RBI steps in to improve credit flow to exporters
Mumbai, Source: The Hindu Business Line
The Reserve Bank of India (RBI) has announced further measures for liquidity management and improving credit flow by doubling the period of entitlement of the first slab of post-shipment rupee export credit to 180 days and allowing banks to avail liquidity support from it to accommodate the funding needs of housing finance companies.
The RBI, in a statement said, in view of the difficulties being faced by exporters on account of the weakening of external demand, the period of entitlement of the first slab of post-shipment rupee export credit, currently available at a concessional interest rate ceiling of benchmark prime lending rate (BPLR) minus 2.5 percentage points, would be extended from 90 days to 180 days with effect from December 1, 2008. Banks have been allowed to avail liquidity support under the Liquidity Adjustment Facility (LAF) through relaxation in the maintenance of Statutory Liquidity Ratio to the extent of up to 1.5 per cent of their Net Demand and Time Liabilities (NDTL) for the purpose of meeting the funding requirements of Housing Finance Companies also. Earlier, banks could meet the funding requirements of only non-banking finance companies and mutual funds under this arrangement.
Forex Liquidity :
Further, the RBI, which is presently providing forex liquidity to Indian public and private sector banks having foreign branches or subsidiaries, through forex swaps of tenors up to three months, has decided that this facility, which is available on request, will be made available up to June 30, 2009.
RBI clarified that the facility under which all scheduled commercial banks (excluding Regional Rural Banks) are provided refinance from the Reserve Bank equivalent to up to 1.0 per cent of each bank’s NDTL as on October 24, 2008 at the LAF repo rate up to a maximum period of 90 days could be rolled over. During this period, refinance can be flexibly drawn and repaid. It has decided to continue The RBI, which is presently providing on request forex liquidity to banks having foreign branches or subsidiaries through forex swaps of tenors up to three months, will make it available up to June 30, 2009.
Source: The Hindu Business Line |
Pharma sector sees rise in export turnover this fiscal
Kolkata, Source: The Financial Express
The Indian pharmaceutical sector reported an export turnover of $1.5 billion in the previous financial year. It is expected to grow in the current fiscal. At present, the sector meets almost 95% of the county's needs, according to industry reports. "The exports turnover of the Indian pharmaceutical market is expected to grow in the coming years, but exactly how much we do not know," said Soumitra Deb, chief research manager, East India Pharmaceutical Works Ltd. He was talking to reporters on the sidelines of a seminar on the role of intellectual property rights (IPR) in the pharmaceutical industry. The Kolkata patent office and the Indian Chemical Council organised the seminar.
Deb also spoke about how the foreign companies had monopolised and dominated the Indian drug market till 1980s-90s.
SK Mitra, assistant controller of patents & designs, ministry of commerce & industry, govt of India, said 32,000 patent applications were received across four patent offices in the country during 2007.
In the same year, 15,000 patents were granted on different technologies. "Granting of patents is increasing every year. Patents are received for sectors like telecommunications, textiles, biotechnology, mechanical, pharmaceutical, etc," he said.
When asked about the pharma sector, he said, "Of 15,000 patens granted last year, around 15% belong to the pharma sector."
AC Banerjee, corporate advisor--research & development, East India Pharmaceutical Works Ltd, said: "Innovations and inventions in this sector must be protected as intellectual property right."
IPR has become important in the face of changing trade environment that is characterised by the features like global competition, high innovation risks, short product cycle and high investments in research & development, said Sharmistha Ghosh, examiner of patents and designs, Kolkata patent office. |
India Inc M&As defy market volatility in 2008
One would think the subprime credit crisis, fluctuating commodity and equity prices and the closure of a myriad large investment banks and other financial institutions could have dealt a body blow to M&A and private investment activity in the country.
Not quite so. Despite recent events, India has seen some of the largest deals in sectors that were till recently not very popular among Indian deal makersmicro finance, oil and gas and automotive sectors.
There have been some landmark deals announced during 2008 (January to December 15, 2008) which displays India Inc’s resilience during turbulent times. The year also witnessed several billion dollar deals, eclipsing 2007’s seven deals by two additional deals, according to a new report.
What is hearty to note, India Inc remains a favourite destination for international private equity funding and inbound M&A. The country is also an active investor in international companies, thereby increasing its global footprint.
There were 24 M&A deals with value of over $250 million in 2008 as compared to 22 deals and 20 deals in 2007 and 2006 respectively. Take Daiichi Sankyo’s pharma target Ranbaxy Laboratories for $4,506.31 million for a 60% stake.
Or even Oil and Natural Gas Corp Videsh’s acquisition of Imperial Energy for $2,800 million. HDFC Bank acquired Centurion Bank for $2,377.50 million, while Tata Motors acquired the operations of Jaguar and Land Rover for a cool $2,300 million. All in 2008.
The year also saw a spurt in domestic M&A activity. The value of domestic deals announced has increased from $4.99 billion and $2.85 billion in 2006 and 2007 respectively to $5.09 billion in 2008, even though the volume of domestic deals decreased from 321 deals in 2007 to 171 deals in 2008. “Corporate India has done significant number of M&A transactions in 2008 with a value of over $30 billion. It is creditable to note that this has been achieved irrespective of the global economic slowdown and dwindling stock prices,” said C G Srividya, partner, specialist advisory services at Grant Thornton.
She adds: “It is noteworthy that the deal traction on M&A has been good andstable in all quarters, irrespective of the volatility in economy and market. After several years, we have seen a significant amount of high value inbound deals, showing the increasing interest and the attractiveness of Indian businesses to international companies.”
Last year, the inbound value was primarily from a single large deal. Interestingly, some of the typical sectors such as oil & gas, automotive, chemicals among others have contributed significantly to the deal value.
Deal volumes (M&A and PE together) though have dropped in 2008 as compared to 2007. There were more than 1,000 deals in 2007, as compared to 751 in 2008. The value of cross border deals (both inbound and outbound) announced in 2008 (January-December 15) has reduced by almost 47% from 2007, according to the annual Grant Thornton report.
The value of inbound deals has fluctuated from $5.4 billion in 2006 and $15.50 billion in 2007 to $12.48 billion this year. The value of outbound deals fluctuated from $9.91 billion in 2006 and $32.76 billion in 2007 to $13.15 billion in 2008. PE investments in Indian companies have crossed the $10 billion mark in 2008. “While private equity has grown considerably over 2006 and prior years, it is about 45% less than last year. This is considering that the billion dollar deals that were seen last year were missing this year and the significant decline has come only from the second half of 2008,” Srividya added.
Source: The Economic Times |
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Package-II to boost exports, realty
The government is expected to come out with a second stimulus package in the next few days to lift slowing growth. This may include steps to ease liquidity and relief measures for export and housing sectors, commerce and industry minister Kamal Nath said.
More measures would also be taken to maintain the growth momentum in employment generating sectors like textiles, steel and pharmaceuticals. The government would also introduce stricter safeguards in the form of stringent anti-dumping laws in these sectors to protect the domestic industry against cheap imports, the minister said.
Mr Nath said the government is looking at real estate industry’s demand for lower interest rates on loans advanced to houses in the bracket of Rs 30-40 lakh. He indicated that the RBI was looking at taking monetary steps aimed at ensuring availability of funds at lower cost. He said the government was considering possible duty cuts for more goods to stimulate demand in the economy.
The second stimulus package comes in the backdrop of the economy registering a 0.4 % fall in industrial growth in October and exports a 12.1% fall during the month. Commerce ministry’s quick estimates predicted a similar decline in November too, though the data is awaited.
The government had cut excise duties by 4% across-the-board in the package announced on December 7. The last package also involved raising public expenditure by Rs 20,000 crore. In addition to the fiscal stimulus, the Reserve Bank of India reduced key ratios and policy rates, releasing about Rs 3,00,000 crore into the system, and signalled a soft interest rate regime.
The government told Parliament that it was confident of the economy growing at 7-8% this fiscal, against last year’s 9%. India’s economy expanded an annual 7.6% in the September quarter.
The measures taken so far this year to fire up the economy could expand the country’s fiscal deficit by 2% to around 5%, chief economic advisor in the finance ministry Dr Arvind Virmani had said in the government’s mid-year review of the economy. Policymakers feel this is an year of extraordinary crises and the response should match its magnitude. Dr Virmani had also said that the country could contemplate measures that may have been unthinkable a year ago. Former finance minister P Chidambaram too had said that this is not an year to worry about fiscal deficit. |
Exports up by 23.7% in April-October 2008 India’s Foreign Trade Data
India’s cumulative value of exports for the period April- October, 2008 was US $ 107796 million (Rs.467505 crore) as against US $ 87144 million (Rs.354064 crore) registering a growth of 23.7 per cent in Dollar terms and 32 per cent in Rupee terms over the same period last year. Exports during October, 2008 were valued at US $ 12822 million which was 12.1 per cent lower than the level of US $ 14588 million during October, 2007. In rupee terms, exports touched Rs.62387 crore, which was 8.2 per cent higher than the value of exports during October, 2007.
India’s imports during October, 2008 were valued at US $ 23360 million representing an increase of 10.6 per cent over the level of imports valued at US $ 21126 million in October, 2007. In Rupee terms, imports increased by 36.2 per cent. Cumulative value of imports for the period April- October, 2008 was US $ 180789 million (Rs.786059 crore) as against US $ 132780 million (Rs.539879 crore) registering a growth of 36.2 per cent in Dollar terms and 45.6 per cent in Rupee terms over the same period last year.
Oil imports during October, 2008 were valued at US $ 7960 million which was 22 per cent higher than oil imports valued at US $ 6525 million in the corresponding period last year. Oil imports during April- October, 2008 were valued at US $ 65774 million which was 60 per cent higher than the oil imports of US $ 41115 million in the corresponding period last year. |
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