AAPI: October 2017

LISBON, 20th October 2017

Index of this Newsletter

INDIA

INDIA & THE WORLD

21. Trump Administration views India as a leading power: Juster
22.1. India to supply over half of Asia’s workforce: report
23.1. Mahindra acquires tractor company in Turkey for Rs800 crore
23.2. Tata Steel forges merger with thyssenkrupp, secures a lifeline for European assets
24.1. Indian robot made in China steals the show at IT event
25.1. Led by Chinese, nearly 600 companies line up $85 billion investments in India
25.2. Indian energy firms move up in Platts Top 250 rankings

* * *

LISBON, 20th October 2017

NEWSLETTER, 20-X-2017

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1.1. A brave new India

Livemint, 10 Oct. 2017, Manas Chakravarty

The tentacles of the state are now reaching deep into the informal economy, thanks to structural economic reforms such as GST and demonetisation

The Narendra Modi government is ushering in a fundamental shift in the relations between the state and the informal economy. The tentacles of the state are now reaching deep into the informal sector.

The vast majority of Indian businesses are in the informal sector. The Sixth Economic Census found that 94.6% of non-agricultural establishments in the country employed five workers or less. Two-thirds of all non- agricultural businesses were what the census termed “own account establishments”, which means they didn’t hire any workers.

As the population grew and farms became subdivided into smaller and smaller fragments, agriculture became a losing proposition for most farmers, who were forced off the land to migrate to city slums, or they scratched out a precarious living by supplementing their income by wage labour or by setting up petty businesses, or they took their own lives. The huge informal sector is, for the most part, a vast sink of disguised unemployment, a reflection of the failure of the formal sector to create jobs for the masses. It is a symptom of the arrested development of Indian capitalism.

As capitalism develops, the informal sector is supposed to wither away. Its stubborn persistence is a scandal. The theory was that as the economy grows, the informal sector would shrink and people would find better and more productive employment in modern industry and services. Alas, reality for most latecomers to industrialization is a far cry from that rosy picture.

The postcolonial Indian state has always had an ambivalent relationship towards the informal sector. While the earlier reservations for small industries have been withdrawn, the state still helps through bank lending, interest subventions, the occasional farm loan waiver and the provision of welfare services and schemes such as the rural jobs guarantee programme. On the other hand, it views the sector as an outmoded relic and often attacks it through dispossession. But the dominant attitude has so far been benign neglect for small capitalists and malign neglect for workers. The government ignores the terrible work conditions in most informal enterprises, while turning a blind eye to widespread tax evasion. The Modi government is set to change all that—it isn’t bothered about work conditions, but wants to make petty capitalists pay their dues to the state.

The informal sector is linked in many ways to the formal segment of the economy. Many small firms do work that is contracted out by large companies. Some are suppliers to large units. Companies in the organized sector benefit from the low labour costs in the informal economy and from its flexibility. Small traders sell products manufactured by the formal sector. Informal enterprises have their own hierarchy and the bigger businessmen among them are by no means poor. Many of them have been able to accumulate substantial surpluses, as well as indulge in conspicuous consumption.

These businesses have been the worst hit by demonetisation and the goods and services tax (GST) and by the attempts to clean up real estate. While the demonetisation shock was one-off, GST with its self-policing mechanism and its clear audit trail is a big threat to these firms and traders.

It’s no wonder that they have been the most vocal protestors against the new tax. The real problem for them is not so much high tax rates or cumbersome procedures, but how to suddenly report profits that are in excess of last year’s declared revenues.

One consequence of the introduction of GST and some of the other measures to tackle black money will be increased market share for the corporate sector. Stockbrokers have been celebrating the opportunities opened up. A Citibank research report says: “The Indian government’s ongoing structural initiatives (and the GST rollout) will accelerate the transition toward the organized sector. Moves towards a less-cash economy, indirect tax changes through GST, direct tax compliance, e-commerce, and some progress on labour law reforms, among others, will prove disruptive to traditional structures in the medium term and result in accelerated formalization as well as economies of scale in the long term.” It’s no surprise that big business has backed these changes to the hilt.

A report by India Ratings says that small and medium units will be hit by GST due to their weak credit profile. While larger firms will benefit from a seamless national market and more rational warehousing, small businesses will see a rise in working capital requirements. But quite a few firms straddling the formal and informal economies will successfully migrate to the organized sector, albeit with some loss of surplus. This will include firms that act as suppliers to companies in the organized sector and many export units. Many small firms, however, could go belly-up, as their costs rise and they become uncompetitive.

These units have little capital, borrow at exorbitant rates, have no economies of scale and use obsolete technology. The Sixth Economic Census said that 78.2% of non-agricultural enterprises were self-financed. It would be a leap of faith to expect these firms to suddenly acquire the capital and the skills to compete in the formal sector.

A fallout of the attack on the informal economy will be a loss of jobs as some of the less nimble firms flounder. That could affect demand. Reports are already trickling in of job losses in small enterprises. These workers don’t have the skills to find employment in the formal sector. In any case, the capital-intensive formal sector has a dismal record in job creation and is increasingly hiring contract workers.

This victory of corporate capital is therefore likely to result in increasing distress for workers in the informal economy. If the distress is widespread enough, the government will remember it needs votes and it may use some of the increase in tax revenues it hopes to get to boost public works. Many will slip through the cracks, especially as some of the cracks may become gaping holes. But in the march towards a Brave New India, they are mere collateral damage.

Manas Chakravarty looks at trends and issues in the financial markets. Respond to this column at manas.c@livemint.com.

1.2. How deep is India’s economic mess?

Livemint, 28 Sep. 2017

The biggest analytical challenge right now—for policymakers and investors—is to separate the transient from the structural

The heads of two companies that are considered yardsticks of the broader economy have recently spoken out about the problems they are facing. Hindustan Unilever chief executive Sanjiv Mehta said in a presentation to investors that rural demand for its products has been weak because of the lingering effects of demonetization as well as the farm crisis. Larsen & Toubro group executive chairman Anil Naik said that private sector companies are not in a position to launch new projects because of the excess debt they have on their balance sheets.

Meanwhile, from within the ruling Bharatiya Janata Party, Subramanian Swamy has warned that the Indian economy could be heading for a crash, while Yashwant Sinha has written a scathing article on Union finance minister Arun Jaitley.

The narrative on the Indian economy has definitely taken on a darker hue ever since it was revealed that economic growth had unexpectedly slumped to 5.7% in the first quarter of the current fiscal year, the slowest pace of expansion in three years. The biggest analytical challenge right now—for policymakers and investors—is to separate the transient from the structural.

One part of the sharp slowdown in quarterly growth has been explained by the inventory destocking by companies before the implementation of the goods and services tax (GST) while another part has been ascribed to the technical problem of the deflators used by government statisticians to convert nominal output growth to real output growth.

Is a cyclical bounceback round the corner once the effects of these two transient factors go away? The sense we get from high-frequency data is mixed.

The manufacturing purchasing managers index (PMI) moved into expansion territory in August after the slump in July. The services PMI has been more sticky. There is some good news in high-frequency indicators such as cars, two-wheelers, tractors, air traffic and railway freight. The data for cement, coal and steel continues to be disappointing. Foreign trade offers a ray of hope. These high-frequency indicators suggest that economic growth in the second quarter could see some recovery from the disappointing levels of the first quarter.

Yet, that still leaves the question of whether India is in the midst of a broader economic slowdown. Remember that growth has been sequentially coming down for six quarters—from much before the Narendra Modi government decided to go in for demonetization in November 2016. Growth in gross value added has come down from 8.7% in the quarter ended March 2016 to 5.6% in the quarter ended June.

The new update released by the Asian Development Bank (ADB) this week offers some clues on the current state of the Indian business cycle. The multilateral lender has used statistical filters to measure cyclical fluctuations around the trend—and thus the time from the trough to peak of a business cycle. The Indian economy bottomed out in the third quarter of 2013, according to ADB. The subsequent upturn in the business cycle has lasted 14 quarters, higher than the average business cycle upturn of 12 quarters but lower than the maximum of 18 quarters.

The upshot: High-frequency data suggests that the Indian economy could see a small recovery in the second quarter of the current fiscal year while business cycle data shows that the cyclical expansion could be running out of steam.

There is also the related issue of whether potential growth—or the rate at which the Indian economy can expand without sending inflation too far away from target—has declined over the past few years. These are the technical questions that economists in the finance ministry, the Reserve Bank of India and the new economic advisory council will have to grapple with.

The Modi government has till now done well to secure macroeconomic stability as well as push through the unfinished reforms agenda that it inherited from the Manmohan Singh regime. The economic slowdown over the past six quarters as well as structural challenges like the banking crisis need the sort of clear economic thinking that this government has not believed in till now. The risk of an economic collapse seems far fetched, but an inability to deal with the ongoing slowdown could come back to bite the ruling party in the next national election.

1.3. Demonetisation’s blow to microfinance sector

Livemint, 10 Oct. 2017, Sarthak Gaurav and Pravin Mankar

Demonetisation has adversely affected the growth in clients, loans disbursed and repayment rates

How has the demonetisation of November 2016 affected the cash-driven microfinance sector? Anecdotal evidence and media reports from different parts of the country in the first few months following demonetisation indicated considerable problems with loan disbursement and repayment. However, as we near the first anniversary of the withdrawal of specified bank notes, evidence of the impact on the hitherto growing microfinance sector demands attention.

The Microfinance Institutions Network (MFIN) is an association of non-banking financial company microfinance institutions (NBFC-MFIs) that publishes a quarterly report called “Micrometer”—a rich source of data on several performance indicators of the country’s microfinance sector. We analysed data from several reports of MFIN, spanning five quarters over the period 1 January 2016 to 31 March 2017 . This covers three quarters before demonetisation and two after demonetisation (the quarter ended 31 December 2016 and 31 March 2017).

In terms of loan amount outstanding, while banks are the largest source of micro-credit (if one includes both direct lending and indirect lending through business correspondence channels), NBFC-MFIs come second. This is followed by small finance banks (SFBs), NBFCs, and non-profit MFIs.

Our analysis reveals severe negative impacts of demonetisation. The year-on-year growth of number of clients reached out registered a decrease of 2% over the previous quarter (pre-demonetisation period). The loan amount disbursed the three months ended 30 December 2016 decreased by 16% from a year earlier. The total number of loans disbursed fell by 26% in the quarter ended 30 December 2016 from the preceding three months. The average loan amount disbursed per account during the quarter stood at Rs20,981, lower than that in the preceding quarter (Rs21,469). In FY16-17, the average loan amount disbursed per account also reduced to Rs17,779 from Rs17,812 in the previous year. These trends suggest that the MFIs registered a decline in the number of clients, total loans disbursed, and average loan disbursed per account in the post- demonetisation period compared to three quarters in the pre-demonetisation period.

This is a clear indication of the reduction in outreach of microfinance as well as a potential decline in availability of credit to low-income households at a time when the prospects of the sector’s growth were high. Although we have not used data for the quarter ended 30 June, reported in the latest MFIN report, due to exclusion of eight SFBs that provide nearly 30% of micro-credit, there is a clear indication of stagnation of loan amount since the previous quarter and a growth slowdown in micro-lending.

Demonetisation has also affected the repayment rates drastically. In order to study trends in delinquency (a widely acceptable indicator of default risk), we looked at portfolio at risk (PAR) over 30 days, 90 days and 180 days. PAR>30 days is the total principal value outstanding of loans that have at least one payment more than 30 days overdue. Similarly, PAR>90 days and PAR>180 days pertains to principal value outstanding that have at least one payment more than 90 days and 180 days overdue, respectively.

As shown in the table, PAR > 30 days has spiked drastically across most of the states. Compared to the figures for March 31, 2016, Uttar Pradesh and Maharashtra registered an incredible increase of nearly 100 times as on 31st March, 2017. States such as Rajasthan, Tamil Nadu, West Bengal, Gujarat, Punjab, Madhya Pradesh and Karnataka experienced increases between 11% and 22% compared to the much lower pre- demonetisation levels. By 31 December, PAR>30 days had increased from a meagre 0.5% in the previous quarters to around 8%.

In contrast to the figures for FY15-16, when the PAR figures remained under 1%, such high figures suggest demonetisation has dealt a blow to the loan repayment culture in micro-lending. Even if we consider the latest findings for the quarter ended 30 June that have certain data limitations, the risk for microfinance portfolios continue to be high despite minor improvement in repayment rates. In findings not reported here, states such as Kerala, Odisha, Assam, Bihar and Jharkhand have experienced modest increase in PAR>30 days that has remained under 10%. In terms of PAR>90 days and PAR>180 days, there is a similar trend but the order of magnitude is not as high. To make matters worse, rumours about loan waivers are believed to have aggravated the worsening collections in several regions.

These findings are worrisome. In contrast to the 2010 Andhra Pradesh crisis that began as a localized event and whose genesis went to a few years before the widespread crisis hit, the current crisis is a macro-political risk with stark unintended consequences for the sector that was showing signs of recovery from the 2010 crisis.

If MFIs, particularly the smaller MFIs, continue to experience worsening repayment rates and defaults, their sustainability is questionable. Bearing in mind the importance of microfinance for financial inclusion and livelihoods of a client-base of around 40 million, demonetisation has dealt a severe blow to the microfinance sector in more ways than one. It has considerably damaged the repayment behaviour and credit discipline that is central to the success of the microfinance model. Even if there is recovery in sight in the coming quarters, our findings highlight the tremendous stress that the sector has borne following demonetisation.

Sarthak Gaurav and Pravin Mankar are, respectively, assistant professor at SJMSOM, IIT, Bombay, and head of dMatrix Development Foundation, Wardha.

2.1. What ails India’s public healthcare?

Livemint, 2 Oct. 2017, Narayan Ramachandran

All at once, India’s healthcare suffers from quality, quantity, footprint, access and affordability issues

The current state of India’s healthcare is like a scene from Shakespeare’s Hamlet where Marcellus famously says, “something is rotten in the State of Denmark”, to which Horacio’s replies “then we should let God take care of it”. Both the rotten state and the apathetic and unimaginative response are symptomatic of the disease that ails India’s healthcare system.

All at once India’s healthcare suffers from quality, quantity, footprint, access and affordability issues. Any one or two of these alone would bewitch most countries—suffering all of them simultaneously is proving to be near fatal.

First, the quantity problem. The World Health Organization estimates that India spent about $267 per capita on health care in PPP adjusted terms in 2014—China spent three times that amount, Brazil five times, European nations 10 times and the US 20 times. In aggregate, India spends only about 1.5% of gross domestic product (GDP) on public healthcare. Most countries spend two or more times that number. This allocation is a fundamental problem that impacts infrastructure, supply of critical equipment and consumables (including syringes, oxygen, etc.), the number of hospitals and the retained staff of doctors, specialists, nurses and assistants.

Second, the quality issue. India suffers from an acute shortage of secondary and tertiary hospitals, a significant shortfall in specialists and specialized equipment, and a rigid regulatory framework combined with corrupt enforcement. All of this leads to appalling quality for the medical system in the country. Add to this a hopelessly inadequate feeder system from preventive health to primary care to secondary and tertiary referral and you have the makings of system that is so completely broken that it may not be fixable without a zero- base approach.

The NITI Aayog has taken the bold step of proposing a complete “repeal and replace” of the Medical Council of India (MCI) which is currently in charge of medical education and medical professionals in the country. It has come to this pass because according to a recent Brookings report the MCI has been a bribe-taking organization for accreditation of medical colleges. It has also used its authority to require that doctors without specialized degrees cannot perform the most routine of procedures like caesarean section or ultrasounds. Combine this with an acute shortage of post-graduate seats for medical education and you have an absurd situation where MBBS doctors are not allowed to legally treat many of the leading causes of death in India. Access and affordability issues add to a rather poor prognosis for the health system. Primary health centres (PHC) in villages are supposed to feed medical cases that require treatment to specialist hospitals in districts and further on to state-level specialist hospitals. PHCs are not present in many villages (about 1 for every 20 villages), and where present so severely undermanned that the “access” system is broken at the first mile. This lack of footprint impacts not only the filtering of patients but also deeply impacts prevention and early detection. A prevention and early detection system is a must if costs of the whole system for the country are to be contained.

The government has been taking some steps—such as increasing the number of drugs under price control. With an increasing footprint for equipment and drugs under price control it is only a matter of time before procedures and protocols also fall under this umbrella. While price control appears to be a solution in the short-term it is rarely a good solution in the long-term because it keeps professional profit motivated players out and encourages participants to cheat and creates incentives for the well-to-do to use illegal methods to get around it. While framework adjustments like requiring the prescription of generics (India is the generics capital of the world after all) make sense, outright price control of the type now mandated for stents is poor policy. The three biggest problems to address are 1) the acute shortage of medical professionals, 2) the hopelessly inadequate medical filtering and referral system and 3) who will pay and how they will pay for medical access. The National Eligibility cum Entrance Test (NEET) combined with a new medical commission is meant to address the first issue but the proposal from NITI Aayog does not go far enough in viewing the medical system in a holistic sense and addressing the entire chain from education and prevention to secondary and tertiary medical care.

There are four basic models of payment for healthcare: the Beveridge model that is modelled on the general tax payer payment system of the British National Health Service, the Bismarck Model of socially funded insurance schemes, a nationally funded health insurance system and an out of pocket model. While there are elements of three of the four systems present in India (except national health insurance), the coverage is extremely limited.

Much work needs to be done to figure out a combination of these methods to address the needs of a heterogeneous India that caters to the urban and rural populations, rich and poor and formal and informal workers.

The diagnosis is clear—the system is broken. The policy doctors seem to be as apathetic and unimaginative as the real ones. The prognosis is not good.

P.S. “Health is the real wealth of a nation”, said Mahatma Gandhi.

Narayan Ramachandran is chairman, InKlude Labs.

2.2. Government unveils new PPP policy as part of push for affordable housing

Livemint, 22 Sep. 2017, Bidya Sapam

The ministry of housing and urban affairs has introduced eight public private partnership (PPP) options for private investments in affordable housing segment

Mumbai: The central government on Thursday announced new public private partnerships (PPP) to promote private investments in affordable housing in line with its Housing for All target by 2022.

Speaking at the Real Estate and Infrastructure Investors Summit 2017, organized by real estate body National Real Estate Development Council (NAREDCO), minister of housing and urban affairs Hardeep Singh introduced eight PPP options for the private sector to invest in affordable housing segment.

He said the policy seeks to assign risks among the government, developers and financial institutions, to “those who can manage them best, besides leveraging under-utilized and unutilized private and public lands.”

Singh said out of the eight PPP models, two involve extending central assistance of around Rs2.5 lakh per house to be built by private builders even on private land as interest subsidy on bank loans in upfront payment under the Credit Linked Subsidy Component (CLSS) component of the Pradhan Mantri Awas Yojana (Urban). “Under the second option, central assistance of Rs1.50 lakh per each house to be built on private lands would be provided, in case the beneficiaries do not intend to take bank loan,” he said.

The other six options include promoting affordable housing with private investments using government land. A few of the models include allocating government land to private firms based on the least cost of construction.

“Under this option, private builders can design, build and transfer houses built on government lands to public authorities...Payment to builders will be made by the public authority based on progress of project as per agreed upon milestones and buyers will pay to the government,” Singh said. Under the six government land- based PPP models, beneficiaries can avail central assistance of Rs1 to 2.50 lakh per house as provisioned under different components of PMAY (Urban). Beneficiaries will be identified as per the norms of PMAY (Urban).

He said an online mechanism for time- bound approvals for building plans and construction permits has already been introduced in Mumbai and Delhi.

Similar initiatives would be announced soon in 53 cities with population of above one million each, he added. Besides, the government is planning to announce a Model Tenancy Act and National Rental Housing Policy soon, Singh said.

3.1. PM launches ₹16,320-crore ($2,55 bn) ‘power for all’ project

BusinessLine, 26 Sep. 2017

The Narendra Modi government, which started its ‘power for all’ campaign in rural India with the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), is continuing its campaign, with the Prime Minister on Monday launching the Pradhan Mantri Sahaj Bijli Har Ghar Yojana — Saubhagya.

Saubhagya is meant to ensure electrification of all willing households in rural and urban areas. Launching Saubhagya scheme, Modi said: “There are over 4 crore households in the country without electricity. That means almost 20 per cent of all 25 crore households are devoid of a basic necessity like power.”

The government is targeting the completion of household electrification by December 2018. Industry observers believe that this represents a natural transition of government policy from electrification of villages to connecting households. Access to energy is central to development and this initiative to expedite that access is strongly positive for growth.

Under the Deen Dayal Upadhyaya Gram Jyoti Yojana, the government had decided to electrify 18,452 unelectrified villages within 1,000 days, by May 1, 2018. Today, there are only 3,000 unelectrified villages left in the country, Modi said.

On Saubhagya scheme, Kameswara Rao, Leader - Energy, Utilities and Mining, PwC India, said, “The last- mile connectivity has always been a challenge, with households facing high connections costs, and States facing higher supply costs. This attempt addresses both, by funding energy-efficient equipment.”

The government also plans to provide solar power packs of 200-300 Watt peak capacity with battery bank for unelectrified households in remote and inaccessible areas and also provide five LED lights, a DC fan, a DC power plug as well as maintenance for five years.

Modi also dedicated ONGC’s ‘Deendayal Urja Bhawan’ office, a booster compressor facility in Bassien Gas Field and paperless office project ‘DISHA’.

3.2. Maharashtra's Dhule district to house 500 Mw solar park

Business Standard, Sep. 29, 2017

Mumbai: The Maharashtra government, in a bid to strengthen its footing in the renewable energy segment, is planning to set up a 500-Mw solar park in Dhule district.

“We already have 1,000 acres available to set up a 250-Mw solar park,” Arvind Singh, principal secretary (energy), Maharashtra, said on Thursday.

“We were planning to have a thermal power plant here, but now we are planning to use this land for the first phase of the solar park.”

He was speaking on the sidelines of the ‘Renew India 2017: The Power of Renewable Energy’, organised by the Confederation of Indian Industry (CII).

Even as the exact area for the second phase of the park is yet to be identified, Singh said that a piece of land adjacent to the existing location in Dhule would be looked at to set up another 250-Mw solar park.

“The entire investment in the park will come from private parties and we will be calling for bids sometime in the next quarter,” he said.

“There are two more private players who are looking to set up solar power plants in Maharashtra,” said Singh, without divulging any details regarding names of the entities or location of the plants.

This is not the first time the state has planned for a solar park. In 2015, Sarus Solar, a joint venture (JV) of three Canadian firms, had planned to invest Rs 6,500 crore to set up a 500-Mw solar photo-voltaic farm in Thane.

Sarus Solar was a consortium of PV manufacturer Canadian Solar, EPC firm Guycan Solar, and investment firm Mackie Research Capital Corporation.

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

4.1. Coming soon: 5000 government-run English medium primary schools in Uttar Pradesh

HT Business, Oct. 10, 2017

Lucknow: Uttar Pradesh will soon have nearly 5,000 state government-run English medium primary schools, minister of state for basic education, Anupama Jaiswal, said on Saturday.

The new schools are likely to become functional from the next academic session. Five or more such schools will be set up in every block of the state, which has over 820 blocks in the state.

Jaiswal said the decision was taken as there was a huge demand for English medium schools. “Parents are queuing up for English medium schools. So, we thought why not have government-run English medium schools to cater to the demand,” she said.

Instead of establishing new schools, the government will convert the existing primary schools into English medium institutions after giving thorough training to teachers and providing English books, said Sarvendra Vikram Bahadur Singh, director, basic education. Jaiswal said efforts will be made to ensure that teachers teach proper English to students and help them pronounce words correctly.

Another official, who refused to be named, told HT, “Two years ago, the Samajwadi Party (SP) government had set up two such schools in every district of the state. And the response was overwhelming. The attendance of students went up in a big way. This led the (present) state government to plan more such schools...”

Before Akhilesh Yadav took the chief minister’s reins in 2012, the SP was against promoting English as a medium of instruction. In fact, the party drew flak for opposing computers and English in its Lok Sabha poll manifesto in 2009.

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

4.2. India's wind power tariff falls to a record low of Rs 2.64 per unit

Livemint, Oct. 05, 2017

New Delhi: India’s wind power tariff fell to a record low of Rs2.64 per unit in an auction conducted by state-run Solar Energy Corp. of India (SECI) for 1 gigawatt (GW) of wind power contracts that ended in the wee hours of Thursday morning.

While ReNew Power Ventures Pvt. Ltd and Orange Sironj Wind Power Pvt. Ltd bid Rs2.64 per kilowatt hour (kWh) to win contracts for 250 megawatts (MW) and 200MW each; Inox Wind Infrastructure Services Ltd and Green Infra Wind Energy Ltd bid a tariff of Rs2.65 per unit for securing contracts of 250MW each, said a person aware of the development, requesting anonymity. Adani Green Energy (MP) Ltd also bid Rs2.65 per unit to win a 50MW contract.

These firms quoted the price at which they will sell electricity to win contracts under the tender that received demand for three times the grid-linked capacity being sold.

These tariffs are lower than the average rate of power generated by coal-fuelled projects of India’s largest power generation utility, NTPC Ltd, at Rs3.20 per unit. The price gap between electricity generated from thermal, solar and wind projects has been bridged. This is primarily due to costs of solar modules and wind turbine generators falling by 80% and 20%, respectively, over the past five years.

A SECI spokesperson couldn’t be immediately contacted. All the nine firms in the fray for the reverse auction bid below the earlier recorded low of Rs3.46 per kWh for another 1GW tender in February floated by SECI. In a reverse auction, the developers are chosen on the basis of the lowest prices offered.

The aggressive bids came in the backdrop of India’s wind sector transitioning from a feed-in tariff regime to tariff-based competitive auctions. Feed-in tariffs ensure a fixed price for wind power producers.

The winning prices are not an outlier, as was evident by the bids placed by Adani Green Energy (MP) Ltd, BLP Energy Pvt. Ltd, global private equity fund Actis LLP’ Sprng Energy Pvt. Ltd, Hero Wind Energy Pvt. Ltd and ReGen Powertech Pvt. Ltd, which also bid low tariffs.

In such a scenario, obtaining finance at the lowest cost has become key to success. India has also witnessed record low solar tariffs of Rs2.44 per unit in May which firmed up to Rs2.65per kWh in an auction conducted by the Gujarat government last month.

SECI received bids for three times the grid-linked wind capacity on offer, Mint reported on 14 July. In comparison, the February auction received 2.6 times the quantum of bids offered.

The latest bids were placed at a time when concerns have been expressed over some states looking to renege on their offtake commitments for projects awarded at a comparatively higher tariff.

Apart from the tariffs for executed power purchase agreements facing a downward tariff pressure from the states, the projects are also facing other impediments such as curtailment of wind power procurement, payment delays and no guidelines for state-level wind bids, according to the Wind Independent Power Producers’ Association (WIPPA).

According to the lobby group, these issues will create a new set of non-performing assets (NPAs) of Rs20,000 crore in India’s wind sector with Indian banks stopping funding to these projects due to the concerns mentioned above.

However, investors’ attraction with India’s emerging green economy continues. A case in point being a joint venture of French energy firm Engie SA and Dubai-based private equity firm Abraaj Group which plans to invest around $1 billion to build a 1,000MW wind power platform in India.

India has a target of installing 175,000MW of renewable energy by 2022. Of this, 100,000MW is to be generated by solar projects and 60,000MW by wind projects.

To help achieve this ambitious target, India’s newly appointed power and new and renewable energy minister Raj Kumar Singh announced last month that he has instructed that 20,000MW each of wind and solar power contracts be auctioned by December.

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

5.1. Smart highways are the road to the future

BusinessLine, 4 Oct. 2017, Suresh Subudhi and Vineet Vijayavargiya

Digital solutions could radically change the face of road travel in India, making it a safe, smart and comfortable experience

The world has been taken over by the digital wave with several industries embracing digital innovations. Therefore, it is imperative for the Indian highways sector also to be at the forefront of this transformation.

‘Smart roads’ or ‘Smart highways’ gaining ground in the developed world essentially use a suite of technologies that are intended to be both interactive and largely self-powering. The concept holds tremendous potential for India considering its road network is the second largest in the world and continues to be the most important means of transport carrying almost 80 per cent of the country’s passenger traffic and around 65 per cent of its freight. This large road asset can be leveraged for a lot more than it currently is, implementing technology innovations that yield significant improvements in the driving experience. We have identified several such innovations that can be applied to create smart highways to help improve and redefine the driving experience across three thematic areas: communication, convenience and safety.

Communication: Imagine if our roads/highways could ‘talk’ to vehicles plying on them! This is not a thing of the future but a reality in the present. Smart-road-to-vehicle communication can help create safer roads, more efficient travel, reduced air pollution and better driving experiences. Cameras and sensors embedded in our roads can detect congestion, traffic blockage or diversions and relay this information in real time back to upstream vehicles through digital signage allowing drivers to vary their speed accordingly or take alternative routes. The autonomous vehicles of tomorrow will require these inputs to chart their driving course in an effective manner and will ensure more road safety in the long run. Road-to-vehicle communication will serve as the foundation for safe, connected, autonomous vehicles of the future, giving vehicles the ability to “talk” to each other, and roadway infrastructure.

Convenience: The idea of smart lighting solutions for roadways powered by either harvesting solar energy or through piezoelectric sensors in the ground both is appealing and scores high on both energy efficiency and utility. Implemented in Japan and Israel, the technology relies on piezoelectric crystals placed below the surface of asphalt used on roadways. These piezoelectric devices, used for harvesting the kinetic energy of roads and walkways from the traffic moving over them, can produce electrical energy that is predictable (based on traffic patterns) and locally storable. The electrical energy harvested is sufficient to power smart lighting poles on highways, freeways and rural roads, and are extremely helpful in foggy or heavy monsoon- prone areas.

The interactive lighting system is another smart solution which uses motion sensor lights that glow bright as a vehicle nears it, illuminating a particular stretch of the road and slowly dims out as the vehicle moves away. It is a splendid solution for less-travelled highways, providing night visibility on demand and proving the best for road safety.

Safety: Safe highways will go a long way in improving throughput of our highways. In a quest to improve safety on highly risky mountain roads and highways in India, ‘SmartLife’ poles were developed. The system uses these poles to communicate with each other and exchange data on incoming traffic just before sharp turns and hairpin bends. These poles gauge the speed of vehicles and alert drivers of approaching traffic by sounding a horn. The first prototype of this system is currently being tested on NH1, the highway connecting Jammu and Srinagar, infamous for being one of the most dangerous roads in the world. Similarly, smart systems can use digital sensors to acquire data pertaining to landslides, accidents, traffic jams and weather conditions, activating warning systems in time and enabling active LED displays on roads and highways. The Eastern Peripheral Expressway is India’s first smart highway bolstered with highway traffic management systems (HTMS) and video detection systems (VIDS) to relay the information collected to a central server in the control room resulting in real-time incident management. The Incident Management Control Centre is integral in maintaining an overall safe roadway. Running 24/7, it monitors traffic with an array of intelligent transport systems and is also able to successfully deploy ground recovery crew to assist motorists in distress. More such initiatives need to be implemented across all our highways.

Charting success

The world is slowly but steadily transitioning to a future in which self-driving automobiles will define the traffic landscape. Are our roads and highways equipped for this transition? Moreover with Smart Cities currently dominating discussions on the next generation of urban infrastructure and transportation, Smart Highways/Roads promise to be the third link to the chain in the fight against congestion and carbon emissions, helping to ease the flow of traffic, reduce accidents and in some instances, serve as viable sources of renewable energy in their own right. Smart highways are a crucial link in improving road transportation landscape in the country.

Suresh is a partner and director, and Vineet is project leader at Boston Consulting Group

5.2. India will have 50,000 km highways network in 2 yrs: Govt

PTI, Sep. 28, 2017

New Delhi: The highways network in the country will be of 50,000 kilometres over the next two years, the government said today.

The state-owned National Highway Authority of India (NHAI) has constructed nearly 30,000 km world-class national highways, the Ministry of Road Transport and Highways said in a statement. "NHAI, under the Ministry of Road Transport and Highways, has another 20,000 km scheduled for completion in the next couple of years. The sustained growth will ensure that Indian national highways network will measure approximately 50,000 km of highways in the next two years," it said.

The focus of the government is on building highway operations for rendering world-class services to the highway users, it said adding NHAI has created a new Highway Operations Division.

This division will focus on all non-commercial highway operational activities for efficient network utilisation and providing hassle-free services, it said.

The Highway Operations Division at NHAI will be headed by Member (Administration) and assisted by a team of experienced officers.

The division will be in charge of the electronic tolling, wayside amenities, road safety and security, incident management helpline, tracking of ambulance, cranes on highways, highway traffic management system, Swachh Bharat Abhiyan, road lighting, wi-fi and other modern amenities on national highways, it added.

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

- AGRICULTURE, FISHING & RURAL DEVELOPMENT

6.1. A four-point agenda for farm revival

BusinessLine, 3 Oct. 2017, Rakesh Bharti Mittal

To make agriculture a viable business, the Government must focus on enablers rather than handouts. Here’s a roadmap

Private sector is yet to harness the business potential of agriculture and allied sectors in India. The dilemma arises in the absence of enough policy enablers to ensure private participation despite the promising potential. Land fragmentation has resulted in poor yields and productivity, making the sector unviable for small farmers. Solving this crisis and reforming the sector will involve re-organisation of key factors of farm production — land, labour, capital and technology.

What makes such a comprehensive relook at agriculture imperative is the fact that 49 per cent of the national workforce and 64 per cent of the rural work force still depend on the sector for a living, even though the share of the sector in the overall GDP has shrunk massively from around 45 per cent in the 1950s to about 16 per cent today.

What needs to be done

The way forward can be carved on what I call the ‘Four Aces of Agricultural Reform’. Let’s take a look at them.

Ace: 1-Long-term leasing laws: The primary challenge is low productivity due to fragmented land holdings. Today, about 85 per cent of all land holdings belong to small and marginal farm categories of less than 2 hectares. This has hindered infusion of technology (use of hybrid varieties and farming techniques) and discouraged capital investment (in irrigation and mechanisation).

The only way to overcome this challenge is by facilitating a legal framework to consolidate these holdings in to larger operational units through “long term leasing of farmland without alienating the land ownership — as has been introduced by Rajasthan, Haryana, Madhya Pradesh and Punjab. This policy reform can be a game changer as also suggested by Niti Aayog in the Model Land Leasing Act — no change in ownership and no tenancy rights, land reverts back upon expiry of lease.

Long-term leasing can facilitate the entry of the private sector into agriculture to infuse much needed energy in the form of crop diversification, introduction of high-value crops, increased mechanisation and introduction of new farming techniques and technologies.

These partnerships may not just impact productivity but have a substantial influence on farmer income as well. Industry also stands to gain by getting access to assured supply of commodities for their processing and marketing operations.

Also, private sector involvement can also result in sustained investment in post-harvest management and processing, which can create incremental employment opportunities in the countryside to take care of the ‘hidden unemployment’ in rural areas.

Another case in point for land aggregation is a study undertaken by CII on forming a pool of farmers to aggregate land. Such land (say 100-250 acres) can be leased to the private sector, which will give the lease rental to farmer at current rates, which is ₹40,000 per acre (assuming two acres per farmer, total lease rental is ₹80,000 a year per farmer).

The same farmers will be employed on their land at minimum wages ₹8,500 per month per person (assuming two members being employed per family, the total income will be over ₹2 lakh a year per farmer.)

Currently, farmers earn ₹1,80,000 to ₹2,00,000 from two acres of farmland. The proposed income will be ₹2,84,000 per farmer. That’s an increase of over 40 per cent in income, which is without any interest burden or risk of a failed crop. Additionally, thousands of farmers in one area can become partners, grow high-value crops, use innovative farming techniques, which will result in higher incomes.

Ace 2: Linking farmers to markets: The other big reform that can potentially impact farmer income substantially is linking farmers to marketplace. The long chain of intermediaries between the farm gate and the final consumer have for long been impacting farmer income negatively. There is a need to de-list fruits, vegetables and other perishables like fisheries from the ambit of APMC. Giving farmers the freedom to sell directly to retailers, food processing companies and aggregators is critical.

Small farmers often find it difficult to access markets on their own. Aggregating farmers into Farmer Producer Organizations (FPOs) will not just help overcome the small holder issue but enable improved market access and better bargaining capacity for them.

To protect the farmers from the vagaries of distress sale in times of bumper harvests, commodity options in agricultural products could be introduced. This will make visible post-harvest prices at the time of planting. Implementation of e-NAM across States and bringing perishables under e-trading will help better price discovery for farmers. There is a need to mechanise and create ‘Agro Clusters’ in key production zones to ensure aggregation of produce.

Ace 3: Improving supply chain and processing capacities: Massive post-harvest losses due to lack of adequate cold chain and storage infrastructure and processing capacity impact farmer income adversely. The private sector must be allowed to procure, store and distribute grains, can start with the Public Distribution System. This will bring down the cost for the Government by 25 per cent and result in storage capacities being set up in consuming States.

In the case of perishables, increased processing capacity can ensure price stability and protect farmer interests. Introduction of new technologies can help in extending the shelf life of fruits and vegetables. 100-per cent FDI in food retailing including e-commerce, introduced last year, will help strengthen investment in front- end retail, which ultimately works in favour of farmers.

Ace 4: Agri startups: There is a need to introduce modern entrepreneurship to Indian agriculture. Promoting agricultural services under the Start-up India Scheme will help bring modern technology and inputs to farmers. To conclude, the Government’s intent is progressive when it talks about programmes such as ‘More Crop per Drop’, ‘Pradhan Mantra Fasal Bima Yojna’, ‘Direct benefit transfer to farmers. Yet, to double farmers’ income, we will have to make agriculture a viable business opportunity and governments should focus more on enablers rather than hand-outs and retrospective incentives.

These four Aces will help to serve as policy enablers for the government to augment its dream into a reality so that the Indian agriculture sector contribute optimally to the economic growth of the country and eventually the well-being and prosperity of the farming community.

The writer is Vice-Chairman, Bharti Enterprises and president-designate, CII

6.2. Government plans partnership between private companies & villages to boost economic infra

Business Standard, Sep. 28, 2017

New Delhi: In a bid to create a thriving economic model in rural India, the Centre is planning to facilitate select gram panchayats’ partnership with private companies and social organisations under its Mission Antyodaya. Around 50,000 gram panchayats across the country have been mapped and ranked for the purpose; most of them have bare minimum economic capital, such as the presence of women self-help groups (SHGs), basic banking infrastructure, and households with savings account.

Under Mission Antyodaya, the government aims to alleviate the lives of one crore households over the next 1,000 days through multiple means that include poverty reduction, improvement in health facilities, economic well-being, etc.

“We won’t give any subsidy or funds to the private sector for setting up appropriate economic infrastructure in the villages, but will only act as a facilitator,” a senior government official said.

Besides economic capital, which carries maximum weight, social and infrastructural gaps in these gram panchayats would also be mapped and ranked. This will facilitate targeted interventions through existing central schemes like Ujjwala for villages with maximum percentage of households without electricity, and Swachh Bharat Mission for those which have a large percentage of households without toilets.

“Suppose we find that in a gram panchayat, the percentage of children in the age group of 0-3 who are underweight, stunted or wasted is the highest, we would focus more on improving the nutritional requirement there,” the official explained.

The gram panchayats have been selected by respective states after an extensive exercise, using the Census 2011 data, data from Socio-Economic Caste Census -2011 and also Centre’s own skills programme to map the skills gap.

Around 30 per cent weightage of the gram panchayats is on infrastructure and access to services like all- weather roads, households getting power for 12 hours daily, and agricultural land giving two crops or protective irrigation. Another 30 per cent weightage is on the level of social development and protection, such as the percentage of children fully immunised, and children are underweight, wasted or stunted.

The maximum weightage would be given to economic development and diversification of livelihoods, like percentage of households with bank loans, households engaged in non-farm employment with skills and bank linkages, etc.

Once all the 50,000 gram panchayats are mapped and ranked according to set parameters, it would provide the government and also the private sector a ready reckoner about the village which would then be used to provide targeted interventions.

“For any private sector and also social sector, this is wealth of information, which would help them make a tangible difference on ground,” a senior official said.

He said the data on economic development and diversification of livelihood will be shared with private companies to enable them to set up businesses in that area.

Government's plan in brief

Alleviate the lives of one crore households in 50,000 gram panchayats over a period of 1,000 days
No fund allocation for private sector or incentives; Centre to facilitate private players to quickly identify economic gap in villages and provide services thereafter
Various social sector schemes like the Swatch Bharat Mission and the Pradhan Mantri Awas Yojana, among others would be converged to provide holistic development
Gram panchayats will be mapped using SECC-2011 data, Census numbers and other available data sources

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

7.1. Keventer Agro to expand dairy business in North-East, strengthen presence in Bengal

BusinessLine, 26 Sep. 2017, Shobha Roy

Kolkata-based Keventer Agro Ltd, a group outfit of the ₹1,800-crore Keventer Group, looks to expand its dairy business by entering the north-eastern markets and strengthening its footprint in West Bengal.

Plans are also afoot to diversify its product basket by having value-added offerings like curd and yoghurt. According to Mayank Jalan, Chairman and Managing Director, Keventer Agro, the company is in ‘active talks’ with multiple people in Guwahati for establishing its presence in Assam. “North East is going to be a special focus for us. We are currently studying the opportunities there,” he told BusinessLine.

“This apart, we have a huge pipeline of new offering for our consumers,” Jalan added without divulging further details.

Dairy, currently accounts for nearly half of the company’s ₹800-crore turnover. Apart from dairy, food processing —frozen food and beverages — is the other major segment.

The company, which sells its pouch milk and ice cream under the ‘Metro’ brand, operates primarily in the Greater Kolkata region and has a market share of 20-22 per cent and 40 per cent respectively.

The company recently raised ₹170 crore from private equity firm Mandala Capital to fund expansion plans. “We are in a position to leverage another ₹300 crore and deploy nearly ₹480-500 crore in the next 18 months towards expansion of the dairy business,” he said.

The company currently has one factory at Barasat with a capacity of producing 400,000 litres of liquid milk a day. The aim would be to ramp up production to six-to-seven lakh litres a day over the next two years. While Bengal will continue to remain at the core of its strategy, Keventer Agro is also exploring possibilities of expansion in Bihar, Jharkhand and Odisha.

Co-packing agreements

As a part of its expansion strategy, the company will look at satellite units (third party manufacturing) and enter into co-packing agreement (for dairy products) with local entrepreneurs. The company has six factories in Tamil Nadu, two in Gujarat and one in Kota running under such co-packing arrangements.

Under co-packing agreements, Keventer will look at entrepreneurs who are willing to invest in setting up a factory. However, the raw materials will be supplied by the company and finished products will be brought back.

7.2. Pradhan Mantri Krishi Sinchai Yojana (PMKSY) has been started to provide a permanent solution from drought

Press Information Bureau, Oct. 16, 2017

Government is investing Rs 50,000 crore for a period of five years to develop complete irrigation supply chain, water resources, distribution network and farm-level application solutions to achieve the target of providing water for every farm

New Delhi: Agriculture and Farmers Welfare Minister Shri Radha Mohan Singh said the government started PMKSY to provide a permanent solution from drought. Three ministries are implementing this scheme in mission mode and the Ministry of Water Resources is leading the project. PMKSY aims not only to create irrigation sources but also to create protected irrigation by harnessing rainwater at micro level through ‘Jal Sanchay’ and ‘Jal Sinchan’. He said it today at the concluding session of India Water Week-2017 organized at Vigyan Bhawan, New Delhi. The theme of the program at the concluding session was "Water and Energy for Inclusive Growth".

Shri Nitin Gadkari, Minister of Road Transport & Highways, Shipping and Water Resources, River Development & Ganga Rejuvenation,; Dr. Satyapal Singh, Minister of State in the Ministry of Human Resource Development and Minister of State in the Ministry of Water Resources, River Development and Ganga Rejuvenation; Shri Arujn Ram Meghawal Union Minister of State for Parliamentary Affairs and Water Resource, River Development & Ganga Rejuvenation, and Dr. Amarjit Singh, Secretary, Ministry of Water Resources, River Development & Ganga Rejuvenation, were present on the occasion.

The Minister said that India is home to 17% of the world population and 11.3% of the livestock population and only 4 percent of the world's water resources are in the country. In such a situation, we have an unprecedented challenge of providing water to such a large human and livestock population.

He said we have a total of 200.8 million hectares of agricultural land in the country out of which only 95.8 million hectares is irrigated, which is only 48 percent of the total. Therefore, it is a challenge to provide water to 52% of non-irrigated land and make it suitable for adoption of advanced farming. It’s possible only through proper water management.

He said PMKSY has been started to provide a permanent solution from drought. Three ministries are implementing this scheme in mission mode and the Ministry of Water Resources is leading the project. PMKSY aims not only to create irrigation sources but also to create protected irrigation by harnessing rainwater at micro level through ‘Jal Sanchay’ and ‘Jal Sinchan’.

He said that the government is investing Rs.50,000 crore for a period of five years (2015-16 to 2019-20) to develop complete irrigation supply chain, water resources, distribution network and farm-level application solutions to achieve the target of water for every farm.

He said that for the year 2015-16, Rs 555.5 crore has been released for drought mitigation and district irrigation scheme. Under this, Rs.175 crore has been allocated for the material for construction of water harvesting structures under MNREGA and Rs.259 crore was allocated to the states for water recharge, drought mitigation and micro-water storage construction in 219 drought-affected districts and 1071 highly drugged blocks identified by the Central Ground Water Board.

In the year 2016-17, Rs.520.90 crore was released for drought mitigation measures. So far, 56,226 water harvesting structures, 1,13,976 hectare irrigation capacity and 675 district irrigation schemes have been prepared.

He informed that the Ministry of Agriculture has been given the responsibility of implementing Per Drop More Crop scheme. During the Financial Year 2011-14, Rs. 3699.45 crore was distributed to the states for micro- irrigation and 16.14 lakh hectare area was brought under micro-irrigation. While Rs.4509 crore was released during 2014-17 and a total of 18.38 lakh hectare area has been brought under micro-irrigation, which is the highest area so far.

He said that during the year 2016-17, Rs.1991.17 crores was allocated for Per Drop More Crop under PMKSY which is 28% more than the Rs.1,556.73 crore allocated in the year 2015-16. In 2015-16, 5.7 lakh hectare area was brought under micro-irrigation, while 8.39 lakh hectare area was brought under micro irrigation during 2016-17, which is the highest so far. The Minister said Rs.3400 crore has been distributed for Per Drop More Crop scheme for the year 2017-18, and till September Rs1601.40 crore has been released. The target is to bring 12 lakh hectare area under micro-irrigation during 2017-18.

PMKSY Scheme is being implemented in the mission mode with the help of Command Area Development to complete 99 major and medium irrigation projects covering 76.03 lakh hectares in a phased manner till December 2019.

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

8.1. India to outperform in shrimp exports in 2017: UN report

Business Standard, Oct. 04, 2017

Bhubaneswar: Amid growing uncertainties in the seafood trade, exporters from India have now a reason to cheer as the country is expected to be the standout performer in 2017 along with Chile.

Indian exports is set to surge by 41 per cent more due to bumper harvesting of vannamei shrimp. "Of the world's major seafood exporters, India and Chile are expected to be the standout performers in 2017. In India's case, bumper harvests of aquacultured vannamei shrimp is the main factor behind expectations of a $2.3 billion increase in Indian seafood exports in 2017," said a report by Globefish, which is a unit within the Food and Agriculture Organisation (FAO) of the United Nations.

The report on seafood demand analysed the market situation until June 2017.

The report will provide respite to Indian exporters at a time when the European Union (EU), the third largest market, is contemplating a complete ban on Indian shrimp imports over quality issues.

For Chile, a combination of a recovery in salmon harvest volumes and the high price level for salmon products will equate to a projected rise of $1.6 billion, marking a rise of 30 per cent, in export value, it added.

Exports from Ecuador primarily include shrimp and tuna, while Peru exports fishmeal and fish oil. Norway is primarily known for the export of salmon, ground ish and small pelagics. Given that exports from these three countries are also expected to swell this year, a substantial increase in the overall yearly exports is logical. On the imports side, both developed and developing markets are expected to perform well in 2017.

Driven by robust demand growth worldwide, a substantial proportion of global production will be exported. The value of world trade in fish and fishery products is expected to increase by a projected 5.8 per cent to $150.9 billion in 2017.

As per an earlier report of FAO, India had emerged as the largest exporter of shrimps in the world by exporting 438,500 tonnes in 2016, marking a 14.5 per cent increase over the last year. The top five shrimp exporters to the international market in 2016 were India, Vietnam, Ecuador, Indonesia and Thailand.

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

8.2. India can be world's food factory: Harsimrat Badal

Livemint, Oct. 06, 2017

New Delhi: As the largest producer of milk and the second largest producer of fruits and vegetables, India has the potential to become the world’s food factory, minister for food processing Harsimrat Kaur Badal said on Thursday, urging the industry to partner with farmers to bring in the latest technology and innovation.

Addressing a session on food processing at the India Economic Summit, Badal said that a push to food processing can mitigate farm distress while helping feed India’s billion-plus population.

“Food processing is a sector that has the ability to address a lot of key issues facing our nation today—be it farmer distress, be it wastage... this sector happens to be one of the greatest job generators as well,” she said. “You need industry to partner with the farmer. Most of the farmers are small and marginal; they don’t have the means to try out new things that will work. What’s important is for this industry (food processing) to flourish because the raw material of this industry is the farmer’s produce,” Badal said.

She said programmes like the Pradhan Mantri Kisan Sampada Yojana would create Rs6,000 crore worth of infrastructure in the next three years. This in turn would “leverage investment worth Rs31,000 crore, which would result in processing of 334 tonnes of agricultural commodities. This would benefit 500,000 farmers”, she said.

Badal admitted that agri-processing was still at a nascent stage, growing at 10% per annum as it is capital- intensive and dependent on seasonal produce. The lack of cold chain grids was another factor affecting food processing, she said.

Data from the agriculture ministry shows that India is the world’s largest producer of milk, contributing about a fifth of global output. Milk production is estimated by the government to grow from 155.5 million tonnes in 2015-16 to 200 million tonnes by 2019-20.

In 2016-17, production of fruits and vegetables is estimated at a record 300 million tonnes, surpassing foodgrain output (estimated at a record 276 million tonnes) for the fifth straight year. However, India’s horticulture sector is marred by frequent price dips and farmers are often forced to dump their tomatoes, potatoes and onions by the roadside. This implies they need better access to markets and infrastructure facilities like warehouses and cold storage—or a functional and an affordable cold chain network—to help them better manage price risks and avoid distress sales.

Further, a government-commissioned study by the Central Institute of Post-Harvest Engineering and Technology (CIPHET), Ludhiana, in 2015 estimated post-harvest losses at a staggering Rs 92,651 crore annually. The study estimated between 5-10% post-harvest losses for grains and oilseeds and 5-16% losses in perishables fruits and vegetables.

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

9.1. India's edible oil output to hit all-time high of 7.7 mn tonnes in 2017-18

Business Standard, Sep. 21, 2017

Mumbai: With the even spread of rainfall in the second half of the current monsoon season raising prospects of better kharif oilseed output, edible oil production in the crushing season 2017-18 is likely to be the highest ever in the country.

Indore-based GGN International, one of India’s largest research firms, forecasts total edible oil production in the country at 7.66 million tonnes for the oil year (November–October) 2017-18, compared to 7.05 million tonnes in the previous year. With an increase in opening stock of a record 2.42 million tonnes, India’s edible oil availability from domestic sources is estimated at an all-time high of over 10 million tonnes. Indian edible oil importers have strategically built a massive inventory on decline in crude palm oil (CPO) prices in the past few months. With a total opening stock of 1.92 million tonnes, India’s total edible oil availability was reported at 8.97 million tonnes in the oil year 2016-17.

The estimated increase in domestic production is likely to reduce India’s annual edible oil import bill, which currently stands at Rs 65,000 crore against an annual inward shipment of around 15 million tonnes. India currently imports CPO largely from Indonesia, refined oil from Malaysia, sunflower oil from Ukraine and refined soybean oil from Argentina.

“India reported continuous drought during the past two years resulted in lower oilseed production and domestic edible oil output. Despite a record soybean output last year, domestic crushers did not find parity due to low oil prices in the international markets. Consequently, huge soybean stocks remained uncrushed so far this season. Thanks to the government’s decision to raise import duty early August, both edible oilseeds and oils have become a little costlier, making soybean crushing profitable. Still, around 1.5 million tonnes of the overall 11.7 million tonnes of soybean output would be left uncrushed this season and would be available for crushing only next year. Apart from that, oil manufacturers would see some parity in crushing domestic seeds, resulting in higher oil availability from local sources,” said Govindbhai Patel, managing partner, G G Patel & Nikhil Research Company.

The firm forecasts India’s kharif oilseed production at 14.43 million tonnes for the harvesting season 2017-18, down over 12 per cent from the previous year’s level of 16.43 million tonnes. Data compiled by the Union Ministry of Agriculture showed India’s soybean acreage lower by around one million ha this year to 10.5 million ha as of September 15. Sowing area under groundnut also posted a decline of 500,000 ha to 4.1 million ha. Acreage under other oilseeds also remained lower this kharif season due to falling prices in the spot market throughout last year. Barring a few occasions, oilseed prices continued to prevail below the minimum support price throughout last year.

“While oilseeds acreage was reported to be lower this kharif season, the September rainfall has raised prospects for better rabi season. We estimate higher oilseed output with positive crushing parity in 2017-18,” said B V Mehta, Executive Director, Solvent Extractors’ Association of India (SEA).

Meanwhile, the Central Government raised import duty on CPO and RBD (refined, bleached and diodized) to 15 per cent and 25 per cent in August from their respective levels of 5 per cent and 15 per cent earlier. The move was aimed to protect farmers’ interest to continue oilseed sowing as farmers had opted this kharif season for shifting from oilseeds to other remunerative crops including cotton which threatened oil availability in India.

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

9.2. On GM crops, a failure to heed scientific evidence

Livemint, 21 Sep. 2017

A wealth of research shows that GM crops make for good science and good economics—and India needs to embrace both

Last week, the Centre told the Supreme Court that it was yet to make up its mind on the commercial release of genetically modified (GM) mustard (Brassica juncea) and was still studying the matter. This week, Union environment minister Harsh Vardhan reiterated the point, underlining that there were “compelling arguments” both for and against GM crops. Vardhan, who also serves as science minister, proffered that the government’s decision will be “based on common good”. If that is indeed to be the case, then this government’s continued dithering on GM crops simply does not add up.

Yes, this has been a controversial issue with the green lobby raising a litany of complaints but the fact of the matter is that a large and growing body of evidence indicates in no uncertain terms that GM crops are indeed safe and economically beneficial.

The Indian state, however, has seemingly always been in two minds about GM crops. During the UPA era, Prime Minister Manmohan Singh and agriculture minister Sharad Pawar favoured GM crops while two successive environment ministers, Jairam Ramesh and Jayanthi Natarajan, stood in opposition. Natarajan’s successor Veerappa Moily, however, was in the pro-GM camp and reversed a moratorium on field trials, which were then re-started in some BJP-ruled states after the NDA came to power at the Centre in 2014. Prime Minister Narendra Modi was considered to be in favour of GM crops, and his environment ministry reported in 2016 that there were no safety concerns regarding the use of GM mustard. In May this year, the Genetic Engineering Appraisal Committee (GEAC), the apex regulatory body for GM seeds, cleared the Dhara Mustard Hybrid-11 (DMH-11) for commercial field use.

But by then the Supreme Court had put a spanner in the works—it was hearing anti-GM campaigner Aruna Rodrigues’ demand for an “independent evaluation” of DMH-11. That case is scheduled for a final hearing in November; meanwhile, a parliamentary standing committee, headed by the Congress party’s Renuka Chowdhury, has advised the government to go slow because it believes that there isn’t enough evidence to decide either way.

This is decidedly odd, for research done by at least six different institutes under the Indian Council of Agricultural Research has found GM crops to be safe for animal health. The Central Avian Research Institute in Bareilly gave genetically modified cottonseed meal to broiler chickens over a period of nine years and found no difference with those that consumed non-GM feed. The Central Sheep and Wool Research Institute at Malpura, in collaboration with the Central Institute of Cotton Research, Nagpur, did similar tests on lambs, and again found no adverse impact. The Indian Veterinary Research Institute, in Bareilly, came up with similar results for goats, the National Dairy Research Institute at Karnal for cows, and the Central Institute of Fisheries Education, Mumbai for fish.

Additionally, the National Institute of Nutrition in Hyderabad conducted tests for toxicity and allergenicity and found no adverse effects. And if all this wasn’t enough, sample this: a 2014 meta-study by Wilhelm Klumper and Matin Qaim of the University of Gottingen, Germany, analysing 147 other studies of GM crops from around the world, found that GM technology helped increase crop yields by 22%, reduced the use of chemical pesticides by 37%, and increased farmer profits by 68%.

Today, GM crops are cultivated over 185 million hectares of land, by more than 18 million farmers across 26 countries, marking a 110-fold increase since GM crops were first commercialized, according to data from the International Service for the Acquisition of Agri-biotech Applications. At least 30 other countries import GM produce, which means about nearly 68% of the world’s population is already consuming GM products.

In fact, India too has been importing GM products—specifically, GM soybean oil and GM canola oil (which is a sister crop of mustard)—for nearly two decades now. These imports cost about Rs80,000 crore annually and are needed to cover nearly half of India’s edible oil demand. Now, if GM mustard, which has a much higher yield than traditional varieties, can be cultivated domestically, it can not only reduce the import bill significantly but also increase the income of about six million mustard farmers.

One only needs to look at the enormous success of BT cotton, the only GM crop that is allowed to be cultivated in the country, to gauge the potential here. In fact, while BT cotton was developed by a foreign company, thus fuelling concerns about vested interests and corporate control among environmental activists, GM mustard has been developed at the publicly funded Centre for Genetic Manipulation of Crop Plants at the University of Delhi after 20 years of research.

Simply put, GM crops make for good science and good economics, and India needs to embrace both. If it doesn’t, it will fall behind.

10.1. Five crore women to get charkha in next 5 years: Giriraj Singh

PTI, Oct. 03, 2017

New Delhi: The government has planned to connect as many as 5 crore village women to charkha (spinning wheel) in next 5 years with a view to provide them employment and promote khadi, Union minister Giriraj Singh said today.

"Following the 'Khadi for Fashion' call of Prime Minister Narendra Modi, the ministry has planned to connect not less than five crore village women to Charkha (spinning wheel)," Singh said while addressing a function on the occasion of Gandhi Jayanti at Khadi Bhawan in Connaught Place here.

Khadi has now been popular in younger generation also, the minister of state for micro, small and medium enterprises said.

"For a significant span of time Khadi was meant for either dadaji (older ones) or netaji (politicians). But, it was the initiatives and appeals made by our Prime Minister who is himself the latest USP of Khadi that Khadi has now become a fashion trend among the youths," he said, adding, "even the results speak. The previous governments could increase the sale by 70 per cent in 10-odd years, but we enhanced it to 90 per cent".

Speaking of solar charkhas, the minister said it would provide employment to at least five crore village women in the coming five years.

"We are already on our heels (in) this connection, with five pilot projects at Varanasi (PM s constituency), Nawada (minister s constituency) and other places. It will ensure a regular income between Rs 6,000 and Rs 10,000 to each of the women," he said.

He claimed that to make khadi a fashion brand across the globe, the department is in regular contact with all leading fashion institutes of the country.

Singh further said that even in Africa, as a part of centenary year celebrations of Gandhiji's Swadeshi Movement, Indian High Commission in Uganda along with the African nation is unveiling Gandhi Charkha gifted by KVIC at the Gandhi Heritage Site at Jinja (Uganda) today, which is also the International Day of Non- Violence.

Khadi and Village Industries Commission (KVIC) Chairman Vinai Kumar Saxena, in his address, said Khadi had been spreading its wings in all directions for creating maximum job opportunities for the artisans.

"Since sanitation and Khadi was close to Mahatma Gandhi's heart, the KVIC is all set to take his legacy forward," he said, adding, "We have also taken up the Prime Minister s call of Sweet Revolution very seriously and we are trying to give a major push to our Honey Mission in the coming days".

Earlier, the minister inaugurated the 60 khadi outlets which were renovated and re-launched during the completion of KVIC s 60th anniversary and a khadi outlet at Chaudhary Charan Singh International Airport at Lucknow, through remote device.

He also handed over the cheques to five artisans, each from two khadi institutions of Uttar Pradesh and Haryana, under the new sales initiatives undertaken by KVIC.

Later, he inaugurated a honey parlour showcasing several qualities of honey at Palika Bazaar.

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

10.2. Chandrababu Naidu targeting US$ 2 billion in IT investments in Andhra Pradesh

Livemint, Oct. 10, 2017

Visakhapatnam: The Andhra Pradesh (AP) government aims to attract $2 billion of investments and create about 100,000 jobs in the information technology (IT) sector, chief minister N. Chandrababu Naidu said on Monday.

Addressing delegates at Blockchain Business Conference at Visakhapatnam, Naidu, who explained how his government is using technology to monitor work on a real-time basis, also remarked that “election is not a problem”, hinting that he was confident of winning the 2019 Andhra Pradesh elections thanks to various schemes introduced during his governance in the last three years.

“I am confident (of winning elections). We have real-time governance and all our departments are online. If someone has a problem, they can send a message through the call centre (set up by the Andhra Pradesh government for public grievances) on a real-time basis. There is 80% public satisfaction,” said Naidu. He added that the state government is also monitoring ground water and reservoir water levels on a real-time basis using technology.

Stressing on the need to utilize technology in governance, Naidu said blockchain is the “real future” and encouraged entrepreneurs to come forward with ideas pertaining to it. Naidu stated that if his government is convinced of the ideas, it would be implemented. He pointed to the government’s e-pragati initiative which has brought all its services under one roof.

He also noted that there is a need to utilise technology to improve the agriculture sector in the state. “Soil testing is a big problem. But recently, Microsoft came forward to do it on a real-time basis,” Naidu mentioned, and announced that Microsoft Corp. co-founder Bill Gates will visit the state in November to attend an event on agriculture in the state.

Naidu also said nine companies have already set shop in Fintech Valley in Visakhapatnam and that another 16 are set to come. Terming the arrival of blockchain as the “fourth industrial revolution”, he asserted that Visakhapatnam will become a knowledge hub.

Naidu’s son and state IT minister Nara Lokesh, who attended the programme, said that blockchain is a new era of “disruptive technology”, and has now become normal. Lokesh said Andhra Pradesh will go beyond pilot projects that have been taken up by his government pertaining to the IT sector. “We are the first state to use blockchain pilots,” he added. At the two-day event, Naidu also launched a blockchain hiring portal and a blockchain report by Wipro Ltd.

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

- INDUSTRY, MANUFACTURE

11.1. Chemical industry can reach $346 bn by 2025: Report

PTI, Sep. 22, 2017

New Delhi: India's chemical industry has the potential to grow from the current USD 155 billion to USD 346 billion by 2025 with concerted efforts, a report said.

The domestic chemical market accounts for 3.4 per cent of the global market.

More than 80,000 chemicals are being used directly or indirectly in various sectors, said the report prepared by Tata Strategic Management Group. It was released by Fertiliser and Chemical Minister Ananth Kumar at an event in Gujarat.

According to the study, the industry faces critical issues like availability of key feedstock, infrastructure status, scale of operations, access to technology, energy security and ease of doing business.

"These issues have hampered industry growth and it needs government interventions to achieve its true potential," it said.

The report recommended adoption of alternate feedstock, increasing investment in R&D and achieving scale through collaboration for overcoming the challenges.

"Indian chemical industry is on the cusp of a growth trajectory. This industry should be looked at as a part of Indian economic growth story," Tata Strategic Management Group CEO Modan Saha said in a statement. He said the chemical industry can play an important role in creating jobs and boosting the country's growth.

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

11.2. Tractor, two-wheeler sales in rural India get monsoon, festive season boost

Livemint, Oct. 11, 2017

Mumbai: A good monsoon has set the cash registers ringing at tractor and two-wheeler firms over Navratri and Dussehra, making it the best festive season for some in the past three years.

But consumer packaged goods firms haven’t seen the desired offtake, with a broad-based recovery from the effects of demonetisation and the goods and services tax (GST) continuing to elude their channel partners. “An early onset of the festive season has helped,” said Rajesh Jejurikar, president, farm equipment sector, Mahindra and Mahindra Ltd.

Unlike last year when key Hindu festivals of Navratri, Dussehra and Diwali fell in October, this year the first two were celebrated in September.

This added to positive sentiment, spurred by a good monsoon and a healthy crop yield in rural India.

Mahindra’s domestic tractor sales in September grew 52% to a record 44,000 units over the same month a year earlier.

The India Meteorological Department (IMD) on 30 September said the monsoon was 95% of the long-term average compared to its forecast of 98%, Reuters reported last Saturday.

Responsible for delivering about 70% of the annual rainfall, the monsoon season is critical for the farm sector that accounts for about 15% of India’s $2 trillion economy.

A strong sales performance across all the tractor companies helped overall tractor volumes advance a brisk 50% during the month, over the last year, said Benaifer Jehani, director research at Crisil Ltd. While demand is strong, the impressive sales volumes also reflect the very high levels of dispatches being organized by tractor firms in order to make the most of the festive season, she said.

Tractor makers, such as automobile firms, count dispatches to dealers as sales.

“The buildup of stocks at the dealerships is humongous in anticipation of a good festive demand,” she said, adding that she expects some correction in the current month.

The festive season has been equally impressive for motorcycle and scooter makers.

Honda Motorcycle and Scooter India (HMSI) Pvt. Ltd, the second largest two-wheeler maker, has all its factories running at peak capacities. On the first day of Navratri, HMSI retailed 52,000 scooters and motorcycles.

Cumulatively, ending with Dussehera, it sold a total of 100,000 units in 10 days, said Y.S. Guleria, HMSI senior vice-president (sales and marketing). This is the best for the company in three years. A lot of it was led by an aggressive network expansion in rural and semi-urban areas where the demand is strong and the company has ability to meet it, he said. HMSI sells four out of every 10 two-wheelers in rural markets. Hero MotoCorp Ltd, the two-wheeler market leader, is equally bullish.

“With close to two weeks still remaining in the festival season, we have set an all-time record by selling over a million motorcycles and scooters in domestic retail sales in the festive period so far, further consolidating our market leadership,” Ashok Bhasin, head of sales, marketing and customer care at the firm said in an email. Hero draws half of its total sales from rural India.

Crisil expects tractor sales for the festive months from September to November to expand by 12-16% from the year-ago period as the high base effect of the previous fiscal kicks in.

However, the festive season has been dull so far for makers of oils, shampoo, soap, chocolates and other daily consumables.

Some have flagged the lagging effects of demonetisation and the impact of the GST rollout on wholesale channels as obstacles to rural recovery.

“The rural market has been evolving every year. The region buys more of the gifting and premium portfolio of Cadbury’s chocolates,” said Hemant Rupani, sales director, Mondelez India Pvt. Ltd, owners of Cadbury. He added that although sales have been decent, they are yet to take off in a big way.

“The wholesale piece (part of the business conducted via wholesale channel) has been upset by the GST,” Rupani said, adding that the rural market performance “could have been better” given that a slew of government schemes to improve rural infrastructure were expected to boost rural demand. In an investor presentation in September, India’s largest consumer packaged goods company, Hindustan Unilever Ltd, said that its growth in rural markets lagged in fiscal 2016-17—falling behind urban markets for the first time since 2011-12.

Citing data from market research firm AC Nielsen, it said consumer sentiment has fallen steadily since 2011- 12.

Analysts said a large part of this depressed demand is the patchy monsoon and lower kharif crop sowing that came right after demonetisation in November last year. Monsoon rains this year were deficient by 5% as of 22 September, said a report by investment bank Morgan Stanley on the same day.

By state, rains were deficient in some of India’s largest consumer markets including Uttar Pradesh, Madhya Pradesh, and Punjab.

Consequently, sowing of rice, pulses and oilseeds declined by 1-9% year-on-year, it added. All these are expected to impact consumer demand.

In a report dated 22 September, equities brokerage firm JM Financial had said that these “channel related issues”, particularly among wholesalers and in the north and the east, will make rural demand recovery a “more gradual affair” even though “the end consumer is quite oblivious to these changes”.

Mahindra’s Jejurikar said rain-deficient states such as Uttar Pradesh have good irrigation cover—as much as 80% and should make up for the shortfall.

Therefore, it’s unlikely to adversely impact farm output. Mahindra has maintained its growth forecast of 10- 12% for the tractor market for the full year.

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

12.1. India to be hub of Isuzu's global manufacturing operations

PTI, Sep. 22, 2017

Vadodara: Japanese auto maker Isuzu today launched its adventure utility vehicle D-MAX V-Cross in the city and said it plans to export its vehicles to countries such as the UAE, Bangladesh and Myanmar, among others.

Isuzu plans to make India a hub of its global manufacturing operations and export vehicles to nearly 20 countries as part of this plan, Isuzu Motors India deputy managing director Hitoshi Kono said at the launch. "Isuzu has invested Rs 3,000 crore in setting up a manufacturing facility in Andhra Pradesh. We plan to export vehicles to the UAE and neighbouring countries such as Bangladesh and Myanmar, among others," he said. The company also inaugurated its first showroom in the city, 'Torque Isuzu,' which is its third outlet in Gujarat after Ahmedabad and Rajkot.

Gujarat has been a very important market for Isuzu and the company sees huge potential for the Isuzu D-MAX pick- up trucks, he said.

Located in Sri City of Andhra Pradesh, the Isuzu manufacturing facility has an installed capacity of 50,000 units per annum and can be expanded to 1,20 lakh units per annum.

The facility is already shipping vehicles to Nepal.

After the GST came into the play in July, Isuzu has reduced prices of MU-X, D-Max S- cab in India by up to 12 per cent, Kono said.

Isuzu Motor India's product line-up includes the MU-X SUV, D-Max V-Cross AUV (passenger vehicles) and under the commercial segment, the company offers the D-Max

S-Cab and the D-Max. Asked about the company's preparedness for the electric vehicles, he said Isuzu will comply with the Indian government's norms for manufacturing of e-cars.

India has set the target of having only electric cars on the roads by 2030.

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

12.2. India key export base for auto firms

Business Standard, Sep. 25, 2017

New Delhi: India is evolving into one of the top global export bases of certain car models made by multinational automobile companies. This is true in case of bigger models, too, and not only in small cars, considered a specialty of the Indian auto industry. The trend is increasingly visible among global brands. Take the case of Germany’s Volkswagen. The Vento is produced only in India and Russia. And, India is the larger of the two.

“In 2016 calendar year, Volkswagen India produced 83,000 Vento cars, against Russia’s 60,000. Russia is also primarily producing the Vento for domestic consumption. They have low volume export to East European markets,” said Andreas Lauermann, president and managing director at Volkswagen India. However, nine of every 10 Ventos made at Volkwagen’s Chakan unit near Pune is exported, making it the biggest export contributing unit for this model.

Korea’s Hyundai, second biggest in India’s car sales, has a similar story with its two-year-old sports utility vehicle (SUV), the Creta. India is its largest producer and exporter. About 45,000 units of this went for export in 2016. However, unlike the Vento, Creta has substantially bigger local demand. Nearly 93,000 units were sold in India last year.

Hyundai is also geared to make India one of the top export hubs for its fifth-generation Verna, a sedan launched recently after a full model change. India will be the fourth production hub for the car, after South Korea, China and Russia.

American carmaker Ford did not respond to queries on where India ranked globally in export for its compact SUV, the EcoSport. However, considering a monthly export shipment of almost 8,000 units, India would be among the top export hubs for the car. Ford ships almost double the volumes of EcoSport compared to domestic sales.

General Motors, which in May decided to stop local sales in the Indian market, exports the largest number of its Beat hatchback from the India unit. It is also produced in Colombia, Vietnam and Uzbekistan. “We recently started shipment of the Chevrolet Beat sedan to 13 markets in Latin America, for which we are the only manufacturer globally,” said a company spokesperson.

What is driving these companies to ship large volumes from India? A prominent factor is that many have not had a great run in the Indian market, leading to under-utilisation of capacity. A mix of export and local strategy is leading to better utilisation. Also, India has turned to be a cost-competitive production base for these companies, with multiple plants across the globe. “Our cars manufactured in India have found high levels of acceptance and are in demand in several markets around the world, as they live up to global standards. And, India offers a great low-cost manufacturing opportunity. We have been able to localise to a great extent and that has given us a further edge,” said Lauermann.

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

13.1. Gujarat set to become India’s first electric vehicle hub

Livemint, 27 Sep. 2017, Maulik Pathak and Amrit Raj

Apart from JSW and Suzuki, MG Motors India and Tata Motors are also looking to produce electric car vehicles from their factories in Gujarat

Ahmedabad/ New Delhi: Gujarat was late when it came to assuming the mantle of India’s Detroit. But that race was for vehicles running on internal combustion engines.

With policy focus shifting in favour of greener technologies and carmakers being forced to adopt electric and hybrid systems, Gujarat leads the race for manufacturing of such systems.

Suzuki Motor Corp.’s recent announcement in this space, has just been followed by JSW Group which has signed an agreement with Gujarat government to promote production of battery operated vehicles in the state along with the production of electrical battery, storage solutions and charging infrastructure. According to a state government release, the company will investment Rs4,000 crore in the venture. According to two officials close to the development, JSW wants to build two lakh vehicles annually and has finalised a location—around 500 acres—near Suzuki’s manufacturing facility in Hansalpur.

JSW Energy’s car factory is expected to start commercial production in financial year 2021.

“The car will have high power, fast pick up will have ultra-fast charging due to which the time for battery recharge will be similar to filling petrol/diesel in regular cars. The running cost of the electric car will be less than Re.1/kilometre,” said a state government official familiar with the company’s plans.

JSW did not respond to an email seeking response.

The Gujarat government has also recently signed an agreement with a Chinese manufacturer for setting up a factory for rolling out electric bikes from Gujarat.

“The proposed factory will come up near Rajkot and will have a capacity to roll out 50,000 electric bikes annually,” said the official refusing to name the company. An announcement on the same is expected to be made soon.

Apart from JSW and Suzuki, MG Motors India and Tata Motors are also looking to produce electric car vehicles from their factories in Gujarat.

MG Motors India Ltd, a subsidiary of China’s largest auto maker SAIC Motor Corp. Ltd is also considering launching electric and hybrid cars in India. The company has recently taken over General Motors India’s manufacturing facility in Halol, Gujarat, from where it looks to launch its iconic MG (Morris Garages) brand vehicles by 2019 starting with an SUV.

“Apart from SUVs and sedans, our product portfolio includes electric vehicles, hybrid, fuel cell among others. All this could be considered for Indian markets where we aim to roll out environment friendly vehicles,” P. Balendran, executive director at MG Motor India told Mint in a July interaction.

Tata Motors is also looking to revamp sales of Nano car by introducing an electric version of the world’s cheapest car at its factory in Sanand, Gujarat, Bloomberg reported. A Tata spokesperson declined to comment.

Ford Motor Co., which has a manufacturing unit at Sanand in Gujarat has said in a press statement that it had joined hands with Mahindra Group to explore a strategic alliance, designed to leverage the benefits of Ford’s global reach and expertise and Mahindra’s scale in India and successful operating model. Among other areas, the two companies were also looking at electrification of vehicles as a potential area of co-operation on which they would collaborate and work together for the next three years. Ford, which also has a manufacturing plant in Tamil Nadu, did not give specific details of future products and where they would be manufactured.

13.2. EESL to procure 10,000 electric vehicles from Tata Motors

BusinessLine, 29 Sep. 2017

Energy Efficiency Services Limited (EESL) will procure 10,000 electric vehicles from Tata Motors Limited. An official statement said that the company was selected through an international competitive bidding aimed at increased participation.

Tata Motors won the tender and will now supply the Electric Vehicles (EVs) in two phases – first 500 e-cars will be supplied to EESL in November 2017 and the rest 9,500 EVs will be delivered in the second phase, the statement added.

The tender floated by EESL is the world’s largest single electric vehicle procurement. Three leading manufacturers – Tata Motors Limited, Mahindra & Mahindra (M&M) and Nissan participated in the tender and the bids for Tata Motors Limited and Mahindra and Mahindra (M&M) were opened.

Tata Motor Limited quoted the lowest price of Rs. 10.16 Lakh exclusive of GST in the competitive bidding. The vehicle will be provided to EESL for Rs. 11.2 lakh which will be inclusive of GST and comprehensive 5-year warranty which is 25% below the current retail price of a similar e-car with 3-year warranty.

14.1. Cabinet approves SANKALP & STRIVE Schemes to boost Skill India Mission

Press Information Bureau, Oct. 12, 2017

New Delhi: The Cabinet Committee on Economic Affairs chaired by the Prime Minister Shri Narendra Modi, has approved two new World Bank supported schemes of Rs. 6,655 crore - Skills Acquisition and Knowledge. Awareness for Livelihood Promotion (SANKALP) and Skill Strengthening for Industrial Value Enhancement (STRIVE). SANKALP is Rs 4,455 crore Centrally sponsored scheme including Rs. 3,300 crore loan support from World Bank whereas STRIVE is a Rs. 2,200 crore - central sector scheme, with half of the scheme outlay as World bank loan assistance. SANKALP and STRIVE are outcome focused schemes marking shift in government's implementation strategy in vocational education and training from inputs to results.

There has been a long felt need for a national architecture for promoting convergence, ensuring effective governance and regulation of skill training and catalysing industry efforts in vocational training space. The two schemes shall address this need by setting up national bodies for accreditation & certification which shall regulate accreditation and certification in both long and short term Vocational Education and Training (VET). The architecture shall help, for the first time in the history of vocational education in India, to converge the efforts of various central, state and private sector institutions thereby avoiding duplication of activities and bringing about uniformity in vocational training thus, creating better impact.

Both the schemes are aimed at institutional reforms and improving quality & market relevance of skill development training programs in long and short term VET. In past many government schemes such as Vocational Training Improvement Project (VTIP) have focussed on strengthening ITIs and over 1600 ITIs have already been modernized under the schemes. STRIVE scheme shall incentivize ITIs to improve overall performance including apprenticeship by involving SMEs, business association and industry clusters. The schemes aim to develop a robust mechanism for delivering quality skill development training by strengthening institutions such as State Skill Development Missions (SSDMs), National Skill Development Corporation (NSDC), Sector Skill Councils (SSCs), ITIs and National Skill Development Agency (NSDA) etc. The schemes shall support universalization of National Skills Qualification Framework (NSQF) including National Quality Assurance Framework (NQAF) across the skill development schemes of central and state governments thus ensuring standardization in skill delivery, content and training output.

The schemes shall provide the required impetus to the National Skill Development Mission, 2015 and its various sub missions. The schemes are aligned to flagship Government of India programs such as Make in India and Swachhta Abhiyan and aim at developing globally competitive workforce for domestic and overseas requirements. To this end, over 700 industry led institutions are being set up for providing job oriented skill training to lakhs of aspirants. An innovative challenge fund model has been employed to select and support proposals to set up such institutions in identified sectors and geographies. 66+ India International stalling institutions are being promoted to focus upon skill training as per global standards for overseas placements. Over 30,000 aspirants shall be trained in IISCs and get certificates from International Awarding Bodies (lABs). Upgrading 500 ITIs, as model ITIs across India and improving their industry connect, is also envisaged by ushering in reforms such as on-line examination, centralised admission, improving efficiency and transparency in the system.

National Policy of Skill Development and Entrepreneurship 2015 highlighted the need of quality assurance measures such as building a pool quality trainers and assessors. SANKALP envisages setting up of Trainers and Assessors academies with self-sustainable models. Over 50 such academies are to be set up in priority sectors. DOT, MSDE has already made significant progress in this direction by setting up a number of Institutes for Training of Trainers (IToT) in public and private sector, offering training in over 35 trades. The schemes shall leverage such institutions for training the trainers in both long & short term VET thereby bringing about convergence. Additional trainer academies shall be set up on the basis of identified sectoral and geographical gaps.

Greater decentralization in skill planning will be ensured by institutional strengthening at the State level which includes setting up of State Skill Development Missions (SSDMs) and allowing states to come up with District and State level Skill Development Plans (DSDP/SSDP) and design skill training interventions to suit the local needs. SANKALP aims at enhancement of inclusion of marginalized communities including women.

Scheduled Castes (SCs), Schedule Tribes (STs) and Persons with Disabilities (PWD) to provide skill training opportunities to the underprivileged and marginalised section of the society.

The schemes will develop a skilling ecosystem that will support the country's rise in the Ease of Doing Business index by steady supply of skilled workforce to the industry. The schemes will also work towards increasing the aspirational value of skill development programs by increasing the marketability of skills, through better industry connect and quality assurance.

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

14.2. MG Motor opens manufacturing facility in Gujarat

BusinessLine, 30 Sep. 2017

Chinese automobile giant SAIC, through its Indian subsidiary MG Motor India, on Friday inaugurated its first car manufacturing facility in India at Halol near Vadodara in Gujarat.

The facility being revamped at a minimum initial investment of Rs 2,000 crore, will have an initial capacity of 80,000 units per annum in the first phase and will roll out its first car in 2019.

Originally, an iconic British Racing Sports Brand - set up in the year 1924 - was acquired by Chinese car giant SAIC in 2008. The latest facility, acquired form the American automobile giant, General Motors, is spread over an area of 170 acres and will be completely revamped by MG Motor by 2019.

The company has already hired an initial workforce of 70 employees at the plant. The facility will entail creation of significant number of jobs, apart from several additional indirect jobs in the State, as part of the ‘Make in India’ and ‘Skill India’ initiatives, the company said.

"Today is a water-shed moment for the MG brand in India with the inauguration of our first-ever manufacturing facility here. Overall, we aim to positively contribute to the ecosystem here in Gujarat, including all stakeholders, by generating employment opportunities for local talent, leveraging the capable supplier base and contributing to the overall benefit of the society and community here," said Rajeev Chaba, President and Managing Director, MG Motor India.

The Morris Garages brand or MG already has at least 500 owners in India since 1924, when the brand was first established in the UK. "These owners and many passionate fans have expressed their curiosity, keenly anticipating the brand’s return to India. The first product will roll out from here in 2019," Chaba added. The MG brand has evolved into a modern-day innovative brand through the last 93 years.

15.1. India gets its first high horse power locomotives from France

PTI, Sep. 21, 2017

New Delhi: India's dream for high horse power locomotive moved closer to reality with the arrival of the first bodyshell of 12000 HP loco from Alstom France at Kolkata port today.

This first-of-its-kind high-power electric locomotive will be used to haul freight trains at twice the existing speed by next year.

The bodyshell for the fleet of the twin-section electric locomotives which Alstom is to supply to Indian Railways was unloaded at Haldia, ready for delivery to the factory at Madhepura where it will be assembled. In November 2015, the public transporter inked a contract with the French company to manufacture 800 such train engines over the next 11 years in a joint venture at the Madhepura locomotive factory in Bihar.

This is the first major FDI (Foreign Direct Investment) project in the rail sector. The first such locomotive, estimated to cost about Rs 30 crore, will be assembled with components brought in from Alstom s factories in France and will have its trial run by February next year. The contract allows for the first five locomotives to be imported, but the remaining 795 are to be manufactured locally in support of the government s Make in India campaign. The total contract is worth above three billion euro.

This project includes the set-up of a plant at Madhepura (Bihar state) and two maintenance depots at Saharanpur (Uttar Pradesh state)and Nagpur (Maharashtra state). The delivery of the locomotives will spread between 2018 and 2028.

The locomotive will run at a speed up to 120 km/h.

The Railways is currently using 6,000HP locomotives for freight services. The increase in speed would also result in improving line capacity in the rail network, a railway official said.

As per schedule, 35 locomotives would be rolled out from the factory by 2020, 60 in 2021, followed by 100 every year till the target of 800 is completed.

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

15.2. Plan to build loco factory with GE on track: Goyal

BusinessLine, 29 Sep. 2017

Railway Minister Piyush Goyal said a locomotive factory will come up as planned in Bihar’s Marhowrah district and it will be set up by US major General Electric.

Addressing a press conference here, Goyal said all decisions on the manufacturing unit would be taken within the terms of the contract between GE and the Railways.

The announcement comes on the back of reports that the Railways is contemplating termination of a contract with General Electric (GE) for setting up a diesel locomotive factory in Marhowrah, after the company warned against changes to the joint venture.

Goyal further said that Indian Railways, which has already speeded up the electrification process to lower its energy bill and control pollution, has decided to go further by electrifying 4,000 km of network a year.

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

16.1. Inside SoftBank’s India investment strategy

Livemint, 21 Sep. 2017, Snigdha Sengupta & Mihir Dalal

SoftBank CEO Masayoshi Son has been writing bigger cheques than in the past to consolidate its hold over the Indian market. MintAsia examines the investor’s India strategy

Mumbai/Bengaluru: Billionaire Masayoshi Son, founder and chief executive officer of SoftBank Group Corp., has for a while now made it his business to bet on the future. That’s probably why a downturn of the kind that is currently in session in India’s technology start-up market doesn’t ruffle him. In an interview in December, during a brief visit to New Delhi, he said, “There are good times and bad times but SoftBank is always there.” Son, 60, has kept his word. In the nine months since his visit, SoftBank has put more than $4 billion to work in the Indian market. That takes the Japanese telecom and media conglomerate’s investments in start-ups in India to more than $6 billion in less than three years. Out of the $4 billion that has been committed this year, more than half will be cornered by Bengaluru-based e-commerce firm Flipkart. SoftBank struck a deal last month to buy a 20% stake in Flipkart for an estimated $2.6 billion. About $1.4 billion is expected to go directly into Flipkart’s coffers. The remainder will be used to buy stakes from some of the company’s existing investors. New York-based Tiger Global Management LLC and venture capital firm Accel Partners are said to be among the sellers.

Earlier, in May, SoftBank bought a 20% stake in New Delhi-based One97 Communications Pvt. Ltd, owner of payments platform Paytm, for $1.4 billion. The deal involved a $400-million payout for early investor SAIF Partners’s stake in the company. Paytm founder Vijay Shekhar Sharma also cashed in some of his shares as part of the deal. The investment spree continued into this month when SoftBank joined Sunil Munjal’s Hero Enterprises to infuse $250 million into Gurugram-based budget stays aggregator OYO (Oravel Stays Pvt. Ltd). The company’s other existing investors, venture capital firms Sequoia Capital India, Lightspeed Venture Partners and Greenoaks Capital Partners LLC participated in the round.

While Flipkart and Paytm are new investments for SoftBank, it returns as an investor in OYO. It had last invested in the firm in August 2016, bringing in about $62 million. It had entered the company exactly a year earlier when it joined OYO’s existing investors Sequoia, Lightspeed and Greenoaks to lead a $100-million funding round in the then less than two-year-old company.

With the latest salvo of investments, Son is clearly sending out the message that India, despite recent setbacks, remains an extremely important market for SoftBank. Further, it is willing to write even bigger cheques than it has in the past to consolidate its hold over the market. What isn’t quite so evident yet is how it plans to execute that strategy without repeating the mistakes from the past.

“In 2015 our chairman and CEO committed to a goal of a minim

um $10 billion investment in ten years. Given our pace of commitments, we expect to hit this schedule well ahead of schedule,” a SoftBank spokesperson said in response to queries from MintAsia.

The beginnings

The spending spree that’s been underway this year is reminiscent of the one that marked the Japanese corporation’s entry here in late 2014. Under then vice-president Nikesh Arora, a former Google executive handpicked by Son, SoftBank made fast work of snapping up stakes in a bunch of leading consumer internet start-ups. By the close of 2015, it had deployed an estimated $2 billion in five firms—Delhi-based e-commerce marketplace Snapdeal (Jasper Infotech Pvt. Ltd), Bengaluru-based ride hailing service Ola (ANI Technologies Pvt. Ltd), Mumbai-based property search platform Housing (Locon Solutions Pvt. Ltd), Gurugram-based grocery delivery service Grofers India Pvt. Ltd and OYO.

If the strategy at the time was to muscle into the best available assets, peak valuations be damned, it worked. Within just 12 months, Arora succeeded in bringing SoftBank abreast with Tiger Global, the largest and most influential investor in the technology start-up market in India for nearly a decade. Along the way, it also contributed to driving up valuations further in an already overheated market.

Snapdeal, which competed with Flipkart, Tiger Global’s single largest investment in India at an estimated $1 billion, saw its valuation vault to $2 billion with SoftBank’s investment. Ola’s valuation jumped three times to more than $600 million. Housing, a two-and-a-half-year-old firm when SoftBank led a $90 million round, was valued at more than $200 million, courtesy the premium paid by its new benefactor.

“Go in, go big and crush the competition with capital… that seemed to have been the strategy. It isn’t fair to assign all blame to Nikesh (Nikesh Arora). Masa (Masayoshi Son) is known to be aggressive when he wants what he wants,” says a venture capitalist in Bengaluru whose firm is a co-investor in some SoftBank-backed companies in India. The person didn’t want to be named.

But the strategy backfired when the market slipped into a downturn somewhere in the last quarter of 2015. Hedge funds and other non-traditional start-up investors, Tiger Global among them, pulled back. The flight of global capital meant that either SoftBank itself would have to pony up most of follow-on capital that portfolio companies would need in the months ahead or the companies would have to lower their valuations to attract new investors. The implosion of Snapdeal early this year is perhaps the best example of the India strategy gone horribly wrong. SoftBank will very likely have to write off its estimated $900 million investment in the company after a bid to merge it with Flipkart fell through last month. Snapdeal, valued at $6.5 billion at its peak, is a shadow of its former self.

“I don’t think they (SoftBank) understood the Indian market very well. If they had taken the time to do that, started off with moderate deal ticket sizes, they could have had a more meaningful impact on the later-stage start-up funding market,” says a venture capitalist with a homegrown firm based in Mumbai.

Righting the wrong

The current environment in India’s start-up market offers SoftBank the perfect opportunity to right the wrongs from the past. Valuations continue to be under pressure across the board. The number of serious rivals to contend with at the deal table remains significantly low. And entrepreneurs have become more rational about how they want to scale their businesses.

“When SoftBank came in three years ago, its timing was off by maybe 1-2 years. That’s not the case now. In a lot of ways, this is the ideal environment for a strategic (investor) like SoftBank to build a solid presence,” says another Mumbai-based venture capitalist who leads the India investments for one of Silicon Valley’s top rung firms. This person didn’t want to be named.

But here’s the problem. SoftBank has never really behaved like a strategic investor. In fact, in its scale and pace of investments, here it has often behaved almost like a hedge fund. Despite the depth of strategic and operational experience it possesses within the organization, by most accounts, it has not really brought that expertise to bear in its portfolio firms.

“The investments here are mostly managed remotely… interaction between the portfolio companies and SoftBank is minimal,” said a former senior executive at a SoftBank-backed company on the condition of anonymity. “There is a fair bit of interaction with the founders (of portfolio firms) but not much more beyond that,” said another former senior executive at a second SoftBank-backed firm. Both didn’t want to be named.

SoftBank Vision Fund

The launch of its global technology investment vehicle, the $100-billion Vision Fund, takes it further away from its strategic identity. The fund raised $93 billion of the target $100 billion corpus in May this year from a slew of global investors such as Apple Inc., the Public Investment Fund of the Kingdom of Saudi Arabia, Foxconn Technology Group, Qualcomm Inc. and Sharp Corp.

SoftBank’s own commitment to the fund is about $28 billion. The fund intends to write out cheques worth $100 million at the minimum for stakes in public and private companies across technology verticals such as the Internet of Things, artificial intelligence, mobile applications, telecoms, cloud technologies and software, consumer Internet and, financial technology.

“The Vision Fund will invest through minority stake, majority stakes and public equity investments of $100 million or more. If a future investment in India meets this criteria then it will likely come through the Vision Fund,” the spokesperson added.

With that much more money at its disposal, it is hard to see how SoftBank’s strategy is going to be any more different from what it has been in the past. In India, the $2.6-billion investment it is making in Flipkart is from the Vision Fund. So is the $250-million round it led in OYO this month. What is clear though is that with the launch of the Vision Fund, big-ticket investments, not just in India, are going to become a priority for SoftBank. Paytm is a Softbank Group Corp investment that pre-dates the Vision Fund, the SoftBank spokesperson said. “I’m not sure what their investment strategy is… they’ve clearly made so many mistakes here. And even recent investments like Flipkart will be tough to make money from because they are all very late-stage investments. Can Flipkart go from $12 billion (valuation) to $20-25 billion in the next three-to-four years?

That’s the main question. Or can Paytm go to $12-15 billion from $7 billion?” says yet another venture capitalist whose firm is a co-investor in a SoftBank-backed company.

Son himself has a rather utopian view of the future as he sees it through the Vision Fund. “SoftBank is aiming not just at one technology, one business model, one brand to drive the world. No. We want to form a coalition of like-minded people, comrades, entrepreneurs… we want to form a group, everyone to work together to create a revolution,” he told stakeholders at SoftBank World 2017, an annual conference, in July. It’s going to be easier said than done.

16.2. Flipkart, Amazon claim huge boost from festive season sales

Livemint, 25 Sep. 2017, Anirban Sen

Flipkart claims it accounted for at least 70% of total e-commerce sales in India during Big Billion Days, Amazon says Great Indian Festival 2017 was the firm’s biggest shopping event ever

Bengaluru: Flipkart and Amazon India, the country’s largest online retailers, have surpassed sales from last festival season’s sale events by a considerable margin, driven by strong demand for smartphones and televisions.

Flipkart’s sales doubled from last year, the online retail firm said in a statement on Sunday evening. Flipkart claimed it accounted for at least 70% of total e-commerce sales in India during its five-day Big Billion Days sale which concluded on Sunday, indicating it had beaten Amazon by a wide margin.

Amazon India declined to comment on its performance in comparison to Flipkart.

Flipkart’s sales and volume were yet again driven by categories such as smartphones and large appliances. Earlier during the week, Flipkart claimed that it sold at least 1.3 million smartphones during the first 20 hours of the sale launch for the category.

Mint could not immediately ascertain the exact figures that both Flipkart and Amazon reported during the sale events, since both Big Billion Days and the Great Indian Festival were to conclude a few hours after this story went to print.

Last week, Flipkart had claimed that it was on track to double sales from last year’s Big Billion Days sale— which would indicate gross sales of at least Rs6,000 crore (nearly $1 billion). Neither Flipkart nor Amazon commented on exact gross sales figures. The sales figures cited above also include sales from Flipkart-owned units Myntra and Jabong.

Gross sales are net of discounts but before product cancellations and returns, which tend to jump during sale events.

“This Diwali for us at Amazon.in was the biggest shopping event ever—the largest in terms of units, sale value, sellers, number of customers, number of pin codes we served, etc.,” said Manish Tiwary, vice- president, category management, Amazon India.

For Amazon, the Prime subscription programme continued to be a big growth driver. Sales from categories such as smartphones and large appliances helped shore up gross sales. Amazon said growth from smartphones more than doubled, while sales from large appliances more than quadrupled from last year. Last week, Amazon had said that sales of mobile phones grew 150% while those of large appliances such as TVs and washing machines jumped by 3.7 times from last year on Day 1 of the five-day sale. “Prime membership continues to be our highest selling product—this is a trend that continues from last Diwali,” added Tiwary.

The strong sales from both Flipkart and Amazon provides a much-needed boost for India’s growing online retail market, which had witnessed a stagnation in the pace of growth earlier this year. The robust sales season sets the stage for India’s top e-commerce firms to finish the year strongly and could well be the turning point for a sector that has been plagued by sluggish expansion over the past one and a half years.

17.1. Festive September fires up car sales amid cess brake

BusinessLine, 2 Oct.2017, G Balchandar

Passenger vehicle industry is expected to report strong growth for September due to the festive season and introduction of new models.

During July and August, car sales grew by nine per cent and 12 per cent respectively after reporting a modest four per cent in Q1 of this fiscal. Utility vehicles maintained strong sales growth 36 per cent and 20 per cent during these months, mainly due to compact SUV sales.

Despite additional compensation cess in GST announced by the government last month, leading car makers, who have announced their sales for September, have reported strong numbers for the month.

Top car maker Maruti Suzuki has reported 10 per cent growth in its PV sales at 1.5 lakh units during September. “Strong demand for existing models and new models fuelled the growth during this festival month,” Rs. Kalsi, Senior Executive Director – Sales & Marketing, Maruti Suzuki India, told BusinessLine. Second largest car maker Hyundai achieved a record sales of 50,028 units in September, a growth of 17 per cent, aided by its new mid-size sedan Verna, which fetched sales of over 6,000 units.

Tata Motors, which is now sporting young portfolio of cars, has recorded 18 per cent increase in its PV sales at 17,286 units during September and that was the highest sales since November 2012. Its just-launched compact SUV Nexon has also brought in incremental growth for the company.

Rise in demand

To make most of the festive season, Maruti is also introducing a few limited editions of its existing models. It has just unveiled a new variant of its SUV S-Cross.

“We have seen a good sales momentum due to Navratri and Durga Pooja celebrations for many models that include WR-V, City and Jazz. There were some improvements in sales of BR-V as well. We hope we will report double growth for September,” said Jnaneswar Sen, Senior Vice-President, Sales and Marketing, Honda Cars India Ltd.

However, players like Toyota, which had a good run during July and August, were feeling the pinch of additional cess.

The company, which announced its September month sales on September 28, has seen a low single-digit growth. Toyota revised the prices September 12 in line with the cess hike which actually reflected the prices in the pre-GST period. However, N Raja, Director & Sr Vice-President, Sales & Marketing, Toyota Kirloskar Motor, pointed out that cess hike had minimal impact and the festive season brought in positive growth in the sales.

Tax rates

“Despite the spike in customer demand, we had to close the month early by September 28, leading to lesser number of production days,” he added. “The total tax incidence (GST + cess) on mid and large-sized cars after new cess rates has increased by just 0.5 per cent if compared to the pre-GST rates, while the same for the utility vehicle is down by 1.5 per cent,” according to Shrikant Akolkar, Analyst-Automobiles at Angel Broking. Lower interest rate environment, revival in rural demand and new model launches will augur well for the PV industry to maintain a positive growth in the near term.

17.2. India’s great leap into services

Livemint, 9 Oct. 2017, Ejaz Ghani

The digital revolution means it is possible for the services sector to deliver rapid growth and jobs more sustainably than the manufacturing sector

China and India are two of the fastest growing economies in the world. But they are following very different growth paths. China is a formidable exporter of manufactured goods. India has acquired a global reputation for exporting services, leapfrogging the manufacturing sector.

Services contribute more than manufacturing to India’s output growth, productivity growth and job growth. Given the relatively large size of the service sector compared to manufacturing, India’s growth pattern resembles that of the US. This raises big questions. Can services be as dynamic as manufacturing? Can services contribute more than manufacturing to output growth, productivity growth and job growth? India’s growth pattern contradicts an iron law of development that has held true for 200 years, since the start of the Industrial Revolution. This law has argued that industrialization is the only route to rapid economic development for developing countries. The potential for explosive growth was seen only in the manufacturing sector.

This is no longer the case. The new industrial revolution and digital technological changes have changed the growth drivers in developing and developed countries. These technological changes have enabled services to be the new driver of growth. The digital revolution, by lowering transaction costs in services and overcoming problems of asymmetric information, has made services more dynamic than in the past. The emergence of e- commerce platforms is an example of how digital revolution can lower transaction costs, increase productivity as well as make it more inclusive. For many internet-based businesses or services, fixed up-front costs can be high initially, but once the physical infrastructure is in place, each additional customer, user, or transaction incurs very little extra cost.

There is mounting empirical evidence that developing countries are relying more on services and less on manufacturing as drivers of growth and job creation (Maria Enache, Ejaz Ghani, and Stephen O’Connell, 2016, Structural Transformation In Africa: A Historical View, Policy Research Working Paper Series 7743, World Bank.

The chart shows the sectoral trends—agriculture, manufacturing and services—over the last four decades, for a large group of countries. In the early 1970s, the relationship between the manufacturing labour share and income was far steeper than it is today, having followed a progressive erosion of the initial strength of this correlation over the past four decades. The relationship between income and economic structure has shifted over time, with countries across the income distribution uniformly increasing the share of labour in service sectors and an increasingly less stark relationship between manufacturing intensity and gross value-added per capita. While global growth convergence in manufacturing was a clear and strong trend some decades ago, it is no longer as strong in recent decades. Services show stronger growth convergence in recent decades.

Is services-led growth sustainable?

Drivers of structural transformation and growth, either services-led growth or manufacturing-led growth, are similar but also changing. These include trade policy, urbanization, and investments in physical and human infrastructure, and are country-specific. But some global trends have started to change. Global trade in goods has never fully recovered since the global financial crisis of 2007-08. But this is not the case with global trade in services, which has exploded. These are structural and not cyclical changes. Globalization of services is the tip of the iceberg. Services, which account for more than 70% of global output, are still in their infancy. The long-held view that services are non-transportable, non-tradable, and non-scalable no longer holds for a host of services that can be digitized.

The globalization of services provides new opportunities for India to find niches beyond manufacturing, where it can specialize, scale up, and achieve explosive growth. As the services produced and traded across the world expand with globalization, the possibilities to develop based on services will continue to expand. This pace of change will be rapid in line with the digital revolution. Global internet usage has grown globally. But this growth is much faster in developing countries. India alone adds one million new users every month to a booming mobile phone market.

What to do?

Although the same set of general non-distortionary growth policies is as important for services as for manufacturing, specific strategies for services matter. Investments in both physical and human infrastructure matter greatly for attracting new enterprises in both manufacturing and service industries. But unlike in the manufacturing sector, investments in human infrastructure, education and skills, matter much more. Given its stage of development, India needs accelerated investments in both physical and human infrastructure to support new drivers of growth and job creation.

A young population is generally more connected with technological changes. So, India’s demographic dividend should be an asset for the digital revolution and services-led growth. Job growth is important, as ten million more people will join the labour force every year in India. Agriculture and manufacturing create fewer jobs today compared to the past. But this is not the case with services.

Some policy experts have rightly argued that India is on the “brink” of a techno-institutional revolution. Take the example of mobile technology and examine its role in banking. Banking is currently concentrated in the urban areas, but cities are saturated with bank branches. On the other hand, 300 million rural people across 300 districts in India have no access to banking. Expansion of digital technology can play a big role in improving rural access to banking. Financial inclusion can be achieved through last-mile connectivity. Services are spatially more neutral compared to manufacturing. So financial inclusion could in turn help medium-size cities, small towns and villages to become new drivers of growth.

India’s experience offers hope to other latecomers to development. The process of globalization in the late 20th century led to a sharp divergence of incomes between those who industrialized and broke into global markets and the “bottom billion” in some 60 low-income countries, where incomes stagnated. It seemed as if the “bottom billion” would have to wait their turn for development, until giant industrializers like China became rich and uncompetitive in labour-intensive manufacturing. This is no longer the case.

Ejaz Ghani is lead economist at the World Bank.

18.1. 40 new hotels with 5,000 rooms in pipeline: ITC

PTI, 17 Sep. 2017

Diversified firm ITC plans to open 40 new hotels, adding around 5,000 rooms over a period of time, as part of the strategy to strengthen its hospitality business, according to a senior company official.

“The company is working on opening 10 new hotels in the next three and half years under its ongoing expansion programme across different verticals entailing overall investment of Rs 25,000 crore,” Sanjiv Puri, ITC CEO and Executive Director, said.

ITC’s hospitality chain has nearly 100 properties under four brands—ITC Hotels, WelcomHotel, Fortune and WelcomHeritage—across 70 locations with around 9,000 rooms.

“A total of 40 new hotels which will add around 5,000 rooms are in the pipeline,” said another senior company official. “These will include both company-owned as well as managed hotels,” the official said without sharing a timeline for all of the new properties to become operational.

In the near-term, however, Puri said that ITC has 10 new hotels in various stages of construction. He said that nine of these hotels are in India and one in Colombo, Sri Lanka, this is line with ITC’s ‘India first’ strategy.

The upcoming ITC hotels are in Kolkata, Hyderabad, Ahmedabad and Srinagar while another four will be under WelcomHotels brand at Coimbatore, Bhubaneswar, Guntur and Amritsar. The Colombo property is ITC’s first overseas project and is being undertaken by a wholly-owned subsidiary in Sri Lanka.

Sharing the roadmap for the hospitality vertical, Puri said, “Our whole premise in hotels is around having an asset right strategy. So we have a mix of our own properties and managed properties. I think with these hotels we will have a very strong footprint and then increasingly, the focus will be on managed properties.” ITC’s hotels business had posted consolidated revenue of Rs 1,414.39 crore 2016–17, up from Rs 1,357.43 crore in 2015–16.

18.2. International market share of Indian airlines rises to 7-year high: Icra

Livemint, Sep. 20, 2017

New Delhi: Indian airlines led by InterGlobe Aviation Ltd-run IndiGo have increased their international passenger market share to and from the country.

“The market share of Indian carriers on international routes increased to a seven-year high of 37% in July 2017,” said Anand Kulkarni, associate vice-president and associate head (corporate sector ratings) at rating agency Icra Ltd. “Indian airlines (predominantly IndiGo) are pushing harder it seems. IndiGo is deploying sizeable capacity on international routes.”

IndiGo’s capacity on international routes increased by 76.1% in July 2017 over the year-ago period, and by 68.2% in the first four months of 2017-18. Its market share has jumped from 3.1% in July 2016 to 5.0% in July 2017, Icra said.

“All other India airlines have more or less maintained their market share,” Kulkarni said.

Indian airlines had a 35.9% share of the international market in July 2016. They outperformed the industry on international routes, with passenger traffic growth of 13.1% in July 2017, as against 9.5% for the industry, Icra said.

To be sure, Indian airlines have been gaining market share over the past few years and ended 2016-17 with a 37.7% share, as against 28.9% in 2004-05, according to the Directorate General of Civil Aviation (DGCA). This means the share of Indian airlines for 2017-18 could be even higher. In 2016-17, Air India had the largest share of international traffic (16.6%), followed by Jet Airways (India) Ltd (14.5%), Emirates (9.9%), Etihad (5%), Qatar (3.9%), IndiGo (3.5%), Air Arabia and Oman Air (3.2% each), SpiceJet (3.1%) and Singapore Airlines (2%). Out of 92 scheduled international airlines that fly to and from India, the top six account for nearly 50% of total international passenger traffic and the top 15 for almost 75%, according to DGCA.

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

19.1. Mastercard lab to help India on inclusive digital economy goal

PTI, Oct. 11, 2017

New Delhi: Global payments solution major Mastercard today said it has launched its first technology lab in the country that will help India move towards digital economy and financial inclusion.

Mastercard Labs in Pune reinforces the commitment of the company to help India move towards its digital journey, it said, adding it will bring new commerce, payment and technology "ideas to life with greater speed than ever before".

This lab will be Mastercard's ninth such establishment in the world and the second in Asia Pacific after Singapore.

Mastercard will engage with financial institutions, merchant partners and fintech companies to identify and experiment in digital payments, data solutions, financial inclusion, alternative payments as well as cyber security.

The lab will also support and work with startups developing next generation, breakthrough commerce solutions through Mastercard's Start Path programme.

"Learning, innovation, and collaboration cannot exist in isolation. The launch of the first Mastercard Labs in India is evidence of our commitment to designing solutions that drive commerce and create more inclusive societies around the world, said Ken Moore, Executive Vice President, Mastercard Labs.

This will help improve lives of common Indian and help them move towards a world beyond cash, Moore added. The lab with incubation, proof of concept, pilot and commercialisation facilities will help deliver additional value to consumers and businesses of India, the company said.

"By establishing the new lab in Pune, we are looking to deepen our active collaborations with governments, issuers and businesses in India and revolutionise the market's digital payments ecosystem to drive greater acceptance and adoption of electronic payments, not just in India but around the world," said Tobias Puehse, Vice President, Mastercard Labs, Asia Pacific.

The launch of the technology lab in India is part of Mastercard's several broad based collaborations in India and Asia Pacific.

Earlier this year, Mastercard co-innovated with National Payments Corporation of India (NPCI) and other payments brands to develop Bharat QR. The QR (quick response) code is the world's first interoperable data acceptance solution that streamlines local electronic payments infrastructure.

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

19.2. India's 4 metros can gain US$ 7.2 bn/yr on digital payment boost

PTI, Oct. 13, 2017

New Delhi, Oct 12: Four metro cities of Delhi, Mumbai, Bangalore and Chennai can reap benefits of USD 7.2 billion annually by increasing payments through digital means, says a study report by global financial services major Visa.

The study conducted by Roubini ThoughtLab and commissioned by Visa examined the economic impact of increasing use of digital payments in major cities around the world including these four Indian cities. "The study estimates that relying more on electronic payments, such as cards and mobile payments, could yield a net benefit of up to USD 470 billion per year across the 100 cities studied roughly equivalent to 3 per cent of the average GDP for these cities," Visa said a release.

Mumbai, with a population of 19,547,000 and GDP of USD 104.1 billion, could gain USD 2.9 billion annual net benefits.

Delhi can gain USD 2.2 billion (GDP USD 74.4 billion); Bangalore USD 1.3 billion (GDP 44.7 billion) and Chennai can realise benefit of USD 0.8 billion (GDP 30.9 billion), it added.

"Increased use of digital payments could potentially save time for consumers and businesses, reduce cash related crime, increase business sales, bring about greater efficiencies, and increase tax revenues for governments," said T R Ramachandran, VISA group Country Manager for India.

He said a greater adoption of digital payments could boost stakeholders productivity by reducing the amount of time spent on payment related activities.

"This boost can act as a catalyst to further economic activity, increasing GDP growth, creating additional jobs and further bumping up wages and productivity catalytic impacts."

As cities increase use of digital payments, the positive impacts can extend beyond financial benefits to consumers, businesses, and government, said the study.

The shift to digital payments also may have a catalytic effect on the city's overall economic performance, including GDP, employment, wage, and productivity growth, it added.

Lou Celi, Head of Roubini ThoughtLab, said: "The use of digital technologies from smart phones and wearables to artificial intelligence and driverless cars is rapidly transforming how city dwellers shop, travel, and live."

However, without a firm foundation in electronic payments, cities will not be able to fully capture their digital future, he added.

Economics and evidence-based research firm Roubini ThoughtLab surveyed 3,000 consumers and 900 businesses across six cities --Tokyo, Chicago, Stockholm, Sao Paolo, Bangkok and Lagos-- in 2016, representing different levels of digital payments maturity.

The surveys examined use, acceptance and cost-benefit impact of physical and digital money and extrapolated these survey results based on specific demographic and economic data to another 94 cities around the world.

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

20.1. Telcos to invest US$ 20 bn in next 2 yrs: Bharti Enterprise VC

PTI, Sep. 29, 2017

New Delhi: Telecom operators in the country are expected to invest USD 20 billion (around 1.3 lakh crore) in the next two years on expansion of network and operations, Bharti Enterprise Vice Chairman Akhil Gupta said today.

"Looking at the financial health of many operators, we need to change their model. They need to get, to my mind and experience, asset light. This obviously means massive investment. By very rough estimate, a conservative estimate, we are looking at over USD 20 billion investments in next two years," Gupta said during a panel discussion at India Mobile Congress.

Gupta, who is also the chairman of mobile tower industry body TAIPA, said these investments have to be economically feasible and the pre-requisites should be done on the basis of infrastructure sharing.

Bharti group Chairman Sunil Bharti Mittal on Wednesday had said Airtel will invest Rs 18,000 to Rs 20,000 crore this year and added that the industry together will be injecting Rs 50,000-60,000 crore to build digital infrastructure.

Talking about USD 20 billion investment, Gupta said "half of this can be given to infrastructure companies at least like optic fibre. There is no reason why operators need to own any piece of property whether national long distance, international long distance, transport network or even connectivity of the towers". Gupta said that over Rs 1-1.25 lakh crore has been invested in mobile tower industry in the last 10 years.

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

20.2. L&T Infotech bags ‘advanced analytics’ project to catch tax evaders

PTI, 2 Oct. 2017

The infotech arm of engineering giant Larsen & Toubro has won the ambitious initiative to use social media analytics to identify tax non-compliance. The deal is “like a $100-million project” for the firm, according to a company official.

“That is really advanced analytics. Now, that is like a $100-million deal for us. It’s not a small deal,” L&T Infotech CEO and Managing Director Sanjay Jalona told PTI.

Terming the work awarded by the Central Board of Direct Taxes as a “high volume digital deal”, he elaborated that the project involves creating a ‘semantic web’ where web pages are structured and tagged in such a way that can be directly read by the computers.

A news report last month had said it was a multi-year contract where LTI would operate on a build-own- operate-transfer basis.

Jalona said apart from the work on the CBDT project, the company, which was listed last year, is working on other high-value digital deals such as the project to digitise parent L&T’s construction vertical “at the core”. This project involves plan and machinery optimisation for the company through interventions like sharing of high-cost assets, he said.

Jalona said the company is investing continuously on the emerging digital technologies, which now constitutes for 30 per cent of its revenue. He, however, asserted that margins will not be diluted as the company undergoes this change.

He said the company is also focussing strongly on blockchain and pointed out to a slew of examples of work with Indian, American and European clients on the front.

INDIA & THE WORLD

21. Trump Administration views India as a leading power: Juster

PTI, Oct. 04, 2017

Washington: The Trump Administration views India as a leading power and a true friend, the President's nominee to be America's envoy to India told lawmakers today, asserting that a strong India and a robust US- India relationship were in US' interest.

In his confirmation hearing before the Senate Foreign Relations Committee Kenneth I Juster, nominee to be the US Ambassador to India, said India's international influence was important and has been growing. "India's role in the Indo-Pacific region and globally will be critical to international security and economic growth over the course of this century," the former top White House official told members of the Senate Committee during his confirmation hearing.

Juster said the Trump Administration will build on the excellent meeting that US President Donald Trump and Prime Minister Narendra Modi had in June this year in seeking to deepen the partnership for the benefit of the people of both countries, and in the interest of shaping a freer, more secure and more prosperous world.

Of the many elements of the effort to expand and enhance the strategic partnership between the two countries and advance common objectives, Juster said one key pillar was to deepen defence and security cooperation, building on the US' recognition of India as a major defence partner.

"Together, our countries seek to ensure freedom of navigation, overflight and commerce, and advance a rules- based, democratic order throughout the Indo-Pacific Region," he said.

Juster said, if confirmed, he would look forward to engaging his counterparts in India to strengthen cooperation on the most pressing challenges to regional security and global peace from North Korea's destabilising pursuit of nuclear weapons to the growing threat that all forms of terrorism pose to people.

"In addition, I will make it a priority to work closely with New Delhi to promote security and stability in Afghanistan, where India already has provided billions of dollars in economic support and is a longstanding partner for peace," he said.

Noting that in the economic sphere, Modi has undertaken important reforms, Juster said the Indian government had liberalised foreign direct investment in several sectors and is working to improve the ease of doing business.

"If confirmed, I look forward to identifying ways that the United States can be a partner in these reform efforts, to the mutual benefit of our business communities and our citizens," he said.

India is 1.3 billion people and its rapidly expanding middle class represent a significant market opportunity for US goods and services, he said.

"I appreciate the imperative to expand free, fair, and balanced trade between the United States and India. We will pursue that goal by working with the Government of India to improve and expedite," Juster said. In his opening remarks, Senator Bob Corker, Chairman of the Senate Foreign Relations Committee, underscored the importance of India-US relationship.

He said the time had come to match the expectations from this relationship.

Expressing his frustration over the "slow pace" of Indian economic reform and compulsory licensing requirement, Corker said the economic playing field was not even in India.

The top US lawmaker also expressed concern over the rise of Hindu nationalism. Corker said he was also concerned about the scale of human trafficking in India, particularly the bonded labour. Senator Mark Warner, Vice Chairman of the Senate Select Committee on Intelligence, introduced Juster before the confirmation hearing. Warner is also Co-Chair of the Senate India Caucus, the only country specific caucus in the Senate. Pledging his full support to India-US relationship, Senator Ben Cardin, Ranking Member of Senate Foreign Relations Committee, also raised the issue of human trafficking in India.

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

22.1. India to supply over half of Asia’s workforce: report BusinessLine,

PTI, 20 Sep. 2017

India, with over 65 per cent of population below the age of 35, will supply more than half of potential workforce over the coming decade in Asia, which is grappling with ageing population, according to a report.

India will however have to first equip its workforce with necessary skills to contribute to the national economy in order for the country to reap dividends of its demographic potential, said the report by Deloitte — ‘Demographics fuelling Asia’s shifting balance of power’

“India is among a handful of South Asian countries that sits on a demographic gold mine,” the report said, adding that the country has a median population age of 27.3 years compared to 35 years for China and around 47 years for Japan.

Deloitte India Lead Economist Anis Chakravarty said: “India will account for more than half of the increase in Asia’s workforce in the coming decade, but this isn’t just a story of more workers...”

These new workers will be much better trained and educated than the existing Indian workforce, he added. “There will be rising economic potential coming alongside that, thanks to an increased share of women in the workforce, as well as an increased ability and interest in working for longer. The consequences for businesses are huge,” Chakravarty said.

The report, however, said, “in order for India to reap the dividends of its demographic potential, it has to first equip its workforce with the necessary skills to contribute to the national economy.”

The country needs to pay special attention to skilling and reskilling its workforce with a focus on the changing nature of today’s jobs with the invasion of machines and improvement in robotics.

“With more than 65 per cent of the population below the age of 35, India will rise as an economic superpower, supplying more than half of Asia’s potential workforce over the coming decade,” it added.

According to the report, Asia’s elderly population will rise from 365 million in 2017 to more than 520 million in 2027.

By 2042, there will be more over-65s in Asia than the populations of the Eurozone and North America combined, it said.

To manage ageing populations, the report suggested steps such as increasing the retirement age, welcoming migrants and increasing productivity and skill development, among others.

23.1. Mahindra acquires tractor company in Turkey for Rs800 crore

Livemint, 20 Sep. 2017, Shally Seth Mohile

The acquisition of Erkunt Traktor Sanayii AS will provide Mahindra access to Turkish agricultural machinery market, the fourth largest globally

Mumbai: Mahindra and Mahindra Ltd on Wednesday said it has acquired Erkunt Traktor Sanayii AS, a Turkish tractor maker and its foundry business for Rs800 crore through Mahindra Overseas Investment Co.(Mauritius) Ltd.

The buyout will provide the company access to Turkish agricultural machinery market, the fourth largest globally, and help the Mumbai-based firm enhance its product portfolio. The transaction, subject to regulatory approval, is expected to be completed by 30 November.

“Turkey is a very strategic market for us; therefore through Hisarlar Makina Sanayi ve Ticaret Anonim Şirketi (Hisarlar) acquisition, which specializes in implements and the one we have announced today, we are putting a firm foot in the Turkish tractor market, a market which is two-third the size of India,” said Pawan Goenka, managing director at Mahindra and Mahindra.

Mahindra had acquired 75.1% in Hisarlar, a Turkish farm equipment company on 21 January.

The latest buyout, he pointed out, is part of a larger strategy that has globalization and diversifying product portfolio beyond tractors, as two important pillars of growth strategy for the farm equipment business. While the Turkish firm will gain from Mahindra’s expansive reach, it would help the tractor market leader in India to add to its product portfolio, he said.

After this acquisition, Mahindra will be focusing on consolidating its presence in the overseas markets it has recently entered. These include Brazil, Turkey, Japan and Algeria. “It will be more about penetrating deeply in the regions we have entered into instead of getting to newer ones,” he said.

As part of the agreement, Mahindra will acquire 100% of the share capital of Erkunt Traktor and at least 80% of Erkunt Sanayii A.S, which is held by Erkunt Traktor. The tractor-making entity markets tractors under ArmaTrac brand.

Established in 2003, Erkunt Traktor manufactures and markets tractors under Erkunt brand in Turkey. It also exports tractors to various global markets under the ArmaTrac brand. Last year, the company sold a total of 4,700 tractors while posting revenues of 314 million Turkish Lira.

The company rolls out 23 tractor models ranging between 50 HP to 110 HP.

The Hisarlar deal would help in growing the farm equipment business in Turkey and Europe, Mahindra had said. Mahindra has no plans to change the management of the acquired entity, said Goenka. It also will not change the name of the company, he said.

Nitesh Sharma, an analyst at PhilipCapital said the move is in line with company's plans of drawing 20% revenue from outside India. It also helps in tiding over the cylical nature of the tractor businesss. However, Sharma is concerned about the capital allocation policy of the company. "Their two-wheeler and truck business continues to make losses and they are spending on acquisitions," he said.

23.2. Tata Steel forges merger with thyssenkrupp, secures a lifeline for European assets

BusinessLine, 20 Sep. 2017

Ending uncertainty over its European assets, Tata Steel on Wednesday announced a plan to form an equal joint venture with Germany’s thyssenkrupp AG.

The non-cash transaction framework to combine the flat steel business of the two companies in Europe and the steel mill services of the thyssenkrupp group will create a behemoth that will ship about 21.3 million tonnes of flat products a year with a turnover of €15 billion (₹115,000 crore), an EBITDA of €1.5 billion, and employing some 48,000 workers.

Of this, Tata Steel’s European operations will contribute annual shipments of 9.8 million tonnes, a turnover of €7.3 billion and employ some 18,000 workers.

The proposed joint venture that will create Europe’s second largest steel maker (after ArcelorMittal) provides Tata Steel an opportunity to stem further bleeding of its heavily loss-making European operations by transferring some €2.5 billion of term debt and about 18,000 workers to the merged entity to be based in Amsterdam.

Tata Steel Europe has a debt of €3 billion, including working capital loans, of which €2.5 billion (₹17,000- 18,000 crore depending on the exchange rate) will be moved to the merged entity along with another about €4 billion of pension and other legacy liabilities.

The capital structure of the new entity — thyssenkrupp Tata Steel — where both shareholders will contribute debt and liabilities, will be done in a manner that will help it “sustain downturn and service its obligations” on a standalone basis.

The joint venture — for which a memorandum was signed — will facilitate cost synergies of about €400-600 million a year through integration of sales and administration, research and development, optimisation of procurement, logistics, service centres and other support activities.

“Today’s announcement marks the latest step in building a future for Tata Steel’s activities in Europe which is sustainable in every sense,” said Andrew Robb, Chairman of Tata Steel Europe.

“The joint venture is being formed not for rationalisation and job cuts but for industrial and strategic logic,” said Koushik Chatterjee, Group Executive Director, Tata Steel. The joint venture would also seek to improve capacity utilisation of the the network across the three hubs of Ijmuiden (The Netherlands), Duisburg (Germany) and Port Talbot (Wales, UK) and their related downstream facilities. N Chandrasekaran, Chairman of Tata Steel, said that the merged entity will ensure that the production sites are intact and have a “sound and sustainable future”. The deal, designed to cope better with the structural challenges facing the European steel industry, is expected to be closed by December 2018 after receiving the requisite approvals from competition authorities.

Cautious welcome

British unions cautiously welcomed the deal they said delivered “industrial logic… as always the devil will be in the detail and we are seeking further assurances on jobs, investment and future production across the UK operations,” said a joint statement from the Unite, GMB and Community Unions, which said they were seeking a meeting with Tata Steel to ensure thyssenkrupp’s pension liabilities would be ring-fenced.

24.1. Indian robot made in China steals the show at IT event

Beijing: An Indian robot made in China, which could recognise people by their nationalities and guide customers in a bank, today captivated Chinese manufacturers at an IT event held in the southern port city of Dalian.

The five-feet Robot Mitra which was designed in Bengaluru but manufactured in the Chinese city of Shenzhen was presented as a model of merger of India's software prowess with China's hardware, Gagan Sabharwal, Senior Director, Global Trade Development, NASSCOM told PTI.

Mitra is a perfect example of how Indian software and China's hardware can be merged, Sabharwal said, adding that the agreement helps to bring the small and medium-sized enterprises and startups of both the countries to launch into Internet of Things (IOT) and Artificial Intelligence (AI), he said.

Its inventors could not bring it to the first India-China Dalian Internet of Things (IoT) Conference which was well attended by top Chinese and Indian manufacturing firms as the airlines did not allow its heavy batteries to be transported.

Instead it was introduced through a presentation which drew considerable attention, Sabharwal said. The robot helps identify people at the airports and other places through nationalities or ethnic backgrounds and recommends hotel, restaurants and places of interests.

Mitra has been deployed at Canara Bank in Bengaluru to guide customers in banking operations. NASSCOM plans to take it to a major IT event in Japan next month to highlight its operational utility at the airports, Sabharwal said.

During the event, NASSCOM and Dalian local government signed an agreement to further strengthen software and IT communication and cooperation amid opportunities brought about by the global digital revolution.

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

25.1. Led by Chinese, nearly 600 companies line up $85 billion investments in India

ET Bureau, 16 Oct. 2017, Ruchika Chitravanshi

NEW DELHI: Sany Heavy Industry heads up a list of close to 600 companies planning to invest a total of about $85 billion in India in projects that will create an estimated 700,000 jobs in the country in next five years. Invest India, the government's foreign investment promotion agency, is planning to actively promote the country as an investment destination and has drawn up a list of 200 companies not present in India that it wants to target.

"We want to achieve a $100 billion target of foreign investment in the next two years — both greenfield and brownfield," said Invest India managing director Deepak Bagla. India recorded its highest FDI (foreign direct investment) in FY17 at $43 billion, up 9 per cent over the previous year.

One of the world's leading engineering machinery manufacturers, China's Sany Heavy Industry plans an investment of $9.8 billion. Amazon, along with several other Chinese companies — Pacific Construction, China Fortune Land Development and Dalian Wanda — are each planning investments of more than $5 billion during this period.

Of the total indicated investment, $7.43 billion has already materialised and 100,000 jobs have been created, according to Invest India.

Rolls-Royce plans to invest $3.7 billion and Australia's Perdaman Industries $3 billion.

Invest India is handholding the investors through the process, starting with identifying opportunities to scouting for locations and guiding them on policy.

Most of the investment proposals are from China at 42 per cent , followed by the US at 24 per cent and the UK at 11 per cent.

Energy and waste management have received the highest investment interest followed by construction and ecommerce.

The Invest India team recently met Prime Minister Narendra Modi to update him on the status of the big foreign investments coming into India. "In essence we are the voice of investor in the system and solely dedicated to FDI," said Bagla.

"The idea is, as PM Modi said, to transform red tape into a red carpet for investors." Commerce and industry minister Suresh Prabhu has said there is a need for a paradigm shift in the government's approach to increase investments and it will reach out proactively to prospective investors.

The agency said it has received more than 100,000 investor queries from 114 countries in the past two years. Invest India says it can help companies meet the most stringent criteria.

25.2. Indian energy firms move up in Platts Top 250 rankings

Business Standard, Sep. 26, 2017

New Delhi: Reliance Industries (RIL) and Indian Oil Corporation (IOC) have made big leaps in the global energy sector this year, according to the latest S&P Global Platts Top 250 Global Energy Company Rankings, which saw Russia’s Gazprom end American giant ExxonMobil’s 12-year reign at No.1. Germany-based energy company E.ON SE ranked second.

While RIL improved its position by five places to third, IOC breached the top 10 for the first time and was placed seventh against last year’s fourteenth. Significantly, 10 of the 14 Indian energy companies that made it to the S&P list this year improved their rankings. In 2016, the list included 15 Indian firms.

S&P Global Platts is the leading independent provider of information and benchmark prices for the commodities and energy markets. The Platts Top 250 Global Energy Company Rankings was launched in 2002 to recognise the top financial performers in the sector. Each company’s ranking is calculated using its asset worth, revenues, profits, and return on invested capital.

Revenues of the top 10 companies surged more than 30 per cent to $1.1 trillion from $830.2 billion in the 2016 rankings. These companies posted combined profits of $63.7 billion last year, 14 per cent lower than the $74.3 billion posted the year before. The top 250 profit figures are adjusted for preferred dividends and exclude discontinued operations and extraordinary operations.

The two dozen biggest movers up included a range of companies from EMEA (Europe, Middle East & Africa) and the Americas, according to the review. The group was heavy with diversified utilities — which provide electricity and natural gas to residential, commercial and industrial users — and pipeline companies that carry oil and gas to the markets. Not surprisingly, both sectors rely on each other for supply and demand. Among the biggest losers in the rankings, by sector, were South American exploration companies and Chinese power providers, it said.

“Commodity price volatility, geopolitical shifts and industry consolidation made investors seek out safe havens in 2016 in the form of strong returns on invested capital, long-term fixed fees, regulatory stability, and access to regional and world markets,” Harry Weber, senior natural gas writer of S&P Global Platts, was quoted in the release as saying. “That helps explain why utilities and pipelines were able to differentiate themselves from other sectors, even as some operators struggled to boost revenue and underwent major transformations that included operational and management changes.”

The bigger story this year is India’s Reliance Industries rising to No. 3 from No. 8 last year and France’s Total rising to No. 10 from No. 12 last year along with Indian Oil Corp that showed the strength of pipelines, said S&P Global Platts.

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

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