Other Briefings
India-Pakistan Restart Cross Border Trade After a Six Decade Hiatus
Oct 21 – Trucks loaded with fresh fruits, honey, nuts, dry fruits and spices crossed the Kashmir valley from Pakistan controlled Kashmir to the Indian side and back for the first time in six decades. In a historic move, the heavily guarded trade route between arch rivals India and Pakistan was opened to trade from both sides on Tuesday. The easing of trade restrictions follows confidence building measures taken by both sides in order to tap the huge potential of trade and economic ties across the India-Pakistan border.
Welcomed by traders and businessmen on both sides of the border, the trade route is heralded as not only a physical gateway for goods, but also has a symbolic and psychological impact – that of opening markets and increasing condidence. Previously goods were transported to the border by porters and loaded onto trucks on the other side.
Russia-India to Sign Civilian Nuclear Energy Deal in December
Oct. 20 – Trying to balance power in the region, Russia agreed to sign a civilian nuclear energy deal with India in New Delhi on Monday, wherein it will help the energy starved nation build four more nuclear energy plants. The Russia-India nuclear pact follows India's nuclear cooperation with the U.S. and France. It also comes just after China agreed to help Pakistan build two more nuclear energy plants and Russia decided to help Iran build a nuclear power plant, all to ease the regions energy needs. India and Russia are also in talks to jointly develop a weapons system.
Russia and India, former cold war allies are expected to sign the atomic energy deal when Russian President Dmitry Medvedev visits India early this December. Russia had agreed to build four reactors in the southern Indian state of Tamil Nadu during past President Vladimir Putin's visit in January 2007.
RBI releases US$30 billion into the Indian Financial System
Oct. 16 – India's central Bank, the Reserve Bank of India will cut the cash reserve ratio (the proportion of their deposits that banks have to maintain in cash with the central bank) by 100 basis points or 1 percent to 6.5 percent, releasing Rs 400 billion rupees ($8.2 billion) into the Indian banking system. This marks the third and steepest cut in CRR in the past two weeks, bringing the CRR down from 9 percent last month.
The RBI has also decided to release Rs 250 billion (US$5 billion) to commercial banks and credit institutions towards a farm waiver scheme immediately. According to the AFP. Last week the RBI announced a cash injection of 600 billion rupees (US$ 12 billion) into the financial system in two instalments. It has also doubled the investment limit for overseas investors in corporate bonds to US$6 billion.
All these measures will collectively, contribute Rs 1,450 billion (US$30 billion) to India's financial system this month.
India Will Achieve its FDI Target This Year
Oct. 14 – Even as liquidity in the Indian economy is drying up, the government has assured the people that enough money is flowing in. Kamal nath, India's commerce and industry minister, announced that while export grew to 30 percent in October, FDI will rise above US$35 billion by the end of this year, meeting the governments target. Earlier he had mentioned that during April-August this year, India had already recieved US$14.6 billion in FDI.
"The huge growth in FDI in India despite global economic slowdown shows how sound and resilient our economy is," Kamal Nath said, adding there was nothing to worry at all. "In August, FDI growth was 124 % and 219% in July this fiscal, which is an indicator to the fact that India with its strong fundamentals can tide over global financial crisis, "he told the Times of India, hinting that India is still an attrctive invetsment destination.
India’s Economy Safe to Bank On
Oct. 13 – Banking on its strong fundamentals the Reserve bank of India's Governor has said that the country may escape the worst consequences of the global financial crisis. He however warned that exports, money, debt and credit markets might be squeezed on account of the US crisis.
"What we are witnessing today in the Indian markets is an indirect, knock-on effect of the global financial situation," RBI Governor Duvvuri Subbarao told a news conference. "We are monitoring the situation on a continuous basis and stand ready to take appropriate effective and swift action," the RBI governor Mr. Subbarao said.
Signed, Sealed and Delivered – India-U.S. Nuclear Deal Now Law
Oct. 10 – President Bush on Wednesday signed legislation that reverses three decades of U.S. policy and allows American businesses to enter India's multibillion-dollar nuclear market.
The U.S. agreement on civil nuclear cooperation permits American businesses to sell nuclear fuel, technology and reactors to India in exchange for safeguards and U.N. inspections at India's civilian — but not military — nuclear plants.
The deal will give India access to US civilian nuclear technology and fuel in return for inspections of its civilian, but not military, nuclear facilities. "India can count on reliable fuel supplies (from US) for its reactors," Bush said, adding "We will give consent to India for advanced reprocessing."
India Eases Foreign Fund Investment Rules to Woo Cash
Oct. 7 – In order to encourage foreign inflows into India, the Securities and Exchange Board of India (SEBI), India's capital market regulator lifted curbs on indirect investment notes by foreign funds to spur inflows into a battered stock market. SEBI initiated the change to stem record sales by offshore funds that have triggered a 42 percent slide in the benchmark index this year, Bloomberg reported.
A requirement forcing investors to register in India before buying shares and limits on offshore derivatives that were imposed in October will be lifted with immediate effect, C.B. Bhave, chairman of the Securities & Exchange Board of India, told reporters after a board meeting in Mumbai.
Not That Easy Doing Business in India
Oct. 6 – Sure billions of dollars in FDI are poring into India, the economy is strong and the political structure is relatively stable, but the decision by Tata Motors to pullout from Singur in India's North-Eastern West Bengal state in the wake of violent protests may affect the broader investment climate in the country, deterring foreign investors and denting economic growth, analysts say.
