India’s economy: Of economic reforms and revival – Competitive Intelligence Bytes – Jul 2017

Competitive Intelligence Bytes
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India remains the fastest growing major economy in the world according to the IMF’s World Economic Outlook Update. In line with its April forecast, GDP growth rate remains unchanged at 7.2% in 2017-18 and 7.7% in 2018-19. With the latest government reforms, perhaps this forecast is a testimony to the confidence in the Indian economy.

 

The banking system in India is mired in distressed loans, currently pegged at over $150 billion. Non-performing advances (NPAs) of state-run banks – which provide a majority of all lending – stood at 9.6% in March this year. The recent determination shown by the government and central bank to clean up these bad debts quickly is good news. The Insolvency and Bankruptcy Code 2016, which came into effect in December last year, marks the start of a creditor in control regime.

 

The other reform (in fact, the biggest tax reform since independence) was the goods and services tax (GST) that came into effect on the 1st July. The one-tax-one-nation regime is likely to result in significant cost savings for key building materials – cement and steel. The question is – will GST revive the real estate sector?

 

Do read about how our due diligence services saved a motorcycle manufacturer from being duped out of millions of dollars.

Case Study
Due diligence saves a motorcycle major from being duped out of millions

 

Our client, an Asian motorcycle manufacturer, was in the final round of talks with a prospective Indian distributor. As a routine requirement, they wanted a background check to be done on their potential partner.

 

As our client did not have a presence in India, they weren’t able to establish the company’s –

– background and reputation

– past business experience and financial figures

– physical presence and infrastructure

 

Publicly available information on the distributor was limited. To verify their existence, we carried out field visits and interviewed business partners whom they claimed they had done business with.

 

Our findings during the due diligence exercise were alarming… Read more

 

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