Monthly Economic Bulletin - October 2015

RECENT TRENDS IN INDIAN ECONOMYDomestic Economy and Markets

India’s Foreign Trade

Agriculture

Inflation

Industrial Production

Foreign Direct InvestmentsMore in this section

OVERSEAS INVESTMENTSGerman defence companies keen to invest in Make in India programme

TCS secures contract from UK’s Nationwide Building SocietyMore in this section

TRADE NEWSIndia, Africa to forge common cause against Western trade bullying

India's spice exports up 30 percent in Q1More in this section

ITP Divison Ministry of

External Affairs Government of India

October, 2015

p. 02/22

NEWS FEATUREModi's infrastructure splurge revives investment in IndiaEnormous progress in US-India relations under Modi's leadership'More in this section

p. 23/26

p. 27/30

p. 31/34

p. 35/39

p. 40/44

SECTORAL NEWSPSUs up investment ante, set to pump in 16% more in FY16

NMDC to invest Rs40, 000 crore in next 8 years for capacity expansionMore in this section

NEWS ROUND-UPCentre may spend Rs 5,000cr in next five years for greener highways

New global tax regime in the works, India set to gain More in this section

MONTHLYECONOMIC BULLETIN

MONTHLYECONOMIC BULLETIN >> RECENT TRENDS IN INDIAN ECONOMY2

October, 2015

Domestic Economy and Markets

ESTIMATES OF GROSS DOMESTIC PRODUCT FOR THE SECOND QUARTER (JULY-SEPTEMBER) OF2015-16 The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the estimates ofGross Domestic Product (GDP) for the second quarter (July-September) Q2 of 2015-16, both at constant (2011-12) andcurrent prices, along with the corresponding quarterly estimates of expenditure components of the GDP. The details of the estimates GDP for Q2, 2015-16 are presented below.

ESTIMATES OF GVA BY ECONOMIC ACTIVITY At constant (2011-2012) prices

GDP at constant (2011-12) prices in Q2 of 2015-16 is estimated at `27.57 lakh crore, as against `25.66 lakh crore in Q2 of2014-15, showing a growth rate of 7.4 percent.Quarterly GVA at Basic Price at constant (2011-12) prices for Q2 of 2015-16 is estimated at `25.80lakh crore, as against `24.02 lakh crore in Q2 of2014-15, showing a growth rate of 7.4 per centover the corresponding quarter of previous year. The economic activities which registered growthof over 7.0 percent in Q2 of 2015-16 over Q2 of2014-15 are ‘trade, hotels and transport & com-munication and services related to broadcasting’,'financial, insurance, real estate and professionalservices' and ‘manufacturing’. The growth in the‘agriculture, forestry and fishing’, ‘mining andquarrying’, ‘electricity, gas, water supply & otherutility services, ‘construction’ and 'public admin-istration, defence and other services’ is esti-mated to be 2.2 per cent, 3.2 percent, 6.7 per cent, 2.6 per cent and 4.7 per cent, respectively, during this period.

Industry analysis

The second quarter estimates are based on agricultural production during Kharif season of 2015-16 obtained from theMinistry of Agriculture, Department of Agriculture & Cooperation(DAC), abridged financial results of listed companiesfrom BSE/NSE, Index of Industrial Production (IIP), monthly accounts of Union Government Expenditure maintained byController General of Accounts (CGA) and of State Government expenditure maintained by Comptroller and Auditor gen-eral of India (CAG) for the period July-September 2015-16. Performance of key indicators of sectors like transport in-cluding railways, road, air and water transport etc., communication, banking and insurance during the period July-September 2015-16 have been taken into account while compiling the estimates. Performance of the corporate sectorduring July-September, 2015-16 based on data received from BSE/NSE have been taken into account. Estimated growthin the indicator compiled on the basis of employee expenses, Profit before tax and depreciation of 3 listed companies de-flated by appropriate price indices has been used to extrapolate the corporate sector estimates of the same quarter ofthe previous year.

Agriculture, forestry and fishing Quarterly GVA at basic prices for Q2 2015-16 from ‘agriculture, forestry and fishing’ sector grew by 2.2 percent as com-


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pared to growth of 2.1 percent in Q2 2014-15. According to the information furnished by the Department of Agricultureand Cooperation (DAC), which has been used in compiling the estimate of GVA from agriculture in Q2 of 2015-16, the pro-duction of cereals, oilseeds and pulses registered growth rates of (-)1.8 percent, 8.5 percent and (-)1.1 percent respec-tively during the Kharif season of agriculture year 2015-16. Around 51.0 percent of GVA of this sector is based on thelivestock products, forestry and fisheries, which registered a combined growth of above 6 percent in Q2 of 2015-16.

Mining and quarrying Quarterly GVA at basic prices for Q2 2015-16 from ‘mining and quarrying’ sector grew by 3.2 percent as compared togrowth of 1.4 percent in Q2 2014-15. As per the available information, private corporate sector growth in the mining sec-tor as estimated for major listed companies at current prices is 5.4 percent in Q2 of 2015-16. The key indicators of min-ing sector, namely, production of coal, crude oil and natural gas and IIP mining registered growth rates of 0.9 per cent,1.7 percent, 0.5 percent and 2.7 percent, during Q2 of 2015-16 as compared to 8.8 percent, (-)2.4 percent, (-)7.9 percentand 0.5 percent in Q2 of 2014-15.

Manufacturing Quarterly GVA at basic prices for Q2 2015-16 from ‘manufacturing’ sector grew by 9.3 percent as compared to growth of7.9 percent in Q2 2014-15. The private corporate sector growth (which has a share of around 65 percent in the manufac-turing sector) as estimated from available data of listed companies with BSE and NSE is 8.1 percent at current pricesduring Q2 of 2015-16 and hence the growth of this sector at constant price is 9.3 percent. The quasi corporate and unor-ganized segment (which include individual proprietorship and partnerships and khadi & village Industries has a share ofaround 26 percent in the manufacturing sector) has been estimated using IIP of manufacturing. IIP manufacturing regis-tered growth rates of 4.6 percent during Q2 of 2015-16 as compared to 0.4 percent in Q2 of 2014-15.

Electricity, Gas, water supply and other utility services Quarterly GVA at basic prices for Q2 2015-16 from ‘Electricity ,Gas, water supply and other utility services’ sector grewby 6.7 percent as compared to growth of 8.7 percent in Q2 2014-15. The key indicator of this sector, namely, IIP of Elec-tricity registered growth rate of 6.8 percent during Q2 of 2015-16 as compared to 9.4 percent in Q2 of 2014-15.

Construction Quarterly GVA at basic prices for Q2 2015-16 from ‘Construction’ sector grew by 2.6 percent as compared to growth of8.7 percent in Q2 2014-15. Key indicators of construction sector, namely, production of cement and consumption of fin-ished steel registered growth rates of 1.6 percent and 1.2 percent respectively during Q2 of 2015-16.The growth in theunaccounted construction which has a share of 12.0 percent in total construction sector is estimated to grow above 10.0percent.

Trade, hotels and Transport & communication and services related to broadcasting Quarterly GVA at basic prices for Q2 2015-16 from this sector grew by 10.6 percent as compared to growth of 8.9 per-cent in Q2 2014-15. Key indicator used for estimating GVA from Trade sector is the sales tax growth. As per the availablemonthly data on state accounts available from CAG website, sales tax collection grew by 6.1 percent during Q2 of 2015-16, which at constant prices is estimated at 11.1 percent. Among the other services sectors, the key indicators of rail-ways, namely, the net tonne kilometres and passenger kilometres have shown growth rate of (-) 2.9 per cent and 1.1percent respectively during Q2 of 2015-16. In case of other transport sectors, passengers handled by the civil aviation,cargo handled by the civil aviation and cargo handled at major ports registered growth rates of 17.0 percent, 3.5 percentand 3.9 percent, respectively, during Q2 of 2015-16. Sales of commercial vehicles registered 10.7 percent growth during


October, 2015

Q2 of 2015-16 over Q2 of 2014-15.

Financial, insurance, real estate and professional services Quarterly GVA at basic prices for Q2 2015-16 from this sector grew by 9.7 percent as compared to growth of 13.5 per-cent in Q2 2014-15. Major component of this industry is the real estate and professional services which has a share of75.0 percent. The key indicators of this sector are the quarterly growth of corporate sector for real estate sector andcomputer related activities which as estimated from available data from listed companies at current prices is 3.6 percentand 15.6 percent, respectively, during Q2 of 2015-16. The other indicators of this sector, viz., aggregate bank depositsand bank credits have shown growth rates of 10.7 per cent, and 9.1 per cent, respectively as on September 2015 asagainst growth of 12.4 percent and 9.6 percent respectively as on September 2014.

Public administration and defence and other services Quarterly GVA at basic prices for Q2 2015-16 from this sector grew by 4.7 percent as compared to growth of 7.1 percentin Q2 2014-15. The key indicator of this sector namely, union government expenditure net of interest payments grew by1.2 percent during Q2 of 2015-16 as compared to 6.4 percent in Q2 of 2014-15.

At current prices GDP is derived by adding taxes on products net of subsidies on products to GVA at basic prices. GDP at current prices inQ2 of 2015-16 is estimated at `32.66 lakh crore, as against `30.80 lakh crore in Q2 of 2014-15, showing a growth rate of6.0 percent. GVA at basic price at current prices in Q2 of 2015-16, is estimated at `30.26 lakh crore, as against `28.76lakh crore in Q2, 2014-15, showing an increase of 5.2 per cent. 5.

Price indices used as deflators

The wholesale price index (WPI), in respect of the groups - food articles, minerals, manufactured products and all com-modities, has declined by 0.5 per cent, 31.6 percent, 1.8 per cent, and 4.5 percent, respectively whereas electricity regis-tered a growth of 4.5 percent during Q2 of 2015-16 over Q2 of 2014-15. The consumer price index has shown a rise of 3.9per cent during Q2 of 2015-16 over Q2 of 2014-15.

ESTIMATES OF EXPENDITURES ON GDP The components of expenditure on gross domestic product, namely, consumption expenditure and capital formation, arenormally measured at market prices. The aggregates presented in the following paragraphs, therefore, are in terms ofmarket prices.

Private Final Consumption Expenditure

Private Final Consumption Expenditure (PFCE) at current prices is estimated at `19.60 lakh crore in Q2 of 2015-16 asagainst `18.09 lakh crore in Q2 of 2014-15. At constant (2011-12) prices, the PFCE is estimated at `15.41 lakh crore in Q2of 2015-16 as against `14.43 lakh crore in Q2 of 2014-15. In terms of GDP, the rates of PFCE at current and constant(2011-2012) prices during Q2 of 2015-16 are estimated at 60.0 per cent and 55.9 per cent, respectively, as against thecorresponding rates of 58.7 per cent and 56.2 per cent, respectively in Q2 of 2014-15. Growth rates of Private Final Con-sumption Expenditure at current and constant prices are estimated at 8.3 percent and 6.8 percent during Q2, 2015-16 ascompared to 13.6 percent and 7.1 percent respectively during Q2 2014-15.


October, 2015

Government Final Consumption Expenditure

Government Final Consumption Expenditure (GFCE) at current prices is estimated at `4.52 lakh crore in Q2 of 2015-16 asagainst `4.23 lakh crore in Q2 of 2014-15. At constant (2011-2012) prices, the GFCE is estimated at `3.56 lakh crore in Q2of 2015-16 as against `3.38 lakh crore in Q2 of 2014-15. In terms of GDP, the rates of GFCE at current and constant(2011-2012) prices during Q2 of 2015-16 are estimated at 13.8 per cent and 12.9 per cent, respectively, as against the corre-sponding rate of 13.7 per cent and 13.2 percent each in Q2 of 2014-15. Growth rates of Government Final ConsumptionExpenditure at current and constant prices are estimated at 6.9 percent and 5.2 percent respectively during Q2, 2015-16as compared to 15.6 percent and 8.9 percent respectively during Q2 2014-15. Gross Fixed Capital Formation

Gross Fixed Capital Formation (GFCF) at current prices is estimated at `9.24 lakh crore in Q2 of 2015-16 as against `8.89lakh crore in Q2 of 2014-15. At constant (2011-2012) prices, the GFCF is estimated at `8.31 lakh crore in Q2 of 2015-16 asagainst `7.78 lakh crore in Q2 of 2014- 15. In terms of GDP, the rates of GFCF at current and constant (2011-2012) pricesduring Q2 of 2015-16 are estimated at 28.3 per cent and 30.1 per cent, respectively, as against the corresponding rates of28.9 per cent and 30.3 per cent, respectively in Q2 of 2014-15. Growth rates of Gross Fixed Capital Formation at currentand constant prices are estimated at 3.9 percent and 6.8 percent during Q2 2015-16 as compared 6 to 7.7 percent and 3.8percent during Q2 2014-15.

Estimates of GVA at basic price by kind of economic activity and the Expenditures on GDP for Q2 and H1 (April-Septem-ber) of 2013-14, 2014-15 and 2015-16 at constant (2011-12) and current prices, are given in Statements 1 to 8. Quarterlyestimates of GDP for 2013-14 and 2014-15 at current and constant 2011-12 prices as per press release dated 29.05.2015are given in Annexures I & II.

The next release of quarterly GDP estimate for the quarter October-December, 2015 (Q3 of 2015-16) will be on08.02.2016.

MONTHLYECONOMIC BULLETIN >> RECENT TRENDS IN INDIAN ECONOMY

India’s Foreign Trade (Merchandise): October, 2015

EXPORTS (including re-exports)Exports during October, 2015 were valued at US$ 21352.79 million (Rs. 138916.98 crore) which was 17.53 per cent lowerin Dollar terms (12.53 per cent lower in Rupee terms) than the level of US$ 25891.39 million (Rs. 158822.95 crore) dur-ing October, 2014. Cumulative value of exports for the period April-October 2015-16 was US$ 154292.24 million (Rs.992503.57 crore) as against US$ 187288.74 million (Rs. 1130539.38 crore) registering a negative growth of 17.62 percent in Dollar terms and 12.21 per cent in Rupee terms over the same period last year.

IMPORTSImports during October, 2015 were valued at US$ 31120.06 million (Rs. 202460.88 crore) which was 21.15 per centlower in Dollar terms and 16.38 per cent lower in Rupee terms over the level of imports valued at US$ 39468.76 million(Rs. 242109.24 crore) in October, 2014. Cumulative value of imports for the period April-October 2015-16 was US$232054.30 million (Rs. 1492679.30 crore) as against US$ 273558.19 million (Rs. 1651512.80 crore) registering a nega-tive growth of 15.17 per cent in Dollar terms and 9.62 per cent in Rupee terms over the same period last year.

CRUDE OIL AND NON-OIL IMPORTS: Oil imports during October, 2015 were valued at US$ 6846.11 million which was 45.31 per cent lower than oil importsvalued at US$ 12517.24 million in the corresponding period last year. Oil imports during April-October, 2015-16 were val-ued at US$ 54975.07 million which was 42.07 per cent lower than the oil imports of US$ 94896.22 million in the corre-sponding period last year.

Non-oil imports during October, 2015 were estimated at US$ 24273.95 million which was 9.93 per cent lower than non-oil imports of US$ 26951.52 million in October, 2014. Non-oil imports during April-October, 2015-16 were valued at US$177079.23 million which was 0.89 per cent lower than the level of such imports valued at US$ 178661.97 million inApril-October, 2014-15.

TRADE BALANCEThe trade deficit for April-October, 2015-16 was estimated at US$ 77762.06 million which was lower than the deficit ofUS$ 86269.45 million during April-October, 2014-15.

INDIA’S FOREIGN TRADE (SERVICES): September, 2015 (As per the RBI Press Release dated 16th November, 2015)

A. EXPORTS (Receipts)Exports during September, 2015 were valued at US$ 13321 Million (Rs. 88208.73 Crore).

B. IMPORTS (Payments)Imports during September, 2015 were valued at US$ 7457 Million (Rs. 49378.61 Crore).

C. TRADE BALANCEThe trade balance in Services (i.e. net export of Services) for September, 2015 was estimated at US$ 5864 Million.

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October, 2015


Agriculture

Sowing of rabi crops crosses 317 lakh hectares: GovtSowing of rabi crops in the country has crossed 317.96 lakhhectares (ha) as on November 27, as compared to 372.61 lakh haat this time of the season last year, an official statement saidhere today.

Quoting reports from the states, the statement said wheathad been sown in 117.32 lakh so far (as compared to 161.57 lakhha at this time last year), pulses in 90.91 lakh ha (97.80 lakh ha)and coarse cereals in 44.40 lakh ha (37.48 lakh ha).

The statement said oilseeds had been sown in 57.08 lakh ha(65.73 lakh ha) and rice in 8.26 lakh ha (10.04 lakh ha).

October, 2015


InflationThe annual rate of inflation, based on monthly WPI, stood at -3.81% (provisional) for the month of October, 2015 (over Oc-tober, 2014) as compared to -4.54% (provisional) for the previous month and 1.66% during the corresponding month ofthe previous year. Build up inflation rate in the financial year so far was 0.34% compared to a build up rate of 1.89% inthe corresponding period of the previous year.

Inflation for important commodities / commodity groups is indicated in Annex-1 and Annex-II.The movement of the index for the various commodity groups is summarized below:-

PRIMARY ARTICLES (Weight 20.12%)The index for this major group remained unchanged at its previous month level 252.4 (provisional). The groups and itemswhich showed variations during the month are as follows:-

The index for 'Food Articles' group rose by 0.3 percentto 264.9 (provisional) from 264.0 (provisional) for theprevious month due to higher price of urad (17%), arhar(12%), gram (7%), moong (6%), barley (3%), jowar,masur, pork and condiments & spices (2% each) andwheat, tea and bajra (1% each). However, the price ofpoultry chicken (8%), beef & buffalo meat and fish-ma-rine (4% each), maize (2%) and coffee and fish-inland(1% each) declined.

The index for 'Non-Food Articles' group rose by 0.2 per-cent to 220.7 (provisional) from 220.2 (provisional) forthe previous month due to higher price of soyabean(14%), raw jute (8%), cotton seed (6%), rape & mustardseed and flowers (4% each) and raw rubber and fodder (2% each). However, the price of groundnut seed (9%), copra (co-conut) and raw cotton (5% each), castor seed (4%) and guar seed and gingelly seed (1% each) declined.

The index for 'Minerals' group declined by 5.0 percent to 222.5 (provisional) from 234.1 (provisional) for the previousmonth due to lower price of iron ore (10%), zinc concentrate (6%), crude petroleum (5%) and manganese ore (1%). How-ever, the price of copper ore (3%) and sillimanite (2%) moved up.

FUEL & POWER (Weight 14.91%)The index for this major group rose by 0.5 percent to 176.4 (provisional) from 175.6 (provisional) for the previous monthdue to higher price of aviation turbine fuel (7%) and high speed diesel (1%). However, the price of bitumen (7%), furnaceoil (2%) and LPG (1%) declined.

MANUFACTURED PRODUCTS (WEIGHT 64.97%)The index for this major group remained unchanged at its previous month's level of 153.3 (provisional). The groups anditems for which the index showed variations during the month are as follows:-

The index for 'Food Products' group rose by 0.8 percent to 174.3 (provisional) from 173.0 (provisional) for the previousmonth due to higher price of sooji (rawa) and soyabean oil (4% each), khandsari and oil cakes (3% each), mustard & rape-seed oil, gola (cattle feed), rice bran oil and cotton seed oil (2% each) and groundnut oil, maida, sunflower oil, mixed

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spices, sugar, wheat flour (atta), tea dust (blended) and gur (1% each). However, the price of tea dust (unblended) (4%)and bakery products, gingelly oil and tea leaf (unblended) (1% each) declined.

The index for 'Textiles' group declined by 0.5 percent to 139.4 (provisional) from 140.1 (provisional) for the previousmonth due to lower price of tyre cord fabric (3%) and cotton yarn, man made fibre, jute sacking bag and man made fabric(1% each). However, the price of gunny and hessian cloth (2%) and jute sacking cloth (1%) moved up.

The index for 'Wood & Wood Products' group rose by 0.1 percent to 194.4 (provisional) from 194.2 (provisional) for theprevious month due to higher price of processed wood (2%).

The index for 'Paper & Paper Products' group rose by 0.2 percent to 155.2 (provisional) from 154.9 (provisional) for theprevious month due to higher price of paper pulp (2%) and kraft paper & bags and corrugated sheet boxes (1% each).However, the price of paper cartons/boxes (2%) and newsprint (1%) declined.

The index for 'Leather & Leather Products' group declined by 0.1 percent to 145.3 (provisional) from 145.4 (provi-sional) for the previous month due to lower price of foot wear/ safety boot (1%). However, the prices of crome tannedleather, leather chappals/ sandals and leather handbags / wallets (1% each) moved up.

The index for 'Rubber & Plastic Products' group declined by 0.7 percent to 147.0 (provisional) from 148.0 (provi-sional) for the previous month due to lower price of rubber products and plastic products (1% each).

The index for 'Non-Metallic Mineral Products' group rose by 0.6 percent to 178.1 (provisional) from 177.0 (provisional)for the previous month due to higher price of marbles (18%). However, the price of polished granite (2%) and glass bot-tles & bottleware (1%) declined.

The index for 'Basic Metals, Alloys & Metal Products' group declined by 0.5 percent to 154.1 (provisional) from 154.9(provisional) for the previous month due to lower price of pencil ingots (5%), angles, metal containers, iron castings,rebars and joist & beams (2% each) and steel: pipes & tubes, rounds, wire rods, billets, ferro manganese, steel castings,iron & steel wire, melting scrap, aluminium, nuts/bolts/screw/ washers, gp/gc sheets, steel rods and plates (1% each).However, the price of pressure cooker (6%), silver (2%) and HRC, sheets, CRC and gold & gold ornaments (1% each)moved up.

The index for 'Transport, Equipment & Parts' group declined by 0.1 percent to 137.7 (provisional) from 137.8 (provi-sional) for the previous month due to lower price of railway brake gear and motor cycle / scooter / moped (1% each).However, the price of railway axle & wheel (2%) and auto rickshaw / tempo / matador (1%) moved up.

FINAL INDEX FOR THE MONTH OF AUGUST, 2015 (BASE YEAR: 2004-05=100)For the month of August, 2015, the final Wholesale Price Index for ‘All Commodities’ (Base: 2004-05=100) stood at 176.5as compared to 176.7 (provisional) and annual rate of inflation based on final index stood at -5.06 percent as comparedto -4.95 percent (provisional) respectively as reported on 14.09.2015.

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October, 2015


Industrial Production

The Quick Estimates of Index of Industrial Production (IIP) with base 2004-05 for the month of September 2015 havebeen released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation. IIP is com-piled using data received from 16 source agencies viz. Department of Industrial Policy & Promotion (DIPP); Indian Bureauof Mines; Central Electricity Authority; Joint Plant Committee; Ministry of Petroleum & Natural Gas; Office of TextileCommissioner; Department of Chemicals & Petrochemicals; Directorate of Sugar; Department of Fertilizers; Directorateof Vanaspati, Vegetable Oils & Fats; Tea Board; Office of Jute Commissioner; Office of Coal Controller; Railway Board;Office of Salt Commissioner and Coffee Board.

The General Index for the month of September 2015 stands at 178.0, which is 3.6% higher as compared to the level inthe month of September 2014. The cumulative growth for the period April-September 2015-16 over the correspondingperiod of the previous year stands at 4.0%.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of September2015 stand at 118.8, 186.7 and 195.7 respectively, with the corresponding growth rates of 3.0%, 2.6% and 11.4% as com-pared to September 2014 (Statement I). The cumulative growth in the three sectors during April-September 2015-16over the corresponding period of 2014-15 has been 1.5%, 4.2% and 4.5% respectively.

In terms of industries, eleven (11) out of the twenty two (22) industry groups ( as per 2-digit NIC-2004) in the manu-facturing sector h ave shown positive growth during the month of September 2015 as compared to the correspondingmonth of the previous year (St atement II). The industry group ‘Furniture; manufacturing n.e.c.’ has shown the highestpositive growth of 69.9%, followed by 21.6% in ‘Electrical machinery & apparatus n.e.c.’ and 9.8% in ‘Chemicals andchemical products’. On the other hand, the industry group ‘Publishing, printing & reproduction of recorded media’ hasshown the highest negative growth of (-) 13.3%, followed by (-) 12.8% in ‘Wearing apparel; dressing and dyeing of fur’and (-) 12.8% in ‘Medical, precision & optical instruments, watches and clocks’.

As per Use-based classification, the growth rates in September 2015 over September 2014 are 4.0% in Basic goods,10.5% in Capital goods and 2.1% in Intermediate goods (Statement III). The Consumer durables and Consumer non-durables have recorded growth of 8.4% and (-) 4.6% respectively, with the overall growth in Consumer goods being 0.6%.

Some of the important items showing high positive growth during the current month over the same month in previousyear include ‘Gems and Jewellery’ (155.6%), ‘Single Super Phosphate (SSP)’ (86.5%), ‘Sugar Machinery’ (84.3%), ‘H RSheets’ (46.1%), ‘Polypropylene (incl. co-polymer)’ (44.8%), ‘Cable, Rubber Insulated’ (37.4%), ‘Generator/ Alternator’(36.7%), ‘Propylene’ (35.6%), ‘Ethylene’ (33.7%), ‘Aluminium wires & extrusions’ (25.0%), ‘Antibiotics & its Preparations’(23.4%) and ‘Cigarettes’ (22.4%).

Some of the other important items showing high negative growth are: ‘Polythene Bags including HDPE & LDPE Bags’ [(-)62.9%], ‘Woollen Carpets’ [(-) 58.5%], ‘Instant Food Mixes (Ready to eat)’ [(-) 47.0%], ‘Heat Exchangers’ [(-) 38.7%], ‘ShipBuilding & Repairs’ [(-) 29.7%], ‘Leather Garments’ [(-)29.3%], ‘Furnace Oil’ [(-) 26.5%] and ‘Tractors(complete)’ [(-) 23.4%].

However, growth rates in respect of individualitems may not reflect their actual contribution inthe overall growth rate of IIP. Taking into accountthe weights of different items, the overall growthrate of IIP can be decomposed into positive andnegative contributions of different items. Suchcontributions of top five items with positive contri-bution and top five items with negative contribu-tion are given below:


October, 2015

Along with the Quick Estimates of IIP for the month of September 2015, the indices for August 2015 have undergonethe first revision and those for June 2015 have undergone the final revision in the light of the updated data received fromthe source agencies. It may be noted that these revised indices (first revision) in respect of August 2015 shall undergofinal (second) revision along with the release of IIP for the month of November 2015.

Statements giving Quick Estimates of the Index of Industrial Production at Sectoral, 2-digit level of National IndustrialClassification (NIC-2004) and by Use-based classification for the month of September 2015, along with the growth ratesover the corresponding month of previous year, including the cumulative indices and growth rates, are enclosed.


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Index of Eight Core Industries (Base: 2004-05=100) September, 2015

The Eight Core Industries comprise nearly 38 % of the weight of items included in the Index of Industrial Production (IIP).The combined Index of Eight Core Industries stands at 166.8 in September, 2015, which was 3.2 % higher compared tothe index of September, 2014. Its cumulative growth during April to September, 2015-16 was 2.3 %.

CoalCoal production (weight: 4.38 %) increased by 1.9 % in September, 2015 over September, 2014. Its cumulative index dur-ing April to September, 2015-16 increased by 4.2 % over corresponding period of previous year.

Crude OilCrude Oil production (weight: 5.22 %) decreased by 0.1% in September, 2015 over September, 2014. Its cumulative indexduring April to September, 2015-16 increased by 0.4 % over the corresponding period of previous year.

Natural GasThe Natural Gas production (weight: 1.71 %) increased by 0.9 % in September, 2015. Its cumulative index during April toSeptember, 2015-16 declined by 2.1 % over the corresponding period of previous year.

Refinery Products (0.93% of Crude Throughput)Petroleum Refinery production (weight: 5.94%) increased by 0.5 % in September, 2015. Its cumulative index during Aprilto September, 2015-16 increased by 3.6 % over the corresponding period of previous year.

FertilizersFertilizer production (weight: 1.25%) increased by 18.1 % in September, 2015. Its cumulative index during April to Sep-tember, 2015-16 increased by 8.0 % over the corresponding period of previous year.

Steel (Alloy + Non-Alloy)Steel production (weight: 6.68%) declined by 2.5 % in September, 2015. Its cumulative index during April to September,2015-16 declined by 0.4 % over the corresponding period of previous year.

CementCement production (weight: 2.41%) decreased by 1.5 % in September, 2015. Its cumulative index during April to Septem-ber, 2015-16 increased by 1.3 % over the corresponding period of previous year.

ElectricityElectricity generation (weight: 10.32%) increased by 10.8 % in September, 2015. Its cumulative index during April to Sep-tember, 2015-16 increased by 4.1 % over the corresponding period of previous year.


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Foreign Direct Investment

FDI inflows rise 13% to $16.63 billion in first half of FY16Foreign direct investment (FDI) in the country grew by 13 percent to $16.63 billion during the April-September period ofthe current fiscal.

The foreign investment was $14.69 billion during April-September 2014, according to the latest figures of the Depart-ment of Industrial Policy and Promotion (DIPP).

During the fist half of the financial year, India received maximum FDI of $6.69 billion from Singaporefollowed by Mauritius ($3.66 billion), the Netherlands ($1.09 billion) and Japan ($815 million).Sectors which attracted highest foreign investment in the period includes computer software and hardware ($3.05 bil-

lion), trading ($2.30 billion), services and automobile ($1.46 billion each) and telecommunications ($659 million).During financial year 2014-15, foreign fund inflows grew at 27 percent to $30.93 billion as against $24.29billion in 2013-14.The government has relaxed FDI norms in as many as 15 sectors including defence, single brand retail, construction

development, civil aviation and LLPs to boost FDI in the country.Foreign investments are considered crucial for India, which needs around $1 trillion in the next five years to overhaul

its infrastructure sector such as ports, airports and highways to boost growth.Growth in foreign investments helps improve the country's balance of payments (BoP) situation and strengthen the

rupee.—Press Trust of India

Modi's infrastructure splurge revives investment in IndiaPrime Minister Narendra Modi's bet on higher public spending to spur economic activity in India has started paying off, ascapital investment shows signs of sustained revival after years of uneven growth.

But corporate spending is still tepid and federal revenues remain stressed, raising the risk of another false dawn forAsia's third largest economy as it tries to recover momentum.

Annual growth in capital goods production, a proxy forcapital investments, hit a 14-month high of 22 per cent in Au-gust, government data showed on October 12. That helpedoverall industrial output expand at its fastest pace in almostthree years.

While the figures, notoriously volatile and lumpy, were in-flated by a favourable statistical base, the annual pace of ex-pansion in the sector, measured on a three-month movingaverage, was 10.1 per cent in August versus 3.8 per cent amonth ago.

Encouragingly, the recovery also appears to be becomingbroad-based. "It's a very positive sign," said a senior officialat the finance ministry, who asked not to be identified be-cause he was not authorised to speak to the media. "It showsthe strategy is showing results."

Weak capital investment has been a key factor behind India's struggle to realise its growth potential. Statistically, theeconomy matched China's growth in the June quarter, but very few analysts think it is growing full steam.

With factories running nearly 30 per cent below capacity, private companies are in little rush to make fresh invest-ments. Stretched corporate balance-sheets are not helping, either.

That has led the government to step up to the plate. At the risk of inviting the wrath of investors and ratings agencies,Modi's administration loosened fiscal deficit targets in this year's budget to double spending on roads and bridges.

Since April, public capital spending has clocked healthy growth of nearly 19 percent on the year, compared with a fallof 1.4 per cent in the corresponding period last year. The government reckons economic growth could increase by atleast a percentage point if its departments don't under spend.

That will help it meet a growth target of 8 per cent to 8.5 per cent for the year ending in March 2016, up from 7.3 percent a year ago. The IMF, though, has lowered its estimate for India's 2015/16 growth to 7.3 per cent, from 7.5 per cent.

"Overall, the industrial production data indicate that despite slowing external demand, the domestic growth cycle isimproving," said Sonal Verma, an economist with Nomura.

But spending the budget is not the only challenge. Finding resources to fund the spending is an equally daunting task.Indirect tax receipts have grown nearly 33 percent between April and September this fiscal year, but sluggish collec-

tions from direct levies are expected to reduce the total tax intake by nearly $8 billion.With tax refunds likely to increase in coming months, New Delhi could face a fiscal squeeze, making it tougher to keep

up the pace of spending. Higher corporate spending could have offset that. But Indian firms are waiting for better returnsbefore committing new investments. "With the private sector showing limited appetite for expanding capex, growth re-covery in fiscal 2015/16 is likely to remain modest," economists at Yes Bank said in a note.

Revenues at India's top companies are expected to fall 8.2 per cent in the July-September quarter, the biggest declinein at least four years, according to Thomson Reuters data.

Source: Reuters

October, 2015

MONTHLYECONOMIC BULLETIN 23 >> NEWS FEATURE

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October, 2015

MONTHLYECONOMIC BULLETIN >> NEWS FEATURE

The relationship between India and the US has grown enormously especially on security and diplomatic fronts afterPrime Minister Narendra Modi came to power, a top State Department official has said and hoped that this alliance willonly become more productive.

“There’s been enormous progress in US-India relations, and certainly since Prime Minister Modi came into office,”State Department Spokesman John Kirby had said on October 9.

“The relationship continues to deepen and grow on the security front and certainly diplomatically, and we look forwardto that relationship continuing to grow and to deepen and to become more productive. I think everybody has every expec-tation that it will,” he said.

Less than two weeks ago Modi had met President Barack Obama at the UN headquarters in New York on the sidelinesof the annual General Assembly meeting.

In the last one year, the two leaders have met five times. Prior to that, US Secretary of State John Kerry and Com-merce Secretary Penny Pritzker have also hosted External Affairs Minister Sushma Swaraj and Union Commerce Minis-ter Nirmala Sitharaman for the first ever India-US Strategic and Commercial Dialogue.

Source: The Hindu Business Line

Enormous progress in US-India relationsunder Modi's leadership'

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October, 2015

MONTHLYECONOMIC BULLETIN >> NEWS FEATURE

Prime Minister Narendra Modi's visit to the US has made Qualcomm Ventures announce $150 million India-dedicatedfund to invest in start-ups. This is not the lone incident when Modi has been able to woo private equity (PE) and venturecapital (VC) investors to invest in India. Last year, during his visit to Canada, he had got commitment for $1 billion India-focused fund from Prem Watsa-led Fairfax Financial.

Modi's push is expected to help the India PE sector raise its largest capital in the past seven years. According to McK-insey, India-located funds have already raised $3.9 billion so far this year. This includes India Value Fund and Everstone

Capital raising $700 million and $730 million, respectively, in thepast three months. Besides, Renuka Ramanth-led Multiples is ex-pected to close $650 million fund-raising this year.

This will take it to at least $4.5 billion, the highest since thehigh of $7.4 billion raised in 2008.

"Sentiments have improved as inflation has come down creat-ing room for lowering interest rates. Also, there is slight upturn inbusiness cycle. These are all lead indicators for better growth inthe next 12 months," says Vishal Nevatia, managing partner atIndia Value Fund that raised $700 million in July.

"Investors in private equity funds are cautiously optimistic todayas they see the government talking about bringing changes for the

benefit of the economy. But there is still much to be desired in terms of GST implementation, revival of stuck projects ininfrastructure space and financial sector reforms," he says.

There are others, too, who are planning to raise funds, signalling a clear revival for PE investments. ChrysCapital andSequoia India plan to raise about $700 million each in their largest funds. "Dedicated outreach to investors by Modi hasreally helped," says Toshan Tamhane, partner and co-leader (private equity practice) at McKinsey & Company in India."Over the years, there was a slowdown but he has brought the sentiment back," says Tamhane.

The revival in fund-raising has also been boosted by record exits in the PE space since the Modi government came topower. According to McKinsey, Indian private equity investors made $5.6 billion worth of exits in the first six months of2015. This will help the sector easily cross the earlier record of $6.1 billion for full year in 2012 as well as 2013. Duringone year of Modi government between June 2014 and July 2015, the PE sector made exits worth $8.9 billion.

"Surely, the government needs to follow up on reforms (goods and services tax, foreign direct investment norms, etc)but loudly and consistently telling the story is important. It does not hurt that this has been a great year for exits," saysArpan Sheth, private equity practice head at Bain & Company India. These exits helped the PE players show better trackrecord on their investments return. With this track record, these players are now able to go back to their limited partnerswho invest in their funds. But there are also other who see the real revival in PE investments some time away.

"Hope has never been higher, but Indian businesses have to start to invest," says Sanjay Nayar, CEO of KKR India. "They are instead burdened (because of the past few years) with high leverage, regulatory and policy bottlenecks and,

hence, we see more over-leveraged and stressed situations rather than growth opportunities." He adds even the ruralsector has come off drastically with consumer and tractor companies seeing a slowdown from the once-famed rural con-sumer.

"Long-term strategic PE and VC capital is amply available for India. A supply-side boost by the government coupledwith a targeted consumption boost should help real growth come back. That's when PE and VC capital will be even moreactive and very useful," says Nayar.

Source: Business Standard

Modi's push to help local PEs raise largestfund in 7 years

MONTHLYECONOMIC BULLETIN >> NEWS FEATURE26

October, 2015

Dilution of government stake, a more flexible personnel policy for public sector banks and digital resolution of debt re-covery cases were some of the banking reforms un-veiled by finance minister Arun Jaitley on September28.

Speaking at the annual general meeting of the In-dian Banks' Association, Jaitley said that the govern-ment is looking at bringing down equity stake in PSUbanks to 52% even as it developed a system of pro-fessionalizing all personnel decisions in public sectorbanks.

The finance minister said that while the PSU bankswould have to follow a developmental agenda of thestate, their administration has to be guided purelyfrom banking consideration and not rom any collat-eral conside ration.

“The Prime Minister was candid enough to say that no bank would receive formal or informal directions from his of-fice,“ said Jaitley. He said that the government was almost ready with a fram ework for a Banks Board Bu reau so that alldecisions ta ken by the banks can be pro essionalized.

Speaking earlier at the event, Chanda Kochhar, MD & CEO, ICICI Bank, said that one of the issues facing the bankingsystem was that se veral large projects were yet o generate cash flows. Also in cases of recalcitrant borrowers, the longpendency of cases was turning out to be a challenge for bankers.

Jaitley said that he has instructed the department of financial services to ensure that debt recovery tribunals and ap-pellate tribunals are only `IT courts'.

“The filing of pleadings, documents and replies would all be done on the net itself with only a provision for two oralhearings in a defined period of time. One for interim order, and one for final order. All other oral hearings in DRT could beeliminated,“ said Jaitley . The government is also working on a new law to fasttrack arbitration to address the stressedareas of the banking sector.

The finance minister further said that project monitoring was now taking place centrally at the Prime Minister's office.He said that investment in infrastructure, particularly highways, was set to kick off due to the cess imposed on fuel.

On power, he said that the issue was largely of state distribution companies failing to recover and the situation waschallenging in some states, and the Reserve Bank of India had put two state governments on notice. “The RBI has in-formed the state governments that if they do not charge adequately , the banking system on its own cannot continue toprovide the support,“ said Jaitley .

Source: The Times of India

Govt may cut stake in public sector banksto 52%, says FM

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October, 2015

German defence companies keen to invest inMake in India programmeGerman companies are enthusiastic about Prime Minister Narendra Modi’s ‘Make in India’ defence procurement initiative.

When Chancellor Angela Merkel, accompanied by six senior Cabinet ministers, comes to India on October 4 for inter-governmental consultations, defence cooperation andmilitary trade will be on the table for discussion.

The focus of military trade will be on sharing ofstate-of-the-art technology for various platforms forthe Indian armed forces.

German defence minister Ursula von der Leyen,who was in New Delhi in May this year, lobbied for thepurchase of German and European military hardwarewith defence minister Manohar Parrikar and othersenior officials. There has been no major procurementfrom Germany since 1989 when India bought Class209 submarines.

But in recent years, big German defence manufac-turers including Atlas Elektronik, Krauss-Maffei Weg-mann, Thyssen Krupp Marine Systems (TKMS) andDiehl Defence, have been bidding and participating in various bids and projects of the Indian armed forces.

Bremen-based Atlas Elektronik last year in November signed the contract for the active towed array sonars (ACTAS)and is also participating in a number of other programmes of the Indian Navy. Talking to FE, Khalil Rahman, CEO, AtlasElectronik India, said, “Currently, we are bidding for three very important programmes which include the IADS pro-gramme, an anti-submarine warfare (ASW) suite consisting of a sonar, a decoy and a fire-control system.

Also, for the sonar systems for 16 shallow water ASW craft. Each of these 16 ships will be equipped with a hull-mounted sonar and low-frequency variable depth sonar (LFVDS). This is a specialised ASW craft designed to operate inlittoral waters.”

And the third bid is for the towed-array sonars for eight Kilo class submarines, Rahman added.Almost eight years ago, New Delhi cancelled a deal for helicopters produced by the European defence giant, the then

EADS (now Airbus); in another case, Rheinmetall Air Defense, a Switzerland-based subsidiary of the German automotiveand defense company Rheinmetall, was banned from the Indian arms market for its involvement in a bribery scandal.

In 2011, the Munich-based tank manufacturer Krauss-Maffei Wegmann signed a cooperation agreement with Indiancompany Ashok Leyland Defence to jointly develop “artillery systems, combat systems, armoured wheeled vehicles, re-covery vehicles, bridge laying systems and other similar products” for Indian and international markets. Diehl Defence, aNuremberg-based manufacturer of missile and rocket systems, opened a liaison office in New Delhi in late March.

According to German publication Der Spiegel, Germany and India are already in talks over the possible acquisition ofsix small German Thyssen Krupp Marine Systems (TKMS) diesel-electric submarines, equipped with air-independentpropulsion (AIP) systems, for a total cost of $ 11 billion. The subs would be built by Howaldtswerke-Deutsche Werft(HDW) in Kiel. TKMS has announced that it is working on several projects with Indian companies. “All of them share incommon the client’s demand for technology transfer as well as the demand for the integration of Indian devices and fa-cilities. That is established practice,” said a company executive.

While the TKMS does not have its own production locations in India, it has successfully worked together with localshipyards and suppliers for some time.

Source: The Financial Express

MONTHLYECONOMIC BULLETIN >> OVERSEAS INVESTMENTS

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October, 2015


TCS secures contract from UK’s NationwideBuilding SocietyIT major Tata Consultancy Services Ltd on September 29 announced a new partnership with a British mutual financial in-stitution for providing a neural automation systemwhich automates and optimises IT operations andprocesses of an enterprise.

Nationwide Building Society selected TCS’ Serv-ices-as- Software platform ignio -- the world’s firstneural automation system for enterprise IT -- aspart of its continued transformation of its technol-ogy and operations, the TCS said in a statement.

As the world’s largest building society, Nation-wide Building Society delivers a wide range of prod-ucts to its customers and recognises theimportance of deploying new services rapidly andincreasing the resilience of its digital solutions, itsaid.

Mike Pighills, Head of Service Integration andTransition, Nationwide Building Society said, “Mov-ing all of our services on to a digital platform, whileensuring a high level of resilience and agility, is amajor priority for Nationwide.” Ignio is designed toautomate and optimise the IT operations andprocesses of an enterprise to improve speed and flexibility, reduce operational risks and enhance user experience.

Inspired by the human neural system, machine learning and other digital technologies, the ignio platform has the ca-pacity to sense, think and act, as well as constantly learn and adapt to enterprises’ context.

Source: Mint

29

October, 2015


Germany on October 5 offered euro 2 billion to the Indian government to develop solar projects and a clean energy corri-dor even as both sides agreed to resume talks for the India-European Union (EU) free trade pact. India also announced itwould fast-track approvals for German firms present here.

“I place great value on Germany’s assistance of over euro 1 billion for India’s green energy corridor and a new assis-tance package of over euro 1 billion for solar projects in India. We also intend to deepen research cooperation in cleanand renewable energy, and energy efficiency,” said Prime Minister Narendra Modi after a three-hour long meeting withGerman Chancellor Angela Merkel. According to a joint statement on cooperation in climate change and energy technol-ogy, Germany welcomed India’s submission of its intended nationally determined contribution to the Paris Agreement.

“Climate change issues definitely occupied most of the time of the discussions between both leaders,” Foreign Secre-tary S Jaishankar said.

Both sides have also decided to set up an Indo-German Climate and Renewable Alliance under the broad Indo-GermanEnergy Forum. Merkel, who is on a two-day visit to India, is being accompanied by six of her senior Cabinet-level minis-ters and a high-powered business delegation. “We are looking at strengthening our financial relations… We also expectfrom the part of Germany to lend their contribution to the further economic development of the country. I know PM hasoutlined a very ambitious plan for the economic development of this country and Germany fully intends to be a goodpartner and supporter in this endeavour,” Merkel told reporters.

On trade, both leaders decided to kick-start the stalled negotiations for an India-EU free trade agreement or broad-based trade and investment agreement “as soon as possible,” according to the joint statement.

According to Jaishankar, PM Modi has urged the Chancellor to use her influence in resolving the ongoing dispute re-garding EU banning 700 drugs from India tested in the GVK labs.

Germany was also apprised of India’s long pending demand to grant it ‘data secured nation’ status. Both sides alsosigned an agreement on setting up a fast-track system for German companies in India.

According to the Amitabh Kant, secretary, Department of Industrial Policy & Promotion, under this agreement, Indiawill monitor German firms operating in India “on a monthly basis” to ensure they are not facing any adverse issues.

“German engineering and Indian IT skills can create the next generation industry that will be more efficient, economi-cal and environment friendly… 1,600 German companies in India, and growing in number, will be strong partners in cre-ating a global work force in India,” Kant added.

Recently, German ambassador to India Martin Ney expressed serious concerns over the difficulties faced by their com-panies here in terms of a complex taxation system, stringent regulatory conditions and lack of an efficient intellectualproperty rights regimes. This was PM Modi's fourth bilateral meeting with Merkel. Following this both sides also held anInter-Governmental Consultation (IGC), which is summit-level meeting and participated by all senior cabinet ministersfrom both countries. Germany also indicated its support for India's membership of the international export controlregimes including the Nuclear Suppliers Group (NSG). During the meeting Merkel is believed to have assured the supportof Germany for India's membership at the UN Security Council. "I welcome Germany's strong support for India's mem-bership of the international export control regimes. As we discussed in the G4 Summit in New York, Chancellor and I arecommitted to pursue reforms of the United Nations, especially the Security Council," Modi said.

Both leaders also reiterated their full support for each other's candidatures for a permanent seat in a reformed UNSecurity Council, according to the joint statement.

The PM said he looked forward to a 'concrete outcome' at the Paris climate change conference. He said Indo-Germanpartnership is expected to grow in areas like manufacturing, trade in advanced technology, intelligence, and counteringterrorism and radicalism.


Germany offers euro 2 billion to developIndia's clean energy corridor

MONTHLYECONOMIC BULLETIN >> OVERSEAS INVESTMENTS30

October, 2015

Japan has offered to finance India's first bullet train, estimated to cost $15 billion, at an interest rate of less than 1%,officials said, stealing a march on China, which is bidding for other projects on the world's fourth-largest network.

Tokyo was picked to assess the feasibility ofbuilding the 505-kilometre corridor linking Mumbaiwith Ahmedabad, the commercial capital of PrimeMinister Narendra Modi's home state, and concludedit would be technically and financially viable. Theproject to build and supply the route will be put outto tender, but offering finance makes Japan theclear frontrunner.

Last month China won the contract to assess thefeasibility of a high-speed train between Delhi andMumbai, a 1,200-km route estimated to cost twiceas much. No loan has yet been offered.

Japan's decision to give virtually free finance forModi's pet programme is part of its broader pushback against China's involvement in infrastructuredevelopment in South Asia over the past several years. “There are several players) offering the highspeed technology .But techno ogy and funding together, we only have one offer. That is the Japanese,“ said A K Mital, the chairman of theIndian Railway board, which manages he network.

The two projects are part of a `Diamond Qaudrilateral' of high speed trains over 0,000 km of track that India wants toset up connecting Delhi, Mumbai, Chennai and Kolkata.

Japan has offered to meet 80% of the Mumbai-Ahmed abad project cost, on condition that India buys 30% of equip-ment including the coaches and locomotives from Japanese firms, officials said.

Japan's International Cooperation Agency , which led the feasibility survey , said the journey time between Mumbaiand Ahmedabad would be cut to two hours from seven.The route will require 11 new tunnels including one underseanear Mumbai.

"What complicates the process is Japanese linking funding to use of their technology . There must be tech transfer,"said Mital.

Source: Reuters

Japan offers India soft loan for $15bn bullet train project

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MONTHLYECONOMIC BULLETIN >> TRADE NEWS

India and the 54 countries of Africa are expected to join forces at a mega summit later this month to form a united frontto counter perceived Western bullying, notably by the US, over global trade negotiations ahead of an upcoming WTO min-isterial meet to be held in Nairobi in December.

Trade officials from India and Africa are already into negotiations ahead of the Third India-Africa Forum Summit (IAFS)being held here October 26-30, to firm up a joint front that will seek to protect the interests of developing countries inthe face of Western pressure to succumb to laws seen as tailored to suit their interests.

The 10th ministerial conference of the World Trade Organization (WTO), to be held in Nairobi on December 15-18, islikely to see the developed world led by the US and the EU in a stand-off against developing countries led by India, Chinaand others, over protecting their interests.

The forging of an alliance between India and the 54 African countries assumes all the more importance in the face oftwo mega regional trading agreements being negotiated - the Transatlantic Trade and Investment Partnership (TTIP) be-tween the US and the EU and the Trans Pacific Partnership (TPP) among 12 countries including the US, Australia,Canada, Mexico, Malaysia, Singapore, Vietnam and Japan.

Many of the developed countries of the two groupings are keen to see that the "high standards" of these agreementsare imported into the WTO corpus.

India is concerned that the TPP and TTIP agreements, that it is not part of, may seek to set international phyto-sani-tary standards and factory standards for goods that India and developing countries like it are not yet ready to measureup to. The two US-led mega trade groupings, being aggressively pursued by the Barack Obama administration, are ex-pected to go beyond WTO standards and protection measures for intellectual property, environment and labour. Thestandards they set up are also expected to put constraints on India's pharmaceutical sector, which produces vital genericdrugs at cheap rates for the masses.

Another alarming factor is that foreign investors can file complaints against governments for not adhering to stan-dards or any other issue at dispute panels under a special mechanism as part of the mega agreements, which would putconstraints on countries like India. India and developing countries like in Africa are not yet ready to meet the high normsthat the two trading blocs are seeking to impose. The negotiations at the IAFS would seek to form a support base of part-nership in countering such heavy-handedness from big blocs, said a source.

Besides forming a common partnership on international trading concerns, the India-Africa Forum Summit would alsosee India and the 54 African countries forming a partnership on global issues like reform of the UN Security Council forgreater representation and on climate change. The discussions on climate change are set to figure in a major way at thesummit, especially ahead of Conference of the Parties in Paris next month.

Terrorism, especially in the wake of terror groups like Boko Haram, Al-Shabaab and Islamic State, spreading their net-work and activities in the continent would also feature in a big way at the IAFS. Countering terror, sharing informationand forging a united front would feature in the talks.

Skilling of their large burgeoning youth population, which is a matter of concern for both sides, would also be a majorfocus area of talks at the summit.

Source: Indo-Asian News Service

India, Africa to forge common causeagainst Western trade bullying

MONTHLYECONOMIC BULLETIN >> TRADE NEWS 32

October, 2015

Spice exports from India grew 30 percent in value terms to touch Rs. 3,976.65 crore ($626.81 million) during the firstquarter of 2015-16 as compared to Rs 3,059.74 crore ($511.22 million) in the corresponding period of 2014-15, an officialsaid.

Through this, the exports so far have achieved 28 percentof the total export target of Rs. 14,014 crore ($2,260 million)set for 2015-16.

Garlic, pepper, small cardamom, fenugreek, nutmeg, fen-nel, spice oils and oleoresins contributed substantially to thespice export basket during April-June period.

"The substantial increase in exports in Q1 is the result ofmarket promotion activities by Spices Board to promote In-dian spices globally," said its chairman A.Jayathilak.

Exports of pepper, known as the "King of Spices", stoodat.Rs 635.9 crore in Q1, marking an increase of 201 percentcompared to the first quarter of 2014-15.

In terms of volume, pepper recorded a growth of 148 per-cent in April-June 2015-16 compared to the correspondingperiod last year to reach 10,750 tonnes.

Around 3,725 tonnes of spice oils and oleoresins worth Rs 564.65 crore were exported during April-June this financialyear, recording an increase of 24 percent in terms of volume and 40 percent in terms of value from the same period lastyear.


India's spice exports up 30 percent in Q1

MONTHLYECONOMIC BULLETIN >> TRADE NEWS 33

October, 2015

The Commerce Ministry has asked the Finance Ministry to rationalise taxes on exports and extend the interest subven-tion scheme to support the export industry, which has been witnessing a continuous fall in export demand through thiscalendar year.

Speaking on the sidelines of a packaging industryevent here, Rajni Ranjan Rashmi, Additional Secre-tary, Ministry of Commerce and Industry, said, “Therelative fall in the export numbers is because of sev-eral reasons, one the global slowdown and also thefall in commodity prices. All this reflects in ournumbers. However, the larger impact of the fall inexport revenue has been curtailed because of lowercosts on oil imports.”

According to data released by the Ministry, ex-ports contracted 20.7 per cent to $21.2 billion andimports shrank 9.95 per cent to $33.7 billion duringAugust, leaving a trade deficit of $12.5 billion.

August saw the ninth continuous month-on-month fall in Indian exports. “Hopefully,” Rashmiadded, “with the fiscal and financial arrangements in place, we will see better days.”

Speaking on the Trans-Pacific Partnership (TPP), a mega regional trade agreement led by the US to which India is nota party, Rashmi said, “The TPP is an important development. It represents a conflict between multi- and bi-laterialism.Regional trading arrangements do not contribute to the multilateral trading regime but at the same time do help somepartners in creating a trade regime with positive and negative consequential effects.”

“If the TPP emerges as major trade bloc, We need to see if this trade bloc will affect our competitiveness in the serviceindustry.

“However,” Rashmi concluded, “investment works on several other factors as well, like market potential, the strengthof a market, and not just on a trade agreement. So the potential for growth in investment in India remains.”

Source: The Hindu Business Line

Rationalise taxes to boost exports, Commerce Ministry to FinMin

MONTHLYECONOMIC BULLETIN >> TRADE NEWS

After falling for five months in a row, oilmeal exports rose marginally by 4 per cent to 1,13,913 tonnes in Septembereven as soyabean meal shipments remained at a historical low, industry body SEA said on October 7.

The country had shipped 1,09,521 tonnes of oilmeals, used as animal feed, in the same period last year.However, oilmeal exports in the first six months of the 2015—16 fiscal declined 29 per cent to 7,23,661 tonnes from

10,24,370 tonnes in the year—ago period, Mumbai—based Solvent Extractors Association (SEA) said in a statement.“The export of soyabean meal is at a historical low during the current year and reduced month by month and reported

at 42,743 tonnes compared to 1,11,027 tonnes in the first six months of the 2015—16 financial year,” it said.The industry body said that soyabean crushing has also very much reduced due to continuous disparity in domestic

price, affecting overall availability of both oils and meals.As a result, capacity utilisation is at the lowest and many plants are closed down due to disparity in crushing and ex-

port, it added.As per the SEA data, the country exported 60,211 tonnes of rapeseed meal, 39,110 tonnes of castorseed meal, 7,500

tonnes of ricebran extraction, 6,886 tonnes of soyabean meal and 206 tonnes of groundnut meal during September2015. In the April—September period of the 2015—16 fiscal, soyabean meal exports dropped sharply to 42,743 tonnesfrom 1,11,027 tonnes in the year—ago period.

Similarly, the shipment of rapeseed meal exports fell to 2,79,369 tonnes from 5,86,352 tonnes in the said period.However, export of ricebran extraction increased to 1,48,906 tonnes in April—September of this fiscal from 1,00,838tonnes in the same period last year.

Exports to South Korea increased marginally to 4,81,827 tonnes in April—September this year from 4,78,555 tonnesin the year—ago period. Similarly, the shipments to Vietnam rose 22 per cent to 1,32,144 tonnes from 1,08,194 tonnes inthe said period.

The shipments to Thailand declined sharply to 17,951 tonnes in April—September of this year from 94,009 tonnes inthe year—ago period.

Source: Press Trust of India

Oilmeal exports up 4% in September

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October, 2015

MONTHLYECONOMIC BULLETIN >> SECTORAL NEWS 35

October, 2015

Capital expenditure by public sector undertakings (PSUs), including Indian Oil, Bharat Petroleum and PowerGrid, is ex-pected to rise from Rs 1.29 lakh crore in FY15 to Rs1.5 lakh crore this financial year. The 16 per cent in-crease follows a 23.5 per cent decline in FY15,compared with Rs 1.69 lakh crore in FY14.

Of the big-budget investments in FY16, Power-Grid is investing Rs 22,500 crore in setting up newtowers to evacuate electricity, while oil refinersBharat Petroleum Corporation and IndianOil are in-vesting Rs 10,000 crore and Rs 15,000 crore, re-spectively, in expanding capacity.

IndianOil, which planned to spend Rs 1.5 lakhcrore through the next five years, was likely to ex-ceed this capital expenditure, said its chairman, BAshok.

Analysts said the higher capex by PSUs, alongwith government spending, could trigger a capex revival for the corporate sector by the second half of FY17. “This is goodnews for the economy, provided the investments announced are implemented. But this, by itself, will not lead to an eco-nomic revival,” said Deep Mukherjee, director of Ind Ra ratings.

Fresh investments have been planned across sectors. Coal India has planned capital expenditure of Rs 5,990 crore, aswell as an additional Rs 4,150-crore investment on various infrastructure projects, for this financial year.

In FY15, PSUs were sitting on a large cash pile, of Rs 1.72 lakh crore. This, however, was lower than the figure of Rs1.9 lakh crore in FY14.

Chief executives of PSUs say funding investment isn’t an issue. “We have lined up investments in the metal and energyspace through the next five years and we do not have any constraint in funding. We have comfortable reserves and canraise Rs 600-700 crore annually from internal accruals alone,” said National Aluminium Company Ltd Chairman andManaging Director T K Chand.

The company plans to invest Rs 60,000 crore in a new smelter and power complex in Odisha, as well as double capac-ity through the next few years.

While PSUs are on a spending spree, private sector companies barring Reliance Industries are taking a back seat andwaiting for an uptick in the economy. “With the global situation remaining bleak, the recent rate cut will provide a much-needed fillip to domestic industry. But more steps are required for Indian companies to make big-ticket investments,”said Sajjan Jindal, chairman of JSW Group.

Analysts say the current growth in revenue or operating profits might not encourage private entities to spend on newprojects. Also, while capacity utilisation levels are less than 100 per cent, a substantial number of companies have highleverage.


PSUs up investment ante, set to pump in16% more in FY16


October, 2015

Iron ore miner NMDC Ltd has set an ambitious plan to investRs.40, 000 crore in the next eight years to reach the miningcapacity of 75 million tonnes per annum (mtpa) by 2018-19and 100 MTPA by 2021-22.

Of this, around Rs.7,800 crore would be invested betweenthis and the next fiscal year, chairman and managing directorNarendra Kothari said at the company’s annual generalmeeting on September 29.

Iron ore demand has been subdued in domestic and globalmarkets, primarily because of weak demand in the wake ofexcess steel capacity globally, which is estimated to bearound 2 billion tonnes per annum. Also, there has beenweak demand from China which impacted the pricing.

Notwithstanding the current subdued demand, Kotharisaid, the company hopes there would be an improvement inthe steel demand domestically because of increased infrastructure activity.

Right now, NMDC produces 30 million tonnes per annum of iron ore, while it has a capacity of 48 MTPA. Last year, thecompany had to resort to steep cuts in iron ore prices because of subdued global demand

“Prices are difficult to predict but it will remain more or less at $55-65 per tonne. If the company is able to sell theproduct at higher prices we will, if it needs correction we will reduce the prices, but we have to sell in any case,” Kotharisaid.

The company had delayed price cuts in the past as global iron ore prices fell rapidly and it could not align to it quickly.This had resulted in loss of volumes.

“The company has not disclosed mine-wise details for achieving the 75 MTPA and 100 MTPA capacity targets. In viewof the weak demand and potential increase in local supply in the coming years, these plans look very optimistic,” saidIIFL Institutional equities in their September research report.

Of the total capex outlay, the company would spend Rs.3, 800 crore this fiscal and Rs.4, 000 crore next year.Around 70% of NMDC’s iron ore comes from its plants at Chhattisgarh and the rest from Karnataka. “Going forward,

on the back of additional mines expected to come on stream, we expect an iron ore sales volume growth of 7.1% in FY15-17,” ICICI Direct said in its NMDC results update report in August.

To revive exports, it also talking to a Japanese customer. “Our exports have not been good, in fact they ran into lossesbecause of higher export duties. But we are now talking to the government to bring it down to the lowest level or tozero,” Kothari said. Last fiscal year, exports stood at 8% of production.

NMDC had earlier guided volume projections of 35MT in FY16, which it is unlikely to achieve.” Their production/dis-patches declined by 18% in August 2015 on a year-on-year basis. Even after assuming acceleration in domestic dispatchand cut in export tax, NMDC’s volume guidance will not be met,” said the IIFL report.

Source: Mint

NMDC to invest Rs40, 000 crore in next 8years for capacity expansion


October, 2015

Indian media and entertainment industry has the potential to log $100 billion (Rs.650,000 crore) turn over by 2025 pro-vided it gets adequate infrastructure and government support, the Confederation of Indian Industry (CII) said on October18.

"Indian media and entertainment industry has the potential to reach $100 billion by 2025," the CII said on the eve of itstwo-day Big Picture Summit beginning here on Monday.

"This would imply growth to Rs.210,000-250,000 crore by 2020. Such robust growth can come only on the back of en-abling infrastructure and the support of the government and the industry itself," a CII and Boston Consulting Group visionpaper prepared for the summit said.

"With a growth potential of 13-16 percent year-on-year it has the potential to emerge as one of the largest employ-ment providers, contributing significantly to the gross domestic product," said the paper titled Vision 2020 Document onMedia and Entertainment Sector.

The current size of the industry is estimated at about Rs.115,000 crore.Digital media advertising in 2014 grew at a staggering 44.5 percent in 2014 over the previous year."The next decade will see a consumption explosion with the rapid growth of digital media. India already has 250-300

million digital screens which include smart phones, tablets, laptops and PCs," said CII director general Chandrajit Baner-jee.

"This is more than the number of TV and film screens put together. This number is projected to multiply to 600 millionscreens by 2020, implying that every second Indian will have a personal media consumption device. The impact of thiswill be massive," he added.

For the films sector, however, 2014 presented a mixed picture, with a handful of box-office records, while severalmore were unable to attract audiences. Thus, overall profitability was impacted.

Actor-producer Ajay Devgn and veteran actress Sharmila Tagore are among those likely to participate in the summitduring October 19-20.

The report says the next decade could also provide India the opportunity to emerge as a global media and entertain-ment hub.

"Unlike mature Western markets, digital media could expand the overall market size by tapping into latent demandand driving new media consumption rather than merely replacing other, more traditional platforms," Kanchan Samtani,partner at Boston Consulting Group said.


Indian media, entertainment can be $100bn industry: CII

MONTHLYECONOMIC BULLETIN >> SECTORAL NEWS

US online marketplace Amazon plans to start cloud services in India and shift some of its servers from Singapore for itsdata centres in India. Sources said these issues, among others, were discussed at a meeting between senior Amazon offi-cials and Union Communications and Informa-tion Technology Minister Ravi Shankar Prasadon Thursday.

A three-member delegation from Amazon,comprising of Amit Aggarwal, vice-presidentand managing director of Amazon India;Monique Meche, vice-president (public policy);and Lisam Mishra, director (public policy), par-ticipated in the meeting, which lasted about 30minutes. The Amazon officials also discussedthe company's expansion plans, as well as afew regulatory and taxation issues it faced inthe country.

"Amazon officials talked about bringingtheir cloud facility to India. The ministry has given a positive response to Amazon and told them Amazon could work ac-cording to the government's cloud policy," said a senior ministry official. He added the company wanted to transfer someof its servers from Singapore for the data centres it planned to come up by next year.

Sources said Amazon was looking for clarity on a goods and services tax (GST), adding the company's officials alsodiscussed the taxation problems it faced in Karnataka. "Basically on the GST issue, they raised questions on the fact thata lot of states have different perspectives. The minister said the government is trying to bring in GST and a lot of con-cerns of e-commerce players would be addressed," the official added.

"With respect to Karnataka, we have always maintained the situation is one in which the laws have not kept pace withnew-age online business models that enable a faster, convenient and nationwide access to customers for sellers, espe-cially small and medium businesses, at significantly low costs. We continue to work with the state government and areoptimistic about a resolution," an Amazon spokesperson had said.

Recently, e-commerce giants such as Amazon and Flipkart have faced a number of taxation woes in Karnataka. Ama-zon ran into trouble with the state's commercial taxes department, following which the state cancelled the licences ofmany smaller merchants registered on Amazon.

Sources said Amazon officials also raised with the minister a few clearances issues the company was facing with theBureau of Indian Standards.

"They talked about their hyper-local plans; they are involving a lot of small-time grocers, which is helping them gainmassive footprint and expand in India. They also told the minister about 60 per cent of their customer base was fromrural India," said the official quoted earlier.


Amazon plans to start cloud services in India

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October, 2015

MONTHLYECONOMIC BULLETIN >> SECTORAL NEWS

US Trade Representative Michael Froman will host the ninth ministerial-level meeting of the US-India Trade PolicyForum (TPF) in Washington on Oct 29 to discuss how to expand trade and investment through forward-looking policy ini-tiatives.

The TPF provides the venue for evaluating progress that has been made on trade and investment issues between theUS and India at the ministerial level, accordingto an official announcement.

"I look forward to hosting Minister NirmalaSitharaman for a productive meeting aboutbringing our countries into greater trade part-nership," said Froman.

This dialogue comes on the heels of Presi-dent Barack Obama's recent meeting withPrime Minister Narendra Modi "where they dis-cussed how partnership between the UnitedStates and India on trade and investment cancontribute to new economic growth and jobcreation opportunities for our peoples," henoted.

"The US-India Trade Policy Forum will allow the United States and India to advance on-going bilateral efforts to ex-pand trade and investment through forward-looking policy initiatives that can benefit our manufacturers, workers, inno-vators, service providers, farmers, and ranchers," Froman said.

The US-India TPF is co-chaired by USTR Michael Froman and Indian Minister of Commerce and Industry NirmalaSitharaman, and is the premier bilateral forum for the discussion and resolution of trade and investment issues betweenthe US and India.

Discussions in the TPF are generally organized around key issue areas, including intellectual property, opening invest-ment in manufacturing, agriculture, and services.

US goods and private services trade with India totalled $102.8 billion in 2014. India is currently the US' 11th largestgoods trading partner with $66.8 billion in total (two ways) goods trade during 2014. Trade in private services with India(exports and imports) totalled $36 billion in 2014.


US to host US-India trade policy forum

39

October, 2015

MONTHLYECONOMIC BULLETIN >> NEWS ROUND UP

The roads ministry would spend Rs 5,000 crore over the next five years to develop green cover along national highways.Launching the Green Highways (Plantation, Transplantation, Beautification and Maintenance) Policy, 2015 here on Tues-day, roads minister Nitin Gadkari said: “On an average, we award highway projects worth Rs 1 lakh crore every year.

In the next five years, we target to award roadprojects worth Rs 5 lakh crore and one per centof it is Rs 5,000 crore, which will be available forplantation purpose or greening the highway inthe next five years.” The policy aims to promotegreening of highway corridors with participationof the community, farmers, private sector, NGOs,and government institutions.

The ministry has identified around 12,000hectares of land for plantation. The governmentplans to ‘green’ about 6,000 km of roads in thefirst year of the policy. The total length of high-ways in India is about 96,000 km, and it consti-tutes only two per cent of the road network. butcarry 40 per cent of the total road traffic.

Gadkari said there will be strong monitoring ofthe initiative by the Indian Space Research Or-ganisation (Isro) and the Airports Authority ofIndia. Isro’s Bhuvan and Gagan satellite systems would be deployed to map the green cover.

He noted this policy would generate employment opportunities for about 500,000 people from rural areas. He alsoasked the state governments to start programmes on similar lines.

The policy would help make India pollution-free, the minister added. It would also help in curtailing the number of roadaccidents in India.

Gadkari added the ministry would felicitate three agencies doing outstanding plantation work every year on June 5 -the World Environment Day. He added that there will be strong monitoring mechanism by The Indian Space Research Or-ganisation (ISRO) and Airports Authority of India.

He said ISRO's BHUVAN and GAGAN satellite systems would be deployed to map the plants and for auditing purpose.He also said that this policy will generate employment opportunities for about five lakh people from rural areas.

He also asked the state governments to start a programme on similar lines.The Green Highway Policy will help in making India pollution free, the minister added. It will also help in curtailing the

number of road accidents in India. The ministry has identified around 12,000 hectares of land for plantation and the gov-ernment plans greening of about 6,000 km of roads in the first year of the policy.

The total length of highway in India is about 96,000 km, and it constitutes only 2% of the road network but carriesabout 40% of the total road traffic.


Centre may spend Rs 5,000cr in next fiveyears for greener highways

40

October, 2015

MONTHLYECONOMIC BULLETIN >> NEWS ROUND UP41

October, 2015

New global tax regime in the works, Indiaset to gain Indian authorities can look to mop up more taxes from purchases made on global etailing portals like amazon.com orecommerce platforms of Macy's and Asos' with an international agency recommending a major revamp of the global tax-ation system allowing levy of valueadded tax in thecountry where the consumer is located.

In response to a move by the G20 countries, Paris-based OECD on October 5 released a new frameworkcalled Base Erosion and Profit Sharing, recommend-ing a spate of changes which will require companiesto reorganise their operations.

Currently , multinationals including the likes ofApple, Google and Starbucks pay low taxes acrossthe globe through ag gressive tax planning, whichentails use of a series of tax treaties, and low-tax ju-risdictions as well.

OECD has estimated that aggressive tax planningby global corporations results in an estimated an-nual revenue of up to $240 billion (over Rs 15.5 lakhcrore), which is more than Centre's tax collection target for the year. This is nearly 10% of the global corporate incometax (CIT) revenues and OECD believes that developing countries would be the major beneficiari es of the proposed tax ar-chitecture.

The BEPS proposal, to be discussed by G20 finance ministers on October 1, will also impact foreign institutional in-vestors operating in India, which, again use tax treaties -such as those with Mauritius -to avoid paying taxes, tax expertssaid.

“The whole approach of BEPS is in favour of developing countries. Therefore, Indian authorities should welcome themand corporations should mature to align themselves to the new regime,“ said Rahul Garg, executive director at Pricewa-terhouseCoopers.

Although OECD has recommended the implementation of its 15-point action plan by 2020, tax consultants said thegovernment may start moving ahead in some areas from the next budget.

“Revenue authorities around the world are seeking more information and transparency in the way multinational com-panies do business -such that they pay their fair share of taxes in each country ...

As and when member countries sign the multilateral instrument, the Indian government will need to filter down thechanges into its treaties and domestic law .We should expect to see more action on the ground starting 2016,“ saidNeeru Ahuja, partner at Deloitte Haskins & Sells.

Source: The Times of India


India's nation brand value has in 2015 increased by a whopping 32 per cent to $2.14 trillion, compared with $1.62 trillionlast year, shows a report by London-based Brand Finance, a leading independent brand valuation and strategy consul-tancy.

Not only has India's rate of increase been the highest among the top 10 by brand value, it has also helped the countryimprove its global ranking by a notch to seventh.

Only three Asian nations - China, India and South Korea - figure among the top 20 most valuable nation brands. Evenas China has maintained its second position, it has lost one per cent of its value over a year to $6.3 trillion in 2015.

South Korea has improved its ranking to 12th from 17th with a 10 per cent increase in value to $1.1 trillion.Meanwhile, in a classic case of how one company's mess can hurt a country, the recent crisis faced by automaker

Volkswagen has not only affected Germany's brand value but also cost it its position as the world's strongest nationbrand.

In addition to a four per cent erosion in brand value to $4.2 trillion, Germany, the third-most-valuable nation brand, hasbeen replaced in the strongest nation brand pecking order by Singapore.

With its intolerance for corruption, generous wages for public officials to discourage graft, heavy tax on cars leading toless congestion and good public transport, and a high-quality education system, Singapore, which has a nation brandvalue of $412 billion, is now the strongest nation brand.

According to David Haigh, chief executive officer, Brand Finance, a nation brand is one of the most important assets forany state in a global marketplace, "encouraging inward investment, adding value to exports and attracting tourists".

Though the US remains the most valuable nation brand in Brand Finance's 2015 edition of Nation Brands report, thecountry's image as the 'Great Satan' in Iran will affect the ability of its firms to export into Iran.

The report says: "Those with a neutral and internationalist branding, such as Apple, should be largely unaffected. Butthe more 'all-American' brands like Coca-Cola might struggle to overcome negative perceptions."

In the case of the UK, there are even stronger negative associations with Iranians, many of whom resent the UK's his-torical political interference in their country.

Germany and France, by contrast, were faster to reach out and had a more established presence in Iran before sanc-tions were imposed on that country. "France's Peugeot was the market leader in the Iranian automobile market. How-ever, its perceived abandonment of the country might mean other European firms are better placed to profit," says thereport.

Brand Finance measures the strength and value of 100 countries using a method based on the royalty-relief mecha-nism employed to value large companies.

The five-step approach includes preparing a brand strength index on the basis of goods and services, investment andsociety. The first is sub-divided into governance, market and tourism (for investment, tourism is replaced by people andskills).

It emphasises a six-step approach by governments to improve the nation brand through appraisal, macro and microimage, consistent and focused vision, brand strategy, market strategy and execution.

India's "Incredible India" slogan, used for tourism promotion, has worked well as "an umbrella brand", with more tar-geted and detailed campaigns appealing to the different audiences.

"Who doesn't want to discover something incredible? An overarching slogan or campaign could be used across theboard," says Courtney Fingar, editor-in-chief of fDi Magazine, which has partnered Brand Finance for this year's NationBrands study.

The strength of Germany's nation brand has traditionally come from its manufacturing prowess. However, recent rev-

India climbs one rank with a 32% sprint inbrand value

42

October, 2015


elations that Volkswagen might have fitted 11 million diesel vehicles with software designed to deceive emission testers,has dealt "a hammer blow" not only to the company's reputation but potentially also to Germany's nation brand.

The study says German industry is known for its efficiency and reliability, and its people are seen as hard-working,honest and law-abiding - the Angela Merkel government's approach to the Greek debt crisis has only intensified the per-ception.

"This (Volkswagen) scandal threatens to undo decades of accumulated goodwill and cast aspersions over the prac-tices of German industry, making the earlier Siemens bribery scandal appear less a one-off bad apple than evidence of abroader malaise.

Despite the vast scale of deception, other companies will need to be implicated before the damage to Germany's na-tion brand becomes critical."

Its receptivity to migrants from Syria will generate more than just goodwill for Germany's nation brand. The influx ofgenerally young people will provide a fillip to its labour force, especially since the country's birth rate has been flagging.

"The desire of migrants to reach Germany and to a less extent Sweden speaks to the existing strength of these power-ful nation brands," says the report.

Interestingly, Iran tops the list of best-performing nation brands; the value of its nation brand value has increased 59per cent over a year ago to $159 billion. Iran is followed by Cameroon, Tanzania, Kenya and Zambia in high rates of in-crease.

The report says Hassan Rouhani's moderate approach is slowly shifting the international perception of Iran's potential."The conflict on its doorstep and the Sunni-Shia divide will remain an impediment to trade and investment locally but

with a market of 77 million people, vast hydrocarbon reserves and a highly educated population, Iran certainly has a re-ceptive audience globally," says the report.

Ukraine and Russia, rivals in political arena, are together in the worst-performing nation brand category, at first andthird spots, respectively. Russia's brand value, at $810 billion, is more than 60 per cent lower than India's.


43

October, 2015


India Inc has emerged as the second most optimistic in terms of business optimism globally with a survey showing that86 per cent of Indian respondents are bullish about an increase in revenue of their companies.

According to the Grant Thornton International Business Report, a quarterly global survey of 2,580 business leaders,India ranked second after Ireland in terms of the business optimism.

Business confidence and expectations for revenue and exports are down in several major economies that have Chinaas a major trading partner.

"India is relatively insulated from the slowdown in China and sees a slight gain in confidence, despite falling exports,"the survey said while taking note of RBI's recent interest rate cut by 50 basis points to support growth.

As per the survey, 86 per cent Indian businesses are optimistic about an increase in revenue compared to 83 per centlast quarter. Moreover, Indian businesses are also positive about profitability with 69 per cent respondents expecting arise in the profits.

"Indian businesses have been consistently optimistic in their business outlook over the past decade barring a couple ofquarters. This is based on the underlying strength of the economy, the consistent high growth rate, the entrepreneurialdynamism in being able to create new opportunities and businesses and the lower reliance on global trade based on sig-nificant domestic demand," Grant Thornton India LLP Partner - India Leadership team Harish HV said.

However, there was further fall in optimism on the rise of employment aspect with only 52 per cent Indian businesseshoping for the same.

"The concern based on the results of this survey is the pessimism on employment, which is a key factor and need forthe country given the demographic dividend which could turn into a demographic nightmare without adequate employ-ment generation. The Government's thrust on 'Make in India' needs much more push to make it a reality and that couldsalvage the situation," the report added.

The survey noted that ICT (Information Communication Technology) infrastructure is the biggest concern for IndianBusinesses followed by lack of skilled workers and red tape. Also, there is not any major improvement in the expecta-tions of an increase in R&D activities and exports in the country from the last quarter.

Source: Press Trust of India

India 2nd most optimistic in biz optimism,says report

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October, 2015

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October, 2015

MONTHLYECONOMIC BULLETIN >> NEWS ROUND-UP

Monthly Economic Bulletin - October 2015

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Transcript of Monthly Economic Bulletin - October 2015