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India Inc Expect Faster Growth in 2019

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Business leaders expect faster growth in the next 12 months driven by expanding domestic market, technology and increased spending, according to a report.

The India Manufacturing Barometer 2019 by the Federation of Indian Chamber of Commerce and Industry (FICCI) and PwC reports that close to 74 percent of companies surveyed believe that the next 12 months will see faster growth in their sector. Around 58 percent of the respondents believe that their sector would grow faster by at least 5 percent.

The sample for the survey includes companies that contribute approximately 12 percent to the manufacturing Gross Domestic Product (GDP) of the country. The sectors include automobiles, chemicals, electrical machinery, food processing, leather, pharmaceuticals and textiles.

India’s economy is projected to grow anywhere between 7.3 – 7.7 percent. Domestic market remains a major demand driver for India Inc. However, business leaders anticipate an increase in turnover from global demand in the future.

Speaking at the launch of the report here on Wednesday, Puneet Dalmia, Managing Director, Dalmia Bharat Group, said that majority of the investment that happens in India is to cater to the domestic market. “Our exports accounted for 1.5 percent of the total exports in 2013 and 1.7 percent in 2017,” he said and added that for a country this big our exports should reflect that. Rajat Kathuria, Director and Chief Executive Officer (CEO), ICRIER, a think tank, agrees. He said, “Our domestic market is big. But to be competitive you need to serve the global market.”

As India expands its manufacturing footprint, Kathuria said the companies should improve their logistics better. Logistics cost in India is about 15 percent of the overall cost whereas the cost is less than 10 percent in countries like Japan. “Efficient logistics now will go a long way than it did in the past,” he added.

Companies such as Dabur and Marico, which derive nearly half their sales from rural markets, also see elections as a key growth driver.

“As we head into elections, we expect the government to announce additional stimulus that will substantially enhance the spending power in the hinterland with disposable income in the pockets of rural consumers,” said Sunil Duggal, chief executive of Dabur, which makes Real juices and Vatika haircare products.

Large consumer goods makers and auto companies have forecast growth of about 10% in the next six months in the approach to the upcoming general election in 2019 that will see substantially increased liquidity in the market.

“We are expecting growth of 7-12% over the next two quarters,” said Nestle India chairman Suresh Narayanan. “The run-up to the general election leads to more cash in the hands of the consumer and that liquidity directly translates into increased consumption for categories as ours.” Revenue growth in the Rs 3.4 lakh crore fast-moving consumer goods (FMCG) sector is expected to increase to 11-12% in FY19 from about 8% in FY18, driven by a revival in rural demand owing to external factors, a Crisil report said.

“This will lead to a significant improvement in the operating performance of FMCG companies and benefit their credit profiles,” the report added.

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Business

An expected China trade deal lacks teeth

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President Donald Trump’s trade war with China has left a trail of economic wreckage across American industries from soybean farms to auto manufacturers. But as the Trump administration sends signals about a potential trade deal with Beijing, one iconic American company is poised to emerge from the bruising conflict in a better position than most: Apple. Under CEO Tim Cook, Apple has kept its China-manufactured iPhones off the list of Chinese imports that Trump has slapped with roughly $250 billion in tariffs. That puts the Cupertino, Calif.-based electronics giant in an enviable position compared with other sectors caught in the crossfire — thanks in part to efforts by the soft-spoken, 58-year-old Cook to cultivate leaders in both countries.

The Trump administration is nearing a trade deal with China that would roll back tariffs on both sides of the Pacific, Ana Swanson and Keith Bradsher of the NYT wrote.

What America could get:

  • The deal would “require Beijing to make big purchases of American agricultural and energy goods and to lower some barriers that prevent American companies from operating in China.”
  • The potential agreement “would expand markets for American financial services firms and farmers, in part by requiring that China buy large amounts of energy and farm goods, like liquid natural gas and soybeans.”

And China:

  • “In return, the United States would most likely drop its tariffs on at least $200 billion of the $250 billion worth of Chinese imports currently subject to American levies.”
  • Beijing is also “pushing for the elimination of all of the Trump tariffs, a person with knowledge of the negotiations said.”

But “early details indicate it would do little to substantively change the way China has long done business and would not force Beijing to curtail cyber theft or the subsidies that the administration complains create an uneven playing field for American companies.” The technology measure is part of a proposed law on foreign investment that aims to address complaints by Washington, Europe, and other trading partners that China’s system is rigged against foreign companies. In a 2017 interview, the president even promised Apple would build “three big plants” in the U.S. — a claim he’s repeated on several occasions — through the company has never confirmed that.

Still, Apple has made some domestic investment plans, pledging in early 2018 to pump $350 billion into the U.S. economy over five years, including via a new corporate campus near Austin. The company touted that figure, a mixture of new and previously planned spending, shortly after Trump’s tax overhaul cleared Congress, paving the way for Apple to repatriate billions of dollars in overseas money at a lower tax rate.

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Telecom Industry Finds Need To Tighten Company Security, In Spite of Huawei

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The GSMA, which assembles 300 operators globally, has pushed back against the US calls on its European allies to block Huawei Technologies as the firm is very close to the Chinese state and its equipment may work for cyber spies.

Currently, the telecoms industry knows the need for complex mobile networks as these are increasingly safe. The head of its main lobby group said Reuters that as the debate spins over equipment vendors on national security grounds, they need to be barred.

The GSMA has proposed a stronger Europe-wide testing government to guarantee that, as operators build next-generation 5G networks, smartphones and the billions of connected devices that will be addicted up to the ‘Internet of Things’ are confined from hackers.

“We are now moving into intelligent connectivity, which means that more stuff will be connected,” said Mats Granryd, director general of the GSMA. He is hosting the Mobile World Congress, a major yearly industry congregation in Barcelona.

“If we have doubts today, the risk is that those doubts would be magnified going forward.”

The GSMA got to find itself trapped in a broader political turmoil as trade tensions between the United States and China thrash the telecoms industry.

Many officials from the US have lobbied their European supporters to forbid Huawei, the global association market leader. The operators countered this, with some saying the squash of 5G services which could be delayed by years if they should shred out and change Chinese kit in their set of connections.

Huawei denies that it has never worked secretly for Beijing, and also clarifies that there is no reliable proof existed which promote illegal contact to the country’s intelligence services.

Fact-based Evaluation

The leaders of European industries have required the United States to authenticate their opinions. Vodafone CEO Nick Read told in Barcelona that this was required to facilitate a “fact-based, risk-assessed review”. The European Commission is also thinking of inducing an actual ban on Huawei.

Digital Single Market Commissioner Mariya Gabriel said in a major address to the Mobile World Congress that she took the industry’s pressures seriously and additionally asked for a “fact-based assessment”.

It is yet to be known whether this similar expression means Brussels will observe the industry’s disputes and avoid inducing a restriction on Chinese suppliers.

Even if the first choice for European operators is apparent that choice and competition between network traders is essential to certify that they can improve and search for new ways to develop.

Granryd, the former CEO of Sweden’s Tele2 said, “We have always worked with security and we will always continue to work security and network integrity.”

“We live from scale, from having a community that can help us propel through innovation, through cost-effective solutions, through quick rollout. That is our aim, to make sure that we have a healthy supplier base that is competing with each other.”

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Microfinance industry posts 43 percent growth in Q3 FY’19

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The aggregate loan portfolio of the microfinance industry grew at a healthy 43.1 percent to Rs 1,66,284 crore as of December 2018, according to a report.

The loan amount includes a portfolio of Rs 458 crore in Andhra and Telangana and stressed (DPD 180+) portfolio of Rs 8,787 crore.

In the period to December 2017, total loan outstanding of the MFI industry was Rs 1,16,198 crore. A total number of microfinance accounts were at 8.91 crores as of December 2018, showing a growth of 24.3 percent over the third quarter of FY18, according to a report released by the Microfinance Institutions Network.

In the December quarter, 50 MFIN members collectively disbursed Rs 19,919 crore loans to 77 lakh accounts, it added.”The MFIs, especially NBFC-MFIs that hold the largest share in the microcredit space, have shed the impact of last year’s liquidity crunch and are focusing on steady growth in the loan portfolio as well as a number of clients in the coming quarters,” he said.

As of December 2018, 74 NBFC-MFIs held the largest share of the portfolio in micro-credit with a total loan outstanding of Rs 60,631 crore, which is 36.5 percent of total microcredit universe.

Banks’ microfinance portfolio stood at Rs 53,605 crore, showing a growth of 50 percent over the last year. NBFCs account for another 10.7 percent and non-profit MFIs account for 2.4 percent of the universe.

Microfinance Institutions Network (MFIN) is an RBI recognized self-regulatory organization and industry association of the microfinance industry.

Non-Banking Finance Company-Microfinance Institutions (NBFC-MFIs) hold the largest share of the portfolio in micro-credit with the total loan outstanding of Rs 60,631 crore, which is 36.5 percent of total micro-credit universe.

During the reporting quarter, NBFC-MFIs members received a total of Rs 8,235 crore in debt funding, an increase of 11 percent, the report said. The total number of microfinance accounts also witnessed an annual growth of 24.3 percent with 8.91 crore active loan accounts in the third quarter of 2018-19, the report said.

In terms of regional distribution of total portfolio (GLP) in the country, the report said East and North East account for 37 percent of the total NBFC-MFI portfolio, South 25 percent, North 14 percent, West 15 percent and Central contributes 9 percent.

In the microfinance industry, NBFC-MFIs’ share stood at 36.5 percent, banks contribute 32.2 percent, small finance banks 18.2 percent and NBFCs 10.7 percent and non-profit MFIs accounted for 2.4 percent.

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