CLEARING THE FDI HIGHWAY

The Government of India has yet again unfolded the red carpet to Foreign Investments by augmenting its Foreign Direct Investment (FDI) guidelines to provide the much needed capital injection to cash-starved sectors, such as retail, real estate & infrastructure, telecommunication, among others, that need capital infusion of more than $600 billion over a period of five to 10 years.

The new guidelines state that foreign holdings in a company with majority control of Indians will not be treated as indirect foreign investment in any downstream subsidiary, thus expanding investment opportunities for global investors seeking to be a part of the growth story of the world’s second fastest growing economy.

The easing of FDI norms fall in line with other growth initiatives and stimulus packages announced by the government last year, which have started showing revival trends in key sectors like steel, cement, automobile, food and beverages and fast moving consumer goods (FMCG).

The cement sector grew 10% in December 2008 as compared to November and the year on year increase of 11%. Steel declined steadily through September, October and November last year. The sector recovered in December 2008 and January 2009 touching the May 2008 figure of 22.86 metric tonnes when the sectoral growth rate was 4.1%. The automobile sector grew too, with the January 2009 figures in the passenger vehicles sales showing a 32% rise over December 2008 and commercial vehicles at 23% over a similar time frame. FMCGs and food & beverages have recorded a year on year growth of 26.4% and 28% respectively for the quarter ended December 31, 2008. Such growth trends across sectors send assuring signals of economic revival and corresponding profitable investments for investors.

BRICS TO ACCOUNT FOR 40% OF WORLD GROWTH BY 2020

BRIC nations - Brazil, Russia, India and China - are likely to contribute 40 per cent of global economic growth in the next 10 years due to a "tectonic shift" in the distribution of global capital over the next decade, global consultancy firm Ernst & Young said.

The Economic Times

FIIs BETTING ON INDIA AS AN OIL HEDGE

Some foreign institutional investors, or FIIs, the largest investor class in the Indian market, could start reallocating capital here as they bet on further meltdown in crude oil prices, even as several equity strategists at large global brokerages appear to be reaching a consensus on the merits of such bets.

MINT

The uncomfortable rise of the rupee

India, it is fair to say, is not yet reconciled to the new-found strength of its currency. One poor wretch, pressed against the car window at a Delhi traffic light, tries to change a dollar bill she presumably cadged off a tourist. She wants Rs 50 for it. Alas, the dollar now fetches less than Rs 40(see left-hand chart). India’s currency has strengthened by about 15% against the greenback in the past year and by over 10%, on an inflation-adjusted, trade-weighted basis, since August 2006. The rupee’s rise may be less dramatic than that of the Philippine peso, Brazilian real or Turkish lira. But it is uncomfortable nonetheless.

The Financial Express
http://www.financialexpress.com/news/
The-uncomfortable-rise-of-the-rupee/252097/