraw or do you retrench? I think retrenching is long-term R&D and there are enough Indian companies under big umbrellas to handle this. If you withdraw, then you are always in this 'do-cycle'. At the end of this, you have to think, who is taking away this 'Indian consumer power benefit'?

Q. Can R&D solve this problem any time soon?
The installed base of all the large companies will dictate solar technology for now. While disruptive technology is the long-term answer, I think there is incremental pathway available that can help us move the efficiency curve [of solar cells] -from 17 percent to 23-25 percent-as well as the cost curve. New materials can take us there and we can use the same equipment.

Q. A fabrication facility has eluded India so far. Now that the Department of IT has floated a tender, do you think India will finally have one?
The process is going on full steam and a foundry is very likely in the near future. Both the need and the end market in India today warrant that some centres of high value manufacturing, such as in aerospace and defence, take off. If you start with national security, most of the semiconductors come from outside. That's a substantial risk. On the other hand, India today has actual customer power; the scale can drive both analog and digital chips.

Q. If the foundry materialises, do you think you'd have the last laugh, after all you've been priming the ecosystem for a while?
(Laughs) That's a good way to end this conversation.

 

[Shaurya]

GIFT SEZ gets its first occupant as Monarch Innovation gets approval to set up unit

AHMEDABAD: An information technology (IT) company Monarch Innovation Private Limited will become the first entrant into the the special economic zone in the upcoming financial hub Gujarat International Finance Tec (GIFT) City.

The Unit Approval Committee of the SEZ recently gave to Monarch Innovation engaged in engineering and design services, making it the first occupant in GIFT which has received an approval as an International Financial Services Centre two months ago IFSC is a liberalised zone for conducting international transactions in foreign currency.

It will enable foreign and Indian banks, non-banking financial institutions, stock exchanges and commodity exchanges to conduct transactions in foreign currencies from India.

A part of GIFT has already been notified as a SEZ by the Board of Approvals (BoA) of SEZ under the central Commerce Ministry.

"The committee gave approval to Monarch to set up its centre in the SEZ of Gujarat International Finance Tec (GIFT) City," committee head and zonal development commissioner Pravirkumar told ET.

Monarch Innovation Private Limited (MIPL) is promoted by Pritesh Patel, an alumni of UK-based Hertfordshire and Harsh Joshi, an alumini of Ahmedabad-based L D College of Engineering. The company will provide 3D Computer Aided Design (CAD) modeling, CAD conversion, tools and mold design, product design, analysis and optimization, Rapid Prototyping, Industrial design and consultancy amongst others.

MIPL has projected net foreign earnings of Rs 35 crore in the fifth year of its operation and will employ over 100 people.

Being developed over an area of 886 acre, the Rs 72,740-crore GIFT city project will house a financial services-based multi-services SEZ, a centre for domestic financial sector, corporate offices, regional offices of companies, a trade centre, housing colonies, social infrastructure and other associated amenities. The project is expected to create 10 lakh new jobs in 10 years. The Vibrant Gujarat Global Summit, 2011 saw investment commitments worth Rs 11,700 crore in the GIFT project.

Financial Technologies Limited, Kotak Bank, ICICI Bank, Banks from Singapore, State Bank of India, Central Bank of India, Union Bank and Vijaya Bank have already shown interest to set up their offshore centres in GIFT. Stock exchanges of London, Tokyo and Singapore are interested to set up offices at one premises and GIFT is the ideal option for them, believe GIFT officials.

Gujarat has 58 SEZ of which 15 are functional, 17 are notified but non-functional, 13 have received formal approval and 13 have received in-principle approval.

GIFT SEZ gets its first occupant as Monarch Innovation gets approval to set up unit - The Economic Times

 

[Shaurya]

India: Renewable Energy Investment Outpaces Rest of the World

Investment in India's renewable energy is out-pacing the rest of the world, thanks to the improving cost-competitiveness
of wind and solar.

Renewable energy investments reached $10.3 billion
in 2011, 52% higher than the $6.8 billion invested in 2010, the highest growth of any significant economy in the world.

India now accounts for 4% of global investment in clean energy.

Policy measures like the India's National Solar Mission and declining prices for wind and solar have made this a record year.

India's National Solar Mission has set a target of producing 10% of its energy - 20,000 MW - using solar by 2022, equivalent to 18 nuclear reactors.

India will exceed its Five Year Plan (2007-2012) target, installing 14.2 gigawatts (GW) of renewables compared to its target of 12.4 GW, according to Bloomberg New Energy Finance.

Funding for solar projects has grown seven-fold since 2010, from $0.6 billion in 2010 to $4.2 billion in 2011, almost reaching that for wind at $4.6 billion.

India added 277 MW of solar in 2011, up from 18 MW in 2010, and will add another 500-750 MW this year.

India ranks third in the world for wind capacity after China and the US. It added a record 2,827 MW of wind capacity in 2011, up from 2,140 MW in 2010. An estimated 2,500 - 3,200 MW will be added in 2012, according to Bloomberg New Energy Finance.

Most of the investments are for utility-scale projects at $9.5 billion, but there was also $425 million invested in companies through venture capital and private equity in 2011, more than four times the amount in 2010.

"India's record performance in 2011, and the momentum it is carrying into 2012, is one of the bright spots in the clean energy firmament. With support mechanisms falling away in the US, the ongoing financial crisis in Europe, and China already going flat out, it is gratifying to see some of the world's other major potential markets coming alive." says Michael Liebreich, CEO of Bloomberg New Energy Finance.

"The surge in installation of renewable energy shows
that it is becoming cost competitive and scalable. To carry this
momentum forward, federal and state governments will have to
ensure four things. First, that transmission lines are available for projects; second, that the grid can handle an increased flow of renewable energy; third, that renewable purchase obligations are enforced; and, fourth, that project developers are paid on time for the power they produce," says Ashish Sethia, head of India research at Bloomberg New Energy Finance.

India: Renewable Energy Investment Outpaces Rest of the World

 

[Anish1]

India's GDP = $1883 bn with a growth rate of 7% = $132 bn added to economy annualy
Pakistan's GDP = $170 bn with a growth rate of 2% = $3.4bn added to economy annualy

Thus India adds 78% of Pakistan to to it's economy annualy.


Indian govt. budget = $300.2bn
Pakistans govt. budget = $28 bn

Indian military spending = $40bn which is 13.3% of the budget.
Pakistan military spending = $6.5bn which is 24% of budget.

Economy of Mumbai = $210 bn
Thus Mumbai's GDP is 124% the size of Pakistan's GDP.