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Indian firms facing talent crunch
By Karishma Vaswani
Business correspondent, BBC News, Mumbai
India's brightest of the bright are in hot demand at global companies
Friday afternoons at the Indian Institute of Technology (IIT) in Mumbai are a time to relax for Ankit Jain, a final-year engineering student.
In between his rigorous exam schedule, Ankit takes some time off from competing with his friends in the classroom to compete with them on the basketball courts.
IIT is one of the hardest schools in India to get into. Every year, 200,000 of India's brightest students try and get into this school. Only 2% of them make it.
Ankit and his friends at the elite institute are considered some of the brightest brains in India. And they have found that they are in hot demand from Indian and foreign businesses.
"There are a lot of recruitment fairs on campus. IBM, Accenture, Google, UBS, Infosys, TCS - all the big companies, Indian and Western are here," Ankit said as he took a break from his basketball game.
"And the salaries they're offering us are amazing. American firms are offering us up to $100,000 (ã53,000) a year - and Indian firms are competing to hire us - with higher wages, housing incentives, car loans, the works."
Rush for talent
Ankit is one of 3 million university students that graduate from schools in India every year. Gone are the times when the only jobs in store for them were careers in the Indian civil service.
Prospects for the Indian professionals are on the rise, thanks to the boom in India's economy. The last set of growth figures showed that India's economy grew by almost 8% in the first quarter of this year - beating expectations.
Thousands of thousands of employees... are being hired in a really short space of time, and there just aren't enough skilled graduates in India to fill these jobs
R. Sankar,
Mercer Human Resource Consulting
This has led to a rush for talent. ICICI Bank, one of India's biggest private lenders, is planning to hire 40,000 people over the next few years.
Reliance, India's biggest conglomerate, has announced its gargantuan retail plans - it will be setting up a chain of supermarkets Wal-Mart-style across India - and is poaching the best and the brightest employees from other firms.
But the frenetic pace of expansion in Indian businesses is leading to a very real problem: there are not enough bright Indian school-leavers to fill the vacant spots in India's corporate payrolls.
'Not enough graduates'
According to Mercer Human Resource Consulting's country head in India, R Sankar, India is facing an imminent talent shortage.
"Just look at the technology sector," he says. "Look at the numbers they're trying to achieve. Thousands of thousands of employees - Tata Consultancy Services has over 70,000 employees - are being hired in a really short space of time.
"And there just aren't enough skilled graduates in India to fill these jobs."
Keeping India's workers interested is key, Mr Deosthalee says.
India's software trade body, Nasscom, says that there could be a shortfall of half a million professionals in the IT sector by 2010.
And it is not just the technology sector that is experiencing a talent crunch. Keeping good staff is a challenge for many other Indian companies too.
The country's top construction and engineering firm, Larsen & Toubro, has seen a 10% drop in employees, losing workers to the fast growing technology and retail sectors.
Those industries are tempting workers with salaries that are a third higher than they were used to. But L&T's Chief Financial Officer, YM Deosthalee, said his firm had found a solution.
"We provide our employees with challenging, dynamic work - work that will keep them interested in what they do," he said.
"It's one of the ways for us to retain competent staff - but it is a challenging environment. Besides the financial ones, 0pportunities to be trained and to travel, though, and work on big projects is what we offer in terms of incentives."
'Curious'
And it is these opportunities that are drawing foreign workers to India's shores. They are being recruited to help offset the challenges of India's talent crunch.
India's booming economy is attracting a lot of foreign interest
Denis Mercier came to Mumbai a year ago to work for the country's biggest software firm, Tata Consultancy Services. He is one of thousands of TCS's foreign employees, many of whom are from Eastern Europe, Brazil, Germany and the UK.
"Every day when I would read the front page of my newspaper in France, I would read about the Indian economy," 24-year-old Denis said, as he lunched with a mixed crowd of foreign and Indian TCS workers in their canteen.
"I was curious - what is happening in this culturally vibrant, fast-growing country? I wanted to find out for myself. And now, to have Indian experience on your resume looks really good too."
Importing skilled workers may be one way for the Indian economy to solve its talent crunch, but it cannot be the solution for long.
The irony is that there are millions of Indians who remain unemployed, working in the informal economy, on odd jobs in construction and building.
The big question is whether India can solve its growing labour crisis by finding a way to get them trained and into the formal labour market, alongside Ankit and his friends.
http://news.bbc.co.uk/2/hi/business/5409252.stm
By Karishma Vaswani
Business correspondent, BBC News, Mumbai
India's brightest of the bright are in hot demand at global companies
Friday afternoons at the Indian Institute of Technology (IIT) in Mumbai are a time to relax for Ankit Jain, a final-year engineering student.
In between his rigorous exam schedule, Ankit takes some time off from competing with his friends in the classroom to compete with them on the basketball courts.
IIT is one of the hardest schools in India to get into. Every year, 200,000 of India's brightest students try and get into this school. Only 2% of them make it.
Ankit and his friends at the elite institute are considered some of the brightest brains in India. And they have found that they are in hot demand from Indian and foreign businesses.
"There are a lot of recruitment fairs on campus. IBM, Accenture, Google, UBS, Infosys, TCS - all the big companies, Indian and Western are here," Ankit said as he took a break from his basketball game.
"And the salaries they're offering us are amazing. American firms are offering us up to $100,000 (ã53,000) a year - and Indian firms are competing to hire us - with higher wages, housing incentives, car loans, the works."
Rush for talent
Ankit is one of 3 million university students that graduate from schools in India every year. Gone are the times when the only jobs in store for them were careers in the Indian civil service.
Prospects for the Indian professionals are on the rise, thanks to the boom in India's economy. The last set of growth figures showed that India's economy grew by almost 8% in the first quarter of this year - beating expectations.
Thousands of thousands of employees... are being hired in a really short space of time, and there just aren't enough skilled graduates in India to fill these jobs
R. Sankar,
Mercer Human Resource Consulting
This has led to a rush for talent. ICICI Bank, one of India's biggest private lenders, is planning to hire 40,000 people over the next few years.
Reliance, India's biggest conglomerate, has announced its gargantuan retail plans - it will be setting up a chain of supermarkets Wal-Mart-style across India - and is poaching the best and the brightest employees from other firms.
But the frenetic pace of expansion in Indian businesses is leading to a very real problem: there are not enough bright Indian school-leavers to fill the vacant spots in India's corporate payrolls.
'Not enough graduates'
According to Mercer Human Resource Consulting's country head in India, R Sankar, India is facing an imminent talent shortage.
"Just look at the technology sector," he says. "Look at the numbers they're trying to achieve. Thousands of thousands of employees - Tata Consultancy Services has over 70,000 employees - are being hired in a really short space of time.
"And there just aren't enough skilled graduates in India to fill these jobs."
Keeping India's workers interested is key, Mr Deosthalee says.
India's software trade body, Nasscom, says that there could be a shortfall of half a million professionals in the IT sector by 2010.
And it is not just the technology sector that is experiencing a talent crunch. Keeping good staff is a challenge for many other Indian companies too.
The country's top construction and engineering firm, Larsen & Toubro, has seen a 10% drop in employees, losing workers to the fast growing technology and retail sectors.
Those industries are tempting workers with salaries that are a third higher than they were used to. But L&T's Chief Financial Officer, YM Deosthalee, said his firm had found a solution.
"We provide our employees with challenging, dynamic work - work that will keep them interested in what they do," he said.
"It's one of the ways for us to retain competent staff - but it is a challenging environment. Besides the financial ones, 0pportunities to be trained and to travel, though, and work on big projects is what we offer in terms of incentives."
'Curious'
And it is these opportunities that are drawing foreign workers to India's shores. They are being recruited to help offset the challenges of India's talent crunch.
India's booming economy is attracting a lot of foreign interest
Denis Mercier came to Mumbai a year ago to work for the country's biggest software firm, Tata Consultancy Services. He is one of thousands of TCS's foreign employees, many of whom are from Eastern Europe, Brazil, Germany and the UK.
"Every day when I would read the front page of my newspaper in France, I would read about the Indian economy," 24-year-old Denis said, as he lunched with a mixed crowd of foreign and Indian TCS workers in their canteen.
"I was curious - what is happening in this culturally vibrant, fast-growing country? I wanted to find out for myself. And now, to have Indian experience on your resume looks really good too."
Importing skilled workers may be one way for the Indian economy to solve its talent crunch, but it cannot be the solution for long.
The irony is that there are millions of Indians who remain unemployed, working in the informal economy, on odd jobs in construction and building.
The big question is whether India can solve its growing labour crisis by finding a way to get them trained and into the formal labour market, alongside Ankit and his friends.
http://news.bbc.co.uk/2/hi/business/5409252.stm
India industrial output slows
NEW DELHI: Indiaââ¬â¢s industrial production slowed in August from a breakneck annual rate in the previous month as monsoon flooding hurt output, but analysts said consumer demand was still hot enough to warrant an interest rate rise.
Industrial production in August rose 9.7 per cent from a year earlier, below expectations for a 9.9 per cent increase and slowing from Julyââ¬â¢s annual pace of 12.7 per cent, government data showed on Thursday.
But the slowdown appeared to be a blip and not indicative of a trend, analysts said. ââ¬ÅThe strength in the manufacturing index was the key factor in the robust industrial output readings,ââ¬Â said Indranil Pan, chief economist at Kotak Mahindra Bank.
ââ¬ÅThe number reinforces the strength of the industrial sector and leaves room for a rate increase, though not necessarily at the October policy review.ââ¬Â
The Indian rupee edged up to 45.5950/6050 per dollar from 45.60/61 before the data and the yield on 10-year federal bonds inched up briefly to 7.64 per cent from 7.63 per cent.
The Reserve Bank of India, the central bank, will review monetary policy on Oct 31. It has raised the benchmark short-term interest rate three times during 2006, most recently in July when a 25-basis-point rise took the reverse repo rate to 6.0 percent.
A rise in incomes on the back of strong economic growth ensured people had more money to spend on items like cars and televisions, which boosted August manufacturing output by 11.1 per cent from a year earlier. In July, it rose 13.3 per cent from a year earlier.
Manufacturing is more than 75 per cent of industrial output. Output of consumer goods, which range from cosmetics to cars, rose in August 14.6 per cent from a year earlier, while production of capital goods, a key barometer of industrial activity, rose 14.7 per cent from a year earlier.
http://www.thenews.com.pk/daily_detail.asp?id=28035
NEW DELHI: Indiaââ¬â¢s industrial production slowed in August from a breakneck annual rate in the previous month as monsoon flooding hurt output, but analysts said consumer demand was still hot enough to warrant an interest rate rise.
Industrial production in August rose 9.7 per cent from a year earlier, below expectations for a 9.9 per cent increase and slowing from Julyââ¬â¢s annual pace of 12.7 per cent, government data showed on Thursday.
But the slowdown appeared to be a blip and not indicative of a trend, analysts said. ââ¬ÅThe strength in the manufacturing index was the key factor in the robust industrial output readings,ââ¬Â said Indranil Pan, chief economist at Kotak Mahindra Bank.
ââ¬ÅThe number reinforces the strength of the industrial sector and leaves room for a rate increase, though not necessarily at the October policy review.ââ¬Â
The Indian rupee edged up to 45.5950/6050 per dollar from 45.60/61 before the data and the yield on 10-year federal bonds inched up briefly to 7.64 per cent from 7.63 per cent.
The Reserve Bank of India, the central bank, will review monetary policy on Oct 31. It has raised the benchmark short-term interest rate three times during 2006, most recently in July when a 25-basis-point rise took the reverse repo rate to 6.0 percent.
A rise in incomes on the back of strong economic growth ensured people had more money to spend on items like cars and televisions, which boosted August manufacturing output by 11.1 per cent from a year earlier. In July, it rose 13.3 per cent from a year earlier.
Manufacturing is more than 75 per cent of industrial output. Output of consumer goods, which range from cosmetics to cars, rose in August 14.6 per cent from a year earlier, while production of capital goods, a key barometer of industrial activity, rose 14.7 per cent from a year earlier.
http://www.thenews.com.pk/daily_detail.asp?id=28035
FDI from China to come under scanner
MK VENU & G GANAPATHY SUBRAMANIAM
TIMES NEWS NETWORK:FRIDAY, OCTOBER 13, 2006
NEW DELHI: For the first time, the government is proposing to put China on the list of countries categorised as a security risk from the standpoint of foreign direct investment (FDI). This means FDI from China will not get automatic clearance even if it goes into an innocuous segment like consumer goods (FMCG). Till now, only Pakistan and Bangladesh were not being given the benefit of the policy of automatic approval of foreign investment proposals.
Now a new framework is being put in place to ensure that all FDI from China, Hong Kong and Macau is screened thoroughly from the security angle, according to government sources. Investments from North Korea, Taiwan and Afghanistan are also being included in the sensitive list. The external affairs ministry, however, has said such a move could affect Indiaââ¬â¢s relations with some of these countries if it is not based on sound principles applied universally. The MEA has argued nations cannot be singled out in this manner.
Besides expanding the list of nations seen as security-risk, the government is also proposing several sectors as sensitive in the context of inviting FDI. The scope of the security filter is being increased to cover FDI in drugs & pharmaceuticals, data processing, metallurgy, IT hardware, data processing, hydrocarbon exploration, pipelines and refineries.
Till now scrutiny from the security angle was applied primarily to ports, aviation, telecom and internet services, which are considered to be sensitive areas. Apart from directors, other senior executives of foreign companies working in these sectors are likely to be brought under security screening, as per minuted discussions held by the National Security Council and forwarded by the PMO to the relevant ministries.
The National Security Council (NSC) has suggested that foreign investment from identified sources should be subjected to special security screening at the time of approval and also during the entire period of operation of the unit. Sectoral regulators should seek the opinion of intelligence and security agencies before deciding on such investments, the NSC secretariat has suggested in the note. This note has been circulated to all economic ministries, apart from the home ministry and the defence ministry.
The Council has suggested the finance ministry could be the nodal authority for implementing and monitoring the security screening. The Foreign Investment Promotion Board (FIPB) functions under the finance ministry and most of the sensitive clearances go through the Board. The automatic approval applicable to certain sectors are handled by the Reserve Bank which works in co-ordination with the finance ministry on FDI issues.
The NSC has said that entities seeking approval for FDI should also submit a declaration that they would not indulge in any activity that undermines national security. Following the controversy over the security implications of higher FDI in telecom and ports, the Council is already working on a legal framework to enable formal screening of FDI from the security angle. As of now, there are no uniform norms for FDI in sensitive sectors and most decisions of the government are being taken on a case-to-case basis. The proposed security norms for the telecom sector, following hike in direct FDI limit to 74%, are also pending.
From the RBIââ¬â¢s point of view, the Foreign Exchange Management Act (FEMA) prohibits FDI from Pakistan and Bangladesh. If the NSCââ¬â¢s suggestions are accepted, the list is likely to be enlarged to include China and some other countries like Afghanistan and North Korea if specified parameters are not met. Companies like Hutch, China Harbour Engineering Corporation and Huawei have already faced roadblocks in their investment plans due to the governmentââ¬â¢s concerns about Chinese companies. Currently even Reliance Industries is seeking government clearance to enable Chinese participation in their pipeline project.
MK VENU & G GANAPATHY SUBRAMANIAM
TIMES NEWS NETWORK:FRIDAY, OCTOBER 13, 2006
NEW DELHI: For the first time, the government is proposing to put China on the list of countries categorised as a security risk from the standpoint of foreign direct investment (FDI). This means FDI from China will not get automatic clearance even if it goes into an innocuous segment like consumer goods (FMCG). Till now, only Pakistan and Bangladesh were not being given the benefit of the policy of automatic approval of foreign investment proposals.
Now a new framework is being put in place to ensure that all FDI from China, Hong Kong and Macau is screened thoroughly from the security angle, according to government sources. Investments from North Korea, Taiwan and Afghanistan are also being included in the sensitive list. The external affairs ministry, however, has said such a move could affect Indiaââ¬â¢s relations with some of these countries if it is not based on sound principles applied universally. The MEA has argued nations cannot be singled out in this manner.
Besides expanding the list of nations seen as security-risk, the government is also proposing several sectors as sensitive in the context of inviting FDI. The scope of the security filter is being increased to cover FDI in drugs & pharmaceuticals, data processing, metallurgy, IT hardware, data processing, hydrocarbon exploration, pipelines and refineries.
Till now scrutiny from the security angle was applied primarily to ports, aviation, telecom and internet services, which are considered to be sensitive areas. Apart from directors, other senior executives of foreign companies working in these sectors are likely to be brought under security screening, as per minuted discussions held by the National Security Council and forwarded by the PMO to the relevant ministries.
The National Security Council (NSC) has suggested that foreign investment from identified sources should be subjected to special security screening at the time of approval and also during the entire period of operation of the unit. Sectoral regulators should seek the opinion of intelligence and security agencies before deciding on such investments, the NSC secretariat has suggested in the note. This note has been circulated to all economic ministries, apart from the home ministry and the defence ministry.
The Council has suggested the finance ministry could be the nodal authority for implementing and monitoring the security screening. The Foreign Investment Promotion Board (FIPB) functions under the finance ministry and most of the sensitive clearances go through the Board. The automatic approval applicable to certain sectors are handled by the Reserve Bank which works in co-ordination with the finance ministry on FDI issues.
The NSC has said that entities seeking approval for FDI should also submit a declaration that they would not indulge in any activity that undermines national security. Following the controversy over the security implications of higher FDI in telecom and ports, the Council is already working on a legal framework to enable formal screening of FDI from the security angle. As of now, there are no uniform norms for FDI in sensitive sectors and most decisions of the government are being taken on a case-to-case basis. The proposed security norms for the telecom sector, following hike in direct FDI limit to 74%, are also pending.
From the RBIââ¬â¢s point of view, the Foreign Exchange Management Act (FEMA) prohibits FDI from Pakistan and Bangladesh. If the NSCââ¬â¢s suggestions are accepted, the list is likely to be enlarged to include China and some other countries like Afghanistan and North Korea if specified parameters are not met. Companies like Hutch, China Harbour Engineering Corporation and Huawei have already faced roadblocks in their investment plans due to the governmentââ¬â¢s concerns about Chinese companies. Currently even Reliance Industries is seeking government clearance to enable Chinese participation in their pipeline project.
India is an expensive, but attractive destination
SANTOSH NAIR
TIMES NEWS NETWORK:MONDAY, OCTOBER 16, 2006
MUMBAI: Despite expensive valuations, India appears more attractive compared with other emerging markets. This is because India is seen as a defensive market amid global growth downturn, says Brad Durham, managing director, Emerging Portfolio Fund Research. In an interview with The Economic Times, Durham said there are potential new sources of flows to India from non-dedicated funds, which had reduced their exposure to the market in recent years. Excerpts from the interview.
Do you expect emerging markets to feel the heat of downturn in the commodities at some stage, especially with many hedge funds having exposure to both commodities and equities?
I think some markets will feel the heat of declining commodity prices, such as those that are major commodity exporters (Russia and Brazil being the most prominent ones). Other markets , like many Asian markets that are net importers of commodities, are helped by lower commodity prices. The oil price drop is good for India since the country imports about 70% of its oil needs and fiscal deficit has forced the central bank to raise rates to stifle inflation. Lower oil prices may take some pressure off inflation.
How do you rate India’s prospects vis-àvis other emerging markets?
I think India rates better now against other emerging markets. That’s because India is seen as a defensive market amid a global growth downturn. Because so much of its growth is internally driven and due to domestic sources of demand, India is less vulnerable to downturn in global growth than other more export-intensive markets like Korea and Taiwan. India has a low correlation with US growth.
On the downside, I am troubled that economic restructuring appears to have lost momentum , unlike in some other emerging markets . Sell off of state-owned companies could bring much-needed revenue into the government , which could step up infrastructure spending and ensure sustained growth and corporate profits over the longer term. These special economic zones seem as they give incentives to investment that may just shift activity into a taxfree environment and may be hurtful to public finances. Investors would prefer to see broadbased restructuring and incentives to invest throughout the economy rather than in small pockets. And labour reform, allowing for more hiring and firing to meet changing market needs will be needed for sustainable corporate earnings over the longer term.
India appears to be expensive compared with other emerging markets, but still foreign investors are ploughing money into Indian equities. How come?
It still is among the most expensive, but is more attractive after the May-June sell off, which has pushed it back in the vicinity of 16.5x forward P/E. And expectations of earnings growth of 20% going forward should provide some scope for further market gains. While India is among the most expensive emerging markets , along with Chile and Czech Republic, but unlike these two markets, India’s EPS in ’06 is among the highest (30%) after Turkey and Taiwan . And the earnings are driven by strong domestic factors — consumption, demographics, infrastructure spending, etc. Hence, the higher valuation is pricing in a secular growth story, with the latest quarterly GDP growth figures confirming the strength.
I also think that there are potential new sources of flows to India from non-dedicated funds. Global Emerging Market funds, for example , have a 4.9% weighting to India, which is well underweight the MSCI EM index weighting of 6.5%. It is the lowest weighting since May ’02. On cap weighted basis, though, lowest weight since 1998. Some fund firms with low India weighting include Templeton, with 1.9%, Schroders 0.8%, and so if these funds start to view India as more attractive then there could be plenty of new flows find their way into the market.
A lot of money has been flowing into the Chinese stock market of late, though most fund managers say that corporate governance has always been a problem area in that market. Your comments.
Investors like China because of the current growth and future growth potential. They have to hold their noses at the poor corporate governance and a potential harder than expected landing after so much poor quality growth and over investment. But like in many EMs, such as Russia, as the capital markets developed and when company management discovered that their interests were aligned with those of shareholders , the quality of corporate governance improved dramatically. I suspect the same will happen with China, but it will take time.
Which are the emerging markets, other than India, you are bullish on?
I like China because of its defensive nature, Thailand because of the new-found political certainty and low valuations, Indonesia because of declining inflationary concerns and monetary easing (rate cuts)and Turkey because of year to date underperformance and strong corporate earnings and growth rates.
http://economictimes.indiatimes.com/articleshow/msid-2172922,curpg-1.cms
SANTOSH NAIR
TIMES NEWS NETWORK:MONDAY, OCTOBER 16, 2006
MUMBAI: Despite expensive valuations, India appears more attractive compared with other emerging markets. This is because India is seen as a defensive market amid global growth downturn, says Brad Durham, managing director, Emerging Portfolio Fund Research. In an interview with The Economic Times, Durham said there are potential new sources of flows to India from non-dedicated funds, which had reduced their exposure to the market in recent years. Excerpts from the interview.
Do you expect emerging markets to feel the heat of downturn in the commodities at some stage, especially with many hedge funds having exposure to both commodities and equities?
I think some markets will feel the heat of declining commodity prices, such as those that are major commodity exporters (Russia and Brazil being the most prominent ones). Other markets , like many Asian markets that are net importers of commodities, are helped by lower commodity prices. The oil price drop is good for India since the country imports about 70% of its oil needs and fiscal deficit has forced the central bank to raise rates to stifle inflation. Lower oil prices may take some pressure off inflation.
How do you rate India’s prospects vis-àvis other emerging markets?
I think India rates better now against other emerging markets. That’s because India is seen as a defensive market amid a global growth downturn. Because so much of its growth is internally driven and due to domestic sources of demand, India is less vulnerable to downturn in global growth than other more export-intensive markets like Korea and Taiwan. India has a low correlation with US growth.
On the downside, I am troubled that economic restructuring appears to have lost momentum , unlike in some other emerging markets . Sell off of state-owned companies could bring much-needed revenue into the government , which could step up infrastructure spending and ensure sustained growth and corporate profits over the longer term. These special economic zones seem as they give incentives to investment that may just shift activity into a taxfree environment and may be hurtful to public finances. Investors would prefer to see broadbased restructuring and incentives to invest throughout the economy rather than in small pockets. And labour reform, allowing for more hiring and firing to meet changing market needs will be needed for sustainable corporate earnings over the longer term.
India appears to be expensive compared with other emerging markets, but still foreign investors are ploughing money into Indian equities. How come?
It still is among the most expensive, but is more attractive after the May-June sell off, which has pushed it back in the vicinity of 16.5x forward P/E. And expectations of earnings growth of 20% going forward should provide some scope for further market gains. While India is among the most expensive emerging markets , along with Chile and Czech Republic, but unlike these two markets, India’s EPS in ’06 is among the highest (30%) after Turkey and Taiwan . And the earnings are driven by strong domestic factors — consumption, demographics, infrastructure spending, etc. Hence, the higher valuation is pricing in a secular growth story, with the latest quarterly GDP growth figures confirming the strength.
I also think that there are potential new sources of flows to India from non-dedicated funds. Global Emerging Market funds, for example , have a 4.9% weighting to India, which is well underweight the MSCI EM index weighting of 6.5%. It is the lowest weighting since May ’02. On cap weighted basis, though, lowest weight since 1998. Some fund firms with low India weighting include Templeton, with 1.9%, Schroders 0.8%, and so if these funds start to view India as more attractive then there could be plenty of new flows find their way into the market.
A lot of money has been flowing into the Chinese stock market of late, though most fund managers say that corporate governance has always been a problem area in that market. Your comments.
Investors like China because of the current growth and future growth potential. They have to hold their noses at the poor corporate governance and a potential harder than expected landing after so much poor quality growth and over investment. But like in many EMs, such as Russia, as the capital markets developed and when company management discovered that their interests were aligned with those of shareholders , the quality of corporate governance improved dramatically. I suspect the same will happen with China, but it will take time.
Which are the emerging markets, other than India, you are bullish on?
I like China because of its defensive nature, Thailand because of the new-found political certainty and low valuations, Indonesia because of declining inflationary concerns and monetary easing (rate cuts)and Turkey because of year to date underperformance and strong corporate earnings and growth rates.
http://economictimes.indiatimes.com/articleshow/msid-2172922,curpg-1.cms
India aims 10pc GDP growth in 2007-2011
NEW DELHI, Oct 18: India, the worldââ¬â¢s second-fastest growing major economy after China, set an ambitious target on Wednesday of attaining 10 per cent annual GDP growth within next five years.
The announcement by Prime Minister Manmohan Singh, a former World Bank official, came less than a month after India beat most forecasts reporting 8.9 per cent growth in the first quarter to June (March-April).
ââ¬ÅThe 11th plan (2007-2011) is going to be historic in many ways,ââ¬Â Singh told a meeting of the national policy-making Planning Commission.
ââ¬ÅThis is the first time since the planning process began that we will be aiming for a growth rate of 10 per cent in the final years of the plan,ââ¬Â he said.
Indiaââ¬â¢s economic plans hark back to the era when the country followed communist-style five-year programmes.
The country registered growth of 8.4 per cent for the financial year to March 2006.
Economists have said that India must achieve double-digit growth to be able to significantly improve living standards in the country of 1.1 billion people where at least a quarter of the population live below the poverty line.
Singh said the ambitious target was achievable on the back of buoyant foreign capital inflow, moderate inflation, brimming foreign exchange reserves and a comfortable current account deficit, pegged at 3.1 per cent of the Gross Domestic Product.
NEW DELHI, Oct 18: India, the worldââ¬â¢s second-fastest growing major economy after China, set an ambitious target on Wednesday of attaining 10 per cent annual GDP growth within next five years.
The announcement by Prime Minister Manmohan Singh, a former World Bank official, came less than a month after India beat most forecasts reporting 8.9 per cent growth in the first quarter to June (March-April).
ââ¬ÅThe 11th plan (2007-2011) is going to be historic in many ways,ââ¬Â Singh told a meeting of the national policy-making Planning Commission.
ââ¬ÅThis is the first time since the planning process began that we will be aiming for a growth rate of 10 per cent in the final years of the plan,ââ¬Â he said.
Indiaââ¬â¢s economic plans hark back to the era when the country followed communist-style five-year programmes.
The country registered growth of 8.4 per cent for the financial year to March 2006.
Economists have said that India must achieve double-digit growth to be able to significantly improve living standards in the country of 1.1 billion people where at least a quarter of the population live below the poverty line.
Singh said the ambitious target was achievable on the back of buoyant foreign capital inflow, moderate inflation, brimming foreign exchange reserves and a comfortable current account deficit, pegged at 3.1 per cent of the Gross Domestic Product.
Indian exports surge 37pc
NEW DELHI, Oct 24: Indiaââ¬â¢s exports in the first six months of the current fiscal year rose 37 per cent to $59.32 billion as against $43.22 billion in the corresponding period last year, the government said on Tuesday.
Trade deficit, however, widened 49 per cent to $24.6 billion in April-September mainly due to oil import costs, according to figures released by the government.Exports grew at more than 40 per cent for the second successive month in September to $10.3 billion as compared to $7.29 billion in the corresponding month in 2005, the governmentââ¬â¢s Central Statistical Institute said in the released data.
Imports in September also increased by 49 per cent to $15.63 billion from $10.48 billion in the same month last year, it said.
The government, however, appeared upbeat over Indiaââ¬â¢s improved trade performance.
ââ¬ÅThe sustained double-digit growth shows India's exports were on a high growth trajectory and the enhanced export target of $125 billion for 2006-2007 would definitely be met,ââ¬Â Commerce Minister Kamal Nath said in a statement.
Nath's commerce ministry earlier this year had forecast a 20 per cent rise in exports for fiscal year ending March 2007 to $120 billion on the back of higher earnings from services such as outsourcing and manufacturing.
For the year ended March 2006 annual exports jumped 25 per cent to cross the $100 billion mark.
http://www.dawn.com/2006/10/25/ebr7.htm
NEW DELHI, Oct 24: Indiaââ¬â¢s exports in the first six months of the current fiscal year rose 37 per cent to $59.32 billion as against $43.22 billion in the corresponding period last year, the government said on Tuesday.
Trade deficit, however, widened 49 per cent to $24.6 billion in April-September mainly due to oil import costs, according to figures released by the government.Exports grew at more than 40 per cent for the second successive month in September to $10.3 billion as compared to $7.29 billion in the corresponding month in 2005, the governmentââ¬â¢s Central Statistical Institute said in the released data.
Imports in September also increased by 49 per cent to $15.63 billion from $10.48 billion in the same month last year, it said.
The government, however, appeared upbeat over Indiaââ¬â¢s improved trade performance.
ââ¬ÅThe sustained double-digit growth shows India's exports were on a high growth trajectory and the enhanced export target of $125 billion for 2006-2007 would definitely be met,ââ¬Â Commerce Minister Kamal Nath said in a statement.
Nath's commerce ministry earlier this year had forecast a 20 per cent rise in exports for fiscal year ending March 2007 to $120 billion on the back of higher earnings from services such as outsourcing and manufacturing.
For the year ended March 2006 annual exports jumped 25 per cent to cross the $100 billion mark.
http://www.dawn.com/2006/10/25/ebr7.htm
India infrastructure may need $80bn
CHICAGO: India needs to attract as much as $80 billion in private investment in infrastructure projects over the next five years to achieve its spending targets, a senior government official said on Friday.
Montek Singh Ahluwalia, a key economic adviser to Prime Minister Manmohan Singh, said at a luncheon here that Indiaââ¬â¢s infrastructure needs the extra foreign investment.
Earlier this month, Indian Finance Minister Palaniappan Chidambaram said the country needs to raise $50 billion annually from domestic markets to improve its rickety infrastructure for such projects as power plants, ports, roads and airports.
Ahluwalia said India also needs to establish an economy that attracts more foreign investors. ââ¬ÅIt is possible to create a political policy environment which would bring in private investors who see the possibility of a good return with a reasonable regulatory framework,ââ¬Â Ahluwalia, deputy chairman of Indiaââ¬â¢s Planning Commission, told members of the Chicago Council on Global Affairs.
ââ¬ÅIf you look at the liquidity sloshing around the world market and you look at India as the next biggest economy after China,ââ¬Â he added, ââ¬Åit should not be difficult to ensure that this much money can flow into India.ââ¬Â
India, seen as one of the hot markets along with China because of growth rates far above those of more mature economies like the United States, wants to raise the ratio of investment in infrastructure as a per cent of its gross domestic product to 8 per cent by 2011 or 2012 from 4.7 per cent now, Ahluwalia said.
At Indiaââ¬â¢s current economic growth rate, it would need to invest about $210 billion, but more would be need to reach a target for a higher rate of investment, he said.
ââ¬ÅTo raise it the way we want to raise it, that would have to go up to about $310 billion,ââ¬Â Ahluwalia said. ââ¬ÅWhile the baseline figure includes dominantly public investment, the extra will have to come dominantly from private investment,ââ¬Â Ahluwalia said. ââ¬ÅWeââ¬â¢d like to get three-fourths of that from private investment in infrastructure, which is about $75 billion to $80 billion.ââ¬Â
Ahluwalia later told reporters the private sector target would be through a combination of equity and debt.
If India can attract such private investment levels, it will be easier to achieve its target of average economic growth in the 2007 to 2012 period of 9 per cent, he said.
Earlier this month, Indiaââ¬â¢s Planning Commission approved a five-year plan that projects GDP growth to accelerate from around 8 per cent in fiscal 2006-2007 to 10 per cent by 2011-2012. It also set a target for keeping inflation below 4 per cent.
Ahluwalia also said he hopes the next pay commission, scheduled to propose salary increases for hundreds of thousands of Indiaââ¬â¢s federal employees when it submits its report in less than two years, does not burden the country with too much added debt.
A similar pay panel in 1997 raised salaries for federal employees by nearly 40 per cent. That sparked demands from states and other state-run company workers for wage increases, and widened the combined state and central deficit to nearly 10 per cent of GDP for several years.
ââ¬ÅIf the economy is growing at 9 per cent and the pay commission award is reasonable ... I think weââ¬â¢ll be able to handle it,ââ¬Â Ahluwalia said.
http://www.thenews.com.pk/daily_detail.asp?id=29747
CHICAGO: India needs to attract as much as $80 billion in private investment in infrastructure projects over the next five years to achieve its spending targets, a senior government official said on Friday.
Montek Singh Ahluwalia, a key economic adviser to Prime Minister Manmohan Singh, said at a luncheon here that Indiaââ¬â¢s infrastructure needs the extra foreign investment.
Earlier this month, Indian Finance Minister Palaniappan Chidambaram said the country needs to raise $50 billion annually from domestic markets to improve its rickety infrastructure for such projects as power plants, ports, roads and airports.
Ahluwalia said India also needs to establish an economy that attracts more foreign investors. ââ¬ÅIt is possible to create a political policy environment which would bring in private investors who see the possibility of a good return with a reasonable regulatory framework,ââ¬Â Ahluwalia, deputy chairman of Indiaââ¬â¢s Planning Commission, told members of the Chicago Council on Global Affairs.
ââ¬ÅIf you look at the liquidity sloshing around the world market and you look at India as the next biggest economy after China,ââ¬Â he added, ââ¬Åit should not be difficult to ensure that this much money can flow into India.ââ¬Â
India, seen as one of the hot markets along with China because of growth rates far above those of more mature economies like the United States, wants to raise the ratio of investment in infrastructure as a per cent of its gross domestic product to 8 per cent by 2011 or 2012 from 4.7 per cent now, Ahluwalia said.
At Indiaââ¬â¢s current economic growth rate, it would need to invest about $210 billion, but more would be need to reach a target for a higher rate of investment, he said.
ââ¬ÅTo raise it the way we want to raise it, that would have to go up to about $310 billion,ââ¬Â Ahluwalia said. ââ¬ÅWhile the baseline figure includes dominantly public investment, the extra will have to come dominantly from private investment,ââ¬Â Ahluwalia said. ââ¬ÅWeââ¬â¢d like to get three-fourths of that from private investment in infrastructure, which is about $75 billion to $80 billion.ââ¬Â
Ahluwalia later told reporters the private sector target would be through a combination of equity and debt.
If India can attract such private investment levels, it will be easier to achieve its target of average economic growth in the 2007 to 2012 period of 9 per cent, he said.
Earlier this month, Indiaââ¬â¢s Planning Commission approved a five-year plan that projects GDP growth to accelerate from around 8 per cent in fiscal 2006-2007 to 10 per cent by 2011-2012. It also set a target for keeping inflation below 4 per cent.
Ahluwalia also said he hopes the next pay commission, scheduled to propose salary increases for hundreds of thousands of Indiaââ¬â¢s federal employees when it submits its report in less than two years, does not burden the country with too much added debt.
A similar pay panel in 1997 raised salaries for federal employees by nearly 40 per cent. That sparked demands from states and other state-run company workers for wage increases, and widened the combined state and central deficit to nearly 10 per cent of GDP for several years.
ââ¬ÅIf the economy is growing at 9 per cent and the pay commission award is reasonable ... I think weââ¬â¢ll be able to handle it,ââ¬Â Ahluwalia said.
http://www.thenews.com.pk/daily_detail.asp?id=29747
Surging imports widen trade deficit
By Anand Kumar
INDIAââ¬â¢s trade deficit is widening rapidly, as the countryââ¬â¢s hunger for imported fuel ââ¬â to sustain high economic growth ââ¬â has pushed up its import bill. During the first half of the current fiscal (April-September), the trade deficit ballooned to $24.6 billion, from $20.3 billion in the first-half of 2005-06.
Indiaââ¬â¢s oil imports zoomed to $28.66 billion, up by a massive 36.8 per cent, during the first half of the fiscal. In September alone, oil imports crossed the $5 billion mark, as against $4 billion in the same month in 2005. Non-oil imports have grown at a more modest 11 per cent.
Indiaââ¬â¢s imports during the first half of the current financial year amounted to $83.92 billion, up a huge 32 per cent over the corresponding first half of the previous fiscal. In September, imports shot up to $15.63 billion (as against $10.48 billion in September 2005).
But with oil prices tumbling ââ¬â it was down to a little over $57 a barrel last week, before gaining a bit ââ¬â Indiaââ¬â¢s import of crude is expected to be lower in the second half of the fiscal. But traditionally, the second half of the financial year is the busy season, when demand for oil, electricity, food grains, consumer goods, capital goods and industrial products soar.
Imports have been growing as the economy continues to expand remarkably. Gross domestic product grew by 8.9 per cent in the first quarter of the current fiscal, on the back of a 9.1 per cent increase in the previous quarter.
Indiaââ¬â¢s current account deficit is also growing. It shot up to $6.09 billion in the first quarter of 2006-07 (April-June), as against a surplus of $1.81 billion in the previous quarter, and a deficit of $3.6 billion in the corresponding quarter of the previous fiscal.
Exports too have been rising, but not as fast as imports. Indiaââ¬â¢s merchandise exports shot up by 37 per cent in the April-September period, adding up to $59.3 billion. Commerce Minister Kamal Nath is confident that the country would attain the targeted $125 billion in exports by the end of the fiscal.
Last year, exports crossed the $100 billion mark for the first time. Exports are likely to touch $165 billion in 2010, when Indiaââ¬â¢s share in global merchandise trade is expected to touch the one per cent mark. At present, it is just 0.8 per cent.
Optimistic projections have it that Indiaââ¬â¢s external merchandise trade (both imports and exports) will add up to $500 billion over the next three years ââ¬â representing $300 billion in exports, and $200 billion in exports. The country expects another $100 billion in service exports (mainly IT and IT enabled services, besides other ââ¬Ëinvisibles,ââ¬â¢ including revenues from foreign tourists).
* * * * *
FOREIGN funds have also been injecting huge funds into the country; in August and September, they pumped in $3 billion into the markets, boosting the Indian rupee, and also equities.
In fact, Indiaââ¬â¢s buoyant capital markets continue to attract international players, many of who plan to set up asset management companies over the next few months. The Indian mutual fund industry has done extremely well, with assets under management having shot up to $65 billion at the end of August, a huge 60 per cent annual increase.
There are 30 asset management companies in India at present, both domestic and international ones. But the number is expected to cross 45 over the next few months, as several European and Far East Asian funds plan to start fund houses in the country.
Last month, UK-based Dawnay, Day International (DDI) got an in-principle approval from the countryââ¬â¢s capital market regulator, the Securities and Exchange Board of India, to float a mutual fund here. DDI plans to launch mutual fund schemes by early 2007, and hopes to raise about a billion dollars by 2010.
Credit Suisse group of Zurich is also setting up a mutual fund in India. Other European financial giants that have been lured by the booming Indian capital markets include Rabobank and Aegon of the Netherlands, and AXA of France. Four Japanese financial majors ââ¬â Sumitomo, Nikko, Shinsei, and Nippon Life ââ¬â have also shown interest in setting up asset management companies.
South Korean firms, which have been active in the stock markets, also plan to set up mutual funds. Mirae, a South Korean finance major ââ¬â which has invested about $800 million in the Indian stock markets, and plans to raise another $200 million from its investors ââ¬â has plans for a mutual fund in India.
Besides setting up asset management companies, international funds are also bullish about the stock markets, and continue to pour money into it. EM Capital Management LLC, a US-based firm, plans to invest about $400 million in Indian equities.
Kuvera Capital, a UK-based hedge fund - which has a presence at the Dubai International Finance Centre - also plans to launch operations in India. Another Gulf-based fund manager, Forsyth Partners (originally from the UK), aims to enhance its exposure to the Indian markets to about $250 million in two years.
The Forsyth India Opportunities Fund is the only fund-of-funds available internationally using domestic Indian funds; it manages $120 million through 16 India equity funds. Forsyth, which offers a range of fund-of-funds investment options and manages over $3.5 billion in assets, recently shifted its global headquarters from London to Dubai.
* * * * *
THE fire at the prestigious Jamnagar refinery of Reliance Industries Ltd (RIL) last week is feared to result in a loss of Rs19 billion in turnover and set back profits by Rs1.25 billion. Of course, the loss could be notional, because Reliance has a comprehensive insurance policy, covering even loss of profit.
The RIL refinery in the state of Gujarat is the third largest oil refinery in the world, processing 660,000 barrels of crude a day. The refinery, operating at 95 per cent capacity, had refined over 15 million tonnes of crude in the first half of the current fiscal (April-September).
The Jamanagar refinery accounts for 25 per cent of the total liquefied petroleum gas (LPG) production in India, and the fire has given rise to fears of a shortage of the commodity. But the Indian government has directed public sector oil marketing companies to begin importing LPG to ensure domestic supplies.
The Reliance group (controlled by the elder Ambani sibling, Mukesh) is investing Rs270 billion in expanding the Jamnagar refinery complex. This would then make it the single largest refinery complex in the world.
Indiaââ¬â¢s energy requirements are galloping, with the economy growing at over eight per cent annually, and with plans to raise this to 10 per cent over the next few years. India at present imports over 70 per cent of its crude oil and natural gas requirements.
The average price of the Indian basket of international crude peaked at $66.8 per cent barrel in the first quarter of the current fiscal, up from $49.3 in the corresponding quarter of the previous fiscal. But with international oil prices having dipped by about $20 a barrel over the past few weeks, the average price for the remaining quarters is expected to be much less.
Last week, a high-powered advisory panel urged the government to formulate policies to ensure energy security for the nation. India plans to set up a buffer stock of crude to reduce price volatility.
The energy advisory committee has urged government officials to use options contracts and futures market, to reduce risks and volatility, and also to build up sufficient foreign exchange to guard against price spurts.
Indian energy giants like ONGC have been investing in oil and gas blocks abroad ââ¬â especially in Russia, Africa and Latin America ââ¬â to ensure that the country is cushioned from the effects of a sharp increase in oil prices.
http://www.dawn.com/2006/10/30/ebr11.htm
By Anand Kumar
INDIAââ¬â¢s trade deficit is widening rapidly, as the countryââ¬â¢s hunger for imported fuel ââ¬â to sustain high economic growth ââ¬â has pushed up its import bill. During the first half of the current fiscal (April-September), the trade deficit ballooned to $24.6 billion, from $20.3 billion in the first-half of 2005-06.
Indiaââ¬â¢s oil imports zoomed to $28.66 billion, up by a massive 36.8 per cent, during the first half of the fiscal. In September alone, oil imports crossed the $5 billion mark, as against $4 billion in the same month in 2005. Non-oil imports have grown at a more modest 11 per cent.
Indiaââ¬â¢s imports during the first half of the current financial year amounted to $83.92 billion, up a huge 32 per cent over the corresponding first half of the previous fiscal. In September, imports shot up to $15.63 billion (as against $10.48 billion in September 2005).
But with oil prices tumbling ââ¬â it was down to a little over $57 a barrel last week, before gaining a bit ââ¬â Indiaââ¬â¢s import of crude is expected to be lower in the second half of the fiscal. But traditionally, the second half of the financial year is the busy season, when demand for oil, electricity, food grains, consumer goods, capital goods and industrial products soar.
Imports have been growing as the economy continues to expand remarkably. Gross domestic product grew by 8.9 per cent in the first quarter of the current fiscal, on the back of a 9.1 per cent increase in the previous quarter.
Indiaââ¬â¢s current account deficit is also growing. It shot up to $6.09 billion in the first quarter of 2006-07 (April-June), as against a surplus of $1.81 billion in the previous quarter, and a deficit of $3.6 billion in the corresponding quarter of the previous fiscal.
Exports too have been rising, but not as fast as imports. Indiaââ¬â¢s merchandise exports shot up by 37 per cent in the April-September period, adding up to $59.3 billion. Commerce Minister Kamal Nath is confident that the country would attain the targeted $125 billion in exports by the end of the fiscal.
Last year, exports crossed the $100 billion mark for the first time. Exports are likely to touch $165 billion in 2010, when Indiaââ¬â¢s share in global merchandise trade is expected to touch the one per cent mark. At present, it is just 0.8 per cent.
Optimistic projections have it that Indiaââ¬â¢s external merchandise trade (both imports and exports) will add up to $500 billion over the next three years ââ¬â representing $300 billion in exports, and $200 billion in exports. The country expects another $100 billion in service exports (mainly IT and IT enabled services, besides other ââ¬Ëinvisibles,ââ¬â¢ including revenues from foreign tourists).
* * * * *
FOREIGN funds have also been injecting huge funds into the country; in August and September, they pumped in $3 billion into the markets, boosting the Indian rupee, and also equities.
In fact, Indiaââ¬â¢s buoyant capital markets continue to attract international players, many of who plan to set up asset management companies over the next few months. The Indian mutual fund industry has done extremely well, with assets under management having shot up to $65 billion at the end of August, a huge 60 per cent annual increase.
There are 30 asset management companies in India at present, both domestic and international ones. But the number is expected to cross 45 over the next few months, as several European and Far East Asian funds plan to start fund houses in the country.
Last month, UK-based Dawnay, Day International (DDI) got an in-principle approval from the countryââ¬â¢s capital market regulator, the Securities and Exchange Board of India, to float a mutual fund here. DDI plans to launch mutual fund schemes by early 2007, and hopes to raise about a billion dollars by 2010.
Credit Suisse group of Zurich is also setting up a mutual fund in India. Other European financial giants that have been lured by the booming Indian capital markets include Rabobank and Aegon of the Netherlands, and AXA of France. Four Japanese financial majors ââ¬â Sumitomo, Nikko, Shinsei, and Nippon Life ââ¬â have also shown interest in setting up asset management companies.
South Korean firms, which have been active in the stock markets, also plan to set up mutual funds. Mirae, a South Korean finance major ââ¬â which has invested about $800 million in the Indian stock markets, and plans to raise another $200 million from its investors ââ¬â has plans for a mutual fund in India.
Besides setting up asset management companies, international funds are also bullish about the stock markets, and continue to pour money into it. EM Capital Management LLC, a US-based firm, plans to invest about $400 million in Indian equities.
Kuvera Capital, a UK-based hedge fund - which has a presence at the Dubai International Finance Centre - also plans to launch operations in India. Another Gulf-based fund manager, Forsyth Partners (originally from the UK), aims to enhance its exposure to the Indian markets to about $250 million in two years.
The Forsyth India Opportunities Fund is the only fund-of-funds available internationally using domestic Indian funds; it manages $120 million through 16 India equity funds. Forsyth, which offers a range of fund-of-funds investment options and manages over $3.5 billion in assets, recently shifted its global headquarters from London to Dubai.
* * * * *
THE fire at the prestigious Jamnagar refinery of Reliance Industries Ltd (RIL) last week is feared to result in a loss of Rs19 billion in turnover and set back profits by Rs1.25 billion. Of course, the loss could be notional, because Reliance has a comprehensive insurance policy, covering even loss of profit.
The RIL refinery in the state of Gujarat is the third largest oil refinery in the world, processing 660,000 barrels of crude a day. The refinery, operating at 95 per cent capacity, had refined over 15 million tonnes of crude in the first half of the current fiscal (April-September).
The Jamanagar refinery accounts for 25 per cent of the total liquefied petroleum gas (LPG) production in India, and the fire has given rise to fears of a shortage of the commodity. But the Indian government has directed public sector oil marketing companies to begin importing LPG to ensure domestic supplies.
The Reliance group (controlled by the elder Ambani sibling, Mukesh) is investing Rs270 billion in expanding the Jamnagar refinery complex. This would then make it the single largest refinery complex in the world.
Indiaââ¬â¢s energy requirements are galloping, with the economy growing at over eight per cent annually, and with plans to raise this to 10 per cent over the next few years. India at present imports over 70 per cent of its crude oil and natural gas requirements.
The average price of the Indian basket of international crude peaked at $66.8 per cent barrel in the first quarter of the current fiscal, up from $49.3 in the corresponding quarter of the previous fiscal. But with international oil prices having dipped by about $20 a barrel over the past few weeks, the average price for the remaining quarters is expected to be much less.
Last week, a high-powered advisory panel urged the government to formulate policies to ensure energy security for the nation. India plans to set up a buffer stock of crude to reduce price volatility.
The energy advisory committee has urged government officials to use options contracts and futures market, to reduce risks and volatility, and also to build up sufficient foreign exchange to guard against price spurts.
Indian energy giants like ONGC have been investing in oil and gas blocks abroad ââ¬â especially in Russia, Africa and Latin America ââ¬â to ensure that the country is cushioned from the effects of a sharp increase in oil prices.
http://www.dawn.com/2006/10/30/ebr11.htm
India central bank warns of overheating economy
MUMBAI: Indiaââ¬â¢s central bank warned Tuesday of overheating in one of the worldââ¬â¢s fastest growing economies as it juggled interest rates in a mid-term policy review aimed at keeping prices in check.
The Reserve Bank of India raised the cost for banks to borrow by a quarter percentage point to 7.25 percent and kept its reverse repurchase rate, the rate paid for deposits from commercial banks, at a four-year high of 6.0 percent.
The central bank did refrain from lifting its long-term rate, or bank rate, from 6.0 percent and kept the cash reserve ratio, the percentage of funds banks have to keep as cash, at 5.0 percent.
The central bank said global oil prices, down more than 10 dollars from record levels above 70 dollars earlier this year, and a booming economy posed a threat to price stability.
The economy, which grew 8.4 percent in the fiscal year ended March and 8.9 percent in the quarter ended June, showed ââ¬Åsigns of overheatingââ¬Â, it said.
ââ¬ÅWhile global inflation conditions have not worsened, concerns relating to price pressures and uncertainties surrounding international crude prices persist,ââ¬Â Reserve Bank Governor Y.V. Reddy said in a statement.
The central bank meanwhile raised its growth forecast to 8.0 percent for the year to March 2007, from an earlier forecast of 7.5-8.0 percent, and said inflation would be contained at 5.0-5.5 percent.
Reddy said industrial output, led by manufacturing, has performed better than expectations.
Inflation, as measured by wholesale prices, rose to a four-month peak of 5.26 percent last week at the same time in a sign of a booming economy, the benchmark Mumbai stock exchange Sensex hit a record high close Monday of 13,024.26.
The Sensex opened firm Tuesday but fell 0.48 percent or 62.36 points in choppy trade to 12,961.90.
The rupee gained against the dollar to 44.98 from 45.00 Monday.
ââ¬ÅThe rupee is likely to strengthen further largely due to strong fund flows into Indian equities,ââ¬Â said Sharad Pawar, an analyst with treasury advisory firm ForexServe.
The Sensex has gained more than 47 percent in the past five months, from a low of 8,799.01 on June 14 as foreign funds pumped in 6.42 billion dollars so far this year.
Industry lobby group, the Federation of Indian Chambers of Commerce and Industry (FICCI), gave a thumbs down to the latest policy statement.
ââ¬ÅThe rate hike will raise the cost of capital for industry. It is bound to pinch small and medium enterprises,ââ¬Â said Saroj Kumar Poddar, president of Federation of Indian Chambers of Commerce and Industry.
Analysts said the Reserve Bank has adopted a ââ¬Åhawkishââ¬Â stance towards monetary policy.
ââ¬ÅWe expect a tightening of liquidity and banks to raise rates to rationalise between lending and deposit rates,ââ¬Â said Sanjit Singh, a vice president of research with brokerage ICICI Securities.
ââ¬ÅRates in India are higher than most countries but the inflationary trend is strong and real economic growth high. The policy stand is hawkish,ââ¬Â Singh said.
Bank credit to industry this year has expanded by more than 30 percent and property prices have risen sharply, sparking fears of a bubble.
Though the central bank faces political pressure to keep rates low to dent poverty in the country of 1.1 billion people with almost 300 million earning less than a dollar a day.
ââ¬ÅThere will be an apparent difference between what I think and what the RBI (Reserve Bank of India) thinks,ââ¬Â Finance Minister P. Chidambaram said earlier this month.
http://www.thenews.com.pk/daily_detail.asp?id=30091
MUMBAI: Indiaââ¬â¢s central bank warned Tuesday of overheating in one of the worldââ¬â¢s fastest growing economies as it juggled interest rates in a mid-term policy review aimed at keeping prices in check.
The Reserve Bank of India raised the cost for banks to borrow by a quarter percentage point to 7.25 percent and kept its reverse repurchase rate, the rate paid for deposits from commercial banks, at a four-year high of 6.0 percent.
The central bank did refrain from lifting its long-term rate, or bank rate, from 6.0 percent and kept the cash reserve ratio, the percentage of funds banks have to keep as cash, at 5.0 percent.
The central bank said global oil prices, down more than 10 dollars from record levels above 70 dollars earlier this year, and a booming economy posed a threat to price stability.
The economy, which grew 8.4 percent in the fiscal year ended March and 8.9 percent in the quarter ended June, showed ââ¬Åsigns of overheatingââ¬Â, it said.
ââ¬ÅWhile global inflation conditions have not worsened, concerns relating to price pressures and uncertainties surrounding international crude prices persist,ââ¬Â Reserve Bank Governor Y.V. Reddy said in a statement.
The central bank meanwhile raised its growth forecast to 8.0 percent for the year to March 2007, from an earlier forecast of 7.5-8.0 percent, and said inflation would be contained at 5.0-5.5 percent.
Reddy said industrial output, led by manufacturing, has performed better than expectations.
Inflation, as measured by wholesale prices, rose to a four-month peak of 5.26 percent last week at the same time in a sign of a booming economy, the benchmark Mumbai stock exchange Sensex hit a record high close Monday of 13,024.26.
The Sensex opened firm Tuesday but fell 0.48 percent or 62.36 points in choppy trade to 12,961.90.
The rupee gained against the dollar to 44.98 from 45.00 Monday.
ââ¬ÅThe rupee is likely to strengthen further largely due to strong fund flows into Indian equities,ââ¬Â said Sharad Pawar, an analyst with treasury advisory firm ForexServe.
The Sensex has gained more than 47 percent in the past five months, from a low of 8,799.01 on June 14 as foreign funds pumped in 6.42 billion dollars so far this year.
Industry lobby group, the Federation of Indian Chambers of Commerce and Industry (FICCI), gave a thumbs down to the latest policy statement.
ââ¬ÅThe rate hike will raise the cost of capital for industry. It is bound to pinch small and medium enterprises,ââ¬Â said Saroj Kumar Poddar, president of Federation of Indian Chambers of Commerce and Industry.
Analysts said the Reserve Bank has adopted a ââ¬Åhawkishââ¬Â stance towards monetary policy.
ââ¬ÅWe expect a tightening of liquidity and banks to raise rates to rationalise between lending and deposit rates,ââ¬Â said Sanjit Singh, a vice president of research with brokerage ICICI Securities.
ââ¬ÅRates in India are higher than most countries but the inflationary trend is strong and real economic growth high. The policy stand is hawkish,ââ¬Â Singh said.
Bank credit to industry this year has expanded by more than 30 percent and property prices have risen sharply, sparking fears of a bubble.
Though the central bank faces political pressure to keep rates low to dent poverty in the country of 1.1 billion people with almost 300 million earning less than a dollar a day.
ââ¬ÅThere will be an apparent difference between what I think and what the RBI (Reserve Bank of India) thinks,ââ¬Â Finance Minister P. Chidambaram said earlier this month.
http://www.thenews.com.pk/daily_detail.asp?id=30091
Thursday, November 09, 2006
India sees textile investment at $7.4 billion
NEW DELHI: India expects investment in its textile sector of 330 billion rupees ($7.4 billion) during the current fiscal year, compared to 219 billion rupees the year before, a textile ministry statement said on Wednesday.
About 250 billion rupees of that would be channeled through the government-funded textile modernisation fund, Textile Minister Shankersinh Vaghela told reporters. The main feature of the Technology Upgradation Fund Scheme (TUFS) is a 5 percent reimbursement of interest to financial institutions which lend under the scheme. It also offers capital- linked credit subsidies to the textile industry.
The government had earlier said it expected to double its fund disbursement under TUFS to 300 billion rupees in 2006/07 from 150 billion rupees in 2005/06.
Indiaââ¬â¢s textile and clothing industry contributes about 14 percent to industrial production, and about 17 percent to the countryââ¬â¢s total exports. It directly employs over 35 million people and another 50 million work in allied activities.
Indiaââ¬â¢s textile export target for the current fiscal year is $19.7 billion of which $4.6 billion was recorded in the April-June quarter compared to $17 billion last year. The European Union is the largest market accounting for 35 percent of textile exports, followed by the US at 27 percent, the statement said.
Indiaââ¬â¢s National Textile Policy 2000 has set a target of $50 billion of annual textile exports by 2010. By when, the statement added, the sector aimed to attract investment totalling 1.4 trillion rupees.
http://www.dailytimes.com.pk/default.asp?page=2006\11\09\story_9-11-2006_pg5_20
India sees textile investment at $7.4 billion
NEW DELHI: India expects investment in its textile sector of 330 billion rupees ($7.4 billion) during the current fiscal year, compared to 219 billion rupees the year before, a textile ministry statement said on Wednesday.
About 250 billion rupees of that would be channeled through the government-funded textile modernisation fund, Textile Minister Shankersinh Vaghela told reporters. The main feature of the Technology Upgradation Fund Scheme (TUFS) is a 5 percent reimbursement of interest to financial institutions which lend under the scheme. It also offers capital- linked credit subsidies to the textile industry.
The government had earlier said it expected to double its fund disbursement under TUFS to 300 billion rupees in 2006/07 from 150 billion rupees in 2005/06.
Indiaââ¬â¢s textile and clothing industry contributes about 14 percent to industrial production, and about 17 percent to the countryââ¬â¢s total exports. It directly employs over 35 million people and another 50 million work in allied activities.
Indiaââ¬â¢s textile export target for the current fiscal year is $19.7 billion of which $4.6 billion was recorded in the April-June quarter compared to $17 billion last year. The European Union is the largest market accounting for 35 percent of textile exports, followed by the US at 27 percent, the statement said.
Indiaââ¬â¢s National Textile Policy 2000 has set a target of $50 billion of annual textile exports by 2010. By when, the statement added, the sector aimed to attract investment totalling 1.4 trillion rupees.
http://www.dailytimes.com.pk/default.asp?page=2006\11\09\story_9-11-2006_pg5_20
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Sensex gains 145 pts as industry zooms ahead
MUMBAI: Exactly six months after its mid-May high, investor wealth scaled a new peak on Friday. Boosted by robust industrial production numbers for September that beat expectations, and steady infusion of funds by foreign institutional investors, investors' wealth, measured by BSE's market capitalisation, reached Rs 34.5 lakh crore. The previous high, Rs 34.35 lakh crore, was scaled on May 11, just before the market went into a month-long correction.
The BSE sensex also closed at a new peak on Friday. With banking and consumer goods stocks leading the rally, the index touched a new intra-day peak at 13,304 and ended at 13,283, up 145 points, or 1.1%.
After a slow start to the day's trading, buying picked up after the industrial production numbers were released. Index of industrial production for September showed a growth of 11.4% year-on-year, backed by strong manufacturing and electricity output, official data showed.
FII investment data showed a steady inflow with $114 million (about Rs 530 crore) coming in on Thursday and the provisional figure for Friday showed a net inflow of Rs 122 crore. Mutual funds, however, showed a net outflow of Rs 71 crore for Friday.
Among frontline stocks, ICICI Bank ended 4.1% higher at Rs 832 while Bhel ended 3% higher at Rs 2,456 and HDFC Bank ended 2.7% higher at Rs 1,044. Despite this, the number of laggards and winners were nearly equal. Compared to 1,270 stocks that ended with gains, 1,219 ended in the red. Turnover, at Rs 4,568 crore, was higher than month's average of Rs 4,286 crore.
MUMBAI: Exactly six months after its mid-May high, investor wealth scaled a new peak on Friday. Boosted by robust industrial production numbers for September that beat expectations, and steady infusion of funds by foreign institutional investors, investors' wealth, measured by BSE's market capitalisation, reached Rs 34.5 lakh crore. The previous high, Rs 34.35 lakh crore, was scaled on May 11, just before the market went into a month-long correction.
The BSE sensex also closed at a new peak on Friday. With banking and consumer goods stocks leading the rally, the index touched a new intra-day peak at 13,304 and ended at 13,283, up 145 points, or 1.1%.
After a slow start to the day's trading, buying picked up after the industrial production numbers were released. Index of industrial production for September showed a growth of 11.4% year-on-year, backed by strong manufacturing and electricity output, official data showed.
FII investment data showed a steady inflow with $114 million (about Rs 530 crore) coming in on Thursday and the provisional figure for Friday showed a net inflow of Rs 122 crore. Mutual funds, however, showed a net outflow of Rs 71 crore for Friday.
Among frontline stocks, ICICI Bank ended 4.1% higher at Rs 832 while Bhel ended 3% higher at Rs 2,456 and HDFC Bank ended 2.7% higher at Rs 1,044. Despite this, the number of laggards and winners were nearly equal. Compared to 1,270 stocks that ended with gains, 1,219 ended in the red. Turnover, at Rs 4,568 crore, was higher than month's average of Rs 4,286 crore.
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Industrial output clocks 11% growth in first half
NEW DELHI: Indian industry is on a roll, growing 10.9% during the first half thanks to manufacturing maintaining its 12% growth tempo. But electricity, a laggard earlier, is trying to catch up fast.
Though the sector grew 11.4% in September 2006, compared with a dip in production last year, growth during the first half was 6.6%. It may still be early to say that it has recovered since economists said that the high growth was also because of the low base last year. Mining, however, continues to lag behind.
The success story in manufacturing is probably the effect of growing demand at home and abroad. Local demand — with consumers spending heavily on buying cars, phones and TVs — is pepping up the sector. But the role of capital goods and intermediates, which add to further production, is equally being felt. With little signs of growth tapering off, economists are predicting pressure on interest rates. Higher demand would create more capacity and a rush by companies to borrow loans to finance expansion. But government is unwilling to allow overall rates to climb up just yet.
Banks, which have a tight liquidity position, may find it tough to meet the credit demand and could be forced to raise interest rates, at least on housing and personal loans and handle the other sectors later. "An interest rate hike appears imminent," said a senior executive with a public sector bank. Besides, bankers pointed out, a rate hike was also required to curb inflationa.
But North Block thinks that companies, which are posting healthy profits and accumulating reserves, would prefer to dip into the corpus to finance expansion.
NEW DELHI: Indian industry is on a roll, growing 10.9% during the first half thanks to manufacturing maintaining its 12% growth tempo. But electricity, a laggard earlier, is trying to catch up fast.
Though the sector grew 11.4% in September 2006, compared with a dip in production last year, growth during the first half was 6.6%. It may still be early to say that it has recovered since economists said that the high growth was also because of the low base last year. Mining, however, continues to lag behind.
The success story in manufacturing is probably the effect of growing demand at home and abroad. Local demand — with consumers spending heavily on buying cars, phones and TVs — is pepping up the sector. But the role of capital goods and intermediates, which add to further production, is equally being felt. With little signs of growth tapering off, economists are predicting pressure on interest rates. Higher demand would create more capacity and a rush by companies to borrow loans to finance expansion. But government is unwilling to allow overall rates to climb up just yet.
Banks, which have a tight liquidity position, may find it tough to meet the credit demand and could be forced to raise interest rates, at least on housing and personal loans and handle the other sectors later. "An interest rate hike appears imminent," said a senior executive with a public sector bank. Besides, bankers pointed out, a rate hike was also required to curb inflationa.
But North Block thinks that companies, which are posting healthy profits and accumulating reserves, would prefer to dip into the corpus to finance expansion.
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Samsung plans $100 million facility in Chennai
CHENNAI: Samsung India Electronics on Friday signed an MoU with the TN government for locating its second Indian plant in Chennai at an investment of $100 million.
Addressing a press conference, R Zutshi, deputy managing director, Samsung India said that the plant will come up in an 80 acre plot in Sriperumbudur, which will make colour monitors, refrigerators, air conditioners, washing machines, printers and other technology products. "Phase I of the project which runs between 2006 and 2009 will suck $70 million and make 1.50 million colour televisions, 1 million computer monitors and other products. Phase II starts from 2010-11, wherein the production capacities would be enhanced," Zutshi added.
The entire park of 80 acres is divided into two parts viz, 50 acres as domestic tariff area (DTA), wherein products made here will be for India, while 30 acres will be an SEZ which will service exports. Besides, 40 acres are being set aside exclusively for Samsung's vendors.
The unit will be a global hub for Samsung wherein products are planned to be shipped to Middle East, Saarc and African markets. Samsung hopes to employ 2,500 people in the production lines at Sriperumbudur.
The construction is slated to begin in January 2007 and commercial production is pegged for August 2007.
Dayanidhi Maran, IT and communications minister said with the entry of Samsung, a new ecosystem is getting created. "Already, with Nokia, Flextronics and Motorola, the telecom eco-system is in place, and with this, Tamil Nadu has a new eco-system, which will be a driver for other investments to come in," he added.
Saktikanta Das, industries secretary, TN government said that it was an important project for the state as this was the first time many new products like monitors and refrigerators would be made in the state. Samsung already has its plant in Noida.
CHENNAI: Samsung India Electronics on Friday signed an MoU with the TN government for locating its second Indian plant in Chennai at an investment of $100 million.
Addressing a press conference, R Zutshi, deputy managing director, Samsung India said that the plant will come up in an 80 acre plot in Sriperumbudur, which will make colour monitors, refrigerators, air conditioners, washing machines, printers and other technology products. "Phase I of the project which runs between 2006 and 2009 will suck $70 million and make 1.50 million colour televisions, 1 million computer monitors and other products. Phase II starts from 2010-11, wherein the production capacities would be enhanced," Zutshi added.
The entire park of 80 acres is divided into two parts viz, 50 acres as domestic tariff area (DTA), wherein products made here will be for India, while 30 acres will be an SEZ which will service exports. Besides, 40 acres are being set aside exclusively for Samsung's vendors.
The unit will be a global hub for Samsung wherein products are planned to be shipped to Middle East, Saarc and African markets. Samsung hopes to employ 2,500 people in the production lines at Sriperumbudur.
The construction is slated to begin in January 2007 and commercial production is pegged for August 2007.
Dayanidhi Maran, IT and communications minister said with the entry of Samsung, a new ecosystem is getting created. "Already, with Nokia, Flextronics and Motorola, the telecom eco-system is in place, and with this, Tamil Nadu has a new eco-system, which will be a driver for other investments to come in," he added.
Saktikanta Das, industries secretary, TN government said that it was an important project for the state as this was the first time many new products like monitors and refrigerators would be made in the state. Samsung already has its plant in Noida.
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