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Embassy of India, Riyadh |
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Issue
5 ♦ March 2005 |
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India Biz News |
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A snapshot of India’s economic scene |
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Budget 2005-06 -India one of the fastest
growing economies in the world India's finance Minister P. Chidambaram continues to usher in reforms with a human face. Budget 2005-06 has a slew of customised social sector measures while also keeping the country on track with a reforms process that has made India one of the fastest growing economies in the world. The
Union Budget 2005-06 rests on Export target of US$150 bn
by FY'09. Trade policy to be further liberalized. Uniform VAT to be
introduced from 1st April 2005 and the services sector to get stable tax
policy; forex to be used for infrastructure projects. Priority is on
roads, ports & airports with an outlay of over US$1.25 bn for 7 mega-cities. Overseas investments are
sought in mining, trade and pensions as well. Over US$103 mn
has been provided for Highway development in North East India; an additional
10 mn hectare will be brought under irrigation.
66,822 villages will have telephone connectivity whereas electricity will be
provided to 125,000 villages; Customs duty has been reduced -
crude oil customs cut to 5%, petro- products to
10%, industrial raw materials to 10% and coking coal cut from 15% to 5%. 10%
capital subsidies scheme for textile sector with the gross budgetary support
up 16.9%. India among top markets for sourcing goods and
services Exports set to cross $75b by '05 India’s exports are on
course to cross the $75-bn mark during 2004-05, surpassing the target of 16%
growth set by the government. According to quick estimates, exports clocked
$61 billion during the first 10 months of
the financial year.
Exports during China, India to overtake Japan by 2020 –
Deutsche Bank China and India will be
the world's second and third largest economies by 2020, pushing Japan into
fourth place, according to research by Deutsche Bank. The FDI likely to treble to $15 billion in '04-05 Foreign Direct Investment (FDI) flow into India is expected to treble to $15 billion in 2004-05 against a mere $5.6 billion the previous year. A sizeable amount is likely to come into the infrastructure sector. Tremendous improvement in investor confidence is said to be the key to the increase in FDI which comes at a time when the government has increased sectoral caps in telecom and civil aviation besides easing procedures. Govt allows 100% FDI in construction The government fully opened up the construction
development sector for foreign investors, a move that will create more jobs
and boost economic growth. However, the government barred the sale of
undeveloped land by foreign investors to prevent speculation in real estate.
Announcing the decision of Cabinet Committee on Economic Affairs, Commerce
Minister Kamal Nath said
FDI up to 100 per cent will be allowed under automatic route in townships,
housing, built-up infrastructure and construction-development projects.
Construction development projects would also include housing, commercial
premises, hotels, resorts, hospitals, educational institutions, recreational
facilities, city and regional level infrastructure. World’s second largest cement company to invest $1
billion in India After ACC and Ambuja, Swiss major on expansion overdrive. Holcim, the world’s second largest cement company, plans to invest $1 billion to expand its footprint in India over the next 5-7 years. This investment is in addition to the Swiss company’s investment of $800 million in acquiring a 67 per cent stake in Ambuja Cement India Ltd (ACIL), the closely held investment firm that owns 13.8 per cent in ACC, and to scale up its holding in ACC to 50 per cent. Gujarat Ambuja Cement Ltd (GACL) will finally hold 33 per cent in ACIL. French aircraft Co to set up training centres in
India FRANCE-based small aircraft manufacturer Avions de Transport Regional (ATR) plans to set up an aircraft maintenance centre and a training centre for pilots in India. The training centre will be set up in collaboration with the low-cost airline, Air Deccan, and will be jointly operated by ATR and Air Deccan in the initial years. These centres, it hopes, will help service its customers in the Indian region more effectively. India Inc. on Cloud 9 India, Inc.’s on a roll. Many corporates have recorded a boost in performance during the first nine months of the current year, with their profits soaring past the previous full year’s figures. A look at the performance of Corporate India for April-December ‘04 showed that as many as 344 companies have posted profits substantially higher than the entire ‘03-04. The list includes companies across sectors like steel, technology, oil refineries, engineering and shipping. The distinguished performers consisted of stalwarts like Reliance Industries, Infosys Technologies, Tata Steel, Wipro, L&T, SAIL, IPCL, Maruti Udyog, Nalco and MRPL. MNCs queue up for oil, gas exploration Foreign oil companies appear to be bullish on oil exploration prospects in India even as they expect to sort out some outstanding issues with the government. Cairn Energy—which has made the biggest onshore discovery in the recent times in India but found itself locked in a battle with ONGC over payment of cess— expressed interest in taking part in the fifth round of bidding under NELP. |
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January 2005 was nearly $7 bn. If the same trend persisted, exports during February-March 2005 would work out to $14 bn, taking the tally for 2004-05 to $75 bn. India's economic growth set to exceed that of China
by 2015’ Consumption expenditure registers high growth of
8.3% The current economic boom seems to have resulted in the traditionally-conservative Indian consumer losing his inhibitions about splurging on the good things of life. Private final consumption expenditure (PFCE) has risen by 8.3% during ’03-04 in comparison with the previous year, according to the Ministry of Statistics. This happens to be the highest growth rate in 23 years. GDP to grow 6.9% in 05 The Economic Survey released by the Government displays optimism on the buoyancy in the Indian economy being sustained and indicates a 7-8% growth in GDP for 2005-06. The performance of the Indian economy has been much better than anticipated. Due to erratic monsoon and surge in global commodity prices, Indian economy was expected to grow by 6.1% in FY05. However, buoyed by impressive performance of industry and services sector, India’s GDP is expected to grow by 6.9% yoy in FY05. In FY06, GDP is estimated to grow by 7-8%. After a strong 9.6% yoy growth in FY04, agriculture and its allied sector are expected to register a modest growth of 1.1% in FY05 on the back of uneven distribution of rainfall. The total food grains stock in the central pool of FCI was 21.7mn tons as on January 1, 2005 in comparison to the buffer norm of 16.8mn tons. Govt clears 74% FDI in telecom Government cleared the long discussed proposal to hike FDI cap in telecom sector to 74 per cent from the current 49 per cent, Finance Minister P Chidambaram said after Cabinet meeting. The Cabinet cleared the proposal to hike FDI in telecom sector. It is estimated that India's telecom sector has the potential to absorb FDI of US $ 2.5 billion annually. The Reserve Bank of India as part of banking sector reforms focused on raising the ceiling of foreign investment in private domestic banks to 74%. FDI in civil aviation sector in domestic airlines has been increased from 40% to 49% through the automatic route, and 100% in case of investments by NRIs. However, no direct or indirect equity participation is allowed by foreign airlines. Indian IT market nears $22 bn
in 2004 The Indian IT market grew 26 per cent year-on-year in 2004 to touch US $ 22 billion, according to a study by consultancy firm Skoch. Total IT and ITeS exports were worth $13.7 billion. India too big for G7 to ignore An invitation to India
to attend meeting of the Group of Seven rich nations underlines the growing
influence of an economy that has become too big and potentially too
influential to ignore. Foreign varsities studying Indian entrepreneurs'
success stories Indian entrepreneurship accounts are becoming popular case studies for management students in foreign universities. Ten MBA students from the University of Wisconsin-Madison School of Business who were on a study of entrepreneurship in the country recently, visited Enercon Systems, a Bangalore-based SME. Enercon Systems is involved in the design, development and manufacture of digital meters and energy management systems for industrial applications. Korea to accept Indian Food Certification The Korean Food & Drug Administration (KFDA) has agreed to accept the Export Inspection Council (EIC) of India's certification of agricultural and food products exported to the Republic of Korea. C.R. Gharekhan
appointed as Special Envoy for West Asia and the Middile
East Peace Process The Government of
India, in keeping with its stated commitment to enhancing its interaction
with the Arab countries, has decided to appoint C.R. Gharekhan
as Special Envoy for West Asia and the Middile East
Peace Process. Gharekhan,
who is working with the Ministry of External Affairs, would be visiting some
of the countries in the region to interact with the local Governments and
other personalities. Le Meridien keen to double
operations in India UK-based Le Meridien Hotels and Resorts (LMHR) would double its operations in India in the next four-five years and plans to open new hotels in Kovalam and Hyderabad this year, its chief executive Robert E Riley said. Le Meridien is planning to open hotels in Kovalam and Hyderabad this year. The company has already nine projects in India. Quote Of The Month "India has the
potential to deliver the fastest growth over the next 50 years with an
average rate of more than 5 per cent a year for the entire period." Dominic Wilson Senior Global Economist
and Vice President |
Some Important Websites:
Ministry of External Affairs : http://meaindia.nic.in/
Ministry of Finance: http://finmin.nic.in
Ministry of Commerce and Industry :http://commin.nic.in
Confederation of Indian
Industry (CII) :
www.ciionline.org
Federation of Indian Chambers of Commerce & Industry (FICCI) : www.ficci.com
India Trade Promotion Organisation (ITPO) : www.indiatradepromotion.org
Trade-India.com:www.trade-india.com/IndianExporters
www.indianexporters.com
Exporters India :
www.indiamarkets.com / India Mart : www.indiamart.com
Recent Queries by Indian Businessmen
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India Biz News is a monthly newsletter of the Embassy of India, Riyadh, B-1 Diplomatic Quarter, P.O. Box 94387, Riyadh - 11693, Saudi Arabia. Reader’s comments and feedback are welcome and should be sent to : The Commercial Wing, Fax: 480 7764, E-mail: com@indianembassy.org.sa Statements and opinions
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