Page 1
November 2011
1 Recent Trends in Indian Economy Page 1-3
• Economic Growth
• Industrial Production
• Agriculture
• Foreign Trade
• Foreign Exchange Reserves
2 Lead Stories of the Month Page 4-49
• PM hopes G20 will help put global economy on track
• 'India's $500 bn export target acheivable'
• India to be 5th largest economy: BCG
• 'India tops G20 in entrepreneurial culture'
• Exports rise 11% at $20 bn in Oct
• Employment grew by 2.15 lakh in April-June
• Exports from SEZs up 26 pc in April-September
• India provides ideal opportunity for investment: Participants at chartered
accountants conference
• India's economy to grow 8.2 pc this fiscal: Meira Kumar
• India no. 2 in 'most-confident' list
• India received $56 billion in remittances
• FIIs allowed to invest in debt instruments of non-banking finance firms
• RBI eases share transfer rules under FDI
• FDI outflows in October at USD 2.06 bn
• Lock-in norms for FDI in real estate may be relaxed
• US looking for more Indian FDI
• Govt OK's PFRDA Bill change, allows FDI
• FII cap in govt, corp bonds hiked by $5 bn
November 2011
Issue No. 379
Page 2
November 2011
Issue No. 379
• FDI inflows up 41 pc at $22.5 bn during Jan-Sep
• Finance Ministry clears 18 FDI proposals worth Rs 2,126 crore
• FIIs want more shares in PSU stake sale
• Draft Cabinet note for 26% FDI in airlines
• India-Canada aims to strengthen ties in energy sector
• India signs tax info treaty with Jersey
• India announces USD 100 mn credit facility to Maldives
• India, Korea to begin negotiations to tweak comprehensive economic pact
• India, Pakistan look to implement trade deal
• Trade pact with South Africa Customs Union by next year
• India, EU committed to trade pact by early next year
• India-China trade can touch $100 bn due to iron ore trade & mining'
• Indian Ocean Rim Association for Regional Cooperation to boost trade
• India, Nepal sign revised DTAA; to share banking, tax info
• Indo-Malaysia trade target of $15bn to be met by 2015: Najib Razak
• India Inc's share of exports to overall sales is rising, says FICCI
• Govt working to boost exports
• SMEs to contribute 22pc to GDP by 2020, says government official
• TRAI proposes easier M&A rules
• 'India's mobile phone demand seen at 350 mn'
• India eyes 1 pc global tourists, 25 mn new jobs in next 5 years
• Jute goods export may touch Rs 1,500 cr
• India's coffee exports up 42% : ICO
• India to continue dominating KPO sector
• Golden time for India to enter sugar export mkt: Sharad Pawar
• Dry ports to boost India's trade
• Gold zooms to all-time high of Rs 29,000+
• India PC market grew 13% in 3rd quarter
• India's Internet users top 100 m in Sept
• Scope for greater private role in higher education: E&Y
• Rubber production increases 8.4% in Oct
• India a top priority market: McCormick
• Rs 500 cr more to be spent on innovation in farm, allied sectors
• 78% of SMEs in packaging industry to expand
Page 3
November 2011
Issue No. 379
• Forging industry to see over 20% growth a year
• Indian dairy industry seen at Rs 5 lakh cr
• Indian food market to treble to $900-bn by 2020: Report
• Public sector spending on healthcare to double in 12th Plan
• Spices exports up 29% in value
• Commercial aviation to grow by 9%
• 'Business intelligence mkt to grow 15.6%'
• Foodgrain productivity up 8 pc at 1,921 kg/hectare in 2010-11
• Soon, domain names in all 22 Indian languages
• 'Power sector has potential to create 6 lakh jobs in 2012-17'
• India continues to be attractive for foreign investors: E&Y report
3 Foreign Trade Statistics Page 50
Page 4
November 2011 1
Recent Trends in Indian EconomyRecent Trends in Indian EconomyRecent Trends in Indian EconomyRecent Trends in Indian Economy
Economic Growth
As per Central Statistics Office (CSO) data for
second quarter of 2011-12, the Quarterly GDP
for Q2 of 2011-12 showed a growth rate of
6.9 per cent over the corresponding quarter
of previous year. The negative growth in
mining and quarrying sector and steep fall in
the growth of manufacturing sector attributed
to the decrease in the growth of GDP in
second quarter of 2011-12.
The economic activities registering a
significant growth in Q2 of 2011-12 over Q2 of
2010-11 are, electricity, gas and water supply
at 9.8 per cent, trade, hotels, transport and
communication at 9.9 per cent and financing,
insurance, real estate and business services at
10.5 per cent.The projected growth rates in
other economic activities in this quarter are
3.2 per cent in agriculture, forestry & fishing,
2.7 per cent in manufacturing and 4.3 per cent
in construction and 6.6 per cent in
community, social and personal services.The
growth of mining and quarrying sector
declined to (-) 2.9 per cent during this period.
Industrial Production
The IIP growth during October 2011 was -5.1
per cent as compared to 11.3 per cent growth
during the corresponding period of previous
year.
In mining, manufacturing and electricity
sectors, the growth rates in October 2011
were (-) 7.2 per cent, -6.0 per cent and 5.6 per
cent respectively.Cumulative growth in these
sectors were recorded at -2.2 per cent, 3.7 per
cent and 8.9 per cent respectively.
In October 2011, under use-based category,
the growth rate in basic goods was (-) 0.1 per
cent, capital goods (-) 25.5 per cent,
intermediate goods (-) 4.7 per cent, consumer
goods (-) 0.8 per cent, consumer durables (-)
0.3 per cent and consumer non-durables (-)
1.3 per cent. .Cumulative growth in these
sectors stood at 5.8 per cent for basic goods ,
(-) 0.3 per cent for capital goods , 0.6 per cent
for intermediate goods.For consumer
goods,consumer durables and consumer non-
durables the growth rates are 3.7 per cent,
4.5 per cent and 2.9 per cent respectively.
The Index of Eight core industries having a
combined weight of 37.90 per cent in the
Index of Industrial Production (IIP) stood at
140.54 in October 2011 with a growth rate of
0.1 per cent compared to its growth at 7.2 per
cent in October 2010. During April-October
2011-12, the cumulative growth rate of the
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November 2011 2
core industries was 4.3 per cent as against
their growth at 5.9 per cent during the
corresponding period in 2010-11.
During the month of October 2011, the
growth in crude oil was 4.4 per cent,refinery
products was 3.6 per cent,fertilizers was 0.2
per cent, steel was 8.7 percent,cement 2.8
and electricity was 8.6 per cent, The coal and
natural gas industries registered a negative
growth of (-) 5.5 per cent and (-) 8.3 per cent
respectively.
Agriculture
Rainfall: The rainfall situation in India is
categorized into four seasons: winter season
(January-February); pre monsoon (March-
May); south west monsoon (June-September)
and post monsoon (October-December).
South west monsoon accounts for more than
75 per cent of annual rainfall.
The cumulative rainfall received for the
country as a whole, during the post monsoon
season (October–December), has been 49 per
cent below the normal during September
2011 (as on 9th September 2011).
Production of food grains: As per the first
advance estimates released by Ministry of
Agriculture (as on 13th October 2011),
production of food grains (kharif only) during
2011-12 is estimated at 123.95 million tonnes
compared to 120.20 million tonnes in 2010-
11.
Procurement: Procurement of rice as on 1st
September, 2011 (Kharif Marketing Season
2010-11) at 33.29 million tonnes represents
an increase of 8.36 per cent compared to the
corresponding date last year. Wheat
procurement during Rabi Marketing Season
2011-12 is 28.14 million tonnes as compared
to 22.46 million tonnes during the
corresponding period last year.
Projection: According to the first advance
estimates of production of foodgrains,
oilseeds and other commercial crops for 2011-
12 released by the Department of Agriculture
and Cooperation on 16.9.2011, the
production of rice and oilseeds is expected
togrow by 8.0% and 0.2% respectively
whereas the production of coarse cereals and
pulses is expected to decline by (-) 6.2% and (-
) 9.7% respectively, during the Kharif season
of 2011-12 as compared to the production of
these crops in the Kharif season of 2010-11.
Apart from production of kharif crops, the
growth in ‘agriculture, forestry & fishing’
estimates of GDP in Q2 are based on the
anticipated production of fruits and
vegetables, other crops, livestock
products,forestry and fisheries, which show
growth in the range of 3-4%.
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November 2011 3
Foreign Trade
India’s exports during October, 2011
increased by 10.82 per cent higher in Dollar
terms. Cumulative value of exports for the
period April- October 2011-12 rose by 45.96
per cent in Dollar terms.Whereas, India’s
imports during October, 2011 registered a
growth of 21.72 per cent in Dollar
terms.Cumulative value of imports for the
period April- October, 2011-12 increased by
30.96 per cent in Dollar terms.
Oil imports during October, 2011 increased by
20.73 per cent. Oil imports during April-
October, 2011-12 registered 40.82 per cent
growth.While,non-oil imports during October,
2011 grew 22.07 per cent higher.Non-oil
imports during April - October, 2011-12
increased by 27.15 per cent.
Foreign Exchange Reserves
Foreign exchange reserves are an essential
element in the analysis of an economy's
external position. India's foreign exchange
reserves comprise foreign currency assets
(FCAs), gold, special drawing right (SDRs) and
reserve tranche position (RTP) in the
International Monetary Fund (IMF). Foreign
exchange reserves are accumulated when
there is absorption of the excess foreign
exchange flows by the RBI through
intervention in the foreign exchange market,
aid receipts, interest receipts, and funding
from institutions such as the International
Bank for Reconstruction and Development
(IBRD), Asian Development Bank (ADB) and
International Development Association (IDA).
The twin objectives of safety and liquidity are
the guiding principles of foreign exchange
reserves management in India, with return
optimization being embedded strategy within
this framework.
During the year 2010-11, foreign exchange
reserves stood at US$ 304.82 billion as
compared to US$ 279.06 billion in the year
2009-10. In the current fiscal 2011-12, forex
reserves have shown an increasing trend as
compared to same period over last year. The
reserves increased to US$ 316.21 billion in
October 2011 as compared to US$ 297.96
billion in October 2010.
Sources: Ministry of Finance, Ministry of
Commerce and Industry, Department of
Industrial Policy and Promotion, Reserve Bank
of India
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November 2011 4
Lead Stories of the MonthLead Stories of the MonthLead Stories of the MonthLead Stories of the Month
PM hopes G20 will help put global
economy on track
Prime Minister Manmohan Singh expected
the summit of world's 20 leading economies
(G20) to signal a "strong and coordinated
approach" to put the global economy back on
track, while addressing medium term
structural issues.
Singh also underscored the need for swiftly
taking the difficult decisions to address the
economic challenges in Europe and elsewhere
against the backdrop of the sovereign debt
crisis in Eurozone.
"It is important for the Cannes Summit to
signal a strong and coordinated approach to
put the global economy back on track, while
addressing medium term structural issues,"
he said in a departure statement before
leaving for the two-day Cannes Summit in
French Riviera.
The Prime Minister said much more needs to
be done to combat the debt crisis despite
measure of confidence being restored in the
market after the twin summits of the
European Union and Eurozone a few days ago.
Noting that the Eurozone is a historic project,
he said, "India would like the Eurozone to
prosper, because in Europe's prosperity lies
our own prosperity".
Developing economies such as India need a
conducive global economic environment to
address the vast challenges they face, he said.
"In an increasingly interdependent world, we
have to be wary of contagion effects and the
import of inflationary pressures in our
economy. We need to ensure that developing
countries have access to requisite funds
through multilateral development banks and
invest surpluses to meet their infrastructure
and other priority needs," Singh said.
The issue of global governance will also come
up for discussion during the G20 meet.
"This is an issue of importance to India, and
we will work with others to develop effective
and representative global governance
mechanisms and carry forward the process of
reform of the international monetary and
financial system," he said.
'India's $500 bn export target
acheivable'
India will achieve its USD 500 billion export
target for 2014 on account of increasing
demand in new markets like Latin America
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November 2011 5
and Africa, a study released today said.
Export trends shows India's dependency on
the US market has reduced by great margin
and in 2011, the UAE emerged as the
country's top export destination, PHD
Chamber Chief Economist S P Sharma said,
adding that China and Singapore have
emerged among its top five export
destinations.
"Due to various government policies and
benefits given under the foreign trade policy,
there has been a diversification in the export
destinations of the country.
There had been big change in export trends
over the last 10 years," he said.
He said India's engagement with regions like
ASEAN has reduced dependency on
developed economies.
The US and Europe, which account for over 40
per cent of India's exports, now contribute
less then 30 per cent, he said.
India to be 5th largest economy: BCG
India is all poised to see huge growth
opportunities and become the 5th largest
economy (nominal GDP) globally at $4.4
trillion by 2020 (from 9th currently), according
to a report released by a Boston Consulting
Group, the knowledge partner of the Indo-
Japan Summit 2011.
Betting high on the Indian growth prospects,
the report says that the subcontinent’s
consumption basket which is one third of
Japan at present will rise phenomenally to
almost twice the size of Japan by the year
2030.
Riding on this growth path, the report says,
the Indian infrastructure sector is expected to
see an investment of upto $1 trillion dollars
over the next plan with the investments of
billions of dollars in sectors such as power,
roads, railways, telecom and irrigation.
Japan which currently has 70 per cent of its
exports concentrated in US, Europe, China, S
Korea and Taiwan is looking forward to tap
the huge opportunities for Japanese-Indian
cooperation across sectors ranging from
infrastructure to the pharmaceuticals.
Admitting that Japan is a late entrant in
tapping the Indian market, compared to the
other European and Asian countries like
Korea, Hiroaki Sugita, senior partner and
managing director, BCG Japan said that in the
last five years there has been a strong rise in
the Japanese interest in India which has
moved beyond the traditional focus areas of
automotive and electronics.
Dwelling on the delay in focusing on India,
Sugita said, “The initial focus of Japan was on
China, since the Chinese growth story
preceded the Indian one, by around six or
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November 2011 6
seven years. It was because of this gap that
the Japanese attention to India got delayed by
a couple of years.”
Drawing a comparison between the China and
India, Hiroaki Sugita said, China is looked at
for short term advantage, but India because
of certain factors like huge population of
young and working people and a vast English
speaking base, presents a long term
advantage.
'India tops G20 in entrepreneurial
culture'
India's entrepreneurial culture has become
the strongest among G20 nations with a
substantial decline in costs and time for
starting new businesses in the country, a
global study by Ernst & Young said.
The report, however, said that efforts were
still needed to lower the business costs, for
further simplification of procedures and to
make India even more favourable business
destination.
Ernst & Young (E&Y) said that the report,
prepared on the basis of a survey of 1,000
entrepreneurs across the G20 nations, has
substantiated India's premier position as an
emerging hub for entrepreneurial activity and
innovation.
It said that 98 per cent of the entrepreneurs
surveyed believed that Indian culture
encourages entrepreneurship, as compared to
80 per cent for the rapid growth markets and
72 per cent for the mature economies.
The study has been released ahead of a G20
Summit in Cannes, France, to be attended by
the leaders of the G-20 nations, including
Indian Prime Minister Manmohan Singh.
The G20 is a block of the world's 20 leading
economies including the US, UK, France,
Germany, Japan, China, Russia and India.
The report, released at the G20 Young
Entrepreneurs Summit in France, found that
the costs of starting a business in India has
declined by 5.5 per cent since 2005.
Besides, time to start a business in India has
fallen from 56.5 days in 2005 to 29 days in
2010. However, 71 per cent of the
respondents from India recommended a
further simplification of procedures to start a
business.
In the survey, 80 per cent of Indian
entrepreneurs reported improved access to
funding, including bank loans.
Exports rise 11% at $20 bn in Oct
India's exports grew year-on-year by 10.8% to
$19.9 billion in October while imports
expanded at a sharper rate, leaving a big
trade deficit of $19.6 billion.
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November 2011 7
Imports increased by 21.7% to $39.5 billion in
October, according to data released by
Commerce Secretary Rahul Khullar.
For the cumulative April-October period,
exports aggregated to $179.8 billion, showing
a handsome growth of 46%, thanks to sterling
trend witnessed in the previous months of the
current fiscal.
Imports for the seven-month period stood at
$273.5 billion growing by 31%, while leaving
the trade gap of $93.7 billion.
"Exports growth continues to look good and
every sector is posting good growth," Khullar
told.
Employment grew by 2.15 lakh in
April-June
Overall employment grew by 2.15 lakh during
the April-June 2011 quarter, with most
sectors showing an increase except textiles,
including apparels, and transport.
“An upward trend in employment has been
continuously observed since July 2009,”
according to the Labour Bureau's quarterly
quick estimates to assess the impact of the
post-2008 economic slowdown on
employment in the country.
IT/BPO Sectors Lead
The information technology and BPO sectors
generated the maximum number of jobs at
1.64 lakh during June over March 2011,
followed by 0.53 lakh in metals, 0.18 lakh in
automobiles, 0.13 lakh in gems and jewellery,
0.01 lakh in leather and 0.01 lakh in handloom
and powerloom sectors.
“The maximum increase in overall
employment by 1.90 lakh was seen in the
direct category of workers as compared to
0.25 lakh in the contract category,” states a
Ministry release.
In export-oriented units, employment at the
overall level rose by 0.67 lakh, while in non-
exporting units, it increased by 1.48 lakh
during June 2011 over March.
However, compared with the last four
quarterly surveys during 2010-11 (June 2011
over June 2010), overall employment
increased by 10.31 lakh, with highest rise in
IT/BPO (7 lakh) followed by 1.31 lakh in
textiles, including apparels, 0.96 lakh in
metals, 0.78 lakh in automobiles, 0.16 lakh in
transport and 0.13 lakh in leather.
The Labour Bureau surveyed 2,289 units and
establishments spread across 11 States and
Union Territories.
Exports from SEZs up 26 pc in April-
September
Exports from special economic zones grew
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November 2011 8
26.2 per cent year-on-year to Rs 1.76 lakh
crore during April-September this fiscal,
according to the Export Promotion Council for
EOUs and SEZs (EPCES).
During April-September 2010-11, exports
from the tax free enclaves had clocked Rs 1.39
lakh crore.
"This quantum of growth in exports will be
maintained and this sector will generate more
and more employment," EPCES Chairman
Jatin Mehta said in a statement.
Exports from SEZs grew 43.11 per cent to Rs
3.15 lakh crore in 2010-11.
Out of 381 notified zones, 148 are
operational. Maximum number of these
enclaves are in sectors like IT/ITES,
engineering, electronics, hardware and
textile.
SEZs and Export Oriented Units (EoUs)
contributed 34 per cent in the country's total
shipments in 2010-11.
As on September 30, the zones employed
7,32,839 people. Under the SEZ Act, the units
get 100 per cent tax exemption on profits
earned for the first five years, 50 per cent
exemption for the next five years and another
50 per cent exemption on re-invested profits
in the following five years.
SEZ developers, on the other hand, get 100
per cent tax exemption on profits for 10
years.
India provides ideal opportunity for
investment: Participants at chartered
accountants conference
India provides a lucrative opportunity for
investment amid the worsening crisis in the
global economy, industry participants said at a
chartered accountants conference here.
While India accounts for 7 per cent of the
world's GDP, it accounts for only 2.5 per cent
of the world capitalisation market, ASK
Investment Holdings Director Bharat Shah
said.
Speaking at the Bahrain Chapter of the
Institute of Chartered Accountants of India
(BCICAI) in Bahrain, Shah said India's
percentage share of global investments is just
0.5 per cent, which logically has to increase
considering the South Asian nation's share of
the world GDP and market capitalisation.
"While the US and Europe are going through a
serious economic crisis, the rapid growth of
the Indian economy, backed by strong
fundamentals, positions India as a favourite
investment destination compared to the rest
of the world," BCICAI Chairman T D Balraj
said.
"There is evidence of corporate earnings
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November 2011 9
growing at a faster pace than GDP growth in
India. Corporate earnings are likely to grow at
15 to 20 per cent, whereas the GDP is likely to
grow at 9 per cent. This shows the market
capitalisation growth is stronger than both
GDP growth and growth in corporate
earnings," Shah was quoted by Bahrain's Gulf
Daily News as saying.
"The stronger growth in market capitalisation
suggests the need for re-rating of Indian
markets and greater valuations than the
Indian markets have been commanding," he
said.
According to Shah, the return on equity of
Indian companies is far superior compared to
comparable firms in other countries and India
has a rich diversity of businesses and sectors,
including information technology and other
intellectual property-backed businesses.
He said the time was ripe for India to become
a favourite destination for global capital.
India's economy to grow 8.2 pc this
fiscal: Meira Kumar
Lok Sabha Speaker Meira Kumar said India has
retained its growth target of 8.2 per cent for
the current fiscal despite adverse global
economic condition and high inflation.
"India is surging ahead to become super
power of the 21st century despite adverse
global condition and high inflation. We have
maintained GDP growth rate of 8.2 per cent
for 2011-12 with projected industry growth of
7.8 per cent," she said at a function of PHD
Chamber.
Kumar's comments come against the
backdrop of a more cautious approach
adopted by the Reserve Bank of India, which
has lowered the economic growth forecast to
7.6 per cent for 2011-12.
"You must remember, millions of countrymen
and women are excluded from benefit of the
progress. We have to strive for inclusive
growth," Kumar said.
She asked the business community to play a
key role for inclusive growth.
"The business community has to play key role
in establishing inclusive and egalitarian
society. Inclusive growth is easily attainable if
we calibrate our objective and strategy
towards achieving financial prosperity with a
sense of social responsibility," Kumar added.
India no. 2 in 'most-confident' list
Indians have emerged as the second most
confident people about their economy, across
the world, on account of higher consumption
and increased foreign investment, according
to a report by research firm Ipsos.
The report said that India's economic
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November 2011 10
confidence grew by 6 points to 75 per cent in
the month of October compared to the
previous month, becoming the second most
economically confident country after Saudi
Arabia.
"The Indian economy has been well insulated
from global economic conditions as it has
been fueled by domestic consumption and
the increased FDI into the country. Our
economy has remained steady at a robust 8.1
per cent and this positive consumer sentiment
is seen reflected in our survey," Ipsos India
Managing Director Mick Gordon said.
The report, which examined citizens'
assessment of the current state of their
country's economy, said that the overall
global average economic confidence was
down by one point to 38 per cent last month.
In terms of gains, two countries-- India and
South Africa-- gained maximum economic
confidence by five points and six points,
respectively.
Individually, Saudi Arabia experienced a six-
point drop to 83 per cent but continued to
hold its pole position, followed by India (75
per cent), Sweden (69 per cent), Canada (66
per cent ) and China (65 per cent).
India received $56 billion in
remittances
India received nearly USD 56 billion in
remittances in the year 2010-11, which is a
jump of USD 2 billion from the corresponding
period a year ago.
Overseas Indian Affairs Minister Vayalar Ravi,
addressing a conference of heads of missions
of Gulf region, gave out the figure saying
remittances has touched USD 55.9 billion last
fiscal.
India had received a total of USD 53.9 billion
as remittances in the year 2009-10 while in
2008-09, the amount was USD 46.9 billion.
The World Bank had earlier this year in a
report said Indian expatriates are expected to
remit about USD 55 billion into the country in
2010-11 and will be the top receiver of
remittances.
The top remitting countries in 2009 were
United States (USD 48.3 billion), Saudi Arabia
(USD 26 billion) and Switzerland (USD 19.6
billion).
FIIs allowed to invest in debt
instruments of non-banking finance
firms
Foreign institutional investors can now invest
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November 2011 11
in debt instruments issued by non-banking
financial companies categorised as
‘Infrastructure Finance Companies' by the
Reserve Bank of India, in addition to the debt
instruments issued by infrastructure
companies.
FIIs would now be allowed to invest in non-
convertible debentures or bonds issued by
infrastructure NBFCs, the RBI said in a
notification.
The earlier lock-in-period of three years for FII
investment in these instruments has been
reduced to one year up to an amount of $5
billion, within the overall limit of $5 billion.
This lock-in-period shall be computed from
the time of first purchase by FIIs.
In April, the limit for FII investment in NCDs
and bonds issued by Indian infrastructure
companies was increased from $5 billion to
$25 billion. This subject to conditions that
such instruments would have a residual
maturity of five years and above, the
investments would have a lock-in-period of
three years and ‘infrastructure' would be as
defined under the extant External Commercial
Borrowings policy.
The residual maturity of five years and above
stipulated would now refer to the original
maturity of the instrument at the time of first
purchase by an FII, the RBI notice said.
RBI eases share transfer rules under
FDI
Reserve Bank of India has eased rules
regarding share transfers between Indians
and non-resident investors, in a move to
liberalize and rationalize policies governing
foreign direct investments (FDI) in the
country, it said in a statement.
Reserve Bank of India has now allowed
transfer of shares between resident and non-
resident investors under the foreign direct
investment route without its prior permission
with certain exceptions, it said.
In 2010/11 (April-March), FDI inflows into
India had declined an annual 25 percent to
$19.42 billion, while the inflows during the
April-June quarter more than doubled to
$13.44 billion compared to year-ago quarter.
FDI outflows in October at USD 2.06
bn
Overseas investments by Indian companies in
October stood at USD 2.06 billion, with Cox
and Kings and Tata Communications emerging
as the major investors.
The FDI outflows in last month were 40 per
cent less than the USD 3.46 billion outflow in
September.
According to the RBI data released,as many as
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November 2011 12
330 overseas investment transactions were
carried out by various companies in October.
Cox and Kings India committed USD 280.56
million in its UK-based wholly owned
subsidiary (WoS)-- Prometheon Holdings (UK)
Ltd -- which is engaged in transport, storage
and communication services.
Cox and Kings India also made five other
investments worth a total of over USD 8.05
million in its WoSs, based in Honk Kong,
Singapore, the UK and Japan.
Tata Consultancy Services has committed USD
48.92 million in its UK-based join venture
Diligenta Ltd. The subsidiary is engaged in
community, social and personal services.
Another Tata Group firm, Tata
Communications Ltd has committed USD
162.5 million in its Singapore-based WoS,
VSNL International Pte, which is also engaged
in transport, storage and communication
services.
In the first seven months of this fiscal (April-
October), the outward FDI stood at USD 21.07
billion.
While Indian companies are spreading their
overseas footprints, the FDI inflows in the
April-September (latest data available), too,
went up by a huge 74 per cent to USD 19.13
billion from USD 11 billion in the
corresponding period last year.
Lock-in norms for FDI in real estate
may be relaxed
The government may relax minimum lock-in
norms for FDI in real estate. It is considering a
lock-in of three years on the original FDI
brought at the time of starting the business.
As of now, the lock-in applies to every tranche
of investment brought in by a foreign player
— a key deterrent for FDI.
If the proposal gets a go-ahead from the
Department of Industrial Policy and
Promotion (DIPP), foreign players could easily
repatriate profits from their investments in
the country and save the original investment,
which is $5 million. This means that the
minimum lock-in period for foreign direct
investment in real estate, which bars
repatriation of profits, would only apply to the
stipulated original investment, which is
pegged at $5 million. Any amount invested in
tranches over this can be repatriated.
In 2009, DIPP had said in a notification that
lock-in period would apply to the “entire
investment” brought in by the foreign player
in a project.
According to FDI regulations, a foreign
investor has to bring in a minimum $5 million
to participate in a joint venture (JV) with an
Indian developer while the rest of the money
can be brought in later, in tranches.
Page 16
November 2011 13
For instance, if a foreign fund invests $500
million, the interpretation has been that it can
recover and repatriate up to $495 million
before three years while the balance $5
million can be repatriated only after three
years. However, the department issued a
notification in 2009 saying original investment
would apply to entire investment brought into
the project. The move is construed as a
deterrent for FDI in real estate that could
dissuade foreign investors from the Indian
market and dampen their investment plans in
India.
US looking for more Indian FDI
The US is eyeing more Foreign Direct
Investment from India, which has already put
in USD 7 billion in the country, a top American
government official said.
Among others, the US strategic focus is on
Asian and European countries including China
for attracting investments there, Barry E A
Johnson, Executive Director of SelectUSA told.
Established in June this year, SelectUSA is a
government-wide initiative within the US
Department of Commerce to encourage,
facilitate and accelerate business investments
by both domestic and foreign firms in the
country.
"Current Indian FDI is USD 7 billion and it is
27th among all the source countries that have
invested in the US(we look forward to
attracting) as much as possible," Johnson said
when asked if they had set any target for
Indian investments.
Besides, Johnson said that considering India's
size, potential and pace of development,
there was "huge room for improvement."
There was an overall focus on attracting
industries and products with high-growth
prospects, he said, adding foreign investment
would be a "huge plus" to both the US and the
countries the investments came from.
Replying to a question on the "Occupy Wall
Street" protests and its impact on business, he
said the agitation has in "no way shut down
business."
Govt OK's PFRDA Bill change, allows
FDI
The government approved amendments to
the PFRDA Bill 2011 (Pension Fund Regulatory
and Development Authority) while agreeing to
the proposed 26 per cent foreign direct
investment (FDI) in the pension sector but
refrained from providing assured returns to
subscribers in the proposed law.
The government had decided not to mention
FDI cap in the legislation itself for retaining
the flexibility of changing it through an
executive order. The 26 per cent FDI cap is to
Page 17
November 2011 14
be mentioned in the regulations to the
legislation.
The changes to the PFRDA Bill were approved
by the Union Cabinet at its meeting.
The Bill, which has already been scrutinised by
the Parliamentary Standing Committee on
Finance, is likely to be taken up for
consideration and passage in the Winter
Session beginning November 22.
"The government is of the view that FDI cap in
the pension should be at 26 per cent at par
with the insurance sector. However, it would
like to retain the flexibility of changing the cap
of FDI as and when required and that is why it
has not been kept as part of the bill", an
official spokesperson said.
The proposed legislation, the official said, will
not provide assured returns to the subscribers
of pension schemes.
The Committee, which is headed by senior BJP
leader and former Finance Minister Yashwant
Sinha, wanted the government to specify the
FDI cap in the legislation itself and provide
minimum guaranteed return to subscribers.
The government also turned down the
Committee's recommendation for allowing
greater flexibility to subscribers of pension
schemes for pre-mature withdrawal of funds
from their accounts.
"The flexibility of withdrawals from funds
under the pension scheme, however, would
be tightened. It would be allowed only in case
of genuine needs...It would be considered
when the need is critical. It will not be allowed
for frivolous reasons," the official explained.
The government, however, upheld the panel's
suggestion to provide greater participation of
the employees and stakeholders in the
Pension Advisory Committee, the official said.
FII cap in govt, corp bonds hiked by $5
bn
The Finance Ministry increased the
investment limit for foreign institutional
investors (FIIs) in government securities and
corporate bonds by USD 5 billion each, a
move that will enhance capital flows and
increase the availability of resources for
Indian corporates.
The FIIs can now invest up to USD 15 billion in
government securities (G-secs) and USD 20
billion in corporate bonds, official sources
said.
The investment limit in long-term
infrastructure bonds, however, has been kept
unchanged at USD 25 billion.
A notification giving effect to the new FII
investment ceilings will be issued by market
regulator Securities and Exchange Board of
Page 18
November 2011 15
India (Sebi) soon.
"The present enhancement will increase
investment in debt securities and help in
further development of the government
securities and corporate bond markets in the
country," the official added.
The decision, which was taken after a review
of the macro-economic situation, would
enhance capital flows and make additional
financial resources available to the Indian
corporate sector, he said.
The official added that the increase in
investment limits became necessary as
"...little space was available for further FII
investment in G-secs and corporate bonds".
As against the FII investment ceiling of Rs
43,650 crore in G-secs, foreign institutions
had invested Rs 41,253 crore as of October
31, 2011.
Similarly, in the case of corporate bonds, FIIs
have invested Rs 68,289 crore (as of October
31, 2011) as against the ceiling of Rs 74,416
crore.
FDI inflows up 41 pc at $22.5 bn
during Jan-Sep
Foreign Direct Investment in India surged by
41 per cent to USD 22.5 billion during the
January-September period this year,
notwithstanding uncertain global economic
environment.
During January-September 201O, the country
had attracted Foreign Direct Investment (FDI)
worth USD 15.97 billion.
Experts maintained that the government
should further streamline policies and make
the environment more conducive to FDI.
The sectors that attracted maximum FDI
during the nine-month period include services
(financial and non- financial), telecom,
housing and real estate, and construction and
power, according to the industry ministry's
latest data.
Mauritius, Singapore, the US, the UK, the
Netherlands, Japan, Germany and the UAE are
the major investors in India.
The FDI inflows totalled USD 19.42 billion in
2010-11 financial year, down from USD 25.83
billion in 2009-10.
Recently, the government further liberalised
the FDI regime, allowing overseas investment
in bee-keeping and share-pledging for raising
external debt.
Besides, the conditions for FDI in construction
of old-age homes and educational institutions
have been eased. These will not be subject to
the minimum and built-up area, capitalisation
Page 19
November 2011 16
and lock-in period norms as applicable for the
construction activities.
Finance Ministry clears 18 FDI
proposals worth Rs 2,126 crore
The Finance Ministry today approved 18 FDI
proposals, including that of Dish TV and MCX,
envisaging foreign investment of Rs 2,126
crore, while referring the application of
Unitech Wireless to Cabinet.
The proposals were cleared following
recommendations of Foreign Investment
Promotion Board (FIPB).
However, decision on 16 proposals including
that of Religare Capital Markets and Cordia
International Corp, USA, was deferred and 11
were rejected, the Finance Ministry said.
The request of "Unitech Wireless (TN),
amounting to Rs 8,250 crore, has been
recommended for consideration of Cabinet
Committee on Economic Affairs (CCEA)," the
statement said.
The company is seeking foreign investment to
promote its telecom business including
unified access services. FDI proposals
envisaging investment of over Rs 1,200 crore
and more are referred to CCEA for clearance.
It also said that decision on Vodafone-Essar's
request of transfer of shares from resident to
non-resident to carry out the activities
relating to telecommunication could not be
taken as more deliberations were needed.
"(Vodafone Essar's Rs 2,835 crore) proposal
has been recommended for the
consideration...after the receipt of inputs
from concerned departments," it added.
The government cleared Dish TV India's Rs
980 crore proposal to raise foreign equity to
produce telecom equipment and marketing of
mobile satellite communications.
The statement further said MCX's (Multi
Commodity Exchange of India) request for
sale of equity shares through an Initial Public
Offering (IPO) to Indians and Sebi registered
FIIs has also been cleared.
The proposal of Mauritius-based Ventureast
Life Fund III LLC seeking induction of foreign
equity worth Rs 950 crore in a trust has also
been cleared.
FIIs want more shares in PSU stake
sale
A group of foreign institutional investors (FIIs)
pressed for higher allocation of shares at the
time of stake sale in state-owned firms.
“We have asked the FIIs to send a paper to us
this week on their issues. Although the
Department of Disinvestment will take the
final call, we can push for it if their demand is
genuine,” a Finance Ministry official said after
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November 2011 17
the meeting with the representatives of FIIs.
The FIIs are reportedly pressing for special
treatment so that they can apply for larger
quantum of shares during the disinvestment
of PSUs.
At present, FIIs are clubbed with the qualified
institutional buyers (QIBs) which are entitled
to buy up to 50 per cent of shares being sold
through IPO and FPOs. Besides FIIs, the QIBs
include insurance companies, banks and
mutual funds. The retail investors can by 35
per cent shares, the High Networth Investors
can get up to 15 per cent of shares sold.
Draft Cabinet note for 26% FDI in
airlines
With Kingfisher Airlines and several other
airlines landing into dire straits, the Industry
Ministry has moved a draft Cabinet note on
allowing 26 per cent FDI by foreign airlines in
the domestic carriers.
"Private airlines in the country are in dire
need of funds for their operations and service
upgradation to compete with other global
carriers," the note circulated by the
Department of Industrial Policy and
Promotion (DIPP) said.
The DIPP in the Industry Ministry has stuck to
its guns suggesting FDI cap of 26 per cent and
not 24 per cent, as proposed by the Civil
Aviation Ministry.
The DIPP feels anything below 26 per cent
would not attract strategic investment from
the foreign airlines.
Investor with 26 per cent stake or more is
considered strategic, as he can have say in the
policy decision of a corporate entity under the
Indian company laws. An investor with 26 per
cent support can block a special resolution in
board of directors for policy change.
The note has been circulated among the key
ministries including the civil aviation, finance,
home and and law.
At present, FDI in domestic passenger airlines
is allowed up to 49 per cent by overseas
entities, other than the foreign airlines. Non-
resident Indians can invest 100 per cent.
India-Canada aims to strengthen ties
in energy sector
India and Canada want to triple their bilateral
trade and are banking on alliances and
investments in energy sector. Both countries
are aiming at increasing bilateral trade to $ 15
billion by 2015 from $ 4.2 billion in 2010.
Canadian minister for international trade and
the Asia Pacific Gateway Edward Fast is on
visit to India to interact with local
industrialists. He met representatives from
Essar, Adani, Suzlon and various state
Page 21
November 2011 18
ventures in Ahmedabad."We have just
scratched the surface and the bilateral trade
can grow beyond $ 15 billion by 2015 if we do
our groundwork well. We understand that
comprehensive economic partnership
agreement between the two will infuse
confidence among Canadian investors to
come to India. In December, Canada and India
will kick off the third round of negotiations
towards the agreement," said Fast. While
addressing industry members at Gandhinagar,
he added that the proposed agreement will
result in GDP growth of close to $ 6 billion.
Bombardier, Niko, GeoGlobal Resources and
McCain Foods are some of the Canadian
companies that are present in Gujarat.
Pandit Deendayal Petroleum University
hosted the meet on behalf of the government
of Gujarat. Referring to the existing alliances
between Gujarat and Canada, principal
secretary of energy & petrochemicals DJ
Pandian said, "Binding between Gujarat and
Canada is not new. Through its partnership
with Canadian companies Niko Resources and
GeoGlobal Resources, the state venture
Gujarat State Petroleum Corporation (GSPC)
found gas in Hazira and KG Basin. Canada has
vast experience in dealing with renewable
energy and Gujarat would like to benefit from
the same to meet its target of producing 20%
of its energy requirements from the
environment friendly means." Hydropower
accounts for more than 72% in Canada's
electricity basket.
India signs tax info treaty with Jersey
India has signed a tax information exchange
agreement with the island of Jersey, the
seventh such agreement to be struck by India
as part of its efforts to clamp down on tax
evasion. But some experts warned the
agreement would do little to increase the flow
of information.
Mr John Christensen, the Jersey-born director
of the international campaign group Tax
Justice Network, described the agreement as
a “needle in a haystack approach” and “unfit
for purpose”.
The Jersey agreement requires India to
provide minimum details about the
information it wants for it to be considered,
and must be “foreseeably relevant” to the
administration and enforcement of domestic
laws, according to a statement from the
Indian High Commission in London.
“The down side is that you have to have
enough information to persuade the courts in
Jersey that you need access to that
information,” he said.
The automatic exchange of information when
a person of one country opens an account in
another – as is the case within Europe under
Page 22
November 2011 19
the savings tax directive – would be the only
effective solution, he said.
He noted the Prime Minister, Dr Manmohan
Singh's comments at the G20 meeting in
Cannes, describing his call for a move to
automatic exchange as an “incredibly
important development”.
“G20 countries should take the lead in
agreeing to automatic exchange of tax-related
information with each other, irrespective of
artificial distinctions such as past or present,
for tax evasion or tax fraud,” Dr Singh told the
G20.
“He is the first significant politician globally to
come forward to the G20 and step up our
game here,” said Mr Christensen.
India has signed information exchange
agreements with Liberia, the Bahamas,
Bermuda, Virgin Islands, Isle of Man, and the
Cayman Island, and concluded negotiations
with a total of 16.
India announces USD 100 mn credit
facility to Maldives
Prime Minister Manmohan Singh announced a
USD 100 million Standby Credit Facility to
Maldives and a number of other key
initiatives, including building the capacity of
Maldivian security forces, boosting India's ties
with this strategic island nation.
The crucial decisions, taken during talks
between Singh and Maldivian President
Mohamed Nasheed, assume significance as
these reflect India's growing outreach
towards the tiny island nation in the Indian
Ocean amidst attempts by China to make
inroads rapidly in the region.
Recognising the common threat from
terrorism and piracy, the two sides decided to
undertake coordinated patrolling and aerial
surveillance, exchange information and
develop an effective legal framework against
these.
Singh, who was here primarily for the 17th
SAARC Summit, was accorded a rare honour
when he addressed the 'People's Majlis'
(Maldivian Parliament), becoming the first
foreign head of government or State to do so
in its history of 78 years.
The two sides signed six agreements,
including a historic framework accord on
development cooperation and a pact under
which India will extend a Standby Credit
Facility of USD 100 million to help stabilise
Maldivian fiscal position.
The new Standby Credit Agreement would
significantly enhance infrastructure and
capacities in Maldives.
The Framework Agreement on Cooperation
for Development is a blue print for
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November 2011 20
cooperation in areas such as trade and
investment, food security, fisheries
development, tourism, transportation,
information technology, new and renewable
energy, communications and enhancing
connectivity by air and sea.
India, Korea to begin negotiations to
tweak comprehensive economic pact
The Comprehensive Economic Partnership
Agreement between India and Korea came
into force on January 1, 2010, but now both
sides are getting ready for fresh negotiations.
The reason: lot of things have happened on
both sides that the tariffs agreed under the
pact have lost their relevance.
On a number of items covered by the pact,
agreed tariffs are higher than what India has
offered on Most Favoured Nation basis to
many other countries.
On its part, Korea has since concluded free
trade pacts with the US and the European
Union at better terms, Korea's Ambassador to
India, Mr Kim Joong Keun, told.
Looking at the CEPA afresh is also likely to
address the issue of the skew in trade against
India.
In 2010, India imported goods worth $11.4
billion and in the first eight months of the
calendar 2011, bought $8.5 billion. But India's
exports to Korea in 2010 was $5.6 billion,
which rose to $5.5 billion in the first eight
months of 2011.
A research paper presented at a Indo-Korea
dialogue conference organised by the Indian
Council for Research on International
Economic Relations (ICRIER) notes that a
further 10 per cent reduction in tariff on all
items except agriculture and fishery products
would increase Korea's exports to India by
$180 million. But it will also lead to increase in
India's exports by $ 600 million.
Korean re-unification
Asked when a reunification of North and
South Korea would happen, Ambassador Mr
Kim said, “not long from now.”
Asked about the effect of the merger of the
two countries on India, he said that a unified
Korea would give Indian companies huge
opportunities to invest.
Korea was split into two in the 1950s and the
North went into the communist fold during
the Cold War.
After the Cold War ended in the late 1980s,
North Korea ceased to get concessions from
the Warsaw Pact countries, such as cheaper
crude oil and as a result, the North Korean
economy went into a tailspin.
However, North Korea is a resource-rich
Page 24
November 2011 21
country. Ambassador Mr Kim noted that the
country had in abundance two of the three
factors of production — land and labour. “You
(India) can bring in capital,” he said.
India, Pakistan look to implement
trade deal
Top officials from India and Pakistan began
talks to flesh out an agreement on opening up
trade between the countries, part of a
warming of ties between the nuclear-armed
neighbours.
Pakistan's Commerce Secretary Zafar
Mahmood met his Indian counterpart Rahul
Khullar at the start of the two-day talks in
New Delhi aimed at implementing a deal to
double annual trade in the next three years to
$6 billion.
The visit followed Pakistan's decision on
November 2 to grant "most favoured nation"
(MFN) status to India, reciprocating a move
made by India to Pakistan in 1996.
"We have to fully normalise our relationship
and you cannot fully normalise the trade
relationship without invoking the MFN
principle (and) so we will be working on that,"
Mahmood told reporters after reaching New
Delhi.
The status will remove discriminatory higher
pricing and duty tariffs that stand as barriers
to exports between the South Asian
neighbours, analysts say.
The prime ministers of the two countries met
last week on the sidelines of a South Asian
summit in the Maldives, saying they expected
to open a "new chapter" in bilateral talks.
India and Pakistan have fought three wars
since independence in 1947, two of them
triggered by their territorial dispute over
Kashmir, which remains a major hurdle in any
future comprehensive peace deal.
A fully-fledged peace dialogue -- suspended
by India after the 2008 Mumbai attacks
blamed on Pakistan-based militants -- was
resumed in February this year.
Trade pact with South Africa Customs
Union by next year
India is expected to sign the much-awaited
preferential trade agreement (PTA) with
South Africa Customs Union (SACU) by the
first quarter of 2012, as both sides are
currently engaged in active negotiations on
seeking greater access of each others’
markets and easier movement of
professionals.
SACU consists of Botswana, Lesotho, Namibia,
South Africa and Swaziland. Since 2007,
negotiations have been on over having a PTA
with the grouping. So far, around eight rounds
Page 25
November 2011 22
of negotiations have taken place.
“When you negotiate, there is always the
aspect of give and take,” said South African
Deputy Minister for Trade and Industry
Elizabeth Thabethe. “It has to be mutually
beneficial for both the sides, taking care of
sensitivities on each side. Every country within
the union has its own set of demands. We are
discussing that. We hope to reach an
agreement by the first quarter of 2012 or the
second quarter,” she told.
Thabethe, who is in India to take part in the
India International Trade Fair that began on
November 14, also said the next round of
negotiations would take place soon. The
progress, so far, has been “considerable”.
However, she highlighted that the PTA should
yield a win-win situation for both sides and
boost bilateral trade and investment.
Under a PTA, the negotiating countries reduce
their tariffs on a particular number of
products from the level they maintain with
countries that are not parties to the pact.
Unlike free trade agreements (FTAs), a PTA
does not slash or eliminate duties from a large
number of tariff lines.
Earlier this year, Minister for Commerce and
Industry and Textiles Anand Sharma had
indicated that the PTA would initially result in
tariff cuts on a specific number of products.
It could be expanded into an free trade
agreement (FTA) depending on the progress
of the PTA, he had indicated during the visit of
South Africa’s Trade Minister Rob Davies.
Since then, both sides are also discussing a
bilateral investment promotion and
protection agreement.
Thabethe is to hold a bilateral meeting with
Jyotiraditya Scindia, minister of state for
commerce and industry.
Both countries have earlier set the target of
achieving $15 billion worth of bilateral trade
by 2014 from around the present $11.12
billion. Thabethe said this target was
“attainable” with greater cooperation in the
small and medium sector, information
technology, infrastructure, rural development
and handicrafts.
India, EU committed to trade pact by
early next year
The Centre said India and the European Union
are committed to a balanced and ambitious
Broad-based Trade and Investment
Agreement (BTIA) by early 2012.
Stating this, the Minister of Commerce,
Industry and Textiles, Mr Anand Sharma, said
in a statement that “This agreement (India-EU
BTIA) will lead to increase of opportunities for
market access in goods and services for both
sides.”
Page 26
November 2011 23
The statement added that Mr Sharma was
speaking during his meeting with Mr Kris
Peeters, Minister President of the Flemish
Government and the Flemish Minister for
Economy, Foreign Policy, Agriculture and
Rural Policy. The Flemish region is a part of
Belgium.
Mr Sharma said Belgium is India's second
largest trading partner in the EU. India-
Belgium trade in 2010-11 grew by 52.44 per
cent to $14.9 billion, of which India's exports
to Belgium were $6.3 billion and imports from
that country were $8.6 billion.
India-China trade can touch $100 bn
due to iron ore trade & mining'
Creating a favourable macro-environment in
the area of iron ore trade and co-operation in
the field of mining exploration can help
achieve the ambitious India-China trade target
of $100 billion by 2015, a top Chinese
diplomat said.
Speaking at a Conference on International
Iron Ore & Steel Making Raw Materials at a
resort near Panaji, Economic and Commercial
Counselor of the Embassy of China Peng Gang
said the target set during Premier Wen
Jiabao's New Delhi visit last year was a
challenge against the backdrop of the ongoing
global financial crisis.
"Our two sides should continue to deepen
mutual trust, strengthen communication,
promote mutually beneficial cooperation,
properly handle differences so as to enhance
the development of China-India Strategic
Cooperative Partnership...," the diplomat said.
Peng also called for preferential foreign direct
investment (FDI) policies and creating a better
investment opportunity had helped China in
its long 30 year phase of opening up and
reform.
"We would like to encourage more Chinese
competent enterprises to establish more joint
ventures in iron ore and steel-making sector
with their Indian peers to increase the
capability of iron processing and steel
production of India," he said.
Peng said the $1 trillion thrust in India's 12th
Five Year Plan on infrastructure development
would also open up new opportunities for
development of mines in India. He said it was
"important to keep a transparent and stable
policy system of mining, trading and export".
"The companies of both countries might
strengthen cooperate and investment with
each other in mining supporting transport,
logistics, ports construction and improvement
with a purpose of creating favourable
infrastructure conditions of mining
development and trade between the two
countries," he said.
Page 27
November 2011 24
He said that both sides might also try to
establish long-term iron ore trade agreement
with a new pricing system.
Peng also advocated green innovative
technologies to produce green and clean steel
and other products.
Indian Ocean Rim Association for
Regional Cooperation to boost trade
The Indian Ocean Rim Association for Regional
Cooperation (IOR-ARC) decided to support
intra-regional growth of business through
infrastructure building and trade facilitation
to boost intra-trade.
"Though intra-regional trade accounts for 24
percent of the global trade, we have the
capacity to increase it by encouraging our
forums to reach out to business and
commercial expertise in the region," the
association said in a communique after its
11th council of ministers meeting.
The day-long meeting, held under the
chairmanship of India for the first time,
discussed the possibility of initiating a
comprehensive study on the feasibility of
preferential trading arrangements for the
region.
"We are of the firm view that the academic,
scientific and business communities of our
membership will find their participation in the
wide variety of trade and tourism expositions
and fairs held in the region of benefit and
use," the association said in its "Bangalore
Declaration".
Emphasising on the need for cross-fertilisation
of ideas between the academic and business
forums and the working group on trade and
investment to strengthen cooperation in the
region, the meeting agreed upon capacity
building in these sectors through programmes
and workshops.
"Capacity building in ICT (information and
communication technologies), analytical
studies on investment promotion, study of
monsoon, marine biology and management of
our coastal zones are areas of relevance.
Energy efficiency and renewable energy
technologies need close attention," said the
declaration.
Appreciating the diversity and richness of the
region's tourism potential and tourism
promotion as an attractive vehicle for socio-
economic growth and development in the
region, the communique said intra-regional
tourism offered huge potential to target high
growth in the sector.
"The second phase of tourism feasibility study
will be undertaken at the initiative of Oman.
We believe that the member countries can
target the tourism sector to realise its full
potential," the communique observed.
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November 2011 25
The meeting also favoured increasing cultural
exchanges to promote people-to-people
contacts, contribute to greater appreciation of
our diverse capacities, social and cultural
values and enhance the visibility and value of
the association.
On the suggestion of Australia as the new vice
chair of the association, the meeting agreed
to consider a new name for the association
and directed its officials to initiate
consultations on changing the name by the
next meeting in 2012.
The regional bloc in which India is a founding
member, was set up in Mauritius in 1997 with
Australia, Bangladesh, Indonesia, Iran, Kenya,
Madagascar, Malaysia, Mauritius,
Mozambique, Oman, Singapore, South Africa,
Sri Lanka, Tanzania, Thailand, the UAE (United
Arab Emirates) and Yemen as the member-
countries.
Seychelles, which left the organisation in
2003, re-joined Tuesday to become the 19th
member of IOR-ARC.
The association has also five dialogue partners
- Egypt, Japan, China, Britain and France - and
two observers - Indian Ocean Tourism
Organisation (IOTO) and Indian Ocean
Research Group (IORG).
India, Nepal sign revised DTAA; to
share banking, tax info
India and Nepal signed a revised Double
Taxation Avoidance Agreement (DTAA), which
will facilitate exchange of information on
banking between the two countries and help
prevent tax evasion.
The revised tax treaty was signed by India's
Finance Minister Pranab Mukherjee and his
Nepalese counterpart Barshaman Pun. It will
replace an earlier agreement signed between
the two countries in 1987.
On his arrival,Mukherjee told, "I am confident
that this mechanism will strengthen and
deepen our bilateral relations, and we would
be in a position to move forward and expand
our trade and other economic activities."
DTAA, which embodies modern trade
principles, will enable Indian investors and
traders to enjoy tax relaxation in India once
they pay taxes in Nepal.
The agreement is also likely to boost
confidence of investors and help Nepal attract
more investment from India, experts said.
India is the biggest source of foreign
investments in Nepal, as also its largest
trading partner. However, Nepal accounts for
only 0.44 per cent of India's total trade.
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November 2011 26
The bilateral trade between the two nations
has increased from USD 1.98 billion in 2009-
10 to around USD 2.70 billion in 2010-11,
registering an increase of 37 per cent.
Indian firms are the biggest investors in Nepal
accounting for about 47.5 per cent of total
approved foreign direct investments.
"The agreement reflects the international
environment, which is prevalent today and
the old agreement needs to be amended,"
Mukherjee said.
Indo-Malaysia trade target of $15bn
to be met by 2015: Najib Razak
Malaysia and India have great potential to
expand bilateral trade and investment,
Premier Najib Razak has said, voicing
confidence that the trade target of USD 15
billion would be reached by 2015 in the wake
of the landmark comprehensive economic
cooperation pact between them.
Najib, who is seen as a pro-India leader, said
"What is heartening is that for first nine
months of this year, (bilateral) trade hit USD
9.4 billion, representing an increase of 34.8
per cent over the same period last year."
The Premier, who also handles the Finance
portfolio, said his optimism was particularly
buoyed by the Comprehensive Economic
Cooperation Agreement (CECA) signed
between the two countries in February and
which came into force from July this year.
"We are confident that with the rollout of
CECA and continued government focus, the
47.7 billion ringgit (USD 15 billion) trade
target will be met by 2015 and quite possibly
before," he said in his keynote address at a
CECA commemoration gala dinner here last
night, which was attended by visiting Minister
of State for Textiles Minister P Lakshmi.
Najib noted that while the trade figures were
promising, Malaysian and Indian companies
had yet to take full advantage of the trade
and investment opportunities available in
each other's countries.
India Inc's share of exports to overall
sales is rising, says FICCI
The corporate sector is becoming increasingly
export-oriented, with the share of export to
overall sales rising for almost all the sectors,
says a study by Federation of Indian Chambers
of Commerce and Industry (FICCI).
“Among the sectors showing a jump in the
share of export to overall sales ratio are non-
metallic mineral products (22.6 per cent to
26.1 per cent), metal and metal products
(10.8 per cent to 13.4 per cent), automobiles
(4.2 per cent to 9.9 per cent) and electronics
(4.5 per cent to 9.7 per cent). The overall
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November 2011 27
jump is from 5.9 per cent in 2000-01 to 18.6
per cent in 2010-11,” the report says.
The FICCI report, however, cautions that
export growth may be tapering. “Export
growth in the first half of the current fiscal is
53 per cent, and the monthly export growth
has moderated significantly in September
2011 to 36.4 per cent from 82 per cent in July
2011,” it says.
While the rising of share of exports is a sign of
growing competitiveness of Indian companies,
increasing global integration also means being
exposed to global downswings.
According to a FICCI research study, the
slowdown in advanced economies had
minimal impact on India's export growth,
owing mostly to the diversification in the
developing markets. For example, according
to the latest data, exports to OECD countries
in 2010-11 accounted for 33.3 per cent of our
exports (37.4 per cent in 2008-09). According
to the latest International Monetary Fund
report on the world economy, real gross
domestic product in Asian economies is
projected to expand at 6.6 per cent in 2012,
up from 6.2 per cent in 2011.
Govt working to boost exports
The government is aggressively working on
boosting trade with China in an effort to tame
the ballooning trade deficit, that touched $20
billion in 2010-2011.
The Ministry of Commerce and Industry is
working on a China-specific strategy paper to
identify the areas in which it can leverage
Indian shipments to China.
While imports from China had been rising at a
blistering pace since 2005, India has failed to
increase its shipments to China. Exports to
China have more than doubled in the last five
years, but it failed to keep pace with China in
terms of pricing and market access.
“We are working on a strategy paper to
increase our trade with China. This will be
done by focusing on certain key areas where
we can increase our exports. But that does
not mean we will have any restrictions on
imports. There is no proposal on curbing
imports from China or raising tariffs on
Chinese goods,” a senior official told.
Total export to China reached $19.61 billion in
2010-2011 from $8.32 billion in 2006-07,
while cumulative imports from China topped
$43.47 billion last year from $17.47 billion,
according to data by the Ministry of
Commerce and Industry.
Some areas identified by the strategy papers
are information technology, drugs and
pharmaceuticals, textiles, chemicals, carpets,
woven fabrics and leather products among
others. The strategy paper would also deal
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November 2011 28
with measures on how to gain more access to
the Chinese market in terms of services trade
with a liberal visa regime, officials said.
In a meeting of the Board of Trade last month,
Minister of Commerce and Industry Anand
Sharma had stressed the need to diversify the
range of products beyond what is exported at
present. India’s exports to China are largely
commodity-based and Iron ore exports
dominate export basket.
Sharma had also said that bilateral trade
between Ithe two countries would reach $100
billion by 2015. The total trade volume has
gone up from $2.3 billion in 2000-01 to $63.09
billion in 2010-11.
Last week, while addressing the meeting of
Consultative Committee on the Commerce &
Industry, Sharma also stressed on the need to
double India’s export in the next three years.
One of the main concerns raised by the
members there was on balancing trade with
China.
SMEs to contribute 22pc to GDP by
2020, says government official
Contribution of small and medium enterprises
to the country's gross domestic product (GDP)
is expected to increase to 22 per cent by
2020, from the present 17 per cent, a top
official of Department of Science and
Technology said.
Indian companies, products and services were
being seen as budding stars and paving way
for 'brand India', especially in the Middle East
and Africa, where Indian firms were given
preference over others, K Jayakumar, Joint
Secretary, Department of Scientific and
Industrial Research, DST, said.
He was speaking at the TechEx 2011, a
technical and engineering exhibition,
organised by the alumni of PSG Institute of
Technology.
L Ganesh, Chairman, RANE group of
Companies, said the eight to nine per cent
growth of Indian economy could be sustained
through manufacturing sector and not IT
sector alone.
Though IT sector was playing a major role in
the GDP growth, the manufacturing sector
with its present contribution of 15 per cent
should increase it to 25 to 30 per cent in the
near future, Ganesh said.
The alumni of the college from 1955 to 2011
are participating in the three-day exhibition,
where 347 stalls showcasing different types of
products are displayed.
TRAI proposes easier M&A rules
In order to enable consolidation in the sector,
the Telecom Regulatory Authority of India
proposed to ease up merger and acquisition
Page 32
November 2011 29
norms.
The regulator said that merged entity could
own up to 25 per cent of the spectrum in a
given circle and it could have a combined
market share of up to 60 per cent.
TRAI, in May 2010, had suggested to bring a
spectrum cap of 14.4 Mhz on the merged
entity. It also had said that the combined
market share should not be more than 30 per
cent. The regulator has now said that if the
combined market share of the merged entity
is below 35 per cent then it can go through
without any approvals. Mergers will also be
allowed if the market share reaches up to 60
per cent but subject to scrutiny by TRAI. This
means that an operator such as Bharti Airtel
which has market share of just over 20 per
cent can acquire any of the new players or
even those with 10-15 per cent market share.
Larger spectrum
The merged entity can also own larger
quantum of spectrum. For example, in
Karnataka over 90 Mhz of 2G spectrum has
been allocated and if TRAI proposals are
implemented, the merged entity can own
22.5 Mhz of spectrum. In addition, the
merged entity can buy spectrum through an
auction or any market-based mechanism.
“The Authority noted that fragmentation of
spectrum, a valuable but finite resource, was
not desirable in the telecom industry where
size is increasingly becoming an advantage in
the delivery of telecommunication services to
the people. It, therefore, felt that
consolidation of spectrum was something to
be facilitated,” TRAI said.
It has also scrapped its earlier proposal to
have at least six operators in each circle post a
merger. The regulator said the number of
operators in a circle does not have any
relevance.
There are nearly 13 operators in each circle at
present. As at the end of December 2009,
seven major players had a share of 98.65 per
cent of the telecom market while six new
players had a collective share of only 1.35 per
cent. Even as at the end of June 2011, the
seven major players continue to enjoy a
significant share of 93.82 per cent while the
six new players cumulatively have a share of
only 6.18 per cent.
'India's mobile phone demand seen at
350 mn'
Demand of mobile phones in India is expected
to reach 350 million units per annum by 2020,
says a study by industry body FICCI with
market analyst firm Ernst and Young (E&Y).
"India is the world's second-largest telecom
market after China, with the total wireless
subscriber base crossing 850 million at the
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November 2011 30
end of June, 2011. By 2020, the handset
demand is projected to reach 350 million a
year," the study said.
At present, Indian mobile handset market is
estimated to be in around 130 million
handsets per annum.
It added that 505 million handsets are
estimated to be manufactured in India, during
the same year.
The study has found that average selling price
(ASP) of handsets in the country is estimated
to increase to Rs 2,950 by 2020 as compared
to Rs 2,300 in 2010.
"In India, handsets are categorised as high,
medium, low, and ultra low cost ASP devices.
The medium ASP segment is likely to be the
fastest growing segment in terms of volume,"
Prashant Singhal, Telecom Industry Leader,
E&Y, said.
He added that affordability of feature-rich
handsets is also expected to be a key enabler
of handset adoption.
The study sees untapped rural market to
provide handset players the next phase of
growth.
"The number of 3G subscribers expected to
cross 300 million by 2020, fuelling the growth
of 3G-enabled handsets. A favourable policy
and regulatory initiative conducive for
handset manufacturing in India is expected to
drive sustainable growth in this segment," the
statement said.
The study recommends that there is need to
set up handset manufacturing cluster parks
that would enable a sustainable ecosystem for
the manufacture of mobile handsets in the
country.
India eyes 1 pc global tourists, 25 mn
new jobs in next 5 years
At least 1 per cent of the total number of
global travellers by 2016, about 25 million
new jobs in next five years, additional foreign
exchange earnings of $15.7 billion.
These are the targets set for the 12th Five-
Year Plan by the Tourism Ministry which
wants the government to recognise tourism
as the vehicle for inclusive, sustainable and
faster economic growth.
In a detailed presentation made to Prime
Minister Manmohan Singh, the Tourism
Ministry has outlined the huge potential of
the sector in creating new employment
opportunities and its direct and indirect
contribution to the economy. But that would
require a four-fold increase in the budgetary
allocation for the sector for the plan period.
The ministry has pitched for an allocation of
Rs 21,900 crore for the five-year period, up
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November 2011 31
from Rs 5,156 crore that was given to it in the
11th Plan.
Tourism Minister Subodh Kant Sahai said the
tourism potential in this country had
remained largely untapped. While China
attracts 5.8 per cent of the global
international traffic every year, India’s share
of the world market remains a lowly 0.59 per
cent. Much smaller countries in the
neighbourhood like Malaysia, Singapore and
Thailand attract many more foreign tourists
than India.
Sahai said taking India’s share of world’s
tourism market to 1 per cent by 2016 was a
realistic target.
The economy is projected to grow at about 9
per cent in the coming years while the growth
of the Services sector is likely to be around 12
per cent a year. If the tourism industry keeps
pace with the growth in the services sector,
India’s target of getting 1 per cent of the
global travellers by 2016 would be a reality,
he said.
India had been clocking a 12-14 per cent
increase in the foreign tourist arrivals during
the middle of the last decade before the
global economic recession badly affected
tourist inflows.
In 2010, India’s tourist arrivals grew by 8.1 per
cent.
Jute goods export may touch Rs 1,500
cr
Jute goods export from India is likely to touch
Rs 1,500 crore this fiscal, a top official of the
National Jute Board said.
Jute goods worth Rs 1,400 crore were
exported to various countries in 2010-11, and
this time it may touch Rs 1,500 crore, the
Board's Marketing Officer B Narasimhulu told
after opening an exhibition-cum-sale of jute
products.
He said the Board, which is under the textiles
ministry, has been encouraging small
entrepreneurs in making jute products and
providing 20 per cent capital expenditure
subsidy for the jute mills.
Besides, it is conducting training programmes
for small groups and NGOs for making various
jute products, he added.
Narasimhulu said the Board is also organising
exhibitions at various places to encourage
artisans to set up their stalls free of cost.
India's coffee exports up 42% : ICO
India's coffee exports rose by 42 per cent to
3,60,540 tonnes in the 2010-11 coffee year
ended September this year, according to a
report by the International Coffee
Organisation (ICO).
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November 2011 32
Shipments of the brew from the country
stood at 2,53,895 tonnes on the 2009-10
coffee year (October-September), ICO data
said.
According to the government-owned Coffee
Board of India, the country's exports of the
brew rose by 31 per cent to 3,60,540 tonnes
in the last coffee year against 2,71,859 tonnes
in the 2009-10 coffee year.
However, the United States Department of
Agriculture (USDA) has put coffee exports
from India much lower than that of the Coffee
Board and the ICO.
According to USDA, the country's coffee
exports rose by 30 per cent to 3,30,000
tonnes in 2010-11 coffee year against
2,53,740 tonnes in the year-ago period.
India largely exports coffee to Italy, Germany,
Russia, Belgium and Spain.
The global body on coffee has put the
production in 2010-11 coffee year at about
3,03,600 tonnes, while Coffee Board has put
the output at 3,02,000 tonnes.
According to USDA, India had produced
3,02,040 tonnes of coffee in the 2010-11
coffee year.
India to continue dominating KPO
sector
India will continue to be at the forefront of
the development of knowledge process
outsourcing (KPO) industry for the
foreseeable future, says a report.
However, in the recent years, a number of
other viable KPO sourcing hubs have emerged
in the Asia-Pacific region, says a report from
independent technology analyst firm Ovum.
The potential KPO delivery locations, including
China, the Philippines and Sri Lanka, are
unlikely to challenge India's dominant position
in the market, but they have enabled many
vendors to pursue a multi-shore strategy, it
said.
Ed Thomas, Ovum analyst and author of the
report, said: "Being able to deliver services
from multiple locations means providers can
offer existing clients greater flexibility and
minimise the risks associated with having all
their operations in one facility, while at the
same time tapping into fresh labour pools".
The KPO industry is maturing and the range of
services being provided has expanded as the
market has developed. From its initial
beginnings in research and analytics, he
Page 36
November 2011 33
definition of KPO currently includes a variety
of services, such as legal process outsourcing
and clinical trial management, among others.
On the latter topic, Ed Thomas said: "A major
challenge facing life sciences companies is the
growing cost of R&D and, as a result, a
growing number of pharma companies are
turning to outsourcing and off-shoring as
ways of reducing these costs.
Golden time for India to enter sugar
export mkt: Sharad Pawar
With projections of surplus sugar production
this marketing year, Agriculture Minister
Sharad Pawar said the country should enter
the export market in a big way and capitalise
on higher global rates.
Sugar production in India, the world's second-
largest sugar producer and biggest consumer,
is estimated at 25-26 million tonnes in the
2011-12 marketing year (October-
September), as against the annual domestic
demand of about 22 million tonnes.
The government is yet to announce the export
policy for the current marketing year. The
country had exported 2.6 million tonnes in the
previous marketing year, of which 1.5 million
tonnes was through Open General Licences
(OGL), in three equal tranches.
"There is surplus sugar. This is a golden time
for India to enter the global market in a big
way and get a better price, which will
ultimately be provided to cane-growers,"
Pawar told reporters.
Sugar industry body ISMA has been
demanding the export of 4 million tonnes of
sugar this marketing year to help mills
improve their cash flows.
At the current global price of about USD 670-
680 per tonne, sugar mills will earn a
premium of Rs 3.5 per kg from exports of the
sweetener vis-a-vis domestic rates if the
government allows overseas shipments.
Food Minister K V Thomas had said that an
Empowered Group of Ministers (EGoM) on
Food, headed by Finance Minister Pranab
Mukherjee, might meet on November 16-17
to decide on allowing sugar exports this
marketing year.
"We will work out a scheme for export of a
certain quantity of sugar, which will be
favourable to both the industry and farmers,"
Thomas had said.
He had said the issue will be discussed in the
meeting of the the EGoM on November 16-
17. "We have no problem with exports of a
certain quantity. We will work out a scheme
for November and December," Thomas had
said.
Sugar production in India rose to 24.3 million
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November 2011 34
tonnes in the 2010-11 marketing year from
nearly 19 million tonnes in the previous year.
In the current marketing year, the
government has pegged output at 25 million
tonnes, while the industry has estimated
production at 26 million tonnes.
Dry ports to boost India's trade
The Union government is considering a pact
with neighbouring countries for development
of dry ports, to global standards. The United
Nations Economic and Social Commission for
Asia and the Pacific (Unescap) is trying to help
Asian countries reach an agreement.
A dry port is an inland terminal directly
connected by rail or road to a sea port,
providing services for handling, temporary
storage, inspection and customs clearance for
international freight. India has 155 places so
notified, with 89 in the development stage.
In the north, Tughlakabad (Delhi) and Dadri
(Uttar Pradesh), already functioning as inland
container depots (ICDs), could be integrated
with dry ports in Pakistan. Similar integration
could be had for Mulund in Mumbai and
another in south Bangalore. “Such ports will
be connected through roads and railways,
resulting in development of infrastructure in
these corridors. This will bring down cost for
traders and provide them greater access to
international markets, thereby increasing
trade,” a finance ministry official told.
Dry ports are usually located where networks
of different transportation modes converge.
This reduces transport costs and transit time,
spurring investment in the surrounding areas.
Unescap says for geopolitical and historical
reasons, the Asia-Pacific region has been
better connected with Europe and North
America than with itself. With the deepening
of economic integration in the region in
recent years, dry ports in the landlocked
countries can play an equivalent role as sea
ports for intra-regional trade.
Some countries in Asia such as China, India,
Malaysia, South Korea, Russia and Thailand
have established functioning dry ports. In
India, the Container Corporation of India has
put in place a network of 59 ICDs, of which 49
are export-import depots. These customs-
bonded ICDs are dry ports in the hinterland
and provide all port facilities to the
customers. The terminals are mostly linked by
rail.
Dry ports can also help reduce carbon dioxide
emissions. Unescap had calculated that the
Birgunj inland depot in Nepal, through dry
port operation and rail connection, had
resulted in reduction of such emission of
almost 58,000 tonnes-equivalent in 2008-
2009. The Birgunj depot handles containers
transported between the dry port and the
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November 2011 35
Kolkata/Haldia ports in India.
Gold zooms to all-time high of Rs
29,000+
Gold price crossed the all-time high level of Rs
29,000 while silver coins touched the record
Rs 68,000 mark in the bullion market here on
strong demand propelled by ongoing marriage
season and deepening financial worries.
Gold gained Rs 200 to touch an all-time high
of Rs 29,140 per 10 grams as the metal rallied
in overseas markets to a seven-week high on
concerns that European leaders will be unable
to tame the region's sovereign-debt crisis.
Silver coins followed suit and shot up by Rs
2,500 to an all-time high of Rs 68,000 for
buying and Rs 69,000 for selling of 100 pieces.
Traders said heavy buying jewellery makers to
meet the marriage season demand and
shifting of funds by investors to bullion from
melting equity boosted the trading sentiment.
Gold of 99.9 and 99.5 per cent purity surged
by Rs 200 each to Rs 29,140 and Rs 29,000 per
10 grams.
The metal gained 0.7 per cent to USD
1,802.93 an ounce in Singapore, the highest
level since September 21. Silver also climb 0.5
per cent to USD 35.13 an ounce.
Sovereign also rose to record level by adding
Rs 150 to Rs 23,150 per piece of eight grams.
Silver ready spurted by Rs 650 to Rs 58,000
per kg and weekly-based delivery by Rs 390 to
Rs 57,870 per kg.
India PC market grew 13% in 3rd
quarter
The combined desk-based and mobile PC
market in India totalled nearly 2.5 million
units in the third quarter of 2011, a 13 per
cent increase over the same period in the last
calendar year, according to technology
research firm Gartner, Inc.
"This growth was primarily driven by the
mobile PC market which grew 29 per cent
year-on-year in the third quarter of 2011,"
said Vishal Tripathi, Principal Research Analyst
at Gartner.
"A number of festivals helped drive demand in
the consumer market in India. The third
quarter was the best quarter in the history of
the Indian PC industry as overall PC shipments
crossed 3 million units for the first time," he
said.
The consumer segment accounted for 55 per
cent of PC shipments.
"However, we need to be cautious and should
not expect the same success to be replicated
in the fourth quarter. After the post-festive
season there will be sluggishness in the
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November 2011 36
market," Tripathi said.
All the major multinational PC vendors
experienced double digit growth in PC
shipments in the third quarter of 2011.
Multinational brands contributed more than
half of the total PC shipments with shipments
from Acer, Dell, HP and Lenovo, the top four
vendors, representing 51.1 per cent of the
market.
India's Internet users top 100 m in
Sept
A survey on Internet usage has found that
India's Internet users crossed 100 million in
September 2011, a growth of 13 per cent
against last year.
At this rate of growth, the country is poised to
touch 121 million users by December 2011.
The survey was conducted by Internet and
Mobile Association of India (IAMAI) and IMRB.
It looked at users in urban and rural India.
The study has found that among the active
Internet users in urban India-active implies
users who had used the Internet at least once
in the last one month-89 per cent of the 28
million active users in 30 cities used the
Internet primarily for e-mail, followed by 71
per cent for social networking and visiting
Web sites.
Music, videos and photos came at the low
end, with just 49 per cent usage. But this was
the top usage (46 per cent) in rural India.
Urban occurrence
Commenting on this, Dr Subho Ray, President
of IAMAI, said Internet usage in urban areas
had more to do with business-related
communication.
“This is one of the key reasons for high usage
for e-mails. Also we need to keep in mind that
while on the move people use the Internet to
access or respond to emails more than
chatting or accessing social networking sites,”
he told.
The survey also found that the youth was
driving the usage of the Internet in the
country, with schoolchildren (21 per cent),
college students (27 per cent) and young men
(27 per cent) in the 21-35 age group
accounting for 75 per cent of urban Internet
usage.
Among India's cities, Mumbai (6.2 million) had
the highest number of active Internet users,
followed by Delhi/NCR (5 million), Kolkata (2.4
million) and Chennai (2.2 million). IT city
Bangalore with 1.7 million had the same
number of users as Ahmedabad, while
Hyderabad (1.8 million) had marginally higher
users.
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November 2011 37
Scope for greater private role in
higher education: E&Y
There is scope for greater private sector
participation in higher education, says a
recent Ernst & Young report.
The report, brought out in collaboration with
industry chamber, Federation of Indian
Chambers of Commerce and Industry,
presents a case for loosening regulatory
framework.
Private educational institutions have been
mushrooming in the past few years. The
percentage of students enrolled in unaided
private institutions has also been growing,
according to the report.
Education is a lucrative business currently as
India figures at the top of the most-sought
after markets in the world with a population
of 234 million in the 15 to 24 years age group,
says the report.
With the implementation of the Right to
Education Act, a surge in enrolment at the
primary and middle levels is expected, which
would create a huge eligible pool for
enrolment in higher education in the long
term, it says.
State governments are focussed on capacity
creation and a bulk of the expenditure is
unplanned, directed toward maintenance and
administration of existing institutions, claims
the report.
The Gross Enrolment Ratio (GER) of India is
rising but is not as yet on par with
international GERs. The Government has set a
target of achieving 30 per cent GER by 2020,
which means about 40 million students
enrolments. At present, there are 14.6 million
students in higher education sector. The
private sector wants to target this additional
capacity of 25 million seats over the next
decade.
E&Y estimates an investment of Rs 1 million
crore, an average of Rs 0.4 million per seat. Of
this, the private sector would be required to
contribute Rs 50,000 crore (assuming that
private sector accounts for 52 per cent of
total enrolment).
The report lists the corporate and academic
collaborations private players must make and
the marketing and brand building initiatives
required to keep the business of education
going good.
Rubber production increases 8.4% in
Oct
Rubber production in the country rose 8.4 per
cent to 89,300 tonnes during October. The
spurt in production was across all geographies
of the rubber-growing belt in the country,
sources in the Rubber Board said. Clear skies
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November 2011 38
in October after bounteous rains during
September were the principal reason behind
the sharp rise in production.
Going by the early indications, production
during the current month is also expected to
look up as weather has remained favourable
so far. Given the remunerative prices
prevailing in the market, farmers are also
putting in extra effort to boost production.
The tapping intensity has increased along with
growing area coming under rain guarding.
With the onset of the North-East monsoon,
rain guarding is also expected to enable
greater tapping operations, which is likely to
boost production during the current month.
Consumption of rubber dipped 6.3 per cent to
76,000 tonnes. However, there has been an
improvement of 2,000 tonnes over the
consumption last month. Rubber Board
sources attributed the fall in consumption to
reduced off-take by automobile companies in
the Indian market and global uncertainties.
The problem has been compounded by a
major slack in consumption by one specific
Indian company, sources said.
However, the overall consumption for the first
seven months of the current fiscal still
remains positive. The reduced off-take by
automobile companies is just beginning to
bite and things will turn positive if the
automobile market rebounds in the coming
months, the sources pointed out. Rubber
production increased by five per cent to
4,80,700 tonnes during April-October 2011.
Rubber imports remained lower during April-
October as against the corresponding period
of last year. This was in contrast to the export
sector which witnessed a strident growth.
Rubber stocks at the end of October was
2,47,000 tonnes as against 2,53,877 tonnes
last year.
India a top priority market:
McCormick
“We have identified a few product platforms
such as cooking ingredients (sauces and
pastes) and convenience foods (ready-to-cook
and ready-to-eat,” said Mr Satish Rao,
Managing Director, Kohinoor Speciality Food
Pvt Ltd., McCormick's India joint venture.
This is part of a strategy of the global food
giant to grow and expand the Kohinoor
basmati brand.
The global food and flavour giant is eyeing
revenues of $85 million from India in its first
year operations this fiscal.
“India is a top priority market and is in line
with our emerging market growth strategy.
We foresee India to be a significant business
in 10 years and are committed to invest in this
fast growing market,” said Mr Alan Wilson,
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November 2011 39
McCormick's Chairman, President and CEO,
addressing a press conference.
As part of its emerging market growth
strategy, McCormick recently formed a 85:15
joint venture with Kohinoor Foods Ltd, a
manufacturer and marketer of basmati rice.
McCormick has invested Rs 520 crore in the
joint venture that will market the Kohinoor
basmati brand in India.
McCormick also plans to grow its packaged
food business in India acquired from Kohinoor
Foods.
“The Indian packaged food industry is
estimated to be $10 billion and is growing
along with families' disposable income,
making an attractive proposition,” Mr Wilson
said.
Investment
The company has so far invested about $150
million in India, from where it also sources
various spices such as pepper, turmeric and
ginger among others for its global operations.
McCormick has a 26 per cent stake in Kerala-
based Eastern Condiments Pvt Ltd.
Rs 500 cr more to be spent on
innovation in farm, allied sectors
The National Agricultural Innovation
Programme (NAIP) will spend Rs 500 crore
more in the next two years on various
projects to add value to agriculture and allied
sectors.
The project cost is pegged at Rs 1,200 crore.
The programme is aimed at developing
technology-based innovations to improve the
income of farmers and those living on allied
sectors. The project is funded by the World
Bank and is guided by Indian Council of
Agriculture Research.
“The programme has already started yielding
results. Though they are implemented in
certain pockets, they can be replicated to
other areas,” Dr Bangali Baboo said.
Dr Baboo was here to address the
‘Innovations for industry' (crop sciences) at
the National Academy of Agricultural
Research Management (NAARM).
Giving an example of replicable projects, Dr
Baboo said a project in Ratnagiri
(Maharashtra) had developed a model that
helped fishermen go to a particular place in
the waters to catch fish. “The model uses
information sent by satellites. It saves time
and fuel for fishermen,” he said.
The meet showcased innovations from seven
Government research institutes such as
Central Tobacco Research Institute,
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November 2011 40
Directorate of Sorghum and Directorate of
Rice Research.
78% of SMEs in packaging industry to
expand
In line with the optimistic trend seen since
December 2010, 78.3 per cent of the SMEs in
the packaging industry which participated in a
survey carried out by IndiaMART Knowledge
Services said that they were planning to
increase their production capacity, while 21.7
per cent felt otherwise.
A majority of the respondents – 69.8 per cent
– are looking to expand their employee base,
while the remainder is not so keen to do so.
Only 48.1 per cent of the participants were
interested in expanding their office network,
while a majority (51.8 per cent) did not feel so
inclined. Some 63.2 per cent of respondents
had high expectations for the next quarter in
terms of business prospects, 16.9 per cent
had low expectations, and 19.8 per cent
believe there will be no change. Forty-nine
per cent expect the market to grow in the
next quarter, 30.1 per cent expect negative
growth, and only 20.7 per cent said they
expect the market to remain the same.
The participating SMEs are involved in flexible
packaging, glass packaging, liquid cartons
packaging, metal packaging, paper-based
containers and rigid plastic packaging. When
asked whether their order book had increased
after December 2010, around 30.1 per cent of
the participants said that it had increased by
more than 20 per cent, while 34 per cent said
that the orders increased between zero and
20 per cent. There was no change for 31.1 per
cent of the respondents and only 4.1 per cent
witnessed a decline.
Forging industry to see over 20%
growth a year
The Rs 15,000-crore Indian forging industry is
poised to grow by over 20 per cent a year and
see investment of about $3 billion (about Rs
15,000 crore) by 2015 for capacity expansion,
according to the Association of Indian Forging
Industry.
The industry, which thrives on 70 per cent of
its business coming from automotive sector
supplies, says that it is undeterred by the
current slowdown in the sector and turmoil in
other markets.
From an average growth of about 25 per cent
a year, the automotive sector in India this
year has come down to about 8 per cent. This
is not small even by any comparison to other
markets which have had de-growth. But what
is interesting is the potential for the domestic
automotive market to grow to a 10 million per
annum from three million. This will sustain
growth, Mr Baba Kalyanai, Chairman and
Managing Director Bharat Forge Ltd, said.
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November 2011 41
Addressing a press conference at the 20th
International Forging Congress -IFC 2011, Mr
Deven Joshi, President AIFI, said the overall
production of forgings increased to 2.3 million
tonnes during the year ended March 31, 2011,
from 1.8 million tonnes in 2009-2010,
registering a growth of over 28 per cent. This
is predicted to reach 4 million tonnes by 2014.
Mr Vidyashankar Krishnan, Managing Director
of MM Forgings and Ex-president-AIFI, said
that 75 per cent of the total forging business
comes from the domestic market. By offering
innovative products, the forging industry is
seeking to increase the overall exports from
25 per cent. Significantly, the domestic
opportunity itself is pretty huge.
The IFC, which is held once every three years,
is being hosted in India after a gap of two
decades. The four-day event has over 1,000
delegates from across the globe.
Indian dairy industry seen at Rs 5 lakh
cr
The value of the Indian dairy industry is
expected to touch Rs 5 lakh crore by 2015,
with milk output pegged at 190 million tonnes
at the end of the period, industry chamber
ASSOCHAM said.
According to an Associated Chambers of
Commerce and Industry of India (ASSOCHAM)
study, the Indian dairy industry is growing at
the rate of 10 per cent per annum.
"Milk production is likely to reach about 190
million tonnes in 2015 from current level of
about 123 million tonnes," the ASSOCHAM
study, titled, 'Indian Dairy Industry: The Way
Ahead', said.
India -- the world's largest milk producer –
accounts for around 20 per cent of global milk
production, with most of it consumed
domestically, it added.
In India, about 60 per cent of milk is
consumed in liquid form, while the remaining
40 per cent is used in the form of butter,
clarified butter (desi ghee), cheese, curd,
paneer, ice cream, dairy whiteners and
traditional sweets.
"Growing at about 10 per cent annually, the
Indian dairy industry is predominantly
controlled by the unorganised sector, which
accounts for nearly 85 per cent," ASSOCHAM
Secretary General D S Rawat said in a
statement.
About eight crore rural families across India
are engaged in dairy production and the rural
market consumes over half of the total milk
produced, he added.
According to the study, an upward spiral in
prices, the lack of proper infrastructure like
cold storages and absence of a transparent
milk pricing system are affecting retail
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November 2011 42
consumption of milk and leading to escalating
milk prices in the domestic market.
The lack of fodder, resulting in low yield from
cattle, is another problem affecting the
sector, it added.
Despite overall food inflation easing
marginally to 10.63 per cent for the week
ended November 5, milk prices grew at a
faster pace of 10.74 per cent during the
period.
The private sector can play a pivotal role in
reducing the cost of milk production by
employing advanced techniques to enhance
productivity, providing breeding facilities for
cattle and by developing processing and
marketing infrastructure, Rawat said.
Andhra Pradesh, Bihar, Haryana, Gujarat,
Madhya Pradesh, Maharashtra, Rajasthan and
Uttar Pradesh are the leading milk producing
states in the country.
Indian food market to treble to $900-
bn by 2020: Report
Indian food market is likely to triple to $900
billion by 2020 from the current $300 billion,
according to an industry report.
"Accounting for 16 per cent of the world
population and 12 per cent of the world food
production, India is one of the largest
producers and consumers of food in the
world. Indians spend around 35 per cent of
their total spend on food - $300 billion
annually that will grow to about $900 billion
by 2020," a Boston Consulting Group report
'India Food Processing: Mission 2020' said.
However, the report adds food processing
levels are substantially lower than most
emerging and developed economies with only
six per cent of the agricultural produce in the
country being properly processed. Of the total
food consumed today ($300 billion), 20 per
cent is processed and it is expected to
increase to 35 per cent (of $900 billion) by
2020.
"Food processing system needs to be
remodelled. We have to figure a way to invest
more in people and capacity among other
things," BCG India principal Nimisha Jain said.
"Food processing is important as it helps to
extend shelf life and reduces wastage,
thereby increasing food supply," Danone
Director Eric Soubeiran said.
The domestic food processing industry is likely
to invest Rs 14,000 crore in the next two
years, according to Ficci. Most of the
investment is likely to come from the existing
companies.
"It is difficult to estimate what will be the
investment cost but company wise, Danone is
setting up manufacturing unit, Britannia is
going towards north-east, we at Nestle are
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November 2011 43
doubling all our capacities. So there is
tremendous interest in investing," Nestle
chairman and MD and Ficci food processing
committee chairman Antonio Helio Waszyk
said. The report also found that last year
there was a shift from pulses to poultry, and
this year it is towards fruits and vegetables.
Fruits and vegetables today account for 25 per
cent of the food consumed and by 2020 it is
likely to be 40 per cent of the food consumed.
Public sector spending on healthcare
to double in 12th Plan
The government said it is studying the report
of an expert committee on healthcare,
constituted by the Planning Commission,
which if implemented will increase the public
expenditure in the sector to 2.5 per cent of
GDP by the end of 12th Five Year Plan.
In the current Five Year Plan, the public
expenditure on healthcare stands at 1.2 per
cent.
In a written reply in Lok Sabha, Minister of
State for Planning Ashwani Kumar said the
High Level Expert Group (HLEG) on universal
health coverage constituted by the Planning
Commission has given its recommendations.
"The report of the HLEG is under examination
and recommendations approved by the
government would be implemented in the
12th Five Year Plan (2012-17)... The
implementation of the proposed scheme will
increase the public expenditure on health
from the current level of 1.2 per cent of GDP
to 2.5 per cent by the end of the 12th Plan,"
he said.
As per National Health Accounts, total health
expenditure, including both public and private
sectors, stood at 4.25 per cent of the GDP in
2004-05.
The recommendations of the HLEG includes
using general taxation as the principal source
of health care financing.
"HLEG has stated that general taxation is the
most viable option for mobilising resources to
achieve the target of increasing public
spending on health and creating mechanisms
for financial protection," Kumar said.
Spices exports up 29% in value
Indian spices exports have increased by 29 per
cent in rupee value terms to Rs 4,165.59 crore
($920.55 million) in April-September during
the current fiscal. In dollar terms, the increase
was 32 per cent.
The total exports of spices and spice products
stood at 2,37,585 tonnes during the period, a
decline of 19 per cent in volumes.
About 2,94,925 tonnes of spices and spices
product valued at Rs 3,220.16crore ($699.25
million) were exported during the same
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November 2011 44
period in the previous year, the Spices Board
said.
During April to September 2011, export of
pepper, cardamom (small), cardamom (large),
ginger, turmeric, nutmeg and mace and other
spices such as tamarind, asafoetida, have
shown an increase both in volume and value
compared to the previous year.
The export of value-added products, curry
powder/paste has also increased both in
volume and value. However, in the case of
chilli, spice oils and oleoresins and mint
products, the increase is in terms of value
only.
The export of other spice items has shown a
decline both in volume and value compared
to the last year.
About 11,250 tonnes of pepper valued Rs
311.52 crore have been exported during the
period against 9,250 tonnes valued Rs163.10
crore in the previous year. The unit value of
pepper has increased from Rs 176.32 per kg to
Rs 276.91 per kg.
A total quantity of 1,825 tonnes of cardamom
(Small) valued Rs 161.00 crore was exported
against 335 tonnes valued at Rs 39.84 crore.
During the period, a total quantity of 280
tonnes of cardamom (large) valued Rs 22.68
crore have been exported against 210 tonnes
valued Rs 9.97 crore of last year.
The unit value of cardamom (large) has
increased from Rs 474.68 per kg in April to
September 2010, to Rs 809.82 per kg during
April to September 2011.
About 41,500 tonnes of turmeric valued at Rs
450.76 crore was exported against 28,500
tonnes valued Rs 389.59 crore last year.
Compared with the spices export target of
500,000 tonnes valued Rs 6,500 crore fixed
for the current financial year, the
achievement of 2,37,585 tonnes valued Rs
4,165.59 crore during April to September
2011, is 48 per cent in terms of quantity 64
per cent in rupee and 63 per cent in dollar
terms of value.
Commercial aviation to grow by 9%
The commercial aviation sector in India and
the Middle East is expected to achieve overall
annual growth of 9 per cent and 10 per cent,
respectively, for several years to come and
will account for 11 per cent of the total
aircraft deliveries worldwide over the next
decade.
A new report by aviation intelligence firm
OAG and UBM Aviation, reveals a striking
contrast of opportunities and challenges in
two of the world's fastest-growing travel
markets.
The OAG India and Middle East Aviation
Page 48
November 2011 45
Market Analysis bases its projections on the
consistently growing demand for air travel, a
surge in aircraft orders, steadily increasing
inbound tourism, spectacular airport
development plans and the enthusiasm of
investors for the sector.
"However, both markets face immense
challenges in meeting the expected future
growth in passengers and aircraft operations,
which require massive expansion of
infrastructure and high-performing aviation
systems," the report said.
In India, the government's open-sky policy has
enticed many foreign aviation leaders to enter
the market, spurring rapid industry expansion
boosted by the growing population and
increased demand for international travel and
trade, as well as an increasing VFR (Visiting
Friends and Relatives) market, the report said.
However, airlines must contend with
insufficient infrastructure and challenging
political bureaucracy in India. "It is estimated
that in the next decade, the Indian market will
absorb approximately 316 commercial jets
and need three times the number of airports
that it has today, whilst at the same time, the
country doesn't have enough skilled labour to
maintain or to fly the aircraft," the report,
which was released here, said.
"Additionally, intense foreign competition
prevents domestic carriers from international
expansion, deeply affecting balance sheets," it
said.
Mario Hardy, Vice President - Asia Pacific,
UBM Aviation, said: "India is amongst the
world's most promising aviation markets and
the region has already taken steps to address
some issues through the recent privatisation
of airports." "Skilled aviation personnel in
developed nations with stuttering economies
may want to look East for opportunities, but
the region is not without risk -- there is
significant progress yet to be made in airport
modernisation, aircraft maintenance, pilot
training and air cargo services," he said.
"It remains to be seen whether the Indian
aviation industry can handle the region's
relentless growth, with its Middle Eastern, oil-
rich neighbours all too keen to take on more
capacity with new fleets of super-jumbos
based in the Gulf and hundreds more on
order," Hardy said.
The OAG market analysis of India and the
Middle East concludes that in order to cut
costs, boost efficiencies and spur competition,
mergers of the more than 30 competing
airlines in the Middle East and India will be
necessary.
'Business intelligence mkt to grow
15.6%'
The market for business intelligence (BI)
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November 2011 46
software in India is forecast to reach a
revenue of USD 81.5 million in 2012, a 15.6
per cent increase over the previous calendar
year, according to technology researcher
Gartner, Inc.
Worldwide BI software market revenue is
forecast to grow 8.7 per cent to reach
approximately USD 12.7 billion in 2012,
Gartner said in a statement.
Gartner analysts said the market for BI
platforms would remain one of the fastest
growing software markets despite
expectations of an economic slowdown.
Organisations continue to turn to BI as a vital
tool for smarter, more agile and efficient
business, and they are increasing their current
usage scenario from just an information
delivery mechanism.
"The BI market has remained strong because
the dominant vendors continue to put BI,
analytics and performance management at
the centre of their messaging, while end-user
organisations largely continue their BI
projects, hoping that resulting transparency
and insight will enable them to cut costs and
improve productivity and agility down the
line," said Bhavish Sood, research director at
Gartner.
"It's a sign of the strategic importance of BI
that investment remains strong".
Among the sub segments, BI platforms is still
expected to be the largest in pure revenue
terms, while Corporate Performance
management (CPM) suites is expected to
grow the highest.
Foodgrain productivity up 8 pc at
1,921 kg/hectare in 2010-11
Foodgrain productivity rose by 8 per cent to
1,921 kg per hectare in 2010-11 crop year,
Parliament was informed.
India's foodgrain productivity stood at 1,798
kg per hectare in the 2009-10 crop year (July-
June), Minister of State for Agriculture Harish
Rawat told the Rajya Sabha.
"The productivity of foodgrains has increased
from 1,715 kg per hectare in 2005-06 to 1,798
kg per hectare in 2009-10 and further to 1,921
kg per hectare in 2010-11," Rawat said.
The average annual growth in the agriculture
and allied sectors during the first four years of
the 11th Five-Year Plan (2007-08 to 2011-12)
was 3.2 per cent as against the targeted rate
of 4 per cent, he added.
"The average growth in Gross Domestic
Product (GDP) of agriculture and allied sectors
suffered a setback due to severe drought in
many parts of the country during 2009-10 and
drought/deficient rainfall in some states
namely Bihar, West Bengal, Jharkhand and
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November 2011 47
East Uttar Pradesh in 2010-11," he said.
However, the GDP growth for agriculture
sector touched 6.6 per cent in 2010-11 -- the
highest growth rate achieved in last six years -
- on account of the corrective actions taken by
the government, the minister informed the
house.
Rawat also said that investments in the farm
sector in the country have been increasing in
the past five years.
"The level of investment (Gross Capital
Formation) in the agriculture sector has been
increasing over the years from Rs 76,096 crore
in 2004-05 to Rs 1,33,377 crore in 2009-10, he
noted.
This includes public sector investment from
16,187 crore in 2004-05 to Rs 23,635 crore in
2009-10 and private sector investment from
Rs 59,909 crore to Rs 1,09,742 crore in the
same period at 2004-05 prices, Rawat added.
Soon, domain names in all 22 Indian
languages
By mid-2012, vernacular domain names in all
22 Indian languages may secure the approval
of the Internet Corporation for Assigned
Names and Numbers (ICANN).
By the end of this year, the central
government would approach ICANN for
internationalised domain names in seven
additional Indian languages. These are Sindhi,
Kashmiri, Kannada, Oriya, Malayalam,
Manipuri and Assamese.
Internationalised domain names (IDNs)
include characters other than the letters of
the basic Latin alphabet (A-Z). Domain names
are entered in the browser’s address bar to
access any website. ICANN allows domain
names to be used by a country’s or a
territory’s internet community. This means
instead of a two-letter country code in Latin
characters (like .in and .uk), the IDN country
code top level domains can use the country's
official language. So, .bharat can be used in
Devnagiri script or any other Indian language
script.
“Once we get ICANN’s approval, the central
government, along with the department of
information technology and Nixi, would look
into the applications and usage of domain
names in the local languages. Getting the
ICANN's approval is just the first step. After
this, we would need the required
infrastructure and administrative experience,”
said Mahesh Kulkarni, associate director and
head of the department, Centre for
Development of Advanced Computing's
(CDAC) graphics and intelligent script
technology.
Kulkarni said roll-out of all the 22 languages
would not happen immediately. “We would
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November 2011 48
like to gather experience before we roll out all
the language domain names,” he said.
Domain names are divided into two segments
— generic top level domains (gTLDs) and
country code top level domains (ccTLDs). The
gTLD segment accounts for domain names like
.com, .net, .org, and .info, while ccTLDs are
country specific like .in (India), .de (Germany)
and .uk (UK).
According to the Internet and Mobile
Association of India, the country is expected
to have 121 million internet users by the end
of this year. Currently, India has 100 million
users, of which 97 million are active users.
Many analysts feel the availability of local
language domain names would help get
people hooked to the web.
CDAC, the department of information
technology and state governments have been
conducting workshops to spread awareness
about the use of local IDNs. “Workshops are
crucial to the success of the IDN initiative for
Indian languages,” said Tulika Pandey,
additional director, e-infrastructure division,
department of information technology.
'Power sector has potential to create
6 lakh jobs in 2012-17'
The country's fast growing power sector has
the potential to create as many as six lakh
jobs during the 12th Five-Year Plan period
(2012-17), a top government official said.
The power sector, vital for good economic
growth, is projected to see a capacity addition
of about 1,00,000 MW during 2012-17 period.
"... to set up about 1,00,000 MW, we need
about two lakh people for construction of
power plants.
"For operation and maintenance, generation
transmission and distribution, there are
employment opportunities of four lakh people
during the 12th Five-Year Plan," Power
Secretary P Uma Shankar said.
He was speaking at 27th Skoch Summit.
According to Uma Shankar, there is an
estimated requirement of four lakh technical
persons for the power sector during the 13th
Five-Year Plan period (2018-22).
However, he noted that employment
potential in the power sector is going to come
down in the future due to automation and
technical upgradation.
India has embarked on massive capacity
addition plans in the power sector, which is
expected to require about USD 300-400 billion
investment during the 12th Five-Year Plan.
Presently, the country has an installed power
generation capacity of over 1,60,000 MW.
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November 2011 49
India continues to be attractive for
foreign investors: E&Y report
Indian economy has successfully weathered
the global financial crisis, thereby proving its
resilience and depth, suggests an Ernst &
Young report titled, ‘Doing business in India’.
The report explores India’s key sectors,
investment climate, funding scenario, laws
and regulations, to aid companies that are
doing, or plan to do business in India.
The study highlights that India is the second
most preferred destination for foreign
investors, next only to China which leads the
chart.
FDI inflows in India from FY’05 to FY’11 has
risen 31.5 percent reaching a figure of Rs
88,500 crore. Mauritius continues to be the
largest source of FDI inflows into India, with
the leading contribution of 36%. Services
sector is attracting the maximum FDI with a
figure of 18 percent, followed by
telecommunications (8%) and automobiles
(7%).
The report highlights that the aerospace and
defence industry is an emerging market in
India, with the Indian military expected to
spend roughly US$ 80billion, over the next
four-to-five years. About 65–70% of India's
defence requirement is imported from global
aerospace and defence companies.
Automotive is another profitable sector in
India for foreign investors, as it is expected
that by 2020, the vehicle production is set to
treble from the levels in 2009 and the size of
the component sector is set to grow from $30
billion to 110b. Banking is another key sector
where the aggregate limit for all foreign
institutional investors (FIIs) is restricted to
24%, which can be raised to 49% with the
approval of the board/general body.
According to Gaurav Karnik, Tax Partner, Ernst
& Young, “Over the past few years India’s
average growth in GDP has ranged between 6
to 8%,which is inspiring to say the least.
Despite the current global economic
uncertainty, India’s GDP is expected to grow
at 7.7%,which clearly underlines India’s
potential as an investment destination.
The fact that FDI has increased by 31.5%
across major sectors further evidences the
attractiveness of the Indian economy. India
has a liberalise FDI policy and recent
announcement of liberalisation of FDI in multi
and singlebrand retail, showcases the
Government’s endeavour to continue to open
up India for foreign investors.”
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November 2011 50
External Sector : Foreign TradeExternal Sector : Foreign TradeExternal Sector : Foreign TradeExternal Sector : Foreign Trade
(US $ Million)
Year /
Month
Exports Imports Trade Balance
Aggregate Oil Non-oil Aggregate Oil Non-oil Aggregate Oil Non-oil
1 2 3 4 5 6 7 8 9
2008-09 1,82,799 27,547 1,55,253 2,98,834 93,672 2,05,162 -1,16,034 -66,125 -49,910
2009-10 1,78,751 28,192 1,50,559 2,88,373 87,136 2,01,237 -1,09,621 -58,944 -50,678
2010-11 2,51,105 41,403 2,09,702 3,69,769 1,03,952 2,65,817 -1,18,664 -62,549 -56,115
2010-11*
April 17,635 2,748 14,888 31,675 9,454 22,221 -14,040 -6,707 -7,333
May 16,657 2,584 14,074 29,747 8,571 21,176 -13,090 -5,988 -7,102
June 19,837 3,343 16,494 28,649 7,830 20,818 -8,812 -4,487 -4,324
July 16,100 2,927 13,174 29,670 8,357 21,313 -13,570 -5,430 -8,140
August 16,854 3,031 13,823 27,044 6,912 20,133 -10,190 -3,880 -6,310
September 18,204 3,021 15,183 29,512 8,035 21,477 -11,308 -5,014 -6,294
October 17,977 3,482 14,495 29,143 8,060 21,083 -11,166 -4,578 -6,588
November 21,513 3,228 18,285 26,340 7,472 18,868 -4,827 -4,243 -584
December 26,387 3,959 22,428 28,997 8,450 20,547 -2,610 -4,491 1,881
January 24,524 4,824 19,700 31,270 9,695 21,575 -6,746 -4,871 -1,875
February 25,671 3,910 21,762 32,401 9,055 23,346 -6,730 -5,145 -1,584
March 30,418 4,880 25,538 34,267 11,953 22,314 -3,849 -7,073 3,224
2011-12 P
April 25,614 5,052 20,562 33,118 11,240 21,879 -7,504 -6,188 -1,316
May 29,431 5,406 24,025 45,049 13,142 31,907 -15,618 -7,737 -7,881
June 26,990 4,623 22,367 38,939 13,277 25,662 -11,949 -8,654 -3,295
July 29,135 5,661 23,474 40,871 12,942 27,929 -11,736 -7,281 -4,455
August 24,313 .. .. 38,354 10,279 28,075 -14,042 .. ..
September 24,822 .. .. 34,589 9,210 25,379 -9,767 .. ..
P : Provisional. R : Revised. .. : Not Available. Source: DGCI & S and Ministry of Commerce & Industry.
Notes: 1) Data conversion has been done using period average exchange rates.
2) Monthly data may not add up to the annual data on account of revision in monthly figures.
2010-11* - The Data is provisional and would undergo revision.
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November 2011 51
DISCLAIMER
The information contained in this Bulletin, is a
compilation of information from various sources.
While we endeavour to keep the information
updated, we make no claim to the accuracy and
completeness of the same
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