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India Economic News Consulate General of IndiaOctober 2013 Munich

Indian Economy expected to grow at 5 per cent according to Finance Minister Mr. P. Chidambaram:

The Finance Minister expressed confidence that the Indian Economy would regain its momentum to grow at around 5% in 2013-14. Hepointed to the encouraging signs of rising exports in the July - September quarter, and a revival in the manufacturing sector. He said India’s fundamentals are strong -such as a young, working, population, economic integration internationally, an effective financial system and a thriving democracy.

Inflation rate rises marginally:

The annual rate of inflation, based on Wholesale Price Index was recorded at 6.46% for the month of September 2013 compared to 6.10% for the corresponding period in 2012.

Rising Exports, diminishing imports reduce Trade Gap:

Commerce Minister Mr. Anand Sharma said that India’s exports posted double-digit growth in August for the second consecutive month, while imports declined, shrinking the trade deficit to $10.9 billion and giving some respite to the falling rupee. Rising international prices of crude oil may, however, put pressure on the country’s

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import bill and trade account in the days to come, he remarked. For April-August 2013-14, the trade deficit declined to $73.36 billion ($74.67 billion). In August, exports rose 12.97 per cent to $26.14 billion, the highest in about two years, compared with $23.13 billion in August 2012, largely due to incentives announced by the Government over the past few months, he said.

Apparel Exports register 19% growth in July, 2013:

India’s garment exports grew by 19 per cent year-on-year to $1.27 billion in July on the back of increasing demand in developed economies such as the US. The Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said the growth was amidst the tight and fast changing economic scenario. It said, “India was in the sixth position as at end May this year, with apparel exports to the US at $285 million, up 3.3 per cent over the same month of the previous year. But it added that our apparel exports to the EU slipped to -1.1 per cent during the first five months of 2013 calendar year. It noted

that the sliding rupee, was advantageous in the short run, but a stable currency and exchange rate is good in thelong run.

Finance Minister calls for strengthening reform process:

Finance Minister Mr. P. Chidambaram spelt out a 10-point action plan to bring the economy back on the high-growth trajectory. The plan includes encouraging manufacturing and exports, controlling twin deficits (fiscal and current account), reviving the investment cycle, and resolving the impasse in coal and iron ore mining. Secretary for Economic Affairs, Mr Arvind Mayaram believes that the steps taken will continue to show signs of growth. This, in turn, will strengthen the rupee and markets.

E-tailing business to grow to US $ 56 billion by 2023:

The potential business in the online sale of goods and services, or e-tailing, in India is estimated to grow to $56 billion from the current $1 billion by 2023, according to industry experts. “E-tailing

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will emerge as a key retail channel, which will drive the growth of corporatised retail,” Technopak Vice-President Ankur Bisen said. An increasing share of incremental merchandise retail is expected to come from urban and semi-urban centres. Apart from them, the demand will also come from the emerging towns and clusters where primary source of livelihood has moved from agriculture to other professions, he added.

23 PSUs invest 23,000 crores:

As per a statement released by the Prime Minister’s Office (PMO), 23 Central Public Sector Enterprises (CPSEs) made capital investments of over Rs 23,000 crore in the first three months of 2013-14 against a target of Rs.25,131 crores. The purpose of the exercise was to enhance investment in the economy and utilise CPSEs to drive economic growth. The PMO noted that six CPSEs - NMDC, PGCIL, NLC, BEL, RINL and HAL - had surpassed their first quarter targets, while NTPC, SJVNL, Coal India,

CONCOR and NPCIL were among those lagging behind.

Japan to Finance Chennai –Bangalore Corridor:

A recent Japanese delegation to India has expressed its “willingness” to financially support the Chennai-Bangalore Industrial Corridor project, with loans from the Japanese International Cooperation Agency (JICA). The delegation was in Delhi to discuss the Delhi-Mumbai Industrial Corridor project with Union Commerce Minister Mr. Anand Sharma. The industrial corridor projects envisage dedicated rail and roadways for freight movement and the setting up of several industrial zones along the transport lines. The Japanese team’s discussion paper says the Comprehensive Integrated Master Plan for the Chennai-Bangalore project is expected to be completed by the end of 2013-14. “The first step in the project is to strengthen the infrastructure around Ennore port (near Chennai),” said Mr. Kiyoshi Mori, Deputy Director-General, Trade and Economic Cooperation Bureau

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of Japan’s Ministry of Economy, Trade and Industry.

Cabinet assents to proposal to set up two Semi-conductor Units:

The Cabinet has given in-principle approval to the proposal of setting up two semiconductor manufacturing facilities in the country. The Cabinet took the decision after considering proposals from two consortia led by Israel's Tower Semiconductor (TSEM) and Franco-Italian STMicroelectronics (STM). The investment envisaged for the two units is around Rs 25,000 crore and the level of Government support for these units will be decided through negotiation with chip makers. The move is expected to promote domestic manufacturing of electronics goods as semiconductor chip is the key ingredient for any product. Presently, India depends highly on imports for meeting electronic product requirement, including chips, and therefore, the fab (semiconductor fabrication plant) units would assist in checking such imports.

US launches probe against Indian trade practices:

The United States International Trade Commission (USITC), a US Federal agency, has launched an investigation into Indian trade policies which allegedly discriminate against the American trade and investment. The topic of the investigation is: ‘Trade, Investment and Industrial Policies in India: Effects on the US Economy’. In its examination, the USITC will enumerate the restrictive trade and investment policies that India maintains or has recently adopted, determine which sectors of the US economy are most affected by these policies, and describe the competitiveness of Indian firms in these sectors.

Industry looking forward for passing of the Insurance Amendment Bill in Parliament:

The proposed passage of the Insurance Amendment Bill which proposes to increase foreign direct investment (FDI) cap in insurance from 26 per cent to 49 per cent is being eagerly awaited by Industry.

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Only 6 per cent of Indians have insurance cover. Of this, 4.4 per cent have life insurance and 5 per cent have a reasonable health cover. Most small businesses (family-owned) have no insurance. According to the 12th Plan, India has to spend $1.2 trillion on infrastructure and faces a gap of nearly $300 billion in funding. Raising the FDI cap for the insurance sector will provide a strong impetus for meeting the long-term financial needs of infrastructure companies.

Indian Employers optimistic on hiring:

The Manpower Employment Outlook Survey for the fourth quarter of 2103 says that hiring prospects are strong in India and other emerging markets, such as Brazil, Taiwan, Panama and Singapore. The survey covered over 65,000 hiring managers across 42 countries. 41 per cent employers in India said that there were good hiring prospects, followed by 35 per cent in Taiwan, 24 per cent in Panama and 20 per cent in Singapore. The hiring sentiment was found to be weak in Europe, where the

economy is in crisis. The nine countries where hiring outlook was unchanged or negative were Italy, Spain, Finland, Ireland, Hungary, Switzerland, the Netherlands, Greece, Czech Republic and Belgium.

Former US Ambassadors press to remove India specific Immigration barriers:

Five former US Ambassadors to India, namely Thomas Pickering, Frank Wisner, Richa rd Celeste, David Mulford and Robert Blackwill, jointly signed a letter to Congress, requesting to remove India-specific discriminatory provisions in immigration reform, underscoring that continuation of such steps would have an adverse impact on the bilateral relationship between the two countries. They further said any comprehensive immigration reform legislation approved by the Congress needs to appreciate the mutual benefit of deepening the bilateral partnership, which is vitally important to the two countries and the global economy.

Consulate General of India, Widenmayer Strasse 15,80538 Munich, Germany. Web: www.cgimunich.com

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Indo – US Trade relations to prosper:

US President Obama termed US – India relations as “one of the most defining partnerships of the 21st century”. The US looks to India as a “regional economic anchor”, re-enforcing the former’s commitment to strengthening the relationship. The commercial relationship is flush with activity as two-way trade in goods and services is set to cross the $100 billion mark. In the last couple of years, India has signed defence contracts with the US worth over $8 billion and is ready to ink more deals amounting to almost $5 billion. The next trade target is ambitiously set by the private sector at $500 billion — within this decade. Bilateral investments are also on the rise. It is remarkable

that India has recently emerged among the top 10 fastest growing source of FDI in the US.

***DISCLAIMER

This newsletter is a compilation of news articlesfrom various business e-newspapers and in no

way is an endorsement or reflection ofviews of Consulate General of India, Munich.

For queries contact:

Mr. VSDL Surendra, Consul (PIC), Consulate General of India, Widenmayer Strasse 15, 80538 Munich, Germany.

Email: cpic@cgimunich.com , Web: www.cgimunich.com