by admin | May 25, 2021 | Business, Commodities, Commodities News, Economy, Markets, News, SMEs
Assocham President Sandeep Jajodia (Left)
New Delhi : A slight easing of food prices helped lower India’s retail inflation in January to 5.07 per cent even as factory production growth slowed somewhat in December to 7.1 per cent, according to official data on Monday.
India Inc lauded the continuing high single-digit recovery in industry as well as the slight fall in inflation.
While retail inflation was 5.21 per cent in December 2017, the Index of Industrial Production (IIP) had grown at an impressive 8.8 per cent in November.
On a year-on-year basis, the consumer price index (CPI) last month was at a much higher level than the 3.17 per cent in January 2017.
The consumer food price index (CFPI) in January stood at 4.58 per cent compared with the 4.85 per cent of December 2017.
As per the data released by the Central Statistics Office (CSO), the sequential slowdown in factory output was mainly on account of lower production in the manufacturing sector.
However, on a year-on-year basis, the manufacturing sector expanded by a healthy 8.4 per cent, while the mining sector’s output inched up by 1.2 per cent and the sub-index of electricity generation increased by 4.4 per cent.
“In terms of industries, 16 out of the 23 industry groups in manufacturing sector have shown positive growth during December 2017 compared with corresponding month of the previous year,” the CSO said.
According to the data, the industry group ‘manufacture of other transport equipment’ has shown the highest growth of 38.3 per cent followed by 33.6 per cent in ‘manufacture of pharmaceuticals, medicinal chemicals and botanical products’ and 29.8 per cent in ‘manufacture of computers, elecronic and optical products’.
Last week, The Reserve Bank of India (RBI) kept its key interest rate unchanged at 6 per cent for the third time in succession at its final bi-monthly monetary policy review of the fiscal, citing upside risks for inflation from rising global crude oil prices and other domestic factors.
The RBI said its decision to keep its repo rate, or short-term lending rate for commercial banks, unchanged is consistent with the neutral stance of the central bank aimed at achieving its median inflation target of 4 per cent.
“We expect headline inflation to be at 5.1 per cent in the fourth quarter (January-March), including the impact of HRA (house rent allowance) to central employees, up from the 4.6 per cent in Q3,” RBI Governor Urjit Patel told reporters in Mumbai after the release of the monetary policy review.
However, the fact that the central bank did not raise the repo rate in the face of hardening inflation as recommended by one of the six monetary policy committee (MPC) members is being considered as an attempt to aid in economic recovery.
Industry chamber Assocham termed the IIP data “a positive sign towards growth cycle of industrial activity in India”.
“However, risks to the Indian economy continues to prevail in the forms of continued uncertainties in the global environment due to geo-political situations, including rising global protectionism could further delay a meaningful recovery of external demand,” said Assocham President Sandeep Jajodia.
“Besides, private investment continues to face several impediments in the form of corporate debt overhang, stress in the financial sector, where (banks’) NPAs (non-performing assets) continue to increase, excess capacity and regulatory and policy challenges,” he added.
“This is the second consecutive month in which IIP has shown high single-digit growth, which is encouraging,” India Ratings and Research (Ind-Ra) Principal Economist Sunil Kumar Sinha said in a statement.
“However, Ind-Ra believes it still early to read much from these numbers as these have been calculated on a low base when industrial output had collapsed due to the impact of demonetisation,” he said.
“Retail inflation came down to 5.07 per cent in January 2018, lower than 5.21 per cent recorded last month, but remained higher than the RBI’s base target value of 4 per cent,” he added.
Rating agency Crisil said that inflation, however, continued to firm up in large parts of the services sectors such as housing, driven by the revision in house rent allowance payments, education and in recreation, amusement and personal care and effects.
“Yet, core inflation, stayed broadly unchanged from the previous month, at around 5.1 per cent in January,” a Crisil release said.
“The industry seems to be shedding away the weight of GST-related glitches behind and trying to get back lost momentum, as both domestic and global growth surge.”
—IANS
by admin | May 25, 2021 | Business, Corporate, Corporate Buzz, Emerging Businesses, Large Enterprise
New Delhi : The Indian electric vehicles (EV) market is expected to grow at double digit rates till 2020, while the nascent telematics market is also poised to develop at a much faster rate, industry chamber Assocham said on Sunday.
The EV industry in the country is at a nascent stage, comprising less than one per cent of total vehicle sales and is dominated at 95 per cent by two-wheelers, an Assocham study done with global advisory services firm EY said.
“Stricter emission norms, reducing battery prices and increasing consumer awareness are driving EV adoption in India, while EVs are not yet mainstream, government push and other indications point to a growing momentum,” stated the study titled “Electric mobility in India: Leveraging collaboration and nascency”.
The report, however, noted the urgent need for creating charging infrastructure at a rapid pace “as it is the determining factor for growth of EVs”.
“The required need at this point in time is the presence of related support industry and infrastructure as it will help the charging infrastructure thrive.”
The study also said that, as compared to public charging, home charging would still continue to be the dominant source with a share of nearly 70 per cent in 2030.
“There is a growing need for a national regulated rate that can be applicable to all charging stations across India,” it said.
Besides, EV adoption will be highly dependent on the pace of fall in battery costs as EVs are significantly more expensive than traditionally propelled vehicles due to high cost of lithium ion batteries.
“With improvement in technology and manufacturing efficiency, the cost is expected to decline to $100/kWh by 2023,” the report said with regard to batteries.
India does not have any policy framework or mechanism for the battery recycling and second use market, the statement said.
“There is a need for long-term supply-side incentives that attract desired investments required for EV deployment,” it added.
Describing telematics as essential for EVs, Assocham said: “Growing use of telematics across multiple services such as EV to grids interaction, fleet/asset management, navigation and location-based systems, insurance, V2V, V2X systems, remote alarm and incidence monitoring, and safety and security, telematics is poised to grow at a compounded annual growth rate (CAGR) of 31.2 per cent till 2020.”
Telematics is supporting new generation intelligent transport solutions by embedding intelligence into vehicles using sensors and chips and improving communication between different stakeholders to provide real-time decision support through interconnected networks.
According to Assocham, the global market size of telematics will be around $47.6 billion in 2020 from $20.02 bn in 2015, while 88 per cent penetration of global integrated telematics for new cars is expected to be achieved by 2022.
—IANS
by admin | May 25, 2021 | Banking, Business, Economy, Emerging Businesses, Finance, Investing, Markets, Medium Enterprise, News, SMEs
New Delhi : Though Indian non-banking financial companies (NBFCs) are growing in market share at a time when the banking system is grappling with the bad loans issue, they will have to keep pace with new technologies to attract investment, industry chamber Assocham said on Sunday.
Citing its joint study “Fuelling NBFCs through Private Capital”, conducted in association with British advisory multinational PricewaterhouseCoopers (PwC), Assocham said in a release that NBFCs need to consider “tweaking their current business models to grow in a hybrid world – digital plus physical”.
“With banks tightening their purse strings owing to increasing bad loans, Indian NBFCs are growing their market share, however, they will have to keep pace with new technologies and changing customer aspirations to attract timely private equity (PE) investments,” it said.
The report suggested that NBFCs must find funds to invest into operating models with the potential to disrupt the industry and challenge the status quo in their business.
The report also said that in order to ride the wave of increasing formal credit penetration in a growing economy, NBFCs will need to invest in new technologies to lower the cost of acquiring new segments, “including thin files, servicing existing customers and de-risking the portfolio”.
“Besides, in order to fulfil demands of the new-age customer in terms of credit facilities, NBFCs will have to invest in analytics and artificial intelligence (AI) capabilities to be able to connect to the customer in a hyper-personalised manner,” it said.
“New tech-based business models have the potential to crunch the learning period substantially and re-balance the strategic advantage of information access by inserting themselves into the value chain with technology,” it added.
State-run banks grappling with the non-performing assets (NPAs), or bad loans, for the last many years, has generated a tremendous opportunity for NBFCs to ramp up its scale, according to Assocham.
“In fact, in the last two years, they have doubled their market share in small and medium enterprises and wholesale loans and have made substantial inroads in other consumer loan categories,” it said.
“Coupled with lower cost, a focused approach on limited credit products and strong underlying risk management capabilities help NBFCs to not only underwrite credit to a targeted set of customers but also to control bad debts, making them one of the attractive sectors for PE funding,” it added.
“… can provide the necessary capital and financial muscle to undertake strategic decisions, right from expanding existing markets, building newer capabilities, improving efficiency or even to refinancing existing high cost debt,” it said.
The report, however, said that private equity (PE) firms firms look to invest in NBFCs which can build scale that provides cost reduction opportunities, market access and operational efficiencies which then give PE firms higher returns when they monetise their stakes.
Also, consolidation of smaller NBFCs will therefore become an attractive target for PE firms in the future as they will have the opportunity to demonstrate a successful exit with substantial multiples, the statement added.
—IANS
by admin | May 25, 2021 | Business, Large Enterprise, Medium Enterprise
New Delhi : Industry body Assocham on Wednesday recommended a weighted tax deduction of 150-200 per cent on actual cost of specified components for the consumer electronics sector in the upcoming Union Budget.
The deduction is required as costs pertaining to finance, energy and logistics/transportation constitute a major portion of consumer electronics sector, the chamber said in a release.
“Further, these costs are auditable and duly included in the financial statements of a company,” the release said quoting the recommendations on direct tax made by the body to the centre.
With a view to revive private investments in the electronics sector, Assocham has suggested that venture capital pool may be introduced in the sector and coordinated by a bank/special purpose vehicle or under public-private partnership mode, according to the release.
“In order to boost the availability of capital funds to India’s $100 billion worth electronics industry, it is imperative that a venture capital pool be created and allied tax incentive provided to enable genuine private players to use funds of such pool through a stringent mechanism,” said D.S. Rawat, Secretary General, Assocham.
Contributors may be offered tax incentives on the dividend, while manufacturers may be provided with tax exemptions, it said.
To make the business more competitive in the electronics sector, Assocham has recommended the government to link the India BPO Promotion Scheme with direct tax benefit.
—IANS
by admin | May 25, 2021 | Corporate, Corporate Buzz
New Delhi : India is expected to see mergers and acquisitions (M&A) worth $50 billion in 2018 riding on plenty of stressed corporate assets on offer at tempting valuations, a report by industry chamber Assocham said on Monday.
The forecast in 2018 was picked by Assocham Year Ahead Outlook from the trends in 2017 when India’s M&A transactions witnessed a quantum jump of 170 per cent in valuations and over 70 per cent in the number of transactions.
According to different data compilations, there were a total of 944 transactions (664 domestic and 280 cross-border) in 2017 worth $46.5 billion ($13.1 billion domestic and $33.4 billion cross-border).
This was against a total of 553 transactions (358 domestic and 195 cross-border) worth $17.5 billion ($7.2 billion domestic and $10.3 billion cross-border) in 2016.
“There has been a quantum leap in M&A transactions in India with more focus on sectors such as healthcare, telecom, energy, real estate, media and entertainment, banking, insurance, oil, cement and consumer products,” said the Assocham paper.
The M&A opportunities in 2018 would remain robust given the fact that lot more assets continue to remain under stress, highlighted the study.
“Besides, several of the big ticket projects, referred to the NCLT (National Company Law Tribunal) under the Insolvency and Bankruptcy Code would see change in promoters in areas like real estate, steel etc,” said Assocham Secretary General D.S. Rawat.
—IANS
