Despite pandemic, Tamil Nadu attracts 17 investors worth Rs.15,128

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The companies which signed the MoUs are from Germany, Finland, Taiwan, France, South Korea, Japan, China, USA, Australia, UK

As many as 17 MoUs’ to bring in fresh industrial investments worth Rs 15,128 crore into Tamil Nadu were signed between a host of foreign companies and the Tamil Nadu government in the presence of chief minister Edappadi K Palaniswami on Wednesday.

These projects in areas such as commercial vehicle manufacture, electronics, footwear, information technology, medical equipment and energy are expected to generate 47,150 jobs in Tamil Nadu, an official release here said.

The companies which signed the MoUs are from Germany, Finland, Taiwan, France, South Korea, Japan, China, USA, Australia, UK and the Netherlands, indicating that Tamil Nadu continues to be a destination for foreign direct investment (FDI).

Palaniswami’s government has been taking a number of initiatives for economic revival.  They include appointment of a high-power committee of economic experts led by former RBI governor C Rangarajan to chalk out strategies in the medium-term, the Industrial Guidance Bureau facilitating single-window clearance of investment proposals, the recent policy announced to boost production of medical equipment and drugs in the wake of Covid-19 and TIDCO offering a Rs.102 crore package to meet working capital requirement of 799 MSMEs’, an official release said.

The MoUs signed today include the following projects: Daimler India is to expand its commercial vehicle manufacturing at its Oragdam factory in Kancheepuram district involving an investment of Rs.2,277 crore, creating 400 more jobs.

Finnish firm Salcomp will invest Rs.1,300 crore in the Nokia special economic zone in Sriperumbudur to manufacture mobile phone components, to generate 10,000 additional jobs in Kancheepuram district and this project would help to rejuvenate the Nokia SEZ in that district.

The MoUs further include Rs. 900 crore investment by Japan’s Polymatech Electronics to make semiconductor chips at the Oragadam SIPCOT industrial park, a Rs.350 crore joint venture footwear manufacture project by Taiwan’s Chung Jye Company Ltd and Aston Shoes, a Rs.400 crore industrial park to be developed at Mappedu in Kancheepuram district by Australian firm, Lai Investment Manager Pvt Ltd., South Korea’s ‘Mando Automotive India  Pvt Ltd.  to invest Rs.150 crore in Pillaipakkam SIPCOT industrial park in Kancheepuram district, Netherlands’ Dinex to invest Rs.100 crore in the Mahindra City Industrial Park in Chengalpattu district for auto-components manufacture, a 750-mw gas-based power project at Ponneri in Thiruvallur district by Indo-UK joing venture, Chennai Power Generation Limited’ involving an investment of Rs.3,000 crore, and France’s IGL India Transplantations Solutions Ltd to invest Rs. 18 crore in medical equipment in SIPCOT park at Cheyyar in Tiruvannamalai district.

Down south in Thoothukudi and Tirunelveli districts, a huge investment of Rs. 2,000 crore is envisaged by Vivid Solaire Energy Private Limited of France, to manufacture wind mills equipment, the release said. The USA’s HDCI Data Centre Holdings Chennai LLP will invest in an IT project in Ambattur in Chennai involving an investment of Rs. 2,800 crore, it said.

While Singapore’s ST Tele Media will invest Rs. 1,500 crore in a new IT project in Chennai, wind mill components will be made by Germany’s Baetter in Chennai involving an investment of Rs.210 crore. Besides there, there are four more industrial investments in the pipeline in Kancheepuram, Thiruvallur and Chengalpattu districts including China’s ‘BYD India Private Ltd’, to invest Rs.50 crore in an electric vehicle manufacture project.

Mahindra Origins in a JV with a Taiwanese company, TJR Precision Technology Company, will invest Rs.46 crore in making precision components at Ponneri. Further, USA’s Lincoln Electric will invest Rs.12 crore in an R & D Centre at Mahindra Industrial Park in Chengalpattu district, the release added.

Top officials including Chief Secretary, Mr. K Shanmugam, Industries Secretary, N Muruganandam, State Guidance Bureau managing director, Ms. Karkala Usha, its executive director Mr. Aneesh Shekhar, and representatives of the various companies were among those who were present on the occasion.

Source: Deccan Chronicle

India replaces France as world’s 6th biggest economy

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India’s GDP amounted to $2.597 trillion at the end of last year, against $2.582 trillion for France

India has become the world’s sixth-biggest economy, pushing France into seventh place, according to updated World Bank figures for 2017. India’s gross domestic product (GDP) amounted to $2.597 trillion at the end of last year, against $2.582 trillion for France. India’s economy rebounded strongly from July 2017, after several quarters of slowdown blamed on economic policies pursued by Prime Minister Narendra Modi’s government.

India, with around 1.34 billion inhabitants, is poised to become the world’s most populous nation, whereas the French population stands at 67 million. This means that India’s per capita GDP continues to amount to just a fraction of that of France which is still roughly 20 times higher, according to World Bank figures.

Manufacturing and consumer spending were the main drivers of the Indian economy last year, after a slowdown blamed on the demonetisation of large banknotes that Modi imposed at the end of 2016, as well as a chaotic implementation of a new harmonised goods and service tax regime.

India has doubled its GDP within a decade and is expected to power ahead as a key economic engine in Asia, even as China slows down.

According to the International Monetary Fund, India is projected to generate growth of 7.4% this year and 7.8% in 2019, boosted by household spending and a tax reform. This compares to the world’s expected average growth of 3.9%.

The London-based Centre for Economics and Business Research, a consultancy, said at the end of last year that India would overtake both Britain and France this year in terms of GDP, and had a good chance to become the world’s third-biggest economy by 2032.

At the end of 2017, Britain was still the world’s fifth-biggest economy with a GDP of $2.622 trillion. The US is the world’s top economy, followed by China, Japan and Germany.

 

India is world’s 40th most competitive economy: WEF

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The Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness.

India has been ranked as the 40th most competitive economy — slipping one place from last year’s ranking — on the World Economic Forum’s global competitiveness index, which is topped by Switzerland.

On the list of 137 economies, Switzerland is followed by the US and Singapore in second and third places, respectively.

In the latest Global Competitiveness Report released today, India has slipped from the 39th position to 40th while neighbouring China is ranked at 27th.

“India stabilises this year after its big leap forward of the previous two years,” the report said, adding that the score has improved across most pillars of competitiveness. These include infrastructure (66th rank), higher education and training (75) and technological readiness (107), reflecting recent public investments in these areas, it added.

According to the report, India’s performance also improved in ICT (information and communications technologies) indicators, particularly Internet bandwidth per user, mobile phone and broadband subscriptions, and Internet access in schools.

However, the WEF said the private sector still considers corruption to be the most problematic factor for doing business in India.

“A big concern for India is the disconnect between its innovative strength (29) and its technological readiness (up 3 to 107): as long as this gap remains large, India will not be able to fully leverage its technological strengths across the wider economy,” it noted.

Among the BRICS, China and Russia (38) are placed above India.South Africa and Brazil are placed at 61st and 80th spots, respectively.

In South Asia, India has garnered the highest ranking, followed by Bhutan (85th rank), Sri Lanka (85), Nepal (88), Bangladesh (99) and Pakistan (115).

“Improving ICT infrastructure and use remain among the biggest challenges for the region: in the past decade, technological readiness stagnated the most in South Asia,” WEF said.

Other countries in the top 10 are the Netherlands (4th rank), Germany (5), Hong Kong SAR (6), Sweden (7), United Kingdom (8), Japan (9) and Finland (10).

The Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness.

Institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation are the 12 pillars.

According to WEF’s Executive Opinion Survey 2017, corruption is the most problematic factor for doing business in India.

The second biggest bottleneck is ‘access to financing’, followed by ‘tax rates’, ‘inadequate supply of infrastructure’, ‘poor work ethics in national labour force’ and ‘inadequately educated work force’, among others.

The survey findings are mentioned in the report.

“Countries preparing for the Fourth Industrial Revolution and simultaneously strengthening their political, economic and social systems will be the winners in the competitive race of the future,” WEF founder and Executive Chairman Klaus Schwab said.

Japan logs biggest current account surplus since 2007

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Donald Trump and Japanese Prime Minister Shinzo Abe are scheduled to meet for talks later this week.

Japan attained its second-biggest current account surplus on record in 2016, Ministry of Finance data showed on Wednesday, just days before the US and Japanese leaders meet for talks with trade surpluses and currency valuations expected to be high on the agenda.

The 20.6 trillion yen ($183.63 billion) surplus reflected the trade balance swinging into surplus on cheaper oil, rising foreign tourists arrivals creating a record travel surplus, and hefty foreign income from overseas investments.

Trade surpluses and currency valuations are in focus as US President Donald Trump pursues an “America First” campaign in which he has accused big exporters such China, Germany and Japan of deliberately weakening their currencies to gain a competitive advantage.

For the whole of 2016, Japan posted a trade surplus of 6.8 trillion yen ($59.95 billion) with the United States, down 4.6 percent from 2015, with U.S.-bound car shipments rising for a second straight year, the Ministry of Finance said.

Trump and Japanese Prime Minister Shinzo Abe are scheduled to meet for talks later this week. Trump said he and Abe would play a round of golf, with Abe as his partner in the game, rather than a competitor.

Wednesday’s data showed the vast bulk of Japan’s current account surplus was generated by Japanese direct and portfolio investment abroad, accounting for 18.1 trillion yen of the 20.6 trillion current account surplus for 2016.

The trade surplus was 5.6 trillion yen in 2016, from the 630 billion yen deficit seen in 2015, earned in part as declining oil prices curbed import costs.

The travel balance logged a record 1.3 trillion yen surplus last year as a record number of foreign tourist visits took Japan’s services deficit to the smallest on record.

Japan’s current account surplus was 1.11 trillion yen in December, a seventh straight month of annual increases, the ministry data showed.

That compared with economists’ median forecast for a surplus of 1.29 trillion yen seen in a Reuters poll.

Source: http://economictimes.indiatimes.com/articleshow/57034126.cms

Brexit offers lifeline on $800 billion emerging company debt

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Britain’s vote to exit the European Union (EU) has thrown a lifeline to emerging-market companies facing an $800 billion wall of maturing debt.

By hindering the Federal Reserve’s plan to raise interest rates, the referendum result has led to speculation borrowing costs will remain lower for longer as policy makers attempt to prevent Europe’s turmoil turning into a recession. This means developing-nation companies that borrowed when it was cheaper to do so won’t have to pay more to service those bonds, at least for now.

The prospect of fewer defaults shows how the so-called Brexit vote is proving a blessing for developing-nation companies that need to pay back about $200 billion per year from 2017 to 2020. Economists from the International Monetary Fund (IMF) to the Bank for International Settlements have been warning Fed monetary tightening may set off an increase in corporate failures in emerging markets. Defaults have been climbing since 2013 and reached a seven-year high in the second quarter.

“We might even see a decline in default rates again in the third and fourth quarters of this year,” said Apostolos Bantis, a Dubai-based credit analyst at Commerzbank AG, who recommends investing in Latin American company bonds. “The overall outlook now is more positive for emerging-markets corporates because the Fed is very unlikely to move any time soon following the Brexit.”

Uncertain outcomes

The policy uncertainty engulfing the developed world has boosted the appeal of emerging countries, usually viewed by investors as more vulnerable to political risk. Yields on a Bloomberg index tracking developing-nation corporate bonds have fallen 27 basis points to 5.19% since the UK vote, adding to a recovery that started when oil prices began rebounding from a 20 January low.

The sentiment shift means that defaults are probably past their peak, according to Kathy Collins, an analyst at Aberdeen Asset Management in London. By 28 June, S&P Global Ratings had recorded 10 emerging-market corporate defaults in the second quarter, the worst quarterly tally since mid-2009. The rating company’s 12-month junk-bond default rate climbed to 3.2% at the end of May from 2.9% at the end of April.

“Given where commodity prices are at the moment, we’re not expecting too many more defaults,” Collins said. “In the first six months of this year, we’ve seen a lot of companies be very proactive in terms of tenders and buybacks in the market.”

Buying back

Russia’s Novolipetsk Steel PJSC and shipping operator Sovcomflot OJSC have announced they intend to buy back debt totaling as much as $2 billion. Latin American bonds sales surged over the past week, which HSBC Holdings Plc partly attributed to an increased likelihood of “ultra-low global policy rates” for longer. Brazilian meat packer Marfrig Global Foods SA sold $250 million of securities to repurchase outstanding notes in a push it said would “lengthen its debt maturity profile and reduce the cost of its capital structure.”

The issuance boom may prove short lived if the prospect of Fed tightening re-emerges. The UK’s vote to end its 43-year association with the EU has also ushered in a period of uncertainty for global markets that may eventually turn investors off developing-world assets. In June, the BIS reiterated a warning that emerging market non-bank borrowers that have accumulated $3.3 trillion in dollar debt are coming under strain as their economies slow and currencies weaken.

“If we get some volatility in emerging markets, say from political noise coming from the EU, and there is no access to capital markets from some issuers, that could be really negative,” Badr El Moutawakil, an emerging-market credit strategist at Barclays Plc in London said.

Even after the Brexit dust settles, looming elections in the US, Germany, France and possibly the UK mean a lengthening list of potentially disruptive events, strengthening the hands of dovish central bankers. Emerging-market companies have raised $3.71 billion of international bonds since the UK’s referendum on 23 June.

“External factors are more supportive,” said Bantis from Commerzbank. “The default trend of the past quarter is unlikely to continue.” Bloomberg

Source: http://www.livemint.com/Politics/sCZ90ORt2l0cm0rnS0DIqJ/Brexit-offers-lifeline-on-800-billion-emerging-company-debt.html

India jumps 19 places in World Bank’s logistics performance index

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India’s logistics performance at its key international gateways has improved in the last two years, according to a World Bank report released on Tuesday.

In the World Bank’s biennial measure of international supply chain efficiency, called Logistics Performance Index, India’s ranking has jumped from 54 in 2014 to 35 in 2016.

While Germany tops the 2016 rankings, India is ahead of comparatively advanced economies like Portugal and New Zealand. In 2016, India’s international supply chain efficiency was at 75% of top-ranked Germany, said the report titled Connecting to Compete: 2016 Trade Logistics in the Global Economy. This is an improvement over the 66% efficiency when compared to the leader (again Germany) in 2014.

Better performance in logistics will not only boost programmes, such as Make in India, by enabling India to become part of the global supply chain, it can also help increase trade. In 2015-16, India’s foreign trade shrank by around 15%.

The Logistics Performance Index analyses countries across six components: efficiency of customs and border management clearance, quality of trade and transport infrastructure, ease of arranging competitively priced shipments, competence and quality of logistics services, ability to track and trace consignments, and the frequency with which shipments reach consignees within scheduled or expected delivery times.

It is computed from the survey responses of about 1,051 logistics industry professionals.

Programmes, such as Make in India, and improvements in infrastructure have helped India improve its logistical performance, said Arvind Mahajan, partner and national head (energy, infrastructure and government) at KPMG India, a consultancy. He also said that the emergence of skilled professionals and technological improvements that have enabled services such as track-and-tracing have helped India close the gap with leaders.

That said, Logistics Performance Index does not address how easy or difficult it is to move goods to the hinterland. For that, World Bank has another measure—a domestic LPI which analyzes a country’s performance over four factors: infrastructure, services, border procedures and supply chain reliability.

While not all yardsticks are comparable across countries, there are some which show that India still has some way to go.

For instance, only 69% of shipments from India meet the quality criteria, compared to 72% for China and 77% for Kenya. On the other hand, it takes two and three days to clear shipments, without and with inspection, respectively—numbers comparable to China but longer than what it takes in top-ranked Germany.

Similarly, India has an average of 5 forms required for import or export, compared to 4.5 for China and 2 for Germany.

In this regard, the Goods and Services Tax (GST) has the potential to revolutionize the transport industry in India, said Capt. Uday Palsule, former managing director of Spear Logistics Pvt. Ltd. “Inter-state travel time will be drastically reduced if the hurdle of checking documents at every state border is done away with,” he said. It will also help boost the returns of the trucking industry and feed into better performance of the logistics sector, added Palsule.

Source: http://www.livemint.com/Politics/aqBXOSWqMObUMUAffuGH6I/India-jumps-19-places-in-World-Banks-logistics-performance.html

US, Europe combined infra spending less than China’s

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Despite a crying need for better infrastructure, investment in it has actually fallen in 10 major economies since the financial crisis, including the US, according to a new study by the McKinsey Global Institute. Meanwhile, China is still going gangbusters on roads, bridges, sewers, and everything else that makes a country run.

“China spends more on economic infrastructure annually than North America and Western Europe combined,” according to the report published Wednesday.

Economists around the world have been arguing that now is a great time to invest in infrastructure because interest rates are super-low and the global economy could use the spending jolt. “Is anyone proud of Kennedy airport?” Harvard University economist Lawrence Summers likes to ask.

The MGI report cites 10 countries where infrastructure spending fell as a share of gross domestic product from 2008 to 2013: the US, UK, Italy, Australia, South Korea, Brazil, India, Russia, Mexico, and Saudi Arabia. The study counts 11 economies, but that’s because it lists the European Union as a separate entity.

In contrast to the widespread declines, the institute says, infrastructure spending grew as a share of GDP in Japan, Germany, France, Canada, Turkey, South Africa and China. The chart from the MGI report shows China’s strength in infrastructure spending. Its bar is the highest. There’s such a thing as too much infrastructure spending, of course. At current rates of investment, China, Japan, and Australia are likely to exceed their needs between now and 2030, the McKinsey & Co-affiliated think tank says. To fund more public infrastructure, the report favours raising user charges such as highway tolls, among other measures.

To encourage more private investment in infrastructure, MGI argues for increasing “regulatory certainty” and giving investors “the ability to charge prices that produce an acceptable risk-adjusted return.”

 

Source:  http://www.business-standard.com/article/international/us-europe-combined-infra-spending-less-than-china-s-116061600030_1.html