The World Bank released a report with startling study on how limited transport connectivity, onerous logistics and regulatory impediments, and lack of trust, it costs more to trade within South Asia than between South Asia and world’s other regions. To give an example – Its 20% cheaper for India to trade with Brazil than with its neighbor Pakistan! The Asian Development Bank retained India’s economic growth forecast at 7.3%. India also laid the foundation for construction of a world class convention centre in Delhi.
ADB’s retains India’s growth forecast – India is expected to grow at a healthy 7.3% in fiscal year (FY) 2018 helped by improved domestic demand, steady revival in industrial growth and reduced drag from net exports, says a new Asian Development Bank (ADB) report. India’s fiscal year ends in March of the next calendar year. In an update to its flagship annual economic publication, Asian Development Outlook (ADO) 2018 (reported by Asia Law Portal in April 2018), ADB maintains its growth outlook for India in line with its April forecasts of 7.3% for FY2018 and 7.6% in FY2019.
GDP Growth at 2 year high – India’s economic growth soared to an over two-year high in April-June quarter, powered by solid expansion in manufacturing, the farm sector and gathering strength in consumer spending, bolstering the government’s reforms record. Data released by the Central Statistics Office (CSO) recently showed the economy grew 8.2% in April-June, the first quarter of the country’s fiscal year which starts in April, higher than previous quarter’s 7.7% and 5.6% in the first quarter of 2017-18. This was the fastest expansion since the January-March quarter of 2016. The manufacturing sector rose an annual 13.5% compared to a decline of 1.8% in the year ago quarter, while the crucial farm sector rose 5.3%, up from 3% growth in first quarter of 2017-18.
Foreign Companies allowed hedging The Securities and Exchange Board of India (SEBI), recently decided to allow foreign companies having exposures in the Indian commodity market to hedge their positions in derivatives. The decision was taken after consultation with the Ministry of Finance and the Reserve Bank of India (RBI). However, they will not be allowed to hedge their exposures in sensitive commodities. Derivatives trading will also not be permitted in commodities they don’t have exposure in. This may differ from company to company. SEBI has clarified that hedging cannot be for a period longer than their physical market exposure. Foreign entities that don’t have exposure in India’s physical market will also not be allowed.
New World Class Convention Centre – Prime Minister Narendra Modi recently laid the foundation stone of India International Convention and Expo Centre (IICC) in Delhi. The facilities provided at the centre will be on par with the best in the world in size and quality, offering setting for international and national events, meetings, conferences, exhibitions and trade shows, the Ministry of Commerce said in a press release. “It will rank among the top 10 in the world and the biggest indoor exhibition space in India,” it said adding the project is expected to generate over 5 lakh employment opportunities. The project is planned over an area of 221.37 acre in Sector 25, Dwarka, at an estimated cost of Rs 25,703 crore. IICC will be an integrated complex with facilities like exhibition halls, convention centre, open exhibition spaces, mixed use commercial spaces like star hotels (5, 4 and 3 star), retail services and high-end offices. The construction will be in line with green building principles and Indian Green Building Council (IGBC) Platinum rating standards. The convention centre can accommodate 11,000 persons, 5 exhibition halls, 1-kilometre long foyer, multi-purpose arena with retractable roof. It will be developed in two phases. Phase-I and II will be completed by December 2019 and December 2024, respectively.
Mauritius Top FDI Contributor – Mauritius remained the top source of foreign direct investment (FDI) into India in 2017-18 followed by Singapore, whereas total FDI stood at USD 37.36 billion in the financial year, a marginal rise over the USD 36.31 billion recorded in the previous fiscal, according to RBI data. While FDI from Mauritius totalled USD 13.41 billion as against USD 13.38 billion in the previous year, inflows from Singapore rose to USD 9.27 billion from USD 6.52 billion. Even as FDI from Netherlands declined marginally to USD 2.67 billion as against USD 3.23 billion in the year-ago period.
India’s high potential for trade in South Asia – India’s current trade in goods with its neighbouring countries in the South Asian region is a mere 30.65 per cent of the potential trade of $ 62 billion, which can be boosted if certain restrictions on the current trade, like tariffs, port restrictions and other non-tariff barriers can be eased, a report from the World Bank said. Currently, India’s actual trade in South Asia accounts for $19.1 billion which is just three per cent of its total global trade at $637.4 billion and around $43 billion below the potential. The World Bank report, titled ‘A Glass Half Full : The Promise of Regional Trade in South Asia‘ states that at present, South Asia is one of the least integrated regions. Intra-regional trade accounts for only 5 percent of South Asia’s total trade, compared to 25 percent in ASEAN. Intra-regional investment is smaller than 1 percent of overall investment. Greater cooperation and regional economic integration can bring about gains in these areas and help tap into the proximity and demographic dividend, South Asian countries enjoy.