India eyes bigger infrastructure investment

The new Indian government hopes that foreign direct investment will help to improve infrastructure and lift a sluggish economy. (AP)
Updated 07 July 2019
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India eyes bigger infrastructure investment

  • Finance minister promises money for aviation, media and insurance

NEW DELHI: Indian Prime Minister Narendra Modi’s government proposed heavy investments in infrastructure, the digital economy and job creation to lift a sluggish economy burdened with a 45-year-high unemployment rate of 6.1 percent. Unveiling a draft budget after a major victory in national elections, Finance Minister Nirmala Sitharaman proposed a bigger role for foreign direct investment in aviation, media and insurance.
The government set a target for the economy to grow to $5 trillion by 2025 from the present $2.7 trillion. Sitharaman said it would reach $3 trillion by March next year.
She told Parliament that India’s economy is now the sixth largest in the world. In terms of purchasing power parity, it is the third largest after the US and China, she said.
She also announced cash handouts for small farmers, a pension scheme for informal workers and a doubling of tax relief for the lower middle class.
Small farmers would be paid 6,000 rupees ($85) annually, benefiting as many as 120 million households. About 30 million retail traders and small shopkeepers with annual incomes of less than 15 million rupees would get pension benefits, she said.
The budget doubled income tax exemptions for those earning up to 500,000 rupees a year from the existing 250,000 rupees. The decision would benefit 30 million lower-earning taxpayers. Raising taxes on the rich people, Sitharaman announced a 3 percent increase for those with an income between $292,000 — $730,000 a year and a 7 percent increase for those with an income above $730,000.
Currently, India imposes a 10 percent surcharge where total income is between 5 million and 10 million rupees and 15 percent on income above 10 million rupees.
At the same time, she reduced corporate tax to 25 percent from 30 percent for companies that have an annual turnover of up to $58 million. This would include 99.3 percent of companies in India and boost profits for a large number of them and stimulate investments, she said. 

FASTFACT

$5T - The Indian government has set a target for the economy to grow to $5 trillion by 2025 from the present $2.7 trillion.

Sitharaman said foreign direct investment in aviation, media and insurance could be opened further after multi-stakeholder examination. Also, insurance intermediaries could receive 100% foreign direct investment. India at present allows 49 percent foreign ownership in the insurance sector. She also said that local sourcing norms of 30 percent would be eased for foreign direct investment in the single-brand retail sector, a demand put forward by several multinational companies. India currently requires investors to source locally 30 percent of the value of goods purchased.
“These companies will certainly have to relook at their strategy
to tap the large Indian consumption potential. It would now be a race for all these retail companies to evaluate the conditions and take a quick decision to invest into
India,” said Anil Talreja, an industrialist. The finance minister said foreign direct investment in India has remained robust despite global headwinds. India’s FDI inflows in 2018-19 were around $64.375 billion, a 6 percent increase over the previous year.
Modi said the budget would accelerate the pace of development, rationalize the tax structure and modernize the country’s infrastructure.
The government will invest 1 trillion rupees ($15 billion) in infrastructure over the next five years, Sitharaman said.
She also said the government will raise 1.05 trillion rupees through disinvestment in government-owned companies in 2019-2020.
The government also earmarked 100 billion rupees for creating the infrastructure to promote electric cars in the country.


Funds managing $2 trillion urge cement makers to act on climate impact

A general view of Gulf Cement Company in Ghalilah, Ras al Khaimah, United Arab Emirates July 16, 2019. (REUTERS)
Updated 23 July 2019
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Funds managing $2 trillion urge cement makers to act on climate impact

  • The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China

LONDON: European funds managing $2 trillion in assets called on cement companies to slash their greenhouse gas emissions on Monday, warning that a failure to do so could put their business models at risk.
Some asset managers are ramping up engagement with heavy polluters to demand a faster transition to a cleaner economy.
“The cement sector needs to dramatically reduce the contribution it makes to climate change,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, which has more than 170 members, mainly European pension funds and asset managers. “This is ultimately a business-critical issue for the sector,” Pfeifer said in a statement.
The group said investors had written to cement or construction materials companies including Ireland’s CRH, Franco-Swiss group LafargeHolcim and France’s St. Gobain to demand they achieve net zero carbon emissions by 2050.
They also noted that Germany’s HeidelbergCement had already adopted the target. The funds urged all cement companies to align themselves with the 2015 Paris agreement to combat global warming, engage with policymakers to ensure an orderly transition to a low carbon economy, and increase their reporting of climate risk.
“Construction materials companies may ultimately risk divestment and lack of access to capital as an increasing number of investors seek to exclude highly carbon-intensive sectors from their portfolios,” said Vincent Kaufmann, CEO of the Ethos Foundation.

FASTFACT

The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency.

Signatories collectively manage assets worth $2 trillion and include Aberdeen Standard Investments, BNP Paribas Asset Management, Sarasin & Partners and Hermes EOS.
Although funds are increasingly engaging with companies from airlines to carmakers on emissions, few are calling for the systemic transformation of the global economic system that scientists increasingly argue is needed to prevent runaway climate breakdown.
The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China.
With climate campaigners traditionally focused on fossil fuel companies, the European cement sector has received comparatively little scrutiny until recently.
On Tuesday, police arrested six climate activists from civil disobedience group Extinction Rebellion at a protest aimed at disrupting a site in east London belonging to London Concrete, a unit of LafargeHolcim.
In June last year, a report from think-tank Chatham House concluded that although there was no “silver bullet” to reduce emissions from cement, it should be possible to deploy a range of policies and technologies to achieve deep decarbonization.