india economic news consulate general of india april 2016 ... · imf retains india's growth...

India Economic News Consulate General of IndiaApril 2016 Munich

EU, India agree to strengthen Strategic Partnership:

India and the 28-member European Union concluded their 13th summit in Brussels by underlining their commitment to strengthen their strategic and economic partnership. The EU was represented at the summit by Donald Tusk, President of the European Council, and Jean-Claude Juncker, President of the European Commission. The Republic of India was represented by Prime Minister Narendra Modi. The leaders endorsed the "EU-India Agenda for Action-2020" setting out a concrete road-map for the EU-India Strategic Partnership for the next five years. The leaders welcomed that both sides have re-engaged in discussions with a

view to considering how to further the EU-India Broad-based Trade and Investment Agreement (BTIA) negotiations. The leaders welcomed the European Investment Bank's (EIB) commitment to supporting long-term investment in infrastructure crucial for environmentally sustainable social and economic development in India. The leaders also welcomed the announcement by the EIB ofthe upcoming establishment, in New Delhi, of the Bank's regional representation for South Asia.

In 2015-16, record 6,029 km of highways constructed:

The construction of highways touched an all-time high of 6,029 km during 2015-16. Prior

Consulate General of India, Widenmayer Strasse 15,80538 Munich, Germany. Web: www.cgimunich.com

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to this, a maximum of 5,732 km of national highway was constructed during 2012-13. According to officials, while NHAI reported construction of nearly 2,000 km, the rest came from works done by the Ministry of Road Transport through its agencies

IMF retains India's growth forecast, cuts global projection:

The International Monetary Fund (IMF) has retained India's growth projections for 2016-17 at 7.5 per cent, while it cut global economic expansion by two percentage points to 3.2 per cent for 2016 and one percentage point to 3.5 per cent in 2017. According to IMF, India’s growth will continue to be driven by private consumption “which has benefited from lower energy prices and higher real incomes”. In its World Economic Outlook, IMF, however, cautioned India that sustaining growth would require labour reforms as well as reducing infrastructure bottlenecks. In 2016-17, India’s growth would be higher than China’s by 1.3 percentage points. The country has

overtaken China since 2014-15, becoming the fastest growing large economy in the world. For 2015-16, India’s growth was pegged at 7.5 per cent, a shade lower than official estimate of 7.6 per cent. The World Economic Outlook report noted that in India, monetary conditions remain consistent with achieving the inflation target of five per cent in the first half of 2017, although an unfavourable monsoon and an expected public-sector wage increase pose upside risks.

Electronics manufacturing gets a Rs 6,000-crore push:

As the country vies for self-reliance in electronic goods production, the Department of Electronics and Information Technology (DeitY) has so far approved proposals amounting to around Rs 6,155 crore (approx. Euro 821 million) under the Modified Special Incentive Package Scheme (M-SIPS). The scheme looks at providing financial incentives to private companies for setting up electronics manufacturing units. The government has given final as well as in-

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principle approval to 28 electronics manufacturing clusters (EMCs) and common facility centres (CFCs) across the country. The government in India, through various initiatives, is looking at reducing the dependence on electronic imports by promoting domestic manufacturing as the demand for electronics hardware in India is projected to grow to $400 billion by 2020 as against estimated domestic production of $104 billion.

Private defence firms keen on Make in India:

Between January 2001 and February 2016, the Commerce Ministry has granted 333 industrial licences to private firms for defence manufacturing, according to data on the Department of Industrial Policy and Promotion (DIPP) website. They include both the familiar names, established one as well as new entrants. In recent times, there has been a rush to be a part of the defence sector that can partly be attributed to Prime Minister Narendra Modi’s emphasis on defence manufacturing as part of his Make in India campaign.

India is the world’s largest importer of defence equipment and spends around $24 billion a year, according to Stockholm International Peace Research Institute. And this means import substitution and indigenization offering domestic private firms a significant opportunity. According to experts, the serious players in the field have been investing for the past decade or more and have built a portfolio in electronics, land systems, aerospace products and short-range missiles. Most of these are either in talks or have already concluded framework arrangements with foreign original equipment manufacturers (OEMs), therefore to a large extent, the preparatory work is completed or in progress. As the government aims to revive the private sector’s role in defence production, the private players now have the opportunity to pick up a 25% share of defence production.

FDI to reduce India's current account deficit: Moody's:

Credit rating agency Moody's Investors Service said India's



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rising foreign direct investment (FDI) inflows reduces the Current Account Deficit (CAD) and also the external financing needs. In a statement Moody's said it does not expect widening of India's CAD based on its assumptions that commodity prices will remain low in 2016 and 2017. According to Moody's, FDI inflows are expected to climb due to central government's measures like liberalization of foreign investment limits and 'Make in India' initiative. According to Moody's, a lower energy import bill and policy measures to contain gold imports are contributing to keeping the trade deficit at moderate levels. However, the prospect of subdued global economic activity - in particular in the Gulf States where more than half of remittances to India originate - may lead to a significant and prolonged weakening of remittance inflows. The rapid rise in FDI inflows mitigates the risks related to a possible widening of the current account deficit from weaker remittances by diminishing India's external financing needs from other inflows in the form of credit and equity

inflows. Net FDI inflows into India hit an all-time high in January 2016, at $3 billion on a 12-month moving average basis. India's current account deficit is now more than covered by its FDI inflows. The rise in FDI points to stronger investor interest in India on the back of robust economic growth

India's electric vehicle sales grow 37.5% to 22,000 units:

As per the data of ‘Society of Manufacturers of Electric Vehicles (SMEV)’, sales of electric vehicles in India grew by 37.5% to 22,000 units in the year ended 31 March 2016. Of these, only 2,000 units were four-wheelers. SMEV added that the industry sold 16,000 units in 2014-15. At these levels, India remains miles away from its objective of selling 6 million electric vehicles by 2020, a vision stated by the government through the National Electric Mobility Mission Plan (NEMMP) 2020 and FAME (Faster Adoption and Manufacturing of Electric Vehicles). However, according its office bears, SMEV took solace from increased awareness among commuters



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about electric vehicles and the fact that people are seeing a good value proposition in EVs.

India ranked 6th in top 10 largest manufacturers list: UN report:

A report of United Nations Industrial Development Organization (UNIDO) has ranked India sixth among the world’s 10 largest manufacturing countries, up by three positions. India previously held the 9th rank. The Yearbook, published by UNIDO, found that in India, the Manufacturing Value Added (MVA) grew by 7.6% in 2015 compared to the previous year. It also said that the quarterly index of industrial production (IIP) shows 1% growth of manufacturing output in the fourth quarter of 2015 compared to the same period of the previous year. The report also said the global growth rate of manufacturing production has slowed to 2.8% in 2015. China tops the list of 10-top industrial producers followed by the US, Japan, Germany and Korea.

Indian IT industry to grow at 12-14% in 2016-17: NASSCOM:

Software industry body, National Association of Software and Services Companies (NASSCOM) expects the country’s information technology (IT) industry to grow at 12-14% during 2016-17 even as a stormy debate on job outsourcing rages on in the run-up to presidential elections in the US, the biggest market for the $108 billion industry. According to Mr. C.P. Gurnani, Chairman of NASSCOM, this projection of growth of 12 to 14% is based on its study and collective inputs from the members. Mr. Gurnani added that all their businesses are showing a fair amount of growth referring to traditional outsourcing firms, product companies and some Internet-based start-ups.

Modi launches Stand-Up India, says tribals can perform as well as others:

To boost entrepreneurship among the Scheduled Castes, Scheduled Tribes and women by facilitating loans, Prime Minister Narendra Modi



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launched the Stand Up India initiative. Launching the scheme, PM Modi announced that the scheme will convert "job-seekers into job creators" besides changing their lives. He said that Stand Up India will help in creating 2.5 lakh entrepreneurs as every bank branch will provide two such loans without collateral for setting up a new enterprise. Loans under the Stand Up India programme will range from Rs 1 lakh (approx. Euro 1300) to Rs 1 crore (approx. Euro 130000), and will be given for greenfield projects in the non-farm sector. A re-finance window via Small Industries Development Bank of India (SIDBI), with an initial amount of Rs 10,000 crore (approx. Euro 130 million), will be available under the scheme, which is expected to benefit 250,000 borrowers.

Launch of Indian subsidiary of Spielwarenmess eG:

Spielwarenmesse eG (Germany) had launched Kids India trade fair for toys and games in Mumbai in 2013. The fourth edition of this trade fair is scheduled to take place 15 to 17 September 2016 in

Mumbai. With a view to consolidate its position in one of the world’s largest growth markets, Spielwarenmesse eG has opened a subsidiary, Spielwarenmesse India Pvt. Ltd., headquartered in New Delhi, India with effect from 1st April 2016. The main objectives of the new, wholly-owned subsidiary include representing Spielwarenmesse eG and staging of Kids India

Asus planning to make India its home market for smartphones:

Taiwan's Asus, the world's fifth largest personal computer maker, plans to make India its home market for smartphones, and is stitching together aggressive growth plans which involves doubling local production and spending on marketing in an effort to be a top five player. Asus, still struggling to establish a presence in an intensely competitive market, plans to double local production to 600,000 smartphones this year, made by contract manufacturer Foxconn in Andhra Pradesh, while more smartphone launches in the Rs 6,000 and above Rs 20,000 price brackets



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will follow. The company that sells smartphones, tablets, laptops and personal computers, has recently launched its gaming laptops and desktops. The company claimed to have 2.3% market share.

Ericsson, Nokia, Huawei and Cisco are betting big on India's 'smart cities' project:

Global majors such as Ericsson, Nokia, Huawei and Cisco are betting big on India's 'Smart Cities' project, which is estimated to be an up to $50 billion (Rs 340,000 crore) business opportunity over five years. Players like Ericsson and Huawei have started working on some of the projects in the country, while Nokia could soon bid for some projects. Cisco, on the other hand, is involved in more than 25 cities, including the government's 20 official smart cities shortlist. The government has defined a smart city in the Indian context as one that provides a decent quality of life to its citizens, a clean and sustainable environment, and supports the application of smart solutions. It has shortlisted 20 cities, including

Pune, Jaipur, Surat, Kochi, Ahmedabad, New Delhi, Chennai, Visakhapatnam, Ludhiana and Bhopal, which will be developed as smart cities. The smart city market opportunity in India will be $45-50 billion over the next five years, according to a report by Sustainability Outlook. The electronic equipment business, just for the first phase, will be a $220-250 million opportunity for these vendors. For companies like Cisco, which are largely looking at IT solutions, the opportunity is pegged at around $25 million per city, according to industry estimates.

India to become US$10 trillion economy by 2032: NITI Aayog CEO:

According to Mr. Amitabh Kant, Niti Aayog CEO Amitabh Kant gave a 2032 date to India becoming a $10-trillion economy by 2032. According to Mr. Kant, the country needs to work towards a 10% growth rate year-on a year against its projected growth rate of 7.4% to achieve a $10 trillion economy by 2032. As per Mr. Kant, aim should be to create



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175 million jobs and achieving zero percent of Below Poverty Line population by 2032. The new plan flows out of a Group of Secretaries report that talked of achieving 10% growth "year-on-year in the next five years" by aiming at 10 'Champion States' growing at 12% and more, 4% agricultural growth rate, 10-12% growth in manufacturing and services, world-class infrastructure and the advancements in technology and innovation. The immediate targets specified for 2019 are India moving up to No. 1 Start-up destination, India's rank in Ease of Doing Business being in Top 30 and 60% digital penetration through JAM Platform and e-payment mobile applications

for government programmes. Target for manufacturing contribution rising to 25% of GDP is fixed for 2022.

***DISCLAIMER

This newsletter is a compilation of news articlesfrom various business e-newspapers and in no

way is an endorsement or reflection ofviews of Consulate General of India, Munich.

For queries contact:

Mr. Asheesh Gupta, Consul (E & C), Consulate General of India, Widenmayer Strasse 15, 80538 Munich, Germany. Email: [email protected] , Web: www.cgimunich.com


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india economic news consulate general of india april 2016 ... · imf retains india's growth...

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