Lockheed Martin Corp. has offered to build its flagship F-16 fighter jet in India, as the South Asian nation scrambles to modernize its aging defense fleet while trying to establish the country as a manufacturing base.
Lockheed Chairman, President and Chief Executive Officer Marillyn Hewson made the offer to Indian Prime Minister Narendra Modi in September, Phil Shaw, CEO of Lockheed’s Indian unit, said in an interview Thursday at the Singapore Airshow. The U.S. and Indian governments are negotiating the deal, he said.
Modi needs to quickly replace many of the air force’s 650 planes -- a third of which are more than 40 years old -- and has vowed to turn India from the world’s biggest weapons importer into a global hub for defense manufacturing. The country sold about $150 million of arms in the last fiscal year, a fraction of the $64 billion in worldwide defense trade and its own arms imports of $5.6 billion.
"The U.S.-Indian relationship that has been developing could benefit Lockheed," Jon Grevatt, Asia-Pacific defense-industry analyst for IHS Jane’s, said by phone from Singapore. But, he added, "I don’t see it happening immediately. This is still very early stages."
After coming to power in May 2014 with the country’s biggest election mandate in three decades, Modi unveiled his ‘‘Make in India’’ campaign to boost manufacturing to 25 percent of gross domestic product by 2022 from 18 percent now. The cornerstone of the policy is attracting companies to set up factories in India for manufacturing.
India picked Paris-based Dassault Aviation SA in 2012 to build 126 warplanes at an estimated cost of about $11 billion -- at the time the world’s biggest fighter-jet deal, and one in which Lockheed lost out. As talks stalled over price and quality guarantees, Modi flew to France last April and sought to directly buy 36 fighter jets from the French government in a bid to speed things up.
Lockheed understands the preferred option on such strategic purchases is a government-to-government discussion, Shaw said. He declined to say whether he thought India had erred by going for an auction process in the first round of the fighter jet deal that Dassault won. India first sought bids for new fighter jets in 2007.
Lockheed Martin is "anxious" to know the Indian Air Force’s requirements, which will help determine how many jets the country seeks to buy, Randall Howard, head of F-16 business development at Lockheed, said in the same interview.
"The problem we see is that India hasn’t come clean and said what its requirements are, in terms of both number of planes and their technical requirements," IHS Jane’s Grevatt said. "Until a requirement is made clear in either a tender or request for proposals, there seems to be a lobbying process going on."
Last week India summoned the U.S. ambassador in New Delhi to convey its displeasure at the planned sale of eight F-16 fighter jets to Pakistan, its nuclear-armed neighbor and biggest strategic rival. Howard called the proposed sale a government decision.
Shaw said Lockheed is in talks with Indian companies, including its existing Indian partner Tata Group, to find a potential partner for the fighter-jet program if it wins the contract. Phone calls seeking comment from Tata Group or Tata Advanced Systems Ltd., the group’s defense unit, were unsuccessful.
India has emerged as the sole ray of sunshine in an OECD global forecast clouded with gloom. It's the only large economy that's been upgraded by the Organization for Economic Cooperation and Development, which pared growth forecasts for all the others. It has raised India's growth forecast for 2016 to 7.4%, cut the global growth estimate to 3% and kept China's unchanged at 6.5%.
In what will come as a boost for the Modi government, which has been drumming up investment at the Make in India Week, the OECD forecast followed positive comments by Moody's. In its Global Macro Outlook released on Thursday, Moody's said India is relatively insulated from external turmoil and put growth for the country over the next two years at a stable 7.5%.
Stocks were buoyant, shrugging off recent tumult, and advancing for the second day led by positive global market cues. These included the US Federal Reserve's comments that it may not consider a faster pace of interest rate hikes this year due to fragile global economic conditions and Iran coming to terms with Saudi Arabia and Russia to freeze oil output levels. The Moody's report chimed with this sentiment.
The Sensex gained 1.14% to close at 23,649 points while the Nifty advanced 1.17% to 7,191, a shade below the immediate critical level of 7,200.
"India will continue to grow robustly, by 7.4% in 2016 and 7.3% in 2017," OECD said in its report published on Thursday. OECD's previous 2016 growth forecast was 7.3% for India and 3.3% for the world. China is expected to continue rebalancing its economy from manufacturing to services, with growth forecast at 6.5% in 2016 and 6.2% in 2017. By contrast, Brazil's economy is experiencing a deep recession and is expected to shrink by 4% this year and will only begin to climb back up next year. Monetary authorities need to be proactive, OECD suggested.
"In emerging market economies, monetary support should be provided where possible, taking into account inflation developments and capital market responses," it said.
Moody's Investors Services expects India to reduce spending appropriately to provide for higher wages to government employees and stay in compliance with the fiscal consolidation road map unveiled last year. "The 23.55% increase in public sector salaries proposed by the Seventh Pay Commission is worth 0.7% of GDP," it said. "The pay increase will also probably raise inflationary pressures. However, we assume the government will cut spending in other parts of the budget to maintain the deficit broadly in line with the 3.5% of GDP objective, thereby mitigating some of the inflationary effects."
Many analysts expect the government to stretch the fiscal consolidation road map again this year, seeing the FY17 deficit at about the current year's level of 3.9% of GDP in particular from overseas. Recent measures that allow 100% foreign ownership in many sectors will help further increases in foreign direct investment ( FDI), it said. At the Make in India Week, which ended on Thursday, investment pledges added up to Rs 15.2 lakh crore ($222 billion).
According to Moody's, the services sector will provide some support to growth. "In a context of low growth in global trade in goods, India's large services export sector (IT services account for about 18% of total exports) provides another source of resilience," it said. The agency said the generally robust economic environment is constrained by "banks' balance sheet repair and elevated corporate debt" and corporate pricing power being limited by the impact on food price inflation and households budgets of two consecutive droughts." Global growth will fail to pick up steam over the next two years amid a slowdown in China, lower commodity prices and tighter financing in some countries.
"Together with Turkey and China among the G20 emerging markets, India benefits from lower commodity prices: in 2014, net commodity imports amounted to 5.9% of India's GDP, compared with net exports worth 1.3%, 3.3% and 4.3% for South Africa, Brazil and Indonesia, respectively," it said.
Headline inflation in India will depend on the weather during the planting season. Without particularly unfavourable weather conditions, it estimates inflation will rise from last year's levels (4.9% on average) and fall back to the central bank's target of 5% by early 2017.
Another year of moderate price gains will help anchor inflation expectations and foster both consumer spending and investment, Moody's said.
Source: The Economic Times
Looking at India as a "favourable" investment destination, Australia is keen to invest in LNG, financial services, education and healthcare sectors of the USD 2-trillion economy.
India, which expects its economy to grow at 7.6 per cent this fiscal, has launched major initiatives to attract companies and investors from abroad amidst a subdued global economic sentiment.
India presents some "great" prospects for Australian businesses on account of a huge market of 1.2 billion people, Australia's Minister for Trade & Investment Andrew Robb told PTI.
"We expect the opportunity for those things that we are good at. We expect the opportunity to be able to come in and compete and to offer. In a lot of cases that would involve doing Joint Ventures (JVs) as there are a lot of local issues that need to be understood and the best way to do that is to find a good and trustworthy JV partner," he added.
When asked about the sectors, Robb said: "We expect to compete in the healthcare, education, financial services; and with world-class services, including resources and energy space."
The Minister said that Prime Minister Narendra Modi has transformed India's image and made it a "favourable" investment destination.
On his expectations from India, Robb said: "We want the opportunity to invest in a way which is not fraught with long delays, approvals and endless red tape.(We want to) invest in an efficient way and also be able to offer, after investing, a fair opportunity to compete with other service offerings.
"And in many cases, I think we will bring IP ( intellectual property) that will be valuable to India and in many cases we will gain IP that will be an advantage to Australia."
He further said there is a "huge interest" in Australia to participate in helping India in developing resources, but also stressed on the need for clarity in policy at the same time.
"... we've got the gas, of course India's got some, but we've got huge quantities of gas.In the past there has been frustration with companies that went in, either at the state level or federal level, commercial frustrations and roadblocks.
"It has discouraged some companies from participating. But, a lot of that has changed under the new government (Modi government). That's why we are doing Comprehensive Economic Cooperation Agreement (CECA), because we think now is the time where India is on the move and they are looking for whatever help different countries can give," he added.
Robb said that if governments get together it can ensure that there are no developments that hold the projects unnecessarily and that right attention is given and decisions are taken.
"States (in both the countries) can be brought in and commitments can be taken from them to give priority to certain projects. So, all of that creates a lot of business certainty, he added.
Talks for a CECA also known as FTA between India and Australia was started in 2011 to provide fillip to both trade and investments between the two countries.
"Well, certainly on the gas front, what the Minister (Power Minister Piyush Goyal) was talking about to Aussies on end-to-end projects, I think end-to-end propositions haven't been timed rightly in the past. I think there is a lot of scope for that. But in the end it will be a commercial decision," he said.
Goyal was in Australia last week for the India-Australia Energy Dialogue, which seeks to increase cooperation between both the governments and business in LNG, clean coal technologies, renewable energy among others. During his meetings with the government and businesses, Goyal stressed India's requirement of cheap gas for its power plants.
He, however added: "But I can say that if you do end-to- end and you have got a lot of certainty attached, both to the development of the project and also the ongoing, then the price issue could well be sorted. I think it's a graceful proposition for us to explore. It's a very worthwhile thing to explore."
Success breeds success and one thing will lead to other. There are some long term prospects for both the countries, Robb said.
Source: The Economic Times
The Make in India week in Mumbai, which concluded on Thursday, has resulted in investment commitments worth Rs.15.2 trillion across various Indian states, Amitabh Kant, secretary, department of industrial policy and promotion (DIPP), told reporters.
Of this, about 30% of the investments fall under the foreign direct investment (FDI) category, he said, adding that these commitments are those that the DIPP and other government agencies have been able to collect information about. “There may be more investment that has been committed but which we have not been able to get information on,” he said.
Maharashtra, which hosted the Make in India week, has bagged more than half this investment commitment.
Chief minister Devendra Fadnavis said the state has signed 2,594 memoranda of understanding (MoUs) worth over Rs.8 trillion. These MoUs would create more than 3 million jobs in Maharashtra. Fadnavis said the investment was spread across the state and that the Vidarbha, Marathwada and Khandesh regions had a share of Rs.1.75 trillion.
“The spectrum of these investment proposals is so large that it covers sectors from real estate to tourism to skill development to agro food processing to animal husbandry. I am sure these investments, and the regions where the investors are putting their money, will open up more sectors and spur more investment,” Fadnavis said.
Asked about the rate of investment implementation, Fadnavis said the state had entered into these MoUs after a rigorous process of vetting.
“Each of these MoUs has been vetted by us and we will make every effort to translate them into reality. The investments should not take more time than what is due,” he said.
Kant, who will soon exit as DIPP secretary, said the investment commitments would typically take 18 months to three years to materialize, and called the Make in India event and programme a big success.
“Since the prime minister launched this initiative, we have been able to create a sense of competition among states. We have promoted an investment-enabling environment and encouraged design, innovation and start-ups. The Make in India week offered a platform to investors, governments, countries, CEOs, consultants, diplomats and companies a common to come together and discuss business,” he said.
The Make in India centre in Mumbai’s Bandra Kurla Complex registered more than 100,000 business enquiries from 13 to 18 February. The grounds where the event was held saw nearly 600,000 visitors, 150 events, 215 exhibitions, and 8245 business-to-business, business-to-government and government-to-government meetings.
Kant said that 20 countries were represented and 17 Indian states exhibited their investment credentials. More than 9,000 Indian companies and 2,000 foreign companies participated in the event, along with more than 1,000 CEOs.
Source: Live Mint
India is considered to be the UAE's primary trade partner, accounting for about 9.8 percent of its total non-oil trade. India is also the largest importer of goods from the UAE, buying about 14.9 percent of that country's exports and about 8.7 percent of its re-exports, becoming the second-largest market of the UAE in the latter category.
India ranks third among countries that export to the UAE, accounting for about 9.2 percent of the total imports by the UAE. The total volume of foreign trade between the two countries amounted to USD 60 billion in 2014, making the UAE India's primary trade partner in the Middle East and North Africa. Economic sources expect the value of trade exchanges between the UAE and India to hit USD 100 billion in 2020.
According to WAM/India Strategic, in a report on economic and trade relations between the UAE and the Republic of India, the Ministry of Economy recommended the strengthening of bilateral relations, increasing of the volume of joint investments and expansion of bilateral trade to make the United Arab Emirates India's primary trade partner. The Ministry said the trade and investment sectors constitute the cornerstones of prosperous bilateral economic ties between the UAE and the Republic of India.
The Ministry also said there are abundant and feasible opportunities for economic co-operation and the establishment of joint ventures between the UAE and India, and that every economic facility is a viable opportunity for establishing partnerships as they all have the necessary factors, such as expertise, modern technology, funds and energy. This encourages both countries to discuss possible partnerships and form specialised committees that can supervise the implementation in a way that serves the interests of both parties.
In its report, the Ministry of Economy also stated that the Framework Agreement on Economic Co-operation between the Republic of India and the Gulf Co-operation Council that took place in August 2005, aimed at exploring the possibilities of establishing a free trade area between the two parties, was a quantum leap in trade exchanges between the two parties. GCC countries are important trade partners of India and account for more than 11percent of India's global exports, a figure that continues to grow. This agreement may also be the key to more comprehensive co-operation between the two parties in various fields.
The report said that India is the seventh largest economy in the world with a total GDP (at current prices) worth about USD 2,182.577 billion in 2015, according to World Bank statistics, achieving growth of up to 6.4 percent from 2014.
The report also said India is one of the developing Asian economies that have maintained their economic position despite the global financial crisis, as a result of the large fiscal stimulus offered by its policies and its pursuit of a policy to reduce interest rates on monetary policy tools, as well as the rise in its industrial production and its decreasing reliance on exports.
Statistics issued by the World Trade Organisation in its 2015 World Trade report indicated that India ranked 19th in the world in terms of exports, worth USD 317 billion, and accounting for 1.7 percent of the global exports. It also ranked 12th in the world with imports worth USD 460 billion, accounting for 2.4 percent of the world's imports.
Based on the data in the World Investment Report issued by UNCTAD, the Ministry's report said that India ranked 10th in the world in terms of attracting foreign direct investment, placing it among the top nations of the world in this category. This is due to several reasons, such as the fact that India is one of the largest economies in the world, its strategic position, its rapidly growing consumer market, and its large skilled and trained labour force that is cost competitive, as well as its industrial sector that is one of the largest in the world, covering all industrial activities and fields, large manpower of scientists, engineers and technicians, besides rich agricultural and mineral resources.
The report also said India had excellent infrastructure, an advanced financial sector, an investor-friendly political and commercial environment offering amenities and tax incentives and facilitating import and export, and an advanced legal environment that allows ease of capital transfer and usage of brand names, in addition to exemption from income tax on profits made from exports, as well as full exemption from customs duties on industrial imports.
The report highlighted the many diverse sectors that attract foreign direct investment in the Republic of India, such as financial and non-financial services, wired and wireless communication, transportation and the industrial sector, oil, chemicals, construction services and the pharmaceuticals sector, as well as food processing services, cement products and electrical equipment.
The report also focused on the availability of large areas of arable land in India, as it is the seventh largest country in the world in terms of area. India is considered to be one of the largest food producers, among the largest sugarcane and tea producers and the second-largest producer of rice, fruits and vegetables.
India is also one of the world's leading countries in the production and consumption of food products due to its population, which is the second largest in the world, thus providing tremendous opportunities for investment in the food processing sector. The pharmaceuticals sector also occupies a central role in the Indian economy.
The report also indicated that the Indian automobile industry has begun to sweep the world markets, where India has become the second-largest manufacturer of tyres, the fifth-largest manufacturer of commercial vehicles and the fourth-largest passenger car market in Asia. It is also the largest producer of tractors in the world.
Tourist services are among the largest service industries in terms of total revenue and foreign exchange earnings. The wired and wireless telecommunication sector in India is the third-largest in the world and the second-largest among the emerging economies in Asia. It continues to grow at an unprecedented pace, and is considered one of the main sectors responsible for economic growth in India.
India is one of the important and influential countries in terms of world trade volume, as it ranked 12th in imports and 19th in exports in 2014, according to International Trade Centre statistics.
The value of India's exports amounted to nearly $310.34 billion in the 2014-2015 period, compared with $314.41 billion in the 2013-2014 period, registering a 1.29 percent drop in value. Forty-three per cent of its exports were concentrated in 10 commodities in the 2014-2015 period.
India's most exported commodity was petroleum oil and oil extracted from bituminous minerals, worth a total of USD 55.93 billion, accounting for about 18 percent of its total exports and registering a 10.7 percent drop from the previous year. Diamonds came in second place, worth USD 24.23 billion in exports, accounting for about 7.8 percent of the country's total exports and registering a 7.3 percent drop from the 2013-2014 period. Jewellery and precious metals were in third place, worth USD 13.2 billion in exports, accounting for about 4.3 percent of its total exports and registering a 22 percent increase from the previous year.
In the 2014-2015 period, India's imports decreased by 0.48 percent, amounting to USD 448.03 billion, compared to USD 450.2 billion in the 2013-2014 period. Fifty-four per cent of its imports were concentrated in ten commodities. The most imported commodities were petroleum oil and raw bituminous mineral substances, worth USD 116.44 billion and accounting for 26 percent of the total imports, an 18.9 percent drop from the 2013-2014 period. Gold, in raw, semi-fabricated or powder form, came in second place, with a total value of USD 34.4 billion in imports, accounting for about 7.7 percent of the total imports, a 20 percent rise from the 2013-2014 period.
The report addressed the economic relations between India and the UAE, stressing that the UAE economy attracts investment due to many reasons, such as the economic and political stability in the country, its status as the gateway to regional and international markets, the abundant investment opportunities it offers, as well as its excellent geographical location, readily available infrastructure and ease of investment procedures in various sectors.
India ranked second in terms of the cumulative value of foreign direct investment in the UAE, with US$5.7 billion being invested in 2013, a 20.4 percent rise from 2012.
The report also included data of the UAE's investments abroad that were surveyed by the Ministry of Economy. It confirmed that the UAE is the largest investor in India from the Arab world, accounting for 81.2 percent of the total Arab investments in India. The UAE also ranked 11th in the world in terms of foreign direct investment in India. The total sum of the UAE's investments in India is estimated to be about USD 8 billion, including USD 2.89 billion as foreign direct investment.
The UAE's investments in India are mainly concentrated in five sectors: construction development (16 percent), energy (14 percent), metallurgical industries (10 percent), services (10 percent), and computer software and hardware (5 percent). Other sectors are petroleum products, precious metals, precious stones and jewellery, as well as metals, chemical materials and wood and wooden products.
The report said DP World is one of the oldest Emirati companies operating in India, where the company runs 34 percent of all container terminals. Emaar MGF's investments in India have risen to nearly USD 2 billion, and it has emerged as a leading company in the Indian real estate sector.
The Ministry of Economy's report said there's an early-stage discussion happening between INMOBI, one of the largest electronics companies located in Bangalore, the Abu Dhabi Investment Authority and the Qatar Investment Authority to enter into a partnership.
The report also said that the UAE, the GCC and India are bound by agreements and Memoranda of Understanding. In September 2015, the India-UAE Joint Business Council was inaugurated by UAE Foreign Minister, H.H. Sheikh Abdullah bin Zayed Al-Nahyan.
In addition, Memoranda of Understanding were signed between the Emirates Authority for Standardisation and the Metrology and the Indian Standards Institute; between the UAE Telecommunications Regulatory Authority and the Telecom Regulatory Authority of India; between the Ministry of Higher Education and Scientific Research in the UAE and the Indian Ministry of Human Resource Development for co-operation in the field of higher education and scientific research; and between the National Council for Tourism and Antiquities in the UAE and the Ministry of Tourism in India; besides the Federation of United Arab Emirates Chambers of Commerce and Industry and India.
In January 2014, the UAE and India signed an air transport services sector agreement, allowing specified carriers from both countries, whether owned or rented, to make regular trips. In 2013, the UAE, represented by the Ministry of Finance, also signed an investment protection and promotion agreement with the Republic of India, in addition to a convention on economic co-operation among the GCC countries in 2005, where nine meetings were held, most recently in June 2007 in New Delhi. A convention on the avoidance of double taxation between the two countries was also signed in 1992.
The report also addressed direct foreign non-oil trade between the UAE and India. It said there was a 21 percent decrease in the total value of bilateral trade in 2014, compared with 2013, as a result of a 33 percent decline in the UAE's re-export traffic, dropping from USD 8.6 billion in 2013 to USD 5.8 billion in 2014.
National exports also fell by 31percent during the same period, while the country's imports from India decreased by 12 percent. This decline has affected the value of trade balance, where the deficit has increased from USD 3.45 billion in 2013 to USD 6.29 billion in 2014.
The report also indicated a 16 percent decline in the total value of the UAE's free zone trade with India in 2014, compared with 2013, as a result of a 59 percent decline in the UAE free zone export traffic, the value of which dropped from USD 738 million in 2013 to USD 304 million in 2014.
Free zone re-exports also dropped by 28 percent during the same period, while free zone imports from India dropped by 3.5 percent. This decline has affected the trade balance, with the deficit increasing from USD 1.9 billion in 2013 to USD 2.8 billion in 2014.
The report said the total value of the UAE's non-oil exports to India amounted to about USD 5.3 billion in 2014, a 31 percent drop from 2013. Gold, in its raw, semi-fabricated and powder forms, accounted for 59 percent of the total non-oil exports to India, worth a total USD 3.16 billion, a 46.6 percent drop from 2013. This was followed by direct ornaments and jewellery, worth USD 364 million in exports, a 41 percent rise from 2013, and copper wire exports, worth USD 319 million, registering a 26 percent rise from 2013.
India is considered the UAE's third-largest trade partner in terms of imports, worth about USD 17.4 billion in 2014, a 12.4 percent drop from 2013.
Sixty-seven per cent of the imports in 2014 were concentrated in 10 commodities. Gold, in all its forms, topped the list of imported goods, with a total value of USD 4.6 billion, accounting for 26.4 percent of the UAE's total imports from India, a 1.5 percent drop from the previous year. Diamond came in second place, worth about USD 3.2 billion, a 47 percent drop from 2013. Jewellery came in third place, worth USD 2.1 billion, a 30 percent rise from the previous year. It is also worth noting that the country's imports of wheat rose by 179 percent in 2014.
In 2014, the UAE's re-exports to India decreased by 32.8 percent, compared to 2013, due to a 32.3 percent decline in the country's re- exports of diamonds, a 73.3 percent decline in the re-exports of precious and semi-precious stones, and a 57 percent decline in the value of re-exports of silver in its raw, semi-fabricated and powder forms, in addition to an 82 percent decline in the re-exports of telephones, despite a 6566 percent rise in the re-exports of hard drives and tapes.
The report addressed a number of indicators specific to the Indian economy. The value of foreign direct investments in India reached about USD 34.4 billion in 2014, a 22.1 percent rise from USD 28.2 billion in 2013. In contrast, Indian investment overseas rose from USD 1.68 billion in 2013 to touch nearly USD 9.8 billion in 2014, an 87 percent rise.
Source: Business Standard