L’Asie, géant mondial économique, s’ouvre désormais de plus en plus à la cuisine occidentale, grâce à plusieurs grands chefs qui s’aventurent notamment en l’Empire du Milieu. La rencontre des cultures culinaires asiatique et occidentale est rendu possible par une ouverture des goûts asiatiques et par une adaptation des grandes toques aux saveurs et coutumes locales. L’Inde et l’Asie du Sud ne sont pas en reste!
China’s banking system is not a good model for India
Jun 9th 2011 | MUMBAI | from the print edition
DURING India’s long experiment with socialist economics after gaining independence in 1947, many big industrial houses managed to survive as recognisably private firms. Banking, though, got it in the neck. “Major banks should be not only socially controlled, but publicly owned,” Indira Gandhi, the then prime minister, announced on All India Radio in 1969. Nationalisation followed.
Today, after 20 years of liberalisation, state-run banks can sometimes look like they are in terminal decline. Some branches are literally rotten, their concrete walls covered in slime and window bars rusted. Yet the reality is quite different. The state sector still controls three-quarters of deposits, and since the financial crisis its share has crept up (see chart).
In 2008 and 2009 foreign banks, burned by bad consumer loans and shaken by events elsewhere, withdrew credit. Some private Indian banks slammed the brakes on, too, including the largest, ICICI, which faced rumours of insolvency—scurrilous, as it turned out, but gleefully repeated by at least one state-bank boss at the time. The public banks, meanwhile, and in particular State Bank of India (SBI), which has a fifth of the market, had an influx of deposits and undertook a lending splurge. SBI’s balance-sheet doubled between March 2007 and March 2011.
The crisis led to a reddening of attitudes across the industry. The requirement that banks must hold up to about a quarter of their deposits in government bonds was no longer denounced as a racket to help fund the budget deficit but instead hailed as an enlightened form of liquidity management. The Reserve Bank of India (RBI), the central bank which regulates banking as well as setting interest rates, made clear its view that India’s approach was superior to the discredited Western models that it had long been told to adopt. It seemed as if India’s state-dominated system might not be a staging-post towards full liberalisation but instead the end destination.
Yet recently things have shifted again. In May SBI’s new chairman announced dire results, with lower lending margins, provisions for pensions and extra charges taken against its loans. The hit, including forfeited profits, was some $2.5 billion, equivalent to over a tenth of the bank’s equity. Since its capital ratios are too low to support fast growth, SBI needs to raise more equity. That means persuading the government, which does not want its 59% stake diluted, to stump up: not an easy task.
With rates rising and the economy slowing, some fear more bad debts could emerge at the state banks that lent freely during the downturn. Meanwhile the private banks seem perkier, with their share of loans beginning to rise. ICICI’s chief executive, Chanda Kochhar, says that after two years of building more branches to suck in sticky deposits, the bank is “in a happy situation” and ready to start increasing credit again. Aditya Puri, the boss of HDFC Bank, which remains the darling of investors thanks to its metronomic performance, plans to keep expanding quickly, too. Other financial firms with banking licences, such as Kotak Mahindra, have been shifting towards the lending business and away from capital markets where profitability has fallen, partly thanks to a rush of foreign investment banks into India.
Two reforms being flirted with by the RBI could make things more competitive. The first would offer foreign banks a deal by which they create proper subsidiaries in India (which should be easier to regulate) and direct more lending to priority areas such as agriculture. In return they will be allowed more branches. One foreign-bank boss reckons that India, much like China, will never allow foreign firms more than a 10% market share, but that would still be almost double current levels. Another is more optimistic, saying that the RBI’s stance is a “huge step”.
The RBI is also considering granting new banking licences to Indian-owned firms. There is some scepticism about the process. One Mumbai financial bigwig jokes that two licences will be granted—one, by the RBI, on the basis of competence, and the other by politicians in Delhi on the basis of bribe size. Still, the result should be an increase in the number of banks. India could end up allowing industrial conglomerates to own banks. That would put it at odds with most countries, where mixing business and banking is considered toxic, but would mean new entrants with financial muscle (although the butchest conglomerate of them all, Reliance Industries, said on June 3rd that it would not seek a licence).
Over the next year private banks will almost certainly win back market share. Farther out, the Beijing model of banking is in any case probably beyond the capacity of the cash-strapped Indian state. Loans are only about a third of India’s GDP compared with over 100% in China. The private sector will be needed to provide the capital to support more credit. Nor can India seal off its financial system to the same extent as China. Its businesses are internationalising faster, and its persistent current-account deficit and bad infrastructure mean it badly needs foreign investment.
As a matter of both preference and necessity, then, Indian’s banking system will become more linked with the world. Its resilience during the crisis partly reflected its competence, but also its insularity and underdevelopment. But if India’s economy is to rival China’s by size, its financial sector needs to become less, not more, like the Middle Kingdom’s.
from the print edition | Finance and economics
As per Francorp India, the consulting arm of Franchise India, the franchising business will grow by an estimated 25-30% in 2012. There is a sign of high optimism in both, franchisors and investors alike. These insights came out from a recent survey conducted by Francorp India, to gauge the confidence of the industry stakeholders, brands and investors, for the coming year.
“The year 2012 will see the horizontal expansion of the service sector, with many new and unique services being offered for the first time, on that scale and level. Services being a majority segment of the franchising business in India, it will be a major driver for the industry as a whole. We expect the sector to grow by 30% and the consumer products sector by over 25% in 2012, thus driving the overall industry by around 25-30% in 2012. Among the services, education segment, the largest amongst the service offerings, is poised to grow by 18-25% next year” said Mr. Gaurav Marya, Managing Director, FRANCORP.
“The way I see 2012 is “Big will not beat small anymore, it will be the fast beating the slow”. The year 2012 bestows a BIG business opportunity. It will see a shift towards enhanced capacities and structured approach, accommodating the varied interests of the stakeholders. The focus would be more on efficiency and effectiveness adds Ms Brototi Sengupta, Vice President – Business Development & Client Relations, FRANCORP.”
Mr. Mohit Ganglani, Business Head of Indian Franchise Association (IFA) further comments “Indian economic growth expected to rebound to 7.5 per cent in FY-13 from 7 per cent in FY12.The government has taken up initiatives on increasing foreign participation- FDI’s in retails and corporate debt market and these are likely to have a positive impact on Indian economy. This will certainly revive sentiment and boost investments in starting or owning a Franchise Business in 2012.”
Most of the franchisors, over 89%, were Indian brands, with 11% being of foreign origin. This is a glaring proof of the fact that even the foreign brands have a faith in the growth of the Indian economy.
Many overseas brands wish to enter India and are testing waters by participating in shows held in India. All of these are optimistic about the Indian growth story and wish to become a part and facilitate value enhancement for the Indian consumers.
Of the brand franchisors surveyed, over 62% were from the service segment and 48% from the products segment. In services, 68% were related to education sector alone. Beauty and wellness grabbed the second position with over 11% of the franchisors hailing from the sector, business services segment following at the third place with 8% and health-care at 4%..
Amongst the products segment, food and beverage was the single largest segment with over 16% of the franchisors from the segment.
Among the franchisor brands that were interviewed, almost all of them were confident about the growth in their respective sectors with over 96% betting an above average growth in their respective sectors.
Almost all, around 98%, of the brand franchisors had expansion plans with over 21% wanting to expand beyond India shores into the SAARC and Middle East countries, to start with.
The brands are mainly looking at North India, for expansion purpose, with over 55% respondents focusing there.
Amongst the zones, Francorp estimates the major growth to come from metros along-with a mix of tier II & III cities. However, this will vary according to the sector.
The survey also got some insights on the sunrise sectors. Most of these were services. Amongst these, the major were gaming, media and personalized services such as home cleaning. Francorp estimates a slow growth rate for these with a potential market waiting to be explored.
India’s young population is showing interest in becoming franchisees. The growth fuelled by rising income and expenditure levels and pushed by the urge to increase wealth has led the youth to explore the opportunity. Almost
63% of the 170 respondents were in the age group of 21-40 yrs.
Over 86% of the investors were self employed. Employed people are not seeing the industry as an option now. However, Francorp estimates that the percentage of the employed people will rise in the coming years. The main drivers for this will be the rising inflation and aspirations. Women investors were still very low at around 1% of the total number of respondents.
Most of the respondents (over 62%) want to go with the established sectors which have a low risk profile like apparel, food & beverage, education and retail. Not many like to take a plunge into new sectors.
North and West India are the favorite zones for investors to invest their money. North India was the top investing preference with over 78% investors willing to invest there. West India followed with only 9%, at the second position. Investors wish to take the Indian franchising industry to the tier II & III cities along with the metros.
Investors are also confident about the growth in 2012 in their sector of interest with over 68% respondents showing optimism. Amongst the sunrise sectors, as perceived by the investors, real estate, telecom, media, entertainment along with some niche sectors like wine and pest control, were top of the mind.
Overall, the franchising industry in India set for an above average growth rate in 2012, with the stakeholders confident about the immense potential of the model. However with the recent policy, economic and socio-cultural developments in India there are limitless opportunities, both for the franchisors as well as the investors which we will have to wait and watch out for.
January 1, 2012 | Author: ruchika
All eyes are on China as it races to become the world’s next great power. Smart bettors would be wise to put some money on India to get there first, and Edward Luce explains why in “In Spite of the Gods: The Strange Rise of Modern India,” his highly informative, wide-ranging survey.
Mr. Luce, who reported from New Delhi for The Financial Times from 2001 to 2005, offers an Imax view of a nation so enormous that it embraces every possible contradiction. Always it seems to be teetering on the edge of either greatness or the abyss. Right now the future looks inviting.
India’s dizzying economic ascent began in 1991, when the government abruptly dismantled the “license raj,” a system of tight controls and permits in place since independence in 1947. Mr. Luce, as you might expect from a Financial Times reporter, does a superb job of explaining the new Indian economy and why its transformation qualifies as strange.
Unlike China, India has not undergone an industrial revolution. Its economy is powered not by manufacturing but by its service industries. In a vast subcontinent of poor farmers whose tiny holdings shrink by the decade, a highly competitive, if small, technology sector and a welter of service businesses have helped create a middle class, materialistic and acquisitive, along with some spectacularly rich entrepreneurs.
“If Gandhi had not been cremated,” Mr. Luce writes, “he would be turning in his grave.”
Mr. Luce, notebook in hand, matches faces to trends as he tours India from the affluent, relatively well-governed south to the poor, hopelessly mismanaged north, where the age-old problems of illiteracy, poverty, government corruption and caste divisions persist.
Much of the book consists of interviews and colorful vignettes intended to illustrate the myriad statistics that, out of context, can numb the mind. The blend of anecdote, history and economic analysis makes “In Spite of the Gods” an endlessly fascinating, highly pleasurable way to catch up on a very big story.
As Mr. Luce dryly observes, “India never lacks for scale.” This is a country where 300 million people live in absolute poverty, most of them in its 680,000 villages, but where cellphone users have jumped from 3 million in 2000 to 100 million in 2005, and the number of television channels from 1 in 1991 to more than 150 last year.
India’s economy has grown by 6 percent annually since 1991, a rate exceeded only by China’s, yet there are a mere 35 million taxpayers in a country with a population of 1.1 billion. Only 10 percent of India’s workers have jobs in the formal economy. Its excellent engineering schools turn out a million graduates each year, 10 times the number for the United States and Europe combined, yet 35 percent of the country remains illiterate.
Despite its robust democracy and honest elections, India faces the future saddled with one of the most corrupt government bureaucracies on earth. Mr. Luce encounters a woman in Sunder Nagri, a New Delhi slum, whose quest for a ration card entitling her to subsidized wheat and other staples involved bribing an official to get an application form. The form was in English, which she could not read, so she had to pay a second official to fill it out. When she turned up to claim her wheat, it was moldy and crawling with insects. The store owner had evidently sold his good government wheat on the black market.
In the northern state of Bihar, Mr. Luce writes, more than 80 percent of subsidized government food is stolen. Most ration cards are obtained through bribery, by Indians who are not poor. It’s the same story in nearly every area of an economy touched by the groping tentacles of a government that “is never absent from your life, except when you actually need it.”
As a former cabinet official tells Mr. Luce, corruption is not simply a nuisance or an added burden on the system. Rather, he says, “in many respects and in many parts of India it isthe system.”
Mr. Luce, traveling the country’s rickety rail system, covers an enormous amount of ground. He inquires into the Kashmir dispute while dissecting India’s fraught relationship with Pakistan; marvels over New Delhi’s spanking-new subway system; describes the middle class rage for megaweddings; pays a visit to Bollywood and, in some of his most absorbing chapters, analyzes the changing caste system, the status of India’s Muslims and the alarming rise of Hindu nationalism.
All this and a visit to C2W.com, a Mumbai company that markets brands through the Internet, cellphones and interactive television shows. Its founder, Alok Kejriwal, is still in his 30s, and to Mr. Luce represents the new India.
“I am greedy,” he tells the author. “I have no trouble admitting to that.”
At one point, Mr. Luce ponders India’s constant state of chaos and compares it to a swarm of bees. From inside the swarm, things look random, but from the outside, the bees hold formation and move forward coherently.
Sometime in the 2020s, at current growth rates, India will overtake Japan to become the world’s third-largest economy. Greatness lies within its grasp, Mr. Luce argues, if it can figure out a way to restructure its inefficient agriculture, put millions of desperately poor people in jobs that pay more than a pittance, wake up to a potential H.I.V.-AIDS crisis and root out government corruption.
Mr. Luce takes a cautiously optimistic view. “India is not on an autopilot to greatness,” he writes. “But it would take an incompetent pilot to crash the plane.”
NEW DELHI |
(Reuters) – India’s economic slowdown is likely to be temporary, Finance Minister Pranab Mukherjee said on Tuesday.
The Indian economy has lost momentum as euro zone debt woes, coupled with high interest rates and policy paralysis at home have hit capital investments.
The government early this month cut its economic growth forecast for the current fiscal year that ends in March to 6.9 percent, the slowest pace in three years.
(Reporting by Arup Roychoudhury; Editing by Subhadip Sircar)
Competition with China is making it nicer, but India could do still more to sweeten relations with its neighbours
Feb 18th 2012 | DELHI | from the print edition
SOUTH ASIA is about the least integrated part of the world. Neighbours supply just 0.5% of India’s imports, and consume less than 4% of its exports. India and Pakistan, mutually antagonistic, account for a fifth of all living humans, yet their bilateral trade is puny, at less than $3 billion a year. The main regional body, the South Asian Association for Regional Co-operation, is an irrelevance. Diplomatic torpor usually reigns in the region: last week, when the elected president of one member country, the Maldives, was toppled in a coup, there was a resounding silence from the neighbours.
India, the regional superpower, is largely to blame. Though it is a democracy and has easily the biggest economy and armed forces in South Asia, it has rarely been a force for good. Instead it has treated the neighbours, by turns, with negligence and high-handedness.
Ideology and size are largely to blame. Economic self-sufficiency—the doctrine that informed Indian policymaking for nearly half a century after independence—made co-operating with the neighbours unnecessary. And India’s size—its population is seven times that of its nearest neighbour, Pakistan—has encouraged bullying tendencies. It has meddled in Nepal’s politics, and in the early stages of Sri Lanka’s civil war it backed Tamil guerrillas. Even today the opposition in Bangladesh claims nefarious Indian influence, and Pakistan says its old foe is supporting separatists in the province of Baluchistan. It has offered no evidence for the claim. But past Indian arrogance makes neighbours ready to believe anything.
This is an economic as well as a diplomatic problem. Lack of integration helps to keep South Asians poor. By one estimate, without barriers trade between India and Pakistan would grow nearly tenfold. Today the main border-crossing near Pakistan’s eastern city of Lahore is at times almost deserted. If educated Sri Lankans were allowed to work in India, they could get good jobs there instead of having to take menial work in the Gulf, thus easing a growing shortage of skilled Indian workers. A regional energy market could boost prosperity; and Indian engagement in the problem of water-sharing could reduce dangerous tensions on the issue.
As a measure of India’s priorities, consider that the world’s second-most-populous country has no more diplomats than tiny New Zealand. By contrast, China has a huge and sophisticated foreign service, housed in sleek new embassies around the world. And it is partly with an eye to a rising China that India now shows signs of change.
These days India is putting more effort into improving neighbourly relations (see article), and is dishing out aid to sweeten the air. The foreign minister, S.M. Krishna, vows never to meddle inside another country. This week the trade minister led a business delegation to Lahore. And for all the accusations of anti-Pakistan meddling in Afghanistan, Indian efforts are accomplishing some good there: training police, and building roads and electricity lines. All over the region, India is opening new consulates. It may even recruit more diplomats.
But there is much more that India could do. It should unilaterally boost regional trade by unclogging roads, and by building better ports and freight parks at its borders. Non-tariff barriers—including the one that insists Pakistani cement crosses the border only by train, not lorry—should go. And India could take lessons from other big emerging powers, such as South Africa and Brazil, on how to build relationships in the region. Elephants must learn to move carefully, for fear of causing damage in the neighbourhood.
from the print edition | Leaders
MUMBAI: Professor Muhammad Yunus, the father of microfinance and chairman of the Yunus Centre in Bangladesh, has finally found a taker for his brand of social businesses in India. He is joining hands with the Indian Institute of Management, Ahmedabad (IIM-A) to float a Rs 50-crore fund to seed social ventures.
He will help raise the corpus and mentor social entrepreneurs. “I am in talks with several industrialists (in India),” Yunus said. He met some of Mumbai’s biggest industrialists during his visit to the city this week.
For the uninitiated, Yunus defines a social business as one that pays no dividend to shareholders, but ploughs all profits back into the company whose purpose is to serve social needs. “It’s a new class of non-dividend business done in a serious way to solve social problems,” he said.
Yunus has pioneered many such social businesses, including a JV with Danone that sells fortified yoghurt to poor children for 6 Bangladeshi Taka; Veolia that sells clean water to 100,000 people across five villages for 1 taka (for 5 litres); and a third JV with chemicals multinational BASF that sells long-lasting insecticidal nets and multi-micronutrient sachets to the poor.
His alliance with IIM-A fructified after one year of discussions with its Centre for Innovation Incubation and Entrepreneurship (CIIE).
STRONG MENTORING NETWORK
We are exploring a collaboration with Yunus to build a stronger ecosystem to support fledgling entrepreneurs who are creating innovative solutions in the social sector,” Rakesh Basant, chairperson of CIIE and professor of economics at IIM-A, said.
The CIIE has been involved in incubating early-stage enterprises across the healthcare, education and livelihood space. They will collaborate with the Mumbai-based arm of Grameen Creative Lab (GCL).
GCL, which seeds social businesses, is a joint venture between the Yunus Centre and circ-responsibility, a consulting company in Germany.
The CIIE and Yunus will collaborate to create a strong mentoring network, an incubation program to be designed by GCL to help entrepreneurs identify and build viable social business options.
The CIIE’s initial idea was to raise a Rs 5-10 crore fund, Basant said. But Yunus raised the bar with the proposal for a Rs 50-crore fund. “Fund-raising has not started yet and we don’t yet know how much we will be able to raise,” he added.
This is the Nobel Laureate’s second visit to India in the past 26 months. He has been building the case for Indian industrialists to start social enterprises that do not return profits to shareholders. None has responded yet. Hence, the plan for a Rs 50-crore fund. Yunus hopes to raise the corpus from Indian corporate and philanthropic foundations.
“Rich industrialists in India prefer charity than investing in business without any return expectations,” says Vineet Rai, founder and CEO of Aavishkaar, which invests in social impact enterprises with a profit motive. India as a country has only now started discovering the risk-reward paradigm and it will be a few more years before the Yunus model will find takers, he said.
Anu Aga, director on the board of Thermax, a $1-billion engineering solutions company, who met the professor in Mumbai last Sunday, is intrigued by the model but is not yet ready to try it out.
There are some exceptions, though. Recently, Piramal Group Chairman Ajay Piramal and Dr Reddy’s Laboratories Founder K Anji Reddy independently started working on social businesses similar to the Yunus model. Reddy’s project provides villagers with pure drinking water. Piramal has a low-cost healthcare delivery model and a rural BPO. Both do not expect returns, but plough profits back to scale up the businesses.
Yunus’ personal journey in this sector has been long, and controversial in the recent past. On April 2011, Bangladesh’s highest court dismissed Yunus as managing director of Grameen Bank, the path-breaking microfinance institution he founded. But Yunus is undeterred and has set up three international joint ventures and about eight social business enterprises over the last five years.