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Hans India
a day ago
- Business
- Hans India
Incentives for exporters, monetary easing to bolster structural reforms in India
New Delhi: The government should implement fiscal incentives for exporters, monetary easing through rate cuts and structural reforms to fully leverage the upcoming GST rate revision, a report said on Tuesday. Key priorities include fast-tracking the India-EU trade deal, slashing import tariffs on intermediary inputs, and welcoming FDI especially from China, a report from HSBC Global Investment Research suggested. Domestically, the research firm called for "more ease-of-doing-business deregulation across states, implementing the four labour codes, and stepping up disinvestment." Highlighting the doubt surrounding who would foot the bill of GST tax rate cuts, the report said, "We may have to wait a bit longer to ascertain whether clouds are lifting or just shifting. In the meantime, it would serve India well to have a growth plan, ranging from fiscal support (incentives for exporters) and monetary easing to structural reforms." The Centre has announced a major GST reform of slashing rates across a variety of products by probably transferring most items from the 12 per cent and 28 per cent slabs to the 5 per cent and 18 per cent slabs. 'Immediate tax cuts could spur demand across products - food, beverages, consumer durables, autos, hotels, cement, building materials, etc.,' the research firm predicted. "If US tariffs on India are eventually lowered, the GDP growth drag could soften too. If the growth outlook improves, it may be easier to digest the short-term disruptions associated with funding the GST rate cuts. If fiscal discipline is maintained despite GST rate cuts, the S&P projections on which India achieved a ratings upgrade, will be upheld," the report said. US government has imposed 50 per cent duties on Indian exports, effective from August 27, with the US accounting for about 20 per cent of India's total exports. However, one-third of these shipments are exempt from tariffs. After revising India's outlook to positive last year, S&P Global Ratings upgraded India's long term sovereign credit rating to BBB from BBB- and the short-term rating from 'A-3' to 'A-2'. "This move may not just boost sentiment, but also help lower the risk premia and borrowings costs in the economy," the HSBC report noted.
Time of India
2 days ago
- Automotive
- Time of India
Proposed GST cut may boost auto jobs, benefit small carmakers: HSBC
The government's plan to rationalise goods and services tax (GST) slabs could lift long-term automobile demand and create jobs, according to HSBC Global Investment Research , reports ANI . The government is considering reducing the 28 per cent GST slab to 18 per cent and discontinuing the cess imposed on automobiles. Passenger vehicles generate around $14–15 billion in GST collections annually, while two-wheelers contribute $5 billion. Currently, passenger vehicles attract a GST of 29 to 50 per cent, depending on engine size and length, as a cess is levied on top of the 28 per cent base rate. Under the proposed framework, smaller cars may move to 18 per cent, while bigger cars could be taxed at a 'special rate' of 40 per cent without additional cess. This could reduce small car prices by about 8 per cent and larger vehicles by 3–5 per cent. HSBC said Maruti Suzuki India would benefit the most, given its heavy reliance on small cars, which account for 68 per cent of its volumes. Mahindra & Mahindra would also gain, though to a lesser extent due to its higher exposure to EVs. In an alternate scenario of a flat 28 to 18 per cent cut across categories, all vehicles would see a 6–8 per cent price drop, but the government would face a revenue loss of $5–6 billion. HSBC noted that while a complete cess removal is unlikely, any reduction would support demand revival.
India.com
02-07-2025
- Business
- India.com
India Projected To Clock 6.8-7% Growth In Q2, Current Fiscal To Register 6.3%: HSBC
New Delhi: India's GDP growth is projected at 6.3 per cent in current fiscal (FY26) despite external headwinds, an HSBC report said on Wednesday, adding that with 70 per cent of the indicators growing positively, the Q2 growth (April-June) is trending at 6.8-7 per cent, with the informal sector taking the lead. HSBC Global Investment Research has updated its 100 indicators framework, which maps high frequency indicators to various sectors, and gives a thorough and sequential read on growth. 'After an amazing April came a measured May with 67 per cent of the indicators growing positively (compared to 72 per cent in April). Still, from a quarterly perspective, Q2 is doing better than Q1 2025 (70 per cent vs 67 per cent),' the findings showed. If this trend continues into June (as is looking likely so far, based on the release of 20 per cent of the data we track), 'GDP growth could come in at the 6.8-7 per cent ballpark', said the report. Informal sector consumption is taking the lead. Key indicators grew positively on a sequential basis in May. These include two-wheeler sales, non-durables production, non-cess GST collection, rural terms of trade, and real rural wages. Meanwhile, formal sector consumption was more mixed; some indicators holding up (demand for petrol, consumer imports, and durables goods production), while others were weaker like passenger vehicle sales. 'A rise in government spending was an added bonus, focused not just on consumption, but also capex,' the report mentioned. India's capital expenditure surged 54 per cent in April-May FY26, driven by strong non-tax revenues and RBI surplus. According to the report, three data points reveal a sharp pivot from formal to informal. 'One, indirect tax collection (proxy for informal consumption) is outpacing direct tax collection after a long wait. Two, overall credit growth is slowing, but within that, credit to MSMEs is bucking the trend. Three, RBI corporate database indicates that salary growth at small firms is outpacing large firms,' it added. In fact, two major pivots will likely define FY26. One, from investment to consumption. During a time of global uncertainties, investment rarely does well. Two, within consumption, as highlighted above, from formal to informal. 'Falling inflation has played a leading role here. It has improved real purchasing power, thereby stoking informal sector consumption, which makes up two-thirds of the consumption pie,' said the report.
India.com
30-06-2025
- Business
- India.com
Inflation To Average 3.2% In FY26, To Boost Mass Consumption: Report
New Delhi: Supported by favourable weather conditions, inflation is projected to average 2.5 per cent over the next six months. According to an HSBC report released on Monday, a high base effect from the past three years, coupled with robust cereal production, is expected to keep food inflation in India subdued for an extended period. Core inflation, too, remains contained, led by a stronger Indian rupee, falling commodity prices, imported disinflation from China, and softer growth than a year ago, said HSBC Global Investment Research in its report. It said it expects inflation to average 3.2 per cent in FY26. FY25 concluded on a strong note for India's granaries, with robust cereal production ensuring ample stock levels. This abundance is expected to help contain cereal inflation in the near term. 'But what matters a bit more is how rains, reservoir levels, and sowing will pan out in FY26,' said the report. The rains had an early start (a week ahead of schedule), stalled thereafter (for two weeks), but the pace has picked up again. Currently, rainfall levels are 9 per cent above normal, much higher than the rains received in the last three years. Region-wise, north-west and central India have received the maximum showers. The IMD expects the rains to cover the entire country in the next few days. 'Good rains benefit not only the summer sowing, but also help fill the reservoirs, which provide buffers in case the rains stall temporarily, and also support irrigation through the winter sowing season. Currently, reservoir levels are higher than last year's levels as well as normal storage levels, with the southern region doing particularly well,' the report stated. It is still early days in the season, but sowing is progressing well thus far. As of June 20, the total area sown so far is about 14m hectares, which is 10 per cent higher than last year. The area sown under rice, pulses, and cereals has increased compared to the same period last year. However, sowing of oilseeds has remained relatively weak so far. According to the report, strong sowing activity augurs well for demand for agricultural workers and their wage outlook. Already, nominal wage growth for agricultural workers is trending at 8 per cent in April, versus 6.5 per cent in the last few months. 'Furthermore, the fall in inflation is helping boost real wages. And this, we believe, will boost mass consumption in the months ahead,' the report mentioned.
Time of India
20-06-2025
- Business
- Time of India
Indian apparel sector to clock 11 pc growth over FY24-FY29: HSBC
HighlightsThe Indian apparel sector is expected to achieve an 11 percent compound annual growth rate from fiscal year 2024 to fiscal year 2029, following a similar growth trend of 11 percent from fiscal year 2020 to fiscal year 2024. The branded segment of the apparel market has experienced significant growth, recording a 16 percent compound annual growth rate from fiscal year 2012 to fiscal year 2024, compared to a 5 percent growth rate for the unbranded segment. India's Textile and Apparel exports have shown positive momentum, with apparel exports growing by 14.43 percent year-on-year in April 2025, reaching approximately $1.37 billion. The Indian apparel sector is projected to clock a 11 per cent compound annual growth rate (CAGR) over FY24-FY29, a report showed on Friday. India's apparel sector expanded at an 11 per cent CAGR over FY20-24, in line with nominal GDP and private final consumption expenditure (PFCE) growth, according to HSBC Global Investment Research. Driven by increasing penetration and affordability, branded segment has seen a 16 per cent CAGR over FY12-24 (unbranded 5 per cent CAGR). Going forward, across different apparel sub-segments, non-formal wear has higher growth expectations with active wear (25 per cent FY24-29 CAGR driven by post COVID-19 trend of casual wear) and organised value retail (16 per cent CAGR FY24-29, the biggest beneficiary of shift from unorganized) expected to clock highest growth. Apparel though remains a competitive market disrupted by e-commerce, foreign brands, and changing fashion cycles, said the report. There are two major business models - Format focused (retail outlets with distribution primarily limited to the company's own outlets and e-commerce) and Brand focused (fixed asset-light business but working capital-intensive due to distribution mix). "We believe format model has an advantage due to its broader customer base and better control over their supply chains. Also, formats are better suited to navigate the emerging risks in the apparel space," the report mentioned. The report prefers value fashion formats given the size of the retail opportunity and limited disruption from e-commerce. Meanwhile, India's Textile and Apparel (T&A) exports have continued their upward trajectory, recording a growth of 7.45 per cent in April 2025 compared to the same month of the previous year. This positive trend was primarily driven by the strong performance of the apparel segment, which registered a robust 14.43 per cent growth year-on-year, an analysis of the data released by the Ministry of Commerce showed. During April 2025, Indian textile exports were about 2.61 per cent higher as compared to the same month last year, while apparel exports registered a growth of 14.43 per cent during the month to touch the $ 1.37 billion mark compared with $ 1.2 billion in April last year.
