สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 2 ธันวาคม 2556

Finance ministry takes exception to commerce ministry OKing trade pacts; to take over negotiation of all investment pacts

The finance ministry will take over the negotiation of all future investment pacts, including those part of comprehensive trade deals, it has told the commerce department, having taken strong exception to the latter unilaterally finalising the text for the India-Asean Comprehensive Economic Partnership Agreement, said two government officials aware of the development. Finance Minister P Chidambaram had raised concerns at Thursday's Cabinet meeting over the pact's text, which had been decided without consulting his ministry, after which the proposal was deferred. The finance ministry, which is the administrative department for India's investment policy, was neither consulted by the commerce department during the talks nor were its views sought when the draft text of the pact was finalised. North Block has the administrative mandate to negotiate bilateral investment promotion agreements or BIPAs. The commerce department has been negotiating free and regional trade agreements as also comprehensive economic partnership pacts that have services and investment components. The usual practice has been to consult the finance ministry on all components as these pacts have implications for the economy, investments and the government's finances. The finance ministry has highlighted that the wording for the accord with ASEAN was not in sync with the latest model for such pacts prepared after much deliberation to protect the country from arbitration suits. India reworked the text for BIPAs after it was served as many as 17 arbitration notices.

(Source: Economic Times)

Export surge not to benefit all export sectors: India Ratings

India Ratings & Research (Ind-Ra) believes given the tentative nature of recovery in global demand, not all export oriented Indian corporates will benefit evenly. The key drivers of this asymmetric growth are divergent expectations of growth trends in developed markets and emerging markets, uncertainty with respect to quantitative easing (QE3) tapering and prices of precious metals. Ind-Ra expects the tentative revival of global demand to benefit pharmaceutical companies the most, followed by textiles and IT companies. We expect India's engineering exports' growth to remain muted given the moderating growth of emerging markets. Also, gems & jewellery exporters are unlikely to benefit significantly due to the relatively lower prices of precious metals. Ind-Ra believes exports of pharmaceuticals from India will continue to witness fast-paced growth driven by patent expiries, higher healthcare spending and demand from new markets such as Europe and Japan.

(Source: Economic Times)

Markets to trade with an upward bias

India's equity markets have witnessed extreme volatility in the last six months. While flows and sentiments deteriorated during the first half of this financial year, a slew of measures announced by Reserve Bank of India (RBI) Governor Raghuram Rajan, positive performance of China's economy and deferment of quantitative easing (QE) tapering by the US Federal Reserve raised investor sentiments in later months. However, the sharp market rally in a relatively short period of time is more based on sentiments and hope. Key risks to India's economy are high inflation, high interest rates, and lower economic growth. Inflation is particularly high in agricultural commodities owing to factors such as structural changes, supply-side issues and higher aspirations. While the measures announced by RBI are intended to achieve the dual objectives of economic growth and inflation control, it will take some time before we can see some tangible results.

(Source: Business Standard)

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