Embassy of India

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Prime Minister Narendra Modi on May 19 outlined his vision of an inclusive Asian century fuelled by India’s progress and wooed South Korean businesses to ‘make in India’ in a big way. Winding up his two-day visit to South Korea, the final leg of his three-nation visit, Modi addressed the Asian Leadership Forum and also the India-Republic of Korea CEOs Forum. He visited the Hyundai Heavy Industries (HHI) shipyard, one of the biggest ship construction

companies in the world, in Ulsan where he spent over an hour. Modi held talks on May 19 with top South Korean CEOs, including LG Electronics’ Kim Jinhong and POSCO chief Kim Jin-il and Hyundai Motor Co’s Chung Jinhaeng. On Monday, Modi had held talks with President Park Geun-hye after which the two sides inked seven agreements, including for avoidance of double taxation. Seoul also offered to provide $10 billion for infrastructure projects in India, including smart cities and railways. Addressing the Asian Leadership Forum, that was also attended by President Park, UN Secretary General Ban Kimoon and Sheikha Mozah of the Qatar royal family, Modi said India “is the new bright spot of hope” for the region and the world and India’s progress will help make the Asian dream “a bigger reality”. He said India’s growth has rebounded to 7.5 percent per year, and it was poised to grow further. Modi said “Asia will succeed more when all of Asia rises together” and said the prosperous countries must be prepared to share their resources and markets with those who need them. “India is located at Asia’s crossroads. And, we will assume our responsibility to build an inter-connected Asia,” Modi said. “An Asia of rivalries will hold us back. Asia of unity will shape the world,” he said. Later, addressing the India-Republic of Korea CEOs Forum, Modi praised the spirit of entrepreneurship of the Korean people. “We in India want to achieve a lot of what Korea has already done. The good news is that India-Korea bilateral trade has risen after signing of Korea-India CEPA in January 2010,” Modi said. The prime minister said there was a lot of scope for improvement in bilateral trade. He assured of the renewed commitment of his government for changing the face of the country, and said there was potential for cooperation between India’s software and Korea’s hardware industry. “Your car-making and our designing capabilities can be put together. Your steel-making capacity and our resources of iron ore can be put together. Your ship-building capacity and our agenda of port led development can become driver of our growth,” Modi said. President Park, addressing the forum, said “Modinomics and Korea’s 3.0 economic plan can combine to become central drivers for lifting the global economy”. Park also proposed strengthened cooperation between India and Korea in manufacturing, creative economy and new energy industries. Modi travelled to Ulsan, a South Korean city located on the southeastern tip of the Korean Peninsula, to visit the Hyundai Heavy Industries Shipyard, one of the biggest ship construction companies in the world. “Shipbuilding is a top priority for us,” Modi told Hyundai chairperson Kil Seon Choi. On Monday, Modi invited South Korean investments in areas like ship building, including LNG tankers. Both countries are to set up a Joint Working Group on shipbuilding. He had also met the Friends of India in South Korea association and thanked the members for helping foster closer ties between the two nations. “I feel proud to meet all of you,” Modi told the members. “This is a very special meeting in Korea for me,” he said. He also urged the members to participate in the International Day of Yoga on June 21. Modi left for home from Gimhae International Airport, where he had arrived earlier from Seoul to travel to Ulsan. In a departure statement, he said his visit to South Korea had been “very satisfying” and expressed his thanks to the people and government for their warm hospitality. He said his meetings with President Park and business leaders were fruitful. “Many aspects of strengthening India-Korea cooperation were discussed,” he said, according to tweets posted by the prime minister. “I leave with the confidence that our ties will get even better and our relationship will benefit people of our nations,” he said. Modi had earlier visited China and Mongolia during his May 14-19 trip.

Quick, transparent decisions hallmark of Modi government: Jaitley
Finance Minister Arun Jaitley said on May 22 the approach to governance in India has seen a complete transformation in the past year, not just with decisiveness but also in terms of speed, clarity and transparency, that has earned the country global respect. At a press conference on one year of Prime Minister Narendra Modi’s government, that had assumed office on May 26 last year, the finance minister said decisions were taken almost daily or on a weekly basis to augment growth and development, than being bogged down by resistance. “Decisiveness even in the face of obstructionism has been the hall mark of the Modi government,” he said, adding: “There is also absolute clarity in the direction in which the government ought to go, and that direction is towards growth and development.” He specifically said some fast and far-reaching decisions were  taken in a transparent manner in areas like railways, power, coal, mining, rural roads, telecom, highways, urban development, financial services, subsidies and petroleum, and these have left a mark for future growth. “A key feature of this government has been a corruption-free administration, decision-making and transparent mechanisms and to take decisions without discrepancies,” he said adding that all this had led, among other things, to India’s business confidence index moving up. “We are today the fastest growing economy in the world. But that is not enough for us,” he said, adding that the public at large now was able to even ask: “Why arent we growing faster that the 8 percent, and this restlessness to grow faster is the real potential of India.” He added: “Our decisions are as fast as this restlessness.”

ArcelorMittal, SAIL tie up to make auto steel in India
The world’s leading steel maker, ArcelorMittal, on May 22 signed an agreement with Steel Authority of India Ltd (SAIL) to set up an automotive steel manufacturing facility in India, under a joint venture (JV). This would be the first greenfield investment by the LN Mittal group in India’s steel sector, after years of trying to get a foothold in the country. “In the coming months, a working group, with representatives from both companies, will work on evaluating a structure for the proposed JV and carry out feasibility studies as part of a comprehensive due-diligence process,” said a joint press release. The deal was signed in London, by ArcelorMittal Chairman and Chief Executive Officer Lakshmi Mittal and SAIL Chairman C S Verma, in the presence of Steel Secretary Rakesh Singh and ArcelorMittal Europe Chief Financial Officer and chief executive, Aditya Mittal. The proposed venture would construct a cold-rolling mill and other downstream-finishing facilities in India. These would offer technologically-advanced products for India’s rapidly-growing automotive sector. Brian Aranha, head (global automotive and commercial coordination), ArcelorMittal, told Business Standard the company would get steel from SAIL’s existing plant. “The signing of the MoU (memorandum of understanding) is the first in the process, which will be linked to key decisions such as the location of and investment in the new plant,” he said. Currently, SAIL produces steel for internal applications in the automobile sector. With the joint venture with ArcelorMittal, it expects to make high-end applications such as auto body sheets. The investment in the new venture will be decided after a feasibility study. Automotive steel would give the ArcelorMittal group the “fastest entry pass” in India, where they could replace imports, said Aranha. Earlier, ArcelorMittal had signed MoUs with state governments, including those of Jharkhand and Odisha but its plans couldn’t take off. It had also set up an oil refinery in Bhatinda, Punjab, along with Hindustan Petroleum Corporation. In 2009-10, the group became a co-promoter in the Miglani-family-run Uttam Galva. The ArcelorMittal group is the world’s leading steel supplier to the automotive sector, with a market share of 17 per cent. “The automotive sector is a highly strategic and important market for ArcelorMittal. Establishing an automotive-focused production presence in India, one of the world’s fastest growing automotive markets, is a natural progression in executing our global automotive strategy,” Mittal said. India is estimated to become the world’s fourth-largest automobile manufacturing country by 2020, growing from the current 3.5 million units to about seven million units. Aranha said considering 650-750 kg of steel was required to produce a unit, the total market size was huge. Besides, with India considering introducing crash standards for vehicles, the demand for new technology would increase, he added. While reducing India’s reliance on imports, Singh hoped increasing the availability of indigenously-produced automotive steel would provide a sustainable competitive advantage to the Indian steel and automotive sectors.

Investment policy for overseas Indians made easier
The union cabinet on May 21 approved certain amendments to the Foreign Direct Investment (FDI) policy to make investments by overseas Indians in the country easier and simpler. Overseas Indians comprise Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs). According to a cabinet communique, the cabinet approved redefining an NRI as an individual resident outside India who is a citizen of India or is an OCI cardholder under Section 7 (A) of the Citizenship Act, 1955, while PIOs who have registered

under the August 19, 2002, central government notification “will be deemed to be overseas citizens of India”. Investment by NRIs under the Foreign Exchange Management Act (FEMA) will be treated as a domestic investment at par with investments made by residents. “The decision to include OCIs and PIOs under NRIs is meant to align the FDI policy with the government policy and provide parity in economic, financial and educational arena,” the statement said. “The amendment is expected to result in increased investments across sectors and greater inflow of remittances leading to the country’s economic growth,” the statement added. The FDI policy for investments by overseas Indians was reviewed with amendments as a follow up of reform measures the NDA government initiated in the past one year and assurances Prime Minister Narendra Modi gave to the Indian diaspora during his official visits to the US, France, Germany, Canada, Australia, Japan and South Korea recently.

India outpaces others in steel output
According to World Steel Association’s recent data, India’s steel production grew by an impressive 6.7% in the first four months of the current year vis- -vis a decline of 1.3% in China, the highest producer by a wide margin and 1.7%, globally. India, now the world’s third largest producer, produced 29.97 MT steel during the January-April period of the current year compared to 28.09 MT in the same period a year ago. China’s production fell to 270 MT from 274 MT a year earlier. Output in Japan fell by 3.7% to 35 MT during the period. Production in the US also dipped by 8.5% to 26.3 MT in the period. Global production came down to 536 MT in January-April from 546 MT a year ago. In April also, India’s steel production growth remained in the positive terrain while decline in output in all other major producing nations. Production in China, Japan and the US fell by 0.7%, 6.1% and 9.8% respectively. In contrast to the worldwide trend, India has been recording reasonable growth in production since last February. During the same month, it moved one step in the world order of steel production surpassing the US. China and Japan are sitting on the first and second positions respectively. It will take some years before India becomes the second largest steel making nation, if the current trend persists. Industry sources said contrary to the falling trend globally, steel demand in India is showing signs of improvement. According to Joint Plant Committee, a unit under the steel ministry, India’s steel consumption grew by 3% in February, 3.1% in March and 7.1% in April. In its short-range outlook, WSA has also recently predicted that India’s steel usage growth rate would be the highest at 6.7% in 2015 compared to a decline of 0.5% in China, 0.4% in the US and 2.4% in Japan.

IIM-B ranked 48 on FT’s top 50 executive education schools list
The Financial Times (FT) Executive Education 2015 Top 50 Rankings saw the Indian Institute of Management-Bangalore (IIM-B) at the 48th position. IIM-B was the only Indian B-school to feature in the top-50 for executive education. In separate rankings by FT for open and customised executive education programmes, IIM-B retained the 53rd position. It debuted at the 57th position in the FT Customized Executive Education Rankings 2015. IIM-B was the only B-school from India to be ranked in the open executive education rankings. In the customised rankings, it was followed by IIM-Ahmedabad, which debuted at the 83rd position.

Executive education offers non-degree programmes to corporations and working professionals

which are either “customised” according to the requirement for the organisation or “open” to all professionals. Shyamal Roy, chairperson (executive education) at IIM-B, said: “IIM-B’s position in the Financial Times 2015 rankings reflects our efforts towards achieving academic excellence and positions us as the forefront of imparting world-class business education in India. It encourages us to continue our commitment to design and offer MBA programmes that will cater to the emerging global requirements.” The FT 2015 rankings are based on the satisfaction of the participants and clients, the diversity of participants and faculty and the schools’ international exposure. Participating schools are marked on various parameters, from preparation to facilities, which accounts for 80 per cent of the ranking. Commenting on the rankings, Ishwar Murthy, dean-faculty of IIM-B, said, “Our current position in the FT ranking is really the result of two factors: The quality of our faculty, and a process of continuous improvement in the delivery of our executive education programmes. In particular, the latter involved a lot of hard work and planning. I am confident that with the path that we have embarked on, we will do even better in the years to come.”

Indian financial sector to spend Rs.53,600 crore on IT: Gartner
The Indian financial sector would spend Rs.53,600 crore on IT products and services in calendar year 2015, global IT research firm Gartner said May 19. “The IT spend by Indian banking and securities companies in 2015 will be 15 percent more than Rs.46,600 crore spent

during calendar year 2014,” Gartner said in its report “Forecast: Enterprise IT spending by vertical industry market, worldwide.” The forecast includes spending by financial institutions on internal IT, external IT services and telecommunications. Projecting a strong growth in software and IT services, the report said the sector was the largest overall spending category at Rs.18,300 crore, accounting for 34 percent of the enterprise IT market. “Software is forecast to achieve the highest growth rate amongst the top level IT spending categories - 19.2 percent in 2015,” Gartner research director Vittorio D’Orazio said in the report. With the Reserve Bank of India (RBI) issuing licenses for six new banks in 2014 with guidelines for more entrants in the banking sector, the report foresees 50 new banks across the country by 2020. “As competition intensifies, banks will invest more in technology to win market share and drive expansion. We expect an increase in IT spending in branches, core banking systems and mobile channel space,” D’Orazio added.

India eyes 15% jump in medicine exports this fiscal
Indian drug makers are hopeful of achieving double digit growth in exports this fiscal after being confined to single digit growth for two years, helped by factors such as several medicines going off patent, strengthening dollar and access to new markets in Asia. “We hope to achieve 10-15 per cent growth in export of pharmaceutical products during the current fiscal,” said PV Appaji, director general at Pharmaceuticals Export Promotion Council (Pharmexcil). This optimism is driven mainly by anticipated increase in the US Food & Drug Administration (FDA) approvals as a large quantum of medicines are going off patent. “Increased focus of Indian drug makers on complex and high value generics and growing acceptance to our generics in key new markets like Japan and appreciating dollar should also help us achieve the targeted exports,” Appaji told ET. India failed to achieve targeted growth in export of medicines in the last two years. As against the targeted growth of 10 per cent during 2014-15 set by the commerce ministry, the country’s pharmaceutical exports saw only 5 per cent growth at Rs 95,000 crore, largely on account of delayed regulatory approvals and price erosion due to increased global competition. The North American market, which accounts for nearly a third of the country’s pharmaceutical exports, proved a drag on revenues of several domestic drug makers, owing to slower product approvals in the US and piled up applications before USFDA. Increased scrutiny and import alerts by the global drug regulators on facilities and products of Indian drug makers over the last couple of years, too, had adversely affected exports and profitability of several large medicine manufacturers, Appaji said. Currency devaluations and geopolitical uncertainties in certain countries like Russia, Ukraine, Venezuela and Brazil also contributed to lower than anticipated exports. Things are expected to improve this year. Large Indian drug makers such as Dr Reddy’s Laboratories, Lupin, Sun Pharma, Glenmark and Aurobindo Pharma have lined up several complex generics for launch and are waiting for global regulatory approvals. Many of them expect double-digit growth in sales this fiscal, anticipating quicker approvals. GV Prasad, co-chairman and chief executive officer at Dr Reddy’s, said India’s second largest drug maker is targeting double digit growth this year. “Europe started to turn around and it is profitable now due to new launches. We are looking at  working with a partner to enter in to the lucrative, however difficult, Japanese market,” he said. The Hyderabad-headquartered company’s chief operating officer Abhijit Mukherjee said the company was expecting increased ANDA approvals this fiscal. Dr Reddy’s, which has clocked $1 billion revenue from the US market alone, has 68 ANDAs pending for approval before the FDA for months. Analysts tracking the sector project faster regulatory approvals to drug applications under the FDA’s new Generic Drug User Fee Act in the place of existing system that took at least 30 months for approvals. “The target set by India of achieving double digit growth in exports appears to be feasible,” said Alok Dalal, pharmaceutical analyst with CLSA. Nitin Agarwal, analyst with IDFC Securities, expects FDA to review and act on 75 per cent of the ANDA applications within 15 months of submission. Neha Manpuria, analyst with JP Morgan, in a report released in January had said, “Growth in the US has been affected by the lag in new product launches. While the trend so far has been tepid, any pickup in ANDA approvals would be a key driver for growth in the near term.”

M&M to buy stake in Mitsubishi Heavy’s farm machinery unit
Vehicle maker Mahindra and Mahindra Ltd said on May 21 it would buy a 33- percent voting stake in the agricultural machinery-making unit of Mitsubishi Heavy Industries Ltd for $25 million. The investment is being made through the issue of common shares and class A non-voting shares of Japan’s Mitsubishi Agricultural Machinery Co Ltd, and the deal is expected to close by Oct 1, the companies said in a joint statement.  Mitsubishi Agricultural makes farm equipment such as tractors, power tillers, rice planters and combine harvesters for sale globally. It brought in about $408 million in revenue for the fiscal year 2015. Mahindra, which is the world’s largest maker of tractors by volume, said the deal would help both companies cut cost and improve their supply chain.

Renewable energy seen generating one million jobs
As India, the world’s third-largest emitter of greenhouse gases but 127th in terms of per capita emissions, ponders over an energy-balanced growth, jobs creation and environment protection in the future, there is encouraging news. The renewable energy sector, a particular focus of attention for Prime Minister Narendra Modi, has generated 400,000 jobs till 2014, according to a report released by the International Renewable Energy Agency (IRENA). The sector could generate a million jobs by 2022, if the government reaches its goal of 100 giga watts (GW) of solar photovoltaic (PV) energy and 60 GW of wind energy. India is ranked fourth globally with 5.7 percent of all the people employed in the renewable-energy sector worldwide. China is the largest global renewable- energy employer, with 44 percent of the world’s jobs, or 3.4 million, followed by Brazil with more than 0.9 million jobs, USA (0.7 million), India (0.4 million) and Germany (0.3 million). Globally, more than 7.7 million people are employed (directly or indirectly) in the renewable-energy sector (excluding large hydropower). This is an 18 percent increase from last year’s 6.5 million, according to the IRENA report. India has a renewable-energy potential of about 895 GW, of which solar alone could generate 750 GW, as IndiaSpend previously reported. The Five of the top 10 countries providing jobs in this sector are from Asia -- China, India, Indonesia, Japan, and Bangladesh. The solar PV sector employs 125,000 people (grid-connected and off-grid applications) in India. It is also the largest renewable energy employer in the world, accounting for nearly 2.5 million jobs. But more jobs blowing in the wind. If the government’s goal of installing 60 GW wind energy is reached, India could create up to 183,500 additional jobsin that sector (excluding manufacturing) by 2022, according to the IRENA report. While most of these jobs (81 percent) would be temporary, for e.g. construction, about 16 percent would be skilled. Direct employment in India increased by 28% to 53,000 in 2014, with 29,000 jobs in installation, operation and maintenance, and the remainder in manufacturing, the report estimates. China leads global employment in solar PV, wind, solar heating and cooling, small and large hydropower, biomass and biogas. Brazil with over 0.8 million jobs is the leading employer in biofuels. India’s renewable-energy contribution stands at 33 GW of installed power capacity as on December 2014. Wind energy contributes 22 GW followed by bio-energy (4), small hydro (4) and solar (3). Over the last 10 years, from 2005-06 to 2014-15, the renewable-energy installed capacity rose five times to reach 12 percent of India’s total installed power capacity. India’s solar PV manufacturers struggle to compete with suppliers from China, United States, Japan and Germany, according to the IRENA report. Only 28% of India’s module production capacity and 20% of its cell manufacturing capacity were utilised in 2014.

UN raises projections for India’s growth, making it the fastest-growing economy
The UN has now raised its projections for the Indian economy’s growth this year by 1.7 percent to 7.6 percent and by 1.4 percent to 7.7 percent next year from the estimates it made in January. The Mid-Year Update to the World Economic Situation and Prospects 2015 released on May 19 puts India on the trajectory to be the world’s fastest-growing large economy, outpacing China, the previous champion in the development stakes. The original report by the UN Development Policy and Analysis Division (UNDESA) released in January had estimated India’s gross domestic product (GDP) growth rate for this year at 5.9 percent and 6.3 next year. They were behind China’s growth rate projection at 7 percent for this year and 6.8 next year in the January report, which remain unchanged. The UN update matches the projections of other international institutions that have put India’s growth rate as the fastest, and all of whom have also revised estimates for India upward. Last week, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) released a report that said Indian economy would grow by 8.1 percent this year and 8.2 next year, which are the highest projections made by international institutions. Ingo Pitterle, a UNDESA Economic Affairs Officer and India expert, told IANS in an interview Tuesday, that with “a return to a high degree of macro-economic stability,” India is winning the confidence of investors and the international community. “Overall, I think the authorities in India have done a very good job over the past two years and this is actually reflected in some indicators,” Pitterle said. “In 2013 India was group grouped together with Turkey, South Africa, Indonesia and Brazil, and considered a fragile economy. “And now you look at the same variables, today they look very different. When you look at the currencies the story is India’s is the only currency that has held up well here, which is a sign of confidence by investors, by the international community, in the Indian economy.” While the rupee has come down by about 9 percent over the past year, it has done better than the currencies of most other countries. Referring to India’s economic policies, Pitterle said: “The changes that are being made are all going in the right direction, both by the government and by the central bank.” “I have been following the Indian economy now for seven years or so,(and) I see a return to a high degree of macroeconomic stability,” he said. “We have seen that inflation came down, and this not only all related to the oil prices but also to a very prudent monetary policy, and we are seeing that the external imbalances have declined, current account balance is much better.” Asked about the differences in the UNDESA projections for India’s growth and ESCAP’s Pitterle said, “I believe that for India’s economy whether it grows by 8.1 percent or 7.6 percent, that doesn’t matter, not in the medium term or the long run. What is important is that it is balanced growth, that it is the same (level of) growth, that it can really have five-ten years of this high growth period without major disruption without causing excessive inflation or other imbalances.” He attributed variations to the time periods and the models that were used to make the forecasts. “We use the calendar year. ESCAP may actually use the fiscal year, which starts on the first of April for India.” In the forecasting model DESA used, a significant part of the growth in India over the past year came from net exports mainly because, not because export grew strongly but because of imports declined, he said. The assumption was that net export decline - - that is the difference between the value of imports and exports - would not continue with the same force, and eventually imports would pick up. “This is a good thing actually for the economy,” he said. But “from a GDP perspective, higher import would lead to lower net export and that would probably translate into slightly lower growth.

Kolkata, Mumbai, Bangalore in fastest growing global cities list
India’s three metropolitan cities, Kolkata, Mumbai and Bangalore, have emerged as the top three fastest growing cities in A T Kearney’s Global Cities Index, which is topped by New York and London. The three cities have been improving their scores steadily in business activity, information exchange, human capital and cultural experience key parameters used to measure a city’s global engagement in the index released today, said the London based global management consulting group. The three India cities have made particularly strong improvements in information exchange, in part due to gains in the number of broadband subscribers, it said. “The ability to attract human capital is key to the success of any city. For that it needs to be able to provide a good environment for living as well as innovation,” said Debashish Mukherjee, a partner with A T Kearney. “India has been pushing for urban redevelopment and improving the infrastructure across its major cities. That has helped its urban centers become more engaged globally,” he said. Mukherjee added: “The Indian government’s plan to develop 100 smart cities across the country is a step in the right direction. India’s major cities should be a priority for the government’s smart city program.” The Global Cities 2015 includes two parts- The Global Cities Index (GCI) and the Global Cities Outlook (GCO). This is the fifth edition of the GCI, which was launched in 2008. The GCI provides a unique assessment of global engagement for 125 cities, measuring how globally engaged each city is across 26 metrics in five dimensions – Business Activity, Human Capital, Information Exchange, Cultural Experience, and Political Engagement. The GCO is new this year: It evaluates the future potential of 125 cities based on the rate of change across four dimensions – Personal Well-being, Economics, Innovation, and Governance. For the GCO, cities in India and China are the ones to watch, especially Ahmedabad, New Delhi and Beijing. New York and London remain the world’s most global cities, as they are the only cities to rank in the top 10 of both GCI and GCO. San Francisco leads the GCO due to its strength in innovation. Other cities ranking at the top of the GCO include London (#2), Boston (#3), New York (#4), and Zurich (#5). Mike Hales, A T Kearney partner and study co-leader, said: “We have identified 16 cities that are ranked in the top 25 of the GCI and in the top 25 of the GCO. We call these cities the ‘Global Elite’.” Beyond New York and London, the Global Elite includes Los Angeles, Chicago, Toronto, San Francisco, Boston, Paris, Brussels, Berlin, Amsterdam, Tokyo, Singapore, Seoul, Sydney and Melbourne.

India continues to lead global consumer confidence index: Nielsen
In the forecasting model DESA used, a significant part of the growth in India over the past year came from net exports mainly because, not because export grew strongly but because of imports declined, he said. The assumption was that net export decline - - that is the difference between the value of imports and exports - - would not continue with the same force, and eventually imports would pick up. “This is a good thing actually for the economy,” he said. But “from a GDP perspective, higher import would lead to lower net export and that would probably translate into slightly lower growth.” India continues to lead global consumer confidence index: Nielsen India remained at the top of Nielsen’s global consumer confidence index for the fourth quarter in a row, but whether confidence translates into consumption is still in doubt. The country’s confidence score rose 1 point from the previous quarter and 9 points from a year ago to 130 in the three months ended March. India was followed by Indonesia (123) and the Philippines (115), according to the online survey conducted by Nielsen. Although India retained its position at the top of the index, a substantial 44% of the respondents polled felt that the economy was still in the dumps, said the Nielsen Global Survey of Consumer Confidence and Spending Intentions. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively. An increase in consumer confidence index is a sign of brighter prospects for an economic recovery. As the sequential increase in confidence in the March quarter is negligible, it still casts a cloud on India’s consumption story. “We are seeing some initial signs of consumption recovery, but will have to wait for another quarter or two to see if this can be sustained. This will depend on factors like timely monsoons and inflation,” said Piyush Mathur, president, Nielsen India region, in a phone interview. This is in line with what consumer product makers such as Hindustan Unilever Ltd (HUL), Godrej Consumer Products Ltd and Marico Ltd said when they announced their March quarter earnings. “There is no clear visible trend emerging at present. It is a bit too early to predict... Maybe we will have to wait for a quarter or two,” said Sanjiv Mehta, chief executive officer and managing director at HUL, the maker of Lux soaps, Surf detergents and Kissan jams, at the company’s earnings conference on 8 May. Delayed and deficient monsoon rains last year, followed by unseasonal showers that damaged winter crops in the past two months, have hurt rural incomes and consumption despite inflation slowing. Consumer Price Index-based retail inflation eased to 4.87% in April, a four-month low. “The fall in inflation is expected to have an impact on disposable income over time, but it will take time for the sectors to be restored to perceptible and sustainable growth,” said Mathur. Growth in infrastructure, engineering and other industrial sectors is yet to gather pace. India’s eight core sectors shrank for the first time in 17 months by 0.1% in March, compared with a 1.4% expansion in February due to a dip in production of steel, natural gas and refinery products, according to official data. The Nielsen survey, established in 2005, measures perceptions of local job prospects, personal finances and immediate spending intentions among over 30,000 respondents with Internet access in 60 countries. Over four in five urban Indian respondents (nearly 83%) polled in the survey, conducted between 23 February and 23 March, exuded the highest level of optimism globally on job prospects in the next 12 months; the figure was 74% in the same quarter last year. India was followed by Indonesia (74%) and the Philippines (73%). According to the survey, discretionary spending and savings of over three in five (65%) online respondents polled indicated this is a good time to buy things they want and need, compared with 54% in the year-ago period. The top three cost-cutting avenues in the March quarter were savings on gas and electricity (49%), spending less on new clothes (45%), and cutting down on holidays and short breaks (35%). The state of personal finances for 80% of urban Indian respondents was good or excellent in the first quarter of 2015, 4 percentage points up from 76% a year ago. The top concerns remained job security (22%), sustaining a work-life balance (11%), and followed by state of the economy (9%). Parents’ welfare and happiness was the second biggest concern for 12% of the respondents.

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