สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 20 ธันวาคม 2556

Cabinet approves trade pact on services, investment with Asean

India has given a go-ahead to services and investment deal with 10-member Asean as part of Comprehensive Economic Cooperation Agreement (CECA). The Union cabinet cleared the proposal on Thursday, overruling concerns of the finance ministry,A decision on the deal was deferred when it was taken up last on November 28 meeting of the Cabinet after finance minister P Chidambaram expressed concerns on the investment text of the agreement, saying it was finalised without any consultation with his ministry. India signed an FTA in goods with Asean in 2009. New Delhi has been keen on a deal in services where it feels the country has more to gain. India's exports to Asean declined by 10.2% in 2012-13 to $32 billion, whereas imports grew by 2.9%, to $43.7 billion, leaving a trade gap of about $11 billion. Lower tariffs in Asean offer local manufacturers significant tariff advantage over Indian producers, an issue that has been time and again raised by all industry bodies. The finance ministry had also highlighted that the Asean agreement was not in sync with the latest model text for such pacts prepared after in-depth deliberations.

(Source: Economic Times)

Beefing up supply chain

India, an enticing manufacturing hub in the emerging econo-mies, is among the top destinations of foreign investment. The FDI-funded original equipment manufacturers are supported by numerous SME manufacturers. However, the country’s recent GDP growth rate doesn’t augur well for these SMEs. India’s manufacturing sector needs a lot more impetus to realise the spectacular, sustained growth expectation as prophesied by analysts a few years back. India’s wage advantage is progressively shrinking; and its energy shortage, connectivity and infrastructure issues continue to be an impediment to growth and investment. Finance is another issue, given that there are not always sufficient funds in terms of working capital or capital for long-term investments. Working capital, in large amount, is locked up in safety stock, simply because of the not-so-good track record of the suppliers’ in on-time delivery. This, in turn, leads to inventory obsolescence and write-offs, especially when they are ill-equipped to forecast demand. The Indian SME manufacturing sector is highly fragmented and manufacturers are unorganised; and in the context of collaboration with partners, there are communication and IT challenges that continue to plague them. Sophisticated IT platforms for internal and external collaboration remain an enigma for a lot of players; and need a lot of hand-holding for efficient and effective deployment. Better supply chain talent acquisition and management can help SMEs evolve to higher maturity supply chain processes, with all its attendant benefits.

(Source: Financial Express)

UN lowers India growth forecast to 4.8% for 2013

The United Nations has lowered India’s economic growth forecast for 2013 to 4.8% while warning that the emerging markets should be prepared to deal with the impact of US Federal Reserve’s quantitative easing programme. India’s economy is forecast to grow at 4.8% in 2013, down 1.3% from its earlier projection, the UN’s World Economic Situation and Prospects 2014 report said. Similarly, it has lowered the growth projection for 2014 to 5.3%, down 1.2% from the earlier forecast. The UN sees India grow 5.7% in 2015. Growth in South Asia remains lacklustre as a combination of internal and external factors hamper activity, particularly in the region’s largest economies, such as India, it said. India’s growth in the first half of 2013-14 stood at 4.6%. To achieve a 5% growth in this financial year, the economy has to expand by 5.4% in the second half.

(Source: Financial Express)

Fed taper has little impact on India

Indian shares and the rupee dropped on Thursday after the US Federal Reserve announced the start of its stimulus withdrawal the previous night, sparking concerns the foreign institutional inflows might recede. But, the decline was moderate, as key global markets had rallied, acknowledging Fed’s attempts to soften the blow from the feared announcement. The US central bank had on Wednesday night said it would reduce its monthly $85-billion bond-buying programme by $10 billion a month starting January. But the Fed promised to keep the low-interest-rate regime longer than the markets had anticipated. So, the investors, expecting withdrawal of $15 billion a month, were relieved by the quantum. Finance Minister P Chidambaram on Thursday said India was now better prepared to deal with the situation arising out of a tapering of the US’ bond-purchase programme than in May 2013.

(Source: Business Standard)

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