New Delhi, May 11
The volatile industrial production numbers which are now increasingly being questioned for the quality of data sprang a surprise by posting a decline of 3.5 per cent in March, pointing to a slowdown in the Indian economy.

The Index of Industrial Production (IIP), which denote factory output, has been in the yo-yo mode in recent months with January numbers showed a surprisingly strong growth while February numbers also were in the positive territory but at the same time the January numbers were revised drastically, thereby not giving a very clear picture.

FICCI president R.V. Kanoria said the March IIP figures show high degree of volatility in industrial performance. “The high negative growth of some important segments like apparel and capital goods in March 2012 are in stark performance to their positive growth in previous month which also raises doubt over the quality of data”, he said.

He added: “Notwithstanding the index’s volatility, the figures are indeed serious and point towards a continued slowdown which doesn’t seem to have bottomed out”.

IIP growth was higher at 9.4% in March last year. The industrial production has been dismal at 2.8% in 2011-12 as compared to 8.2% in previous fiscal due to de-growth in mining at 2% and slower 2.9% growth in manufacturing.

The latest numbers have the government worried. Finance Minister Pranab Mukherjee said the IIP figures are disappointing and continued weak global business sentiments are also adversely impacting recovery in domestic private investment. He said domestic investment recovery remained frail and, though the RBI's monetary stance had been reversed in its last policy announcement, it would take some more time for interest costs to come down.

Expressing "deep concern" over the IIP numbers, especially in capital goods and manufacturing, Commerce & Industry Minister Anand Sharma indicated the government may be looking to give sops to some export sectors.

The stock markets also reacted to the weak IIP data with the BSE Sensex falling to its lowest since Jan 16 on Friday to 16,300 points in the fourth consecutive losing session. Dipen Shah, head of fundamental research, Kotak Securities, said the weaker-than-expected IIP for March had an impact on the markets. The rupee, which had strengthened slightly on Thursday, depreciated once again versus the US dollar on Friday.

The cabinet has put on hold a proposal pending for years to raise the limit on foreign direct investment in insurance firms, possibly until after the 2014 elections, dashing the hopes of foreign insurers to spread their wings in a promising emerging market. — Reuters

Mumbai, May 11
The Indian rupee, which gained slightly on Thursday after the Reserve Bank of India asked exporters to convert half their dollar holdings into the local currency, began sliding again after the discouraging data on industrial production.

The rupee, which closed at Rs 53.44/45 against the US dollar on Thursday, fell further to Rs 53.62/64 on Friday.

With traders expecting the rupee to weaken further, the RBI said it was looking at further interventions to defend the local currency. "To the extent that we have the power, we have the capacity, we have the instruments, and the rupee is behaving in a way that suggests instability, we’ll use those instruments," RBI deputy governor Subir Gokarn was quoted as saying today.

Analysts said the measures undertaken by the central bank betrayed the desperation of policy makers. The falling rupee was "adding to inflationary pressures and discouraging foreign investors needed to plug the current account gap," a report by Dariusz Kowalczyk, strategist at Credit Agricole, said.

The rupee has been declining steadily against the dollar, losing 20% in the past year. Since March 1 alone the rupee has fallen 9% against the dollar.

Speculators in the currency market are expecting the Indian government to come up with measures like the Millennium and Resurgent India bonds that were floated more than a decade ago to raise funds from nonresident Indians. These bonds mobilized several billion dollars and helped shore up the rupee then.

Chandigarh, May 11
The season for cheer for exporters has been short lived. With the Indian rupee continuing its depreciation against the dollar, exporters in the region who were earlier cheering for getting more rupees for their exports, are now worried with the foreign buyers pushing them for bigger discounts.

As competition among exporters hots up, more and more exporters are now being pushed by their foreign buyers for reworking the export deals. The exporters say they are being threatened with termination of contracts, citing poor quality as a reason, if they do not renegotiate the deals with their buyers and give them a discount of 5 to 10 per cent.

Sources said this is mainly because exporters are vying for export orders and those with no orders are now wooing buyers by offering goods at heavily discounted rates. Since the rupee has depreciated, these exporters will still get a good margin by selling goods at a discounted rate.

Punjab Chamber of Small Exporters senior vice president A.K. Kohli told The Tribune though exporters in the region were in a “very good position” because of the rupee sliding against the dollar, it was worrisome that the inter se competition among exporters here was leading to buyers demanding renegotiation of export deals.

“Though buyers seek discounts of up to 10% most exporters have been able to seal the deals by offering a 2.5-3% discount,” said Ashok Katyal, a leading sports goods exporter from Jalandhar.

The Indian rupee opened weaker at 53.63 levels against the US dollar , down by 21 paise since Thursday. It was seen appreciating yesterday on account of the new RBI norms regarding the exchange earner account and the central bank’s limit for overnight positions. According to these norms, exporters will have to convert about US $2.5 billion into rupees from their foreign exchange accounts in the next 15 days.

Experts say though this may be a temporary measure adopted by the central bank to prop the rupee, its slide will continue.

Naveen Mathur, associate director, commodities and currencies, Angel Broking, told The Tribune the rupee would continue to remain depreciative. “This is mainly because the market is still not sure about the flows and policy reforms in the coming days. We expect the rupee to remain within the range of 53-55 to the dollar during the next few weeks,” he said.

Tokyo, May 11
Shares in Sony Corporation slumped more than 7 percent to near 32-year lows, as investors doubted the Japanese consumer electronics giant has a strategy to fix its loss-making TV business and compete in the smartphone market against Apple Inc and Samsung Electronics.

The last time Sony shares were this low, in the summer of 1980, its first Walkman portable cassette player had just gone on sale in the United States. So far this year, Sony has seen more than $3 billion wiped off its market value.

The maker of Bravia TVs, Vaio laptops and PlayStation games consoles on Thursday posted a record annual loss of $5.7 billion, but forecast a first profit in five years as it looks to halve losses at its ailing TV business. The net profit forecast was below analysts' expectations.

Japanese firms, which long dominated the global TV industry, have been overtaken by Samsung and LG Electronics, which are rolling out next-generation sets using organic light emitting display (OLED), in a reshaping of Asia's flat panel sector. A stronger yen, which erodes the value of exports, has also not helped.

"(In the past) if you wanted a top quality TV you had to buy a Sharp, Panasonic or Sony. Those days are gone," Steve Durose, senior director & head of Asia-Pacific at Fitch Ratings, told Reuters last month.

"I didn't see anything positive in there (Sony's results)," said a trader at a US bank. "There's really nothing in there that can justify buying the stock. You see the loss narrowing in the TV business. That's fine, but I don't see any future in the TV business, so it doesn't matter what they do."

Shares of Panasonic Corp, which makes Viera TVs, also fell 1.6%, to their lowest close in more than three decades. After the market closed, Panasonic also posted a record annual loss, of $9.7 billion, and predicted a return to profit this year after a heavy bout of cost-cutting and restructuring.

Sharp Corp, Japan's other main TV manufacturer, fell 5.1 percent to its lowest close since November 1979.

TOO OPTIMISTIC? Analysts said the Sony results were largely neutral while its forecasts looked too optimistic. "We see no catalyst that might spur a sustained (share) rally," Deutsche Bank analyst Yasuo Nakane wrote in a note. — Reuters

New Delhi, May 11
India is looking at Nigeria, Venezuela and Canada as part of its strategy to diversify its crude oil imports in view of the difficulties being faced in buying it from Iran.

In future, Brazil could also be considered for oil imports. However, despite American pressure, India has no plans to stop buying oil from Iran.

With the US continuing to nudge India to further cut its oil imports from Iran, US Special Envoy & Coordinator for Energy Affairs Carlos Pascual will arrive here on Monday to hold discussions on alternate sources of oil supplies to this country.

Besides New Delhi, Ambassador Pascual will travel to Mumbai and hold talks with Indian officials, energy industry experts and members of the civil society.

US Secretary of State Hillary Clinton, who was here earlier this week, had already informed her Indian interlocutors about Pascual’s visit.

His visit assumes significance since the United States has not given any indication to India that it would not attract the proposed American sanctions after the end of June for its oil purchases from Iran.

Last March the US announced sanctions that threaten to shut out importers of Iranian oil from the US financial system unless they make significant and continuing cuts to their purchases from Iran by the end of June. Japan and ten European nations have been granted exemption while India and China remain at risk.