Category — Economy

Harvard Study: India Becomes New Economic Growth Pole, Surpasses China

According to the Harvard University‘s Center for International Development  growth projections, India will feature on top of the list of the fastest growing economies until 2025 with an average annual growth of 7.7 per cent. The university-wide center works to advance the understanding of development challenges and offer viable solutions to problems of global poverty.

Indian flag

Key Highlights of the  study:

  • “The economic pole of global growth has moved over the past few years from China to neighboring India, where it is likely to stay over the coming decade.”
  • “The countries that are expected to be the fastest growing – India, Turkey, Indonesia, Uganda, and Bulgaria – are diverse in all political, institutional, geographic and demographic dimensions.”
  • “India, Indonesia and Vietnam have accumulated new capabilities that allow for more diverse and more complex production that predicts faster growth in the coming years.”
  • “What they [the countries mentioned in the previous bullet] share is a focus on expanding the capabilities of their workforce that leaves them well positioned to diversify into new products and products of increasingly greater complexity.”
  • “India has made inroads in diversifying its export base to include more complex sectors, such as chemicals, vehicles, and certain electronics.”

NDTV says, that the growth projections are based on measures of each country’s economic complexity, which captures the diversity and sophistication of the productive capabilities embedded in its exports and the ease with which it could further diversify by expanding those capabilities.

 

 

July 10, 2017   No Comments

India Holds $124 Billion in U.S. Securities

The most recent data available with the U.S. Treasury Department shows that India increased its holding of American government securities to $124.1 billion at the end of April, a $7 billion increase from the previous month.

Among the BRIC nations, India had the third largest exposure to the U.S. government securities after China and Brazil, while Russia‘s holding rose to $104.9 billion reports the Press Trust of India.

With the U.S. economy witnessing relatively better economic growth trends, India has hiked its exposure to the securities. According to the latest estimate from the Bureau of Economic Analysis released last month, “Real gross domestic product increased at an annual rate of 1.2 percent in the first quarter of 2017.”

picture depicting growth

June 27, 2017   No Comments

India Ratifies UN’s Convention for Goods Transit

India is the 71st signatory to the United Nations’ TIR (Transports Internationaux Routiers) Convention, an international transit system that facilitates the seamless movement of goods throughout countries in Asia and Europe.

TIR is the global standard for goods customs transit managed and developed by IRU, the world road transport organization. IRU, will work closely with all relevant stakeholders in India on training, development, and outreach efforts to prepare the country in six months in implementing the convention said Umberto de Pretto, secretary general of IRU.

A Truck

India recently ratified the trade facilitation agreement of the World Trade Organization, and this move will help India access transnational multi-modal connectivity.

Kazem Asayesh, senior advisor on TIR and Trade Facilitation said, “The TIR system has been facilitating trade and international road transport for over 60 years, by allowing customs-sealed vehicles and freight containers to transit countries, without border checks.”

A study in the United Nations Economic and Social Commission for Asia and the Pacific region estimated that implementing TIR can generate economic benefits ranging from 0.14 to 1.31 percent of national GDP, reports the Times of India.

June 22, 2017   No Comments

Private Consumer Companies Outpace Listed Peers

Privately-held companies in the consumer goods (“FMCG or Fast Moving Consumer Goods)  sector in India have outpaced their peers in the public domain, highlighting an opportunity for private equity investors.

For example, listed cookie maker Britannia Industries Ltd., which owns popular brands such as Good Day and Tiger, grew at a CAGR of 14.4% between 2010 and 2016. Anmol Biscuits, a private entity whose net sales are less than a tenth of Britannia’s, recorded growth of 20% for the same period.

Highlights from a joint study by VCCircle’s data research arm VCCEdge and management consultancy AT Kearney:

  • Though smaller in terms of revenues, private companies grew at a CAGR of 11% compared with 6% for listed firms from 2010 – 2016. This disparity in growth was due to better consumer connect, inorganic growth strategy, and entry into global markets, the report said.
  • The study found that margins have fallen across the spectrum as companies have invested in infrastructure development for tapping new markets, and product innovation.
  • Return on capital employed improved to 13.4% during FY16 against 10.4% in FY09, due to better capital utilization, reinvestment of profits in optimization of manufacturing facilities and supply chain networks.
  • The report suggests that risk-averse investors should focus on large private FMCG firms, while risk-seeking investors should cherry-pick by targeting mid-sized firms.                                                                                                                     Anmol Biscuits

June 22, 2017   No Comments

M&A Deals Surge in India

According to assurance, tax, and advisory firm Grant Thornton, during January-May 2017, there were 170 mergers and acquisition deals worth $35.45 billion in India, registering a significant jump over last year deals worth $13.37 billion.

“All eyes seem to be now on the Goods and Services Tax implementation and its impact on not only trade and economy, but more importantly on investor interest,” Grant Thornton India partner Prashant Mehra said. He added that since there is a clear visibility on this, one should see good traction in both M&A and PE.

A handshake

In May, the e-commerce sector led the deal activity by contributing over 53 percent of the total transaction value. The month also witnessed deals worth over $100 million in the banking and financial services, hospitality and leisure, and real estate sectors, Grant Thornton’s report added.

“Increasing consolidation is driving deal volumes in the start-up sector, capturing 25 percent of volumes with highest activity witnessed in the on-demand services space,” quotes BusinessLine from the report.

June 21, 2017   No Comments