India Market Watch: Modi Reaches USA, Chinese and Japanese India-bound Investments Grow
Modi visit to the US
Narendra Modi landed in Washington D.C. on Sunday, starting off a low-key three-day visit. This is the Indian prime minister’s fourth visit to the US, and first since President Trump’s inauguration.
At the top of Modi’s agenda are India’s concerns over the issuance of H1-B work visas, job creation and American investments, as well as securing and stabilizing a working relationship with the new American President.
Modi’s small-scale interaction with 600 members of the Indian community in Virginia on Sunday contrasted with his extravagant Madison Square Garden address during President Obama’s term – a move analysts are calling tactful, lest it impact more serious matters with President Trump, known for his crowd-size fixation.
Overall, the trip is to be a no-frill, business affair. Modi held a roundtable interaction with 20 CEOs of American MNCs (including Microsoft, Apple, Google, Cisco, and Amazon) on Sunday evening, before heading to the White House for bilateral talks with President Trump on Monday.
While speaking to the American business community, Modi was keen to emphasize that the government had implemented 7,000 reforms for ease of doing business, targeting “minimum government, maximum governance”.
Salary growth stagnant in Indian companies
Across industries, Indian companies have paid out lower salary hikes in the last 10 years, which plummeted from 15.1 percent in 2007 to 10.2 percent in 2016.
While the sudden decline was a knee-jerk response to the 2008 recession, the last few years of relatively high economic growth has translated into very little in terms of salary benefits.
The findings are part of a comprehensive study – India Salary Increase Survey – conducted by the consulting firm Aon Hewitt.
Breaking down these results, the salary increments in real pay are even more subdued when adjusted for inflation and subject to the tax surcharge for employees earning more than US$77,525 (Rs 50 lakh).
Currently, consumer products and life science industries are the market leaders in terms of salary increase in India, while the IT sector has seen a major drop despite being among the largest employers in the country.
Chinese, Japanese investments into India grow
The Chinese investment story in India has been a departure from its strategy in other countries, where it is more focused on large-scale infrastructure and energy projects.
Nevertheless, Chinese state-run firms like China Harbour Engineering Co. Ltd and China Datang Corp. (CDC) have now begun to show interest in the sector, looking to acquire Indian companies in the engineering, procurement, construction (EPC) and power generation segments.
Yet another state-owned firm, China Southern Power Grid, is in negotiations with Essel Infraprojects Ltd. to be able to jointly bid for power transmission projects in the country.
On a different trajectory is Japan’s investment trends in India – bilateral economic ties have only deepened under the positive influence of business reforms and investor incentive programs.
In a recent interview, the Japanese ambassador to India, Kenji Hiramatsu, reflected upon the growing momentum in his country’s investments into India’s manufacturing sector.
Besides their dynamic trade relations, Ambassador Hiramatsu pointed out that Japanese investments to India grew to a total of US$4.7 billion in 2016 – a big increase over US$2.6 billion in the year prior.
Illustrating this confidence is the fact that several Japanese companies have moved their operations or production bases to India.
Japanese companies have also begun manufacturing here to export to foreign markets (Maruti Suzuki) or to avoid imports, such as by creating a local spare parts industry – taking advantage of the Make in India initiative.
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