India Could Outpace China with Shifts in U.S. Policy

In a long article, supported ably by charts, the South China Morning Post compares the differences between the economies of India and China, and puts forth reasons why “India could trump China as U.S. policy shifts“.

China's A50 vs India Nifty 50

Highlights of the publication’s views:

SCMP Views on India China
Debt India’s debt ratios are only half of those of China and have not been growing during the past decade The country is awash in debt. China’s total debt (public + private) portends slower growth
Trade Much less export dependent: Exports account for 13 % of GDP Export dependent: Exports total 21 % of GDP
Exports to US: 1.6% of GDP Exports to US: 4% of GDP
India’s lack of dominance in the traded-goods sector may help avoid the ire of a more insular U.S. Vulnerable to any change in the mood in Washington
Politics India doesn’t appear to be on President Trump’s radar and… President Trump has focused his trade concerns on two countries: China and Mexico
… This is good news for India and worrisome for China A trade war with the US could destabilize China’s economy and augment the probability of a debt crisis and a currency devaluation
Currency The Indian rupee is probably about fairly valued Currency is overvalued
India’s FX reserves rose from $326 billion in early 2016 to $337 billion in early 2017 Spent one quarter of its currency reserves defending the renminbi
Equity Markets India’s Nifty Fifty Index has vastly outperformed the China A50 in recent years; trades at 18.6x earnings China A50 trades 12.8x earnings for Chinese shares
Demographics and Agriculture India’s per capita consumption is 2500 calories per day Chinese per capita consumption is now over 3,000 calories per day
India’s population will probably expand by 30% over the next 25 years China’s will probably stay about the same adding about 0.1 per cent to China’s population per year
India represents an enormous opportunity for the world’s farmers, especially those who can provide lentils, peas, chickpeas, almonds and other dietary staples. Also, as India grows richer, consumption of dairy and vegetable oils will probably grow considerably China, by contrast, has a mature diet and its food consumption needs may not change a great deal going forward

April 13, 2017   No Comments

In 2016, India Held $118.2 Billion U.S. Government Securities

Data available with the U.S. Treasury Department showed that India was the 12th largest holder of U.S. government securities at the end of 2016, with exposure worth $118.2 billion in December.  Among the BRIC countries, India stood at 3rd place after China and Brazil in terms of exposure.
US Currency
Japan – $1.09 trillion
China – $1.06 trillion
Ireland – $288.2 billion
Cayman Islands – $263.5 billion
Brazil – $259.2 billion
Switzerland – $229.3 billion
Luxembourg – $223.4 billion
United Kingdom – $217.1 billion
Hong Kong – $191.4 billion
Taiwan – $189.3 billion
Belgium – $120.4 billion
India – $118.2 billion

April 13, 2017   No Comments

In a U.S.- China Trade War, Does India Benefit?

Analysts differ on their opinions on whether India stands to gain if there were to be a trade war between the U.S. and China, but the majority say India stands to benefit from the tensions.

The Economic Times reports that Seshadri Chari, a national executive member of the ruling Bharatiya Janata Party, says,”China’s production strength requires a market, and the U.S. is no longer a Chinese market. At this stage, China cannot risk a meltdown in its economy. It’s too politically risky for Xi Jinping. They need a big market. And in Asia, we are the largest market. Today, India is dealing with China from a position of strength.
 Ship in a port

“A protectionist America hurts China more than it hurts India, though India is not without concerns,” states Ashok Malik, a distinguished fellow at the Delhi-based Observer Research Foundation.

“If the U.S. and China don’t get along, the U.S. will turn increasingly to India as a large Asian actor,” says Shashi Tharoor, a lawmaker with the opposition Congress Party and chair of India’s parliamentary standing committee of foreign affairs. He added, “And China, if its U.S. market contracts, will need to diversify its markets and investment outlets, including toward India.”

It would be “premature” to assume U.S.-China ties will nosedive given the scale of their interdependence, says Ashok Kantha, a former ambassador to China and director of the Institute of Chinese Studies in New Delhi.

April 10, 2017   No Comments

India’s Motherson Sumi Acquires Finland’s Automotive company

Noida, India-based automotive component firm Motherson Sumi Systems, a joint venture between its parent Samvardhana Motherson Group and Sumitomo Wiring Systems of Japan, acquired Finland’s PKC Group Plc for about $609 million.

“We are very happy to announce that we have successfully acquired 93.75 per cent shareholding in the PKC Group, which has significant market presence in the American and European markets with major growth plans in China,” chairman Vivek Chaand Sehgal of Motherson Sumi said in a statement. The acquisition will expand the company’s footprint significantly in the commercial vehicle segment.

Headquartered in Helsinki, Finland, PKC is a global tier 1 supplier of wiring harness and associated components to original equipment manufacturers in the heavy and medium duty commercial vehicles and locomotive segments across North America, Europe, Brazil and China, reports Livemint.

Motherson Wiring Harness

Motherson Wiring Harness

 

April 3, 2017   No Comments

Flexible Office Concepts Gain Traction in India

To set up its presence in India, China‘s e-commerce firm Alibaba rented 30 seats in a flexible office in Bangalore. The deal for the dedicated seats or private studios is with co-working community venture CoWrks one of the largest commercial real estate developers in the country.

Inside an Office

Sidharth Menda, CEO at CoWrks, said many corporations have been rethinking their real estate strategy to now include working out of CoWrks. Bangalore-based data tracking firm Tracxn says that currently there are 61 sites where co-working spaces are available in India of which 16 were set up last year. Start-ups and e-commerce firms opt for such spaces to keep overheads low, reports the Economic Times.

March 29, 2017   No Comments