สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 18 กรกฎาคม 2556

FDI reforms: now Pharma in focus
A day after a high-level panel headed by Prime Minister Manmohan Singh relaxed foreign direct investment (FDI) norms in sectors ranging from telecom to single brand retail, now it seems he would hold a separate meeting to review the policy in the pharmaceutical sector by the month-end.

According to a senior official, the main concern of the ministry of commerce and industry is that a stage might come when India might not have a company ready to manufacture drugs on behalf of the government, even if the provision of compulsory license is invoked. The fact that acquiring companies are paying huge valuations which are many time the cost of setting up new projects does raise a question on their motivation. Thus a separate meeting on the issue might be taken up by the PM.

"The health ministry is concerned that if the FDI policy on pharma remains unchanged, it would adversely impact the availability of essential drugs, production capacity and supply of low priced drugs," the official added.

Presently, 100 per cent FDI is allowed in new projects through the automatic route in the pharmaceutical sector, while 100 per cent is also allowed in existing facilities subject to the government's permission. During the meeting with senior Cabinet ministers on Tuesday, the PM discussed the matter "informally" and decided to hold a separate meeting on the issue due to the sensitivity of the matter.

(Source: Business Standard)

A mixed response to FDI push
A day after the current United Progressive Alliance (UPA) government unshackled crucial sectors of the economy by inviting foreign direct investment, the Opposition on Wednesday cried foul, some saying that the UPA government's decision has been taken in haste and under pressure from western nations. While other charged the government of taking the decision at the fag end of the UPA's tenure to bolster the government prospects.

Bharatiya Janata Party (BJP) Deputy Leader in the Rajya Sabha Ravi Shankar Prasad said: "The panic decision taken by the government on FDI is not going to impact the Indian economy which is indeed in a terminal state. The story of India has come under a serious cloud under the leadership of Sonia Gandhi and Prime Minister Manmohan Singh". The Communist Party of India (Marxist)-CPI (M)-attacked the government for allowing 100 per cent FDI in the basic and cellular services in the telecom sector. While the Telugu Desam Party (TDP) accused the UPA of "mortgaging India's sovereignty to foreign multinationals."

In response, while rejecting the charges, the Congress spoke out in support of the government decision. In an official statement, the party cited facts and figures to bolster its claim that during the first four years of the National Democratic Alliance regime, the FDI inflow had been an average of $ 4.85 million a year. Under the UPA from 2004 till the present, it has been an average of $ 30 million a year i.e. a whopping 619% more.

(Source: the Financial Express, Business Standard, the Economic Times)

Minerals production slides 5.7% in May
According to a statement, the country's mineral output dropped 5.7 per cent in May this year, compared to the same month last year, while the total value of the production stood at Rs. 18,074 crore in the month under review.

As far as the production level of minerals during the month was concerned, the country produced 43.2 million tonnes (mt) of coal, 4.5 mt lignite, 2,935 million cu.m. natural gas (utilised), 3.2 mt petroleum (crude), 0.2 mt bauxite, 288,000 tonnes chromite and 12,000 tonnes copper.

The gold production was recorded at 128 kg, iron ore at 131 lakh tonnes, lead at 17 thousand tonnes, manganese ore at 237 thousand tonnes, zinc at 143 thousand tonnes, limestone at 242 lakh tonnes, and magnesite at 17 thousand tonnes besides 3735 carat diamond, source said.

(Source: the Financial Express, Business Standard)

Rupee weakens despite FDI eased
The rupee posted a marginal fall on Wednesday as continued dollar demand from importers eroded early gains from the government's decision to relax the foreign direct investment rules in various sectors. The currency ended at 59.35 a dollar, compared with the previous close of 59.32. It had opened at 59.06 and during intra-day touched a high of 59.05 and a low of 59.58 a dollar.

"There was month-end dollar demand due to which the rupee came under pressure wiping out initial gains. The government needs to take concrete steps to boost inflow of dollars to strengthen the rupee," said a currency dealer with a state-run bank. The rupee's weakness, in spite of strong steps taken by the Reserve Bank of India (RBI) on Monday, shows the demand for dollars remains strong, overriding RBI's attempt to stamp on speculation.

(Source: the Financial Express, Business Standard)

Gujarat government announces a five year housing scheme for 22 lakh dwellers
Gujarat government on Wednesday announced affordable housing schemes for 22 lakh urban households in the state in five years. This includes rehabilitation of slum dwellers, a subsidy of Rs.100,000 to families in economically weaker category and Laow Income Group (LIG) as well as an interest subsidy of Rs.100,000 for citizens booking flats in schemes by private developers. It will also provide Rs. 50,000 per house for providing urban infrastructure to schemes for Economically Weaker Sections (EWS).

Economically Weaker Sections are classified as families with an annual family income of upto Rs.100,000. Laow Income Group (LIG) families (with annual incomes in the bracket of over Rs.100,000. upto Rs 250,000 lakh) will get houses over a carpet area of 31-50 square metre. The government plans to cater to 40,000 urban families in the category in 2013-14. It has earmarked Rs. 400 crore under the Mukhya Mantri Awas Samruddhi Yojana for the purpose. The cost of a house is likely to be in the range of Rs. 7-11 lakh excluding the stamp duty costs.

The source said that EWS families and beneficiaries under Slum Rehabilitation scheme will have to register their property on a stamp paper of Rs. 100. Citizens, both under EWS and LIG category, buying houses from private developers will get an interest subsidy of Rs. 100,000.

(Source: the Economic Times)

Now Multi-brand retail FDI may ease
Under pressure from international retailers, the government might soon amend the foreign direct investment (FDI) policy on multi-brand retail trading (MBRT) by easing some conditions which had drawn sharp criticism from global investors. However, there is no proposal to hike the FDI limit in the sector from 51 per cent.

The department of industrial policy and promotion (DIPP) will seek to change three main conditions that have invited the most criticism by retail conglomerates such as Walmart, Tesco and Carrefour. This pertains to the riders concerning back-end infrastructure, mandatory sourcing and establishment of retail stores only in cities having more than a million of population.

The move comes at a time when the economic scenario is gloomy, with the rupee at an all-time low and investment sentiment depressed. It was only last month that DIPP had issued a set of clarifications on these issues but this failed to soothe retailers' nerves.

(Source: the Economic Times, Business Standard)

Economic Section
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