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INDIA ECONOMIC NEWS

Published by Embassy of India Bangkok September 2015


National Meet on Promoting Space Technology based Tools and Applications in Governance and Development

The Prime Minister, Shri Narendra Modi attended a special session at the National Meet on Promoting Space Technology based Tools and Applications in Governance and Development, in New Delhi on 7th September 2015. In his remarks at the special session, the Prime Minister emphasized the need for new initiatives in all areas of governance, using space technology applications. He recalled his visit to ISRO in June 2014, when he had urged ISRO to work on this, and expressed satisfaction that the number of Government departments using space technology had gone up substantially since the time of that visit. The Prime Minister called upon all Ministries of the Union Government to identify at least one space application in their work within the calendar year 2015. The Prime Minister recalled the eminent space scientist Vikram Sarabhai’s words on the costs of India’s space programme, who had said that no effort should be spared in the objective of fulfilling the needs of India’s common man. The Prime Minister said he was happy to note the high degree of enthusiasm among government departments to use space technology in their respective areas of governance. He emphasized on the need to make use of all available resources and data, to derive best results. The Prime Minister gave a number of illustrations on possible applications of space technology for the benefit of the common man: location of fish catches for fishermen, irrigation infrastructure for Pradhan Mantri Krishi Sinchai Yojana, tracking of illegal mining etc. Shri Narendra Modi said technology is the most powerful medium that the Government has to ensure good governance, transparency and accountability. He emphasized that there should be no “space” between the common man and space.


NEWS ARTICLES (from the press) India to join UN-based 'Better Than Cash Alliance' Source: The Economic Times, 1 Sep, 2015

India is joining the UNbased 'Better Than Cash Alliance', which promotes transition from cash to digital payments to reduce poverty and drive inclusive growth, the government said. "The new partnership with the Better Than Cash Alliance, made up of governments, companies, and international organisations, is an extension of Indian government's commitment to reduce cash in its economy," the Finance Ministry said in a statement. India joins the Alliance for digitisation of payments to achieve financial inclusion and to share success stories from PMJDY, the world's largest financial inclusion programme, the statement said. Under PMJDY, in one year, about 180 million new accounts have been opened, with deposits totaling more than USD3.4 billion (223 billion Rupees). The announcement has come ahead of United

Nations Special Summit in New York, where Prime Minister Narendra Modi along with other world leaders will launch Sustainable Development Goals (SDGs). Commenting on the development, Better Than Cash Alliance Managing Director Ruth GoodwinGroen said that India's leadership and progress are inspirational for countries around the world. The Better Than Cash Alliance is a partnership of governments, companies, and international organisations that accelerates the transition from cash to digital payments in order to reduce poverty and drive inclusive growth. Government accepts AP Shah Panel report on MAT; no levy on FIIs prior to April 1, 2015 Source: The Economic Times, 2 Sep, 2015

Foreign institutional investors will not face minimum alternate tax, or MAT, in India. The Narendra Modi government decided to accept a high-level panel's report to bring down curtains on the

acrimonious issue that had undermined its promise of a stable and nonadversarial tax regime. The government will soon issue a directive to its officials not to pursue MAT demand on foreign institutional investors (FIIs) or foreign portfolio investors (FPIs) for the period before April 1, 2015, pending legislative change, the finance ministry said in a statement. The development will provide some support to the Indian markets facing sharp selloff because of a combination of China slowdown, impending interest rate increase in the US and slower than expected GDP growth in the first quarter. The government clarification, backed by recommendations of the AP Shah committee, will be followed up with amendments to Section 115 JB of the Income Tax Act as early as in the winter session of Parliament to close the issue for good. "We would be bringing out that amendment in the statute," finance minister Arun Jaitley said. "Meanwhile, pending such an amendment all the field formations are conveyed


NEWS ARTICLES (from the press) by the way of a circular that this is the decision of the government and they will have to hold their hands and not make further orders in the matters," he said. This means the .Rs 602crore demand notice sent to 66 FIIs/FPIs will now be on hold. "All the notices that have already been issued will now be interpreted in accordance with the pre April 1, 2015 law. So what applies post April 1, 2015, will also apply pre April 1, 2015," Jaitley said. He said necessary amendments will be made in the next session of Parliament. The budget for FY16 had made amendments to provide that the levy will not apply after April 1, 2015, triggering a raft of tax demands from assessing officers for period before that, reignited the charge of tax terrorism on Indian tax authorities. This prompted the government to set up a committee headed by retired Justice AP Shah to take a look into the issue. The committee reasoned that the Section 115JB applies to firms governed by the companies law and should not apply to FIIs/FPIs that do not have

presence here and are not covered by the law. The committee made two recommendations: amend Section 115JB of the Income Tax Act clarifying the complete inapplicability of the MAT provisions to FIIs/FPIs; or, CBDT may issue a circular clarifying the complete inapplicability of the MAT provisions to FIIs/FPIs. The government has decided to do both. Jaitley clarified that the circular will deal with only FIIs and not MAT on foreign companies bringing in foreign direct investment (FDI), which will be decided based on the Supreme Court decision in the Castleton case that involves the issue of ley on a foreign company. "I won't comment on Castleton case as there is a distinction between FIIs and foreign companies," he said. Though the Shah committee has not gave a recommendation on the issue, it feels MAT should not apply to foreign companies that do not have presence in India. "Therefore, we find that the ratio in Castleton that even foreign companies having no 'place of

business' or 'permanent establishment' are also covered by Section 115JB, is not the correct position of law," it said. Centre's 'Green Fund' to transform 96,000 km of national highway into green corridor Source: The Economic Times, 3 Sep, 2015

The government is planning to create a "Green Highways Fund" under its ambitious policy to transform India's 96,000 km network of National Highways under which it will be mandatory to set aside 1 per cent of the total road project cost for plantation. The Road Transport and Highways Ministry is formulating the "Green Highways (Plantation & Maintenance) Policy 2015" to develop ecofriendly NHs with the participation of community, farmers, NGOs, private sector, government agencies and the Forest Department. "It has accordingly been decided that henceforth, for the work related to the greening of National Highways, I per cent of the civil work cost should be added separately while arriving at the total project


NEWS ARTICLES (from the press) cost (TPC) of National Highways being developed on EPC/BOT mode," the ministry said in a communication to states. It said, "One per cent of the TPC will be set apart for highway plantation and its maintenance. This fund will be transferred to NHAI to maintain a separate fund account called 'Green Highways Fund' only for this purpose." This fund will be transferred to National Highways Authority of India (NHAI) to maintain a separate Fund Account called "Green Highways Fund" only for this purpose, it said. NHAI will act only as a Fund Manager for maintaining the account and releasing payments based on recommendation of concerned officials and agencies. "This Fund will be utilised for Plantation & Maintenance work on all stretches of National Highways," it said. Earlier, Road Transport and Highways Minister Nitin Gadkari had said that to transform India's national highways into green corridors, the government will soon implement an ambitious

policy under which one per cent of the road construction cost will go towards planting trees. The government plans to create a brigade of 1,000 contractors to fulfil this ambitious task, he has said adding, "Now, we have taken a decision that one per cent of cost in construction is for tree plantation and other things. We are going to create 1,000 contractors in the country." He has said if the cost of road construction comes to around Rs 1 lakh crore, Rs 1,000 crore will go for plantation. Gadkari has specified that planting trees in any particular area will depend on the soil suitability there, besides climate and success stories like Alphanso can be planted in Konkan in Maharashtra. The new green policy, he said, will help create jobs and contribute to the economic growth. The Indian road network of 33 lakh kms is the second largest in the world and consists of about 96,000 kms of NHs, which constitute only 1.7 per cent of the road network but carry about 40 per cent of the total road traffic.

India among few bright spots in global economy, says IMF Source: The Economic Times, 5 Sep, 2015

The IMF said India is among the few bright spots in the global economy as G20 Finance Ministers began their two-day meeting against the backdrop of concerns over Chinese economic slowdown looming large on world markets. The remarks from International Monetary Fund (IMF) Chief Christine Lagarde came at the meeting of G20 Finance Minister and Central Bank Governors where they also discussed monetary policy uncertainties. Lagarde told the gathering that between advanced and emerging economies, there are problems in most places in the advanced world while in emerging economies, there are problems in China although not that big as stock markets are making it to be, according to officials present at the meeting. Among emerging economies if there is any growth, that is in India. India is among the few bright spots in the global


NEWS ARTICLES (from the press) economy, the officials said quoting Lagarde.

hike rates although not in a "one go, big bang" manner.

Officials said that RBI Governor Raghuram Rajan said at the meeting that they are surrounded by economic gloom probably hinting at concerns over slowdown in China.

Government relaxes rules for sugar exports

Policymakers from South Korea, Australia, China and the US were among those who were present at the meeting. Meanwhile China assured other G20 member countries that its economy would not collapse and would continue to grow at a slower pace, officials said. They added that draft declaration has so far not named the US or China. India deprecated the recent devaluation of major currencies followed by currency depreciation in a large number of emerging markets which raises the risk of competitive devaluations. Currency devaluations at a time when the global demand is sluggish is a major threat to stability in the global economy, India had said. Rajan said global economies witnessing sustainable growth need to

Source: The Economic Times, 7 Sep, 2015

The government relaxed norms for sugar exports by doing away with the registration requirement with the Commerce Ministry. The industry said the move would help expedite sugar exports from India, which is saddled with surplus stock. "The requirement of registration of quantity with DGFT for export of sugar has been dispensed with," Director General of Foreign Trade (DGFT) said in a notification. Earlier, prior registration of quantity with DGFT was mandatory. "Industry welcomes the government's move to remove the requirement of Registration Certificate (RCs) for exporting sugar. In the current environment when exports are unviable, RC requirement could have delayed exports. So, this is a good decision," Indian Sugar Mills Association (ISMA) Director General Abinash Verma said.

At present, the exporters have to take RCs from DGFT, which are issued for a maximum 50,000 tonnes. Sugar output of India, the world's second-largest producer, in 2015-16 marketing year (OctoberSeptember) is likely to exceed domestic demand for the sixth consecutive year. India exported 1.26 million tonnes of sugar during October 2014-April 2015 of the ongoing marketing year. Although exports are not viable now due to sharp decline in global prices, the government is trying all options, including barter trade, to push export of 4 million tonnes of surplus sugar to help cash-starved domestic mills make payment of dues over Rs 14,000 crore to cane farmers. The country is estimated to produce 28 million tonnes of sugar in 2014-15 marketing year, against the annual demand of 24.8 million tonnes. There is still a surplus stock of 10 million tonnes in the country. The government is providing subsidy of Rs


NEWS ARTICLES (from the press) 4,000 per tonne on export of raw sugar. 'Make in India' got investment proposals worth $3.05 billion: Nirmala Sitharaman Source: Business Today, 3 Sep 2015.

The government received investment proposals worth $3.05 billion under 'Make in India' initiative, which is an indication of the impetus being provided to the economy, said Commerce and Industry Minister Nirmala Sitharaman. 'Make in India' aims at attracting domestic and foreign investments to make India a global manufacturing hub. Government assured exporters that it will give top priority to developing modern infrastructure for boosting shipments to overseas markets and spurring economic growth. Sitharaman said that after a phase of slowdown, India is very much on the recovery path with higher GDP rate and improved manufacturing growth. "I know all of you have concerns about infrastructure growth among others. I assure you, we will give maximum

priority to infrastructure growth and development," she said at the Diamond Jubilee celebrations of Engineering Export Promotion Council of India (EEPC India). Besides slowdown in the global demand, infrastructure bottlenecks are hampering India's exports. She also said that government has received investment proposals worth $3.05 billion under 'Make in India' which is an indication of the impetus being provided to the economy. 'Make in India' aims at attracting domestic and foreign investments to make India a global manufacturing hub. Sitharaman asked engineering exporters to build a brand for the sector in the global market. Engineering exports accounts for about 22 per cent in the country's total merchandise exports. Besides North America and Europe, engineering exports have spread to regions like Africa and Asean, she said adding the key driver in increasing engineering exports is

shifting of manufacturing bases to India. Commerce Secretary Rita Teaotia said despite numerous challenges on domestic and global front, the sector has proved that India can be a consistent and a good competitor on the global front. Teaotia said that economic growth in several large economies is not good and "for us borrowing rates are high on account of inflation as well as some currency variations". She said new opportunities have emerged in outsourcing of engineering goods and services, product design, product improvement and maintenance and "these need to be an area of aggressive focus for us". India's share in global engineering trade is only 1.2 per cent and the share of high value products in the total basket is only 6 per cent, she said. "But this really is an opportunity and it means that sky is the limit in terms of potential," she said. India's engineering exports have increased from $50 billion in 2010-11 to $70 billion in 2014-15.


NEWS ARTICLES (from the press) Approval of National Offshore Wind Energy Policy Source: Press Information Bureau, GoI, 9 Sep, 2015

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi, has given its approval to the National Offshore Wind Energy Policy. With this approval, the Ministry of New & Renewable Energy (MNRE) has been authorized as the Nodal Ministry for use of offshore areas within the Exclusive Economic Zone (EEZ) of the country and the National Institute of Wind Energy (NIWE) has been authorized as the Nodal Agency for development of offshore wind energy in the country and to carry out allocation of offshore wind energy blocks, coordination and allied functions with related ministries and agencies. The approval paves way for offshore wind energy development including, setting up of offshore wind power projects and research and development activities, in waters, in or adjacent to the country, up to the seaward distance of 200 Nautical Miles (EEZ of the country) from the base line.

Preliminary assessments along the 7600 km long Indian coastline have indicated prospects of development of offshore wind power. With the introduction of the National Offshore Wind Energy Policy, the Government is attempting to replicate the success of the onshore wind power development in the offshore wind power development. The policy will provide a level playing field to all investors/beneficiaries, domestic and international. All the processes would be carried out in a transparent manner by NIWE. The development would help the country in moving forward towards attaining energy security and achievement of the NAPCC targets. The scheme would be applicable throughout the country depending upon offshore wind potential availability.

FDI allowed via partly paid shares, warrants; prior government nod not required for raising money Source: The Economic Times, 16 Sep, 2015

The government has decided to consider foreign investments in partly paid shares and warrants eligible instruments under the foreign direct investment policy, bringing greater flexibility in their use to raise capital. "The government has reviewed the extant FDI policy...to allow partly paid shares and warrants as eligible capital instruments for the purpose of the FDI policy," the department of industrial policy and promotion (DIPP) said in a notification amending the consolidated FDI policy circular 2015. Till now warrants and partly paid shares could be issued to foreign investors only after approval through the government route. Bringing them under eligible foreign investment instruments means that prior government permission will not be required for raising money through these instruments


NEWS ARTICLES (from the press) in sectors where FDI is allowed under the automatic route. "DIPP has synchronised its rules with the RBI guidelines, which was treating it (partly paid shares and warrants) as capital instruments already. It is a good step as it removes another ambiguity and brings such FDI under automatic route," said Devraj Singh, executive directortax and regulatory services, at EY. The government has also inserted a new clause in thepolicy that says: "An Indian company may issue warrants and partly paid shares to a person resident outside India subject to terms and conditions stipulated by the Reserve Bank of India in this behalf, from time to time." In another step towards improving ease of doing business in the country,the DIPP, in a separate note, clarified that facility sharing agreements within two group companies will not be treated as real estate business provided the arrangements are at arm's length price. DIPP has also added the condition that in accordance with the relevant provisions of the Income Tax Act 1961 the annual lease rent earned by the lessor company

hould not exceed 5% of its total revenue. Madan Sabnavis, chief economist at CARE Ratings, the notifications were in line with the government's move to remove hindrances at policy levels for investors. e-visa facility to be extended to 37 more countries Source: The Times of India, 10 Sep, 2015

e-Visa facility would be extended to 37 more countries to attract maximum foreign tourists, a top tourism ministry official said. Currently, we have given eVisa facility to 113 countries and the number will go upto 150 soon, tourism secretary Vinod Zuthsi said at the Indian Association of Tour Operators (IATO) function. Zutshi said the discussions are on with concerned ministries including external affairs and home ministry and it is expected that extension of the e-Visa facility to more countries soon. He said involvement of all stakeholders is required for promotion of tourism in the country

A total of 22,286 tourists used e-Visa facility to visit India in August this year, compared to 2705 in August, 2014. An integrated approach is required to take the Incredible India to the next level, the tourism secretary informed. He said India has vast tourism potential as many places with great opportunity are yet to be explored. "We have to unravel the hidden treasure of many lesser known places. But it requires integrated strategy to promote them," Zutshi said. Referring to many religious places which have daily visitors in thousands, he said these places attract pilgrims in hordes without any promotion. We have many plans but it needs to be put on fast track to take the Incredible India to the higher level, he added. Speaking in the function Ashwani Lohani, who has recently taken over as CMD of Air India said "challenge is great...there are lot of expectation and pressure to perform." Lohani, who has made a turnaround in the Madhya


NEWS ARTICLES (from the press) Pradesh tourism, however, said "Air India is not MP tourism. It is a hard nut to crack. Lot of things to be done. But I am hopeful for positive results because all AI employees want to soar high in the sky again." Government appoints CVCFL as implementing agency for Electronics Development Fund Source: The Economic Times, 21 Sep, 2015.

The government has appointed CANBANK Venture Capital Fund Ltd (CVCFL) as the agency to implement the Electronics Development Fund (EDF). The EDF is set up as a 'Fund of Funds' to participate in 'Daughter Funds' which in turn will provide risk capital to companies developing new technologies in the area of electronics, nanoelectronics and Information Technology (IT), an official statement said. The EDF would take minority participation in seed funds, angel funds and venture funds dedicated in this area, it added. The statement said the EDF shall invite requests from professionally

managed private/public funds for its participation. EDF participation in a fund may vary depending on the nature of the fund and risk involved. EDF will support both Indian and foreign funds which are registered in India and comply with SEBI and other regulations in this regard. With appointment of CVCFL as the agency to implement EDF, the EDF is now operational and start receiving requests for participation from seed funds, angel funds and daughter funds. The requests for seeking participation by EDF must be made on or before March 31, 2017. As part of the 'Digital India' programme, it is envisaged to develop the Electronics System Design and Manufacturing (ESDM) sector to achieve 'net zero imports' by 2020. Setting up of EDF is one of the important strategies which would enable creating a vibrant ecosystem of innovation, research and development (R&D) and with active industry involvement.

India a 'shining star' in global economy: Nirmala Sitharaman Source: The Economic Times, 22 Sep 2015.

Notwithstanding a financial crisis being experienced by major economies like China, India "stands out" as a "shining star" in the global economy and is sustaining a certain momentum despite challenges, Commerce and Industry Minister Nirmala Sitharaman said. "India today stands out in (the) global economy," Sitharaman said in her remarks at a panel discussion on 'US-India Economic Ties: Ready for Takeoff?' organised by Carnegie Endowment for International Peace, a top American think tank. Global demand, economy and prospects of looking at what could happen in next few months require a lot of light and positive energy, she said, adding that the depression in demand is showing on all the economies. "Notwithstanding, I still say, India stands out, to borrow a phrase from my finance minister as a shining star, because if you look at the parameters, we


NEWS ARTICLES (from the press) are still going to have between seven to seven and half per cent growth and that for an economy that still has challenges is sustaining a certain momentum within the Indian economy in spite of the global demand where it is," Sitharaman said. "India gives you a steadier picture," she noted, referring to the "responsible" behaviour of the Indian stock markets to the Chinese economic crisis. "India offers certain sense of stability, which today economies long to have," she said, adding that the fundamentals of the economy are very strong. "India is an inviting investor's domain. I would like every investor to look at it," Sitharaman said. In a world of depression where demand is not rising, here is a market which is waiting for quality goods, is the best place for investors and is the best place to produce, she said. For all this, the current government is addressing all the impediments including infrastructure and other lacunae, the minister said. In just 15 months, Sitharaman said

India is an energy surplus country.

business leaders to 'Make in India'.

Private sector investment in India's infrastructure sector, she said, is headed towards 50 per cent by 2017.

"Reform in governance is my number 1 priority. We are for simplified procedures, speedy decision making, transparency and accountability," Modi told the top 47 CEOs from the Fortune 500 companies whom he met over dinner on Thursday.

Sitharaman assured the Washington audience that the Indian government is taking several steps to address the challenges being faced by the Indian economy. The Centre, she said has worked with the state governments towards ease of doing business. Sitharaman said with the political will that Prime Minister Narendra Modi has been showing in pushing India to be a better economy and with the red tape that would no longer be known for what it has been known for, will only make India a better place for all the investors. PM Modi dines with Fortune 500 CEOs, invites them to 'Make in India' Source: The Times of India, 25 September, 2015.

Prime Minister Narendra Modi met top CEOs in the US, listing the various sectors that India has opened up for investments and inviting the US

"FDI all over the world has fallen but in India it increased by 40 percent. This reflects confidence in the Indian economy," the Prime Minister said. READ ALSO: On Day 1 of US trip, PM Modi signals: India now open for business The Prime Minister said India is ready to welcome them (CEOs) with both hands and it is the right time for them to come and invest in the world's largest democratic country. Fortune Editor Alan Murray moderated the discussion. Among the CEOs of Fortune 500 companies who attended the dinner were Lockheed Martin Chairman and CEO Marillyn Hewson, Ford President and CEO Mark Fields, IBM Chairman


NEWS ARTICLES (from the press) Ginni Rometty, Pepsi Co Chief Indra Nooyi and Dow Chemical Chairman Andrew Liveris. Citigroup Chairman Michael O'Neill, MasterCard CEO Ajay Banga, Boeing International President Marc Allen, Goldman Sachs President Gary Cohn, Blackstone President Hamilton James, SanDisk cofounder Sanjay Mehrotra, Harman International Chairman Dinesh Paliwal and Time Inc CEO Joe Ripp were also present on the occasion. India, US sign $3-bn contract for Apache, Chinook helicopters Source: Business standard, 29 September 2015.

US and Indian officials signed two contracts for the purchase by the Indian Air Force (IAF) of 22 AH64E Apache attack helicopters, and 15 CH-47F Chinook multi-mission heavy lift helicopters. Two of the contracts, which were signed between teams from Boeing headquarters in the US and Indian defence ministry officials, were for the direct commercial sale (DCS) part of the contracts. This includes the entire

Chinook helicopter, and the flying portion of the Apache (less engines), as well as logistic support, spares and services. The purchase of the Apache weaponry and radar was signed separately as a foreign military sale (FMS) purchase by the Indian defence ministry, which signed a letter of agreement to this effect with the Pentagon. The FMS portion of the sale includes munitions, training, aircraft certification, and components like engines, electrooptical sensors and the radar. “Contracts for purchase of 15 #Chinook and 22 #Apache Helicopters signed”, tweeted defence ministry spokesperson, Sitanshu Kar. He did not release further details. The value of the deal for both helicopters, including DCS and FMS portions of the sale, is approximately $3 billion. According to the contract signed, Boeing will start delivering the Chinook and Apache helicopters in 36 months. The entire delivery is to be completed in 48 months from the signing of the contract.

Both helicopters will be delivered in fly-away condition, i.e., fully-built and ready for operations. Since Boeing is committed to a 30 per cent offset liability, there may be some portions that are built in India. Already, Indian companies are involved in the building of the Chinook. Bengalurubased Dynamatics Technologies builds the aft pylon and cargo ramps for the Chinook’s global supply chain. Boeing sources say that additional Indian vendors are being scouted for building more components. This contract will further consolidate the US position as India’s secondbiggest arms supplier, behind only Russia. The Apache AH-64E is the world’s most fearsome attack helicopters. It is armed with anti-tank missiles, rockets and a chain gun that fires 625 rounds per minute that can rip apart and armoured vehicles. The Apache has flown close to a million mission hours in conflicts from the First Gulf War in 1991 to Afghanistan and Iraq. Similarly, the Chinook, which first flew


NEWS ARTICLES (from the press) in the Vietnam War, but has continuously evolved in design, is one of the world’s most well-reputed heavy lift helicopters. It is capable of underslinging and lifting a light 155 millimeter Howitzer to support troops in high altitudes of up to 15,000 feet. RBI to allow additional $18.2 billion in foreign purchases of government debt Source: The Economic Times, 29 September, 2015

India's central bank will allow foreign investors to buy an additional $18.2 billion in government bonds in stages over the next few years, as part of measures introduced on Tuesday to open up domestic markets. The long-anticipated change involves increasing the government debt limit for foreign investors to up to 5 per cent of the current outstanding amount of bonds. The increase, to be carried out in stages until March 2018, will translate into 1.2 trillion rupees ($18.19 billion) in potential investment. The Reserve Bank of India (RBI) said foreign investors would also be

allowed to buy into debt issued by the country's states for the first time, although only up to 2 per cent of outstanding debt, or totalling 500 billion rupees by March 2018. The actions highlight the growing confidence India can withstand a likely increase in US interest rates later this year, which is expected to lead to selling by foreign investors in most emerging markets. "These moves should boost inflows," said Leong Lin Jing, an investment manager at Aberdeen Asset Management in Singapore in emailed comments. "They also signal the RBI's rising confidence in the resilience of India's capital markets. India, particularly versus other EMs (emerging markets), has seen stable capital flows supported by FDI (foreign direct investment) and bond buying."

since mid-July, 2013 after the decision. Among other measures, the RBI said it would allow Indian companies to issue rupee-denominated bonds with minimum maturity of five years. The RBI also said it would lower limits on how much government debt banks are mandated to hold in stages, in a move expected to help increase the amount that can be used for loans. In currency markets, the RBI said it would allow flexibility in managing currency risk for investors in over-the-counter markets in order to make hedging easier. Cashless economy: RBI to promote card usage in smaller towns Source: The Economic Times, 29 September, 2015.

The RBI announced the market measures as part of a policy review in which it cut its key repo interest rate by a bigger-thanexpected 50 basis points.

In efforts to move towards a cashless society, the Reserve Bank today said it will come out with a concept paper on promoting electronic payments, especially in smaller towns, by November-end.

The benchmark 10-year bond yield dropped as much as 17 basis points to 7.56 per cent, its lowest

"With growing financial inclusion, there are concerted efforts to enhance the use of


NEWS ARTICLES (from the press) technology and move towards a 'less-cash' society." "In order to promote electronic payments and use of cards for transactions, the Reserve Bank will put in the public domain a concept paper for proliferation of card acceptance infrastructure in the country, especially in the tier III to tier VI centres, by end-November 2015," it said. In its Fourth Bi-monthly Monetary Policy statement, the RBI also said it has issued Rs 100, Rs 500 and Rs 1,000 denomination banknotes with a new numbering pattern with ascending order of the size of the numbers from left to right. "This is being introduced in a phased manner for all denominations of banknotes," the RBI said. Further, with a view to making identification of banknotes easier for visually challenged persons, the process for introduction of additional identification marks has been initiated and is being introduced in Rs 100, Rs 500 and Rs 1,000 notes. In another move, the RBI said exchange traded currency futures and

options will be introduced in three cross-currency pairs -- EUR-USD, GBP$and USD-JPY. This is being done with a view to enabling direct hedging of exposures in foreign currencies and to permit execution of crosscurrency strategies by market participants. The RBI said necessary guidelines will be issued in consultation with SEBI by end-November 2015. At present, exchange traded currency derivatives include futures and options in four currency pairs -- USDINR, EUR-INR, GBP-INR and JPY-INR. To provide more flexibility to market participants in managing their currency risk in the OTC market and for making hedging easier, the RBI said that it has been decided to increase the limit for resident entities for hedging their foreign exchange exposure in the OTC market from $250,000 to $one million without the production of any underlying documents. The Reserve Bank also proposed to comprehensively review the documentation related

requirements in the OTC market. The possibility of participation by financially sophisticated investors up to certain limits in currency markets without underlying exposure will also be examined. Revised draft of the existing framework will be issued for public comments by endDecember 2015. Rate cut of 0.5% for stronger, sustainable growth: Raghuram Rajan Source: The Economic Times, 29 September, 2015.

Reserve Bank Governor Raghuram Rajan said the 0.50 per cent reduction in key rate is to ensure strong and sustainable growth, and was driven primarily by its preconditions being met and the weakness in external environment. "The conditions we had laid out have been broadly met except monsoon... We have also seen some dramatic reduction in external environment, including China has had a tremendous effect on commodity prices including on oil prices and its prospects," Rajan told reporters after the


NEWS ARTICLES (from the press) monetary announcement.

policy

RBI cut the lending rate by a surprising 0.50 per cent, terming it as a "frontloaded" action but affirmed its commitment to the accommodative stance it adopted in January. Rajan also made it clear that the RBI has not been "excessively aggressive" with the rate call and it should not be misconstrued as a bonus ahead of the Diwali festivities. "We have used what room we had, I don't think we were excessively aggressive. We weren't throwing Diwali bonus. Given the state of the economy, how can we move it forward," he said. After the clarity on meeting the January 2016 target of containing inflation under 6 per cent, Rajan said the focus now needs to shift to squeezing it further to 5 per cent by early 2017. He acknowledged the difficulties in meeting the target, but made it clear that it is "imminently feasible" and drew attention towards the success in bringing down inflation by two percentage points in the last one year.

The Governor said help from the government is very crucial, and welcomed the support being given through keeping the minimum support prices of grains lower and initiating other supply side measures.

Source: The Economic Times, 29 September, 2015.

On inflation, Rajan expressed concerns on pressures emanating on the services front, where we have seen prices of education and healthcare go up considerably.

The Finance Ministry today forwarded a report published in Financial Times, London, that said "India grabs investment league pole position."

He also said that it is difficult to gauge the supply in this sector, unlike other ones. For growth, where the RBI has cut its estimate by 0.20 per cent to 7.4 per cent, Rajan said increasing the investments is very crucial. "The capacity utilisation, the first factor which leads to more investment, is still very tepid and...suggest there is room for more domestic demand which will be non-inflationary and it would create more investment. We need to restart investment. Corporate investment has been weak," he said. India trumps China, US in wooing FDI worth $31 billion during H1 FY16: Report

With $ 31 billion of foreign capital inflows, India has surpassed China and the US to take the pole position in attracting largest FDI in the first half of 2015, a report said.

The report said India has attracted $ 31 billion of FDI in H1 2015, ahead of $ 28 billion of China and $ 27 billion of US. "A ranking of the top destinations for greenfield investment (measured by estimated capital expenditure) in the first half of 2015 shows India at number one, having attracted roughly $ 3 billion more than China and $ 4 billion more than the US," the FT report said. India is tracking well ahead of where it was at this time last year: it has more than doubled its midyear investment levels, attracting $ 30 billion by the end of June 2015 compared with $ 12 billion in the first half of last year. The report said that in 2014 India ranked fifth in


NEWS ARTICLES (from the press) terms of capital investment, after China, the US, the UK and Mexico. "In a year when many major FDI destinations posted declines, India experienced one of 2014's best FDI growth rates, increasing its number of projects by 47 per cent," it said.

India Economic News, September 2015, Embassy of India, Bangkok  

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