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India
to be ahead of US by 2050: Report
Productivity
growth will help India sustain over 8 per cent growth until 2020
and become the second largest economy in the world, ahead of the
US, by 2050, according to the BRICs report. The original
report had projected that India's GDP would outstrip Japan's by
2032 and that in 30 years, it would be the world's third largest
economy after China and the US. The new report goes one step
further by moving India up from No. 3 to No. 2 in the global
sweepstakes of tomorrow.
Tourism projects likely to get tax exemption for 10 years
Tourism
Ministry has proposed to declare a conditional 10-year tax
holiday for all tourism projects in the country. While companies
would enjoy full tax exemption up to 50% of the profit, for
enjoying tax benefits for balance amount they would be required
to re-invest that part of the profit in tourism projects. It is
proposed that this no-tax regime should operate for at least 10
years beginning from April 1, 2007, till March 31, 2017. The tax
concession period will however, be computed from the date of
commencement of commercial operations. The proposal move is
aimed at encouraging existing tourism industry to re-invest in
the sector. The Ministry has also stressed upon the need to
encourage investments from non-tourism sector into hospitality
and tourism projects. “There should be an additional incentive
package which would encourage investors in general to invest in
tourism projects in hill areas, rural areas and pilgrim
centres,” he said. In order to attract foreign tourists, it is
proposed that tax exemptions should be allowed to tourism
establishments for their expenditure on overseas promotional and
publicity activities. Exemptions are also sought for the money
spent on training hospitality and tourism staff in recognised
institutes. In order to encourage tour operators, it is proposed
to rationalise depreciation rates on vehicles. While determining
the rate of depreciation, factors like mileage covered by a
vehicle and year of manufacturing should be considered instead
of the month of purchase, as is the existing norm, the Ministry
said. The Ministry is also in favour of rationalising service
tax. “Service tax has to be on the service charge for the
services rendered by operators of tourism industry and not on
the total cost which includes components like hotel charges,
transport charges, guide fee and meals,” it proposed.
India Inc mops up US$ 53 billion
Indian
corporates and banks raised a whopping sum from domestic and
overseas markets in 2006 mirroring the sizzling growth in the
domestic GDP. According to Bloomberg data, a total of Rs
23,49,030 million was raised via equity and debt issues in
domestic and overseas markets, 66 per cent more than it mopped
up in 2005. The country’s GDP grew by 9.2 per cent over a year
ago in the quarter ended September 2006, forcing an upward
revision in forecasts for the full year 2006-07 to over 8 per
cent. Banks were the capital guzzlers in 2006 as credit
continued to grow at an unprecedented 30 per cent for third
successive year. Of the Rs 7,62,000 million funds raised through
bond floats in the domestic market, over Rs 5,80,000 million
was raised by banks through perpetual and tier II issuances as
they sought to boost their capital adequacy to support credit
growth. International bond issuances from India had an identical
story. Banks accounted for $2,448 million of the total $2,937
million raised through overseas bond issues.
US$ 2.67 billion FDI in telecom till August '06
The actual
foreign direct investment (FDI) inflow into the Indian telecom
sector stands at Rs 1,17,990 million till August 2006, with
holding companies topping the list with an investment of Rs
4,84,200 million. The cellular mobile telephone services brought
in investments of Rs 31,000 million and manufacturing and
consultancy Rs 16,190, million, according to a paper by the
Ministry of Telecommunications and IT. Over Rs 14,050 million
came in through automatic route, while basic telephony services
brought in Rs 3930 million, cable TV network and internet Rs
1720 million, radio paging Rs 910 million, e-mail services Rs
680 million and satellite telephony service Rs 480 million. VSat
services with Rs 281 million, value-added services Rs 230
million and radio trunking service with Rs 71 million were the
other contributors to inflow.
Foreign inflows to touch US$ 15 billion by fiscal end
Foreign direct
investment (FDI) into India is expected to touch $15 billion by
the end of the present fiscal, with more overseas firms eyeing
good returns from the sub-continent. “While FDI will account for
$12 billion, retained earnings (earnings ploughed back into
investments) will be to the tune of $3 billion,” said Commerce
and Industry Minister.
Citi Property to invest US$ 500 million in Indian realty
New York based
Citigroup Property Investors (CPI) is planning to invest $500
million to build assets in Indian property market. According to
Managing Director and Head-Asia pacific, CPI, the company is
looking at investing in the hospitality and residential sectors
in addition to creating office space in tech-parks. "The funds
being brought to India are being utilised for creating a quality
land bank in major cities and also to invest in specific
projects undertaken by builders," he added.
US$ 10 billion SPV planned out of forex kitty
The Finance
Ministry is considering a proposal to use part of India's
$177-billion forex reserves for infrastructure projects, by
floating a special purpose vehicle (SPV) called India Investment
Corporation (IIC) with a corpus of $10 billion. The SPV, which
will be formed to fund long-term infrastructure projects, will
invest in corporate and infrastructure bonds. Apart from
ensuring fund flow to India’s creaking infrastructure, the move
is also expected to ensure a better rate of return for RBI,
which normally invest India’s forex kitty in overseas treasury
papers. The proposed funding option is expected to come as a
boost to sectors like power, roads, airports, ports and
railways.
Ericsson to put in US$ 100 million annually
Swedish telecom
equipment giant Ericsson announced an investment of $100
million every year in India with an option to enhance it
depending upon the growth. “We will be investing $100 million
annually for the next five years. The figure could go up
depending upon the growth in the sector, Managing Director,
Ericsson India, told. Asked about Ericsson’s projections of
growth in the Indian telecom sector, he said last year GSM
cellular mobile telephony grew by 100 per cent. “This is growing
phenomenally and I do not see an end to it,” he added.
Ericsson’s global CEO, who attended CII-CEOs forum, said:
“Indian telecom market has grown more than double in last five
years and we have a lot of activities here.”
'Sunil Mittal Asia's Businessman of Year'
India's Sunil
Mittal has been adjudged Asia's Businessman of the Year by US
magazine Fortune for steering his telecom business in the
world's fastest growing wireless market. In a lead article in
its latest issue, Fortune said after establishing Bharti Airtel
as India's number one mobile service provider, Mittal is now
forging his "most audacious" foreign partnership yet. "In
November, he announced that Bharti will team with Wal-Mart to
transform India's under-developed retail market," the report
said. The magazine said it was an easy choice to declare Mittal
as Asia's top leader for his business acumen and some crucial
agreements he has signed in recently.
Franklin invests US$ 40 million in India
US mutual fund
company Franklin Templeton Investments has invested USD 40
million in a back office unit in India, the company said. The
facility, which began operations in the southern city of
Hyderabad, will support Franklin's operations and technology
groups globally, it said in a statement. Franklin Templeton
also has a mutual fund in India, which manages assets worth Rs
234 billion (USD 5.29 billion), according to data from
Association of Mutual Funds in India.
Japanese companies in India
YKK
Corporation, which manufactures a wide range of products such as
zippers and zippers parts, has a manufacturing plant in Bawal,
Haryana. The company caters to markets such as garment,
footwear, luggage, etc. It is known for its range of zippers
such as no. 3 & 5 polyester coil, no. 3 & 5 vislon, no. 3 & 5
metal zippers, and no. 2 & 3 invisible coils. It also produces
metal zippers made of aluminium, golden brass, antique brass and
antique silver. It has full-fledged production facilities for
tape weaving, dyeing, die casting and slider assembly, plating
and enamelling, metallic and non-metallic slide fasteners chain
making, and zipper assembly. The company operates in India
through its network of 5 branches and 40 dealers, which are
located in 24 cities across India. |
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India
on world radar for investments
India's robust
economic growth has put the country on the world radar for
attracting investments from global investors, Commerce and
Industry Minister said. 'India is on the world radar as never
before, thanks to the current robust economic growth. No
investor wants surprises, but (they want) improvements. And that
is what we promise to deliver,' the Minister told about 750
business delegates from 26 countries participating in the
three-day CII partnership summit. 'The time for surprises is
over. Now, we shall we give you constant improvement and
betterment.' Asserting there could not have been a better time
to engage with India, he said the reforms process was being
widened and deepened to provide opportunities to businesses from
the world over. 'The foreign direct investment (FDI) regime is
getting progressively liberalised. The regulatory mechanisms are
being strengthened and overseas investments in key areas of
infrastructure are being made most welcome,' the minister
pointed out. In this context, Kamal Nath said foreign inflows,
including portfolio investment, were estimated to touch about
$15 billion by the end of the current fiscal (2006-07), with
more overseas firms eyeing good returns from the subcontinent.
While foreign institutional investment (FII) is set to account
for $12 billion, the FDI will be about $3 billion. The overall
foreign investment, including FII and FDI, is expected to go up
by 120 percent over the last fiscal.
NCAER raises GDP forecast to 8.44 per cent
The National
Council of Applied Economic Research (NCAER) has revised its
forecast for the country’s gross domestic product growth for
2006-07 to 8.44 per cent, from the 8.13 per cent that it had
forecast in October last year. The projected real GDP growth is
still lower than the 9 per cent witnessed in the first two
quarters of this fiscal, but if compared to the earlier forecast
it is higher by 0.3 percentage points. Significantly, the NCAER
has projected a lower fiscal deficit of 3.63 per cent for the
current fiscal, against its October projection of 3.71 per cent.
It has also projected a decline in the current account deficit
to 1.93 per cent, from the earlier forecast of 2.11 per cent for
2006-07. The council has kept its inflation forecast unchanged
at 4.98 per cent for the full year. It has also maintained its
agricultural growth estimate at 2.65 per cent for 2006-07 due to
erratic and uneven rainfall witnessed across all regions this
monsoon.
US$ 60 billion IT exports by 2010 in sight
The ebullient
results of software big companies in the last quarter have
triggered a buzz that the target of $60 billion worth of
software exports by 2009-10, dubbed ambitious when first talked
of by Nasscom, is well within reach. Software exports stood at
$23.6 billion in 2005-06. Over 90 per cent of the revenue comes
from exports. The results assume more significance in the last
quarter (ended December 31, 2006) because the billing days were
lower compared with other quarters and rupee appreciation was to
the order of 2-3 per cent, which ate into profitability. Despite
this, TCS is already on its way to becoming a $4 billion
company, having posted over $1 billion in terms of revenue in a
single quarter. Last quarter, it became the first Indian IT firm
to register a net profit of Rs 10,000 million in a single
quarter. TCS has reported an over 40 per cent growth in net
profit over the last four quarters. Infosys, too, beat market
expectations to post a 50 per cent plus year on year increase in
net profit for the second successive quarter. The company has
done well by posting their third consecutive quarter of double
digit dollar-term growth and operating margins expansion by 0.6
per cent. Wipro’s revenue growth rate this quarter was over 40
per cent year on year. All its business segments and
wholly-owned subsidiaries have seen growth despite the rupee
appreciation.
India emerges fourth-biggest M&A target
While domestic
corporate giants such as Tatas, Ambani and Ranbaxy are
continuously looking abroad for mergers and acquisitions, India
has emerged as the fourth-biggest target in the Asia-Pacific IT
space with deals worth over 3.5 billion dollars in 2006. Total
merger and acquisition activities in Asia-Pacific technology
sector totalled 35.1 billion dollars in 2006. Indian companies
were target in deals worth 10 per cent of the total value, data
compiled by global financial information provider Dealogic
shows. Taiwan was the most targeted nation with deals worth 12.2
billion dollars through 76 transactions, followed by Japan with
seven billion dollars in 441 deals and China with 5.1 billion
dollars in 275 deals, Dealogic data shows.
India, Inc. tweaks global giants' business model
In a global
world, India and Indian companies are becoming more integrated
with their global peers. It is no longer possible for a Fortune
500 company anywhere in the world not to have India in its
strategy. The strategy component is not just about tapping
Indian market, it is about leveraging the massive talent base in
IT, BPO, pharmaceuticals and product development. Indian talent
is helping global companies build and manage their IT networks,
do their core finance, marketing, and other operations. Indian
companies are helping their global peers in developing, testing
and bringing to market everything from a new drug to a new model
of a car. Indian companies are tweaking and turning the business
model of global companies upside down. They are forcing the
board of global corporation to look at their cost base in a more
global manner. They want to control the cost or spending budgets
of companies across industries. The beginning in this area was
made by the IT companies, but it is spreading to other sectors
very fast. You can no longer just call it outsourcing, Indian
companies are now playing the global services game. Indian IT
companies have already forced global services companies like
Accenture, IBM Global Services and EDS to change their model.
India-based BPO have started managing the core operations of
several global companies. Even in pharmaceutical and automobile
industry, global product development chain is getting
transferred to Indian companies.
'FDI inflows to India increased in 2006'
Increasing
attractiveness of India, China and Singapore for investors
helped South, East and Southeast Asia maintain their upward
trend for FDI inflows in 2006, with India surpassing South Korea
to become the fourth largest recipient of FDI in the region, the
United Nations has reported. Overall, FDI grew in 2006 for the
third consecutive year to reach USD 1.2 trillion, the UN
Conference on Trade and Development (UNCTAD) said but warned
that economic growth is likely to slow down this year because of
high commodity prices and other factors. It said FDI inflows to
South, East, Southeast Asia and Oceania reached a new high of
187 billion dollars in 2006, showing an increase of 13 per cent
over 2005. India, it said, surpassed South Korea to become
fourth largest recipient in the region while China, Hong Kong
and Singapore were the three largest recipients of FDI. China
and India are challenging the dominance of Asia's newly
industrializing economies as the main sources of FDI in the
developing world, it added. On the overall FDI growth, UNCTAD
said "the total of USD 1.2 trillion is a 34 per cent increase
from 2005, although still short of the record of USD 1.4
trillion set in 2000. The continued rise in FDI largely reflects
high economic growth and strong economic performance in many
parts of the world.
Malaysia
offers to build expressways
The Malaysian
government has roped in about a dozen companies and proposes to
build a network of national expressways spanning 7,000 km. The
project, to be executed on a build-operate-transfer basis in a
phased manner, envisages two expressways: one linking
Thiruvananthapuram, Chennai, Bangalore, Hyderabad and Pune; the
other connecting Delhi and Kolkata. Malaysian Cabinet Minister
of works told FE that 11 Malaysian companies, including IJM,
United Engineers Malaysia Group and Ranhill Corporation, were
keen on the project. “The expressway will pave the way for
investors pumping in money to set up units along (the
expressways). However, land acquisition will have to be done by
the Indian government,” he said. If the proposal passes muster
with the Indian government, it could well turn out to be the
biggest foreign direct investment in a road project in the
country. Infrastructure funding experts estimate the project to
cost at least Rs 4,20,000-5,60,000 million, given the ballpark
cost of Rs 60-80 million a km, depending on terrain.
German companies in India
STEAG encotec
(India) Pvt Ltd was incorporated in the year 2001 as a wholly
owned subsidiary of STEAG encotec GmbH (Germany). Indian
operation has around 110 employees working in Delhi, Hazira and
other sites. STEAG encotec has its activities spread across
three areas – Engineering Services, Operation and Maintenance of
Power Plants and IT. The company provides inputs for simulation
of plant conditions using its software Ebsilon, as well as
software to optimize the efficiency of power plants. Its
customers in India include large public sector undertakings such
as Bharat Heavy Electricals Ltd. (BHEL) and National Thermal
Power Corporation (NTPC).The company also has a strong IT
division. Its engineers and developers do development work for
not just India but also the German parent.
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