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Exports up in all major sectors
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The country's exports saw an upward movement
across the board in all major sectors in 2004-05. Agriculture and allied
products exports increased by over 11 per cent in dollar terms and by over
9 per cent in rupee terms. According to an official communiqué, agriculture
and allied products increased to $6.03 billion during the financial year
2004-05 $5.4 billion during 2003-04. Agriculture and allied products
showing a substantial increase in exports were rice, pulses, tobacco,
spices, nuts and seeds, cashew, gur, gum meal,
castor oil and processed food items. Dairy and poultry products showed a
record increase of over 65 per cent in the last fiscal year, while export
of chemicals and related products registered a growth of over 27 per cent.
Gems and jewellery exports saw a jump of over 29
per cent to reach a level of $13.7 billion in 2004-05 compared to $10
billion in 2003-04. According to the release, India emerged as a major
exporter of petroleum products in 2004-05 at $6.7 billion, up by over 90
per cent from $3.5 billion in 2003-04. Engineering goods exports increased
from $10 billion in 2003-04 to $14.5 billion in 2004-05, showing a growth
of over 38 per cent. There has been an across-the-board increase in exports
of all engineering items from India including machine tools, machinery and
instruments, transport equipment, iron and steel, manufactures of metals
and residual engineering items, it said. The country's exports have been on
a high growth path with merchandise exports reaching $79.2 billion in 2004-05
recording a growth of 24.1 per cent in dollar terms, which is the highest
since 1974-75.
India's share in world exports increased from
0.66 per cent in 2000 to 0.82 per cent in 2004. The export target set for
2004-05 at 16 per cent was exceeded by 50 per cent.
50% of fortune 500 firms outsource
from India
As much as 50% of Fortune 500 companies are
clients of Indian IT companies and over 200 of these 500 companies are
currently outsourcing their service and support services to India. And it
is just not IT. Big global companies are setting up R&D, software
development and engineering centres that cater to
their global operations. They are also using India as a test market for
clinical trials and developing products for the global market. These are
the findings of a study on Fortune500 companies in India, conducted by KPMG
and the India Brand Equity Foundation (IBEF). Fortune 500 companies have
begun to recognise the high managerial talent
present in India and thus are training Indians to serve abroad. Big
companies like Citigroup and GSK are routinely assigning global positions
to their Indian employees.
Gartner sees IT services segment
growing 19.8%
The Indian IT services market, which has recorded
a strong growth at 26.7 per cent in 2004-05 for the Asia-Pacific region, is
projected to grow at a compounded annual growth rate (CAGR) of 19.8 per
cent through to 2009, according to a report by Gartner. The report predicts
that the Asia-Pacific IT services market will have a CAGR rate of 8.9 per
cent from 2004 through 2009, outpacing the global growth rate of 6.1 per
cent. While emerging markets of India and China are seen as the main
engines of growth in the next few years, it forecasts that professional
services, led by development and integration, IT management and consulting,
will be the region's strongest performing IT services market segment.
BMW drives into India
Co lines up US$22.9 million for TN plant. BMW,
the German luxury car maker, has decided to set up a plant in Chenglepet, Tamil Nadu,
through a wholly-owned subsidiary at an investment of US$22.9 million. The Chenglepet
plant will assemble automobiles using completely knocked down car parts
kits imported as well as sourced in India.
It will also import completely-built units from the German parent
and its group companies. The Indian subsidiary will also market and
distribute the automobiles in India and overseas, in addition to providing
after-sales service.
Singapore pact `to go beyond free
trade' — It includes special visa, air transport liberalisation
India and Singapore turned a new
chapter in the traditional ties by signing the Comprehensive Economic
Cooperation Agreement (CECA), paving the way for an integrated package of
trade in goods and services, an agreement on investments, mutual recognition
in services, cooperation pact in customs, science and technology,
education, e-commerce, intellectual property and media. Singapore is an
important trading partner of India with bilateral trade of $6.4 billion.
The balance of trade is tilted in favour of India
to the tune of $1.2 billion. CECA will take effect from August 1.Official
sources told Business Line here that India would cut tariffs on imports
from Singapore under the CECA, gradually cutting them to zero over a
five-year period. Singapore has zero customs tariff on all products except
six and Singapore has agreed to bind all their tariff lines at zero customs
duty for India including beer. Under early harvest programme
for duty cut, as many as 506 products mostly information technology items
and aeroplane parts would be allowed duty-free to
India from Singapore.
More upper-end cars to cruise on
Indian roads
With the galloping Indian economy putting more
disposable income in the bulging pockets of well-heeled Indians, luxury car
makers — led by Bentley, Porsche and Audi — are stepping on the gas with
plans to woo these high spenders. British luxury car maker Bentley rolled
out the fastest sedan in India — the Rs 170
million Continental Flying Spur. Well, that’s not all. This would be
followed by two luxury convertibles — the open-top versions of Arnage and Continental. Both the cars would be priced
in the over Rs 20 million range. Not to be left
behind, Porsche is preparing to introduce its Rs
60,00,000 two-door sports coupe Cayman S by year-end, coinciding with the
launch of Audi’s luxury sports utility vehicle Q7, also priced at Rs 65,00,000. Though total sales here would still be
limited to just double digits, the manufacturers are confident that India
would soon be the market that would drive demand for such premium luxury
models — some of which cost almost as much a house in a posh south Delhi
locality.
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India becomes a US$650 bn economy
Strong manufacturing and services growth propelled
India’s per capita income at current prices to Rs
23,241 ($534) in 2004-05. India became a $650 billion economy. The impressive 10.7% growth in per capita
income was achieved despite a meagre 1.1% growth
in output of the monsoon-hit farm sector, which is the source of income and
livelihood for over 600 million of the country’s 1.08 billion
population. The revised estimates of
national income, released by the Central Statistical Organisation
(CSO) thus had a possible explanation for the burgeoning consumer class in
the country and the busy shopping centres. The
rise in jobs and income in the services sector has created a large consumer
base among the youth, willing to spend on manufactured goods like cars, TVs
and electronic items. Middle-class households are taking advantage of low
interest rates on consumer and housing loans. The per capita income at
current prices rose by 10.7% in 2004-05 from Rs
20,989 in the previous year. In the
final quarter of 2004-05, there was an acceleration of real GDP growth to
7% from 6.4% in Q3, showing the continued growth momentum in services and
manufacturing.
India’s $1bn m-cap club swells to 63
Global fund managers are always on the look-out
for markets that offer a range of scrips in the
$1bn market capitalisation category. That might
explain why many fund managers find India so attractive. The number of
companies in India with an m-cap of $1bn and above has gone up to 63 from 41 a year ago. The number was 27 in
April ’03. If the rate at which foreign money is pouring into the country
is sustained, the club will have new members every year. There is also another $1bn dimension to
the story. The number of companies
with $1bn in sales rose to 32 from 31 a year ago, with the addition of Tata Consultancy Services. The number of companies with
an annual net profit of $1bn rose to 5 from 4 a year earlier. This
exclusive club includes Oil & Natural Gas Corporation (ONGC), Reliance
Industries (RIL), Steel Authority (a new entrant), National Thermal Power
Corporation and IndianOil (IOC). The new entrants in the $1bn m-cap club
include banks like Bank of Baroda, Union Bank of India, Bank of India, Kotak Mahindra Bank, UTI
Bank, IDBI (all these have more than doubled their market value) and
Reliance Capital (m-cap up more than three times). Apart from these, the
list includes Bharat Forge, ACC, Nicholas Piramal, Hindustan Zinc, Container Corporation, IPCL
and Essar Oil among others. Essar
Oil’s high m-cap is because it has recently undergone a restructuring,
which has resulted in a four-fold increase in its equity base.
TCS to enter into JV with China
Government
Tata Consultancy Services
has been selected to partner the National Development and Reforms
Commission, an arm of the Chinese government, in a crucial joint venture.
The JV aims to cater to the software as well as IT enabled service needs,
including business process outsourcing, of China, the APAC region and the
international market. In the process, TCS is believed to have pipped Wipro, Infosys and Satyam to the post.
The Indian software bigwigs were extremely keen on this partnership not
only because of the scale of the assignment but also because it gives the
chosen one a firm foothold in the Chinese government machinery. About 18
Indian companies including TCS, Infosys, Wipro and others have already set up shop in China,
employing about 2000 people. Nasscom chairman S Ramadorai has said he expects the number to double to
4,000 by the end of this year.
Carrera to invest
US$252.7 mn in textile projects in India
Italian companies are investing in capacity
expansion and striking manufacturing, distribution and franchising deals
with India Inc. Much of the US$275.7 mn FDI
inflows from Italy in ’04 came during the second-half. In the first-half of
’05, inflows are estimated at that for the whole of ’04. The last few
months have seen hordes of Italian brands like Paneria
watches, signing brand franchising deals with Indian players. Many more
have taken place in leather, fashion and accessories’ space. Scavolini, a
premier Italian brand, has tied up with builders in Mumbai, Gurgaon and Bangalore. Salvatore Ferragamo,
the shoemaker for Hollywood stars, is finalising
its franchisee in India.
Toyota, Daihatsu set to build car
plant in India
The
already overcrowded small car market in India is set to witness the entry
of a new volume player in Toyota. The Japanese car maker is planning to
invest $89 million to set up a new factory in India — along with its
mini-vehcile making arm Daihatsu — to roll out a new compact car by 2007.
The model most likely to be produced at the new plant is a 1-litre-class
car based on the Passo model that Toyota and Daihatsu co-developed.
Daihatsu, Japan’s second-largest minivehicle maker after Suzuki, will
manage and operate the new plant. Toyota and Daihatsu plan to jointly set
up a firm to supervise the local operations. Compact cars are popular In India and
drive sales for major players such as Suzuki and Hyundai.
Govt ready to open up financial
services, telecom
In a
move that has significant implications for the domestic industry, the
government is considering opening up a number of key segments including
financial, telecommunication, audio-visual, advertisement and photographic
services. Groundwork to liberalise these sectors is underway and commitments
to this effect will be undertaken at the World Trade Organisation (WTO) in
case the country’s major trading partners come up with proposals for
adequate liberalisation in agriculture and industrial goods. The commerce
& industry ministry has already initiated consultations with the
finance ministry, department of telecom and the information &
broadcasting ministry for this purpose. The move follows directions from
the Union Cabinet on the basis of discussions held under the leadership of
Prime Minister Manmohan Singh. While the revised offers of India under the
ongoing services negotiations will not reflect willingness to open or bind
liberalisation of these areas, the government wants to be prepared with
better market access proposals. In case a quid-pro-quo is necessary to gain
better market access in agriculture and industrial goods, then the improved
offers could be put on the table. The preparatory work to offer better
market access in specified services will be ready soon as WTO talks are expected
to pick up pace in the run-up to the Hong Kong ministerial meeting. The
service sector has been chosen as India’s bargaining chip since it is not
easy to offer more liberalisation in agriculture and industrial goods
(non-agriculture market access or NAMA). While the top priority is to
defend the country’s small farmers, the balancing factor could be an offer
of better market access in services. As of now, India has indicated to its
trading partners that it is willing to submit offers in 11 major sectors
and 103 sub-sectors. The government has offered to bind market access in
professional services, other business services and environmental services,
sources said. The sub-sectors include architectural services, engineering
services, management consultancy and services incidental to fishing.
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