Factory output shrinks 4.3%; Lowest in almost 8 years

Source: The Economic Times, Nov 12, 2019

NEW DELHI: India’s industrial production shrank for the second consecutive month in September, its worst performance in the series that began April 2012, highlighting the persistent structural slowdown in the economy and firming up expectations of further monetary easing next month with scant signs of a turnaround.

As per the Index of Industrial Production (IIP), factory output contracted 4.3% in September, the lowest in almost eight years in this series, which began April 2012 (with 2011-12 as the base year) and the lowest since October 2011when compared with the earlier series with base year 2004-05. IIP had contracted 5% in October 2011.

The decline was steeper than the 1.4% reduction seen in August, suggesting that the economy may have slumped further in the second quarter of the current financial year. Industrial production grew 4.6% in September 2018.

Economists expect second-quarter growth — the GDP figure is to be released on November 29 — may be lower than the six-year low of 5% in the June quarter. The Reserve Bank of India (RBI) had said last month that growth may be marginally better at 5.3% in the July-September period.

“This is a weak phase in the economy and sentiments are not robust but it’s tough to say if the economy has bottomed out,” said IDFC First Bank chief economist Indranil Pan. The lender sees second-quarter growth at 4.9-5.1%.

The central bank has pared its FY20 annual growth forecast to 6.1% from 6.8% estimated earlier. The economy grew 6.8% in FY19.
Full year growth estimates
Economists’ estimates for the full year are generally more gloomy. Growth for the current fiscal year may dip to around 4.7%, dragged down by the industrial sector, said 20191113-3ICRA principal economist Aditi Nayar. Nomura cut its GDP forecast to 4.9% for FY20 from 5.7% earlier. Axis Bank chief economist Saugata Bhattacharya said, “Overall, Q2 GDP growth is likely to be weak and robust recovery will take some time.”

The RBI has cut interest rates by a cumulative 135 basis points this year and will review monetary policy early next month, with the announcement scheduled for December 5. One basis point is one-hundredth of a percentage point.

Last week, Moody’s Investor Service lowered its outlook on India’s sovereign rating (Baa2) to negative from stable, saying that the domestic economic downturn could be structural, as opposed to cyclical, implying that more policy changes were needed in order to revive growth.

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Funding of cosmetics & beauty startups doubles to $108m in ’19

Source: ETRetail.com, Nov 11, 2019

Chennai: Startups in beauty and cosmetics space saw investments more than double to $108 million in 2019 till date, as compared to $51 million in 2018. The number of deals also rose to 12 from seven.

Nykaa saw a deal of $14 million in April, which increased its valuation to over $700 million and MyGlamm brought in $19 million from Bessemer Ventures. Smaller firms such as Roots Ventures and Sauce.VC are also placing some bets in the sector, data from Venture Intelligence shows.

In an indication of increasing wellness and fashion consciousness coupled with newer options, more Indians are buying cosmetics and skin care products, creating business opprtunities for a new crop of startups.

Analysts added that the category is moving towards growth-stage funds from from seeing just small-scale investments. Venture Intelligence MD Arun Natarajan added that with the economic slowdown, a higher number of proven business models are being funded. “With the success of Nykaa, similar companies within the segment are coming up and are seeing investor attention,” he said.

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New Zealand sees big potential to cooperate with India in dairy sector

Source: The Hindu Business Life, Nov 10, 2019

Ahmedabad: Soon after India’s exit from the multi-lateral trade pact, Regional Comprehensive Economic Partnership (RCEP), a prominent partner in the mega trade bloc, New Zealand, has extended a helping hand for best practices in the dairy sector by offering technology and systems.20191111-5

On the last day of his three-day visit to India, Damien O’Connor, New Zealand’s Minister of State for Trade and Export Growth, engaged with Amul at the milk capital of India, Anand, and tried to understand India’s cooperative structure and the functioning of the dairy market in the country.

He hinted that New Zealand will continue to explore the Indian dairy market with the right products at the right time using Indian milk with advanced technology. Asked if New Zealand looks at India as a potential market, O’Connor stated: “Our countries share a lot of similarity in legal systems, cultural background. About 5 per cent of our population in New Zealand is Indian or of Indian descent. So, we believe it’s a market we should talk to. There is also an opportunity for more trade with India.”

O’Connor, who is also Minister for Agriculture, spent a day meeting dairy farmers and visiting Amul’s milk product manufacturing facilities around Anand.

“We discussed how the (dairy) market works in India. (It is) slightly different than in New Zealand. But there are many similarities between our dairy industry and Amul. We have built a very successful dairy industry,” O’Connor said during a media interaction at AmulFed dairy in Ahmedabad on Thursday..

“Though small, at about 2 per cent of the world’s total dairy production — it is based on cooperatives. And that has delivered benefits to our farmers and allowed our industry to grow. And I am sure the same thing that we see today (at Amul) will allow growth for Amul and the Indian dairy industry,” he added.

Notably, during the earlier negotiations for an RCEP agreement, Indian farmers, led by milk federations and dairy organisations, had expressed their apprehensions about dumping of dairy products by major producers like New Zealand, destroying the farmer-driven milk economy in India.

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These 12 services sectors on govt’s radar to boost exports, FDI inflow; eyes investments, tie-ups

Source: Financial Express, Nov 10, 2019

To boost trade exchange in services between India and the world, the commerce ministry is looking to attract investments and partnerships in strategic areas including financial management and accounting, telecom projects, aviation and space programme, content, media distribution, infrastructure, outsourcing publishing work, intellectual property management services etc. in its annual Global Exhibition on Services (GES) event later in November in Bengaluru. The government is aiming at boosting Indian services in the global market by focusing on 12 services sectors and seeing participation from 100 countries.

The government, through GES, “seeks to enhance strategic cooperation and develop synergies to strengthen multilateral relationships between all stakeholders, tap the potential for services exports and increase FDI inflow,” the commerce ministry said in a statement on Sunday. Esports will also be the key market in focus by commerce ministry’s export promotion council — Services Export Promotion Council (SEPC). Esports market will likely grow from $655 million global revenue in 2017 to nearly $1.8 billion by 2022 even as the fanbase of esports is expected to grow from 270 million in 2016 to 495 million in 2020. Read the rest of this entry »

October manufacturing activity at two-year low, PMI at 50.6

Source: The Economic Times, Nov 01, 2019

India’s manufacturing activity hit a two-year low in October as new orders and output rose at a slower pace, making the business confidence slip to its lowest level in over two-and-a-half years, a private survey showed on Friday.

The IHS Markit India Manufacturing PMI fell to a two-year low of 50.6 in October, from 51.4 in September highlighting only a marginal improvement in the health of the manufacturing industry.

The index remaining above 50 indicates growth while a score below that mark means contraction.

“PMI data for October showed a continuation of manufacturing sector weakness in India, with sales growth softening to the slowest in two years,” said Pollyanna de Lima, principal economist at IHS Markit.

“Weakening demand had a domino effect in the manufacturing industry, knocking down rates of increase in production, employment and business sentiment,” de Lima added.

The survey report showed that growth was restored in capital goods and softened in the consumer goods category, while a quicker contraction was registered at intermediate goods makers.
The PMI is based on a survey conducted among purchasing executives in over 400 companies, which are divided into eight broad categories—basic metals, chemicals & plastics, electrical & optical, food & drink, mechanical engineering, textiles & clothing, timber & paper and transport.

Challenging market conditions, coupled with delayed client payment, dampened business confidence in October.

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Data centres may prove to be the next big opportunity in India

Source: The Economic Times, Oct 23, 2019

The business of setting up large data centres, trudging along nicely over the years, has picked up pace lately, with at least three major business groups announcing plans to enter this segment in the last four months alone, and established players going ahead with aggressive expansion plans of their own.
In July, the Adani group said it would invest up to Rs 70,000 crore to set up solar powered data parks in Andhra Pradesh.

This was followed by real estate major Hiranandani Group announcing a Rs 14,000 crore investment plan, and Reliance Industries partnering with Microsoft to provide cloud services to small and medium enterprises.

Last week, incumbent Oracle announced the launch of its Gen 2 Cloud region in Mumbai, with another planned in Hyderabad.

ST Telemedia Global Data Centres (STT GDC), which currently has a capacity of 70 MW spread over 2.14 million square feet, plans to double this by March 2020, and grow further to 200 MW over 4 million sq ft, within three years.
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DPIIT working on mechanism to help investors set up facilities in India

Source: Business Standard, Oct 22, 2019

The Department for Promotion of Industry and Internal Trade (DPIIT) is in the process of setting up of a mechanism to handhold investors and help them set up their facilities in India, a senior government official said on Monday.

DPIIT Secretary Guruprasad Mohapatra said that the proposal is being sent to the Commerce and Industry Minister Piyush Goyal for approval, following which it will set up an investment promotion and facilitation agency Invest India. It will be funded by the DPIIT.

“Very soon we will be announcing it. Within Invest India, another format in which we actually do hand-holding from investment query that anybody makes to operationalising it in the field…,” he said here at a function. Read the rest of this entry »