PowerPoint Presentation

Government and Economic Policies India

By: Paul Young, CPA, CGADate: November 6, 2016

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`This presentation will discuss the India economy as well as government policies that will support economic growth. India is an emerging market that is expected to grow at a pace of 7.6%+ for the next 10+ years.

Paul Young - Presenter

BioCPA/CGA25 years of experience in Academia, Industry and Financial solutionsYoutube Channel - https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

Agenda

Growth 2016India GDPIndia ManufacturingIndia Retail SalesIndia eCommerceBankingTaxationOECDBEPSTRAdeFDICanada and IndiaOther Sources

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Global Forecasthttp://www.gbm.scotiabank.com/English/bns_econ/globaloutlook.pdf

The worlds top-20 largest economies account for 75% of global GDP (measuredin purchasing power parity terms). Led by China and India, and to a lesser extentIndonesia, the fast-growing Asia-Pacific nations represent a dominant 47% of thetop-20 group. Brazil and Mexico in the Americas, and the Russian Federation andTurkey in the EuroAsian region also belong to the core group of emerging-marketeconomies, yet growth rates in these four economies still represent a fraction oftheir Asian counterparts

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India / GDP

http://www.tradingeconomics.com/india/gdp6

China and India GrowthAccording to a report by NCAER, the Indian economy expanded at 7.6 percent in 2015-16 while on the other hand it anticipated improvement in agricultural sector and associated increase in rural demand to give an upward push to economic growth.It also indicated that the domestic aviation sector growth continues to be robust."Food inflation is also showing signs of dampening in the latter part of the second quarter. However, fuel inflation may revive. Although urban demand is predicted to remain strong, external demand continues to be volatile," adds the NCAER statement.It further said that India's fiscal position remained under stress during first half of the current fiscal.Despite healthy growth in tax revenues, the combination of rising expenditure and lower-than-expected non-tax revenues is likely to test the government's resolve to abide by the fiscal deficit target set out in Budget 2016-17, NCAER added.

Source http://www.business-standard.com/article/news-ani/ncaer-indicates-india-s-gdp-growth-at-7-6-pct-in-2016-17-116110600427_1.html

1. http://money.cnn.com/2016/06/08/news/economy/india-china-economy-gdp-statistics/7

India / Manufacturing SectorIssues:Poor RoadsReliability of PowerSkill LaborAccess to CreditLand availability

New Delhi:Manufacturing sector growth in India hit a 22-month high in October, driven by a sharp and accelerated increase in new orders, purchasing activity and output, a monthly survey showed today.The Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) -- a gauge of manufacturing performance -- rose to 54.4 in October from 52.1 in September, indicative of a robust improvement in manufacturing business conditions in the country.

http://www.tradingeconomics.com/india/manufacturing-pmihttp://www.hindustantimes.com/india/defence-manufacturing-is-india-s-biggest-job-spinner-modi/story-yqqNSoMXkd22tt9XAkZVkL.htmlhttp://www.adb.org/news/features/manufacturing-and-make-india-12-things-knowhttp://www.dnb.co.in/manufacturing_India_2025/ManufacturingIndiain2025.asphttp://www.firstpost.com/business/indias-mfg-sector-growth-hits-nearly-2-year-high-in-oct-pmi-3082126.htmlhttp://indiabudget.nic.in/ub2016-17/bh/bh1.pdf

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India / Retail Sales

Retail Sales:International Finance Corporation (IFC), the investment arm of The World Bank, plans to invest up to Rs 134 crore (US$ 19.86 million) in Kishore Biyani's Future Consumer Enterprises Ltd, which is expected to aid the company in driving its growth plans.Amazon India has opened six new fulfillment centres across Chennai, Coimbatore, Delhi, Jaipur and Mumbai, which will open up 5.5 million square feet of storage space for sellers on the marketplace who use the Fulfilled by Amazon service.IKEA, the worlds largest furniture retailer, plans to invest Rs 10,500 crore (US$ 1.56 billion) to set up 25 stores across India and hire over 15,000 permanent employees and 37,500 temporary employees to assist in running its stores.Amazon Inc. has announced that the company would invest an additional US$ 3 billion in India operations, thereby taking its committed investment in the country to over US$ 5 billion.Aditya Birla Fashion and Retail Limited (ABFRL) has announced that it will acquire exclusive online and offline rights of Forever 21, an American fast fashion brand, in the Indian market.Massimo Dutti, a premium fashion brand from Spain offering sophisticated womenswear, menswear, footwear and accessories, has entered India by opening its first store at the Select Citywalk mall in New Delhi.Lenskart, India's largest online eyewear retailer, has raised Rs 400 crore (US$ 59.3 million) in series D round of funding led by World Bank's investment arm International Finance Corporation (IFC), which will be used to enhance its technology, supply chain, lens manufacturing, and expand the reach of its high-quality eyewear products across Tier-3 and Tier-4 cities of India.Neil Barrett, one of the leading Italian fashion brands, has forayed into the Indian market by establishing its retail presence through an exclusive partnership with Fervour, a multi-brand boutique that stocks international designer brands.New York-based designer brand Kate Spade will be launched in India later this year and will set up a network of stand-alone stores across major cities, thus becoming one more global brand entering the Indian retail space after the Government of India relaxed single brand retail norms recently.KartRocket, a Delhi based e-commerce enabler has completed its US$ 8 million funding round by raising US$ 2 million from a Japanese investor, which will be used to enhance Kraftly, a mobile-first online-to-offline marketplace targeting small sellers, individuals and home-based entrepreneurs in India in product categories such as apparel and accessories.

http://www.statista.com/statistics/232429/forecast-for-retail-sales-growth-of-india/http://www.ibef.org/industry/retail-india.aspx9

Retail Sales eCommerce With 36 million units in India under the micro, small and medium enterprises category as per government data, the opportunity for digital platforms aggregating their requirements is massive. Indias B2C ecommerce sector is expected to be somewhere between $100 billion and $150 billion in five years and B2B is likely to exceed that, said Sumit Jain, partner at Kalaari Capital, an investor in Industry buying and Power2SME.This year so far, domestic B2B ecommerce companies have raised $79 million from investors, near five-fold increase from all of last year a validation of the sectors improving potential. Thats still a fraction of the estimated $9 billion domestic consumer facing online retailers raised in 2015.

http://economictimes.indiatimes.com/industry/services/retail/indias-ecommerce-market-to-breach-100-billion-mark-by-fy20-goldman-sachs/articleshow/49532128.cmshttp://www.financialexpress.com/article/industry/companies/e-commerce-in-india-funding-plunges-heres-why/288069/http://factordaily.com/alibaba-acquire-flipkart-merge-paytm/http://economictimes.indiatimes.com/articleshow/55101870.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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India Debt

Source: https://www.dbs.comIndias total external debt declined in the June 2016 quarter, primarily due to lower external commercial borrowings. By June 2016, external debt was down to US$479 billion, translating to 23.4% of GDP the smallest in three years. Apart from valuation effects, this pullback was largely due to a sharp fall in offshore borrowings, followed by some outflows in non-resident deposits. Easing domestic borrowing costs have lowered the appetite for external commercial borrowings, with the June quarters figure down 50% on the year. On non-resident deposits, the upcoming foreign-currency non-resident (FCNR) maturities is likely to further lower the debt burden.Despite this improvement, total external debt continues to run in excess of foreign reserves, remaining a source of concern. The ratio of foreign reserves to total debt stood at 76% by June 2016. Encouragingly, the total debt breakdown points to an improving external profile. The share of short-term debt (original maturity) in total debt declined marginally. On a residual maturity basis i.e. debt that is due below one-year, short-term debt was broadly flat at 42.4% of total external debt. More importantly, the ratio of foreign reserves to short-term debt is at a comfortable 4 times. Long-term debt has also moderated in the quarter.

http://www.tradingeconomics.com/india/government-debt-to-gdp

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India / Banking Sector

Indias state-owned banks need to merge into a half dozen well-capitalized institutions than can underwrite economic growth, said the head of the new Banks Board Bureau. In addition to the $3.7 billion earmarked in the 2016/17 budget, the government is ready to inject fresh funds into the banking sector, Vinod Rai, the veteran bureaucrat appointed this year oversee the sectors overhaul, told Reuters.Prime Minister Narendra Modi has made restoring the banks to health a major initiative of his government. Healthy banks will be able to provide the lending and investment needed to create jobs for the million young Indians who join the labor market each month.However, the state banks hold most of Indias $120 billion in troubled loans. Yet, they also control about 70% of all lending in Asias third largest economy, according to Reuters. The government set up the Banks Board Bureau in April to drive balance sheet improvement and consolidate the sector.

http://atimes.com/2016/05/new-bureau-will-try-to-consolidate-indias-state-banking-sectors/

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India / Taxation

Source - Deloitte

1. http://www2.deloitte.com/content/dam/Deloitte/in/Documents/tax/in-tax-india-guide-2015-noexp.pdf13

India / OECD Tax Avoidance

Indian transfer pricing regulations have been heavily affected by the changing global tax and transfer pricing environment prompted by the OECD's BEPS Project.India has been one of the strongest supporters of the BEPS project, quickly adopting many BEPS measures despite not being an OECD member country. India adopted BEPS Action 13 to introduce the master file, local file and country-by-country reporting (CbCR) into its local legislation from April 1 2016. It further signed the multilateral competent authority agreement for the automatic exchange of CbCR."There is heightened early-stage anxiety on the part of companies that will be required to comply with CbCR, as the extensive nature of reporting and the implications from a BEPS-risk assessment standpoint has dawned on them," said Gokul Chaudhri, head of direct tax at BMR Advisors, Taxand India.

http://www.worldtransferpricing.com/India/

https://www.world.tax/articles/india-signs-oecd-country-by-country-reporting-agreement.php14

India TradeRecently-released data related to Indias external sector showed that the trade deficit totaled USD 8.3 billion in September, which was a smaller shortfall than the USD 10.2 billion gap recorded in September 2015 (August 2016: USD 7.7 billion deficit). The rolling 12-month trade deficit narrowed from USD 95.4 billion in August to USD 93.5 billion in September, which is the smallest accumulated shortfall since December 2009.The improvement in trade data came on the back of a pick-up in export growth and a slight contraction in imports. Imports totaled USD 31.2 billion in September, which represented a 2.5% fall from the same month last year (August 2016: -13.5% year-on-year; September 2015: -26.1% yoy).Meanwhile, export growth picked up steam, rising from Augusts 1.2% over the same month last year to 4.6% (September 2015: -24.2% yoy). Indias shipments abroad totaled USD 31.2 billion, which represented an over one-year high.

Source - https://www.focus-economics.com/country-indicator/india/trade-balance

India / FDIThe sectors that receive maximum inflows include computer hardware and software, trading business, automobile industry and chemicals.

India receives maximum FDI from countries, including Mauritius, Singapore, the Netherlands and Japan.

In 2015-16, FDI went up 29 per cent to USD 40 billion as against USD 30.93 billion in the previous fiscal.

Source - http://economictimes.indiatimes.com/news/economy/finance/fdi-in-india-rises-30-per-cent-to-21-6-billion-in-april-sep/articleshow/55271609.cms

Canada and India TRADECanada and India need to complete FIPA and Trade AgreementAccessing the india market which is growing at 7.6%+ is very important for Canadian business like forestry, food processing, oil and Gas, metals, etc.

Source - http://www.producer.com/2016/10/canada-needs-trade-deals-with-india-china/ or https://news.gov.bc.ca/releases/2016FIN0045-002049

Other Sources

Canada and India - http://www.slideshare.net/paulyoungcga/government-policy-fipa-and-trade-agreement-india-and-canadaIndia and Canada - http://www.slideshare.net/paulyoungcga/india-and-canada

Contact:Paul_Young_CGA@Hotmail.com