ECONOMY
Rupee Gets a Symbol

This July has brought a much-awaited financial identity for Indians. The Indian Rupee got its symbol (), which is an amalgamation of the Devanagari Ra and the Roman R without the stem. With this the Indian currency has joined an elite club of currencies including the Dollar, Euro, Pound Sterling and Yen that have unique symbols. The new symbol, which has been designed by IIT Mumbai post-graduate D Udaya Kumar, has been approved by the union cabinet.

Commenting on this, information and broadcasting minister Ambika Soni has said, “It’s a big statement on the Indian currency. The symbol would lend a distinctive character and identity to the currency and further highlight the strength and global face of the Indian economy.”

The new symbol will not be printed or embossed on currency notes or coins, but would be included in the Unicode Standard to ensure that it is easily displayed and printed in the electronic and print media. The encoding of the rupee symbol in the Indian Standards is estimated to take about six months, while encoding in the Unicode and ISO/IEC 10646 will take 18 months to two years. It will also be incorporated in software packages and computer keyboards in use in India.

The new symbol also heralds the emergence of a new confident India, with a special place in the world economic order, the minister has concluded.

CONSTRUCTION
Construction Companies See Strong Order Inflows

The Indian construction industry has witnessed strong order inflows due to an improved economic outlook and industrial capex in the first quarter of this fiscal. According to Financial Express, orders flowed in from the road and urban infrastructure verticals. The road segment saw an order inflow of 1,200 km, aggregating 17,000 crore during the period.

‘’Analysts expect the sector to report a top line growth of 20-22% with EBITDA margins to be more or less flat as commodity prices have remained stable. Strong operational efficiency is expected to support the average adjusted PAT, anticipated to rise 15%,’’ reports FE.

An IDFC Securities report states that Jaiprakash Associates is expected to report a 55% growth in revenues, led by a strong cement division performance as well as robust construction revenues. GMR Infrastructure on the other hand is expected to report losses; incremental revenues should flow from the second quarter for its T3 terminal at New Delhi.

“Companies may see opportunities to unlock value over the next one to two years, as they have been incubating new businesses,” says Atul Rastogi, analyst with Daiwa Securities.

RETAIL
Centre Keen on Retail Sector Watchdog

The Ministry of Consumer Affairs, Food & Public Distribution has put forth the proposal of creating an independent body to regulate India’s vast retail sector. The retail regulatory authority would ensure that retail traders are provided with a level playing field if the government opens the sector to more foreign participation.

Foreign direct investment (FDI) in multi-brand retail has not yet been entertained by the government. However, up to 51% is allowed in single brand retail. On the other hand, FDI of up to 100% is allowed in wholesale cash-andcarry trade.

The prime objective of creating a regulatory authority is to protect the interests of neighbourhood kirana stores that might get wiped out with the proliferation of large domestic retailers. It is being mulled that environmental and urban laws should restrict multiplication of malls and corporate retailers in a particular area. In fact, it has been suggested that population density should be considered as the criteria for setting up a shopping mall at a particular place.

With 1.5 crore outlets, India’s retail sector is highly fragmented. Notably, only 4% of the outlets are bigger than 500 sft in area and the remaining 96% are in the unorgainsed sector. Giants like Wal-Mart,Tesco and Carrefour, some of whom are already in cash-and-carry business, have been trying to convince the government to let them enter India’s retail sector. But the government is of the view that if a liberal FDI regime is encouraged, large global retailers would wipe outsmall retailers by adopting the tactic of predatory pricing.

Nevertheless, there is now a growing opinion that speaks in favour of FDI. It is being felt that large foreign investments would help in reducing costs, create new employment opportunities, and improve conditions for small manufacturers and retailers.

Few months back, the Ministry of Commerce and Industry had prepared a concept note to allow up to 51% FDI in multi-brand retail other than primary goods (foods, groceries and vegetables), but with some stiff riders. The ministry was also keen on FDI in retail of food grain and other essential commodities in order to create a parallel network to the public distribution system.

PAINTS
Paint Prices Raised Again

Arrival of July has led paints to become more expensive in the country. With the cost of raw materials going up, paint companies are planning to raise the price of their products between 2-4%. This trend has been started by India’s largest paint manufacturer Asian Paints, which has increased product prices by 3% from July. More companies including Berger,ICI, Nerolac, Shalimar Paints, etc are also expected to follow this trend anytime soon. The paint majors had earlier increased prices by 4% in May.

The raw material price raise is not only due to costlier crude oil but also due to the shortage of titanium dioxide, a key component of paint which comprises 20% of the total raw material cost. The price of titanium dioxide has gone up from US$ 2000 a tonne to over US$ 2,600 in the last few months, and is likely to increase further according to manufacturers. That’s because many manufacturers of titanium dioxide across the globe had shut their units during recession. Moreover, the shutdown is leading to supply shortage of this component as the demand for raw material has been growing now, thus pushing up the overall price of paints. Reportedly, another key raw material for paint - bisphenol - has seen a jump in price, while emulsion has also become substantially costlier.

STEEL
Government Aims to Double Steel Production by 2012

The government expects the steel capacity to go beyond 200 million tonnes by 2020. During the meeting of National Steel Consumers’ Council, union minister Virbhadra Singh said, ‘’We are planning to expand steel production through brownfield and greenfield projects, and expect to double the steel production from the present 60 million tonnes to 120 million tonnes by 2012.’’

The minister added, ‘’The massive technology infusion in industrial production in the past few decades has almost completely changed the way steel industry does business today. We need new technology in order to produce better quality steel at low cost.’’ Moreover, the government is looking to acquire new technology from South Korea and Japan.

Commenting on the relationship between steel producers and consumers, Singh stated that steel being an industrial intermediate holding a strategic position in the development of any economy and in the line of value chain, it has been the endeavour of the Ministry of Steel for a long time to see that the two sides of the steel business follow a harmonious and synergetic path to achieve synchronised growth in the larger interest of the country. In the meeting, issues with respect to steel prices, supplies, imports, exports and government’s policy initiatives were also discussed.

EXPORTS
Exports Up 30.4%

India’s exports zoomed for the eighth straight month in June, surging 30.4% to 80,425 crore as compared to 63,450 crore during June 2009. Commerce secretary Rahul Khullar, while releasing this data, stated that first quarter (April-June 2010-11) exports reached a level of 2,38,760 crore at a growth of 32.2%, while imports were 39,01,000 crore with a growth of 34% and a trade deficit of 1,51,340 crore.

The minister also informed that India’s imports for June rose 23% to 1,33,010 crore, which would widen the country’s trade deficit to 49,585 crore according to Reuters calculations.

Asia’s third-largest economy is targeting close to 15% export growth in the current fiscal year, after experiencing a sharp decline of 4.7% in the 2009-10 financial year as global recession crimped demand.

GREEN BUILDINGS
Centre Mandates Greener Commercial Buildings

The Prime Minister’s council on climate change cleared the Urban Habitat Mission under National Action Plan on Climate Change (NAPCC) which will now make the energy-saving building codes mandatory in three years for new commercial buildings. While the energysaving building codes are already in place, they have not been implemented as they remain voluntary in character.

The Urban Habitat Mission, one of the eight under the NAPCC, will set up demonstration projects across the country and provide the funds to push states to alter building bye-laws and other regulations in order to move towards greener habitats.

The implementation of the energy saving code for commercial buildings is seen as one of the low hanging fruits that the government can implement at minimal cost to the economy. Currently, only 700 buildings have implemented this code; but the government will now mandate that the JNNURM funds for urban development be made conditional to the changes in the bye-laws facilitating the energy codes.

The eight missions along with the low carbon growth plan, the first report of which is expected by the end of the month, are intended to reduce India’s greenhouse gas emission intensity per unit GDP by 2020 by 20-25%. The reduction is to be achieved from the 2005 levels.