Tag: Research Report

Auto industry down 18 pct in FY16; misses target

Auto industry down 18 pct in FY16; misses target

11/04/2016 00:09

Auto industry missed the target of producing 4.1 million passenger vehicles last fiscal under the Automotive Mission Plan 2006-16, although it exceeded the cumulative production target of 27.75 million units for the 10-year period by 1 per cent.

The turnover in 2015-16, as per Society of Indian Automobile Manufacturers (SIAM) estimates, stood at Rs 6.01 lakh crore, which is within the target range of Rs 5.61 lakh crore and Rs 7.31 lakh crore under the Automotive Mission Plan (AMP) 2006-16.

According to SIAM, in 2015-16 actual production of passenger vehicles was at 3.4 million units, by 18 per cent from the target of 4.1 million.

Likewise, in the two-wheelers there was a shortfall of 42 per cent with actual production in FY16 at 18.8 million units as against a target of 32.6 million units.

Commercial vehicles also missed the target of achieving 8.9 lakh units in 2015-16 with actual production standing at 7.8 lakh units, a shortfall of 12 per cent.

Similarly, three-wheelers also missed the target by 4 per cent with actual production in 2015-16 at 9.3 lakh units against the target of 9.7 lakh units.

On the other hand, the auto industry managed to exceed the cumulated production targets of various categories except the two-wheelers for the ten-year period.

As per SIAM figures, cumulative production of passenger vehicles in FY06-FY16 period was at 27.91 million, more than 1 per cent from the target of 27.75 million. This was possible due to a surplus of 26 per cent witnessed around 2009-10 to 2012-13.

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FDI in India up 29 pct after ‘Make in India’ launch: Min

FDI in India up 29 pct after ‘Make in India’ launch: Min

17/03/2016 10:15

The Indian Government has said that Foreign Direct Investment in the country has increased by 29 per cent for the 15-month period ended December last year after the launch of ‘Make in India’ initiative.

As per reports, the initiative aims at promoting India as an important investment destination and a global hub for manufacturing, design and innovation.

Commenting on the issue, Commerce and Industry Minister Nirmala Sitharaman told the media, “FDI inflow has increased 29 per cent during October 2014 to December 2015 (15 months after ‘Make in India’) compared to the 15 months period prior to the launch of this initiative.”

“During April-January 2016, the government has received 424 FDI proposals. Out these, 285 proposals have been disposed of,” he added.

The Minister further added that foreign investment in business to customer (B2C) e-commerce activities had been “opened in a calibrated manner” and entity was permitted to undertake retail trading through e-commerce under certain circumstances.

Feb WPI dips to -0.91 pct, remains in negative zone for 16th straight month

14/03/2016 12:43

Continuing its deflationary trend for sixteenth consecutive months, India’s Wholesale Price Index (WPI) shrank to -0.91 per cent for the month of February as compared to -0.90 per cent for the previous month, lower than India Ratings and Research’s (Ind-Ra) expectation of negative 0.80 per cent.

“Inflation in food and non-food articles came in at 3.2 per cent and 2.9 per cent, respectively, in February 2016,” according to data published by the ministry of commerce & industry on Monday.

The index for ‘food articles’ group declined by 3.2 per cent to 259.1 from 267.6 for the previous month due to lower price of fruits & vegetables, egg, arhar and gram, the data showed. On the other side, the index for ‘non-food articles’ group declined by 2.9 per cent to 217.9 from 224.5 for the previous month due to lower price of flowers, gingelly seed, castor seed and niger seed.

In February, the index for fuel and power group declined by 1.2 per cent to 169.6 from 171.6 for the previous month due to lower price of aviation turbine fuel (14%), bitumen (7%), furnace oil (3%) and LPG, petrol and high speed diesel (1% each).

Meanwhile, the manufacturing index rose by 0.3 per cent to 153.1 from 152.7 for the previous month.

For the month of December, 2015, the final Wholesale Price Index stood at -1.06 per cent as compared to -0.73 per cent, respectively.

Dec IIP indicates industrial recovery is still fragile: Ind-Ra

16/02/2016 12:04

The Index of Industrial Production (IIP) grew negative 1.3 per cent in December 2015, as against India Ratings and Research’s (Ind-Ra) forecast of 0.8 per cent. A second consecutive month of negative growth in factory output once again demonstrates that the industrial recovery is still uneven and fragile, said the rating agency.

“A part of the negative growth in December 2015 is an outcome of floods inundating Chennai, a major manufacturing hub for electronics and automotive,” Ind-Ra said in a report.

Of the USD 38 billion annual production of auto components in India, almost 25 per cent (USD9.5bn) comes from Chennai and its surrounding automotive belt. However, cumulatively during April-December 2015, at 3.1 per cent factory output growth is still higher than the 2.6 per cent growth recorded during the same period in 2014. Ind-Ra expects industrial gross value added to grow at 7.3 per cent in FY16.

Manufacturing growth came in at negative 2.4 per cent in December 2015, lowest since October 2014. After a relatively robust performance till October this fiscal, the manufacturing sector growth has dwindled. Although the government is trying to accelerate the manufacturing sector growth with emphasis on ‘Make in India’ and stepped up spending on infrastructure, it is still besieged with a number of challenges. A number of manufacturing sectors are still saddled with excess capacity due to lack of demand while few others are facing the brunt of cheap Chinese imports. A depreciating yuan and growth slowdown have resulted in an uptick of imports from China.

10 of the 22 industry groups in the manufacturing sector showed a contraction in December 2015. The capital goods sector contracted by 19.7 per cent in December 2015. This is the second consecutive month of negative growth in capital goods. However, cumulatively for April-December 2015, capital good is still showing growth of 1.7 per cent albeit lower than the 5.1 per cent recorded during the same period in 2014.

The Reserve Bank of India had earlier noted that the buoyancy witnessed in the capital goods sector till October 2015 is primarily from the demand generated from the projects stalled earlier, but have been revived lately. Clearly so long as greenfield investments do not pick up, sustaining capital goods growth will remain a challenge. Yet, Ind-Ra believes with government focus on increased capex in the sectors vital for growth – roads, railways, ports, rural roads etc, we may have to wait for more data to discern a trend.

E-Commerce ind likely to generate 2.5 lakh jobs in 2016

08/02/2016 08:50

E-commerce industry is likely to generate nearly 2.5 lakhs jobs in the online retail in 2016 including temporary employees, supply chain, logistics, ancillary units etc, reveals the ASSOCHAM recent paper. As per the estimates, 2.5 million staff will be required to work within the e-commerce industry by 2016. The paper shows that majority of e-commerce departments and businesses have increased their turnover since last year and present a huge opportunity for the industry to develop further. According to the ASSOCHAM recent paper, nearly 3,50,000 staff working under e-commerce industry and are looking to bring in new staff over next 12 months. Increasing smartphone ownership and investment from retailers are fuelling the rapid growth of m-commerce in India. Releasing the ASSOCHAM paper, D S Rawat, Secretary General ASSOCHAM said, the popularity of smartphones and other emerging channels increase with consumers, more retailers are beginning to merge and combine multiple departments and operations for all of their customers. “The hiring activities are expected to grow by over 60-65 per cent in this sector and may help create between 5-8 lakh employment opportunities in two to three years,” he added. The paper further suggests that a considerable amount of staff also work in areas supporting the e-commerce industry, including distribution and delivery, customer support and website development. While M-commerce currently represents only 20-25 percent of the India’s e-commerce market, this share is expected to grow as businesses, including those operating in the online to offline space such as taxis and restaurants, look to seize greater market share. It is also likely to be further accelerated by advancements in mobile technology and improvements in security and connectivity of shopping and payment platforms. The paper says that India’s e-commerce market was worth about USD 3.8 billion in 2009, it went up to USD 17 billion in 2014 and to USD 23 billion in 2015 and is expected to touch whopping USD 38 billion mark by 2016.

India’s domestic passenger traffic grew by 20.2 pct: IATA

05/02/2016 00:25

India’s domestic air passenger traffic grew by a whopping 20.2 per cent in 2015 over the previous year, helped by higher economic growth and increase in number of flights across domestic airlines network, according to the global airlines body IATA.

“Total domestic travel grew by 6.3 per cent in 2015, although there was a wide dispersion in performance by market. The India and China domestic markets led the way, with both registering double-digit annual growth (20.2 per cent and 10.9 per cent respectively),” the International Air Transport Association (IATA) said in its latest report.

Globally, international passenger traffic rose 6.5 per cent during 2015 compared to 2014 while capacity (addition of aircraft in the network) increased by 5.9 per cent.

As per the IATA, Indian carriers also recorded a higher seat occupancy during 2015 over 2014, IATA said.

The growth in India’s domestic air traffic was more than three-folds of the global average of 6.3 per cent.

“All markets (globally) showed growth, led by India and China but there was wide variance. Capacity rose 5.2 per cent and load factor by 0.9 per cent over 2014 to a record 81.5 per cent,” it said.

In the case of India, rise in domestic traffic was strongly helped by solid economic growth and an 8.3 per cent increase in the average frequency of flights on each route over the year, the airlines’ body said.

India’s economic growth for the fiscal 2014-15 stood at 7.2 per cent against 6.6 per cent recorded in FY14, reported PTI.

According to IATA, the domestic load factor of Indian airlines’ jumped by 6.7 per cent from 2014 to a record high of 83.2 per cent.

“Last year’s very strong performance, against a weaker economic backdrop, confirms the strong demand for aviation connectivity. But even as the appetite for air travel increased, consumers benefited from lower fares compared to 2014,” IATA Director General and Chief Executive Officer Tony Tyler said.

Aviation delivered strong results for the global economy in 2015, enabling connectivity and helping drive economic development, he said.

FDI in multi-brand retail of food won’t harm local mkts: ICRIER

04/02/2016 17:19

The Centre must consider allowing FDI in multi-brand retail of food and grocery to boost food processing as it is unlikely to pose any threat to local stores because a majority of Indian consumers still buy fruits and veggies from the local markets, an ICRIER report said.

The current policy already has a provision for allowing 51 per cent foreign direct investment (FDI) in multi-brand retail and the BJP-led NDA government has not yet rolled back the policy decision taken by the previous UPA regime, said the media report.

The report by Delhi-based think tank Indian Council of Research on International Economic Relations (ICRIER) comes weeks after Food Processing Minister Harsimrat Kaur Badal wrote to the Prime Minister suggesting a “relook” at the country’s FDI policy in multi-brand retail in food processing.

“The survey findings show that a majority of Indian consumers prefer to buy fruits and vegetables from the local markets (53.3 per cent) and push carts (18.8 per cent) despite presence of organised retail stores in select metros,” ICRIER’s Arpita Mukherjee said.

So, allowing FDI multi-brand retail of food and grocery sector will not have any impact on local vendors. “Therefore, the government must explore the possibility of liberalising FDI in multi-brand retail and ease conditions on foreign investors to improve access to variety of products,” she said.

At present, the food and grocery sector is largely non-corporate and there are restrictions on FDI in multi-brand retail. Further, some states do not allow direct sourcing. As a result, global multi-nationals have not shown interest in investing in the food supply chain.

High taxes on processed fruits and vegetables and variations in taxes across states also hinder the processing, she added.

Besides this, the ‘Indian Phytonutrient report’ which was released today made several recommendations to address the supply chain barrier of fruits and vegetables in a bid to increase India’s daily intake of these fresh farm items to the level of WHO recommended quantity of 400 grams per person.

The survey covered 1,001 respondents in five cities — NCR region, Delhi, Mumbai, Chennai, Hyderabad and Kolkata — to learn the consumption of fruits and vegetables in India.

The survey showed that the daily consumption of fruits and vegetables remained low at 280 grams per person despite India being the world’s largest producer of these items.

Lifestyle issues, seasonal availability, high cost, inconvenient market location, limited storage capacity at home among others were the reasons for low intake, it said.

To raise the consumption level, ICRIER Director and Chief Executive Rajat Kathuria said, “There is a need to identify gaps in food supply chain infrastructure and focus policy on the creation of the right infrastructure.”

Fruits and vegetables should be delisted from APMC so that there is no cess and remove restrictions on inter-state movements of fruits and vegetables, he suggested as per the media report.

Real estate sector to see muted demand in FY17: Ind-Ra

02/02/2016 12:00

India Ratings and Research (Ind-Ra), a country’s leading rating firm, on Monday revised its outlook on the real estate sector to negative for FY17 from negative to stable, based on the expectation that property demand will not revive during the year.

“This will result in a continued fall in unit sales and revenue, and thus lower cash flows and worse credit metrics in FY17. Hence, Ind-Ra has also revised the rating outlook on sector companies to negative from stable,” the rating firm said in a statement.

A revival of property demand would depend on a meaningful reduction in prices or a significant improvement in economic growth resulting in positive customer sentiments. The revival is unlikely until FYE17, as property prices will remain high and on the Ind-Ra’s estimates of GDP growth improving to 7.9 per cent in FY17 (FY16: 7.4%).

Companies have resorted to refinancing of debt through higher-cost funding from non-banking finance companies or private investors. This extends maturity and reduces the pressure on them to reduce prices to liquidate inventory and repay debt. However, this also increases the likelihood of stress when such instruments fall due.

Investor interest in the sector remains high and has received support from the relaxation of entry and exit conditions for foreign investors into the sector. While these measures will result in higher investment flows, it will be negative for the sector as most of the investments are in debt-like instruments and increases the likelihood of stress.

Ind-Ra expects demand for office space to be stable during FY17 driven by demand from IT/ITes and e-commerce segments. Demand for retail space has been hit by the expansion of e-tailers; however, it has been supported by the entry of foreign single brand retailers.

Cargo traffic at 12 major ports grow 3% in Apr-Dec 2015

22/01/2016 10:51

India’s top 12 major ports saw an increase in cargo traffic by 3.18 per cent to 447.05 million tonnes (MT) during the first nine months of the current fiscal, said the media report.

These ports operated by the central government had handled 433.26 MT of cargo during April-December period of the previous fiscal, 2014-15. According to the latest data, Kandla Port handled the maximum 73.87 MT of cargo during the period, which was up 4.26 per cent against 70.85 MT during April-December 2014.

Paradip Port handled 55.13 MT, the second highest cargo traffic during the April-December period of the current fiscal.

The port had handled 52.39 MT during the same period a year ago.

JNPT at Mumbai handled 48.23 MT while Mumbai port handled 46.39 MT of cargo during April-December.

Vishakhapatnam handled 42.24 MT, Chennai 37.41 MT, Kolkata 37.30 MT, New Mangalore 25.29 MT, VO Chidambaranar 27.80 MT, Kamarajar (Ennore) 22.96 MT, Cochin 16.49 MT and Mormugao 13.89 MT during the April-December period.

In growth terms, Mormugao port registered the highest growth of 35.31 per cent during the period followed by VO Chidambaranar port with 19.30 per cent growth.

There are 12 major ports under the control of the Centre besides 187 minor/intermediate ports under the jurisdiction of states along the 7,517 km long coastline of the country.

The 12 major ports – Kindle, Mumbai, JNPT, Marmugao, New Mangalore, Cochin, Chennai, Ennore, VO Chidambarnar, Visakhapatnam, Paradip and Kolkata (including Haldia) handle approximately 61 per cent of the country’s total cargo traffic.

Construction ind can help India combat global doom: Study

22/01/2016 08:59

In the midst of doom and gloom in the global economy with consequential impact on India, highly job-oriented construction industry can give quite positive results in terms of stepping up economic growth, more employment and raising tax revenue for the government, if the stress-ridden sector is provided immediate succour, a just-concluded ASSOCHAM-TARI study has pointed out. “Construction sector, which is the second largest employment generator after agriculture, comprising roads, ports, airports, bridges and real estate, has the multiplier potential to create benefits at least double the size of direct inputs,” highlighted the study titled ‘Construction industry: Contributing to Make in India,’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) jointly with Thought Arbitrage Research Institute (TARI). “The output multiplier demonstrates how an increase in demand of Indian construction sector can lead to an increase in overall output of the economy by 2.4 times thereby showcasing strong backward linkages of the sector with ancillary and complementary industries such as cement, steel, iron, bricks, sand, chemicals, heavy machines and equipment, sanitary ware, wood, electrical and other fixtures, paints and others,” noted the study. “Over 75 percent of real estate projects of the total investments worth over Rs 14 lakh crore remained non starter (under implementation) as of FY15 owing to plethora of issues like delays in environmental clearances, project approvals, acquisition, lack of finance and carrying the baggage of badly executed public-private-partnership (PPP) models that are crippling growth of construction in India,” said ASSOCHAM Secretary General, D S Rawat while addressing a press conference. “One of the major problems facing the industry is a high level of debt on their balance sheets, resulting from project delays which, in turn, were caused by things like environmental issues both at the state and Central levels,” said Rawat. “With the union government liberalising foreign direct investment (FDI) rules in realty and construction sector, we are hopeful that it will lift the affordable housing space, revive steel, cement and other related sectors, rev up employment scenario and boost the GDP (gross domestic product) growth,” he added.