Who wins India China trade war

New RERA to be boon for buyers

BENGALURU: Land cheating cases are not new in a city like Bengaluru. While most of the times there are reports of builders’ being declared the accused, the landowners stay out of the picture. According to a recent order by the Karnataka Real Estate Regulatory Authority (RERA), to bring transparency in the real eBENGALURU: Land cheating cases are not new in a city like Bengaluru. While most of the times there are restate sector, landowners, who get a share of total revenue generated from the sale of apartments or a constructed building, fall under the category of  ‘promoter’. 

The word ‘promoter’ is not properly defined in the Real Estate (Regulation and Development) Act 2016. While it may be common knowledge what the terms ‘landowner’, ‘builder’, ‘developer’ and ‘promoter’ mean, a clear definition was not mentioned. However, the term was believed to have been brought out because, in Bengaluru, many projects are joint development projects. In some cases, landowners could also be promoters of the projects. 

RERA activist Bhagylakshmi Ayyar said the move to include landowners to be held accountable for the ongoing projects may help buyers. “There are cases wherein the landowners and the builder get into an agreement to approach the court and delay the deadline to get a stay order purposefully to continue receiving interest from the investors. This order will now hold both parties responsible for the timely completion of the project,” she said. After the new rules came in, 12-15 projects have been registered so far.

Vishnu Vardhan Reddy, a permanent member of the RERA board, said these kind of cheating cases were quite common and civil courts must take cognisance of these issues. “Many courts are still not aware of these issues. So we discourage them from taking up cases of litigation between landowners and builders where the project is registered under RERA,” he said.

A trend commonly observed was the collusion of farmers and builders, said a senior police officer. “The builders take the land of say 20 farmers. They set the layout and make it attractive for the investors. Once they have invested, the farmers file a petty case against the investors, forcing the work to be stopped and the perpetrators enjoy the money along with the interest,” the official saidAccording to the city’s crime record bureau, there might be a slight decrease in cheating cases. Moreover, while cases have reduced, there is an increase in the number of victims, senior officials said

India could be a winner in the US-China trade war

The largest national flag at Rajiv Chowk on March 7, 2014 in New Delhi, India.

India could benefit from the fallout in the U.S.-China trade war, experts told CNBC — but much-needed reforms on land and labor could prove to be a challenge for companies trying to do business there.

Trade tensions between Washington and Beijing have caused some manufacturers to shift production out of China, to avoid higher tariffs.

As a result, Southeast Asian nations, such as Vietnam, have often been cited as winners in the trade shifts. India could be a beneficiary too.

″India could increase its trade footprint in (the) midst of the US-China trade conflict, particularly under categories on which US has imposed tariffs on China," Radhika Rao, an economist at Singapore bank DBS Group, wrote in an August report.

"Apart from trade, diversion in investment flows is an opportunity that India could benefit from, as manufacturers seek alternative origination destinations," Rao added, implying it could attract foreign investments into the country.

India's share of the global export market is relatively small.

Even though Germany's population is nearly 16 times smaller than India's, German exports made up 8.17% of the world's total trade flows in 2017. Comparatively, Indian exports accounted for only 1.68% of world trade that year.

Winning sectors

The top three sectors in India that could benefit from the trade war are: pharmaceutical, chemicals and engineering, Rao told CNBC in an email.

India is already competitive in these industries globally and will likely be well-placed to meet further demand in these areas, she noted.

India needs to move fast, through innovative policies and clear focus on infrastructure development ... But lot more remains to be done and done urgently.

The South Asian nation's pharmaceutical industry supplies over half the world's vaccine demand, and 25% of medicines in the United Kingdom, according to a July 2019 report from the India Brand Equity Foundation (IBEF).

On the engineering side, India was the world's 12th largest producer of machine tools in 2017, a separate IBEF report said. The country also exports more than 60% of its engineering goods to the U.S. and Europe.

The manufacturing sector may benefit too — particularly the textiles, footwear and electronics sectors, said Rajiv Biswas, Asia Pacific chief economist at IHS Markit, in an email.

That's because exports from the U.S. and China will become more expensive as the tariffs kick in, and some manufacturers may move production to other Asian countries — including India.

"India may be able to benefit from this trend over the medium term, with global manufacturers increasingly focused on the rapidly growing Indian domestic consumer market," Biswas said.

For instance, Taiwan's Foxconn — the largest electronics contract manufacturer in the world, which assembles Apple products — moved production into India from China this year. This was to "diversify their manufacturing supply chain away from excessive reliance on Chinese production," said Biswas.

The Indian economy could benefit by $11 billion from these trade shifts, Rao wrote in the report, citing estimates by the United Nations Conference on Trade and Development.

Challenges for businesses

Businesses in India face two key challenges: land laws and labor regulations.

Land laws are the "biggest hurdle" for manufacturing and infrastructure development, said Societe Generale economist Kunal Kundu in a note to CNBC.

Current land laws make it difficult for the private sector to obtain space for manufacturing units, he said.

That's because land ownership is fragmented across several states, and companies need extended periods of time to obtain land, or bypass legal issues that may crop up.

Indian technicians check mobile phones at the Chinese Celkon Manufacturing plant on the outskirts of Hyderabad, India on June 26, 2015.

Another problem is that labor laws in India are "extremely complex," noted Kundu. They comprise about 40 acts and companies are required to adhere strictly to all of them. This makes it difficult for manufacturers.

Land and labor reforms are two of the "most important factors of production" needed, according to Kundu.

Hence, he recommended, a national employment policy should be formulated — particularly one that allows manufacturers to make labor redundant during business down cycles.

Attracting investors

The lack of proper infrastructure could also be a problem, Nomura economist Sonal Varma told CNBC.

That includes connecting manufacturing plants to proper roads and ports, as well as ensuring that power is available.

The government has been seeking to improve some of these policies, but it will be some time before they can be fully realized. It is also trying to boost infrastructure and foreign investment in India through a multi-billion dollar budget.

Recent policy reforms in August were seen as a step forward for investment. For instance, the government approved 100% foreign investment in coal mining, and eased rules in contract manufacturing and retail.

"India needs to move fast, through innovative policies and clear focus on infrastructure development ... But (a) lot more remains to be done and done urgently," Kundu said.

More changes to existing laws are needed before India can reap the full benefits of these investments to boost the economy.

As India is a big country, a lot of laws are controlled by the state government — not by the central government, Varma said. "The changes need to be not just ... top down from the central government, but also bottom up from different state governments."


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