สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 9 มกราคม 2557

Government keeps 100% FDI policy in pharma unchanged

Despite concerns over a series of takeovers of Indian pharmaceutical companies by international ones, the government on Wednesday kept the existing policy, allowing up to 100 per cent foreign equity in the sector. Notifying the decision, taken by the Cabinet Committee on Economic Affairs (CCEA) in November, the department of industrial policy and promotion (DIPP) under the ministry of commerce and industry stated 100 per cent foreign direct investment (FDI) would be allowed in both greenfield (new) and brownfield (existing) segments. As earlier, FDI in brownfield will be subject to approval by the Foreign Investment Promotion Board (FIPB).  While both the health and commerce & industry ministries had proposed more restrictions for new entrants into the sector, the finance ministry felt putting various riders on new investment would hurt the flow of foreign exchange. FDI in the pharma sector grew 86.5 per cent to $1.08 billion (Rs 6,750 crore) during April-October of the current financial year over the same period last year. The commerce and industry ministry had suggested lowering the FDI cap to 49 per cent in the brownfield segment, keeping in mind the affordability of medicines and takeovers of domestic drug making companies by multinational giants. Commerce and Industry Minister Anand Sharma had felt the present FDI policy in the sector had not yielded tangible benefits. He said investments in new areas had not displayed value addition in terms of additional infrastructure or the research and development segment. While, FDI in brownfield investment had resulted in acquisition of domestic manufacturers by multinationals.

(Source: Business Standard)

Gold loans: Some easing, some stiffening by RBI

The Reserve Bank of India (RBI) has eased the norms for extending loans against gold jewellery as collateral. Now, non-banking finance companies (NBFCs) can give a loan up to 75 per cent of the gold value; the previous limit was 60 per cent. A committee chaired by K U B Rao had recommended this, once business levels of gold loan NBFCs came to an appropriate level. The loan-to-value ceiling had been raised after moderation in the growth of gold loan portfolios of NBFCs in the recent past, RBI stated on Wednesday. Only the intrinsic value of the gold content should be used for determining the maximum loan. No other cost elements should be added. Some NBFCs are adding making charges to the value of the gold jewellery, RBI said. It added that the finance companies would have to give a certificate on the gold purity. The certified purity will be used to determine the maximum permissible loan and the reserve price for auction. NBFCs can, however, include suitable caveats to protect themselves against disputes on redemption, RBI said. NBFCs had raised apprehensions on certifying the purity of gold jewellery, saying this could lead to disputes with borrowers. RBI said ownership verification should also be done, especially where the jewellery pledged is more than 20g. NBFCs should have an explicit policy in this regard in their overall loan policy.

(Source: Business Standard)

PM pegs growth at 5% for FY14

Striking an optimistic note, Prime Minister Manmohan Singh on Wednesday pegged the country’s economic growth at five per cent for the financial year ending March 2014, while assuring investors India would re-emerge as an attractive investment destination soon. Singh was speaking at the 12th annual Pravasi Bharatiya Divas here. “Our economy has done well over the past decade. In the nine years since 2004, we averaged a healthy growth rate of 7.9 per cent per annum. There has been no doubt of a slowdown in the recent past, and we will probably end this year at the same level as last year with a five per cent growth. A number of international as well as domestic factors has contributed to this situation. Despite these challenges, our economic fundamentals remain strong,” Singh said. He also blamed the lack of political consensus for reform measures being held up in the country as a number of key Bills proposed by the government have been pending in Parliament. “With greater political support, we could have legislated deeper reform measures — for example, in the financial and insurance sector. However, our decisions are already beginning to make an impact and India is re-emerging as an attractive investment destination. I am confident you will see the evidence clearly in a few months,” Singh said. Referring to UPA government’s efforts to bring more transparency and accountability in governance, Singh said the task is complicated because there is a need to overhaul entrenched practices and systems while respecting the federal nature of Indian polity.

(Source: Business Standard)

Economic Section

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