ECONOMIC INTELLIGENCE BULLETIN · Economic Intelligence Bulletin includes abstracts of important economic/commercial/ technical development and reviews as reported in the issues of

ECONOMIC INTELLIGENCE BULLETIN 16TH JULY 2015- 31ST JULY 2015

2015

GOVERNMENT OF INDIA

DIRECTORATE GENERAL OF SUPPLIES &DISPOSALS

JEEVAN TARA BUILDING, 5 SANSAD MARG,

NEW DELHI - 110001

SUMMARY OF ECONOMIC INTELLIGENCE BULLETIN.

Economic Intelligence Bulletin includes abstracts of important economic/commercial/

technical development and reviews as reported in the issues of financial dailies. The

Bulletin pertains to the fortnight ending 31st July, 2015.

1. PRICE TREND

1.154 DECLINING STEEL PRICES HAUNT ITS RAW MATERIAL MAKERS

Where declining steel prices have not spared large integrated domestic

primary pig iron units, even smaller in size, does not arise. Due to this, in the past

three or four months, several sponge iron units across the country have shut down,

pellet plants have been unable to sell and the pig iron industry has seen capacity

utilisation drop significantly.

―Concerns over staying afloat have risen in the sponge iron industry as

moving in line with steel prices‘ rates of sponge iron have dropped to Rs 3,000 per

tonne from Rs 22,000 a year ago. The industry has an annual capacity of 50 million

tonnes but currently is producing only 17-20 million tonnes. When an industry is

running at 30 per cent of the total capacity, it can never make money,‖ Deependra

Kashiva, executive director of the Sponge Iron Manufacturers Association, told

Business Standard. Most sponge iron industry executives said apart from low steel

prices, lack of quality raw materials like iron ore and non-coking coal at the right

price was also posing an issue.

―Ore prices have come to $40 a tonne globally, but Odisha is selling ore at Rs

5,000 a tonne,‖ said an industry executive. The road ahead for the sponge iron

industry looks tough as demand improvement is not expected at least until September,

due to the monsoons.

(BUSINESS STANDARD 17th July, 2015)

1.155 BASE METALS DECLINE 6% IN TWO WEEKS

Copper, for example, has weakened by a little over six per cent in the past two

weeks, to settle last week at $5,224 a tonne, a level not seen after July 15, 2009. The

fall was in tune with expectations, due to uncertainty on demand from China, the

world's largest consumer - it was till recently taking 45 per cent of the red metal's

production.

Much new supply is expected to hit the market in 2016-17, despite the weak

recent price environment. The capital invested by copper miners increased

disproportionately from 2009, as the price remained high and there was a consensus

that copper was better positioned than the bulks.

As a consequence to the falling demand from China, base metals are likely to

remain in a supply surplus. Data compiled by the International Lead and Zinc Study

Group estimates the world market for refined zinc metal was in surplus by 143,000

tonnes during the first five months of 2015, as compared to 199,000 tonnes of deficit

in 2014.


1.156 OIL PRICES FALL FOR SIXTH DAY AS GLUT BITES

Oil prices fell for a sixth day on 29th

July 2015, marking their longest string of

losses in a year, as worsening global oversupply offset the potential lift from a weaker

dollar and an expected drop in U.S. crude stocks.

A Reuters survey on 28th

July 2015 showed members of the Organization of

the Petroleum Exporting Countries produced around 3 million barrels per day (bpd) of

oil more than daily demand in the second quarter, compared with around 2 million

bpd in the first three months of the year.

Front-month Brent futures were last at $53.08 a barrel, down 22 cents, by

1045 GMT, on course for their sixth straight daily decline, the longest such run since

last July.

Brent hit a session trough of $52.28 on 28th

July 2015, its lowest since Feb. 2

after a meltdown in Chinese equities raised concern over the health of the world's top

commodity consumer. U.S. crude for September delivery last traded at $47.75 a

barrel, down 23 cents on the day.


1.57 GOLD DOWN RS 200 ON GLOBAL CUES, SILVER EASES BY RS 150

Falling for the third straight day, gold prices tumbled by another Rs 200 to Rs

25,090 per ten gram at the bullion market on 30th

July 2015, in line with a weakening

global trend amid subdued demand from jewellers.

Silver also eased by Rs 150 to Rs 34,050 per kg on reduced off-take by

industrial units and coin makers.

Traders said a weakening global trend where gold heading for its largest

monthly decline in two years, as the Federal Reserve moved closer to boosting US

interest rates for the first time since 2006, mainly kept pressure on precious metals

prices.

Globally, gold fell 1.1 per cent to USD 1,084.51 an ounce and silver by 1 per

cent to USD 14.66 an ounce in Singapore.

Following gold, silver ready declined by Rs 150 to Rs 34,050 per kg and

weekly-based delivery by Rs 70 to Rs 33,780 per kg.

Silver coins also dropped by Rs 1,000 to Rs 48,000 for buying and Rs 49,000

for selling of 100 pieces.

(THE FINANCIAL EXPRESS 31st July, 2015)

2 FISCAL POLICY

2.108 GOVERNMENT CLEARS 10 FDI PROPOSALS WORTH RS 1,675 CRORE

Government has cleared 10 foreign direct investment (FDI) proposals

entailing capital inflows of Rs 1,675.15 crore into the country.

The inter-governmental panel, chaired by Finance Secretary, cleared the

proposal of Singapore-based Nickelodeon Asia Holdings resulting in an investment of

Rs 940.50 crores. Nickelodeon Asia Holdings Pte Ltd (Nick Asia) had proposed to

acquire 50 per cent equity interest in Prism TV.

Besides, the government also cleared Rs 620 crore FDI proposal of NTT

Communications India Pvt. Ltd for downstream investment in an Indian company yet

to be incorporated for carrying out the telecom services.

Two proposals from the pharma sector also got nod. Sudeep Pharma's

proposal would bring Rs 60 crore FDI, while Sparsha Pharma International's would

result in investment of Rs 36.61 lakh.

A proposal of Ajeet Pratap Singh of Indore was also cleared for setting up of

Limited Liability Partnership (LLP) with FDI of 70 per cent. This would result in

investment flow of Rs 3.5 lakh.

FDI proposals under approval route are cleared by the FIPB. However, those

proposals involving investment of more than Rs 3,000 crore are given final clearance

by the Cabinet Committee on Economic Affairs (CCEA).

(THE ECONOMIC TIMES 16th July, 2015)

2.109 FIIS REDUCE STAKE IN GOVT BANKS

Foreign institutional investors (FIIs) have cut their exposure in public sector

banks (PSBs) for a second straight quarter, amid concern over worsening asset

quality.

Punjab National Bank (PNB), Oriental Bank of Commerce, Bank of Baroda

(BoB), Bank of India (BoI) and Canara Bank saw foreign investors cut stake by up to

three percentage points in the June quarter. In State Bank of India (SBI), Andhra

Bank, UCO Bank, IDBI Bank, Syndicate Bank, Indian Overseas Bank and State Bank

of Mysore, their stake declined by a little less than one percentage point, according to

the shareholding pattern filed by these banks.

A total of 28 public and private sector banks have thus far disclosed their June

quarter shareholding. This shows FIIs‘ stake declined in 21 banks, while it increased

marginally in six – DCB Bank, Punjab & Sind Bank, Karnataka Bank, South Indian

Bank, Indian Bank and Corporation Bank. In Central Bank of India, it was

unchanged.

As a result, the PSB index on the National Stock Exchange has

underperformed the market. Thus far in 2015, the CNX PSU Bank index has fallen 22

per cent, as compared to a three per cent rise in the CNX Nifty and no change in the

Bank Nifty.


2.110 NOD TO COMPOSITE CAP ON FOREIGN INVESTMENT

The Cabinet on 16th

July 2015, allowed composite foreign investment caps,

merging those on foreign direct investment and portfolio investment. The move will

benefit companies in single-brand retail, credit information business and commodity

and power exchanges; it isn‘t applicable to banks and defence companies.

Bankers, however, claimed they would benefit from the move, leading to

confusion on the matter. Besides, a clause in the proposal, mooted by the Department

of Industrial Policy and Promotion (DIPP) — portfolio investment up to an aggregate

of 49 per cent be allowed without being subject to government approval and sectoral

norms — has resulted in various interpretations, with some experts saying foreign

portfolio investment (FPI) of up to 49 per cent could be allowed in the print media.

Briefing reporters after a Cabinet meeting, Finance Minister Arun Jaitley said,

―From now, all FIIs (foreign institutional investors), NRIs (non-resident Indians) and

other foreign investments will be clubbed…It will be constituted as a composite cap.‖

However, a board resolution would still be needed from the company

concerned to increase FPI beyond 24 per cent, but that level could now be increased

to the sectoral caps.

Earlier in the day, the Cabinet announcement had evoked positive response

from lenders, with YES Bank saying it had already secured board approval for

increasing the FPI limit up to 74 per cent, as well as an enabling nod from

shareholders for this.

However, later in the day, the DIPP and finance ministry officials clarified the

composite caps wouldn‘t be applicable to the defence and banking sectors, the FPI

cap would remain at 24 per cent in defence and 49 per cent in private sector banks.

Currently, foreign investment of up to 49 per cent is allowed in defence and 74 per

cent in private banks. Subject to certain conditions, foreign investment may exceed 49

per cent in defence, with the approval of the Cabinet Committee on Security.

Besides FDI and FPI, investment by NRIs, foreign venture capital investors,

limited liability partnerships and those in the form of depository receipts would

qualify as foreign investment.


2.111 FDI RISES TO 4-MONTH HIGH OF $3.85 BILLION IN MAY

Foreign direct investment (FDI) in the country rose to four-month high of $

3.85 billion in May 2015, up by 7 per cent compared to the same month of last year,

official data showed. In May 2014, FDI stood at $ 3.60 billion. India received FDI of

$ 3.60 billion in April 2015.

The FDI figures for May 2015 are the highest since January 2015, when

foreign equity investment was at $ 4.48 billion. During April-May period of this

fiscal, FDI in the country grew by 40 per cent to $ 7.45 billion as compared to $ 5.30

billion in the same period last year.

Amongst the top 10 sectors, computer software and hardware received the

maximum FDI of $ 2.27 billion during the two months, followed by automobile ($ 1

billion), trading ($ 664 million), services ($ 488 million) and power ($ 155 million).

During the period, India received the maximum FDI from Singapore ($ 2.9

billion) followed by Mauritius ($ 1.68 billion), the Netherlands ($ 587 million) and

the US ($ 552 million).

During financial year 2014-15, foreign fund inflows grew at 27 per cent, year-

on-year, to $ 30.93 billion as against $ 24.29 billion in 2013-14.

The government has relaxed FDI norms in various sectors, including

insurance, railways and medical devices, to boost FDI in the country.

(THE FINANCIAL EXPRESS 23rd July, 2015)

2.112 NO FDI IN MULTIBRAND RETAIL UNDER TRADE PACT: EU TOLD

The government has categorically informed the European Union (EU) that it

will not allow European multibrand retail firms to set up shop here, even as both sides

decided to resume negotiations towards concluding the long-pending Bilateral Trade

and Investment Agreement (BTIA). While the negotiations for a BTIA, or a free trade

agreement (FTA) as it is better known started in 2007, it has missed two deadlines

since then.

This will be the first such attempt by the Narendra Modi government since it

came to power in May last year. Commerce and industry minister Nirmala Sitharman

and EU trade commissioner Cecilia Malmström have met a couple of times but an

official round of talks has not taken place so far. During these meetings, India and the

EU were able to reach ―common ground‖ with the latter dropping its insistence on

including sustainable development issues as part of the deal. The EU, it seems, has

also agreed to not let issues related to other development objectives such as

environment protection and climate change be included in FTA.

However, the government has assured the EU it is willing to reduce tariffs on

automobiles and wines and spirits, among the latters‘ prime demands. In the bargain,

India has asked the EU to grant it a ‗data secure‘ nation status. This will pave the way

in boosting the country's information technology and IT-enabled services sectors. It

has also demanded a relaxed visa regime and increase in immigration quotas for its

teeming professionals.


2.113 FDI INFLOWS ROSE IN 2014-15 FROM 3 NATIONS VISITED BY PM

Inflows from foreign direct investment (FDI) increased in 2014-15 three

countries out of four major investing nations visited by Prime Minister Narendra

Modi last fiscal with Australia showing a decline, government said on 30th

July 2015.

Replying in the Rajya Sabha, external affairs minister Sushma Swaraj said

Modi visited 26 countries from June 2014 to July 2015 and all visits had a substantial

economic component.

"These efforts have helped in creating a positive image of India and, as a

result, FDI equity inflows increased from USD 24.3 billion in financial year 2013-14

to USD 30.9 billion in 2014-15, a growth of 27.3%," she said.

A break-up of FDI inflows from top 10 countries visited by Modi showed

increase in eight cases and decline in two others.

Out of this, he visited only four countries during the last fiscal. Among these

four nations, FDI inflows increased from Mauritius, Japan and the US.

FDI inflow from Australia declined marginally. Swaraj further said, FDI

inflows in the first two months of the current fiscal also increased by 40% to USD 5.3

billion.


3. IMPORT AND EXPORT POLICY

3.32 EXPORTS CONTINUE SLIDE FOR 7TH MONTH; DOWN 15.82 PCT IN

JUNE

Contracting for the seventh month in a row, India‘s exports dipped by 15.82

per cent in June to USD 22.28 billion due to global slowdown and dip in crude oil

prices that impacted shipments of petroleum products.

In June 2014, the merchandise exports had stood at USD 26.47 billion. The

last time exports registered a positive growth was in November 2014 when shipments

expanded at a rate of 7.27 per cent.

Imports, too, declined by 13.40 per cent to USD 33.11 billion in June 2015

due to fall in oil and gold shipments.

Trade deficit narrowed to USD 10.82 billion in the month under review

compared with USD 11.76 billion in June 2014, according to the data released by the

Commerce Ministry.

The main exporting sectors which reported negative growth include petroleum

products (about 53 per cent), engineering (about 5.5 per cent), leather and leather

goods (about 5 per cent), and chemicals (1.26 per cent) in June.


3.33 ALUMINIUM FIRMS SEEK INCREASE IN IMPORT DUTY

Forced to operate their plants at nearly half the capacity due to burgeoning

imports from China, aluminium companies on 16th

July 2015 urged the government to

raise import duty on aluminium metal scrap and the metal itself to 10% from 2.5%

and 5%, respectively.

In a presentation to the mines ministry, aluminium producers said though the

country‘s installed production capacity currently stands at 4.2 MT, the production was

just half of that in the previous fiscal, mainly because of cheaper imports. As a result,

their share in domestic consumption fell to 44% last fiscal from 60% in FY11. During

the same period, the share of imports went up to 56% from 40%.

China and West Asia contribute to a lion‘s share of aluminium imports to

India, which consumed around 2.8 MT last fiscal. Companies from these countries

enjoy an advantage of around $100 per tonne over Indian firms‘ cost of production of

$1,750 a tonne.

China, which accounts for 50% of global aluminium production, is exporting

more than 20% of its produce and its exports to India have surged 32% CAGR in last

five years. Imports from West Asia during the period have gone up 14% CAGR,

Aluminium Association of India (AAI) said in its presentation.

The cost of generation of electricity, which accounts for nearly 40% of the

total domestic cost of aluminium production, has gone up drastically, with coal prices

having risen 24% in the last three years, they said. Shortage of bauxite and alumina

for aluminium smelters has also posed a threat.

Continuous fall in international prices in the recent years hasn‘t helped either.

LME prices have come down 35% in the last three years to $1,660 per tonne in June

2015, from a peak of $2,555 per tonne in June 2011.

(THE FINANCIAL EXPRESS 17th July, 2015)

http://images.financialexpress.com/2015/07/Gr83.jpg

3.34 INDIA'S COTTON EXPORTS TO CHINA PLUNGE 56.7% IN 2014-15

Cotton prices in the domestic market are subdued due to 56.72 per cent fall in

India's exports to China in 2014-15, Parliament was informed. "Export of cotton from

India to China declined by 56.72 per cent from 61 lakh bales in 2013-14 to 26 lakh

bales in 2014-15.

"As a result, there had been sluggishness in the domestic prices as compared

to last year," Commerce and Industry Minister Nirmala Sitharaman said in a written

reply to Rajya Sabha. She said cotton policy adopted by China is the major reason for

less imports.

China's stock levels have reached over 8,000 million kg and due to this they

are importing less, she said, adding "reduction in import quota granted to actual users

of cotton thereby discouraged direct import by spinners and encouraged them to buy

more of domestic cotton and also from government agencies holding stock".

Contracting for the seventh month in a row, India's exports in June is dipped

by 15.82 per cent to USD 22.28 billion.

(THE FINANCIAL EXPRESS 23rd July, 2015)

3.35 OIL IMPORTS TO INDIA FROM SAUDI ARABIA DOWN 8%

India has cut crude oil imports from its top supplier Saudi Arabia by over 8%

in 2014-15 as it raised purchases from Africa and Latin America in an apparent bid to

cut reliance on volatile Middle-East.

Crude oil import from Saudia Arabia was cut to 34.99 million tonnes in the

year to March 31, 2015 from 38.18 MT in 2013-14, Oil Minister Dharmendra Pradhan

said on 27th

July 2015.

While imports from sanction-hit Iran were almost flat at 10.95 MT, shipments

from Kuwait fell to 17.85 MT from 20.35 MT. Imports from Iraq were almost flat at

24.51 MT but the same from UAE rose 15% to 16.11 MT.


3.36 SILVER IMPORT JUMP 35% IN H1 AS GOLD LOSES LUSTER

Silver prices may have fallen faster than gold prices in the last one year, but

imports of the silver metal rose significantly in the period. Silver imports in first half

of 2015 have jumped 35per cent to 3,824 ton.

"With prices continuing to fall, demand from electronic goods manufacturers

has helped imports," said Rajiv Popley, Director, Popley Group. Imports of the while

metal were at record high of 6,843 ton in 2014.

Silver imports normally rise in the second half as demand increases for the

festive season and for exports before Christmas. As there are lesser facilities for

making silver articles, the demand starts from August onwards, much ahead of the

festivals.

Silver prices have fallen 35per cent from a year ago while gold prices are

down 23per cent in the international market. A year ago, silver prices were trading

around US $21 per ounce while gold was around US $1,300 per ounce.


3.37 GOVERNMENT EXPECTS $933 MILLION FROM IRON ORE EXPORTS TO

JAPAN, SOUTH KOREA

The government is expecting to earn over USD 933 million (about Rs 5,989

crore) from exporting 16.5 million tonnes (MT) of high grade iron ore to Japan and

South Korea, Parliament was informed 27th

July 2015.

Government approved exports under Long Term Agreements (LTAs) to Japan

and South Korea through MMTC for supplying 16.5 MT of high grade iron ore,

Minister of State for Steel and Mines Vishnu Deo Sai said in a written reply to Lok

Sabha.

"The foreign exchange expected to be earned is around USD 311.05 million

per annum at current sale prices against export of iron ore under LTAs," he added.

In June, the Cabinet, chaired by Prime Minister Narendra Modi, gave its

approval to renew LTAs with Japanese and South Korean steel mills for supply of

high grade Indian iron ore, during the three year period from April 2015 to March

2018.

The quantities covered under the LTA will be in the range of 3.8 to 5.5 MT

annually and will be supplied primarily from the mines of NMDC and the contract

will be executed by MMTC.

(THE FINANCIAL EXPRESS 28th July, 2015)

3.38 PRICE FALL ADDS SHINE, SILVER JEWELLERY EXPORTS JUMP 55%

At a time when gold and diamond jewellery exports declined significantly due

to weak global demand, shipments of silver jewellery have shot up over the last few

years following big investments by local jewellers in technology to produce world-

class ornaments.

Data compiled by the Gems & Jewellery Export Promotion Council (GJEPC)

showed India‘s silver jewellery exports rose 55 per cent to $523.13 million in the

April-June quarter of 2015 from $337.46 million in the same quarter of the previous

year. By contrast, exports of gold jewellery fell 23.13 per cent to $1153 million in the

April-June quarter this year from $1,500.02 million in the corresponding quarter of

2014.

Similarly, exports of cut and polished diamonds fell 7.52 per cent to $5,232.97

million in April-June 2015 from $5,658.26 million in the same quarter last year.

―Silver jewellery exports have witnessed a sharp increase in the last few years due to

rising overseas demand,‖ said Vipul Shah, chairman, GJEPC. Indian jewellery

manufacturers have invested in technology, a neglected area until recently. Being

dominated by unorganised sector players, the quantum of investment and technology

tie-ups was not known. But the industry estimates investment worth crores of rupees

in the last few years.

A Thomson Reuters GFMS report estimates world silver jewellery demand

grew a staggering 47 per cent to 215.2 million oz (6,693 tonnes) in 2014, thanks to

strong performance in India.

Demand for silver jewellery, mostly fashion ornaments, is coming to India not

only from the US but also from Europe and the Middle East. The GFMS report said

silver extended its popularity in the jewellery and silverware markets as fashion

turned to bigger and heavier pieces. Falling silver prices contributed significantly to

the rise in global jewellery demand. Silver averaged $19.07 an oz in 2014, a decline

of 19.8 per cent from the previous year.

(BUSINESS STANDARD 31st July, 2015)

4. MISCELLANEOUS

4.149 ADB'S INDIA FORECAST: SUNNY WITH A CHANCE OF 7.8% GROWTH

The Asian Development Bank (ADB) on 16th

July 2015, reaffirmed its growth

forecast for India, pegging Gross Domestic Product (GDP) to grow at 7.8 per cent in

FY16 and 8.2 per cent in FY17. ADB's growth forecasts are higher than that of the

International Monetary Fund's (IMF), which projects India to grow at 7.5 per cent in

each of these years. The World Bank had earlier projected India to grow at 7.5 per

cent in 2015. However, it scaled down growth projections for Asia by two percentage

points to 7 per cent in 2015. China would similarly face two percentage points less

growth to 7 per cent in the current calendar year than estimated earlier.

While there continues to be some uncertainty on the monsoon front, ADB says

that a healthy monsoon has seen summer crop sowing increase by 57.6 per cent over

last year's. This is expected to boost agricultural growth.

Growth is expected to accelerate to 8.2 per cent in FY 2016-17 on the back of

strong service sector growth and removal of the procedural bottlenecks that have

hampered investment.

While maintaining India's growth forecast, ADB cut its forecast for

Developing Asia to 6.1 per cent from 6.3 per cent, largely on account of a slower than

expected economic activity in United States and China.


4.150 NPPA ADDS 39 MORE DRUGS TO THE CONTROLLED LIST

Expanding the number of drugs under control, the National Pharmaceutical

Pricing Authority (NPPA) has added 39 more drugs meant to treat diabetes, infections

and digestive disorders to the list. The move is likely to impact drug makers such as

Abbott Laboratories, Ipca Laboratories, Lupin, Cadila Healthcare and

GlaxoSmithKline.

NPPA stated in a statement that it has fixed/revised the prices in respect of 39

formulation packs. The price of formulations including Ciprofloxacin Hydrochloride,

Cefotaxime, Paracetamol, Domperidone and Metformin+Glime has been fixed to

make the drugs affordable. The list of control drugs exceeded 500 before the latest

addition.

"The drugs which are put under the scanner have a market size of around Rs

1,054 crore. The reduction in the price ranges from 5-40 per cent depending upon the

drug category," said Sarabjit Kour Nangra, vice-president (Research-Pharma) at

Angel Broking. Stock price of these companies ended in the green or remained flat.


4.151 MANUFACTURING SECTOR GROWTH DECLINES IN JULY: SBI-INDEX

India's manufacturing sector growth declined both in terms of month-on-

month as well as yearly basis in July, an SBI research report said, adding that the June

IIP numbers may continue to be weaker.

The yearly SBI Composite Index, an indicator for manufacturing activity in

the country, for July declined to 49.7 from 53.2 in June 2015. The Monthly Index also

declined from 47.0 in June to 46.7 this month.

"Going forward, IIP numbers for June may continue to be even weaker as the

yearly SBI composite index for June 2015 had witnessed a decline," the report said.

It further added that the declining momentum in credit growth is likely to have

started impacting and this is leading to decrease in momentum of IIP growth.

An index value of 42 to 46 means (moderate decline), 46 to 50 (low decline),

50 to 52 (low growth), 52 to 55 (moderate growth) and above 55 high growth, SBI

said.


4.152 COTTON RESERVES IN INDIA SWELL TO RECORD AS CHINA BUYS

LESS

Cotton stockpiles in India are poised to jump to a record as exports plunge and

a revival in monsoon rains boost crop prospects.

Inventories will surge 25 per cent to 7.39 million bales (a bale is 170 kg) by

October from 5.89 million a year earlier, the Cotton Association of India estimates.

That would be the highest ever, data from the Cotton Advisory Board show. The

surplus could widen with next year's harvest likely to be a near record 40 million

bales, according to trader Gill & Co.

China is importing less cotton, used to make everything from jeans to tee

shirts, after inventories in the world's largest user swelled. That has shippers from

India to U.S and Australia battling for market share in countries such as Bangladesh

and Vietnam. Prices in New York slumped to a five- year low in January amid global

oversupply.

India's exports will probably drop to 5.5 million bales in the 12 months ending

September from 11.79 million bales a year earlier, Shah said. That would be the

lowest since 2008-2009, board data show. About 5 million bales have been shipped so

far this season, he said.

China's imports in the first half of the year slumped 33 percent to 933,853

metric tons, customs data shows. Only 8.65 percent of the cotton offered at the first

state auction this year was sold, Cncotton.com, an industry website owned by state-

run China National Cotton Information Center, said on July 20.

Prices fell to 57.05 cents a pound on Jan. 23, the lowest level since August

2009 on ICE Futures U.S., and traded 0.3 percent lower at 64.32 cents on 23rd

Jul

2015. Futures on the Multi Commodity Exchange of India Ltd. in Mumbai have

declined about 34 percent from a record in 2013.

(THE FINANCIAL EXPRESS 24thJuly, 2015)

4.153 INDIA REPORTS POSITIVE GROWTH IN STEEL IN H1

India remained the only exception among the top four steel producing nations

to report positive growth in production in the first six months of current year. While

production in India grew by 4.2% compared to the same period last year, global

output declined by an average of 2% during the January-June period of 2015.

Data compiled by World Steel Association (WSA), a premier global industry

body, India‘s production during the January-June period of the current year stood at

44.95 MT compared to 43.13 MT during the year-ago period. Global production fell

to 813 MT during the period from 829.93 MT a year earlier.

The fall in global production is mainly due to decline in output by China,

Japan and the United States. Production in China fell to 409.97 MT compared to

415.37 MT, recording a decline of 1.3%, even though China produced a little more

than half of global steel output during the period.

Production declined by 4.7% and 8.6% in Japan and the US respectively to

55.23 MT and 39.85 MT during the January-June period of the current year compared

to a year ago.


http://images.financialexpress.com/2015/07/Gr104.jpg

4.154 RUPEE DROPS TO 6-WEEK LOW AMID MONTH-END DOLLAR DEMAND

The rupee fell to its lowest level in almost six weeks on speculation importers

are stepping up dollar purchases to pay month-end bills.

A gauge of expected rupee swings has surged 181 basis points from a 2008

low of 4.77 per cent on July 21 before a Federal Reserve meeting this week to

consider the timing of the first interest-rate increase since 2006. Higher US borrowing

costs will reduce the allure of emerging-market assets. Indian sovereign bonds were

steady on 27th

July 2015.

The rupee slipped 0.2 per cent to 64.17 a dollar, the weakest level since June

16, prices from local banks compiled by Bloomberg show. The currency retreated 0.9

per cent last week, the most since April. Its one-month implied volatility, a measure

of expected moves used to price options, jumped 95 basis points on 27th

July 2015 to

6.58 per cent.


4.155 CONSUMER CONFIDENCE IN INDIA RISES TO 4-YEAR HIGH: NIELSEN

India continued to lead the global consumer confidence index, with the score

in the second quarter of 2015 reaching the same level as in 2011, says a report.

According to global information and insights provider Nielsen, in the second quarter

of 2015, India‘s consumer confidence score rose to 131 followed by the Philippines

(122) and Indonesia (120).

` However, half of respondents (50 per cent) felt that India is still in economic

recession, up six points from the previous quarter (44 per cent in the first quarter of

2015) but three in five (61 per cent) indicate that India will be out of the recession

over the next 12 months.

As per the survey, four in five (81 per cent) urban Indian respondents

indicated the highest level of optimism globally on job prospects in the next 12

months. Over three in five (65 per cent) online respondents polled said this is a good

time to buy things they want and need, leading the global top 10 countries for this

parameter, the report said.

These optimism levels are five percentage points higher than the same period

last year (60 per cent in second quarter of 2014).

When it comes to investing spare cash, 60 per cent of online respondents in

India indicated it is a good time to put spare cash into savings, a dip of four

percentage points from last quarter (64 per cent in the first quarter of 2015). About 79

per cent of urban Indian respondents indicated that the state of personal finances was

good or excellent in the second quarter of 2015, at the same levels as same period last

year (79 per cent of the second quarter of 2014).


4.156 ADAPTIVE RBI POLICY CAN LIFT INDIA’S GROWTH TO 7.6%

An accommodative monetary policy would lift India‘s economic growth to

7.6% in 2015 and 8% in 2016, but lack of reforms could derail medium- to long-term

growth prospects, Moody‘s Analytics said in a report on 30th

July 2015. ―We expect

at least one more benchmark rate reduction in 2015,‖ Moody‘s Analytics, a division

of Moody‘s Corporation, engaged in economic research and analysis, said. The RBI is

scheduled to review monetary policy next on August 4.

―There could be two more 25-basis point rate cuts in 2015,‖ Moody‘s said,

ascribing the prediction to rainfall deficit being not as large as expected earlier and

curbing of food inflation.

Foreign firms are wary of investing in India as lengthy delays in acquiring

land tend to stall projects. South Korean steelmaker Posco‘s long-proposed $12

billion plant in Odisha was on the verge of being scrapped due to issues related to

land acquisition.

If reforms are not delivered swiftly like in China, it said, India‘s economic

growth may not rise above 7.5% even though it has the potential to grow near 10%.

The Indian economy grew by 7.3% in FY15.

(THE FINANCIAL EXPRESS 31stJuly, 2015)

ECONOMIC INTELLIGENCE BULLETIN · Economic Intelligence Bulletin includes abstracts of important economic/commercial/ technical development and reviews as reported in the issues of

Documents