India

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

Given the problems of female infanticide and sex-selective abortions in India you might think that the country would one day be filled with single men unable to find a bride.

You might well, however, be wrong. A new academic paper predicts that by 2050 India will face the reverse problem: women will find it more difficult than men to find an eligible partner. Behind the findings are two main factors: the typical age gap between Indian men and women at marriage, and rising levels of education among Indian girls. Read more

Maruti Suzuki led a two-track recovery in India’s car industry last year, dragging up overall sales while local competitors such as Tata Motors floundered. But new figures out on Tuesday have disappointed analysts in the festive period.

The 32 year-old brand, with a reputation for churning out reliable and affordable cars, posted net profits of Rs8.02bn ($131m) in the quarter ended December, up 18 per cent year-on-year. That’s well below an average forecast for profits of Rs9.06bn in a poll by Thomson Reuters. Read more

Just what are we to read into this? Mainstream and social media in India are abuzz with the revelation that, when Prime Minister Narendra Modi met US President Barack Obama on Sunday, the pinstripes of his suit were not pinstripes at all but his full name, Narendra Damodardas Modi, spelt out in block capitals over and over again. Read more

By Kavaljit Singh of Madhyam

It’s official: India and the US will resume negotiations on a high-standard bilateral investment treaty (BIT). In a joint statement on Sunday by Prime Minister Narendra Modi and President Barack Obama, the leaders affirmed their “shared commitment to facilitating increased bilateral investment flows and fostering an open and predictable climate for investment.”

Since 2008, the two countries have been engaged in sporadic discussions to arrive at such a treaty. In the coming days, negotiations will begin on its wording, based on each country’s revised model treaty textsRead more

Emerging Asia is set to be the world’s fastest-growing region again in 2015, skirting the contagion from Russia’s crisis and riding the fall-out from weak commodity prices, according to Fitch, the credit rating agency. Nevertheless, structural frailties stalk seven out of 10 countries in the region, with surging debt levels a particular concern, the agency said.

The region, excluding China, is expected to expand by 5.9 per cent in 2015 and 6.1 per cent in 2016 – compared to an average for global emerging markets of 4.1 per cent and 4.5 per cent respectively, Fitch said in a report. These forecasts compare with the International Monetary Fund’s (IMF) estimates that developing economies would this year grow at 4.3 per cent, accelerating to 4.7 per cent in 2016. Read more

By Kavaljit Singh of Madhyam

President Barack Obama’s upcoming visit to India is likely to kick-start stalled negotiations on a bilateral investment treaty (BIT) between the US and India that has been under sporadic discussion since 2008, aimed at facilitating greater cross-border investment flows.

Negotiations will resume based on model treaty texts prepared by each side. In April 2012, the US released a new version of its model BIT. New Delhi launched a review of its investment treaties in mid-2012 in the wake of public outcry over arbitration notices served by 17 foreign companies (including Vodafone and Sistema) challenging various policy measures and demanding billions of dollars in compensation for the alleged violation of India’s BITs. Read more

By Frederic Neumann, HSBC

Things in China look a bit soggy. True, growth a touch above 7 per cent is nothing to sneer at. But it’s down sharply from days past. And as the Mainland matures, those double-digit growth rates seem even less likely to return. Where, then, to look for the next story of hyper-charged growth?

Plenty of promising places around: Sri Lanka will probably grow faster than China this year, and so could the Philippines, Vietnam and Bangladesh at some point. But, from a global perspective, these will hardly make a dent; certainly, commodity markets will not get terribly excited about accelerating demand from these markets. Read more

Last year in India was remarkable not only for the resurgence in economic dynamism that followed the election of Narendra Modi, the prime minister. New data shows it was also a banner year for mergers and acquisitions.

In the calendar year to December 30, India saw deals worth $48.4bn, according to Dealogic, marking the highest value since 2010. Inbound deals were valued at $16.5bn, their highest level since 2011. Read more

By Saurabh Mukherjea of Ambit Capital

As I finish my two-week year-end trip to meet our western clients (around 40 of them), it is obvious that enthusiasm regarding investing in India is at record highs. Over the past fortnight, I have met at least 10 western-hemisphere-based funds that have either just started investing in India or have applied to the Indian securities regulator for Foreign Portfolio Investor (FPI) status (which allows them to access the Indian stockmarket directly). Even more interestingly, half a dozen of the clients I met have moved to larger, better-appointed offices in money centres like London, New York, Zurich and San Francisco. Read more

It’s a few minutes into Marion Akinyi Onginjo’s social studies lesson at Bridge International Academy Gicagi in Nairobi and the class 4 teacher is being drowned out by loud cheers next door.

Bridge International Academy Gicagi, Nairobi. Photo: Tosin Sulaiman

Class 4 finally gets its chance to make some noise when one student, Margaret, correctly answers a question about subsistence crops. After Onginjo tells the class, “let’s give Margaret the cowboy cheer,” they stand up, spin imaginary lassoes in the girl’s direction and yell, “One, two, three, four, five, yee-hah.” Read more

This month, the FT interviewed a senior executive at Uber in India about the US taxi-hailing company’s plans for rapid expansion in the country. But later that week, a 25 year-old woman said she had been raped by her Uber driver in New Delhi. The government banned the service from operating in the capital and asked state governments to ban all unregistered web-based taxi services.

Swept away by its bold ambitions, it seems Uber has fallen foul of local circumstances in its rush to recruit new drivers. The company declined to discuss this and related issues followed the alleged rape. But are Indian taxi services any more cautious in selecting their drivers? And assuming Uber gets past the rape case, can it go on to succeed in India? Read more

By Shumita Sharma Deveshwar of Trusted Sources

The Indian government’s sale of a 5 per cent stake in the Steel Authority of India Ltd (SAIL) was meant to serve as a gauge of investor sentiment towards public sector stocks before the bigger sell-offs of shares in Coal India and the ONGC oil & gas group. But it has left some doubts about the potential success of the record disinvestment programme and the consequent reduction of the fiscal deficit. Read more

How do you like your smartphones and tablets? Light or large? Black or white? For most consumers in emerging markets the question is: cheap or cheaper?

This is the market manufacturers should be focusing on, according to a new report by Gartner, a technology research company, which estimates that no less than 78 per cent of global smartphone sales will come from developing economies by 2018. Read more

A problem in a single electricity transmission line running between India and Bangladesh caused a nationwide blackout in Bangladesh on November 1. The outage lasted nearly 10 hours, making it the country’s worst incidence of power failure since a cyclone knocked out the national grid in 2007.

Insufficient energy production remains a major roadblock to Bangladeshi growth. Apart from such poorly maintained infrastructure, power generation is stifled by ancient land acquisition laws that impede mining and a severe shortage in the production of natural gas; coal and gas account for 70 per cent of energy generated in the country. Read more