AAPI: July 2017

LISBON, 20th July 2017

Index of this Newsletter

INDIA

INDIA & THE WORLD

21.1. Remittances to India dip for second consecutive year: Reserve Bank
22.1. Decks cleared for Dhirubhai Ambani Aerospace Park
22.2. Tata, Lockheed Martin partner to make F-16s in India
23.1. FIEO sets export target of US$ 325 bn for this fiscal
23.2. M&M to form JV in Brazil to reap success in S America
24.1. Strategic issues dominate Modi-Trump talks
24.2. Modi in Israel: India-Israel ties elevated to strategic partnership
25.1. Prime Minister Modi and Prime Minister Costa launch unique Start-up portal
25.2. India-Vietnam should achieve US$ 15 bn trade target by 2020: Prez

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LISBON, 20th July 2017

NEWSLETTER, 20-VII-2017

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1.1. India’s potential for leading global growth

Livemint, 11 Jul.2017

An innovative method of measuring economic growth and potential points to India’s dominance over the coming decade

After the best part of three years as the fastest growing major economy in the world, India fell behind China in the last quarter of FY17—headline material in the slightly shopworn story of the dragon versus elephant growth race. But according to growth projections released late last month by researchers at the Center for International Development (CID) at Harvard University, based on 2015 data, the reversal is an inconsequential blip. India took over from its neighbour as the “economic pole of global growth” over the past few years and will remain so at least through the decade to 2025. The economic logic underlying those projections raises some intriguing questions about India’s growth trajectory.

The projections are based largely on CID’s new 2015 Economic Complexity Index—part of the Atlas of Economic Complexity, a brainchild of economist Ricardo Hausmann and physicist César A. Hidalgo. In a 2009 paper, The Building Blocks Of Economic Complexity, Hausmann and Hidalgo laid out their reasoning for this new model to judge economic growth. They have argued that a country’s economy consists of different capabilities—everything from postal services to the ability to mass produce a certain kind of screw—that are combined in various ways to produce goods and services. The more diverse these building blocks and the more robust the networks that can be used to combine them, the stronger a country’s economy with higher gross domestic product per capita. It’s back to basics in a way—an extension of Adam Smith’s insight on a nation’s wealth being linked to effective division of labour.

To give a practical example, the rural poor in several districts of India lack the physical infrastructure to travel far or communicate with more than a limited set of people. This limited interaction and communication means they are poor in knowledge and productive capabilities—and consequently in economic opportunities. Both the economic networks they are part of and their ability to make economic gains via those networks are poor. The reverse also holds true. Make it easier for people to communicate and share and use knowhow—the agglomeration economies of urban centres—and economic benefits follow.

Since measuring these capabilities and networks is an impossible task, the Atlas uses exports as a proxy. Richer countries will export a greater variety of products exported by few other countries, while poorer countries will export fewer, simpler products that are also exported by many other countries. For instance, if Japan, ranked at the top of the index, has vehicles, machinery and electrical machinery as its top exports, Ghana, ranked near the bottom, relies on crude petroleum, gold and cocoa beans. It makes intuitive sense. And it can be used for predicting growth more accurately than conventional methods that look at land, labour, institutions and human capital. The greater an economy’s potential to build on existing capabilities and diversify, the greater its growth potential—and the larger the disparity between its complexity and wealth, the faster that growth can be. That is why the CID researchers have painted such a rosy picture of India’s prospects; it remains poorer than its economic complexity, based on its branching out into chemicals, vehicles and electronics exports, suggests. Productivity structures for services matter as well—another area in which India has done well, although the current woes of its information technology sector reiterate the necessity of moving up the value chain to more sophisticated offerings.

The tricky bit, of course, is using this as a policy aid. Hausmann has recommended that governments function as venture capital does—searching out areas of the economy which could serve as stepping stones to greater diversification and innovation, pumping money into them and moving on if they turn out to be unproductive. This is unfeasible for multiple reasons. Gauging the optimum horizon for such investment is not easy. And predicting which areas are worth investing in at a time when automation is leading to rapid, unforeseen industry shifts is fraught with risks and unacceptable opportunity costs. Then there is the risk of public investment crowding out private investment.

That said, the ECI does offer insight into why financial inclusion and inclusive growth are so important in India. Less complex economies that produce less sophisticated goods usually have more lop-sided distribution of wealth. Diverse economies with sophisticated products cannot come about without economic inclusivity that draws more people into productive networks. Nor will a country produce sophisticated goods on a large scale without a robust domestic market for them—something that requires higher median income. In other words, a lack of inclusive growth could spoil the CID’s growth narrative for India. Hausmann has pointed out that complexity is a more accurate predictor than the measures used in endogenous growth theory, such as investment in education and innovation—improving human capital, essentially. But thus far at least, while CID’s work has given us useful new tools to measure growth and economic potential, there are no shortcuts to developing the capabilities that form the building blocks of economic complexity. Inclusive growth, better penetration and quality of education and better infrastructure, both tangible and intangible, to enable networking of diverse capabilities, remain India’s best bet.

Can India be the lynchpin of global growth over the next decade? Tell us at views@livemint.com

1.2. K. Kasturirangan to head panel to prepare new education policy

Livemint, 26 Jun. 2017, Prashant K. Nanda

Eminent scientist Krishnaswamy Kasturirangan will head a nine-member panel formed by the HRD ministry to prepare a new education policy

New Delhi: Three years into office, the Union government on Monday formed another committee, this time headed by space scientist K. Kasturirangan, to come up with the blueprint for a new education policy.

Given that the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) has under two years left in its tenure, the big question is whether the government will have sufficient time to deliver on an electoral promise made in the run-up to the 16th general election. “The committee for preparation of final draft of National Education Policy has been constituted under the chairmanship of eminent scientist Padma Vibhushan Dr K. Kasturirangan,” the human resources development (HRD) ministry said in a statement on Monday.

The formal communication from the HRD ministry did not set a timeline for the new committee to submit a report.

The previous committee was constituted under the chairmanship of T.S.R. Subramanian, former cabinet secretary, by the government in 2015. Due to differences between some members the committee and the then HRD minister Smriti Irani, the recommendations submitted in 2016 were not received well.

An official of the HRD ministry said the new committee could take “six to seven months” for preparing the report.

Another HRD ministry official, who spoke on condition of anonymity, admitted that it would be tough to implement the recommendations of the committee in the next one year and that “it would have been better to constitute it in 2016 itself for a smooth implementation of the policy before 2019 elections.” The Kasturirangan committee will supersede the Subramanian committee. The Subramanian committee had advocated a new civil service cadre for the education sector, abolition of the University Grants Commission, continuation of a no-detention policy till Class V, and the teaching of English at the primary school level.

The Kasturirangan committee has been mandated to make Indian education contemporary, improve its quality, and internationalize it.

It could also provide a roadmap for the entry of foreign universities into India. The ministry said the new committee would take into account the ground work done over last 30 months and inputs received from the Subramanian committee and start work with “immediate effect.” “In an exhaustive exercise carried for last 30 months the HRD ministry has received thousands of suggestions from educationists, teachers, experts, students and other stakeholders from across the country,” it said.

The Rajya Sabha debated some of the issues last year. Many MPs have given their views in writing and 26,000 people have provided feedback on the MyGov website, the ministry said. All these, including the Subramanian committee’s detailed inputs, “will be considered by the committee,” said the ministry.

Apart from Kasturirangan, the nine-member committee includes K.J. Alphonse, a retired bureaucrat and special invitee to the BJP’s executive committee, mathematician and Fields Medal winner Manjul Bhargava from Princeton University and Vasudha Kamat, a prominent academic. “We all know what the education sector needs - quality improvement. It’s difficult to understand what committee after committee is doing. I believe the education policy should have rolled out in 2016 for a smooth implementation. Then only, its results would have started coming by 2019. Now, it’s only getting delayed for no one’s benefit” according to Rohin Kapoor, director, education practice at consulting firm Deloitte India.

2.1. Housing for all: There’s a lot to be built

BusinessLine, 9 Jul. 2017, Shreya Deb

The Government must clear policy bottlenecks for the Pradhan Mantri Awas Yojana to meet its ambitious target

Amidst the government’s celebrations on completing three years in office, one flagship scheme remains a massive — and challenging — opportunity: Housing for all by 2022. The groundbreaking, affordable housing initiative backing this promise, the Pradhan Mantri Awas Yojana (PMAY), plans to provide homes to 18 million households in urban India and nearly 30 million households in rural India . But as of this April, the Government has approved only 1.88 million urban houses — and roughly 103,000 have been built. The progress of PMAY’s implementation has been disappointing. However, it’s important to understand how India’s affordable housing puzzle challenges the programm’s ability to reach the 2022 goal.

There are factors impeding PMAY from reaching its full potential.

Challenge 1: How do we “build” millions of new houses? The Technical Group on Urban Housing Shortage estimated that the national housing shortage reached 18.78 million in 20123. It’s easy to see why real estate developers may be keen to highlight the need to build millions of new houses. But at the current pace of PMAY, with a little over 100,000 houses built, it will take hundreds of years to build our way out of the housing shortage. However, the Technical Group’s report pointed out that 80 per cent of the shortage was attributed to congested houses — something that may be better addressed by enabling individual households to upgrade their own homes.

Challenge 2: Land is scarce If the aim is to build millions of new housing units, clearly, land is scarce. However, if the intent is to enable people to upgrade their congested housing, then there is no shortage; these congested households are already occupying land. The challenge is to in-situ upgrade this housing. The Government has made efforts to unlock this land potential by providing Transfer of Development Rights (TDR) to incentivise developers to in-situ rehabilitate slums. While this has proven effective in Mumbai, the economics breaks down in smaller cities where land values are not as high and developers are unable to recover their costs.

Challenge 3: The unacknowledged bottleneck of property records An important aspect of PMAY is the interest subsidy on a home loan and the direct subsidy for individual house construction or enhancement. However, a requirement to avail either subsidy are title documents to the property. And therein lies the crux of the problem: our land and property records are in a poor condition. Many people continue to live in ancestral homes, whose title deeds may be in the name of deceased grandparents. Slum dwellers — arguably the target beneficiaries under PMAY — are unlikely to have title documents. To complicate things further, land records are governed by the State’s revenue department, while housing is a separate agency. Citizens are unable to navigate this maze to obtain their property documents, ending up locked out of the scheme’s benefits.

Challenge 4: One crore vacant houses do not enter the rental market The Census showed there were over 10 million vacant houses in 2011, nearly half the urban housing shortage. The vast majority of these property owners are private citizens who prefer to leave their house vacant, rather than offer it on rent. This reflects the distorted rental market in India where property owners fear they may lose their property to tenants, leading to under-utilisation of assets.

Overcoming challenges

There are three major policy levers that can help solve these challenges. First, States need to simplify the process of updating property records. This will allow all citizens to obtain legal documents to their land and property in order to fully embrace the subsidy features of PMAY and access credit, which will enable them to upgrade their housing.

Secondly, enable individual households who don’t have legal titles to in-situ upgrade their housing by providing them with security of tenure — even a “no eviction guarantee”. Ahmedabad’s success with the Slum Networking Program shows that the security and comfort from such measures can encourage slum residents to invest money and upgrade their shelter. Finally, States need to push through the much-needed rental reforms that balance the interests of tenants with the protection of property owners’ rights, and don’t distort rental markets by artificially controlling rents. This has the potential to bring vacant housing stock into the rental market and alleviate the housing shortage.

The writer is Principal, Investments at Omidyar Network

2.2. Uttar Pradesh gets 70,784 more houses for urban poor under PMAY (Urban)

Press Information Bureau, Jun. 23, 2017

Karnataka gets 56,281 more; Andaman & Nicobar Islands get 609 first time Ministry of HUPA approves 127,674 more houses with an investment of Rs.6,532 cr Central assistance of Rs.1,915 cr approved for these new sanctions

New Delhi: Ministry of Housing and Urban Poverty Alleviation has approved construction of 70,784 affordable houses for the benefit of urban poor in Uttar Pradesh under the Pradhan Mantri Awas Yojana (Urban) with an investment of Rs.3,528 cr for which central assistance of Rs.1,062 cr has been approved.

Further to the discussion Minister of HUPA Shri M.Venkaiah Naidu held with the Chief Minister of Uttar Pradesh Shri Yogi Adityanath soon after assumption of office, the State Government sent affordable housing proposals for 145 cities and the same have been approved. Earlier, Uttar Pradesh has been sanctioned 41,954 houses including those approved under Rajiv Awas Yojana, which has been now subsumed under PMAY(Urban). With these latest approvals, the total number of houses sanctioned for Uttar Pradesh has increased to 1,12,738.

Of the 70,784 houses approved, 56,839 will be constructed under the Affordable Housing in Partnership component and 13,945 houses under Beneficiary Led Construction component of PMAY(Urban). Under these two components, central assistance of Rs.1.50 lakh is given to each beneficiary.

Under the latest approvals, Lucknow has got 1,525 houses, Gorakhpur-501, Ayodhya-500, Iltifatganj- 903, Faizabad-769, Dudhi-765, Rudauli-713, Singahi Bhiraura-821, Chatra-783, Purdhinagar-674, Kanpur Dehat-442, Daurala-505, Sikandra-447, Akbarpur-449, Aliganj-511, Bareily-139 and Azamgarh-119.

Karnataka has been sanctioned 56,281 more affordable houses for 93 cities and towns with an investment of Rs.2,950 cr and Central assistance of Rs.844 cr. Bengaluru has been sanctioned 8,291 houses, Bellary-1,613, Shivamogga-1,500, Chennapatna- 1,450, Hubbali-1,300, Dharwar-1,292, Challakere-1,127, Kanakpur-1,163 and Sira-1,008. For the first time, Andaman & Nicobar Islands has been sanctioned 609 houses for Port Blair with an investment of Rs.54 cr and central assistance of Rs.9.00 cr.

With these latest approvals, the total number of affordable houses approved for construction under PMAY(Urban) has increased to 20,95,718.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

3.1. Government limitations in job creation

Livemint, 18, Jun. 2017

There are no quick fixes for India’s jobs problem, no matter what campaign promises may say

The issue of employment is a subterranean rumble underlying the daily rhetoric of Indian politics. Frequently, it grows in volume to dominate the discourse. This is such a moment. The Congress reacted to the Narendra Modi government’s completion of three years in office with an attack revolving around its alleged failure to create enough jobs. Bharatiya Janata Party (BJP) president Amit Shah responded with practised whataboutism, noting that if the Congress had paid similar attention to the issue during its time in power, it would not have suffered such electoral reverses over the past few years. This may be true; it is certainly irrelevant. It is an apt time, however, to consider an important question: What effect can the government actually have on job creation?

One of Modi’s core campaign promises in the run-up to the 2014 election was creating jobs for the youth. His government has failed to deliver. Comprehensive employment data in India is sadly lacking. In its absence, quarterly employment surveys (QES) carried out by the government since 2008— suspect as they are—will have to do. They paint a bleak picture. These surveys look at eight sectors that are considered labour-intensive—six manufacturing and two services to begin with, and expanding to cover the entire manufacturing sector as of April 2016. In 2015 and 2016, this data showed average employment generation to be around 200,000 jobs a year. This is a precipitous decline from the 2009-11 period, when it was 950,000 jobs annually.

But 950,000 jobs annually is also inadequate given that there are 12 million new entrants in the workforce every year. Granted, the QES data does not include informal sector jobs—but employment in the formal and informal sectors is unlikely to be moving in vastly different directions. And the latter is not, in any case, a sustainable situation.

This jobless growth—much in the news this decade—is not a new phenomenon. A 2014 Reserve Bank of India paper by Sangita Misra and Anoop K. Suresh, Estimating Employment Elasticity Of Growth For The Indian Economy, threw up some interesting facts about India’s employment elasticity—the percentage change in employment associated with a one percentage point change in economic growth. Firstly, elasticity has been on the decline since the 1970s and 1980s. Secondly, overall employment elasticity is low. Thirdly, in manufacturing, elasticity is higher in the organized sector than in the unorganized sector. And fourthly, certain sectors in manufacturing, such as motor vehicles, electrical equipment and apparel, have relatively higher elasticity.

Given this, what can the government do? Increasing public investment to crowd in private investment—and thus boost job creation—has been much talked about in the current scenario where the twin balance-sheet problem has rendered the latter anemic. But this has its limits. It is not a suitable solution for a slump in employment generation that spans decades, as in India. Technological changes, automation and geopolitical changes all complicate the issue: They herald structural economic shifts that no government can truly anticipate or compensate for. Creating new doles or expanding old ones has been a go-to in Indian economic policy when times have been tough. The United Progressive Alliance government was particularly culpable in this regard. But this is sleight-of-hand at best and ruinous at worst; no one can pretend that the employment generated via, say, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is any sort of serious remedy.

There are, essentially, no quick fixes. This is not to say that governments aren’t culpable. But outside of immediate crises such as the great recession, effective policy prescriptions will be those that target long-term shifts in the policy environment and the scaffolding of the economy, leaving it to private capital and companies to respond to the changing nature of employment and production.

Factor market reforms would be a good place to start. In a World Bank research paper, A Detailed Anatomy Of Factor Misallocation In India, Gilles Duranton, Ejaz Ghani, Arti Grover Goswami and William Robert Kerr find that land allocation in the country is barely better than random. This in turn leads to financial misallocation, given that land is needed as collateral. Consequently, less efficient firms often have better access to land and capital than more efficient ones. Likewise, for all the hoopla schemes like Make in India and Startup India generate, labour reforms that enable enterprises in the informal sector—responsible for the bulk of manufacturing employment generation—to scale up, or enterprises with greater elasticity in the formal sector to respond swiftly to market shifts, will have deeper and more sustainable effects.

There are other areas where reforms are needed. For instance, the right to education Act might recognize a real problem, but it does nothing to address the quality of education—essential for later employability—that only policy and administrative overhauls at the state levels can address. Admitting limitations and advocating long-term solutions with no immediate pay-offs does not, unfortunately, make for a good line in the cut and thrust of electoral politics. Regardless, this is the only way in which the government can sustainably help boost employment—Shah and the Congress’ theatrics notwithstanding.

3.2. India's clean energy sector could create 300,000 new jobs by 2020: Study

Livemint, Jun. 22, 2017

New Delhi: More than 300,000 new workers can be employed in wind and solar jobs and more than one million total employment opportunities can be created in achieving India’s ambitious clean energy goals to install 175 gigawatts (GW) of renewable power by 2022, said a study released on Wednesday.

It highlighted that the solar and wind energy sectors employed more than 21,000 additional people across India in 2016-17 while an additional 25,000 people will be employed over the coming year. The study also said that labour-intensive rooftop solar segment will employ 70% of the new workforce, creating seven times more jobs than large-scale projects such as solar farms. India’s clean energy workforce comprises solar installers, maintenance workers, engineers, technicians and performance data monitors.

The study Greening India’s Workforce: Gearing Up For Expansion of Solar and Wind Power in India published by Delhi-based think tank, Council on Energy, Environment and Water (CEEW), and the Natural Resources Defense Council (NRDC) also stressed that strong growth in the domestic solar manufacturing industry could provide full time employment for an additional 45,000 people in India. Just before 2015 Paris Climate summit, Prime Minister Narendra Modi led National Democratic Alliance (NDA) government had announced an ambitious target of 175 GW renewable power which included 100 GW Solar power and 60 GW wind power.

At present, India’s installed wind power capacity is 32.2GW and solar is 12.2GW. According to the CEEW analysis, India’s clean energy goals have the potential to put 34,600 people to work in wind power, 58,600 in utility solar and 238,000 in rooftop solar jobs over the next five years. “Solar jobs will be well distributed across India with Maharashtra and Uttar Pradesh leading in job creation. Wind jobs are likely to be concentrated in a few states that have high wind potential, as has been the case with wind capacity,” said the study.

“80% of the new clean energy workforce will be employed during the construction phase. However, despite these being contractual jobs, the large pipeline of renewable energy projects creates enough opportunities for workers to stay employed. Additionally, since most of these jobs are in the rooftop solar PV segment, central and state governments must provide greater policy support to the rooftop sector,” said Neeraj Kuldeep, Programme Associate at CEEW.

Nehmat Kaur, consultant and development economist at NRDC said, “Clean energy expansion is generating thousands of new jobs while meeting India’s climate and economic goals. With this tremendous opportunity, India is stepping up as a global leader in demonstrating how a growing economy can scale up renewables, generate employment and provide access in the face of rising energy demands.”

The study recommended to central government and state governments to provide policy priority to rooftop solar to create renewable energy jobs.

It also recommended the governments to support development of training centres led by the private sector to source construction jobs locally since solar jobs are well distributed among states.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

4.1. Niti Aayog OKs Rs 18,000 cr ($2,79 bn) project to increase train speeds

PTI, Jun. 21, 2017

New Delhi: The ambitious Rs 18,000 crore project for increasing train speeds on the Delhi-Mumbai and Delhi-Howrah rail corridors has got the Niti Aayog's approval, paving the way for being put up for Cabinet clearance.

The mega project is meant to bring about a paradigm shift in rail operations enabling trains to run at 160 km per hour on the busiest routes on the Indian railway network. Aiming at reducing travel time between the three metropolises, the project envisages fencing off the entire 3,000 kms on both routes, upgradation of signaling system, elimination of all level crossings and installing train protection warning system (TPWS), among other works to make trains run at an increased speed of 160 kmh.

"Any project more than Rs 1,000 crore in worth will have to get the Niti Aayog clearance. So now after getting the Niti Aayog clearance yesterday, the proposal will now be examined by the expanded railway board," said a senior railway ministry official involved with the project. The expanded railway board is comprised of senior representatives from department of expenditure, department of programme implementation and Niti Aayog, besides the board members. The Railways will submit the proposal for cabinet clearance after getting the proposal approved by the expanded railway board.

The 1,483-km long New Delhi-Mumbai rail route will also include the Baroda-Ahmedabad sector, and is estimated to cost Rs 11,189 crore.

The 1,525-km long New Delhi-Howrah route, which also includes the Kanpur-Lucknow section, is estimated to cost Rs 6,974 crore. The work on both sections will be given to a single agency through global bidding for effective implementation of the project.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

4.2. India gets good ranks on FSB's reform report card to G20

PTI, Jul. 04, 2017

New Delhi: The Financial Stability Board (FSB), an international body for global financial system, today listed India among countries that are 'compliant or largely compliant' on implementation of priority area reforms.

Ahead of the G20 Summit in Germany to be attended by Prime Minister Narendra Modi, among other world leaders, the FSB today submitted its status report on progress in financial regulatory reforms in various jurisdictions, including India. The report listed India as a 'compliant' jurisdiction with regard to the Basel III reforms in area of risk- based capital and as 'largely compliant' on liquidity coverage ratio.

Other countries that have been found to be 'compliant or largely compliant' on these metrics include Argentina, Australia, Brazil, Canada, China, Hong Kong, Indonesia, Japan, Mexico, South Korea, Russia, Singapore, South Africa, Switzerland, Turkey and the US. At the same time, France, Germany, Italy, the Netherlands, Spain and the UK have been found to be 'materially non-compliant' on at least one parameter.

With regard to the Net Stable Funding Ratio (NSFR), India figured among the countries where "final rule published but not in force, or draft regulation published". On compensation related reforms, India is among the jurisdictions where "all except a few (three or less) FSB Principles and Standards implemented", as per the FSB report. On trade reporting in the over-the-counter derivatives market, India was among the countries where necessary regulatory framework was being implemented.

On shadow banking, the FSB report named India among the jurisdictions where the final implementation measures are in force for valuation, liquidity management and stable net asset for monetary market funds, while final adoption measures were taken for implementing an incentive alignment regime and disclosing requirements on securitisation. The FSB also said that the jurisdictions that have not had an IMF-World Bank Financial Sector Assessment Program (FSAP) in the last five years are undergoing one in 2017-19 and these countries include India.

It further said that the FSB examined progress in implementing G20 reforms in recent peer reviews of three EMDE (Emerging Market and Developing Economies) members -- Argentina, Brazil and India -- and has made recommendations to address identified gaps.

The report was submitted ahead of the G20 Summit in Hamburg on July 7-8 along with a letter from the FSB Chair Mark Carney to the G20 leaders.

As per the letter, the G20 reforms are building a safer, simpler, fairer financial system and banks are considerably stronger, more liquid and more focused.

"A series of measures is eliminating the toxic forms of shadow banking and transforming it into resilient market-based finance," it noted, while adding that a greater resilience is being achieved without impeding the supply of credit to the real economy.

It also said some unfinished business to finalise and implement reforms merits attention. "Basel III must be completed urgently and then implemented faithfully... Further work is required to build effective cross-border resolution regimes, and to realise fully the benefits of trade reporting in improving transparency in OTC derivatives markets.

"The underlying causes of misconduct are being addressed by bolstering individual responsibility, accountability and better aligning incentives and reward, but more needs to be done," it said. The report identified three areas where authorities need to remain vigilant -- maintaining an open and integrated global financial system, market liquidity and the effects of reforms on emerging market and developing economies.

The FSB sought the G20 leaders' support to reinforce global regulatory cooperation. The FSB also released a a Framework for post- implementation evaluation of the effects of the G20 financial regulatory reforms, developed in collaboration with the standard-setting bodies, and with input from external stakeholders and through public consultation.

The framework will guide analyses of whether the G20 reforms are achieving their intended outcomes and help to identify any material unintended consequences that may have to be addressed, without compromising on the objectives of the reforms.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

5.1. 22 states abolish check posts after GST rollout

PTI, Jul. 04, 2017

New Delhi: As many as 22 states, including Delhi, West Bengal and Maharashtra, have abolished check posts within three days of the implementation of the Goods and Services Tax (GST). Eight states, including Assam, Punjab, Himachal Pradesh, and some north-eastern states, are also in the process of abolishing check posts, a finance ministry statement said.

State border check posts scrutinise material and location-based tax compliance, resulting in delays in delivery of goods and cause environment pollution as trucks queue up for clearance.

One of the key objectives of the GST, which came into effect from July 1, was to make India a single market where goods and services can flow seamlessly. The other important states which have abolished the check post include Uttar Pradesh, Bihar, Haryana, Gujarat, Madhya Pradesh, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu. With the abolition of check posts, the long queues often witnessed at state borders will not be seen.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

5.2. 70% commodities to become cheaper under GST: ICAI

Business Standard, Jun. 30, 2017

New Delhi: With the goods and services tax (GST) set to be rolled out from July 1, the Institute of Chartered Accountants of India (ICAI) on Thursday sought to dispel the concerns about price rise due to the new indirect tax regime.

The ICAI’s indirect tax committee chairman, Madhukar Narayan Hiregange, said prices of 70 per cent commodities would come down if the GST chain was not broken.

A study by the institute has revealed that the GST regime would yield Rs 6,700 crore to the Delhi exchequer in the current financial year as people from the unorganised sector would come into the tax fold. In general, GST will also have a cascading effect on the direct tax collections of the state government, said Hiregange. Meanwhile, ICAI would launch a new course on the GST regime, which would be unveiled by Prime Minister Narendra Modi on July 1 — the day of the GST roll-out. The institute’s course was last revised 13 years ago.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

6.1. What right does Jaitley have to deny loan waivers to farmers: BKS leader Kelkar

BusinessLine, 19 Jun. 2017, AM Jigeesh.

‘The Centre has money to distribute among industrialists but not to farmers’

The Sangh Parivar’s farmers’ organisation, Bharatiya Kisan Sangh, holds the policies of the Centre responsible for the unrest that looms large over the country’s agrarian sector and the nationwide protests started a month ago. The outfit has urged the Centre to convene a special session of Parliament to discuss and decide the future of farming in the country as the crisis, according to them, is likely to erupt like a volcano. Prabhakar Kelkar, Vice-President of Bharatiya Kisan Sangh, spoke to BusinessLine in detail about the political, economic and social issues behind the protests. Excerpts:

The BJP says that the protests by farmers were instigated by the Opposition parties. What is your view?

The country is sitting on a volcano. A volcano in the form of farmers’ unrest... It can erupt on any day. The farmers’ unrest has been brewing for some time in several places. No one can predict from where the volcano will erupt. In Uttar Pradesh, sugarcane farmers were protesting. In South India, coconut farmers were agitated. Mustard farmers were unhappy in Rajasthan. Peanut cultivators were protesting in Gujarat. This unrest is genuine. Opposition’s role comes later. Though States and Centre governments have helped the farmers in production by providing water and power, the issue is with procurement and sales. For example, the governments encouraged farmers to cultivate pulses. Farmers in Madhya Pradesh got good remunerative price for green gram. Production was also good. But this year, the prices came down.

There is no policy from the Centre for deciding the income of farmers’ produce. The CACP (Commission for Agricultural Costs and Prices) does not have farmers’ representatives for the last three years. We have been demanding the Centre to have at least one person from the Kisan Morcha (of the BJP) or an agriculture expert. The Government is neglecting agriculture. There have been many schemes, but none for the infrastructure development.

So what is your demand?

There should be special session of Parliament at least for three days on the issues of farmers. Parliament should prepare a roadmap for the sector at least for the next five years. We had met the Lok Sabha Speaker on this. The Centre must take an initiative on this. Even though the crisis is looming large, the Centre is not holding any discussions with the farmers’ representatives. Also, farmers need a guarantee for what they produce. We do not support the MS Swaminathan Committee report. But we demand at least 25-30 per cent increase in the MSP. We demand governmental intervention between the producers and the traders. The way the Cotton Corporation of India works is a very good example for how the government can effectively help farmers in selling their produces. FCI, NAFED and other procurement agencies failed to help the farmers in the last three years as they did not get financial support both from the Centre and the States. Secondly, the traders who buy produce from farmers at a cost below the MSP should be punished through a law and thirdly the import duty on food grains and other agri-produce should be increased. There should be a one-umbrella policy. There should be a higher-level coordination between the Agriculture Department, Food and Civil Supplies Department and the Commerce Department.

How do you see the demand for farm loan waivers?

We are not in favour of farm loan waivers. But what makes us angry is the fact that the Centre has ₹15 lakh crore to distribute among 15 industrialists. In every Budget, the Centre gives the industries ₹1-2 lakh crore to address the non-performing assets of industries. So why should not the farmers get that amount?

Then Finance Minister Arun Jaitley asks the States to generate money for such waivers on their own. Who is Arun Jaitley to deny loan waivers to farmers? What is the base for his stand? You have a lot of money for industries. Is industries not a state subject? Is industry a special child of the Centre? The reaction for his statement comes from the ground, from the farmers in the form of protests. States like Madhya Pradesh and Rajasthan used to give bonus to farmers along with the MSP. The Union government intervened and stopped it. This bonus was used for as an investment by farmers. When they stopped paying bonus, we urged them to increase the MSP. But the increase was very marginal. So, all these issues have ended up as agitations by farmers. The issue is that agriculture is not in the focus of policymakers. The problem started when we started industrialising the society. Politicians do not differentiate between progress and development. The development should be based on overall progress. What development are they intending if half of the population is not allowed to progress? The progress should be based on the development of agriculture and infrastructure for agriculture. If that happens, this country will prosper.

6.2. Indian farming: Chronicle of a crisis

Livemint, 14, Jul. 2017, Abhiram Ghadyalpatil and Sayantan Bera

Farmers have been demanding loan waivers and more remunerative prices for crops after a crash in commodity prices. A look at the roots of a crisis that has been in the making for some years now

In 2013, Raju Pathan, a 44-year-old farmer from Nashik district in India’s western Maharashtra state, borrowed Rs9 lakh from a national bank to lay a water supply pipeline that would bring water to his 1.1 acre farm from a source of irrigation 9km away.

Pathan wanted to shift to grape vines, a prime horticulture crop in this part of India. The pipeline was laid and Pathan took an additional Rs3 lakh as a crop loan from a cooperative bank and Rs1 lakh short-term credit from another national bank to buy saplings, manure, and insecticides. In 2016, he reaped the first harvest of more than 150 quintals (1 quintal is equal to 100kg) of table grapes and sold those to local traders for Rs25 per kg. For the second season in 2017, Pathan spent Rs1.5 lakh on inputs cost and labour. This year, Pathan sold another 150 quintals for Rs15 per kg.

“Minus the input cost of Rs1.5 lakh, I have earned around Rs4.5 lakh from two harvests. But this is a notional income because along with my brother who is the co-owner of the farm, I carry debt of around Rs13 lakh,” Pathan said in a recent interview.

If only his farm had been serviced by canal irrigation that the government provides, Pathan would not have taken the first, Rs9 lakh loan. “I could not have waited for the government to lay the canal. So I took a loan thinking once the plants start bearing fruit, I will be able to repay it. But the non- remunerative prices in the first two years of the harvest make me wonder if I made the right decision to invest in grapes,” Pathan says.

Pathan belongs to the small and marginal category of farmers in India, with land holdings of less than 2 hectares (4.94 acres), who constitute 85% of total operational farm land holdings in India, where agriculture provides a livelihood to half the population of 1.3 billion people.

Such farmers have been at the forefront of protests demanding farm loan waivers in parts of India that have suffered because of a widespread drought in 2014 and 2015. A record harvest following bountiful—if unevenly spread—rains in 2016 didn’t help; prices crashed below the cost of production and a cash crunch that followed the invalidation of high-value banknotes in November deepened the crisis.

The weather office has predicted another year of plentiful June-to-September south-west monsoon rainfall in 2017, but that may not quite help the cause of farmers if commodity prices stay low. Whether Pathan will qualify for a farm loan waiver the Maharashtra government has announced for marginal farmers and to what extent is not clear yet. On 12 June, Maharashtra became the second Indian state to declare a farm loan waiver that will cost Rs34,022 crore. Uttar Pradesh, India’s most populous state, where the Bharatiya Janata Party (BJP) won a record mandate in the February-March assembly elections, had been the first, saying it will spend Rs36,359 crore to follow up on an electoral promise by Prime Minister Narendra Modi to alleviate farm distress.

The Congress government in the breadbasket northern state of Punjab announced a loan waiver on 19 June (estimated at Rs10,000 crore), also following up on an electoral promise, and the southern state of Karnataka, ruled by the same party, said three days later that it would partially waive loans taken by banks from cooperative banks; the largesse will cost Rs8,165 crore. That’s a combined Rs88,546 crore, or $13.7 billion.

Pressure is mounting on other states, especially the BJP-ruled states of Madhya Pradesh, Rajasthan, Chhattisgarh, Haryana, and Gujarat to emulate Uttar Pradesh and Maharashtra. Many of these states will go to the polls in the next two years, implying more loan waivers may be announced to score electoral dividends.

The rich also pay

Although Uttar Pradesh’s largesse was the immediate trigger, farm distress preceded rural unrest and demands for loan waivers in most Indian states. Also, it is not only the small and marginal farmers who are in trouble. Even relatively prosperous farmers with large land holdings are in distress, as evidenced by violent protests in those parts of Maharashtra and Madhya Pradesh where farmers have shifted from food crops to capital- and labour-intensive commercial crops, horticulture, and medicinal plants. Even within the states, farm unrest has rocked relatively richer and irrigated parts compared to dry and historically backward regions. For instance, Ahmednagar, Nashik, Pune, Kolhapur, and Sangli districts of Maharashtra, which constitute the main theatre of farm protests, are largely irrigated, prosperous, politically powerful, and leading pockets in terms of crop diversification—from sugarcane to horticulture to dairy to traditional food crops and oilseeds. Yet, the call for a farmers strike from 1 June that caused the state government to bow to demands for a loan waiver was given in Ahmednagar district, which produces bountiful quantities of milk and pomegranate.

Nashik district, where Raju Pathan participated in the strike, is the heart of Maharashtra’s grape vineyards that account for 80% of India’s grape output. “This is a myth that big farmers do not suffer losses. In fact, the loss that a big farmer suffers makes a direct negative impact on the economy. We provide employment to farm labourers, farm equipment and input companies thrive off our investments, and we take greater risks by shuffling between crops,” said Nashik district’s Ratan Borgude, who owns a 15-acre-pomegranate farm. Borgude says he has suffered an average loss of Rs40 per kg of produce since 2014.

Common concerns

What, however, binds these farm protests across diverse states is the commonality of concerns— indebtedness, frequent crop failures because of unpredictable weather, and lack of assured markets and prices for farm produce. Both in Maharashtra and Madhya Pradesh, the demand for loan waivers has come up because farmers have not been getting remunerative prices. “If we were getting good prices on a stable basis, we would not have become indebted. Last year, chana (chickpea) was selling for as high as Rs12,000 per quintal. This year, the rate has come down to Rs5,500. Soybean has come down from more than Rs10,000 to Rs2,800 per quintal. Before government started buying onion for Rs8 a kg, it was selling for Rs3 to Rs5. These prices don’t even cover for the cost of production. How do we repay loans,” says Jaisingh Sisodiya, a farmer in Ratlam district of Madhya Pradesh.

Sisodiya has a debt of Rs2 lakh but the crops he has grown on his 9-acre-farm—soybean, maize, and tulsi (Holy basil)—have fetched him only between Rs2,300-2,800 per quintal, Rs800 per quintal, and Rs6,000-7,000 per quintal, respectively, as against Rs10,800, Rs1,200, and Rs17,000 in 2016. “Productivity is indeed increasing in Madhya Pradesh but not my income,” Sisodiya says. What precipitated this crisis? It was in the making for some years now, despite the central government initiating reforms like a new crop insurance scheme and electronic trading of farm produce. Farmers in 2014 and 2015 experienced back-to-back droughts in most parts of India—something without precedent in the past 30 years. The drought dented production of foodgrain and India’s agricultural output contracted 0.2% in 2014; it grew by a dismal 0.7% the next year. A normal monsoon in 2016 led to a rebound in growth to 4.9% in 2016-17, the highest in five years, as production of foodgrain and perishable crops touched never-seen-before levels. Following a normal monsoon in 2016, foodgrain production rose to a record 273 million tonnes (mt) in 2016-17, a year on year rise of 8.7%, while production of perishable horticulture crops touched a record 295 mt during the year.

Crash at the farm gate

But a collapse in farm gate prices caused farm incomes to plummet, despite the Narendra Modi government setting an ambitious target of doubling farm incomes by 2022—the 75th year of India’s independence. The ban on high-value currency notes hastened the price collapse as most of the trade in India’s primary sector is conducted in cash. In the months following demonetisation, wholesale vegetable prices fell 24% in November (year on year) followed by a steeper 33% fall in December, and 32% in January. Four months later, in May, wholesale cereal prices contracted by 2.3% while vegetable prices fell by 18.5%. Price of pulses, a staple in the Indian diet, contracted by 19.7%—after farmers increased acreage and drove production to a record 22.4 mt in 2016-17, a staggering 37% year-on-year rise.

The collapse of farm gate prices led to unrest among farmers in several states. It began when farmers in a small village in Maharashtra’s Ahmednagar district decided to go on strike from 1 June and pledged not to supply any produce to wholesale markets. Their demands were a total waiver of farm loans and better crop prices—in line with the recommendations of a panel that had suggested crop support prices (at which government agencies procure foodgrain from farmers) be fixed at 50% over production cost. This was also a pre-poll promise by the BJP to farmers before it stormed to power in the 2014 general election.

‘Pressure cooker with steam building’

Soon, protests spread from Ahmednagar to adjoining districts in Maharashtra, with farmers resorting to dumping of produce and spilling milk on highways, leading to a sudden spike in retail perishable prices in cities like Mumbai and Nashik.

As the state government agreed to a Rs30,000-crore loan waiver (and later raised it to Rs34,000 crore), the protests spilled over to neighbouring Madhya Pradesh, where five protesting farmers were shot dead by the state police on 6 June.

While the immediate trigger for these protests was the promise made by the Prime Minister during the Uttar Pradesh state elections that farm loans will be waived if the BJP is elected, the crisis was long in the making.

“It was like a pressure cooker with steam building up inside,” said Dharmakirti Joshi, chief economist at rating company Crisil Ltd, tracing the angst among farmers to two primary reasons. One, the government’s own data from the Commission for Agricultural Costs and Prices (CACP) showed output prices were rising slower than input costs, which affected farmers’ earnings.

Two, low global food prices led to lower export earnings. “So, it is somewhat strange that India did not see large-scale protests or disruptions during a drought year but in a year production is at a record high,” Joshi said, adding, “demonetisation was like the last straw on the camel’s back.”

“In the short term, the government should raise support prices—instead of quick fixes like loan waivers—while medium-term solutions lie in fixing structural problems like insurance, irrigation and access to markets,” Joshi said.

Dwindling incomes

Overall numbers show the paltry returns farmers are earning. Data from CACP show farmers earned just a 6.7% return over costs (going by minimum support prices) for paddy, a major staple grown during the rain-fed Kharif (summer) crop season. For pulses like moong (green gram), support prices in 2016-17 were just 0.7% over costs. For arhar (pigeon pea), the so-called minimum support price (MSP) was fixed at Rs5,050 per quintal, compared with costs pegged at Rs4,314 per quintal, or a return of 17%; but here, too, farmers sold at a loss in wholesale markets (at between Rs3,500 and Rs4,000 per quintal) as government agencies didn’t buy enough. While the increase in support prices did not factor in rising costs, a more severe problem was the absence of any price support for perishable horticulture commodities. For instance, 2016-17 marked the fifth year when production of commercial horticulture crops outstripped that of foodgrain. The year was also replete with images of farmers dumping their harvest of tomatoes, potatoes and onions by the roadside.

The fire sale was at display in Haryana, another breadbasket state in the north, a few hours drive from the capital city of Delhi. When MintAsia travelled to Kurukshetra district on 11 June, farmers were clueless about how to dispose of their large potato stock piles with wholesale rates plummeting to less than a rupee per kilo (it costs thrice as much to grow a kilo). “Our plight is only noticed when we come down to the streets and create a nuisance,” said Gurnam Singh, a prominent farmer leader from the state. “For a farmers’ family, expenses on education and health have gone up several times in the past decade, while losses from farming are piling up. A debt waiver is like some oxygen which might just help us to stay afloat.”

7.1. In Maharashtra, demand grows for a minimum support price for all farm produce

Livemint, 18 Jun. 2017, Abhiram Ghadyalpatil

In a year when Maharashtra’s agriculture sector recorded a growth of 12.5%, a look at why farmers in regions as distantly located as Nashik and Wardha are up in arms

Ahmedabad/Nashik/Warda (Maharashtra): Rajendra Borgude, 42, is a prosperous farmer half of whose 50 acre-irrigated farmland goes under grape cultivation. He drives a Nissan Terrano and was

able to get a crop loan of Rs12 lakh from Nashik District Central Co-operative Bank (NDCCB) in 2016. In the first week of June, Borgude led the angry farmers in Naitale in blocking roads, throwing milk and farm produce on streets, and bringing agriculture markets in the area to a halt—part farmers’ strike in Maharashtra from 1-12 June.

The reason for his anger: no guarantee of an assured price for his grapes and tomatoes. “I had to sell grapes for Rs10 a kilogram to local traders. Last year the cost was Rs40 per kg,” he says. Maharashtra government has declared a farm loan waiver but has yet to define the criteria for eligibility. “Loan waiver is welcome though I am not sure I will get the benefit. But the real solution is a legally guaranteed minimum support price for all farm produce. Unless I am guaranteed a price of at least Rs40 per kg for grapes, farming is a gamble,” says Borgude.

Fruits and vegetables are not among some 28 farm commodities which get a government-fixed minimum support price (MSP).

Some 535km away Gajanan Charde, a dryland farmer in Vidarbha’s Wardha district, is in distress even though his produce is among those crops that carry an MSP. Charde is bitter with Prime Minister Narendra Modi who, speaking in Vidarbha as a Prime Ministerial aspirant in March 2014, promised a higher MSP by factoring in 50% cost of production. In 2016-17, he gave an MSP of only Rs5,050 per quintal (or 100kg) for tur.

“Last year, the traders were offering Rs9,000 per quintal because there was a shortage of tur. I thought Modi would give at least Rs6,000 since he wanted more tur grown,” Charde says. He carries a debt of over Rs1 lakh from a nationalized bank. “Had I got a higher MSP for tur, I would not need a loan waiver,” he adds.

In the last three years, the MSP for tur or arhar has gone up from Rs4,350 to Rs4,625 to Rs5,050 per quintal. In the same three years, the tur yield in Maharashtra, India’s largest tur producing state, has gone from 510,000 tonnes to 444,000 tonnes to a record high 2.35 million tonnes in 2016-17. Charde was one of those farmers who responded to Modi’s appeals and shifted from cotton to tur expecting a higher MSP. But he sold his 25 quintals for only Rs126,250 at the MSP.

According to the National Crime Records Bureau (NCRB), 60,750 farmers committed suicides in Maharashtra from 1995 to 2013.

Though bitter, Charde considers himself lucky—the bulk of tur in Maharashtra was bought by traders for Rs3,800-4,100 per quintal.

In the year when Maharashtra’s agriculture sector recorded a growth of 12.5%, why are the farmers in regions as distantly located as Nashik and Wardha up in arms? “In 2016, when there was no drought, it is the double whammy of market, in the form of lack of good MSP and private market prices, and the government—in the form of inept handling—that have caused this widespread anger among rich and poor farmers alike,” a farm sector expert and former Maharashtra bureaucrat says, requesting anonymity.

“There are structural and systemic problems which are pre-Modi. But while Modi has not been able to solve most of those structural problems, he has heaped some of his own on the farmers like demonetisation, failure to fulfil the 50% of cost of production promise, and concrete steps to increase farmers’ income,” farm activist Vijay Jawandhiya says.

To be sure, the farm distress has been a steady phenomenon in Maharashtra since 1995. According to the National Crime Records Bureau (NCRB), 60,750 farmers committed suicides in Maharashtra from 1995 to 2013.

Between 2014 and 2016, more than 10,300 farmers have committed suicide in the state. Till May end this year, the state has seen around 900 farmer suicides.

The root causes as farm experts have pointed out are crop failures due to inconsistent climate, unstable and unpredictable market prices, and archaic regulations that market middlemen exploit. Farmers say the systemic problems have been aggravated by “market disruptors like demonetisation”, indebtedness, and government’s targeting of consumer inflation at the cost of good remunerative prices.

Pandurang Bodke, a farmer in Sinnar village, Nashik district, points out that farmers are also consumers. “Last year, soyabean sold for Rs4,100 per quintal and the price of edible oil was Rs75 per litre. This year, price of soyabean has dropped to Rs2,700 but oil still retails for Rs80 per litre. How does a farmer survive?” he asks.

In Puntamba, Rajendra Jagdale, runs a small tea and snacks stall. “I just about manage to survive because of daily income from this stall. Surviving solely on farming is impossible. I sold onion for Rs5 per kg as compared to Rs20 last year. For an investment of Rs2 lakh, the income was only Rs85,000,” Jagdale says. He prefers legally guaranteed MSPs for all crops over loan waiver. “Loan waiver will only make us eligible for fresh credit. What will happen next year if prices are still volatile? Government should declare MSP well in advance.”

Harish Petkar, dairy farmer in Puntamba, decided four years back to invest in pomegranate when maintaining 25 Holstein-Friesian crossbred cows became unviable. “Those 25 cows would together give around 150 litres of milk each day and the milk collection centre used to send one tanker exclusively to my farm. But the price of cow milk was only Rs17 per litre then. Maintenance cost is Rs250-300 per day per cow. I cut down on the herd and now have only four cows left,” Petkar says.

He took a loan of Rs20 lakh from Axis Bank and invested the money in developing a pomegranate farm on his 18.5 acres. “It takes four to five years for the trees to bear fruit. There is an investment of Rs1.25 lakh per acre of pomegranate. If we are getting a price of Rs50 per kg, the income could go up to Rs3.5 lakh per acre of which Rs2 lakh would be net profit. But the price today is only Rs35 per kg and even pomegranate farming has turned unviable,” Petkar says. In Niphad of Nashik district, 24-year-old Kundan Sangle agitatedly shows his onion sale receipt. It is a sad document. It says he sold 23 quintal of onion on 13 June for Rs565 per quintal plus Rs100 as bonus from Maharashtra government.

“The expense per acre is Rs40,000. I got only Rs15,295,” Sangle says. Tell this price of Rs6.65 per kg to Kailash Pachore of Sinnar who on 11 June had sold his onions for a miserable Rs3 per kg. “I would say Sangle was still lucky,” Pachore says.

7.2. When big retail meets small farmers

Livemint, 13 Jul. 2017

From strengthening farm infrastructure to streamlining the supply chain, large retailers have the potential to galvanize Indian agriculture

The knock-on effects of the Indian grocery store going big and coming online stretch far beyond consumer benefits. From strengthening infrastructure in the farm sector to streamlining the food supply chain, thereby increasing productivity, farmers stand to benefit as well. The Union government clearing US e-commerce giant Amazon’s $500 million investment in the food retail sector earlier this week should be seen in this context.

Amazon is not the only one. The department of industrial policy and promotion is also expected to soon greenlight similar investment proposals, totalling $195 million, from Bigbasket and Grofers, the two established market leaders in India’s online grocery space that already sell fresh fruits and vegetables, or FFV (Amazon only does packaged items). In fact, the proposals had already been approved but recent administrative changes stemming from the dissolution of the Foreign Investment Promotion Board mean that these have to go through the clearance process afresh.

Amazon, Bigbasket and Grofers were the three major candidates that expressed interest in food retail after the government opened up the sector last year—allowing 100% foreign direct investment both in brick-and-mortar stores and online establishments on the condition that the goods were procured within the country. In short, India’s growing food retail sector is about to get a whole lot more competitive, and as this paper has argued earlier, Indian farmers are likely to be its biggest beneficiaries.

The most important aspect in this regard will be the development of modern supply chains in the agricultural sector, which is currently fragmented and hinges on middlemen. What this means is that there is a huge gap between wholesale and retail prices, and farmers don’t profit much even when their produce is sold at a high price. However, big retailers can reach out directly to the small farmers through collectives and bring them into the system. For example, with more than 20 collection centres across the country, Bigbasket procures about 60% of its FFVs directly from farmers and the company reportedly expects that number to go up to 80% as it adds more collection centres. Others big retailers like METRO Cash & Carry, Walmart, Mother Dairy, Reliance Fresh, Heritage and PepsiCo also have similar arrangements.

The absence of critical infrastructure facilities, such as cold storage, is another problem—resulting, for example, in the wastage of 30-40% of the country’s total produce every year. In 2016, the Central Institute of Post-Harvest Engineering & Technology in Ludhiana pegged the annual value of harvest and post-harvest losses of major agricultural produce at a whopping Rs92,651 crore (calculated using production data of 2012-13 at 2014 wholesale prices). In a country where thousands struggle to have two square meals a day and malnourishment threatens to stunt social development, such wastage is a deeply problematic.

Investments in better storage facilities and an overall tightening of the supply chain, including direct procurement from farmers, can go a long way in preventing such wastage, bringing down food inflation and also preparing the Indian farm sector for more exports. And while some these processes have been in the works for decades—think of Mahagrapes, the cooperative firm which exports grapes to Europe and the Middle East, or Operation Flood which ushered in the White Revolution, or even PepsiCo’s Rs180 crore citrus fruit processing facility in Nanded—progress has been slow and patchy. The entry of large retailers like Amazon, which not only have deep pockets but also the technological expertise, should help breathe new life into the sector.

The government is also working in conjunction with the private sector here. For example, in May, the Union cabinet cleared a Rs6,000 crore scheme for agro-marine processing and development of agroprocessing clusters called SAMPADA. Weeks earlier, the government had announced plans to set up 100 integrated cold chain projects for perishable items. According to Union food processing minister Harsimrat Kaur Badal, the idea is to build a “national food grid”—except that it will have limited success without reforms in the agricultural produce market committee system.

India is one of the world’s largest producers of fruits and vegetables, yet only about 4% of its FFVs are processed. In comparison, China processes 23% of its produce, Indonesia 50% and Brazil 70%. Clearly, India has a long way to go, and more so since domestic consumer preferences are changing. As incomes and standards of living improve, Indians are moving up the food chain and demanding high-value FFVs. Their tastes are also diversifying, resulting in greater demand for poultry items and seafood, for example. Though this change is yet to reflect in government policy, which still focuses on foodgrain, it actually works well also for farmers, who earn more from FFVs. In fact, according to Bigbasket chief Hari Menon, direct sourcing has increased margins by 6-7% and farmer incomes by 10-15%,

That said, as big retailers make their way into the Indian FFV market, expect some blowback from small vendors who, experience shows, will be hit to some extent. But the political considerations arising from that must not be allowed to play spoiler as they have before. The benefits that will accrue across the board—from consumers to farmers to the economy in general if the agricultural sector receives a shot in the arm—are worth fighting for.

How do you think big retailers can improve India’s farm supply chain? Tell us at theirview@livemint.com

7.3. Why a Dalit businessman planted mango trees in his Alibaug farmhouse

Livemint, 14 Jul.2017, Ashwaq Masoodi

Humiliated for plucking a mango, Sunil Zode dreamt of becoming a ‘big man’ despite his Dalit roots. A businessman now, he owns a mango orchard

New Delhi: Owning land means different things to different people. For some, it is an investment. For others, a source of livelihood. Then there are those for whom land ownership is a matter of prestige. For Sunil R. Zode, 57, owning land means having a sense of belonging, a profound feeling of attachment to the soil that no amount of wealth could ever bring. It is also his way of healing the scar of humiliation from his childhood that he has harboured for 47 years. Zode was in Class IV when he plucked a mango from a tree in a small farm which his father, a daily labourer, had bought. As a child, Zode couldn’t comprehend why the trees on their land were owned by upper castes, if the land was tilled and maintained by his father. When he plucked the mango, the landlord’s farm caretaker beat him up, stripped him, and took away all his clothes. At 10, he was old enough to feel the insult, and also to intentionally keep alive the memory of this humiliation for the rest of his life.

Today, Zode is chairman of Conaitre Group, an enterprise comprising eight companies in sectors such as LPG distribution and pesticides, with an annual turnover of around Rs30 crore. While traditionally Dalits were not allowed to own land, Zode now owns six acres and a farmhouse in the posh Alibaug locality in Raigad district of Maharashtra. Purchased in 2004, the current value of this land is over Rs5 crore. Zode made sure he converted most of it into a mango orchard. “Mango orchards for long were used as a great tool of subjugation by the upper castes. So many mangoes would fall on the ground and go waste, but a Dalit was not allowed to touch it. Dalits would assemble around the trees, waiting for the upper castes to announce that they could pick the fallen fruits. Mango orchards were a status symbol in those days,” says Chandra Bhan Prasad, a Dalit entrepreneur and writer.

In an historical speech in Agra on 23 March 1956, B.R. Ambedkar pointed out the importance and need of land ownership for Dalits. “I am much worried for the landless labourers living in the villages...The main reason for their ruin is that they do not own land. That is why they are victims of atrocities and insults. I will struggle for them and if the government creates hurdles, I will lead them and fight legal battle for them. But I will make every possible effort to get land for them,” he said. Efforts have been made by governments in different states such as Madhya Pradesh and Maharashtra to provide “land to the tillers” but even today a Dalit landlord is an exception. In several cases when Dalits become moneyed, they make sure they buy land. In the case of Zode for instance, it isn’t as if other investment options weren’t available. But his dream was to own a piece of land. “Having some land that I have complete ownership on, has given me some sort of a satisfaction,” says Zode.

Even Ashok Khade, a businessman and one of the first Dalit millionaires, bought 150 acres of land in his native village of Sangli. And the piece of land he bought was the one on which his mother had worked for the upper castes when Khade was growing up.

In a predominantly agrarian economy, land distribution is important in determining power relations. And historically, the plight of Dalits has been mostly attributed to the absence of land reforms. Casteism, which has resulted in discrimination against so called lower castes in different ways, (like what they eat or wear or what occupations they take) has also led to discrimination in land ownership. At the all-India level, according to the 70th round of Land and Livestock Holdings Survey of the National Sample Survey Office (NSSO), 58.4% of rural Dalit households are landless. Landlessness is particularly severe among Dalits in Haryana, Punjab and Bihar, where more than 85% of Dalit households do not own any other than homestead land.

“To own land for me signifies that you are the son of the soil. That you belong to the land and it belongs to you... that you have something that nobody can take away from you. Coming from a farmers family, land means power to me,” says Zode.

There is a certain sense of calm and satisfaction that Zode emanates, like a man who knows the worst is over. Growing up in a poverty-ridden joint family and belonging to a low caste meant a life full of hardships. Every dream had a price. If Zode wanted to continue studying, he knew he had to earn to be able to pay his fees.

“Because of financial constraints, my priority was how to earn more, not how to get more marks in school. Because my elder brother took care of me since I was two... which is when our parents passed away... I realized early on that I have to do something to share the responsibility,” says Zode. Born in Sahur, in Vardha district, Zode studied in the village till Class VII and then did his college and masters in labour management (MLM) from Mumbai.

Realizing that business was a relatively easier and quicker way of making money, Zode started a business of LPG dealership in 1983 with the help of a government subsidy. Until then, he had worked as an attendant in a poultry farm in Raigarh district, while he also went to college. His story is similar to many other rags-to-riches stories that began with a childhood where sleeping on an empty stomach, owning only a change of clothes, and having to suffer humiliation due to poverty, was usual. From where Zode started, dreaming big was not a natural choice. But, as he says, he kept having those conversations with himself, reminding himself again and again that he didn’t have to live the life of his parents with no steady income. All these hardships sowed the seeds of becoming a “big man”. But a big man to Zode meant someone who could generate jobs, make life easier for those who have suffered like he did, and of course someone who could earn money enough to have luxuries like a good house and cars. Zode now has a house in Bandra and several cars, including an Audi and a Mercedes.

While working in the poultry farm in Saral village, close to Alibaug, Zode would keep looking at the land around him. It was then that he decided he wanted to do something that gave him enough money to buy land in a posh locality.

Even today, every time he passes Saral on the way to his farmhouse in his Audi, Zode looks at the poultry farm which still exists. “I started my work here, and here is where I have decided to come back. It reminds me and my children of what I started from and also keeps reminding me of having my feet on the ground,” says Zode.

This is the last in a three-part series.

8.1. Amazon to buy Whole Foods in $13.7 billion bet on bricks and mortar retail

On Monday, PTI first reported that the Department of Industrial Policy and promotion (DIPP) had approved Amazon’s proposal to invest about $500 million to build out a food retail business. An Amazon India spokeswoman confirmed that the company has received government approval to build out a supply chain for food retail.

“Yes, we have received the government approval for food retail... We are excited by the government’s continued efforts to encourage FDI (foreign direct investment) in India for a stronger food supply chain,” said an Amazon India spokeswoman. Amazon did not comment on whether it would launch a private label in the food business once the approval comes through.

According to one of the executives mentioned above, Amazon can potentially control every aspect of the supply chain of the food business and not be dependent on third-party sellers on its marketplace once the approval comes through.

“Currently, Amazon provides a marketplace for sellers to sell their products. Once this approval comes through, it will allow Amazon to control the supply chain end-to-end and will allow Amazon to invest in every part of the supply chain,” said the executive.

With the licence to retail food through its own subsidiary, Amazon will be in a position to gain a significant edge over arch-rival Flipkart, which is preparing to launch the grocery category over the next few weeks. The fact that Amazon is armed with deeper pockets gives it a significant edge over BigBasket, which currently is looking to raise at least $75 million in fresh funds. Over the past year, BigBasket has even held talks with Amazon India for a potential sale, although those talks have not materialized in a deal yet.

For now, Flipkart has no option but to play catch-up in a category where it has already attempted a failed venture in the past through an app called Nearby that it shut down in February last year. This time, Flipkart is planning to launch its own private label in the grocery segment and has re-hired former company executives Manish Kumar and Nitin Rajput as part of the effort. In February last year, Amazon entered the grocery space by launching deliveries through a separate app called Amazon Now. Since then, Amazon has grown the category rapidly and challenged the status quo of established incumbents such as BigBasket and Grofers, which are struggling to prove that their businesses are sustainable in the long run.

The government currently allows 100% FDI in the food retail business. According to a PTI report on Monday, the government had received investment proposals worth $695 million from three companies—Amazon, BigBasket and Grofers. “Grocery and food are both very tricky categories and hard to crack. Most large supermarket chains have struggled to build out proper supply chains and create sustainable businesses. Having said that, of all e-commerce companies, Amazon is probably the best placed to succeed in this category. They have deep pockets and they’ve already made inroads through Amazon Now and programmes such as Prime,” said Harminder Sahni, founder and managing director at Wazir Advisors.

8.2. A reality check on Patanjali

BusinessLine, 9 Jun. 2017, Aarati Krishnan

Yes, Baba Ramdev’s FMCG business has grown by leaps and bounds. But are its plans well- founded?

The media and analysts will agree that the top bosses of multinationals in India tend to be boring, strait-laced and politically correct. This is probably why Baba Ramdev, yoga guru, brand ambassador and maverick founder of Patanjali Ayurved, has been getting such rave reviews. He cheerfully does headstands while posing for press shoots, rants against MNCs for conspiring against him and ‘looting’ India, and puts forth revenue targets that are four times his last reported sales. The rise of Patanjali has inspired CLSA to write a wistful research note titled “Wish you were listed, Patanjali” heaping praise on the business model. Brand consultants have credited Patanjali with bringing about a “tectonic shift” in FMCG branding and there are stories aplenty about how Ramdev is set to oust the Unilevers and Nestles in India.

While he deserves credit for breaking into the heavily guarded bastions of the FMCG sector, hype about Patanjali Ayurved seems to far overshadow reality.

Growing, but not that big yet

As an unlisted, closely held company, Patanjali Ayurved’s audited financials are not easily accessible to the public. That must be reason why Ramdev’s ambitious targets (₹10,000 crore sales by FY17) aired in various interviews are often confused with the firm’s actual numbers. According to its last official filings for FY15, Patanjali Ayurved had total sales of ₹2,013 crore. A report by Brickworks Ratings estimates provisional sales for FY16 at ₹3,267 crore (for 10 months up to January 2016). Annualising, this would place Patanjali ahead of smaller listed FMCG players such as Jyothy Labs (₹1,644 crore) and Emami (₹2,600 crore), and neck-and-neck with GSK Consumer (₹4,500 crore) and Colgate Palmolive (₹4,100 crore) last fiscal. But it is yet to break into the big league of Hindustan Unilever (₹31,000 crore), Godrej Consumer (₹9,000 crore), Dabur India (₹8,450 crore), Nestle India (₹8,200 crore) and Marico Industries (₹6,100 crore). To be sure, Patanjali’s sales growth rates in the last three years have been scorching, with revenues growing at a 55 per cent annual rate when the FMCG market was inching up at 8-9 per cent. But these growth rates have to be seen in the context of a low base, and the vast product portfolio that Patanjali relies on for its critical mass.

Carpet-bombing strategy

Though Patanjali’s current size would suggest that it has already made big market share gains at the cost of the MNCs, this isn’t true yet. This is because Patanjali’s strategy relies on spreading itself thin across dozens of FMCG categories and carpet-bombing consumers with scores of products, rather than on focussing its energies on one or two large wins. Patanjali’s portfolio spans personal care products, toothpastes, home cleaning products, dishwash and detergents, staples such as atta, salt and cooking oil and tea, juices and dairy products, apart from a range of ayurvedic formulations.

With sales of about ₹5,000 crore splintered across as many as 390 products, Patanjali is yet to grab a large enough share of any category to pose a material threat to the leading player. Even in toothpastes, the only personal care category where its Dant Kanti, a best-seller, is snapping at the heels of an MNC, Patanjali’s market share is just 5 per cent to Colgate’s 55. In the food or dairy categories where Patanjali has made significant inroads, there is little MNC presence. Any aggressive gains by Patanjali in these categories may threaten desi players such as Emami, Dabur India or Amul far more than the MNCs.

Tough to be natural

Over the long term, the ayurvedic plank on which Patanjali’s products are positioned may work better for niche brands than for category leaders. While all-natural ingredients may have consumer appeal in dairy, cooking oils, honey or health drinks, they may prove less efficacious in household cleaning products, detergents or even processed food.

If Patanjali is serious about using fully organic formulations and natural ingredients, it has a tough task on its hands in procuring these ingredients to fuel its furious growth. While there’s already an efficient, low-cost global supply chain in place for chemical ingredients that go into conventional FMCG products, there are no such readymade solutions for ayurvedic versions. In fact, these are the key reasons why Indian FMCG players who enthusiastically adopted the ‘herbal’ plank have tasted limited success in the past, whether it was the desi Himalaya and Zandu Pharmaceuticals, or Hindustan Unilever which had to shelve its Ayush rollout.

Pricing and costs

All this suggests that Patanjali’s current business model of offering ‘all-natural’ products, at steep price discounts of anywhere between 10 and 30 per cent to competing MNC brands, doesn’t quite add up. Until FY15, Patanjali’s business model was very distinct from the MNCs that it loves to hate. The company’s umbrella branding strategy helped it gain loyal consumers among Ramdev’s followers and those with a yen for swadeshi products.

As its products only retailed through 10,000 exclusive chikitsalayas and yoga kendras, it could dispense with market research and take a hit-or-miss approach to product rollouts. From its centralised mega-facility in Haridwar, the firm churned out as much as its customers demanded. But if Patanjali is to succeed in its ambitious plans of giving the MNCs a run for their money, it may have to abandon these quaint practices. A national presence will require substantial investment in manufacturing units in southern, western and eastern India. Word-of-mouth may need to be supplemented by a national advertising campaign.

Acquiring a nationwide distribution presence will require more sophisticated supply chain and inventory management.

It is clear that Ramdev is well aware of these compulsions. In FY16, the company kicked off a television and print advertising campaign, forged alliances with big-box retailers like the Future group and entered the e-commerce channel. But this still leaves us with two big questions. First, how will Patanjali’s profits bear up under all these additional expenses? In FY15, Patanjali Ayurved reported a 23 per cent operating profit margin with a 16 per cent net profit margin. This was fairly comparable with the margins (operating profits at 17-25 per cent) of the listed FMCG firms. But then, listed FMCG players manage these margins after spending 12 to 18 per cent of their sales on advertising and promotion. So it isn’t clear how Patanjali will accommodate similar spends if it is to continue with its low-price strategy.

The even more burning question is where Patanjali will find the capital needed to bankroll its mega investment plans. In fact, with over 90 per cent of its equity held by Acharya Balkrishna, it isn’t even clear how Patanjali has found all the equity for its successes so far. Yes, the MNCs that Ramdev reviles do make huge profits and pay out generous dividends and royalties to their foreign parents. But by virtue of being publicly listed companies in India, multinationals such as Hindustan Unilever or Nestle India have also contributed to the exchequer and turned many ordinary investors into millionaires.

For Patanjali to gain similar credibility, it needs to explore a listing on the public markets too. Not only will that clear the air on the company’s funding sources, it may open up one more swadeshi option for Indian investors in FMCG stocks.

9.1. Uber India’s Amit Jain: We want to take Travis Kalanick’s vision forward

Livemint, 3 jul. 2017, Mihir Dalal, Anirban Sen

Uber India president Amit Jain says the cab-hailing firm will keep investing and growing in India despite CEO Travis Kalanick’s exit

Bengaluru: Cab-hailing giant Uber Technologies Inc. is arguably facing the most tumultuous period in its eight-year existence—over the past few weeks and months, the world’s most valuable start-up has been rocked by the departure of its enigmatic founder and chief executive (CEO) Travis Kalanick following a series of ethical and corporate lapses, including allegations of developing a workplace culture inimical to women.

Moreover, Kalanick’s departure has raised concerns over the future direction of Uber’s business in India, which is widely seen as the world’s last remaining major Internet economy where US-based firms such as Amazon.com Inc., and Uber are attempting to build multi-billion dollar businesses. In an interview, Uber India president Amit Jain dismissed concerns over the future of the firm’s India operations and also spoke about steps Uber is taking to boost employee morale during this difficult phase, new initiatives that it will soon launch in India, the issue of driver incentives and dealing with regulators. Edited excerpts:

What kind of impact has Travis Kalanick’s departure had on Uber India? How have you gone about steering the India business through the events of the past two weeks?

In terms of what has happened in the last few weeks—it’s obviously big news about Travis resigning as Uber CEO.

Personally, I’ve known Travis for close to two years now—he was very involved with the India business, so I got a chance to work very closely with him. Obviously, we’re saddened by his decision to resign—he’s an amazing leader, an amazing visionary. His vision continues to be true even today. What we strive to do in India is double down on that vision and continue to make investments. Today, we have close to 245,000 driver partners on our platform and we want to make sure that this number continues to grow.

Business in India is absolutely rock solid. It continues to grow at an exponential rate. We continue to grow the number of cars that are there on our platform. India continues to be a very strategic market for Uber. The investment in the India business is strong—so, nothing changes from that perspective.

Will Kalanick’s exit impact budgets and resources towards Uber India?

Absolutely not. Couple of reasons for that—as I said earlier, India continues to be a very big market for Uber and the commitment towards India is absolute. We will do whatever it takes to continue to invest and grow the market.

Secondly, for the last four years, we were in a cycle where investment was required because we were growing our business here. Now, as we move from a start-up to a sustainable business, we’ll get to a point where we’ll need far fewer investments and become sustainable. And we’re very early in our journey to get there—so, as we progress to get there, we will do whatever it takes to invest in the market.

So, the budget allocated towards India won’t be affected by his departure?

That is correct.

Are you expecting attrition in Uber India to increase because of the negative publicity and uncertainty about the top leadership?

Our attrition in the last four years in India has been minimal. Our team has continued to grow and expand. We are close to a 1,000-person team in India right now. A year and a half back, we were less than half that number. We continue to grow our team. I do not expect attrition as a result of this.

Any other steps that you plan to take to ensure there’s no attrition because of this?

We plan to launch multiple exciting products even faster. We just launched UberEATS in Gurgaon. We’ve got three other exciting products on the road map. UberMoto is a product that we started investing in earlier this year. We plan to expand that to multiple cities.

How do you plan to fill the void left by Travis’s departure vis-a-vis the India business?

Travis is on our board and he will continue to be involved. He’s a very influential board member, so nothing changes in terms of how India goes forward. I’m still here. We have our local leadership in place, so nothing changes. We have very strong leaders across all our regions who will continue to run the regions like before. Nothing changes in the short term. For the long term, we will still have access to Travis’s vision.

There was an online petition in New York that was started by employees to get Travis back. Have any of your India employees signed that petition?

Travis inspired a lot of people...Travis was here in December last year. He spent a week meeting many of our employees and he travelled to Mumbai, Hyderabad and Delhi. He was also here earlier last year in March—so, he was close to many of the people in India. His vision, his determination was an inspiration to many. So (his exit) was something that many people are saddened about.

An Uber executive, Eric Alexander, obtained medical records of a rape victim in Delhi. Were any of Uber India’s employees involved in getting the records?

Unfortunately, I can’t comment on the issue because it’s sub-judice. I personally don’t know much more because I wasn’t (at Uber) at that time.

How far is Uber India from becoming sustainable?

(Profitability) is definitely not an endless path. We’re a four-year-old company in India. So, it’s a path and we’re on that path and we’re very comfortable with where we are on that path. We cannot give you a specific date or time.

What steps are you taking to become a self-sustaining business?

When you enter any market, there’s always an investment phase. To put it in layman’s terms, during an investment phase, you need supply on the roads because if you don’t have that, you don’t have enough demand. We have to invest to ensure a certain level of supply. One of the areas that help a company like ours is the efficiency of cars. By efficiency, I mean—for the time that a driver partner is online on our platform, what percentage of the time is he or she actually making money? That percentage will continue to push higher and higher over time... As factors continue to scale towards profitability, how do you continue to increase the efficiency of the number of cars on the platform, and then derive price points that are much cheaper than the cost of private car ownership, where your car is potentially used less than 5% of the time? That’s the journey that we will continue to move in to get profitable.

What kind of growth has Uber India seen over the past year?

On the business side, we’ve grown 2.5x since last June. We’ve much more than doubled. We continue to see exponential week-over-week growth. The (2.5x) growth is for both trips and GMV (gross merchandise value). The other milestone that we’re about to hit—we will soon hit our 500 millionth trip in India in the next couple of days. We’ve had 1 billion interactions between our riders and driver partners in less than four years.

Drivers at Uber and Ola have struck work continually since the end of last year. What steps have you taken to assuage driver concerns after you cut incentives?

Driver earnings have two components. One is organic earnings that the rider pays for and the other is incentives, what we provide over and above what the rider pays.

Our aim is that the total driver earnings have to be more attractive than what drivers get from other opportunities. Incentives can come down when organic earnings go up. And organic earnings go up by improving efficiency and utilisation (rates of cabs). We’ve said this before, the strikes that happened, in most cases, were driven by a handful of individuals. And many of those individuals were not even on our platform. So the strikes are not representative of the vast majority of drivers.

Any plans to expand to more cities?

We’re there in 29 cities in India and then in Dhaka and Colombo. We’ll expand rapidly in these cities but you will not see us enter many more cities over the next 6-12 months. We may go into a few but our main focus is to figure out how to become a bigger and bigger part of the rides taken. We’re at 1% and in some cities maybe 2% of all rides taken in a city. That’s the opportunity ahead of us.

10.1. Nothing in India is business as usual right now

BusinessLine, 23 Jun. 2017, K Giriprakash

Last year, Debarati Sen joined the Indian operations of American multinational 3M as its Managing Director. In an interview with BusinessLine, she shares the company’s growth path, how the firm’s vendors and customers have navigated through demonetisation and what the future holds for them as the GST kicks in.

Edited excerpts:

3M has a large vendor base and is closely involved with MSME and SMSE customers. What has been the impact of demonetisation on your company as well as your customers?

In spite of demonetisation, there has been an overall improvement for us and our channel partners, with 20-plus per cent improvement in our bottom-line and 10-plus per cent improvement in our top-line; we expect that to continue in future. Today, whichever corporation you talk to, there is more activism — people are seeing things getting better; no one sees it as perfect or even good. But the economy is definitely getting better. There is confidence in the current policy environment. This is a good time to be in India. We tend to be more successful when there is core domestic economy coming and thriving. This indirectly also impacts our industrial business. Our consumer business, which is the most visible part of our business, has grown very well and we expect it to continue on a solid growth path.

What did 3M do to overcome these challenges?

We are building an organization that learns, quickly adapts, quickly shifts tracks and has the mentality to learn small things and scale up. We are really trying to build this atmosphere and culture where people learn very quickly and don’t get phased out when more, big destructions come their way. If there is anything I personally get involved in, it is the organizational response and how we understand, anticipate and quickly react. That is what is going to differentiate the winners from losers in India. There are lots that are going to come our way; we know it. We cannot sit and say it is business as usual. Nothing in India is business as usual right now. It is exciting. It is good stuff, right!

So how does a multinational like yours remain agile? How do you manage all those ever- changing situations?

I think the good thing with our company is that we have been in 200 countries for over 115 years — that brings domain adaptability. It is not domain knowledge, it is domain adaptability. I will just take an example: I have worked with 26 countries, lived in two countries and worked in three continents. So the expectation is that we should be adaptable and agile. And what 3M does around the world is, we build expertise in all areas. My job is to make complex things simple. Similarly, within the company, I do a lot of teaching. I even use the phrase ‘you need to be the GM of your business’. The health of the enterprise is very important for us. India is not very attentive to balance sheets. We have seen that for the lack of having access, large companies like us been brought down to the heels. A lack of attention to the financial hub, over-leverage position, does not help.

How has the stock performed vis-a-vis the Sensex, which has seen a steady climb?

During the last 12 months, our stocks hit the highest ever. We crossed 15,000 last July and went back and then back to 15,600 and whatever it is now. During the last five years, I think Sensex grew 11 per cent and we (3M) grew 26 per cent. We are not always driven by actual larger curves. People are really looking at fundamentals now. I think diversity is our biggest strength. So we are never going all the way up or all the way down because we’ve got so many different superset goals laid on each other. We tend to be the most steady stock.

How do you plan to navigate through the implementation of the GST?

We are training, coaching and teaching. But we are not our customers’ IT service providers or CA; so they have to do a lot of things on their own. That aside, I am in the Karnataka State Council of CII (Confederation of Indian Industry). One of the key reasons we are on it is because I think it is our duty to bring along growth in the economy. We talked about it at the State Council meeting that we need to teach faster. I have multiple accounting and tax experts, which some of our customers might not have. So it has to be an industry work. We are handholding our vendors, SMEs and channel partners. This is a period of turmoil. It will be the survival of the fittest and some will probably not make it.

10.2. PMGSY registers significant success in the first quarter of 2016-17

Press Information Bureau, Jul. 06, 2017

Pradhan Mantri Gram Sadak Yojana (PMGSY) is being implemented across the country, particularly, in States having historical deficit of rural roads (Assam, West Bengal, Odisha, Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Rajasthan, Himachal Pradesh, J&K and Utttrakhand ) as never before. The pace of construction of PMGSY roads reached a 7 year high of 130 kms per day in 2016- 17 as against an average of 73 kms during the period 2011 to 2014. In the present financial year 2017-18, the target is to construct 57,000 kms of PMGSY roads, at an average per day rate of 156 kms and to provide connectivity to 16,600 eligible habitations.

In the first quarter of the present financial year 2017-18 (April-June, 2017), a total of 10,556 kms of PMGSY roads have been constructed, clocking an average of 117.28 kms per day. This compares very favorably to the first quarter of 2016-17 (April-June, 2016), when a total length of 8,756 kms was constructed at an average of 97.29 kms per day. The progress in terms of length constructed in the present financial year is 18.51% of the total annual target. The present rate of construction would further accelerate from October, 2017 to March, 2018. Hence, there is every reason to believe that the annual targets will be met with a strong probability of achievement exceeding the targets. Against an annual target of providing connectivity to 16,600 eligible habitations, in the first quarter of the financial year 2017-18, 2,543 habitations have been provided connectivity, which is 15.31% of the annual target.

PMGSY aims to connect 1,78,184 eligible habitations across the country out of which projects relating to 1,61,576 habitations have already been sanctioned (90.67% of the eligible habitations) and 1,29,004 habitations have been connected till June, 2017 (72.39% of eligible habitations and 79.84% of sanctioned habitations), by constructing a total of 5,12,031 kms of roads. PMGSY has also focused on use of non-conventional construction materials (waste plastic, cold mix, fly ash, jute and coir geo-textiles, iron and copper slag, cell filled concrete, paneled cement concrete etc.) and “Green Technologies” in PMGSY roads. The target for use of such materials and technologies during 2017-18 is 10,082 kms. Against this target, in the first quarter of the financial year till June, 2018, 1,235.22 kms have been constructed. The States which are doing particularly well in this field are Rajasthan (381 kms), Punjab (181 kms), Odisha (131.38 kms), Madhya Pradesh (116.07 kms) and Tamil Nadu (102 kms).

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

– INDUSTRY, MANUFACTURE

11.1. Maruti, Honda drive industry growth in FY18

Business Standard, Jun. 19, 2017

New Delhi: Domestic sales of passenger vehicles (cars, vans and utility vehicles) and two-wheelers witnessed a healthy growth rate of about 12 per cent and 10 per cent, respectively, in the first two months of the financial year 2017-18. However, this is not the real growth of the industry, as it was dominated by just two companies — Maruti Suzuki in the case of passenger vehicles (PV) and Honda in two-wheelers. Both the companies are controlled by Japanese auto majors — Suzuki and Honda, respectively.

If one looks at the performance of the PV industry minus Maruti Suzuki, the growth rate comes down to sub-five per cent from 12 per cent. Maruti grew at 19 per cent in April-May 2017, pushing the industry’s growth. Maruti’s growth helped it reach a market share of almost 52 per cent during this period, for the first time in over a decade. Three products of the company — Baleno, Brezza and Dzire — enjoy a waiting period of at least two months.

The second-biggest player, Hyundai, saw a volume growth of less than four per cent. M&M, which stood third, witnessed a volume decline of over six per cent. A few other players, all with a market share of five per cent or lower, were able to show double-digit growth but on a small base. These included Honda Cars, Tata Motors, Toyota, Ford, and Nissan.

The story is identical in the two-wheeler segment. After a weak phase post demonetisation, the industry clocked a 9.6 per cent growth rate in domestic sales in the April-May period. But, if we were to look at the industry’s growth minus Honda Motorcycle and Scooter India (HMSI), this rate comes down to below three per cent. HMSI, riding on the rising popularity of scooters, witnessed its domestic sales grow by 28 per cent in April-May. Market leader Hero MotoCorp’s domestic sales registered less than three per cent growth, while TVS Motor, the third-biggest player, grew at 10 per cent. HMSI, the second-biggest player, sold over a million units in the first two months. “This growth is coming on back of demand for both scooters and motorcycle models,” said Y S Guleria, senior vice president (sales and marketing), HMSI.

HMSI’s scooter sales grew 32 per cent, against the industry’s 24 per cent, while motorcycle sales surged 21 per cent as compared to a four per cent growth rate in the industry. Accordingly, HMSI expanded its market share to 31.5 per cent from 27 per cent during April-May last year. Guleria said the company had set an “aggressive” target, to grow domestic sales by 20 per cent in FY18. HMSI’s growth made India the largest contributor to Honda’s global two-wheeler business by volume last year. India sales contributed 28 per cent to Honda’s volume.

Abdul Majeed, partner at PwC India and a sector expert, said both Maruti Suzuki and HMSI had managed to sustain a high double-digit growth by creating successful mass products and backing them with an extensive sales and service network.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

11.2. China’s MG Motors to take over Halol plant as GM exits

Livemint, 5 Jul. 2017, Maulik Pathak

MG Motors looks to launch its iconic Morris Garages brand of vehicles by 2019 from the Halol plant in Gujarat that General Motors gave up before its India exit

Ahmedabad: MG Motors India Ltd, the newly formed subsidiary of China’s largest auto maker SAIC Motor Corp. Ltd, is aiming to enter the Indian markets by taking over General Motors India’s manufacturing facility in Halol, Gujarat, from where it looks to launch its iconic MG (Morris Garages) brand vehicles by 2019.

For this, the company is looking to chalk out an India-centric strategy that will allow it to gain a foothold in a market where the US-headquartered General Motors Corp., SAIC Motor’s joint venture partner in China, could not.

“We are going to develop products for Asian markets with our key focus on India. We have seen big multinational brands fail when they try to run their Indian operations from their overseas headquarters. With this in mind, our strategy will be very much India specific and all key decisions will be taken here,” according to P. Balendran, executive director at MG Motor India.

On 28 June, SAIC Motor had announced its plan to enter the Indian automobile market through a fully- owned car manufacturing facility in the country and said that the company is in the process of finalizing its manufacturing facility and is firming up its product strategy for the Indian market, details of which will be announced at a later stage.

MG Motors is finalizing its investment plans for Gujarat and an initial memorandum of understanding (MoU) for co-operation is likely to be signed soon with the state government. “The deal between MG and GM for the Halol factory is in the final stages. The Chinese auto-maker is also weighing the option to make fresh investments to the tune of Rs3,000 crore at Halol. MG Motors wants to make Gujarat its manufacturing hub,” according to two government officials in the know of the development. They were speaking on the condition of anonymity.

As part of the ongoing negotiations with the state government, the Halol factory land, which has been leased out to GM India, is likely to be transferred to MG Motors by Gujarat Industrial Development Corp. (GIDC), to which it belongs, for a transfer fee.

Andhra Pradesh is also seen in close competition with Gujarat in wooing MG Motors to set up a green field facility.

“We are in talks with various state governments but our preferred destination is Gujarat,” according to Balendran. In January this year, the Competition Commission of India (CCI) approved the acquisition of certain assets of GM’s Halol plant by SAIC Motor’s Indian subsidiary.

Chinese car maker SAIC to commence India operations in 2019

A GM official said that talks with MG India for the Halol factory sale are at an advanced stage and the deal is likely to be closed soon.

“GM India continues to progress toward the sale of the Halol plant assets. GM production at the Halol plant ceased on 28 April, as we implemented our decision to consolidate manufacturing operations at our export hub in Talegaon,” a company spokesperson said in an email response. The introduction of the iconic British Sports Car Brand ‘MG’ in India is an important part of SAIC Motor’s global strategy, the Chinese car-maker said in is 28 June statement. The MG brand, which originated as an iconic British racing sports brand in the year 1924, has evolved into a modern-day innovative brand through the last 93 years, it added.

Most of the senior officials in MG Motors India, including managing director Rajeev Chhaba, have worked with General Motors in the past. While Balendran used to head corporate communications and corporate affairs at GM India, Chhaba has served as the MD of GM India before Karl Slym. Tavera recall happened under him, following which he was sacked. The present in-charge for corporate communications at MG Motors India, Saahil Anant, was part of Bala’s team at GM as well. “Of the 14 top officials hired by MG Motors presently, at least ten have held senior positions at GM India in the past,” said a second MG Motors official, who did not wish to be named.

Balendran, who worked at a senior position with GM for over 18 years, is cited to be the man who has played a key role in setting up and running the Halol factory. The company has also hired Anil Yadav as product planning head for MG Motors India. Yadav has played a key role in the development of various products for Maruti Suzuki and Hyundai Motor India Ltd.

When General Motors entered Halol way back in 1996 and rolled out its first Opel Astra car from here, it was the first car company to set up a factory in Gujarat and it targeted the premium segment. But things have changed in the last one decade after Tata Motors decided to shift its Nano factory from Singur and companies, including Ford India Pvt., Suzuki Motor Corp. (SMC) and Honda Motor Co., have lined up huge investments in the state.

As a key to its operations strategy for India markets, MG Motors is also looking at setting up a dedicated suppliers’ park that will house as many as a dozen vendors of SAIC Motor, China. Balendran confirmed that the company was working on a plan to set up a vendors’ park close to its manufacturing facility in India that will create local employment. Another key area for MG Motors is launching electric cars and hybrid cars in India. “Apart from SUVs and sedans, our product portfolio includes electric vehicles, hybrid, fuel cell among others. All this could be considered for Indian markets where we aim to roll out environment friendly vehicles,” said Balendran.

GM India’s bread-winner had been the Chevrolet Tavera, a multi-utility vehicle. The company, however, failed to crack the Indian market with less than 1% market share where its sales fell by more than a fifth last year to just 28,949 vehicles. Unable to turn around its fortunes, GM India last month announced that it would stop selling its vehicles in the country by 2017-end. “The best pathway for the company to improved financial performance in India is to focus on export production out of Talegaon and withdraw Chevrolet from the domestic market,” the company said in its email response.

The company’s plans to introduce SUVs for Indian markets, including the Captiva and Trailblazer, did not get much success.

GM, which is currently very bullish on electric vehicles in the US, made attempts to introduce an electric version of its Spark model in the past called e-Spark.

At the Frankfurt Motor Show in 2009, GM India and the erstwhile Reva Electric Co. declared a technical collaboration to develop affordable electric vehicles for the Indian market. The company shelved its plans after Mahindra and Mahindra (M&M) bought a controlling stake in Reva Electric. NITI Aayog unveiled a policy blueprint this month aimed at electrifying all vehicles in the country by 2032, which could form the basis for green cars in the country and MG Motors seems to be eyeing this opportunity along with other car companies in India.

Mint reported on 8 June that the company plans to enter India’s highly competitive sports utility vehicle (SUV) market in 2019 with two models.

SAIC Motor’s India subsidiary MG Motor to roll out two SUVs in 2019

“We have not decided our product portfolio yet but all I can say is that SUV is the fastest growing segment and we may look into it for the Indian markets,” said Balendran.

Amrit Raj contributed to the story.

12.1. Builders bet on affordable housing amid realty slowdown

Livemint, 18 Jun. 2017, Madhurima Nandy

Both large and mid-sized realty firms are betting big on building and selling homes in the Rs20-60 lakh segment, driven by demand and encouraging government tax incentives

Bengaluru: A slew of developers have lined up robust expansion and investment plans for affordable housing this year, despite the prolonged slowdown in real estate.

Not only large realty firms, but also mid-sized ones are betting big on building and selling homes in the Rs20-60 lakh segment, propelled by demand from homebuyers and encouraging government tax incentives. Shapoorji Pallonji Real Estate plans to invest Rs600 crore on buying land parcels this year to build a pipeline of projects. These are in National Capital Region (NCR), Hyderabad, Bengaluru and possibly a fourth, in Maharashtra. It is also planning to launch a project in Hinjewadi, Pune by the end of the year.

“We have around 35-40 million sq. ft of housing projects under various stages of development. The focus is on mid-income housing in the Rs30-60 lakh category,” said Venkatesh Gopalkrishnan, CEO, Shapoorji Pallonji Real Estate.

Tata Housing Development Co. Ltd is also in discussions with multiple landowners across Kolkata, Pune, Mumbai, Chennai and Bengaluru and hopes to launch at least three large projects this year, a company spokesperson said.

“All our affordable housing projects will be upwards of 20 acres and will be launched under our affordable housing brand New Haven with a starting price of Rs25 lakh,” he said. After some delay, Mahindra Lifespace Developers Ltd expects to launch a project in Palghar, near Mumbai, later this year under its Happinest affordable housing brand. “We are also looking to buy land, primarily in Maharashtra,” said Sriram Mahadevan, business head for Happinest.

Housing shortage at the beginning of the 12th Five-Year Plan (2012-17) was estimated at 18.78 million, according to a report by the ministry of housing and urban poverty alleviation. The 2017 Union budget proposed infrastructure status for affordable housing projects to facilitate higher investments in the sector and a 100% tax deduction on profits for building houses of up to 30 sq. metres in four metro cities and 60 sq. metres in carpet area in other cities. Mumbai-based Poddar Group plans to launch three projects in suburban Kalyan with homes priced at Rs25-40 lakh.

Emgee Group, also based in Mumbai, is gearing up to launch its largest ever project in the distant suburb of Neral, in the next few months. The 80-acre project, which will build around 14,000 homes of Rs8-16 lakh, will see an investment of around Rs1,600 crore over the next 7-8 years.

Not only developers, investors too are confident about returns on investment in mid-income projects.

The project is under the government’s Pradhan Mantri Awas Yojana (PMAY) and buyers can avail its credit-linked subsidies.

“We are also planning to build another 1,000 homes in Asangaon but that will launch that in early 2018,” said Mudhit Gupta, chairman and managing director of Emgee Group. Earlier this week, the government amended the PMAY scheme and extended it to private land to increase the scope to build affordable housing projects.

“We feel this is a much-needed reform and will provide a great platform to showcase sustainable partnership between public and private sector. Our member developers showcased immense support to affordable projects post budget by committing to 375 affordable projects in April 2017. With this new amendment, we expect this number to grow twice or thrice,” said Jaxay Shah, president, CREDAI, a builders’ association.

Not only developers, investors too are confident about returns on investment in mid-income projects. Brick Eagle Capital Advisory LLP plans to launch its first affordable housing alternate investment fund to raise Rs700 crore some time soon. “The need for capital may be around Rs10-50 crore in a project but there are thousands of projects that need money,” said Rajesh Krishnan, founder and CEO, Brick Eagle Group, which funds and incubates affordable housing firms. Kotak Realty Fund will also raise a $100 million fund that will invest in smaller-sized apartments both in large and tier-II cities.

12.2. Garib Nawaz Skill Development Centres to be established in 100 districts of the country: Shri Mukhtar Abbas Naqvi

Press Information Bureau, Jul. 07, 2017

Shri Naqvi felicitates candidates, belonging to Minority communities, selected in the prestigious civil services examination & got financial assistance under “Nai Udaan” scheme Shri Mukhtar Abbas Naqvi chairs General Body and Governing Body meeting of Maulana Azad Education Foundation

New Delhi: The Minister of State for Minority Affairs (Independent Charge) & Parliamentary Affairs, Shri Mukhtar Abbas Naqvi today said here that Garib Nawaz Skill Development Centres will be established in 100 districts of the country which will effectively ensure employment oriented skill development of youth belonging to Minority communities.

Shri Naqvi said that in next six months, Garib Nawaz Skill Development Centres, providing job oriented skill training in various fields, will be established in Hyderabad, Noida, Lucknow, Jaipur, Nagpur, Aurangabad, Bhopal, Indore, Allahabad, Mysore, Chennai, Goa, Gauhati, Kolakata, Patna, Kishanganj, Dehradun, Shahjahanpur, Rampur, Ranchi, Giridih, Mewat, Tijara, Panipat, Delhi, Uddhamsingh Nagar, Amritsar, Chandigarh, Mumbai etc.

The Minority Affairs Minister today felicitated candidates, belonging to Minority communities, selected in the prestigious civil services examination who got financial assistance under “Nai Udaan” scheme, for coaching and preparation of competitive exams, of Ministry of Minority Affairs. Shri Naqvi said that education is solution to several problems including poverty. Through education, we can also tackle menace of radicalism and terrorism.

Shri Naqvi said that this is for the first time that a record number of youth from Minority communities, which also includes about 50 Muslims, have cleared the civil services examination 2016. It is the highest since Independence. Bilal Mohiuddin Bhatt from Jammu and Kashmir has got 10th rank. Shri Naqvi said that the results show that there is no dearth of talent in Minority communities. They just need an opportunity and better atmosphere. And our Government has worked hard in this regard. Financial assistance for coaching for administrative services examination will be increased for youth belonging to Minority communities- Muslim, Sikh, Christian, Jain, Buddhist and Parsi.

Shri Naqvi said that youths belonging to Minority community especially those from Jammu and Kashmir should take inspirations from these candidates who have cleared civil services examination. Congratulating the candidates who were felicitated today, Shri Naqvi said that they are ideals for the youth belonging to Minority communities. They should guide the youth from their community and support them. A total of 7 candidates who got financial assistance under “Nai Udaan” scheme, have been selected in the civil services examination this year. These candidates include 5 Muslims and 2 Jains. So far, 3198 candidates have been provided financial assistance under the scheme. Out of which, 24 candidates have cleared and finally selected in the civil services examination. A high-level 11-member committee, constituted by the Ministry of Minority Affairs to chalk out a detailed roadmap for educational empowerment of Minorities today submitted its report to Shri Naqvi during Governing Body and General Body meeting of Maulana Azad Education Foundation. The Ministry of Minority Affairs is in the process to establish 5 world class educational institutions to provide better traditional and modern education to students belonging to Minority communities in technical, medical, Ayurved, Unani etc fields.

Shri Naqvi said that the Ministry of Minority Affairs is working on a strategy so that these institutes can get started in next two years. We have proposed 40 per cent reservation for girls in these institutions. The Minister said that to provide quality education to each and every child, Ministry of Minority Affairs will launch a mega education campaign “Tahrik-e-Taleem”. The campaign will be launched on 15th October, the birth anniversary of former President of India Dr APJ Abdul Kalam. About 100 Navoday Vidyalaya type schools will be opened in Minority concentrated areas. The Ministry has established 23 Gurukul type residential schools.

Shri Naqvi said that our commitment is “inclusive growth and atmosphere of trust”. No destructive agenda can dominate or weaken our development agenda. We all should come and work together to remove all hurdles from the path of development through education.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

13.1. India's garment exports may hit USD 20 billion in FY18

PTI, Jun. 28, 2017

Mumbai, Jun 27 (PTI) India's garment exports are expected to register a 15-18 per cent growth to touch USD 20 billion during the current fiscal following improved market conditions in US and other markets.

"We have clocked 15 per cent growth in garment exports at USD 17 billion in FY17. We expect 15-18 per cent in current fiscal to register exports of USD 20 billion.

"The US market, which consists of 30 per cent market share is doing reasonably well and we are also looking at good exports potential to South America, European, Middle East and Japanese markets this year," Clothing Manufacturers Association of India (CMAI) president Rahul Mehta told PTI here.

Due to the world recession and heavy competition from China, Bangladesh and Vietnam, India could not fulfill the export target for the year 2016-17.

However, there has been a growth in export to the tune of 13 per cent in dollar terms, in the last 5-6 months. This has been mainly due to the favourable special apparel package announced in July 2016. "We are strong player in spring and summer wear, but we need to increase exports of autumn and winter wear, which we hope to do in coming years," he said.

Mehta said demonetisation last year had not hit the industry and proposed GST (Goods and Services Tax) rates implementation is also unlikely to impact the industry adversely.

Whilst welcoming the GST, Mehta said there could be some confusion and uncertainty for initial 2-3 months for manufacturers and dealers. However, in the long run, it will be beneficial to the garment industry.

The government has accepted most of the recommendations made by CMAI, and keeping a majority of the industry under the 5 per cent GST slab, he said.

Although, there is some concern among fabric manufacturers for the 5 per cent duty. The government has also accepted CMAI's request to reduce the GST applicable on job work from 18 per cent to 5 per cent, but unfortunately this has been done only up to the fabric stage, Mehta said. Job working in garmenting still attracts 18 per cent GST. This will be a major blow to the small manufacturer, most of whom follow the job work basis of manufacturing. CMAI has requested the government to reconsider this obvious anomaly and reduce GST on job working at the garment stage to 5 per cent.

To showcase the business opportunity, CMAI is organising 65th national garment fair, the largest apparel trade show in Mumbai from July 10-12.

The B2B fair will be spread over approximately 6 lakh square feet, covering all the halls at the Bombay Exhibition Centre. The trade show will have 881 stalls displaying 1005 brands by 822 exhibitors.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

13.2. Textile industry size to touch US$ 250 bn in 2 years: Official

PTI, Jul. 05, 2017

Mumbai: The size of India's textile market is expected to touch USD 250 billion in the next two years from USD 150 billion now, a senior government official said today. "We see tremendous growth potential for the textile industry and it is expected to touch USD 250 billion in the next two years from the present USD 150 billion. The domestic market is (currently) estimated at USD 110 billion and exports at USD 40 billion," Textile Commissioner Kavita Gupta said. She was speaking after inaugurating the 6th edition of `HGH India 2017', the annual trade show for home textiles and home decor, here.

Gupta said in the last two years, a lot of buoyancy has been created in the textile sector. She said various schemes have been launched, not only to upgrade technology but also to extend financial aid, to the sector. The capital investment subsidy announced by the Centre has been introduced in segments like weaving, garment, technical textile and made up, which has helped the sector.

"We are also looking at modernising the machines and trying to add state-of-the-art facilities, which will help the sector. In addition, the government announced Rs 6,000-crore special packages for the industry last year.

"Rebates on state levies have been introduced to encourage exports. There is an additional 10 per cent subsidy for the garment and made up segments, which means the home textile industry will get an effective 25 per cent capital investment subsidy on the new machines they bring in, leading to efficiency and modernisation of the sector."

Subsidies have proved be very beneficial for the sector and led to increase in employment and attracted huge investments, she said.

The textile industry needs to utilise the various schemes launched by the government for the benefit of customers, the commissioner added.

The three-day exposition has attracted 500 brands, manufacturers and importers. The event provides a platform to traders across segments to explore new business opportunities in the Indian market.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

14.1. Indian logistics industry may grow at 9-10%: ICRA

PTI, Jul. 04, 2017

New Delhi: The logistics industry in India is likely to grow at a rate of 9-10 per cent over the medium- term, supported by underlying structural positives, rating agency ICRA said today. While the key driving factor on the demand side would be the economic recovery, the trend towards outsourcing of non- core activities like logistics, warehousing and associated activities to integrated players is likely to drive the share of the organised segment, it said. "The domestic sector is currently in a transformation phase with game-changing trends like implementation of GST, increasing focus by foreign investors across the logistics value chain, growing demand for end-to-end solution providers and emergence of new avenues such as e-commerce, logistics parks, cold chains and new startups.

"The government's thrust towards building multi-modal transportation infrastructure is also likely to have a significant influence," Subrata Ray, Senior VP and Group Head-Corporate sector ratings, ICRA, said.

"The logistics space in India is expected to grow at a rate of 9-10 per cent over the medium-term," the rating agency said in its report.

The GST implementation will also support organised players as it will have three major implications - consolidation of warehousing network and a shift towards a 'hub and spoke' model, higher degree of tax compliance and creation of level playing field between express and traditional transport services providers by virtue of access to input tax credit, ICRA said.

It said the Railways' competitive position is expected to improve on the back of commercialisation of DFCs and augmentation of existing network.

The railways account for 30 per cent of total freight movement in India and are a preferred mode of transportation for long haul and bulky commodities such as coal, iron ore, fertilisers, steel and cement. "Despite its dominance in transportation of select commodities, it has gradually lost market share over the past few decades due to a confluence of factors, including under- investment in infrastructure, limited private sector participation, better service and reliability offered by road transport segment, and increase in freight charges by railways," it said.

Additionally, the government's other major emphasis is on improving India's transportation mix by developing inland and coastal waterways.

At present, seaways account for a minuscule 6 per cent of total freight movement in India compared to countries like China (30 per cent) and USA (14 per cent) that heavily use waterways. Given the economic and environmental benefits, the government has chalked an ambitious Sagarmala project that aims at doubling the share of seaways in the transport mix over the next decade by executing multiple projects related to expansion and modernisation of various ports. The report said with an attempt to improve integrated logistics, the government also plans to develop about 35 strategically located multi-modal logistic parks (MMLPs), close to major manufacturing and consumption centres. These initiatives have significant potential to bring down the logistics costs in the country over the medium term.

"Overall, the Indian logistics industry is at the cross- roads, poised for growth on the back of the economic recovery and changing industry dynamics," it said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

14.2. Tractor industry may record volume growth of 10% in FY18: ICRA

PTI, Jun. 20, 2017

Mumbai: The Indian tractor industry is expected to record a volume growth of 9-10 per cent in the current financial year, mainly supported by healthy monsoon, according to rating agency ICRA. "Healthy monsoon expectation, coupled with good reservoir levels, augurs well for farm output in the current fiscal. This, coupled with an expectation of improvement in non-farm income, aided by the government's focus on rural spending, infrastructure creation and irrigation spending, is likely to drive the demand for tractors, which is expected to record a volume growth of 9-10 per cent this fiscal," ICRA said in a report here.

"Over the long term, we continue to maintain an annual growth estimate of 8-9 per cent for the industry. The long term industry drivers for the industry continue to remain intact. The government remains committed towards rural development and agro-mechanisation, a critical component in improving the state of agriculture in the country," ICRA Senior Group Vice President Subrata Ray said. Also, he said, continued support towards enhancing irrigation penetration through fresh allocations would reduce rainfall dependence.

"This, coupled with other factors such as increasing rural wages and scarcity of farm labour, is likely to aid growth in industry volumes," he added.

Tractor volumes reported a healthy growth during FY17, boosted by improving farm sentiments following healthy southwest monsoon and expectations of better cash flows in the backdrop of strong growth in kharif and rabi crop production.

Additionally, ICRA said, government support programmes in various states also supported demand to an extent.

The volumes suffered a blip in November 2016 following demonetisation. However, domestic volumes recovered quickly to a moderate to healthy growth in volumes during December 2016-March 2017, it added.

In April and May, 2017 also, leading tractor Original Equipment Manufacturers (OEMs) have reported robust double digit growth rates in domestic volumes.

However, tractor exports market remained weak during FY17, with the weak demand in the global markets attributable to high supplies of commodities and accompanying fall in crop prices across various markets, ICRA said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

15.1. Fading glory: Indian pharma industry in uncharted terrain

Livemint, 23 Jun. 2017, Isha Trivedi

For Indian pharma companies, the unbridled optimism at the turn of the century is gone. This is a time to adapt, regroup and reinvent

Mumbai: At the turn of the millennium when the rich world was fighting the Y2K bug, India’s drug makers were busy plotting a raid. In a market that began opening up just a decade earlier, they had learnt to make cheap copies of patented drugs. Local laws permitted such copying if it used a production method different from the patented process. These companies had also gained expertise making ingredients for multi-national drug makers.

Finally, it was time to step out. Among the first Vikings were Ranbaxy Laboratories Ltd, Dr. Reddy’s Laboratories Ltd and Cipla Ltd.

In 2001, Hyderabad-based Dr. Reddy’s hit the jackpot in US when one of its drugs—a generic version of anti-depression drug Prozac—secured exclusive marketing rights for a limited period. The outsize profits from that one launch attracted many more drug makers to the US. Meanwhile, Yusuf Khwaja Hamied, the scientist-chairman of Mumbai-based Cipla Ltd, started offering medication for AIDS-ravaged Africa at cut-rate prices, while the drug giants sold the same drugs at over 30 times more. For millions of patients in Africa, Hamied was god. For Big Pharma, he was captain of the pirate ship.

Suddenly, the world was the playground for India’s drug makers who had stayed home until the economic liberalization of 1991 set them free. The US would quickly become the largest market for India’s large generic drug companies. The dream run would continue for many years. Until the engines started stalling.

Then, and now

Fast forward to 2017, and it’s not a pretty sight. Even after surviving tough scrutiny to sell drugs in the US, their profits there are no longer what they used to be. Revenue and margins have been squeezed. Alarmed by news of inspections, warnings and import alerts, investors have fled the sector. For the first time, India’s largest drug maker, Sun Pharmaceutical Industries Ltd, on 26 May said it expects a single-digit revenue decline this fiscal, shocking investors. According to an official at a Mumbai-based pharma firm, who spoke on condition of anonymity, generic oral solid drugs, which fetched 40-60% margins till about five years ago, now earn only 20-25%. For the sector, the near-term outlook is bleak.

Pharmaceutical exports to the US jumped from $0.3 billion in 2005 to $5.9 billion in 2015, according to a February report of industry lobby Indian Pharmaceutical Alliance (IPA), which cited data from the US Department of Commerce and the US Bureau of Census. However, with the generic growth tapering off, the industry is compelled to tweak its business model.

What spelled the end of the dream run for Indian pharma? Two reasons, mainly: One, prices have fallen with rising competition and distributors buying jointly in the US; two, quality issues. The US generic drugs market expanded at a compounded annual growth rate (CAGR) of 15% in 2010-15, but is expected to slow down to 5% CAGR in 2016-20 due to the lower value of patented drugs expiring during this period, broking firm Edelweiss Securities had said in its November 2015 report.

Brokerage firm Credit Suisse said in a May report that annual price erosion in generic drugs in the US is likely to increase to 10-12% from 7-8% currently. This is because product approvals are on the rise and consolidation has enhanced the bargaining power of pharmacy chains.

In 2012, big pharmacy chains such as Walgreens, CVS Health, Express Script and Rite-Aid bought 55% of generic drugs in US, while smaller firms bought the rest. Since then, the smaller ones have tagged on to the larger ones, resulting in four large consortia that account for nearly 90% of purchasing in 2016, the report said. Recently, Express Script started participating in the Walgreens consortium, meaning there are three giant consortia with tremendous bargaining power at the negotiating table.

As new companies enter US and existing ones seek to introduce more products, competition has increased, depressing prices and making it tough to maintain market share. While there is higher competition from more Indian companies in the US, Chinese firms are also increasing their presence. “Historically, the Chinese cornered the API (active pharmaceutical ingredients) market, but they are getting stronger in formulations. India has had language and other skills advantage in terms of ANDA filings and regulatory process, but China is gradually importing talent and they are very good at squeezing costs,” Sameer Sah, associate partner at legal firm Khaitan and Co., said. ANDA is short for abbreviated new drug applications filed with the US Food and Drug Administration (FDA) for a generic product approval. APIs are the essential ingredients in a drug, while formulations are the final products.

According to company officials and consultants, it’s critical for pharma companies to develop complex generics, specialty products, biosimilars and innovative products, which will drive future growth and offset pricing pressures in plain vanilla generics.

“Indian companies are still focused on a low-pricing approach. However, in a changing landscape where margins are low and pricing pressure is high, companies need to diversify their product range, adopt differential strategies and focus on evolving as innovators,” said Utkarsh Palnitkar, partner and head-infrastructure, government and healthcare, and life sciences-KPMG in India. It is also crucial to resolve compliance issues and raise overall quality.

That is easier said than done, especially while maintaining margins and profits.

Inflection point

“The Indian generic industry is at a critical inflection point. In the next five years, it will be imperative for the industry to transition to a specialty/innovation player or a strong biosimilar organization. However, this transition is not easy because we don’t have inherent skills of building an innovative/specialty business, which is a completely different ball game,” Glenn Saldanha, chairman and managing director of Glenmark Pharmaceuticals Ltd, said.

Yet, leading Indian drug makers such as Sun Pharma, Dr. Reddy’s Laboratories, Lupin Ltd, Cipla, Glenmark Pharmaceuticals, Cadila Healthcare Ltd, Aurobindo Pharma Ltd, and Biocon Ltd have made investments to create such products (see table for research and development spends). “In the past 4-5 years, most leading companies are talking about specialty. It has gone from being nice-to-have to must-have. All of us, I would still say, have taken smaller bites in specialty. We need to get a lot more deep,” Nilesh Gupta, managing director of Lupin, said.

The discipline required to be a specialty company is much higher than a generic company. Plus, the specialty product offerings must have a clear clinical advantage; otherwise, doctors and insurance companies may not cover it.

Specialty drugs are high-value products used to treat complex, chronic conditions such as cancer, rheumatoid arthritis and multiple sclerosis. These products may have special handling and mode of administration.

Nearly half of the medical spend in the US currently goes towards specialty therapies. Moreover, new product launches in specialty therapies have been higher than in traditional therapies, due to substantial unmet needs, Fitch Ratings said in a November 2016 report. “Specialty margins are significantly higher and much more stable than the generic side. Typically, brand margins are 90% plus, generic margins are 50% or thereabout. So, you can see what it means for the Ebitda (Earnings before interest, taxes, depreciation and amortization). There is no reason why 30% Ebitda cannot be maintained over a period of time,” Lupin’s Gupta said.

According to a July 2016 report by JM Financial Institutional Securities Ltd, Indian companies have been slow to make investments in the complex generics and specialty drugs space, and those that have will find the investments return-dilutive in the short-to-medium term, given the complexities and long gestation period for developing and bringing these products to the market.

The product development cost for a complex generic is around $5 million, compared with $1-2 million for a simpler final dosage form, Dr. Reddy’s said in its annual report for 2015-16. Development spends on an inhalation, complex injectable or a biosimilar product is much higher. “Different companies are at different evolution stages but all are not going to get there. It is a very tricky battle,” Sujay Shetty, pharma leader India and Asia Pacific at PricewaterhouseCoopers Pvt. Ltd (PWC), said.

Biosimilars, a similar version of innovative biologic drugs, is also a big opportunity, but Indian firms are lagging here as well.

“In the branded space now, biologic constitutes nearly 50% of drugs by value. So, I believe the next wave of growth will come from biosimilars. Indian companies are nowhere in this area. None of their biosimilar ventures have actually taken off, but this is an area we cannot miss if India is to be relevant in future,” Sriram Shrinivasan, emerging markets leader for life sciences and global generics leader at EY, said.

The global life sciences industry is gradually moving from chemical-based drugs to biologics. The global sales contribution of biologics is expected to increase from 24% in 2015 to 27% in 2020, Palnitkar of KPMG said.

Some Indian companies are developing biopharmaceuticals such as vaccines, biosimilars, insulin and monoclonal antibodies. In the near term, the biosimilars play for most firms will be confined to emerging markets, including India. As of now, Biocon Ltd, along with partner Mylan Inc., is the only company that has succeeded in filing applications for biosimilars in the regulated markets of the US and Europe.

Biosimilars have huge potential in emerging markets and a lot of Indian companies are looking at it; but as far as regulated markets are concerned, it is going to be a game of deep pockets, Abhijeet Mukherjee, chief operating officer of Dr. Reddy’s, said. He added that investments for biosimilars are huge and, hence, Indian companies would pursue these opportunities through partnerships.

Innovator companies are expected to queer the pitch, Shetty of PWC said. “Earlier, Big Pharma did not care if you were making generics. This has changed in recent years due to less products coming out of pipeline. Due to lower opportunities, they have come very hard on generics and in biosimlars, they are very serious; they won’t vacate the market. This means, the cost of launch and risk of launch will be tremendously high, say $50-100 million. Very few Indian generic companies can afford that,” he said.

For a generic drug maker, transforming to a specialty- and branded drug-focused company will take a minimum of three years. These years will be tough. Also, the key will be to raise quality standards to global levels as it will lead to a steady flow of revenue which can be used for innovation initiatives, consultants said. Then there are the inspections.

Inspections

In 2009, the US FDA found severe lapses at the manufacturing units of erstwhile Ranbaxy (now merged with Sun Pharma). With India accounting for 40% of US generic drug filings, FDA decided to ensure the drugs from India are of top quality. Inspections rose from 108 in 2009 to 290 in 2015. India has the highest number of US FDA-approved plants outside the US, with the total at 572 currently, compared with 433 in 2013.

Indian drug makers currently facing FDA's warning letters, observations or import alerts include Sun Pharma, Dr. Reddy’s, Lupin, Wockhardt Ltd, Ipca Laboratories Ltd and Divi’s Laboratories Ltd. To be sure, the rise in inspections is also due to the 2012 Generic Drug User Fee Act (GDUFA) in the US, which sought to speed up generic approvals and eliminate disparity in inspections of US and foreign manufacturing facilities.

One-fifth of the FDA inspections happen in India and China currently, up from 11% in 2012, said Edelweiss Securities in a February report.

FDA has also made other changes. It has cut prior intimation time for plant inspections to as little as 24 hours from 25-30 days and inspection frequency has increased to once or even twice a year from once in two-to-three years earlier.

The regulatory overhang is likely to persist as over the next three years, US FDA will inspect the pending 190 Indian facilities, which it hasn’t audited in the past five years, Edelweiss Securities said.

“Most Indian companies are working on increasing the level of awareness and compliance to meet US FDA standards and, in the long-term, this will also become a sustainable competitive advantage,” Mukherjee of Dr. Reddy’s said. US FDA’s norms on good manufacturing practices keep evolving and companies need to keep pace with the changes. A plant that had cleared an FDA audit earlier may be pulled up for some violation of norms in any subsequent inspection. The crucial part here is that companies should not get repeated quality lapses observations from FDA for the same plant as it indicates that remedial measures and investments in quality upgradation were inadequate. Consultants advising companies on quality compliance say the management’s mindset should be to overhaul the entire system in order to ensure higher quality of products in the long run and not have short-term goals.

Enhancing efficiency

At a time when costs are rising due to higher investments in research and development (R&D) and quality compliance, bringing operational efficiency will be crucial to maintaining profitability. Companies will try to improve the product mix with more reliance on niche products, reduce cost of production, and sell higher volumes, D.G. Shah, secretary general of IPA, said. “We need to continue to look at cost structures and productivity to find ways of improving our performance on total delivered costs. Investing in products, segments and markets that offer relatively more price stability would be the other way (to improve operational efficiency),” a Sun Pharma spokesperson said in response to an email query.

Shrinivasan of EY said there is a lot of inefficiency in the sector. Capacity utilization and inventory management need to improve, which will help in enhancing competitive advantage of companies.

This downturn (in the pharma sector) gives us an opportunity to tighten up in a way we have never done in the past and improve operational efficiency- Nilesh Gupta, managing director of Lupin

“Companies need to further bring down costs. During the good years, there are several areas where costs had increased; but because of strong growth and margins, companies could absorb it. For example, staff costs of companies have risen significantly over the years,” Rahul Guha, partner and director at The Boston Consulting Group (BCG), said.

“This downturn (in the pharma sector) gives us an opportunity to tighten up in a way we have never done in the past and improve operational efficiency,” Lupin’s Gupta said. Pharma companies have come up with strategies to deal with the challenges and propel growth, but the key will be execution. Adoption of information technology tools will be necessary to bring operational efficiencies. BCG’s Guha said while the US remains the biggest market, firms should evolve their model to profitably serve other regulated markets like Europe and Japan, as well as in emerging markets. India’s pharma exports to Europe have been around $2 billion in the past five years, while exports to Japan have come down to $34 million in 2016 from $62 million in 2012, according to data from the International Trade Centre, a joint agency of the World Trade Organization and the United Nations.

As firms enter uncharted territory of specialty and innovative products, they will need to acquire capabilities they lack, which means mergers and acquisitions and collaborations will be routine, analysts said.

“Inorganic growth can help Indian pharma firms access new markets and enhance technological capabilities in developing new drugs. Collaborations in areas such as R&D, manufacturing and marketing, can also help enhance value by reducing cost and increasing efficiency,” KPMG’s Palnitkar said. PwC’s Shetty said given the current financial profiles of Indian generic drug makers, the deal size for acquisitions is unlikely to exceed $1 billion and that, too, limited to leading firms. Until then, the pharma sector is likely to remain under pressure. “Pharmaceutical companies can adapt to disruption through shifts in their business models and refocus on new fields of play. However, even these changes are unlikely to generate the kind of growth and revenue that shareholders demand,” Palnitkar said. The market has got used to rapid growth but now investors will have to take a longer-term view because for the next two-to-three years, the ups and downs in the industry are expected to continue. The pillbox built by the early entrepreneurs has cracked, and a new one is yet to be built. For Indian drug makers, the unbridled optimism at the turn of the century is gone. This is a time to adapt, regroup and reinvent.

15.2. Sun Pharma enters into $55.5-mn deal with Samsung BioLogics

BusinessLine, 4 Jul. P T Jyothi Datta

Drugmaker Sun Pharmaceutical Industries Ltd has entered into a long-term manufacturing agreement with Samsung BioLogics for biological drug Tildrakizumab.

Tildrakizumab is Sun Pharma's investigational drug being evaluated for the treatment of moderate to severe plaque psoriasis, a skin ailment. And filings for this product have been accepted for review by the US Food and Drug Administration (May 2017) and the European Medicines Agency (March 2017), Sun Pharma said.

The agreement was signed at Samsung BioLogics’ headquarters in Incheon, South Korea. And the approximate value of the contract will be $ 55.5 million, the note said, adding that other financial details of the agreement were confidential. TH Kim, President and CEO of Samsung BioLogics, said in the statement that the collaboration with Sun was important for it as it was a “testament” to its ability to provide reliable supplies through its GMP-certified (Good Manufacturing Practices) facility to pharmaceutical companies.

Other deals on Tildrakizumab

Sun Pharma's wholly-owned subsidiary had received worldwide rights for tildrakizumab from Merck (through a Merck subsidiary), known as MSD outside the United States and Canada, in 2014. Funded by a Sun Pharma subsidiary, Merck was responsible for the completion of Phase-3 or late trials in patients with mild-to-moderate plaque psoriasis.

Merck was also responsible for manufacturing finished goods to support Sun Pharma’s initial product launch. Post-approval in the US, Sun Pharma would be responsible for all other regulatory activities, including subsequent submissions, pharmacovigilance, post approval studies, manufacturing and commercialisation of the approved product.

Sun Pharma was also responsible for all regulatory, pharmacovigilance, post approval studies, manufacturing and commercialisation of approved products for all non-US markets, Sun Pharma said. Merck was also eligible to receive milestone payments and royalties on sales of tildrakizumab. Meanwhile, Sun Pharma also closed a licensing agreement with Almirall last July, involving the development and commercialisation of tildrakizumab for psoriasis in Europe.

Almirall was to lead the Europe studies and participate in larger global clinical studies for psoriasis indication subject to the terms of the Sun Pharma-Merck agreements, as well as certain cost sharing agreements. Sun Pharma was eligible to receive development and regulatory milestone payments and, additionally, sales milestone payments and royalties on net sales. Sun Pharma added that it would continue to lead the development of tildrakizumab for other indications, where Almirall would have a right of first negotiation for certain indications in Europe. The agreement between Sun Pharma and Almirall, however, remained subject to the exclusive license agreement between Sun Pharma and Merck, it added.

15.3. Indian firms' drug approvals by US rise 50% in 2017

Business Standard, Jul. 05, 2017

At a time when the US business for the Indian pharmaceutical industry is in slow lane, drug approvals by the US Food and Drug Administration (FDA) have risen sharply. Data collated from the FDA website show between January and June, Indian companies, including their US-based subsidiaries, received 141 drug approvals. This is significantly higher than the 94 approvals received during the same period last year, a rise of 50 per cent. Among the companies that received approvals this year are Cadila Healthcare (Zydus Cadila and its subsidiaries), Aurobindo Pharma, Lupin, Gland Pharma, and Glenmark.

In comparison, the growth rate in drug approvals for non-Indian companies is lower at 15.27 per cent. From 216 approvals between January and June 2016, non-Indian companies received 249 approvals during the same period this year.

Some of these non-Indian companies are also promoted by Indians. Amneal Pharmaceuticals, founded in New Jersey in 2002 by the Patel family, has grown to be the seventh-largest generic manufacturer in the US by prescription volume. It is led by Chintu and Chirag Patel and has a presence in Australia, Europe and Asia. It received 20 drug approvals between January and June 2017. In India, it has a manufacturing site near Ahmedabad.

Ranjit Kapadia, analyst with Centrum Broking, said, "Indian companies have established a strong base in the US in the generic drugs space. They are competing among themselves for market share," he said.

Analysts also noted that Indian companies had made the most number of drug filings in the US. Moreover, the process of drug approvals has been expedited by the FDA.

Gaurav Jain, vice-president and co-head, corporate sector ratings, ICRA, said, "In mid-2012, the Generic Drug User Fee Amendments (GDUFAs) were implemented to expedite the process of abbreviated new drug applications (ANDAs) approvals by the FDA. In October 2016, the GDUFA entered its cohort-five phase, in which the FDA has to act on 90 per cent of the ANDA submissions within 10 months."

Compared to this in the cohort-four phase of the GDUFA, the FDA had to act on 75 per cent of the ANDAs submitted within 15 months.

This is evident from the growth rate in drug approvals by the FDA so far this year. In 2017, the FDA has approved 390 ANDAs, up from 310 approvals between January and June 2016. However, ICRA feels that the annual growth trajectory for the Indian pharmaceutical industry is likely to moderate to 7-10 per cent over 2017-18 to 2019-20. The momentum is likely to slow because of pricing pressure on the generic business.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

– SERVICES (IT, R&D, Tourism, Healthcare, etc.)

16.1. Digital economy can reach US$ 4 trillion in 4 yrs: Technology sector to government

PTI, Jun. 19, 2017

New Delhi: Surpassing the government's expectations to make India USD 1-trillion digital economy by 2022, technology companies today said it has potential to grow up to USD 4 trillion during the period. IT Minister Ravi Shankar Prasad, who chaired a meeting with industry captains to chalk out a growth plan, said the government will formulate a new set of strategies to support growth including a new electronics policy, software product policy and a framework for data security and protection. "There was unanimity among all the participants that USD 1-trillion digital economy is an understatement. India has the immense potential to go to USD 2 to 3 to 4 trillion digital economy potential," Law and IT Minister Ravi Shankar Prasad told reporters after meeting with top industry leaders.

The meeting was attended by top experts such as Nasscom President R Chandrashekhar, Google India's Rajan Anandan, Wipro's Rishad Premji, Indian Cellular Association National President Pankaj Mohindroo, NIIT Chairman Rajendra Pawar and Hike Messenger CEO Kavin Bharti Mittal, among others.

Notable absentees from the event included Flipkart co- founder Sachin Bansal and Paytm founder Vijay Shekhar Sharma.

The government has projected that Indian digital economy will become USD 1 trillion by 2022 from around USD 450 billion digital economy at present.

As of now, the Indian electronics market is estimated to be around USD 100 billion, IT sector USD 150 billion, telecom USD 150 billion, e-commerce USD 30-40 billion and rest is estimated to be size of shared economy like taxi hailing services, start-ups etc.

"One participant said that BPO alone has potential to reach USD 1 trillion potential. One participant said that electronics manufacturing itself has the potential to reach that in coming in 3-4 years. I asked them specifically that is this the hope shared by all. All of them said we share this," Prasad said. The Ministry of Electronics and IT has projected IT and ITeS sector to grow to USD 350 billion by 2025 from USD 160 billion, while electronics sector is poised to touch USD 300 billion by the same time (from USD 100 billion currently).

Telecom and e-commerce are projected to grow to USD 150 billion each, while sharing economy and digital skilling each presents a USD 30 billion opportunity.

Digital payments, cyber security and Internet of Things -- all of which are expanding at a significant pace -- are expected to touch USD 50 billion, USD 35 billion and USD 20 billion, respectively.

It was also projected that the digital economy will generate 30 million employment opportunities by 2024-25, which is double than the current scenario.

The ministry has identified digital payments, Make In India, Start-Up India, Skill India among the key drivers of the digital economy.

Highlighting the potential of the "new economy" with avenues like digital payments and e-commerce, Prasad said the focus needs to be on creating technology that is affordable, developmental and digitally inclusive.

Prasad said that deliberations at the meeting had also brought out the need to promote an ecosystem to facilitate more start ups in areas like education, agriculture and healthcare. "I have decided that we will have a coordinated action with Health, Agriculture and HRD Ministries to promote an ecosystem to facilitate more startups in these areas," he said.

Prasad added that the idea of setting up special innovative zones for start-ups will be explored and a framework for startup cluster policy will be developed.

Besides, digital skilling has a lot of potential as India has a rich talent pool that can be used to meet global demand in emerging technologies like artificial intelligence. "We need to re-skill and re-purpose ourselves. We have a list of different skills, where we need people... If you re- skill yourself in blockchain or AI, there is no shortage of jobs globally," Tech Mahindra Managing Director and CEO CP Gurnani said.

Citing a Nasscom report, Prasad said that in the last three years, almost six lakh people have been employed in the IT sector, while in 2016-17, the number of people employed was around 1.7 lakh. About 2.5-3 million new jobs are expected to be created by 2025. He refuted reports of job losses by Indian IT firms, terming them as "motivated". "There has been a lot of debate, and by any standards of economy, this talk of job decline in the IT sector is motivated," he said.

In terms of challenges, the participants had pointed out the need for setting up a dispute resolution mechanism and liberal regulatory norms.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

16.2. Accenture raises the stakes with $1.8 billion acquisition plan

Livemint, 28 Jun. 2017, Varun Sood

Accenture plans to spend $1.8 billion on acquisitions in 2017—more than what its Indian rivals TCS, Infosys, Wipro combined spent in the past three years

Bengaluru: Accenture Plc plans to spend $1.8 billion on acquisitions this year—more than what its three biggest Indian information technology (IT) rivals combined spent in the past three years—as it seeks to accelerate growth.

Aided by the planned acquisitions of companies such as analytics and cloud computing firms, Accenture, which does as much business as Tata Consultancy Services Ltd (TCS), Infosys Ltd and Wipro Ltd put together, is poised to outpace them in growth this year for the first time since it went public in 2011. The acquisitions plan was spelt out in a post-earnings call with analysts.

IT sector: How the mighty have fallen

Accenture, which follows a September-August fiscal, is expected to report a 6.7% dollar revenue growth in the year to August 2018, according to Keith Bachman, an analyst with BMO Capital Markets. Indian IT firms, which follow an April-March fiscal, will have to better their performance from last year or risk growing slower than Accenture.

TCS, Infosys and Wipro reported a dollar revenue growth of 6.2%, 7.4% and 4.9%, respectively, last year. Although TCS and Wipro do not provide an annual growth forecast, Infosys expects its revenue to grow 6.1-8.1% this year—a guidance that analysts say could be cut in coming months. This aggressive acquisition model of Accenture, which spent more than $900 million in each of the past two years on buying companies, is driven by Fortune 1000 clients demanding from their IT vendors solutions that help them run their businesses better. Newer technologies, such as data analytics and cloud computing, along with a strong consulting practice, are the growth drivers for technology outsourcing vendors as customers across industries are spending less on traditional outsourcing work like application maintenance.

More acquisitions have also helped Accenture make itself future-ready: Last week, Accenture, reporting its third quarter earnings, said its “new” offerings, which include digital, cloud computing and security-related solutions, accounted for 50% of revenue. A contrarian, conservative approach by its Indian rivals, which have together spent $1.66 billion in acquisitions since April 2014, appears to be to build digital capabilities from grounds-up, and this underscores the struggles at domestic IT firms. “Accenture has done a tremendous job with financial engineering and M&As (mergers and acquisitions),” said Ray Wang, founder of Constellation Research, a technology research and advisory firm. “They have bought their way into offensive growth, entered new markets such as AI (artificial intelligence), marketing operations, and digital transformation with design firms faster than others.” Since 1 April 2014, TCS, Infosys and Wipro have together spent $1.58 billion on acquisitions, with $80 million more spent together by Infosys and Wipro through their corporate venture arms in making minority investments in close to two dozen start-ups.

Accenture is expected to end FY17 on 31 August with at-best 5.8% dollar revenue growth. For the year to August 2016, the management said its 15 acquisitions accounted for 2 percentage points of overall 10.5% constant currency growth (6% dollar revenue growth). Constant currency eliminates effect of currency movements.

“If M&A contributes two points of growth to FY17 revenue, then inorganic revenues may contribute higher growth in FY18,” Bachman wrote in a note dated 22 June, after Accenture reported its third- quarter March-May earnings. “We continue to believe Accenture is well positioned in an evolving digital market.”

Importantly, none of Accenture’s three dozen acquisitions over the past three years are large: More than three-fourths of the firms acquired have less than 200 staff, estimates JPMorgan Chase and Co. analyst Viju George.

However, Indian IT firms continue to look away from acquisitions. TCS last invested $50 million in stitching together a joint venture partnership with Mitsubishi Corp. in Japan in 2014 while Infosys has not made an acquisition in over 20 months. Wipro, which spent $1.14 billion in buying five firms over the past 36 months, has spent $8.7 million to buy one firm in the past eight months. All Indian firms claim they constantly evaluate M&A opportunities but some experts say they need to change the way they have approached acquisitions if they want to keep pace with firms such as Accenture. “I think the reason Indian IT companies have been reluctant comes more from the pressures at the board level and with external shareholders,” said Ray Wang, founder of Constellation Research, a technology research and advisory firm. “The DNA of an M&A organization is different from organic growth. This will require some management changes like having a more decentralized management and also more executives who have high growth M&A experience.”

17.1. Nasscom sees headwinds, pegs IT export growth at 7-8%

BusinessLine, 22 Jun. 2017, KV Kurmanath

Industry will hire 150.000 people, expand into new markets

As global headwinds continue to adversely impact business, IT industry association Nasscom has pegged a lower growth rate for IT-BPM exports for Financial Year 2017-18. It forecasts exports of $124-125 billion, a growth rate of 7-8 per cent for the year, a notch lower than the 8-10 per cent growth it had pegged for 2016-17. It also expects the industry to see net hiring of 1.3-1.5 lakh during the year.

Nasscom President R Chandrasekhar says increased protectionist rhetoric, Brexit, visa issues, and delayed decision-making due to macro-economic uncertainties will serve as headwinds for the industry.

Eyeing newer markets

As the US market, which accounts for about 60 per cent of India’s IT exports, poses a particular challenge, the industry is looking to open newer markets such as Japan, China, Africa and the Gulf region.

The association generally gives its annual guidance in February at its flagship leadership conclave in Mumbai, but had deferred this year’s announcement citing global uncertainties owing to geopolitical crises.

Traditional IT services revenues may be taking a hit, but Nasscom sees a ray of hope in the increased contributions from digital verticals as more firms undergo digital transformation.

Announcing the guidance for 2017-18 here on Thursday, Nasscom President R Chandrasekhar and Chairman Raman Roy allayed fears, amplified by media reports, of big job losses due to global roadblocks faced by the industry.

“We could not come out with the guidance numbers in February due to the uncertainties that existed then. We are going to have a growth rate of 7-8 per cent during the year,” Chandrasekhar said. On reports of poor job scenario in the industry, he said the industry continues to hire in big numbers. “Over 50 per cent of the employees of the top firms have been upskilled to be ready to meet newer job demands. We have identified 55 skillsets with job potential,” he said.

Domestic revenues for the IT-BPM industry would grow at 10-11 per cent to reach $26-26.5 billion, up from $24 billion last year, Chandrasekhar said. Digital projects are contributing 15-20 per cent of revenues for large companies, indicating a significant trend.

Other challenges

Currency volatility has led to a difference of 1-3 per cent in growth as measured in constant currency and reported currency terms. “We have seen longer gestation periods for return on investments on spendings by companies on research and development on newer technologies and upgrading skills of the employees,” Chandrasekhar said.

Though the US market is showing strains, it will continue to be a major contributor to the industry. “It won’t change overnight,” Nasscom Vice-Chairman Rishad Premji said.

17.2. TCS gears up for aggressive digital push

BusinessLine, 30 Jun. 2017, Te Raja Simhan

Software major re-skills over two lakh employees in digital technologies

Sanjay Kumar (name changed), an employee of Tata Consultancy Services, is glued to his mobile phone busy with Fresco Play, a gamification learning platform to re-skill himself in digital technology, which is the most happening domain in the IT sector.

Along with Kumar, 2.14 lakh other TCSers of the total 3.80 lakh employees have been re-skilled in digital technology under the in-house digital competency development programme that allow employees learn any time, anywhere and over any device, said Ravi Viswanathan, President, Growth Markets, TCS.

Re-skilling programme

The first step in this ‘mammoth’ re-skilling programme was initiated in 2014 by former CEO N Chandrasekaran with a vision to train one lakh TCSers on digital technologies such as DevOps, Artificial Intelligence and machine learning.

“We did not know where to start. We had to reinvent ourselves, our courses, our learning methods and our people’s aspiration.

“We wanted employees to come to our training voluntarily. We did not want to set up class rooms and tell team leaders to send 100 or 200 people. We wanted to set up a platform and make it voluntary for employees to use it. We succeeded in it,” he said.

Fresco Play enables an employee from CEO to a trainee to access training module in mobile, Web and seamlessly change between devices. “We made it palatable by making the module 15 to 30 minutes. We designed it for modern TCSers as they commute,” he said.

Nearly six lakh digital certifications have been issued from the system. This translates to nearly three digital certifications per employee. This number will be much higher at entry level, he said. As soon as the certificate is issued, the information is loaded in the company’s resource management framework. A team leader will know that there are many people with competency in a particular domain and openly advertise for a particular job in the system. An employee can apply for it or the opportunity can drag the employee, said Viswanathan.

IT business is always about disrupting, and disrupting fast. In last 30 years, the industry has grown from $50 million to $150 billion and there was disruption in every stage — right from Custom built software to advanced languages such as Oracle, SAP to now the latest SMAC (social, mobile, cloud and analyitcs), he said.

“Through re-skilling, we are driving the message that all of us need to re-skill ourselves. Please invest time as the company has given you a training platform that can be accessed through mobile device or even classroom,” he said.

Technical upgrade

It is also strong message to clients on how TCS enables its employees wherever they are to get technically upgraded and that 2.14 lakh employees have gone through digital certification. “We have innovated to disrupt the internal learning platform,” he said. “Certification is an input in to the performance appraisal system. We don’t want to make this you do this but make it a culture. I can see the culture happening. When 2.14 lakh employees have taken up a course, it reflects the fact that is a consumption culture. Otherwise, the worse thing to do is set target for everybody to do, and it may not work,” he said.

18.1. NITI Aayog says before Air India privatization, the airline’s domestic and international business, and real estate assets should be delinked and then sold separately

Livemint, 22 Jun. 2017, Jyotika Sood and Utpal Bhaskar,

NITI Aayog’s recommendation comes against the backdrop of the government considering privatization of Air India, which has a 14% domestic market share and about Rs50,000 crore in accumulated debt.

New Delhi: Government think tank NITI Aayog has recommended that the privatization of Air India should be done only after unbundling the airline and its real estate assets. “There are some things that NITI Aayog has suggested and NITI is just a recommending body. Essentially, what it has said is that you delink all the property and sell it off. You have domestic and international operations. It has said that you just sell off these three independently,” said a senior government official requesting anonymity.

Air India’s long and difficult journey towards privatization

Air India was merged with Indian Airlines in 2007 by the Congress-led United Progressive Alliance government.

The NITI Aayog’s recommendation comes against the backdrop of the government considering selling loss-making Air India, which has a 14% domestic market share and around Rs50,000 crore in accumulated debt.

NITI Aayog vice-chairman Arvind Panagariya told television channel CNBC-TV18 on Thursday that he expects the government to take some action on privatizing Air India in the next six months. “Something should be happening this year,” Panagariya said.

Air India has the largest domestic and long-haul fleet of 140 planes in the country and flies to nearly 41 international and 72 domestic destinations.

Apart from the planes, the airline also has vast land holdings, including nearly 32 acres in central Mumbai, besides its iconic headquarters on Marine Drive valued at more than Rs1,600 crore. It also has properties in New Delhi, London, Hong Kong, Nairobi, Japan and Mauritius. “One firm can bid for both (domestic and international operations) because the segments are different,” added the official cited above.

Three reasons why Tata may buy

Air India stake with Singapore Airlines The Times of India on 31 May reported that NITI Aayog has suggested that the real estate assets be hived off into a separate company before offering up to 100% equity to a strategic partner. Addressing a press conference last month, civil aviation minister Ashok Gajapathi Raju said that NITI Aayog had recently submitted its recommendations on Air India to the ministry. “NITI Aayog has made recommendations for making Air India strong and viable. All courses of action are being examined. We have not closed any option,” Raju told reporters.

A committee including civil aviation secretary R.N. Choubey has sent its views on Air India’s divestment to the department of investment and public asset management. The Union cabinet is expected to take a call on the stake sale shortly.

The airline has so far received Rs23,993 crore of the Rs30,231 crore equity infusion promised by the government under a financial restructuring plan introduced in 2012. It reported a loss of about Rs3,587 crore in 2015-16, compared with a loss of Rs5,859 crore in the previous year.

The Economic Survey 2017 had recommended that government should privatize Air India. “Whilst there have been some improvements in its operating and commercial performance, the company does not yet have a viable business model or a clear long-term direction. And it remains hamstrung by massive debts,” aviation consulting firm CAPA Centre for Aviation said in its report late last month. “In such a highly competitive and challenging environment, Air India cannot continue to be funded by taxpayers to fight private capital.”

Spokespersons for NITI Aayog, the civil aviation ministry and finance ministry did not immediately respond to queries emailed on Thursday.

18.2. India plans open sky pact with countries within 5,000 kms'

PTI, Jul. 14, 2017

New Delhi: Gulf carrier Oman Air's CEO Paul Gregorowitsch today said that India has plans to have open sky agreements with countries within a radius of 5,000 kilometres. An open sky air service agreement allows for airlines from the two countries to have an unlimited number of flights as well as seats to each other's jurisdictions.

"If the current policy of the Indian government to also consider an open sky (agreement) for those destinations which are within 5,000 kilometres materialises in the next two years, then it will automatically (provide us) a more level environment," Gregorowitsch said at a media round table here. The move could be implemented by 2020, the Oman Air CEO claimed. "From (the) information I have received in Oman, Indian government has said it will consider it (open sky agreement) by 2020," he said.

He also said that such a move would be a "win-win" for both India as well as the Oman carrier, as the latter is planning to add more aircraft and more destinations.

However, the move should be complemented with more airports being made available in the country by permitting military airports to be used for civil purposes, he added. As per the National Civil Aviation Policy 2016, the government will enter into an open sky air service agreement on a reciprocal basis with SAARC countries and countries with territory located entirely beyond a 5,000-kilometre radius from New Delhi.

"For countries partly or fully within the 5,000-kilometre radius, where the designated carriers of India have not fully utilised 80 per cent of their capacity entitlements, but foreign carriers/countries have utilised their bilateral rights and are pressing for increase in capacity, a method will be recommended...," according to the policy.

Oman Air has been able to add 5,067 seats in summer this year. In the winter schedule too, it will add 1,821 seats after the bilateral agreement between the two countries was revised to permit the carrier to operate additional seats.

The total weekly flights have now gone up from 128 to 161.

"This has allowed us to move to a total 27,405 seats, while we are allowed to have 28,000 seats between Oman and India," Gregorowitsch said.

He also touched upon the challenges facing the airline because of infrastructural shortcomings at airports in India.

"In Mumbai, we are moving from double (flights) daily to triple (flights) daily. While we have bilaterals, the infrastructure is quite difficult as there is only one runway," Gregorowitsch added. While speaking about diplomatic tensions facing Qatar, he said the tension in relations affected all countries in the region.

"If you look at markets, they look at the middle east as one big entity and unrest in Qatar reflects on all the nations. There are no winners, there are only losers. People could have second thoughts because they sense a kind of instability in parts of middle-east," he said.

Currently, the airline has 47 aircraft in its fleet, which comprises Boeing 787S, Boeing 737s, Airbus 330s and Embraer 175s. Its plan to expand the fleet size to a total 70 aircraft and serve 75 destinations by the end of 2020 has been postponed to 2023.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

18.3. Domestic airlines eye bigger share of foreign traffic

BusinesLine, 25 Jun. 2017, Anand Kalyanaraman

Aim to take advantage of relaxed regulations and larger fleet size Unlike many countries, international air traffic to and from India continues to be dominated by foreign airlines, primarily from West Asia. But Indian carriers have been growing their share of the pie steadily. From about 30 per cent in FY14, the share of domestic airlines in India’s international traffic rose to 34 per cent in FY16 and further to 35 per cent in FY17, says a report by rating agency ICRA. This is a result of Indian carriers outperforming their international counterparts in traffic growth. For instance, in FY17, while overall traffic growth to and from India was 8.4 per cent, the domestic carriers grew their international traffic at a faster 11.8 per cent.

While this is much slower than the about 22 per cent growth in domestic air traffic in FY17, the foreign traffic opportunity is also getting much attention from Indian carriers. More flights by both established players (Air India and Jet Airways) and relatively new entrants (IndiGo Airlines and SpiceJet) have aided the trend of growing market share on foreign routes. The Jet Airways and Air India groups have, over the years, built up significant share on the international routes (13.5-15.5 per cent), while IndiGo and SpiceJet are gradually building up their presence (about 3 per cent share each).

More on the cards

In the coming years, the share of domestic carriers in India’s international traffic is likely to grow. One, with the government replacing the 5/20 rule with the 0/20 rule last year, airlines such as Vistara and Air Asia India are ramping up their fleet to reach the 20 aircraft threshold that will let them fly foreign routes; there’s no more waiting to complete five years in domestic operations before going international. These airlines could start international flights in calendar 2018. GoAir, which already has more than 20 aircraft, has plans to start flying foreign routes in the current fiscal (FY18). Next, a fair portion of the large aircraft orders placed by many Indian carriers is likely to be placed on international routes.

A recent ICICI Securities report says that in April-May 2017, the total capacity of IndiGo Airlines, which has the largest order book among domestic carriers, increased 21 per cent y-o-y. The chunk of this was deployed on international routes, with 17 per cent capacity growth in the domestic segment and 64 per cent in the international segment.

In the case of Jet Airways, too, while domestic capacity increased 7 per cent y-o-y in April-May 2017, international capacity grew 10 per cent. GoAir, in the medium term, intends to deploy as much as 30 per cent of its expanded capacity on international routes.

Profit pressure

Are foreign routes of Indian carriers doing better than domestic ones? Not quite. Jet Airways gets more than half its revenue and profit from international operations, aided by the tie-up with its strategic investor Etihad Airways. But this segment did worse than the domestic business last year (FY17), with a sharper fall in operating profit and margins. Similarly, the international operations of IndiGo, which contribute about a tenth of its overall revenue and profit, did worse than the domestic business last year.

Competition and higher costs, including fuel expense, which impacted the domestic business, took a bigger toll on the airlines’ international business. Despite this, domestic carriers are likely to step up on their international business. For one, margins in the international segment remain better than the domestic operations, aided by lower fuel costs. Also, airlines in India would prefer deploying a portion of the impending huge fleet capacity expansion on foreign routes, lest they drag down domestic fares. According to a report by ICRA, the current order book of Indian carriers is nearly double their current fleet size.

19.1. Israel’s Rafael eyes larger role in India’s defence programme

BusinessLine, 6 Jul. 2017, Amrita Nair-Ghaswalla

Keen to make India a global manufacturing hub for its high-tech defence systems, Israeli firm Rafael Advanced Defence Systems is “speaking” to several Indian companies. Though the defence major has been working with different branches of the Indian military, it is seeking to enlarge its partnerships in India.

“India and Israel are strategic partners and Israel has always supported India’s urgent operational necessities during times of crisis,” said a senior official of the company. For Rafael too, he added, India is a strategic and significant partner. Rafael designs, develops, manufactures and supplies a wide range of defence systems for air, land, sea and space applications. “Rafael has always stood by India to supply systems at short notice during various operational contingencies. We work with the different branches of the Indian military and Indian security,” the official told BusinessLine.

The company has been looking to establish global manufacturing hubs for the supply of systems abroad, and is keenly watching “the Indian defence industry as it matures”, said the official, adding: “Rafael is open to exploitation of our R&D intensive and combat proven technology for developing the Indian defence industry.”

Though the company has already partnered with Bharat Forge, Reliance Defence, Bharat Dynamics and Astra Microwave Systems, among others, and has “excellent relations with the DRDO and the forces”, it is keen to expand its activities in India.

Several of the company’s armaments are already in use with Indian forces. A spokesperson for Rafael told BusinessLine that the company has integrated its “electro-optical Litening pod, air-to-air missiles Python-5 and i-Derby, as well as air defence systems in India”. Last June, Rafael agreed to supply 164 Litening targeting pods to the Indian Air Force (IAF), for use on four types of combat aircraft including the Sukhoi Su-30 fighters. Rafael Litening-5 targeting pod is integrated on Airbus Defence and Space-owned Eurofighter combat aircraft. The IAF has been using Litening-3 Pods on the Mig-29, Sukhoi-30KI, Mirage-2000, and the indigenous developed LCA Tejas.

19.2. The Ministry Of Shipping Draws Up Cruise Tourism Reforms

Press Information Bureau, Jul. 11, 2017

Customs & Immigration processes to be simplified Single Window System for pre cruise requirements, uniform security procedures, collaboration between the Bureau of Immigration and CISF to be implemented

New Delhi: The Ministry of Shipping, in conjunction with the Ministry of Tourism, has announced reforms to the regulatory processes governing the cruise tourism industry in the country. The objective is to revolutionize this industry which has a high employment generation potential, by simplifying the rules and procedures pertaining to various aspects of cruise port operations like security, immigration, and customs. According to Special Secretary, Shipping, Shri Alok Srivastava, the promotion of cruise tourism requires not just improvement in infrastructure but also uniformity, transparency and predictability in the procedures followed by multiple government organizations . In other words, Ease of Doing Business is critical for the success of cruise tourism.”

The reforms are based on the recommendations of a global consultant engaged by the Ministry to draw up an Action Plan for providing a customer friendly and hassle free logistics process for the cruise tourism industry and develop an enabling ecosystem necessary to promote and sustain cruise shipping in India.

Key recommendations given by the consultant which can be immediately implemented are:-

Single window system for all pre cruise requirements for cruise operators like entry of vehicles, personnel and guides electronically doing away with checking of registration, license papers of vehicle at each time.
Create a separate dedicated approach road and entrance to the cruise terminals.
A uniform and consistent security procedures by CISF at all ports.
Providing adequate security and access to the port for passenger over-night and visiting local venues.
No face to face check after dis-embarking formalities.
Security checks for embarking passengers would be done only once.
Joint collaboration between the Bureau of Immigration and CISF and redesign the existing procedure to give a pleasant experience to the cruise tourists visiting India.
Standard Operating Procedures (SoPs) to be framed for training and education of the personnel carrying out the process for better handling of passengers.
Use of technology for clearances, providing passenger manifest to CISF and doing away with manual time consuming process.
Implementation of green lane/red lane at existing terminals with random custom checking as is done in the airport.
Declaration of only limited items of inventory of the cruise ships in place of the existing requirement of having the complete inventory for all the stocks in the ship.

A committee has been set up to work out the modalities and requirements for implementing the above recommendations in a time bound manner

The Consultants have also been asked to suggest five potential cruise circuits for international, domestic and river cruise, that can be immediately taken up for development and to prepare Techno- Economic Feasibility Report (TEFR) for these circuits. Specific ports/terminal would also be considered for development for international cruise tourism as per a suggested Model Terminal Design, and suitable policy/regulatory framework based on international best practices, strategies of cruise terminal operation.

Earlier this month, a workshop was organized by the Ministry of Shipping to bring together all the stakeholders to deliberate upon and draw up a concrete action plan for implementation to promote cruise tourism in the country. The workshop was inaugurated by Minister of Shipping, Road Transport and Highways Sh. Nitin Gadkari, and was also attended by Dr. Mahesh Sharma, Minister of State (Independence charge), Tourism and Culture and Secretary, Tourism Smt. Rashmi Verma. About 100 concerned stakeholders including Customs, Bureau of Immigration, Ports, CISF, State Tourism Boards, Maritime Boards and Ports Departments, Cruise shipping lines etc also attended the workshop.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

20.1. India is a great place for innovation: Microsoft

Livemint, Jul. 13, 2017

Washington: India is a great place for innovation and there is a lot of opportunity for Indian firms and start-ups to work with Microsoft and develop cloud-based tools and platforms for a global marketplace, according to a senior official of the software giant.

Alyssa Fitzpatrick, general manager of Microsoft’s worldwide channel sales, on the sidelines of the ongoing annual partnership meet of Microsoft ‘Inspire’, said that some of the great things have been happening in the Indian market from an innovation perspective.

She said that Microsoft was going to market with solution maps. “That’s gonna give us an opportunity to bring some of the innovation from India into those solution maps and really highlight it for the rest of the world’s consumption,” she said.

A recognised leader for transforming global direct and indirect sales in the software industry, Fitzpatrick has carried responsibility for over 50,000 global partners, encompassing management consultancies, global systems integrators and services partners.

Fitzpatrick, a frequent traveller to India when the Indian IT sector was in its infancy stage, cited the example of a small time app developer in India, which now has global presence. “India is a great place of innovation, she said.

“I think there is a lot of opportunity in the Indian market to join together with Microsoft, as we’re going through this transformation and really give opportunity to develop in our Cloud and produce in our Cloud, so that they can be sold globally in the Cloud,” she said.

Noting that it is a very exciting time in India, she said it is because they have gone through the entire maturity of the Cloud, and starting to adopt the Cloud. “Where we’re at right now is, there is a much quicker adoption happening than has happened in the past. We are seeing an acceleration. It is a very exciting time in India, from an innovation perspective, but also from an adoption of the Cloud, and really embracing that Cloud model,” she said.

Fitzpatrick said she really enjoyed watching India become a global force. “We definitely see that there is a very strong skill-set that comes in India. And, by working together, it is a very complementary relationship between Microsoft and the Indian market.”

“We absolutely see that as a very, very positive journey, as the last decade and a half, seeing how India has really stepped up on the global stage from a technology innovation and technology development but also technology implementation prospective. And so, being able to collaborate is a very rich experience with Microsoft,” Fitzpatrick said.

Chris Hallum, senior product marketing manager, Windows Commercial of Microsoft, said that the company was entering into the endpoint protection market with a complete holistic suite of protection detection and response tools to address the issue of cyber security. “All with one experience for managing it, observing what’s going on, the security operations perspective, and we’re now a serious contender for endpoint protection,” Hallum told PTI in an interview. “We call it intelligence driven protection detection response,” he said. Unlike others who are providing cyber security tools, the official said Microsoft has the unique advantage that the people that build the features at Windows are also chartered to understand security and chartered to secure them.

“McAfee, as an example, can only hope to understand. They do a good job, so I’m not trying to disparage them, but we do have a unique advantage in our ability to secure our own systems,” he said. “We also have the unique advantage, in that we can build the protection deep in the system. When you build protection features that sit on top of Windows, if Windows get compromised I can compromise of things running on top.”

“If I bait the security features very, very deep in the system then the attacker has to find a way to penetrate very deep so they can compromise those features. By building it deep in the system, it gives us another advantage,” Hallum said.

Microsoft, he said, is also dramatically improving its RS3 called Device Guard in Windows 10. Hallum said Windows Defender Exploit Guard is a brand new feature that will make it very, very difficult for vulnerabilities and for the system to be exploited and for the types of host intrusion types of attacks to succeed as well. Noting that the average cost of security breach is estimated to be $3.5 million, Hallum said the steps being taken by Microsoft would drastically reduce that cost.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

INDIA & THE WORLD

21.1. Remittances to India dip for second consecutive year: Reserve Bank

BusinessLine, 19 Jun. 2017, Tina Edwin

Sharp fall in oil prices, and political turmoil in some Arab nations cited as reasons Personal transfers by Indians living overseas, including remittances by migrant workers to their families in India, have declined for the second consecutive year in 2016-17, Reserve Bank of India data show.

The transfers have fallen below the $60 billion level for the first time since 2010-11, even though, according to estimates, India remains the top recipient of remittances.

The balance of payments (BoP) statement released late last week shows personal transfers between resident and non-resident households dipped 6.8 per cent to $59.1 billion last fiscal, after falling 5.8 per cent in 2015-16 to $63.4 billion. Significantly, workers’ remittances that make up a substantial portion (over 60 per cent) of household-to-household transfers rose last fiscal after a big dip in the preceding year.

A large chunk of workers’ remittances comes from Indian migrants working in the oil-rich Arab nations. The sharp fall in oil prices in 2015, political turmoil in some of the nations in the region, and interventions by the governments of many West Asian nations to protect their economies affected remittances from the region.

As the result, total workers’ remittances declined 14.6 per cent in 2015-16 to $37.7 billion. However, a part recovery in oil prices and improved political condition in the region as well as turnaround in other parts of the global economy enabled a 3.7 per cent recovery in the amount transmitted by overseas workers to their families in India to $39 billion in 2016-17. Household transfers and remittances are an important source of funds to finance the country’s imports and are mostly seen as a more stable source of foreign exchange than foreign direct investment and foreign portfolio inflows.

It is also described as a third pillar of development — overseas development assistance and FDI being the other two. Household-to-household transfers had peaked in 2014-15 to $67.3 billion. That year, workers’ remittances climbed to $44.1 billion and accounted for 65 per cent of the transfers between households.

A World Bank report on ‘Migration and Remittances’ in April said that economic slowdown in Saudi Arabia and Kuwait had adversely impacted Indian migrant workers in those nations. It further suggested that slow growth and fiscal consolidation in Gulf Cooperation Council nations could keep remittances’ growth in nations such as India muted. For the current calendar year, the report has forecast remittances to India may rise about 1.9 per cent.

22.1. Decks cleared for Dhirubhai Ambani Aerospace Park

BusinessLine, 11 Jul. 2017, Amrita Nair-Ghaswalla

Construction activity at the Dhirubhai Ambani Aerospace Park at Mihan, Nagpur, is set to kick start by the end of this month, with the Commerce Ministry giving its approval for developing the park. Reliance Defence is looking to invest ₹6,500 crore in the park.

The facility is set to host the first ‘Make in India’ defence project, since it will be home to the Dassault- Reliance Aerospace joint venture. France’s Dassault Aviation and Reliance Defence have teamed up in a 49:51 stake joint venture, to carry out the obligations and execute the ₹30,000-crore offset programme related to the sale of 36 Rafale fighter jets.

The park will also be home to the largest defence sector foreign direct investment (FDI) in the country, with the French aircraft manufacturer slated to bring in the first tranche of FDI amounting to ₹200 crore by the month-end.

On July 3, the Ministry of Commerce granted approval to the Anil Ambani-led Reliance Infrastructure arm Reliance Aerostructure as a co-developer of the park, confirmed a senior executive. The Maharashtra Airport Development Company is the nodal agency for developing the aerospace park. A senior executive told BusinessLine that manufacturing at the site will start by the end of this year with the last approval falling in place. Some 50 people have already joined the company. “For the last two months, we have people who are already training in France. They are part of the team, the lead managers at the site, and have been undergoing training with the Dassault team in France,” the executive told this newspaper.

Job creation

Phase I of the project is expected to result in the generation of more than 700 highly skilled direct jobs and 2,800 indirect jobs. The aerospace park will eventually generate more than 10,000 jobs, promoting the ‘Make in India’ and ‘Skill India’ initiatives of the government.

The park is spread over 289 acres, and is set to become the largest greenfield aerospace park in the country. Business at the aerospace park over a 30-year period is expected to exceed ₹2,00,000 crore under ‘Make in India’. “We are also working with many other companies and have multiple projects. All of this will contribute to the government's Make in India initiative,” an official pointed out. Employee count too is expected to go up progressively over the next five years, with around 700 people employed just for Dassault’s single project. Since each project at the park will have its own requirement, overall the pool of skilled workers is expected to be quite large. Apart from the Dassault-Reliance offset facility, the park will also be home to the proposed facilities of Thales, Daher and Strata, among others.

22.2. Tata, Lockheed Martin partner to make F-16s in India

Livemint, 19 Jun. 2017

Tata Advanced Systems and American defence supplier Lockheed Martin have signed an agreement to manufacture F-16 fighter jets in India

Tata Advanced Systems Ltd and US plane maker Lockheed Martin Corp. have signed an agreement to produce F-16 fighters in India ahead of the government’s plan to buy more fighter jets. India is likely to need 200 more fighter planes and has sought proposals for single-engine craft. “F-16 production in India supports thousands of Lockheed Martin and F-16 supplier jobs in the US, creates new manufacturing jobs in India, and positions Indian industry at the centre of the most extensive fighter aircraft supply ecosystem in the world,” said a joint statement on Monday by Tata and Lockheed at the Paris Air Show, according to Reuters.

The deal comes days ahead of Prime Minister Narendra Modi’s visit to the US on 26 June. India has announced defence contracts ahead of or during similar international visits in the past. India and the US have increased defence cooperation over the past decade. US President Donald Trump, on his part, has opposed any move to move manufacturing facilities to foreign shores.

“This unprecedented F-16 production partnership between the world’s largest defence contractor and India’s premier industrial house provides India the opportunity to produce, operate and export F-16 Block 70 aircraft, the newest and most advanced version of the world’s most successful, combat- proven multi-role fighter,” the firms said in the statement.

India will also have the chance to export the F-16, which is flown by air forces around the world, the joint statement said. Some 3,200 of these planes are being flown by 26 countries. Tata is already building airframe components for the C-130 military transport aircraft. “This agreement builds on the already established joint venture between Lockheed Martin and Tata and underscores the relationship and commitment between the two companies,” said N. Chandrasekaran, chairman of Tata Sons Ltd.

“Lockheed Martin is honored to partner with Indian defense and aerospace leader Tata Advanced Systems Limited on the F-16 programme,” said Orlando Carvalho, executive vice-president of Lockheed Martin Aeronautics. “Our partnership significantly strengthens the F-16 ‘Make in India’ offer, creates and maintains numerous new job opportunities in India and the US, and brings the world’s most combat-proven multi-role fighter aircraft to India.”

Sweden’s Saab is the other contender to supply the Indian Air Force, offering to make its Gripen fighter in India. It has not yet announced a local partner for the plane, which it has pitched as a modern alternative to the F-16s.

Mint first reported on 16 February that Saab is in talks with the Gautam Adani-led Adani Group for a manufacturing partnership.

Saab has also promised to build what it calls a world-class fighter jet facility in India if it wins the order. It also did not offer any immediate comments on the subject on Monday evening. The Adani Group entered the defence business in 2015. It has a Israeli joint venture called Adani-Elbit Advanced Systems India Ltd.

Anil Ambani-led Reliance Group has already formed a joint venture firm with Dassault Aviation SA of France for the manufacture of the 36 Rafale aircraft that India ordered for $8 billion during Prime Minister Narendra Modi’s trip to France in 2015.

23.1. FIEO sets export target of US$ 325 bn for this fiscal

PTI, Jun. 22, 2017

New Delhi: With exports recording continuous growth, exporters body FIEO expects that the country's merchandise shipments would reach USD 325 billion this fiscal.

Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta also said while India is showing a positive trend on exports since the last nine months, there is a bit of anxiety in the business with regard to the Goods and Services Tax (GST).

"Indian exports have been on an upward trend in last few months with export of USD 275 billion in last fiscal and a target of USD 325 billion to achieve in 2017-18," FIEO said in a statement. Further, it has organised an interactive session with Commerce Secretary Rita Teaotia in Kolkata. Quoting the secretary, FIEO said, "GST is a well needed reform and the transition will require some time, and calibrated process of foreign trade policy will be continuous". With regard to shipping lines overcharging, she stated that the Director General Shipping has been informed and they are waiting for a response from them.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

23.2. M&M to form JV in Brazil to reap success in S America

BusinessLine, 14 Jul. 2017, Thomas K Thomas

In a bid to get greater access to the South American market, Mahindra & Mahindra will form a joint venture with a local player in Brazil for its tractor business. This is in addition to its earlier announced move to acquire a tractor distributing firm in the country.

Speaking to BusinessLine, Mani Iyer, President and CEO, Mahindra North America, said: “We are very serious about South America and have tall plans in terms of launching products and localisation. We have already made investments in acquiring distributors there. As we are very new to that market, we will look for a joint venture based in Brazil.”

Mahindra has identified Mexico, Brazil, Argentina and Chile as the four key South American markets for its tractor business. “We have learnt a lot from the US and will use the expertise we have gained, to be among the top-three in the new markets,” Iyer said. “Brazil will be the centre for our South America rollout.”

Mahindra is currently the number-three tractor brand in the US with sales of nearly 25,000 units a year, just behind regional strong players Kubota and John Deere. The company expects to double its revenues to $1 billion by 2020, up from $600 million now. In addition to tractors, Mahindra also sells utility vehicles in the US.

Branding

To achieve this growth, Mahindra is spending millions of dollars in advertising to improve its brand awareness and will continue to spend more. While it also has rolled out attractive warranty and insurance schemes for its users, the one thing that has worked in Mahindra’s favour is, it has been able to brand its products as the ‘toughest tractors in the world’. “Rivals can copy when it comes to schemes and offers, over a period of time, but building a tractor that’s tougher than Mahindra at current price points can never be done by our competitors,” said Cleo Franklin, Chief Marketing Officer and Vice-President (Strategic Planning), Mahindra North America. The company is also undertaking a major revamp of its product portfolio with as many as 40 new launches this year, including upgrades of existing models. “We have never done a revamp of this scale before. This is part of our strategy to stay ahead of competition and bring features that our customers have been asking of us,” said Franklin.

Mahindra has unleashed an aggressive campaign to reach out to consumers, including women and millennials. To meet localisation needs, the company has invested in setting up assembly units in the country and is now looking to invest in a greenfield manufacturing facility for tractors in the US in the next 3-5 years. “We already have invested a lot — brand, technology, distribution points, dealers and people. The number of products being made for the US market alone is very high. It will call for more localisation,” Iyer said.

Mahindra has nearly 550 dealers in the US, which will be scaled up to around 750 over the next 2-3 years. It also has five distribution centres in the country and one in Canada. The tractor maker is in the process of opening up distribution in Mexico.

(The writer is in Houston at the invitation of M&M)

24.1. Strategic issues dominate Modi-Trump talks

BusinessLine, 27 Jun. 2017, Nayanima Basu

The much-awaited meeting between Prime Minister Narendra Modi and US President Donald Trump was nothing short of a tough talk between both sides putting the spotlight back on strategic and security issues while the troubled economic issues clearly took the backseat. In an effort to achieve something substantial at a time when both sides are marking 70 years of diplomatic ties, the two leaders clearly steered away from the usual rhetoric and charted a new path that heavily dealt with issues related to counter-terrorism and security while at the same time conspicuously sending out sturdy messages against each other’s respective opponents, be it China, North Korea or Pakistan.

According to the joint statement issued by both sides post Modi’s daylong meetings with Trump, the US and India asserted that a robust partnership between the two will result in bringing peace and stability in the Indo-Pacific region. They even reiterated the importance of freedom of navigation, overflight and commerce in the region with obvious reference to China and its role in the South China Sea dispute.

While US was successful in putting North Korea and weapons of mass destruction on the joint statement, India was able to bargain its way by having one full paragraph dedicated to Pakistan and the fact that terrorists are breeding on its soil.

“The joint statement has clearly focussed on strategic issues and India was quite successful in culling out for itself a balanced joint statement. The statement has made it clear that the leaders are more focussed on strengthening strategic issues while the economic issues, which is full of complaints, will be there for the officials to handle,” said Neelam Deo, Director, Gateway House, who was also India’s Consul General in New York from 2005 to 2008.

India claimed major diplomatic victory against Pakistan by having America designate Hizb-ul- Mujahedeen chief Syed Salahuddin as a ‘Specially Designated Global Terrorist’ while the US also asked Pakistan to speed up the trials on 26/11 Mumbai blasts, Pathankot and Uri among others. Both sides also decided to cooperate with each other against some of the dreaded terrorist organisations such as Al-Qa’ida, ISIS, Jaish-e-Mohammad, Lashkar-e-Tayyiba and D-Company. In a 20-minute one-on-one meeting between Modi and Trump, it was decided that a new consulting mechanism will be set up on domestic and international terrorist designations listing proposals. The leaders announced increased cooperation to prevent terrorist travel and to disrupt global recruitment efforts by expanding intelligence-sharing and operational-level counterterrorism cooperation.

Both sides decided to exchange information on known and suspected terrorists for travel screening even as they decided to strengthen exchange of information between the intelligence officials on both sides over movements and linkages of terrorist groups and their leaders, as well as on raising and moving of funds by terrorist groups.

US also supported India’s “early membership” in the Nuclear Suppliers Group, the Wassenaar Arrangement, and the Australia Group. In addition to that, Trump also reiterated America’s support for India’s permanent membership on a reformed UN Security Council.

Defence cooperation

Reiterating India’s recognition by the US as a ‘Major Defence Partner’, both sides decided to work together on advanced defense equipment and technology. The decision to buy ‘Sea Guardian’ drones from US in a $2-billion deal was also finalised by India during the talks. “India is being considered as major defence partner was clear from the fact that the US agreed to sell these drones for the first time to a non-NATO country. This clearly shows the strategic importance with which US is viewing India,” said Nandan Unnikrishnan, Vice-President, Observer Research Foundation.

Modi also extended an invitation to President Trump to visit India.

24.2. Modi in Israel: India-Israel ties elevated to strategic partnership

Livemint, 5 Jul. 2017, Elisabeth Roche

India, Israel sign seven pacts in areas such as space, agriculture technology and water conservation during Narendra Modi’s historic visit

New Delhi: It took 70 years for an Indian prime minister to visit Israel. Yet, it only took a day for both sides to elevate their ties to a strategic partnership.

This is significant given that the two countries established diplomatic relations only 25 years ago. Now the relationship between the two countries has been elevated to the status accorded by India to key partners like the US, Russia, Germany and Japan.

Israel, India launch technology fund during Narendra Modi visit

“This historic first-ever visit by an Indian prime minister to Israel solidified the enduring friendship between their peoples and raised the bilateral relationship to that of a strategic partnership,” said the opening paragraph of a joint statement issued after Prime Minister Narendra Modi and his Israeli counterpart Benjamin Netanyahu concluded their talks in Jerusalem on Wednesday. Adding new context to the ties—anchored previously in security , defence cooperation and agriculture—were seven pacts covering areas of collaboration in space, water conservation and fostering innovation.

In his remarks to journalists, Netanyahu described the India-Israel partnership as a “match made in heaven” but implemented on earth.

“The Modi visit and the elevation of ties to a strategic partnership has given the India-Israel relationship the public endorsement that Israel has been seeking for a while,” said C.U. Bhaskar, director at the New Delhi-based think tank, Society for Policy Studies. “Previously, the relationship was below the median,” he added.

Besides bilateral cooperation in the areas of research and innovation, water utility reforms, agriculture and space, the two countries were also looking at cooperation in third countries and continents like Africa, Netanyahu said, adding, “This (India-Israel) is a partnership to seek the good, to achieve the good.”

Modi, in his remarks, described his talks with Netanyahu as “productive.” “Israel is among the leading nations in the field of innovation, water and agricultural technology. These are also among my priority areas in India’s development. We agreed that efficiency of water and resource use; water conservation and its purification; and productivity increases in agriculture are key areas in deepening our bilateral cooperation,” Modi said.

“Our decision to establish a bilateral technology innovation fund worth $40 million for research in industrial development will help us in achieving this goal,” he added. Briefing reporters, Indian foreign secretary S. Jaishankar said Modi’s visit “marks the real broad-basing of the relationship. The agenda today envisages Israel as a major development partner and technology partner”.

Underlining the significance of the agreements signed on Wednesday, Jaishankar said that India had set itself the goal of doubling farmers’ incomes by 2022 and hence was looking at technological intervention to achieve this objective.

Earlier, speaking to reporters, Modi said he and Netanyahu had also “agreed to do much more together to protect our strategic interests and also cooperate to combat growing radicalization and terrorism, including in cyber space”.

According to the joint statement which provided a glimpse of the future contours of the relationship, “the two leaders...visualized that the two countries will become close partners in development, technology, innovation, entrepreneurship, defence and security”.

To boost trade and investment, the two sides “agreed that negotiations would be conducted on an agreement for the protection of investments in order to encourage bilateral investments from both sides,” the statement said.

25.1. Prime Minister Modi and Prime Minister Costa launch unique Start-up portal

Press Information Bureau, Jun. 27, 2017

New Delhi: Prime Minister Modi and Prime Minister Costa today launched a unique startup Portal - the India-Portugal International StartUp Hub (IPISH) - in Lisbon. This is a platform initiated by Startup India and supported by Commerce & Industry Ministry and Startup Portugal to create a mutually supportive entrepreneurial partnership. IPISH hosts a range of tools and will provide information on the start-up hotspots of Bangalore, Delhi and Lisbon; and on associated subjects, such as policy, taxation, and visa options. It will develop a Go-To-Market Guide to support start-ups.

IPISH is expected to help in mutual capacity building, and enable connections between start-ups, investors, and incubators from relevant sectors. It is also expected to establish a network of honorary ambassadors based in India and Portugal to guide start-ups from both countries.

Background:

There are strong complementarities between India and Portugal in the start-up sector. Portugal has one of the highest rates of business creation in Europe and has emerged as one of the most vibrant European eco-systems for entrepreneurship. Lisbon is hosting the Web Summit - a key annual international technology conference - for 3 years from 2016 onwards. The last Web Summit had 700 participants from India, and the number is expected to go up further this year. The governments of both India and Portugal are focusing on promoting Start-ups.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

25.2. India-Vietnam should achieve US$ 15 bn trade target by 2020: Prez

PTI, Jul. 05, 2017

New Delhi: President Pranab Mukerjee today said India and Vietnam should take steps to achieve USD 15 billion bilateral trade target by 2020.

He said this while speaking to the Vietnamese Deputy Prime Minister and Foreign Minister Pham Binh Minh, who called on him at the Rashtrapati Bhavan.

"The status of present bilateral trade between India and Vietnam is satisfactory. However, the two countries should work together to achieve the target of USD 15 billion bilateral trade by 2020," the President said. In 2016-17, the two way trade between the countries stood at USD 10.14 billion.

Mukherjee said many Indian companies were keen to invest in Vietnam for the development and prosperity of their people.

He said it was his strong belief that this partnership will continue to strengthen in the years to come. The President said the two countries traditionally share warm and cordial relations, based on mutual respect and goodwill.

Our fruitful partnership has grown in recent years, Mukerjee said, adding that he was "confident" that it would continue to strengthen in the years to come.

The President also recalled his state visit to Vietnam in September 2014 and thanked Minh for his country's warm hospitality.

He also congratulated Minh on his elevation as a member of Politburo last year. The Vietnamese deputy PM reciprocated the President s sentiments and said Vietnam is keen to work with India in taking their mutual relationship to greater heights.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

AAPI

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Thursday 20 July 2017

NEWSLETTER, 20-VII-2017

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

– INDUSTRY, MANUFACTURE

– SERVICES (IT, R&D, Tourism, Healthcare, etc.)

NEWSLETTER, 20-VII-2017

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

– INDUSTRY, MANUFACTURE

– SERVICES (IT, R&D, Tourism, Healthcare, etc.)

INDIA & THE WORLD