AAPI: 2017

LISBON, 20th December 2017

Index of this Newsletter

INDIA

INDIA & THE WORLD

21.1. Hyderabad a model city for drawing investment: US envoy Kenneth Juster
22.1. India-Africa trade likely to cross US$ 100 bn in 2 yrs: Naqvi
22.2. India, Russia discuss ways to boost trade, investments
23.1. Indian and Italy sign a new MoU for cooperation in Agriculture and Phytosanitary issues
23.2. Korea scouting for investment opportunities in Bengal
24.1. India-Japan Act East Forum will be a milestone: Envoy
24.2. Aurobindo Pharma sets sights on East Europe for inorganic growth
25.1. WTO ministerial begins with moderate hope of outcome
25.2. WTO Buenos Aires meet: India hardens stand on food security issue

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LISBON, 20th December 2017

NEWSLETTER, 20-XII-2017

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1.1. President of India inaugurates northeast development summit; says development of northeast is true measure of the India-Asean partnership

Press Information Bureau, Nov. 22, 2017

Manipur: The President of India, Shri Ram Nath Kovind, inaugurated the Northeast Development Summit in Imphal, Manipur, today (November 21, 2017).

Speaking on the occasion, the President said that the Northeast is an amazing social and cultural ecosystem. Few regions of the world have such a wealth of cultural, ethnic and religious diversity packed into such a small area. This variety is an inspiration for all of us. The Northeast is home to some of the oldest indigenous communities in the world. It is one of our spiritual homelands. Whether it is the traditions of the Devi in Kamakhya or of Buddhism in Tawang and elsewhere, they make for a sacred bond that unites India with Southeast Asia. Christian missionaries have contributed to education in this region. And there is even a small but thriving Jewish community in Manipur and Mizoram.

The President said that the Northeast’s geographical location makes it the obvious gateway to India, linking the vast economies of the Indian subcontinent and of today’s ASEAN countries. This is the potential we have to tap. And this is the idea that must inspire this Summit.

The President said that central to the Government of India’s approach to the development of the Northeast is an urgent and speedy enhancement of connectivity. This is a multi-modal programme, across land, water and air. And it refers both to connectivity within India as well as to connectivity between India and its eastern and Southeast Asian neighbours.

The President emphasised that in the development of the Northeast is both the development of India – as well the true measure of the India-ASEAN partnership. He stated that the opportunity is before us and we should grab it.

Later in the day, the President graced and addressed the inaugural event of ‘Manipur Sangai Festival 2017’ in Imphal.

Addressing the gathering, the President said that he was happy to inaugurate the Sangai Festivalwhich is the perfect showcase for the cultural diversity and richness of Manipur, comprising its various communities and beautiful social fabric. The food and culture, adventure sports and crafts, handlooms and universally-admired dance forms of Manipur cannot find a more appropriate setting. Manipur’s cultural traditions, its social, religious and ethnic mosaic, and its history of courage and resilience are an inspiration for everybody in India.

The President paid tributes to the martyrs of 1891 and said that these heroes will always be remembered for their contribution to the cause of our freedom and human liberty. For every Indian the great Bir Tikendrajit and his comrades are cherished icons.

The President said that a favourite – not just his favourite; our favourite, the whole country’s favourite – is the magnificent Mary Kom, Manipur’s very own Olympic medallist. He recalled his tweet after she won the gold medal in the Asian Boxing Championship recently, “You make us prouder with every punch.”

The President called Manipur the heartland of Indian football. In the Under-17 World Cup hosted by India, our inexperienced but determined boys put up a fighting show – and eight of the 21 members of our national team were from Manipur. This list included the captain Amarjit Singh Kiyam and the gallant goal-keeper Dheeraj Singh Moirangthem.

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

1.2. The emerging Indo-Pacific architecture

Livemint, 19 Nov. 2017, W.P.S. Sidhu

While the ‘Quad’ is a crucial pillar of the peace and security architecture in the Indo-Pacific region, it needs to be buttressed by at least two other pillars—EAS and Apec

The term “Indo-Pacific” has long been in vogue among marine biologists and ichthyologists to define the stretch of water from the tropical Indian Ocean, through the equatorial seas around the Indonesian archipelago, the South China Sea, and to the western and central Pacific Ocean. The term entered the geopolitical lexicon only in the early 21st century and, predictably, has proved to be far more contentious than its scientific definition. The region has been the locale for some of the bloodiest inter- and intra-state wars in the 20th century and promises to be the theatre for similar conflagrations in the foreseeable future between failing, emerging and established nuclear-armed countries. This potential for conflict is exacerbated by the absence of a robust regional peace and security architecture.

Against this backdrop, efforts to rejuvenate the Quadrilateral Security Dialogue (or the “Quad”) between Australia, India, Japan and the US on the sidelines of the Association of South East Asian Nations (ASEAN) and the East Asia Summit (EAS) in Manila are of notable significance. Although this meeting was low-keyed and downplayed by India in particular, the Quad itself has the potential to secure the region against great power conflict.

There are several factors why the countries chose to revivify the Quad at this juncture. For India, the Doklam confrontation with China and concerns over the latter’s so-called Belt Road Initiative (BRI) were crucial considerations. Similarly, following US secretary of state Rex Tillerson’s visit, there is a desire to engage Washington more closely in the region. For Australia, and to some extent Japan, the key drivers behind formally reviving the Quad was the concern about the commitment of the Donald Trump administration to the bilateral alliance arrangements and the quest to buttress them with the Quad commitment. For the US, the Quad offers a way to share its burden of containing China in the region.

When it comes to fruition, the Quad will not be dissimilar to the North Atlantic Treaty Organization (Nato), which managed to “keep Russia out, the US in and Germany down”. Most observers have simplistically branded the nascent organization as a tool to contain China. However, to be truly effective—like Nato—the Indo-Pacific Quad will also have to fulfil three simultaneous missions: keep China out, the US in and Japan down.

While managing China and keeping Beijing on the status-quoist path, the Quad will also have to ensure the continued engagement and commitment of Washington to the region, which can no longer be taken for granted. Given the disruptive and isolationist tendency of Trump (evident in his skipping the EAS) and, possibly other future US leaders, this is a crucial role that the organization will have to fulfill. Similarly, given Japan’s brutal World War II record in the region, the Quad will also have to reassure other potential future members, including from ASEAN, that Tokyo’s role will remain benign and any revisionist tendencies will be kept in check.

Although the Quad was formally initiated in 2007 at the prompting of Japanese Prime Minister Shinzō Abe, its informal origins can be traced to 2004. In the wake of the devastating Indian Ocean tsunami, Australia, India, Japan and the US launched an ad-hoc humanitarian assistance and disaster relief (HADR) mission, which allowed them to come together operationally. Since then the four navies have worked together on several occasions.

While formal Quad meetings were shelved following strong objections from China in 2007, discussions nonetheless continued. For instance, in 2015 the foreign secretaries of Australia, India and Japan met ostensibly to firm up the security leg of India’s “Act East” policy. Soon thereafter the India, Japan, US trilateral meeting was held in Honolulu. Thus, the Quad continued to function under the garb of two trilateral meetings. Subsequently, since 2015, the India-US Malabar naval exercises have included Japan and are likely to include Australia in the next iteration, thus making the military component of the Quad a reality.

Nonetheless, the Quad’s potential is likely to be limited by several internal differences. For instance, while India promotes the principle of “freedom of navigation”, it is reluctant to enforce it through freedom of navigation operations by sailing warships through exclusive economic zones, particularly in the South China Seas. Thus, the 2015 Indian Maritime Security Strategy cautions that there may be divergent security perceptions “with nations that may be traditional friends (read US)”. Members of the Quad will have to address these differences to develop the institution further.

Moreover, while the Quad is a crucial pillar of the peace and security architecture in the Indo-Pacific region, it needs to be buttressed by at least two other pillars. The EAS serves the role of the political pillar and the Asia Pacific Economic Cooperation (Apec) as the trade and economic pillar. While all Quad participants are members of EAS, India is still not a member of Apec. This lacuna needs to be remedied if New Delhi is to contribute to all three pillars of the Indo-Pacific architecture.

Finally, India will also have to shed its inherent abhorrence for formal military arrangements and cooperation, even though this might bring with it the prospect of being dragged into a war not of its making. As Nato has shown, sometimes a democratic military alliance is essential to maintain peace.

W.P.S. Sidhu is professor at New York University’s Center for Global Affairs and associate fellow at the Geneva Centre for Security Policy.

2.1. Vision of the Government is '24x7 Power for All' - All the States on board to achieve Target by March 2019: Shri R. K. Singh

Press Information Bureau, Dec. 08, 2017

Programmes to reduce Power Losses below 15% by March 2019 in all States on track, says Union Power Minister

Consensus among States on Ending Human Interface in billing process; Mandatory installation of Prepaid/Smart Meters to prevent corruption and increase compliance in Bill payments

States to ensure Cross Subsidization in Power Sector remains below 20%: Shri R.K. Singh

Separation of Carriage & Content in Power Distribution to be brought about through an amendment to Electricity Act

Union Minister of State (IC) for Power and New & Renewable Energy, Shri Raj Kumar Singh, chaired a Conference of Power and Energy Ministers of States/ Union Territories (UTs), held here today. A total of 17 States and 1 UT attended the Conference and deliberated on a host of issues including progress on Union Government flagship schemes at the State level and reform measures that need to be brought about at both Union and State levels to ensure 24x7 Affordable and Quality Power for All.

Addressing the media, Shri Singh clearly laid out Union Government’s Vision behind holding this Conference. The Minister made very clear that 24x7 Power is a Fundamental Right of every citizen of the country and all States will have to ensure that by March 2019. The States have arrived at consensus-based roadmap to bring down losses in State Utilities/ DISCOMS to below 15% by then and any gratuitous load shedding by them after that deadline would attract penalties. “There can be no justification to pass on the burden of our inefficiency to the consumer and this shall not be allowed post March 2019. It is for the Power Utilities to devise strategy to reduce their losses, the consumer must not be burdened with high power tariffs irrationally”, the Minister added.

During the Inaugural Session of the Conference, Shri Singh said that Power is at the core of economic growth of the country. “Without power there can be no development; We are on our way towards becoming a developed country and power reforms are top priority. Industrialization and job creation is not possible without affordable and quality power for all. We are about to add 40 million new consumers by December 2018 and expected economic growth of 8 to 9% in the next 5 years, power demand would increase manifold. Further, electricity will edge out other forms of energy in the coming future as it is more efficient and easy to transport. Electricity will take place of fossil fuels for mobility, cooking etc. and will decrease the imports of petroleum products. Becoming self-sufficient in Power is essential for our strategic autonomy on the global stage. In addition to this, renewable energy will take place of fossil fuels in the near future as storage systems become viable”, the Minister said.

Government of India is providing funds to the States under ongoing Central Government schemes of over Rs. 85000 crores, for strengthening their power infrastructure. As the Country is power surplus presently, the States are now in a position to provide 24x7 power for all, which should be a primary obligation of the State Utilities, provided that the consumer pays for the power consumed, Shri Singh said. “It has been observed that some States are not able to bill the consumers effectively and are losing about 50% of the expected recoveries. Where the consumers are billed properly, the recovery is around 95%”, the Minister added.

Proposing a slew of reforms, Shri Singh said that in order to decrease the losses of the DISCOMs and make them viable, the Union Government is proposing to do away with human interface in meter reading and billing of consumers for power consumption. Mandatory installation of prepaid meters for small consumers and smart meters for large ones, with every connection in the future in each State, would prevent corruption and increase compliance in bill payments, the Minister stated.

“This will be a pro poor step as it will give the poor consumers flexibility to recharge that prepaid meters online through mobile phones, as and when they want, with a small amount at any given point of time. This would also do away with the human element in meter reading, billing and recovery of the amount from consumer and hence the corruption involved at the lowest level.”, said Shri Singh. Giving an example of a successful implementation of prepaid meters, the Minister said that Manipur has been able to reduce its losses by over 50% by installing prepaid meter in all its urban areas.

Shri Singh emphatically stated that if losses continue, no matter how much funds are injected into the Power Utilities, the Non-Performing Assets (NPAs) would start building up again and the DISCOMs would ultimately become unviable in the near future. “This is an unacceptable situation and we have to make the losses a thing of the past”, he added. The Minister also requested all the State Energy Ministers to take continuous review of DISCOM losses with senior officials of the State electricity department and ensure that the leakages are plugged and 24x7 power for all is mandatorily ensured by all States.

Speaking about the separation of carriage and content, the Minister said that it is proposed through an amendment in the electricity act to segregate the carriage from content in the distribution sector. It is planned to introduce multiple supply licensees in the content, based on market principles, and continue with the carriage as a regulated activity. Shri Singh further said that it is also proposed to set in place special police stations and courts to settle cases in the power sector at the earliest.

Talking about the reforms in the renewable energy sector, Shri Singh said that India has pledged to achieve 175 GW of renewable energy by 2022 and 40% of installed power capacity from renewable energy by 2030 as an action plan to fight climate change. To ensure the achievement of this goal, it is mandatorily ensured by State governments that the Renewable Purchase Obligations (RPOs) are fulfilled, the Minister added. Shri Singh also said that the Union Government is focusing on hydropower and soon the new hydro power policy will be formulated. “Hydropower is important as balancing power and will be instrumental in decreasing our dependence upon fossil fuels in the future”, Shri Singh added.

Stating other reform measures in Power Sector planned in near future, the Minister said that the Government of India is focusing on Make in India and the future industrialization and employment generation in the country has to be indigenous. “For giving a push to Make in India and Domestic Industrialization, we have to make quality power affordable for all and all States have to ensure that the Power Purchase Agreements are honored, tariffs are sustainable and the element of cross subsidization remains below 20%”, Shri Singh said.

Further, the Minister added that, to help the poor power consumers, the government is pushing for Direct Benefit Transfer (DBT) of subsidy in power sector. This would make the industry more competitive and the burden of excessively high tariffs will be taken away from the consumers.

Ministers from the States of Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Goa, Haryana, Jammu & Kashmir, Jharkhand, Karnataka, Kerala, Manipur, Nagaland, Odisha, Sikkim, Tamil Nadu, Telangana, Uttar Pradesh and UT of Puducherry were present during the Conference with their senior officers. Other dignitaries present were Shri Ajay Kumar Bhalla, Secretary Power, along with other senior officers of the Ministry.

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

2.2. Tata Projects-Daewoo jt venture wins Rs. 5,612 cr Mumbai trans harbour link project

BusinessLine, 4 Dec. 2017

Package involves construction of a 7.8-km-long bridge section across the Mumbai Bay

Tata Projects Ltd through a joint venture with Daewoo E&C of South Korea has announced that it has secured a $850-million contract (Rs. 5,612 crore) to design and build a part of India’s longest sea-bridge - Mumbai Trans Harbour Link.

While the Tata joint venture emerged as the lowest bidder for both the sea packages 1 & 2, it was awarded only one of the packages (package 2) as provided in the tender conditions.

The package awarded to Daewoo-Tata Projects joint venture involves construction of a 7.8-km-long bridge section across the Mumbai Bay, including Shivaji Nagar Interchange at Navi Mumbai, at a contract value of Rs. 5,612 crore ($850 million), which is a complex stretch.

Tata Projects is one of India’s fastest growing construction companies and together with its Korean partner, it will bring new technology and latest construction methods and techniques to deliver this milestone project.

The project will use reverse circulation drill method for foundation and erection of a large block (180m) orthotropic steel deck structure at navigational span. Specialised steel will be imported from Japan for fabrication. Tata Projects adheres to highest quality and safety norms and is geared for on-time delivery of its projects.

Reverse circulation drilling

Reverse circulation drilling is a method of piling in hard rock strata wherein the machine drills through the rock and the cut material gets mixed with water, which the machine brings back to surface by using pressurised air.

This method is faster and proven to be successful than conventional bored piling method in hard rock. High drilling penetration rates can be achieved using this method as it is quite versatile. It is also an environment friendly technique when compared to conventional methods as it doesn’t use bentonite/polymer.

An orthotropic steel desk structure - comprises structural steel plate and an extended arm. The arm is located at the obligatory span for enabling navigation. This structure is stiffened longitudinally and transversely to allow for bearing various loads. Thus, prefabricated structures can be moved across. The 180m structure planned is among the largest used.

3.1. Crony capitalism, political pressure contribute to current problems in economy: Prashant Bhushan

BusinessLine, 19 Nov. 2017, N S Vageesh

Many of the country's leading corporations including Reliance Industries, Reliance (ADA) group, the Adani group and Essar group came under a blistering attack from senior lawyer and civil rights activist Prashant Bhusan at Mumbai today, as being examples of crony capitalism which along with political pressure contributed to many of the problems facing the economy today.

He was speaking on the topic, 'The mounting problem of NPA - who is the culprit? ' at the AIBEA's National Banking Conclave.

There were many cases of over-invoicing involving these corporations pointed out by the Directorate of Revenue Intelligence (DRI) as well as CAG audits in the past years, he said.

The modus operandi of many of these cases were very similar, he said.

The money was siphoned out through over-invoicing by intermediary companies set up outside India which would then remit the money to another fully owned company in a tax haven like Cayman Islands, for example, he said.

In the case of Reliance Industries, the CAG had pointed out in a scathing report some years ago that there was over-invoicing to the extent of over 1 billion dollars in the D-6 gas fields, he said.

Bhushan questioned the sharp rise in the prices of Rafale fighter aircraft deal which India had signed with the french manufacturer when the PM had visited France a few months ago.

He said when the UPA was in power, the price of a single aircraft was around Rs. 530 crore. A month before Manohar Parikkar, former defence minister resigned, he had mentioned that the cost per aircraft worked out to Rs. 700 crore, he said.

Just a little while later, the PM went to France and a contract for 36 planes was signed and the cost had risen to Rs. 1,700 crore per aircraft. This, he said, was justified by the government on the grounds that a new helmet was being offered for the pilot as well as a new bay for an extra missile!

He questioned the Government's anti-corruption credentials when there was no transparency in such deals.

He called for greater transparency in the loan appraisal process when a corporation approaches public sector banks for funds.

Bhushan said they ought to lose their right to privacy when they ask for public funds and cannot later take protection under the rules when their default has to be disclosed.

He urged the setting up of an independent credit appraisal authority to do the appraisal of every loan proposal from top corporations. This would ensure that forum shopping being done by corporations (moving from one public sector bank to another in search of loans) would come to an end.

Although this may result in erosion of autonomy for banks themselves, it would also prevent the problem of individual banks coming under pressure, he said.

He also suggested that conditional personal guarantees must be taken from promoters which will kick in, if there is any attempt to siphon out money from the enterprise they are running. They cannot take protection under the limited liability concept of corporations then.

Bhushan also cautioned bankers to be wary about the pitfalls in the new Insolvency and Bankruptcy code. This was already being manipulated by some unscrupulous borrowers, he said.

In the case of Amrapali Group, a real estate group with about 20 companies, which had recently been taken through the insolvency process, many group companies were declaring bankruptcy one after another.

Bank of Baroda (the banker to the group) was trying to get it to declare insolvency through the process and the company was not resisting it all. Instead, the auditor of its companies was appointed as an Insolvency resolution professional and called this an example of collusive practice.

Privatisation of public sector banks is not the solution to the problem of NPAs, Bhushan said. Public sector banks fulfil a vital social need and a country like India with large number of poor people need access to finance.

He pointed out that the government should not abdicate its responsibility to poor people. There will be need for soft loans for farmers, for instance, something which private sector banks are never going to give, he said.

3.2. Indian aviation market will surpass US and China in 15-20 years

PTI, Dec. 08, 2017

Srinagar: India's aviation market would surpass the US and China by crossing a billion passenger trips per year in the next 10 to 15 years, Union Minister of State for Civil Aviation Jayant Sinha said here today.

Sinha, who was speaking at the day-long Ideas Summit 2017 of entrepreneurs here, said the aviation industry now equaled the Indian Railways in terms of turnover as it generated a total revenue of about Rs 1.8 lakh crore this fiscal.

"The growth in aviation sector is unprecedented. In the last three-four years, we have actually been growing at 15-20 per cent. From 100 million passenger trips a few years ago we will double to about 200 million passenger trips this fiscal.

In fact, India is already the third largest domestic aviation market in the world only after the US and China," he said.

The US stood at around 900 million passenger trips per year and China was at 600 million, Sinha said, adding that projections point at India growing to a one billion passenger trips market in the next 15-20 years.

"So, from 500 planes in the sky, we will have to go to about 2000 planes," Sinha said at the event organised by the Foundation for Resource Development and Education at SKICC.

The Union minister said aviation was going to be one of the largest industries in India and airlines had placed orders for over 900 planes.

"If you think that we are just making up these numbers, let me tell you that today our airlines have already placed orders for 935 planes," he said.

He said the government is trying to spread air connectivity throughout the country. "We have grown the aviation sector to see the PM's dream of 'sab udenge, sab judenge' being realised," he said.

The minister said the aviation industry generated a turnover of about Rs 1.8 lakh crore this fiscal which is equal to that of the Indian Railways.

"Today the airline industry is as big as the Indian Railways and the Indian telecom industry," he said.

In 2014, the country had about 75 operational airports and through the regional connectivity scheme 'Udaan', the government added 25 more airports to the aviation network this year and now there are 100 operational airports, Sinha said.

"For J-K, you will probably have five or six more airports," he added.

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

4.1. Where is the economy headed in 2018?

BusinessLine, 9 Dec. 2017, Muthukumar K

We put the components of GDP plus inflation factors under the scanner to gauge how they will drive India’s economic recovery. Here are our findings

As the year draws to a close, the big question is, how will the economy perform in 2018? Will India regain the title of the fastest growing BRIC economy by inching ahead of China?

After reeling under the effects of GST and demonetisation, GDP growth in the September 2017 quarter showed signs of a pick-up. It clocked a growth rate of 6.3 per cent after sliding for five consecutive quarters. Whether the pick-up will gather further momentum or fizzle out remains a billion-dollar question. The government and monetary authorities are working towards getting Indian economy to its potential growth rate of 7 per cent plus in 2018 — which evaded us in 2017.

Bits-n-pieces

Forecasting GDP of the Indian economy for 2018 need not be an exercise of crystal ball-gazing. It requires analysing the prospects of various components. GDP — as per the expenditure method — is measured as a sum of Consumption, Investment and Government Expenditure (which in economic parlance is referred to as C + I + G). While consumption includes consumption by the households, investment refers to capital formation in the economy. Government expenditure includes Government Final Consumption Expenditure (GFCE) - spends made on items like education, health as well as salary and arrears. In addition, investments are also considered part of Government expenditure.

To the above figure, if one incorporates the external sector by way of net exports (exports minus imports), one arrives at the nominal GDP of an economy. Thus, in all, we could analyse the four components of GDP to gauge its robustness in driving the economic recovery for India. And since we are looking at estimating real GDP growth, inflation is another important factor that cannot be ignored.

Consumption

Consumption is the largest component of the Indian economy, constituting about 54 per cent of GDP. Post the note ban in November 2017, the worrying factor is that its share in the economy has fallen drastically (it was 59 per cent as of December 2016).

Consumption growth — as measured by growth in the private final consumption expenditure — fell consecutively in the initial three quarters of calendar year 2017. From a high growth level of 11.1 per cent in the December 2016 quarter, it fell to 7.3 per cent, 6.7 per cent and 6.5 per cent in the first, second and third quarter of this calendar, respectively. The note ban and GST implementation have had impact on household consumption in 2017.

With consumption being the primary growth driver of the economy, boosting it will be crucial to bring the economic growth rates back to 7 per cent levels. And in this, the Central government will play an important role. For instance, lowering GST rates of mass consumption products like detergents, aftershave and chocolate, which were in the 28 per cent tax rate, to that of 18 per cent could boost consumption.

Moreover, over the next one-and-a-half years, with eight State elections as well as General elections on the cards, rural consumption is expected to get a boost from the government’s populist measures. It is expected that the government will try to appease most sections of the society — be it farmers, traders, consumers or the poor — to get the votes.

While further farm loan waivers seem unlikely from the Central government, farm loan waivers announced by the various State governments as well as the effect of the Seventh Pay Commission payout at the state levels is expected to put more money into the pockets of consumers in 2018. Moreover, the la Nina forecast by the Australian weather bureau should bring good rains and further boost rural demand.

However, at the current juncture, consumer sentiment remains poor. The MasterCard India Consumer Confidence Index was at 86 as of June 2017, down from 95 in December 2016.

Demand for consumer durables seems to have been hit more; IIP (Index of Industrial Production) growth for consumer durables was a negative 1.8 per cent during the first nine months of calendar year 2017 as compared to 5.9 per cent witnessed during the corresponding period of the previous year. However, IIP growth for consumer non-durables remained strong — averaging 8 per cent in 2017 as against 7 per cent a year before.

Going forward, getting back to 8 per cent plus growth rate in consumption will be crucial to put the economy back in recovery mode. The consumer lending rate, which is currently at a multi-year low, should remain at lower levels to aid consumption. Higher growth in personal and credit card loans in recent times shows that consumption is set to improve next year.

Investments

Investments as measured by Gross Fixed Capital formation (GFCF) are the second most important constituent of the Indian economy. Saddled with excess capacity, the private sector, which comprises the bulk of the country’s overall investments, is currently sitting on the fence. Back-of-the-envelope calculations hint that India requires investment of about 35 per cent of GDP (investment rate) on a consistent basis to clock 7 per cent GDP growth rate. This is with the assumption that every ₹5 of investment results in an output of ₹1 (in technical terms, it is referred to as the Incremental Capital Output Ratio or ICOR).

While India showed initial promise by clocking investment rate of 36 per cent in late 2011 (and registering 7 per cent plus GDP growth rates), the investment rate is plunging now. The average investment rate for the first three quarters of 2016 was about 30 per cent as against 29 per cent in the corresponding period of 2017.

IIP growth (monthly average) halved to 2.7 per cent in the first nine months of 2017 as against 5.7 per cent witnessed during the corresponding period of the previous year. IIP y-o-y growth in manufacturing also slowed down to 2 per cent in 2017 as compared to 5.7 per cent a year before.

Excepting auto, pharma and computer & electronics, the IIP growth figure was lower in 2017 as compared to 2016 for most of the other sectors. Textiles, leather, chemicals and chemical products, basic metals, electricals, coke and refined products and machinery were among the laggards.

Also, the Purchasing Managers Index (PMI) figures — usually out before the industrial output and GDP figures — indicate that while manufacturing PMI was up in November 2017 to 52.6 as compared to 50.3 in the previous month, the services sector PMI dipped below 50 (48.5), indicating contraction of business activity. PMI (composite) averaged 50.6 in the first 11 months of 2017, as compared to 52.5 in the corresponding period of the previous year.

Credit slowdown

In all, industrial activity is not showing any concrete signs of pick-up for the moment. Moreover, credit growth has slowed down — thanks to excess capacity and banks’ aversion to lend. The credit growth of scheduled commercial banks to the industry stood at -0.2 per cent (October 2017 vs October 2016) as compared to -1.7 per cent in the corresponding period of the previous year.

Bank recap

While the capex cycle is unlikely to change over the next year, the government is trying to enable credit offtake by recapitalising public sector banks to the extent of ₹2,10,000 crore. This is expected to be completed by the end of FY19. While part of the money will be used to clean up bad loans, the rest is expected to boost credit growth.

However, given that banks will need to take huge write-offs, particularly on large NPA accounts, getting back to the healthier credit growth rate of 16-18 per cent seems unlikely in 2018 given the challenges of overcapacity and risk emanating from possible increase in interest rates. Investments will therefore continue to be a drag on the economy. It will continue to remain at levels similar to 2017.

Government spends

The share of government consumption is relatively smaller — 12-13 per cent of GDP. However, it has been up sharply in 2017 on the back of increased spends by the Centre. In the initial three quarters of 2017, its growth averaged about 18 per cent as compared to 12 per cent a year before. After clocking high growth rates in the first two quarters of 2017, it fell sharply for the September quarter to 4.1 per cent.

Further, a tight fiscal situation might lead to a cut in government spends to meet the fiscal deficit target set for 2017-18. There are signs of slowdown in revenue collection. For the period April-October ’17, revenue receipts were about 48 per cent of budget estimates (for 2017-18) as compared to 51 per cent amassed during the corresponding period of the previous year.

While tax revenues were higher at 52 per cent of budget estimates (for 2017-18) as against 50 per cent a year before, non-tax revenues were down to 33 per cent as against 52 per cent a year before. Less dividends from the RBI (thanks to demonetisation) played spoilsport, reducing non-tax revenues to the extent of ₹35,000 crore in 2017-18 for the Central government.

Moreover, after the reduction in GST tax rates for several household items, the monthly GST collections, according to reports, were down to ₹83,000 crore in October ’17 as compared to ₹93,000 crore it clocked every month during the period July-September ‘17. This could impact the fiscal situation as well its spending power.

While it is likely that the government will make do the shortfall by pushing disinvestment, the risks of lower GST collections remain in addition to expected shortfall in collections from the telecom sector. In all, with overall finances appearing dicey, Central government consumption spends are expected to be muted in 2018.

Inflation

So far, consumer inflation has been well within the RBI’s target of 4 per cent (plus/minus 2 per cent) . CPI (Combined) averaged 3 per cent in 2017 during the first 10 months of 2017 as compared to 5.3 per cent in the corresponding period of the previous year.

While housing and fuel and lighting were up sharply in 2017, food and clothing were lower in 2017 compared to a year before.

Moreover, there is the greater risk of inflation being stoked due to increase in input prices for producers, which will ultimately be passed on to the consumers. Monthly WPI inflation averaged 3.3 per cent in 2017 as compared to a negative 0.5 per cent in the previous year. WPI inflation is up for manufacturing, fuel, power & lighting as well as crude petroleum & natural gas.

For starters, crude oil prices are on the way up, risking import-led inflation for the economy. Moreover, food inflation is also inching up with prices of tomato, onion and eggs soaring in recent months.

Going forward, while food inflation is expected to come down with cooling of vegetable prices, the risk of rising international crude oil prices remains a worry. Moreover, with the Centre already hitting 96 per cent of the 2017-18 fiscal deficit target in October 2017 itself, the targeted fiscal deficit might be breached — risking inflationary trends for the economy. The Centre was targeting a fiscal deficit to GDP ratio of 3.2 per cent for FY18 and 3 per cent for FY19.

Economic outlook

To sum up, consumption will lead the economy on the recovery path, taking it towards the 7 to 7.2 per cent growth in 2018 from 6.5 per cent expected in 2017. While investments are likely to remain muted, any surprise performance from the manufacturing sector can push GDP growth levels.

Incidentally, the SBI Composite Index was up slightly in November to 51.2 — indicating expansion of manufacturing activity. While the external sector is unlikely to turn around and be a game-changer, there are risks of inflation delaying the recovery. Especially, with elections on the cards, it seems fiscal prudence will give way to populism — risking worsening of the fiscal situation.

4.2. Labour-intensive exports need a policy push

Livemint, 8 Dec. 2017

Challenges on the export front may increase owing to the growing threat of protectionism and rising automation

The government of India has taken several measures to boost exports in its midterm review of foreign trade policy 2015-20. Apart from incentives for specific sectors such as ready-made garments and footwear, it also allowed duty-free procurement of the inputs needed for exports on a self-assessment basis. Further, a new logistics division has been established in the department of commerce to coordinate development in the logistics space. These measures, along with recent changes in the goods and services tax, are likely to help the export sector.

However, at a broader level, India needs structural changes to be able to attain higher and sustainable exports growth in the medium to long run, particularly in labour-intensive sectors. At a time when the global economy is witnessing a synchronized recovery, the latest gross domestic product data showed that India’s exports went up by just 1.2% in the second quarter of the current fiscal. According to the World Trade Organization (WTO), merchandise trade volume in 2017 is expected to grow by 3.6%, compared to 1.3% in 2016.

Exports are an important driver of economic growth and will also help create much needed jobs for India’s growing workforce. They played an important role in transforming countries such as South Korea and China in recent decades. Therefore, India will need to work on increasing competitiveness to expand its exports share in the world market.

It is often argued that India stands to gain as labour-intensive manufacturing is moving out of China due to rising wages and an ageing population. But this is not happening in a big way, and India is losing out to other Asian countries such as Bangladesh and Vietnam. In an article published in these pages earlier this week, economists at CRISIL showed that India’s “revealed comparative advantage”, an indicator of competitiveness, in some of the labour-intensive sectors has actually declined over the past decade. Vietnam and Bangladesh are becoming more competitive and are capturing the low-end manufacturing space being vacated by China. India will need to swiftly take necessary measures in order to improve its position. The latest Economic Survey (2016-17) also highlighted how India is losing out in labour-intensive sectors like apparel and footwear, and why it is important to focus on these sectors. For instance, apparel is 80 times more labour-intensive than the auto sector. India will have to work on multiple levels to increase its competitiveness.

First, it will need to improve logistics to increase efficiency, both in terms of the time and costs involved. The trade policy review shows that the government is addressing this issue.

Second, the government will need to move forward with reforms in the factor market. India has a large number of small enterprises, which are not in a position to attain economies of scale and compete in international markets. As the Economic Survey highlighted, Indian firms in the apparel and leather sectors are smaller than those in China, Vietnam and Bangladesh. The reason for this is regressive labour laws. Firms in labour-intensive sectors will need more freedom to operate. Similarly, more flexibility in land acquisition will also help the manufacturing sector.

Third, while there is a threat of rising protectionism, India needs to be prepared to protect its interests without compromising on its open trade policy. India has always supported rule-based multilateral trade negotiations under the WTO. But as progress has been limited in recent years, it should also look for opportunities to reduce trade barriers at the regional and bilateral levels.

Fourth, it will be important to keep the currency competitive. This is not to suggest that India needs an undervalued currency, but the Reserve Bank of India (RBI) should not allow the rupee to appreciate sharply. The RBI has done well in recent months to absorb a significant amount of the foreign exchange flow by building reserves to keep the rupee in check. However, the 36-currency exports-based real effective exchange rate is still showing significant overvaluation. As we have argued in these pages before, now that India has adequate reserves, policymakers should reassess the kind of funds it needs. This will not only assist in keeping the rupee competitive and stable but will also help in conducting the monetary policy.

To be sure, the government is working on increasing the ease of doing business, which should also help India’s exports. Policymakers would do well to increase the pace of reforms as challenges on the export front may increase owing to the growing threat of protectionism and rising automation.

5.1. Delhi’s air pollution is both a challenge and an opportunity

Livemint, 24 Nov. 2017, Montek Singh Ahluwalia

Success in tackling Delhi’s air pollution could provide a template for making other cities liveable—an essential requirement for attracting investment and generating quality jobs

Air pollution in Delhi has dominated the headlines over the past few weeks and rightly so. The problem is especially urgent because Delhi is not the only polluted city in the country. Eleven of the 20 most polluted cities in the world are in India. Given the massive expansion we expect in the urban population over the next 20 years, and the need to attract investment to create quality jobs, we need to make our cities liveable and attractive to tourists. Success in Delhi could provide a much needed template for the other cities.

Awareness of the problem

Recognizing the problem is the first step towards corrective action and there is progress in this area. A few years ago, an American journalist stationed in Delhi wrote a farewell piece saying that he was leaving Delhi because the air pollution monitors in the US embassy showed that staying in the Capital would put his children’s health at risk. There was an outburst of nationalistic outrage that the embassy was probably exaggerating the problem. Since then, a number of government monitoring stations have been established in Delhi and they confirm that the problem is indeed serious.

The figure above reports the level of air pollution by PM 2.5 particles at the Siri Fort station in New Delhi for the 12 months from mid-November 2016 to mid-November 2017. The sharp spikes when readings go off the chart are frightening and attract headlines but the real problem is not these emergency situations. It is that the average for the year, at 142, is far too high. It is more than three times the national standard of 40, and 14 times the stricter WHO (World Health Organization) standard of 10. If the monsoon months are excluded, most of the readings are consistently in the unhealthy range.

Medical experts in India have warned that children exposed to this level of pollution will develop asthmatic problems much earlier than normal. Pregnant women exposed to high levels of air pollution are more likely to deliver low birth weight babies, with all the permanent health problems that it causes. Senior citizens are also at risk.

Many activists have been working hard at raising consciousness and even pushing the judiciary to act. But judicial pushing can only go so far. It is useful in cases where prohibition of activities is all that is needed. It cannot devise a carefully crafted strategy operating on many fronts. This is for the government to do and then implement.

Can pollution be controlled?

Until a few years ago, Beijing was more polluted than Delhi. There were many stories in the international press about the very high levels of pollution in the run up to the prestigious 2008 Olympic Games in Beijing. The Chinese government took firm action to control local industrial pollution, reduce the use of coal in power plants, and also restrain the sale of cars in Beijing. National Aeronautics and Space Administration’s (Nasa) satellite data show a 17% decline in the concentration of fine particulate matter over China between 2010 and 2015. The same data show an increase of 13% over India in the same period. Pollution in China is still bad, but it is seen to be slowly coming under control whereas it is rising in India.

An action plan for Delhi

If we want to bring pollution down from the average of 142 to the national standard of 40, we need to (a) reduce pollution by as much as 72% and (b) ensure that it stays at that level notwithstanding growth of population and economic activity. This will require action on a massive scale by many central ministries and Delhi state government bodies acting on different areas.

The Environmental (Prevention and Control of) Pollution Authority (EPCA), established by the Supreme Court, has prepared a comprehensive multi-dimensional action plan for control of pollution in Delhi. It includes proposals for shifting to cleaner vehicles and fuels, restraining the growth in cars and expanding public transport as an alternative, stopping pollution from coal-based power plants, controlling pollution from industry, putting a stop to burning garbage, preventing pollution from construction activities and controlling burning of crop residues in neighbouring states. Some of the actions have to be taken by the central government and others by the Delhi state government and local bodies. Actions that have to be taken by the central government are also spread across different ministries.

Road dust contributes about 38% of the pollution. This component is particularly difficult to control since it reflects both poor road conditions with unpaved footpaths, and the use of traditional technology—hand-held brooms—for sweeping the streets. Such sweeping can shift litter to one side, to be collected separately. It does little to control road dust. It only throws it up in clouds and shifts it to the side, from where it is disturbed again by traffic through the day. Vacuum cleaning devices attached to mechanical sweepers will help, but that would require massive investment in equipment, which may be beyond the funding budget of the municipality. Similarly, proposals for sprinkling water over all the roads in the city would run into water-availability constraints.

Vehicle emissions account for 20% of the pollution and this component is likely to increase as the number of cars multiplies. There is much that could be done in this area. The decision to advance BS VI fuel to 2018 for Delhi, and 2020 for the whole country, is a welcome move. It needs to be accompanied by action to ensure that new cars are all equipped with engines designed for BS VI fuel. The two together will reduce particulate pollution by 70% to 80%. However, since the large stock of older cars will remain for many years, and the total number of cars is also expected to expand, the total pollution load from automobiles may not come down sufficiently over the near future. There is no alternative to actively discouraging car ownership and plan a massive shift to public transport in the capital.

Discouraging car ownership calls for many tough decisions. We need to increase the taxation of cars by introducing an annual or biannual licence fee, as we have for buses. We also need to introduce higher parking charges in the areas of the city that are congested and the charges should be high enough to discourage car usage. We need to eliminate the current favourable tax treatment of diesel compared with petrol to discourage the trend to use diesel vehicles, especially SUVs. The WHO has classified diesel as a No.1 carcinogenic, along with tobacco. Diesel need not be banned since its use in sparsely populated areas will not create excessive pollution, but it should definitely be discouraged in urban locations. A higher licence fee could be prescribed for diesel vehicles.

In the longer run, electrification of cars and scooters will solve the problem, but even if all cars sold from 2030 onwards are electric, it will be a long time before a substantial portion of the stock of cars becomes electric. To accelerate adoption of electric vehicles (EVs) we should announce that all taxis and three wheelers must compulsorily be made electric in Delhi, as soon as such vehicles become available.

Discouragement of cars needs to be accompanied by a parallel effort to expand bus and Metro services. This is widely supported, but it runs into financial constraints. The EPCA has recommended the creation of an urban transport fund to upgrade public transport. All receipts from parking charges, and also the licence fee on cars and buses should be paid into this fund. Those who support public transport often baulk at measures to raise funds to finance it. The Central government could offer to provide matching funds equal to what is raised by the cities.

We should definitely consider ending the use of coal in power plants located close to Delhi. There are gas-based power plants which are under-utilized partly because the utility prefers to buy lower priced coal-based electricity, and partly because gas is not available. Gas could be imported, but this will make gas-based power even more expensive. A regulatory intervention forcing coal-based plants to shut down, ensuring adequate supply of gas, and most importantly, allowing the price of electricity to rise, is needed. Higher energy prices will be resented but they are essential if we want to shift to more energy- efficient outcomes. The present cess on coal needs to be increased steadily over time.

Tough action is also needed to control of industrial pollution. Sunita Narain of the Centre for Science and Environment has been conducting a one-woman battle to ban the import of Pet coke, an exceptionally dirty fuel which is banned in the US, but which is freely imported by us (from the US) and used by many smaller industries. The use of Pet coke is banned in Delhi, and we can monitor domestic refineries to ensure that they don’t sell the Pet coke they produce in Delhi. However, if large quantities are allowed to be imported, the ban on its use can only be enforced in Delhi by policing the consumers, which is near impossible. An outright ban on the import of this dirty fuel is a low-hanging fruit.

Burning mixed municipal waste in Delhi is highly polluting. We need to shift within the next three years to an effective system of separating municipal waste into biodegradable waste which can be converted into compost and energy, recyclable waste including plastic which can be recycled, inert waste which can be converted into refuse-derived fuel for power generation, and residual non-combustible waste which has to go to scientific landfills. This is a challenge for the Delhi government which it should take on.

Since many ministries are involved, the ministry of environment should be tasked with (a) identifying the actions planned by different ministries, (b) estimating the effect of these actions on the trajectory of pollution, (c) determining whether the resulting trajectory is acceptable as a national commitment towards reaching the national target, and if not pushing for stronger action, and finally (d) monitoring progress on an agreed trajectory to see if pollution is indeed being reduced as projected. If progress is unsatisfactory, then the ministries have to go back to the drawing board.

Something along these lines would put us on a credible path to reducing pollution over time. It will take time, but at least we will know when we can start breathing easy. Anyone who doubts whether the costs are worth it should consider that researchers have concluded that if Delhi’s air pollution could be lowered to the national standard, it would increase the life expectancy of Delhi’s citizens by six years.

Montek Singh Ahluwalia was the deputy chairman of the erstwhile Planning Commission.

5.2. Kotak warns of softer issues impeding higher growth

PTI, 9 Dec. 2017

The richest banker Uday Kotak has flagged concerns over “softer issues” like the massive spike in pollution in the national Capital and has warned that it may hinder “hard growth” targets like a 9 per cent expansion of the economy.

He also made a very persuasive case for domestic ownership of assets, saying foreign investors should not benefit from our growth story.

“I think of what’s happening in New Delhi...are we at a stage where we really will find a big challenge because of the softer issues to manage a hard growth of 9 per cent per annum and how are we going to manage a balance between hard growth and softer aspects,” he told a seminar at the IGIDR here today.

Pointing to former Reserve Bank governor Bimal Jalan’s earlier statement that 48 per cent of the food for the poor does not reach them, Kotak asked how are we going to manage the ecosystem for better serving the poor.

Kotak, the executive vice-chairman and managing director of the fourth largest private sector lender Kotak Mahindra Bank, also pointed to other areas like judges and teachers, possibly referring to the gaps in both quality and quantity which get frequently written about.

On the issue of foreign ownership of assets, he said, “it’s good we’ve opened up to foreign inflows, which we need for financing our external balance sheet. But it has come at a significant price as the nation is giving up a lot of its wealth to a lot of outside people.”

He cited the example of mortgage lender HDFC, whose market cap has grown from Rs. 500 crore in the 1980s to around Rs. 2.60 trillion now but the company is 85 per cent owned by foreign funds. “The entire benefit of this growth from Rs. 500 crore to around Rs. 2.60 trillion has benefited a saver in Boston or anywhere else in the world,” he rued.

Kotak said he looks at the current account balance as the country’s overall profit and loss statement and despite all the enabling factors like reasonably low crude prices, the country has consistently been showing loss. Kotak, however, lauded policymakers for managing the debt side of the balance-sheet very well.

Stating that the financial sector is undergoing a “major transformation,” Kotak said there is a case to look at whether the robust financial sector needs 70 per cent control by the state, hinting at the public sector banks’ market composition in the banking sector.

He said last year’s demonetisation has helped in formalising financial savings, which can now be used for investing in local companies while Aadhaar is transforming the entire marketplace.

- AGRICULTURE, FISHING & RURAL DEVELOPMENT

6.1. Sharad Joshi’s ‘Marshall Plan’ for farmers

Livemint, 12 Dec. 2017, Shyam Ashtekar

The slapping of export restrictions, minimum export prices, and unfair imports as a means to target inflation have affected farmers

Today is the second death anniversary of Sharad Joshi, a legendary farmer leader who fought for remunerative prices for agricultural produce till 1992 and then for the liberalization of the farm economy. He reached great summits in farm agitation and also witnessed political debacles, but won the argument that farmers were and still are being treated adversely in the post-independence era, thanks to socialist “redistribution” and planned development.

The continued flight of capital from farms, lack of profits, fragmentation of land, rising input prices and pressure lobbies like food security and Swadeshi, have nearly made it impossible to sustain farming. The current crisis is only the tip of the iceberg. Joshi was aware of the all-round defeat of farmers, especially as suicides were the order of the day and happened even when nature was favourable. Constantly concerned with karza mukti (freedom from indebtedness) for farmers in his last years, Joshi proposed a comprehensive plan—he called it the Marshall Plan— to liberate farmers from the shackles of indebtedness, poverty and hopelessness. Based on his brief notes and emailed letters to colleagues, the Shetkari Sanghatana now argues in favour of the Bharat Utthan plan outlined here.

Joshi argued that the farmer has suffered serious blows and losses over generations, thanks to non-remunerative prices, anti-farmer socialist laws like the Land Ceiling Act (LCA) and the Essential Commodities Act (ECA), and opposition to technology and external investment in farming. The farmer has lost the battle for survival, leading to suicides and reservation movements, displacement, slums and crimes. India, in its own interest, needs a comprehensive plan for the farmer to survive and remain afloat. Here are the 10 main points of the agenda:

1.Freedom—and not a waiver—from all the arrears of banks and power companies, since all these have accumulated due to the exploitation of debt-ridden families on account of deliberate anti-farmer policies like levy, market restrictions, import-export restrictions and blockade of alternative capital investments or exit policies.

2. Doing away with all anti-farmer laws, especially the ECA and the LCA and the restoration of property rights that were abrogated through the creation of schedule IX.

3. Opening up local and national markets, allowing free competition, lifting monopoly rights and opening up futures’ markets. A major mechanism for manipulating prices of farm produce to favor the “other consumer” (the urban vote bank) is the Foreign Trade Act, 1995. The slapping of export restrictions, minimum export prices, and unfair imports as a means to target inflation have affected farmers. A calibrated approach is necessary to allow farmers to change cropping and other practices to remain competitive. Finally, best prices are obtained in freely operating markets as governments only distort and disrupt markets.

4. Infrastructure investments—in roads, rail, transport, power, labs, storage, cooling and processing, etc. The investments can be both public and private. Private investment in farming has all but dried up due to socialistic restrictions in the form of various land laws and trade restrictions.

5. Uninterrupted and good-quality power supply. Currently, power companies are offering power to farmers that cannot be used elsewhere at night. The billing should be metre-based rather than horse-power based, as this entails inefficient use and excess charge.

6. Open access to farm technologies, including genetically modified seeds, currently under siege by Swadeshi and leftist groups. Farmers cannot compete in domestic or global markets unless new technologies are available.

7. External investment in infrastructure, retail, farming, including domestic investment that is discouraged due to restrictive laws and various anti-profit mechanisms in place.

8. Dissolution of the leaky Food Corporation of India, and transfer of cash subsidies to needy families for sustenance. This will help develop the foodgrain markets and create a level playing ground for non-wheat/rice foodgrains.

9. An exit policy for farmers who want to quit farms for better prospects. The current laws prevent sale of land and easy capitalization.

10. The farm policy is far too muddled. The farmer welfare approach needs to be replaced by an agribusiness policy. Various ministries must put their heads together to liberate agribusiness. Currently, states are only implementing agencies while the Centre is playing spoilsport by enacting anti-farmer policies.

Joshi argued that the minimum support price (MSP) regime could not solve the problems of farmers any longer and was only working to throw a spanner in the works. The socialist framework works only against farmers, not for them. The farmer, due to various restrictions, is unequal before the law vis-a-vis others, and has been reduced to second-class citizen status, looking for help in every adversity because he doesn’t have the resources or reserves. The farmer is forced to till small pieces of land with no technology and deal with adverse markets and a rent-seeking bureaucracy. In simple terms, Joshi’s formula is to make farming or quitting easy, in an economic and democratic manner. Development comes only with freedoms, not shackles. This is the time to discuss Joshi’s liberty for farmers plan, rather than waivers and unworkable MSPs.

Shyam Ashtekar is a member of the Shetkari Sanghatana.

6.2. Farm Reform: No 'acche din' yet for Madhya Pradesh small farmers after price deficiency payment scheme

BusinessLine, 12 Dec. 2017, Rajalakshmi Nirmal

For the price compensation scheme to work, government must rein in trade cartels and fix prices right

In a move to appease the farming community after the Mandsaur incident, the Madhya Pradesh government introduced the Price Deficiency Payment scheme on a pilot basis in October under the name ‘Mukhyamantri Bhavantar Bhugtan Yojana’.

Under Price Deficiency Payment (PDP), a brainchild of the NITI Aayog, farmers who sell their crops at a price below the MSP (minimum support price) are to be compensated for the difference.

The Mukhyamantri Bhavantar Bhugtan Yojana was launched on October 16 with regard to eight crops, including soyabean, groundnut, sesame, maize, moong, urad (black gram) and arhar (tur).

The State government claims that 20 lakh farmers have registered for the scheme.

A BusinessLine study of the scheme found that in pulses and maize, prices in key markets in MP are sharply lower than in other States. This has put MP farmers at a disadvantage. This writer sounded out small farmers from the State to take stock of the situation, and not many seemed to have a clue of the ruling prices in other States.

How the scheme works

The compensation to be paid to farmers under the scheme is based on average yield of the crop in the district and the ‘modal’ price fixed by the State government based on mandi prices in MP and prices in two other States where the same crop is grown. For soyabean it is Maharashtra and Rajasthan; for maize, Karnataka and Maharashtra; for urad, Rajasthan and Uttar Pradesh.

The modal price is announced every 15/30 days for crops sold in the preceding weeks. For the farmers who sold the crop between October 16 and 31, the modal price was announced in the first week of November and for crops sold between November 1 and November 30, it was announced in the first week of December.

The modal price for soyabean sold in November was ₹2,640/quintal. This meant the State would compensate for the difference between MSP of ₹3,050 and modal price of ₹2,640, which is ₹410/quintal — the maximum benefit any soyabean farmer will receive under the scheme. Farmers who sold their crop for a price higher than the modal price are paid the difference between the sale price and MSP. Say, a farmer sold his soyabean at ₹2,700/quintal, he will be paid ₹350/quintal (₹3,050 minus ₹2,700).

The State compensates farmers based on their land holding and the average yield in the crop in the specific district. Farmers who produce over and above the average yield don’t get compensated for that excess output and they have to take the market price for it.

Realities from the field

Traditionally, akin to the situation in most States across the country, in MP too, procurement in oil seeds and pulses has been minuscule. Only wheat and maize see some government procurement at MSP in MP, points out a NITI Aayog report.

With the Mukhyamantri Bhavantar Bhugtan Yojana, almost half of all farmers in the eight crops including tur, urad, maize, soyabean and moong have been drawing the benefit. So, has the farmer truly gained from the scheme?

In Sagar district of MP, where there is large-scale sowing of soyabean, not many small farmers knew about Bhavantar Bhugtan Yojana. Naveen Bolumalla, who is with SRIJAN, an NGO in the district that works with soyabean farmers, says, “Small farmers here don’t know about the scheme, they are still selling only to commission agents in the village.”

This same feedback was received from a few other districts of the State – Agar Malwa, Chindwara, Tikamgarh. This begs the question: how many of the 20 lakh-odd farmers registered under the scheme as claimed by the State are small farmers in need of the government’s support? In Chindwara district, a maize belt, farmers complain about the government keeping mum on steep price correction.

“After the new scheme came into being, the government is not procuring from us, so glut has increased in the market… traders are quoting very low prices and government is not interfering,” said Rajkumar, a farmer who had sown maize on his 12-acre land in the last season.”

BusinessLine found that prices in MP, especially in urad, tur as also maize, were sharply lower than the market prices in UP.

In arhar, (tur), prices in Kanpur, UP, last week were about ₹3,500/quintal compared to ₹3,000/quintal in Indore, MP. In urad (black gram), prices were about 30 per cent lower – ₹3,700/quintal in Kanpur versus ₹2,700/quintal in Indore. In maize, the price difference was about 8-10 per cent. In Davangere, a large maize market in Karnataka, prices were at ₹1,190-1,200/quintal while in Indore, they ruled at ₹1,088-1,100/quintal.

This is probably an indication of cartels in action.

A person from Sagar district, who spoke to us on condition of anonymity, said: “In Bilhara mandi (Jaisinagar) you may hardly see 20 traders in urad, and many of them are members of the same family and even before the auction opens, they decide a price… Since the government is anyway compensating farmers, it has become easy now for traders to ask farmers to take money from the government.”

The larger problem

In small mandis, cartels can’t be checked but if in large mandis, as the one in Indore, prices are so much lower than other States, it signals a larger problem.

Farmers of the State are at a disadvantage now because of the sharp price correction. In urad, where the price is lower by almost 30 per cent, the modal price may not necessarily reflect the fall in prices entirely. Hence farmers under the scheme will still be short-changed. In fact, for the 50 per cent of farmers in the State who are not registered with the scheme, it is an even deadlier blow.

But why didn’t all farmers go for this compensation scheme? BusinessLine connected to a few farmers in Tikamgarh, a large urad growing region in MP.

The son of a woman farmer said, “Many are small and marginal farmers here with just 2/3 acres of land and they give away produce to the mediator (agent) in the village. The mandi is too far away and they can’t pay for the transportation …”

Price Deficiency Payment is a great idea. But if the government is not able to check trade cartels and fix the reference price properly, it is not going to help farmers.

In the long term, no price support scheme can work in its entirety, indicate experts. It is only farmers’ direct connect to consumers and freeing of exports that can help.

7.1. 80% of women entrepreneurs self-finance their biz in India

PTI, Nov. 22, 2017

New Delhi: Notwithstanding the various government schemes that provide financial aid, 8 out of 10 women entrepreneurs across the country are self-financing their businesses, says a report.

According to a report by sheatwork, a knowledge hub for women entrepreneurs, self finance is a major source of funding for 80 per cent of women entrepreneurs.

"While significant efforts have been made by the central and state governments as well as independent agencies through the years in India, there still exists a huge gap in awareness and promotion levels of women entrepreneurship," sheatwork.com founder Ruby Sinha said.

A state-wise analysis shows that, Goa, Jammu & Kashmir, Karnataka, Rajasthan and West Bengal have emerged as top five states offering the maximum number of schemes for women entrepreneurs.

Further, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu along with West Bengal have the highest number of women entrepreneurs in the country with a majority in small and medium sized businesses, the report said.

Sector-wise, the education sector sees the maximum number of women entrepreneurs followed by financial services, insurance, livestock, forestry and lodging.

Interestingly, the Northeastern states of Arunachal Pradesh, Meghalaya and Nagaland have lesser overall number of women entrepreneurs but the ratio of male to female entrepreneurs is very strongly favoured towards women.

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

7.2. Centre increases the agricultural education budget this year by 47.4 percent as compared to the financial year 2013-14: Agriculture Minister

Press Information Bureau, Dec. 04, 2017

Shri Radha Mohan Singh addresses on the occasion of National Agricultural Education Day

New Delhi: Union Minister of Agriculture and Farmer’s Welfare, Shri Radha Mohan Singh has said that it is our main objective to attract youth including school children towards agricultural education. Shri Singh mentioned that Government of India has started celebrating many National and International Days related to agriculture for its integrated and rapid development. It was stated by Shri Radha Mohan Singh while addressing at Dr Rajendra Prasad Central Agricultural University, Pusa, Samastipur, Bihar on the occasion of National Agricultural Education Day (December 3, 2017).

The Agriculture Minister said that two years back Government of India decided to celebrate National Agricultural Education Day on December 3 because it is the birthday of our first Union Agriculture Minister and Former President of India, Dr Rajendra Prasad Ji. Shri Singh further added that all State Agricultural Universities and ICAR Institutes are celebrating National Agricultural Education Day in a big way since then.

Shri Singh mentioned that the Government of India has started implementing many programmes towards strengthening Agricultural Education, Research and Extension for a long term and sustainable development in agriculture. With the development of new technologies, agricultural trends are changing daily. To maximize the use of advanced technologies, it is important to provide adequate strengthening of agricultural education. He expressed happiness that ICAR has initiated many new programmes to enhance the quality of higher agricultural education in the country. The government of India has increased the budget of Agricultural Education by 47.4% this year as compared to the financial year 2013-14.

The Agriculture Minister further said that in order to adopt quality and holistic approach to higher agricultural education, the Fifth Dean Committee Report has been implemented in all the Agricultural Universities. This is First-of-its-kind that all Graduate Level Courses of Agriculture and its related subject have been declared as Professional Courses, in which agricultural graduates will be able to get a better opportunity from professional work in the future. Agricultural graduates will get more benefit from declaring their professional degrees as this degree has now become similar to the engineering degree. He also mentioned that agricultural graduates will get more opportunities to go abroad for higher education.

Shri Singh informed that in the Fifth Dean Committee Report, guidelines have been prepared for necessary administrative educational standards for the construction and implementation of contemporary courses for the subjects covered in agricultural education. He said that the Student READY programme has been started for graduates of agriculture and allied subjects to ensure new direction for entrepreneurship development better employability. The main objective of this programme is to provide confidence and complete skills to agricultural Graduates while studying at undergraduate level. Under this programme, there is also a provision for working with the farmers in the fourth year of the bachelor's degree. Apart from this, the system of training has also been widely given in the production industries. The stipends given to students under Student READY have been increased from Rs 750 / - to Rs 3000 / - per month.

Recognizing the immense potential of North-Eastern India, six new colleges have been opened by the Modi Government under the Central Agricultural University, Imphal. This has resulted in the increase in the number of agricultural colleges in North East India by more than 85 percent in the last two years and the number of total colleges has gone up to 13. Out of this, two colleges of Agriculture in Arunachal and Meghalaya State, two colleges of Horticulture in Mizoram and Sikkim, a College of Veterinary Science in Nagaland and a College of Food Technology in Imphal, Manipur have been opened. The Agriculture Minister said that the Central Government has set up two separate Indian Agricultural Research Institute, IARI-Jharkhand and IARI-Assam in Jharkhand and Assam respectively. The task of opening 4 new colleges under the Rani Lakshmibai Central Agricultural University, Jhansi is in full swing in the Bundelkhand region.

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

8.1. The rural economy is not just about farming

Livemint, 24 Nov. 2017, Niranjan Rajadhyaksha

More than half of Indian industrial production comes from the rural areas

It is no secret that millions of Indians are moving to cities in search of better lives. The facts about the rapid transformation of the rural economy in recent years are less well known. These facts are important given that India has to create around 10 million jobs every year to stave off social unrest.

A new paper written for the NITI Aayog by Ramesh Chand, S. K. Srivastava and Jaspal Singh provides fascinating insights into the structural transformation of the rural economy. More than half of Indian industrial production comes from the rural areas. Rural construction also accounts for nearly half of the total building activity in the country. The value of rural services is about a quarter of the total services output. Agriculture has accounted for less than half of total rural output since the turn of the century.

Rural industrialization is clearly the big story. Production by rural factories was only a quarter of the total industrial production in the country in 1971. That share doubled by 2012. The puzzling fact is that the share of rural industrial employment in total industrial employment has been around the same over those four decades. The three economists suggest that rural industries have been more intensive users of capital than their urban counterparts, though there is no detailed examination of this paradox in their paper. It is also not clear whether the numbers of rural output are skewed because data from the census towns have been included.

The higher capital intensity of rural industries is puzzling because one would have expected the opposite, given the fact that rural wages are lower and rural industries are likely to be more credit constrained than urban industries. The lack of adequate job creation by rural industries is balanced by the rising share of rural construction work in employment statistics. The rural housing boom in the first decade of this century absorbed millions of workers.

Chand, Srivastava and Singh pose what could be the central challenge of Indian public policy in the coming decades. Rural employment has shrunk after 2005 while the urban areas have not been able to absorb the millions who are leaving the farm. The Narendra Modi government has to figure out whether it wants to deal with the problem of rural joblessness indirectly through promoting urban growth or directly through the creation of jobs in villages. This NITI Aayog paper suggests the latter course while the action plan released earlier this year argues in favour of the successful Asian strategy of creating quality jobs through the expansion labour-intensive modern manufacturing.

The development experience of most successful countries has involved a shift of labour from traditional sectors with low productivity to modern sectors with high productivity. Countries such as India that have not yet made the transition inevitably have dual economies—where the traditional sector coexists with the modern sector. Mainstream growth models deal with a single sector with a single production function, and hence have their limitations in a country such as India where multiple economies exist in proximity to each other. We saw this dualism during demonetization, when the formal and informal sectors did not deal with the policy shock in the same way.

The question then is whether India should bank on the Asian development model of helping people move to high-productivity activities or try to raise productivity levels in the traditional sectors? Some of the ongoing debates on the need to bring informal enterprises into the formal economy need to be framed against the backdrop of this big policy choice.

This column had earlier cited a paper by economists Xinshen Diao, Margaret McMillan and Dani Rodrik, in which they empirically examined the drivers of economic transformation across the world. The three economists decomposed growth into two categories—labour productivity changes within a sector on the one hand and the change in labour productivity as people move from the traditional to modern sectors on the other hand. They argued that the Indian experience comes closer to the latter course, Asian rather than Latin American.

As B.R. Ambedkar wrote nearly 100 years ago: “In short, strange as it may seem, industrialization of India is the soundest remedy for the agricultural problems of India. The cumulative effects of industrialization, namely a lessening pressure (of surplus labor) and an increasing amount of capital and capital goods will forcibly create the economic necessity of enlarging the holding. Not only this, but industrialization, by destroying the premium on land, will give rise to few occasions for its sub-division and fragmentation. Industrialization is a natural and powerful remedy...”

And then the 1936 political manifesto of his Independent Labour Party noted: “The party believes that the fragmentation of holdings and the consequent poverty of the agriculturists are mainly due to the pressure of population on the land, and unless the pressure is relieved by draining off the excess population subsisting on land, fragmentation will continue, and the condition of the agriculturists will remain as poverty-stricken as it is today. In the opinion of the party, the principal means of helping the agriculturists and making agriculture more productive consists in the industrialisation of the province.”

The recent wave of rural industrialization would definitely have interested the great man.

Niranjan Rajadhyaksha is executive editor of Mint.

8.2. 100 million Soil Health Card distributed to farmers in the first phase (2015-2017): Agriculture Minister

Press Information Bureau, Dec. 06, 2017

Shri Radha Mohan Singh launches Soil Health Card (SHC) Mobile App. Shri Radha Mohan Singh addresses farmers on the occasion of World Soil Day in Jhajjar, Haryana

New Delhi: On the occasion of World Soil Day, Union Agriculture and Farmers Welfare Minister Shri Radha Mohan Singh said that the objective of SHC is to provide information about the Soil Health to 120 million farm holdings in the country. The Agriculture Minister stated it while addressing farmers on the occasion of World Soil Day in Jhajjar, Haryana today. It is worth mentioning that every year World Soil Day is celebrated on 5th December. In India, Soil Health Card scheme was launched in February 2015 in Rajasthan. The Minister said that Soil Health Card mobile App has been launched today to help the farmers. The app will benefit field-level workers as it will automatically capture GIS coordinates while registering sample details at the time of sample collection in the field and indicate the location from where the sample has been collected.

This app works like other Geotagging apps developed for the Rashtriya Krishi Vikas Yojana. The app contains farmers’ details including name, Aadhaar card number, mobile number, gender, address, crop details, etc.

Shri Singh said that SHC informs farmers about nutrients status of the soils along with the recommendation on appropriate dosage of nutrients to improve soil health and fertility. A farm will get the soil card once in every 2 years so that nutrients deficiency can be regularly detected and improved. He said that the imbalanced use of fertilizers damages the fields and reduces production. The Minister informed that in the first phase (2015-17) 100 million SHCs have been distributed so far. The aim of the Ministry is to provide SHC to all 120 million farm holdings by December, 2017. The second phase began on May 1, 2017, and will continue for the year 2017 to 2019.

The Agriculture Minister said that the key features of Soil Health Card include a uniform approach to collect samples and test them in the laboratory, covering all the land in the country and renew SHC every two years. This scheme is being implemented in collaboration with State Governments. GPS based soil sample collection has been made compulsory to monitor the changes in soil and to prepare a systematic database to compare them with the past years’. The Minister further said the online registration of samples and test results are uploaded on the National Portal of the Soil Health Card. Based on the test results, the system automatically calculates the recommendations.

Shri Singh said that Soil Health Card is prepared in 14 local languages and distributed to the farmers. The Minister expressed happiness over the preparation of SHC in the local dialect. Now the SHC can be prepared in local dialects such as Kumaoni, Garhwali, Khasi, and Garo. He said that farmers should use nutrients on their farms as per the recommendations in the card. This will reduce the cost of production and increase the output and income of the farmers.

The Agriculture Minister informed that the SHC portal has been linked to the Integrated Fertilizer Management System (iFMS) and distribution of fertilizers has started in 16 districts on the basis Soil Health Card recommendation as a pilot scheme. It is worth mentioning that on the Occasion of World Soil Day, programs are being organized in all the districts at the state level to generate awareness about Soil Health. Talking about the progress of SHC distribution in Haryana, the Minister informed that in the first phase, the aim was to distribute SHC to 43.6 lakh farmers and so far 28.92 lakh farmers have been provided SHC. The remaining are being distributed. To promote SHC, various initiatives are being organized by state governments and ICAR, its institutions and Krishi Vigyan Kendras to promote Soil Health Card scheme.

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

9.1. Meet India’s connected cows as dairies push to double milk productivity

Livemint, 4 Dec. 2017, Pankaj Mishra

From Sangli in Maharashtra to Salem in Tamil Nadu, a quarter of a million cows and buffaloes are now tethered to intelligent software and genomics

Around 200 milk farmers from Indapur village, some 140km southeast of Pune in Maharashtra, and surrounding areas are sitting under a pink-and-white shamiana on a sunny afternoon in November. It is an awareness workshop on what data tracking and genomics can do for milk farming, but the buzz is more around when dairies will raise milk procurement prices.

As veterinarian Abdul Samad strides to the stage to address the gathering, some in the crowd are expecting a political speech. Samad starts by talking about stagnant milk prices but quickly segues into something else. “Stop agitating about milk prices and start focusing on improving productivity and profits. Have you ever cared for where the bull semen is coming from when you do artificial insemination for your cattle?”

The switch from politics to bull semen quality is a hard swerve and there are amused murmurs in the audience.

But reality is staring them in the face.

Milk prices in India rose three times in the decade to 2015 but have plateaued since. This has led to Indian dairies and the farmers they procure milk from looking for solutions to rein in costs and at the same time raise milk output. For a country that produces some 155 million tonnes of milk a year, the big question is how to increase the productivity of Indian cow from the current average of 1,200 litres a year to the average in countries such as the US and Israel: around 3,500 litres annually.

“Even a small shop owner keeps all the records, data. Where is your cattle data?” Samad, who retired as dean of Bombay Veterinary College in 2010, asks the farmers of Indapur.

With more than four decades of work behind him, the vet knows what he’s talking about.

In 2002, Samad, along with software engineer Prashant Murdeshwar, co-founded a company called Vetware Pvt. Ltd. It now offers a mobile-based and easy-to-use app, called Herdman, for farmers to capture cattle data using QR (quick response) codes on the front end.

That data is used to produce insights about cattle health, matching bulls to bring about genetic improvement, and even milk production forecasting. These insights are delivered in the local language to milk farmers and the vets looking after their herds.

The potential of using software and genomics is immense in India’s fragmented milk farming sector, where some 120 million farming families are engaged in cow and buffalo rearing, according to the Indian Agricultural Census. If they can double milk yield, it will have large implications for nutrition in India, milk and milk product exports, and generation of new national income that is better distributed among the country’s 700 million farmers.

The repository of information that Herdman covers includes feed data, days to puberty and calving, weight, health and disease tracking, milk yields, and quality of milk for each of some 240,000 cows and buffaloes on the software across India. Chitale Dairy from Sangli and Hatsun Agro Products in Chennai are the pioneers of adopting techniques wrapped into Herdman.

Hatsun wants to deploy the solution to over 1 million cattle in two years. Larger dairy operations such as Amul have their own tagging and data collection solutions.

Connected cow

Many in the crowd at Indapur are clueless but curious about how tracking cattle data using mobile phones can help them double milk productivity. “How long can we remain cry babies hoping the politicians will help address the pricing issue?” asks Sudhakar Mane, who has a dozen cows in Indapur. “This doctor is saying we can even correct the problems in our current cattle by getting semen from bulls who can ensure the next generations are far more productive.”

“But how? Hope this isn’t some kind of a gimmick?” asks Ganesh who is from a nearby village. He goes only by his first name.

The answer, according to Samad, 64, lies in genomics apart from using software tools to ensure farmers do not make blind decisions and err in managing the health of their herds.

“If you look at right from 1952 till today, we have hardly made any difference as far as the national average is concerned. We must talk of national average, not some isolated examples of animals giving 20-30 litres of milk everyday,” says Samad.

Herdman combines intelligent tracking of animals with genomics big data to help milk farmers make informed decisions about breeding their cattle with the right bull.

“Breeding is about selecting good animals and leaving out bad animals. Unless you have records and the data, how would you know where the good animals are?” asks Samad.

ABS Global Inc., a US cattle genomics company, is tapping cattle big data by relying on Herdman, apart from its own software algorithms that do intelligent matchmaking between cows and buffaloes with bulls to give birth to high milk-producing female calves.

“Software such as Herdman help keep the data accessible. For instance, when a farmer is evaluating a cow to buy, he can scan the QR code tag and read all the historic data to make a more informed buying decision,” says Arvind Gautam, the head of ABS Global’s India operations. ABS is not the only entity in this space—its rival Sexing Technologies is also active in India.

Hatsun is designing a breeding programme for its over 300,000 cows and buffaloes by figuring out dry periods (when cows don’t produce milk) for each of them. This information, too, comes from Herdman.

“If for instance, Hatsun gets to know that March is when most of its cattle will be in dry period, it can redesign the breeding programme in a way that there’s a healthy mix between lactation periods to ensure milk productivity doesn’t suffer,” says Gautam.

Experts such as Marcia I. Endres, a professor at the University of Minnesota’s animal science department, say the key is to ensure that smaller farms in India get data at a low cost, which can then be used to improve operations. Endres has studied Samad’s software.

“An old adage says ‘you can’t manage what you can’t measure’ and the software collects information that the farmers and their veterinarians did not have before,” says Endres.

Once an animal is registered on Herdman, current health and any historical data available is captured. From thereon, each event including heat period, artificial insemination date, pregnancy, calving, vaccinations, treatment of any diseases occurred and, finally, the milk yield across different lactation cycles is recorded.

For every animal registered on the system, farmers have to pay Rs50 annually. They may use the app for free, but will have to put up with pop-ups of local ads.

Big data meets cattle genomics

After Samad’s session in Indapur, the farmers move to a hall on the first floor of a building nearby. The room is full and farmers such as Mane are now prepared to get the final tips.

“How can India double milk production by 2026?” ABS’s Gautam asks the audience.

Maintaining records of cattle health and their family history, or parental matching, is only the starting point. It takes years before results from genomics-based breeding start showing.

ABS’s genetic mating software matches cows with bulls using dozens of parameters and based on expectations of a farmer from the next generation calf. Depending on the cow they have and the problems they want to rectify, farmers can demand anything from more fat content in the milk to better rudder placement, or even set a target of 20 or 30 litres milk daily.

After these requirements are captured, the software algorithm runs search queries in its database to find an appropriate set of bulls and displays the result by ranking them according to their effectiveness. This matching process, which involves running hundreds of potential combinations, takes less than 30 seconds.

Gathering all the genetic data on bulls and cows is such a massive effort that Chitale Genus ABS (India) Pvt. Ltd, a joint venture between ABS Global and Chitale Dairy, which started groundwork in 2010 in Bhilwadi, Sangli, has selected only a few breeds to start with: Murrah, the buffalo breed, and Gir and Sahiwal for sire.

“The more data we feed into the system, the better it gets. As data grows, its reliability too will improve,” says Gautam. Companies such as Sexing Technologies and ABS have been described as the Monsantos of the dairy world for the genetic-level potential they hold for the $350 billion global dairy industry.

What Samad’s Herdman software does is solve one tiny piece of the grand puzzle. For India’s milk productivity to double by 2026 for instance, it will need to combine all genetic big data of cattle with a scientific breeding programme.

Like dairy farmers in the US did. “The high productivity per cow in the US has a lot to do with improvements in genetics and management that could only happen because we had records on how the cows are producing every day or at least once a month from testing, allowing producers to select the best animals and improve management practices by being able to measure the results,” says Endres, the US professor.

India lags countries such as Brazil, too.

“Until 1985, they (Brazil) were doing cross-breeding like we are doing mostly today,” says Samad. “Then they realized cross breeding is not the answer for tropical countries like theirs.” Recording data was followed by identifying genetically superior animals.

Slowly, the results started showing. Brazil has two kinds of herd systems: one is where the cows are free-grazed and the other where they are stall-fed. For the grazed ones, the average yield today is 4,000 litres to 4,500 litres of milk annually. The ones that are fed specific nutrients along with feed in stalls, yield 8,000 litres and more, according to Samad.

Not just that. Cows with breeds of Indian origin dominate the Brazilian market. The top nine breeds of bulls, including Ongole from Andhra Pradesh, account for nearly 80% of milk production in Brazil and were taken from India, and improved genetically. A descendant of the Gir breed of cows from Gujarat, has recorded 60 litres of milk a day in Brazil, according to agricultural economist Devinder Sharma.

The US has raced even further ahead—the “connected cow” is enabled by everything from real time sensors to robotic milking.

“More recently we have seen growth in the use of technologies such as individual cow sensors (for rumination, activity, feeding and resting time, temperature, etc) and automation (robotic milking and automated milk feeders) which provide even larger amounts of individual animal data to be used for health, reproduction and performance improvement,” says Endres.

A Bahubali in Bhilwadi

ABS’s efforts has led to creating a league table of India’s top performing bulls. “Bahubali, the bull, is more popular in our community than the movie (of the same name),” Vikas Dandelkar, a farmer in Bhilwadi, said at the local milk collection centre.

The semen of Bahubali, a cross-breed Murrah buffalo bull in Sangli, is much sought after—each of its semen doses costs Rs150 versus Rs30 for a normal bull insemination dose. Placed No. 2 on India’s league table for bulls by semen quality, it has exceptionally high dam yield of 5,586kg per lactation with fat content of more than 7%.

“Since there is no genomics in buffaloes or indigenous cattle breeds, selection of bull is as per mother’s milk data—higher the better,” says Gautam of ABS. There are 96 other bulls on the league table including Holstein breed Stryker and Brute, Jersey breed Preet and Tyson, and two other Murrah buffaloes Redhu and Maharaja. They are all based in a farm in Bhilwadi at Chitale Genus ABS labs.

Chitale Dairy has seen its milk productivity improve since the genomics lab was first set up in 2010. From around 350,000 litres a day three years ago, Chitale now procures over 750,000 litres daily in Bhilwadi, Sangli. And, the improvement has come by keeping number of cows and buffaloes, around 100,000, mostly unchanged.

“To achieve this level of improvement, having big data is a must,” says Vishwas Chitale, director, Chitale Dairy. “(Results with) genomic selection is only possible with recording.”

Some of the improvement in yields at Chitale Dairy are due to other interventions such as feeds.

Herdman is not the only software being used by milk dairies and farmers in India. From National Dairy Development Board (NDDB)’s own software solution, developed in-house, to products from newer technology start-ups such as Stellapps, there are enough options.

NDDB has been actively using software in data capture, genomics and even to ensure a balanced diet for some 2.7 million bovines.

“The country’s breeding programme depends on this,” Niraj Prakash Garg, a deputy general manager at NDDB’s IT division, said at Anand, Gujarat, in December last year. He was referring to NDDB’s ration balancing programme aimed at ensuring balanced, personalized fodder for nearly 2.7 million cows and buffaloes across 40,000 Indian villages.

In March, NDDB also launched a new Android app for tracking and managing genetic improvement of cattle using artificial insemination. The plan is also aimed at capturing big data on millions of bovines and over 15 million milk producers. “The key output is you’re able to identify which bull is good,” says Garg. Extra emphasis is given to the ration programme, which helps farmers optimize feed for their cattle, personalized for each animal. By December 2016, over 2 million cattle were already part of the diet programme with each of the milk farmers saving Rs30 every day per animal because of the software, according to Garg.

NDDB’s scale of operations dwarfs all other dairies. During 2015-2016 for instance, cooperatives registered under the NDDB collected around 15.58 million tonnes of milk from cows and buffaloes under its ration programme. “It’s not a pilot or an experiment, but a full, mainstream programme with demonstrated benefits,” says Garg.

Software limited

For Samad and ABS, Bhilwadi’s Chitale Dairy has been a sandbox to experiment with software to genomics. With those experiments maturing, Samad’s Herdman software is now evolving with bigger dairies such as Hatsun in Chennai, which has some 220,000 cows on the software. Hatsun, a publicly-traded company, runs India’s largest private dairy operation.

“If you are able to manage the data, you can easily increase the milk yield, without doing anything, else by 20-25%, only because you are preventing management losses. Otherwise, you don’t do pregnancy tests, you come to know after six months and by then you, as a farmer, have lost half the year of precious time,” says Samad.

By combining the operational data about cattle with genomics on the other end, the benefits could be far more.

“It keeps on calculating and tracking performance indices of health, fertility and milk production of each animal and keeps flagging the problems and prompting for appropriate interventions,” says Samad. “We find that 90% of the time, it is not the infection but it’s the management (or lack of it) which is causing the problem.”

Still, both Gautam and Samad agree that the real benefits of genomics will take at least a decade to start showing on a sizeable scale.

There are issues of broken economics to deal with—how to cover additional expenses such as the cost of fortified feed and that of sexed semen (Rs150 for a dose but an insemination may take multiple attempts) while milk prices remain stagnant. Pradeep Balhara, the owner of the 1,000-cattle Balhara Dairy in Jabalpur, Madhya Pradesh, says, “You can’t talk vitamins and other nutrients if the basic, staple food is missing.”

Sexed semen is semen engineered to produce offspring of a desired sex.

Among the early users of Herdman—Balhara’s been using it for over a decade— the biggest benefit for him, he says, has been the ability to plan the breeding cycles of different animals. “It means a lot for a dairy like us, we can avoid the dry seasons,” he says.

It’s moving the needle for small farmers, too. Mahesh Dhondiram Yesugade, a milk farmer in Sangli with one cow, started using Herdman two years ago and followed its advisories. He says his income increased by Rs200 a month in the first year and in the latest month by Rs1,000 — an increase of some 50% from the Rs2,000 he used to make earlier. “I now plan to buy another cow and plan breeding in a way that there’s no dry season,” he says.

Farmers like Balhara and Yesugade are critical to the success of the Second White Revolution, following the first in the 1970s and 1980s. The benefits of data- and genomics-driven dairying will need showing, not telling, says Endres, the University of Minnesota professor. “We need to have the early adopters, otherwise a technology will not be successful. Cultivating those early leaders is important.”

This story has been published in association with FactorDaily.

9.2. Milk output rises 19%; dairy farmers' income up 24% in 2014-17

PTI, Nov. 27, 2017

New Delhi: India's milk production rose by 19 per cent in the last three years to touch 163.6 million tonnes, leading to a significant increase in dairy farmers' income, Agriculture Minister Radha Mohan Singh said today.

Addressing a function on the National Milk Day, he said the government has launched many programmes in the last three years to raise dairy sector's productivity.

The minister announced that a National Action Plan Vision-2022 would be unveiled that would focus on creation of infrastructure for handling of increased milk production and help achieve the target to double farmers' income by 2022.

"Our milk production has increased to 163.6 million tonnes in 2016-17 from 137.7 million tonnes in 2013-14. This means that output has grown by 18.81 per cent during this period," Singh said on the National Milk Day being celebrated on the birth anniversary of Dr Verghese Kurien, the father of white revolution.

India is the largest milk producer in the world, he said, adding that the country's milk production grew at an annual rate of 6 per cent during 2014-17 as against 4 per cent during the previous three years.

The per capita milk availability has also increased to 351 gram in 2016-17 from 307 gram in 2013-14, he added.

"Income of dairy farmers has increased by 23.77 per cent during 2014-17 compared to 2011-14," Singh said.

Stating that milk demand is rising in the country, the minister emphasised on value addition in the dairy sector to boost farmers' income.

At present, Singh said, only 20 per cent of the total milk production is converted into value-added products and the aim is to take this to 30 per cent. The value-added products help generate 20 per cent higher income.

Singh said the animal husbandry department is preparing a National Action Plan Vision-2022 to create infrastructure for handling of increased milk production. The plan would not only focus on meeting the demand of milk and milk products but also help in achieving the objective of doubling the farmers income.

A scheme 'Dairy Processing & Infrastructure Development Fund (DIDF)' with an outlay of Rs 10,881 crore has already been launched for dairy cooperative sector.

This scheme would focus on creation of additional milk processing and chilling infrastructure facilities as well as on providing electronic adulteration testing equipment.

Singh said the government had launched 'Rashtriya Gokul Mission' in December 2014 to conserve and develop indigenous bovine breeds.

The minister said there are about 7 crore rural households engaged in dairying in India with 80 per cent of total cow population but the productivity is very low.

Terming the dairy sector as economic backbone of rural India, he said there is a need to boost livestock productivity for raising farmers' income and conserve indigenous bovine breeds.

Singh also stressed on shifting milk procurement to organised sectors like co-operatives and private companies from the unorganised sector. "Organised sector should handle at least 50 per cent of the total milk production".

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

10.1. Groundnut barfi fits Paper Boat’s DNA

BusinessLine, 28 Nov. 2017, R Balaji

The ubiquitous and universal favourite groundnut chikki or barfi has hit the markets in a new wrapping from Paper Boat, a brand that has offered traditional beverages and fruit drinks.

It has been soft launched in a few cities including Chennai, where it is labelled Paper Boat ‘kadalai mittai’ (groundnut sweet).

There’s more to Paper Boat’s groundnut sweet than just a new wrapping and branding. The company hopes to take the traditional sweet a notch up on the quality scale by procuring the major raw materials itself to ensure quality.

Not just procurement, even the processing involved in making the sweet is upgraded to offer consumers a better quality product than is commonly available in the market. Paper Boat is involved in every stage from field to shop shelf, according to Neeraj Kakkar, CEO, Hector Beverages, the company behind the Paper Boat brand that specialises in regional drinks and fruit-based beverages.

Paper Boat procures groundnuts directly from farmers groups in Gujarat to ensure the right quality. It benefits over 10,000 farmers spread across two-three districts in the State, he said. It supplies the raw materials to a few chikki makers distributed across various locations to tap the regional markets.

In Chennai, it was launched a couple of months back, and the response “is positive”, he said. However, he declined to specify details about the quantity of sales. The supply chain is just stabilising in various cities it has been launched, he said.

Beats chocolates

Traders unanimously agree the volume of sales of groundnut sweets is the largest among the confectioneries, even bigger than chocolates. But it is essentially dominated by the unorganised sector and data is scarce.

In Chennai, for instance, over 500 families are involved in cooking up ‘kadalai mittai’ for various local brands. It is a household kitchen operation that housewives use to augment family income. But there are also a few industry kitchen scale operations.

Kakkar said a product like groundnut sweet, a traditional Indian sweet, ideally fits Paper Boat’s DNA. Possibly the next product in line would be ‘aam pappad’.

There are hardly any national brands in groundnut sweets and the company hopes to occupy this niche.

10.2. Sugar output up 42% at 3,9 million tonnes in Oct-Nov: ISMA

PTI, Dec. 06, 2017

New Delhi: India's sugar production has gone up by 42 per cent to 39.51 lakh tonne in the first two months of the current 2017-18 marketing year that started October, industry body ISMA said today.

The Indian Sugar Mills Association (ISMA) has pegged 251 lakh tonnes (lt) sugar output this year as against 202 lt in the last year.

Releasing the latest production figures, ISMA said sugar production during October-November reached 39.51 lt, much higher than 27.82 lt in the year-ago period.

As many as 443 mills were operating till November this year as against 393 mills in the year-ago period.

As per the ISMA data, sugar production in Uttar Pradesh - the country's leading sugar maker, rose to 13.59 lt till November from 8.48 lt in the year-ago period.

Similarly, the output in Maharashtra - the second biggest producer - increased to 14.90 lt from 9.42 lt in the said period.

In Karnataka too, sugar production rose marginally to 6.82 lt in October-November as against 6.80 lt in the same period last year.

Gujarat mills produced 1.80 lt till November of this year when compared with 1.42 lt in the same period last year.

"Crushing operations in all the other states have also begun and slowly the pace of crushing is picking up," ISMA said.

Other states together produced 2.40 lt in October- November as against 1.7 lt in the year-ago period.

"Most of the sugar mills in UP had advanced their date of start of crushing by a fortnight or so, and hence sugar production is on higher side," the industry body said.

The current year started with an opening balance of around 38.76 lt, which is the lowest ever in the last several years.

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

-INDUSTRY, MANUFACTURE

11.1. N Chandrasekaran wants Tata companies to cash in on India opportunity

PTI | Nov 29, 2017

At the same time, "some level of consolidation is essential" for the salt-to-software conglomerate, which saw 64.1 per cent of its total revenues in 2016-17 from global operations in over 100 countries, N Chandrasekaran observed.

NEW DELHI: No other market is going to grow faster than India in the next 10-20 years and Tata companies should use the opportunity to make investments and take part in and contribute to India's growth story, according to the group's chief N Chandrasekaran.

"No other market, I believe, is going to grow faster than India in the next 10-20 years. Considering our demographic profile, we will have a consumer population that is going to have higher spending power," Chandrasekaran said in an interview to the group's in-house magazine Tata Review.

Stressing that India is "a massive market, the biggest game in town", he said, "The opportunity for many of our businesses in India is fantastic. They should use this opportunity to make investments and participate in and contribute to India's growth story."

He, however, said different firms of the Tata group need to understand their individual domestic prospects, because all of them may not have the same growth opportunities.

"Each will need to craft its own strategy and this will have to be company specific," Chandrasekaran added.

In 2016-17, Tata group's international revenues were at $64.40 billion, 64.1 per cent of total $100.39 billion. The UK and the US were two main overseas revenue contributors.

When asked about the 'constant criticism' of the Tata group being too widespread which prevented it from capitalising fully on its potential, he said, "There is definitely some truth in that.

"We have far too many companies in the Tata group and some level of consolidation is essential. Our aim should be to achieve the optimal level of consolidation without losing the entrepreneurial spirit we are famous for."

Chandrasekaran, however, said the management has not worked out all the details about the consolidation.

"We have our thoughts on this and we will consider them carefully," he said.

After taking over as chairman of Tata Sons, the holding company of major Tata companies, in February this year, the seasoned marathoner has been on a sprint to address pressing issues that "required priority intervention".

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Citing examples of Tata Steel-Thyssenkrupp merger and the Tata Teleservices-Bharti deal, he said, "Suffice to say, we are focused on the issues that need our attention."

"Overall, it has been a good experience thus far," he said about his stint as the Tata group chief.

Top Comment

No offense intended. The TATA GROUP leadership, (since Mr. Ratan Tata retired @75 age), doesn''t have the fire, to rush ahead like a hungry lion and seize opportunities in this Universe with a do or ... Read MoreNo offense intended. The TATA GROUP leadership, (since Mr. Ratan Tata retired @75 age), doesn''t have the fire, to rush ahead like a hungry lion and seize opportunities in this Universe with a do or die attitude. I say Universe, because launching space-bodies/ satellites is also a big business today. Mr. Jeff Bezos of Amazon is very smart, started by selling just books online, then competed against ebay and sold everything that ebay did, then did better than ebay with a fresh and renewed mindset, and then, he''s sold some Amazon shares and started ''Blue Origin'', quickly and fearlessly, to grab this space-bodies/satellite launching business opportunity, in this Universe. Universe, I said. Buying JLR and turning it around was a good opportunity seized from Ford, in this world, by Mr. Ratan Tata. World, I said. Now look, small words like ''cash in on India Opportunity'' are in the news about this gigantic Tata Group. ''Consolidation'' is another small ''chicken-sized'' word which is uttered when the lion is not hungry; he''s tragically and painfully lying on his death bed, contemplating on ''mere survival''. Since so many years, Airtel and Tata Docomo are in the Telecom market, suddenly this cool-headed fire-in-the-belly bloke called Mr. Mukesh Dhirubhai Ambani steps in with Reliance JIO, and everyone else is running for cover and survival; that’s the fire of right competition I''m talking about, which is required in The Tata Group. Go one generation up, and the same fire of right competition was demonstrated by this bloke''s dad Mr. Dhirajlal Hirachand ''Dhirubhai'' Ambani. A leader in any facet of life, is the one who has the fire within, knows the way, goes the way and shows the way. Leaders who don''t know the way, never go the way, and hence give empty talks on showing the way, which no one will ever take, because they don''t have the fire within..arthur

Highlighting the significance of digitisation and how the world was changing rapidly, Chandrasekaran said Tata companies have to think through their digital journey.

"They have to understand what it means to them, be open enough to adopt and adapt, and make the necessary adjustments in their business models. We will definitely engage with our companies and bring them the necessary tools to get them started on this journey," he said.

11.2. Tata Motors rolls out electric Tata Tigor for EESL

PTI, 7 Dec. 2017

The first batch of e-Tigors are being produced for the Energy Efficiency Services, which had placed an order for 10,000 electric sedans in October

Homegrown auto major Tata Motors today rolled out the first batch of the electric variant of its compact sedan Tata Tigor from its Sanand facility in Gujarat.

The first batch of e-Tigors are being produced for the Energy Efficiency Services (EESL), which had placed an order for 10,000 electric sedans in October, and are part of the first 350 orders that the company had won in the first phase.

The first batch was flagged off in the presence of Tata group chairman N Chandrasekaran, group patriarch Ratan Tata, and Tata Motors managing director and chief executive Guenter Butschek. “As we work together to build the future of e- mobility, I am confident that our customers will respond very favourably to this electric model,” Chandrasekaran, who flagged off the first batch of the vehicles, said.

The government is planning to have only electric cars by 2030 in its efforts to reduce both oil imports as well reduce carbon emissions to a significant extent.

The third largest passenger car-maker had become the L1 bidder in amid stiff competition and won the bids for 10,000 e-cars floated by EESL in September as the other bidder, Mahindra’s, quoted Rs. 2.3 lakh above the former’s and was initially out of the race. But later it was given the option to match Tata Motors’ price and accordingly chose to sell 150 e-Veritos to EESL. Mahindra has already supplied some of them.

The EESL order first mandated supply to be completed on/before November 30 but was later postponed to December-end. For phase 1, Tata Motors is required to deliver 250 Tigor EVs, for which it has received a letter of agreement.

For an additional 100 cars, the agreement is expected to be issued shortly by EESL, the company said. “With e-Tigor, we’ve begun our journey in boosting e- mobility and offering a full range of e-vehicles to customers. This tender has effectively paved the way for connecting our aspirations in the e-mobility space with the vision of government,” Butschek said.

The electric drive systems for the EESL order have been developed and supplied by Electra EV-a company established to develop and supply electric drive systems for the automotive sector, the release said. “Tata Motors is committed to the government vision for electric vehicles by 2030 and will work in a collaborative manner to facilitate faster adoption of electric vehicles,” the release said.

12.1. $1 billion-worth deal between Mittals and SAIL to be approved next week: Sources

Reuters, Dec. 7, 2017

The much-delayed collaboration to make automotive-grade steel is nearing realisation after legal teams from SAIL and ArcelorMittal finalised a joint term-sheet in talks mediated by a government think-tank in the past two weeks, the sources said.

NEW DELHI: State-owned Steel Authority of India Ltd (SAIL) is set to approve a long-proposed $1 billion joint venture with ArcelorMittal at its board meeting next week, three sources with direct knowledge of the matter told Reuters.

The decision to approve the deal was reached after talks between ArcelorMittal's billionaire Chairman Lakshmi Mittal, India's Steel Secretary Aruna Sharma and SAIL Chairman P.K. Singh at a meeting last week in New Delhi. The much-delayed collaboration to make automotive-grade steel is nearing realisation after legal teams from SAIL and ArcelorMittal finalised a joint term-sheet in talks mediated by a government think-tank in the past two weeks, the sources said.

"The joint term-sheet has been prepared and it should hopefully reach its logical end soon," a senior government official involved in the talks said. "SAIL has called an emergency board meeting to approve the joint venture." The official did not give a day for the meeting, but two sources with knowledge of the talks said it would be Tuesday. The sources asked not to be named because there had not been any official announcement. SAIL, ArcelorMittal and the steel ministry did not immediately respond to requests for comment.

India is banking on the partnership to cut imports of high-grade auto steel that mostly comes from Japan and South Korea. India is a major automobile producer and exporter. SAIL and ArcelorMittal signed a preliminary understanding in 2015, but disagreements over key commercial terms have delayed the venture that would give the Luxembourg-based company a foothold in the world's fastest growing major steel market.

The venture agreement was extended multiple times, and the last extension lapsed on November 30, the sources said.

One of the key points of disagreements between SAIL and ArcelorMittal had been on internal rate of returns and a "non-compete" clause. The sources said the two companies were still exploring the location for the joint venture company in Maharashtra and Gujarat states in the west, and Andhra Pradesh in the south.

"They want the location to be near to a port," the government official said.

12.2. Government readies institutional framework to push electric mobility

PTI, Nov. 20, 2017

New Delhi: The government plans to set up a committee for an institutional framework on large-scale adoption of electric vehicles in India as a viable clean energy mode -- particularly for shared mass transport -- to help bring down alarming levels of pollution in big cities.

According to officials, government think-tank Niti Aayog has sought comments from ministries, including heavy industry, environment, road, transport and highways, and power on the issue and is in the process of chalking out the nitty-gritties of the framework.

"It (framework) is at a primary stage, the discussion is on. We have given our comments on it. The final decision is yet to be taken," top sources in the heavy industry ministry told PTI.

The panel will be tasked with issues related to electric mobility, including setting up of charging stations across the country, especially in big cities, manufacturing of lithium ion batteries in India and subsidising the cost of electric vehicles on a long-term basis until their cost of production comes down to boost their sales and encourage automakers.

The Centre has recently invited proposals from cities with population of above 10 lakh for extending grants under the FAME India (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India) scheme to promote large-scale adoption of EVs (electric vehicles) in multi-modal public transport.

With an aim to promote the eco-friendly vehicles, the government had launched the FAME India scheme in 2015 offering incentives on electric and hybrid vehicles of up to Rs 29,000 for bikes and Rs 1.38 lakh for cars. The scheme is currently running in pilot mode.

Earlier, Railways Minister Piyush Goyal, who was power minister at that point, said the government is working on a road map to ensure all-electric car fleet in the country by 2030.

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

13.1. Xiaomi looking to invest $1 billion in Indian startups

Livemint, 20 Nov. 2017, Mihir Dadal and Amrit Raj

Xiaomi will invest $1 billion in 100 Indian startups over the next 5 years to create an ecosystem of apps around its smartphone brand, says CEO Lei Jun

Bengaluru: Chinese phone and appliances maker Xiaomi Corp. will invest as much as $1 billion in 100 startups in India over the next five years, seeking to create an ecosystem of apps around its smartphone brand, chief executive Lei Jun said in an interview.

Lei said Xiaomi and its sister company Shunwei Capital, which have purchased stakes in six Indian internet companies including Hungama and KrazyBee, will invest in businesses such as content, financial technology, hyperlocal services, including mobile phone repairs, and manufacturing in order to increase the adoption of mobile internet in the country.

“In China, in the past four years we’ve invested $4 billion in over 300 companies. In the next five years, we will invest in 100 companies in India. We will basically replicate the most successful ecosystem business model of China in India. We will have all types of services and products and integrate them. That is the Xiaomi business model. We focus on a few key things and everything else, we let our partners provide. We’ve reached just a huge scale in seven years because of this partnership/affiliation model,” Lei said.

Xiaomi, one of the world’s most valuable privately held tech companies, is the most prominent Chinese investors in India after the two internet giants, Alibaba Group Holding Ltd and Tencent Holdings Ltd. If the company meets its investment target, it would become one of the most prolific internet investors in India. Unlike Alibaba and Tencent, Xiaomi is only looking for investments that will expand mobile internet usage and hook customers to its phones in a smartphone market that is defined by fickleness among shoppers in constant lookout for the next new thing. By providing entertainment content and other services, Xiaomi is hoping to make its value-for-money phones more lucrative to customers and differentiate its offering from those of rivals such as Samsung, Vivo, Oppo and others.

“Any apps that increase the frequency of usage of smartphones—we’re interested in this. As long as it is related to acceleration of mobile internet. We only pick minority stakes. The purpose is to work closely (on the business side) with these companies,” Lei said.

Xiaomi, which entered India in 2014, accounted for 23.5% of smartphone shipments in the country in the September quarter, according to research firm IDC, becoming the joint No. 1 smartphone vendor in India. Samsung also had 23.5% share in the quarter. In the preceding three months, Xiaomi’s market share was 17%.

Xiaomi, which last raised equity capital at a valuation of $45 billion in late 2014, sells its phones in some 60 countries. India is the company’s biggest market outside of China, where it sells a variety of products including televisions, smartwatches, air purifiers, water purifiers and others. The company will introduce other products in India over the next two quarters, Lei said.

Xiaomi’s valuation makes Lei, a successful serial entrepreneur, one of the richest men in China. Among his previous ventures was Joyo, an online book retailer bought by Amazon when it entered China.

Lei said that the company wasn’t planning to list its shares any time soon. “Right now, we do not have such plans. Being a public company has its advantages and disadvantages. We can only go for an IPO when we feel comfortable. We have enough cash. We haven’t made any losses except in 2015 when we lost a little bit of money because of working on global expansion.”

13.2. Xiaomi founder Lei Jun: India is a bigger priority for us than China

Livemint, 20 Nov. 2017, Amrit Raj and Mihir Dalal

With an R&D centre in Bengaluru, coupled with focus on design in India, Xiaomi plans to bring around 200 products in India which are not just smartphones, says founder Lei Jun in an interview

Bengaluru: Chinese smartphone maker Xiaomi Corp. disrupted the Indian market with its cost-efficient Mi range of phones and has gained handsomely since it introduced them in the country in 2014.

According to International Data Corp., Xiaomi, along with South Korean firm Samsung Electronics Co. Ltd, were joint leaders in the Indian smartphone market with each controlling 23.5% market share. Lei Jun, Xiaomi’s founder, also known as LJ, believes his company needs to forget that they are No.1 in the market even though the company will get the confidence to do “cool” things in India.

In an interview, the 49-year-old Chinese entrepreneur said that his firm has given India priority over its home market China and will build products keeping India in mind first. With a research and development (R&D) centre, coupled with focus on design in India, the company plans to bring around 200 products in India which are not just smartphones. Edited excerpts:

You have become joint No.1 in the Indian market in no time. How do you plan to consolidate your position?

Ranking No.1 to the Indian team is still very crucial and important. Most importantly, it will give a lot of confidence to the India team. Also, China is such a gigantic market and in India, we have proven that Xiaomi products and the model. The next thing that we are to do is that forget ourselves being No.1. We are a start-up. We need to build the coolest products and offer them at a very honest and reasonable price. Then, more Indian customers will like our brand. We will bring them a lot more cool and interesting products. So, we really don’t need to worry about how the competitors see us. We just have to keep up to what our fans think about us.

What sort of war chest have you prepared in terms of new products, investments, etc?

We will definitely bring more interesting and high quality products into the Indian market. For example, this pen (shows a pen) costs two US dollars and it is a very smooth writing. Another example is screw drivers... very exquisite. In China, we sell it for 100 RMB. Other competitor products are 10 times worse in quality but three times more expensive. This is the most favoured screw drivers by engineers made by Xiaomi.

So, which of the other products do you plan to bring to India?

That you will find out in the next two months. In China, we have some 200 products. In India, we have some 20 products, which is very few... mainly because we have very few people in India office... only 350. We are growing way too fast.

So, we really need to select the products that Indian consumers will love the most. We believe it will take us 3-4 years to reach to the levels of 200 products, which we could bring in.

So, you are saying that you are constrained by your team strength in India to launch new products?

No it is mainly because of the rapid growth that we have seen. Because, even if we bring them to India, we won’t do justice as the customers won’t really understand why they are so good. So, our philosophy is all about being focused.

So, quantity is not the most important metric. It is actually every product has to be a best seller.

Most of these products that we are talking about are initially designed for the Chinese environment. So, in the past two years, we have implemented India number one priority strategy at our headquarters. From R&D, design, we have considered a lot of Indian consumer needs.

For example, India’s climate is hotter. In China, we have such good products; but when we brought them to India, some users said there are some overheating issues. In the beginning, we were very confused and realised they suffered initially because of India’s climate. So, later in India, while selling products, we included a lot of these thermal diffusing components, including the charging cable, which is very good quality in China. In India, some people were complaining that there are some defects with the cable. So, we discovered the reason. Because of India’s humidity being higher, when they plug in many, many times, the coating will get eroded. Then we applied thicker coating, including the charger.

Is that something you have planned for other products, which are not in India yet?

We cannot just simply bring them over from China directly. We need to first understand the user’s needs and likings. Even we would require some team members to move over to India to build India-specific products... may be we build products that we won’t sell in China. That way Indian fans will love us more... We will also set up an R&D centre in Bangalore in future. We will hire more local engineers just to design India products. Next year, you will see India-specific products.

So, they will be more than just smartphones?

Yes.

What percentage of India revenue comes from smartphones?

We have not disclosed our India revenue because we are right now in 60 countries. We have 12 countries where we are ranked in top five. Of course, India is performing the best of all the countries in terms of shipment and scale of work. Perhaps, by the end of the year, we might disclose that number. So, we have adopted the India No.1 strategy, which includes design, R&D, manufacturing, supply.

So, are you giving India a priority over your home market as well?

Yes. Even the Chinese teams had some opinions as everything was prioritized India. We became No.1 because our company is small, so we focus all our energy on India. That’s why we have really supported India on the supply front.

India has seen a data outburst recently. What kind of impact will that have on the smartphone market?

Popularization and adoption of smartphones, 4G data plan coming down will really help us celebrate the mobile internet development in India. It will really help accelerate Indian society’s technological innovation of India. It is essentially building a gigantic information infrastructure and highway for India. Because data is so cheap, India pretty much skipped the broadband era. A lot of times, Indian users consumed way more data, compared with Chinese users.

Of course, the Chinese went through the PC internet era before they went to the mobile internet era. Chinese internet has produced companies such as Alibaba, Baidu and Tencent. These are all now global juggernauts. So, this popularization will definitely help the whole industry in India. In the next 5-10 years, India will produce 5-10 global internet companies.

This year has been a comeback year for Xiaomi at a global level. What impact has it had on your valuation?

Valuation is not the most important thing. We’re one of the very few companies that are willing to build world-class products but offer them at a very reasonable price. Look at Apple and Samsung, their prices keep going up! We’re not like them.

In the past two years, when we were doing a restructuring, people think that Xiaomi is no longer doing well. Because we’ve grown too fast there are many difficulties. From the 10-15 people who started the company to more than 10,000… So in the past two years before this, we have only one aim: strengthen the fundamentals. We don’t care about revenue and we didn’t pursue growth. It’s only at the beginning of this year that we started pursuing growth again.

14.1. Government set to achieve Rural Housing Targets

Press Information Bureau, Nov. 20, 2017

New Delhi: Hon’ble Prime Minister launched Pradhan Mantri Awas Yojana (Gramin) exactly one year ago on 20th November, 2016 from Agra. A target of completing one crore new houses after beneficiary registration, geo-tagging and account verification by 31st March, 2019 was set. Of these, 51 lakh houses had to be completed by 31st March, 2018.

After the launch, it took few months to complete the process of beneficiary registration, geo-tagging, account verification etc. 55.85 lakh houses have already been sanctioned and work is under progress. Nearly 30 lakh of these houses have reached roof level of construction and 15 lakh of these houses are at finalization level.

As on 20th November, 2017, 9.03 lakh houses have already been completed. It is expected that 10 lakh PMAY(G) homes will be completed by 30th November, 2017, 15 lakh houses by 31st December 2017, 25 lakh houses by 31st January, 2018, 35 lakh houses by 28th February, 2018 and 51 lakh houses by 31st March, 2018. States like Chattisgarh, Jharkhand, Madhya Pradesh, Maharashtra, Orissa, Rajasthan and West Bengal have completed a large number of houses.

New designs, local construction material, use of technology through rural mason training, geo-tagging of assets and payment directly into the account of beneficiary through IT-DBT platform have ensured transparent, hassle-free and quality programme implementation. All States and UTs are trying very hard to facilitate beneficiaries to complete their homes on time. The use of Socio Economic Census (SECC 2011), validation by Gram Sabha and use of Space Technology for geo-tagging has ensured that there are least inclusion errors and it is only the homeless and those living in one kuccha room with kuccha roof or two kuccha rooms with kuccha roof are the beneficiaries of this pro-poor programme. Technology has been used to empower the poor. The homes are designed by the best of institutions after studying the existing local design typologies and are constructed by beneficiaries as per their need.

These homes are not only changing the rural landscape but also bringing about a social transformation in villages across the country. The poor are getting safe homes and can live with dignity with facilities like toilet, LPG connection, electricity connection, drinking water facility etc. The governance reforms under PMAY(G) and the impact of higher demand of steel and cement on growth is being studied by the National Institute of Public Finance & Policy, New Delhi. The Central Building Research Institute, Roorkee will undertake a study on actual use of new designs, impact of rural mason training, local materials and new technologies under PMAY(G). A study on social transformation is being commissioned separately to understand the impact of a good housing programme. The progress of PMAY(G) can be seen by any person on Awaassoft.nic.in platform with geo-tagged photographs and complete details of beneficiaries and payments made to them.

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

14.2. IKEA opens first Hej Home in India at Hyderabad

BusinessLine, 22 Nov. 2017, V Rishi Kumar

IKEA, the Swedish furnishing retailer, on Wednesday opened its first experiential centre Ikea Hej (Hello) Home close to the IT hub of Hyderabad and their upcoming first store in the country.

The Hej Home provides some insight into Ikea products and solutions which its future customers can actually buy when the store opens in India at Hyderabad early next year.

The Hej Home, designed and set up over a six-month duration, highlights what the retailer stands for and what to expect from an IKEA store.

Potential future IKEA customers can experience its products before they can actually buy it from its stores in spring 2018.

Ikea Hej Home reflects its understanding of life at home in India and its unique home furnishing solutions for homes.

It also gives a peek into IKEA’s long-standing relationship with India, its history and philanthropic activities. It showcases the IKEA food and room settings based on its learnings of Life at Home in Hyderabadi families, especially those living with children.

The display includes the bedroom, living area, kitchen and dining, play area among others. With the launch of IKEA Hej Home, the retailer is getting closer to the first IKEA India store opening.

Ulf Smedberg, Country Marketing Manager, IKEA India, said: “IKEA Hej Home launch in Hyderabad is a great opportunity to meet the many people who share our passion for home, children, family, food and most importantly our strong values of togetherness and love!"

Ikea loyalty programme

At Ikea Hej Home visitors can connect sign up for its loyalty programme, through which our customers can participate in many activities even before the store opens.

Through this exposition, IKEA also looks forward to connecting with potential future coworkers, especially the women in Hyderabad. IKEA has a commitment to hire 50% women coworkers at all levels in India. As the IKEA experience cannot be complete without food, visitors can also get a glimpse of the IKEA Food and taste Swedish and Indian delicacies that will be sold in the IKEA store’s 1,000 seat restaurant, one of the largest in the world.

Ikea plans to bring Hej Home to other cities as well.

After the Hyderabad store, the second store will open in Mumbai during 2019, followed by Bengaluru and Delhi NCR.

15.1. Garment makers fear exports will drop 15% to $14 billion this fiscal

BusinessLine, 28 Nov. 2017

Garment manufacturers are apprehensive of an over 15 per cent drop in exports in 2017-18 to $14 billion, from $17 billion a year ago, because of a reduction in duty drawback reimbursement rate and rebate on State levies (ROSL) following the implementation of the Goods and Services Tax (GST).

“So many garment manufacturing units are shutting down all over the country, be it in Noida, Okhla, Jaipur or Ludhiana. Exporters are losing orders because of their loss in competitiveness. If the government doesn’t step in to restore the earlier input reimbursement rates, there will not only be a sharp drop in exports, but millions of jobs will also be lost,” said PMS Uppal, President, Okhla Garment and Textile Cluster. Industry representatives point out that the total reimbursement under duty drawback and ROSL has been brought down to 7 per cent from 14 per cent, eroding all profit margins.

“We feel let down by the meagre rates of duty drawback and ROSL. The government has assumed that this is being made up by GST refunds but this is not the case as there are a lot of embedded taxes that are not being reimbursed,” said Sudhir Sekhri, Chairman, Garments Exporters Association.

While exporters are relieved about the recent decision of the government to increase the rates of incentives under the Merchandise Export from India Scheme for garments and made-ups to 4 per cent from 2 per cent, they say it is not enough to compensate for their losses.

“Our competitiveness has been affected to the extent of 6-7 per cent on account of the reduction in the drawback and ROSL rates. We were earlier working on a profit margin of 4-5 per cent. We have now reached a situation that exporters are losing their orders to producers in Vietnam and Bangladesh because of uncompetitive prices,” Uppal said.

The garments industry, which employs over 12 million people, may have to retrench half the workforce by the end of the financial year if the government doesn’t redress the situation, exporters said.

India’s apparel exports declined 39 per cent in October with an overall decline of 5.94 per cent in the April-October period.

The industry fears a 39 per cent drop in exports of garments in November as well.

15.2. India to have 1 lakh startups in 7-8 yrs, says Pai

PTI, Dec. 04, 2017

Udaipur: India will have one lakh startups in the next 7-8 years, employing 3.25 million people and creating USD 500 billion in value, Manipal Global Education Chairman T V Mohan Das Pai said today.

He said these startups will help solve India’s problems in the future.

"By 2025, I believe that we will have 100,000 startups all over the country. They will create USD 500 billion of value and lot of money for investors. They will employ 3.25 million people," Pai told PTI on the sidelines of Rajasthan Digifest here.

Currently, there are 32,000 startups and every year 7,000 companies are coming around.

"Youngsters through the use of technology are solving hard core challenges and I believe that innovation by young people will transform India," Pai said.

The impact has already been seen in many sectors including education, healthcare, education and e-commerce.

Pai, who is also an angel investor, believes that India has possibly got the third largest ecosystem for startups after the US and China.

The two day Rajasthan Digifest, which started yesterday, is aimed at providing a platform for entrepreneurs and startups to get more traction leading to funding, engagement and increasing the customer base.

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

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16.1. Run small finance banks like a social business: Grameen Bank’s Muhammad Yunus

Livemint, 19 Nov. 2017, Malvika Joshi

Grameen Bank founder Muhammad Yunus has said the focus on lending to the poor should not be lost

Mumbai: Nobel Peace Prize winner and founder of Grameen Bank Muhammad Yunus says that small finance bank licences can be a good thing, but focus on lending to the poor should not be lost. Edited excerpts from an interview:

Some of the bigger micro finance institutions (MFIs) in India have converted into small finance banks, or have been acquired. How do you see the MFI sector evolving in India, going forward?

I kept telling the policymakers when we met that there are various solutions to follow from what Grameen Bank has done. One is to become a very limited kind of bank…to create a bank for the poor. I told them why don’t you create a new legislation and create banks for the poor? Today’s banks are all for the rich although it is not said that way. If you have to create a bank for the poor, you need to create a new legislation so that money can be lent without collateral. They agreed to introduce the legislation, but there was no progress.

I said pick the right micro credit (companies) and give them the licence just to take deposits so that they do not have to depend on foreign investors and donors who push them to profiteering. Now the licences have been given. Let’s see how they work. There are dangers. I tell them—look, licence can be good but licence can be bad for you as well…you can get disoriented. You have investors in your bank who can push you. No outsider should be able to take money out. You need to protect that and almost run it like a social business.

Nobody should be able to take out personal profit from the bank. Only then you can focus on the poor. Otherwise even with a limited licence, you try to move up. Bandhan has got a full licence. I told Shekhar (Chandrashekhar Ghosh, founder and CEO of Bandhan Bank)—look now you are in danger…very soon you will be a rich people’s bank. There is a danger that somebody else may start running the bank and you will still have microcredit but it will be a showpiece.

What happens to MFIs that did not get a banking licence?

Microfinance is at the core a financial services business. If banks are (profiting) from poor people, people who are critical …should come up with an alternative. After all, the banks are bringing their services. One way I suggest is to transforming themselves into a social business. You can get into an agreement with investors that none of them will take any profits out of this institution.

In your latest book, A World of Three Zeros, you talk about the concept of business action tank.

This was a concept created by French companies like Danone, Veolia, Sodexo and many others, where each of them created a social business alongside their regular business to address social issues. It was separate from their moneymaking business but was not a corporate social responsibility initiative. CSR is a donation. But these social business ventures will carry the parent company’s name so that even if the business is small it is powerful and real and the whole world can learn from it. In a business action tank, companies will come together to address social issues.

How do you plan to set up business action tank in India?

We have started working with a few Indian companies including some companies of the Tata group. They can create thousands of social businesses. What they do can be scaled up globally.

And this is better than CSR?

This is much better than CSR. Charity is a good thing but unfortunately it goes out and never comes back. There is only one time use of money but in social business it goes out, does the work and comes back. In a social business, you can use the same money again and again. It creates an institution. Charity does not create an institution. My suggestion is put CSR money in social business rather instead of just writing a cheque.

16.2. MFIs gross loan portfolio surges 24% to Rs 38,000 cr in Q2

PTI, Nov. 22, 2017

New Delhi: Gross loan portfolio of Non- Banking Finance Company-Microfinance Institutions (NBFC-MFIs) soared 24 per cent to Rs 38,288 crore in the end of September quarter year-on-year, said an industry body.

The NBFC-MFIs segment, according to MFIN, is expected to grow further on account improvement in loan disbursements and decrease in risk assets.

The aggregate gross loan portfolio (glp) of MFIs stood at Rs 38,288 crore at September-end, said Microfinance Institutions Network (MFIN), the first RBI appointed Self- Regulatory Organisation (SRO) and an industry association.

"This represents a Y-o-Y growth of 24 per cent over Q2 2016-17 and 11 per cent over the last quarter," it said.

NBFC-MFIs disbursed 63.1 lakh loans in July-September period of 2017-18 which has increased by 2 per cent as compared to the corresponding period during last year.

Commenting on the data, MFIN chief executive Ratna Vishwanathan said the growth in loan disbursements as compared to last quarters reflects that the industry is now returning to normal.

The sector was adversely affected by demonetisation, which had pulled out 8 per cent of total currency in circulation.

"It is also important to note that NBFC-MFIs are now increasingly integrating digital modes for disbursements and collections which will help them mitigate logistical issues related to cash handling to some extent," said Vishwanathan.

She further said that with decreasing percentage of portfolio at risk and improvement in disbursements, "we expect the industry to show better growth figures in the coming months".

The loan amount disbursed during the September quarter increased by 18 per cent to Rs 13,853 crore as compared to Rs 11,734 crore in the corresponding quarter last fiscal.

"In fact, 54 per cent of these disbursements were done in cash-less mode, mostly through direct transfer to the customer bank accounts," the MFIN said, adding average loan amount disbursed per account also witnessed an increase of 15 per cent.

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

17.1. L&T Hyderabad Metro set to transform the Telangana capital

BusinessLine, 27 Nov. 2017, V Rishi Kumar

The ₹14,132-crore Hyderabad metro rail, seen as an engineering marvel and transformational project for Hyderabad, Secunderabad and the IT hub of Cyberabad, will be open to the public on November 29.

Prime Minister Narendra Modi will inaugurate a 30-km-long stretch, part of the 72-km long elevated metro rail project.

Being developed by the construction major L&T, the concessionaire, it has faced a number of hurdles and managed to get over them.

The project, which was expected to be ready by July 2017, five years from commencement, has been delayed by about 12-18 months, and the cost of the project is also likely to go up by about ₹3,500 crore to ₹4,500 crore, a problem issue. While the government and L&T are in discussions, there is no official word on the cost escalation.

Along with over ₹2,000 crore investment made by the State for securing the Right of Way, land acquisition and compensation to those who have parted with their properties, the project cost is likely to cross ₹20,000 crore when fully ready.

Significantly, the metro project will be a combination of one of the most modern metros, but pack a lot of commercial reality facilitating transit-oriented development. It would include commercial property of 18.5 million sq ft. About half of the revenue would be from ticket sales and the rest from commercial exploitation.

Challenges on the way

Considered to be one of the biggest PPP projects, it had fair share of challenges, right from securing right of way, delay in clearances from the Railways for Rail Over Bridges, and the tough transition during the Telangana agitation phase.

At one point, during 2015-16, the project progress was threatened with the new government seeking change in alignment at couple of locations of the three corridor project. As on date, a stretch of about 6 km, which heads into the dense Old City corridor connecting up to Falaknuma is still in the limbo.

While L&T, which had completed couple of stretches of 12 and 8 km in the metro corridors, could have actually operated them in 2016 itself, it had to wait to commission the project now. The government was keen that a longer completed stretch, connecting busy locations, would be beneficial for the commuters. While the project is progressing, and works are under way on the other stretches, the last mile connectivity, which plays a crucial role in the success of any metro, needs to be sorted out by the State.

A truly multi-modal transport is critical for the success of metro even if the entire length of 72 km is completed.

Background

The Delhi Metro Rail Corporation, then headed by Metro man E Sreedharan, prepared a report for the metro project along with various routes.

The first set of tenders were called for and the Maytas Infra-led consortium was awarded the contract in 2008, during the YS Rajasekhara Reddy regime in the unified Andhra Pradesh. It had declined Viability Gap Funding.

However, this was later cancelled and re-tendered, where L&T was awarded as it sought least amount as VGF. Of the total cost of ₹14,132 crore, the Centre sanctioned ₹1,458 crore as one-time capital grant with the remaining contribution of ₹12,674 crore from L&T.

KT Rama Rao, Telangana IT and Industries Minister, says “This project reflects both engineering and financial innovation, and the new State will work on its early completion and initiate studies for next expanded phase.”

Smart cards which can pack 16 different services and include multi-modal transport will make it easy for consumers.

NVS Reddy, Managing Director of HMRL, describes the metro as an urban rejuvenation project that would transform Hyderabad as a global city.

VG Gadgil, a veteran of over 40 years with L&T, worked on the project from the day one for over 3.5 years before handing over the baton to Shivanand Nimbargi, MD & CEO of L&T Metro Rail Hyderabad Ltd.

The project is sought to be made financially viable by taking up transit-oriented development along the three corridors of 29 km, 15 km and 39 km respectively and at terminal points.

L&T contracted some of the best-known global players and awarded contracts to Hyundai Rotem of South Korea for coaches, Thales for signalling, Samsung, Keolis among others.

Litigations

The metro had to face a number of court cases for property and land acquisition and in some cases traders who were getting displaced voiced their concerns. Efforts are on to develop some commercial spaces which would help relocate them.

With the commissioning of 30 km, the real test would be to ensure people shift to use this mode in place of personal vehicles.

While the 66-km stretch is likely to be ready in second half of 2019, minus the Old city section, the government is also considering extending the metro lines in the second phase of the project. Funding would be a challenge.

Can this Metro project transform Hyderabad?

17.2. Broadband to every household by next year: Telangana Minister

PTI, Dec. 07, 2017

Hyderabad: The Telangana Government today hoped that it would be able to provide broadband connection to every household by next year after which revolutionary changes are expected in the education and health sector.

According to an official release, Telangana IT and Industries Minister K T Rama Rao review the progress of various ongoing projects of his portfolio in the state.

A pilot project being undertaken in four villages in Rangareddy district on the technology demonstration network will be over by the first week of the next month, it said

A senior official of Vijaya Bank handed over documents pertaining to loan to Telangana Fiber Grid Corporation for Rs 561 crore, the release said.

"We hope that broadband connection will be provided to every household by next year after which revolutionary changes are expected in the education and health sector," the minister was quoted as saying in the release.

The officials also informed the minister that they expect environmental clearances for the proposed "Pharma City" near here, by next year.

The minister also reviewed progress on the second phase of T-Hub, IMAGE Towers (for gaming and animation) and T-Works, it further said.

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

18.1. Media, entertainment industry to touch Rs 8 trillion in revenue by 2022: report

Livemint, Dec. 04, 2017

New Delhi: The Indian media and entertainment (M&E) industry is expected to double its revenue to reach Rs7.5-8 trillion by 2022 from an estimated Rs4.5 trillion in 2017, said a report published by consulting firm Boston Consulting Group (BCG) and lobby group Confederation of Indian Industry (CII).

Over the next five years, the industry is poised to grow at an average annual growth rate of 11-12%, according to the report.

The report highlighted that the media and entertainment industry has the potential to generate four million jobs (direct and indirect) over the next four-five years, on the back of technology adoption, big data and analytics.

“The Indian M&E sector has huge room for growth and can create four-five million jobs without much spending from public infrastructure. Digital platforms are proliferating and there are tremendous opportunities that never existed before—especially for creators, storytellers and technology providers,’’ Chandrajit Banerjee, director general at CII, said in the report.

By 2022, total employment across the industry is expected to be 6-6.5 million from the estimated 3.5-4 million in 2017. The report said that the structural changes across the industry and major shifts around adoption of technology, big data and analytics will lead to several new job roles and a massive reskilling of the current workforce.

With rising consumer demands, changing business models and digital disruptions leading to a consumption explosion, the industry is required to prepare itself for an entirely different workforce. The report highlighted that media and entertainment organizations need to rebuild their strategies to fit in the shifting digitally oriented landscape. “It’s the need of the hour for the industry to identify the creative, technological and analytical skills that will be required over the next five-seven years to restructure its business model for the upskilling exercise,” said Kanchan Samtani, partner and director at BCG, in the report.

According to the report, the M&E industry will require 140,000-160,000 trained/employable individuals entering the workforce every year for the next five years. The demand for talent and functional skills in the industry will outstrip supply, given the pace of growth in the industry, the report said.

“Hence, the M&E industry needs to prepare itself for a completely different and perhaps, unrecognizable workforce by 2020,” the report added.

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

18.2. First ever International Conference cum Exhibition on AYUSH and Wellness inaugurated in New Delhi today

Press Information Bureau, Dec. 05, 2017

1500 delegates from 60 countries and 250 manufacturers of alternative medicine are participating in Arogya 2017

New Delhi: The First Ever International Conference on AYUSH and Wellness ‘Arogya 2017’ was inaugurated by the Minister of Commerce and Industry, Shri Suresh Prabhu and Minister of State for AYUSH, Shri Shripad Yesso Naik in New Delhi today. The three day exhibition cum conference is being held at Vigyan Bhawan from 4th to 7th December, 2017. ‘Arogya 2017’ has been jointly organized by Ministry of AYUSH and Ministry of Commerce and Industry of Government of India including Pharmexcil in partnership with FICCI to showcase the strength and scientific valuation of traditional system of medicine. Nearly 1500 delegates from India and 60 countries are participating in ‘Arogya 2017’.

Addressing the delegates, the Commerce and Industry Minister, Shri Suresh Prabhu said that ‘Arogya 2017’ is the first of its kind International Conference which has been organized in India. Through ‘Arogya 2017’, we have decided to share the traditional medicine knowledge of India with humanity across the world, the Minister explained. India, he said, however is not the only country with traditional medicine knowledge. Through this conference we also hope to learn from participants from other countries of the world and the Government of India will be very happy to work with all the countries in this sector, he said.

Minister of State for AYUSH, Shri Shripad Yesso Naik said that Ministry of AYUSH is trying to achieve comprehensive integration of AYUSH in the health services. Through the Ministry of AYUSH, we are not only promoting developmental activities of traditional medicine at National level but also looking at more international cooperation and collaboration opportunities at bilateral, multi lateral, regional and global levels. In this direction, declaration of 21st June as International Day of Yoga by the United Nations has generated global interest for yoga as well as lot of cooperation opportunities for exchange of Yoga information, expertise and qualified, certified and accredited trainers of Yoga. Similarly, through our collaboration agreement with WHO we intend to develop AYUSH technical guidelines and documents for the benefit of member countries, the Minister added. Shri Shripad Naik said that India has signed MoUs with some country Governments and also with International Universities for fostering cooperation in the area. We should build up the institutional mechanisms and the health systems with the evidence-based approaches, shared practical experiences and best practices of traditional medical systems, he added.

Secretary AYUSH, Vaidya Rajesh Kotecha said that India is perhaps the only country in the world with a separate ministry of traditional medicine which reflects government’s commitment towards development of AYUSH system of medicines. We hope to increase the size of AYUSH sector three fold over the next five years including products and services, the AYUSH Secretary said. It is for this reason that the Government is following a multi prong strategy including signing of MoUs and agreements with large number of countries, collaborative research and academic activities and offering international scholarship in AYUSH among others.

DG Pharmxcil, Mr. Udaya Bhaskar; Secretary General FICCI, Dr. Sanjaya Baru; Deputy Secretary General FICCI, Mr. Vinay Mathur; DG Gyan Bharti, A. Jaykumar; AYUSH Expert in WHO, Dr. G Geeta Krishnan; MD Sri Sri Tattva, Shri Arvind Varchaswi also highlighted the steps taken by India in promoting the AYUSH Sector at home and abroad.

‘Aroyga 2017’ is a comprehensive exhibition cum conference on Ayurveda, Yoga, Naturopathy, Unani, Siddhha, Sowa Rigpa, Homoeopathy and wellness. More than 250 manufacturers of alternative medicine are showcasing their products and services at International Arogya 2017. The mega event has brought key stakeholders of AYUSH sector together under one roof to showcase latest research and developments in alternative medicine systems of India and boost exports of AYUSH products.

A White Paper "AYUSH for the World" by Frost & Sullivan was launched at the event to offer a roadmap for AYUSH regulations and registration in ASEAN and BIMSTEC countries. It notes that India is the second largest exporter of Ayurvedic and alternate medicine to the world and has a potential to generate 3 million job opportunities. The Indian herbal market is valued at around Rs 5,000 crore currently, with an annual growth rate of 14%.

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

19.1. Inside TCS’s transition led by CEO Rajesh Gopinathan

Livemint, 1 Dec. 2017, Varun Sood

Bengaluru/Mumbai: Tata Consultancy Services Ltd’s (TCS’s) chief executive officer (CEO) Rajesh Gopinathan likens his role at India’s biggest software services company to that of a conductor leading a musical ensemble.

“It is more an orchestra kind of situation. There is a conductor. Each of the participants knows the score. You change the tempo to bring in your own signature, but technically everybody knows the score or everyone is a virtuoso in their own area,” Gopinathan, 45, said in a recent interview.

“And you may emphasize or de-emphasize. You have the power, but you exercise it very lightly. The orchestra is trained to follow the conductor. But it is not dependent on the conductor,” he said.

You need to understand your own teams and you need to respect them. Respect them from the bottom of the heart, and they will respect you. It is this mutual respect that is the key to get extended teams to work together- TCS CEO Rajesh Gopinathan

Gopinathan had big boots to fill at TCS, which ended with $17.6 billion in revenue in the year to 31 March.

Less than three months after the Tata group holding company, Tata Sons Ltd, sacked Cyrus Mistry as chairman on 24 October 2016, Gopinathan was named CEO of TCS.

Gopinathan, who was chief financial officer (CFO) and vice-president, replaced Natarajan Chandrasekaran, under whom TCS generated $1 billion in incremental revenue each year since 2011; Chandrasekaran was named chairman of the $100-billion group, with interests ranging from automobiles to aviation and tea to telecom.

Gopinathan’s approach towards his job at the helm underscores an important leadership trait: respect for the team.

“You need to understand your own teams and you need to respect them. Respect them from the bottom of the heart, and they will respect you. It is this mutual respect that is the key to get extended teams to work together,” he said.

His approach—of building a strong rapport with both customers and employees—underlines why TCS has retained all its senior executives even as business continues uninterrupted, calming the worst fears voiced by analysts after Chandrasekaran left the company, where he spent three decades, to occupy the most senior role available at the Tata group.

Understandably, the consensus view now is that this has been one of the smoothest management transitions at an Indian corporate entity.

“The approach reflects a mature leader who understands not only their internal environment but also the external requirements. We, too, often live in a short-term, quarter-to-quarter world that lacks a long view. Rajesh has started on a good note,” said Ray Wang, founder of Constellation Research, a technology research and advisory firm.

Typically, it takes 18-24 months to know for sure if a company has managed a successful CEO transition. So it will be premature to draw a conclusion now. But what cannot be argued is that Gopinathan has started on the right note by retaining the team his predecessor took a decade to assemble and nurture.

The approach reflects a mature leader who understands not only their internal environment but also the external requirements. We, too, often live in a short-term, quarter-to-quarter world that lacks a long view. Rajesh has started on a good note- Ray Wang, founder of Constellation Research, a technology research and advisory.

Retaining senior management is always challenging, and TCS’s two smaller Bengaluru-based rivals—Infosys Ltd and Wipro Ltd—have experienced this in the past.

In the six months leading up to Vishal Sikka’s appointment as the first non-founder CEO of Infosys in June 2014, and in the ensuing six months, Infosys saw the exit of at least a dozen executives, who reported to either the CEO or the chief operating officer (COO). Sikka quit in August this year after a battle between the company’s founders and the board.

Wipro, which managed a relatively better transition after appointing Abidali Neemuchwala (co-incidentally also a former colleague of Gopinathan at TCS) as CEO in February last year, too, saw the departure of three senior executives.

At TCS, only former digital business head, Satya Ramaswamy, left the company after the management decided to carve the digital unit into individual components to scale them up.

While Infosys and Wipro saw an exodus of senior executives when Vishal Sikka and Abidali Neemuchwala took over as CEO, only one business head has quit TCS since Rajesh Gopinathan took the reins of the company

TCS has other virtuoso leaders like K. Krithivasan, president of the banking, financial services and insurance (BFSI) business unit. Krithivasan, who completed 27 years with TCS last year, has served the firm well: TCS now gets more business from banks than any other informational technology (IT) outsourcing firm, including Accenture Plc, which, although it is twice the size of TCS, gets less business from BFSI.

In the year to March, TCS earned $7.1 billion in revenue from the BFSI unit, which means, Krithivasan, along with three other leaders, run a business division that, if classified as a standalone company, will be India’s fourth largest IT firm (behind Wipro, which ended with $7.7 billion in revenue last year).

“All of us can tell you, he (Gopinathan) is a great guy to work with. He is a very objective guy,” said Krithivasan.

Why did Tata Sons zero in on Gopinathan to lead the company?

“From a CEO succession point of view, we did have a few candidates in mind. The board met each of the individual candidates, they met collectively, and then they decided. But it’ll be difficult to say what worked in his favour,” said Ajoyendra Mukherjee, executive vice-president and head of global human resources at TCS.

TCS won’t comment publicly, but one executive credits Gopinathan’s wide experience across different groups as one reason for his success.

“He has seen the broadest view of TCS among all of us,” said Debashis Ghosh, president of the manufacturing, life sciences and energy practice at TCS.

He (Rajesh Gopinathan) has seen the broadest view of TCS among all of us- Debashis Ghosh, president of manufacturing (life sciences and energy) at TCS

Chandrasekaran hired Gopinathan from Tata Industries Ltd in 2001 and, together, the two are credited with building TCS’ e-Business practice into a $500-million unit in five years. In 2005, Chandrasekaran again got Gopinathan to help him run TCS’s strategy office for two years. Later, Gopinathan moved into the business finance division, before taking over as CFO in 2013.

Another executive attributes his ascension to Gopinathan’s razor-sharp focus on execution. “TCS is not a company which will do something radically different. Rajesh is a very meticulous and articulate guy. Above all, Chandra trusts him completely and so will rely on him to execute his vision. After all, he, having been a part of review meetings for five years, knows the business so much that it came as no surprise to anyone of us,” said a TCS executive on condition of anonymity.

Gopinathan’s focus on execution is something that would be appreciated by Nandan Nilekani, non-executive chairman of Infosys which is still searching for a replacement to Sikka.

TCS is not a company which will do something radically different. Rajesh is a very meticulous and articulate guy. Above all, Chandra trusts him completely and so will rely on him to execute his vision- A TCS executive

“Let me tell you that you should not underestimate execution. That is what business is all about,” Nilekani told reporters in October, after being quizzed on what Infosys will focus on.

Gopinathan is not a flashy, gregarious personality like Sikka. He also does not possess the easy charm of someone like Francisco D’Souza, CEO of Cognizant Technology Solutions Corp., to impress a client. Gopinathan is a soft-spoken man, who rarely lets down his guard.

Still, Gopinathan’s financial acumen is in no doubt. Large outsourcing deals are becoming more complicated, with elements of new-age technologies such as data analytics, artificial intelligence and cloud computing increasingly becoming part of a business that traditionally depended on work like application maintenance and infrastructure management for its bread and butter. Any IT vendor needs financial judgement to agree to work with a client at a fixed price.

“We have always done business having good client relationships and then working on delivery side of software. But with Rajesh, financial discipline is one thing I have learnt,” said Ghosh of TCS.

Gopinathan, under the tutelage of Chandrasekaran, and support offered by the senior management team, relies the most on data when it comes to making decisions.

Gopinathan is not a flashy, gregarious personality like Sikka. He also does not possess the easy charm of someone like Francisco D’Souza to impress a client. Gopinathan is a soft-spoken man, who rarely lets down his guard.

“So, say if the team in data analytics in the US needs more investments, Rajesh will approve of these only if the return on capital makes sense. Chandra would come to a decision with both his experience and data playing equal parts,” said an executive on the condition of anonymity.

At 45, Gopinathan is younger by a couple of months than Chandrasekaran was when he occupied the corner office at TCS in 2009.

Senior executives at TCS have a reason for sticking with the firm and working with a man who is still early into his journey of building client relationships.

“Most of us joined this company as trainees. We all were from ordinary middle-class backgrounds, and we all have grown based on performance. The company has allowed us to make mistakes. Whatever we are is purely because of the company,” said Krithivasan.

“Now there is lot of respect for Chandra. And when I look back, he (Chandrasekaran) was an elder brother to the team. Rajesh, too, gives us as much independence as Chandra. You don’t make friends over one meeting. Personal relationship with clients is also part of a journey and does not happen overnight,” added Krithivasan.

We are betting on our people that this culture is the more robust and resilient culture which will allow us to go over multiple cycles of technology. Otherwise, I am merely a financial investment engine- TCS CEO Rajesh Gopinathan

Gopinathan maintains TCS will build both technologies and talent rather than buy it from outside. This approach is fraught with risks as this takes time, and for this reason, TCS’s insular approach has started eroding the firm’s growth. TCS managed a 6.2% dollar revenue growth last year, slower than 7.1% in the previous year, and less than half the 15% growth reported in 2014-15.

Globally, firms across industries are cutting spends on legacy work such as application maintenance, and ploughing the savings into newer projects in areas such as data analytics and cyber security solutions. This means companies like TCS now have to deploy tools such as automation and data analytics platforms to help clients run their businesses more efficiently. TCS’s build-everything approach contrasts with Accenture Plc’s strategy of buying companies and hiring executives as it makes itself future-ready by investing in newer technologies.

Accenture spent $1.7 billion to buy 37 firms last year, with these acquisitions helping it improve its dollar revenue growth to 6% (from 3.5% in 2015-16) to end with $34.9 billion in revenue in the year to August.

Gopinathan remains unfazed.

“I agree, it is a risk,” he said. “(But) we are betting on our people that this culture is the more robust and resilient culture which will allow us to go over multiple cycles of technology. Otherwise, I am merely a financial investment engine,” he said.

19.2. IBM’s India revenue tops $5 billion in FY17

Livemint, 4 Dec. 2017, Anirban Sen & Varun Sood

Big Blue IBM now biggest IT services firm in the domestic outsourcing market

A little over a decade after it captured a landmark outsourcing contract from telecom firm Bharti Airtel Ltd, International Business Machines (IBM) has touched $5 billion in revenue in India—making it larger than a bunch of other top homegrown outsourcing firms like Tech Mahindra.

IBM, the world’s largest technology services firm that is popularly referred to as Big Blue, posted robust growth of nearly 41% in the April-March period, driven by strong technology spending in the domestic outsourcing market. According to filings with the ministry of corporate affairs, IBM reported revenues of Rs32,325 crore ($5.01 billion) in the fiscal year to March, compared with Rs23,005 crore a year ago.

The latest figures make IBM the biggest technology services firm in the domestic outsourcing market, which is home to information technology (IT) giants such as Infosys Ltd and Tata Consultancy Services Ltd (TCS). The India businesses of the likes of Infosys, Wipro and TCS pale in comparison to IBM’s India revenue.

IBM did not immediately respond to an email seeking comment.

Mumbai-based TCS generated 6.3% of its overall revenue ($1.1 billion) from India in the year ended March 2017, an 8% increase from a year ago. Infosys pulled in 3.2% of overall sales, or $326.7 million, in business from India in the year ended March 2017, a 32% increase from the year-ago period. Wipro does not disclose the revenue it generates only from India, but puts out a combined revenue figure from India and the Middle East.

IBM has dominated the domestic outsourcing landscape for the better part of the last one-and-a-half decades, with multi-year, multi-billion dollar outsourcing contracts from marque technology customers such as Bharti Airtel Ltd, Vodafone India Ltd and Idea Cellular Ltd (much before the Vodafone-Idea merger).

At one point, the size of IBM’s original 10-year contract with Bharti Airtel had swelled to around $2.5-$3 billion, or nearly $300 million in annual revenue. The size of that contract has since then shrunk by more than half, as Bharti Airtel reduced its exposure to IBM and also cut back on outsourcing, as part of a strategy revamp.

In the 2000s, IBM replicated the global delivery model perfected by Indian software exporters and built up a workforce consisting of hundreds of thousands of programmers in India who maintained software applications and back-office projects, among other things.

At one point, the size of IBM’s India workforce had touched 150,000—that figure has, however, shrunk in the past five years to about 100,000 as IBM has automated a number of commoditized services, such as software maintenance, according to at least three IBM executives.

IBM does not provide a region-wise breakup of its staff in its financial reports—the employee figures for IBM in India were obtained from company sources, brokerage reports and industry estimates.

To be sure, IBM’s latest revenue figures have been generated not just by domestic outsourcing contracts, but also include overseas outsourcing contracts, which are managed by IBM’s local teams in India—similar to the way homegrown IT services firms like Infosys and TCS generate a majority of their revenue from clients in North America.

According to two executives familiar with IBM’s latest numbers, IBM India generates a majority of revenue from selling services to overseas clients and from a process referred to as “cost recovery”, where it recovers a big chunk of the cost of products and services it sells overseas from customers and service providers it works with.

Analysts tracking IBM globally indicated the firm needs to shrink its dependence on traditional outsourcing services such as software maintenance, which have become extremely commoditized in the past five years and are increasingly getting automated.

“We have ongoing concerns about global business services given that application maintenance is almost 50% of revenue, and we think the entire industry faces revenue and margin pressures. Hence, we think application maintenance will continue to face challenges in CY2018, and we believe IBM should consider getting out of this business as we have mentioned previously,” said Keith Bachman, an analyst at BMO Capital Market in a note dated 18 October.

20.1. India will need 2.07 million more doctors by 2030, says study

Livemint, Nov. 28, 2017

New Delhi: To achieve a modest doctor-to-population ratio of 1:1,000, India will need 2.07 million more doctors by 2030, according to a study published in the Indian Journal of Public Health, in September this year.

The study titled Aggregate Availability of Doctors in India: 2014-2030, conducted by the economics and business policy faculty at the FORE School of Management, used Medical Council of India’s (MCI) historical data from 1960-2015 on registration stock of doctors obtained from Indian medical registers.

Also, it accessed other data on emigration of doctors from the Organization for Economic Cooperation and Development and destination country sources.

According to the World Health Organization (WHO) and the ministry of health, India has seven doctors per 10,000 people. The research paper found that there were only 4.8 practicing doctors per 10,000 people available in India in 2014.

“As per the availability of practicing doctors in India for 2014, the latest year for which data are available, there were 600,031 doctors available for practice in India in 2014 to serve its 1,239 million (1.239 billion) population with a doctor-population ratio of just 4.84 per 10,000 people in contrast to the government data,” the study said.

The research has also highlighted that given these findings, and the prospects of the numbers increasing over the next 15-year period, it looks like an impossible task to achieve even a modest doctor-population ratio of 1:1000 by 2030, by when the population is estimated to reach 1.476 billion.

“The current availability of doctors data in India is based on the registration stock of doctors accumulated since the early 20th century. This has not been adjusted to attrition of the strength occurring due to retirement, emigration, etc. Rest of the registered doctors have either retired or emigrated from the country to practice abroad. It is estimated that the country would be able to achieve a ratio of about 6.9 practicing doctors per 10,000 people only by 2030,” said Basant Potnuru, associate professor, economics and business policy, FORE School of Management.

Due to non-availability of data, the leakage of doctors for reasons such as those who discontinued medical practice due to change in profession, death or for any other reason during 1979-2014 (35-year period) is assumed to be zero.

“Thus, taking into account only two important causes of attrition of doctors such as retirement and emigration, the strength of practicing doctors reduced by 36.5% of the stock and the doctor-population ratio slipped from 7 to 4.8 per 10,000 people,” said Potnuru.

“Similarly, the availability of practicing doctors in 2030 will be based on the estimation of the stock and attrition due to retirement and emigration. If the registration stock of doctors continues to increase at the rate it has increased in the last two decades, the availability of practicing doctors in 2030 will be 1,018,008, after deductions made for retirement and emigration of doctors,” he said.

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

20.2. Incentivizing new vaccine development

Livemint, 6 Dec. 2017

The creation of incentives to produce vaccines for poverty-associated infections is key to improving public health

The flaws in a system appear most vividly when it fails where it is most required to work. Tuberculosis (TB) is one of India’s severest health crises. It kills two Indians every 3 minutes and more than 1,000 people every day. India accounts for 27% of the world’s 10.4 million new TB cases, and 29% of the 1.8 million TB deaths globally. Surely, this says something about the crisis in our public health policy.

In an interview last week, World Health Organization (WHO) deputy governor Soumya Swaminathan lamented, saying that India doesn’t have a good TB vaccine. “Polio could be eliminated because we had a vaccine. On all three fronts—diagnostics, drugs and vaccines—we have a long way to go in terms of new drug discovery. With drug resistance coming up, we will need a pipeline of new drugs. So this is where India has to step up, I think, along with other Brics (Brazil, Russia, India, China and South Africa) countries. We should no longer wait for other countries to do the research. This is a disease that affects us.”

Swaminathan’s call to action is overdue. TB is difficult to diagnose, and the BCG vaccine that is currently in use (developed in the early 20th century) is ineffective for young people and adults. A new vaccine, cheaper and effective diagnostic tests, and treatment for the drug-resistant strains of TB are needed. Research and development (R&D) requires a concerted effort by both governments and the private sector. The government typically supports basic research while pharmaceutical companies focus on product development, clinical research or implementation research.

The lack of progress in developing a vaccine for TB is part of a larger problem. Relative to their social need, there is a dearth of overall R&D on diseases concentrated in poor countries. Only 10% of global health research is devoted to conditions that account for 90% of the global disease burden—the ‘10/90 Gap’. Specifically with regard to TB, while the public sector globally contributed 61% of the R&D funding between 2009-15, the private sector only spent 17%.

One reason for the lack of private investment is that the potential consumers (patients and governments) are poor. But there are two other reasons: First, the benefits of the research on these diseases spill over to many countries, so none of the small countries has an incentive to unilaterally support the research. Second, governments have a poor record of respecting patents. WHO’s The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) has provisions for ‘compulsory licensing’ that allow governments to license the production of essential drugs to local manufacturers who must then pay royalties to the innovator.

The problem, therefore, is that the medical innovation industry doesn’t consider poor countries as their market. The solution, then, lies in increasing the value proposition of serving these markets. This has been done in the past, when the US Orphan Drug Act of 1983 created incentives for companies to create drugs for rare diseases like Huntington’s and muscular dystrophy—diseases which affect less than 200,000 people in the US and hence have a limited market. Over 200 new orphan drugs have been developed since 1983 and as of 2000, biotechnology companies had sponsored more than 70% of the projects in the US.

Thus, the creation of incentives to complete the research cycle, from product development to implementation, is key to controlling the infectious diseases associated with poverty. One important proposal in this regard is made by Harvard researcher Michael Kremer and Rachel Glennerster of the Abdul Latif Jameel Poverty Action Lab, who suggest the use of advance purchase commitments (APCs). In an APC, a sponsor (whether a government or a donor agency) commits to fully or partially finance the purchase of vaccines for a disease at a pre-specified price. The funds are spent only if the desired product is developed. This would create a larger market, with more certainty, which would attract more firms to develop new products. Thus, APCs could replicate the incentives that have led pharmaceutical companies to pursue drugs to treat baldness and depression in dogs, while millions are sick from preventable or treatable infectious diseases.

During the budget speech in 2017, the finance minister announced the goal to eliminate TB by 2025. The main features of the proposed National Strategic Plan (NSP) for TB Elimination, 2017-2025 are providing incentives to private hospitals to follow standard protocols for diagnosis and treatment, giving cash transfers to patients to compensate them for the direct and indirect costs of undergoing treatment as well as incentives to complete treatment. This is in addition to free diagnostics and treatment for TB at government hospitals. Given the fact that incomplete treatment and improper care leads to the development of drug-resistant TB, these interventions are welcome.

But prevention is better than cure. All these years, the government should have focused more on creating a vaccine; they are easy to administer, need little diagnosis before use and can be taken in a few doses rather than involving long treatments. But what is gone is gone and the government must take steps to encourage research, both basic and applied, using APCs. It could make budgetary accommodation, or use its position in global diplomacy to encourage other nations and donors to do so. Ultimately, it will have to appeal to the interest of private companies for medical innovations.

How should the government promote vaccine development for diseases? Tell us at views@livemint.com

20.3. Govt to increase health budget to 2.5% of GDP by 2025: Minister J.P. Nadda

Livemint, Dec. 12, 2017

New Delhi: The government on Monday said it will increase the total health expenditure to 2.5% of gross domestic product (GDP) by 2025, from the current 1.15%, with more finance flow to the states, in a bid to achieve Universal Health Coverage.

“In union budget 2017-18, the government increased budget for health sector by 27.7% and National Health Policy (NHP) 2017 released this year also envisages to increase health expenditure as a percentage of GDP from the existing 1.15% to 2.5 % by 2025,” health minister J.P. Nadda said. “The Government through the 14th Finance Commission also increased devolution of finances from 32% to 42% of divisible pool—an increase estimated at Rs25 lakh crore over award period to provide States with greater flexibility and autonomy to design, implement and finance schemes,” he said.

The health ministry has announced that 150,000 sub-health centres will be transformed into health and wellness centres for providing comprehensive primary care.

For tackling non-communicable diseases (NCDs), a major cause of death and disability in India, the ministry has initiated universal screening of common NCDs such as diabetes, hypertension and common cancers at the sub-centre and primary health centres. The current sanctioned budget for tackling NCDs such as such as cardiovascular disease, hypertension, obesity and diabetes is Rs955 crore (2017-18).

The health ministry is also focusing on maternal health and planning to invest more in the area.

“We have also launched “LaQshya” Labour Room Quality Improvement Initiative, a Safe Delivery Mobile Application for health workers who manage normal and complicated deliveries in the peripheral areas, and also released the operational guidelines for obstetric High Dependency Units (HDUs) and Intensive Care Units (ICUs),” Nadda said.

The safe delivery application has clinical instruction films on key obstetric procedures which can help health workers translate learnt skills into practice.

It can play a pivotal role in training, post-training reinforcement, mentoring and demonstration. The application has been tailored to India and been field tested in a few districts where it has been found to be useful for health workers who provide maternity care.

Nadda said the operational guidelines will complement the already existing national guidelines and help the states and state level policy makers set up and operationalise these critical care units, dedicated to pregnant women and recently delivered mothers, in medical colleges and district hospitals.

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. Hyderabad a model city for drawing investment: US envoy Kenneth Juster

Livemint, Nov. 28, 2017

Hyderabad: Hyderabad is a model city in terms of drawing investment from the US, given that the city is a hub for American IT (information technology) companies, said US ambassador to India Kenneth Juster on Monday. He added India is a strategic partner for the US in the Asia-Pacific region, and that economic relationships are as important as security ties.

“This is the most dynamic part of the world as a large part of the world’s economic growth is here. It is also critical for international relations for prosperity and freedom of trade,” said Juster, on the importance of the Global Entrepreneurship Summit (GES), which begins in Hyderabad on Tuesday.

Addressing a press conference on Monday, Juster stated that credit rating company Moody’s Investors Service raising India’s sovereign rating from the lowest investment grade of Baa3 to Baa2, and changing the outlook to stable from positive was a compliment to Prime Minister Narendra Modi.

When asked how much investment the three-day (28-30 November) GES is expected to generate, NITI Aayog chief executive Amitabh Kant said this is not an investors’ meet. “We are trying to create an ecosystem for disruption (of technology through innovation) start-ups and to bring entrepreneurs together. The objective is to drive innovation,” he added during the press conference, which he attended along with Juster and S.P. Singh, chief secretary of the Telangana government.

Answering a question on H-1B visa restrictions, Juster said that the US government is currently reviewing its worldwide visa policies and refused to comment further on it. “I don’t think that the H-1B visa policy will contradict business plans,” he mentioned.

Juster also said that India was selected by the US government to host the GES last year by former US President Barack Obama’s administration and that countries are chosen with regard to growing opportunities for women and creation of jobs. “We want to give importance to that and highlight how women play a greater role,” said the US ambassador.

On why Hyderabad was chosen, Kant said the PM was very keen that events should move out (of the capital) and that the city was shortlisted after five states had applied for it. The event will have 1,500 delegates from 150 countries participating in it.

On Tuesday, Prime Minister Narendra Modi will inaugurate the event in the evening, following which Ivanka Trump, adviser to the US President, will participate in a panel session on “opening up opportunities for women entrepreneurs in their countries and communities”.

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

22.1. India-Africa trade likely to cross US$ 100 bn in 2 yrs: Naqvi

PTI, Dec. 05, 2017

New Delhi: Union Minister Mukhtar Abbas Naqvi today said the bilateral trade between India and Africa will cross USD 100 billion mark in next two years, owing to improvement in business environment in India and better connectivity across the African continent.

The bilateral trade between India and the African nations was recorded around USD 57 billion in 2015-16.

"Africa offers lucrative business opportunities for Indian micro, small and medium enterprises (MSMEs) across diverse sectors such as FMCG (fast moving consumer goods), mining and minerals, telecommunications, construction and others," Naqvi said at a conference organised by Assocham.

He observed that India is attracting business leaders and investors from across the globe as the government has been able to build a conducive business environment aimed at inclusive growth, according to a press release issued by Assocham.

The minority affairs minister also said it is due to the various reforms ushered in by the Centre that even global rating agencies and noted economists have impressed upon India as a very 'safe and strong' investment destination.

In apparent reference the previous UPA government led by Congress, the Minority Affairs Minister said, "When we had come to power there was an atmosphere of policy paralysis and corrupt practices were prevalent but we have succeeded in reversing that through various reforms".

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

22.2. India, Russia discuss ways to boost trade, investments

PTI, Nov. 20, 2017

New Delhi: India and Russia have discussed ways to boost bilateral trade and investments to strengthen economic ties, the commerce ministry said today.

Commerce and Industry Minister Suresh Prabhu met Russia's Minister for Economic Development Maxim Oreshkin in Moscow yesterday and discussed the current level of trade between the countries and ways for its enhancement.

"They also discussed opportunities that the fast growing economy of India provides for doing business, particularly in the field of manufacturing," the ministry said in a statement.

Prabhu is on a visit to Russia from November 15-17, to participate in the Shanghai Cooperation Organisation meeting of the ministers of member states responsible for foreign economy and trade.

This is the first ministerial conference on trade organised by the organisation after India became a full member in June.

Prabhu also met the Member of Board (Minister) for Trade of the Eurasian Economic Commission (EaEC), Veronika Nikishina and discussed early start of negotiations of the proposed free trade agreement between India and the Eurasian Economic Commission.

Belarus, Kazakhstan, Russia, Armenia and Kyrgyzstan are EaEC members.

A joint feasibility report on the proposed agreement was completed last year. It concluded that the proposed pact is feasible and mutually beneficial with substantial potential welfare gains and augmentation of trade in goods.

Further, it said Prabhu participated in a round table interaction with 30 of Russia's leading business leaders from sectors including steel, engineering, railways, financial services and nuclear energy.

"The minister told the gathering about the new initiatives of the Government of India, particularly with regard to ease of doing business, priority areas like financing in the nuclear energy sector, natural gas and railways," the statement added.

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

23.1. Indian and Italy sign a new MoU for cooperation in Agriculture and Phytosanitary issues

Press Information Bureau, Dec. 07, 2017

India contributed 37 million USD in the 10th replenishment of IFAD for the period 2016-2018: Shri Radha Mohan Singh

Shri Radha Mohan Singh meets Shri Maurizio Martina, Italian Minister for Agriculture, Food and Forestry Policies

New Delhi: Union Agriculture and Farmers Welfare Minister, Shri Radha Mohan Singh welcomed the visiting delegates led by Shri H.E Maurizio Martina, Italian Minister for Agriculture Food and Forestry Policies , mentioning that India and Italy enjoy traditionally friendly and cordial relations. Shri Radha Mohan Singh also conveyed that India attaches great importance to the development of bilateral ties between the two countries and look forward to further expand and strengthen ties between the two countries in various areas including in the Agriculture sector. Shri Singh thanked the Italian Minister for participating in the AGRIMACH India, 2017 along with a large business delegation.

Shri Singh identified areas such as agriculture machinery, training, investment, institutional linkages, precision farming, cattle breeding and fisheries having much potential for cooperation, and briefly provides the initiatives taken by the Government in the field of agriculture market, soil health, irrigation, crop insurance etc.

Shri Singh also raised the issue of Indian exports of grapes and rice suffering on account of arbitrary Maximum Residue Levels (MRLs) set by European Commission. He suggested a mutually acceptable solution can found to this issue, as these limits were set by EU without any scientific assessment being shared to India.

The two Ministers signed a new MoU for cooperation in Agriculture and Phytosanitary issues that will replace the one signed in 2008. The MOU provides a good framework for cooperation in this field. Earlier in the day, the Minister met Mr. Gilbert F Houngbo and congratulated him on being appointed as the President, IFAD.

Shri Radha Mohan Singh said that India has always had an active association with IFAD ever since it was set up in 1977 as the 13th specialized agency of the United Nations. India is a founder member of IFAD, a key contributor among the member Countries, participates actively in the Fund's governing bodies, and holds a permanent seat in IFAD Executive Board. It currently holds the chairmanship of the Governing Council and of the Evaluation Committee.

Union Agriculture Minister further said that he welcomes the new country strategy for IFAD engagement in India for the period 2018-2024, which proposes to strategically focus on 'smallholder food and agricultural production systems that are remunerative, sustainable and resilient' and achieving India’s goal of doubling farmers' incomes. Shri Singh also appreciated IFAD plans to establish sub-regional hubs in New Delhi to serve as a sub-regional hub, covering Nepal, Bhutan, Bangladesh, Sri Lanka and Maldives besides India. This will significantly enhance opportunities for further investment, technology and knowledge cooperation, including South-South Technical Cooperation (SSTC).

Shri Singh said India has contributed 37 million USD in the 10th replenishment of IFAD for the period 2016-2018. He further added that he looks forward to enhanced cooperation between India and IFAD in the coming years. Together, we can do much more by expanding the collaboration with the private sector, and to engage more systematically in South-South Technical Cooperation involving public and private organizations as well as farmers and their organizations.

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

23.2. Korea scouting for investment opportunities in Bengal

PTI, Nov. 28, 2017

Kolkata: South Korean diplomat Hai Kwang Lee on Monday heaped praise on West Bengal Chief Minister Mamata Banerjee for her "vision and strong persuasive capabilities" and said his country is scouting for investment opportunities in the state as it is an important market.

Korea has organised its first ongoing 'Korean Caravan', a diplomatic outreach programme as a step toward it.

"Chief Minister Mamata Banerjee is a charismatic politician and leader with a vision and strong persuasive capabilities," the acting Korean ambassador to India told PTI here.

Besides cultural events as part of the 'Korean Caravan', a 10-member business delegation is also in the city to evaluate scope and investment possibilities here, he said, adding a business meeting has been scheduled on Tuesday with the state's investment nodal agency WBIDC.

LG Electronics, Hyundai Construction, Toosan and chemical company Han Hwa, among others, are part of the delegation.

He said already 20 Korean companies have some presence in this part of the country and more were keen.

Lee said he will try to mobilise companies to attend the upcoming Bengal Global Business Summit scheduled to be held in the city early next year.

He indicated Korea is inclined to invest in India over China and more such Korean Caravans will be organized in this part of the country to strengthen ties.

The bilateral trade between the two countries is about USD 15.8 billion with a positive trade balance for Korea.

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

24.1. India-Japan Act East Forum will be a milestone: Envoy

PTI, Dec. 06, 2017

New Delhi: The India-Japan Act East Forum will be a "milestone" for an enhanced relationship between his country and the North Eastern Region of India, and reinforce the bilateral ties, Japanese envoy Kenji Hiramatsu today said.

The ambassador said this in his address at the first meeting held in New Delhi under the newly established 'Act East Forum' which was set up to identify specific projects for economic development of the North Eastern Region (NER).

"Indeed, I am sure that the Act East Forum will be a milestone for an enhanced relationship between Japan and the North Eastern Region in India," he said.

He emphasised that historically, Japan was related to the NER through the experience of the Battles of Imphal and Kohima during the World Ward II.

During Japanese Prime Minister Shinzo Abe's visit to India in September, both sides had signed a pact to establish the India-Japan Act East Forum.

"Furthermore, Japan is keen to expand business opportunities of Japanese companies in the North Eastern Region so that we can directly share the economic profits with the local societies," the envoy said in a statement.

The statement was handed out to a group of journalists from India and Japan, during Hiramatsu's interaction with them at the Japanese Embassy here late evening.

The Forum consists of all the "relevant Union ministers and state governments of North Eastern Region from India's side, and the Embassy of Japan and all government-affiliated agencies in New Delhi from Japan's side," he added.

"This is the first such framework to get all relevant officials together," the envoy said.

Hiramatsu said, "I am sure that this initiative will further expand our cooperation in the North Eastern Region, deepen friendship between Japan and this region, and reinforce the Japan-India relationship further."

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

24.2. Aurobindo Pharma sets sights on East Europe for inorganic growth

Pres Trust of India, 26 Nov. 2017

Hyderabad-based Aurobindo Pharma is looking at inorganic growth opportunities in Eastern Europe and other geographies for deeper market penetration and to secure newer technologies.

Apart from acquisitions, the company is also keen to expand its product portfolio in the US and Western European markets with high-value drugs.

The high-value products that are in the pipeline include oncology, hormones, depot injections, peptides, inhalers, patches and films, vaccines and biosimilars, the company said.

“Our acquisition strategy will be largely around two platforms. One is to penetrate markets deeper and the other to secure newer technologies and platforms. We always maintain that anything that can come across in Eastern Europe will be prioritised,” Aurobindo Pharma’s Managing Director N Govindarajan said in an earnings presentation.

But he was quick to add that there is no pressure on him to do an acquisition to fill any gap as “there is enough opportunities to grow organically“.

Earlier this year, the company announced acquisition of Portugal’s Generis Farmaceutica SA from Magnum Capital Partners for a consideration of €135 million (around ₹969 crore).

25.1. WTO ministerial begins with moderate hope of outcome

PTI, 11 Dec, 2017

The 11th ministerial meeting of the 164-member WTO has begun amid only moderate hopes of an outcome as developed and developing nations braced up to push their agendas at the highest policy making body of the World Trade Organization.

India is being represented at the meeting, which began on Sunday, by Commerce and Industry Minister Suresh Prabhu who will be pushing for a permanent solution to the public food stock-holding issue which is crucial for operating the food security programme.

During the course of the four-day deliberations, the developing nations will resist the efforts by the developed nations to formally set aside the Doha Development Agenda (DDA) and place new issues including e-commerce on the negotiating table.

According to officials, with different interest groups taking tough positions on crucial issues, one could expect only moderate outcome from the WTO’s 11th Ministerial meeting.

Prabhu has intensified his consultations and bilateral meetings to muster support for issues like public stock-holding and Special Safeguard Mechanism (SSM), which are crucial for India. The minister had met the representatives of European Union, his South African counterpart and participated in the meetings of the South Centre and the G33 grouping.

“Met with the EU and had bilateral meetings (with trade ministers of other countries)...so that we have a common platform. So when we finally push our agenda there is enough support for us,” Prabhu told reporters here.

Outcomes expected

According to Stephen Ndung’u Karau, chair, Agriculture Committee, some outcome is expected on the public food stock-holding besides a few other agriculture issues. As regards SSM, Karau said, “Several members want an outcome...but more likely outcome may be a work programme.”

He said that the outcome is likely to be on issues concerning domestic support, export restrictions and cotton. He also said that other issues like export competition, sanitary and phytosanitary (SPS) and market access may have work programmes.

Edwin Kessie, Director, Agriculture Division said that “even if we don’t get a solution, Peace Clause will continue”.

India is keen for a permanent solution to the public stock-holding issue at the ministerial, the highest policy making body of the WTO and wants that the solution should be better than the Peace Clause.

Peace Clause and solutions

Under the global trade norms, a WTO member country’s food subsidy bill should not breach the limit of 10 per cent of the value of production based on the reference price of 1986–88. Apprehending that full implementation of food security programme may result in breach of the WTO cap, India has been seeking amendments in the formula to calculate the food subsidy cap.

As an interim measure, the WTO members at the Bali ministerial meeting in December 2013 had agreed to put in place a mechanism popularly called the ‘Peace Clause’ and committed to negotiate an agreement for that at the 11th ministerial meeting, which is underway at Buenos Aires.

Under the Peace Clause, WTO members agreed to refrain from challenging any breach in the prescribed ceiling by a developing nation at the dispute settlement forum of the WTO. This clause will be there till a permanent solution is found to the food stockpiling issue.

As regards SSM, it is an instrument which would help developing countries to deal with import surges and price dips as a result of high subsidies provided by the developed countries to agriculture products. An agreement on SSM is important for India as the applied customs duty on some of the agriculture products is at the bound rate, meaning it can’t be raised further. These include products such as chicken legs, apples, olive oils and rice.

25.2. WTO Buenos Aires meet: India hardens stand on food security issue

Livemint, 12 Dec. 2017, Asit Ranjan Mishra

At WTO Buenos Aires meet, India says it does not see any outcome that does not include a permanent solution to the issue of public stockholding for food security purposes

Buenos Aires: Signaling a hardening of its position, India on Monday said it does not envisage any negotiated outcome at the 11th ministerial conference (MC11) of the World Trade Organization (WTO) that does not include a permanent solution to the issue of public stockholding (PSH) for food security purposes. It also maintained that it would strongly oppose moves by some countries seeking a mandate to discuss investment facilitation.

Speaking at the plenary session ahead of closed doors negotiations, trade minister Suresh Prabhu said a permanent solution is a matter of survival for 800 million hungry and undernourished people in the world. “A successful resolution of this issue would fulfil our collective commitment to the global community,” he said. The heads of delegation meeting was to start later on Monday where delegates will have to answer “Yes” or “No” to specific issues on the table. “We are still not clear what is the way forward after that. But we do expect there will be texts in some areas,” an Indian trade diplomat said, speaking on condition of anonymity.

India has made it clear that it does not want decisions to be taken by a small group of members like in the Nairobi ministerial in 2015 and has sought greater transparency in decision-making.

On a permanent solution to public stockholding, the diplomat said a decision has to be taken by India whether to accept one that offers India only less onerous notification obligations. Other developing countries are seeking permission to introduce new food security programmes as well.

“We are seeking three things: easy workability of the peace clause than mandated, inclusion of future food security programmes and a stronger legal basis. Which element is good enough, we will take a judgment call (when the offer is made). But it has to be an improvement over what we currently have under the peace clause with no additional payments,” he added.

Prabhu said new issues that are sought to be introduced into the negotiating agenda of the WTO, such as e-commerce and investment facilitation, would be “extremely divisive”.

Shifting the priority from DDA (Doha Development Agenda) issues to non-trade issues like investment facilitation and MSMEs (micro, small and medium enterprises), for which there is no mandate, is difficult to accept,” he added.

A group called the Friends of Investment Facilitation (FIFD), comprising 11 countries including China, Pakistan and Brazil, has moved a proposal to appoint a facilitator for discussions on investment facilitation at the WTO.

“We will strongly oppose this. We are working with other like-minded countries,” the Indian trade diplomat said.

On e-commerce, the official said the European Union, which was the only entity seeking a negotiating mandate, may not now insist on it. “At least that is the sense we got after our bilateral meeting with the EU trade commissioner,” he added.

India is proposing that e-commerce discussions should continue at various working groups without any negotiating mandate. “In the interest of efficiency, we can agree to have dedicated discussions in respective bodies. But our emphasis on a bottom-up process and not bringing issues directly to WTO general council meeting remains,” the Indian diplomat said.

India has also modified its stand on automatic extension of the moratorium to abstain from imposing customs duties on electronic transmission by two years at every ministerial conference. It now wants its position on the e-commerce discussions to be endorsed at the MC11 before giving the nod to any such extension.

Asit Ranjan Mishra is in Buenos Aires at the invitation of India’s commerce ministry to cover MC11.

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AAPI

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Wednesday 20 December 2017

NEWSLETTER, 20-Xii-2017

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

– INDUSTRY, MANUFACTURE

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

NEWSLETTER, 20-XII-2017

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

- AGRICULTURE, FISHING & RURAL DEVELOPMENT

-INDUSTRY, MANUFACTURE

INDIA & THE WORLD