สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 14 ตุลาคม 2556

Policy soon to facilitate entry of foreign banks: Rajan

The Reserve Bank of India (RBI) would soon come out with major reforms in the banking sector that would allow foreign banks to enter India in a big way and even take over domestic lenders, Governor Raghuram Rajan said. The banking sector reforms, in particular to those facilitating entry of foreign banks in India in a “big way”, is part of the five pillars of reforms, including monetary policy framework, which RBI was to implement in the next few years, the RBI Governor said. He also added that there would be two conditions. “One,  reciprocity. The foreign country should allow the same to our own banks and, second, they should come through one route. Either you have a branch or you have a subsidiary; don’t do both. That is primarily to simplify our regulatory function, but also to make it clean. But once you have a fully owned subsidiary, we would allow you a lot of freedom,” he said.

(Source: Business Standard)

Rifts between Indian firms, foreign partners rise

Instances of friction between Indian companies and foreign partners in the fast-moving consumer goods and retail sectors appear to be on the rise. Cases in point through the past year are Reebok, Bharti-Walmart, McDonald's, Faber-Castell, Gillette, Beam Global, Bunge and Di Bella Coffee. Though lawyers and experts blame this on growing differences over business issues, the timing isn't lost on many - it comes at a time when sectors such as retail are being opened (100 per cent foreign direct investment, for instance, has been allowed in single-brand retail). As such, foreign companies no longer need Indian firms to help them run operations here. A senior lawyer from one of the top three law firms in India says, "You'd be surprised to note having an Indian partner can actually increase the risk for a foreign promoter. This is because more often than not, the foreign promoter has no control over the business here. If an Indian partner is involved in fraud or misappropriation of funds, it can actually set the international company back, impacting its potential to do business in India and nearby countries. Also, its brand name and credibility are hit." Experts say patience between Indian and foreign promoters is slowly wearing thin, prompting many to opt for early break-ups. "Differences between partners on how the business should be run and how much time and money should be put into operations are growing. Often, both sides allege the other isn't working according to the plan, claiming the agreement between the two has been violated. In my view, there is a trust deficit that exists between partners today," says Arvind Singhal, chairman of Gurgaon-based retail consultancy Technopak Advisors.

(Source: Business Standard)

India is not facing any financial crisis; govt won't seek IMF funds in five years: Raghuram Rajan

India will not need to go to the International Monetary Fund (IMF) for funds in the next five year and the country is not confronting any financial or economic crisis, Reserve Bank of India ( RBI) governor Raghuram Rajan said in the US capital sending out a strong signal that the country had put its recent troubles behind. Rajan's plain speak at a panel discussion at the annual meetings of the IMF and the World Bank was aimed at those who argued that the country should approach the IMF to negotiate a credit line to avert a 1991-like situation when India did not sufficient forex to pay for even a month of its imports. The suggestions reached a fever pitch in end August when the rupee plunged to record low 68.85 against the dollar. India has put in place a plan that seeks to compress imports to rein in current account deficit (CAD) and measures to boost capital flows. The plan seems to be working with CAD now likely to fall to 1% of GDP in the second quarter of the fiscal from 4.9% in Q1. The rupee has bounced back to close at 61.07 to the dollar on Friday. Rajan said India needed to get back on growth path.

(Source: Economic Times)

Cyclone Phailin unlikely to rattle general insurers

The general insurance industry is unlikely to see huge losses arising out of the cyclonic storm Phailin, which hit the eastern coast last night, as most commercial installations and ports along Orissa and Andhra Pradesh are relatively less affected. That, and poor retail penetration in the region, are unlikely to result in major losses, say industry officials. They, however, said that not only is the domestic general insurance industry closely watching the event, but global re-insurers are also keeping a tab on the developments. Around 9 pm last night, the very severe cyclonic storm, Phailin, made landfall in Gopalpur in Orissa. Before the cyclonic storm hit the coast, some people lost their lives even as the authorities evacuated over five hundred thousand (at the last count) from the storm-affected areas of the two states.

(Source: Financial Express)

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