AAPI: August 2017

LISBON, 20th August 2017

Index of this Newsletter

INDIA

INDIA & THE WORLD

21.1. Temasek Holdings to increase exposure to India, says Senior Managing Director
21.2. India, Japan join hands for big infrastructure push in Northeast
22.1. Exports need to grow at 26.5 % annually for India to grab 5% share of the world trade
22.2. L&T bags ₹3,375-cr order in Mauritius
23.1. Assam’s Luxmi Tea to develop 4,500 hectare plantation in Rwanda
24.1. Indian pharma team heading to St Petersburg to explore jt ventures
24.2. Indian pharma gets US FDA booster dose
25.1. India's engineering exports to China rise 123% in June qtr
25.2. Mumbai Metro contracts bagged by 7 companies

* * *

LISBON, 20th August 2017

NEWSLETTER, 20-VII-2017

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1.1. Economy on a steady growth path despite blips

BusinessLine, 14 Aug. 2017, K.R. Srivats

It is well known that 1991 was a watershed year in India’s economic history. As the country celebrates 70 years of Independence, it is critical to do a health check of the economy and see how it has fared since. The course correction in 1991 was forced by circumstances and the country embraced a more open economy.

A clear message that has come out is that the direction of policy stance — to be a more open economy and encourage foreign investments — has not changed in the last 26 years. India has kept the faith on pursuing a market-oriented open economy strategy despite unexpected challenges like the 2008 global financial crisis and several irregularities between 2011 and 2014 that dented the credibility of the then UPA-II Government. The spate of irregularities had somewhat created a policy paralysis, leading to fall in growth levels as compared to the Golden Period of 2003-08 (when the country even hit 9 per cent growth levels)

This has indeed worked in India’s favour with the country now emerging as one of the fastest growing large economies of the world.

The pace of economic growth may have faltered in recent years, but India has only progressed despite the State’s overarching presence in most economic activities.

There is no doubt that the country only gained from its decision to unleash the animal spirits in sectors such as information technology, oil refinery, pharmaceuticals, telecom and to some extent banking, giving a larger role for the private sector. A large part of the credit should go to former Prime Ministers Narasimha Rao and Manmohan Singh (who was Finance Minister in 1991 Congress-led Government). The successive Finance Ministers – P Chidambaram, Yashwant Sinha, Pranab Mukherjee — kept the tempo going and ensured that India did not completely retract from the path of a free market open economy. The current dispensation — led by Prime Minister Narendra Modi — is also not in any manner looking to alter this trend.

A strong capital market infrastructure — built in the last two decades — has only helped in the economic transformation journey.

To gauge the extent of transformation of the Indian economy, sample the following two macro data points: In 1991, the country’s foreign currency reserve, at the height of the economic crisis, was just $1 billion. Today, the forex reserves have gone up to a record $385 billion (as of end June this year).

The total foreign investments (both portfolio and foreign direct investment) in 1991-92 were hardly $150 million. Foreign Direct Investment (FDI) hit an all-time high of $60.1 billion in 2016-17. The cumulative value of investments by Foreign Institutional Investors (FIIs) during April 2000-December 2016 stood at $183.69 billion.

In the last three years, the Government has eased 87 FDI rules across 21 sectors to accelerate economic growth.

Now, the big question is whether the current average GDP growth rate of 7.5 per cent is sustainable in the coming years. It would be if only the Government were to allow the private sector to have larger role in certain sectors of the economy and dilute its entrenched presence; have robust disinvestment strategy and do nothing that will disturb the economic growth engine.

A case in point is the banking sector — nearly 80 per cent of the banking assets are still controlled by public sector banks, which have in the recent years lost their glory due to their inability to recover the funds provided to some high profile and recalcitrant borrowers.

The ballooning non-performing loans situation have also compelled the government and the Reserve Bank of India to take urgent actions through enactment of Insolvency Code and empowering the central bank to refer cases of erring borrowers for insolvency proceedings.

Booming economy

Another interesting data point to show how the Indian economy has expanded in the last two decades is the direct tax receipts. In 1998-99, the country’s total direct tax collections stood at ₹44,600 crore. This progressively increased to ₹3,14,468 crore and is budgeted to touch ₹9,80,000 crore in 2017-18.

It is this surge in tax collections that has encouraged the Centre to share a larger 42 per cent of the central tax receipts with the State Governments.

While the taxpayer base has increased due to better tax administration and introduction of technology, what should be of worry to policymakers is that inequality has sharply increased in the recent years.

The story is even better (over the last two decades) in indirect tax receipts front with collections budgeted at ₹9,26,900 crore in 2017-18.

GST effect

The crucial outcome that would have a bearing on the economy is how Goods and Services Tax (GST) gets implemented in the coming months and whether it is revenue-augmentative to the States. Coupled with the effects of demonetisation, India is staring at a huge challenge that could pull down the growth levels or take it back to the much desired 9 per cent growth trajectory. Only time will tell which way the country will go on the GDP growth front.

1.2. India to be among top 3 economic powers in 10-15 yrs: John Chambers (Cisco)

PTI, Aug. 03, 2017

New Delhi: India will figure among the top three economic powers in the world over the next 10-15 years, riding on the strength of its democracy and partnerships, according to Cisco Chairman John Chambers. Chambers, who is also the Chairman of the newly-formed US-India Strategic Partnership Forum, predicted that India would turn out to be a role model for the world economies.

"You will not be a slow follower but a fast innovator.

You will be the model for the rest of the world...India will be the example for the rest of the world not as an emerging country but as a developed country that reinvents itself again and again," he said at discussion on India-US Commercial and Strategic relationship.

Chambers said if he were to bet on one nation for the future outside the US, his home country, "it would be India".

Asked where he saw India in the coming 10-15 years, especially given ongoing flagship reforms like Digital India, smart cities and Make in India, Chambers said "India would not only be one of the three top economic powers of the world" but grow with the strength of its democracy and partnerships.

He, however, cautioned that it was important to realise that one could get left behind very quickly in the dynamic hi-tech industry.

Stating that Prime Minister Narendra Modi's vision for digital India was a model for the world, he said there are similar digital trends in countries like France and Israel.

Chambers said that strategic partnership between India and the US needs to be seen beyond pure trade numbers and profits to include larger goals like meeting the needs of the economies, focusing on inclusion, fostering innovation and entrepreneurship and corporate responsibility.

Confessing that he was a "champion of India", Chambers lauded the role of Modi in shaping progressive policies and innovative ideas.

"My love for this country is no secret...I love the people of this country," said the high-profile tech czar.

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

2.1. New way to grow liver tissues outside human body (scientist of Indian descent)

BusinessLine, 22 Jul. 2017, TV JAYAN

A scientist of Indian descent spearheaded the effort

In a development that would make liver donations a passé in not-so-distant future, a team led by a scientist of Indian descent at the Massachusetts Institute of Technology (MIT), in US, has found a way to engineer complex liver tissues outside the human body.

While it may be too early to expect the technique of growing liver cells outside the body to be available in a hospital near you, it is a significant feat considering that the liver — just like the heart and kidney — one of the most complex organs to regenerate through tissue engineering.

Once it matures, the technique will not only help the patients who are waiting for a donor liver, but also those who suffer from chronic liver diseases, which otherwise do not qualify for conventional liver transplants. Such lab-bred liver tissues may benefit millions of people suffering from chronic liver diseases, including more critical cirrhosis and hepatitis.

Aiming at more transplants

“There are just not enough organs to go around. Our goal is that one day we could use this technology to increase the number of transplants that are done for patients, which right now is very limited,” said Sangeeta Bhatia, a professor of health sciences and technology at MIT, who led the study which appeared in the journal Science Translation Medicine on Wednesday.

Working closely with their compatriots from Rockefeller University and Boston University, Bhatia’s team developed a new way to grow human liver tissues by organising tiny subunits that contain three types of liver cells embedded into a biodegradable tissue scaffold, which is the size of a contact lens.

Subsequently, the researchers implanted the scaffold into the abdomen of a mice which had damaged liver, exploiting a technique that Bhatia’s lab developed in 2011. They had then shown that if these “seeds” of liver cells are implanted in the abdomen of a mouse with damaged liver, they would multiply by taking advantage of regenerative signals available from the surrounding environment.

Using this understanding, in the current study, the scientists implanted the scaffold into the abdomen of mice with dysfunctional livers. The signals from the surrounding environment not only stimulated the endothelial cells to form blood vessels, but also triggered the proliferation of hepatocytes (the cells that perform most of the liver’s critical functions). This led to a 50-fold expansion of the original tissue.

Scientists’ caution

The scientists, however, cautioned that these implants currently contain fewer than 1 million hepatocytes. A healthy human liver has about 100 billion hepatocytes. But the scientists hoped that at least 10 to 30 per cent of that number would be necessary to help most patients.

To boost their hepatocyte population, the researchers said they can take advantage of a key trait of liver cells. “The liver is one of the only organs that can regenerate, and it’s the mature cells that divide, without an intermediate stem cell. That’s extraordinary,” Bhatia said in a statement issued by MIT.

Regenerative signals

“The idea is that it’s the seed of an organ, and you organise it in a way that it can be responsive to these regenerative signals, but it’s a minimal unit of what you eventually want to end up with,” Bhatia said.

What is exciting, according to her, is that the architecture of the tissue that emerged looked a lot like the liver architecture in the human body.

2.2. The rising challenge of vector-borne diseases

Livemint, 19 Jul. 2017

To mount a successful offensive against malaria and other such diseases, India must learn the right lessons from its previous campaigns

It’s an old story, except that it only seems to get worse with every passing year. And so it is this year too. The monsoon season has resulted in a spike in vector-borne diseases across the country even as there has been an equally worrying increase in off-season incidents.

In New Delhi, which was the epicentre of a chikungunya outbreak last year and a dengue outbreak the year before, at least 50 new cases of malaria have been reported in the past week alone, taking the total number of cases since January to 225, according to the city’s municipal corporations. Across the country, in Kerala, there have been more than 10,300 new dengue infections and the disease has claimed 21 lives this year. Tamil Nadu has reported 4,400 cases, followed by Karnataka with more than 2,100 cases. Swine flu is also on the rise: More than 600 people have already died and another 12,460 people have been infected this year. In comparison, there were only 1,786 infections and 265 swine flu deaths all of last year.

Similarly, chikungunya, which reappeared in this country a little more than a decade ago, has shown no signs of abating. In just three years between 2014 and 2016, there has been a 300-400% increase in the incidence of chikungunya, according to data analysed by the Centre for Science and Environment (CSE).

Against this backdrop, the government last week released a national strategic plan for the elimination of malaria, and pledged to eradicate the vector-borne disease by 2027. This is a change from previous years, when the focus was on containing the disease, but achieving this lofty goal will depend on effective implementation and sustained commitment to the project. The government will also need to tackle the root causes of the problem, such as genetic changes in pathogens, insecticide and drug resistance, the challenges of poor urban planning.

Another area of concern is funding. Last year, the Central government released only 68% of budgeted funds under the national vector-borne disease control programme, and an even smaller percentage of that was actually utilized, according to the CSE’s State Of India’s Environment 2017. The lack of adequate healthcare workers who can carry out a prevention programme on a war footing is also a challenge. This includes not just field workers but also entomologists who can research all aspects of vector populations and recommend how these can be kept below the “critical mass”.

Finally, the prospects for vaccines against vector-borne diseases seem to be poor. In India, the International Centre for Genetic Engineering and Biotechnology has been working on a malaria vaccine for at least a decade but it is not ready for clinical trials yet. A dengue vaccine that is being used in about a dozen other countries is not yet allowed in India.

Fighting vector-borne diseases isn’t easy, least of all in a place like India that is a breeding ground for at least six major vector-borne diseases—malaria, dengue, chikungunya, filariasis, Japanese encephalitis and visceral leishmaniasis. As pathogens travel across continents and new strains continue to emerge, the fight against vector-borne diseases has, once again, become a global public health challenge.

From the 17th through the early 20th century, vector-borne diseases such as malaria, dengue, yellow fever, plague and typhus routinely wreak havoc on entire populations. And, according to Duane J. Gubler, an expert on tropical infectious diseases who headed the vector-borne infectious diseases division at the Center for Disease Control and Prevention in the US for 15 years, it was only after these diseases were brought under control, and in some cases eliminated, that public health could meaningfully improve,

However, as is evident today, those successes were short-lived. Since the 1970s, many of these diseases have resurfaced, with even greater intensity in recent decades. And while there are many different factors, local and global, that have contributed to the resurgence of each pathogen, Gubler lists two common factors that have impeded response strategies: 1) the diversion of financial support and subsequent loss of public health infrastructure, and 2) the reliance on quick-fix solutions such as insecticides and drugs.

In India, for example, the early success of the anti-malaria programme led to a certain amount of complacency. As P.K. Rajagopalan, a former director of the Vector Control Research Centre in Puducherry, writes, our health policy planners did not “foresee vector adaptation to chemical pressure”. A.P. Ray, the father of India’s relatively successful anti-malaria programme, “depended too much on the efficacy of DDT (dichloro-diphenyl-trichloroethane)” and assumed that “there would be no further need for entomologists in mosquito control work”—hence, researchers were moved to other tasks such as family planning, funds were diverted, and only a small field staff was engaged in DDT spraying. This, Rajagopalan argues, was a huge mistake: When malaria and other vector-borne diseases resurfaced, India was found unprepared. These are some important lessons from the past that India must keep in mind if it wants to mount a successful and sustained offensive against vector-borne diseases.

3.1. Lending to priority sector is good business, Mundra tells banks

BusinessLine, 17 Jul. 2017

Given the overexposure of the banking system to large corporates and the consequences thereof in the last few years, Reserve Bank of India Deputy Governor SS Mundra said lending to priority sector is good business for all the right and justifiable reasons.

“The excessive lending to corporate sector was the outcome of what I call “least input and maximum output” approach.

“With little effort one could create large credit volumes whereas creating similar volumes in the priority sector would have required commitment of larger resources in terms of branch staff and operating people,” he said.

Priority sector loans include those given by banks to segments such as agriculture, micro, small and medium enterprises, affordable housing, and renewable energy.

‘Noteworthy changes’

Speaking at a recent ‘Conference on credit flow to priority sector — policy and implementation’ held at the College of Agricultural Banking, Pune, the Deputy Governor pointed out that because of the regulatory dimension, focussing on smaller loans would become all the more necessary now.

“A couple of noteworthy changes have happened in the recent past — there is a revision of single and group borrower exposure limits and an overall ceiling on exposure of an entity to the banking system has been mandated.

“These developments would push the corporates to gradually shift to markets for meeting their funding requirements,” explained Mundra.

Apart from the bitter experience (of lending to corporates) of the past and the need for risk diversification, Mundra said banks should look at priority sector lending for better business opportunities due to the earning potential presented by the segment.

He referred to the fact that there has already been a conscious move by banks into the ‘retail’ segment from corporate.

‘Not productive’

“I am not suggesting that movement to retail is not okay, but from overall economic and credit perspective, retail loans are not productive loans in the hands of the borrower as they neither generate income nor they lead to further economic activities.

“On the contrary, loans to segments such as agriculture, small and micro enterprises do support economic activities, generate income and also surplus. Such borrowers then become worthy recipients of retail credit. That is the larger philosophy and reason for moving over to priority sector as a business case,” Mundra said.

Each credit extended by banks to priority sector can be a life-changing event and the priority sector credit as a whole can change the lives of a multitude of people of this country, he added.

SLBC to be revamped

The RBI is looking at revamping the entire structure of State Level Bankers’ Committee (SLBC). The committee is an inter-institutional forum for coordination and joint implementation of development programmes and policies by all the financial institutions in each State.

There are several agencies involved with priority sector activities of banks. Under the SLBC structure, district credit plan (DCP) is prepared and the lead bank offices operate at the district level.

The National Bank for Agriculture and Rural Development (Nabard) prepares the potential-linked credit plan (PLP), SLBC adopts it and then it is distributed amongst all banks.

“I have a suspicion that between the overall priority sector strategy and what happens at the SLBC and DCP levels, there may not necessarily be any logical linkage. In the RBI, we are looking at revamping the entire structure of SLBC and as such, some of these will undergo a change,” said Mundra.

3.2. Over 250 million LED bulbs distributed under UJALA scheme: EESL

PTI, Jul. 18, 2017

New Delhi: With the implementation of government's UJALA programme in Arunachal Pradesh, the world's largest non-subsidised LED bulb distribution programme is now being implemented across the country, EESL said today. Moreover, over 25 crore LED bulbs have been successfully distributed under the Unnat Jeevan by Affordable LEDs and Appliances for All (UJALA) programme, in addition to over 28 lakh LED tubelights and 10 lakh energy efficient fans, EESL said in a statement.

The programme is being implemented by Energy Efficiency Services Ltd (EESL), a joint venture of PSUs under the Power Ministry, in collaboration with various power distribution companies (discoms) in 29 states and seven Union Territories. "UJALA scheme is being implemented in each and every corner of India," EESL Managing Director Saurabh Kumar said. Post the implementation of GST, the 9-watt LED bulbs available under the UJALA scheme are priced at Rs 70 per unit across the country, while the 20-watt LED tubelights and the BEE 5-star rated energy efficient fans are priced at Rs 220 per unit and Rs 1,200 per unit respectively. Eligible consumers can purchase these appliances from the authorised EESL distribution centre nearest to their home.

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

4.1. IFC to invest up to US$ 6 billion on energy initiatives in India

Livemint, Jul. 19, 2017

Mumbai: International Finance Corporation (IFC), a member of the World Bank Group, said on Tuesday that it will invest up to $6 billion in the next five years on various sustainable and renewable energy programmes in India, of which 20% will go in building eco-friendly or green homes in the country, said a top company executive.

Jun Zhang, country head, IFC India said affordable and sustainable homes is a key part of the organization’s strategy in India.

In a press conference which announced the launch of an awareness programme on green homes along with Sustainable Housing Leadership Consortium (SHLC), a group of real estate firms which supports green homes, Zhang said IFC has invested around $2 billion on renewable energy and climate change programmes in India since 2005.

Formed in 2006, members of SHLC include Godrej Properties Ltd, Mahindra Lifespace Developers Ltd, Shapoorji Pallonji Real Estate, Tata Housing Development Company and VBHC Value Homes Pvt. Ltd. “We invest and advise housing finance companies, developers, and have also helped leading private-sector banks to issue green bonds to finance green homes. Through this first-of-its-kind multi-stakeholder consortium, we are trying to identify private-sector solutions for greener homes, “ he said.

IFC has already invested in affordable housing projects through partnerships with various leading real estate firms like Tata Housing Development Company Ltd and Shapoorji Pallonji Real Estate Ltd.

As part of the green home campaign launched on Tuesday, SHLC along with various other stake holders are working towards making 20% of India’s new homes eco-friendly by 2022. At present, around 2% of the existing homes are certified green buildings.

In a press statement, SHLC said it is collectively committed to making 100% of its new housing portfolio green, thus contributing 100 million sft of green housing by 2020.

Anita Arjundas, managing director, Mahindra Lifespace Developers Ltd, said there’s an incremental cost of 2-3% on making green buildings. However, the effort is to reduce the cost by as much as possible by through initiatives and by identifying technologies, she added.

Tata Housing Development’s managing director and chief executive officer Brotin Banerjee said the consortium would tie up with various industry bodies to spread awareness about green homes across the country. Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

4.2. Modi, Abe to kick off bullet train project in Sept

BusinessLine, 25 Jul. 2017, Nayanima Basu/Mamuni Das

The foundations for the much-touted Mumbai-Ahmedabad High Speed Rail (MAHSR) or bullet-train project using Japanese ‘Shinkansen’ technology is going to be laid during the visit of Japanese Prime Minister Shinzo Abe here in September 12-14.

Abe and Prime Minister Narendra Modi will be jointly inaugurating the project with the laying of foundation stone and a ground breaking ceremony. This is expected to take place in Ahmedabad or Gandhinagar (Gujarat), sources told BusinessLine.

The loan agreement may also be signed between both sides during the visit. This involves a commercial loan worth $12 billion, at a cost of 0.1 per cent, for a 50-year period including a 15-year moratorium, according to diplomatic sources.

“The project is finally going to take off after a lot of initial hiccups,” said an official, involved in the project.

For detail designing of the project, Japan has appointed a consortium of consultants led by Japan International Consultants for Transportation, Nippon Koie Group and Oriental Structures.

The joint feasibility study was done in 2015, and after that follow up studies were conducted to finalise standards and specifications for the project.

At present, there is just one Mumbai-Ahmedabad HSR project that is being planned. The decision was taken by Modi and Abe in December 2015 during the Japanese Prime Minister’s last visit here.

It was decided then that the construction of the 500-km bullet train link between Mumbai and Ahmedabad will begin in 2018-end and made operational by 2023.

Although the actual work on HSR is expected to begin next year, it will be inaugurated this year during Abe’s visit here for the India-Japan Annual Summit that takes place alternately in India and Japan.

India is keen to have joint ventures with Japanese firms that would lead to transfer of technology and manufacture certain components in India in line with the Make in India model, said sources.

India has also set up the National High Speed Rail Corporation Ltd, where a Managing Director has been appointed and other officials may also be appointed soon. The government plans to build HSR in Delhi, Kolkata and Chennai as well. The idea is to adopt the ‘Shinkansen’ technology, although it is more expensive compared to the Chinese technology, sources said.

During Prime Minister Modi’s visit to Japan in November last year, he had travelled in the Japanese bullet-train with Abe from Tokyo to Kobe. He had also visited a bullet-train manufacturing unit where Shinkansen bogies are made.

5.1. Demographics is India’s advantage”

BusinessLine, 26 Jul. 2017, Aarati Krishnan

Attracting the foreign portfolio money required to fund growth poses no challenge for India, given the many favourable tailwinds, says Sukumar Rajah, managing director and chief investment officer for Asian equity at Franklin Templeton Investments. Apart from being the lead portfolio manager of Franklin Templeton’s India-related funds, Rajah is responsible for overseeing regional and multi-country funds and investment processes at Asia. BusinessLine caught up with him on a recent India trip to get his views on the FPI perception of India, the languishing capex cycle, and much more.

Edited excerpts

India’s stock market valuation, at the Nifty price-earnings ratio of 25, looks expensive from a historical perspective. Is this a worry?

Profit margins in India are unusually depressed. Earnings growth in recent times has been challenged by a few factors. There are the write-offs in banks, which make up sizeable weights in the Indian benchmarks. There have been regulatory challenges in the pharma sector.

The IT sector, which was a big contributor to earnings, has gone into slowdown mode lately. Banking sector problems have also taken longer to resolve than we expected. These factors have delayed the recovery. But now we do see a meaningful recovery in some sectors, such as materials.

Eventually, bank write-offs will have to wind down. Therefore, earnings recovery will happen. In large-cap stocks, I don’t think valuation is much of an issue. The issue is primarily with mid and small-cap stocks where a lot of domestic liquidity has flowed in. Those pockets of over-valuation do need to correct.

What is the FPI perception on the achievements of this Government? Within India, the narrative is sharply divided.

The perception is that India’s long-term prospects are very good. There may be concerns in the short-term about valuations. From the market perspective, momentum in other emerging markets may be higher. But the majority view is that India is an attractive market for the long-term. Most FPIs also have a reasonable weight in India in their portfolios, relative to the benchmark. The problem really is that India’s weight in the global benchmarks is quite low. For higher allocations, this needs to improve. For that to happen, the free float of this market needs to expand.

The Government has cracked down on round-tripping of capital, renegotiated tax treaties and is a signatory to the anti-BEPS treaty. Will these actions impact foreign inflows?

I don’t see a challenge. The fact that the Current Account Deficit (CAD) has narrowed considerably means that India doesn’t require very high foreign flows at this juncture. If we did have a large opportunity for investment, the CAD would have widened sharply through the import of capital goods and so on.

The narrow CAD is partially a sign of weak demand, caused by the restructuring and rebalancing issues that we are facing. Once these are sorted out, investment demand will pick up. Globally, there is more money than available opportunities.

Lately, RBI has also adopted an inflation targeting framework with a 4-6 per cent range, mainly to ensure rupee stability. If the currency stabilises, the risk perception for India will come down. If risk perception falls, a reduction in cost of capital for the economy is inevitable. For India, finding foreign money to fund growth is not the problem.

You were one of the earliest investors in the Indian software sector, in the 1990s. Today there is a lot of despondency about whether the sector can sustain its growth rates.

There were certain levers that allowed the Indian software sector to grow at a high rate. The first lever was the trend of global IT services being increasingly outsourced to countries like India. India also rapidly gained market share within this pie. These two levers worked to deliver far higher growth rates for Indian software players, compared to the global growth in IT spending.

But now, India’s global share in key categories of IT spending is already high and the room to expand this is limited. This means that the growth in Indian IT companies has to converge towards the growth in global IT spends, which is in the single digits. Margins for Indian firms are under pressure too, because earlier they were competing with European or US-based firms and had a beneficial cost structure compared to them.

Now Indian software majors compete with each other, and global IT firms have set up shop here. Can they find new avenues to grow? It is possible. But it is not easy, given the manpower profile that they have worked with so far. The business has been built on bread-and-butter stuff, and to take on cutting edge tasks is quite different. Therefore, we (Franklin Templeton) are valuing these companies for much lower growth rates than we used to.

What are the macro trends in India that excite you as an equity investor?

Favourable demographics and the increasing size of the middle class population are the biggest drivers. When you have favourable tailwinds, it creates demand, income growth and higher savings. It is very difficult to fight demographics.

If you look at Japan, despite managing such a high standard of living, technological excellence and so on, they’re unable to grow the economy due to an ageing population.

India hasn’t fully capitalised on its demographic advantage in the last 10 or 20 years due to weak governance. Now, the governance framework is improving and we can get a higher benefit from demographics.

There’s a view that economic growth is not creating enough jobs. What is implication of this for consumption?

The perception seems to be that the Government should manufacture jobs. That’s not correct as such job creation cannot be sustainable. The Government should stick to improving governance. Job creation will automatically follow.

All available indicators tell us that governance is improving. My accountant was just telling me that all the interactions with the Income Tax department have moved online. That’s just one instance. I am quite confident that job creation will happen. There is a lag between governance improvements and job creation. It cannot happen overnight.

What are risks to this bull market? Typically, we focus on domestic factors but market crashes in India are often triggered by global events.

Global risks remain mainly geopolitical. The foreign policy of the US is a big a challenge. But that is getting contained lately with the EU and others taking a stance. A substantial weakening of the US economy is a risk too. But unless a big risk like a war manifests itself, we don’t really see a big correction like we saw in 2007-08 after the global financial crisis, when there was a synchronous decline in world markets.

Global equity markets are not all that overvalued. The bond markets are more frothy. People are over-invested in bonds and will face more challenges there. I am therefore positive about diversified global equity portfolios.

Emerging markets have underperformed in recent years and are therefore quite promising. China-related fears have abated a little too and a free fall appears unlikely.

5.2. India’s electric mobility plan to need ₹1.8-lakh-cr (~$28 bn) investments’

BusinessLine, 9 Aug. 2017

The shift to electric vehicles (EVs) will need an investment of ₹1.8 lakh crore in setting up charging stations and other infrastructure in the country, according to a report by Feedback Consulting.

To realise the EV mobility dream, the Centre should not follow the solar panels story by depending on China for batteries, it cautioned.

Policy makers must ensure that Make in India is seriously followed to enable electronics design and manufacturing to have a significant play, the report said.

“Various policies have been put in place to promote electric vehicle as a future mode of mobility. But there are hiccups as well,” says AM Devendranath, Vice-President, Feedback Consulting.

Compared with China, India’s electric vehicle sector is in the same stage that the solar industry was five years ago. Over the last five years, Chinese solar imports dealt a blow to the domestic panels manufacturing industry and the Make in India story was a non-starter in this space.

The Centre needs to ensure that the story does not get repeated in the EV space as there is every possibility that China will present a huge competition to the Indian Industry, the report highlighted.

There is a need for a strong policy framework to promote Indian manufacturing and support from the government to make Indian stakeholders move towards EV gradually.

Also, the government needs to help Indian auto ancillary industry move towards making EV components in India and a series of support initiatives will be required to develop products, testing infrastructure and also to reskill the huge workforce.

The government is urging power PSUs to take a lead in setting up the EV charging infrastructure in the country.

There is a need for more action on getting lithium manufacturing in India in a big way and not be a nation of assemblers with core imports from China. “This would need serious work in securing the raw materials for battery manufacturing,” Devendranath said.

The EV charging infrastructure would need large investments and this investment should be directed towards ‘Made in India’ chargers again as it will help in electronics manufacturing in a big way.

There will also be a need to set up a global technology centre in motors design and manufacturing space. Global firms should be encouraged to invest in India.

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

6.1. Agriculture: On the cusp of self-sufficiency

BusinessLine, 14 Aug. 2017, Vishwanath Kulkarni

Since Independence, India’s foodgrain production has registered an over a five-fold increase, to around 273 million tonnes in 2016-17. The country has largely attained self-sufficiency as it transformed itself from a status of ‘ship-to-mouth’ to an exporter over the past 70 years.

Despite this progress, the agriculture sector faces major challenges as yields stagnate amidst dwindling average size of landholdings and the vagaries of climate change.

The adoption of Green Revolution in the 1960s gave a major impetus to foodgrain production in the country, which then had largely depended on imports to feed the demand. The rise in irrigation cover, coupled with the adoption of improved and hybrid seeds, largely led to the increased foodgrain output.

The average yields of cereals such as rice and wheat have more than doubled since the 1970s, but are still lower than that of China or the US. The sluggish growth in yields of pulses and oilseeds still remain a concern. Cotton yields have more than doubled since 2001 with the introduction of genetically modified seeds.

The irrigation cover, which stood at around 18 per cent of the area in the early 1950s, has now inched up to over 50 per cent. Despite this, the dependency of Indian agriculture on the south-west monsoon is still high and the output is still vulnerable to any major fluctuations in the annual rainfall pattern.

The share of agriculture in the country’s gross domestic product, which stood at around 53 per cent in the early 1950s, has now come to around 15 per cent. Despite this dip, over half the population in rural India still depends on agriculture and allied sectors such as dairying and poultry among others for livelihoods.

The record food output notwithstanding, in recent years, the per capita net availability of foodgrains per day (including cereals and pulses) has been below 500 grams. As per provisional estimates for 2017, the per day per capita foodgrain availability is estimated at 485.4 grams. This is almost similar to the trend witnessed in the 1960s and 1970s. In 1961, the per day per capita food availability stood at 468.7 grams, while in 1971 it was at 468.8 grams.

The slower pace of growth in per day per capita food availability indicates a trend that production has barely kept pace with the growing population.

Though India has emerged as an exporter of food produce — mainly rice, cotton, fruits and vegetables — in recent years, the country still remains a net importer of edible oils as the oilseed production is still way below domestic demand. So is the case with pulses till recently, although production of legumes had shot up last year.

Cultivation costs

This apart, the rising cost of cultivation coupled with lack of remunerative prices has aggravated the agrarian distress and made farming unviable, at least for a large section of the small and medium farmers. Also, the issue of labour shortage and rising wages has driven Indian farmers to adopt mechanisation.

As farmers diversify from foodgrains to high-value crops such as fruits and vegetables, the adoption of technology is on the rise — be it in terms of hybrids and high-yielding varieties or the practices and techniques.

Going organic

Also, there is a renewed interest in the past few years in concepts such as organic farming. This apart, the forgotten grains such as millets — considered to be nutri-rich and which require less water to grow — seem to be finding favour among farmers as well as consumers. The demand for organic and nutri-rich foods is driving the trend.

The Economic Survey 2016-17 suggests that the response to the agrarian distress needs to be addressed by increasing productivity, mainly by increasing the coverage of water saving irrigation systems like micro irrigation systems and routing inputs through direct benefit transfer mode in a crop neutral manner.

“The controversies on the adoption of high yielding varieties and genetically modified seeds need to be resolved and extended to all crops, not just mustard,” the Survey said.

6.2. Consumer goods cos with a rural bias outdo urban peers

BusinessLine, 10, Aug. 2017, Priya Kansara

India’s rural economy, which suffered two back-to-back droughts (2014, 2015) and then the demonetisation shock in 2016, have either shown strong resilience or recovered smartly, if the performance of consumption-driven companies in the June 2017 quarter is anything to go by.

Maruti betters Tata Motors

According to data provided by Capitaline, companies that derive substantial part or relatively higher share of their business from rural areas have done better in Q1 than their peers who are urban focused. Also, companies that are more domestic market-focused have outperformed their export-oriented peers. The higher the share of domestic or rural markets, the better has been the performance.

For example, Maruti Suzuki has done better than Tata Motors while Hero MotoCorp has reported better financial performance than Bajaj Auto in Q1 within the automobile sector.

The same is the case with Escorts, which has done better than M&M. According to analysts, rural markets form 40 to 60 per cent of sales for Maruti, Hero MotoCorp and M&M while Escorts gets about 80 per cent of revenues from tractors (mainly rural-oriented).

Tata Motors derives a majority of its business from the Jaguar Land Rover (85 per cent of consolidated revenues) while the domestic/ standalone business is incurring losses.

Bajaj Auto derives substantial portion of its revenues from exports. The share of exports to its sales shot up to 46 per cent in Q1 from about 36 per cent in FY17. Rural markets form 40-50 per cent of the domestic business volumes.

HUL leads in FMCG

In the fast-moving consumer goods category, Hindustan Unilever’s financial performance has been superior to its peers (though smaller and into different categories) such as Godrej Consumer and Marico. Similarly, among paints companies, Kansai Nerolac and Berger Paints have reported better financial performance than Asian Paints.

An analyst from a mid-sized broking firm pointed that around 40 per cent of the India sales for consumer (including paints) companies come from rural or semi-urban markets. But the share of rural markets in the overall business would be relatively lesser for Godrej, Marico, Dabur and Asian Paints as they get 16-50 per cent of their business from overseas operations. Among the consumer durables industry, Whirlpool has done better than IFB Industries. An analyst from a brokerage-cum-NBFC said the share of rural/semi-urban sales of Whirlpool would be in the range of 25-30 per cent while it will be much lesser for IFB.

Among housing finance companies, firms such as Repco Home Finance and CanFin Homes which have relatively larger share of affordable housing (mainly the semi-urban kind) in total loans have bettered HDFC.

Motilal Oswal expects rural consumption to revive or recover further given the combination of positives such as normal monsoon, higher MSPs, farm loan waivers and higher government spending in rural areas. M&M, HUL, M&M Financial Services, Hero MotoCorp, Colgate-Palmolive, Crompton Greaves and

7.1. Flipkart’s big billion day, courtesy SoftBank

Livemint, 10 Aug.2017, Mihir Dalal and Anirban Sen

SoftBank invests $1.4 billion directly in Flipkart, buys shares worth $1.2-1.4 billion from investors to become the largest investor in the firm along with Tiger Global Management

Bengaluru: SoftBank Vision Fund has bought stake worth at least $2.6 billion in Flipkart Ltd, in a deal that provides a part exit to some of the e-commerce company’s investors, boosts the ability of India’s largest internet firm to take on arch-rival Amazon India, and gives SoftBank Group Corp. a piece of India’s most valuable start-up.

The latest round of funding takes Flipkart’s cash reserves to more than $4 billion. Flipkart didn’t disclose the amount, but SoftBank invested roughly $1.4 billion directly in Flipkart, three people familiar with the matter said on condition of anonymity.

SoftBank will also buy Flipkart shares wor th $1.2-1.4 billion from Tiger Global Management, Accel Partners, IDG Ventures and Flipkart co-founders Sachin Binsal and Binny Bansal, among others, the people cited above said.

Flipkart’s largest investor, Tiger Global, whose representative Kalyan Krishnamurthy is the company’s chief executive, will get a majority of the $1.2-1.4 billion from SoftBank, the people said.

Flipkart has now raised more than $6 billion in cash since starting out in 2007, by far the highest by any Indian start-up and among the highest by any start-up globally. Flipkart, which also owns fashion retailers Myntra and Jabong as well as mobile payments firm PhonePe and eBay’s India platform, had raised $1.4 billion from Tencent Holdings Ltd, eBay Inc. and Microsoft Corp. in April.

The SoftBank investment comes after Flipkart’s proposed takeover of Snapdeal, the Japanese investor’s portfolio company, collapsed last week.

“This is a monumental deal for Flipkart and India. Very few economies globally attract such overwhelming interest from top-tier investors. It is recognition of India’s unparalleled potential to become a leader in technology and e-commerce on a massive scale. SoftBank’s proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor,” Flipkart founders Binny Bansal and Sachin Bansal said in a joint statement.

The investment will likely make SoftBank the largest investor in Flipkart along with Tiger Global, whose influence on the company’s board will diminish. Both SoftBank and Tiger Global will end up owning 20-25% in Flipkart after the deal, the people cited above said.

Mint reported on 11 July that the SoftBank-Flipkart deal may see the return of Sachin Bansal and Binny Bansal to more prominent positions at Flipkart. While the company’s official position all along has been that the Bansals were always involved at the company, it has been clear to most people that starting January 2017, when Krishnamurthy was named CEO of Flipkart, he and Tiger Global have been in charge.

With SoftBank’s entry, Binny Bansal, in particular, as well as Sachin Bansal will play a more active role at Flipkart, the people cited above said. Flipkart also will end up with five strong voices on its board: SoftBank, Naspers-Tencent, Tiger Global, Accel and the Bansals. This is a break from the past when Tiger Global’s Lee Fixel, Flipkart’s godfather, was by far the most powerful voice on the company’s board since he first invested in Flipkart in November 2009.

For SoftBank, the deal with Flipkart represents a reversal in its India portfolio. Three months ago, its largest investment was Snapdeal. Now, the Snapdeal bet has proved to be a washout and SoftBank is the largest shareholder in two Snapdeal rivals, Flipkart and Paytm (One97 Communications Ltd). These two deals, which amount to more than $4 billion, have changed the dynamics of India’s Internet business and made the Japanese investor the most powerful and influential entity in the start-up ecosystem. In May, SoftBank, which is also the largest shareholder in cab hailing firm Ola, invested $1.4 billion in Paytm.

Already, some analysts and investors are saying that SoftBank may orchestrate a mega merger between Paytm and Flipkart at some point in the future.

“We want to support innovative companies that are clear winners in India because they are best positioned to leverage technology and help people lead better lives. As the pioneers in Indian e-commerce, Flipkart is doing that every day,” said Masayoshi Son, chairman and CEO of SoftBank Group Corp.

While expectations around the size of India’s e-commerce have significantly diminished from the heady estimates of 2015, it is still considered the last big e-commerce market left. Flipkart is the only local start-up that is seen as serious competition to Amazon India over the long term.

With its financing round in April and the latest SoftBank investment, Flipkart has settled the debate over its ability to take on Amazon. Its prospects have also lifted over the past nine months as it has seen a resurgence in sales.

Goldman Sachs served as financial adviser and Khaitan and Co. and Gunderson Dettmer Llp served as legal advisers to Flipkart in the SoftBank deal. Citi served as financial adviser and AZB and Partners served as legal adviser to the SoftBank Vision Fund.

7.2. Amazon India to expand grocery offering to more cities in coming months

Livemint, 28 Jul. 2017

New Delhi: Amazon India plans to aggressively invest in growing its grocery and food business, launch more categories and products and forge alliances with large offline grocery and supermarket chains as the online marketplace looks to beat arch-rival Flipkart, which is expected to launch its own grocery offering over the coming weeks.

In an interview, Amazon India’s consumables business head Saurabh Srivastava said the company would launch its grocery offering in more new cities over the coming months. Currently, Amazon’s grocery and pantry business is available in over 30 cities.

“We launched consumables in June 2013, but two years before that when we started working on building out the India business, it was very clear that we wanted FMCG to be a big part of Amazon India’s offerings from the very beginning,” said Srivastava, director of category management for Amazon India’s FMCG (fast-moving consumer goods) business.

“The growth of the (grocery) business has been very good so far—in terms of units, we are the largest category on the (Amazon India) platform, and in terms of growth, we are one of the fastest growing (businesses),” he added.

Amazon India recently got the government’s approval to retail food products in India, which potentially allows the e-commerce giant to create a full-fledged food retail business and sell food products through its wholly-owned unit in India. Amazon has proposed to invest at least $500 million for its food retail business in India—a proposal that has been approved by the Department of Industrial Policy and Promotion (DIPP).

According to an executive aware of Amazon India’s plans, the company may launch a new private label to delve deeper into the grocery business—much like BigBasket. Even arch-rival Flipkart, which is expected to launch its grocery business in the coming weeks, plans to launch a private label when it enters the segment. Srivastava declined to comment on whether Amazon would launch a private label for its grocery business, but said that the company would look to build out an end-to-end food retail business in India.

“The food ecosystem needs investment, technology and infrastructure—and since the government was interested in making sure that companies come in and invest in (building) that, we believe that there is value that we can add as a strong technology company,” said Srivastava.

Amazon first launched its grocery offering in February last year in Bengaluru through its Amazon Now mobile app, as part of a strategy to take on hyperlocal grocery delivery businesses such as Grofers. Since then, Amazon has tied up with retailers such as Big Bazaar, Reliance Fresh, Bharat Petroleum In and Out, Godrej Nature’s Basket and Food World, among others. Amazon also set up Kirana Now in 2015, wherein the firm partnered with local kirana (neighbourhood grocery) stores for delivery.

Large online marketplaces have so far struggled to successfully crack the grocery business, according to experts such as Harminder Sahni, founder and managing director of Wazir Advisors.

For instance, Flipkart was forced to shut its grocery app Nearby in February 2016, barely five months after it started testing the service. Digital payments unicorn Paytm also shut down its grocery service in 2015, citing poor demand.

“If you look at the past decade, most large supermarket and grocery chains have struggled to build out proper supply chains and create sustainable businesses. Having said that, Amazon is probably the best placed to succeed in this category. They have deep pockets and they’ve already made inroads through Amazon Now and programmes such as Prime,” said Sahni.

However, over the past two years, with the expansion and relative maturity of the e-commerce market in top-tier cities in India, large online marketplaces are betting that the grocery business is poised to take off in a big way.

“We think this category will mostly have value in top cities—it is an offering that customers in those cities would appreciate—that’s how we’ve looked at it,” said Srivastava. Amazon’s rapid foray into the grocery business over the past one-and-a-half years prompted Flipkart to also rethink its strategy on a business it had abandoned earlier.

According to at least two Flipkart executives who declined to be named, CEO Kalyan Krishnamurthy charted out a clear strategy in late 2016 to tap into the grocery segment and pushed company executives to roll out the business by the middle of 2017, not wanting to concede too much headway to Amazon India. “We have seen strong growth from tier-2 and tier-3 cities—in fact, a big chunk of our subscriptions is going to those cities,” said Srivastava. “Over the last 14-15 months, we have collected a lot of data and we know that customers need this category. So, we’ll keep adding more selection over the next few months.”

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

8.1. Himachal promoting organic farming in a big way

PTI, 31 Jul. 2017

Shimla: A Rs 321 crore project is under implementation in Himachal for diversification of agricultural activities under which the farmers are being motivated to adopt organic farming and grow cash crops, an official said. The project, being implemented in five districts of the State, has yielded good results and a large number of farmers have come forward to switch over to organic farming and go for off season cash crops cultivation as the state emerges as a front runner in organic farming, an official spokesman here said.

Nearly 22,000 hectare has been brought under organic farming and 40,000 farmers have got themselves registered under the scheme.

A target of bringing 2,000 hectare of additional land under organic farming has been set while 200 bio villages have already been set up in the state.

The state government has announced first, second and third prizes of Rs 3 lakh, Rs 2 lakh and Rs one lakh respectively for the progressive farmers adopting organic farming.

The scheme is being implemented in Kangra, Una, Bilaspur, Hamirpur and Mandi districts in collaboration with Japan International Co-operation Agency (JAICA).

So far, Rs 212 crore had been spent under the scheme and a provision of Rs 80 crore has been made for the current financial year.

Agriculture Development Society is a key player in implementing the scheme engaged in developing irrigation facilities, motivating farmers to adopt organic farming and producing cash crops.

Agriculture University Palampur has separately established Organic Farming Wing for giving direction and momentum to the campaign in the state.

The farmers of Shimla, Solan and Sirmour districts have already taken a lead in getting themselves registered for organic farming and taken up vegetable cultivation, supplementing the efforts of the state government to promote organic farming.

Consumption of chemicals is very low at 158 grams as against the average of 381 gms per hectare in the country and potential for expanding organic farming was very high, the spokesman added.

As Sericulture is an important component in promoting organic farming, the state government is giving special impetus to vermi-compost production in large scale and the farmers are being provided 50 per cent subsidy for installing vermi-compost unit and 1.50 lakh such units have been established in the state so far.

A target of setting up 20,000 more such units had been fixed to ensure adequate availability of vermi-compost to the farmers.

The state government has fixed the norms for maintaining quality of vermi-compost and for giving commercial dimension to this activity, commercial units of vermi-compost are being established in the state and five units for production of Bio fertilizers have been established so far.

Himachal Pradesh has received Krishi Karmanya Awards for two consecutive financial years in 2014-15 and 2015-16 for excellent enhancement in agriculture production.

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

8.2. Govt plans Rs 45,000 crore ($6,9 bn) investment in north-east states

Livemint, Aug. 04, 2017

New Delhi: India on Thursday sought Japan’s assistance in a slew of areas—tourism, skill development, food processing, infrastructure development as well as making buildings resistant to earthquake damage—in a bid to fast-track development in its north-east region.

Addressing the first Japan-India Coordination Forum for Development of the NorthEastern Region, Naveen Verma, secretary in the ministry for development of the north-eastern region, said India plans to spend Rs45,000 crore for the development in the region bordering China, Bhutan, Bangladesh and Myanmar.

“This is being spent in pockets. What we are looking at is the gaps, the gaps that are not being met either by the state plans or by our interventions,” Verma said, adding “that is an area where we can look at the scope of collaboration.”

Verma noted that India’s north-east had a lot of skilled manpower which “can certainly help boost the Japanese economy.”

Given that the north-eastern region has 3% of India’s population and 8% of area, “distances are such that we need lot of investment in infrastructure. That’s one area that we are looking at, one of the takeaways,” Verma said.

“Of course we are also in seismic zone V. So, lot of building technologies will be useful. In fact, look at natural calamities, the entire north-east is very vulnerable,” he said.

Given the north-eastern region’s strategic location, India has been keen to involve countries of South East Asia and East Asia in its development. Singapore, Thailand and South Korea besides Japan are some of the countries India has invited for investment and skill development in the region.

Given its un-demarcated border with China and China’s close ties with Pakistan, New Delhi has been wary of involving Beijing in the region’s development. China, on its part, claims almost all of Arunachal Pradesh as part of South Tibet—something India rejects.

India is currently engaged in a tense military standoff with China in Doklam region of Bhutan.

In his remarks, Japan’s ambassador to India Kenji Hiramatsu described Japan as a “a natural partner for the development of the north-east region.”

India’s “Act East strategy” and historical and cultural linkages between India and the East Asia were two reasons for forging close ties with Japan.

“The north-east region is located at the strategically and the economically important juncture between Japan and South East Asia as well as within between Bimstec (Bangladesh-India-Myanmar-Sri Lanka-Thailand-Economic Cooperation) countries. Therefore Japan-India have placed particular importance on the cooperation in north-east, which is clearly and repeatedly stated in the joint statements of our annual summit meetings,” Hiramatsu said.

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

9.1. North East-Agra transmission line (800 KV, DC) to be inaugurated soon

BusinessLine, 7 Aug. 2017, M. Ramesh

The North East-Agra transmission line, said to be the biggest power transmission line to be built in the country in terms of capacity, is to be inaugurated soon. This is means that cheap power from the hydro-rich North-East can now reach the central part of North India.

A spokesman of the government-owned Power Grid Corporation of India told BusinessLine that the line “is under testing and is likely to be commissioned shortly”. BusinessLine learns that the formal inauguration of the line might happen on September 1.

The multinational giant ABB, which has a big play in power transmission infrastructure globally and in India, has built the line for PGCIL.

When it is commissioned, the project will be fully operational – in September 2015, the first phase of the project Biswanathcharlie – Agra line went online, capable of carrying 1,500 MW across 1,728 km, from the Assamese town to Agra.

The leg that will be commissioned soon runs between Alipurduar, in northern West Bengal and Agra, completing the project, so that the full line can carry 8,000 MW, zipping through the lines at a voltage of 800,000 volts. (In contrast, the power that is supplied to homes is about 220 volts.) The project cost ₹12,000 crore.

Confirming the imminent commission of the line, Sanjeev Sharma, Managing Director and CEO, ABB India, told BusinessLine that the ‘Ultra high voltage direct current' technology that ABB has reduces the land footprint of the line to a third of a conventional (AC) line. Without this, it will be difficult for the line to have passed through the narrow ‘chicken's neck' – the Siliguri corridor.

“There is also a provision for reversal (of flow) of power from Agra to the North-East,” a September 2015 press release of ABB said.

The project, which one transmission expert described as “unique and a technological marvel”, because it takes power from two points, that is, Biswanathcharlie and Alipurduar, and dumps it in Agra.

The completion of the project is good news because it will enable better transmission of clean, hydro-power both from the North-East and Bhutan, to consumption centres in north India. Further, because of this line, more projects in the North-East could be planned.

According to the Ministry of Development of North Eastern Region, the seven far-eastern States have a hydroelectric potential of 60,000 MW, with Arunachal Pradesh alone accounting for 85 per cent of it.

Focus on South

This, incidentally, ABB's sixth HVDC transmission line project in India, and the company has begun work on the seventh — the Raigarh-Pugalur line — a ₹4,350-crore project that ABB won in January. The line, which runs a distance of 1,830 km between the points in Chhattisgarh and Tamil Nadu, is longer than the NE-Agra link, but is smaller in terms of transmission capacity. The 6,000-MW capacity line will serve 80 million people.

Importantly, the line will enable easier transmission of renewable energy from the southern States to elsewhere in the country.

ABB's Sharma said that a notable part of the project is that almost all the components, such as the transformers, gas-insulated substations, breakers and relay panels, are all fully made in ABB's factories in India.

9.2. Free electricity connections released to 2.63 crore BPL Households under DDUGJY; a total of 6,015 villages were electrified in 2016-17: Shri Piyush Goyal

Press Information Bureau, Jul. 21, 2017

New Delhi: Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines, Shri Piyush Goyal, in a written reply to a question in Lok Sabha today, informed the House that under Rural Electrification component of Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), 2.63 crore BPL Households have been electrified till 30.06.2017.

Free electricity connections released to BPL HHs under RE Component of DDUGJY

Answering to a separate question in Lok Sabha today, Shri Goyal also informed that as per information provided by the States, as on 30.06.2017, there are 3,618 un-electrified census villages left out of the total 18,452. He further added that a total of 6,015 villages were electrified in 2016-17. The details of villages electrified are as given below:

State-wise details of villages electrified during 2016-17

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

10.1. Agrarian crisis: the challenge of a small farmer economy

Livemint, 21 Jul. 2017, Sudipto Mundle

Government procurement at the minimum support price is supposed to protect the farmer. But it mainly benefits the large traders.

The rising frequency of farmers’ agitations in Tamil Nadu, Maharashtra, Madhya Pradesh and elsewhere and the high incidence of farmer’s suicides are symptoms of a deep malaise in rural India. But beyond scanning the morning headlines, urban India has barely noticed. So long as growth keeps chugging along at 6% plus and food prices remain stable, urban India doesn’t really care.

This complacency about the misfortunes of Bharat is quite dangerous. Agriculture is still the core of our food security. With over 1.3 billion mouths to feed, imports will not solve our problem if there is a severe drought and food shortage. Those old enough will recall the desperate years of 1964-65 and 1965-66. Moreover, though agriculture now accounts for less than 15% of gross domestic product (GDP), it is still the main source of livelihood for nearly half our population. It was, therefore, reassuring to see Nitin Gadkari candidly recognize in a recent TV interview that there is a crisis in Indian agriculture. But what are the roots of this crisis? And what is the way forward? I can only outline the answers to these critical questions in this short column.

The fundamental root of the agrarian crisis is the intense pressure of population on land. Demographic pressure has pushed down the land: man ratio to less than 0.2 hectares of cultivable land per head of rural population. It has also progressively pushed down the size structure of landholdings. Around 83% of rural households are either entirely landless or own less than 1 hectare of land. Another 14% own less than 3 hectares. At the opposite end, less than 0.25 of rural households own more than 10 hectares of land and a minuscule 0.01% own over 20 hectares.

So the story of the Indian farmer is really the story of this class of landless or marginal farmer households who account for well over 80% of rural households. Their burgeoning growth is the consequence of decades of land fragmentation as family plots are divided and passed on from one generation to the next, especially male children. Their tiny plots of land can no longer sustain whole families, especially in rain-fed agriculture, which accounts for two-thirds of India’s total cultivable area.

The second element of the crisis is the shortage of money. Landless or marginal farmers lack the resources to either buy or lease more land or invest in farm infrastructure—irrigation, power, farm machinery, etc.—to compensate for the scarcity of land. As land scarcity intensifies with population growth, farming progressively becomes a less viable source of livelihood.

The third element of the crisis is the barrage of risks to which a farmer is constantly exposed. The first risk is the weather. The large majority of small farmers are dependent on the rains. A weak monsoon or even a delayed monsoon—timing matters—means a significant loss of output. The next risk is weak soil fertility, pests and plant diseases. The third risk is price. Even a good harvest can be bad news for the small farmer, placing him at the mercy of the trader. The better the crop the lower would be the price. Net income sometimes collapses if there is a very good crop of perishables. The highly distorted and exploitative product market is the second most important factor responsible for the misery of the small farmer.

For foodgrains like rice and wheat, government procurement at the minimum support price is supposed to protect the farmer. But it mainly benefits the large traders who sell grain to the government. Small farmers typically do not have enough marketable surplus to justify the cost of transporting the crop to government corporations in the towns. Their crop is usually sold to traders at rock bottom post-harvest prices in the village itself or the nearest mandi. In the case of other crops, Agricultural Produce Market Committees (APMCs), which were supposed to protect the farmer, have had the opposite effect. Farmers have to sell their produce through auctions in regulated markets controlled by cartels of licensed traders, whose licences give them oligopolistic market power. These cartels fix low purchase prices, extract large commissions, delay payments, etc. Based on his research, Ashok Gulati, a former chairman of the Agricultural Prices Commission, claims that the farmers may typically get as little as 25% of the price that consumers finally pay. A consolidated mark-up of 300%.

Despite subsidies on power, fertilizers, etc., input costs have been rising faster than sale prices, further squeezing the meagre income of the small farmers and driving them into debt. About 52% of agricultural households are estimated to be in debt, and the average size of household debt is Rs47,000. If small farmers are subjected to any of the production or marketing shocks described above, it knocks the bottom out of their precarious existence. The household slides into a downward spiral of extreme distress, debt default and more distress. Ajay Dandekar and Sreedeep Bhattacharya have pointed out in a recent paper that there is a strong correlation between crop failure and the incidence of farmer suicides (Economic & Political Weekly, 27 May).

Not surprisingly the rural youth, especially young males, are migrating to the towns and cities for a better future. But their dreams are quickly shattered. There is not much employment growth anyway and they lack the skills required for a decent job. What remains is a burgeoning army of unemployed, miserable and frustrated young men. The frightening brutalization of our society, from the insanely cruel rape-murder of a young physiotherapy student in Delhi in 2012 to the inhuman lynching of minority or Dalit victims, feeds on this mass of misery and anger. The agrarian crisis is morphing into a social nightmare.

What is to be done? Increasing land scarcity and the marginalization of farmers cannot be easily reversed. But is there a different way of organizing agriculture to contain the adverse consequences of such marginalization? An idea that has gained much traction in recent days is cooperative farming. In a recent article, citing the Amul Dairy Cooperative in Gujarat, which was later replicated throughout the country, former chief economic adviser Ashok Lahiri discussed whether the same model could be applied for other agricultural products (‘Lessons from milk for agriculture’ , Business Standard, 5 July. The same day, in her acceptance speech for being appointed Officer in the Order of Agricultural Merit, a prestigious French award, economist Bina Agarwal spoke at length about the spread of voluntary cooperative farming systems not just in India but in several other countries. These include parts of France and Germany, Romania, Kyrgyzstan, Nicaragua, Kenya, and Bangladesh among others.

There are several variants of cooperation ranging from collective action in accessing credit, acquiring inputs and marketing to production cooperatives that also include land pooling; labour pooling; joint investment, joint water management and joint production. The advantages of aggregating small farms into larger, voluntary, cooperatives include greater capacity to undertake lumpy investment in irrigation and farm machinery, more efficient farming practices, greater bargaining power and better terms in the purchase or leasing of land, access to credit, purchase of inputs and the sale of produce. The cooperative approach also has its problems, such as internal conflict, free riding, etc., but farming communities have also found institutional solutions to these problems.

The conditions for success of such cooperative approaches that Agarwal has identified include voluntariness, cooperative units of small groups, relative socioeconomic homogeneity of cooperating households, transparent and participatory decision-making, checks and penalties against free riding, and group control over the fair distribution of returns.

In India, successful cooperative farming usually refers to sugar cooperatives in Maharashtra and, especially, the Amul milk cooperative in Gujarat. However, there are several more recent examples of successful cooperation in other states as well, especially Kerala and Andhra Pradesh. The Radhakrishna Committee Report on Credit Related Issues under the Swarnjayanti Gram Swarozgar Yojana, among others, has analysed in great detail the working of the highly successful Kudumbashree programme in Kerala and the Society for Elimination of Rural Poverty programme in Andhra Pradesh.

The key feature of both programmes is that they are women-led initiatives founded on a base of voluntary women’s self-help groups (SHGs). Both now have many hundreds of thousands of such SHGs at the sub-village level. These are aggregated through structures of democratic representation into higher-level associations. While both are closely linked to accessing credit, they have extended into many activities, including land pooling, organic agriculture, dairy, fishery, marketing and even non-farm activities such as insurance, auditing, entrepreneur incubation and training. While the state governments have played a key role in nurturing these programmes from the beginning, with assistance from multilateral agencies, an essential aspect of both institutions is that it is the SHGs, not the governments, which are in control.

The Radhakrishna Committee has noted the existence of similar embryonic initiatives in other states such as Tamil Nadu, Orissa, Uttar Pradesh and several states in the North-East, among others. It has emphasized the need for state governments to maintain a flexible approach, adjusted to ground conditions in each state, and the need for them to reach out to local voluntary institutions without seeking to control them if the SHG-based approach is to be successfully replicated in other states.

These are among the many lessons of successful cooperative farming in India and abroad that will have to be learned for the institutional transformation of our small farmer economy into cooperative farming systems on a national scale to address the agrarian crisis.

Sudipto Mundle is emeritus professor at the National Institute of Public Finance and Policy and was a member of the Fourteenth Finance Commission.

10.2. Ministry of Agriculture & Farmers Welfare releases Rs.16094.13 crore in the first quarter of 2017-18

Press Information Bureau, Aug. 04, 2017

New Delhi: Ministry of Agriculture & Farmers Welfare is continuously striving for holistic development of Indian Agriculture and its backbone - farmers. To achieve the goal of doubling of farmers’ income by 2022, the Ministry’s budget of Rs. 62125.02 crore during 2017-18 has increased by about 39% as against Rs. 44721.84 crore during 2016-17.

In the first quarter upto June, 2017, Rs.16094.13 crore has been released as against Rs.10498.90 crore during the quarter ending June, 2016. This works out to 53% increase in the amount released.

From the above, it can be seen that Ministry is making concerted efforts for development of agriculture and welfare of farmers in the country.

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

– INDUSTRY, MANUFACTURE

11.1. India smartphone market may see strong pick-up in Q3: JPMorgan

PTI, Aug. 08, 2017

New Delhi: A strong pick-up in smartphone market is expected in the third quarter of 2017 driven by improved sentiments and inventory build up before the upcoming festive season, according to a report by JP Morgan. The report estimated that demand was soft in the Indian smartphone market in the second quarter (April-June) 2017 compared to the year-ago period, given the lack of clarity around GST implementation that "postponed the usual inventory build". Also the demand was impacted on account of slower conversion of feature phone users to smartphone users.

"We believe that sentiment has improved in early July and the third quarter of 2017 should see a strong pick-up with inventory builds and preparation for the peak sell through season in late third quarter and early fourth quarter," the report on 'India smartphone market' said.

It added the July-September quarter could see 25-30 per cent sequential growth in smartphone units, implying a seven per cent year-on-year growth.

The report noted that smartphones accounted for 45 per cent of the total handsets in April-June quarter. It "may remain in the same range, affected in the short-term by the launch of the Rs 1500 (USD 23) Reliance Jio feature phone".

Last month, Mukesh Ambani-owned Reliance Jio had announced its new feature phone, offering life-long free voice calls bundled with 4G data streaming at an "effective price of zero". The phone, targeted at 50 crore feature phone users in the country, will be available for pre-booking from August 24 on payment of a refundable security deposit of Rs 1,500.

"This is likely to appeal heavily to current feature phone users, who are primarily on the 2G network. This may slow the migration from feature phone to smartphones for some users in the near term...," the JP Morgan report said.

However, as prices come down, the adoption should again pick up, the report added.

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

11.2. Domestic mobile manufacturing industry to touch Rs1.35 trillion ($20,6 bn) by FY20: report

Livemint, Aug. 03, 2017

New Delhi: India’s domestic mobile manufacturing industry is projected to touch Rs135,000 crore by FY2019-20, up from Rs94,000 crore in FY2016-17. Of this, the market size of domestic manufacturing of smartphones is expected to be Rs120,200 crore by FY2019-20, industry body Internet and Mobile Association of India (IAMAI) said in a report on Wednesday.

According to the report titled Indian Mobile Phone market: Emerging Opportunities for fulfilling India’s Digital Economy Dream, published jointly by IAMAI and Enixta Innovations, a start-up focusing on artificial intelligence, “In the backdrop of such strong growth potential for smartphone adoption, India is set to increase its domestic localisation rate from 6.1% in 2016 to 25.8% in 2019, which translates to Rs31,000 crore in value generated through local sourcing and assembly.”

The report also estimated that by 2020, about 96% of mobile phones to be sold in India will be locally manufactured. In 2016, two out of every three mobile phone sold in India were produced locally. The projections come in the wake of Reliance Jio Infocomm Ltd’s launch of JioPhone, which essentially is a feature phone but promises to disrupt the traditional handset market as it offers 4G services with the device. Other telecom companies such as Bharti Airtel are expected to follow suit wherein they will tie up with makers of feature phones to offer their services.

Launching the report, Dr. Ajay Kumar, additional secretary in the ministry of electronics and IT (MeitY) said, “25% to 30% of the global economy will be actually determined by the digital economy… The component roadmap is going to continuously enhance the value addition. The phase manufacturing programme initially had focused on mobile manufacturing. Now since component manufacturing is such an important part of it, we need to bring in representation from component manufacturers also. There is a taskforce which drives this phase manufacturing programme. Component manufacturers should be brought into this taskforce so that they can guide and bring their vision. We are working with industry in that regard.”

Kumar emphasized that India is the second largest smartphone market and phones are central to all plans for Digital India, which in turn will further expand the demand for mobile phones.

“All of these value addition leaves us with three major components for which we need to find some answers. These are the difficult ones and constitute significant part of the value: the touch panel, lithium ion battery, and chips,” Kumar added.

Responding to media, Kumar said that Apple Inc. is a big and important brand…discussion is still going on regarding its demands on tax breaks for manufacturing phones in India.

“Battery pack, non-electronic parts, accessories, packaging etc. have high local sourcing possibilities. Medium local sourcing possibilities for display or touchscreen and camera, while main electronic components seem to have low local sourcing capabilities,” the report said.

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

12.1. Britannia to build ~1,000 cr (~$150 million) plant in Maharashtra

Business Standard, Aug. 08, 2017

Kolkata: In the past 98 years of its history, biscuits major Britannia Industries Ltd (BIL) is coming up with its largest plant ever in Ranjangaon in Maharashtra where investment of Rs. 1,000 crore over a 2-year period will be made which will make the company less dependent on outsourced manufacturing of its products.

"We have already acquired 96 acres for this project and have applied to the government for another 48 acres", the company's managing director, Varun Berry said here after BIL's annual general meeting (AGM).

To be completed in the next 1-2 years in phases, the 0.12 million tonne (mt) annual capacity plant will initially have six production lines of biscuits, and one line each for cakes and croissants. At a later date, other product lines like rusks, flour mill and dairy products may be incorporated.

Commissioning of this project, the largest ever in the company's history, will increase BIL's annual production capacity to 1.22 mt which will help it reduce outsourcing.

During the course of the AGM, the company's chairman, Nusli N. Wadia, while responding to a shareholder's query said that out of the total production in the company, 45 per cent is outsourced and he plans to bring it down to 35 per cent in the short-term. Berry later confirmed that the comment was related to the commissioning of this new greenfield venture.

Berry reasoned that the nearby catchment area for this integrated food park, which includes Pune and Ahmednagar in Maharashtra produces the highest quantity of cow's milk in the country which can be easily fed to this Ranjangaon plant. BIL plans to manufacture 85 per cent of the total dairy produce from this plant once it is commissioned.

The company will also be undertaking a feasibility study for manufacturing specialised kind of flour which it requires for the upcoming cream-filled croissants range of products. Recently, it has entered into a joint venture agreement with Chipita S.A., a Greek company, for the manufacture and sale of ready-to-eat croissants.

"Every year, we will target to launch one new product and enter one new geography. The ambition is to become a total foods company", Berry said adding that he plans to set-up a Rs. 55 crore plant in Nepal in the current year to cater to that market.

Additionally, the company is also in the process of commissioning a greenfield plant each in Assam and the Mundra Special Economic Zone. The latter will cater exclusively to its export market.

This year, the company has lined up a Rs. 400 crore capital expenditure plan and has upped it's cost saving plan from the current Rs. 140 crore per annum to Rs. 250 crore this year.

Price increase likely

Berry maintained that the immediate effects of the Goods and Services Tax (GST) was neutral for the company and thus it didn't increase prices. However, in the coming days, the average price in the BIL portfolio is likely to shoot up by 2-3 per cent.

"We had increased our product prices in the year before the GST implementation and thus didn't need to increase it further. However, a 2-3 per cent price increase is likely", he said.

Under the new tax regime, biscuits attract a 18 per cent tax, packaged bread is taxed at 17 per cent while the tax rate for cheese is 12 per cent and for rusks, it is five per cent. "Wherever price benefits needed to be done, we have done that", he added.

To face the changeover, the company had started corrections in the distribution channels in the preceding months of GST implementation like increasing the credit period to its sales channels, restocking of products in 4.7 million outlets and other measures which helped it maintain an operating profit in the first quarter of the current fiscal year. However, like any other FMCG company, BIL is planning to increase the share of direct distribution by adding 40,000 outlets thi year. Currently, direct distribution accounts for 16 per cent.

Berry added that the company is considering consolidating its cream biscuits business this year which has a 35 per cent market share. In the past the company had consolidated other brands to merge with the 50:50 brand of salty biscuits.

"The plan is to have one large brand in each of the five categories", the company's vice president of marketing, Ali H. Shere said.

Tax benefit erosion marginally hits Q1 bottomline

BIL posted a six per cent growth in its topline at Rs. 2301 crore for the quarter ended June 31, 2017 although its net profit dipped marginally by 1.4 per cent at Rs. 216 crore.

In the corresponding months of the last fiscal year, BIL posted a Rs. 2162 crore net earning and a profit of Rs. 219 crore.

Berry reasoned that the dip in profit was the result of erosion of tax benefits to the company as it was able to sail through the undercurrents created in the consumer market on account of the switchover of the tax regime. On the BSE, The BIL scrip peaked by 4.96 per cent to close at Rs. 4107.35 apiece reaching a peak of Rs. 4214.50 per share at 12:18 P.M.

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

12.2. Baba Ramdev to launch Patanjali branded clothes

Livemint, Sounak Mitra, 3 Aug. 2017

Baba Ramdev’s Patanjali Ayurved is preparing to launch its ‘swadeshi’ line of branded clothes, including jeans, by April and has set a sales target of Rs5,000 crore for the first year

After food, medicines and cosmetics, the yoga guru-turned-tycoon who discovered the business potential of everything homegrown is ready to raid the next big consumer market: branded apparel.

Ramdev’s Patanjali Ayurved Ltd is preparing to launch its ‘swadeshi” line of clothes for men, women and children by April, his spokesperson S.K. Tijarawala said. The sales target for the first year: Rs5,000 crore.

“Patanjali will have different products in each category—value-for-money clothes for the masses and apparel that would have the snob value meant for the classes. We’ll start with woven clothes, knitwear and machine-made apparel, including denims,” said Tijarawala.

While Patanjali is working on a suitable brand name aligned with its ‘swadeshi’ agenda, ‘Paridhan’ (apparel) is one option, Tijarawala said, adding “we may have more than one brand”.

The apparel line will initially be made available across 250 exclusive retail outlets in April 2018, said Tijarawala. Besides the wide network of Patanjali stores, they will also be sold at other apparel retailing outlets across the country, including Kishore Biyani-led Future Group’s Big Bazaar. Patanjali, he said, may also look at selling them through retail outlets managed by state-run Khadi and Village Industries Commission (KVIC). There are 15,000 KVIC outlets across the country.

Patanjali already has a tie-up with Big Bazaar. In October 2015, Future Retail tied up with Patanjali to promote, distribute and market the latter’s products across its outlets in 243 cities.

Patanjali has already teamed up with a few hundred handloom weavers in northern India. In an interview to Mint in May 2015, Ramdev had said his company would work with handloom weavers to save them from distress and revive the khadi industry.

“Besides, we will have arrangements with apparel makers, and we will set up our own manufacturing units for making clothes,” said Tijarawala, declining to share investment details.

Patanjali is entering a market projected to grow over 9% every year till 2022 from about Rs2 trillion in 2012, according to a 2013 report by retail consulting firm Technopak.

“Extending brands beyond core is always challenging,” said Rajat Wahi, partner, management consulting at Deloitte India. “But the company has shown strong marketing acumen before and has its own fan following, which may be helpful,” he said.

Patanjali, which started off with ayurvedic medicines in 2006, makes a wide variety of packaged goods now, ranging from toothpastes and skin creams to biscuits and noodles. Every year, Ramdev has announced Patanjali’s entry into new business areas as part of his agenda to challenge what he calls the dominance of multinational companies in India.

Last month, it entered the private security business through a subsidiary, Parakram Suraksha Pvt. Ltd. The firm also said it may buy into infrastructure companies with stressed assets, Mint reported on 17 July.

Patanjali Ayurved reported sales of Rs10,561 crore in the year to 31 March, almost five times its 2014-15 sales of Rs2,006 crore. It aims to cross Rs20,000-25,000 crore in sales by 31 March 2018, Ramdev said on 4 May.

13.1. Indian Pharma exports to USA may go up in 2017-18: Report

PTI, Jul. 18, 2017

Hyderabad: Despite pricing pressure and stiff competition, the Indian Pharma exports to the USA may go up in 2017-18 as USD 50 billion worth of drugs are expected to become off-patented during the current year giving hope to boost export market, said a report by Care Ratings.

"The Indian pharmaceutical industry is likely to face competition from other countries to get ANDA (Abbreviated New Drug Application) approval. Apart from this, the Indian pharma companies will continue to witness pricing pressure in the US generics market due to consolidation of distribution channels and increase in competition.

"The pharma export volumes from India to US however are expected to rise. This will be backed by about USD 55 billion expected sales gain to generics drugs on account of branded drugs going off patent during 2017-19 which will create an opportunity for CRAMS segment. We expect growth rate for CRAMS (Contract Research and Manufacturing Services) to be higher compared to average growth rate of the industry. These factors are likely to support pharma exports from India," the Care report said.

The Indian Pharmaceuticals Industry (IPI) earns around 70 per cent of its revenues from sale of generic drugs and generates around 50 per cent of its revenues from exports.

IPI registered revenue of around USD 33 billion in 2016. Exports form a major part of the industry's turnover and over 50 per cent of the sales comes from exports.

Of the total exports of USD 16.8 billion during the year 2016-17, majority of the exports, accounting for 40.6 per cent were to the American continent followed by 19.7 per cent to Europe, 19.1 per cent to Africa and 18.8 per cent within Asia, the report said.

"The prime reasons for the weak exports were price erosion in the generic market in the USA due to consolidation among customers i.e. the distribution channels, increase in competition, absence of blockbuster drugs going off patent and regulatory issues faced by Indian pharma companies," it said.

In 2015-16, exports to USA surged by 27.8 per cent to USD 5.5 billion on a year-on-year basis. However, the export scenario to USA weakened and it grew by a marginal 1.3 per cent to USD 5.6 billion in 2016-17.

In 2016-17, the industry faced a slew of issues with increased scrutiny of regulatory authorities, increase in competition in generics market of one of its primary export destination, USA. This, in turn, resulted in marginal growth in exports to that country.

Also, stricter enforcement of Drug Price Control Order has impacted revenue growth rate of the industry in domestic market, the report said.

The report also said with implementation of GST, there will be no major change in the prices of medicines and there is an expectation that the government will continue to keep a check on the prices of controlled as well as non-controlled drugs. '

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

13.2. India needs to make select APIs (Active Pharmaceutical Ingredients), cost notwithstanding: Cipla chief

BusinessLine, 11 Aug. 2017, PT Jyothi Datta

The country needs to produce select Active Pharmaceutical Ingredients notwithstanding its cost, Cipla doyen YK Hamied said responding to a query on India's dependance on raw materials from China and how that would be affected given the present stand-off between the two countries.

The Government needs to gear itself up, he said, referring to public sectors drugmakers like Hindustan Antibiotics Ltd and the role they can play in producing medicines that are critical to the country. In fact, he pointed out, if India and China combine and stop raw material supplies, it would affect the whole world. Over 40 percent of the generic drugs consumed in America have their origin in India, Hamied told mediapersons after the company's shareholder meeting.

Back on home ground, he said there was uncertainty in the industry given the multiple laws that are being discussed by Government. Having been in the industry for 57 years, “I dont know why they (the Government) don't take us into confidence,” he said.

As for the Rs. 14,630 crore Cipla, he said, it was on the path of “strategic transformation”. The company was looking to “safeguard” its performance given the decline in active pharmaceutical ingredients and the tender-based business in AIDS and malaria drugs. Biotech, he said, would be “repositioned” to follow a broader licensing and partnership model.

Outlining details on the road ahead, Umang Vohra, Cipla Managing Director and Chief Executive said that Cipla would look to maximise its presence in core markets like India, the United States, South Africa and some emerging countries over the next two years. This period would also see research spends hover at about 8 percent of sales, he said, adding that a Rs. 800 crore investment would be made this year in capacity expansion.

Q1 performance

Cipla reported quarterly revenues of Rs. 3,525 crore for the three month period ended June 30, 2017, down three percent from total income of Rs. 3650 crore in the same period last year. The India business took a 13 percent hit at Rs. 1271 crore, due to GST implementation and channel destocking in its anticipation. The company was working with distribution channels to make products available, Vohra told shareholders.

Cipla's profit after tax for the quarter stood at Rs. 409 crores, up 21 percent from last year's performance in the corresponding period. “Despite the impact of GST on India business, we had a very healthy quarter from an operational perspective. The quarter saw EBITDA margins expanding to over 18 percent driven by strong focus on enhancing operational efficiency and control on spends,” Vohra said in a company statement.

14.1. TVS Motor ready for hybrid, EV ride

BusinessLine, 12 Aug. 2017

The company’s first hybrid two-wheeler, which will run on a combination of a petrol engine and an electric motor, is expected to hit the market by December while an electric vehicle will be rolled out by February or March 2018, said Venu Srinivasan, Chairman and Managing Director, on the sidelines of the company’s annual general meeting here. TVS Motor has been working on hybrid and electric technologies for several years now.

By 2020, a fifth of the two-wheeler market will comprise electric vehicles, Srinivasan forecast. “Lithium-ion batteries are still a challenge because of the availability. But the falling cost of batteries will favour adoption of hybrid and EVs,” he said.

Technologies that may result in batteries cheaper than lithium are also being developed, the TVS chief said. “We are working with multiple agencies and we will have to commit investments in multiple technologies.”

The lack of charging infrastructure is still a concern, but things are improving.

Srinivasan said that rapidly improving technology and the strong commitment by the government would propel hybrid and electric vehicles into the mainstream.

Q1 net up 7%

TVS Motor Company registered a 7 per cent rise in net profit, at ₹129 crore for the quarter ended June 30. Total revenue grew 19 per cent at ₹3,800 crore.

A provision of ₹16.50 crore towards additional discount offered to dealers for pre-GST stocks held on June 30, 2017 for selling vehicles at revised prices impacted the bottomline. There were pressures on raw material costs during the quarter, said SG Murali, Chief Financial Officer.

Due to GST implementation, the price reduction was in the range of ₹350 to ₹1,500 in the commuter segment, while in the premium segment, prices were reduced up to ₹4,150 depending on State-level taxes pre GST.

14.2. Let’s use disruptions as an avenue to do even better’

BusinessLine, 11 Aug. 2017, Murali Gopalan

Vinod Dasari breaks into a huge smile when I ask him if he is worried about the spate of disruptions happening lately. Be it demonetisation or the Goods and Service Tax, the system has seen a few shockers including, of course, the Supreme Court verdict in March on the Bharat Stage IV transition.

You would expect the Managing Director of Ashok Leyland to articulate his anxieties but he springs a surprise by insisting that this is the best thing that could have happened. “I keep telling my people and team here if we were making the same 10 models and selling 10,000 units month after month, life would be boring,” he says.

From Dasari’s point of view, there is so much uncertainty and disruption that this is where his team’s creativity and talent can come into play. “Let us use the disruptions as an avenue to do even better. I think this is the most exciting time,” he adds.

As he puts it, with Bharat Stage VI emission norms scheduled to be mandatory by April 2020, there is no telling what kind of vehicles Ashok Leyland will be producing 3-5 years from now. For instance, there could be a greater emphasis on electric options instead of internal combustion engines. Likewise, solutions could take precedence over products. “The game is going to change considerably,” says Dasari.

The Ashok Leyland chief is in Mumbai for the unveiling of four digital solutions under an umbrella called the Digital Market Place. “The underlying fact is that we are not doing digital for digital sake,” he reiterates.

In the commercial business, there are only two things which are important. “One, you must have a vehicle that performs better than somebody else’s,” says Dasari. “Two, you need to have a network to ensure that it continues to perform well.” By the end of the day, if the wheels are not rotating, it simply means that “you are not making money”.

Digital initiatives

It is in this context that Leyland’s latest digital initiative becomes an important part of the growth story. Even as the company has expanded its network to about 2,700 outlets across the country, nearly 60 per cent of vehicle servicing is done in local garages. The latest BS IV trucks have electronics and the challenge is to make the customer’s life easier.

This is where the four pillars of Digital Market Place come into play. The first, iAlert, lets customers track and trace their vehicles. The dashboard displays information on its health and if remedial measures are needed.

Should this be the case, he clicks a button, which goes to an app called Service Mandi where a whole bunch of trained and rated mechanics are on hand to help out. “You can be sitting anywhere and not worry about his expertise or if he is overcharging you,” says Dasari.

With the third pillar, e-Diagnostics, all vehicles now come with a Bluetooth attached, which helps the mechanic or driver resolve the problem through an easy-to-follow visual process. “The idea is to get the vehicle running as quickly as possible,” says the Leyland boss.

The last part of this digital drive is called LeyKart, which offers 24x7 availability of spares. All that needs to be done is to enter the vehicle registration number and select the relevant part. For this exercise, the company covered the entire spectrum right from the customer to mechanic to ensure that everything could be done from a mobile phone.

Customer first

The more important part of this initiative is the tremendous revenue potential on the aftermarket side. Yet, Dasari adds that Digital Market Place was not launched to grow the aftermarket or due to the fact that digital was the “hot thing”. “The idea was to first fix the customer’s problem where the top priority was to do something right,” he says.

This involved a marathon exercise where the competencies of nearly 20,000 mechanics were individually mapped. They were trained and their infrastructure reviewed before a star rating on their capabilities was assigned to each of them.

“This is the underlying work we did over the last six months to a year,” says Dasari. What was even more interesting that it was youth power at Leyland that led the way into making this a reality.

One of the main spurs for this exercise was the recent transition to BS IV, which naturally posed a fair degree of concern to fleet operators. After all, this meant added technology and this digital drive is expected to go a long way in easing customers’ woes.

“We will come up with more innovations for BS VI as in the case of BS IV and this include a host of innovations,” says a visibly excited Dasari. He believes that this is where Indian creativity and competence in the digital space could be leveraged to the hilt.

The Leyland chief is also of the view that some of his company’s technological initiatives like iEGR (intelligent exhaust gas recirculation) to meet BS IV norms cannot be flippantly dismissed as “Indian jugaad” given that it is serious hardcore innovation. “Rather than be proud of it, people tend to discard it as jugaad. Have some respect for Indian engineers, sometimes they are very creative,” says a tongue-in-cheek Dasari.

15.1. Maruti Suzuki order backlog swells to 1.5 lakh unit

BusinessLine, 29 July 2017, G Balachandar

Car market leader Maruti Suzuki India Ltd is sitting on an order backlog of about 1.5 lakh units for just three models alone -- Baleno, Vitara Brezza and new Dzire.

The three models continue to witness strong demand and the waiting period stands at 16 weeks for Baleno and new Dzire and 22 weeks for Brezza, the company management told the investors’ conference call.

While the demand for some of the existing models is robust, Maruti is also gearing up roll out a few new models during this fiscal. A new variant of S-Cross, a new Swift and a petrol version of Brezza are expected. It has already launched Baleno Rs. and a new Dzire.

At a time new model launches have dried up in the PV market, Maruti’s proposed introduction of new models will help it sustain the growth momentum and defend market share.

Market share

During Q1 of this fiscal, Maruti’s market share in the PV segment increased to 50.5 per cent when compared with 46.2 per cent in the year ago quarter. With robust volumes for Brezza, Maruti has achieved leadership position in utility vehicle market too.

Maruti’s Gujarat factory produced about 24,000 units during Q1 of this fiscal and it is expected to reach full capacity operation by the end of this fiscal. The production ramp up will ease company’s capacity constraints and may help drive higher sales of its popular models like Baleno and Vitara Brezza.

The company expects to add second production line at Gujarat and that is expected to be ready by early 2019.

During Q1, its Nexa outlets contributed 20 per cent to the total domestic sales. Share of first time buyers was 50 per cent of domestic sales in the first quarter when compared with about 44 per cent in Q4 of previous fiscal.

GST impact

On the impact of GST, the management said there was a slowdown in retail sales during first ten days of July. However, the demand has picked up now.

The company expects stronger volume growth in Q2 of this fiscal due to festive season and uptick in rural growth.

15.2. Honda's Karnataka plant is now company's biggest in the world for two-wheelers

Livemint, Aug. 03, 2017

Bengaluru: Honda Motorcycle & Scooter India Pvt Ltd (HMSI),a subsidiary of Japan’s Honda Motor Company Ltd, on Wednesday inaugurated the fourth assembly line in its Narsapura, Karnataka facility making the unit in Karnataka the biggest two-wheeler factory for the company.

The new line increases the production capacity of the Narsapura plant to 2.4 million units.

Honda said that the new assembly line in Narsapura takes its total investment in India to over Rs10,000 crore since 2001.

“The latest expansion further fortifies Honda’s ability to serve the market faster with its increased annual production capacity to 6.4 million units from all plants (in India),” Minoru Kato, president and chief executive of HMSI, said in a statement.

Honda’s confidence stems from its increasing market share in the segment with consistent double digit growth in domestic sales and exports.

In July, Honda two wheelers registered a 20% growth and gained 2% market share (total 28%) selling 544,508 units compared to 453,884 units in the corresponding period last year. The bulk of the sales (511, 939 units) were in the domestic market.

In the April-June quarter, Honda’s erstwhile Indian partner Hero MotoCorp, the market leader, sold 1.8 million units, up 6.15%, in the domestic market, staying ahead of Honda, which grew 19.4% during the quarter and sold 1.5 million units.

To be sure, Honda’s sales are driven by its scooters while Hero dominates the motorcycle market, which has slowed significantly largely due to tepid growth in the rural economy.

“In 2016-17, India alone contributed 28% to Honda’s global two-wheeler business and became the number 1 contributor. The growing Indian two-wheeler market is a top priority for Honda,” Shinji Aoyama, chief officer, regional operations (Asia &Oceania), Honda Motor Co said in a statement.

The company’s cumulative investment in the Narsapura plant since 2013 is Rs 2600 crore, HMSI said in the statement. The new assembly will create 7000 direct employment and 15000 indirect employment opportunities, it added.

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. Dial D for Disruption: RJio to launch free 4G feature phone

BusinessLine, 21 Jul.2017, Tanya Thomas/Rajesh Kurup

After disrupting the broadband space, Reliance Jio is all set to overwhelm the mobile phone market. The company on Friday said that it would launch a new 4G feature phone in September that would be sold for free. A buyer will have to deposit ₹1,500, which will be refunded if the phone is returned to the company after three years of use. The phone will, however, be locked down to work only on RJio’s 4G network.

Reliance Jio has built capacity to sell 5 million 4G feature phones a week starting September and has set a target of selling at least 260 million phones within 12 months of launch. There are about 500 million feature phone users in India today.

Currently, there are no feature phones in the market, which support 4G services, including voice telephony. Feature phones account for over 55 per cent of phones sold in India and up until now, these users could not enjoy fast 4G speeds.

The Jio phone boasts of front and back cameras and a 200mAh battery, NFC (near-field communication) capabilities, and comes pre-loaded with Jio apps. It runs on Jio’s own operating system, built on HTML5. While the phone has been developed in-house, the actual phones will be made by third-party equipment manufacturers like Foxconn and Flextronics.

The cheapest 4G phone available in the market costs ₹3,000. The new Jio phone practically puts a 4G phone in the hands of users for free. The phone is available for beta-testing from August 15 and for pre-booking from August 24.

The first units will be shipped out in September, Chairman Mukesh Ambani said at Reliance Industries’ annual shareholder meeting. “Because of Jio, India’s 4G coverage will be more than its 2G coverage,” Ambani said “The Jio phone will make the 2G feature phone obsolete.”

Rajan S Mathews, Director-General at the Cellular Operators Association of India (COAI), said. “This is a compelling offer and is beneficial to customers. At these price points, in the short term, incumbents are at the risk of losing customers.”

“The pressure is also now on handset manufacturers, with RJio planning to make about 5 million devices every week, which is difficult to match,” Mathews added.

In the 10 months since the launch of Jio’s 4G mobile services, over 125 million users have signed up. The new feature phone opens up the lower end of the market to RJio. However, this segment of the market has not taken well to previous efforts by operators to lock them to a particular network. The other challenge is that RJio’s tariff plan is higher than the average revenue per user (ARPU) for this segment.

The telecom industry’s current ARPU per month, an initial report by brokerage firm UBS said, is ₹120-130, to below to ₹100 for feature phone users. The cheapest Jio plan is higher than the current ARPU, albeit with data benefits. The cheapest network plan that a Jio feature phone user can buy, with free voice calls and 500 MB of data a day, is for ₹153 a month, ₹54 a week or ₹24 for a two-day plan.

Jaipal Singh, Senior Market Analyst, IDC India, said, “It will not be disruptive or a category killer. For most people in this segment, internet is not a priority; they may not even be aware of how to use the internet.”

But clearly Ambani is looking to a plan. He told shareholders that RIL will soon have over 10,000 Jio offices, in every city and tehsil in the country.

“These offices will service our sales channel partners and over 10 lakh physical retail outlets that sell Jio services. In addition, we will integrate with all major e-commerce platforms,” he said, laying out the new phone’s distribution plans.

16.2. RIL will aspire to be one among the top 50 companies in the world

BusinessLine, 21 Jul. 2017, Rajesh Kurup

Over the next decade, India has the potential to move from a $2.25 trillion to a $6 trillion economy: Mukesh Ambani

Reliance Industries Ltd (RIL), in the next 10 years, will aspire to become one of the top 50 companies in the world, its Chairman and Managing Director, Mukesh Ambani, said on Friday.

“India at 80 should aspire to become, and can certainly become, one of the three largest economies in the world. RIL at 50 will aspire to become, and will certainly become, one among the top 50 companies in the world,” Ambani said, addressing RIL’s 40th AGM, here today.

“My vision rests on the synergy between financial value creation and societal value creation, both aimed at ensuring and enhancing the prosperity and well-being of 1.3 billion Indians. On both counts, RIL’s strategy will closely align with the Indian dream of inclusive, all-round and accelerated development,” he added.

Over the next decade, India has the potential to move from a $2.25 trillion (Rs 150 lakh crore) economy to a $6 trillion (Rs 390 lakh crore) economy.

"This will have a multiplier effect on each of our existing and new businesses.''

“I am confident that RIL’s own growth over the next 10 years, and our contribution to the Indian economy will surpass what it has achieved in the past 40 years. Similarly, RIL’s overall societal value creation over the next 10 years will also be multiple times higher than in the past 40 years,” he said.

Explaining his vision, Ambani said that RIL has now become a future-ready business conglomerate in terms of globally competitive combination of people, processes and systems, business acumen, innovation and technology.

Reliance is ready to participate in the Fourth Industrial Revolution, which will bring about the most disruptive changes in the Indian and global economy in the coming decades.

17.1. India will need 2,100 planes in next 20 years: Boeing

PTI, Aug. 01, 2017

New Delhi: Boeing today said India will take deliveries of 2,100 new planes worth USD 290 billion in the next 20 years, calling it the "highest forecast" for the country.

India's share will account for more than 5.1 per cent of the total global demand of 41,030 aircraft, the American aeronautic giant said.

According to Boeing's Current Market Outlook released today, almost 85 per cent of these new planes in India are likely to be single-aisle with low-cost carriers operating more than 60 per cent of all flights.

"The increasing number of passengers combined with a strong exchange rate, low fuel prices and high load factors bode well for India's aviation market, especially the low-cost carriers," said Dinesh Keskar, senior vice-president, Asia Pacific and India Sales, Boeing Commercial Airplanes.

Keskar, however, warned that infrastructure could be a challenge for the country with airports in Mumbai being 'choked'.

This could be one of the factors why bigger planes could grow from current 15 per cent to 25 per cent of the total aircraft, he said.

Boeing said it will revise its projection next year depending on how the government's regional connectivity scheme (RCS) takes off.

The multinational aviation giant expects to benefit from RCS in years to come, when smaller 70-seat aircraft will be replaced by bigger ones such as Boeing's 737s, following an increase in traffic on these routes.

"RCS will allow opening of new routes, thus providing more connectivity. Over the next 4-5 years, the growth on those routes will make a Boeing 737 viable. We are very bullish that if it (RCS) works out, we will be one of the beneficiaries," Keskar said.

The passenger traffic in South Asia is expected to grow at a rate of 8 per cent, followed by China at 6.2 per cent.

The growth rate in the region is likely to be more than double that of Europe (3.7 per cent) and North America (3 per cent).

Boeing has already started the delivery of its 737 MAX 8 aircraft and will be delivering its first 737 MAX 9 next year.

It had also launched its 737 MAX 10 at Paris Air Show earlier this year.

In 2019, Boeing plans to launch 737 MAX 7, the smallest member of the MAX family, as well as 737 MAX 8-200 with 200 economy seats.

Boeing is also planning to replace its Boeing 757 by 2025 with a plane which will have 225-275 seats and will be able to fly approximately 5,000 nautical miles. It also promises to offer "twin aisle comfort for single aisle cost".

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

17.2. Boeing eyes India tie-ups for drones, digital technology

Livemint, 9 Aug. 2017, Tarun Shukla

Boeing International president Marc Allen said Boeing is casting its ‘anchor deep into India’ and more announcements are likely soon.

New Delhi: Boeing Co. is in talks with Indian companies to collaborate on drones, digital technology and aerospace services, a top company executive said.

The US-based aircraft maker is already making the fuselage of its Apache attack helicopters and floor beams for some of its planes in collaboration with the Tata group in India and has also invested in an engineering unit in Bengaluru.

Marc Allen, president of Boeing International, said Boeing is casting its “anchor deep into India” and more announcements are likely soon.

“You see that we are producing the structure for Apache (helicopters) but what’s ahead now will be the progression (of this),” he said in an interview on 1 August. “We have talked around a variety of possibilities whether it is autonomous systems or whether it is systems themselves on another platform. None of them are announced yet, so I am not going to make news... but there are a number of discussions ongoing, so that’s going to continue growing.”

Drones with artificial intelligence for autonomous functioning are able to do surveillance, track targets, and fire on targets, said Bharat Karnad, professor for national security studies at New Delhi-based Centre for Policy Research.

Boeing’s Insitu ScanEagle, for example, is a small, long-endurance, low-altitude unmanned aerial vehicle and is used for reconnaissance. The firm has also stepped up its research in autonomous systems. Boeing is also looking to work on digital technology and services out of India, Allen said.

Boeing has won contracts worth about $14 billion from India over the past few years including C17 Globemaster transport planes, Harpoon missiles, P-8 anti-submarine warfare jets, besides Apache and Chinook helicopters. In lieu of that, it has an offset obligation to source products and services worth about 30% of the value from India. “The bigger piece what should not be missed is the inflection point in the relationship between both countries,” said Allen, 44, who is also on the US-India Strategic Partnership Forum.

“It’s natural progression. If you (Boeing) looked at the market 10-15 years ago, as we started the earlier conversation after civil nuclear arrangement, it was just a matter of what do US companies have to sell to India? Today, that’s not the conversation. Today, the conversation is where can we partner together to create mutual benefit for India and the US, the US and India, and those efforts only advance with trust with shared capability and with real tangible projects to work on. All three of those are present now,” he said.

Boeing, he said, is already sourcing $1 billion worth of products annually from India.

“That scale is feeding the trust, it’s feeding the shared capabilities and now you have specific projects coming along—the two-engine fighter (F-18s) that is giving us the opportunity to build on that scale to reach a new framework and a new architecure,” he said. “So at this point, the easiest way to think about is (that) we are hitting an inflection point for bilateral trade security efforts between India the US and for industrial engagement.”

Boeing’s F-18, French Rafale, Swedish Saab Sea Gripen, Russian MiG-29K are contenders for a proposed $15 billion, 57 fighter aircraft purchase by the Indian Navy.

“Boeing has the single largest offset obligation among foreign vendors. Initially, there were some hiccups in implementation, but with the streamlining of the offset policy over the years, implementation is expected to be smooth,” said Laxman Kumar Behera, research fellow, Institute for Defence Studies and Analyses.

18.1. Google launches professional consulting services in India

BusinessLine, 16 Jul. 2017, Varun Aggarwal

Internet giant Google has quietly started rolling out its professional consulting services in India wherein it will work directly with large clients to offer IT-based consulting solutions.

“We have invested significantly into professional services in India. These are consulting services, change management services for the customers where we work with them to solve some of their most complex problems,” Mohit Pande, Country Head - India, Google Cloud, told BusinessLine.

With the professional services arm, Google will work with large clients directly to train their staff in technologies such as machine learning and artificial intelligence and help build applications on top of Google’s machine learning platforms.

Key market

Google sees India as a significant market for its cloud services, where it competes with Amazon Web Services, IBM Softlayer and Microsoft Azure. Google is so far the only big cloud provider which does not have a data centre in India, but plans to open one in Mumbai before this year-end.

“India assumes a lot of significance for us. It is a large market where public cloud is set for huge amount of growth. I also think because of the environment in India where internet services are getting better, data are getting cheaper,” Pande said.

Google has invested over $30 billion on its cloud platform in the last three years globally. This includes investments in setting up cloud data centres across the globe, one of which is set to come up in India.

Plans to set up lab

Given the growing importance of India, Google may also set up an Advanced Solutions Lab in India, which so far is only in Mountain View, California, Pande indicated. The lab will be an extension to Google’s Professional services in the country.

“Right now we have Advanced Solutions Lab only in Mountain View, California. But we soon intend to open it in multiple parts of the world as well. At Advanced Solutions Lab, we take customers who come with their core problems and in this lab we bring in our engineering and product teams and together help customers. We build solutions along with the customer to solve the problems,” Pande said.

Google, however, will continue to work with its partners such as TCS and Infosys to deploy its offerings. “We work with our partners for scale. But professional services are Google-led where it engages with the customer directly,” Pande said, adding that Google will not compete with Indian IT services players in any way.

“TCS and Infosys can continue to deliver (Google services) but many customers want to engage with us directly because there are skills that we bring in and areas that we are able to pool in with our engineers,” Pande added.

Google has a significant presence in India with its G-Suite services, which include Gmail, messaging and Google drive offerings for enterprises.

Cloud offerings

Google is now investing heavily in India for its cloud offerings, in particular its public cloud offering termed Google Cloud Platform wherein companies can rent compute and storage capacity from Google.

For this, the company is planning to double its headcount for the cloud business in India wherein it is hiring people in sales and marketing roles as well as engineers for professional consulting services.

18.2. Google trained over 500.000 people to digitally empower SMBs

PTI, Jul. 27, 2017

New Delhi: Google India today said it has trained over 5 lakh individuals under its 'Digital Unlocked' programme, which was launched to digitally empower small and medium businesses in the country. Google Vice President (India and South-East Asia) Rajan Anandan said while India has the world's second largest Internet userbase, only 32 per cent of the 51 million SMBs in the country have an online presence. "SMBs cite a lack of understanding of the benefits of digital technologies and technical skills as the essential reasons for being offline," he added. Anandan said the company has launched a number of initiatives to ensure that these enterprises and individuals can come online to maximise their business and potential, including programmes like Digital Unlocked and Internet Saathi

Hexaware unveils new business unit

IT firm Hexaware Technologies today launched its new Professional Services unit, which will be headed by Arun Ramchandrana Increased demand for digital transformation and technology services prompts Hexaware to create its new Professional Services unit, the company said in a statement. Ramchandran has been named as the Executive Vice President and Head of the Professional Services vertical, it added. "The Professional Services vertical will be an important growth driver for us for the next several years," Hexaware Technologies CEO and Executive Director R Srikrishna said.

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

18.3. IBM sets up first machine learning hub in India

PTI, Aug. 04, 2017

New Delhi: Tech giant IBM today said it has set up its first Machine Learning (ML) Hub in India in Bengaluru that will provide hands-on training in these new technology areas.

Organisations can visit the hub for hands-on training on ML and collaborate with IBM experts to build and deploy analytic models for a new generation of intelligent applications, IBM said in a statement. However, IBM did not disclose any investment details related to the new centre.

The new Hub is the latest addition to the tally of such centres. IBM gas ML Hubs operating in Toronto, San Jose, Beijing, and Boblingen, Germany.

"Through the Hubs, data professionals, business analysts and engineers work with IBM data science experts to understand and master the leading tools, technologies and techniques needed to visualise, analyse and interpret data," IBM said.

IBM also help companies build and test rapid, scalable prototypes for fast deployment of these models at the organisations, it added.

A Gartner report forecasts highest growth in India IT spending in software and IT services for 2017, which includes building new digital platforms with ML and artificial intelligence at the core.

"IBM Machine Learning hub reiterates our mission to partner and prepare enterprises for the cognitive era by unleashing the potential of machine learning," Gaurav Sharma, Vice President at IBM India Software Labs, said.

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

19.1. Microsoft may invest up to $100 mn in Ola parent

Livemint, 25 Jul. 2017, Mihir Dalal and Sayan Chakraborty

Microsoft’s investment in Ola parent ANI Technologies could see the firm switch to Microsoft’s Azure cloud services platform from Amazon Web Services (AWS)

Bengaluru: Microsoft Corp. could invest $50-100 million (Rs320-640 crore) for a small stake in ANI Technologies Pvt. Ltd, which runs Ola, in a deal that could see the ride-hailing service switch to Microsoft’s Azure cloud platform from Amazon Web Services (AWS), two people familiar with the matter said.

Microsoft chief executive Satya Nadella has been pushing Azure in India to grab market share from AWS and others.

In February, Microsoft announced a long-term cloud services deal with Flipkart Ltd; Microsoft later invested about $200 million of the $1.4 billion round raised by the online retailer.

ANI Technologies boss Bhavish Aggarwal. Ola, the third-most valuable start-up in the country, has been trying to raise fresh capital since June 2016. Photo: Bloomberg

Ola is in the middle of a fundraise. The home-grown online taxi firm, the third-most valuable start-up in the country, has been trying to raise fresh capital since June 2016. It has so far received Rs2,345 crore from SoftBank Group Corp. and others in the latest round and is in talks with investors to get more cash. Ola got a pre-money valuation of roughly $3-3.3 billion in the latest round, a sharp drop from the $4.5 billion valuation it commanded in September 2015. Pre-money refers to the valuation excluding the current round’s cash infusion.

“The talks with Ola are in very early stages. More than the money, it is more about Nadella’s vision of partnering with more and more large technology companies in India and establish Azure as service of preference. Microsoft is likely to invest in Ola but a term sheet is yet to be issued,” one of the two persons cited above said on condition of anonymity.

Ola needs massive amounts of capital as it is locked in a bruising battle with the local unit of Uber Technologies Inc., the world’s most valuable and deep-pocketed start-up. After it sold its Chinese business to Didi Chuxing in August, succeeding in India became one of the top priorities for Uber.

The talks with Ola are in very early stages. More than the money, it is more about Nadella’s vision of partnering with more and more large technology companies in India and establish Azure as service of preference (A person aware of the development)

Ola and Uber differ over who controls how much of the market. Uber claims it is bigger than Ola but executives and investors at Ola claim that Uber is less than half of Ola’s size. There is no conclusive way of checking either claim.

Uber India president Amit Jain said in an interview in September 2016 that Uber’s completed trips had risen from 1.6 million in January 2016 to 5.5 million at the end of August 2016.

Uber in the crosshairs as SoftBank helps rivals raise $9 billion

Ola reported a seven-fold jump in revenue to Rs758.23 crore in the year ended 31 March 2016, but losses nearly tripled to Rs2,313.7 crore because of heavy discounts to customers and spending on incentives to its drivers.

This month, the cab-hailing business was jolted by the kidnapping of an Ola rider by one of the drivers on its platform. A 29-year-old doctor in Delhi was kidnapped by an Ola driver and his accomplices on 6 July and held captive for nearly 14 days before the police found the victim, who was unhurt, in Uttar Pradesh and arrested four of the kidnappers.

The crime is seen as the biggest threat to the expansion of cab-hailing services in India since the rape of a woman Uber rider in December 2014 forced the company and Ola to be stricter about their driver verification processes, add an SOS button on their apps and generally pay more attention to passenger safety. The two companies will now have to implement more stringent processes while signing up new drivers, a move that is likely to hit sales growth.

19.2. Titan partners with Amazon to enter US watch market

Livemint, Aug. 09, 2017

Bengaluru: Titan Co. Ltd has partnered with Amazon.com Inc. to enter the US watch market, a departure from its typical strategy of entering new markets through the traditional brick-and-mortar retail route. The two companies will look at gradually expanding the scope of their collaboration to other markets too, possibly starting with the European Union and Japan.

Under the partnership, Amazon will sell Titan watches through its global selling programme that allows local merchants from India to sell in other countries. Apart from watches, the Bengaluru-based firm will also launch its range of Fastrack accessories and eventually look at adding other products from its portfolio. E-commerce is the fastest growing retail channel even for Titan, its watches and accessories chief executive officer S. Ravi Kant said at a press conference in Bengaluru on Tuesday.

“The US e-commerce market is a very mature market. I think the US watch industry is about $11-12 billion and the e-commerce contribution should be in the range of 15-20%,” he added.

Titan sells its watches in more than 30 countries, with a significant presence in the Middle East, and overall contribution from exports to sales is under 10%. E-commerce is growing very rapidly as a retail channel even in some countries where the company has had a presence for decades, the company said.

Titan has chosen 500 models from its eponymous watch brand and its Fastrack youth segment brand for Amazon in US, to be priced at $30-$300. Titan has not had any formal discussions yet with Amazon about the latter being the exclusive e-commerce partner for it in the US, Ravi Kant said.

Geopolitical conditions in the Middle East and currency fluctuations in a few of the Far East markets that Titan sells in, like Malaysia and Singapore, hit watch exports in 2016-17 according to the company’s annual report. Entering the US market is one way of mitigating that hit, Ravi Kant said in an interview on the sidelines of the event.

Titan’s watches and accessories business grew 2.7% annually in 2016-17 and earned Rs2,028 crore in revenue, the company said in its annual report.

“The global selling programme itself is getting a lot of momentum. We started this about two years ago with a few hundred sellers. Today we have more than 23,000 sellers listing 65 million products in ten different marketplaces,” said Gopal Pillai, director and general manager of seller services at Amazon.

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

20.1. Sagarmala project to boost GDP by 2 pc: Ocean Group

PTI, Jul. 20, 2017

New Delhi: Logistics solutions provider Global Ocean Group today said the government's ambitious Sagarmala project will add 2 per cent to the country's GDP.

The Sagarmala project, a progamme aimed at economic development of the country through port-led activities, will boost the GDP by 2 per cent, the company said in a statement.

Managing Director, Ocean Group, Brijesh Lohia said, "This project will boost economic activity near coastal locations and establish Coastal Economic Zones (CEZs)."

Kandla Port has been identified as a potential CEZ. The project will redevelop existing port infrastructure through upgrade in port handling equipment and extensive use of IT in improving monitoring and operations of port activity, he said.

The project is expected to enhance shipping and port handling capacity, the company said.

"India offers great potential for developing offshore renewable energy and government has accorded due priority to attract investment in this area. The power generated will feed the coastal activity and also contribute to the national grid," Lohia said.

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

20.2. Govt looks to attract 4 million cruise tourists in 5 yrs: Gadkari

PTI, Aug. 09, 2017

Mumbai: The government wants to increase the number of cruise tourists to 40 lakh in five years from last year's 1.80 lakh, Union minister Nitin Gadkari said today

Given the right impetus, the number of tourist ships visiting India can go up from the present 158 to about 955 per year, the ports and shipping minister said at a special event on cruise tourism here.

Gadkari said the revenue benefit will shoot up to Rs 35,500 crore in 2022 from the over Rs 700 crore last year. Speaking on the occasion, David Dingle, the chairman of Carnival UK, that controls 42 per cent of the global cruise tourism market, flagged a slew of concerns on taxation and port charges, which he said are higher by 50 per cent when compared to the developed world.

"Anything to do with cruising in this country must not attract any GST whatsoever. Not only it is about money, (but) in principle, the cruise industry would not come to a part of the world where it has to pay GST on the ticket price and on the sales made onboard. That does not happen," Dingle said.

"We need to think about it as an industry operating in international waters. The place of consumption is really important. The place of consumption is almost entirely on the high seas. And for that reason alone, GST should not apply," he said.

Calling for a withdrawal of the GST, Dingle said, "We would not bring our ships here in any significant numbers if cruising attracts any GST."

Speaking after Dingle, Gadkari said the ministry had not thought about GST, but assured that it will represent the case to the Ministry of Finance along with the Tourism Ministry.

It can be noted that the Shipping Ministry has already moved the GST Council, the highest decision making body under the recently introduced indirect tax regime, to exempt the cruise tourism sector from GST at par with other nations.

At present, cruise tourism is not taxed and the Shipping Ministry wants to keep it out of the GST regime in order to boost the industry.

"Major cruising nations like the UK, the US and Germany have zero rate domestic cruises. India should also have zero rating for cruise tourism as it is in nascent stage in the country and such steps will provide it a much-needed boost," it said in a proposal sent to the GST Council.

Dingle also flagged issues with income tax.

"We have to have the right to repatriate our profits through double tax treaties. And that means that domestic profits have to be repatriated to our fiscal bases through double tax treaties," he said, underlining that India is not yet so big a destination to host its own companies.

Dingle also said that while Mumbai Port Trust has reduced its tariffs, the transit charges are very high. Docking at a smaller port like Goa results in charges of up to Euro 50,000 as against Euro 15,000 for developed ports in the Mediterranean Sea, he said, adding, "port costs must reduce by 50 per cent to be competitive."

"The opportunity is enormous, you are doing a fabulous job, ports are on side. But let us also encourage your Finance Ministry here also to recognise the enormous economic benefits cruise industry can bring to this country and help us with those tax issues so we bring many ships to India," Dingle said.

Earlier, citing estimates presented by an international consultant which seem to have been used to fix the targets, Mumbai Port Trust Chairman Sanjay Bhatia had said the number of ships will go up to 955 from the present 158 ships.

The size of the vessels which call will also increase, with a single ship expected to carry 4,200 passengers as against the present 1,250.

Gadkari said 80 per cent of the traffic will be concentrated in Mumbai and announced that construction of a Rs 300-crore dedicated terminal will begin in 15 days. Each of the tourist will spend USD 100 per day while the ship is anchored in a city like Mumbai, Gadkari said, adding there will be enormous benefit to downstream sectors like hospitality, car rentals, and food and beverages.

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. Temasek Holdings to increase exposure to India, says Senior Managing Director

BusinessLine, 18 Jul. 2017

Temasek Holdings, Singapore’s State investment company, has invested around S$1 billion every year for the last five years in India and will continue to progressively increase its exposure, Ravi Lambah, Senior Managing Director & Joint Head, Temasek India, said.

The Indian market is a consumption play with themes such as increasing urbanisation, young population, growing middle-class and other related advantages that Temasek finds attractive and aligned with its own preferences, he said. He drew comfort from the ongoing implementation of reform measures such as GST, the crackdown on NPA problem, the relatively stable currency as well as improving macro numbers on fiscal deficit, current deficit and inflation. Financial services, telecom, media, technology, FMCG and healthcare sectors will continue to dominate the portfolio preferences, he said.

Room for opportunities

India accounts for about 5 per cent of the S$275-billion portfolio of Temasek worldwide. Asked about opportunities for investment, Ravi said Temasek held the view that we were headed into a lower growth world, but there were still opportunities in individual sectors which the institution would tap with a bottoms-up approach.

He said the fund would not hesitate to increase exposure in its existing investments if they met the desired criteria, since it was not fearful of concentration risk or constrained by it. As a long-term investor, the organisation was prepared to wait for suitable opportunities and take exposure accordingly, he said.

Asked whether Temasek would invest in infrastructure themes, Ravi pointed to investments in companies such as Singapore Airlines, Ascendas-Singbridge, Sembcorp Industries, and Singapore Telecommunications, among others, and said Temasek preferred to route its investments in these (infra) sectors through its portfolio companies.

21.2. India, Japan join hands for big infrastructure push in Northeast

Livemint, Utpal Bhaskar, 3 Aug. 2017

India-Japan forum, set up to focus on strategic infrastructure projects in the northeast, will hold its first meeting today

New Delhi: Japan has joined hands with India to aggressively develop infrastructure projects in India’s northeastern states.

As part of the strategy that is also being viewed as an attempt to contain China, an India-Japan Coordination Forum for Development of North East is being set up to focus on strategic projects such as connectivity and road network development, electricity and disaster management.

This new initiative, with representation from the northeastern states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, comes in the backdrop of Chinese troops making repeated incursions into Indian territory.

“The idea is to create a road map for attracting investments in the region which holds immense strategic importance for us,” said an Indian government official, requesting anonymity.

The first meeting of the forum will be held on Thursday at a time when Beijing has accused New Delhi of sending troops into its territory and obstructing the construction of a road. The issue has snowballed with either side refusing to vacate the area.

A Japanese embassy spokesperson confirmed the development. “Development of North East is a priority for India and a key to promote its Act East Policy. Japan has also placed a special emphasis on cooperation in North East for its geographical importance connecting India to South-East Asia and historical ties,” the spokesperson said in an emailed response.

Japan has been helping India with some of the infrastructure projects such as the Mumbai-Ahmedabad high-speed rail corridor or bullet train, which will be funded by Japan International Cooperation Agency.

Japan’s Prime Minister Shinzo Abe will visit India in September, when he is expected to attend the ground-breaking ceremony of the high-speed rail corridor.

“It is not a formal working group but a coordination forum to identify priority development areas of cooperation for development of NER (north-eastern region),” said a ministry of development of north-eastern region (DONER) spokesperson in an emailed response.

Thursday’s meeting will be chaired by DONER minister Jitendra Singh and attended by Japan’s ambassador to India Kenji Hiramatsu. The forum may have representation from India’s ministries of external affairs, road transport and highways, power and the department of economic affairs.

Queries emailed to the spokespersons of India’s ministries of external affairs, road transport and highways, power and finance on Tuesday remained unanswered.

“Priority areas obviously include infrastructure, disaster management and other natural priorities of NER like tourism, handicrafts and handlooms, water resources including fisheries, power, etc,” the DONER spokesperson added.

India and China have also sparred over hydropower projects in Arunachal Pradesh, a state that borders China and has the highest potential for hydropower generation in India.

Several multilateral lending agencies, including the World Bank, have been unwilling to fund projects in the so-called disputed border states in India’s northeast region—seen as sensitive as parts of the region are claimed by China.

Experts say that Japanese involvement in these projects may get expedited with the Dokalam incident acting as a trigger.

“India has been looking at alternative sources for investments in the region. Japan has been India’s partner for a long time and there is a certain degree of comfort. The current situation can help fast track the entire process. It will give a shot in the arm for India given that there is a sense of urgency now,” said Alka Acharya, professor in Chinese Studies at Jawaharlal Nehru University.

With an eye on China, India is working on a slew of road and bridge projects to improve connectivity with Bangladesh, Nepal and Myanmar. Also, India is pulling out all stops to expedite the South Asian Sub-Regional Economic Cooperation (SASEC) road connectivity programme in the backdrop of China’s ambitious One Belt One Road ( Obor) initiative aimed at connecting around 60 countries across Asia, Africa and Europe.

India has been critical of China’s Obor initiative, questioning China’s intentions in developing the China-Pakistan Economic Corridor, part of Obor, since it cuts through Gilgit and Baltistan areas of Pakistan-occupied Kashmir.

22.1. Exports need to grow at 26.5 % annually for India to grab 5% share of the world trade

BusinessLine, 12 Aug. 2017

Exports need to grow at 26.5 per cent annually for the next five years for India to reach a “respectable’’ 5 per cent share in world trade from the existing 1.7 per cent it has been stuck at since 2011, according to the second part of the Economic Survey for 2016-17.

This could be achieved only through reforms in trade policy by diversifying exports, rationalising tariffs and developing world class export infrastructure, it added.

Making a case for lowering average applied tariffs, the Survey stated that there is scope for reduction by selectively bringing down tariffs across many lines, while retaining higher tariffs for sensitive and important items.

On a bold note, it further proposed that bound tariffs (ceilings) committed to at the World Trade Organisation could be reduced which can help India to take a more pro-active role in multilateral and bilateral negotiations.

India’s negotiating team at the WTO, at present, is focussed on getting a fair deal in the area of agriculture subsidies and protecting sensitive items against import surges and has not shown any interest in negotiating tariff reduction.

Trade policy

Highlighting the importance of the forthcoming review of the country’s Foreign Trade Policy next month, the Survey said that the review exercise is particularly important in the light of recent international developments and special efforts are needed to not only review but accelerate India’s exports.

In a suggestion that the exporters might not treat with enthusiasm, the Survey proposed that some export promotion schemes could be phased out if tariffs are reduced to realised or near realised levels, while others could be streamlined as many duties have been subsumed under GST.

The duty drawback rates (refunds given to exports in lieu of input duties paid) can also be revised downwards and the revenue saved could be used for export marketing efforts.

To increase exports, the Survey made a case for a demand based export basket diversification rather than a mere supply based strategy. It also stressed that world class export infrastructure and logistics, especially port-related, need to be developed on a war-footing.

For greater States’ participation in exports, devolution of funds to States need to be linked with their export effort, it suggested.

Green shoots

On a positive note, the Survey said that some green shoots have started to appear on the trade horizon with world trade growth projected at 3.8 per cent and 3.9 per cent in 2017 and 2018, India’s exports continuing to be in positive territory for the fourth consecutive month in May and in double digits in April-May 2017. All external sector indicators like reserves cover for imports, external debt to GDP ratio, foreign exchange reserve cover for external debt and debt servicing ratio, too, are in the comfort zone.

It, however, cautioned that rising trade deficits on the domestic front and rising protectionist tendencies on the global front are things to watch in the short term.

On currency fluctuation, the Survey pointed out that while the rupee has been one of the most stable currencies among EMEs, the appreciation of the real effective exchange rate (REER) indicates that India’s exports have become slightly less competitive.

Lauding the government’s move to bring FDI in most sectors under automatic approval route, except a small negative list, the Survey said that it resulted in FDI equity inflow of $43.4 billion in 2016-17, which is not only an increase of 8 per cent over the previous year, but also the highest ever equity inflow.

22.2. L&T bags ₹3,375-cr order in Mauritius

BusinessLine, 2 Aug. 2017

Larsen & Toubro (L&T) has bagged a ₹3,375-crore order from Metro Express Ltd, a Mauritius state-owned company, to design and build an integrated light rail-based urban transit system in the island nation.

The project envisions 26-km metroline with 19 stations. Apart from stations, the scope of work for L&T includes construction of viaducts and bridges, track works, DC electric traction systems, ticketing and passenger information systems and integration and construction of depots.

The contract was signed on July 31, the company said in the statement. The project is scheduled to be completed in 48 months and will be fully funded through a Government of India grant and line of credit.

“The new light rail system will significantly transform the way Mauritius will commute in the future and will also bring in economic benefits along the route,” said SN Subrahmanyan, MD and CEO of L&T.

According to Rajeev Jyoti, CEO, Railways Strategic Business Unit at L&T, the company is currently building the Riyadh and Doha metros, apart from 17 others in India. “With this project we are looking forward to spreading our influence in Africa too,” he said, adding that it is L&T’s first project in Africa in the metro and railway sector.

Despite a 12 per cent growth in L&T’s domestic order book, its international orders fell 40 per cent on the backdrop of slowing investment cycle in the West Asian region, the key market for L&T outside India.

Jyoti said L&T is selective in terms of projects outside India. Clarity on financial closure is one of the main criteria for making a decision on new bids, he added. L&T is exploring Bangladesh and Sri Lanka among other markets, he said.

23.1. Assam’s Luxmi Tea to develop 4,500 hectare plantation in Rwanda

Livemint, 21 Jul. 2017, Arkamoy Dutta Majumdar

Capping three years of negotiations, Luxmi Tea has secured 438 hectares under lease from the Rwandan government. In a first for an Indian company, Assam’s Luxmi Tea Co. Pvt. Ltd has concluded a deal with the government of Rwanda to develop around 4,500 hectares (ha) of tea plantation jointly with local growers.

Capping three years of negotiations, Luxmi Tea has secured 438ha under lease from the Rwandan government. The company will support local growers with know-how to cultivate 4,000ha more, and buy their crop paying a 44% share of revenue, director Rudra Chatterjee said in an interview.

Companies such as McLeod Russel India Ltd and Jay Shree Tea and Industries Ltd have invested in African countries such as Rwanda and Uganda, but they bought into existing plantations and expanded them. This is the first time an India company is developing a plantation from scratch.

Rising costs, falling yield a threat to Indian tea firms: Rudra Chatterjee

Though a first for an Indian company anywhere in the world, this isn’t the first such project in Rwanda. A year ago, the Rwandan government struck a similar deal with consumer goods maker Unilever Plc. to develop two large plantations.

At the time of signing the deal in May last year, Unilever had said it would, over time, invest $40-50 million in the project, which would include a factory to process tea leaves. Luxmi Tea has budgeted for an investment of $25 million over eight years.

“This is a project for the long haul,” said Chatterjee. Production from Rwanda will be scaled up from 1 million kg to 8 million kg over 10-12 years, he added.

Like Unilever, Luxmi Tea, too, will set up a factory immediately.

Of the 4,500ha which is to be developed, around 400 ha is currently under cultivation.

The UK’s funding agency Department for International Development (DFID) is also investing in the project. It is providing a grant of £6.8 million to help small growers develop their plantations, according to Chatterjee.

The project appears to have “tremendous potential” in view of the quality of the crop that Rwanda is known to produce, said Krishan Katyal, chairman and managing director of J. Thomas and Co. Pvt. Ltd, India’s largest tea broker and consultancy. Rwanda produces the CTC (crush, tear, curl) variant, which derives its name from the process of production. It sells at a premium over tea produced by other African countries, added Katyal.

The plantations to be managed by Luxmi Tea are at an elevation of 7,000ft, which means the company will not have to deal with pests. The yield is going to be similar to that in Assam at around 2,500kg per ha per annum, according to Chatterjee. When fully scaled up, the plantations are to employ up to 10,000 people, he added.

“The key challenge is to manage the plantation, which is our core strength,” he said.

Founded 105 years ago, Luxmi Tea currently has 18 estates and produces 15 million kg of tea. It has estates in Assam, Tripura and Darjeeling, where it bought the Makaibari tea estate.

“My father found the soil and climatic conditions in Rwanda extremely favourable,” said Chatterjee, referring to Dipankar Chatterjee, chairman of the group.

Rwanda’s soil is volcanic with high carbon content. It rains all year round, which means there is no need for irrigation.

“Also, production by volume does not fluctuate from month to month, and cup quality is consistent all year round,” said Chatterjee.

24.1. Indian pharma team heading to St Petersburg to explore jt ventures

BusinessLine, 25 Jul. 2017, Amiti Sen

Responding to Russia’s call for collaboration in the pharmaceutical sector, India is planning to turn an exhibition for domestic drug producers in St Petersburg in September into a hunting ground for companies interested in joint ventures to tap the vast Russian market.

“We have asked the Pharmaceuticals Export Promotion Council of India (Pharmexcil) to identify companies interested in Russia and carry out a due diligence. Since there is already an exhibition planned for Indian drug companies in St Petersburg in September, if the due-diligence is done by that time, some of the companies interested in joint ventures can also travel with the delegation and explore possibilities,” a government official told BusinessLine.

The Commerce Ministry can then ask the Russian side form a delegation and the two sides can discuss and decide on the possibility of joint ventures, the official added.

The proposal of exploring joint ventures in the pharmaceutical sector was made recently during an Indo-Russian bilateral meeting by Boris Dubrovsky, Governor of the Chelyabinsk Region of the Russian Federation.

Seeking proposals from Indian companies, Dubrovsky pointed out the joint ventures in this region would be extremely beneficial for the Indian industry.

“In view of the importance of the CIS region in our Indian pharma exports, we request our members to inform us their views and interest in setting up joint ventures in this region to enable us to proceed further in this matter,” a recent communication from Pharmexcil to its members stated.

Pharmexcil — the council for promotion of pharmaceutical exports set up by the Commerce Ministry — followed the communication with a meeting with top Indian pharmaceutical companies ready to look at the possibility of investing in the Russian market.

“Indian pharmaceutical companies like Dr Reddy’s, Glenmark and Ranbaxy are already exporting to the Russian market. But joint ventures always help in increasing the market share as it raises the level of confidence of locals while buying products of foreign companies,” the official said.

Exports of pharmaceuticals from India to Russia have been steadily declining from $535.89 million in 2013-14 to $351.68 million in 2016-17 due to the country’s increasing tendency to give preference to local products and strict regulatory requirements.

“Joint ventures with Russian pharmaceutical companies will not only help Indian companies to increase their presence in the Russian market but also tap the potential of the Eurasian Economic Union, which include Belarus, Kazakhstan, Russia, Armenia and Kyrgyzstan,” the official added.

24.2. Indian pharma gets US FDA booster dose

Business Standard, Jul. 28, 2017

Mumbai: With Cadila Healthcare, Unichem Laboratories and Glenmark Pharmaceuticals getting the US drug regulator’s nod this week to launch one generic drug each, the tally of abbreviated new drug application (ANDA) approvals for Indian firms went up to 129 this year — a 45 per cent jump from 89 in the January-July period of last year.

An ANDA contains data which, when submitted to the US Food and Drug Administration (FDA), provide for the review and ultimate approval of a generic drug product.

The FDA raised regulatory concerns several times over the last three years, leading to import bans and the suspension of new drug approvals from certain facilities of Indian pharma companies. The regulator has now started granting approvals for new drugs from some of these units where concerns have been addressed. Experts also attribute the surge in number of approvals to the Trump administration's focus on reducing health care costs.

This month, Divi’s Laboratories became the fourth company to claim that it had redressed the FDA’s concerns. In February, Cadila Healthcare got the regulator’s clearance for its Moraiya plant in Gujarat after an inspection. The company plans to double its sales over the next three years to reach the $1-billion mark in the US from the current $553 million.

Also, in March, the FDA lifted its ban on India’s largest drug maker Sun Pharmaceutical's Mohali plant, paving the way for resumption of exports to the US. Hyderabad-based Dr Reddy’s Laboratories addressed the issues for its API (active pharmaceutical ingredient) plant at Miryalguda (Telangana) this year.

“While on the one hand the US FDA is putting pressure on companies to upgrade their facilities to its standard, on the other hand it has now become more efficient by providing faster approvals to new drugs,” said Jagdish Dore, managing director at Sidvim Lifesciences, a firm specialising in preparing Indian companies for FDA inspections.

There are still a large number of companies grappling with FDA concerns. While some of the facilities of Wockhardt, Ipca Laboratories, and Sun Pharmaceutical are still under import alert, some plants of Divi's Laboratories, Dr Reddy’s and Sun have received warning letters.

The FDA does not give new drug approvals from facilities that receive a warning letter. Though the new generic drug user fee amendments (GDUFA) that the FDA introduced in 2012 had promised to clear the backlog, applications were being cleared at a slower pace earlier.

“We have seen an increase in pace of drug approvals since last year after we complained to the FDA about delays,” said D G Shah, secretary general of the Indian Pharmaceutical Alliance.

“The FDA's recent move to expedite approval of generic drugs with limited competition will give further impetus to the process,” said Shah.

The higher number of approval for generic drugs is also coming at a time when the US government is working to bring down drug costs. May and June 2017 have seen the most generic drug approvals since the FDA began tallying its monthly approvals. It has also lent credence to FDA Commissioner Scott Gottlieb's pledge to speed approvals and lower drug costs.

“Higher number of new drugs approvals has increased earnings visibility for Indian pharma companies,” said Amey Chalke, analyst at HDFC Securities.

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

25.1. India's engineering exports to China rise 123% in June qtr

PTI, Jul. 31, 2017

New Delhi: India's exports of engineering goods to China saw a whopping 123 per cent growth at USD 629 million during April-June this fiscal, driven by an upsurge in shipments of non-ferrous metals, according to trade body EEPC India.

The country's shipments to China stood at USD 282 million in the April-June quarter of the previous fiscal. The rise assumes significance as India has a massive trade deficit with China, which mounted to USD 46.56 billion last year as Indian exports continued to decline while the bilateral trade marginally slowed down by 2.1 per cent to nearly USD 71 billion, data released earlier showed.

India's overall exports grew by 4.39 per cent to USD 23.56 billion in June, according to commerce ministry data.

Shipments in the first quarter of 2017-18 rose by 10.57 per cent to USD 72.21 billion while imports surged 32.78 per cent to USD 112.2 billion, leaving a trade deficit of USD 40 billion.

Shipments of engineering goods from India to China aggregated USD 234 million in June, against USD 94 million in the same month last year.

The sharp rise was on the back of a mammoth 971 per cent increase in the shipments of non-ferrous metals in June this year to USD 158 million from a mere USD 14.75 million in the same month last year, the analysis revealed. T S Bhasin, chairman of the Engineering Export Promotion Council (EEPC) of India, hopes that bilateral trade continues to flourish between the two neighbours.

For the April-June period, non-ferrous metals exports to China saw an increase of 344 per cent from USD 80 million last year to USD 355 million in the first quarter of the current fiscal.

"China is certainly a key trading partner for India. The two economies are among the fastest growing in the world and can complement each other. A pick up in the Chinese economy is also contributing to the rising consumption of the key metals," the EEPC India Chairman said.

China and South Korea were the leading importers of non-ferrous metals from India during April-June with 17 per cent and 14.6 per cent share respectively, Bhasin said.

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

25.2. Mumbai Metro contracts bagged by 7 companies

BusinessLine, 2 Aug. 2017, Ksenia Kondratieva

Bids for new EPC contracts for Mumbai Metro’s two elevated corridors — Metro Line 2B and Metro Line 4 — were opened here on Tuesday and seven out of ten infrastructure developers who submitted bids earlier this year have bagged contracts, industry sources said.

Four packages were up for bidding in the DN Nagar-Bandra-Mankhurd Metro-2B corridor and there were five packages of Wadala-Ghatkopar-Mulund-Thane-Kasarvadavali Metro Line-4 corridor.

Contract winners

Reliance Infrastructure and L&T bagged two packages each.

Reliance Infra participated in the bidding in joint venture with Italy-based Rizzani de Eccher S.p.A (RdE). According to knowledgeable sources, the contracts won by each company is in the range of ₹1,200-1,400 crore.

The remaining five packages were won by NCC Infra, Simplex Infrastructures, JMC Projects, TPL-CHEC (a joint venture between Tata Projects and China Harbour Engineering Company), and Mumbai-based J Kumar Infraprojects.

Tata Projects spokesperson confirmed that the joint venture won the Mumbai Metro Line-4 package CA12 for 6 km corridor from Kapurbawdi to Kasarvadavali with 6 elevated stations valued at around ₹675 crore. L&T and Reliance Infra did not officially confirm the developments.

Project cost

The Mumbai Metropolitan Region Development Authority (MMRDA) has estimated the total cost of Metro Line 2B at ₹10,980 crore and of Metro Line 4 at around ₹14,500 crore. The construction of the elevated viaduct and stations has to be completed within 30 months for both the corridors.

Metro Line 2B from DN Nagar to Mandala is 23.643-km-long elevated corridor with 22 stations that will connect Mumbai’s eastern and western suburbs.

It will provide access to Western Express Highway, Eastern Express Highway, Western and Central Railway lines, Mono Rail as well as Metro Line 1 and Line 2A, Line 4 and Line 3 (Colaba to SEEPZ), which is under construction.

Metro Line 4 from Wadala to Kasarvadavali is 32.32-km-long elevated corridor with 32 stations that will connect Eastern Express Roadway, Central Railway, Mono Rail, Metro Line 2B and the proposed Line 5 (Thane to Kalyan), Line 6 (Swami Samarth Nagar to Vikhroli) and Line 8 (Wadala to General Post Office).

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Sunday 20 August 2017

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– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

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– INDUSTRY, MANUFACTURE

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