Browse by

Business Current Events

Sony to Contract-Manufacture via Foxconn under "Make in India" Initiative

Giving huge boost to Prime Minister Narendra Modi’s pet project “Make in India” initiative, Japanese electronics behemoth Sony is learnt to be entering into a contract-manufacture deal with Taiwanese electronics part manufacturer Foxconn for manufacturing their products in India itself. Sources say that this decision has been taken as various incentives provided by Government of India to foreign investors in setting up their manufacturing base here led Foxconn to set up multiple facilities in India. However, confirmed reports say that Sony is not starting its manufacturing unit in India as of now. Kenichiro Hibi, Managing Director of Sony India, has said that they haven’t taken a final decision yet but considering various ways of making in India and one of the major possibilities is surely contract manufacturing. Reports say that Foxconn has chosen Andhra Pradesh’s Sri City to set up facility for manufacturing Sony’s products.

RBI Governor assures Greece Default will have Limited Impact on Indian Economy

Raghuram Rajan, RBI Governor, said during a board meeting that due to little exposure of Indian economy to European countries, effect of Greece crisis in India will be limited. He went on to add that in terms of trade and finance, India’s exposure to Greece is “very, very limited”. He specifically mentioned that initially after confronting adverse effects, if any, volatility can be witnessed but after sometime the investors will start to differentiate and will find out that the India story is actually strong. Rajan went on to say that growth prospects are healthy and macro economic policies are good as well. However, he acknowledged that there can be some effect of Greek crisis on exchange rate, depending upon effect of the crisis on Euro. RBI governor vouched for strong Indian story by claiming that the buffers including the foreign exchange one are quite reasonable.

Government and RBI in Discussion on Recapitalisation of State-Owned Banks

Reserve Bank of India’s Governor Dr Raghuram Rajan has said that Union Government is in talks with the RBI on recapitalisation of state-owned banks. He went on to welcome government’s initiative of providing more capital to the banks because he believes this will give the banks the required buffer. Rajan went on to say that the additional capital will help the banks utilize some in cleaning their balance sheet. RBI Governor went on to add that capital infusion becomes important for banks if they don’t have the capacity of cleaning the balance sheet. There are some banks that are currently in financial stress and this capital infusion, announced by Finance Minister Arun Jaitley in addition to the already allocated capital during budget, will “hopefully” help them in their endeavour. He also called for government’s intervention in the stuck projects for dealing with the NPA problems of the banks.      

SBI Chairperson Announces Massive Branch Overhaul and Digital Banking Focus

State Bank of India (SBI), largest institutional lender of India, has said that it has undertaken a major branch format change along with opening of new branches in accordance with needs of the customers. Arundhati Bhattacharya, Chairperson of SBI, has said that their branch network is going through a transformation, which will include relocation of branch in accordance with the movement of habitation and catering to the needs of the clientele. To attract more young customers, focus will be given on e-corners. InTouch and InTouch Light branches, digital branches, are also going to be the focus. Bhattacharya also pointed out that most of the SBI branches are located in the older parts of Tier-I and Tier-II cities and in the newer parts there are just a few. Branches will be relocated to newer parts of the cities from the older ones, on population shift.

SC's Verdict on Regulation of Network Rates by PNGRB gives major Boost to Investment in CGD Sector

Supreme Court has given the verdict that Petroleum and Natural Gas Regulatory Board (PNGRB), downstream regulator, doesn’t possess power for regulating or fixing network rates. Reports say that this landmark verdict is all set to unleash fresh salvo of investment in CGD or City Gas Distribution sector. Supreme Court has upheld order given by Delhi High Court, back in 2012, where it said that no statutory provisions are there for PNGRB in fixing retail gas prices. SC’s verdict was delivered in response to the petition filed by the downstream regulator challenging the Delhi HC’s verdict in favour of Indraprastha Gas Limited (IGL). The tussle between IGL and PNGRB dates back to 2012 when the latter asked the former to reimburse 64 per cent of the retail rates charged by IGL to its customers with 5-years retrospective rate. Director at India Ratings and Research, Salil Garg, welcomed the verdict.

Global Rating Agency Fitch lowers Economic Growth Projection from 8 Per Cent to 7.8 Per Cent

Global Economic Outlook report of Fitch, global rating agency, has lowered economic growth projection of India for 2015-16 from earlier projected 8 per cent to 7.8 per cent. In the report, Fitch has also pointed out that they expect Indian economy to grow at a faster pace than that of China for the first time since the year 1999. They expect GDP of India to accelerate to 8.1 per cent in 2016-17, followed by 8 per cent in 2017-18. Fitch has however noted that demand scenario of Indian economy is strengthening, as per available data, and the key themes of India's growth outlook are structural reform implementation and consequent rise in investment. Reports say that in terms of real GDP growth forecast has been lowered from 8 per cent to 7.8 per cent in 2016-17 and from 8.3 per cent to 8.1 per cent in 2017-18.

Indian Bourses Hold Ground Inspite of Looming Greece Default

Indian bourses today not only held ground with Greece accepting bailout conditions set by its creditors but also increased considerably. While Sensex closed at 28020.87 points (an increase of 240.04 points or 0.86 per cent), Nifty closed at 8453.05 (an increase of 84.55 points or 1.01 per cent). Analysts say that market today witnessed broad-based buying. Buying interests were witnessed, especially in auto, realty, power, IT, and capital goods sectors. These indices in BSE increased anywhere from 1.3 to 1.7 per cent. Small caps as well as mid caps advanced by 1.4 and 1.3 per cent respectively. Biggest gainers today are Ambuja Cements, BHEL, Yes Bank, Cipla, Axis Bank, Tata Motors, HCL Technologies, UltraTech Cement, and Power Grid. Greek PM Alexis Tsipras has conveyed in writing to the international creditors that Greece can accept their last minute bailout plan, provided some conditions are changed.               

CEO of Airbus Defence and Space Conveys PM Modi about the company's "Make in India" Plans

CEO of Airbus Defence and Space, Bernhard Gerwert, met Prime Minister Narendra Modi and conveyed his company’s plan of becoming a part of “Make in India” initiative. Statement issued by Prime Minister's Office said that Gerwert expressed interest in following a cluster approach with regional partners in an effort to become a partner in “Make in India” initiative. The PMO statement also said that Prime Minister Modi welcomed interest shown by Bernhard Gerwert in the ambitious “Make in India” programme. While talking to the media, Airbus CEO said that PM Modi’s visit to France’s Airbus manufacturing unit in Toulouse enhanced their interest and also created positive atmosphere. Airbus Group has already started consolidating its operation in India, as per its new strategy, and brought all the Indian operations under Airbus Group India Private Limited. This is the first ever such move outside France by Airbus Group.

Roadmap for Ending Corporate Tax Exemptions to be presented by Government in 45 Days

Shaktikanta Das, Revenue Secretary, said that Union Government is all set to unveil a roadmap in coming 45 days to end corporate tax exemptions. He also said that the roadmap will lead to lowering of tax rate to 25 per cent in four years time. Das, while making this statement also added that all the preparatory arrangements have been done for implementing Goods and Services Tax (GST) from April 1, 2016. During annual budget placement in February 2015, Union Finance Minister Arun Jaitley also said that corporate tax will be pared out gradually by 5 per cent in coming 4 years from the existing 30 per cent mark. The announcement comes at a time when different political parties are getting ready for the showdown in Rajya Sabha during Monsoon session on the issue of GST, whose implementation can increase economic rate by 1-2 per cent points.

NITI Aayog Vice Chairman expects Indian Economy to Surpass $3 trillion mark within 5 Years

Arvind Panagariya, Vice Chairman of NITI Aayog, has said in an interview that he expects Indian economy to hit $3 trillion mark in the coming five years. He went on to say that he will be “greatly disappointed” if GDP growth of the economy doesn’t hit the 8 per cent mark in 2015-16. Available data says that during 2014-15, Indian economy grew at the rate of 7.3 per cent and it is currently little over $2 trillion, which makes India 3rd largest economy in the Asian continent. Arvind Panagariya stressed on export led growth as he said that India accounts for less than 2 per cent export share in total global economy and hopes to reach 12 per cent global export share in coming years. Panagariya said rising wages in China has made many companies seek other low wage destinations and India is perfectly suited for that.

IMF Paper says Indian Banks Slow in Passing on benefits to Consumers after Key Rate Change by RBI

A new research paper by International Monetary Fund (IMF) has pointed out that Indian Banks are significantly slow in passing on benefits of major policy rate change by the Reserve Bank of India to the consumers. The paper presented by IMF economist Sonali Das, “Monetary Policy in India: Transmission to Bank Interest Rates” said that when it comes to passing on the key rate changes of apex bank, Indian banks are “albeit slow” to pass on the same to bank interest rates (whether lending or deposit). She also acknowledged that speed of adjusting deposit and lending rates to policy rate changes has improved in the recent years. Sonali pointed out that Indian banks pass on the policy rate changes more quickly in case of deposit rates than lending rates. The concerned paper concluded on the basis of data from March-end 2002 to October-end 2014.

Food Business of ITC crosses US$1 Billion Revenue Mark

ITC has entered the league of top five food companies of India as the company’s revenue during 2014-15 fiscal was Rs. 6,411 crore, which surpasses US$1 Billion revenue level when equated at current exchange level. The other companies on top five slots are Mondelez India, Britannia, Nestle, and Parle. Reports say that ITC posted a 12 per cent growth in foods segment and that’s significant because it reached this feat when most of the other food companies were struggling to maintain single digit growth figure. The latest Nielsen figure shows that the top three slots in the food business are held by Parle, Nestle and Britannia.  Interestingly, ITC entered food business in India in 2005 and is among the youngest companies in the segment. Some of the top brands of ITC are Aashirvaad, Pasta Treat, Yippee, Bingo, Sunfeast, Mint-O, Candyman, and others.  

Report says Rs. 13,500 worth Projects in Highway Sector Either Awarded or in Final Stage of Awarding in FY16

Reports say that Narendra Modi government has given utmost focus on highway development projects in 2016 financial year, which is evident from the extent (Rs. 13,500 crore) of projects awarded or in the final phase of awarding under Public Private Partnership (PPP) model. It has more than doubled from 2014-15’s Rs. 6,300 crore worth projects awarded and just two projects in 2013-14 fiscal. An official said that private developers shied away from PPP projects due to regulatory hurdles, ceiling to sectoral exposure by banks, equity crunch, and over-leveraged financials. The official also said that renewed focus of the government on PPP model in infrastructure/highway projects and continued efforts of boosting the sector has revived interest of private developers. He went on to add that government is currently trying to do away with NHAI’s lack of land acquisition and inadequate preparation for projects.

RBI Clears Air on Governor Raghuram Rajan's Comment on Great Depression-like Situation

Reserve Bank of India issued a statement saying that Governor Raghuram Rajan, while making a comment on Great Depression like situation didn’t mean that there is a prevailing risk of the world economy to slip into a Great Depression like situation. The apex bank said that the Great Depression of 1930s was caused by multiple factors and not by beggar-thy-neighbour policies only. However, there are many central banks across the world now following policies that is increasing their risk of slipping into a beggar-thy-neighbour like situation, which was witnessed during the 1930s. In the statement RBI categorically mentioned that global economy is currently in a steady recovery mode with uncertainties prevailing in Euro area, which may slip into a Great Depression like situation. In the statement, RBI also mentioned that the remarks made by Rajan at London Business School’s AQR conference on 25 June were mischaracterized by media.

Sensex tanks over 600 Points Today with Deepening Greece Crisis

With the looming risk of Greece default this week, Indian bourses are witnessing bloodbath today. 30-stock benchmark BSE Sensex today opened 450 points below previous close. At 11.45am IST, Sensex was trading at 27,276.26 (down by 535.58 points or 1.93 per cent) and hit a low of 27,209.19 (down by 602.65 points). CNX Nifty was also down by 163.85 points and was trading at 8217.25 points at 11.50am IST. In comparison to previous close, the low at around 11.50am was 8,195.65, which is 185.45 points lower. Lows of both Sensex and Nifty today were lower than their 30 days simple moving average, analysts point out. Reports say that Greece failed to reach a deal with IMF in settling its $1.8 billion debt and is expected to default by tomorrow day-end. A referendum has been called by Greece on 5 July for deciding on proposed cash-for-reforms terms by the creditors.

RBI Data shows Foreign Exchange Reserves increased to a Whooping $355.46 Billion

Data published by Reserve Bank of India show that up to June 19, foreign exchange reserve has increased to a record high of $355.46 billion, an increase of $1.17 billion. Gold reserves of India in the week to June 19 remained unchanged at $19.34 billion. Special drawing rights with IMF has increased to $4.07 billion, an increase of $26.6 million, and India’s reserve position with IMF jumped to $1.32 billion, an increase of $8.5 million. Inspite of this record increase in forex, a HSBC report opined that India’s foreign exchange reserve needs to increase by an additional $60 billion for creating the coveted buffer to tackle prolonged global financial tightness. The concerned HSBC report specifically mentioned that the additional proposed forex reserve will cushion the risks arising from key vulnerabilities such as “short-term external debt and portfolio outflows” as well as unhedged external commercial debt.

Narendra Modi Government to Infuse $1.8 billion in PSUs up above Budgetary Allocation of $1.2 billion for 2015-16

Finance Secretary Rajiv Mehrishi told media that Narendra Modi government is all set to infuse $1.8 billion (around Rs. 11,500 crore) additional fund to the public sector banks, up and above the $1.2 billion (Rs. 7,940 crore) fund already allocated during 2015-16 budget for recapitalisation of PSU banks. Finance Secretary had said earlier this month that government is all set to provide the public sector banks $9 billion or around Rs 57,000 crore funds over two fiscal years for recapitalisation so that the PSU banks are able to meet global capital adequacy norms. In fact, Finance Minister Arun Jaitley earlier said that he agrees to the PSU bank heads’ demand that additional funds are required. RBI’s Deputy Governor R Gandhi said yesterday that currently PSU banks are adequately capitalised but to fulfill global capital adequacy norms in the coming days additional money will be required.       

PM Modi to Launch Ambitious "Digital India" Programme on 1 July

PM Narendra Modi is all set to launch his ambitious pet project “Digital India” programme on 1 July. As per reports, the programme expects to bring advantages of digital services to every Indian. Reports say that the leading Indian business magnets such as Mukesh Ambani (MD and Chairman of RIL), Azim Premji (Wipro Chairman), Cyrus Mistry (Chairman of Tata Group), and Satya Nadella (CEO of Microsoft) will be present at the programme. They will also give brief messages along with presentation on revolutionalising Indian digital space. Mukesh has made his foray into the digital world as Reliance Jio Infocomm is going to make nationwide launch of its coveted 4G services coming December. “Digital India” launch programme will be attended by other corporate leaders such as Sunil Mittal (Chairman of Bharti Group) and Gautam Adani (Chairman of Adani Group). However, confirmations from invitees are yet to be received.   

RBI's Report says Rs 53,000-crore Exposure of Indian Banks to State Electricity Boards may turn NPAs by Sept'15

Financial Stability Report of Reserve Bank of India said that there is “very high probability” of Indian banks’ exposure, amounting to Rs. 53,000 crore, to 7 State Electricity Boards (SEBs) becoming Non-Performing Assets (NPAs) in July-September 2015 quarter. The report also mentioned that in 2012 these loans were restructured with a moratorium for the principal loan amount, which is Rs. 43,000 crore. The 90-days moratorium period is coming to an end on June 30 and if the concerned SEBs don’t pay-up principal amount and/or interest, the pending exposure of the banks will become NPA. The report highlighted that it is unlikely for the government to pay up the “overdue principal/installments in time” due to its inadequate fiscal space. Meanwhile, MoS Finance, Jayant Sinha, said during Edelweiss-Wells Fargo organised conference, that government has to find out a solution for distressing the already burdened power and distribution companies.

Australia wants to Finalise CECA to become part of "Make in India" and Unlock India-Australia Trade Potential

Australia’s Parliamentary Secretary to the Minister for Foreign Affairs, Steven Ciobo, said at a meeting in Hyderabad that Comprehensive Economic Cooperation Agreement (CECA) is very important to them because after its finalisation they want to make inroads in the Indian manufacturing sector in a big way through active participation in “Make in India” initiative. He also said that CECA encompasses investment, goods, and services and will be a game changer in the India-Australia trade potential. The aggressive targets set by Australian PM Tony Abbott and Indian PM Modi in the proposed CECA will improve two way investment scenarios (including FDI) and also help global supply chains. During the programme, organised by CII Telangana and Andhra Pradesh, Steven Ciobo went on to compare the trade figures of India-Australia (presently at $15 billion) with that of China-Australia to highlight the potential India has of increasing trade with Australia.