Indian Economic Status Newsletter June 2013 - Find Indian Economic News, IIP Growth % (Index of Industrial Production) Graph, WPI % Growth (Wholesale Price Index) Graph, Corporate Headlines and Who’s Expanding in India
India NewsletterJune, 2013FROM THE EDITORS DESKIs growth cycle turning for India?Rohit ChaturvediFounder and MDExpand in IndiaIndia has seen a spate of challenges over the last few years- scams everywhere fromCommonwealth games to Coalgate to Telecom, stalling of ports, townships, mines,Central Government’s retrospective tax amendments to policy paralysis, decliningexports, rising trade deficit, falling currency, decelerating economy, downgrade threatfrom rating agencies and so on.It’s difficult to say that these challenges are behind us .A few things however look to beimproving - dropping global commodity prices like oil & crude oil products, coal , rubber& others like gold specifically would do well to assist India (which is predominantly animporter of these products) , falling domestic inflation and thereby expectation of easingof interest rates going ahead will give some philip to consumer demand, CabinetCommittee on Investment (CCI) fast tracking some major infrastructure projects whichcould boost investment sentiment as well as industrial demand, thrust on exports (thoughthe global growth situation is weak), and some policy actions to reduce oil subsidy ,reduction in fiscal deficit and other efforts to woo foreign investments. The big hangoverfor the next one year remains the Central elections in 2014. It’s anybody’s guess as towhat will happen at a specific level, but at a broad level coalition is here to say and thecoalition politics will continue to play its part in India’s future story. What remains to beseen is that, are there signs that we are becoming better at running a coalitiongovernment.Despite the above challenges, most experts are of the view that the worst seems to bebehind for India for this economic cycle and going forward situation should improve.2013-14 may be marked with an uptick in growth trend as the macro data seems to befalling in place to enable around 6% GDP growth for the year.Some small movement continue to happen on the ground in terms of divestments andconsolidation (highly leveraged corporate) , capacity expansion plans (Consumer goodscompanies specifically) and Global firms entering/expanding in India (in sectors likeHealthcare, Leisure, , Security, Renewable Energy specifically) For other companies eyingIndia (who are convinced about its long term story) this could be a good time to bringIndia back on their radar screen , before the economy again gathers momentum leadingto crowding out of great partners, right priced assets, relatively weaker competition andsettling down time .ECONOMIC AND POLITICAL NEWSIndex of Industrial Production- IIPAs per Quick Estimates on the Index of IndustrialProduction (IIP), industrial growth in March 2013improved to 2.5% yoy. It compares positively to amarginal 0.6% yoy growth in February 2013 and 2.8% yoyde-growth in March 2012 owing to growth in consumernon-durables and capital goods segments. Overall duringFY2013, the index decelerated and reported a shallow1.0% yoy growth as compared to 2.9% yoy growth inFY2012 and a more robust 8.2% yoy growth in FY2011.Wholesale Price Index- WPIWholesale Price Index (WPI) inflation for April 2013moderated for the third straight month to 4.89%, a 41-month low as compared to 5.96% in the previous monthand 7.50% in April 2012. The deceleration is broad-basedsince inflation across primary articles, fuel andmanufactured articles has moderated.Indian economy to grow at 6.1% in FY2014: WorldBankS&P warns India of rating downgrade, retainsnegative outlookGovt sets $325bn exports target for 2013-14Trade deficit widens to USD17.8bn in April 2013GST rollout only after next govt. comes to powerCommerce and Industry Minister Anand Sharma hassought from Japan more market access for Indianexporters in sectors such as agriculture, marine andpharmaceutical products. India invites investmentfrom Japan in infra, electronicsIndia, China agree to take steps to address tradeimbalanceMinistry of External Affairs (MEA) to draw roadmapfor Missions to push exportsThe Centre has embarked on the ambitious e-Indiaproject with an outlay of Rs 20,000 crore (USD 3.6 Bln)and created SPV Bharat Broadband to connect of250,000 gram panchayats through broadband.Indias GDP reduced 4.8% in the fourth quarter from4.7% in the third quarter of 2012-13. The Indianeconomy touched a decade-low GDP growth rate of 5%in 2012-13, which is in line with the advanced estimates.
CORPORATE NEWSRIL-BP submit plan to enhance KG-D6 gasoutputNovartis appoints Citigroup as broker forIndian co share saleBHEL to set up a power equipmentfabrication plant in MaharashtraInternational Finance Corporation (IFC) isinvesting $25 million (Rs 134 crore) inChennai-headquartered Ravindranath GEMedical Associates Pvt. Ltd (RGE), whichoperates a chain of hospitals in Chennai,Hyderabad, Bangalore and Mumbai underthe Global Hospitals brand.Cairn India to spend $3bn on oil explorationin 3 yrsJSW Steel eyeing coal mines in Africa, USand CanadaGSPC to spend `2,000cr (nearly 350 mlnUSD) on gas terminal at KG-BasinThe Asian Development Bank announced itsfirst equity investment in India’s privatesector renewable power generation. It hasdecided to invest $30 million in Hyderabad-based NSL Renewable Power Private.WHO’S EXPANDING IN INDIAAutomotive lubricant maker ValvolineCummins is setting up newmanufacturing and packaging facility thefacility, which has come up at aninvestment of $30 million, will produceValvoline automotive lubricants for theconsumer, industrial and heavy dutymarkets. The plant has an initialproduction capacity of 120 million litresper year and it can be expanded up to150 million litres.Renault SA and Nissan Motor Co. areexpanding the production capacity attheir joint-venture factory in India by athird this year as part of their strategy toutilize the South Asian country as a globalmanufacturing hub and also to tappotential demand in the local marketWHO’S EXPANDING IN INDIATop German luxury car maker BMW India is quite keen on expanding itsoperations across a wide variety of cities in the country. For this purpose thecompany has created a ‘mobile showroom’ for the city of Kottayam in Kerala,which has been identified as a strong emerging market among Tier II cities in thisState. The mobile showroom is a weather-proof and air-conditioned structure,appearing as a replica of BMW’s luxurious dealerships in different metro cities.Triumph Motorcycles have been eying the Indian market since they presentedtheir bikes at the 2012 Auto Expo. Triumph Motorcycles have replied that theIndian entry would happen at the end of the third quarter of 2013.Electrical goods company Havells is planning to increase its presence across TierII and Tier III locations in Tamil Nadu. Havells is looking to enhance its presenceto all the 110 towns by appointing 60 more dealers in addition to the 400 odddealer/distributors in the state.The Indian subsidiary of Swedish industrial machining tools maker Seco Tools ABis setting up an additional manufacturing facility adjoining its existing plant inPune to double its present production capacity. It has also shifted its Asia-Pacificheadquarters to India.Honda Motorcycle opens third plant in India126.96.36.199.7 3.42.5-5188.8.131.52-3.5-1.32.5-20.22.3-0.48.3-0.6 -0.52.40.52.5-6-4-2024681012IIP GROWTH % (INDEX OF INDUSTRIAL PRODUCTION)184.108.40.206 7.27.6 7.6 7.58 8.17.3 7.3 7.26.6 6.864.9JAN12 FEB12 MAR12 APR12 MAY12 JUNE12 JULY12 AUG12 SEP12 OCT12 NOV12 DEC12 JAN13 FEB13 March, 13 April, 13WPI % GROWTH (WHOLESALE PRICE INDEX)
WHO’S EXPANDING IN INDIASandvik AB’s subsidiary Sandvik Asia is makinginvestments in India-specific manufacturing and R&D. Inmanufacturing (at Chakan near Pune), fresh investmentsare being made for new products meant for the domesticmarket. For the R&D Bangalore centre, they haveplanned major expansion. Some 250 more engineerswould be added in the next three years for developmentof locally applicable products.Reliance Industries Limited (RIL) is gearing up to enterthe defense space of India by investing and signing newdeals with global market players to procure offsetmanagement of defense equipments. In order to comeup with new strategies in the defense play, RIL isplanning to invest about $1 billion in the aerospace fieldover the next three years.Cement makers are expanding capacity despite a glutbecause they anticipate an increase in demand fromconstruction and infrastructure projects ahead ofnational election, to be held next year. Expansion plansworth Rs. 8,522 crore (nearly USD 1.5bln) have beenannounced since the beginning of 2013, with France’sLafarge being the latest.ATLAS ELEKTRONIK has founded its subsidiary ATLASELEKTRONIK INDIA Pvt Ltd with headquarters in NewDelhi. ATLAS ELEKTRONIK INDIA Pvt Ltd will deal withmarket research, analysis, supply chain management andprovide technical and logistical support to customers andto the German parent company.Qatar National Bank (QNB) will start operations in Indiain the third quarter of this year, expanding its reach toAsias third-largest economy.Satellite navigation provider Garmin Corporation isbetting big on the Indian PND (personal navigationdevice) market and plans expansion in terms ofmanpower.NTL Lemnis India Private Limited, a joint venturecompany of NTL Electronics India and Netherlands basedLemnis Lighting is keen to invest in Gujarat in future. Thecompany has recently started its sales office in the state.The Indian division of German organizer Messe Frankfurthas further extended its event portfolio in the Indianmarket with the acquisition of wastewater and recyclingexpo, Watertech in Gujarat. The organizer has also takenover Pollutech, Wastetech and Cleantech fromExhiference Media, which are held concurrently withWatertech.WHO’S EXPANDING IN INDIAThe newly formed AirAsia India, the Indian arm ofMalaysias low cost carrier AirAsia will buy 50 moreplanes as part of its aggressive expansion strategy inIndiaNominum, a provider of network-based service deliveryplatform for mobile operators, is set to expand in India.UK-based healthcare services firm Bourn HallInternational is investing $100 million (around Rs 540crore) in its Indian subsidiary to finance an expansionplan to set up 18 new fertility clinics in India by the endof FY16. Gems and jewellery exports fall 9% in FY2013Life Healthcare, South Africa’s second-largest private-hospital owner by market value will seek expansionopportunities in India and Africa to respond to slowerprofit growth.Over a year after its joint venture with DLF ended, Hiltonhas firmed up its expansion plans for India, with 21 newhotels planned in the next five years across five brands.The hospitality chain is also planning to bring its luxurybrand Waldorf Astoria to India.Worldhotels continues its expansion in India with TheGalaxy Hotel & Spa joining its First Class Collection.Dubai-based Rotana Hotels may announce its firstproject in a few months as part of its expansion plans inIndia and likely to invest USD 3-5 million over the nextfew years.Amid a rising number of international legal disputesinvolving entities and businesses in India coming to fore,a number of litigation funds from abroad are sensing aniche business opportunity for them in India.Several foreign companies, including Taiwanese firmTung Ling Industries and German multi brand retailerProwl, are planning to enter the Indian kidswear marketdue to the increasing demand for children’s clothing inthe country.With money flowing in from Etihad Airways, whichbought a 24 percent stake at 32 percent premium to themarket price, Jet Airways seems all set for a massivefleet expansion.
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