Posts Tagged ‘CII’

RBI’s Move to Modify the ECB Guidelines

India Inc cautiously welcomed the RBI”s move to modify the ECB guidelines and said this also indicates a gradual withdrawal of stimulus measures announced to help the industry tide over the global crisis.

However, Ficci said that the RBI”s step may make availability of funds through ECB route more expensive while the ECB route is frequently used by SMEs for raising funds, which are even otherwise available at a high price from the domestic banking system.

Meanwhile, it also said that the relaxation of certain ECB norms given by the RBI during the liquidity crisis period to India Inc have been gradually withdrawn that is an indicator of a gradual withdrawal of the stimulus package.

Further, CII said that RBI”s steps are an indication of slowly unwinding of the liquidity enhancing measures while these measures should not be seen as a precursor to monetary tightening through a rate hike.

On the other hand, the chamber welcomed the central bank”s decision to allow NBFCs exclusively involved in financing infrastructure projects to avail of ECBs.

Manufacturing Sector Showed Firm Indications of Recovery

Confederation of Indian Industry (CII) survey said India’s manufacturing sector showed firm indications of recovery and was on a higher growth trajectory in the first half (H1) of the current fiscal (2009-10).

However, the survey compared results for April-September 2009 with April-September 2008 and showed that growth rates in the majority of sectors had positive trends in the first half of 2009-10.

Meanwhile, there is also a significant shift in the trends, from the negative and moderate growth category to the high and excellent growth one, as 12% of the sectors registered such a shift in H1 2009-10 compared with all of 2008-09.

The buoyant manufacturing growth in the first half is led by a rise in production of basic goods, intermediate goods and consumer durables while around 10% of the sectors surveyed registered an excellent growth rate in H1 2009-10.

On the other hand, the share of the sectors registering moderate growth declined to 35.8% in H1 this year while Q2 witnessed substantial decline in the share of sectors recording a negative growth rate, to 19.4% from 40 per cent in the first quarter of the current year.

Sectors showing a greater growth rate increased to 35.5% of the total in July–September 2009 while sectors registering an excellent growth rate of above 20% include nitrogen gas, phosphate, motor starters, industrial gasses, and construction equipment.

A high 10-20 per cent growth rate was registered by pumps, light commercial vehicles, cars, scooters and other consumer durables like electronics and home appliances.

Moreover, 20 of 29 sectors have reported negative growth rates in the first half of 2009-10 and with the exception of soda ash, machine tools, cars, multipurpose vehicles and biscuits, all other sectors reported negative and moderate growth rates.

Northern Region – Largest Contributor to the GDP :)


North India - Largest Contributor to the GDP

CII report states that although the economic growth in the region has underperformed the national average, the Northern Region continued to be the largest contributor to the GDP at 27.5% in 2007-08.

However, it said that it clocked a CAGR of 6.2% against 6.5% nationally while the under performance had been witnessed across primary and tertiary sectors.

Moreover, the northern region has not been able to capitalize on its traditional stronghold –agriculture while it has also not been able to capitalize on the opportunities in the service sector like the other regions.

One of the key reasons of under performance in the primary sector has been slow growth rates witnessed by two of the largest agrarian states in the region – Uttar Pradesh and Punjab, which contribute 57.5 per cent to the region’s primary sector.


Performance of the northern region has been reasonably good in the secondary sector, driven to a large extent by growth in the construction sector.

Construction, on the other hand, is also the fastest growing sub sector for the region, CAGR of 12.6% over 1999-00 to 2007-08

Other fastest growing sub sectors for the region are transport, storage and communication; Banking & insurance, real estate, ownership of dwellings & business services.

Discussing the state economies, CII offical said that Uttar Pradesh, Rajasthan and Delhi are the three largest economies in the region.

Chandigarh, Uttarakhand and Haryana are the three fastest growing economies in the region.

All northern region state economies have witnessed declining contribution from the primary sector.

The greatest increase in percentage contribution of the secondary sector has been in Uttarakhand, 15 per cent points.

Similarly the contribution of the tertiary sector has witnessed greatest increase in Haryana, 10 per cent points, he said.


India Inc calls for investment-oriented budget !

India Inc calls for investment-oriented budget

India Inc calls for investment-oriented budget

In the forth coming Union Budget, which is scheduled on July 6, 2009, India Inc has asked for an investment-oriented Budget, besides demanding a cut in the direct tax rates for boosting the economy.

Representatives of industry chambers CII, FICCI, Assocham and several other industrialists also wanted printing of more currency notes to finance the fiscal deficit, instead of going for market borrowing which squeezes money available for private investment.

In the pre budget consultations with the Finance Minister Pranab Mukherjee, the industry leaders also sought fringe benefit tax removal and also demanded the raising of fund through disinvestment.

“We talked about reducing corporate tax rates a bit… we also talked about bringing down personal income tax rates, if possible. We suggested that income tax exemption limit be raised from Rs 1.5 lakh to Rs 2.5 lakh or Rs 3 lakhs,” FICCI President Harshpati Singhania said.

On the other hand, CII President Venu Srinivasan asked the government to print more currency notes to finance the fiscal deficit.

He also said current borrowings, pegged at Rs 3.6 lakh crore should be monetised, so that private investment is not crowded out, and interest rates do not keep increasing. What we need is significant investment in infrastructure. Money should be raised through disinvestment.

On FDI, Mittal said that it has been the corner stone of reforms and the government should invite more FDI in the country by making investor friendly environment.

He said infrastructure should be given a fillip in every form. Specific to the telecom sector, there should be rationalisation of duty structure, he added.

L&T CMD A M Naik said investment allowance should be reintroduced and income from foreign investment should be exempted from tax.

The industry bodies further said the Budget should also focus on education and skill development apart from moderating corporate tax and raising depreciation rates for plant and machinery from 15 per cent to 25 per cent.