AAPI: February 2017

LISBON, 20th February 2017

Index of this Newsletter

INDIA

INDIA & THE WORLD

21.1. In defence of globalization
21.2. L&T, European co MBDA tie up for missiles
22.1. Green Investment Bank, Oman SGRF eye stake in Leap Green Energy
22.2. Tata Steel, Creative Port ink deal for stake in Odisha port
23. US seeks enhanced India market access after Trans-Pacific Partnership pullout
24. Ireland pushes for more investments from India
25. From airports to e-commerce, Canadian institutional money pouring into India like never before

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LISBON, 20th February 2017

NEWSLETTER, 20-II-2017

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1.1. Economic priorities in a protectionist world

Livemint | Narayan Ramachandran | 5 Feb. 2017

India needs to focus more on itself and use the opportunity to restructure and reform even as the world regards India as a (relative) beacon of hope

Budget season is upon us again. The breathless conversation about magic bullets continues unabated even though it has been a long time since budget speeches have led to any significant change in India’s economic speed or direction. This budget follows numerous earlier ones with grand pronouncements combined with inconsequential change.

Rather than getting worked up about one budget gimmick or another, it will be more useful to focus on structural priorities in the context of a global regime shift. This new global regime (see: “Once Again Politics Matters”) means that countries are more inward-focused, with a political promise to protect jobs, reduce imports and substitute fiscal for monetary tools. In such a regime, India needs to focus more on itself and use the opportunity to restructure and reform even as the world regards India as a (relative) beacon of hope. Here is a non-exhaustive set of priorities:

Macroeconomic stability: Even though the budget initiatives are insipid, India is macroeconomically stable with moderate inflation, low current account deficit (approximately 1% of gross domestic product, or GDP) and a modest fiscal deficit (3.5% of GDP in 2016-17). By and large, the Narendra Modi government has maintained the National Democratic Alliance’s (NDA’s) focus on fiscal moderation, as was the case under the previous NDA government led by Atal Bihari Vajpayee. However, India still runs a shameful revenue deficit of about 2% of GDP and successive governments have not undertaken to eliminate it—a top priority for credible macroeconomic performance will be to target a low current account deficit and a small but positive revenue surplus. Reduction and targeting of subsidies (fertilizer in particular) should continue to the point that its impact is modest on the overall system.

Skilling, employability and jobs: India has tried many different approaches to the skilling and employment problem over the years—almost all ineffective. Over 10 million youth enter the job market each year. Add that to a cumulative pool of several tens of millions of unemployed and underemployed youth and you have the makings of a demographic time bomb. The latest budget adds a new alphabet soup of initiatives to this: STRIVE, SANKALP and SWAYAM. The only real hope is long-term and that is to both strengthen the quality of primary education and have an industrial strength apprentice and vocational training system in India. Short- term fixes with catchy acronyms distract from the long-term goal of a population that can read, add and write at the appropriate levels and that can be properly bifurcated into an academic and vocational stream at high school. While manufacturing can and should be a focus for jobs, the Make In India hoopla diverts attention from fixing practical challenges for large-scale employers such as housing, transportation and employability of labour.

Infrastructure: This NDA government has the right DNA for infrastructure. That preference is manifest in the progress on roads, rail and minor ports. The highway and rural roads programmes continue and progress has been made in both ocean vessel and inland shipping infrastructure—though much remains to be done in trans-shipment capacity. The rail ministry is led by a competent minister and despite some setback on rail safety (inconclusively tied to terrorism), impressive strides have been made in thinking about how to prioritize and fund revenue and capital expenditure. The capital required to modernize Indian Railways— complete broad-gauging, electrifying comprehensively, updating signals and upgrading passenger rakes and railway stations—is huge. It will have to be done bit by bit rather than in a big bang but the process has begun and must continue in a sustained manner. A modern, more connected and efficient inter-state rail system combined with city metro rail can energize India’s commuter, passenger and goods economy. The emphasis on affordable housing is welcome but more needs to be done to encourage supply delivered by ethical, value- based developers who can join the surging number of affordable housing finance companies that already exist.

Institutions: The piecemeal strategy to fractionally reduce government ownership in public sector companies does nothing to improve governance and is merely a chimerical approach by successive governments to fund shortfalls in budgets. Meaningful governance change can only come if company managements can be changed, are held accountable by market shareholders and are allowed to participate in wealth creation through carefully designed employee stock ownership plans. The public banking sector could become a real constraint if the gaping recapitalization wound is allowed to fester. The government would do well to follow several recommendations made in the P.J. Nayak banking governance report several years ago. Only time will tell whether the multilayered political compromises in the new goods and services tax have dramatically weakened its impact at birth. The government deserves full credit for the relentless promotion of digital initiatives and the India stack—low-cost delivery has already begun to make a difference in inclusive financial access, micro-credit, payments and insurance. Retirement savings must join this financial thrust so that India can create deep pools of long-term money. Only with domestic savings in India’s private and public markets can we reduce the dependence on foreign capital. P.S: “Know thy self, know thy enemy. A thousand battles, a thousand victories,” said Sun Tzu.

1.2. Focusing on domestic growth
Livemint | Krishnamurthy Subramanian | 6 Feb. 2017

Given the demonetisation undertaken by the government in November 2016, the current budget was presented at a historic moment in the Indian economy. To understand the government’s emphasis on the rural economy, we have to understand a key narrative that must influence economic policies in democratic countries.
As several governments in developed countries become more protectionist, the export-driven growth models followed by China in manufacturing and India in IT and IT-enabled services will produce diminishing returns. Unlike the smaller economies such as those of the East Asian nations, a large economy such as ours can shift away from export-oriented growth to domestic-consumption-based growth. However, for this to happen, rural demand and demand among the poorer sections of society has to be increased significantly. This can only happen if productive jobs and productive enterprise increase significantly for the poorer sections of society and thereby enhance disposable income among the domestic population. This will need “Make in India” to combine with “Make for India”, “Skill India” to combine with “Work gainfully in India” and “Startup India” to combine with “Feed, clothe, house and serve India”.

Given the current levels of inequality, such a boost in domestic consumption cannot happen in the immediate future. India not only has one of the highest levels of inequality in the region, it also shows very large increases in inequality since 1990. Its net Gini index of inequality (based on income net of taxes and transfers) rose from 45.18 in 1990 to 51.36 in 2013. Thanks to the high growth achieved since liberalization, India has made great strides in reducing poverty. While 80% of the rural population was poor in 1990, this percentage was less than 30% in 2011. Also, while about 40% of the urban population was poor in 1990, this percentage was less than 20% in 2011. Yet, these impressive figures look discouraging when compared to even Vietnam and Indonesia, which all started with higher poverty levels than India in 1990 and have been able to do better than India in reducing poverty. A more equitable distribution in the gains from growth is required to boost the consumption capacity of the Indian economy.

One of the key trends underlying this huge concentration of wealth and incomes is the increasing return to capital versus labour. In almost all rich countries and in most developing countries, the share of national income going to workers has been falling. This means workers are capturing less and less of the gains from growth. In contrast, the owners of capital have seen their capital consistently grow through interest payments, dividends, or retained profits faster than the rate at which the economy has been growing. Tax avoidance by the owners of capital has only served to exacerbate this cleavage between the returns to capital and to labour. To balance the disparity in the returns to capital versus the returns to labour, creating jobs in the economy is absolutely paramount.

Given these emerging trends in the medium to long term, the current government’s emphasis on reducing risks in the poorer and weaker sections of society through the twin tools of large-scale insurance programmes and credit availability is important. Economic shocks affect the poor significantly more than the rich or the middle classes. The ability to bounce back from economic shocks is important if the overall economic status of the poor has to improve. This year’s budget further pushes this agenda by proposing to raise coverage under the Pradhan Mantri Fasal Bima Yojana scheme to 40% in FY18 and 50% in FY19. So far the progress on this front is encouraging, with 39 million hectares or 26.5% of all farmers covered as of December 2016. The target for agriculture and allied credit has been set at Rs10 trillion, which is quite substantial. The allocation to the Pradhan Mantri Krishi Sinchayee Yojana is up 71% when compared with the FY17 estimate. The doubling of the total corpus of the National Bank for Agriculture and Rural Development’s (Nabard) Long-Term Irrigation Fund and a new micro-irrigation fund are also important steps in this direction.

Also important is the increased allocation for construction activities such as roads and affordable housing. Both are highly labour-intensive and employ low-skill workers. Affordable housing under the Pradhan Mantri Awas Yojana has received an increased allocation of 38.7% over FY17. Allocation for road transport has increased 11% in fiscal 2018. In the same spirit, the 44% increase in allocation to rural housing will also help push job creation and create demand in the rural economy. Providing infrastructure status to affordable housing will facilitate higher investments in this sector and, thereby, create low-skilled jobs. The income-tax exemption for developers of affordable housing with a carpet area of 30 and 60 sq. m in the four metros and non-metros, respectively, instead of built-up area of 30 and 60 sq. m will bring a larger number of projects under the ambit and, thereby, foster higher investments in this sector.

Given the emphasis on outcome-based monitoring advocated by the government, the outcomes in these key areas of rural development must be carefully monitored to ensure success of the initiatives. Such success would pave the way for the economy to substitute away from the focus on export-oriented growth to domestic- consumption-based growth.

2.1. Companies turning more responsible, but still a long way to go
Livemint | Moyna Manku | 13 Feb. 2017

The India Responsible Business Index measures 100 listed companies on five criteria to see how socially inclusive they are
Businesses need to recognize their role in creating an environment in which the rights of workers and other stakeholders, including communities throughout the supply chain are respected.

New Delhi: The World Economic Forum’s The Inclusive Growth and Development Report 2017 defines “inclusive growth” as “a strategy to increase the extent to which the economy’s top line performance is translated into the bottom line result society is seeking, i.e., broad-based expansion of economic opportunity and prosperity”.
Any business or industry is made up of various stakeholders—shareholders, consumers, suppliers and communities directly or indirectly linked to them. Increasingly, investors, government agencies and even not- for-profit organizations are pushing for the business community to be more inclusive, for it is the only way to ensure business longevity.

Companies need to look beyond the definition of CSR
In an attempt to gauge how Indian firms are coping with the interests of various stakeholders, a collaborative effort of non-profits—Oxfam India, Corporate Responsibility Watch, Praxis and Partners in Change—has put together the second edition of India Responsible Business Index (IRBI), a follow-up from 2015. “The IRBI is a tool which can be used by all stakeholders to assess a company’s performance, but most importantly for the companies themselves to self-assess and take corrective action. Several companies on the index have improved over the last one year but there is still significant room for improvement,” said Nisha Agrawal, chief executive officer of Oxfam India.

The index, scheduled for release in Delhi (see ‘Methodology and Disclosures’ at the end of the story) on Tuesday (14 February), ranks the top 100 BSE-listed companies on their performance on five parameters— inclusive supply chain, community as stakeholders, community development, employee dignity and human rights and non-discrimination at the workplace.
The index states that businesses need to recognize their role in creating an environment in which the rights of workers and other stake-holders, including communities throughout the supply chain are respected.

While there are some improvements being witnessed, barely half the firms (of the total 100) have committed to inclusive supply chains. In 2015, only 40 firms extended human rights policies to their supply chain whereas in 2016 the number has gone up to 54. Other aspects of sustainable supply chain have also seen some improvement—for instance, in 2015 there were only four firms with policies on procuring raw material at fair price; in 2016 this number has gone up to nine. And in 2015, 60 firms did not have a policy on giving priority to local suppliers; this number has gone down to 39.
However, simultaneously there has been a decline in some other key aspects of company policies on inclusive supply chains. For instance, the number of firms with an explicit policy on extending company employment policy to the supply chain has fallen from 78 in 2015 to 71 firms in 2016.

Business responsibility helps risk mitigation
The few firms involved in such practices say that responsible business extends beyond the boundary walls of a company. Namita Vikas, group president and managing director climate strategy and responsible banking at Yes Bank Ltd, said that sustainable practices—be they about reducing negative environmental footprint, energy consumption or community development—have to be part of company strategy and integrated with business decisions. She cited Yes Bank’s internal indices for selecting projects that it gives loans to, which, along with financial performance, also measure the environmental, social and governance (ESG) impact of the project.

Vikas added that while there may not be any study to show the direct link between irresponsible business and non-performing-assets (NPAs), they are interlinked. “We do know that if businesses are not responsible and responsive towards ESG challenges, there may be potential for conflict stalling of businesses and other issues that lead to NPAs,” she said.
Another key aspect of responsible business is for companies to treat communities as stakeholders (see chart 2). The coming of corporate social responsibility (CSR) rules in 2014 has increased awareness and expenditure by firms on community development, which finds reflection in the IRBI rankings.

In 2015, there were only nine firms that had held public hearings regarding project impact with communities. This number has gone up to 13 in 2016. Similarly, there were only 27 firms with a provision for conducting impact assessments in 2015; this number has gone up to 31 in 2016. But IRBI distinguishes between community development under CSR and community as stakeholders. The latter deals with companies going beyond the norms specified by the ministry of corporate affairs, which many firms are not practising. For example, 44 companies had policies on the need for impact assessment in 2015; this number came down to 41 in 2016 as per the index.

Amita Joseph, CEO of not-for-profit Business and Community, said, “It is critical for businesses to consider communities as stakeholders because businesses do not create products or services out of thin air. They use labour as well as natural resources, both of which communities have an equal stake in. Plus, in the end, the communities are also consumers.”
Agrawal of Oxfam India said that this year’s index shows improvement over last year. “There are many positive signals suggesting that responsible business narrative is becoming more holistic,” she noted. She pointed out that even government legislation is pushing for more responsible practices. From the coming fiscal year (1 April 2017) business responsibility reports will be available for the top 500 companies instead of just 100.
Capital market regulator Securities and Exchange Board of India (Sebi) recently issued a notification asking the top 500 companies to voluntarily adopt integrated reporting.

Methodology and disclosures
The India Responsible Business Index 2016 is based on self-reported and publicly available disclosures of the top 100 BSE-listed firms by market cap as on 31 March 2015. The information provided has not been externally validated.
Data from annual, business responsibility and corporate social responsibility reports, and any other company policies, published until 31 October 2016, has been used to answer 116 questions.
The firms have been graded on five parameters: Non-discrimination at the workplace, respecting employee dignity and human rights, community development, inclusive supply chain, and community as business stakeholders.

Each company’s policy commitments have been measured against the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business. The answers were send to the firms for verification by 15 January 2017. Of the 100 firms, 33 responded.

2.2. Revive demand to boost manufacturing sector
BusinessLine | 19 Jan. 2017

The government should enhance the purchasing power of common man by leaving more money in his hands and revive overall demand to boost manufacturing sector.
The eminent speakers at the BusinessLine ‘Count Down to Union Budget, 2017’ on Thursday were unanimous in their call for improving ease of doing business, reviving demand and renewed focus on sectors that help in job creation.

Seshagiri Rao, Joint Managing Director, JSW Steel, said the Budget should tweak the tax structure to help consumers spend more. This will not only spur demand but also improve the capacity utilisation of manufacturing sector, which has expanded production capacity in anticipation of robust demand. Of ₹16.33 lakh crore of taxes government collect annually about 65 per cent is mopped up through direct taxes while the rest comes from indirect taxes.
Globally, more taxes are collected from indirect tax payers leaving money in the hands of consumers to spend, he said.
The GST rate of 17-22 per cent being discussed is much high and with so many State government taxes, levies and royalty on mining kept out of GST will push of cost further, said Rao.

Key challenge
Satendra Singh, Head of Strategy and Business Development, Global Manufacturing Operations, Nokia, said the government plans announced in every Budget sounds exciting but implementation is the major issue. Nokia has developed base station in India for launching 4G technology but the roll out is happening now. Inconsistent policy measures such as introduction of 10 per cent duty on companies operating in Special Economic Zone posed a major challenge and scared away investments, he added.

Ullas Kamath, Joint Managing Director, Jyothy Labs, said the government digital push would bring about 25 per cent of the un-organised sector on the mainline and block their ability to under cut the market in long run. The incident of tax on consumer goods is among the highest. On a bottle of shampoo prices at ₹100, the tax component alone accounts to ₹40 and makes the company wonder whether they are selling the shampoo to the consumer or the government, said Kamath.

K Krishna Moorthy, Chairman, India Electronics and Semiconductor Association, said the Budget should focus on providing special incentives to sector that can generate employment, the plank on which this government came to power.

Lalit Kanodia, Chairman, Electronics and Computer Software Export Promotion Council (ESC), said the country has lot of potential to develop design for electric cars at a cost 15 per cent lower than the US and some incentives to this sector can unleash lot of potential for India.

The tax holiday of 10 years given to IT sector helped companies make about 800 acquisition overseas and establish as significant player. Such targeted incentives is the need of the hour, he said. Jiten Divgi, Managing Director, Divgi TorqTransfer Systems, said the company has been selling auto components to China from its factory in North Karnataka much before the ‘Make in India’ was conceptualised and the margins for this product are much better if it is sold in China than India. Sachchindanand Shukla, Group Chief Economist, Mahindra & Mahindra, said the fresh investment by the private sector will not happen unless the issue of excess capacity built by the industry is not tackled by improving the demand.

Improve power supply
While the power companies claim that there is surplus capacity, there are village without electricity supply and in some places the supply is not consistent. “Banks are flush with funds but there are no takers because in almost all sector the capacity utilisation is much low and so the cost of production is higher, leading to losses. Hopes the Budget addresses this issue,” he said.

3.1. Govt to take steps to boost private investment in roads, shipping
Economic Times | Jan. 20, 2017

New Delhi: The government will take tangible steps to boost corporate investment in roads and shipping with business-friendly strategies that balance profitability with effective project execution, Mansukh L Mandaviya, minister of state for road, transport and shipping, has said.
"We are creating an investor-friendly model for private sector. Who will invest in roads if there's no profit?" the minister told corporate leaders at the ET Roundtable on highways, ports and shipping on Thursday. He said his ministry would sympathetically consider their suggestions that the PPP model needs to focus on strengthening the element of partnership between the investor and the government.
"We must modify the public-private partnership model as per the need of the day and there's a constant need to change the mindset at all levels. We'll be coming up with a lot of policy interventions in coming days to revive the interest of private sector," Mandaviya said.

He also said cashless payments and toll and upcoming GST law would transform the transportation and logistics sector by cutting down the cost through simplified payment and tax structure.
Business leaders were concerned about the PPP model, but also said it can help infrastructure take a giant leap. "PPPs can bring the same revolution as telecom in infrastructure. The government has taken a lot of important measures but there's still a need to walk that extra mile," said Puneet Dalmia, managing director at Dalmia Bharat Group.
Essar Ports managing director Rajiv Agarwal emphasised the need for "real partnership" between stakeholders, along with access to low-cost funds and flexibility in contracts, in the wake of uncertainties. "This will help revive confidence and investment climate enabling achievement of the national objective of national development on the back of strong infrastructure," he said.

Feedback Infra chairman Vinayak Chatterjee said some solutions were already available with the government. "The Kelkar report has called for a rational allocation of risks among various stakeholders in a project, and moving away from the onesize-fits-all approach to PPP model concession agreements," he said.
Kaushik Pal, CEO-roads business, at Reliance Infrastructure, said his company had gone all out to encourage cashless tolling. However, the company had to bear the cost of 1% that was charged on cards and wallets. Industry leaders also emphasised the need to focus on optimisation of different modes of transport -- road, rail and costal shipping. Anil Radhakrishnan, chief executive officer at Adani Logistics Ltd, said the government should incentivise coastal shipping to make it attractive.

Participants also raised concerns about the reluctance of banks to fund projects. Malvika Pillai, portfolio manager, infrastructure and natural resources, International Finance Corporation, Asia-Pacific, said funds were readily available for the sector but there were several obstacles such as badly structured projects and issues of land acquisition.
Anand Kumar, MD, National Highways Infrastructure Development Corporation, said all projects should be made public from the stage of planning itself so prospective bidders know what is coming up in two years and they can plan their resources accordingly.
Dispute resolution mechanism is another area that needs to be addressed, industry believes. "The capacity of decision makers has gone down; most disputes are caused because of this. The government must empower officers to make decisions independently," Chatterjee of Feedback Infra said.

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

3.2. Tata Steel, Creative Port ink deal for stake in Odisha port
Business Standard | Jan. 27, 2017

Bhubaneshwar: Tata Steel has executed a definitive agreement with Chennai-based Creative Port Development (CPDPL) and their promoters for the proposed development of Subarnarekha Port at Chaumukh village in Odisha’s Balasore district. According to the agreement, Tata Steel will acquire majority equity stake in CPDPL, and the port development is envisaged through a wholly-owned subsidiary, Subarnarekha Port (SPPL).
The acquisition and development is subject to certain conditions, detailed technical assessments and financial closure. In a regulatory filing with BSE, Tata Steel said it has executed the share purchase agreement to acquire 51 per cent equity shares of CPDPL.

The cost of acquisition will depend on the capital outlay of the project which is under investigation and will be firmed up after studies are completed. Though the exact cost of acquisition will be known at the completion of the project, the current outlay for the acquisition is estimated at Rs 120 crore. “As Tata Steel grows in India in the future, securing competitive logistics solution is a key aspect in de-risking our in-bound and out-bound supply chain. The proposed Subarnarekha Port will address the long-term strategic needs of the Company and we look forward to working with various stakeholders to develop this port. Our commitment to the State and people of Odisha will be reinforced with this investment,” said Tata Steel. CPDPL, promoted by two technical entrepreneurs, Ramani Ramaswamy and Ramaswamy Rangarajan, had entered into a concession agreement with the Odisha government in January 2008 to develop the Subarnarekha Port as an all-weather deep-draft facility.

A detailed engineering study to arrive at the configuration and the project cost will be undertaken soon. Koushik Chatterjee, group executive director (finance & corporate), Tata Steel, said: “The investment to develop the Subarnarekha Port will address the strategic needs of Tata Steel in the future. The location of the proposed port makes it attractive to structurally enhance the competitive position of our Indian operations and we look forward to working together with the current promoters to make Subarnarekha a very efficient port in the future. With the growth envisaged in Kalinganagar in the future, our offtake through Dhamra is also slated to increase.”

The port project proposed at Subarnarekha needs 1215.43 acres of land for the port area and 1565.93 acres for the rail corridor. Out of 1215.43 acres of land needed for the port area, 158 acres constitute Gochar land, 193 acres Bhudan land, 138 acres of encroached land and the remaining 724 acres being a free land. According to the concession agreement signed originally, the port would have an initial capacity of 10 million tonnes per annum (mtpa) which was to be scaled up to 40 mtpa in 10 years. According to this agreement, the port developer would share revenue with the state government at the rate of five per cent from first to the fifth year, eight per cent from sixth to 10th year, 10 per cent from 11th to 15th year and 12 per cent for the remaining 15 years.

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

3.3. Government raises Rs 30,000 crore via disinvestment proceeds
Economic Times | Jan. 24, 2017

New Delhi: The government has raised around Rs 30,000 crore from disinvestment proceeds, said department of investment and public asset management (DIPAM) secretary, Neeraj Gupta. This is the highest amount grossed through the stake sale programme.

In this fiscal, the government has budgeted around Rs 56,500 crore from disinvestment proceeds, of which Rs 20,500 crore was to come through strategic sales. The government will also divest its 10% stake in Moil Ltd. on Tuesday where it currently holds 75.58% stake.
“We will do our best to achieve the disinvestment target,” said Gupta adding that he is hopeful of getting a good response from Moil Ltd. stake sale. Moil’s scrip closed at Shares of MOIL closed at Rs 382.70, up by 0.90% on a day when Sensex gained 0.31%.

The government expects to raise around Rs 480 crore from the stake sale at a floor price of Rs 365 per share. The floor price is at a discount of 4.63% and retail investors will get a further discount of 5.20% in the offer for sale (OFS).
Gupta said that the second tranche of CPSE exchange traded fund got bids worth Rs 13, 802 crore. The issue was oversubscribed two times and the government is expected to raise around Rs 6,000 crore through this route.
The CPSE ETF comprises shares of Oil & Natural Gas Corporation, GAIL India, Coal India, Rural Electrification Corporation, Container Corporation, Bharat Electronics and Engineers India, among others. It had raised Rs 3,000 crore through the first offer in 2014.

Next fiscal, the government is expected to give a big push to its strategic sale programme. It already has approval for bringing down government stake in companies such as Pawan Hans Ltd and BEML ltd. In October 2016, the cabinet had accorded in-principle approval for Niti Aayog’s proposal to sell strategic stakes in more than a dozen state-run enterprises.
Stake sale of shares in blue chip companies held through Specified Undertaking of the Unit Trust of India (SUUTI) will also be on top of the agenda. This fiscal, the government sold its holdings in L&T held through SUTTI and garnered around Rs 2,000 crore.

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

4.1. Madhya Pradesh woos global investors with mega solar project
Livemint | Jan. 25, 2017

New Delhi: The world’s largest solar power plant, coming up in Madhya Pradesh, has caught the interest of clean energy companies from around the world.
Twenty leading firms, including Italy’s Enel Green Power SpA, SoftBank-promoted SBG Cleantech Ltd, Canadian Solar Energy Holding, Singapore3 Pte Ltd and Green Infra Wind Power Project Ltd, promoted by Sembcorp Industries Ltd, have expressed interest.
“The 20 firms will bid for three units of 250 megawatts (MW) each that make up the project in the second round of auctions to be held in about 10 days,” said a person with direct knowledge of the development, speaking on condition of anonymity. The first round of auctions was held earlier this month.

The 750MW plant is being set up in Rewa district by Rewa Ultra Mega Power Ltd, a joint venture between Solar Energy Corporation of India Ltd and Madhya Pradesh Urja Vikas Nigam Ltd. In the second round, companies will compete on the tariff at which they can sell power.
Shapoorji Pallonji Infrastructure Capital Co. Ltd, Torrent Power Ltd, Hero Future Energies Pvt. Ltd, ReNew Power Ventures Pvt. Ltd, Azure Power Global Ltd, Aditya Birla Renewables Ltd, Mahindra Renewables Pvt. Ltd and Orange Renewable Power Ltd are among the bidders.

A spokesperson for Sembcorp India said renewable power projects in India that are large scale and offer adequate coverage of payment and development risks will be attractive for long-term investors. “India is one of Sembcorp’s key markets and an integral part of the company’s emerging market strategy. We are constantly on a lookout for suitable opportunities in the country. However as a policy, we do not comment on any specific opportunities,” the spokesperson said in response to an emailed query.
India has over 8.5 gigawatts (GW) of solar power capacity and is targeting 100GW by 2022. Of this, 40GW will come from rooftop solar projects. With the renewable-power purchase obligations of power distribution utilities, falling prices of imported solar panels from China and concessional taxation on solar panels, the industry has been growing rapidly, resulting in falling tariffs and a boost for electrical equipment manufacturing and services.

According to a report issued this month by clean energy research firm Mercom Capital Group, renewable energy project development has changed significantly over the last quarter largely due to Chinese module price declines. “The average selling prices of Chinese modules in India have declined about 10% since August and by about 30% over the last 12 months. This has provided a much-needed boost to developers which won projects at low bids and were struggling to make project economics work,” said the report.
According to Ashish Khanna, executive director and chief executive of Tata Power Solar Systems Ltd, a stronger focus on solar panel and equipment manufacturing, better access to finance and streamlined import duties on panels and system components will go a long way in reaching the 100GW target.

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

4.2. How solar power was made cheap
BusinessLine | M Ramesh | 10 Feb. 2017

Solar tariffs have crashed to unprecedented levels of less than Rs 3 a kWhr in the auctions that are currently under way for 750 MW of solar projects in Rewa, Madhya Pradesh.

Solar power developers submitted an initial bid for three blocks of 250 MW each and the lowest bid – which happened to be Rs 3.64 – became the benchmark for further bidding process, which began on Thursday and continued through the night.
Whoever offers to sell electricity at the least price will bag the mandate to put up a project and sign the power purchase agreement with Rewa Ultra Mega Solar, an equal joint venture of Madhya Pradesh Urja Vikas Ltd and the government of India-owned Solar Energy Corporation of India (SECI).
At the time of writing this report, tariffs had gone below the Rs 3-mark, a level that many people still think is ridiculously low and unviable.

However, there is an opposite view as well. Companies like Singapore’s Sembcorp, Adani, Softbank, Italy’s Enel and GDF Suez are among the bidders. These are large companies, not fly-by-night operators, and they know what they are doing.
One industry expert, whose company dropped out of the race, said that the big players were assuming solar modules to be available at an incredible price of 27 cents, and betting on un-hedged foreign currency loans at cheap interest rates.
In an unrelated tweet, Paula Mints, a solar energy expert based in the US, who runs a company called SPV Market Research, said: “Make no mistake, current module prices are below costs. If this continues, quality will suffer and there will be a significant consolidation.”
Another expert in India, whose company builds solar plants for others (‘EPC company’) said that the game plan of the bidders was probably to “go EPC-light”, meaning that they would do the construction of the plant by themselves.

Historic
The Rewa bid will mark an epoch in the history of renewable energy, with the tariffs coming so low. Hardly six years back, in December 2011, when an unknown French company called SolaireDirect put in a bid for Rs 7.49 in the first auctions under the National Solar Mission, it made headline news and the company was roundly criticized for being reckless.
This trend – low bid and criticism of recklessness – has continued ever since. For instance, when the now- defunct SunEdison bid Rs 4.63 for a 500 MW project in Andhra Pradesh, it was bombarded with criticism. Tariffs continued south regardless, and earlier this year. Finnish company, Fortum, won a project in Rajasthan, bidding Rs 4.34 a kWhr. The fall in prices are a result of precipitous declined all costs, but particularly, prices of solar modules, thanks to capacity oversupply in China.
When SunEdison bid Rs 4.63, module prices were around 43 US dollar cents, and many thought they had hit the bottom. However, prices are now around 30 cents, and some believe there is room for further decline. The Rewa auction indicate that the players are betting on that.

5.1. Isro creates record, launches 104 satellites
Livemint | Feb. 15, 2017

New Delhi: India’s space agency Indian Space Research Organisation (Isro) successfully launched 104 satellites in a single mission on Wednesday, setting what it says is a world record of launching the most satellites at one go. Of the 104, 101 are foreign satellites to serve international customers as the South Asian nation seeks a bigger share of the $300 billion global space industry.
“This is a great moment for each and everyone of us. Today we have created history,” said project director B. Jayakumar.
Prime Minister Narendra Modi tweeted his congratulations on the launch conducted by the state-run Isro that went off smoothly and was carried live on national TV news channels. “This remarkable feat by ISRO is yet another proud moment for our space scientific community and the nation,” he said. “India salutes our scientists.”

Modi is bullish on India’s space programme and has repeatedly praised the efforts of scientists who three years ago pulled off a low-cost mission to send a probe to orbit Mars that succeeded at the first attempt. Isro’s low prices attracted international customers to launch 75 satellites last year from Sriharikota in the southern state of Andhra Pradesh.
The launch of PSLV-C37 in a single payload, including the Cartosat-2 series and 103 co-passenger satellites, together weighed over 650kg. Out of 101 nano satellites, 96 were from the United States and one each from Israel, Kazakhstan, the Netherlands, Switzerland and the United Arab Emirates.

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

5.2. Rs 2.35 lakh crore ($34,5 bn) takeaway from business summit; infrastructure gets big push
Economic Times | January 23, 2017

Kolkata: Chief minister Mamata Banerjee on Saturday made it clear that demonetisation had failed to dampen the spirit of the 3rd Bengal Global Business Summit while announcing investment proposals worth Rs 2.35 lakh crore on the concluding day of the event. "We have received commitment for Rs 2.35 lakh crore.This is despite demonetisation and remonetisation," Mamata told the audience at the plenary session on Saturday morning.
Till the previous evening, investment proposals had touched only Rs 30,000 crore. Central government investments, including expansion of Metro rail projects in Kolkata and suburbs worth Rs 23,590 crore has been included in the list of proposed projects that include proposals in sectors like manufacturing, infrastructure, MSME, urban development, transport, IT, telecom and hospitality.

Manufacturing and infrastructure took the lead with proposed investment of Rs 61,765 crore, followed by medium, small and micro enterprises (MSME) sector. According to the government, the biggest proposal came from Chinese firm TEB Technology , that will invest Rs 27,200 crore in Texmaco to manufacture MRTS rakes. Currently, TEB operates MRTS in Beijing and Philadelphia. The next biggest was in infrastructure and real estate where Shapoorji Pallonji group has committed Rs 24,000 crore. One of the big-ticket in vestments is an in dustrial growth corridor triangle for Rs 22,000 crore.

The other major proposals include Howrah MSME hub for Rs 18,000 crore, Rs 12,500 crore by Reliance in telecom, Tajpur port for Rs 12,000 crore, RP-SG Group investment in FMCG for Rs 10,000 crore, truck terminal and Paribahan Nagar at Rajarhat for Rs 10,000 crore and theme-based township by Ambuja for Rs 10,000 crore and Rs 12,000 crore investment by Reliance in telecom infrastructure. Interestingly, unlike last year where a lot of projects was announced by the Centre, this time majority was from private entrepreneurs and that include a fare amount of foreign direct investments. Besides TB Technologies, FDI may come from Cedrus of Russia, Auto Haus of China, ATTIVO and in mining. Mamata did not elaborate on the investments but mentioned about an MoU between Handong University of Korea and West Bengal Housing Infrastructure De velopment Corporation for green cities, Norway showing interest in maritime projects, Italy keen on leather and manufacturing and Japan on drinking water project. Making a distinction between claims and reality at such investment meets in other states, Mamata remarked: "Instead of touting fi gures like Rs 50 lakh crore or Rs 60 lakh crore, the ultimate result is zero. We have got Rs 2.35 lakh crore. This is enough for us."
Referring to the past two editions of BGBS in which the state had received proposals worth over Rs 4.93 lakh crore, the CM said 40% were in the implementation stage. "Any project takes some time to implement. One has to prepare the DPR and then do other studies. We announce only those projects that will be implemented or have commitment for implementation," she added.
Later state finance and industries minster Amit Mitra said that success of a business summit largely depends on business to business meetings and in case of BGBS this time, 425 B2B meetings were held.

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

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

6.1. LJ Iyengar Bakery: Rising from the south
Livemint | 22 Jan. 2017

Once a quiet, tree-shaded suburb of Mysuru, Kuvempu Nagar hasn’t been able to stave off the deliberate march of urban development. Two-wheelers zip up and down its streets, adding a noisy soundtrack, while an outcrop of new businesses competes for your attention. Where there may have earlier been an odd bakery or two to serve the neighbourhood, there are now several on the same street, all loosely tied together by a prefix that serves both as a descriptor and a brand. These are the Iyengar bakeries: stubbornly old-school, vegetarian bakeries that have defied passing trends and fickle tastes to retain an almost puzzling popularity. The LJ Iyengar Bakery is a modest establishment, like the others in the area, with a rectangular glass display you can gently lean over while you pick what you would like to eat. In one corner sit neat loaves of freshly baked white bread, and in the other are “puffs”, layers of puff pastry folded into golden triangles, encasing an onion, carrot and potato heart. The biscuits lie heaped on the highest rung: Crumbly, cardamom-scented almond biscuits alongside rich, cashew-flecked ones, and earthy ragi biscuits to soften the burn of the green chilli-laden khara (or spicy) biscuits.

On top of the showcase, shielded by a thick plastic sheet, are the fast-selling items that rarely last through the day: masala toast, or slices of toasted white bread, topped with palya or slivers of mixed vegetables, and elegantly coiled khara buns slathered with a fiery marinade of ground curry leaves and green chillies. In the dimly lit inner sanctum of the bakery, workers coated in a thin dusting of flour shape sweetened bread dough into flat logs and bake them until their spongy air pockets shrivel. Bone-dry and butterscotch brown, the freshly baked rusks snap like autumn twigs.
There is nothing particularly novel about any of these items, especially in the age of supermarkets groaning with exotic ingredients and French pâtisseries constantly expanding the contours of the cake universe. But the enduring demand for them testifies to the lingering success—against mounting odds—of the Iyengar legacy.

The desi touch
It’s difficult to trace the origins of the Iyengar bakery, with numerous claimants to the honour of being the first- ever. Some believe it all started with BB Bakery, a 119-year-old establishment in Bengaluru’s busy Chickpet area, arguably the longest-running Iyengar bakery in the city. “My father’s great-grandfather, H.S. Thirumalachar, started a sweet shop on Chickpet Main Road in 1898. For the first three years, it was only a sweet shop, until an Englishman working at the famous West End hotel taught him how to bake bread,” says Pavithra Vijay, daughter of the current, fourth-generation owner, H.T. Srinivas.
Others believe that the bakeries were an opportunity born out of adversity. A devastating drought in the 1950s and 1960s is believed to have dried up jobs for the farming communities in and around the Hassan district in Karnataka. With no other means of livelihood, several members of the Iyengar community, drawn from the Ashtagrama or eight principal villages in the district, are believed to have migrated to Bangalore (now Bengaluru) and started bakeries. As subsequent generations of the community were drawn to the trade, they came to be identified as Bakery Iyengars.

However, there is very little anthropological record or archival proof available on the community. According to T.S. Ramesh Bairy, a sociologist and associate professor with the department of humanities and social sciences at the Indian Institute of Technology, Bombay, the bakeries find a mention in Nam Brahmanike, a play written in the 1930s by popular Kannada playwright T.P. Kailasam. “In my reading, this is a play that Kailasam, a much celebrated Iyer Brahmin, wrote in response to the rather acute anti-Brahmin sentiment in the princely Mysore state—something like, ‘The only time people today say ‘Brahmin bekari’ is when referring to the Iyengar bakery.’
“Here, he was playing on the similarity in sound between the Kannada word bekari (which means ‘we want’) and the English bakery. So clearly, these bakeries go a long way back in time,” Bairy says, adding that it was only in the late 1990s that Iyengar bakeries became associated with Bengaluru. “Earlier, many of these bakeries were called Hassana Iyengar’s bakery (referring to the Hassan region),” he says. “But by the late 1990s, they were being increasingly referred to as Bangalore Iyengar bakeries.”

Regardless of their origin, how did Iyengar bakeries with their strictly vegetarian offerings come to amass such a wide audience? To understand, let’s backtrack a bit—to the gastronomic universe of the 1980s, when there really were few things better than sliced bread. But before the bland doughiness of commercial white bread had tantalized our collective taste buds, the neighbourhood bakery was the prized purveyor of carb-laden treats. In Karnataka (and eventually, elsewhere in the south), the introduction to the still unfamiliar pleasures of bread and baked goods came with a distinctly desi tadka.
By adopting quintessentially Indian flavours and seasonings to Western pâtisserie staples such as shortbread cookies and puff pastry, Iyengar bakeries fostered a kind of culinary curiosity. A spicy potato filling was added to the tea bun and the aloo bun was born. Nippattu, deep-fried savoury biscuits traditionally eaten at teatime, were updated with onions, curry leaves and green chillies to make baked nippattu, spicy, buttery biscuits that are now synonymous with Iyengar bakeries. Over time, Iyengar bakeries created an oeuvre of home-grown foods with a uniquely Indian identity.

“The Iyengar-style masala bread is such an iconic representation of how we took something so entirely ‘foreign’ and made it our own,” says food blogger and author Saee Koranne-Khandekar, who included a recipe for the bread (and a sweet, Iyengar-style milk bread) in her book Crumbs!: Bread Stories And Recipes For The Indian Kitchen, published in May. “The heat from green chillies and earthiness from cumin—what can be more Indian than a bread with tadka!”
It was the sort of gentle innovation that a curious clientele with limited options clearly embraced. “I think (they) were our window into the world of Western food,” says Richa Gaur, 30, a Mumbai-based HR professional who hails from Bengaluru, and professes to an abiding love for Iyengar bakeries. “The amalgamation of Indian flavours was perfectly suited to the local palate, and yet it was so ‘cool’! Every hip birthday party had to feature cake, Pepsi and ‘pups’ (or puffs), as the owners used to call them.” The LJ Iyengar Bakery is 65-70% mechanized.

The second proofing
But just like the poofy hair and synthetic clothes of the 1980s soon became embarrassingly outdated, popular tastes also inevitably sought newer pleasures. Liberalization in the early 1990s ushered in the era of fast food, and pizzas replaced puffs at hip birthday parties. In the decades since, the frantic pace of urban life (and the convenience of supermarkets) has sounded the death knell for several stand-alone, neighbourhood businesses. There is no doubt that these developments have also had a bearing on Iyengar bakeries.
It has never been more crucial than now for Iyengar bakeries to stay ahead of the curve. To this end, several of the older bakeries have made once-unthinkable concessions, like using eggs in their cakes (to replace the stodgy, Dalda-heavy rava, or semolina, cakes) and paneer and egg fillings in the puffs. While purists may rue these transgressions of tradition, they are perhaps inevitable—and even necessary in a fiercely competitive and rapidly changing marketplace. “The original Iyengar bakeries never had cakes, pastries and the ubiquitous egg puffs,” says Mysuru-based journalist Ratna Rajaiah. “Now, no bakery can survive without these hottest- selling items.”

Others, like LJ Iyengar Bakery in Bengaluru’s Jalahalli neighbourhood (not related to the one in Mysuru) have streamlined their processes and taken steps towards modernization.
“Our bakery is 65-70% mechanized. We have rotary ovens, machines for mixing the dough and dividing it, and to cut vegetables,” says Madhu Iyengar, 32, a second-generation baker who oversees operations at the LJ Bakery, which is owned by his father Sampath Iyengar. After completing his master’s in business administration in 2008, Madhu gained hands-on experience in the baking department of Pillsbury, the American flour giant, in Bengaluru. Armed with this knowledge, he began to attend bakery trade shows, both in India and overseas.
Madhu admits that it was initially difficult to convince his father of the need for change. “I faced a lot of resistance from my father. Money was a big factor, because he had worked very hard to earn it,” he says. But once he had gained his father’s approval, the bakery’s fortunes began to look up. “Once we invested in machinery, our business went up and we required more hands than before,” he says.

For second-generation bakers like Madhu, the challenge lies not just in satisfying a loyal customer base built over decades but also in reaching out to a new audience: one that seemingly processes the world through a smartphone screen. Recognizing that word-of-mouth publicity is no match for the reach of the digital medium, some bakeries have taken tentative steps towards establishing an online presence. One of these is Iyengars’ Bakery, a well-known landmark in Austin Town in the heart of Bengaluru, which offers a few items—nippattu, rusk, honey cake, plain cake—through its website Iyengarsbakery.com. Madhu, too, is currently working on a website for LJ Bakery and plans to eventually develop an app.

Controlling the conditions
Where does that leave conventional bakeries like BB Bakery, which have been slower to adapt? There is both pride and a touch of frustration in Vijay’s voice as she tries to answer that question. “My father sticks to low pricing because he is loyal to his old customers, who still come every morning just to buy two buns or a quarter-kilo of rusk,” she says of her 58-year-old father, Srinivas. While the number of customers hasn’t dwindled, the rising cost of raw materials and labour has stretched his resources thin.
Besides, there is the looming question of the bakery’s future. Having earned his chops in the trade after years of observation and hands-on training, Srinivas is, perhaps understandably, proprietorial about his trademark recipes. “There are many modern methods to make cakes and pastries, but my father’s methods are very different,” says Vijay. “He says that it will take at least a year or two for us to get trained.”

Adding to his challenges is a new crop of Iyengar bakeries, hoping to capitalize on the fail-safe brand name. “Nowadays, anyone can start a bakery and call it an Iyengar bakery. There is no control,” says Vijay, echoing the sentiments of several of the people I interviewed. What was once the exclusive domain of the Bakery Iyengars is now increasingly being appropriated by entrepreneurs from outside the community. This fact places an even bigger strain on the already fragile thread that unites the “original” Iyengar bakeries. Lacking a formal association to unite and represent them—the Iyengar Bakery Association is now all but defunct—and with the competition at the door, it’s clear that the older Iyengar bakeries have no choice but to evolve in order to remain in the reckoning.
Vijay believes a little recognition of their bakery’s heritage from the government may provide a much needed shot in the arm. “My father wanted me to mention this: If (Prime Minister) Narendra Modi’s principle is ‘Make In India’, we have been doing just that since 1898, using traditional techniques. But he needs help, both in terms of finance and labour.”

With next to no record of the number of Iyengar bakeries located in Bengaluru and beyond—although there is no dearth of Iyengar bakery-inspired recipes on the Internet—it’s difficult to ascertain the rate at which the industry is growing. According to an article written on the Indian bakery industry by Nemat Sheereen S., an associate professor at the Cochin University of Science and Technology, and published on the portal FNB News in April, the unorganized sector accounts for 80% of the total bread production and 90% of other bakery production in India. Iyengar bakeries fall under this sector, although specific statistics about them are difficult to find.
Despite widespread predictions to the contrary, however, it appears that Iyengar bakeries—even those with questionable provenance—are only burgeoning in number. “In Thane, where I live, there is an Iyengar bakery in nearly every lane,” says Koranne-Khandekar. “This is a typically Marathi neighbourhood, so a vegetarian bakery is greatly treasured.”

By some estimates, Mumbai has a few hundred Iyengar bakeries, and counting, even though their link to the original Iyengar legacy seems to be tenuous at best. Other cities in India, such as Pune, Chennai and Hyderabad, also have their versions of the Iyengar bakery, and there even seems to be one in Singapore. If anything, this is proof that it is impossible to hold a good idea down for too long without others getting wind of it. For the older bakeries, the challenge lies in translating a successful concept into a profitable business. To this end, some bakers, such as Raman and Lakshmeesha Iyengar of the Bangalore Iyengar’s Bakery, have decided to patent the brand name. Until that happens, the solution may lie in accepting a truism that holds when it comes to the food industry: Change is the only constant.

6.2. Uber to bring UberEATS, its food delivery app, to India
Livemint | Jan. 24, 2017

New Delhi: Uber Technologies Inc. will soon launch food delivery service UberEATS in India, the company said in a blog post on Monday.
Uber’s entry into the food delivery segment comes at a time when most food start-ups are struggling with poor unit economics, while some have shut shop because of a dearth of funds.
“I am incredibly excited about bringing UberEATS to India. This is a significant investment, it spans multiple cities and regions, and it has the potential to change the food industry—with the push of a button—in one of the most vibrant food cultures in the world,” Allen Penn, the Asia-Pacific head of UberEATS, said in the blog post.

UberEATS, which is a separate app, was first piloted in 2014 in Los Angeles. The service has since been expanded to 58 cities across the world, including New York, Paris, Seattle, Bangkok, Singapore, Tokyo and Hong Kong. The service works on two models. While in some of the older markets, such as Chicago, Houston and Los Angeles, consumers can choose from the entire menu of the restaurants, some of the newer markets offer consumers an instant delivery menu—essentially a list of curated items that can be ordered quickly. The food is delivered either in a car affiliated to Uber or by individual delivery personnel. The company has invited individuals to sign up for the delivery service in cities including Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai.

Uber did not reveal a launch date for UberEATS in India or divulge more details about the operations. The world’s most valuable start-up at $68 billion, Uber has so far raised about $11.4 billion in debt and equity from a clutch of investors including Morgan Stanley, Saudi Arabia’s Public Investment Fund, Goldman Sachs and Fidelity Investments.
The firm has branched out to food delivery, long-haul freight and a local-delivery service for businesses called UberRUSH.
Interestingly, Uber’s entry into food delivery in India comes at a time when homegrown food start-ups, barring a few, are cash starved and have put expansion on hold. Food delivery was one of the worst-affected segments following a funding slowdown since mid-2015, forcing the likes of Spoonjoy, Dazo, Eatlo and Tinyowl to shut shop.

According to industry experts, the average order value for food in the US is around $20, about four times more than the average Rs300 (about $4-5) in India. As a result, delivery firms in India, which charge clients a commission of 10-20% of the order value, end up losing money as each delivery costs more than Rs50. Uber’s food delivery service will primarily compete with Swiggy (Bundl Technologies Pvt. Ltd), which has raised $75 million from investors, and Zomato Media Pvt. Ltd, which has raised about $224 million.

Even Swiggy is bleeding. According to documents available with the Registrar of Companies, it posted a near 65-fold increase in losses for the fiscal year ended March 2016 from a year earlier, indicating heavy cash burn and poor unit economics in food start-ups.

Swiggy’s revenue rose to Rs23.59 crore for the year ended 31 March from Rs11.59 lakh a year earlier. Losses bulged to Rs137.18 crore from Rs2.12 crore in fiscal 2015. Total expenses stood at Rs160.77 crore, implying that Swiggy burned about Rs13 crore per month in fiscal 2016.
Ola, Uber’s biggest local competition in the ride-hailing segment, had started a food and grocery delivery business early 2015. The company shut both verticals in March last year, after they failed to meet expectations.

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

7.1. Nabard allowed to raise ₹20,000 cr for crop loans
BusinessLine | 24 Jan. 2017

Hoping to give a boost to the agriculture sector after its decision to demonetise high-value currency, the government on Tuesday allowed the National Bank for Agriculture and Rural Development to raise ₹20,000 crore for short-term crop loans to farmers at lower rates.
The funds will be raised by Nabard at the prevailing market rate and will be used for on-lending to cooperative banks at an interest of 4.5 per cent.
“In light of the good monsoon and expectation of increased credit demand and to boost agricultural production, farmers need to be supported through cooperative banks, which purvey credit at their doorstep,” said an official statement.

The Union Cabinet also gave its post-facto approval for the allocation of additional capital of ₹2,000 crore to Nabard for this purpose in the Union Budget. Of this, additional capital of ₹500 crore will be released this fiscal.
An interest subvention of about 1.8 per cent and Nabard’s administrative cost of 0.2 per cent will also be provided as per the scheme of the Department of Agriculture, Cooperation and Farmers Welfare.
In line with the government’s focus on encouraging cashless payments by farmers, Nabard will also coordinate the conversion of operative Kisan Credit Cards into RuPay or ATM-enabled cards by cooperative banks and regional rural banks.
The Cabinet also gave ex-post facto approval for interest waiver for November and December 2016 for farmers accessing short-term crop loans from cooperative banks.
Nabard will provide additional resources to cooperative banks to extend the interest waiver. “An additional financial liability of ₹1,060.50 crore will be required for this purpose,” said the release, adding that the allocated ₹15,000 crore for 2016-17 for the Interest Subvention Scheme has already been utilised.

New pension scheme
Meanwhile, the Cabinet also approved a new pension scheme for senior citizens that will provide a guaranteed return of 8 per cent for 10 years.
“The Union Cabinet has given its post-facto approval for launching of Varishtha Pension Bima Yojana 2017,” said an official statement, adding that it will be open for subscription for one year from launch.
The scheme will be managed by Life Insurance Corporation of India. It will give subscribers options for monthly, quarterly, half-yearly or annual pension. The differential return would be borne by the Centre as subsidy on an annual basis.

7.2. Agriculture to grow more than 4 per cent as Government announces a slew of pro-farmer measures in General Budget 2017-18
Press Information Bureau | Feb. 02, 2017

Farm credit fixed at a record level of Rs 10 lakh crores; Irrigation fund hiked to Rs 40, 000 crores
Finance Minister announced setting-up of a Dairy Processing and Infrastructure Development Fund with a corpus of Rs 8,000 crores to augment farm income

Government says, with a better monsoon, agriculture is expected to grow at 4.1% in the current year i.e.2016- 17 as the total area sown under kharif and rabi seasons are higher than the previous year. Presenting his Fourth Budget in Parliament today, the Union Finance Minister Shri Arun Jaitley said that adequate credit would be made available to the farmers in time and the target for agricultural credit in 2017-18 has been fixed at a record level of 10 lakh crores. He said that special efforts would be taken to ensure adequate flow of credit to the under serviced areas, the Eastern States and Jammu & Kashmir. The farmers will also benefit from 60 days’ interest waiver announced by the Prime Minister in respect of their loans from the cooperative credit structure.
The Finance Minister Shri Jaitley said that about 40% of the small and marginal farmers avail credit from the cooperative structure and the Government is committed to support NABARD for computerisation and integration of all 63,000 functional Primary Agriculture Credit Societies (PACS) with the Core Banking System of District Central Cooperative Banks. This will be done in 3 years at an estimated cost of Rs 1,900 crores, with financial participation from the State Governments to ensure seamless flow of credit to small and marginal farmers.

Elaborating on other pro-farmer measures, the Finance Minister said that a Long Term Irrigation Fund has already been set-up in NABARD and the Prime Minister has announced an addition of Rs 20,000 crores to its corpus which will take the fund to Rs 40,000 crores.
The coverage of Fasal Bima Yojana will be increased from 30% of cropped area in 2016-17 to 40% in 2017-18 and 50% in 2018-19. The Finance Minister Shri Jaitley said that the Budget provision of `Rs. 5,500 crores for this Yojana in BE 2016-17 was increased to Rs. 13,240 crores in RE 2016-17 to settle the arrear claims. For 2017-18, a sum of Rs 9,000 crores will be provided and the sum insured under this Yojana has more than doubled from Rs 69,000 crores in Kharif 2015 to Rs 1,41,625 crores in Kharif 2016.
Referring to his last year’s Budget Speech, where the Finance Minister had focused on ‘income security’ of farmers to double their income in 5 years, Shri Jaitley said, that the Government will take more steps and enable the farmers to increase their production and productivity and to deal with post-harvest challenges. The coverage of National Agricultural Market (e-NAM) will be expanded from the current 250 markets to 585 APMCs. Moreover, assistance up to a ceiling of Rs 75 lakhs will be provided to every e-NAM market for establishment of cleaning, grading and packaging facilities.

Admitting that Dairy is an important source of additional income for the farmers, the Finance Minister Shri Jaitley announced that a Dairy Processing and Infrastructure Development Fund would be set-up in NABARD with a corpus of Rs 8,000 crores over 3 years. He said that issuance of Soil Health Cards has gathered momentum, even as the Government has decided to set-up new mini labs in Krishi Vigyan Kendras (KVKs) and ensure 100% coverage of all 648 KVKs in the country.crores to augment farm income

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

8.1. Government to double income of farmers by 2021-22
Business Standard | Feb. 13, 2017

New Delhi: The government might ask the National Sample Survey Office (NSSO) to assess farmers’ income once every five years, instead of the current practice of every 10 years.
This is part of the stated objective of doubling farmers’ income by 2021-22. A senior official said the Centre is aiming at the real income of farmers, adjusted for inflation. The base year would be the 2016-17 financial year, ending next month.
The earlier such NSSO study was in 2012-13. This showed the nominal (not adjusted for inflation) income of farmers usually doubles every six years. It pegged the income at Rs 6,426 a month in 2012-13 as against Rs 2,115 a month in 2002-03, annual increase of 11.7 per cent.

For real incomes of farmers’ to double by 2021-22, agriculture and allied activities need to grow at a much faster rate than the current average.
The official clarified that when the government talked of doubling agriculture income, it does not mean only from the crop sector but the gamut of economic activities in which farmers are engaged, including masonry, during their off-season. “We (mean) joining a whole lot of economic activities and processes like providing a proper market for agricultural commodities, proper utilisation of fallow land, horticulture and so on,” the official explained.
He said Gross Domestic Product data on agriculture and allied activity also gives a fair idea of farmer income and could be used to track the rise or change. The sector’s size was Rs 16.7 lakh crore in 2016-17, according to advance estimates from the Central Statistics Office.

To achieve all this, the Centre has constituted a committee under the chairmanship of an additional secretary in the ministry of agriculture. It will determine the growth rate needed to double farmers’ or agricultural labourers’ income in five years. “We are working on various aspects and will come out with a full-fledged strategy to accomplish the objective,” the official added. He said sub-groups were working on issues like ways to improve the cold chain network, crop productivity, how to expand horticulture, other crops, animal husbandry, etc.
“The report, which can be expected in the next few months, will have implementable strategies on all aspects of agriculture, which together will double farmers’ income,” he added.

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

8.2. Cabinet approves 'Pradhan Mantri Gramin Digital Saksharta Abhiyan' for covering 60 million rural households
Press Information Bureau | Feb. 09, 2017

New Delhi: The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved 'Pradhan Mantri Gramin Digital Saksharta Abhiyan' (PMGDISHA) to make 6 crore rural households digitally literate. The outlay for this project is Rs.2,351.38 crore to usher in digital literacy in rural India by March,.2019. This is in line with the announcement made by Finance Minister in the Union Budget 2016-17.
PMGDISHA is expected to be one of the largest digital literacy programmes in the world. Under the scheme, 25 lakh candidates will be trained in the FY 2016-17; 275 lakh in the FY 2017-18; and 300 lakh in the FY 2018-19. To ensure equitable geographical reach, each of the 250,000 Gram Panchayats would be expected to register an average of 200-300 candidates.

Digitally literate persons would be able to operate computers/digital access devices (like tablets, smart phones, etc.), send and receive emails, browse internet, access Government Services, search for information, undertaking cashless transactions, etc. and hence use IT to actively participate in the process of nation building.
The implementation of the Scheme would be carried out under the overall supervision of Ministry of Electronics and IT in active collaboration with States/UTs through their designated State Implementing Agencies, District e-Governance Society (DeGS), etc.

Background:
As per the 71st NSSO Survey on Education 2014, only 6% of rural households have a computer. This highlights that more than 15 crore rural households (@ 94% of 16.85 crore households) do not have computers and a significant number of these households are likely to be digitally illiterate. The PMGDISHA being initiated under Digital India Programme would cover 6 crore households in rural areas to make them digitally literate. This would empower the citizens by providing them access to information, knowledge and skills for operating computers / digital access devices.

As the thrust of the Government is on cashless transactions through mobile phones, the course content would also have emphasis on Digital Wallets, Mobile Banking, Unified Payments Interface (UPI), Unstructured Supplementary Service Data (USSD) and Aadhaar Enabled Payment System (AEPS), etc.

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

9.1. Export of soybean meal increases by 446.38 per cent
Economic Times | Feb. 07, 2017

The export of soybean meal and its other value added products during January 2017 is 1,55,164 tons compared to 28,398 tons in January 2016 showing an increase of 446.38% over the same period of last year, according to figures released by Soybean Processors Association of India (SOPA) on Monday. On a financial year basis, the export during April’2016 to January’2017 is 6,01,294 tons as compared to 3,30,702 tons in the same period of previous year showing an increase of 81.82%.
During current oil year, (October – September), total exports during October 2016 to January 2017 is 5,25,562 tons as against 1,29,174 tons last year, showing an increase by 306.86%.

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

9.2. Horticulture output to exceed foodgrain yield
Business Standard | Feb. 10, 2017

New Delhi: India’s horticulture production, at around 287.32 million tonnes, will continue to outstrip that of foodgrain by a good margin in 2016-17 also, even as vegetables might see just a marginal decline. Foodgrain production is projected to be more than 270 million tonnes.
Under horticulture, fruit production in 2016-17 is expected to be 91.72 million tonnes, against 90.18 million tonnes last year.
Vegetables production in 2016-17, according to the first advanced estimates, is expected to touch 168.59 million tonnes, against 169.06 million tonnes in 2015-16, a fall of less one per cent.

The other items include plantation crops, spices and flowers.
Horticulture production has been more than foodgrain output for the past few years even when the country faced back-to-back droughts in 2014 and 2015.
Kharif grain production, according to the first advanced estimates, was around 135.03 million tonnes, the highest ever, while rabi output could also be good on the back of a record rise in the wheat and pulses area. Though India’s horticulture output has been growing steadily for the last few years, it is much less than that of China.
That apart, the processing of horticulture produce is low in India as compared to China.

A study by YES Bank a few years ago showed that India has only two per cent of the products in temperature- controlled conditions, while in China the corresponding figure is 15 per cent. In Europe and North America it is 85 per cent.
Cold storage facilities are available for just around 10 per cent of horticulture production in the country and 30- 40 per cent of the annual production is wasted before consumption.
In 2009, China processed around 30 per cent of the food (fruit and vegetables), while in India it is far less.

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

9.3. Grapes bump up fruit exports by 40%
Business Standard | Feb. 15, 2017

Triggered by a sharp increase in production, led by grapes, exports of fresh fruit jumped 40 per cent in the first nine months of the financial year on account of a sharp output decline in competing countries. Export growth was lower in value terms.
The data compiled by the Agricultural & Processed Food Products Export Development Authority (Apeda) showed fresh fruit exports jumped to 487,441 tonnes ($403 million) in April-December 2016 against 348,675 tonnes ($335 million) in the corresponding quarter last year.
“We expect this season to remain very good on bumper production,” said Subhash Arve, president, Maharashtra Grapes Growers Association. “But the climate is still crucial for the growth of sucrose (sweetness) in grapes. With increasing day temperature, the sucrose content is expected to grow fast, which would ultimately help ramp up exports.”

Apart from grapes, India exports mangoes to a number of European, American and West Asian countries. Exports of grapes from India were estimated to have jumped 15-20 per cent this season, following crop damage in exporting countries such as Chile and South Africa. India also started shipping fruit to China, a market that opened for Indian exporters last year.
Another factor for the sharp increase in exports was the entry of large corporate houses that provide special attention to factors such as seeding, field preparations, planting, re-planting, time of harvesting, post-harvest management and marketing. With deep pockets, large corporate houses in fruit management have helped India compete with developed countries that have the best quality produce.

Ashok Sharma, chief executive officer of Mahindra Agri Solutions Ltd, said: “As far as the continuity of white seedless grapes is concerned, India has emerged as the most reliable source as well as a business partner for the European Union. Over the years, Indian growers have relentlessly worked on improving hygiene factors, food safety and quality. Because of reliable service, our country’s export volumes have been growing year-on-year. The markets look favourable this year as well; areas registered for exports has gone up. We have also seen an increase in the number of farmers approaching us for advisory in cultivating exportable grapes. Our estimate is that the containers exported from India to Europe would go up by five-10 per cent compared to last year.”
Companies like Mahindra Agri Solutions not only provide advisory to farmers but also help increase farmers’ incomes through skilful marketing of their produce.
Meanwhile, the 1st Advanced Estimates of the Ministry of Agriculture has forecast grapes output to set a record of 2.64 million tonnes for 2016-17, against 2.59 million tonnes last year on increased acreage. The grape export season starts in January and continues till April-end.

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

10.1. Suresh Prabhu launches first phase of station redevelopment project
Livemint | Feb. 09, 2017

New Delhi: Railway minister Suresh Prabhu on Wednesday launched the first phase of his ambitious station redevelopment project under which he plans to modernize 400 railway stations across the country by providing several passenger-friendly amenities.
These redeveloped stations would support digital signage, have escalators and elevators, self-ticketing counters, executive lounges, luggage screening machines, walkways and holding areas for passengers, among other facilities.

The 23 stations shortlisted for the first phase include Chennai Central, Ranchi, Udaipur City, Indore, Yesvantpur, Bengaluru Cantt., Visakhapatnam, Howrah, Kamakhya, Faridabad, Jammu Tawi, Secunderabad, Vijayawada, Kozhikode and Bhopal.

The project of re-developing 400 A1 and A category stations in the country is the biggest non-fare revenue generating programme being undertaken by Indian Railways. The projects will be executed in a public-private- partnership (PPP) model through a fair bidding system.
Under the project the entire cost of redeveloping stations will be met by leveraging “commercial development of vacant separable land and air space in and around the station”.

A senior railway ministry official, requesting anonymity, said under the first phase of the project Indian Railways will provide approximately 140 acres of encroachment-free land at these stations to the developers on a 45-year lease. “The phase is expected to be of approximately Rs6,000 to Rs9,000 crore in size,” he said. Railway ministry, in a statement, said that the program will provide approximately 2,200 acres of prime land to the private developers across top 100 cities of the country. A committee of eminent experts would be formed to provide suggestions to zonal Railways on proposals submitted by bidders in addition to the technical and financial committee recommendations.
Commercial potential of this vacant Railway land at/near stations will be leveraged to develop world-class stations with no additional funding required from the Railways. The program is expected to generate a surplus in excess of Rs10,000 crore for Indian Railways which can be invested in other modernization projects.

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

– INDUSTRY, MANUFACTURE

11.1. Hero Future Energies plans 100 MW solar power plant in South-East Asia
Livemint | Amrit Raj & Utpal Bhaskar | 22 Jan.2017

New Delhi: The Munjal-family promoted Hero Future Energies Pvt. Ltd is planning to put up one large grid connected solar plant of up to 100 megawatts capacity in Southeast Asia, apart from expanding in Africa and India, its founder and managing director Rahul Munjal said in an interview on 13 January.
Backing Munjal’s ambitious plan is around $125 million cash that International Finance Corp. (IFC), together with IFC Global Infrastructure Fund—a private equity fund managed by IFC Asset Management Co.—have invested.
By the end of January, the money will come into Hero Future Energies, and will provide the much- needed ammunition to Rahul Munjal, 40, who is the elder son of Hero MotoCorp Ltd founder late Raman Munjal, to be the first among third-generation Munjal family members to make his mark in the business landscape.
“The idea is to grow. Between me, Abhimanyu, Ujjwal and Akshay (family members), we are all in the prime of our careers. And by the end of the next decade, everybody will be in their 40s or 50s, and this is the time. So, everybody has been told that expand your wings as much as you can...create good solid value for the group,” Rahul Munjal said in an interview.
In 2013, Munjal’s younger brother Abhimanyu founded the Hero Group’s financial services business Hero FinCorp Ltd.
Akshay, Rahul’s cousin and son of Suman Kant Munjal, managing director of Rockman Industries Ltd, runs BML University in Dharuhera, Rajasthan. Akshay’s brother Ujjwal has founded Hero Electronix, which has made rapid strides in design and development of chips. He also assists his father at Rockman. Akshay and Ujjwal have a younger brother, Vidur, who has finished his studies and now works for KPMG in India.

In 3 years, renewable sector will be worth Rs2 trillion in India: Rahul Munjal
The current chairman of Hero MotoCorp, Pawan Munjal has two daughters and a son. While his son, Anuvrata, is studying abroad, Vasudha, the elder daughter, runs a chocolate boutique under the brand Chokola. The younger one, Supriya, has her own clothing line. Sunil Munjal, the youngest son of Brijmohan Lall Munjal and joint managing director of Hero MotoCorp, has a daughter and she assists Sunil who has exited Hero Group.
“The idea is that the group has been reliant on a large company for a long time and, going forward, that should not be the case. There should be several large companies in different industries. We don’t need to have all our eggs in one basket. Vision is growth, expansion... have different risk profiles for the group. That is the whole point,” Rahul Munjal said.
At Hero Future Energies, he said, the company is funded till 1400 MW and it also has a separate pipeline of 1200 MW. Between now and September 2018, the firm plans to spend the money raised from IFC. “So, for the next 16 to 18 months, we are completely funded. We will have 1400 MW by then, and on the other hand, we’ll have very healthy cash flow in this company itself, which should be able to give us 400-500 MW a year,” Munjal said.
Hero Future Energies has so far been funded by the promoter family of the automobiles-to-financial services Hero Group itself. Munjal stated that his family has invested around Rs 700 crore in the venture thus far.

Munjals find adviser in Sunil Mittal for realignment of Hero Group businesses
India plans to achieve 175 GW of renewable energy capacity by 2022 as part of its climate commitments, wherein it has promised to achieve 40% of its electricity generation capacity from non-fossil fuel based energy resources by 2030. This includes 60 GW from wind power, 100 GW from solar power, 10 GW from biomass and 5 GW from small hydro projects.
“In India, there are not too many sectors which are booming. Fortunately, renewable is one of them where you see lots of growth. If you see the kind of growth solar has had, it is 100% YoY (year on year), so which of the industry is growing at 100%? If it is so, then it is about how good you and your team is? Are you able to keep up with the industry? Are you growing as much as an average player is growing in the industry? There are these three questions that we ask,” said Munjal, who has built a second office in New Delhi and is already scouting for another office space.

11.2. India a key market for water and air purifier company AO Smith
Times of India | Jan. 24, 2017

Bengaluru: US water technology and air purifying solutions company AO Smith said India, apart from China, will be the key markets for its growth in the future.
India is still a small market for the company, contributing about 1% of its total sales. But last year, revenue increased in high double digits compared to 8% globally, chairman and chief executive Ajita Rajendra said. "We have a long-term view on India and our expectation is to continue growing at the current double-digit growth rates," he said.
The company has invested $75 million in India so far and also has a factory which started in 2010. AO Smith is also looking at ways to work with the Indian government in areas of air purification in the country at a time when pollution levels in various cities have reached alarming levels.

"We will be happy to share our technical expertise and collaborate with the government," Rajendra said. Pollution levels in the country, especially in the Delhi-NCR region, were the talk of the town in October, which were higher than the prescribed standards of WHO. as pollution levels increase, demand for such purifiers can only go up.
The company, which is known in India for water heaters and purifiers, already has an air purifier business in China.

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

12.1. India's smartphone user base topped 300 million in 2016
Economic Times | Jan. 25, 2017

Kolkata: India’s smartphone user base topped 300 million in 2016 with the market growing by 18% led by theChinese brands such as Vivo, Oppo, Lenovo and Xiaomi, says a latest study by Counterpoint’s Research. This is as compared to the global smartphone market which grew by a modest 3%.
The researcher said in the crucial October-December quarter, the Chinese brands contributed to 46% of the total smartphone market with no Indian brand figuring amongst the top 5 smartphone brands for the first time ever. This the company attributed to demonetization and the rapid expansion of the Chinese players that continue to expand their presence throughout India, riding on aggressive portfolio strategies and substantial marketing spends.

Counterpoint estimates that more than 83 million smartphones in 2016 were made in India and three out of four were manufactured domestically in the last quarter. And more than 7 out of 10 smartphones shipped in India were LTE capable. The researcher said one in three smartphones sold during the last quarter were through ecommerce channels, a segment which grew 24% in 2016.
Apple crossed 2.5 million unit sales in last year, with one-third of its total shipment coming alone from the record fourth quarter driven by seasonality and the launch of iPhone 7. The company thereby captured the tenth position in the smartphone rankings during the last quarter but led the premium segment (above Rs 30,000) with 62% market share.

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

12.2. Larsen & Toubro to invest ₹2,080 crore in Bengaluru
BusinessLine | Anil Urs, 10 Feb.2017

Larsen & Toubro plans to set up an IT Park and IT SEZ in Bengaluru for a combined investment of ₹2,080 crore.

The conglomerate, which is engaged in technology, engineering, construction, manufacturing and financial services, has over $16 billion in revenues.
L&T’s application to set up an IT park and IT SEZ in Yelahanka near the international airport came up before the Karnataka State High Level Clearance Committee (SHLCC) for clearance on Friday.
According to RV Deshpande, Karnataka Minister for Industries, the company’s application is for setting up an IT Park at an investment of ₹800 crore, creating 9,100 jobs, and an IT SEZ for ₹1,280 crore. The SEZ will create 9,800 jobs.

Earlier, Deshpande told reporters that the State government is holding a ‘Make in India-Karnataka’ conference on February 13-14 to showcase the State’s capabilities. About 55 global companies are expected to take part in it.
“Make in India started long back in Karnataka with Bosch establishing its manufacturing facility in Bengaluru in 1953. The manufacturing industry in the State has also come a long way and has upgraded to hi-tech manufacturing. This includes new areas of nano technology, robotics, 3D printing, space, satellite, drone, rocket and aircraft technologies as well as high-end electronics,” he added.

The event, supported by CII, is expected to bring together industrialists, CEOs and policy makers from different countries.
Deshpande said the two-day event will have 10 sessions, one on ‘Make in India’ followed by nine focus sector sessions. The meet is expected to deliberate on sectoral issues, Karnataka’s action plan and how the State can sustain its competitive advantage.

13.1. Driverless buses may soon hit Indian roads
BusinessLine | Varun Aggarwal, Jan. 25, 2017

Driverless cars may be many years away from reaching India, but driverless buses and trucks could hit Indian roads as early as 2020.
Tata Motors has begun trials for driverless buses at its Pune campus, where a full-fledged bus has been plying on a fixed route, without any human intervention, for two months.
Sensors have been placed at simulated bus stops, and the bus slows as it approaches them. It stops to allow passengers to board and alight and then continues on its journey.

“We have the prototype ready with several sensors such as optical sensors, proximity sensors, and even radar. These sensors are now easily available off-the-shelf but we’ve put them together to create a fully autonomous bus that we are testing within our campus,” a senior executive from Tata Motors told BusinessLine.
Tata Motors says it is taking extreme caution to ensure the vehicle adheres to safety norms. Currently the buses run at less than 10 kmph within the campus. However, as the platform stabilises, the company said it would test them at higher speeds and more realistic road conditions.
Mahindra has also started trials for driverless technology. But Group Chairman Anand Mahindra says driverless technology in India will be first seen in tractors.

Tough terrain
Lack of disciplined driving makes driverless technology extremely difficult for Indian roads. However, buses that ply on a dedicated corridor or at industrial sites or rural locations may not have such limitations. That has sparked interest from Indian manufacturers to try driverless technology in these areas.
Driverless buses and trucks also solve the biggest issue plaguing the transportation industry — non-availability of drivers.
However, before a fully autonomous bus or a truck, the Tata Motors executive said semi-autonomous vehicles would take to the roads.
“Advanced driver assistance systems (ADAS) would ... solve significant challenges for drivers, making the drive less stressful and a lot safer,” the executive said.
ADAS features, most of which are already available in luxury cars automate certain tasks. For instance, the Range Rover Evoque has a ‘Park Assist’ feature, wherein the car parks itself in the nearest vacant parking spot.

13.2. Tata Motors launches electric, hybrid buses priced up to Rs. 2 cr
PTI, BusinessLine | 25 Jan. 2017

With the aim to push green technology in mass public transportation vehicles in India, Tata Motors today launched a fully electric bus and a hybrid one, with indicative prices ranging between Rs. 1.6 crore and Rs. 2 crore.
The company, which is leader in the commercial vehicles space in the country with a market share of around 45 per cent, also showcased its LNG powered bus.
Besides, it also unveiled a bus with fuel cell technology and electric versions of its light commercial vehicles SuperAce, Magic and Magic Iris.
“At Tata Motors our aim is to not only comply with emerging regulations of clean and green emissions but also be ahead of the requirements,” Tata Motors Commercial Vehicles Executive Director Ravindra Pisharody told reporters here.

The biggest opportunity for such buses are in metros for public transportation, he added.
The company has already received an order for 25 units of Starbus Hybrid buses from MMRDA Mumbai and deliveries would commence in the first quarter of 2017-18.
It aims to start deliveries of fully electric buses in the next quarter after getting clarity on subsidies for the segment, Pisharody said.
“We have been consistently developing and manufacturing products that can contribute to CO2 reductions across all road transport segments and with early investments in new technologies, we are geared to further strengthen our market leadership,” Pisharody said.
The company plans to play an active role in mass public transportation with the new range of future ready buses, he added.

The home-grown auto major also displayed an articulated bus. When asked about its export plans, Pisharody said the company is ready if orders come in from overseas markets.

Commenting on the market share in the bus segment in the domestic market, he said: “Traditionally, we have had a market share of 30-35 per cent, but due to large orders received it would jump to over 45 per cent at the end of this fiscal.”
Tata Motors currently designs, develops and manufactures buses in Pune, Dharwad, Pantnagar and Lucknow. It also has a joint venture with Marcopolo of Brazil for fully built bus solutions. It also has a partnership with ACGL of Goa for bus bodies.

14.1. Peugeot maker to drive back into India with CK Birla group
BusinessLine | 25 Jan. 2017

PSA of France is set to script its India comeback with the CK Birla group, the makers of the iconic Ambassador.

The duo will commission a car project in Tamil Nadu by 2020 at an initial outlay of ₹700 crore and make one lakh units annually, according to a statement available on the PSA Group’s website.
The partnership comprises two joint venture agreements. In the first, PSA will hold a majority stake in the company being set up with Hindustan Motor Finance Corporation (HMFC) for assembly and distribution of PSA passenger cars in India. HMFC has in its fold a ready-made facility in Tiruvallur near Chennai that has, over the years, assembled Mitsubishi cars and Isuzu commercial vehicles.
The second agreement will involve setting up a 50:50 joint venture between PSA and AVTEC, originally a part of Hindustan Motors, for manufacture and supply of powertrains. AVTEC has a facility in Hosur and this arrangement will ensure high levels of localisation to keep costs in check. Access to a ready-made plant in Tiruvallur also puts in perspective a modest (initial) outlay of ₹700 crore when a car project of this size would have otherwise involved investments of at least five times more.

In fact, PSA had earmarked over ₹4,000 crore for its Sanand facility in Gujarat five years ago but had shelved the proposal following the global slowdown. Better known for its Peugeot and Citroen brands, it was among the early entrants to India’s automobile sector in the 1990s. The company had then teamed up with Premier Automobiles to manufacture the 309 model from a plant near Mumbai. However, it had to cope with a host of issues ranging from a lockout to shortage of kits that led to huge losses and closure of operations in 1997. PSA then contemplated a comeback with Tata Motors to manufacture the 307 model but this plan was shelved too. A good decade later, the French carmaker announced its mega ₹4,000-crore investment for a new facility in Gujarat but that was eventually scrapped. Now, after putting its house in order, the company is ready all over again to participate in an intensely competitive market with a more pragmatic approach.

Previous alliances
As for the CK Birla group, its flagship company, Hindustan Motors, has had alliances with General Motors and Mitsubishi over the years which were little to write home about.
It was also in the news a couple of years ago when it shut down its Uttarpara plant in West Bengal and brought the curtains down on production of the Ambassador.

14.2. Tata, Liberty seal £100-m UK steel deal
BusinessLine | 9, Feb, 2017, Vidya Ram

Tata Steel will sell its speciality steel business in the UK, which employs around 1,700 people, to Sanjeev Gupta’s Liberty House Group for £100 million, the companies confirmed on Thursday.
The companies had signed a letter of intent over the deal in November 2016, but have now reached a definitive sales agreement.
Tata Steel’s speciality division covers assets in Yorkshire and services centres in Britain and China. It focuses on steel for the aerospace, automotive and oil and gas industries.

The sale will leave Tata Steel with its strip products business, after selling its long products business to Greybull Capital last year, as it seeks to transform and restructure its European operations in the face of tough conditions for the industry.
“We will be handing over a business which has been transformed following difficult decisions to restructure and re-focus on higher-value markets,” said Bimlendra Jha, CEO of Tata Steel UK.

Major step
Gupta, the Executive Chairman of Liberty House, said the asset was one of a handful of operations in this sector and would enable the company to “melt scrap steel to create high value added products”. The company, he said, was focusing on a strategy to recycle UK scrap using renewable energy, and that the acquisition represented a major step.
Liberty House has made a string of purchases in the UK steel sector over the past two years, acquiring Tata Steel’s Scottish assets last year.
Unions welcomed the development. “Community has been campaigning for months for longer term certainty for these highly skilled jobs, and we will now engage more directly with Liberty to understand their plan for the business,” said Roy Rickhuss, General Secretary of the Community union.
Unions are currently balloting members on proposals to change the British Steel Pension Scheme, which Tata Steel says is essential to the sustainable future of its British business. The company said it was in discussions with the scheme’s trustee and the pension regulator to develop a structural solution to the scheme in coming months.

15.1. Tesla may enter India this summer: Elon Musk
Livemint | Feb. 09, 2017

New Delhi: Electric car maker Tesla Inc. is likely to introduce its products in India sometime in the summer of 2017, its chief executive Elon Musk said on Wednesday.
“Hoping for summer this year,” Musk said about his company’s expected launch in India, responding to a query on Twitter.
Tesla’s much anticipated Model 3, which is positioned as a mass-market, affordable car, will be retailed at $35,000 in the US. Some Indians have also booked it by paying an advance of $1,000. The Economic Times newspaper reported in April that Vijay Shekhar Sharma, founder of mobile wallet company Paytm; venture capitalist Mahesh Murthy; Vishal Gondal, founder and CEO of wearable and fitness technology company GOQii; and Sujayath Ali, CEO of online fashion platform Voonik, were among those who tweeted about booking the Model 3.

Sales of electric vehicles in India rose 37.5% to 22,000 units in the year ended 31 March 2016, according to industry lobby group Society of Manufacturers of Electric Vehicles. Just 2,000 units were electric cars. To put that in perspective, non-electric car sales rose 7.87% from the previous year to 2.025 million units in the year ended 31 March 2016, according to the Society of Indian Automobile Manufacturers (Siam).
At these levels, India has far to go from the six-million by 2020 target set under National Electric Mobility Mission Plan (NEMMP) 2020 and FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles). An electric vehicle consortium formed by Maruti Suzuki India Ltd, Mahindra & Mahindra Ltd, Tata Motors Ltd and Ford India Pvt. Ltd has collapsed with Maruti and Ford pulling out of it. The coming of Tesla will not prop up sales of electric vehicles in India, but it will create an aura that will augur well for the electric vehicles industry, said Abdul Majeed, partner and national auto practice leader at PricewaterhouseCoopers.

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

15.2. Early-stage start-ups will look to raise US$ 800 million in 2017: report
Livemint | Feb. 14, 2017

Bengaluru: Early-stage start-ups will seek to raise at least $800 million in 2017 as they stop blindly chasing growth and start looking for profitability, a report by venture debt firm InnoVen Capital said.
Venture capital funding in Indian start-ups last year plummeted by almost one-third from the heydays of 2015 and 2014, when venture capital firms queued up to invest at high valuations. According to a separate report by KPMG and CB Insights, a start-up intelligence firm, Indian start-ups raised $3.3 billion in 2016 across 859 deals, as against $8.2 billion across 890 deals in the previous year.
According to the survey by InnoVen Capital, the slowdown in funding was palpable with about 63% of the 175 respondents—founders of bootstrapped, angel-funded or series A and B start-ups—described the fund-raising experience last year as “unfavourable”. About 7% of the start-ups raised a bridge round, 9% ended up raising a sub-optimal round from new investors while 15% of the start-ups failed to raise any money.

“The environment is clearly pointing out that investors are becoming cautious about where to invest. This year won’t be too much different. Investors will invest in companies which have a path towards profitability or at least understand how to move towards profitability. Money is there and will continue to be there for companies which have scaled,” said Ajay Hattangdi, group chief operating officer and chief executive officer (India) of InnoVen.
About 94% of the respondents said they will try to raise money in 2017.
“There is also money available for great ideas. Where there will be relatively less money is companies which have missed milestones or me-too models which will have difficulty to differentiate,” he added.
Apart from demanding that start-ups slow expansion, slash costs and cut discounts, many venture capital firms are setting performance milestones; some investors are only releasing funds in instalments, Mint reported in January last year.

The slowdown in funding has also prompted many start-ups to shut shop or sell out to larger rivals. According to Tracxn, a start-up tracker, as many as 212 start-ups closed down in 2016, including grocery delivery start- up Peppertap and food delivery start-up Tinyowl, against 140 the previous year.
According to the InnoVen Capital report, about 53% of the start-ups with annual revenue of more than $1 million will focus on profitability this year, while the corresponding number for start-ups with more than $10 million in annual revenue stands at 75%. About 80% of the start-ups expect to turn profitable in the next two years.

The report also states that about one-third of the respondents expect to give an exit to investors through mergers and acquisitions, an indication that consolidation is likely to be the flavour of the season in 2017. To be sure, there were about 162 M&As in 2016, including Flipkart’s acquisition of fashion portal Jabong and MakeMyTrip’s acquisition of Ibibo Group’s India travel business, and 150 the previous year, according to Tracxn,
“Consolidation will happen. India until now hasn’t been an acquisitive market. At this point, there is a certain level of maturity among the companies. When they see a competitor being available for a particular price, it is a matter of time that people will see an opportunity in buying them out,” said Hattangdi.

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

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

16.1. Delhi will be the first to welcome Lufthansa’s Airbus 350
BusinessLine | Ashwini Phadnis | 22 Jan. 2017

India is to become the first market in German airline Lufthansa’s global network to which the Airbus A350 aircraft will be deployed.

The first Airbus A350 flight from Munich to Delhi will land here on February 11. The airline will operate a daily flight on this route with the new aircraft.
Confirming the move, Wolfgang Will, Senior Director, South Asia, Lufthansa German Airlines, told BusinessLine that over the past 50 years, Lufthansa has always looked to provide the very best and latest in air travel to Indian consumers.

The decision to deploy the A350 on this route was taken as India’s travelling population is expanding rapidly, especially to Europe. Besides, this route via the airline’s hub in Munich is considered very convenient due to short distances between gates and short connection times, officials said.
The aircraft will provide seating for 293 passengers including 48 in business, 21 in premium economy and 224 in economy.
Will added that passengers on this route will now enjoy a higher level of comfort with improved components such as a newly designed self-service area in business class while new seats with ergonomically designed cushions and more space to store personal items will be available to those travelling in economy class.
All passengers will also have larger screens with state-of-the-art user interfaces and improved broadband internet services.
Apart from passenger comfort, the deployment of the Airbus A350, which is considered one of the most modern long-haul aircraft, will also help save the environment, as its average jet fuel consumption of 2.9 litres per passenger per 100 km means 25 per cent less fuel than any other comparable aircraft type, airline officials said.
The new aircraft, however, will not have a first class. Lufthansa has determined that the demand for first class strongly depends on a specific route and the Delhi-Munich route does not see that kind of demand. The Airbus A350 will replace the Airbus A340 aircraft which currently operates on the Delhi-Munich route.

16.2. Aero India starts in Bengaluru today, to focus on Make on India
Livemint | Feb. 14, 2017

New Delhi: The 11th edition of the Aero India air show which starts in Bengaluru on Tuesday is expected to be one of the largest in recent years, with a focus on Prime Minister Narendra Modi’s Make in India initiative. Around 270 Indian and 279 foreign firms are slated to participate in the event where some major companies, including Airbus and Boeing Co, are expected to sign deals under the Make in India banner.
“It is expected that two lakh business visitors will attend the show. The gross area (of the show) has also increased from 2,50,000 sq. m to 2,60,000 sq. m,” the ministry of defence said in a statement.
While Modi had inaugurated the previous Bengaluru air show in 2015, defence minister Manohar Parrikar is likely to open it this year as the event coincides with election activity in several states.
The highlight of the show at the city’s Yelahanka Air Force Station will be fighter jets that make up a large part of the 72 aircraft being showcased. Among these will be Rafale fighter jets made by French aircraft manufacturer Dassault Aviation SA. India bought 36 of these aircraft for an estimated $8.9 billion last year in a deal that has been negotiated several times over the years.

Dassault Aviation said three fighter jets will participate—one single-seat Rafale C and two of the two-seat Rafale B.
Rafale planes have been used by the French armed forces in combat operations for more than a decade. They entered service with the French Navy in 2004 and the Air Force in 2006. Some of the 152 planes delivered so far have been used in combat in Afghanistan, Libya, Mali, Iraq and Syria.
India had started hunting for multi-role fighter jets in 2007 but later decided to scrap that tender, instead announcing that it would buy Rafale jets from France under a government-to-government deal agreed during Prime Minister Modi’s visit to Paris in 2015.
The combat aircraft—delivery of which is expected to begin in September 2019 and be completed by April, 2022—come equipped with state-of-the-art missiles such as Meteor and Scalp, according to the defence ministry.
With the air-to-air Meteor missiles, the Indian Air Force will be able to hit targets as distant as 150km, compared with the 80km it was so far capable of targeting. Scalp, an air-to-ground cruise missile with a range in excess of 300km, will also give IAF an edge over adversaries.

“Demonstrating Rafale’s capabilities in Aero India reaffirms our total commitment to India’s sovereignty. We have had a long standing relationship with Indian Air Force and industry and, thanks to the unmatched capabilities of the Rafale and to our full involvement in the innovative approach of the “Make in India” initiative, we are entirely dedicated to partner India in meeting its strategic defence and economic needs,” Eric Trappier, chairman and chief executive of Dassault Aviation said in a statement.
The Russian Sukhoi 30MKI, Light Combat Aircraft (LCA), Advanced Jet Trainers (AJT) Hawks are also likely to be present at the show.
But all eyes will be on American F-16s and Swedish Saab fighter jet Gripen E and its naval variant Gripen Maritime. Both companies are vying to bag the next multi-billion order from India under the so-called strategic partnership model according to which the manufacturer will be asked to set up an assembly line in India. Airbus said it will showcase its H130 chopper ambulance on static display.
“The future of Indian aerospace and defence industry rests on the realization of the ‘Make in India’ vision. I look forward to having conversations around the topic at Aero India,” said Pierre de Bausset, president and managing director at Airbus India.
“We have partnered with Tata and Mahindra and are working with a host of other companies to script ‘Make in India’ success stories,” he added.

The firm said it procures about $500 million (about Rs3,400 crore) worth of products from India annually from around 45 suppliers, generating local employment for more than 6,000 people.
The Tata Group said all its key firms will participate in the event, including Tata Advanced Systems Ltd, Tata Consultancy Services, Tata Advanced Materials Ltd, Tata Motors Ltd, Titan Co. Ltd, Tata Steel (Specialty Steel business in Europe), TAL Manufacturing Solutions Ltd and Tata Power Strategic Engineering Division. The five-day show will have exhibitors from the US, France, UK, Russia, Israel, Germany, Belgium, Switzerland, Ukraine, Singapore, Sweden, Spain, South Africa, Italy, the UAE, South Korea, Hong Kong, the Czech Republic, Canada, Australia, Poland and Greece.
Indian Air Force’s Sarang Team,the Surya Kiran Team, the Scandinavian Air Show Team from Sweden and the Evolvkos Aerobatic Team from the UK will perform aerobatics at the show. Aero India, which began in 1996, has become one of the largest air shows in Asia. This show is followed by one in Abu Dhabi and most international players move on to showcase their military ware there over the weekend.

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

17.1. India has opportunity to improve its global trade share in 2017: Maersk
Economic Times | Jan. 20, 2017

Mumbai: Real growth in global trade is expected to hover around 1% to 2% and a weak outlook for 2017 can be foreseen, according to international container shipping company Maersk. However, reducing costs across high-growth trade sectors can give a booster of 5-8% to exports.
“The outlook for global trade in 2017 remains weak. Real growth is expected between 1% and 2%. However, India has the opportunity to improve its share of global trade, especially in exports, through increased competitiveness and be probably the only country to deliver nearly double-digit growth in container trade this year,” Franck Dedenis, managing director – India, Bangladesh & Sri Lanka Cluster, Maersk, said. The insights were contained in “Stimulating India’s EXIM Growth,” a study conducted by Confederation of Indian Industry (CII) and Maersk.

It further revealed that indirect/hidden costs of trade in textiles, pharmaceuticals, electronics and auto components accrued from unreliable transport services and regulatory/bureaucratic delays are as high as 38%-47% of the total logistics cost and a 10% reduction can boost India’s competitiveness and contribute additional revenues of up to $5.5 billion.
“Indian ports and terminals are well placed to deliver efficiencies and higher productivity. APM Terminals in Nhava Sheva has consistently increased its container throughput and productivity since 2006 and as a result

has improved India’s liner shipping connectivity delivering an additional 9% in trade for the country since. We believe terminals can collectively contribute better to lowering costs of trade with certain interventions such as market driven tariff regime, better rail connectivity from ports and reducing middle men or increasing transparency in inland movement of cargo among others,” Julian Bevis, senior director, South Asia, Maersk said.
APM Terminals, a joint venture between APM Terminals and Container Corporation of India (CONCOR) operating from Nhava Seva, JNPT, recently adopted Direct Port Delivery service. Improvements in regulatory documentation, inland transportation and costs and terminal handling were hailed as the game-changers for the industry in the study.

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

17.2. Welspun to invest ₹20 cr in Egyptian cotton promotion
BusinessLine | Virendra Pandit, 9 feb. 2017

Last August, the US retail giant Target Corporation terminated contract with Welspun after alleged lapses in its products supply.
Walmart also stopped selling Welspun Egyptian cotton products. Later, the company appointed consultancy firm Ernst & Young to look into the alleged lapses and implemented changes in its supply chain management. The company had made a provision of ₹501 crore in the September quarter to resolve the controversy surrounding Egyptian cotton.
Post verifying Welspun’s quality and supply chain reliability processes, the Cotton Egypt Association has allowed the company to use the Egyptian cotton logo for five years until 2022.

In an agreement signed with the Association on Thursday, the company has agreed to enhance the complete supply chain of the Egyptian cotton starting from cultivation to the final product, which will also benefit the Egyptian farmer and the industry.
The two organisations will also create programmes for promotion of Egyptian cotton logo in the retail markets across the globe.
Dipali Goenka, CEO and Joint Managing Director, Welspun India, said the sheer nature of Egyptian cotton makes it a luxury to be cherished by all and Welspun will help create marketing programmes and execute them using its extensive global network.

The company is also exploring options for expansion of its Egypt operations to include a manufacturing facility for Egyptian cotton home textile products.
“We foresee an increase in demand for Egyptian cotton and find an ideal condition for making Egypt one of our hubs for sourcing and manufacturing Egyptian cotton products. We’re looking at the best option to utilise this opportunity,” she added.

18.1. GVK wins bid for ₹16,000-cr Navi Mumbai airport project
BusinessLine | 13 Feb. 2017

Bags bid by offering 12.6% revenue share
After years of delay, the Navi Mumbai International Airport (NMIA) is finally off the ground, with the GVK Group-owned Mumbai International Airport Ltd (MIAL) winning the financial bid for the ₹16,000-crore project. In the first phase, the airport is expected to handle 10 million passengers.
The project is being developed by the Maharashtra government’s City and Industrial Development Corporation (CIDCO).
On Monday, GMR Group and MIAL submitted their financial bids. CIDCO spokesperson Mohan Ninawe said GMR had offered 10.44 per cent of the total revenue share generated by the airport to CIDCO, while MIAL offered 12.60 per cent of the revenue share.

Tata Realty and Hiranandani had also shown interest in the project but dropped out later.
An evaluation panel will prepare a report on the qualified bid, which will be sent to a Project Monitoring and Implementation Committee and the Maharashtra Cabinet for a final decision.
The project, spread over 1,160 hectares, is designed to be one of the world’s largest greenfield airports. It will have two parallel runways of 3,700 metres and full-length taxiways spaced with 1,550 metres between them, thereby facilitating simultaneous and independent operation of the runways.
The airport, which was mooted 15 years ago, has been on the drawing boards of the Central and State governments and CIDCO for the last 15 years. It has faced environmental and land acquisition problems. On November 22, 2010, final environmental clearance was provided by the Union Environment and Forest Ministry.
However, the project could not take off as villagers and landholders refused to accept the compensation. CIDCO continues to negotiate with 950 families on providing alternative accommodation and sources of livelihood.

18.2. AccorHotels plans to add close to 550 rooms in eastern India
Economic Times | Feb. 09, 2017

Kolkata: AccorHotels plans to add close to 550 rooms in eastern India as the company expands its footprint in Guwahati and Kolkata. The expansion is likely to take place over the next three years.
To start with, Novotel, a sub-brand of the company , will debut with its Guwahati property. Targeting a mid- year launch, it is likely to have 122 rooms. This would be followed by IBIS and Formule1 in Kolkata by 2018. Talking about the eastern India hospitality scenario, Arif Patel, vice-president of sales, marketing, distribution and loyalty at AccorHotels India, said: "The potential in the east India market remained untapped for years and it has just started getting its share of branded hotels. Accor is attempting to give the east an option to choose from a chain of luxury hotel to branded budget rooms." The company is likely to double its Kolkata portfolio to four hotels.

Accor is likely to launch subbrands IBIS and Formule1 in Kolkata, adding to the 500 rooms in the city from Novotel and Swiss Hotel. The entry of these brands into the eastern market will add another 316 keys to the city. The 129-room Formule1, according to Patel, would be the cording to Patel, would be the first new- generation hotel from the sub-brand in the country.
"Travellers are getting younger and hence new products constantly need to be added to the offerings one has.The new generation Formule1 would be targeting a younger crowd between the 22 years and 35 years age group, and will be having an all new décor as well as food and beverage offerings.Everything will be designed according the tastes and pockets of the age group," said Patel.
Accor is expecting an 8-10% growth in average room rentals and 4-5% growth in occupancy. The company is bullish on the wedding market.

"There is a lot of demand for high budget weddings in the east and due to lack of branded options a lot of them move abroad to locations like Thailand and Singapore. The city can now get back these businesses lost to such locations for weddings," said Patel. Another set of customers for the group would be medical tourists, mostly from Bangladesh.
AccorHotels, that has 46 hotels in India across various categories, is targeting to touch 10,000 keys from its present inventory of 8,000 keys. The group also plans to expand its presence to 25 other cities across India.

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

19. Modern retail to touch Rs1,71,800 crore ($25,7 bn) by 2019: Report
Livemint | Feb. 15, 2017

New Delhi: Modern retail in India is expected to double in size in three years to Rs 1,71,800 crore ($25,7 bn) from the current Rs 87,100 crore ($13 bn) across the top six retail markets of the country, largely driven by omni-channel retailing, said a report jointly published by property consultant Knight Frank India and lobby group Retailers Association of India (RAI).
These six markets include NCR (national capital region), Mumbai, Chennai, Bengaluru, Pune and Hyderabad. According to the report titled ‘Think India. Think Connected Retail’ based on a survey of 45,000-50,000 shops (including malls and shopping streets) across top six cities, retail stores across the country (online and offline) are reinventing themselves to embrace the idea of omni-channel retailing. Consequently, penetration of modern retail is expected to “see a substantial rise from the current 19% to 24% in three years.” Omni-channel retailing extends to brick-and-mortar stores, smartphones, computers, tablets, direct mails and television.

The emergence of technology and increased use of plastic money and mobile wallets have been the key drivers behind the growth of omni-channel retailing, the report said.

Moreover, with initiatives like foreign direct investment (FDI) retail policy and state-level retail policies where “government is taking up the role of a facilitator to create an environment conducive to the retail business” has further helped the cause.
“The concept of shopping has undergone a tremendous change in terms of retail format and consumer buying behaviour thereby bringing in a new era of modern retail across the country. With the boundaries between offline and online stores blurring, omni-channel retailing is an idea whose time has come,” said Aditya Sachdeva, director, retail at Knight Frank India in a statement.

According to the report, brands which maintain an offline presence across the country have adopted or aspiring to adopt omni-channel strategy in the near future. Department store operator Shoppers Stop Ltd recently launched a Shoppers Stop mobile application and had re-launched its online shopping portal. The company is also looking to increase the contribution of online sales from current 1% to 10% in the next three years.
“Today’s time-poor customers are demanding a seamless navigation across channels. We are working proactively towards delivering an omni-channel experience to the customers,” said Govind Shrikhande, managing director at Shoppers Stop Ltd, in the report.

While brands like GAP, Woodland and Bestseller India-owned Jack & Jones, Vero Moda, Only & Selected Homme are following the same strategy, there are others like Swedish fast-fashion brand Hennes and Mauritz AB (H&M) who have decided to focus on just offline stores right now.
“With H&M offering online shopping in 35 markets out of the 64 markets that we are present in, online platform is a natural expansion of our business. We see a great potential for future growth in India in the online space but prefer to focus on retail stores for the moment,” observed Janne Einola country manager, H&M India Retail Pvt Ltd, in the report.

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

20.1. Cabinet approves bill to make IIMs autonomous
Livemint | Jan. 25, 2017

New Delhi: The Indian Institutes of Management (IIMs) have finally got what they have been demanding for years greater autonomy.
The Union cabinet on Tuesday cleared the Indian Institute of Management (IIM) bill, 2017 that aims to grant “complete autonomy” to the elite B-schools and allow them to award degrees instead of diplomas, as is the case now.
The bill will allow IIMs “complete autonomy... combined with adequate accountability”, the cabinet said in a statement after meeting in New Delhi.
The IIM bill, under discussion for several years, will grant the premier management schools freedom in terms of administration, recruitment and daily functioning.

“The IIM Bill, which was approved by the Cabinet, has been prepared with the aim of furthering excellence in these premier institutions,” Prime Minister Narendra Modi said in a post on the microblogging site Twitter. Human resource development minister Prakash Javadekar termed the cabinet approval a “historic decision”. “We trust excellence and quality,” Javadekar, who could not attend the cabinet meeting because of family engagements, said in a post on Twitter.
The bill will ensure IIMs are “board-driven, with the chairperson and director selected by the board”. This means neither the human resource development (HRD) ministry nor the president of India will have a say in the selection of top executives at these B-schools.

Currently, the boards largely make recommendations and the government either accepts or rejects their proposals. This includes subjects like the appointment of directors and the chairman of the board of governors. The bill became controversial because of concerns that it may erode the autonomy of these premier institutions. The IIMs protested against the bill in June 2015 when the first draft was put up for public feedback.

“If the bill is passed in the current format, then there will be a revolt in the IIM system,” J.J. Irani, chairman of the IIM Lucknow board, said at the time.
Following intervention by the Prime Minister’s Office, the HRD ministry made changes to the draft, accommodating most of the demands of the elite schools. Most disputed issues, such as the composition of IIM boards, selection of board chairmen and course fees, will now be decided by the IIMs with little interference from the ministry, Mint reported in August.
The IIM bill is silent on reservations in teaching staff recruitment or the so-called faculty reservations. The issue had garnered attention after Javadekar in September touched on the need for such reservations. But the HRD ministry has not issued any formal directive to IIMs to implement faculty reservations yet.

“On the face, the bill seems to have addressed the IIMs’ concern about autonomy while ensuring accountability,” said IIM Ahmedabad director Ashish Nanda. He said that he had not seen the final copy of the bill yet.
The bill contains a provision for a “Coordination Forum of IIMs”. The forum was a contentious issue as the IIMs were concerned that this would allow the HRD ministry to control the B-schools, considered a nursery for future corporate leaders. The coordination forum, in its final shape, will have limited power and the HRD minister will not be its convener. It will be an advisory body, consisting of 33 members, and its chairman will be selected by a search- cum-selection committee. Likewise, the governing board of an IIM will have 15 members including three women members and five from the alumni community.

The bill will grant statutory status to IIMs, which will be termed institutions of national importance. “This will allow us to grant degrees instead of diplomas,” said Rishikesha Krishnan, IIM Indore director. The move will give global recognition to courses offered by the IIMs, especially the newer institutions. All IIMs are separate autonomous bodies registered under the Societies Act. Being societies, the IIMs were not authorized to award degrees until now so they have been awarding post- graduate diplomas in management instead. While these diplomas are treated as equivalent to MBAs, the equivalence is not universally recognized.
The bill provides for a periodic review of IIMs’ performance by independent agencies. The annual report on the IIMs will be placed in Parliament and the comptroller and auditor general will be auditing their accounts. The bill is expected to be tabled in the upcoming budget session of Parliament.

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

20.2. To boost Skill India Mission, Govt sets aside Rs 17,000 crore in Budget
Economic Times | Feb. 03, 2017

New Delhi: The government has set aside over Rs 17,000 crore for skilling, employment generation and providing livelihood to millions of youth who enter the workforce every year, giving Skill India Mission—Prime Minister Narendra Modi's pet project— a major leg up.
At least 10 million young people enter the country's workforce every year, but job creation in India has not kept pace with this influx, making rising unemployment a major challenge for the government. The total sector outlay for 2017-18 has been pegged at Rs 17,273 crore, 16% higher than 2016-17's revised estimate of Rs 14,870 crore. In fact, the ministry of skill development and entrepreneurship, which has been set up by the BJP-led NDA government to implement the 'Skill India Mission' project, has seen a 38% jump in its allocation for the next fiscal at Rs 3,016 crore, as compared with Rs 2,173 crore in the revised estimate of 2016-17.

"The highest ever allocation to the sector will be used to speed up the process of skilling in a manner that we make our youth employable in the fastest possible way," a senior official said. According to the official, the role of the skill development ministry does not end after imparting skills to the young labour force.
"For the success of Skill India Mission, the ministry has to facilitate employment for these skilled youths, and this requires mediation with industry and other ministries to help create quality and sustainable jobs in the market," the official said. Finance Minister Arun Jaitley, in his budget speech on Wednesday, announced at least half a dozen skilling initiatives not just for the youth but also for women to ensure gender parity. The biggest initiative under the programme is the launch of SANKALP (Skill Acquisition and Knowledge Awareness for Livelihood Promotion Programme) at an investment of Rs 4,000 crore to provide marketrelevant training to 350 million youths. Besides, the ministry would set up 100 India International Skills Centres that will conduct advanced courses in foreign languages to help youngsters prepare for overseas jobs.

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. In defence of globalization
Livemint | Jim O’Neill | 22 Jan. 2017

Despite the challenges it has created, globalization has made the world a better place. And we still need it to eradicate poverty
I was recently in beautiful Chile for a Futures Congress, and I had a chance to travel south to the very tip of Latin America. I also recently made a BBC radio documentary called Fixing Globalization, in which I crisscrossed the UK in search of ideas for improving certain aspects of it and discussed topical issues with well-known experts. In both cases, I saw things that convinced me that it is past time for someone to come to globalization’s defence.
Chile today is Latin America’s richest country, with per capita gross domestic product (GDP) of around $23,000—similar to that of Central European countries. This is quite an achievement for a country that depends heavily on copper production, and it sets Chile apart from many of its neighbours. Chile is facing economic challenges, and its growth rate leaves something to be desired; but it also has many promising opportunities beyond its borders.

For example, when I led a review on antimicrobial resistance, I learnt that copper has powerful anti-bacterial properties and is an ideal material for use in healthcare facilities where bacteria often spread. This means that copper producers such as Chile, Australia and Canada can improve global health—and boost exports—by introducing affordable copper infrastructure into hospitals and other clinical settings.
Chile is also a storehouse of knowledge for managing earthquakes and tsunamis. While I was there, I visited La Serena, which in 2015 experienced the sixth-strongest earthquake ever recorded. But the ensuing tsunami killed only 11 people, though it surely would have killed far more in many other places. Chilean officials’ advanced preparation and rapid response seems to have made the difference. With so much institutional experience, Chile can be a valuable resource for other countries threatened by seismic events.
Beyond Chile, it is interesting that Chinese President Xi Jinping attended the World Economic Forum’s annual meeting in Davos this year. Now that Donald Trump has been elected president of the US, and the UK is withdrawing from the European Union, I had assumed that such an elitist event’s glory days were behind it. Xi’s presence suggests that China is exploring where it can position itself on the world stage, and which elements of globalization it can harness to its advantage.
Indeed, as the Chinese ambassador to the UK pointed out, China is already the largest importer —yes, importer —for at least 70 countries, and accounts for about 10-11% of all imports globally. Despite its supposed economic challenges, China will likely be a bigger importer than the European Union before this decade is over, and it will probably surpass the US soon thereafter.

Moreover, economic inequality among countries has declined sharply in the past 20 years, owing partly to China’s rise, as well as to economic development across Asia, Latin America, and elsewhere. By 2010, the UN had already achieved its Millennium Development Goal of halving poverty by 2015, and recent projections suggest that, by 2050, poverty will be eradicated everywhere except Africa.
This will not happen without globalization. African countries, in particular, will need to trade more with one another, and there is talk of creating an African free-trade area. But this could prove difficult now that anti-trade sentiment is on the rise. Are globalization’s critics—those who wrongly consider it a zero-sum game— against eradicating global poverty?

Policymakers can take action to alleviate anxieties about globalization. For starters, the seemingly endless growth of profits as a share of global GDP must stop. Anyone who thinks this sounds radical needs to brush up on economics. Higher profits should attract new market entrants, which would then erode incumbents’ profits through competition. The fact that this isn’t happening suggests that some markets have been rigged, or have simply failed. Policymakers need to address this with stronger regulation. For example, the current climate is far too permissive of share-repurchase programmes.
At the same time, policymakers need to pursue measures to increases wages for the lowest earners, which could boost productivity as capital becomes less expensive relative to labour. And, as World Bank president Jim Yong Kim pointed out to me, we need to strengthen enforce, ment of laws governing trade deals, and do more to help challenged domestic sectors that lose out as a result of those deals.

This reminds me of a sad story I heard from some laid-off Goodyear tyre workers in Wolverhampton, in England’s West Midlands. They told me that job listings for their lost positions were posted on a noticeboard, and they could reapply if they wanted to move to Mexico. The workers surmised that it was easier for the company to close its factory in the UK than to close even less productive factories in France or Germany. Surely changes like this can be handled better.
Lastly, policymakers need to prioritize development projects such as the UK’s “northern powerhouse” and “Midlands engine”. And more such initiatives should be launched elsewhere. Despite the many challenges it has created, globalization has made the world a better place than it otherwise would have been. And we still need it to eradicate poverty and generate higher living standards for all.

©2017/PROJECT SYNDICATE
Jim O’Neill is honorary professor of economics at Manchester University and former commercial secretary to the UK Treasury.

21.2. L&T, European co MBDA tie up for missiles
Times of India | Feb. 15, 2017

NEW DELHI: Engineering conglomerate L&T entered into a joint venture on Monday with European defence major MBDA to develop and produce new-generation tactical missiles for the Indian armed forces.
L&T will own 51% in the JV , named 'L&T MBDA Missile Systems' to be registered in India, with the European company holding 49%, in keeping with FDI norms in defence. The JV will initially work to develop and supply fifth-generation, anti-tank guided missiles, missiles for coastal defence batteries and high-speed target drones to the Indian forces.

L&T group executive chairman A M Naik said his company also hopes to ink the Army's Rs 4,600-crore contract for 100 tracked, self-propelled guns within a month or so. The K9 Vajra-T Howitzer has been developed by L&T in collaboration with Korean company Samsung Techwin, as was earlier reported by TOI. As for the JV, Naik said L&T and MBDA, which is the world's largest exporter of missiles, have been already working together for over five years now. "We feel the time has now come to strengthen the partnership for the government's `Make in India' initiative," he said.

MBDA CEO Antoine Bouvier, said, "Our business strategy in India has always been focused on forming partnerships at the deepest level, not just with the armed forces but also with the Indian industry . The setting up of the JV is a natural progression...It's a strategic partnership between India and Europe."
The JV will bid for different military projects under the new IDDM (indigenous design, development and manufacturing) category of the Defence Procurement Procedure of 2016, which has been accorded top-most priority by the government to boost the country's fledgling defence-industrial base.

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

22.1. Green Investment Bank, Oman SGRF eye stake in Leap Green Energy
Livemint | Reghu Balakrishnan & Utpal Bhaskar, 22 Jan.2017

Mumbai/New Delhi: State General Reserve Fund of Oman (SGRF) and UK Green Investment Bank Plc. (GIB) are in separate talks to acquire a stake in JPMorgan-backed Leap Green Energy Pvt. Ltd, four people familiar with the development said.
SGRF manages the oil and gas revenues of the energy-rich Oman and has a diversified portfolio in 25 countries. GIB is UK government owned and finances green projects. Mint reported on 18 August 2015 that JPMorgan Asset Management Holdings Inc., the investment arm of JPMorgan Chase and Co., plans to sell half its stake in Leap Green Energy.

“SGRF is interested in acquiring a stake in Leap Green. JPMorgan has been looking for a buyer for some time now,” said one of the four people cited above, requesting anonymity. A second person, one of the four cited above, who also didn’t wish to be identified, confirmed SGRF’s interest in acquiring a stake in Leap Green.
GRF’s interest comes in the backdrop of sovereign wealth funds from West Asia developing an interest in the Indian clean energy space following Prime Minister Narendra Modi’s pitch for investment during his UAE visit in August. Dubai’s sovereign wealth fund, Investment Corp. of Dubai through its subsidiary Dubal Holding Llc is scouting for investments in an Indian renewable energy platform, Mint reported on Thursday.

Investment Corp. of Dubai eyes India renewable energy investments
JPMorgan holds about 75% stake in Leap Green Energy, acquired in tranches since 2010. Leap Green Energy, founded in 2006, is promoted by former Formula 1 driver Narain Karthikeyan’s family. JPMorgan has a total investment of about $100 million in Leap Green Energy.
“GIB has also evinced interest for a minority stake in Leap Green Energy,” said a third person, requesting anonymity.
Established in 2012, GIB invests through five funds including a £200 million fund dedicated for India and African nations.
“JPMorgan has no immediate plans to offload control stake. While JPMorgan will sell part stake, promoter will raise primary money through stake dilution,” said a fourth person who also didn’t wish to be identified.
According to information available on SGRF’s website, Oman India Joint Investment Fund, an India-focused private equity fund, has raised $220 million for its second fund and is targeting a corpus of $300 million by the end of 2017.
Experts say that more foreign investors coming to the Indian green energy sector is good news for the industry.
“Indian power sector is seeing continued and enthusiastic response from international investors post the development in cleaning up the distribution sector,” said Sambitosh Mohapatra, partner, energy, PwC India. In the meantime, the UK government is all set to sell GIB to Macquarie Group Ltd and the deal is expected to close soon.
The sale of the Edinburgh-based bank is on track to be completed before the end of March, in line with the deadline the government set when it announced the privatization this year, Bloomberg reported last month. While a JPMorgan spokesperson declined to comment, Rajeev Karthikeyan, managing director of Leap Green Energy didn’t respond to phone calls and a message left on his cellphone. A message left in his office also remained unanswered. Queries sent to SGRF, UK Green Investment Bank and Macquarie Group remained unanswered.
GIB could be valued at as much as £4.2 billion ($5.2 billion), including investments that the new owners will be expected to make over the next three years, Bloomberg reported citing Shaun Kingsbury, the bank’s chief executive.
Recent large deals in the Indian clean energy space include Tata Power Co. Ltd buying the entire 1.1 gigawatt renewable energy portfolio of Welspun Energy Ltd for $1.4 billion and Hyderabad-based Greenko Energies Pvt. Ltd, backed by Singapore’s sovereign wealth fund GIC Holdings Pte. and Abu Dhabi Investment Authority, acquiring SunEdison’s Indian assets for $392 million last year.

22.2. Tata Steel, Creative Port ink deal for stake in Odisha port
Business Standard | Jan. 27, 2017

Bhubaneshwar: Tata Steel has executed a definitive agreement with Chennai-based Creative Port Development (CPDPL) and their promoters for the proposed development of Subarnarekha Port at Chaumukh village in Odisha’s Balasore district.
According to the agreement, Tata Steel will acquire majority equity stake in CPDPL, and the port development is envisaged through a wholly-owned subsidiary, Subarnarekha Port (SPPL).
The acquisition and development is subject to certain conditions, detailed technical assessments and financial closure. In a regulatory filing with BSE, Tata Steel said it has executed the share purchase agreement to acquire 51 per cent equity shares of CPDPL.

The cost of acquisition will depend on the capital outlay of the project which is under investigation and will be firmed up after studies are completed. Though the exact cost of acquisition will be known at the completion of the project, the current outlay for the acquisition is estimated at Rs 120 crore.
“As Tata Steel grows in India in the future, securing competitive logistics solution is a key aspect in de-risking our in-bound and out-bound supply chain. The proposed Subarnarekha Port will address the long-term strategic needs of the Company and we look forward to working with various stakeholders to develop this port. Our commitment to the State and people of Odisha will be reinforced with this investment,” said Tata Steel. CPDPL, promoted by two technical entrepreneurs, Ramani Ramaswamy and Ramaswamy Rangarajan, had entered into a concession agreement with the Odisha government in January 2008 to develop the Subarnarekha Port as an all-weather deep-draft facility.

The port project proposed at Subarnarekha needs 1215.43 acres of land for the port area and 1565.93 acres for the rail corridor. Out of 1215.43 acres of land needed for the port area, 158 acres constitute Gochar land, 193 acres Bhudan land, 138 acres of encroached land and the remaining 724 acres being a free land. According to the concession agreement signed originally, the port would have an initial capacity of 10 million tonnes per annum (mtpa) which was to be scaled up to 40 mtpa in 10 years.
According to this agreement, the port developer would share revenue with the state government at the rate of five per cent from first to the fifth year, eight per cent from sixth to 10th year, 10 per cent from 11th to 15th year and 12 per cent for the remaining 15 years.

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

23. US seeks enhanced India market access after Trans-Pacific Partnership pullout
Livemint | Ravi Kant, 24 Jan. 2017

Geneva: The Donald Trump administration will seek enhanced market access in India as it begins to formulate trade deals based on a bilateral framework to secure maximum gains for American companies and workers, while ensuring proper enforcement of such one-on-one deals, White House spokesperson Sean Spicer said on Monday.
On his first full day in office, President Trump signed an executive order for pulling the US out of the 12- country Trans-Pacific Partnership (TPP) agreement. He said his trade deals would be “one-on-one” and “that will be better” as they would be easier to enforce.
At an earlier meeting with top business executives, Trump said he would punish companies that shut down factories in the US and moved jobs outside by imposing a “very major” border tax. Several analysts have already warned that the proposed border tax will violate global trade rules of the World Trade Organization (WTO).

Trump’s decision to junk Trans-Pacific Partnership an opportunity for India
Elaborating on Trump’s decisions, Spicer said they “usher in a new era in US trade policy”, based on bilateral deals that would take precedence over multilateral agreements. He argued that multilateral deals are not beneficial to US’ interests because they end up catering to the “lowest common denominator” as was the case with the 12-member TPP that put small countries on the same footing as the US.
Bilateral deals, on the other hand, offer a stronger bargaining position to the world’s largest economy and could be more easily updated or renegotiated, he explained.
Asked to comment on how the Trump administration would pursue relations with India, Spicer said that the US wants greater market access in India. But he did not elaborate on the areas in which the US wants enhanced access.
It remains to be seen whether the issue of market access and a possible bilateral trade agreement figured prominently in President Trump’s phone call to Prime Minister Narendra Modi late on Tuesday—details of which were unavailable at the time of publishing this story.

Donald Trump speaks with Narendra Modi over the phone
Trump’s trade policy based on “Buy American, Hire American” will cover both manufacturing and services sectors. The US, which outsources IT-related services to Indian companies, is already toying with proposals to review/tighten H-1B visas for ensuring more jobs for American professionals.
Last year, India launched a trade dispute against the US at the World Trade Organization over Washington’s alleged barriers on the movement of short-term service providers, or non-immigrant visas. India has raised two sets of issues concerning the US’s “measures relating to fees for L-1 and H-1B visas”, and “measures relating to numerical commitment for H-1B visas”.
While the HI-B visa category corresponds to the US’ commitments in the GATS schedule with respect to natural persons engaged in “speciality occupations”, the L-1 visa category corresponds to intra-corporate transferees. GATS refers to the general agreement on trade in services, a WTO treaty.

Why Trump’s withdrawal from Trans-Pacific trade deal is a boon for China
New Delhi challenged several US measures such as the US Consolidated Appropriations Act of 2016 (Public Law 114-113)—which would require higher filing fees and fraud prevention and detection fees under specific circumstances—and Section 402 of the Emergency Border Security Supplemental Appropriations Act of 2010 (Public Law 111-230)—which was valid for the period between 13 August 2010 and 30 September 2015, involving higher filing fees and fraud prevention and detection fees of an additional amount of more than $2,000.
The US measures denied Indian IT companies favourable treatment as compared to American companies offering “like” services, India argued.
Against this backdrop, a bilateral trade agreement between the US, the world’s largest economy, and India, which has a long way to go, will obviously be beneficial to the former. Despite a trade surplus with the US to the tune of more than $20 billion last year, India will have to pay a huge price in a bilateral trade agreement with the US in agriculture, the pharmaceutical sector, and even in manufacturing sectors.

24. Ireland pushes for more investments from India
BusinessLine | Vidya Ram | 26 Jan. 2017

Until a few years ago Indian firms had only a small footprint in Ireland, but that is begining to change as the EU nation has made a concerted effort to attract businesses — particularly from the IT, pharmaceutical and advanced manufacturing sectors.
IT majors such as TCS and Infosys have a presence in the country, while Tech Mahindra earlier this month opened a new centre of excellence.
BusinessLine spoke to Tanaz Buhariwalla, Director of India, IDA Ireland (the country’s inward investment promotion agency), about the opportunities, particularly in the wake of the UK’s move to leave the EU.

How is Indian investment changing in Ireland?

We have seen real growth in the last four to five years: there are now around 40 Indian companies ranging from the IT services sector — we have the top six, who started with customer service centres and are now moving up the value chain — to pharmaceutical companies, medical devices firms and advanced manufacturing. Now we are even seeing younger technology companies showing interest.

What is the impact of Brexit on Ireland?
Brexit was not what Ireland had hoped for but now that it has happened we are in a favourable position. The IDA has of course developed Brexit strategies. It has certainly opened up opportunities, but when it comes to India that would have been so in any case: Indian firms have always targeted the EU as a market, therefore we are now just adding an extra layer.

Has there been a greater expression of interest since Brexit?
We are definitely seeing Indian companies — from medium to large — discussing Brexit strategies and the IDA has been talking to many of them. Some companies are looking at consolidating their EU presence in Ireland. Many will have a plan internally but no one will take action until the terms of Brexit are clear.

How can Ireland benefit?
The advantages include English, and we are a common law jurisdiction — there is a great double taxation agreement with India. These things add to the attractiveness. We now have a fairly decent base of Indian companies which is an advantage: until recently we had other multinational companies but Indian companies lacked the comfort that the others had — now we are able to offer the full package. We initially focused on the IT services sector but we’ve increasingly been focusing on medical technology, pharmaceutical and engineering.
Our research showed that Indian companies were looking for a base in Europe, but were often choosing Eastern Europe, because they sought EU certification at a lower cost. We have the advantage of being part of Western Europe without the higher cost of a Western European nation, which has been a big attraction. It adds to the Make in India idea: make in India, added value in Ireland.

How do you see investment playing out going forward?
We have set ourselves the target of doubling the number of investments from India to 75 in the next five years, and doubling the job count to 10,000. We are on the track to meet this: this year looks very good. This is pre- Brexit — Brexit is not driving the investment we have seen or that is on the cards. There is much more to come once Brexit is announced.

25. From airports to e-commerce, Canadian institutional money pouring into India like never before
Economic Times | Feb. 07, 2017

Mumbai: For Anuj Ranjan, the globetrotting India head of Brookfield, the fundamental investment thesis behind buying a large telecom towers portfolio from Reliance Communications was not all that different from taking over Hiranandani's 4.5 million square foot of swish office and shopping space in the financial capital. The world's largest democracy with a billion plus population needs to communicate, share information as well as work and play to sustain its trillion dollar economy.
More importantly, both are scaled-up, income generating, operational assets which can be leveraged further using their global expertise to build out larger platforms. Similarly, they have high margins with low capital expenditure going forward and built-in escalators.

Toronto based Brookfield is the world's 2nd biggest manager of alternative assets like real estate and private equity with $250 billion of assets and have already overshadowed traditional Wall Street heavyweights Carlyle, KKR or even Apollo Global Managament. So capital has never been a handicap for Ranjan and his 1000 odd team on the ground.
Fresh from raising $14 billion to invest in infrastructure -- believed to be the largest single commitment to the sector of its kind -- the Candian firm has been scouting around for compelling stories across emerging markets like ours. So when both the Hiranandani and the Reliance towers came up for grabs last summer, Brookfield jumped head long.

By the end of the year, they wrote a $2.6 billion to stitch up both -- arguably among the largest FDI commitments in India in the year. The Brookfield Reliance Infratel transaction worth $1.6 billion alone is also the second-biggest private equity transaction ever in the country, behind Temasek’s $2 billion investment in Bharti Telecom in 2007.
Call it Canada calling. The bulge bracket Canadian asset managers from pension or PE funds have been the biggest India Bulls in the last one year, whipping up a storm with their investment frenzy. Between marque names like CPPIB, Caisse de depôt et placement du Quebec (CDPQ), Ontario Teachers or Brookfield and Fairfax, they have jointly committed around $7-8 billion across companies and funds so far, according to industry estimates. This would be among the single-largest country-wide commitment towards India in recent times. Such Canadian transactions mirror the excitement of PE opportunities in India, which reached fever pitch in the peak vintage of 2007-2008.
This becomes even more striking once compared to FDI or trade data. Canada has never been a top investment source for us with bilateral trade touching a mere $6.5 billion in March 2016. That's only a tenth of neighbour US, the 5th largest FDI partner, as per the latest government figures.
“Our long investment horizon aligns to the financing and capital needs of India’s economy, growing entrepreneur culture and the strength of business in the country,” says Suyi Kim, Managing Director, Head of Asia Pacific at CPPIB.

From the building blocks -- airports, roads, power plants to warehouses, logistics parks and commercial real estate to financial services and even financial services firms and even ecommerce companies, their bets are becoming bolder and complex, cheque sizes bigger. Even "regulated sectors" like banking, airports or distress debt is fair game as are risky emerging bets like ecommerce. Last February, instead of safe havens like government securities, Ontario Teachers decided to put its pension capital to back a $200 million capital raise by Snapdeal.

By the time you will be reading this, probably the board of the sleepy community lender from Kerala and also one of the oldest private player in the country -- Catholic Syrian Bank -- would have given Prem Watsa-- Canada's Warren Buffet and among the earliest champions of the India story -- their approval to acquire a controlling 51% slice of their bank through his flagship Fairfax Financial Holdings. Late last November Watsa and his close confidante Deepak Parekh managed to swing RBI to allow the first takeover of an Indian bank by a foreign investor. This was Watsa's 2nd bold bet within 1 year -- having bought into GVK's Bangalore airport earlier in 2016.

"We are currently at the initial stages of seeing direct investments by the larger pension funds. As they get a better understanding of the market and get more confidence based on the track record of initial investments, we expect an increased allocation towards India as well as participation from other large North American, European and Australian pension funds,” feels veteran invetment banker Ashok Wadhwa, Group CEO, Ambit, who has advised several Canadian investors in the recent past.
Around the same time when PWC was doing a detailed dilligence of RCom's towers for Brookfield during last Diwali, across the Atlantic, another investment prospect was hotting up. This too involved a blue blooded Canadian investor -- Canada Pension Plan Investment Board (CPPIB).

Four years after buying GlobalLogic, a Silicon Valley headquartered IT outsourcing firm started by 4 IIT-ians with core operations in India for $420 million, PE Group Apax Partners wanted to take some money off the table. CPPIB historically has been one of the biggest investors into Apax's funds as a sponsor -- or limited partner (LP) in PE jargon speak -- and have been pressing them for co-investment or co-underwriting opportunities. In 2011, Apax had joined forces with them and another Canadian pension fund PSP Investments to buy medical devices firm Kinetic Concepts in US in a multi-billion dollar trade. Since then, CPPIB has been scouting for emerging technology companies.

Meanwhile, in just three years, GlobalLogic had doubled in size under Apax's watch, so it could either cash out entirely or dilute partially and still enjoy the upside. It chose the latter and within 3 months of bilateral discussion, CPPIB closed its 1st technology services investment at a $1.5 billion valuation, to become co-owners of the company. Apax too laughed its way to the bank, raking in more than three times money on a four-year-old investment.
Among the largest in the world, CPPIB alone has invested over $3 billion in India since 2012, the largest commitment amongst all its peers. With GlobalLogic, it now gets to ride one of the hottest new megatrends.

NATURAL EVOLUTION
For most, the rising Canadian institutional interest is a natural progression that comes after the previous waves of Singaporean, Middle Eastern sovereign wealth fund interests. Historically though they have always been indirect investors through the global funds that they have backed and invested in as LPs. From KKR to Blackstone, from TPG to Bain, these relationships predates the Modi government.
Way back in 1994, CDPQ invested $250,000 in IndOcean's fund -- the first instance of Canadian institutional money trickling into India. Then for almost 22 years, there was limited traction till CDPQ, CPPIB set up offices here, recalls a senior fund executive who did not wish to come on record. Even during the boom years of 2004-08, there was no Canadian except for Fairfax. But now as India increasingly become strategic, the involvement is proactive.
This has also led to a windfall for even our home grown PE executives. Several domestic funds like Renuka Ramnath's Multiples, True North (formerly IVFA) or even Kedaara Capital today count the Canadians like CPPIB or PSP Investments as among their key sponsors during fund raising. Its opened up a new market for them to tap as well.

"Earlier they used to invest through general partners like large PE funds, both domicile and global funds like ours. But now, they have started investing directly in big numbers. It’s a growing trend. Their confidence in taking the macro India risk is good for the country and economy in a long run," agrees Sanjay Nayar, CEO, KKR in India.
But the aggression also changes the tried and tested industry dynamics. "Once they have tasted blood and built local capabilities, why would they share management fees and carry with their GPs (managers of the fund who execute the investments), " asked an India head of a global buyout fund on condition of anonymity. That means in larger transactions in infrastructure or real estate, the big asset managers are creating direct competition to traditional bulge bracket PE names or the usual SWFs like GIC or ADIA. Alternatively, they are chasing co-investment opportunities. Both Blackstone and KKR for example teamed up with CPPIB when Lafarge's India assets came on the block or more recently to buy Bharti Infratel, India's largest telecom towers company.

"It's a complex market but moving in the right direction and is an important long-term destination for our capital. One of the reasons we established an on-the-ground presence with strong local talent was to help us understand and navigate this complexity,” Kim adds.

SLOW YET STEADY
Compared to their US counterparts, the Canadians have been far more conservative in scoping out high growth emerging market opportunities. Its only in the last 3-4 years that they have looked beyond the usual happy hunting grounds of Canadian bonds, global equities (read US and other OECD countries) and hedge funds to adapt a far global and diversified portfolios.
For a country that is 40% reliant on its banks and financial institutions and another 40% on energy, volatile oil prices forced looking beyond the usual safe havens. For example CDPQ which looked to deploying just under $3 billion in India by the end of 2016 alone, buoyed by simpler rules, smoother implementation of policy and a central government that is almost “managerial” in fixing problems and removing roadblocks through structural reforms, only 8-9% of their $250 billion assets under management have so far been allocated for emerging markets including India.

In retrospect, this inherent conservatism perhaps saved the Canadian firms from the post Lehman meltdown when most US firms bruised badly. Similarly US PE groups that rushed into India during 2004-08 era too has had a chequered portfolio. Most, including the most sophisticated investors, had burnt while navigating the complexities of the local market and its makers. The Canadians in comparison had no baggage to deal with while convincing their headquarters.
It took Brookfield seven years after setting up its India outpost to break clutter and establish themselves as an owner and operator of high profile, chunky assets and complex businesses. In one of the largest commercial real estate transactions, Brookfield bought out Unitech Corporate Parks Plc. (UCP), a portfolio of six assets including special economic zones and information technology (IT) parks across the National Capital Region in 2014 for around Rs 4700 crore. Thereafter, last August, it took over distressed Gammon Infrastructure's six road and three power projects for an enterprise valuation of Rs 2000 crore. The Hiranandani portfolio will now help them to break into Mumbai while Reliance is a far larger pan India play.

"People ask us whether we are we a strategic buyer or a PE fund. In fact, we are a strategic that evolved into a private equity fund over a decade ago, and so we actually bring both together," Rajan had told ET in an earlier interaction.
"It's unlikely that Brookfield will go for vanilla growth oriented companies. They always look for opportunities with arbitrage of value creation," quipped an entrepreneur who has worked closely with them recently. "They are financial guys but with a deep understanding of business issues like contracts, operating assets." For most of them now, the wager is on the macro fundamentals even if the opportunities are specific and micro. "With average global growth at 2%, India's growth prospects are attractive.

As long term investors, we also recognize India’s potential which rests on its economic fundamentals,” said Anita Marangoly George, Managing Director, South Asia, CDPQ. “India’s attractive labour force - young and growing – is one of its key assets. Progress is being made in India’s governance through several structural reforms including the passage of the GST Bill and the Bankruptcy code, among others. All of these will contribute to strengthening the economic fundamentals of this country.” For patient capital providers growth is increasingly becoming difficult to find around the world and as the world’s 2nd fastest-growing major economy, India offers a runway “that looks exciting” over the next 10-15 years. As a fund manager who did not wish to be identified puts it, " growth rates are growth rates. They go up and down. What matters more is what’s going on underneath."

"The global economic balance has been changing fast so a lot of the fund managers felt they too needed to allocate assets accordingly and build global capabilities. Moreover with some of the emerging markets like China and Brazil have slowed down in recent years making India that much more attractive," argues Vikram Gandhi, founder VSG Capital, a long time advisor to CPPIB. Some feel, Watsa's billion dollar India specific fund raised after his meeting with Prime Minister Modi in November 2014, months after the change of guard in Raisina Hill, was a watershed. "When Prem went out and raised a fund there was a call to action. It was a new government and there was more urgency than ever before," argues Watsa's chief consiliegre in India since 2011, Harsha Raghavan, MD & CEO of Fairbridge Capital.

But even for the 66-year old Watsa, who recently compared Modi with Singapore's Lee Kuan Yew while championing his efforts to crack down on crony capitalism, financial turnaround of state power distribution companies and pet projects like smart cities and Make in India, the UPA years threw enough opportunities like Thomas Cook, Ikya, Sterling Holidays to sink his teeth into. The Hyderabad born contrarion investor made his India debut back in 2001 picking up a 26% stake in ICICI Lombard, in 2001 through Hamblin Watsa Investment Counsel Fund and waited for a decade to write his next cheque to 9 per cent stake of brokerage firm IIFL in 2011.

SMART PARTNERSHIPS
"We look for local partners who we can work with for the long-term, whom we can scale up with over multiple cycles and are among the very best at what they do. And in India, we have established some very strong partnerships that we’re confident will help us to realize our investment expectations,” says CPPIB's Kim. In December, it agreed to invest $300 million to buy into select mall assets of Atul Ruia-led Phoenix Mills. It already has JVs with Shapoorji Pallonji Group for office spaces, L&T for roads while with Kotak Mahindra Bank where it owns 6% with an option to go upto 10%, it has floated a $525 million stressed asset fund. To navigate a complex market like India, it pays to have a local partner for critical mass and intelligence. CDPQ too is looking at creating an Rs 5000 crore asset reconstruction platform with home grown Edelweiss Financial Services while Brookfield and SBI look to launch a $1 billion distress debt fund.

Along with Tatas, ICICI Venture and 2 other SWFs from the Middle East, CDPQ has also launched a dedicated $850 million investment vehicle to scoop up troubled and stranded power units across the country. While Tata Power ---- India's largest integrated power company --- will use its technical expertise to operate and resuscitate the troubled units and also handle the operation and maintenance post-acquisition as the asset manager, the financial investors will source deals, organise funds, conduct financial diligence, capital raising and debt refinancing. "Our core areas -- property, infrastructure, power and private equity, that is building materials and industrial businesses -- happen to be where a lot of the stress is. But the assets themselves are not stressed, but world class.

They just happen to belong to businesses that are stressed," said Ranjan. But for their long term sustainability, stable policy is critical. “While the regulatory framework has improved significantly, it is key that these regulations remain consistent,” warns CDPQ's George. “The growth rate in several of the key sectors in India also makes it a highly competitive market. Valuation multiples too in most sectors are higher than those in most developed markets.” For Nayar, private investing is also fraught with unknown risks. "If something goes wrong, these fund managers will get nervous and may start withdrawing funds, which will be a major negative," he puts in a word of caution. But for the moment it is India that is the bright splash in world of grey.

As George's boss Micheal Sabia, Chief Executive Officer CDPQ, told a room full of attentive investors during his last trip to Mumbai, “India needs investors who focus on fundamental value and deep economic trends. In other words, India needs builders.” And here lies a niggling worry.
Many would say, meaty opportunities are still hard to come by in a market like ours. Much of the Canadian investments is still not flowing into as FDI to back physical assets but is largely flowing through equity markets. "Risk is not appropriately priced yet," said a senior investment official who did not wished to be quoted. "Show me the opportunities where I can put in a few billions of dollars. Capital is not a problem when you have a trillion dollars in the pension pool, chunky deals are."
Hopefully the Indo-Canadian corridor will make sure no one would be left complaining.

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

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Saturday 18 February 2017

NEWSLETTER, 20-II-2017

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

– AGRICULTURE, FISHING and RURAL DEVELOPMENT

– INDUSTRY, MANUFACTURE

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

NEWSLETTER, 20-II-2017

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

– INDUSTRY, MANUFACTURE

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