Tourists steer clear of Brazil, Russia, India and Nigeria because of onerous visa requirements, EM Squared reported last week. But even with easy tourist visas in place, these emerging market giants won’t reach their full potential. The real key lies in enhancing the ease of doing business and developing adequate infrastructure.
Visa policies are certainly a real barrier to tourist arrivals. No matter how beautiful or intriguing your country is as a tourist destination, if you make it too complicated for tourists to visit, they will stay away. That problem is not limited to emerging markets. A few years ago, US Travel Association estimated that the US lost the equivalent of 467,000 jobs due to the difficulty for citizens of primarily Brazil, India and China to obtain a visa. Read more
In a surprising recent move, India has served notices to 57 countries including the UK, Germany, France and Sweden seeking termination of bilateral investment treaties (BITs) whose initial duration has either expired or will expire soon.
For the remaining 25 countries with similar treaties whose initial duration will expire from July 2017 onwards, such as China, Finland, Bangladesh and Mexico, India has asked for joint statements to clarify ambiguities in treaty texts, to avoid expansive interpretations by arbitration tribunals. Read more
By Derek Scissors, American Enterprise Institute
Over the next few years, the Indian economy will seem to be doing well, if judged only by headlines. Real growth in gross domestic product (GDP) was just reported at 7.3 per cent in the final quarter of last year, which impresses some. GDP growth, however, is not translating into economic dynamism.
Despite improvements in the business environment under Narendra Modi, the prime minister, India’s development model remains state-led. The state is horribly inefficient, inhibiting prosperity, and modest reforms expected in the upcoming national budget will have little impact.
Counting on India as a market saviour is a mistake. Read more
For much of the early 2000s, Brazil, Russia, India, and China (the Brics) were seen not just as “the engine of new demand growth and spending power,” as Goldman Sachs researchers put it in 2003, but also as the likely begetters of a new international order, in which the US – and the west more generally – would play a much less significant role.
Today, the idea that the Brics could lead the way to this new order seems more distant than ever. Read more
Reform is a pressing need across emerging markets, especially as global demand remains weak and rising US interest rates threaten to increase funding costs. For countries to revive growth, they will need to create a more favourable environment for business. Politicians in many countries acknowledge this and have put structural economic reforms at the heart of their governing agenda.
But everywhere the outlook for reform is heavily dependent on political leadership and the larger political economy: where leadership and popular support for reform is strong – as in India – the outlook is positive; but where politicians are more interested in power than leadership – such as in Turkey and South Africa – the prospects for positive change are dim. Read more
By Jayant Rikhye, HSBC
To the list of emerging Asia’s economic powerhouses, add one more: South East Asia and its 625 million inhabitants.
Spanning countries as diverse as Vietnam, Indonesia, the Philippines and Singapore, the Association of South East Asian Nations (Asean) is often considered an “also-ran” that gets far less attention than China and India.
To underestimate the region, however, would be a mistake. Read more
India is an enticing prospect for many digital content brands today. With nearly a sixth of the world’s population and a rapidly growing number of consumers coming online for the first time, having a presence in this market is crucial for future growth.
Netflix has been announcing updates to its platform, demonstrating a willingness to find the best approach to consumers in high-growth markets. The announcements have included the introduction of carrier billing and in-app subscription sign-ups. Perhaps most significantly, this month Reed Hasting, Netflix CEO, said the company would like to create Bollywood content – the strongest signal yet that it is serious about becoming a major player in India. Read more
This weekend Narendra Modi, India’s prime minister, came to Silicon Valley to promote his Digital India initiative. His trip signals that the Indian government sees technology as critical to delivering on its development goals. One example is a programme called Pradhan Mantri Jan-Dhan Yojana (PMJDY), which Modi launched to ensure that all Indian citizens have access to financial services.
In the last year, the government has opened 175m bank accounts under the scheme, with deposits totalling more than $3.4bn. This progress is already a triumph of technology. Read more
Connecting the dots between disparate trends can help unearth surprising opportunities in emerging markets. In our view, the impact of infrastructure investment on healthcare is a little-known link with big implications.
India provides a fascinating case study. Last year, the new government led by prime minister Narendra Modi set an ambitious target to increase national highway construction from two kilometres a day to 30 kilometres a day within two years at a cost of five trillion rupees. We believe the biggest impact can be found beyond the obvious. In our view, improvement in healthcare will enjoy a huge boost from the highway campaign because better roads make it much easier – and cheaper – for hundreds of millions of rural workers to access better doctors, clinics and hospitals. Read more
By Simon Currie and Stephen Begley, Norton Rose Fulbright
India is the latest in a string of markets to witness a solar energy boom. Solar power currently accounts for just over one percent of India’s total installed power capacity of 261 gigawatts (GW) and the government’s new target is to add a staggering 100 GW of solar capacity by 2022.
Traditional markets for solar, like Europe, don’t offer the same growth prospects making India one of the next big stories for the global solar industry. It has already come a long way from just under 12 megawatts (MW) of installed solar capacity at the end of 2010, to 3,743 MW as of March 2015. This has largely been achieved through federal reverse auctions, with the first tranche of the next round eagerly awaited later this year; a significant 1000MW will be up for grabs. Read more
India’s ecommerce market is on a rocket-like trajectory. The success of home-grown players such as Flipkart and Snapdeal has grabbed investor attention and now venture capitalists and global tech giants are flocking from China and elsewhere in the hope of finding India’s Alibaba – vital ammunition in the battle for the Indian middle class, which is set to outstrip that of the US in a matter of years. Read more
A stark dichotomy has emerged between Indian economic data and the reality on the ground. In the latest example, the Reserve Bank kept interest rates unchanged at its last monetary policy review earlier this month and issued a dovish statement. Signs of an investment revival are meagre and consumption demand remains weak – in strong contrast with the GDP growth estimates of the government and the Central Bank.
Despite general optimism following the election of the Narendra Modi government last May, the pace of economic revival has been slow as both investment and consumer demand remain weak. Read more
Since Narendra Modi’s government has been in power, significant changes have been made to boost India’s economy and society. One major change was implementing the Indian Insurance Act, first proposed by the previous government.
The Act enables global reinsurers to enter as 100 per cent owned branches and increases overall foreign direct investment (FDI) in the insurance industry from the current limit of 26 per cent to 49 per cent. While there are many aspects of insurance, the most significant opportunity not only for insurers but also for Indian society, is the health insurance sector. Read more
By Rajeev Malik of CLSA
The general drift in the financial trenches is that Governor Raghuram Rajan of the Reserve Bank of India (RBI) will stay on hold at the bank’s April 7 policy meeting. After all, he just cut rates – in a second consecutive out-of-meeting action – in early March. What’s more, consumer price inflation moved up in February; this will constrain the RBI from easing. Finally, following the surprise rate cut in January, the RBI had stayed on hold at its February policy meeting; it will repeat this behaviour next month.
For these reasons, hardly anyone expects a rate cut next week. However, valid as these arguments are, they are overshadowed by factors that make a stronger case for another cut. Read more
Gulzar Ahmed is one small link in the human bridge between Dharavi, one of India’s largest shanty towns, and the fashion boutiques of Milan.
The master tailor in a small workshop run by Italian designer Viola Parrocchetti, Ahmed is one of thousands of skilled craftsmen that live and work in Dharavi, providing tailoring and embroidering services to India’s thriving fashion industry, much of it destined for export. Read more
Narendra Modi, India’s pro-business prime minister, swept to power last year offering a new efficient form of government and a crackdown on the high-level corruption that has weighed on growth for decades.
But in a new report, analysts at Ambit Capital, a Mumbai-based brokerage, suggest that this otherwise positive shift may be negative for India’s rural economy – if only in the short-term. Read more
By Sanjeev Prasad, Kotak Institutional Equities
The Indian government’s annual budget – to be announced on Saturday – will be intensely scrutinised for clues about the evolving policy priorities of Narendra Modi, the prime minister.
But while many will be focused on expenditure and revenue plans, Indian business will be looking in a somewhat different direction. It is hoping that the budget will further reforms to bring about a lower ‘visible’ role of the government in the economy, under which it relinquishes or reduces its multiple roles of financier, manager, owner, policy-maker and regulator.
The budget is an ideal opportunity for the government to re-evaluate its role in the economy at a time when the private sector, states and local governments are playing an increasingly larger role in economic and social development. A greater ‘invisible’ role of the government simply as a facilitator of private sector investment is required. Read more
By Bibhas Saha, Durham University Business School
When Narendra Modi, the India prime minister, assumed office in May 2014 everybody knew big changes were coming, but very few could foresee that labour reform would be one of them. Modi knows that if India wants to export more it has to take China on at its own game by creating a more flexible labour market and upgrading skills in a vast pool of potential labour supply.
India is far behind on both, with low literacy and complex labour laws. The laws are archaic (one dating back to 1926) and among the most rigid in the world. Of particular concern is the job security law, which was first introduced in 1976 and then further stiffened in 1982. At that time the objective was to improve job security in private sector firms so they were in line with the public sector. Read more
Abdul Halim removes an envelope from the inside pocket of his fake leather jacket and slides it carefully across the counter at MTB Exchange, a money transfer shop on Whitechapel, in London’s East End. Within hours, the £500 it contains will be picked up by his father, a chicken farmer in a remote part of northern Bangladesh. “He needs it very much,” says the impeccably mannered 30-year-old.
Every other month, Halim sends home nearly a month’s worth of wages, earned in a 20-hour-a week job as a kitchen porter in a Knightsbridge restaurant. He would like to earn more, he says, but the terms of his visa require his presence at a north London college, where despite his almost non-existent English, Halim is studying business management. Read more
As global oil prices have crashed, central bankers around the world have had to deal with new disinflationary pressures. For some, like Thailand and Korea, this may be bad news but for Raghuram Rajan, the governor of the Reserve Bank of India (RBI) who has been battling with spiraling inflation, the recent trends are a welcome relief.
Rajan began loosening policy in the new year – but is there any risk, beyond rebounding oil prices, that inflation could pick up pace again in India? Read more