Bangalore/Mumbai, September 2
India’s factory sector expanded at its slowest pace in more than two years in August as export orders shrank amid weakening global demand, a survey of manufacturers in Asia’s third-largest economy showed.

Still, India was one of the few countries to show growth. Similar surveys released on Friday showed manufacturing activity contracted in the euro zone, Britain and China, with PMI (Purchasing Managers’ Index) readings all below the 50 level that demarcates growth from contraction.

The HSBC Markit India Manufacturing PMI fell to 52.6 in August, below expectations for 52.9 and July's reading of 53.6. It was the lowest reading for the PMI since March 2009, when it was below 50.

"The main driver of the weaker reading was a significant contraction in export orders, which are facing stiff global economic headwinds," said Leif Eskesen, chief economist for India & ASEAN at HSBC.

Growth in new manufacturing orders in India slowed for the fifth consecutive month, while the export orders index fell to 45.0 in August from 49.2 previously..

Cooling order growth suggests the headline PMI is likely to slow further in the months ahead.

“It’s very clear that these outside risks are rising,” said DK Joshi, principal economist at Crisil in Mumbai. "There are clear downside risks to industrial activity."

Weakening global demand, rising prices and tighter monetary policy by the Reserve Bank of India (RBI) have combined to crimp economic growth. Data this week showed the economy grew 7.7 per cent in the three months to June from a year earlier.— Reuters

New Delhi, September 2
The government today said that the banking system is facing liquidity crunch as is reflected from increased borrowings by lenders from the Reserve Bank.

“The net borrowings by bank from RBI in the recent times, is a reflection of the deficit liquidity conditions,” Finance Minister Pranab Mukherjee said to a question in the Lok Sabha.

On an average, banks and primary dealers have borrowed Rs 46,298 crore on a daily basis from the RBI so far this fiscal (April-August). This is marginally lower than the Rs 46,946 crore borrowed in the previous fiscal (2010-11).

"Borrowings by banks from the RBI with the Governments securities as a collateral is a normal liquidity management operation for banks and this happens whenever there is overall liquidity deficit in the system,” Mukherjee added. During 2008-09 and 2009-10, banks have placed funds worth Rs 4,212 crore and Rs 1,00,310 crore with the RBI, he said.

Banks invest in government securities as part of their statutory requirement to maintain the Statutory Liquidity Ratio, currently at 24 per cent. The RBI managed the day-to-day liquidity in the banking system through its Liquidity Adjustment Facility.

“This is in line with best international practices," Mukherjee added. — PTI

Mumbai, September 2
Textile and apparel exporters today opposed the government move to accord more concessions to apparel imports from Bangladesh, terming it "ad-hoc and arbitrary."

Commerce and Industry Minister Anand Sharma hinted at allowing Bangladesh to export more duty-free garments into the country, ahead of Prime Minister Manmohan Singh's two-day visit to Dhaka next week. "In April, we had raised the (duty-free) quota from 8 million pieces to 10 million ... There is some more demand and the government will take a fair view on that," Sharma said in New Delhi.

On whether Dhaka has demanded more duty-free garment exports, Sharma said, "It is true that many of the tariff lines in the textiles sector are being discussed." Both the Apparel Export Promotion Council (AEPC) and Clothing Manufacturers Association of India (CMAI) said the move would spell "disaster" for the domestic industry in the absence of any reciprocal benefit for it.

"This is really going to spell disaster for us because Bangladesh is our largest competitor in the export markets. Giving them free access to our market is going to put jobs of million workers and businesses of thousands of small and medium enterprises at stake," AEPC Chairman Premal Udani said here.

He said it has never happened in the past that such an accelerated process of concessions have been given to anyone.

The domestic industry was willing to remove 14 items from the negative list. But an abrupt removal of 48 items, which comprise nearly 85 per cent of our imports from Bangladesh, will severely dent apparel manufacturing activity in the country, he added.

"The industry had agreed to an increase in the tariff rate quota (TRQ), but removal of items from the negative list will open floodgates of Bangladeshi imports. Also, the duty-free imports of apparel translate to significant loss to the domestic fabric industry," Udani said.— PTI

Mumbai, September 2
Mahindra & Mahindra (M&M) today said it will launch its new global sport utility vehicle, XUV500 in the domestic market and South Africa simultaneously by December-end.

Designed and developed entirely in-house by M&M, the new SUV is Mahindra's first global offering with significant inputs in styling and development taken from customers across the globe.

“We plan to sell the XUV 500 in India and South Africa before its introduction in other global markets. I am confident that the XUV 500 will follow the footsteps of its illustrious predecessors to evolve into an iconic brand," M&M President for Automotive and Farm Equipment Business Pawan Goenka said. The auto giant will manufacture the new SUV at its Chakan plant near Pune, Goenka added. — PTI

Chandigarh, September 2
The Life Insurance Corporation of India (LIC) has invested Rs 7,370 crore in Punjab, in the form of state government securities, state electricity board and in various corporate houses.

L C Meena, senior divisional manager, Chandigarh, said that thecompany has so far invested Rs 5,427.83 crore in state government securities and has also let 
Rs 297.60 crore to the Punjab State Power Corporation Ltd.

“Besides this, we have also invested Rs 1605.49 crore in various corporate houses in the state,” he said.

“The investments are made by the Central office. So we cannot disclose as to how much and in which company LIC has invested” he added. Meena added LIC’s premium collection in 2010-11 was Rs 470 crore and they were targeting a premium of Rs 581 crore, an increase of 24 per cen, from the region this year. — TNS

New Delhi, September 2
The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has dismissed petitions filed by Idea Cellular challenging the show-cause notices issued by the government on merger of Spice Communication with the Aditya Birla group firm.

The TDSAT rejected Idea Cellular's plea after observing that it would be "improper" to pass any order as the Department of Telecom (DoT) is yet to pass the final order.

The regulator also also made it clear that after the DoT passes an order in this regard, Idea can challenge it.

“Keeping in view the fact that the respondent (DoT) is yet to pass any final order in the matter, we are of opinion that this order may not be construed to mean that in the event such an order is passed, the petitioner would be remediless,” said the TDSAT bench headed by its Chairman Justice SB Sinha.

It further said that Idea "would be entitled to raise all such contentions which are available to it for filing appropriate application before this tribunal in such event.”

In its notice dated June 1, 2011, the Department of Telecom (DoT) had said the merger happened despite it rejecting it on January 7, 2010. It also said that such information was suppressed by Idea before the Delhi High Court in its application for amalgamation of Spice Communication with Idea Cellular.

The Delhi High Court on July 4 dismissed Idea’s plea and had directed the company to surrender the spectrum to DoT along with a penalty of Rs 1 crore penalty for suppressing fact.— PTI

Mumbai, September 2
India Inc raised over $4.16 billion from overseas markets in July through external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs).

Around 85 companies raised over $3.67 billion for various projects through the automatic route, which does not require RBI’s or the government approval.

Another $492 million were raised through the approval route, according to the RBI data. Private sector giant Reliance Industries raised USD 1.09 billion through ECBs for refinancing of old loans.

NTPC mopped up $500 million through ECBs during the month for new investments and Indian Oil Corporation also raised an equal amount for import of capital goods.

Corporates, registered under the Companies Act, 1956, can access ECBs up to $500 million in a financial year under the automatic route. The ECB, which is not covered by the automatic route, is considered under the approval route on a case-by-case basis by the RBI.

ECBs are used as an additional source of funding by to augment resources available domestically. Foreign Currency Convertible Bonds are also governed by norms similar to ECBs.

Other major fund raised in July using the automatic route came from Bharat Aluminium which raised $200 million for new projects, while Mundra Port & Special Economic Zone mopped up $150 million for its port project.— PTI

BRIEFLY

Rajkumar Ghosh new IOC director
New Delhi: Rajkumar Ghosh has taken over as Director (Refineries) of state-owned Indian Oil Corporation. He takes over from B N Bankapur who superannuated On Wednesday, a company press statement said here. Ghosh was working as Executive Director (In-charge) at the Refineries Headquarters. — PTI

RN Nayak takes charge as POWERGRID chief
New Delhi: RN Nayak has assumed charge as the Chairman & Managing Director of Power Grid Corporation of India Ltd on September 1. Shri Nayak has over 33 years of work experience in the power sector. He has worked for more than 20 years in POWERGRID.— TNS

MICRA drives August sales for Nissan
New Delhi: Nissan Motor India Private Ltd (NMIPL) today announced domestic sales of 1,384 units for the month of August 2011 compared to 1,249 units in August 2010.— PTI

ICICI Bank’s 2nd Retail Branch in Singapore
New Delhi: ICICI Bank Limited (“ICICI Bank”), India’s largest private sector bank, has launched its second retail branch in Singapore at 184 Serangoon Road and will be known as the Bank’s Little India branch. — TNS

Over 5,600 cos defaulted on PSU bank loans
New Delhi: Over 5,600 companies have defaulted to the tune of about Rs 51,000 crore in loans taken from public sector banks as on September 30, 2010, Parliament was informed on Friday. — PTI