MEA Weekly Newsletter May 19-26-2014

8/12/2019 MEA Weekly Newsletter May 19-26-2014

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NEWS FEATURE

Narendra Modi-led NDA Govt looks to give SAARC ties a trade boostNot merely a goodwill gesture of invitations to its leaders to attend the swearing-in ceremony on May 26,more good news awaits India's South Asian neighbours from the incoming Narendra Modi government,

which is looking to economically integrate the region's 1.6 billion people.

Rupee becomes best performing Asia-Pacific currencyBoosted by capital inflows and euphoria around the incoming government, rupees surge to 11-monthhigh levels has made it the best performing currency in Asia-Pacific region against the US dollar so far in2014.

More in this section

Foreign investment inflow expected to double to $60 bn: AssochamForeign investment inflows are estimated to more than double to $60 billion this fiscal riding on the highexpectations from the incoming Narendra Modi-led government, the Associated Chambers of Commerceand Industry (Assocham) said on May 25.

Government approves 10 FDI proposals worth Rs 140 croreThe government has cleared 10 foreign direct investment proposal totalling Rs 139.95 crore, including thatof Equitas Holding and Ambit Pragma Fund II.


OVERSEAS INVESTMENTS

ITP DivisionMinistry of

External AffairsGovernment of India

Issue no 572 I May 20-May 26, 2014

p. 02/04

TRADE NEWS

Natural rubber imports shoot up 84% in AprilImports of natural rubber rose 84% to 26,445 tonne in April on account of lower prices in international marketsand drop in domestic production.


p. 08/10

p. 05/07

p. 11/14

p. 15/16

SECTORAL NEWS

Narendra Modi government to boost power capacity with 4 ultra-mega projects

The Narendra Modi government is set to give a big push to India's power capacity addition programme byputting four 4,000 MW ultra-mega projects (UMPPs) up for bidding in its first year in office.


NEWS ROUND-UPRBI to have regular process of bank licences: Rajan

Reserve Bank of India Governor Raghuram Rajan on May 20 said the central bank would soon announce a

regular process of granting bank licences, ending the current system of giving it in tranches.


WEEKLYECONOMIC

BULLETIN


2/13

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WEEKLYECONOMICBULLETIN

>> NEWS FEATURE


Narendra Modi-led NDA Govt looks to giveSAARC ties a trade boostNot merely a goodwill gesture of invitations to its leaders to

attend the swearing-in ceremony on May 26, more good news

awaits India's South Asian neighbours from the incoming

Narendra Modi government, which is looking to economically

integrate the region's 1.6 billion people.

The commerce ministry is putting together a plan todeepen trade and investment ties with the South Asian Asso-

ciation for Regional Cooperation (Saarc) countries. Noting

that security concerns mainly between India, Bangladesh

and Pakistan have been holding back the economic integra-

tion of the region, a senior official involved in the formulation

of the new strategy told FE that the core of this plan is free

movement of goods, people and voice (by allowing easier

usage of SIM cards of member countries in each other's terri-

tory). The aim is to ensure that the next Saarc summit in

Nepal, likely in October-November, is a landmark one by inking pacts on game-changing proposals including a Saarc visasystem similar to the European Union's Schengen visa as well as a South Asian Development Bank. The member coun-

tries include Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

Currently, India runs a huge $15-billion trade surplus with other Saarc countries, with exports worth $17.5 billion and

imports of just $2.5 billion. The idea is to correct this skewed trading system in a way that Indian businesses can source

more from other Saarc countries and build better value chains. For this, India has to invest more in the region by taking

advantage of the arbitrage in wage and electricity rates, the sources said.

For better people-to-people ties, the proposal is to set up a Saarc visa regime envisaging liberal multi-entry visas like

the European Union's Schengen visa system to ensure that all citizens of the Saarc member countries can move freely in

South Asia. Currently, there is a Saarc Visa Exemption Scheme, in which some categories of people(including higher

court judges, businesspersons, parliamentarians, journalists, senior officials and sportsmen) are given a Special Travel

document that exempts them from visas within the region. This arrangement will now be reworked to promote tourism

(including medical tourism) and trade within the region.

The other measure being considered is a South Asian Development Bank with an initial corpus of $5-10 billion. This

will be used for ensuring better connectivity by building railway lines, roads, waterways, ports and customs stations to

resolve all the transit issues. In the pipeline is better connectivity between the Chittagong port (in Bangladesh) to Haldia

and Vishakhapatnam ports in India to avoid the current routing of goods through Colombo and Singapore ports.

Also, plans are afoot to exploit the potential of wind power in Sri Lanka, estimated at 20,000 MW, by linking this to a

bigger grid to be exported to India and exported back when there is a fall in wind power generation there.

Besides, on the cards is a Cabinet note to increase the usage of the interest subvention for project exports through

EXIM Bank of India for Saarc countries. This is linked to the Buyers Credit Scheme and is being implemented through

EXIM Bank, ECGC and the National Export Insurance Account. It is aimed at providing long term concessional creditthrough EXIM Bank, as co-financing in infrastructure sectors. On the trade front, India already has a granted duty-free-

quota-free access to all least developed countries in Saarc (barring Pakistan and Sri Lanka) to the Indian market. Efforts

are also on to expedite the completion of negotiations for a Saarc Agreement on Trade in Services.

Source: The Financial Express


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>> NEWS FEATURE


Boosted by capital inflows and euphoria around the incoming government, rupees surge to 11-month high levels has

made it the best performing currency in Asia-Pacific region against the US dollar so far in 2014.

With a gain of about 5.3 per cent since the start of this year, the rupee has sprinted ahead of its other Asia-Pacific

peers, including Indonesias rupiah and New Zealand dollar, in terms of year-to-date rise, shows an analysis of various

currencies vis-a-vis the greenback.

The rupee, which closed at 58.52 levels against theUS dollar on May 23, has incidentally seen a lions share

of 5.3 per cent gain in the past one month.

The Indian currency stood at Rs 61.80 level per US

dollar at the start of 2014 and has recorded a gain of

327 paise in less than six months, partly helped by ro-

bust foreign fund inflows. This marks a major turn-

around since August last year, when rupee touched its

life-time low of 68.80.

...positive sentiments out of the election results en-

abled us to upgrade our FII flows estimates by $5 billionto $20 billion, implying an overall BOP (balance of pay-

ment) surplus of $29 billion. We expect the USD/INR

range to be 57-61 in FY2015, Indranil Pan, Chief Econo-

mist of Kotak Mahindra Bank, said in a report.

The highest-ever tally in the Lok Sabha elections has helped BJP secure a majority on its own, thus raising hopes of

big-bang reforms to revive the economy.

In Asia-Pacific, the rupees gains versus the US dollar are followed by the Rupiah (Indonesia) that has appreciated 4.6

per cent, New Zealand dollars 3.75 per cent rise and Australian currencys 3.5 per cent rise.

The Yen (Japan), the Won (South Korea) and the Ringgit (Malaysia) have gained between 2-3 per cent in this calendar

year so far.

Philippines Peso has appreciated 1.6 per cent against the US dollar, followed by 0.5 per cent uptick in Thailands Baht

and Singaporean dollar. While the Hong Kong dollar is almost unchanged since 2014 started, the Taiwan dollar and Chi-

nese Yuan have lost value.

Source: Business Line

Rupee becomes best performingAsia-Pacific currency


4/13

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Foreign investment inflows are estimated to

more than double to $60 billion this fiscal rid-

ing on the high expectations from the incoming

Narendra Modi-led government, the Associated

Chambers of Commerce and Industry (As-

socham) said on May 25.Riding on huge expectations from the in-

coming Modi government, global investors are

gung-ho on the Indian economy, which is ex-

pected to witness over 100 percent increase in

foreign investment inflows - both FDI and FIIs -

to above $60 billion in the current financial

year against $29 billion during 2013-14, an

Assocham study projected.

The unfolding scenario also points to eas-

ing of prices and lowering of interest rates, thetwo major challenges that the Indian economy

had been facing for some years now, Assocham President Rana Kapoor said.

However, Assocham immediately pointed to the challenge posed to the Reserve Bank of India by the emerging situa-

tion, where the problem of too few US dollars has become one of too many and the rupee in its exchange has strength-

ened to Rs.58.50.

"The emerging situation will pose a new challenge to the Reserve Bank to deal as it will have to balance the rupee

rate and inflation from the increased liquidity into the system," Assocham said.

In fact, the RBI does not want the rupee to strengthen further so as not to hurt exports, and has decided to ease con-

trols on gold imports its had imposed last year.

The new finance minister and the RBI, thus, will have to be on the same page in dealing with this scenario, which will

see the strengthening of rupee and a further improvement on the current account balance, Assocham said.

Foreign institutional investment (FII) in the current fiscal would remain more than foreign direct investment (FDI) in-

flows, Assocham said. The expectations are that FII investment in both debt and equity markets could exceed $35 billion

while FDI money could be above $25 billion.

India will continue to outpace all other emerging economies in terms of FII inflows, the study found.

Source: Indo-Asian News Service

Foreign investment inflow expected todouble to $60 bn: Assocham


>> OVERSEAS INVESTMENTS


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Government approves 10 FDI proposalsworth Rs 140 croreThe government has cleared 10 foreign direct investment proposal totalling Rs 139.95 crore, including that of Equitas Hold-

ing and Ambit Pragma Fund II. The proposals were cleared following recommendations for the same by Foreign Investment

Promotion Board ( FIPB) in its meeting held in March, the Finance Ministry said.

It further said decision on seven proposals was deferred while decision on five have been kept in abeyance.

Equitas Holding, a holding cum investment company in micro-finance sector, has got approval to increase FDI from 89.64

per cent to 95.64 per cent by transfer of shares from resident Indians to Non-residents.The proposal entails investment of Rs 79.93 crore. Ambit Pragma Fund II, a Trust (APF - II) has got government's nod to in-

crease foreign equity from 93.04 per cent to 94.88 per cent.

The seven proposals on which decision has been deferred include that of Alhcon Parenterals (India), HBM Private Equity

India, Mauritius and Speciality Restaurants.

Decision has been kept in abeyance on the proposals of Amri India, Financial Software and Systems (P) Ltd, Brunswick

India and two others.

The government also rejected a proposal of I Energy Wind Farms (Theni) which had sought post-facto nod for issue of

shares to Indian Energy (Mauritius) Ltd, Mauritius (foreign investor) one day before receipt of inward remittances.

Source: Press Trust of India

India's forex reserves gain $1.09 bnIndia's foreign exchange (forex) reserves rose by

$1.09 billion to $314.92 billion for the week ended

on May 16, led by a sharp jump in overseas cur-

rency assets, Reserve Bank of India (RBI) data

showed.

The reserves had gained by $1.97 billion to

$313.83 billion for the week ended May 9.

According to the RBI's weekly statistical supple-

ment, foreign currency assets, the biggest compo-

nent of the forex reserves, jumped by $1.26 billion

to $287.81 billion in the week under review.

The foreign currency assets had jumped by $1.97

billion to $286.54 billion.

The RBI said the foreign currency assets, ex-

pressed in US dollar terms, include the effect of ap-

preciation or depreciation of non-US currencies held in reserve such as the pound sterling, euro and yen.

However, India's reserve position with the International Monetary Fund (IMF) decreased by $158.1 million to $1.68 bil-

lion.The value of special drawing rights (SDRs) also fell. The SDRs were down $14.5 million to $4.46 billion.

The value of gold reserves remained the same in the period under review at $20.96 billion. The reserves had declined

by $601 million at $20.96 billion in week ended on May 2.



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Now, Singapore is Indias top FDI source

Singapore has overtaken Mauritius as the largest source of foreign direct investment into India, ending its long run over

the top slot.

According to the latest data compiled by the department of industrial policy and promotion, FDI inflows from Singa-

pore added up to nearly $6 billion (over Rs 35,500 crore) in 2013-14, compared with $2.3 billion in the previous year.

In contrast, FDI inflows from Mauritius almost halved to $4.9 billion (Rs 29,360 crore) last year from $9.5 billion in

2012-13.

There was a change at the third spot as well with the UK reclaiming its position with inflows of $3.2 billion in 2013-14,pipping Japan ($1.7 billion). The US retained the fifth slot with inflows of less than $1 billion.

Source: The Times of India

FIIs pour in Rs 14,000 crore in MayOverseas investors have pumped in over Rs 14,000 crore in Indian stocks so far this month as the new BJP government,

which is to take charge on May 26, is seen as being reforms-oriented.

Foreign Institutional Investors (FIIs) purchased shares worth Rs 84,777 crore and sold equities amounting to Rs

70,553 crore, a net inflow of Rs 14,224 crore ($2.4 billion) from May 2-23, according to data from the Securities and Ex-change Board of India.

At the same time, foreign investors have infused a net amount of Rs 12,037 crore ($2.03 billion) in the debt market.

Market analysts said that foreign investors are betting on the new government under the Narendra Modi-led BJP as

they see it initiating reforms to spur economic growth.

Given the decisive political mandate, analysts believe that Indian markets have the potential to get more inflows.

FIIs, the main drivers of the equity market, have helped push up the BSE benchmark index, Sensex, by over 10 per cent

so far in May.

On the day of election results, May 16, it had shot up about 1,400 points in intra-day trading to cross the 25,000 mark,

a record high.

The strong inflows in the recent months have taken the net investment by FIIs to Rs 46,000 crore in Indian equities so

far this year, and over Rs 38,000 crore in the debt market during the period taking the total to Rs 84,000 crore.

They had invested Rs 9,602 crore in Indian stocks in April, compared with Rs 20,077 crore in March, Rs 1,404 crore in

February and Rs 714 crore in January.

Currently, there are 1,709 registered FIIs in the country, along with 6,418 sub-accounts.



7/13

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>> TRADE NEWS

Natural rubber imports shoot up84% in April

Africa-India Partnership Day being held in Rwanda

Imports of natural rubber rose 84% to 26,445 tonne

in April on account of lower prices in international

markets and drop in domestic production.

According to the Rubber Board data, India's nat-

ural rubber imports stood at 14,396 tonne in the

same month last year. Natural rubber imports in FY2013-14 increased by 49% to 3.24 lakh tonne from

2.17 lakh tonne in 2012-13.

Imports increased despite the Centre raising im-

port duty on natural rubber to R30 per kg or 20%,

whichever is lower, in December last year.

The basic customs duty on natural rubber earlier

stood at R20 a kg or 20% whichever was lower.

"Imports have gone up as prices of both block rub-

ber and sheet rubber in the international market

are lower as compared to domestic prices," a sen-ior rubber board official said.

The gap between international and domestic prices of block rubber is R30-35 per kg, while that of sheet rubber is R17-

18 per kg. About 95% of rubber imported is used by tyre manufacturers and India imports a big chunk from Vietnam and

Indonesia.

Meanwhile, the production of natural rubber dropped 4% to 51,000 tonne in April 2014 as against 53,000 tonne in the

same month last year. The consumption, however, fell marginally to 81,500 tonne in the month from 82,980 tonne in

April 2013, the data showed.

Rubber exports declined to 28 tonne in April this year as compared to 1,538 tonne in the same month a year ago.

Source: Press Trust of India

In an effort to further boost India-Africa business collaborations, an "Africa-India Partnership Day" was organised on May

22 on the sidelines of the African Development Bank's annual general meeting in Kigali, Rwanda on May 19-23.

The second such event, organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Exim

Bank, has as its theme "Sharing Indias Experiences with Africa", FICCI said.

India's investments in Africa since 2005 total $50 billion and lines of credit to African countries total $8 billion.

Several multinational giants like Tata, Reliance, Bharti Airtel and Ashok Leyland have significant presence in Africa.

Bilateral trade between India and Africa has shot up from $25 billion in 2006-07 to around $70 billion in 2012-13. The

Indian government has targeted it to touch $200 billion by 2020.According to FICCI, the Africa-India Partnership Day "will serve to help in synergizing the priority areas for engage-

ment between the African Development Bank, Government of India and Exim Bank of India."



8/13


>> SECTORAL NEWS


The Narendra Modi Government is set to give a big push to India's power capacity addition programme by putting four

4,000 MW ultra-mega projects (UMPPs) up for bidding in its first year in office.

Apart from the UMPPs at Bedabahal in Odisha and Cheyyur in Tamil Nadu, where the Power Finance Corporation

(PFC) has already initiated the bidding process, two more mega projects are being readied for bidding one in Bihar and

another in Jharkhand in FY15.

While one of the two sites being examined atRajouli (Nawada district) and Rajouri (Banka district)

will be selected for a possible UMPP in Bihar, a

site at Deoghar in Jharkhand has already been se-

lected for the second UMPP in the state.

The ministry of coal has been asked to identify

urgently coal blocks suitable for UMPPs for Bihar

and the second Jharkhand ultra-mega power project.

The idea is to get all possible clearances for these

projects so that bidding could be initiated at the ear-

liest, said a power ministry official. The ministry hasalready included UMPP programme in the to-do-list

to be taken up by the next government.

Sources said that UMPP in Bihar has assumed im-

portance after the recently concluded Lok Sabha

elections that has given good numbers for the NDA

in the state.

Bihar so far does not have a UMPP and the state

government had been pitching for at least one such

mega project for quite some time. It is expected that indigenous coal-based project in the state would get its fuel linkage

from a nearby mine in Jharkhand, which will also feed the coal requirements of Deoghar UMPP.

If all the four UMPPS are awarded in a space of one year, it would be record of sorts for the country as 16,000 MW of

new capacity would get the nods. Ever since the start of UMPP programme way back in 2006, only four projects have

been allotted of which three have been bagged by Reliance Power in Sasan (Madhya Pradesh), Krishnapatnam (Andhra

Pradesh) and Tilaiya (Jharkhand). The fourth, at Mundra in Gujarat, has been bagged by Tata Power.

The good response for the two UMPPs at Cheyyur and Bedabahal and the good sentiment prevailing in the country

after the elections has prompted the power ministry to push two more such projects in a single year. All the nine appli-

cants for Odisha and eight applicants for the TN UMPP have been selected for issuance of Request For Proposal (RFP) to

put in their price bids. These include companies such as NTPC, NHPC, Tata Power, Jindal Power, JSW Energy, CLP India,

Sterlite.

Source: The Financial Express

Narendra Modi Government to boostpower capacity with 4 ultra-mega projects

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9/13


>> SECTORAL NEWS


Beating the record of recent years, Punjab and Haryana have procured over 180 lakh tonnes of wheat this season, offi-

cials said on May 19.

"Punjab state has successfully achieved the wheat procurement target of 115 lakh tonnes on May 18 despite in-

clement weather conditions and untimely rains," a spokesman of the food and supplies department in Punjab said.

Farmers have been paid over Rs.14,378 crore for the wheat procured.

The spokesman said the procurement process was in full swing with various government agencies and private millersprocuring over 115.63 lakh tonnes of wheat till May 18 evening at 1,757 procurement centres.

The agencies had procured only 110.32 lakh tonnes of wheat in the like period last year.

"The Punjab government is committed to procuring all the wheat coming to the mandis (wholesale grain markets) of

Punjab despite meeting the procurement target already," he said.

Sangrur, Ludhiana and Bathinda districts led in procurement in the state this time.

In neighbouring Haryana, over 64.4 lakh tonnes of wheat has so far arrived in various grain markets. As much as 64.38

lakh tonnes out of these has been procured by government agencies, a state government spokesman said.

Last year, only 58.57 lakh tonnes of wheat had arrived in the corresponding period.

Sirsa, Fatehabad and Karnal districts led in wheat procurement.


Domestic air passenger traffic rose 4.75 percent in April to 53.18 lakh passengers -- up from 50.77 lakh ferried during

the corresponding month last year, data showed on May 20.

According to data furnished by the civil aviation ministry,

passengers carried by domestic airlines during January-

April, 2014 was up 2.02 percent at 206.99 lakh from 202.90

lakh passengers in the corresponding period of last year.

Regional passenger carrier Air Costa achieved the highest

overall occupancy in the month under review at 77.8 percent,

followed by IndiGo at 76.9 percent, GoAir at 76.1 percent,

JetLite at 76 percent, SpiceJet and Air India's domestic op-

erations both at 73.3 percent and Jet Airways at 70.9 per-

cent.

The data also showed that low cost carrier (LCC) SpiceJet

had the highest cancellation rate of one percent followed by

Air India's domestic operations at 0.8 percent, Air Costa at0.5 percent, GoAir, Jet Airways and JetLite all stood at 0.4 percent and IndiGo at 0.1 percent.


180 lakh tonnes wheat procured inPunjab, Haryana

Domestic air passenger traffic grows 4.75percent in April

9


10/13



>> SECTORAL NEWS

As part of efforts to ensure that Indian pharmaceutical products meet international standards, the government is spend-

ing about $500 million to build the capacity of the country's drug regulators, a senior official said in Mumbai on May 21.

National drug controller G.N. Singh said part of the money is to be used to set up a National Drug Regulatory Acad-

emy to train professionals who test drugs in the laboratories. "India believes in safety, efficacy and quality of drugs and

is organising the system to maintain standards," Singh told media on the sidelines of the second International Exhibition

for Pharma and Healthcare (iPHEX 2014) that began in Mumbai on May 21.Singh said the government was also compiling a national pharmacopia to guide in the manufacture of drugs.

"We are also planing to harmonise the standards in all the states with a central regulatory system," he said, adding

that these were all gradual investments that would also see the improvement at the sea ports and other ports to ensure

that products that leave the country were of the right standard.

He said the government's zeal to bring about affordable quality drugs to the people could only materialise if the gov-

ernment's zero tolerance for poor quality drugs was monitored by implementing laws that punished those who violated

the rules. Sudhanshu Pandey, joint secretary in the ministry of commerce and industry, said Indian generic drugs have

become globally accepted and respected, and for this reason, there was the need to send a loud message out that the

government was ready to ensure that the manufacturers met the standards required of them.

Pandey said patents for about 160 drugs would be expiring soon and that would give manufacturers more opportuni-ties but, at the same time, he cautioned that it meant that innovations in the industry will have to be transparent so that

global regulators would not question the standards.

Pharmaceutical Export Council of India (Pharmexcil) says that eight out of the world's top 25 generic companies come

from India.


India to spend $500 mn to boost capacityof drug regulators

Inland shipping will get a boost with the government relaxing the baseline for inland vessels which can now move

deeper into the sea.

"Government has relaxed the norms for inland vessels to move deeper into the sea. The baseline has been relaxed by

12 km from coastline which is known as territorial waters," DG Shipping Gautam Chatterjee told PTI.

"This will help inland waterways transport. Now inland vessels can venture into sea to offload cargo from large ves-

sels directly and this in turn will bring huge operational cost saving for the trade," Chatterjee said. Currently, there are

some 800 redundant ocean going vessels being used in inland water transport, but gradually the picture will change

with the policy, Chatterjee said. Inland waterways transport companies are constructing new inland vessels, he said. Jin-

dal ITF is transporting imported coal to NTPC's power plant at Farakka through inland waterways. The company won a

Rs 650-crore contract from the Inland Waterways Authority of India.

Chatterjee said a proposal has been sent to the Ministry of Shipping to introduce Indian controlled tonnage concept toincrease cargo share by Indian shipping companies.

Currently, the share of cargo handled by Indian flag liners is just eight per cent.

Source: Business Standard

Inland shipping to get boost from coastalbaseline relaxation

10


11/13


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Relaxing rules for importing gold, the Reserve Bank of India on May 21 allowed star/premier trading houses to bring in

the yellow metal for sale in the domestic market. Last July, to rein in

increasing imports that swelled current account deficit and weak-

ened the rupee, the RBI had banned imports by trading houses for

sale in the local market. They were allowed to import only for re-ex-

ports. The RBI decision will increase the supply of gold and bring

down prices.

The decision has already started showing results: in the Mumbaimarket on May 21, gold prices were hovering around Rs 28,300 per

10 grams, down from Rs 28,800 level at 5 pm.

Under the new scheme, when a nominated bank, agency or any

other entity imports gold, say 100 kg, of which 20 kg can be released,

in part or full, to exporters of gold. The remaining 80 kg can be sold or lent to the domestic entities engaged in jewellery

business, bullion dealers or banks operating the gold deposit scheme and gold loan.


Digital payments in India is expected to touch Rs1.2 trillion by December 2014, a 40% increase from Rs85,800 crore the

previous year, propelled by growing Internet penetration, growth in e-commerce and the ease of online payments, ac-

cording to a report by the Internet and Mobile Association of India (IAMAI).

The market for payments made through digital medium has grown at a compounded annual growth rate (CAGR) of

10% between 2010 and 2013. The report titled Digital Money is IAMAIs first such on digital payments and was prepared

in association with the Payments Council Of India (PCI) and IMRB. The report states that nearly 60% of the total value of

transactions in 2013 came from online travel, 23% from financial services and 12% from online retailing. Nearly 80% of

these transactions were dominated by desktop personal computers and laptops, with smaller contribution from mobile

phones and tablets. However, the report expects phones and tablets to contribute close to 30% by 2020.

The four metrosDelhi, Mumbai, Kolkata and Chennaicontributed about 60% of the total digital payment gateway

market size, followed by Bangalore, Hyderabad, Ahmedabad, Pune which together contributed 25% in 2013. The report

said that about 53% of the 800 million online transactions made in 2013 were made using credit and debit cards while

44% came from Internet banking. The rest were attributed to Mobile Wallet, Pre-Paid Cash cards and Immediate Pay-

ment systems (IMPS) over the Internet.

Given the higher penetration of debit cards compared to credit cards in the country, about 32% of the transactions

were made through debit cards while 21% came from credit cards.

According to a Reserve Bank of India (RBI) report published in February 2014, there were nearly 350 million debit

cards compared to 19 million credit cards. Credit card penetration in India has been on a downward journey and the can-nibalisation is benefiting debit cards and Internet banking. In 2012, the number of credit cards were 10-15% higher than

what it was in 2013 as banks are restricting the issuance of credit cards due to credit risk and higher non performing as-

sets (NPAs), according to Vishwas Patel, chairman of PCI.

Source: Mint

RBI eases curbs, gold prices to fall

Digital payments in India to touch Rs1.2trillion by Dec: Report


>> NEWS ROUND-UP



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views.

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MEA Weekly Newsletter May 19-26-2014