สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 2 กรกฎาคม 2556

100% FDI in Some Sectors, a National Security Threat

The Department of Industrial Policy and Promotion (DIPP) said on Monday, after holding a meeting with 15 ministers, that complete ownership by foreign interest in some areas of infrastructure will be dangerous for national security. This motion came as a backdrop to the Finance Minister's proposal to increase the FDI on almost all sectors to boost foreign capital inflow. Therefore, DIPP is expected to soon move the Cabinet on raising the foreign direct investment (FDI) cap for some key sectors like civil aviation, defence, telecom and multi-brand retail.

"The home ministry has concerns on (raising FDI caps in) telecom, defence, civil aviation and space. Its concerns have been conveyed to various departments, especially where security is an issue," said DIPP Secretary Saurabh ChandraChandra after the meeting.

(Source: The Financial Express, Business Standard)

Industrial Sectors Still Down

Two separate sets of data revealed on Monday showed that in the first three months of current financial year industrial activities are not doing so well and there are fewer indicators for their recoveries.

Source released by the Commerce and Industry Ministry demonstrated that the combined output of 8 core industrial sectors rose only 2.3% in May which is less than 2.4% in the previous month. In the year 2012 core sector output rose 7.2% in the same month. The June Purchasing Managers' Index (PMI) showed domestic demand remained weak and the currency depreciation was raising input cost for manufacturers, which may dampen demand if passed on to consumers.

(Source: the Economic Times, the Financial Express)

Govt invites Private in Cyber

Today, with the release of India's first Cyber Security Policy, the Union government is urging private technology companies to come join in hand. It is expecting an investment of $1 billion (about Rs 5,940 crore today) from private technology companies. The move to involve private security firms has exposed the government's inability to check a meteoric rise in cyber crime and growing privacy concerns in the country.

"This is the first time we have opened doors for private players to guard India's cyber ecosystem. So far, we have worked on an ad-hoc basis. Their help will be sought in research and training of manpower. All over the world, private players are actively engaged in the information security business, which has already become a multi-billion dollar industry," said a senior government official, requesting anonymity.

(Source: Business Standard)

16.5% Decline in May Jewellery Export

The Germ and Jewellery Export Promotion Council (GJEPC) said on Monday that the industry saw 16.5% decline in export in May partly due to a weak demand from western markets. The May export stood at $2.70 billion whereas the previous month gain is accounted for $3.38 billion. Thus, it was even lower than previous month. Last year's May export was at $3.24 billion, according to the data.

(Source: the Economic Times)

R&D and MNCs Tax Rules Cleared

The Finance Minister has done a clearance as to how the R&D and MNCs would be taxed. The new set of guideline by Central Board of Direct Tax (CBDT) will lower tax dispute and not tarnish India's appeal as an R&D hub. This will also prevent arbitrary tax demand, according to the source. The larger point is that it is conceptually wrong for the tax authority to demand a share of the profit arising from R&D at a captive unit. Besides, MNCs also need simple rules that they can follow in pricing their services while doing business with their parents or subsidiaries overseas. Therefore, clarity and certainty in tax regime to be made is a matter of necessity.

(Source: the Economic Times)

Gas price hike, Power Plants and Fertilizer Makers worried

The new gas price which elevated from $4.2 to $8.4 has posed anxieties to gas-base power producers and fertilizer makers. Experts are predicting that it could take two to three years to improve gas availability. Regarding the fertilizer makers, passing on them the price means the burden to the farmers or government will have to bear additional burden (subsidy) as high as Rs. 8,300 crore.

On the other hand, in May 2013, gas-based power plants saw their PLF (plant load factor) fall to 29 per cent against 50.3 per cent a year ago. The gas price hike also means the rise of the cost of gas-base power impacting the whole chain of demand and supply. Analysts say the new price a unit for gas-based power plants will work out to be 85 per cent higher compared to domestic coal-based power. However, the impact of this on the profitability of companies will be limited as they have cost-plus-return purchase power agreements (PPAs) with distribution companies (discoms). But, if discoms become reluctant to offtake costlier power, it would expose companies to the risk of under-recoveries of the fixed charges.

(Source: Business Standard, the Economic Times)