Thought of The Day

News

USA returns favor to India with SelectUSA and Red Carpet

To address the imbalance of US investments in India being two-and-half times more in worth than the reverse flow, the US Department of Commerce Thursday announced it was making special efforts to encourage Indian businesses "set up shop in the US". The announcement was made here by Ambassador Vinai Thummalapally, executive director of SelectUSA, an arm of the US Department of Commerce whose brief is to attract and retain business investment in the US.

Thummalapally, originally from Andhra Pradesh and a former US ambassador to Belize in central America, is embarking on a week-long tour of five Indian cities, including Bangalore, Hyderabad and Coimbatore, to attract investments from these place to the US.

The SelectUSA Program

As part of its work of bringing potential investors in touch with the US economic development administration, a delegation from various American states is to come to India for the first time in the first half of 2015, Thumalapally told reporters here."There is tremendous bullishness in the US about Indian investments. Big Indian companies like Tatas, Mahindras and Reliance are already established there. We believe, there are thousands of Indian SMEs (small and medium enterprises) that can use our services," Thummalapally said.

News

Alibaba looking for magic lamp of funds in India

China's Alibaba has been in talks with Snapdeal as it looks to enter India's booming online retail industry, according to two people aware of the development. Alibaba, whose mammoth share sale in the US is underway, is considering investment in Snapdeal as one of its options while it sizes up the online consumer market in this country. "India is a huge opportunity for Alibaba," said a person directly aware of the matter. "Eventually it will look at entering the business-to-consumer space in India and talks are on."

The Economics of Crowd Funding

The Chinese company, which is expected to be valued at over $165 billion (Rs 10 lakh crore) at the conclusion of its initial public offer, has discussed a possible investment with Snapdeal, though both firms are yet to reach any conclusion, said the person. So far, Alibaba has only been linking Indian merchants with overseas buyers and sellers. If it enters the Indian online retail space by aligning with Snapdeal, it will be competing directly against market leader Flipkart and Amazon. While the Chinese company would be a late entrant, it has the advantage of size — by sales Alibaba is bigger than Amazon and eBay combined — and cash (it will raise up to $25 billion in the IPO this week) "We are currently in a quiet period," said Pamela Munoz, manager (international corporate communications) at Alibaba, in reply to an email query on the developments. One source estimated that Snapdeal could raise up to $300 million in a potential round of fund-raising. So far this year, Delhi-based Snapdeal has raised a total of $233 million in two rounds of investments, which saw participation from eBay and billionaire Azim Premji's family office Premji Invest. The last round in May valued the firm at $1 billion.

Political Article

The Political Economy of Diesel Price Deregulation

India will decide on ending government control on diesel pricing after elections in two states next month, an oil ministry source said, even though local prices of the fuel are currently higher than the global rates, making a case for a cut in retail prices. This is perhaps the first time that retail prices in India are higher than the global rates due to a sustained monthly rise in local prices since January 2013. "We tinker with diesel prices once a month...There is a case for a cut in diesel prices towards the end of the month but a decision is yet to be taken on that," the source with direct knowledge of the matter said. "The diesel under-recovery has been wiped out and there is over-recovery of Rs 0.35 per litre with effect from Sep. 16," a government statement said on Tuesday. The government will consider decontrolling diesel and cut the fuel's price by 40 paise per litre this month as the sharp fall in global crude oil prices has paved the way for a major reform in fuel pricing, government and industry sources said. The fall in global prices has helped state oil firms make a profit on diesel, which has been a source of heavy subsidy burden for about a decade. The government is weighing the political impact of fuel pricing as elections in crucial states of Maharashtra and Haryana are due in weeks.

North –South Consensus on Fuel Price Reforms

Officials said that the government has to take a call on whether or not it should announce price deregulation simultaneously with the cut in diesel prices. "Oil minister Dharmendra Pradhan is expected to consult senior cabinet ministers on diesel price issue after he returns from Vietnam this week," one source said. Finance Minister Arun Jaitley and RBI Governor Raghuram Rajan have already expressed their keenness on fuel price reforms. Before the unexpected fall in global oil prices, Jaitley had told Parliament that the government would be able to decontrol diesel fully in a year if there are no international shocks in the oil sector. 

Thought of The Day

News

A legend of the Indian automobile industry closes his innings at Maruti Suzuki

Mayank Pareek, the sales chief of India's largest carmaker Maruti Suzuki has put in his papers after serving the company for more than two decades. Pareek’s departure is the second top-level exit at Maruti this year after Sudam Maitra, who was the in-charge of supply chain.

His exit also comes barely a fortnight before the upcoming launch of Maruti’s executive sedan, the Ciaz, on October 1.He is touted to be replaced as the head of marketing and sales by Shashank Srivastava, who is currently the executive officer for exports.

Pareek’s Innings at Maruti Suzuki 

Known among the automobile fraternity as the face of Maruti Suzuki, Pareek has served the carmaker for more than two decades at a time when its market share peaked to its highest for the past five years. According to people in the knowledge of he is likely to remain part of the automotive industry and may reveal his plans shortly. The reasons for the Pareek's departure is not clear, but unconfirmed talks surfaced shortly after, that he might be headed to rival carmaker Tata Motors. Pareek was instrumental in maintaining Maruti’s leadership position in the fiercely competitive domestic passenger vehicle segment. In the five months to August this year, Maruti’s sales have grown nearly 30%, more than double the pace of the industry, which grew by 12.5%.

Marketing Article

The Bits and Pieces of the Android One Program

The 'most powerful man in mobile' wears his stature lightly. Ask him how it feels to bear the title and he shrugs. "There are many powerful men and women in mobile. I'm fortunate to be part of that group. But by no means do I think I'm the most powerful person." At 42, the tall, slight and soft-spoken Sundar Pichai is senior vice-president at Google where he oversees Android, Chrome and Google Apps. He's been rumoured to have been in the running to become Microsoft CEO ("I can't comment on rumours," he says when asked). There's also speculation that he'll lead Google one day. "Larry (Page) is very committed to Google for the long term. So that's a hypothetical question," he replies.

 Pichai confesses to not knowing too much about Google's operations in India, though he adds, "I follow India news on the TOI website every day." In 2013 Andy Rubin who led the development of Android moved on and Pichai who was head of the Chrome platform took over. There has been speculation that the two platforms will be rolled into one." If we had decided to fully converge, we wouldn't have arrived at Chromecast. The team could think about it in a different way because the attributes of Chrome are different," said Pichai.

What Does Android One Offer To Customers and Manufacturers?

The Android ecosystem might already be a billion devices large, but Google wants to expand it more and at a faster pace. This is where its new programme, Android One, fits in. No, it is not a new operating system, but an effort to bring the best hardware-software combo possible to the magical $100 price point. So the first set of Android One smartphones, launched in India and carrying Indian brands on the rear, will all be priced at Rs 6,399, aiming to woo the first-time smartphone buyers. Sundar Pichai, Google senior vice president for Android, Chrome and Apps, said the price point and the entire value proposition is good enough to get new customers on board. “This gives us an opportunity to expand the market significantly… we see a lot of opportunity going ahead,” said Pichai, who is originally from Chennai. Pichai said Android One tries to solve the problems people face with hardware, software and connectivity while buying affordable smartphones. It will also solve the obstacle of language by including Google Translate with a Hindi-English-Hindi package. There will also be Google Now with a focus on cricket and even train reservations and going ahead free access to YouTube.

Indian Economy Article

Inflation Rates on the Decline: RBI to Wait Before Announcing Rate Cut

Reserve Bank of India Governor Raghuram Rajan said on Monday inflation in Asia’s third-largest economy was still high and there was no point in cutting interest rates to see inflation pick up again. Wholesale Price Index (WPI) for the month of August shrunk to a five-year low of 3.74% versus 5.19% in July. This is much below an ET Now poll of 4.4%. The WPI for June has been revised to 5.6% versus 5.43% earlier. 

What do the numbers say?

The primary articles inflation dipped to 3.89% in August versus 6.78% in July. The manufactured products inflation came in at 3.45% versus 3.67% in July. The food price index dipped substantially to 5.15% versus 8.43% in July. The fuel & power inflation was reported at 4.54% versus 7.40% in July. While the news was greeted with cheer, most analysts are of the opinion that the Reserve Bank of India's (RBI) tough stand on inflation will continue, since it is the Consumer Price Index (CPI) that the central bank tracks. CPI inflation slowed to 7.8 per cent in August from nearly 8 per cent in the previous month. Consumer food inflation went up 9.42 per cent from 9.36 per cent in the previous month but with the monsoon improving dramatically in September, a further spike is unlikely. Declining crude and vegetables prices will provide further relief with a cut in diesel prices on the cards. However, most experts still expect the RBI to hold interest rates when it reviews monetary policy on September 30. Retail inflation is still close to RBI's March 2015 target of 8 per cent.

The central bank wants to bring down interest rates when it is “feasible”, Rajan told a banking conference.Retail inflation, which the central bank tracks for setting lending rates, edged down marginally to 7.8 percent in August from 7.96 percent a month earlier, helped by slower annual rises in prices of fuel and clothes.

Thought of The Day

Internationl News

US poverty rate falls for first time in seven years

WASHINGTON: The share of Americans living in poverty fell last year for the first time since 2006, a sign an improving economy was finally trickling down to the country's least fortunate households. 

Still, the figures from the Census Bureau on Tuesday also showed the average person's income was essentially flat in 2013 when taking into account inflation, and 8 percent lower than in 2007 when the nation fell into recession. 

The report offered a mixed bag for President Barack Obama and his Democratic Party ahead of November's congressional elections. 

On the one hand, median household income, one of the broadest measures of economic well-being for the average voter, has declined since Obama took office and only edged up $180 last year to $51,939, which the report deemed a statistically insignificant increase. 

But the poverty rate did post a meaningful decline, dropping a half percentage point to 14.5 per cent. The decrease appeared driven by fewer people relying on part-time work, as the survey found an additional 2.8 million Americans were working full-time during the year. 

"That seems to be the main thing" behind the decline, said Charles Nelson, an official at the Census Bureau. 

A family of two adults and two children is considered to be living in poverty if they earn less than $23,624 per year, according to the Census Bureau.