Asia-Pacific countries sign RCEP; India gives it a miss
Fifteen Asia-Pacific countries with a combined GDP of over $26 trillion and comprising nearly 33% of the world's population- have signed Regional Comprehensive Economic Partnership (RCEP).
India had opted out of this China-backed deal in November last year as its core concerns were left unaddressed. The deal would have brought down import duties on 80% to 90% of the goods, thereby flooding the market with Chinese goods. India’s trade deficit with other RCEP countries was also rising. India had also raised a red flag over the move to use 2014 as the base year for tariff reduction.
With India pulling out of RCEP, there is an opportunity for India to strengthen its domestic industries. A large number of sectors had expressed serious apprehensions on RCEP citing dominance of cheap foreign goods would dampen its businesses.
On the other hand, there is a threat of losing investments. With the entry of cheaper imports restricted, the domestic consumers may end up paying more for the products.
Major push to revive the real estate sector:
The government has increased the fund allocation for Prime Minister Awaas Yojana-Urban (PMAY-U) to revive the real estate sector. The amount allotted under the scheme is now increased up to Rs 18,000 crore, from Rs 8,000 crore set aside in the FY21 budget.
According to the Minister, the higher allocation towards the PMAY-U scheme will help in starting construction work of 12 lakh houses and completing 18 lakh houses. This scheme was launched in 2015 to provide housing for all in urban areas by 2022.
The decision to increase the allocation for PMAY-U is expected to act as a booster to the real estate sector. But it will also give a thrust to the overall economy by raising demand for key industrial inputs like steel and cement, and generate employment opportunities.
TCS announces major acquisition:
Tata Consultancy Services (TCS) has announced plans to acquire Deutsche Bank’s IT business and select assets of Prudential Financial subsidiary Pramerica Systems in Ireland.
Acquisition from TCS indicates a major strategy shift on its part. The IT giant has mostly dependent on organic growth and never really dependent on acquisitions in the past. The acquisitions will strengthen India’s largest IT services company’s banking and financial services portfolio.
Change in strategy is mainly due to the increasing competition in the BFSI space. Recently peers like Infosys and Cognizant have successfully managed to win major deals. Wipro's new CEO Thierry Delaporte has proven capability in the space and poses a threat as well.
Moreover, BFS growth has slowed down due to cost optimization activities banks had undertaken in the US and UK. The acquisition, hence, will effectively improve TCS' standing in the BFS vertical.