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Doing business in India easier now: Modi

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Modi
Doing business in India easier now: Modi

New Delhi, November 3, 2017: Prime Minister Narendra Modi on Friday invited global investors to do business in India, which he said was “easier now” after his government repealed archaic laws and launched attractive fiscal incentives.

Describing India as “one of the fastest growing economies” in the world, Modi said it was an opportune time for global businesses to invest in the country.

 “India has jumped 30 ranks this year in the World Bank’s (Ease of) Doing Business rankings. India was ranked number one in the world in 2016 in greenfield investment.

“India is also rapidly progressing on the Global Innovation Index, Global Logistics Index and Global Competitiveness Index,” Modi told the gathering of global businessmen at the inauguration of World Food India 2017 here.

Billed as the biggest congregation of global investors and business leaders of major food companies, the three-day event aims to transform the food economy and realise the government’s vision of doubling famers’ income by establishing India as a preferred investment destination and sourcing-hub for the global food processing industry.

“Private sector participation has been increasing in many segments of the value chain. However, more investment is required in contract farming, raw material sourcing and creating agri-linkages. This is a clear opportunity for global chains.”

Modi said India offered single window clearance for investors and had launched attractive fiscal incentives.

“There are opportunities in post-harvest management, like primary processing and storage, preservation infra, cold chain and refrigerated transportation.

“There is also immense potential for food processing and value addition in areas such as organic and fortified foods.”

He said food processing was a way of life in India that had been practiced for ages.

“Simple, home-based techniques, such as fermentation, have resulted in the creation of our famous pickles, papads, chutneys and murabbas that excite both the elite and the masses across the world.”

Modi said farmers were central to India’s efforts in food processing and as such the government launched the Pradhan Mantri Kisan Sampada Yojana to create world-class food processing infrastructure.

“This will leverage investment of $5 billion, benefit two million farmers and create more than half a million jobs.”

The food event will host over 2,000 participants and 200 companies from around 30 countries.

Apart from representatives of 28 states, it will also see participation of 18 ministerial and business delegations, nearly 50 global CEOs along with heads of all leading domestic food processing companies.(IANS)

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Slow Pace of Private Investment, High Finance Costs Impact India’s Economy

"Sales might turn positive in August as the liquidity situation is expected to improve"

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india's, sovereign bonds, economy
A sovereign bond is a debt security issued by a national government and is either denominated in foreign or domestic currency. Pixabay

Consumption driven growth might become an unintended beneficiary of the government’s plans to raise a part of its gross borrowings from external markets. Presenting the Union Budget 2019-20 last Friday, India’s Finance Minister Nirmala Sitharaman proposed to raise a part of the government’s gross borrowings from abroad.

The budget proposal is expected to free-up additional liquidity in the domestic market and lower interest rates. Consequently, it will provide consumers and industry with cheaper access to finance.

According to Edelweiss Securities Lead Economist Madhavi Arora, lower interest rates wil aid consumer driven sectors which have been bogged down due to subdued demand.

Currently, the economy suffers from rural distress, slow pace of private investment and high finance costs. These together have subdued consumer sentiment and further impacted everything from car sales to air passenger traffic. This in turn has impacted production levels and further stalled hiring and wage levels.

india, sovereign bonds
“India’s sovereign external debt to GDP is among the lowest globally at less than 5 per cent,” Sitharaman said in her maiden Budget speech in Parliament. Flickr

The slowdown has impacted the automobile sector the hardest. The off-take data for May showed that domestic passenger car sales were down 26.03 per cent to 147,546 units. “Issuance of sovereign bonds should ideally free up resources available for production needs at a reduced cost,” explained Grant Thornton India Partner Sridhar V.

“Government’s move to issue sovereign bonds by itself is an indication of its confidence in the macro fundamentals and could boost economic activity.” However, Kavan Mukhtyar, Partner and Leader – Automotive, PwC India cited the need for further liquidity infusion.

“Cheaper interest rates (as an impact of government’s external borrowings) will aid in lowering the ownership cost. However, the need of the hour is to increase the availability of liquidity through NBFCs (non-banking finance companies) and banks,” Mukhtyar said.

“Sales might turn positive in August as the liquidity situation is expected to improve.” Off-loading sovereign bonds is a mechanism available to governments for raising cheaper funds from international markets.

india, sovereign bonds
“Sales might turn positive in August as the liquidity situation is expected to improve.” Pixabay

A sovereign bond is a debt security issued by a national government and is either denominated in foreign or domestic currency. “India’s sovereign external debt to GDP is among the lowest globally at less than 5 per cent,” Sitharaman said in her maiden Budget speech in Parliament.

“The government would start raising a part of its gross borrowing programme in external markets in external currencies. This will also have a beneficial impact on the demand situation for government securities in the domestic market,” she added.

This will be a first such bond issuance. In 2013, the government had considered the idea, but never implemented it. At that time, the country was faced with major fiscal and current account deficits.

Instead, the Reserve Bank of India at that time announced a scheme to incentivise foreign currency non-resident (FCNR) deposits, which brought in nearly $34 billion. As a result, most of India’s debt is rupee-denominated.

india, sovereign bonds
Instead, the Reserve Bank of India at that time announced a scheme to incentivise foreign currency non-resident (FCNR) deposits, which brought in nearly $34 billion. As a result, most of India’s debt is rupee-denominated. VOA

The government’s latest move is being seen as prudent in the face of limited options to raise funds as a slowing economy curtails tax revenue, while the borrowing target of a record Rs 7.1 trillion ($104 billion) this fiscal year remains a tough task.

ALSO READ: Is Budget 2019-20 a Hope for India’s Development?

“It will aid the sector to a limited extent. While the interest is low, transmission of cheap capital in the system is important, which takes time,” said Rahul Mishra, Principal, A.T. Kearney.

“Also, given the NBFC crisis, the overall availability of capital is very limited and whatever capital is available, it has strong checks and collateral requirement. A combination of low interest, eased out lending norms and better transmission of money will have a positive impact on consumption sectors over a 3-6 month period,” he added.  (IANS)