Home / Knowledge / News / Textiles / Dull global demand, high leverage to test India's growth
Dull global demand, high leverage to test India's growth
06
Jul '16
Moody's Investors Service says that India's (Baa3 positive) GDP growth over the next two years will be challenged by lackluster global demand and high leverage in some corporate sectors.

"Growth will be adversely affected by high leverage of some large corporates also weighs on credit demand, while impaired assets in the banking system negatively affect credit supply," says Marie Diron, a Moody's Senior Vice President and Manager.

By contrast, India's medium-term potential will be supported by the gradual implementation of further targeted policy reforms, thereby improving the business environment, state of infrastructure and productivity growth.

As for whether or not Brexit will affect India's financial markets, Moody's says that any effects will be limited because exports to the UK and the rest of the European Union account for 0.4 per cent and 1.7 per cent of India's GDP respectively. In addition, India is not significantly exposed to a potential sharp fall in capital flows to emerging markets.

Moody's analysis is contained in its latest edition of Inside India, a quarterly publication that looks at major credit trends in India. The publication also notes that India has acquired energy assets in Russia (Ba1 negative) to enhance the country's energy security.

Specifically, India's national oil companies (NOCs)—Oil and Natural Gas Corporation Ltd. (ONGC, FC:Baa2 stable, LC: Baa1 stable), Oil India Limited (OIL, Baa2 stable), Indian Oil Corporation Ltd (IOC, Baa3 positive), and Bharat Petroleum Corporation Limited (BPCL, Baa3 positive)—signed agreements with OJSC Oil Company Rosneft (Rosneft, Ba1 negative) to acquire upstream oil and gas assets in Russia.

The Indian NOCs have announced four deals, which together will result in the NOCs owning a 49.9 per cent stake in Rosneft's Vankor field, and a 29.9 per cent stake in Rosneft's Tass-Yuryakh field. Moody's estimates that the combined value of the deals will total about $5.5 billion, based on recently concluded transactions for the same fields.

The assets can potentially provide the NOCs with an additional crude oil production of 225-250 thousand barrels per day (kbpd), which would be equivalent to about 34-38 per cent of India's total domestic oil production of 664 kbpd for the fiscal year ended March 2016 (fiscal 2016). The acquisitions will more than double India's overseas oil & gas production of 194 kbpd reported in fiscal 2016.

According to the report, India's relaxation of foreign investment rules is credit positive. It also says that consolidation of public sector banks will face challenges under current conditions.

The analysis says that when it comes to securitization, new regulations will pave the way for the market's transformation and improve creditor rights while the new bankruptcy code will boost bargaining power of creditors. (SH)

Fibre2Fashion News Desk – India

Must ReadView All

Textiles | On 24th Jan 2017

Textile industry demands relaxation of laws from Budget

The upcoming Union Budget 2017-18 should focus on relaxing certain...

President Donald Trump; Courtesy: White House

Textiles | On 24th Jan 2017

US sets ball rolling for withdrawal from TPP

President Donald Trump has set the ball rolling for withdrawal of the ...

Textiles | On 24th Jan 2017

Indian cotton consumption estimated at 290 lakh bales: CAI

The domestic consumption of cotton during the crop season 2016-17...

Interviews View All

Smita Murarka
Amanté

‘There is huge demand in the Indian lingerie market for non-wired styles.’

Sanjay Yagnik
Maa Tex Speciality

‘We suggest reducing dosage of sizing chemicals to reduce sludge...

Vasanth Kumar
Max Fashion India

‘Traditional high-street retailers are now willing to offer franchisees to ...

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Kevin Nelson
TissueGen

Kevin Nelson, Chief Scientific Officer, TissueGen discusses the growing...

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Pranav Mishra
Huemn

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
January 2017

January 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search