E c o n om i c & M a r k e t R e v i e w
Source: Cushman & Wakefield India Pvt. Ltd.
INDIAN ECONOMY
• India ranks as the tenth largest economy by
market exchange rates and the third largest
economy when adjusted for purchasing
power parity
1
.
• The Indian GDP is forecast to grow 7.2%
in 2014 and 7.5% in 2015 (calculated
at a factor cost of 2011 to 2012 prices)
2
.
This is based on the view of declining
inflation and improved fiscal management
and business climate.
• With the improved outlook, Consumer Price
Index (“CPI”) came down to 4.4% in November
2014 from 11.2% in November 2013
3
. The CPI
has remained stable at 5.0% from December
2014 to February 2015
3
. Wholesale Price Index
came down to nearly 0.0% in November 2014
and remained at that level from December
2014 to February 2015
3
. Currency volatility also
moderated and stabilized at current trading
range of INR 60-62 and INR 46-49 against the
US Dollar and Singapore dollar respectively in
the last one year after touching an all-time low
of INR 68 against US Dollar in August 2013.
INDIAN GOVERNMENT
• In May 2014, India elected a new Central
Government that won a clear majority in the
lower house of Parliament, the first time in
30 years. Led by Prime Minister Narendra Modi,
the National Democratic Alliance has enthused
investors and business confidence in the
Indian economy, both nationally as well as
internationally. The new Government has
announced various measures and started
implementing various reforms that focus on
improving business sentiments, streamlining the
administrative process, easing restrictions on
foreign direct investments and enhancing the
country’s infrastructure.
• One major policy reform introduced in FY14/15
was the introduction of Real Estate Investment
Trust (“REIT”). The Securities and Exchange
Board of India approved REITs regulations in
September 2014. This is expected to provide
better access to funding for developers,
better valuations for commercial properties
and a more structured and transparent
commercial real estate market.
• In India’s FY15/16 budget, the Government
proposed various incentives to promote the
successful launch of REITs in India. The proposal
includes the pass through of rental income
from the REIT’s assets, concessional tax relating
to capital gains for the REIT’s sponsor and tax
exemption on units’ sales by other unit holders.
(For other unitholders, tax is exempted for the
sale of units that are held for at least 36 months.)
Recently the Government through its amendment
of Finance Bill on 30 April 2015, has provided
relaxation for the sponsors of REIT by exempting
Minimum Alternative Tax on notional gains on
transfer of shares of Special Purpose Vehicle
(“SPV”) to the REIT trust in exchange of units of
REIT trust. Further Government also approved
foreign investment in REITs. This approval enables
the foreign investment inflows in to the completed
rent generating assets. However further clarity is
required on tax issues such as dividend distribution
tax, corporate tax for the assets held by REIT
controlled SPV’s. Nonetheless, a successful REIT’s
launch will also depend on the quality of the
assets it holds and the income stream that is
expected from its portfolio.
1
Source: World Bank, 2013
2
Source: International Monetary Fund
3
Source: Ministry of Statistics and Programme Implementation
ASCENDAS india trust ANNUAL REPORT 2014/15
