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Saturday 20 January 2018

NEWSLETTER, 20-I-2018











LISBON, 20th January 2018
Index of this Newsletter


INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC. 


1.1.  Cabinet approves new Consumer Protection Bill
1.2.  545,090 Affordable Houses Sanctioned for Urban Poor Under PMAY(Urban)
2.1.  Protect workers, not jobs
2.2.  Patanjali to turn into a non-profit organization: Baba Ramdev
3.1.  What lies behind the spurt in anti-Dalit crimes in India?
3.2.  Rural indicators point to worsening farm distress
4.1. The Emperor’s New Airport. Sycophancy is behind the billion-dollar Mopa Greenfield project being forced on Goans
4.2. GVK inks pact with Cidco for ₹16,000-cr (~$2,5 bn) Navi Mumbai airport project
5.1. Aerospace industry eyes biz worth ~12,500 cr (~$2 bn)
– AGRICULTURE, FISHING & RURAL DEVELOPMENT
6.1. Panel sets out an action plan to make agriculture profitable
6.2.  Dairy sector to grow at 15% CAGR till 2020 to Rs 9.4tn ($146,66 bn): Report
7.1.  Food processing sector to attract USD 18 bn in 4 yrs: Govt
7.2.  Indian shrimp exports set to double to US$7 bn by 2022: Crisil
8.1.  Bengal initiative to turn farmers into entrepreneurs a success
8.2.  New US$ 318 million loan Agreement Signed with World Bank to Support Climate Resilient Agriculture - over 500,000 Farmers to Benefit in Tamil Nadu
9.1. Parle Agro to add more fizz to biz with new fruit-based drinks
9.2. Sugar production to increase by 23 pc to 25 MMT in SY 2018
10.1. Delivering pro-poor development
10.2. From food to cosmetics, home-grown brands belt up for the organic ride


– INDUSTRY, MANUFACTURE


11.1. Apple India sales rise 17% to $1.8 billion in 2016-17
11.2. Around 356 mobile charger factories to be set up in India by 2025
12.1. Mercedes-Benz calls for tax breaks on electric vehicles in India
12.2. We expect double-digit growth over next two years
13.1. Maruti’s new Swift can be a ‘game-changer’ in 2018
13.2. Over 280 million LED bulbs distributed under UJALA Scheme till 19th December, 2017 and 524,3 million sold by private sector till October 2017: Shri R.K. Singh
14.1. Electronics manufacturing needs a policy push
14.2. Kookhyun Shim appointed MD, CEO of Kia Motors India
15.1. Indian real estate is on an upward trajectory
15.2. With RERA kicking in, NRI interest in Indian realty set to rise


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


16.1. Air Deccan set to relaunch operations with Re1 flight tickets
16.2. Cabinet approves establishing India's First National Rail and Transportation University at Vadodara
17.1. Metro ups the ante to battle Walmart in cash-and-carry retail biz
17.2. SoftBank pushes Flipkart to focus on growth, market share
18.1. Medical tourism value in India to touch USD 9 bn by 2020: Govt
18.2. AI (Artificial Intelligence) spending by Indian cos may grow by 8-11% in 18 mths: Intel
19.1. Industry-agriculture balance needed for growth, West Bengal CM Mamata Banerjee
19.2. Reliance will invest ₹5,000 crore in Bengal to expand petroleum outlets: Mukesh
20.1. With 100 successful satellite launches, ISRO in new orbit
20.2. The secret sauce behind a successful Indian start-up


INDIA & THE WORLD 

21.1. A global opportunity for the Indian workforce
21.2. Every public schoolteacher’s wish list for 2018
21.3. Innovation hubs emerge in India, Singapore: Capgemini report
22.1. AI could help add $957 bn to Indian economy by 2035
22.2. By 2020, AI will generate more jobs than it might destroy: Vymo CEO Yamini Bhat
23.1. India rice exports surge to record on Bangladesh's strong import appetite
23.2. Farm exports post 18% growth in April-October
24.1. India to woo ASEAN with connectivity, maritime projects
25.1. Modi to encapsulate making of new, innovative India in Davos
25.2. Petronet LNG: Stepping on the gas


* * *

LISBON, 20th January 2018

NEWSLETTER, 20-I-2018



INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC. 



1.1. Cabinet approves new Consumer Protection Bill 
PTI, Dec. 21, 2017

New Delhi: The Cabinet today approved a new Consumer Protection Bill that seeks to establish an authority to safeguard consumers' rights and has provisions for penalty and jail terms in case of adulteration and misleading ads by companies.
Celebrities endorsing misleading ads are also liable for fine and ban of up to three years.
According to sources, the Cabinet has approved introduction of the Consumer Protection Bill, 2017, which will result in withdrawal of a bill brought in 2015. 

In August 2015, the Centre had introduced the Consumer Protection Bill in the Lok Sabha to repeal the 30- year-old Consumer Protection Act, 1986.
A Parliamentary Standing Committee had also submitted its recommendations in April last year.
The consumer affairs ministry has brought this bill as there were many amendments to the bill introduced in 2015. 

On misleading ads, the bill provides for fine and ban on celebrities. In case of first offence, the fine will be up to Rs 10 lakh and a one-year ban on any endorsement. For the second offence, the fine will be up to Rs 50 lakh and up to three years' ban. 

However, for manufacturers and companies, penalty is up to Rs 10 lakh and up to two years' jail for the first offence.
The fine will be up to Rs 50 lakh and five years' jail for subsequent offence.
The bill also provides for penalty and up to life term jail sentence in case of adulteration. 

"The Bill has provisions for misleading ads and e- commerce trade," Food and Consumer Affairs Minister Ram Vilas Paswan had recently said.
Sources said the new bill seeks to enlarge scope of the existing law and make it more effective and purposeful. 

It seeks to establish a Central Consumer Protection Authority (CCPA) to protect consumer rights. It has provisions for post-litigation stage mediation as an alternate dispute resolution mechanism. The bill also provides for product liability action.
Prime Minister Narendra Modi had recently said that consumer protection is the government's priority.
"We are in the process of bringing a new law on consumer protection keeping in mind the need of the country and business practices here," he had said. 

He had announced that a Consumer Protection Authority would be formed with executive powers for immediate redressal. 
"The stress is being given on consumer empowerment.
Strict provisions are being contemplated against misleading advertisements," Modi had said. 

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


1.2. 545,090 Affordable Houses Sanctioned for Urban Poor Under PMAY(Urban)
Press Information Bureau, Dec. 29, 2017 

Rs. 31,003 cr investment approved with central assistance of Rs. 8,107 cr

Andhra Pradesh Gets 142,447 Houses, Uttar Pradesh-120,645, Karnataka-118,646, Madhya Pradesh- 100,341, Jharkhand-30,486, Chattisgarh-29,703 

New Delhi: Ministry of Housing & Urban Affairs has approved the construction of 545,090 more affordable houses for the benefit of urban poor under Pradhan Mantri Awas Yojana (Urban) with an investment of Rs. 31,003 cr with central assistance of Rs. 8,107 cr. The approval was given in the 29th meeting of the Central Sanctioning and Monitoring Committee in its meeting held here yesterday. 

Andhra Pradesh has been sanctioned 1,42,447 houses in 31 cities and towns with an investment of Rs.9,919 cr with central assistance of Rs.2,137 cr. Uttar Pradesh got 1,20,645 houses in 282 cities and towns with an investment of Rs.5,076 cr and central assistance of Rs.1810 cr. Karnataka has been sanctioned 1,18,646 affordable houses in 65 cities with an investment of Rs.6,870 cr and central assistance of Rs.1,780 cr. Madhya Pradesh has been sanctioned 1,00,341 houses in 165 cities and towns with an investment of Rs. 4,232 cr with central assistance of Rs.1,505 cr. Jharkhand has been sanctioned 30,486 houses in 31 cities and towns with an investment of Rs.3,837 cr with central assistance of Rs.388 cr. Chattisgarh has been sanctioned 29,703 houses in 124 cities and towns with an investment of Rs.911 cr with central assistance of Rs.446 cr. 

Arunachal Pradesh has been sanctioned 2,822 houses in 6 cities with an investment of Rs.157 cr. with central assistance of Rs.42 crores.
The approval accorded today was for construction of 2,68,017 new houses under the Beneficiary Led Construction (BLC) component of PMAY (Urban), building, 1,09,904 in Karnataka, 1,18,485 new houses in Andhra Pradesh, 18,598 in Uttar Pradesh, 10,008 in Madhya Pradesh, 6,289 in Jharkhand -under Affordable Housing in Partnership (AHP) component. 

In Uttar Pradesh, 1,02,047 houses, in 90,333 in Madhya Pradesh, 23,962 in Andhra Pradesh, 10,408 in Jharkhand houses, in Karnataka- 8,742 will be built under BLC component under which an eligible beneficiary is assisted to build a house on the land owned by him/her.
With the above proposed houses, cumulative houses under PMAY(U) would become 36,00,819 after final approval from CSMC. Further after subsuming projects of RAY scheme the total number of houses being funded under PMAY(Urban) would be 37,42,667 houses. 

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


2.1. Protect workers, not jobs 
Livemint, 10 Jan. 2018, Ajit Ranade 

It is time to reorient labour laws to abide by the principle of ‘protect the worker, not the jobs 

This past year, an estimated 75,000 jobs were lost in the telecom sector due to financial stress in companies, and industry consolidation leading to redundancies. Another 50,000 jobs may have been lost in the information technology sector, as the industry faces new challenges due to Artificial Intelligence and H-1B visa woes. These are but two examples of formal sector job losses. According to the BSE-CMIE (Centre for Monitoring Indian Economy) survey, the estimated job losses due to the impact of demonetisation could be anywhere between three million and 12 million, in the subsequent two or three quarters that followed the disruptive announcement in November 2016. 

While these jobs losses may not be permanent, most of these are likely to be in the informal sector. Much of India’s workforce is in the informal sector. Which means that workers do not have a written contract, nor retirement or health insurance benefits. They also lack security of tenure. India’s challenge is to create 10-15 million jobs per year as new aspirants attain working age. In addition to this number are the workers seeking to escape the trap of low productivity jobs in agriculture. Of course, the actual number of new jobs that need to be created every year could be lower, due to falling labour force participation, especially among women. This latter fact itself is a cause for worry, but we won’t dwell upon it here.
Among the topmost priorities of the Narendra Modi government is to ensure rapid job creation. Not only do we need sustained creation of new jobs, but also of good quality, that are ready to meet future needs and with higher productivity and wages. All of this should preferably happen in the formal sector. Else the spectre of jobless and restless youth could spell social instability and much worse. Political analysts believe that joblessness among youth has been one of the factors behind the recent caste- and quota-based agitations. This challenge requires a multi-pronged, multi-disciplinary approach that can address different circumstances in different sectors and regions of the country (as an aside, it can be mentioned that there are officially about two million vacancies waiting to be filled at all levels of government, including, in the judiciary, the armed forces and law enforcement. Surely, filling them up would be a good start?). 

Labour is constitutionally on the state list, so reform will come largely from states’ initiatives. As for sectors, the four most labour-intensive sectors are agriculture, including agro-processing, textiles, especially garment making, construction and tourism. Two years ago, the Central government announced a special package for the textile sector, with an employment subsidy. The Centre agreed to pick up the provident fund (PF) contribution of the employer, to incentivize hiring of workers. That initiative largely failed, because most of employment creation happens in the informal (non-PF category) sector, in apparel making. This basic problem should have been anticipated. But building on that, other states have announced employment-linked subsidies, not just in apparel, but other sectors as well. Jharkhand has the most generous package, and Odisha and Punjab are not far behind. The incentives also include land allocation to set up worker colonies or dormitories, so that they can be within walking or small commuting distance of their workplace. If successful, these state-level initiatives can be replicated elsewhere too. 

The Centre’s own Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) provides 100 days of employment to one member of every rural household, without the attendant liability of having to make those workers “permanent” employees of the government. In that sense MGNREGA is actually a proxy for unemployment insurance. Indeed, MGNREGA work can cover all kinds of jobs, including road construction, forestry, small irrigation projects or horticulture. This is the principle of protecting the worker, not the jobs. An example can be cited from Germany in the post-2008 crisis period. Fearing massive job losses, the federal government offered private companies a salary subsidy to retain workers. The German government figured it would be less costly to provide a wage subsidy and retain workers rather than having a large number of unemployed collecting the dole. It worked. This too is an example of protecting the worker, not jobs. 

Thus, the big policy reform needed in India for job creation is around reforming labour laws. These laws are supposed to exist to protect workers. But de facto they have ended up protecting jobs, not workers as a class. The various inflexible labour laws have created a barrier between formal and contract workers, leading to sometimes ugly incidents such as the violence in Manesar in July 2012. This implicit caste divide is damaging the worker morale. There is a wide gap in pay and benefits between formal and informal sector employees in the same organization. But more importantly, labour laws have ended up discouraging the hiring of new formal sector workers. Casualization and contract workers have become the norm, leading to low productivity, low wages, insecure tenure and no benefits. 

It is time to reorient labour laws to abide by the principle of “protect the worker, not the jobs”. Since the Modi government enjoys immense political capital, it is time to bite the labour reforms bullet. As suggested by many others, this can be done by grandfathering all the existing formal sector employees, who will continue to be under the old laws, so as to reduce their opposition to reforms. All new entrants would be under new labour laws, which will hopefully lead to large-scale job creation. 

Ajit Ranade is chief economist at Aditya Birla Group. 


2.2. Patanjali to turn into a non-profit organization: Baba Ramdev 
Livemint, 17 Jan. 2018, Sounak Mitra

Baba Ramdev has set up a charitable organization, Patanjali Seva Trust, which will be the sole holding entity for all companies that are part of Patanjali Group 

New Delhi: Yoga guru-turned-businessman Baba Ramdev said Patanjali Ayurved Ltd will be turned into a “non-profit” entity as it seeks to plough back earnings from its businesses into charity.
“We’ll not list Patanjali on the stock exchanges. We will list Patanjali in people’s hearts. We are transforming Patanjali into a non-profit organization,” Ramdev said on the sidelines of a press conference. Patanjali has, since its inception, used all profits generated from business for charity, he added. 

Patanjali Ayurved is a privately held company that is 98.6% owned by Ramdev’s close aide Acharya Balkrishna, who was ranked the 19th richest Indian by Forbes in 2017 with an estimated net worth of $7.3 billion. Ramdev does not directly own shares in the company.
As a first step, Ramdev has set up a charitable organization, Patanjali Seva Trust, which will be the sole holding entity for all companies that are part of Patanjali Group, according to a group executive who did not want to be named. There are a few dozen registered firms in the Patanjali Group. 

While Patanjali Ayurved manufactures and sells a host of consumer packaged goods—from pulses to ghee, biscuits to shampoo, juices to anti-ageing cream—the group has interests in a bunch of other businesses, including educational institutes, ayurvedic medicines and hospitals, to name a few. The company has also expressed interests in entering new areas such as infrastructure, solar power and apparel, among others. There could be several reasons why Ramdev has set up Patanjali Seva Trust as the holding entity. “It could be an exercise to avoid inheritance tax that the government may impose in the future. A trust as a holding entity ensures succession of the company’s assets, wealth preservation in perpetuity,” said Radhika Jain, partner, Grant Thornton India Llp. “In the structure where a Trust is the holding entity, the tax liabilities go to the holding entity. And, if the Trust’s motto is to use all income for charity, it gets huge tax advantage,” Jain added. Pranav Sayta, tax partner, EY, said just turning Patanjali Ayurved into a trust will not by itself give much tax advantage. “But if income generated from commercial operations is used in charitable causes as a set objective of the entity, the tax advantage is huge,” he said. 

According to the Patanjali executive cited above, Ramdev has written a ‘will’ for Patanjali group companies ensuring succession. “Ownership of Patanjali can never be transferred to anyone other than a sanyasi (saint). The Trust structure is to ensure future of the business empire. After the demise of Baba Ramdev and Acharya Balkrishna, the company will be owned and run by sanyasis only,” the executive said. 

In a statement, Ramdev said Patanjali’s main aim behind its activities was to do charity works of “over Rs1 trillion” in areas of education, health, yoga, ayurveda, research, gau seva (cow welfare) and services to the common man. “We have already undertaken charity works to the tune of over Rs11,000 crore,” it added. To be sure, the profit that Patanjali Ayurved has generated from its business so far is likely to be far less. In the year ended 31 March 2017, Patanjali doubled its revenue to Rs10,561 crore from Rs5,000 crore in the previous year. Patanjali’s meteoric rise was in the last two to three years. Its revenue jumped from Rs446 crore in 2011-12 to Rs2,006 crore in 2014-15. 

According to India’s Income Tax Act, Charitable Trusts and Section 8 companies, including non-government entities, can claim tax exemption under Sections 11, 12, 12A, 12AA and 13 of the Income Tax Act.
The Income Tax Act does not prohibit a charitable trust from carrying on business and income generated from businesses undertaken by a charitable trust shall also qualify for tax exemption provided certain conditions are fulfilled. 

On 19 October, the Central Board of Direct Taxes (CBDT) released draft amendments to rules relating to the registration of religious and charitable trusts, in line with changes in the Income Tax Act brought through the Finance Act of 2017, Mint reported. 


3.1. What lies behind the spurt in anti-Dalit crimes in India? 
Livemint, 09 Jan. 2018, Dipti Jain

The rising rate of crimes against Dalits seems to be driven by rising impunity and changing economic equations in the countryside 

Bengaluru: The violence on the 200th anniversary celebrations of the battle of Bhima-Koregaon has once again put the spotlight on violence against Dalits in India. Recently published data from the National Crime Records Bureau (NCRB) show that the rate of crimes against Dalits has risen in recent years, even as the conviction rate for such crimes has declined. 

One caveat here is that part of the increase in crime rates may simply be a reporting effect — it is possible that more crimes against Dalits are being reported and registered, but the data does not allow us to segregate the reporting effect from the actual increase. 

In 2016, an estimated 214 incidents of crimes against scheduled castes (SCs) were reported per million SC population, up from 207 the previous year, the NCRB data shows. Till 2015, NCRB provided data on crimes recorded under the SC/ST Prevention of Atrocities (POA) Act as well as overall data on crimes against SCs, which included crimes registered under other provisions. However, from 2016 onwards, this overall figure has not been provided. The estimate for 2016 has been generated based on the ratio of POA/non-POA crimes. Also, as pointed out in an earlier Plain Facts column, the population projections used by NCRB to calculate crime rates are not consistent over time. Hence they have been re-estimated for this analysis. 

The increase in crimes against Dalits in recent years has followed a sharp plunge in conviction rates for such crimes, NCRB data shows. From 35% in 2010, the conviction rate for such crimes fell seven percentage points to 28% in 2015. Over the same period, the overall conviction rate in the country for all Indian Penal Code (IPC) crimes increased nearly six percentage points to 46.9%. 

The decline in the conviction rate for crimes against Dalits may have created an impression that this may be driven by false filing of cases. Indeed, that has been the contention of middle caste groups such as the Marathas in Maharashtra, who have been demanding a repeal of the POA Act. But data from NCRB does not seem to support this contention. In fact, the share of false cases filed under this provision has declined over time. 

The data seems to suggest that it is the rising impunity with which crimes are being committed against Dalits that may be contributing to the rising violence against the community.
Another factor that may be contributing to the spike in anti-Dalit violence is rising living standards of Dalits, which appears to have led to a backlash from historically privileged communities. 

A 2014 research paper by Smriti Sharma of the Delhi School of Economics published in the Journal of Comparative Economics showed that an increase in the consumption expenditure ratio of SCs/STs to that of upper castes is associated with an increase in crimes committed by the latter against the former.
“They may be perceived as a threat to the established social, economic and political position of the upper castes...if an improvement in the expenditure ratio is on account of a worsening of the upper caste economic position, crimes could be used as a means of asserting their superiority and expressing their frustration at their worsened relative economic position,” Sharma argued in the paper.
While Dalits continue to count among the poorest of all social groups in absolute terms, their position vis-a-vis upper castes has improved over the past decade.
Between 2004-05 and 2011-12, upward income mobility among Dalits was also higher than among other social groups, according to an analysis of Indian Human Development Survey (IHDS) by the economist Thiagu Ranganathan and co-authors published in the Economic and Political Weekly last year. 

Rising income and growing educational achievements may have led many Dalits to challenge caste barriers, causing resentment among upper caste groups, leading to a backlash, according to social scientists. “Increase in education levels (among Dalits) has been accompanied with an increase in awareness of the world as they aspire to leave their villages and travel to urban areas,” said Dipankar Gupta, sociologist and former professor at Jawaharlal Nehru University (JNU). “The effect of reservation in institutions has seeped in and they’ve become more aware of what the country owes them,” he added. 

The stasis in farm income over the past few years may have added fuel to fire, causing disquiet among predominantly agrarian middle caste groups, who perceive their dominance in the countryside to be weakening.
The growing scramble for Dalit votes by different political actors has only added a fresh twist to a conflict that has been simmering for some time.


3.2. Rural indicators point to worsening farm distress 
Livemint, 09 Jan 2018, Sayantan Bera 

Sluggish wage growth, lower crop planting, fluctuating prices paint a dismal picture for farmers and the agriculture sector 

Graphic: Ahmed Raza Khan 

New data released by the government on rural wages, crop prices and sowing of winter crops reveals that rural distress is worsening.
Planting of wheat, the main winter crop, between October and early January was 5% lower than a year ago due to lower sowing in Madhya Pradesh by close to a million hectares; area under oilseeds was lower by over 5%. 

Rajasthan accounted for most of the decline in oilseed cultivation because of 0.7 million hectares lower sowing of mustard.
Similarly, data on nominal rural wages, a bellwether for rural demand, is showing sluggish growth. According to the labour bureau, in October 2017, nominal rural wages for ploughing (men) rose 6.6% year-on-year. 

At the same time, crop prices continue to be a point of concern for farmers. 

Worsening rural distress holds serious political implications. Not just because it is an election year, with eight state assemblies going to the polls, including Karnataka, Madhya Pradesh, Rajasthan and Chhattisgarh which are plagued by farm distress. The Gujarat election results showed that the Bharatiya Janata Party (BJP) bore the brunt of farmer angst and was able to scrape together a win only because it made up the rural vote deficit in urban areas.

“There is little doubt that farmers are in pain but I suspect whether rural distress is directly proportional to anti- incumbency. Despite its poor performance in rural Gujarat, BJP increased its vote share by almost 2%. The same may happen in other states,” said Abhay Kumar Dubey, a professor at the Delhi-based Centre for the Study of Developing Societies. 

The tepid progress in winter planting is due to uneven rainfall during the monsoon last year, leading to moisture stress. Worryingly, it follows an estimated 2.8% dip in India’s rain-fed kharif production in 2017-18, compared with the year before.
In the case of rural wages, while the growth is higher than the growth of 5% and 3.1% seen in the previous years (October 2016 and 2015, respectively), it is well below the growth of 17% and 17.6% growth in nominal wages witnessed in October 2014 and 2013, respectively, implying stressed farm incomes and sluggish labour demand.
Farmer protests began in several states such as Madhya Pradesh, Maharashtra, Rajasthan and Haryana in June last year to press for remunerative prices for farm produce and loan waivers, following a collapse in prices of most pulse varieties and oilseeds such as soybean.
Wholesale prices of major horticulture crops such as potatoes, tomatoes and onions have fluctuated sharply, forcing farmers, in some instances, to dump their produce.
“The biggest problem for the Indian farmer is falling profitability, which has come down dramatically for most crops. Against sky-high expectation of at least 50% profit over costs (BJP’s promise during 2014 general elections), the disillusionment has manifested in the continuous protests by farmers over the past year,” said Ashok Gulati, agriculture chair professor at the Indian Council for Research on International Economic Relations, Delhi. 

Gulati added that it will be prudent for the government to acknowledge the problem and speed up implementation of flagship programmes on crop insurance and irrigation, which are lagging behind due to poor implementation. “Now that the BJP is ruling in as many as 19 states, the prime minister should force these states to reform agriculture markets, which will help farmers get a better price for their produce,” Gulati said.
In 2014-15 and 2015-16, both drought years, growth in agriculture contracted by 0.2% and rose by 0.7%, respectively, before rebounding to a high of 4.9% in 2016-17 following a normal monsoon (in 2016) and a bumper harvest. GDP advance estimates released on 5 January showed that farm growth rate is estimated to plummet to 2.1% in 2017-18. This implies a dismal 1.9% average agriculture growth rate in the first four years of the BJP-led National Democratic Alliance government. 


4.1. The Emperor’s New Airport. Sycophancy is behind the billion-dollar Mopa greenfield project being forced on Goans
The Times Of India - Goa eEdition, 11 Jan 2018, Vivek Menezes 

Every day that passes in Goa, there are more reminders of the lasting messages underlying the classic Hans Christian Anderson tale about a vain emperor surrounded by cynical sycophants, and an intimidated public. In the story, the ruler is duped by tailors who tell him they have woven special garments that are most beautiful, but will be invisible to those who are ‘unfit for their positions, stupid or incompetent’. So the pompous fool walks around naked, being praised for his non-existent clothes by yes-men, while the general populace is too frightened to tell him the truth, for obvious reasons. 

There are many relevant examples of this phenomenon playing out in the world today, with particularly glaring incidence in Goa. The most egregious case is the billion-dollar Mopa “second airport” project, which is being steadily forced upon a largely helpless state populace. Ask any experienced veteran of the airline industry anywhere in the world to assess the situation in India’s smallest state, and the answer will always be exactly the same — there is no way two commercial airfield facilities can be viable in Goa. If Mopa becomes functional, Dabolim will inevitably shut down. Off the record, every official of Airport Authority of India (AAI) admits the same. Yet, once again last week in the state assembly, chief minister Manohar Parrikar claimed Dabolim would continue to operate civilian flights after Mopa comes online in 2020. 

Here, it is useful to remember the findings of the only rigorously professional and neutral study ever conducted on the question of two airports in Goa by the International Civil Aviation Organization (ICAO) arm of the United Nations, just a decade ago, in 2007. The study projected air traffic ramping up to almost 10 million passengers by 2035 by the most optimistic scenarios, and confirmed Dabolim will easily handle the growth with some minor improvement. The bottom line is unambiguous, “a dual airport system is a second best solution only, compared to a single airport system to serve a relatively small air transportation market such as Goa’ s market.” In short, open Mopa means closed Dabolim. 

Look anywhere in the world, and the record of crudely foisted second airport experiments is abysmally bad. In a case very much like Goa, the little town of Ciudad Real built an expensive new facility to receive international flights, even though the successful Barajas International airport outside Madrid was just over an hour’s drive. But almost no one wanted to use the new option, which quickly teetered into bankruptcy. A few years later, the entire infrastructure was sold to a Chinese construction company for a few thousand euros. It is still lying there unused. 

However, the most strikingly relevant case for Goa is that of Mattala Rajapaksa International Airport in Sri Lanka, now popularly known as ‘the world’s emptiest international airport’. There are so many similarities between Mopa and this ridiculous white elephant project, forced onto his hometown by one-time strongman president Mahinda Rajapaksa (who named his pet project after his mother), despite the presence of a perfectly adequate and well-located international airport in Colombo. For some time after it was opened with great pomp in 2013, the leader could force airlines to fly in to use it. 

But then as always happens in a democracy, the regime changed. Now all foreign carriers abandoned the new airport in Hambantota. The national carrier Sri Lankan Airlines eventually also left. Today, there are exactly two airlines using the hangars, runways and passenger terminals. There is no way to pay back the immense loans it required to build the unnecessary scam infrastructure so the government has resorted to the humiliating process of inviting expressions of interest from any companies interested in using the buildings for any commercial activity whatsoever. This is precisely what is on the cards for Goa at Mopa. 

The state political cadre conveniently neglects to factor in the reality that “greenfield” airport projects have generally not worked in India, most especially in tourist destinations. The AAI itself will readily admit that, since the dawn of the new millennium, it has built at least eight new airports, which have failed to draw even a handful of flights. In Jaisalmer, AAI spent over $17 million for a modern facility to handle hundreds of thousands of visitors per year, but not a single one has yet disembarked. 

Hans Christian Andersen’s famous old story has a powerful ending. Only one innocent child was unawed and unselfconscious enough to raise his voice to shout “but he has no clothes on”, and then everyone else was emboldened to let the all-powerful leader know he was fooling no one but himself. This is where the analogy to Goa today falters, because everyone knows, but no one speaks up. 

(The writer is a photographer and widely published columnist. Views expressed are personal) 


4.2. GVK inks pact with Cidco for ₹16,000-cr (~$2,5 bn) Navi Mumbai airport project 
BusinessLine, 09 Jan. 2018, V. Rishi Kumar 

GVK Power & Infrastructure Ltd has signed a concession agreement for the mega ₹16,000-crore Navi Mumbai International Airport project.
The agreement has been signed through a special purpose vehicle, Navi Mumbai International Airport Pvt Ltd with Cidco, the nodal authority of the Maharashtra government for the implementation of the project.

Through its subsidiary, Mumbai International Airport Pvt Ltd, GVKPIL holds 74 per cent equity shares in the proposed Navi Mumbai Airport Ltd with Cidco holding the balance 26 per cent.
The initial concession period is 30 years from the appointed date and extendable for 10 years.
The agreement was inked in the presence of Maharashtra Chief Minister Devendra Fadnavis; Executive Chairman MIAL, GVK Reddy; and Chairman and Managing Director of Cidco Bhushan Gagrani in Mumbai, according to a regulatory filing with the BSE. 

GVK Reddy said: “GVK has got the opportunity to yet again display its technical and managerial prowess in the airports sector after having created the award winning Mumbai airport, for developing and maintaining Navi Mumbai International Airport. With the support of Central and Maharashtra governments and Cidco, we are confident of delivering the much-needed second airport for the twin cities of Mumbai and Navi Mumbai.” 

Divest interest 

GVK subsidiary MIAL was declared successful bidder for Navi Mumbai International Airport in February 2017 and received the Letter of Award from Cidco on October 25, 2017.
The Hyderabad-based diversified infrastructure company, which also had the Bangalore International Airport Ltd, under its fold, divested its interest in the project to Prem Watsa-headed Fairfax Holding. 

The divestment was done to pare GVK’s debt and to concentrate on the development of the Navi Mumbai project.
The much-delayed ₹16,000 crore project is being looked towards to facilitate the projected growth of the aviation sector. 

While some of the works related to the project are already on and being handled by infrastructure companies, rehabilitation of people affected by land acquisition, levelling of the area to pave way for construction works and diversion of river pathway are in progress.
During a recent interaction, GVK Reddy told BusinessLine that, “We are confident of sorting out all these issues and gearing up to develop a world class airport. This will have a number of advantages when compared to the Mumbai airport project developed by us.” 

Shares hit upper-circuit 
On Monday, GVK Power shares closed at ₹21.10, hitting upper circuit of 5 per cent on the BSE. 


5.1. Aerospace industry eyes biz worth ~12,500 cr (~$2 bn) 
Business Standard, Dec. 13, 2017 

New Delhi: On Tuesday, Hindustan Aeronautics Ltd (HAL) offered the aerospace vendors that feed its aircraft assembly lines a tantalising glimpse of major business opportunities ahead, adding up to some Rs 12,500 crore.
HAL Chairman T Suvarna Raju told a gathering of the company’s vendors in Bengaluru that they would soon participate in building 100 trainer aircraft — the indigenously designed Hindustan Turbo Trainer–40 (HTT-40). In addition, the Light Utility Helicopter (LUH), of which the Indian Air Force is committed to buying 187 pieces, is nearing certification. 

“Given our large number of platforms with the Indian defence forces, we remain committed to increase the scope of work to our vendors to ensure success of our programmes. HAL is looking to produce 100 basic trainer aircraft HTT-40 soon, once spin tests are completed in the coming months. In the rotary wing segment, our efforts are on to achieve basic certification of LUH by the middle of 2018”, said Raju. 

In 2013, then IAF chief, Air Chief Marshal NAK Browne wrote to the defence minister stating that the HTT-40 would cost Rs 59.31 crore in 2018, and escalate by 2020 to Rs 64.77 crore. That letter was intended to scuttle the HTT-40 project as too expensive, and make a case for importing more Pilatus PC-7 Mark II trainers from Switzerland. 
Now, however, it has emerged that HAL will build the HTT-40 for an affordable Rs 45 crore apiece. With the defence ministry having already approved the procurement of 106 indigenous trainers for the IAF, this would translate into business worth about Rs 5,000 crore for the aerospace sector. 

HAL has managed to develop the indigenous trainer for a frugal Rs 450 crore, employing internal company funds, Raju told Business Standard in July. An additional Rs 120 crore will go on establishing the HTT-40 manufacturing line.
Separately, the manufacture of 187 LUHs, each costing an estimated Rs 40 crore according to internal HAL estimations, will generate business worth Rs 7,500 crore for the aerospace industry. 

HAL says indigenisation levels in these platforms would be as high as 80 per cent, given that many imported components, sub-systems and systems would be progressively manufactured in India under transfer of technology. That means Rs 2,500 crore would flow abroad to global original equipment manufacturers (OEMs). Even so, Indian aerospace vendors, for the most part micro, small and medium enterprises (MSMEs) that depend almost entirely on government orders, see the remaining Rs 10,000 crore as a significant opportunity. 

Business is also expected to flow from a separate acquisition of 197 Kamov-226T light helicopters, which Russian helicopter manufacturer, Kamov, will initially supply ready-built, and then transfer technology to progressively manufacture in HAL.
In manufacturing aircraft like the Jaguar, Sukhoi-30MKI and the Hawk trainer, HAL had monopolised most of the manufacturing work, relying on very little outsourcing. More recently, the manufacture of the Tejas Light Combat Aircraft (LCA) has seen HAL assume the role of “systems integrator”, with a significant percentage of the supply chain outsourced to private aerospace industry. In the future, HAL envisages functioning exclusively as a systems integrator, with a private industry supply chain feeding in components, sub-systems, systems and even major assemblies like the forward, middle and rear fuselage. 

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


5.2. Government laying emphasis on improving connectivity in the Northeast: Dr Jitendra Singh 
Press Information Bureau, Jan. 02, 2018 

New Delhi: The Union Minister of State (Independent Charge) for Development of North Eastern Region (DoNER), MoS PMO, Personnel, Public Grievances, Pensions, Atomic Energy and Space, Dr Jitendra Singh has said the Government has given a big push to a diverse range of infrastructure projects in the region. Briefing the media after releasing the Calendar for the year 2018 of the Ministry of Development of North Eastern Region (DoNER), Dr Jitendra Singh said the Government under the leadership of Prime Minister Shri Narendra Modi has laid emphasis on improving rail, road, air and inland waterways connectivity in the NER and with a host of power projects, the region is already on course to turning power surplus. 

Prime Minister Narendra Modi said in Aizawl, Mizoram on December 16, 2017 the Centre is committed to put all the state capitals of the northeast on the rail map and is executing 15 new projects of 1,385 km length, at a cost of over Rs 47,000 crore in the region. With the dedication of the 60-MW Tuirial hydropower project at the hands of the Prime Minister, Mizoram became the third power- surplus state in the north-east after Sikkim and Tripura. The Tuirial project, which was announced and cleared in 1998 by the then Atal Bihari Vajpayee government, is the first major central project to be successfully commissioned in Mizoram, the Prime Minister said. 

The Airports Authority of India (AAI) has taken initiatives to strengthen regional air connectivity in the North Eastern States. A new terminal building is being constructed with an estimated expenditure of Rs 500 crore at Agartala Airport and the AAI would spend Rs 2,500 crore in North East States in next three years, AAI Chairman Shri Guruprasad Mohapatra said at Agartala on Dec.15, 2017. As many as 92 air routes connecting state capitals in the region are being planned as part of the Centre’s Udaan scheme. 

Reflecting the improving regional connectivity and tourism potential, over 1.6 lakh foreign and 77 lakh domestic tourists visited Assam and the other Northeastern states during 2016, registering a 5.2 per cent increase over the previous year. Last year, the region registered a significant quantum jump of more than 15.8 per cent. 

In a major boost to the Inland Waterway Transport System in the northeast, Union Shipping Minister Shri Nitin Gadkari on December 29, 2017 flagged off cargo movement on the Pandu-Dhubri route of the Brahmaputra river. Transportation of cargo on the National Waterway 2 -- from Pandu in Guwahati to Dhubri along the Assam-Bengal border would reduce logistics cost and save 300-km road travel. The 891-km stretch of the Brahmaputra river between Sadiya in the easternmost part of upper Assam and Dhubri was declared the National Waterway-2 in 1988. Five bridges would be constructed on the river to ease transportation. The bridges would connect Jorhat with Nematighat, Disangmukh with Tekeliphuta, Louit with Khablu, Numaligarh with Gohpur and North Guwahati with Guwahati, the union minister said at the flagging-off ceremony in Majuli Island in Assam. Another roll-on, roll-off (ro-ro) ferry service to transfer passengers and vehicles in large numbers will start here soon, Shri Gadkari said. Dr Jitendra Singh said the Northeast is all set to get India’s first-ever "Air Dispensary" based in a helicopter and the DoNER Ministry has already contributed Rs. 25 crore as part of the initial funding for this initiative. The proposal put forward by the Ministry of DoNER, he said, has been accepted and is in the final stages of process in the Union Ministry of Civil Aviation. 

Dr Jitendra Singh said Arunachal Pradesh welcomed the New Year by keeping its promise of making the state Open Defecation Free. It has become the second state in North-East after Sikkim to achieve ODF status. Arunachal Pradesh has managed to do this before the deadline of October 2, 2019. The state government had cut short the national ODF target by one year and ten months ahead of the national target and set 31 December, 2017, as the final target to achieve ODF status in Arunachal Pradesh. The project undertaken under Swachh Bharat Mission (Gramin) saw the light of day only after the State Government extended an incentive of Rs 8,000 per toilet. This is in addition to the Centres support of Rs 12,000, raising the grant for constructing a toilet to Rs 20,000. 

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. Panel sets out an action plan to make agriculture profitable 
Livemint, 16 Jan. 2018, Sayantan Bera 

The committee’s suggestions on major reforms include an overhaul of the Union agriculture ministry 

New Delhi: In a detailed action plan for doubling farmers’ incomes, a top government panel has proposed major reforms to the existing administrative structure.
This includes an overhaul of the Union agriculture ministry, setting up a three-tier planning and review mechanism through district, state and national level committees and an annual ease of doing agribusiness survey. 

The committee on doubling farmers’ incomes (DFI), which was set up in April 2016, has also suggested adoption of a liberalized land leasing policy to recognize tenant farmers, contract farming, freeing up of agricultural markets and strengthening decentralized procurement of crops by states.
“The need is to reorganize some of the divisions (of the agriculture ministry) so as to bring into focus new aspects like agri-logistics, investments for capital formation, primary processing etc.,” the DFI committee said in a report titled Structural Reforms and Governance Framework.

The panel’s recommendations come in the backdrop of continued farm distress and the government’s signal that the forthcoming Union budget will put forth solutions to address the problem. The recent elections to the Gujarat assembly demonstrated that unaddressed, farm distress can pose a political challenge too.
With a goal to transform agriculture into profitable agri-businesses, the committee suggested revamping the marketing division of the agriculture ministry into a division of marketing and agri-logistics, and upgrading the Rashtriya Krishi Vikas Yojana (RKVY) division to a ‘division of investment in agriculture’ to promote strategic investments in production and post-production facilities. To capture value from agri-commodities, the committee has suggested that the crops division be restructured as the ‘division of crops and primary processing’ to focus on primary processing of harvested produce at the farm gate. 

Further, the DFI committee suggested an annual ‘ease of doing agri-business survey’ to evaluate states on different reform parameters. “Such a recognition itself is expected to position the states appropriately and help them attract needed investments, while making farming itself facilitative and competitive,” it said. 

The report also suggested liberalizing the definition of a ‘farmer’ to include cultivators, lessee farmers and sharecroppers. “This will enable the cultivators to access the support-system intended to buttress those pursuing an agricultural enterprise.”
Towards a new review and monitoring mechanism of agriculture policy and schemes, the committee also suggested a three-tier ‘planning, review and monitoring committee’ at the district, state and national level. “The existing planning and review mechanism needs to be strengthened with an institutional arrangement that includes both the state and central machinery,” it said. 

The report also suggested a national level policy and planning committee represented by ministers of agriculture, commerce, rural development, water resources, food and consumer affairs, and food processing, among others. Its proposed task would be to review the policy framework and progress in doubling farmer’s incomes, review trade policy, budgetary allocations and status of farmers’ welfare.
The DFI committee is tasked to formulate the strategy to double real income of farmers between 2015-16 and 2022-23. 

In its earlier report released in August last year it had said that to achieve a desired 10.4% annual increase in real farm incomes (which actually grew at just 3.6% per year between 2002-03 and 2012-13), capital investments by the private and public sector need to grow at 12.5% and 16.8%, respectively, per year for the seven years between 2015-16 and 2022-23. This means an increase in private and public investments from Rs1.78 trillion in 2015-16 to a staggering Rs4.86 trillion in 2022-23, calculated at 2015-16 prices. 

“In the last two years public investments in agriculture in real terms fell by about 4.7%, so renaming and revamping the agriculture ministry will not help farmers,” said Himanshu, associate professor at Jawaharlal Nehru University. “Little has happened on ground to reform agriculture markets and farmers have no risk cover against price volatility which is the reason behind their present misery,” he added. 


6.2. Dairy sector to grow at 15% CAGR till 2020 to Rs 9.4tn ($146,66 bn): Report 
PTI, Dec. 18, 2017 

Mumbai: India s dairy industry is expected to maintain 15 per cent compounded annual growth (CAGR) over 2016-20, and attain value of Rs 9.4 trillion on rising consumerism, a report said.
"India s dairy industry is worth Rs 5.4 trillion by value, having grown at 15 per cent CAGR during 2010-16. Going ahead, the dairy industry is expected to maintain 15 per cent CAGR over 2016-20, and attain value of Rs 9.4 trillion on rising consumerism, Edelweiss Securities said in a report. 

India has progressed from being deficient in milk production at 20 million MT in 1970 to becoming the world's largest milk producer at 160 million MT, accounting for 18.5 per cent of global milk production.
Further, India is expected to emerge as the largest dairy producer by 2020, the report said.

The Union government implemented the Central Scheme National Dairy Plan - Phase 1 during 2012-17 to improve productivity of dairy cooperatives through several input activities. Investments by private players in the domestic dairy sector are also expected to further augment milk productivity, it explained.
Going ahead, India s milk production is expected to outperform global production and grow at a similar 4.2 per cent CAGR to 185 million MT per annum, and surpass EU to emerge the largest dairy producer by 2020. Interestingly, the country s per capita milk consumption has also been increasing at 3 per cent CAGR as compared to 1 per cent CAGR globally. 

The report notes that there is huge scope for India s per capita milk consumption to spurt led by growth in value-added products (VADP), which is at 34 per cent of industry versus 86 per cent for the global mature markets like EU, the report said.
India has a potential of 15-30 per cent plus growth in VADP like cheese, whey, UHT milk over next few years, it added.
Led by rising disposable income, and growing consumer preference for branded and value-added milk and milk products, investments by organised players also in the sector has been on the rise.
The report pointed out that other top milk producing geographies like EU, USA, China, Pakistan are expected to grow their production volumes at 2 per cent growth over 2020, which is lower than India's growth estimates. 

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


7.1. Food processing sector to attract USD 18 bn in 4 yrs: Govt 
PTI, Dec. 21, 2017 

New Delhi: India's food processing industry could attract an investment of USD 18 billion in the next four years as this sector provides great business opportunity with an annual growth rate of over 8 per cent, a top government official said today.
Addressing a PHD chamber conference Food Processing Secretary J P Meena said the food processing sector has a great future and can generate huge employment opportunities, besides increasing farmers' income. 

He mentioned that the government received an investment committment of USD 12.5 billion in the food processing sector during the World Food India event held last month here.
That apart, Meena said the government has launched a Rs 6,000 crore "SAMPADA' scheme to boost food processing sector and this programme would attract an investment of Rs 31,000 crore or USD 5 billion. 

"If these committments are grounded, we will have an investment of USD 18 billion over the next 3-4 years which is a huge investment," the secretary said.
Meena said the ministry's emphasis is to connect food processing industries to production centres and farmers. 

The secretary expressed concern that farmers' income and their living standards have not improved even as production has increased over the years.
Meena said the food processing sector could play an important role in increasing farmers' income, but to achieve this, there is a need to connect farmers' demand for raw material with processing units.
He said the country imports many fruits and vegetables even as there is enough domestic supply as processing units do not get varieties and quality they need.
"There is a great future for food processing. But we will have to connect with farmers. If we are able to do this, this will be a win-win situation for both farmers and processors," Meena said.
He said the government would soon launch a scheme to set up mini food parks across the country. Under this scheme, grant up to Rs 10 crore would be provided. 

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


7.2. Indian shrimp exports set to double to US$7 bn by 2022: Crisil 
PTI, Dec. 14, 2017 

Mumbai: Country's shrimp exports is likely to double from USD 3.8 billion to USD 7 billion by 2022 due to strong demand, high quality, improved product mix and an increase in aquaculture area in several states, a report said.
"We expect shrimp exports from India to nearly double to USD 7 billion by 2022, driven by strong demand, high quality, improved product mix and an increase in aquaculture area in Andhra Pradesh, Gujarat, Odisha and West Bengal, even as our Asian rivals battle structural issues and rising domestic consumption," the rating agency Crisil said here.
The global shrimp industry is estimated at USD 30 billion and India's market share is estimated at 13 per cent by value terms. 

India became the biggest exporter of shrimps with USD 3.8 billion exports during fiscal 2016. Indian exporters have in the past few years emphasised on lower-density shrimp farms to control diseases, while maintaining quality across the value chain. The use of resilient specific pathogen free (SPF) brood-stock imported from the United States has also helped the industry greatly. 

Consequently, between fiscal 2012 and 2017, India's shrimp production doubled, and helped it grab the opportunity created by lower supplies from Asia, the report said.
Since 2010, shrimp production in Asia has been severely affected by diseases, floods, labour issues and tightening environmental norms. Production in Vietnam has declined 40 per cent from peak levels because of shortage of fresh water, salinity intrusion and illegal shrimp farming. 

Thailand, which was once the top exporter, is now ranked 5th after a 65 per cent plunge in production from peak levels.
During 2016, China's shrimp production also nosedived 60 per cent even as its consumption more than doubled, rendering it a marginal exporter. In addition, these countries also faced significant quality challenges. Crisil said that the rival countries are now trying to get their house in order. Improving hatchery procedures is helping Thailand to recover slowly, but Vietnam is expected to take more time to sort out quality issues. 

China is struggling with both structural issues and surging domestic demand. Consequently, India's primacy in shrimp exports is unlikely to be seriously challenged over the medium term.
Additionally, larger Indian exporters are expanding infrastructure to cater to increasing demand for value- added products from big global retail chains and restaurants. 

Therefore, we foresee value-added exports also rising from the current 15 per cent levels significantly. "Strong volume growth and higher proportion of value-added products will bolster the operating profitability of several shrimp exporters. Additionally, healthy accretions and the absence of major debt-funded capital expenditure will reduce leverage and further strengthen their credit profiles," Crisil Ratings director Rahul Guha said. 

Going forward, the movement of rupee value, protectionist tendencies and increasing stringency towards quality are among importer nations key monitorables, Crisil said. 

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


8.1. Bengal initiative to turn farmers into entrepreneurs a success 
Livemint, Dec. 22, 2017 

Kolkata: Mohammed Abdul Jabbar Khan hasn’t ever tasted many of the vegetables he grows on his farm at Bhangar, in suburban Kolkata. “I am told celery leaves are used in salads, but we don’t know how to use them,” he says.

The same is true of at least 1,750 farmers in Bhangar who came together in 2011 to form an enterprise under the leadership of Khan, now in his early forties. The Bhangar Vegetable Producer Co. Ltd was incorporated in September 2012 under a unique initiative aimed at transforming farmers into entrepreneurs.
Five years on, it is a profitable enterprise that has been retaining its earnings to expand operations. After paying a small dividend for two years, the company chose to hold back its earnings for the last two financial years as it is trying to accumulate Rs30 lakh to buy a plot of land, says Khan, who is chairman of the company. 

The model is simple: the company exclusively buys the produce of its shareholders and sells it in the markets of Kolkata, through its own outlets as well as through stalls operated by state-run agencies. A substantial part is exported through private agencies.
“Because we have been able to standardize quality, export of vegetables from the state has grown manifold in the past few years,” says Nandini Chakravorty, secretary in West Bengal’s department for food processing and horticulture development.
Export of vegetables from Kolkata airport in fiscal year 2016-17 jumped 65% from the previous year to around 10,000 tonnes, according to a state government official who asks not to be named. The aim is to double it in five years, he adds. 

With new markets opening up, farmers are now being encouraged to grow a wide variety of vegetables—ones that fetch better prices, both locally and in foreign markets.
For instance, farmers who typically grew cauliflower and cabbage in winter, are now growing broccoli, lettuce and even bananas because the returns are higher, says Sabir Ali, a young farmer who has created a space covered by transparent polythene sheets—locally called polyhouse—to protect his crop from rain. 

When Bhangar Vegetable Producer Co. was conceived as an idea in 2011, the state created 117 groups with 15 members in each, and gave each group a grant of Rs25,000 under a central government-funded programme. These farmers eventually became shareholders in the companies when they were incorporated, and now own at least 50 shares each. 

The farmers contributed around Rs10 lakh towards the Rs20 lakh start-up capital of the company—the other half was received as a one-time grant from the central government.
After the company took off, subsidies were provided to buy farm implements and vehicles. The company now owns 15 trucks to carry the produce of its shareholders to markets and this has helped snip out middlemen from the supply chain, says Abdur Sattar Mollah, another farmer. 

With income from farming zooming, farmers in Bhangar invested in the company are now building more and more polyhouses to protect crops from rain. Each costs about Rs8 lakh, says Mollah, and the government provides a subsidy of around Rs5 lakh. “With training, we are now better farmers,” he adds.
The centre provides 60% of these subsidies; the state pays the rest, according to the unnamed state official cited above. 

The experiment has so far been “very successful”, says Chakravorty, and encouraged by it, the state government is investing to revive facilities created to test and package raw fruits and vegetables for exports. Standardization of quality is paramount because the US and European markets are “very demanding” in terms of food safety standards, she says.
The model may have worked in Bhangar, but may not be replicable across India, says Prasenjit Bose, an economist and social worker. Farm income is not uniform across the country, he points out, adding that it is relatively higher in Bhangar.
Farmers elsewhere may not be able to invest to start a company, according to Bose. “And I am not sure such a firm has the management bandwidth to survive difficult years,” he adds. 

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


8.2. New US$ 318 million loan Agreement Signed with World Bank to Support Climate Resilient Agriculture - over 500,000 Farmers to Benefit in Tamil Nadu 
Press Information Bureau, Dec. 27, 2017 

New Delhi: The Government of India, the Government of Tamil Nadu and the World Bank today signed a $318 million loan agreement for the Tamil Nadu Irrigated Agriculture Modernization Project to promote climate resilient agriculture technologies, improve water management practices, and increase market opportunities for small and marginal farmers. About 500,000 farmers, of which a majority are small and marginal, are expected to benefit from improved and modernized tank irrigation systems.
The project will rehabilitate and modernize about 4,800 irrigation tanks and 477 check dams, spread across 66 sub-basins, in delivering bulk water to irrigation systems. 

Tamil Nadu, being a water-stressed state, continues to experience water shortages which are expected to further exacerbate in the future. Rehabilitating and modernizing irrigation tanks will improve the reliability and availability of irrigation water for farming communities, making them less prone to climatic hazards. More than 160,000 ha of currently partially irrigated lands will come into full irrigation under this project,” said Sameer Kumar Khare, Joint Secretary, Department of Economic Affairs, Ministry of Finance. 

The agreement for the project was signed by Sameer Kumar Khare, Joint Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India; S. K. Prabhakar, Principal Secretary, Public Works Department, on behalf of the Government of Tamil Nadu and John Blomquist, Program Leader and Acting Country Director, World Bank, India on behalf of the World Bank. 

“This project will help Tamil Nadu scale up its efforts to unlock the full potential of its agriculture sector. It will support farmers improve the efficiency of water used in farming, diversify into high value crops, and produce crops that are resilient to the increasing threats of climate change. Such efforts will be a win-win for all, leading to better use of scarce water resources and raising household incomes of farmers,” said John Blomquist, Program Leader and Acting Country Director, World Bank, India. 

Though significant progress has been made during the past decade in crop diversification, still there is scope for achieving a higher level. Paddy is the dominant crop occupying 34 percent of total cropped areas, whereas fruits and vegetables are grown on 11 percent and pulses and oilseeds on 14 percent of total cropped areas. By helping farmers’ access modern technologies, linking them to markets, and providing postharvest management support, the project will enable farmers to shift from a mono crop paddy system to mixed cropping including high-value crops (fruits, vegetables, and spices), pulses, oilseeds, and millets. 

To enhance the ability of crops to withstand expected adverse impacts of climate change, the project will support smallholder producers adopt new conservation technologies such as the System of Rice Intensification (SRI) and Sustainable Sugar Initiative (SSI). They reduce average water usage by 35 percent and increase yields by 22 percent per ha. The project is expected to increase the yield of rice, maize, and pulses by 18–20 percent. 

The project will also coordinate with other World Bank-supported projects in Tamil Nadu and at the national level, including the Tamil Nadu Rural Transformation Project, National Hydrology Project, and National Groundwater Improvement Project to ensure synergy and enhance long-term project impact.
The $318 million loan from the International Bank for Reconstruction and Development (IBRD) has a 5-year grace period, and a maturity of 19 years. 

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


9.1. Parle Agro to add more fizz to biz with new fruit-based drinks 
BusinessLine, 20 Dec. 2017, Abhishek Law

Parle Agro — which makes fruit-based drinks like Frooti, Appy and Appy Fizz, and bottled drinking water brand Bailley — plans to be a ₹5,000-crore company by next year.
A de-growth in the synthetic carbonated soft-drink space and increasing popularity of fruit-based ones have seen Parle Agro increase its market share year-on-year.
The company will look to close the current year (Parle Agro follows a January-December year for accounting purposes) at around ₹4,200 crore.
According to Nadia Chauhan, Joint Managing Director and CMO, Parle Agro is also open to brand extension and portfolio expansion with more fruit-based offerings. Butwill go slow, as it does not want to launch “me too” products. 

“We will, of course, try and expand the portfolio. I think that’s something important to us. But, unlike a lot of other companies we are not the ones who will go on introducing many products at a time. We take our time,” she told BusinessLine.
“Our agenda is to introduce products with a difference, which are not me-too or a copy of an existing one. Such innovations take a long time to establish and we have quite successfully done that,” Chauhan added. Parle Agro introduced Appy Fizz — an apple flavour sparkling / fizzy drink — in 2005, virtually creating the fruit-based fizzy drink category. Today, it occupies a 99 per cent market share. 

Similarly, earlier this year, it launched ‘Frooti Fizz’ (its mango-based fizzy fruit drink) — the first extension of its most popular and largest revenue generating brand, Frooti — in 32 years.
The FFSD (or fruit flavoured still drink) category in India is pegged at ₹5,500 crore, with the mango-based drinks occupying 85 per cent of the market. 

Marker share 
While Frooti enjoys a 25 per cent market share in the mango-based drink category, Appy (the apple flavoured drink from Parle Agro) occupies a 65 per cent market share in the apple-based drink segment.
According to Chauhan, there is no “either / or” between fizzy and non-fizzy drinks when it comes to determining the future growth drivers for Parle Agro. The entire fruit-based drink segment is growing. 


9.2. Sugar production to increase by 23 pc to 25 MMT in SY 2018 
PTI, Dec. 19, 2017 

Mumbai: Country's sugar production is expected to increase by around 23 per cent to around 25 million MT during SY2018 (sugar year) driven by a projected recovery in production in the key sugar-producing states Maharashtra and Karnataka, a report said.
"Based on the latest estimates, we anticipate sugar production to increase by around 23 per cent to around 25 million MT during SY2018 from 20.30 million MT during SY2017, mainly driven by an expected recovery in sugar production in the key sugar-producing states, ICRA Ratings said in its review here. 

Maharashtra production is expected to increase by 71 per cent year-on-year to 7.2 million MT and Karnataka production is expected to rise by 24 per cent year on year to 2.6 million MT, supported by relatively better monsoons during 2016 and 2017, it said.
While North Karnataka is expected to benefit from the monsoons, the mills in South Karnataka and Tamil Nadu (TN) continue to be impacted by poor rainfall, it added. 

The production in UP is also expected to increase by 18 per cent YoY to around 10 million MT in SY2018, supported by higher acreage under better cane variety, resulting in higher yields and recovery rates. ICRA anticipates the domestic sugar consumption to increase to around 24.8 million MT in SY2018 and a closing stock between 4.5 - 5.0 million MT. 

The rating agency said prices will soften in short-term on account of the arrival of fresh supply from the new crop.
"There could also be some short-term softening of prices in the next quarter on account of the arrival of fresh supply from the new crop. However we expect prices to remain steady over the near-term," ICRA said. 

However, overall some moderation in margins from Q3 FY18 onwards is not ruled out. The margins and cash flow generations for mills with efficient operations, forward integrations and adequate stocks are likely to remain satisfactory, it added.
This apart, these mills have by and large seen significant deleveraging over the last couple of years, which will help them withstand cyclical downturns better, it said. 

The rating agency pointed out that the sugar realisations continue to remain healthy and are likely to augur well for the UP-based sugar mills. The profitability margins of the UP-based mills are further expected to be supported by the healthy cane volumes and recovery rates, ICRA Ratings Senior Vice President Sabyasachi Majumdar said. 

"In terms of profitability, the mills in Maharashtra and North Karnataka are likely to be negatively impacted by higher costs for SY2018, but may reap benefits arising out of higher production. 

However, the mills in Tamil Nadu and South Karnataka are likely to be adversely affected in FY2018 due to continued low cane availability in SY2018 and the increase in the Fair and Remunerative Price (FRP) cane costs," Majumdar added. 

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


10.1. Delivering pro-poor development 
Livemint, 02 Jan. 2018. Pradeep S. Mehta 

The government must take appropriate steps to reinvigorate the rural economy for both economic and political reasons 

But for Prime Minister Narendra Modi’s relentless campaigning, inability of the Congress to highlight limitations in the National Democratic Alliance’s (NDA’s) urban development model, the role of None of the Above (NOTA) option, and copious amount of luck, the Bharatiya Janata Party (BJP) would have lost its Gujarat bastion. While it has traditionally been a darling in urban areas, the poor performance of the BJP in rural areas is telling. In predominantly rural areas, the Congress won 62 seats, against the BJP’s 43. This is despite the pro-poor rhetoric of the government. 

While the BJP might have saved face owing to urban support in Gujarat, this was substantially due to the personal connect of the prime minister and the lack of alternatives, which may not be the case in the forthcoming state elections in 2018, particularly in Rajasthan, Madhya Pradesh, and Karnataka, and more importantly, in the general election of 2019. Creating a connect with urban and semi-urban trading community may particularly be difficult owing to continuing challenges with the goods and services tax (GST) regime. 

It also appears that more young and first time voters are, albeit unsurprisingly, getting disenchanted with the BJP and attracted to other options. It is this set of voters which also migrates from the rural to urban belts in search of employment opportunities, putting pressure on urban resources. The competition for opportunities available in urban areas is expected to increase, which might add fuel to the building discontent, costing the BJP its urban support base. Coupled with this, an already dissatisfied rural voter might cost it an election. 

A two-fold strategy would be required to avoid such collapse. First, the government should stop testing the patience of its urban voters. It needs to address genuine challenges faced by small and medium-sized traders in compliance with GST- related procedures, claiming refunds and credits, and address concerns around potential hounding by the National Anti-Profiteering Agency, and the e-way Bill. While the government has claimed making significant advancements in ease of doing business, the ground realities do not appear to support such claims. Availability of land, skilled labour and finance is still a challenge and avoidable compliance costs put immense burden on small industries and traders. Government obsession with technology-enabled start-ups, wherein success stories are few and far between, has completely ignored small- scale frugal innovation, such as low-cost farm mechanization equipment, which is awaiting support to scale up.

Second, the government must take appropriate steps to reinvigorate the rural economy for both economic and political reasons. This involves removing artificial barriers to growth of agriculture, and ensuring adequate opportunities exist for income generation in rural non-farm sector. Investments must be made in export- oriented agriculture value chains, modern storage and warehousing facilities, and knee-jerk reactions adversely affecting agriculture export must be avoided. The distortions in pricing of fertilizers and agriculture procurement, and restrictions on agriculture futures, need immediate review and correction. 

In summary, the government will need to dismantle the disincentives to prosperity in rural and urban areas. Both areas suffer from different types of disincentives and thus, different strategies will need to be devised to deal with each of them. 

So, is the government working in this direction? It appears not. Recently, the government has decided to reimburse banks the merchant discount rate (MDR) in respect of debit card/ BHIM Unified Payments Interface/AEPS (Aadhaar enabled payment system) transactions of less than Rs2,000 for a period of two years, with the objective of promoting adoption and usage of digital payments. It is estimated that the total MDR support would be Rs2,512 crore. 

This measure assumes awareness and willingness of consumers and merchants to adopt digital payments, availability of basic infrastructure, and existence of payment acceptance infrastructure, which is unfortunately not the case. A deeper analysis would reveal that such distortion of market-based incentives might be counter- productive in the long term. As realized on the first anniversary of demonetization, the digital villages have reverted to old ways of using cash. 

Despite digitization being a laudable objective, the country is currently grappling with more serious challenges, such as employment generation. And the government has recently announced a paltry package of Rs2,600 crore for a period of three years for employment generation in the leather and footwear industry, a move which clearly indicates its priorities. 

At best, the government appears to be playing to the gallery and score points for its short-sighted efforts to promote digital payments in predominantly urban areas. The government must realize that tinkering with processes of doing business resulting in gains on global indices is not enough.
If it really wants to recover lost ground, it will need to help the rural and urban poor populace realize its untapped potential by implementing transformational changes in social sectors. This would include investment in areas like education, health and social security. Without these, India’s growth story is expected to be non- inclusive and short lived, similar to the fate which the government is staring at currently. 

Pradeep S. Mehta is secretary general of CUTS International. 


10.2. From food to cosmetics, home-grown brands belt up for the organic ride 
Business Standard, Jan. 09, 2018 

Ahmedabad: From fabric to food to cosmetics, new homegrown brands are looking to carve an organic niche within the booming herbal category If 2017 was the year of herbal-ayurvedic brands, could 2018 be the breakthrough year for India’s organic labels? A group of new brands in hair care, cosmetics, food and apparel is betting on just such a possibility; they are designing premium offerings, tying up with large retail chains, advertising heavily and running innovative consumer awareness initiatives to push through their organic credentials. While the market is still small and largely urban-centric, the ayurveda story is fueling hope and enthusiasm among the producers of organic fare. 

Among those flaunting the organic label are personal care brands such as Azafran, Iraya, food brands such as Organic India, Vedic India and apparel brands such as Bhu:sattva. These brands believe that the Indian consumer has become more discerning and would be more willing to look at organic as a brand differentiator than she was a couple of years ago. 

On the flip side, as much as organic acts as a ‘differentiator’, it also adds to the brands’ list of challenges, the first being lack of awareness. “Consumers tend to confuse between herbal and organic products easily. While all organic products are herbal, the opposite is not true,” says Elkana Ezekiel, non-executive director of Azafran Innovacion, an Ahmedabad-based company that offers organic personal care products, and home care under the brand Azafran Organics. Azafran is promoted by the daughters of Dishman Pharmaceuticals’ chairman Janmejay Vyas, Aditi and Mansi Vyas.
The difference between herbal-ayurvedic and organic is simple but significant. Herbal products are those that are prepared from plants and use natural raw materials. The plants, however, can be grown naturally or by using chemical pesticides and fertilisers. Organic, on the other hand, refers to a process of cultivation where no chemicals are used. 

According to several market research studies, organic is the choice of millennial consumers as it addresses one of the big concerns of this generation: environmental degradation. And that is where the new brand owners see their biggest target group. However, organic labelling requires special certification and that takes time. “It takes three years to get the land on which cultivation would happen to become free of residual fertilisers and pesticides,” says Jainam Kumarpal, director of Rising Tradelink (RTL) that owns Bhu:sattva, an organic fashion brand.
Also the organic segment is very small. Former managing director at Zydus Wellness (that owns brands like Everyuth) Ezekiel who knows the personal care industry well says that in his domain, such products wouldn’t be even 5 per cent of the total market. Even so, the numbers are significant, given that the total face-wash market in India is estimated to be around ~20 billion while the hair care market is around ~70-80 billion. 

Also the new brand owners, many of whom are breaking away from their parents or grandparents’ businesses, are not going for scale, nor are they focused solely on the local market. Besides they are drawing hope from the numerous surveys about the organic market. In a survey carried out by Euromonitor International in 2016, around 71 per cent consumers surveyed had said that they would pick up a face cream or lotion (personal care item) if it claimed to be ‘natural’ while another 38 per cent felt that they would buy a shampoo or hair oil if it had ‘botanical’ ingredients. 

Moving from natural to organic is just a step away according to the new brands. Also organic helps carve an identity that is distinct from the big brands in the game such as Hindustan Unilever’s Ayush, Colgate’s new sub brands and of course, Patanjali. Besides many big brands stay away from the organic market, given the huge procurement challenges that govern the space, thereby leaving it open for smaller players. “This is the reason why start-ups have chosen to dabble into the ‘organic’ space. With smaller scale, it is possible for them to have control over procurement, while for bigger players the task gets increasingly difficult,” said a Mumbai- based analyst. 

Azafran has its farms near Sanand in Gujarat and Bhu:Sattva works with around 2,000 farmers to procure organic cotton. Organic cotton comes at a 20-25 per cent premium over conventional cotton and has tremendous global appeal. Bhu:Sattva exports nearly 70 per cent of its fabric production and plans to start its first standalone store in 2018. So far it has been selling at over 100 multi-brand retail stores in 38 cities. Azafran has scaled up faster; it is already in 1,500 stores within a year of its launch. 

Kumarpal believes that organic can go mainstream in India and is working towards the same. However, there is some unevenness in the way consumer preference plays out. Southern India, for example, is the largest market for ‘natural’ and ‘organic’ products. “While Gujarat is a major cotton producer, consumers here do not understand the concept of organic cotton fabric. In South the story is completely different,” Kumarpal says. Fashion and personal care apart, start-ups in the organic food space are also thriving. Players like Organic India and Vedic Cow make and sell ‘organic ghee’ that costs at least 40-50 per cent more than conventional ghee. 

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


- INDUSTRY, MANUFACTURE 


11.1. Apple India sales rise 17% to $1.8 billion in 2016-17 
Livemint, 12 Dec. 2017, Anirban Sen 

While Apple is within touching distance of $2 billion in sales from India, the pace of expansion is slower than the 53% growth it posted in 2015-16 

Bengaluru: Apple Inc., the maker of iPhones, is now within touching distance of crossing $2 billion in sales from India, although the world’s most valuable technology company faced significant headwinds late last year because of the impact of demonetization, which slowed down the pace of its growth in the country and hurt sales. 

According to documents posted with the Registrar of Companies on Tuesday, Apple India Pvt. Ltd posted sales of Rs11,619 crore ($1.8 billion) for the year ended March 2017, compared with Rs9,937 crore in the year-ago period—which translates to a 17% growth in a country, which Apple globally has termed as one of its fastest growing markets. 

In the preceding 12 months ended March 2016, Apple India had reported a growth of 53%. Apple declined to comment for this story. 

Apple did not disclose a reason for the slowdown in the pace of growth in India, although experts tracking Apple attributed it to two reasons.
Firstly, the government’s decision to ban large currency notes late last year had a significant impact on the sales of Apple and other competitors like Samsung. Post demonetization, consumer spending plummeted and shoppers largely stayed away from buying high-value items such as smartphones. Online retailers such as Flipkart and Amazon India had also witnessed a slowdown in the sale of smartphones late last year after the government’s demonetization drive. 

Secondly, the large base effect seems to be catching up with Apple in India—while the company rapidly reached its first billion dollars of sales in the country, generating the next few billion dollars of sales will prove to be trickier for the company in a price-conscious country. 

There may have been a third reason for Apple’s modest growth in 2016-17—according to Tarun Pathak, associate director at Counterpoint Research, the mix of older generation smartphones such as the 4S and 5S models may have contributed to a fall in the average selling prices (ASPs), and thus a fall in the rate of growth. “Last year, older generation iPhones like 4S and 5S entered the mix for Apple and sold very well. For consumers, who are used to seeing Apple models at a minimum price of $400, those older generation iPhones proved to be very appealing. What happened as a result was that it brought down the overall ASPs for Apple, and thus the slowdown in the pace of growth,” said Pathak.
Two Apple executives, who declined to be identified, also pointed out that while Apple posted a lukewarm 17% growth in 2016-17, the company has generated an additional $1 billion of revenue since the year ended March 2015, when it first crossed the $1-billion mark in India. 

Apple counts India as one of its most important markets globally and has launched a slew of initiatives in the country over the past two years, including production and manufacturing of iPhones. Apple has already started initial production of its iPhone SE model in Bengaluru and has started shipping the models to local customers. In February, the government of Karnataka had announced Apple’s proposal to start manufacturing operations in Bengaluru. The phones are being manufactured for Apple by Wistron, a Taiwanese original equipment manufacturer (OEM). 

In recent calls with investors, Apple chief executive Tim Cook has also emphasized the importance of India to the company, with revenues from India more than doubling during the September quarter.
“Revenue from emerging markets outside of greater China was up 40%, with great momentum in India, where revenue doubled year over year,” said Apple chief executive Tim Cook in a post-earnings conference call with investors in November. 

“I feel like we’re making good progress there and are gaining understanding of the market, but we still have a long way to go, which I sort of see as an opportunity instead of a problem. And I do feel great about the growth rate. And so that’s India,” added Cook.
Apple is planning to launch more new initiatives in India in the near term, including its payments service Apple Pay, according to a top company executive. 

“At the Apple level, India is an incredible opportunity... because what we’re seeing is huge advancements in digitization, bypassing older technologies to newer technologies and we think that we have a really great product that can help move things even faster. And that’s the reason I’m here, that’s the reason (CEO) Tim (Cook) came here before. That’s the reason why Tim will be back and I will be back. We view this as a very long-term opportunity but with very short-term gains that we can have here,” said Apple senior vice president Eddy Cue in a 16 October interview. 


11.2. Around 356 mobile charger factories to be set up in India by 2025
PTI, Dec. 20, 2017 

New Delhi: Indian mobile phone industry expects that the government push to encourage production of battery chargers will lead to setting up of 356 factories that can generate 8 lakh jobs in the country by 2025, says the industry body Indian Cellular Association.
"I have no doubt that seemingly impossible target of producing 1.46 billion chargers by 2025 will become a reality, with more than 356 charger factories employing over 8 lakh people," ICA National President Pankaj Mohindroo today said at a workshop of mobile battery charger makers.
The companies at the workshop asked the government representatives present on the occasion to impose 15 per cent basic custom duty on mobile chargers that are being imported in the country.
Ministry of Electronics and IT representative S K Marwah asked industry players to submit structured recommendation to the government for its consideration. 

Mohindroo said Phased Manufacturing Program (PMP) of the government has boosted the confidence of companies in the mobile sector...
"It was heartening to see the deep confidence with which the entire ecosystem -- mobile phone brands, EMS companies, Charger manufacturers and manufacturers of components of chargers -- responded to the clarion call for building a world-scale mobile charger industry in India," he said.
Under the PMP programme government has accepted industry demand to give them level-playing field compared to imported products by imposing duty on certain components that are sourced by mobile phone companies.
Mohindroo said the target number of 356 factories does not include the component industry which is going to be built feeding the charger industry. 

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


12.1. Mercedes-Benz calls for tax breaks on electric vehicles in India 
Livemint, 18 Dec. 2017, Arushi Kotecha 

Mercedes-Benz India CEO Roland Folger says the carmaker would like to make electric vehicles in India once it starts selling more than 400 electric cars per year in India

Mumbai: India’s largest luxury car maker Mercedes-Benz India Pvt. Ltd has called for tax breaks for the automobile industry to build a sustainable business model for electric vehicles in the country.
In an interview, managing director and chief executive Roland Folger said his company would like to manufacture electric vehicles in India once it crosses sales of more than 400 such units a year in India. Mercedes boasts of being India’s only luxury vehicle maker with more than 60% localisation. 

A critic of the present government’s “arbitrary” tax policy on the luxury segment, Folger also called for tax breaks on EVs imported through the CBU (completely built unit) route to make for a “sustainable business case”.
“We need to wait for government policy to see how the pricing of our EVs works out. The government should consider tax breaks to CBUs for one to two years,” Folger said. 

If the maker of the E-Class sedan chooses to import EVs into the country, the cars will belong to the parent Mercedes-Benz’s EQ brand, which was unveiled at the Paris Motor Show in October 2016. At present, the parent company is developing nine electric cars for the global markets, Folger added. The German company is also waiting for a stable government stance on taxation of hybrid vehicles “though plug-in hybrids are a meaningful alternative to EVs”. 

However, an analyst said it would be futile to expect tax breaks given the low commercial viability of luxury EVs at the moment.
“Luxury EVs are like fighter aircraft; India can’t make them and importing them is very costly. The EV technology is difficult for a country like India to accept, so it does not make sense for a government to subsidise a product which won’t see much demand in the first place”, said Deepesh Rathore, co-founder and director at London-based consulting firm Emerging Markets Automotive Advisors. 

Globally, the cost of EVs must come down to be able to import them, he added. 

Meanwhile, Folger admitted that sales for 2017 “did not see a negative surprise though they could have been better if not for the cess hike in September”. From January to September, Mercedes-Benz India sold 11,869 units, a 19.59% jump over the corresponding period in 2016.
Separately, speaking on the sidelines of a dealership inauguration in the Thane district of Maharashtra, Folger said a distribution network expansion is on the cards as the company has decided on a few tier-2 and tier-3 cities to expand its reach, without mentioning specifics. 

At present, Mercedes has 92 dealerships in 45 cities.
For 2018, Folger expects Mercedes-Benz India and the luxury car segment in India to grow by the double digits “save for external events”, on the back of higher disposable incomes and newer players such as Kia Motors and Genesis entering the market. 


12.2. We expect double-digit growth over next two years 
BusinessLine, 27 Dec. 2017, G Balachandar 

For Hyundai Motor India Ltd (HMIL), 2017 has been a year of excellence. The company is striving to achieve a sales target of more than 6.72 lakh units including domestic sales and exports. YK Koo, Managing Director & CEO of HMIL, spoke to BusinessLine about the challenges ahead and growth prospects. 

Excerpts: 

How would you describe 2017 for the auto industry in India? 
The year 2017 has been one of learning for the automobile industry. The learnings will lead to a wave of positive changes and new growth curve in the future. The auto industry will for the first time achieve the landmark figure of three million cars in 2017 (January-December). The festival season saw a remarkable growth for the industry, with the evenly spread monsoon along with the 7th Pay Commission building strong positive sentiments in the market. 

Do you see a stable growth curve for the passenger vehicle industry over the short and medium term? 
We believe that the Indian automobile industry has strong future prospects and is set to continue on its growth trajectory in the long term, on the back of steady economic growth. We expect a double-digit growth over the next couple of years.

How have the new vehicle launches helped Hyundai in 2017? 
The changing market trends and rising customer aspirations have always been the key driving force at Hyundai Motor India.
Hyundai rolled out the five millionth car with the NextGen Verna in the Indian market, the fastest in the industry symbolising Hyundai's long-term commitment to the Indian market. 
Along with this, there has been a strong pull for the Creta, Elite i20, and Grand i10 during the festival season. 

You faced challenges in growing exports in 2017. When do you expect positive growth, and to regain your strong position in exports?
Exports are part of our global strategy, which is based on the market demand of various countries. HMIL has been the largest exporter of passenger cars with over 5.2 million cars exported since inception to more than 87 countries worldwide. 
Having said that, the Indian market is evolving fast and we are currently focusing on catering to the high demand of Hyundai cars in India, with a strategic shift of export production to global plants. HMIL received a record initial export order of 10,501 units for the new Verna from the Middle East market. This is the single largest order the company has received since inception. 

What are your plans for Auto Expo 2018? How many products/concepts are you likely to showcase? 
We will be showing new models and global technologies during Auto Expo 2018 that firmly defines Hyundai as a modern premium brand. 


13.1. Maruti’s new Swift can be a ‘game-changer’ in 2018 
BusinessLine, 31 Dec. 2017, S Ronendra Singh 

Swift — the iconic brand from Maruti Suzuki India’s (MSIL) stable has made many records since its inception 12 years back, and is now coming in a latest avataar next month, which could be one of the biggest launches this year.
Not only customers, but Swift has made memories and pride for employees of the company too, as it was the first premium hatchback for India from MSIL. 

"I was the North Head at that time and it was an exciting time for us because Swift was admired on roads — particularly the red colour. Though we sold quite many of the white colour also, it was not so popular because the character of the vehicle was highly performance-oriented and sporty...sporty, performance oriented and bold vehicle," R.S. Kalsi, Senior Executive Director (Marketing and Sales), MSIL, recalls speaking to BusinessLine. 

Right from day one of its launch in 2005, because of the performance and goodwill of the people it became a sort of cult on the similar lines of Harley Davidson, and social media also started having groups like ‘Swift users/ lovers club', said Kalsi. But, will the new Swift create more value to the customers and make records as the earlier ones? 

“We have been able to sell 1.7 million units of Swift till now, which is quite an achievement in that category, particularly when most of the competition models after six months or one year later became fatigue and number started declining. Here it was not like that. Customer acquisition continues till date and we will continue to provide the excitements with the new Swift," he said. 

When Swift was launched, there were also some set of notions about a small car. But, here was a car that was designed bold and aggressive, and yet could be reliable and economical. It could have features offered in a large car, and cost well under ₹4 lakh, Kalsi said, adding that majority of them are first-time and aspirational buyers who want a product that looks sporty and no compromise on comfort and performance. 

According to Puneet Gupta, Associate Director, IHS Markit (automotive forecasting), the new Swift can be a game-changer and will further help MSIL strengthen its market share in India.
“This time it is two-wheeler buyers who are on the target. We have seen in the past few months that sales of Swift have been declining. It is strongly accepted that MSIL will be able to reverse this trend. This will also bring new cheer for their loyal 'A' segment customers who were looking to upgrade to bigger hatchback," he said. 

Features 
The third generation Swift will refuel the energy in Maruti Suzuki and will further intensify competition in the already flooded segment, including its own Baleno, he said, adding that the question is, will it be a revolutionary design and if it can repeat the same success as its old generations.
The new Swift will be powered by same engines (1.2-litre K-Series petrol and 1.3-litre DDiS diesel) but with refinement for better fuel efficiency, as per sources in the company. 

The 2018 Swift will also come with auto gear shift (AGS) and front airbag as a standard and is expected to be priced at ₹4.99 lakh to ₹7.99 lakh (ex-showroom).
It will be launched during the Auto Expo next month, which could be one of the biggest launches for a passenger car this year. The next biggest launch could be followed by the Hyundai Santro (code named AH2) expected to be re-launched in the second-half of this year. 


13.2. Over 280 million LED bulbs distributed under UJALA Scheme till 19th December, 2017 and 524,3 million sold by private sector till October 2017: Shri R.K. Singh
Press Information Bureau, Dec. 22, 2017 

As a result of Stringent Quality Control Mechanism, the failure rate of LED bulbs under UJALA scheme is only 0.48%. Defective Bulbs are replaced free of cost to consumers by EESL 

New Delhi: Minister of State (IC) for Power and New & Renewable Energy, Shri Raj Kumar Singh, in a written reply to a question on status of LED bulbs distributed in the country, in Lok Sabha today informed that Energy Efficiency Services Limited (EESL), a joint venture company of Public Sector Undertakings (PSUs) under the Ministry of Power is distributing LED bulbs under Unnat Jyoti by Affordable LEDs for All (UJALA) to domestic consumers across the country. As on 19th December, 2017, more than 28 crore LED bulbs have been distributed under the scheme. In addition, other market players in the private sector have also sold 52.43 crore LED bulbs till October, 2017. 

Informing about the quality benchmarks adhered to in LED bulb manufacturing, Shri Singh stated that the LED bulbs distributed under UJALA scheme undergo a 3-tier (at bidding stage, distribution stage and post distribution stage) quality control checks, to ensure that only high quality LED bulbs are distributed. As a result of stringent quality control mechanism, the failure rate of LED bulbs under UJALA scheme is only 0.48% and all the defective bulbs are replaced by EESL free of cost to consumers. 

Quality standards for LED products are laid down and enforced by the Bureau of Indian Standards (BIS) and Ministry of Electronics and Information Technology (MeitY). BIS has informed that M/s Nielsen had reported that a number of LED bulbs being sold were spurious. BIS has also informed that Electric Lamp and Component Manufacturers’ Association of India (ELCOMA) had complained to the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry about the presence of poor quality lamps, both imported and local in the market. Hence, BIS has taken up the matter with MeitY for taking appropriate action under the Compulsory Registration Order (CRO), 2012, the Minister informed. 

Further, MeitY has informed that the information provided by ELCOMA was not explicit. Accordingly, they have been requested to provide the details of types of LED luminaries which were not complying to CRO. 

Shri Singh also informed that MeitY has notified “Electronics and IT Goods (Requirement of Compulsory Registration) Order, 2012 (CRO)”, under the provision of Compulsory Registration Scheme of BIS Act, 1986 mandating Indian Safety Standards for 30 categories of electronic products including LED products. The grant of registration under CRO is done by BIS based on the submission of test reports of the product from BIS recognized laboratory by the manufacturer. The documents are examined for their adequacy and conformance to the Indian Standards by BIS. To curb the sub-standard products and ensure the safety of consumers, MeitY carries out surveillance on the goods notified under the CRO, the Minister added. 

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


14.1. Electronics manufacturing needs a policy push 
Livemint, 02 Jan. 2018 

India’s electronics manufacturing has been unable to respond to the rising demand, increasing the import bill while the country loses an opportunity to create employment for millions 

A growing middle class, rising disposable incomes, declining prices of electronics and a number of government initiatives have led to a fast-growing market for electronics and hardware products. However, India’s weak manufacturing base has not been able to respond to this increasing demand, leading to a growing trade deficit.
Of the country’s total demand for electronics, between 50-60% of the products and 70-80% of the components are imported. India’s imports of electronic goods grew 31% between April and October 2017 to $29.8 billion. Meanwhile, the trade deficit reached close to $100 billion during the April-November period of 2017, against $67 billion in the same eight-month period a year ago. 

This is an ominous sign. If the situation doesn’t change, a report by Deloitte Touche Tohmatsu states, expenses on electronics imports could surpass those on oil imports by 2020. Moreover, the industry has the potential to provide millions of jobs, directly and indirectly.
In order to deal with the problem, the government has listed the electronics industry as a priority sector under its Make In India campaign. There are various government schemes to encourage domestic manufacturing which provide tax and tariff concessions, investment subsidies, preferential market access in government procurement and export subsidy. In fact, as recently as December, the government increased the import duty on various electronic items like smartphones, LED bulbs and microwave ovens—for most products, the rate increased from 10% to either 15% or 20%. 

But, as this paper has often argued, the way forward is to increase the country’s general competitiveness in the export market instead of pursuing sectoral policies. India’s share in the global electronics market was a minuscule 1.6% of the market in 2015 that is currently valued over $1.75 trillion. With a large domestic market and a number of trained engineers, India’s absence in the electronics manufacturing supply chain is an anomaly that better policies can correct. Instead of preserving our market for domestic manufacturers, the goal should be to capture a larger piece of this global market. There are various factors that have kept these goals from being met. 

First is the inverted tax structure for electronic goods. Due to a limited base of local component suppliers, manufacturers are dependent on importing parts. Under the World Trade Organisation’s information technology agreement of 1995 (ITA-1), tariffs on 217 IT products were set at zero. However, the positive custom duties on the components (or parts) used in electronic products make it expensive for domestic manufacturers to compete with foreign competitors who can access the components at lower prices. The solution is to bring the duties on components down to the level of the product. Some parts might be used for multiple products that may have different duties, but it’s important to rule in favour of simple rules and apply the rate-cut regardless of use. It’s not difficult to imagine a rule for assessing the eligibility for the duty- concession depending on the use to which a component is put—it is precisely this kind of paperwork that needs to be avoided. 

Second, foreign direct investment (FDI) in electronics is less than 1% of the total FDI inflow because of onerous labour laws, delays in land-acquisition and the uncertain tax regime have kept investors at bay. While the labour laws may be reformed in 2018, and we might be past the times of retrospective taxation, the memory of the Vodafone and Nokia cases is still fresh in investors’ memory. In order to inspire confidence, laws need to be liberal and predictable. In the case of taxation, it is important to clearly establish the tax liabilities under different circumstances in full detail. A possible experiment could be special economic zones like the Dubai International Financial Centre—Dubai’s normal civil and commercial laws do not apply in this area and a British chief justice ensures the practice of British common law.
Third, the procedures for cross-border trade work against the competitiveness of Indian producers as shown by the Doing Business rankings—India ranks 146 in the category of trading across borders due to the high costs of compliance. The numerous forms, fees, inspections and the associated time discourage domestic producers from exporting and keep them out of the international supply chain. 

Between 2000 and 2015, hardware production in India increased from Rs31,100 crore to Rs1.02 trillion. Meanwhile, information technology (IT) services revenue increased from Rs37,750 crore to Rs8.4 trillion. This shows that India is capable of producing globally competitive products. But while the non-material nature of IT services has constrained the state’s grabbing hand, the electronics manufacturing industry did not have that privilege.
China, with its rising labour costs, will soon not be the global manufacturing hub it is today. This is an opportunity for countries like India, the Philippines, Thailand, etc., to attract companies to move their plants to their country. Despite its low costs of labour, India might lose this race if it doesn’t reform the key sectors of the economy.
This is not to suggest that the government is oblivious to these challenges. In fact, much has been done in the past couple of years to suggest that we are moving in the right direction. Introduction of the landmark goods and services tax (GST) has increased the distance that trucks are travelling by about 30%. GST has also reduced the confusion associated with various state and local taxes. And the government seems determined to improve the condition of highways and ports.
Yet, much needs to be done towards removing barriers that discourage exports and creating a reputation for stable and predictable rules. 


14.2. Kookhyun Shim appointed MD, CEO of Kia Motors India 
BusinessLine, 03 Jan. 2017, V Rishi Kumar 

Kia Motors India (KMI) has announced the appointment of Kookhyun Shim as Managing Director and Chief Executive Officer responsible for driving Kia Motors’ expansion in the Indian market. Shim will oversee the construction of Kia Motor’s first manufacturing facility in India and strengthen the company’s position in the fifth largest global automotive market. 

Kia’s future development in the Indian market will be supported by a $1.1-billion investment plan for a greenfield manufacturing unit in Andhra Pradesh. Shim, 58, brings over 30 years’ experience in the automotive industry to his new role, having most recently served as Head of Kia Motors Manufacturing Georgia Plant Coordination Group. Prior to this, he was responsible for the head coordinator of Kia production in Slovakia. “We are delighted to announce the appointment of Kookhyun Shim as MD & CEO for India,” said Han-Woo Park, President at Kia Motors Corporation. “We recognise India as a major market with huge potential for our world-class cars. We are confident that Shim’s leadership will provide the direction we need to grow our presence in what is one of the world’s biggest new car markets,” he said. 

“Kia has big plans for India,”said Kookhyun Shim. “The Indian economy is at an inflection point, and I am excited to work in an emerging market that’s forecasted to become the third largest globally by 2021. India is a crucial market for all global automotive brands, and I aim to replicate the success that Kia has seen in many other major markets. Kia’s brand slogan, ‘The Power to Surprise’, will be present in everything we do here.”
In April 2017 Kia Motors signed a memorandum of understanding (MOU) with Andhra Pradesh to build a new manufacturing facility in Anantapur district. The ground-breaking ceremony of Kia Motors’ first manufacturing facility in India is under consideration to commence in the first quarter of 2018. The manufacturing facility is expected to begin production in the second half of 2019 and produce approximately 300,000 units per year. Founded in 1944, Kia Motors Corporation, with revenues of over $45 billion, produces over 3 million vehicles a year from 14 manufacturing and assembly operations in five countries.


15.1. Indian real estate is on an upward trajectory 
Livemint, 02 Jan. 2018, Brotin Banerjee 

After a year of important reforms, the future is looking bright—particularly when it comes to affordable housing 

India’s real estate sector witnessed some significant developments over the past year-and-a-half. These have changed the face of the industry and augur well for it in the long run. The sector has become more transparent and organized owing to recent policy changes and consumers are better off for these.
The reforms began in May 2016, when the Real Estate (Regulation and Development) Act 2016 (RERA) came into force. The Act came into full effect from May 2017, bringing unprecedented levels of transparency into real estate projects. RERA promises to minimize delays in projects, weed out unscrupulous developers, and provide homebuyers with detailed information on the specifications and the progress of the projects they invest in. 

RERA was followed by the introduction of the goods and services tax (GST), which rolled many different taxes into one. Until then, both consumers and developers had to pay multiple, and often varying taxes, which caused confusion. GST has come as a relief for both, by bringing clarity into the process. Moreover, it will lower the cost of construction, and bring more liquidity into the market. 

The sector will also benefit from the amendments that were made late in 2016 to the Benami Transactions Prohibition Act. This, coupled with the central government’s stated intent to make Aadhaar linkage compulsory for all property transactions, will help in curbing malpractices and stopping the inflow of black money into real estate.
All these developments are highly significant. They will not only bring transparency and accountability, but also consolidation in their wake. Developers need to be sufficiently funded to achieve RERA compliance. Small or cash-starved developers will probably have no choice but to partner with larger, established players to survive. Moreover, unscrupulous developers—big or small—will have no place to hide in the transparent environment that RERA will usher into the industry. The real estate sector will be institutionalized, and probably have fewer—but larger and more reliable—developers in the years to come. 

As the industry adapts to all these developments and trends, it is likely that the residential real estate segment will pick up in the first half of 2018. Home loan interest rates have gradually been decreasing over the past few years, and banks and financial institutions are offering varied, attractive schemes to incentivize customers, particularly for ready-to-move-in properties. The recapitalization of banks will also rejuvenate the banking sector and give a boost to lending. This will spur healthy competition between different actors and ultimately result in cheaper loan options for consumers. The Reserve Bank of India had slashed key interest rates by 25 basis points (a basis point is one hundredth of a percentage point) in August, and kept the repo rate unchanged in December. This, too, will help in lowering interest rates on home loans. 

Home loan rates apart, the other major factor that could give a boost to real estate in the near future is affordable housing. In 2017, the government tried to incentivize affordable housing with renewed zeal. The guidelines of the Pradhan Mantri Awas Yojana (urban) (PMAY) were amended to encourage more millennials—married or single—to invest in property. Even unmarried children of a household are now eligible to apply for loans under PMAY. The government is trying to attract both middle-income and low-income groups to this segment. 

In September, the central government extended, under PMAY, the benefit of interest subsidy on home loans for households in the middle-income group. This scheme was originally scheduled to end in December, but has now been extended till March 2019. In November, the cabinet approved increasing the carpet area of houses eligible for interest subsidy under this scheme. Consumers from economically weaker sections and low-income groups, for their part, are eligible for an interest subsidy at the rate of 6.5% for a tenure of 20 years, or during the tenure of the loan, whichever is lower.

Affordable housing, however, can achieve the desired levels of momentum and growth much faster with the participation of the private sector, which has shied away from it so far for several understandable reasons. In a much-awaited move to change this situation, the Union budget for 2017–18 granted infrastructure status to the affordable housing segment. More recently, the ministry of housing and urban affairs introduced as many as eight public-private-partnership options to encourage private investments in affordable housing projects. These new policies, if implemented well, could give a much-needed boost to this segment and make it a powerful growth driver for the real estate sector. 

A boom in affordable housing and the resulting construction and allied jobs can help make a significant dent in the malaise of joblessness. It can also have a multiplier effect on the national gross domestic product, and boost the demand for different categories of products and services. India’s real estate is transitioning to a new era after what has been a rather eventful year. And the prospects for homebuyers, developers, and the financial ecosystem are brighter than they have ever been. 

Brotin Banerjee is managing director and chief executive officer, Tata Housing. 


15.2. With RERA kicking in, NRI interest in Indian realty set to rise 
BusinessLine, 18 Dec. 2017, Garima Singh 

Implementation of Real Estate (Regulation and Development) Act, 2016 will boost the Non-Resident Indian sentiments on Indian real estate sector, say market experts. 

With more transparency coming in the realty sector, there is bound to be an increase in the number of NRIs planning to buy property back home, they said..
The Indian real estate sector, in recent times, has witnessed a lot of changes, more so after the introduction of the Real Estate (Regulation and Development) Act, 2016 and the Goods and Services Tax (GST). 

“As RERA will ensure timely delivery of projects and also since all the information will be available online, it will boost the confidence of NRIs who are thinking of investing in the Indian real estate market. But, the GST might have a negative impact on the buyers as there might be increase in the price of the properties,” said Parveen Jain, Vice-Chairman, NAREDCO (National Real Estate Development Council). 

Right now, prospective home-buyers have to pay a 12 per cent GST to developers if they are planning to buy a property which is under construction. However, there is no GST on the fully constructed property. 

Greater transparency 
However, RV Verma, former Chairman of the National Housing Bank, has a different take on the GST.
He said, “The introduction of the GST in the real estate and construction industry will certainly benefit the sector and its various stakeholders. This will bring in greater transparency in the valuations of transactions as it provides incentives to the builders for adopting and declaring fair and real valuations. This , in turn, will result in more transparent and efficient pricing with the suppliers of residential housing standing to gain from the input credits which was not the case under the service tax regime.”
On the factors that the NRI should keep in mind while purchasing a property in India, Verma, who is also a consultant to the World Bank, said: “With RERA, the NRI community will have better access to the information about the builders, their track record and the status of various approvals.
“So, the NRIs should check all the aspects, including the status of land and its land use.”
Anuj Puri, Chairman, ANAROCK Property Consultants Private Ltd, said: “In fact, interest in residential properties from NRIs whose focus is not so much on investment growth as on owning a home for themselves and their families back home continues unabated.
“The fact that residential property prices in India have bottomed, with developers rolling out highly attractive offers, has worked very well for such buyers.”
The introduction of RERA has turned out to be a real market force, and the transparency it enforces will draw residential real estate back to the centre stage.
Industry experts also think that there is not much appreciation in property prices in the real estate market of the developed countries.

Workshops for NRIs 
Since many NRIs are not too familiar with RERA, some of the real estate firms like Omkar Realtors are organising workshops to brief them about the laws, according to its Senior Vice-President Rahul Maroo. Also, keeping in mind the NRIs preference of healthy lifestyle, many developers in India are coming up with projects which are at par with international standards, he added. 



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16.1. Air Deccan set to relaunch operations with Re1 flight tickets 
Livemint, 12 Dec. 2017, Tarun Shukla 

Air Deccan will relaunch begin with bases at Mumbai, Delhi, Kolkata and Shillong, connecting them with smaller cities 

New Delhi: Air Deccan, India’s first domestic low cost airline, is set to relaunch operations this month with what it is remembered for the most—Re1 airfares.
Air Deccan, founded by G.R. Gopinath in 2003, merged with Vijay Mallya’s Kingfisher Airlines in 2008, which was grounded in 2012 under financial duress. 

In its second innings, the airline will begin with four bases at Mumbai, Delhi, Kolkata and Shillong, connecting them with smaller cities around them.
The first Air Deccan flight will take off on 22 December and fly to Mumbai from Nashik, Gopinath told Mint, speaking from his home in Bengaluru. 

“This will be my last Udan and then I will hang up my boots,” said Gopinath, who has been waiting for a re- entry for few years now.
The government’s Udan scheme (Ude Desh Ka Aam Nagrik), which loosely translates as “let the common man fly” and proposes to connect small towns on fares of about Rs2,500 for a one-hour flight, has provided that entry for the entrepreneur. Air Deccan, which has the tagline “Simplifly”, will brand its entry with a “the common man takes to the skies” logo designed by cartoonist the late R.K. Laxman. 

“Some of the initial lucky people will be able to get Re1 fares also,” Gopinath said, even though most tickets will start at about Rs1,400 for a 40-minute Nashik-Mumbai flight, a distance that would take four hours to cover by road. 

Air Deccan will also operate daily return flights between Nashik and Pune and Mumbai and Jalgaon.
By January, the airline plans to station a second aircraft in Delhi to connect the city with Agra, Shimla, Ludhiana, Pantnagar, Dehradun and Kullu.
Air Deccan will also station two planes in Kolkata, flying them to Jamshedpur, Rourkela, Durgapur, Bagdogra, Burnpur, Cooch Behar, Agartala, and from Shillong to Imphal, Dimapur, Aizawl and Agartala. It will use 19- seater Beech 1900 D planes that are used worldwide. Three of these planes have already joined its fleet and two more will be added over the next few weeks, according to Gopinath. 

By January, four planes will be used for services and one will be kept on standby.
Gopinath said he would like to expand faster, but is not getting slots and parking at the congested Mumbai and Delhi airports and flying to airports on the outskirts would ruin the small airline even before it has taken its first baby steps. Initially, the airline was not granted even one slot at these airports and it took several requests made to the aviation ministry before a few slots were given, said Gopinath.
Smaller planes are exempt from paying any fee and therefore don’t bring revenue to the airport.
“The private sector airport monopolies are not aligned to the vision of Prime Minister Narendra Modi and the steps being taken by aviation ministry in making Udan a success,” Gopinath said, adding, “They say we can give three slots per week for Kolhapur-Bombay. Do you think someone who goes by plane will like to come by train the next day?”

An email seeking comment from the Mumbai airport remained unanswered till the time of going to press. A Delhi airport spokesman said to support Udan, the airport has offered 26 slots to four airlines. Air Deccan had requested for a total of 10 slots, out of which 6 slots have already been offered to the airline. “In addition, 4 post-midnight slots have also been offered. However, Air Deccan is yet to finalize their schedule,” it added. “India presents such a big market with so many different levels of airports that you need a turboprop to address a good part of the regional market,” former Jet Airways chief executive Steve Forte said, adding, “The government should have some guidelines for airports to provide for regional connectivity.” 


16.2. Cabinet approves establishing India's First National Rail and Transportation University at Vadodara 
Press Information Bureau, Dec. 21, 2017 

  • Indian Railways on the path of modernization through widespread technological and infrastructure upgradation 
  • Contribute to 'Make in India' and 'Skill India' and help generate large scale employment 
  • Foster innovative entrepreneurship and support start-up India initiative 
  • Use of latest pedagogy and technology applications: Envisioned to be a best-in-class institute which will use latest pedagogy and technology applications to provide high-quality education and training. 
  • India will emerge as a global leader in transportation sector through cutting edge technology and skilled manpower. 
The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved the Ministry of Railways' transformative initiative to set up the first ever National Rail and Transport University (NRTU) in Vadodara to skill its human resources and build capability. This innovative idea, inspired by the Prime Minister, will be a catalyst for transformation of rail and transport sector towards New India. 

The University will be set up as a Deemed to Be University under de novo category as per the UGC [Institutions Deemed to be Universities] Regulations, 2016. Government is working towards completing all approvals by April 2018 and to launch the first academic program in July 2018.
A not-for-profit Company under Section 8 of the Companies Act, 2013 will be created by the Ministry of Railways which shall be the Managing Company of the proposed university. The company will provide financial and infrastructural support to the university, and appoint Chancellor and Pro-Chancellor of the university. Board of Management, comprising professionals and academics, shall be independent of the Managing Company with full autonomy to perform its academic and administrative responsibilities.
Existing land and infrastructure at National Academy of Indian Railways (NAIR) at Vadodara, Gujarat will be utilized, and suitably modified and modernized for the purpose of the university. In its full enrolment, it is expected to have 3000 full time students. The funding of the new University/Institute is to entirely come from Ministry of Railways. 

This university will set Indian Railways on the path of modernisation and help India become a global leader in transport sector by enhancing productivity and promoting 'Make in India'. It will create a resource pool of skilled manpower and leverage state-of-the-art technology to provide better safety, speed and service in Indian Railways. It will support 'Startup India' and 'Skill India' by channeling technology and delivering knowhow, and foster entrepreneurship, generating large scale employment opportunities. This will lead to transformation of railway and transportation sector and enable faster movement of people and goods. Through global partnerships and accessing cutting edge technologies, India will emerge as a global centre of expertise. The university plans to use latest pedagogy and technology applications (satellite based tracking, Radio Frequency Identification and Artificial Intelligence) to improve on-the-job performance and productivity. Close collaboration with the Indian Railways will ensure that the stakeholders have access to Railways' facilities, which will work as 'live labs' and they will be able to work on solving real life problems. It will have 'Centres of Excellence' showcasing high-end, niche technology like High Speed Train. 

Background: 
Government of India has taken a very important decision whose impact will be felt through the next century and the decision is that country's first railway university will be constructed in Vadodara" - Hon'ble Prime Minister speaking about rail university in Vadodara in October, 2016. 

As Indian Railways is set to embark on ambitious projects such as High Speed Trains (popularly known as bullet train), massive infrastructure modernisation, Dedicated Freight Corridors (DFCs), highest focus on safety etc., Indian Railways will require high level of proficiency and skills. Further, factors such as unprecedented growth in the transportation sector in India, increased requirement of qualified manpower and upgradation of skills and capability required to drive the transformation of Indian Railways have necessitated a world-class training hub. 

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


17.1. Metro ups the ante to battle Walmart in cash-and-carry retail biz 
BusinessLine, 14 Dec. 2017, Tanya Thomas 

German wholesaler aims to double its store count of 24 in next three years 

In the two years he has spent at the helm of Metro Cash and Carry, India’s largest operator in the organised wholesale space, Arvind Mediratta, MD and CEO, has taken the fight for growth to his former employer Walmart’s strongholds in the northern and western markets.
The store count for the Dusseldorf-based wholesaler, the first foreign giant to enter India, now stands at 24. Mediratta plans to double this in the next three years. Closest rival Walmart opened its 21st store last month and hopes to reach 50 by 2020. 

Since both are private companies, the latest financial figures are hard to come by. Metro reported FY17 sales of ₹5,632 crore, while for the 15 months ended FY16, Walmart’s sales in India was close to ₹4,000 crore. Metro currently has six stores in Bangalore, four in Hyderabad, two each in Mumbai and Delhi, and one each in Kolkata, Jaipur, Jalandhar, Zirakpur, Amritsar, Vijayawada, Ahmedabad, Surat, Indore and Lucknow. 

In an interview with BusinessLine, Mediratta said that the German wholesaler is going to consolidate its share in the northern and western markets, particularly Punjab, UP, Gujarat and West Bengal. Walmart has five stores in Punjab and four in UP, and is making inroads in Andhra Pradesh and Telengana – Metro’s backyard – with four stores in the region. 

Future plans 
Mediratta is not cowed, either by the US giant’s commitment to invest ₹3,200 crore in the Indian market over the next three years, or the onslaught of e-commerce in the grocery retail sector. Instead, his future plans include strengthening the sales contribution from the HoReCa (hotels, restaurants, cafes) category, widening the product suite and enrolling a larger number of clientele on digital platforms. 

Metro’s German parent, for its part, has made commitments to invest ₹1,690 crore for its India operations till 2020. HoReCa accounts for 15 per cent of the sales for Metro in India. “We want to expand this segment into a wider range of products, such as crockery, appliances, electronics, besides fresh foods,” said Mediratta. The majority of a cash and carry business’ clientele are small retailers and business owners. Metro has over 18-lakh active businesses as part of its clientele. Industry estimates say there are over 1.2 crore kirana stores and that 3 per cent of all consumer products are traded through the organised wholesale route. 

Metro is helping small retailers on to digital platforms, be in payment or on social media. “We’ve given PoS machines to 100 retailers in Hyderabad and Bengaluru [where Metro has the highest number of stores] so that customers can make card and mobile wallet payments. We’re also encouraging clients to create social-media groups for the 200-300 households that they serve; this can personalise service and they can give customers special discounts. This way, retailers don’t lost business to e-commerce players.”
Metro is also tieing up with start-ups to provide GST accounting platforms to their clients and to extend short- term loans. Last month, the wholesaler launched a membership programme for Uber drivers in Bengaluru, which gives them access to a wide range of car accessories, oils, lubricants, cleaning products and confectionery and beverages (the last two for customers ). Metro plans to take this programme to their other markets over the next 6-9 months. 

“In the long-term, I believe grocery will be safe from e-commerce,” said Mediratta. It’s difficult for e-commerce players to maintain cold chain integrity, especially if the ticket value is low, because then the delivery costs become very high, he explained. So the advantage still lies with players who trade in scale. Another area of focus for Metro is doubling its share of sales in private label products, particularly in organic and pesticide-free food and home-care products, from its current single-digit contribution to sales. 

Challenges 
While Metro and Walmart were initially forced into the wholesale business in India because of laws barring foreign investment in multi-brand retail, they’re quickly building scale and amassing market share in the wholesale game.
The two multinational giants will soon face challenge from the Indian players. Reliance Industries’ retail operations also plans to focus on the business-to-business segment, while Kishore Biyani’s Future Consumer has tied up with UK’s Booker Group for a wholesale JV in India. 

The fate of this venture, though, hangs in balance after Tesco, also a retailer in the UK, bought out the Booker Group this year. Tesco is present in India through a joint venture with Tata’s retailing arm Trent Hypermarket. 


17.2. SoftBank pushes Flipkart to focus on growth, market share 
Livemint, 18 Dec. 2017, Mihir Dalal 

SoftBank is willing to pump in ‘several billions of dollars’ to help Flipkart increase its market share to 60-70% and leave Amazon India far behind 

Bengaluru: After raising cash from SoftBank Vision Fund, online retailer Flipkart has tweaked its strategy to focus on boosting market share rather than narrowing its losses, two people familiar with the matter said. Cash-rich SoftBank Group Corp. is pushing Flipkart to make sales growth and market expansion its top priority, indicating that an already-delayed public offering is no longer on the agenda for the next three years at least, the people cited above said on condition of anonymity. 

SoftBank wants Flipkart to increase its market share to 60-70% over the next few years, the people said. The Japanese investor has assured Flipkart that it is willing to pump in “several billions of dollars” to help Flipkart expand the e-commerce market and widen its narrow lead over rival Amazon India, they said. Analysts estimate that Flipkart, which owns online fashion retailers Myntra and Jabong and payments app PhonePe, controls 40-45% of the e-commerce market. 

Flipkart has signed up consultant Bain and Co. to craft a strategy to expand its user base and improve customer loyalty rates over the next two to three years, the people said. The company is also increasing its pace of investments and acquisitions to boost growth, Mint reported on 23 October. 

In 2016, India’s e-commerce market grew less than 15% to $14.5-15 billion, according to RedSeer Management. That was a sharp slowdown compared with the expansion of the preceding years, and forced companies, investors and analysts to change their rosy projections about the potential of e-commerce.
Now, e-commerce insiders say that while the industry will become huge over the next 10-15 years, it will only grow at a rate of 25-30% over the next few years, until macro-economic factors such as broader economic growth, smartphone penetration and comfort levels with internet all improve significantly.
Flipkart and SoftBank didn’t respond to emails seeking comment. 

In August, SoftBank through its $100 billion Vision Fund struck a deal to invest $1.4 billion directly into Flipkart and buy shares worth $1.2-1.4 billion from Flipkart shareholders. The deal will make SoftBank one of the two largest shareholders in Flipkart along with Tiger Global Management, whose former employee Kalyan Krishnamurthy is the chief executive of the online retailer. 

Before the SoftBank deal, Flipkart had already raised $1.4 billion from Tencent, eBay and Microsoft in April. But at that time, it was striving to strike a balance between cutting losses and boosting sales. With the entry of SoftBank, which has an unrivalled appetite and cash to fund technology firms, Flipkart has landed a long-term backer willing to invest large sums of money to control a large part of the last big unconquered e-commerce market in the world.
Given SoftBank’s ambition and firepower, Flipkart is now prioritizing market expansion and market share gains over profitability. In an interview published on 19 September, Flipkart CEO Krishnamurthy confirmed as much. 

“Profitability is not the highest priority today. We will again go into a very clear consumer market building mode and expanding the market. We want to bring as many people as possible into the e-commerce fold, as many categories on a regular basis and we will invest towards that. We are very comfortable on the burn that we have today,” Krishnamurthy had said. 

Flipkart’s new approach means that an IPO gets pushed back further. In the past, Flipkart made some tentative moves toward an IPO but it hasn’t conclusively prepared for one.
With SoftBank’s entry, other Flipkart investors have accepted that an IPO isn’t going to happen any time in the near future, the two people cited above said. While Flipkart co-founders Binny Bansal and Sachin Bansal have already made hundreds of crores of rupees each through share sales and bonuses, early Flipkart investors including Tiger Global Management, Accel Partners and IDG Ventures will secure partial exits by selling some of their shares to SoftBank. This allows them to go along with the plan to delay the IPO, the people cited above said. 


18.1. Medical tourism value in India to touch USD 9 bn by 2020: Govt 
PTI, Dec. 19, 2017 

New Delhi: The government has said that the value of medical tourism in India is likely to reach a whopping USD 9 billion by 2020 as compared to the USD 3 billon in 2015.
Tourism Minister KJ ALphons today informed the Lok Sabha that India has emerged as a major medical tourism destination over the years. 

Alphons said that according to a Ministry of Commerce report published in 2016, India is among the top six medical value travel destinations of the world which also include Thailand, Singapore, Malaysia, Taiwan and Mexico.
"It is further informed that as per the report, through adequate focus and effective execution, Indian medical value travel, pegged at 3 billion USD in 2015, can be 9 billion USD opportunity by 2020", the minister said. Alphons went on to say that the ministry had recognised medical and wellness promotion tourism as niche tourism product for promotion, organised wellness and medical tourism promotion shows and also produced a film on it. 

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


18.2. AI (Artificial Intelligence) spending by Indian cos may grow by 8-11% in 18 mths: Intel 
PTI, Dec. 15, 2017

Bengaluru: Increasing influence of artificial intelligence-based solutions across verticals is expected to push companies to spend 8-11 per cent more over the next 18 months on this new-age technology, a report by global chip maker Intel said today.
The Telecommunications, Media, and Technology (TMT) vertical is a major consumer of the AI technology with current adoption rate of 37.5 per cent, it said. 

However, sectors like retail, services and healthcare are expected to lead in 2019, with an expected adoption rate of 74 per cent over the next 18 months, said the report, based on the survey conducted by research firm IDC India.
"IT budget spend on AI is likely to increase between 8-11 per cent, led by TMT and manufacturing sectors," it said. 

The study surveyed 194 large Indian organisations across sectors to gauge the appetite towards the adoption of AI.
"Like their global counterparts, Indian enterprises too, are looking at leveraging technologies like AI and IoT to increase business efficiency and employee productivity. 

"About 64 per cent respondents believe that this technology can empower them in revenue augmentation through better targeting of offers and improved sales processes," Intel India Managing Director (Sales and Marketing Group) Prakash Mallya told reporters here.
While benefits of AI are clear, 76 per cent companies believe they will face a shortage of skilled personnel to harness the power of AI, he added. 

Intel claims to power 97 per cent of data centre servers running AI workloads worldwide.
Intel is betting on five key areas -- AI, Internet of Things (IoT), 5G, Augmented/Virtual Reality and connected vehicles -- to drive growth, Mallya said.
The company has been strategically investing in the development of the ecosystem in India to promote innovative application of AI, he said, adding that it has a "huge opportunity to lead the next generation of computing transformations in India". 

Earlier this year, Intel India had said that it will train 15,000 people in India in the area of AI by April next year. According to the report, nearly 1 in 5 organisations surveyed (22.2 per cent) has implemented AI technology in some way in the recent past. This number is expected to increase considerably by mid-2019 with nearly 7 in 10 firms (68.6 per cent) anticipated to deploy it. 

Businesses, particularly in retail (including e-commerce) and telecom are exploring mechanisms to boost their revenue by using AI for better targeting of offers and improved sales processes, it said, adding that manufacturing and retail sectors are looking at refining their supply chain networks using AI.
Besides, financial services organisations are more focused on improving regulatory compliance and fraud reduction from AI implementation, while retail and automotive establishments are looking at improving consistency in the way decisions are made, the report said. 

However, concerns around adoption of AI continue with high costs, acute shortage of skilled professionals, unclear return on investment and cyber security are emerging as the key hindrances.
Regulatory compliance and lack of quality data are seen as other important challenges. 

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


19.1. Industry-agriculture balance needed for growth, West Bengal CM Mamata Banerjee 
Livemint, 18 Jan. 2018, Arkamoy Dutta Majumdar 

Projects proposed during Bengal summit can create two million jobs, says West Bengal minister Amit Mitra 

Kolkata: West Bengal chief minister Mamata Banerjee on Wednesday said that the state needs to strike a balance between industry and agriculture for economic growth, echoing her predecessor Buddhadeb Bhattacharjee.

Banerjee was speaking on the final day of the Bengal Global Business Summit 2018 in Kolkata.
With growth in agriculture slowing, Banerjee’s key challenge now is to create new jobs. While she fiercely resisted acquisition of farmland for industrial projects, she said she is not opposed to factories being set up in West Bengal. 

As many as 110 agreements have been signed over the past two days, and if they were to materialize, they will result in an investment of Rs2.19 trillion, the state government said in a statement.
State commerce and industries minister Amit Mitra said about 2 million jobs will be created if the projects proposed over the past two days materialize. Considering the slow economic growth of the country this year, the response to the event was commendable, he said. 

Cab aggregator Uber India Technology Pvt. Ltd signed a memorandum of understanding with the state government, aiming to create up to 100,000 “micro-entrepreneurship opportunities” over five years.
Uber’s rival Ola Fleet Technologies Pvt. Ltd has also committed to investing Rs300 crore to scale up services and create 5,000 new jobs in a year, said Mitra, who is also the finance minister of the state. 

Under an agreement with the West Bengal Transport Infrastructure Development Corp., Ola is to acquire up to 5,000 cabs and hire unemployed people to drive them, the company said in a statement.
Uber, on the other hand, will identify potential driver-partners from across the state with the help of the state government, which will set up schools to train drivers, the company said in a statement. 

Both Uber and Ola are lobbying the state government for permits to ply more cabs. Training more drivers will lead to better utilization of available cabs.
Among big ticket investments committed on Wednesday, Pranav Adani, managing director of Adani Wilmar Ltd, said his group had invested Rs750 crore in West Bengal. There are plans to double the capacity of the company’s edible oil refinery at Haldia from 1,600 tonnes. The group is also exploring opportunities to set up a port in the state, he added. 


19.2. Reliance will invest ₹5,000 crore in Bengal to expand petroleum outlets: Mukesh 
BusinessLine, 16 Jan. 2018, Abhishek Law 

West Bengal Chief Minister Mamata Banerjee with Reliance Industries Chairman Mukesh Ambani at the Bengal Global Business Summit, in Kolkata on Tuesday. - Debasish Bhaduri

Reliance Industries Ltd will invest ₹5,000 crore in the next three years for the expansion of its petroleum outlets in West Bengal, its Chairman, Mukesh Ambani, said here on Tuesday. 

This comes over and above the investments that the company will make towards strengthening its optical fibre network here, and its proposed electronics manufacturing facility for mobile phones, set-top boxes and television sets.
“We will invest ₹5,000 crore in the non-Jio business in West Bengal in retail petroleum outlets in the next three years,” said the RIL Chairman. 
Ambani’s investment commitment came as the biggest takeaway of the ₹17,000 crore proposals that the State received during the first day of the Bengal Global Business Summit. 

Other investments 
For example, Sajjan Jindal, Chairman of JSW Group, who had committed investments to the tune of ₹10,000 crore in paint, steel and cement sectors, is still at the drawing board stage.
On the other hand, Saroj Poddar, Chairman of the Adventz Group, committed ₹1,000 crore, the details of which were not available. 

Similarly, Sanjiv Goenka, Chairman of the RP-Sanjiv Goenka Group, committed to invest ₹1,000 crore in the group’s power distribution business. This apart, the group will continue to invest in setting up a medical facility (it already owns Woodlands Hospital) in the city – it would also look at a speciality carbon black making facility at Durgapur.

The investments for both these proposals were not mentioned. Goenka, while reiterating the previous year’s promise of investing ₹10,000 crore in the FMCG sector, said that RP-SG Group would look at setting up an FMCG park. No further investment break-up relating to the proposal was available.
Kishore Biyani, of Future Group, while claiming to be bullish on Bengal, reiterated his previous promise of setting up a garments park and opening more shop-in-shop formats of Biswa Bangla – the flagship handicrafts and apparel store of the State government. 

The first Biswa Bangla store was opened at the group’s organised retail format – Central – in Kolkata last year. The other major announcement came from H-Energy Private Limited. The company has signed an MoU with Kawasaki Kisen Kaisha Ltd (K Line) to jointly develop a project to import LNG. The project envisages an FRSU in the off-shore Digha region to provide re-gasified LNG (R-LNG) to customers in West Bengal and Bangladesh. The city gas project is expected to start in 24 months, said Darshan Hiranandani, CEO of H- Energy. 

LN Mittal, CEO of ArcelorMittal, and Uday Kotak, CMD of Kotak Mahindra Bank, were also present among the industrialists, which also included Sanjiv Puri, CEO, ITC Ltd; CS Ghosh, MD and CEO of Bandhan Bank; and Purnendu Chatterjee of TCG, among others. 

SpiceJet soars 
Meanwhile, Ajay Singh, Chairman of SpiceJet, said his company was planning to start services between Kolkata and Chittagong later this year. Plans were also afoot to revive operations from the greenfield airport at Andal through services to Hyderabad and Bengaluru.
“We intend to have more flights from Kolkata to ASEAN countries. We also intend to give a fillip to tourism in the region through sea plane services. We may explore Gangasagar or Sunderbans for such services,” he said.
The company was also looking at the possibility of manufacturing sea-planes in West Bengal. 


20.1. With 100 successful satellite launches, ISRO in new orbit 
BusinessLine, 12 Jan. 2018, M Somasekhar 

India began its space journey in 2018 with a bang - scoring a perfect century of satellites launched into space. The PSLV C40 successfully placed the 100th satellite, Cartosat-2 series, a weather monitoring one into orbit in a smooth launch from the Sriharikota space port this morning. It also launched 29 more smaller satellites sequentially during a window of two hours of skilful manoeuvres. 

Big boost 
The launch will be a big boost in many ways for the Indian Space Research Organisation (ISRO). It marks a remarkable comeback for the PSLV, after the set-back it suffered on August 31, 2017 when the PSLV C39 mission carrying the first private sector built satellite IRNSS 1H navigation satellite failed. The second important message is the confidence that ISRO has established among global customers. That we could get 28 micro satellites on board the PSLV C40 and launch them is a clear indication, said a jubilant AS Kiran Kumar, Chairman of ISRO. 

The success also gives a fitting farewell to Kiran Kumar, under whose stewardship in the past three years the Space Agency has built a strong reputation with many launches, including the record breaking 104 in one go. In turn it also sets up a blistering pace and challenge to the incoming Chairman K Sivan, Director of the Thiruvananthapuram based Vikram Sarabhai Space Centre, who is expected to take over later this month. “Launch vehicle technology is complex, tough and challenging. That’s why it’s called risky business. Hence, we need success to build customer confidence and grow business. Present launch has done that," said Kiran Kumar. Every launch is a fresh test of a range of technology capabilities. PSLV C40 once again proves the mastery of ISRO on many of them. Along with the Cartosat and one more mini satellite of India, the launch vehicle put 28 satellites from 6 countries into the low earth orbit. 

Buoyed by the growing business that Antrix Corporation, the commercial arm of ISRO is attracting for the PSLV, the Government recently announced that it will fund the space agency’s efforts to develop an exclusive Small Satellite Launch Vehicle (SSLV). This launcher can cater exclusively to mini and micro satellites. There is growing demand from private sector, research institutions and universities who want to put small payloads into low orbit for space data. 

India offers cost competitive advantage vis-a-vis Big players like Arianespace, US, Russia, ESA etc. through PSLV. The SSLV can emerge more lucrative as ISRO can bring down its launch costs and offer better price to customers, instead of the present piggyback ride on the PSLV, which can then focus on higher payloads.
The present flight carried satellites from US, Uk, France, Finland, Korea, Finland and Canada. About 25 are nano satellites and rest are micro types. 

The success also sets the tone for the hectic schedule of launches spread over the year. It will also push confidence for the upcoming GSLV Mark III Launch. GSLV is key to India’s big leap into space business and long interplanetary and Moon and Mars missions in future. 

Chequered Journey 
India’s satellite launch story did not have a great beginning. In fact, it began on a disastrous note. The first Satellite Launch Vehicle (SLV) failed in the first attempt in 1979. The second attempt proved successful.
As it advanced into the Augmented Satellite Launch Vehicle, the going became tougher as both the ASLV 1&2 failed in 1987 &88. It was a only in 1992 on the third attempt, the ISRO tasted success. Then it moved on to the Polar Satellite Launch Vehicle(PSLV). Here again it was unlucky on its maiden flight in 1993.
However, after getting the act together and learning from failures it got everything right in 1994. There was no looking back for the PSLV and ISRO. In 42 missions, the workhorse has just failed less than half a dozen times. 

On the satellite front, India’s journey began with Aryabhatta Launch from the Soviet Union in 1975. The indigenous Rohini 1 was launched subsequently and it grew from strength to strength into communication, remote sensing, ocean studying, geographical data collecting satellites being placed into orbit both from Arianespace Vehicle in Kouru and PSLV. 

Lucrative Market 
With the PSLV firmly establishing its niche strengths, the next challenge for the ISRO will be to operationalise the GSLV at the earliest. If it can add the SSLV in a couple of years, the space agency will emerge as a formidable force in the multi-billion dollar Launch Vehicle sector, where several private players like SpaceX, Lockheed Martin, Amazon’s Jeff Bezos and are entering in a big way. 

For 2018 ISRO has ambitious plans of having one rocket launch every month, with the mission carrying different payloads and applications. The focus will be on getting increased business by Antrix and strengthening the country’s own satellite based coverage.
With the firm backing of Prime Minister Narendra Modi, who did a quick congratulatory tweet to ISRO, the space agency hopes to get increased funding like in 2017-18, when it got Rs. 9000 crore. The future looks both exciting and competitive for ISRO. 


20.2. The secret sauce behind a successful Indian start-up 
Livemint, 11 Jan. 2018, Shailesh Chitnis 

Successful start-ups tend to be led by a group of not-so-young co-founders 

In the popular imagination, a successful start-up founder in India is a young male IITian who struck gold in his first business venture. But data on Indian start-up founders shows that this is largely a myth. Successful start- up founders indeed largely belong to pedigreed institutions such as the Indian Institutes of Technology (IITs) but they tend to have plenty of experience compared to founders whose start-ups fold up. 

The analysis is based on data for over 330 start-ups and 560 founders. The start-ups selected are businesses built around an innovative product or a tech-enabled platform. This definition precludes any companies that offer pure services or consulting solutions. The data on each start-up founder has been verified using at least two public sources.

The shortlisted companies were split into two groups—those start-ups that have shut shop versus those that have scaled up—start-ups that are active for the past two years, and have raised more than $10 million. The ideal differentiator between successful and other start-ups would have been profits but given how elusive profits have been in the Indian start-up ecosystem, this analysis uses total funds raised as a proxy for scale. Among the 330 start-ups, 151 start-ups have folded while 179 start-ups have scaled up. 

As the above chart shows, start-ups that have scaled up tend to have founders with significant years of work experience. Less than a fifth of start-ups that folded had 10 or more years of experience. In stark contrast, about half of start-ups that scaled up had 10 or more years of prior experience. 

Being a young founder has its advantages: the ability to be unencumbered by traditional ways of doing things, or being able to dedicate more time than older colleagues. But experienced founders usually have deeper domain expertise, are better equipped to manage people, and also have access to a wider network of investors and employees. 

While pedigreed institutions such as the IITs and IIMs (Indian Institutes of Management) tend to produce a high number of founders, the more important difference between start-ups that succeed and those that close shop appears to be higher education, especially education abroad.
The data on start-ups reinforces the stereotype of a male founder. Only 13% of the founders in our sample were women. When considering only single founder companies, the number is even more dismal at a paltry 5%. 

The data also suggests that having co-founders tends to increase the chances of success. 91% of start-ups in the sample that folded had a single founder. In contrast, only 37% of start-ups that have scaled up had a single founder.
Ultimately, there is no one definition of an ideal founder. Bhavish Aggarwal of Ola Cabs fits the mould of a young IIT founder whose company experienced explosive growth fairly quickly. Vijay Shekhar of Paytm had a different path to success. A non-IITian, he worked in obscurity for more than a decade before striking it big. Finally Rashmi Daga, founder of FreshMenu, one of the few food tech successes, worked at big and small firms for many years before venturing on her own. 

Nonetheless, the aggregate patterns tell us that the successful start-up is likely to be led by a group of well- educated co-founders with several years, if not decades, of work experience between them. 

Shailesh Chitnis is head of product at Compile Inc., a data intelligence company. 



INDIA & THE WORLD


21.1. A global opportunity for the Indian workforce 
Livemint, 12 Jan.2018 

India will need to make policy adjustments to be able to take advantage of a potential change in the composition of the global labour force 

The integration of developing economies such as China and India into the global economy in the last few decades has helped lift millions out of poverty. The introduction of their labour forces into the global economy increased growth and income in these economies which also resulted in a decline in global inequality. The World Bank’s latest “Global Economic Prospects” report shows that the second wave of change in the global labour market will play out over the next two decades, with developing economies contributing to all of the addition in the global skilled labour force, as the number of skilled workers in advanced economies is expected to decline. The rising level of skill and education in developing economies will also lift potential global growth and continue to reduce global inequality. 

The global skilled workforce is likely to increase from 1.66 billion workers in 2011 to 2.16 billion by 2040. Skilled workers have been defined as those having at least nine years of education. Since improvement in the level of education and skill tends to increase income, rising income in the developing world will lead to a reduction in inequality. The global Gini coefficient is estimated to decline from 65.8 in 2012 to 62.6 by 2030. However, income from other sources may still increase inequality. The way things progress in India, to a large extent, will determine how fast income convergence happens and the level of global inequality declines. The World Bank in this context notes: “...fast-growing EMDEs (emerging market and developing economies) with a large number of poor, such as India, which accounts for 28 percent of the world’s poor in 2013, will continue to contribute to the reduction of global inequality.” 

While India benefited by integrating with the global economy, the next wave of gains will depend on how well it adjusts to the changing economic and technological environment. India will need to make adjustments to be able to take advantage of a potential change in the composition of the global labour force. Policymakers will need to work on different levels to be able to create a competitive labour force and make India benefit from the emerging global situation. 

First, India urgently needs to focus on education and skill development. A lot has been written on this subject in the past. The “Annual State of Education Report” periodically shows the depressing state of education in Indian schools. The World Bank also highlighted the problem in its “World Development Report” last year. Despite several initiatives by the government, outcomes in the area of skill development have also not been as desired. One way of improving outcomes could be better use of technology in education, as economist Karthik Muralidharan and others have shown. India needs rapid improvement from primary to tertiary education to be able to compete in the global market. The changing technological landscape also means that the workforce should be in a position to make quick adjustments. 

Second, the World Bank in its analysis assumes that additional workers will get employed . This will be a big challenge for India. It has not been able to create enough employment opportunities for people moving out of agriculture. The basic reason for this is India has not capitalized on labour-intensive manufacturing.
Recent research shows that India’s competitive advantage in some of the labour-intensive sectors has actually declined in recent years. The legal and regulatory requirements in markets like land and labour make it difficult for firms to grow and take advantage of economies of scale. To be able to absorb its rising workforce, India needs to remove impediments in the manufacturing sector. If prospects for manufacturing don’t improve soon, even better outcomes in education would be of limited use. 

Third, even though inequality at the global level declined in recent decades, it has gone up in advanced economies as the national income share of wages came down. This has resulted in a political backlash. Therefore, the lingering risk of protectionism is unlikely to dissipate in a hurry. India will need to protect its interest in such an environment and look for opportunities to increase trade at both bilateral and multilateral forums. Also, adequate attention should be paid to currency management in the world of volatile capital flows. Exports are an important driver of growth and job creation. It will be difficult to grow at a faster pace without the backing of strong exports. 

Even though India is likely to regain its position as the fastest growing large economy in the world this year, the rate of growth will still be much lower than what China attained in its high growth years. A skilled labour force along with a focus on manufacturing and exports will help India grow at a faster rate in the medium to long run. An increasing number of skilled workers not only raises the potential growth but also reduces inequality within the country by reducing the skill premium. 

Will India be able to take advantage of changes in the global workforce? 


21.2. Every public schoolteacher’s wish list for 2018 
Livemint, 18 Jan. 2018, Anurag Behar 

The wish list that follows is written in the voice of a teacher, as I have heard it often 

Here is the “Every ordinary public schoolteacher’s wish list for 2018,” as a sequel to my previous column. The list does not contain the very specific kind of wishes that most teachers have about their individual students. These range from the desire that a student becomes more attentive, to another learning math better, and often includes matters like improvement in a child’s health and in the home environment of another. The wish list that follows is written in the voice of a teacher, as I have heard it often. 

Dear Mr Officer,
1. Please do not ask me to go out of the school on “official duty”. If I am out of school, I cannot teach. Even if I am asked to go out of school for 10 days in a year, it means about 5% of the teaching days are lost. It is impossible to compensate for this loss. It forces me to rush through the syllabus.

2. Could you please stop the boring and ineffective training programmes that you organize? It is clear to me that I need to learn a lot to be able to teach better. I need to deepen my understanding of the content of the subjects, its related pedagogical approaches, and other matters such as why children behave the way they do. Could you offer, maybe, a bouquet of opportunities from which I can choose, depending on what I need to learn, rather than being forced to sit through something that is either irrelevant or which I already know? Also, wherever you organize these programmes, please do ensure that there are clean toilets on the premises.

3. The trainers should only be the best among the teachers. And they should have been prepared well.

4. There are many teachers who are very good. I would like to get to know them, to learn from them and to seek support when required. It would also be useful to observe how they teach. It would be very helpful if these opportunities are created systematically, rather than leaving it to individuals.

5. Don’t make me teach math when I haven’t studied it beyond class VIII myself. Recruit and appoint an adequate number of teachers for each grade, each subject in each school. Many states have eliminated corruption completely in teacher recruitment—learn from them.

6. Don’t make the syllabus so content-heavy that it doesn’t leave any time to get the children to understand, connect and apply; especially in an administrative culture which is focused solely on covering the syllabus. All aspects of the curriculum should fully reflect the good and progressive curriculum envisioned in the National Curricular Framework 2005. For this, the exams will have to be changed, the textbooks improved dramatically and the syllabus redone.

7. Textbooks, notebooks, uniforms and other things should reach us at the school a few days before the start of the sessions. Do break the long-held tradition of all these things arriving at the school months after the school session has started.

8. Convince the finance minister, and whoever else needs to be convinced, to increase the money that we get for the midday meals for the children. For many of these children, this is the most important meal of the day. The allocation for this has not increased in 10 years. With the food inflation, can any of us cook today with the same expenditure as 10 years ago?

9. Do something sustained to develop engagement of the local community in the school through the school management committee (SMC). I also need to learn how to work with the SMC more effectively, and this would be helped by a peer support network of teachers and head teachers.

10. No more tests and exams. We have more than enough of these in some name or guise. Going on assessing children’s learning is not going to improve anything. Instead could you help us make the continuous comprehensive evaluation that we do, more effective.

11. Have courage and fire the truant teachers. You are not able to do that, instead all teachers are painted with the same black brush. Don’t make us suffer for your weakness.

12. Don’t keep asking for data that should be available with you. Invest in information and technology (IT), develop a good management information system (MIS). Reduce our administrative overload.

13. Nothing substantial needs to be done to motivate us. Only two things will help. One, don’t keep blaming us for all the ills of the system. Two, treat us with the respect that is due to any other human being. We are not expecting any special status for being “developers of the society” (which we are). But do treat us like an equal human being. Not as the lowest rung in a massive bureaucratic machine, often blamed, mostly ignored and regularly mistreated.

14. We want our students to become confident, independent thinkers, humane and responsible. What matters most for this is the culture that we set in our school and classroom, and our own behaviour. Such a culture can be developed in a school only if the administrative culture of the system is empowering, trusting and enabling. 

15. Please don’t start new programmes every year and keep shifting priorities. We have had enough of flavours of the month and year, and pet projects of high officials.

16. And last but not the least, please don’t ask to “innovate”. A teacher by definition has to innovate every day. You can’t see this unless you come and sit with us in the class. So, please, please, focus on the fundamentals and let us focus on the same.
Wish you a very happy New Year!

Anurag Behar is the chief executive officer of Azim Premji Foundation and leads the sustainability initiatives for Wipro Ltd. He writes every fortnight on issues of ecology and education. 


21.3. Innovation hubs emerge in India, Singapore: Capgemini report 
PTI, Dec. 20, 2017 

New Delhi: Organisations globally are heavily investing in innovation centres and while the US remains the market leader, innovation centres are rapidly coming up in India and Singapore, says a Capgemini report. According to Capgemini's Digital Transformation Institute's report released today, Silicon Valley is no longer the default option for firms seeking to open an innovation centre. Globally, it now accounts for only 13 per cent of innovation centres compared to 18 per cent in 2015.
"Newer hubs such as Singapore and India will continue to attract investment, given their governments' push towards a digital economy and abundance of digital talent," the report noted. 

In terms of newly opened innovation centres(between November 2016 October 2017), the US topped the chart, followed by Singapore and Germany in the second and third place respectively.
Others in the top 10 include India at the fourth place, UK (5th), Israel (6th), France (7th), China (8th), Canada (9th)and Saudi Arabia (10th), the report said. 

The report further noted that in August 2017, PayPal announced plans to launch two innovation centres in India, one each in Bangalore and Chennai on the lines of the ones they have in the US and Singapore. Similarly, energy giant Shell recently launched a Technology Centre in Bangalore as they consider India to be "a heartland-of-talent, proficient at generating best-in-class ideas, insights and business models", it added. The report further said though firms globally are heavily investing in innovation centres in an attempt to keep up with market changes, they are failing to become more innovative. 

The report noted that while the number of global innovation centres continues to grow, only 17 per cent of companies have adopted a company-wide culture of innovation.
"Organisations need to accept that they cannot just open innovation centres and expect an overnight transformation in their creative output. 

"To achieve and sustain real change, firms need to create a culture in which all employees are encouraged, through financial and non-financial incentives, to experiment and push ideas to market," said Lanny Cohen, Global Chief Technology and Innovation Officer of Capgemini.
Capgemini's Digital Transformation Institute surveyed 1,700 respondents from 340 organisations from March to April 2017. This included eight countries: the US, the United Kingdom, France, Germany, Italy, Sweden, the Netherlands, and Spain. 

The survey covered five sectors: automotive, banking/insurance, consumer products, retail, and telecommunications. 

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


22.1. AI could help add $957 bn to Indian economy by 2035 
PTI, 21 Dec. 2017, 

Use of artificial intelligence (AI) could add USD 957 billion to the Indian economy in 2035 provided “right investments” are made in the new age technology, says a report by consulting firm Accenture. However, based on the current state of activity, areas of opportunities and challenges, India lags on key indicators of AI development, it said. 

This is despite presence of a tech-savvy talent pool, renowned universities, healthy levels of entrepreneurship and strong corporations, it added. The report, ‘Rewire for Growth’, estimates that AI has the potential to increase India’s annual growth rate of gross value added (GVA) by 1.3 percentage points, lifting the country’s income by 15 per cent in 2035. In value terms, it expects the GVA to be about USD 7.35 trillion by then, including the AI gains. 

AI’s transformative power can be compared to the advent of computing itself, and there’s strong early evidence that AI can play a key role in unlocking socio-economic value in India, Accenture India senior managing director and chairman Rekha M Menon said. “The time to act is now. With the right investments AI can create a flywheel effect ‘liberating’ people to create long term economic and societal value,” she added. The report noted that major Indian technical universities have been pioneering fundamental research in AI, but are not doing enough to strengthen the AI ecosystem around them unlike their global counterparts like Cambridge and Oxford in the UK. 

It also stated that although AI startups have witnessed higher than average growth in India since 2011, and in 2016 ranked third among G20 countries measured by the number of AI startups, the size of funding received is substantially smaller than in the US and China. 

The report suggested development of a long-term vision and action plan that unites the ecosystem, and addresses technical and ethical questions as they arise. Increased spending on core AI research, facilitating ecosystem collaboration and creating opportunities for smaller players will play an important role, it added. 


22.2. By 2020, AI will generate more jobs than it might destroy: Vymo CEO Yamini Bhat 
BusinessLine, 02 Jan. 2018, Vinson Kurian 

Machines did not destroy all jobs – they created newer, more skilled ones. Can we expect the same of artificial intelligence (AI)? 
Absolutely yes, says Yamini Bhat, Co-Founder & CEO at Vymo, a Bengaluru-based start-up that provides predictive sales analytics solutions.
A recent Gartner study estimates that by 2020, AI will generate 2.3 million jobs, exceeding the 1.8 million that it would wipe out.
Vymo works with four of the top 10 banks in India, among other leading organisations. The start-up is funded by Sequoia Capital and is recognised by Gartner as a ‘Cool Vendor’.
Yamini Bhat spoke to BusinessLine on how AI could ‘creatively disrupt’ the workplace. Excerpts: 

Does AI mean the end of the salesperson? 
On the contrary, the salesperson will become more relevant. AI will empower and augment salespeople with additional intelligence, rather than make them redundant.
AI will let salespeople focus on more human attributes of their work, such as empathy, higher order intelligence and other aspects that may require human discretion and engagement. If anything, it ill help salespeople be more human. 
It is an inevitable change. According to IDC, over 40 per cent of companies said they will adopt AI within the next two years. 

...So what does it bring to the table? 
Most repetitive tasks will be coded away, decisions will become more data driven, and the average worker will possess the power of augmented intelligence.
Complexity of jobs will increase disproportionately and it will require re-skilling people if they have to stay relevant. This has been the trend for the last 100 years, and humans are adapting to changing circumstances at the workplace. 
Indeed, it is one of the prime reasons why human IQ has increased steadily in that time. 

Another view has it that AI actually helps salespeople keep their jobs. Does it? 
Yes, it does. AI improves productivity dramatically, making it more lucrative for organisations to hire and retain workforce.
To illustrate this with an example: it is common for organisations to disproportionately support and incentivise upper quartile reps (top 1-50 per cent of the sales force) to do more.
This is prioritised over raising the productivity of the bottom quartiles.
To test this hypothesis at Vymo, we graphed a model basis sales performance data for some of our clients over the last five years. 
The result was that with the current approach of undue focus on upper quartile reps, incremental cost to the company increases significantly, crossing incremental sales impact with time. In fact, by year three, we see a downtrend in profitability! 

Can AI identify correlations that might have been missed by a human, as is being argued by some? 
At Vymo, we are able to analyse data of the best sales reps across the organisation and correlate activities to outcomes.
So the Vymo engine can predict with a high degree of accuracy, for instance, when a sales rep should reach out to a prospect based on a variety of parameters, such as lead source, prospect profile, product, location, time of quarter/year, and so on. 
Based on this data, the Vymo app suggests next best actions, which proactively nudges reps into performing high-ROI activities, such as calls and meetings, at the most optimal time. For instance, if a meeting is cancelled, Vymo automatically detects that there is scope for an activity in the calendar and prompts: “You have only one meeting today. Here are three suggestions.” 


23.1. India rice exports surge to record on Bangladesh's strong import appetite 
Reuters, 10 Jan. 2016 

India’s rice exports likely jumped 22 per cent in 2017 to a record 12.3 million tonnes as neighbouring Bangladesh ramped up purchases after flooding hit its crops, industry officials told Reuters.
The boost in shipments from the world’s top exporter of the grain is set to extend into 2018 as Bangladesh and Sri Lanka continue to buy aggressively amid depleting inventories in No.2 exporter Thailand, the officials said. “Bangladesh was actively buying throughout 2017. It offset the impact of slightly weaker demand from African countries,” said M Adishankar, Executive Director at Sri Lalitha, a leading rice exporter located in Andhra Pradesh. 

Bangladesh’s purchases likely lifted India’s non-basmati rice exports by 38 per cent in 2017 to 8.4 million tonnes and total exports to 12.3 million tonnes, the officials and exporters said. That would surpass 2014’s record of 11.5 million tonnes.
They based the 2017 export figures on their estimates for December shipments plus previously issued government data for January to November. Government numbers for December are expected to be released around the start of next month. 

Bangladesh: major importer 
India exports non-basmati rice mainly to African and Asian countries and premium basmati rice to the Middle East, the United States and Britain.
Traditionally the world’s fourth-biggest rice producer, Bangladesh emerged as a major importer of the grain in 2017 after floods damaged crops and pushed domestic prices to record highs. 

Bangladesh sourced more than 80 per cent of its 2017 imports of 2.4 million tonnes from India, said Badrul Hasan, head of Bangladesh’s State grains buyer.
Bangladesh’s overseas rice purchases are likely to remain robust until supply rises after its summer crop, also known as Boro, in May, Hasan said. 

Boro contributes more than half Bangladesh’s typical annual rice output of around 35 million tonnes.
Last year, Bangladesh reduced import taxes on rice to boost private buying. It also bought rice from India in State-to-State deals to quickly raise supplies and try to rein in prices.
But rice prices stayed high in Bangladesh despite the largest imports in nearly two decades, which will encourage farmers to expand the amount of land used to cultivate the staple crop, Hasan said. 

Non-basmati 
India’s rice exports in 2018 depend largely on non-basmati shipments as basmati exports are likely to remain more-or-less steady at around 4 million tonnes, said Vijay Setia, President of the All India Rice Exporters’ Association.
“Non-basmati exports depend on stock positions in importing countries like Bangladesh and Sri Lanka,” Setia said. 

African nations stepped up buying from Thailand last year, but that could ease in 2018 as State stockpiles are depleted in the Southeast Asian country, potentially boosting appetite for Indian supply, said a Mumbai-based dealer with a global trading firm.
“For key markets like Bangladesh and Sri Lanka, India has freight advantage over Thailand. This will help even in 2018,” the Mumbai-based dealer said. 


23.2. Farm exports post 18% growth in April-October 
BusinessLine, 16 Jan. 2018, Amiti Sen 

Agricultural exports from India grew 18 per cent to $21 billion in the April-October 2017-18 period compared to just 5 per cent in 2016-17, according to a government official.
The Commerce Ministry will put up a draft Agricultural Export Policy for stakeholders’ comments which will aim at boosting exports by identifying new markets, niche products and involving states, Commerce Joint Secretary Santosh Sarangi said at a press conference on India’s mega international food and beverage trade show - Indus Food beginning on January 18. 

The two-day global food trade fair will see the participation of over 400 exhibitors and attract buyers from about 43 countries resulting in a business of an estimated $1.5 billion-$2.5 billion, according to government estimates. 

“Once the draft Agricultural Export Policy is approved by the Commerce Minister, we will put it up online for stakeholders’ comments and suggestions,” Sarangi said, adding that the policy will be placed before the Cabinet only if the final document includes provisions that would need approval at the top level.
Export of agricultural produce must touch around $60 billion by 2020 (double from the level of $31 billion in 2015) to help double farmers’ incomes in line with the Prime Minister’s stated policy. “Exports can be increased largely by focussing on value addition and bringing down wastage through pre and post-harvest interventions,” Sarangi said. 


24.1. India to woo ASEAN with connectivity, maritime projects 
BusinessLine, 7 Jan. 2018, Nayanima Basu 

It is destination ASEAN for India this new year even as the government is all set to woo the 10 member countries with mega connectivity plans while paving the way for a grand roadmap on maritime security and cooperation.
While all the heads of state of the ASEAN member countries will witness a grand display of India’s might in weaponry and armaments during the Republic Day celebrations, they will be given a detailed and elaborate presentation on India’s connectivity and maritime security plans by Prime Minister Narendra Modi a day before during the India-ASEAN Commemorative Summit, sources told BusinessLine. 

The idea is to “catch up” with China’s speed and magnitude in terms of enhanced connectivity through roads and ports to make the country’s presence felt as Beijing makes inroads with its ‘Belt and Road Initiative’ (BRI), sources added.

ASEAN-India connectivity 
In fact, with an escalating aggressive posture that is being taken by China at the South China Sea as it continues to reclaim islands and convert those into military bases, ASEAN is increasingly seeking a greater security role to be played by India by way of large-scale connectivity.
The blueprint of ASEAN-India connectivity was prepared in 2010 when India gave a push to its ‘Look East’ policy under the previous government. It was then continued by the present BJP government under the refurbished ‘Act East’ policy. 

During the summit, PM Modi will give a detailed update on some of the construction activities that have been underway for a long time. One such project is the India-Thailand trilateral highway that begins from Moreh in Manipur and ending in Bangkok by cutting through Myanmar. This is expected to be completed by 2020. The highway is expected to be extended to Cambodia, Laos and Vietnam at a later stage. 

“The India-Myanmar-Thailand Trilateral Highway, and its extension to Laos and Cambodia, should also be extended to reach Vietnam, realising the East-West link under the Dawei project, which played a central role in the context of transport connectivity.
Air and maritime connectivity could be enhanced by the greater liberalisation of the ASEAN-India air services agreement and ASEAN-India cooperation in maritime transport,” said Prabir De, Professor, Research and Information System for Developing Countries (RIS), and Coordinator, ASEAN-India Centre (AIC), India.
Yet another project, the Kaladan Multimodal Transit Transport Corridor connecting Myanmar’s Sittwe Port with Kolkata port, is almost nearing completion. 

This will also have road connectivity from Zorinpuri in Mizoram till the Sittwe port via Paletwa in Myanmar. A Special Economic Zone is also expected to come up there.
Additionally, the Bangladesh-China-India-Myanmar (BCIM), which connects Kolkata, Dhaka, Silchar, Imphal, Mandalay, Boashan and Kunming and covering a total length of 2,800 km, is also part of the mega connectivity plan. 

But these plans are small when compared to the $180-billion BRI project of China. Under the BRI, Beijing has made a multi-pronged strategy to have both surface as well as maritime connectivity.
China is building high-speed connectivity rail links in Malaysia, Lao PDR, Cambodia and Indonesia, apart from metro connectivity and other projects in Vietnam. 


25.1. Modi to encapsulate making of new, innovative India in Davos 
PTI, Jan. 15, 2018 

New Delhi: Prime Minister Narendra Modi, accompanied by several ministers and business leaders, will encapsulate making of 'a new, young and innovative India' when he addresses the rich and powerful from across the world at the snow-laden Swiss resort town of Davos later this month.
In his first appearance at the WEF Annual Meeting -- being held this year with a theme of 'Creating a shared future in a fractured world' -- Modi is also expected to talk about his experience with 'cooperative federalism' in India, while urging the world for a collective crackdown on terrorism, economic imbalances, cyber threats and various societal ills.
Sources familiar with the draft programme of various sessions of the 48th Annual Meeting of the World Economic Forum (WEF) said the Indian leaders, including Modi, will also talk about numerous steps they have taken to make it easier to do business in India, check corruption, clamp down on black money, streamline taxation and boost sustainable growth. 

Adding further star power, Bollywood king Shahrukh Khan, for a change, would not be seen serenading heroines with his signature 'open-arm' charm on Swiss Alps, but will rather talk about creating a change in India through women empowerment.
Another star speaker will be ex-RBI Governor Raghuram Rajan, who has been praised as well as criticised often for his vocal views on everything from politics to economics and is credited for predicting the global economic crisis of 2008. 
He will speak on the power of economic narratives and how policymakers can address the challenges of the 21st century.
The final programme of the five-day event, starting January 22, will be unveiled on Tuesday by Geneva-based WEF, which describes itself as an international public-private organisation working to improve state of the world and has been hosting the confab every year in Davos. 

Modi is being seen as one of the biggest stars this year, with US President Donald Trump being the other. Those scheduled to attend the powwow also include UK's Theresa May, Canada's Justin Trudeau, France's Emmanuel Macron, Pakistan's Shahid Khaqan Abbasi, Jordan's King Abdullah and Queen Rania, Brazil's Michel Temer and Switzerland's Alain Berset. 

This will be Modi's first Davos visit and also the first by an Indian Prime Minister since the one by H D Deve Gowda in 1997. In case of Trump, he will be the first US President to attend since Bill Clinton in 2000. 

As many as six union ministers, two chief ministers, over 100 CEOs and several other high-profile attendees from India will be hobnobbing with their counterparts from across the world, while over 3,000 global elite at their annual jamboree would be served Indian cuisine including desi 'chai-samosa' and several Gujarati dishes, among those from various other states, at the opening night welcome reception. 

As per the draft programme, Modi will deliver the opening plenary on January 23. A day before, he will have a bilateral meeting with Swiss President Berset. Modi is expected to have other bilaterals as well and will also meet global CEOs.
Among other Indian leaders, Finance Minister Arun Jaitley will have several engagements and will also speak at a session on 'India's role in the world', talking about how the political changes, structural reforms and technology innovations are changing the country's socio-economic context. 

Union Minister Jitendra Singh will speak at a session on 'From fragile cities to renewal', while Piyush Goyal will talk on 'post-establishment politics' and how a new generation of political leaders has swept into governments and parliaments around the world. Goyal will also speak on disaster resilience in infrastructure and on 'designing for smart mobility'. 

Industry Minister Suresh Prabhu is expected to meet his counterparts from other countries and discuss the WTO-related issues, among other engagements, while Dharmendra Pradhan will talk about value-chain innovations that can help the industries and governments unlock economic and societal value.
M J Akbar, Minister of State for External Affairs, will speak on nuclear threats to international security, as also on securing peace and stability in the Asian century. 

Among other Indian participants, Department of Industrial Policy and Promotion Secretary Ramesh Abhishek will talk about the Asian innovation ecosystem, while NITI Aayog CEO Amitabh Kant will talk about the use of big data in policy making and on implementing strategies for inclusive growth.
Chief Ministers Devendra Fadnavis (Maharasthra) and N Chandrababu Naidu (Andhra Pradesh), as also Telangana minister K T Rama Rao will talk about investment attractiveness of their respective states, while the Indian CEOs, led by industry body CII, would be also pitching the India growth story in addition to exploring potential business deals. 

This will be the first time that India will host the welcome reception, where yoga will also be showcased along with cuisine from across the country. 

The prominent Indian businessmen would include Gautam Adani, Mukesh Ambani with wife Nita, Rahul Bajaj with son Sanjiv, N Chandrasekaran with a host of Tata group executives, Chanda Kochhar, Uday Kotak, Naresh Goyal, Anand Mahindra, Sajjan Jindal, Salil Parekh, Sunil Mittal with son Kavin, Salil Parekh, Azim Premji, Ravi Ruia and Prashant Ruia. 

Besides, several Indian-origin global leaders will be present, including Lakshmi Mittal and son Aditya, Indra Nooyi and Sundar Pichai, who will talk about the age of artificial intelligence, future of the open web and the technology's impact on society. PepsiCo's Nooyi will pitch for urgent steps needed to be taken towards better capitalism. 

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


25.2. Petronet LNG: Stepping on the gas 
BusinessLine, 9 Dec. 2017, Anand Kalyanaraman 


Huge market opportunity, expansion plans should keep this gas importer in fast lane 

After a stand-out performance in 2016-17, gas importer and regasifier Petronet LNG has continued to deliver strongly this fiscal year too. The company’s profit nearly doubled in 2016-17 to ₹1,706 crore and grew 23 per cent y-o-y in the half-year ended September 2017 to ₹1,026 crore.
In the recent September 2017 quarter, profit growth was 28 per cent. The good show has been driven by strong volume growth — up 26 per cent in 2016-17 and 15 per cent y-o-y in the half-year ended September 2017. Higher operating margins due to lower sourcing costs also boosted the bottom-line. 

Keeping with the robust operating and financial performance, the Petronet stock has gone from strength to strength — more than doubling over the past two years. Since our recommendation in April this year, the stock has gained about 16 per cent. 

Despite the rally, investors with a long-term perspective can buy the stock. At ₹251, it now trades at about 20 times its trailing 12-month earnings, only a tad higher than the average 19 times it has quoted at over the past three years. This is thanks to earnings growth keeping pace with the stock’s rise.
Favourable demand-supply supply dynamics for imported gas, prospects of continued volume growth with further expansion of the Dahej terminal in Gujarat and improving utilisation of the Kochi terminal in Kerala are key positives that should keep Petronet’s growth ticking over the next few years. 

Besides, likely stakes in upcoming LNG terminals in the country, international expansion opportunities, and prospects of LNG as transportation fuel should help the company. 

Volume growth
Petronet’s strong volume growth over the past two years has been primarily due to the expansion in the mainstay Dahej terminal capacity from 10 mtpa to 15 mtpa.
Decline in global gas prices coupled with insufficient domestic supplies drove demand for imported gas. Petronet LNG, as the country’s largest gas importer and regasifier, benefited significantly, with the Dahej terminal operating at more than 100 per cent capacity over extended periods. 

The 5 mtpa Kochi terminal, hobbled for long due to pipeline connectivity troubles, has also shown gradual improving capacity utilisation — from single digits earlier to about 15 per cent — thanks to the headway made in laying pipelines. 

Both Dahej and Kochi terminals are set for continued good growth in volumes. Capacity expansion at Dahej from 15 mtpa to 17.5 mtpa is expected to be complete by the end of 2018-19.
Also, utilisation at the Kochi terminal should increase from about 15 per cent now to 40 per cent from 2019-20 by when the Kochi-Mangalore terminal is expected to be commissioned. From losses in earlier years, the company is now making operating profit at the Kochi terminal, which should further improve to net profit as utilisation improves. While Petronet will face competition from new LNG terminals that are likely to be set up over the next few years, it should be able to hold its own and retain its position as the premier LNG player in the country. 

One, natural gas is cleaner and cheaper than many competing fuels, and demand in the country far exceeds supply. This is expected to continue with economic development and the government’s thrust to encourage the use of gas.
Domestic gas supply, while it could pick up with new discoveries, is unlikely to increase at a rapid pace, due to low formula-based prices. So, import dependence, currently at about 40 per cent, is likely to increase in the coming years. 

Expansion plans 
The moderation in global gas prices over the past few years along with oil prices and the successful price renegotiation with major suppliers such as Qatar’s RasGas have cut imported gas costs and aided demand growth.
Next, Petronet’s business model has some inherent advantages. It has back-to-back take-or-pay contracts for its long-term gas supplies from the Dahej terminal; these make up the chunk of the company’s volumes. 

Also, it gets a 5 per cent annual price escalation in regasification tariffs for its long-term supplies.
Besides, Petronet is seeking to expand its presence, nationally and abroad. While it is the dominant LNG player on the West Coast, the company is likely to make a foray on the under-served but high-potential East Coast too by picking stake in the 5 mtpa Ennore terminal near Chennai, being set up by Indian Oil. Petronet also has plans to expand operations globally by taking stakes in projects in Bangladesh and Sri Lanka.
The company also plans to launch LNG as a transportation fuel, with work underway in Kerala. If this takes off, it could further aid capacity utilisation at the Kochi terminal besides providing a new revenue stream. 

Strong financials 
Reduced price realisations saw Petronet’s revenue decline about 9 per cent in 2016-17. But profitability improved sharply due to lower sourcing costs, operating efficiencies and the Dahej terminal operating above capacity. The operating margin increased from about 7 per cent in 2015-16 to almost 12 per cent in 2016-17. This, along with decline in interest cost, resulted in net profit nearly doubling last year. In the half-year ended September 2017 too, the company’s operating margin remained healthy at about 13 per cent. Return on equity is good at over 20 per cent levels.
A strong balance sheet, low leverage (debt-to-equity of 0.23 times) and robust cash levels (about ₹500 crore) as of September 2017 — gives the company enough headroom to fund its expansion plans. 

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