India Drastically Improves in World Bank’s Ease of Doing Business Rankings
India, for the first time, moved into the top 100 in the World Bank’s Ease of Doing Business global rankings on the back of sustained business reforms over the past several years.
The report also recognizes India as one of the top 10 improvers in this year’s rankings and is the only large country this year to have achieved such a significant shift. Substantial improvements led to this ranking shift such as significant improvements in its business regulations which have been trending India in the past few years – adopting 37 reforms since 2003.
Nearly half of these reforms have been implemented in the last four years. his year, the eight indicators on which reforms were implemented in Delhi and Mumbai, the two cities covered by the report are: starting a business, dealing with construction permits, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency (see the factsheet). Last year the Doing Business report recognized India for reforms in the areas of getting electricity, paying taxes, trading across borders and enforcing contracts.
The World Bank’s Ease of Doing Business report captures reforms implemented in 190 countries in the period June 2, 2016 to June 1, 2017. To download the report, please click here.
What to Expect From Emerging Markets
India has ousted China as the emerging market with the most growth potential, according to Agility’s latest Emerging Markets Logistic Index.
The top 5 ranking positions for Market Connectedness with ports and infrastructure are:
- Saudi Arabia
The report also covers “Markets on the Move,” “Trade Lanes,” and an “Outlook and Overview.” Findings highlighted concern of volatility in the global economy and were reflected in eight of the top 10 emerging markets shifting positions. China still remains at the top of the Logistics Index despite, economic concerns. The Asian trade lanes are highlighted as the most promising for growth.
Among the top 10, countries that are taking steps to diversity and embark on economic and business climate reforms are UAE, India, and Malaysia.
What This Means For Florida:
As Florida strive to improve our connectivity and access to other markets, we should be mindful of opportunities that non-traditional markets bring. Emerging markets are still ripe for growth in the coming decades but diversifying our trading partners is essential to stay ahead of the game.
The Florida Chamber has long advocated for policies that call for strategic investments in international economic development. From continuing our support of Enterprise Florida export capacity building grants for small businesses and opening and supporting our foreign offices, to investing in a marketing campaign to promote the state globally – all are strategies that where highlighted in the Florida Chamber Foundation’s Trade and Logistics Studies and continue to be part of the Florida Business Agenda.
India and the Asia-Pacific Economic Cooperation
Asia Society Policy Institute (ASPI) launched an initiative, ‘India and APEC: Charting a Path to Membership,’ to develop the case and a strategy for gaining India’s membership in Asia-Pacific Economic Cooperation (APEC). The ASPI initiative will be supported in India by leading business association Confederation of Indian Industry (CII).
Joining APEC would be a game-changer for India and would position it for integration into global supply chains as well as serve as a bridge to one day joining the TPP.
India is Asia’s third largest economy and its participation in APEC would be a win for India and the region, particularly at a time when China’s economy is slowing down. India’s entry will require it to update its policy and regulatory environment preparing it for greater market access and trade liberalization in order to fully participate in the global market place.
APEC had a moratorium on new membership for a decade, which has now been lifted.
APEC’s members include the U.S., Russia, China, Australia and Japan. It represents 2.8 billion people and accounts for 57 percent of the world’s gross domestic product and 47 percent of global trade.
What Does This Mean for Florida?
While India is not one of Florida’s top trading partners, its potential is tremendous. Its large economy still remains a “sleeping giant” as it has not fully integrated into the global market place and still lacks critical infrastructure investments to maximize capacity and stimulate business growth. India’s integration into APEC could open doors for greater market access to U.S./Florida exporters and businesses looking to tap into its potential. Relationship building is important for Florida to be at the forefront of an emerging powerhouse that is India poised to become.
In order to remain globally competitive, Florida needs to diversity our trading partners and markets to expand and grow Florida trade. This is a strategy identified in the Florida Chamber Foundation’s most recent Trade and Logistics study. To learn more about how the Florida Chamber is work to build Florida’s international relationships, contact Alice Ancona today at firstname.lastname@example.org.
India: World’s Fastest Growing Economy
India will be the world’s fastest growing economy, for the second consecutive year in 2016 at 7.5 per cent according to the World Economic Outlook Update recently released by the International Monetary Fund.
India’s growth projection for current year is at 7.5 per cent, which will be higher than China’s 6.8 per cent. China was the fastest growing economy in 2014, at 7.4 per cent as against India’s 7.3 per cent, as per the IMF data.
India, in the coming years, has plans to expand its manufacturing base, simplify India’s regulatory bureaucracy, and improve its tax structure and to modernize its infrastructure and military and is looking to the U.S. for involvement and investment.
Trade between India and the U.S. and Florida for that matter is a shadow of what it could be. There are opportunities in India for Florida. Forecasters predict consumer spending in India will exceed $4.3 trillion in 2023, nearly quadruple the level last year. The U.S. is now India’s second-largest supplier of military hardware, accounting for 7 percent of its military imports between 2009 and 2013.
BRICS Ink $50 Billion Lender in World Bank, IMF Challenge
By Raymond Colitt, Unni Krishnan and Arnaldo Galvao
Leaders of the five BRICS nations agreed on the structure of a $50 billion development bank by granting China its headquarters and India its first rotating presidency. Brazil, Russia and South Africa were given posts or units in the new bank.
The leaders also formalized the creation of a $100 billion currency exchange reserve, which member states can tap in case of balance of payment crises, according to a statement issued at a summit in Fortaleza, Brazil.
Both initiatives, which require legislative approval, are designed to provide an alternative to financing from the International Monetary Fund and the World Bank, where BRICS countries have been seeking more say. The measures coincide with a slowing of economic growth in the five countries to about 5.4 percent this year from 10.7 percent in 2007, according to economists surveyed by Bloomberg.
“The BRICS are gaining political weight and demonstrating their role in the international arena,” Brazilian President Dilma Rousseff said after a signing ceremony.
IMF Managing Director Christine Lagarde congratulated the BRICS on establishing the reserve arrangement and said the Washington-based lender would be “delighted” to work together on the international safety net designed to preserve financial stability, according to an e-mailed statement.
Until the eve of the summit, India and South Africa had vied with China to host the headquarters of the bank, dubbed the New Development Bank, whose membership may eventually be extended to other countries.
Russia’s Finance Minister Anton Siluanov told reporters that the BRICS decided in favor of Shanghai because the city offers better infrastructure, opportunities to capture private funding, and is home to more investors than the competitors.
Each member country got something out of the deal. The first chairman of the Board of Governors will be from Russia, while the first chairman of the Board of Directors will be Brazilian. South Africa will establish an African regional center for the bank, which may not get off the ground for two years, according to Carlos Cozendey, secretary for international affairs at Brazil’s Finance Ministry.
Founding members have equal voting rights. Of the total subscribed capital, $40 billion are callable shares. Payment of the remaining $10 billion of paid-in shares will be made over seven years.
Unlike the IMF and World Bank, which are managed by Europeans and Americans, the BRICS bank “is quite democratic,” Brazilian Finance Minister Guido Mantega told reporters. Yet the idea is not to compete with the Washington-based institutions but complement them, Rousseff said in Brasilia today on the second day of the summit that includes leaders from Latin America. “We have no interest in giving up the IMF — on the contrary, we we are interested in democratizing it, making it more representative.”
Each member country has the right to withdraw different amounts from the joint currency reserves, according to a statement from Brazil’s central bank. China can withdraw half the amount it earmarks or $20.5 billion. Brazil, Russia, and India may withdraw the same amount they commit or $18 billion, while South Africa can tap $10 billion, twice its contribution.
“It’s a type of insurance policy,” said Mantega.
The BRICS have evolved from the original term coined in 2001 by then-Goldman Sachs Group Inc. economist Jim OâNeill to describe the growing weight of the largest emerging markets in the global economy. In 2011, South Africa joined to give the BRICS a broader geographic representation.
“Separately, all the BRIC economies in the last two years have slowed, so there is quite a lot of attention on the declining economic influence of them,” O’Neill said in an interview with Bloomberg TV India. “But I think that the general Western view is just wrong. Even at the slower rate of growth, they are, their importance to the world continues to rise.”
There are still plenty of opportunities for business, and the newly-created development bank will help those opportunities become reality, said Jorge Gerdau Johannpeter, chairman of Brazilian steelmaker Gerdau SA.
“The bigger the financing possibilities, the bigger the chances of implementing projects,” Gerdau told reporters at the summit.
The biggest winner among the BRICS and its newly created bank may be South Africa, as it stands to gain financial expertise, investment and trade, said Colin Coleman, the Johannesburg-based head of Goldman Sachs Group Inc. in sub-Saharan Africa, who attended the BRICS Business Council meeting.
“Arguably we have the greatest amount to benefit because we’re partnering diplomatically and otherwise with some of the world’s most important emerging-market economies,” Coleman said in a phone interview.
While BRICS trade ministers in a joint communique said that member countries stood by the World Trade Organization’s Bali agreement, Brazil’s Trade Minister Mauro Borges said he understood India had certain concerns about its implementation and that the BRICS countries didn’t intend to forge a common stance on the issue.
BRICS share of world exports rose to 16 percent in 2011, from 8 percent in 2001.
Russia also proposed at the summit in the northeastern coastal city of Fortaleza the creation of an Infrastructure Fund during the summit, Kirill Dmitriev, chief executive officer of the Russian Direct Investment Fund, told reporters. The fund could start up as early as next year, he said.
In Brazil, Five Nations Plan Future Together…Again
Now that the FIFA World Cup is over in Brazil, it’s back to business in South America’s largest nation. And in the northeastern city of Fortaleza, leaders from Brazil, Russia, India, China and South Africa made more declarations about how they will become a winning team.
There was more talk about creating a development bank to fund projects in each others’ countries, and declarations on teaming up with mega sporting events. The Summer Olympics takes place in Rio in two short years.
Brazil, Russia, India and China have been meeting together for the past six years. South Africa is only a recent partner in what has become an emerging markets G-5 of sorts, with presidents hammering out growth ideas. Historically, the U.S. and former colonial powers in Europe have been the prime source of funding — and still are. But in the last seven years, for instance, China has replaced the U.S. as Brazil’s biggest market, thanks to soybeans and iron ore. And China continues to invest heavily in South Africa mining. Meanwhile, Russia has been touting its growing relationship with Chinese energy companies looking for natural resources and access to new technologies. On balance, however, the BRICS are still beholden to foreign investment from advanced economies, be it portfolio investors or multinationals based in the U.S. and E.U.
India’s new Prime Minister Narendra Modi is greeted by a representative of the Brazilian government in Fortaleza on Monday. Modi was attending his first BRICS Summit, where he met with the presidents of Brazil, Russia, China and South Africa.
The BRICS leaders said Tuesday that they were now exploring new areas of cooperation, including mutual recognition of university degrees; labor and employment and social safety net policies; foreign policy planning; trade insurance and building a seminar of e-commerce experts to move the five-some in the direction of the advanced economies, which dominate the high tech space.
For followers of the BRIC summits, it was more of the same, with this years theme being about sustainable and inclusive growth. This is a problem especially for Brazil, China, India and South Africa, and more so in China and India where income disparities are worsening.
In a declaration signed by the national presidents on Tuesday, deeper tights were center-stage. “We pledge to deepen our partnership with a renewed vision, based on openness, inclusiveness and mutually beneficial cooperation,” the signed document read. “We are ready to explore new areas towards a comprehensive cooperation and a closer economic partnership to facilitate market inter-linkages, financial integration, infrastructure connectivity as well as people-to-people contacts.
The BRICS continue to face significant financing constraints to address infrastructure gaps and sustainable development needs, particularly in India where poverty is most rampant. The leaders signed an agreement to officially launch the so-called New Development Bank (NDB), a World Bank for the BRICS, with the purpose of mobilizing resources for infrastructure and sustainable development projects in the four countries.
The NDB comes with authorized capital of $100 billion, with the bank’s headquarters in Asia’s new capital: Shanghai.
This year’s summit came with big money announcements.
The countries signed a treaty for the establishment of the BRICS Contingent Reserve Arrangement with an initial size of an additional $100 billion. This arrangement will be used to help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements, according to the declaration.
For investors who thought that China and Russia might open their economies to private enterprise, the declaration shows how the BRICS are firm believers in state owned enterprises. In Brazil, that includes oil giant Petrobras, the country’s biggest company by market cap. In Russia, that’s behemoth banks like Sberbank and gas firm Gazprom. For India, that’s basically ever bank on the mainland, not to mention the oil majors.
The presidents signed an agreement saying that they “encourage our state-owned companies to continue to explore ways of cooperation, exchange of information and best practices.”
Although each country has different problems, it was clear by reading the 72 paragraph declaration that each country had its input: from Russia being lauded for its role in hosting the G-20, to China reaffirming its interest in human rights.
Brazil-BRICS Trade: A Visual Breakdown
By Elizabeth Gonzalez
On July 15, several of the world’s most powerful emerging market leaders will meet in Brazil. Heads of state from the five BRICS countries—Brazil, China, India, Russia, and South Africa—will convene for the group’s sixth summit.The meeting marks the first official visit to Brazil by both Chinese President Xi Jinping and Indian Prime Minister Narendra Modi. The trade bloc, which first began heads-of-state summits in 2009, brings together a group of markets that the World Bank estimates will account for the majority of global growth by 2025. Ahead of the meeting, AS/COA Online zeroes in on the Latin American country’s trade relationship within the bloc.
China dominates trade relations among the BRICS, according to Brazil’s Ministry of Development, Industry, and Foreign Trade. In 2013, the value of China-Brazil trade was more than nine times larger than Brazilian trade with India—the Latin American country’s second largest partner within the group.
Click here to see the visual breakdowns.