AAPI: July 2019

DELHI, 20th July 2019

Index of this Newsletter

INDIA

INDIA & THE WORLD

21.1. Opinion | An Indo-European partnership can be a winning combination
21.2. Cabinet approves signing of morandum of understanding between India and Russia in the field of Railways
22.1. Three Indian universities about to make it to QS top 150
22.2. Opinion | Let’s step up efforts to get professionals in governance
23.1. Internet monopolies: India’s trust deficit
23.2. OYO Hotels partners China's Meituan
24.1. Trump issues a fresh tariff threat to India before trade talks this week
24.2. Turning the spotlight on Zambian emeralds
25.1. Veracruz invests in almond growth: Group is planting 2,000ha of almond trees in Beira Baixa, Portugal, at a cost of €50m
25.2. India to overtake Japan to become 3rd largest economy in 2025

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DELHI, 20th July 2019

NEWSLETTER, 20-VII-2019

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1.1. Making of Azim Premji: The Philanthropist

Livemint, 24 Jun. 2019, Varun Sood, Sundeep Khanna

The inside story of how Wipro’s founder meticulously put in place the plan to give away his fortune to charity

India’s most generous citizen is no accidental philanthropist. Azim Premji isn’t the kind of man who gets up one day and stricken by conscience, decides to give away a part of his wealth to charity. The giving away of his fortune was as carefully thought through as the making of it. Indeed, Premji rarely does anything unplanned. This is a man whose calendar is filled months in advance. Even the idea in 2001 of setting up a charitable foundation, which is now backed by an endowment valued at $21 billion making it among the five largest endowments across the world, took over six months of discussions with executives who would be running it.

The outcome was the Premji Foundation which today trains thousands of teachers across 50 districts in six states, such that students can be taught better in government schools. Its impact cuts across domain, straddling pedagogy, education policy besides of course the mechanics of philanthropy and is the reason why Nandan Nilekani, chairman, Infosys Ltd. calls him “a giant figure".

Modest beginning

It started with an initial endowment of Wipro shares worth $125 million to the foundation in 2001. But that modest beginning was preceded by years of planning, vitally making the money that he would eventually gift. Before the first act of giving, Premji, a businessman known for his austere lifestyle and equally severe business style which includes worrying about the money being spent on tissue paper used in the company’s bathrooms, grew Wipro from a company with just $2 million in sales in 1966 into a $11 billion giant corporation selling software services to the world and consumer products to Indian customers.

The company he inherited, Western India Vegetable Products Ltd, was founded by his father Mohamed Hasham Premji in 1945, and was listed on BSE (then Bombay Stock Exchange) the very next year. Hasham Premji ran the company until his death in 1966 whereupon Azim, who was in the second year of engineering at Stanford University, came back to take over its reins. At that point the family owned about 50% stake in Wipro.

Back then, it was a different India, one in which business was arbitrary and wholly dependent on government largesse. In 1977, the then socialist-leaning Janata Party government of Morarji Desai sent International Business Machines packing as New Delhi believed the company was dumping old machines in the country. Fledgling companies like HCL Technologies Ltd and Wipro saw an opportunity in the vacuum that was created and quickly got into assembling and marketing IT hardware.

Western India Vegetable Products Limited’s name was also changed to Wipro Products the same year. “The company has been issued a letter of intent for the manufacture of microprocessor based system mini computers and is taking necessary steps for effective implementation of the project," reads a statement from Wipro Products Ltd’s annual report for the year 1980. That year its total revenue was just ₹43.1 crore, up from ₹7.2 crore a decade earlier in 1970.

The making of a billionaire

It was only by the end of 1982 that Wipro started the manufacturing and marketing of microprocessor- based computer systems and Wipro Products was renamed to Wipro Ltd. Next year, in 1983, Wipro reconstituted this Information Technology Division into a wholly-owned subsidiary.

Premji, according to executives who have worked with him, had little knowledge of the IT business. To best understand this business, he decided to learn from the people who he hired to run and build the business. It’s a trait that’s come to define the man who executives say is in perennial learning mode. “At that time of my joining and even for many years after that, Premji used to sit in the interviews of all new recruits," said Mindtree executive chairman Krishnakumar Natarajan, who joined Wipro in 1981 as a fresh engineering graduate and worked there till 1999. “I believe this was because he focused on building talent and at the same time, he realized he could understand the IT business"

The Y2K bug fear at the turn of the century presented a perfect opportunity for companies like Wipro to start deploying armies of engineers to help global companies rewrite computer code and maintain the IT infrastructure in case of the feared catastrophe. Business surged and with Premji continuing to increase his personal holding in Wipro from the dividend he got from his shareholding, by 2000 his 75% holding in the company helped him emerge as the richest Indian with a fortune of $30 billion.

By the end of 2002, Premji held almost 84% shares in Wipro, up from 50% when he took over the company as managing director in 1966. Later, the market regulator capped promoter holding at 75% and Premji, over the years, had to bring down his ownership.

The philanthropist

That’s also the time that the man, who prefers to live a short walk through-the-woods away from the Wipro office in Bengaluru’s distant Sarjapur, started his next innings which would see him emerge 16 years later as the one of world’s foremost philanthropist.

Even as he diluted his holding for regulatory purposes, he also transferred some shares to the Trust or the Foundation he had set up in 2001. All told, between 2001 and 2019, Premji donated Wipro shares worth nearly $12 billion in a staggered manner to the endowment. This includes the announcement made by Premji earlier this year, where he made the country’s single-largest donation, transferring economic ownership of 34% of his shares in Wipro worth $7.5 billion to Azim Premji Philanthropic Initiatives and Azim Premji Trust.

Premji had taken his time to announce his intent, but the desire to do give back to society, had always been there. It was fired by the spirit of his mother, Gulbanoo M.H. Hasham Premji, a trained doctor who spent a lifetime helping set up a children’s orthopaedic hospital at Haji Ali in Bombay, even while she served as chairperson of Wipro after the death of her husband in August 1966.

“Amongst the key influences on him were his mother’s example of having set up and run a charitable hospital for children for 50 years, and Mahatma Gandhi’s idea of trusteeship of wealth," said Anurag Behar, chief executive officer of Azim Premji Foundation. “He actively started thinking of philanthropy in 1999-00 including setting up the Foundation"

Among the four areas initially discussed between founder CEO of the Trust Dileep Ranjekar and Azim Premji were education, nutrition, healthcare and some initiatives in governance as possible areas of work. Primary education was finally selected as the Foundation’s focus of work because it was a critical factor that significantly impacted other issues in the country. “We saw education as the most important method and process for empowerment of people, clearly there were other important areas of work possible, however this very fundamental nature of education was the determining criteria," said Behar.

An early realization that for philanthropy to be meaningful it had to bring about large-scale change or at least initiate the process of transformation, guided Premji’s vision and he refused to “cut out cheques" merely to appease his conscience, said an executive, on the condition of anonymity. This single-minded approach to philanthropy is no different from his approach to business. Over the years, he has rarely agreed to serve on boards of companies, or take up other assignments, according to former chief financial officer Suresh Senapaty, since Premji believed that the business needed all his time and energies.

The future

The endowment now owns 14% of the promoter’s shareholding in Wipro and also has economic ownership or the right to receive all money earned from 53% of promoter shares. This means the endowment gets money earned from 67% of promoter shares in Wipro, leaving Premji, his wife Yasmeen Premji, and two sons, Rishad and Tariq, with monetary gains from only 7% of their 74% equity in Wipro.

“Azim Premji’s commitment to philanthropy, which began with the cause of education for disadvantaged children, has been a strong message to corporations and businessmen. His recent commitment will contribute towards meeting his vision of inclusive development," said Ratan Tata, Chairman Emeritus, Tata Sons.

Today, the foundation is training teachers in government schools even as another philanthropic arm has started giving grants to non-government organizations and founded the Azim Premji University. Premji’s philanthropic entities are run by Anurag Behar, co-chief executive officer of the foundation, along with Dileep Ranjekar. Now they will have his undivided attention, a huge benefit that comes with attendant alarms for he is known to be unrelenting in his questioning and often drills down to the basics of every transaction. He is also completely hands-on, often visiting schools in remote locations to get a first hand feel for the subject. Annual treks have kept him fit for his 73 years.

As he prepares to step down as chairman of the company he’s steered for over 50 years and devote himself wholly to his other passion, Premji has prepared meticulously and assiduously. The Foundation has now been functioning for 18 years, has an excellent, handpicked team in place, is adequately funded and is bulletproofed against any fall in the fortunes of Wipro.

In conclusion

The two philanthropic trusts, Azim Premji Philanthropic Initiatives and Azim Premji Trust, earned ₹11,357 crore ($1.65 billion) over the past nine years by way of dividends, share sales and buybacks, becoming one of the richest and largest charitable trusts in India.

Simply put, even while it owns 67% economic interest of Wipro’s stock and in turn gets the dividends that accrue from this holding, its primary source continues to be returns from Azim Premji’s family office, Premji Invest which has between $5 billion and $7 billion in funds under management, having delivered returns upwards of 30% over the last two years.

Premji has over the years put in place this carefully crafted cushion to ensure the business of the philanthropy isn’t dependent on the fortunes of Wipro. In the future, the core aim of the foundation which is to use education as a force multiplier to create a more just society will just get magnified.

“He has been most successful in creating a very successful IT company. However, his greatest legacy he has passed on to the corporate world is philanthropy. He does not throw his wealth around and has a very simple living and has shown that the wealth does not always have to go to the family and can be given to the charitable cause," said Anu Aga, chairperson, Thermax, the Pune-based engineering firm.

From selling vegetable oils to changing the way millions of children are taught in , Azim Premji has always been an exemplar for business and society.

While India may find a few more entrepreneurs to emulate his feats in business, his philanthropic endeavors are unique and truly special. In redefining philanthropy by putting his money where his heart is, Premji has shown the way for billionaires not just in India but across the world.

1.2. India ready to take a giant leap into space, to set up own station

Livemint, Jun. 14, 2019

NEW DELHI: Having entered the Mars orbit in its first attempt and given the world evidence of water on the moon, India on Thursday announced plans to set up its own space station, marking its biggest leap yet in space exploration.

The 360-tonne International Space Station (ISS) circling the earth 400km above its surface is the only space station with a human crew. A multinational collaboration of Europe, the US, Russia, Japan and Canada, it has six astronauts on board at anytime of the year.

“Our space station is going to be separate and much smaller. We will launch it as a small module and that module will be used to carry small micro-gravity experiments. We are preparing the proposal to submit to the government after the successful completion of Gaganyaan in 2022," said K. Sivan, chairman, Indian Space Research Organisation (Isro).

The Indian space station will be placed in the low earth orbit, also at 400km above the earth’s surface. The project is at a nascent stage and will be executed after 5-7 years. Costs have yet not been estimated yet.

Scientists highlighted that a separate space station would help the space agency to sustain the human space flight missions in future and it will be an extension of India’s first human space flight mission in space in 2022.

“There is a very tight schedule ahead of us. The first unmanned space mission under Gaganyaan has to be undertaken in December 2020. So many research laboratories, educational institutions, specialised institutes, the Defence Research and Development Organisation and industries are involved," he said.

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

2.1. India’s next generation reforms must begin in courts

Livemint, 18 Jun 2019, Vishnu Padmanabhan, Sriharsha Devulapalli

The high pendency rates in India’s judicial system have dragged down growth and investments in an investment-starved economy

Plain Facts High Court Supreme Court Law Commission

Last week, eighteen months after the crime, a special court in Pathankot delivered its verdict on the Kathua case. By Indian standards, this was a relatively quick judgment. Most cases in India, because of delays at both the police and judiciary level take far longer. Across India’s subordinate courts --- the first port-of-call for most cases --- more than a third of the 31 million cases have been pending for more than three years. In the High Courts, the pendency is even higher: half of all the 8 million cases in the High Courts have been pending for more than three years.

When cases remain unresolved for years, it hurts both society and the economy. The 2017 economic survey of the finance ministry pointed out that the slow resolution of economic and commercial cases was one of the biggest stumbling blocks in reviving the investment cycle in the country.

“The government’s efforts to make business and commerce easy have been widely acknowledged," the survey said. “The next frontier on the ease of doing business is addressing pendency, delays and backlogs in the appellate and judicial arenas. These are hampering dispute resolution and contract enforcement, discouraging investment, stalling projects, hampering tax collections but also stressing taxpayers, and escalating legal costs. Coordinated action between government and the judiciary-- a kind of horizontal Cooperative Separation of Powers to complement vertical Cooperative Federalism between the central and state governments-- would address the “Law’s delay" and boost economic activity."

Although this is a country-wide problem, some parts of the country are more affected than others, a Mint analysis of pendency data shows. The lower courts in West Bengal, Odisha and Bihar, in particular, struggle to dispose their cases. In all three states, nearly 50% of cases in the lower courts have been pending for more than three years. On many occasions, the pendency at lower courts translates to pendency at the state’s higher courts. In both Calcutta High Court and Odisha High Court, nearly 70% of cases have been waiting for a resolution for more than three years. Some state courts, though, dispose of cases more quickly. In Punjab and Haryana for instance, less than 6% of all cases have been pending for more than three years.

Overall, eastern states have much higher pendency rates compared to the western states of the country. The eastern half of the country is also much poorer than the western half, as an earlier Plain Facts column had pointed out.

In the Indian judicial system, a court’s ability to dispose of cases depends on both the volume of cases it has to process and the resources it has. On both these fronts, India faces challenges. Through 2006, 15 million cases were initiated in India’s lower courts but in 2017 this figure had increased to more than 20 million cases. Similarly, cases reaching the High Courts too have increased over the last decade.

Some legal scholars have speculated that increased cases in courts is a result of India’s development: a more prosperous society results in greater awareness of rights and empowers more people to turn to the courts.

But the increasing judicial burden could also be self-inflicted. Some scholars have pointed out that Indian High Courts are becoming more generous in accepting writ petitions (filed when fundamental rights are perceived to be violated). Of all the cases pending for more than five years in the high courts, 26% are writ petitions.

More importantly, even as the case burden has increased, court resources haven’t kept up. While India’s Supreme Court is now fully staffed (with 31 judges filling all sanctioned posts) for the first time in 18 years, the remaining courts remain chronically understaffed. The sanctioned strength of India’s High Courts is 1,049 but currently, there are only 680 judges in office (a vacancy rate of 37%). Similarly, in the lower courts, the vacancy rates for judges is at 25%.

The obvious solution to this would be to increase both the sanctioned strength of courts and hire more judges. In 2016, Chief Justice T.S. Thakur estimated that India needed 70,000 more judges to clear the legal system’s backlog. Over the last decade, the sanctioned strength has increased gradually but hiring hasn’t kept up - with vacancy rates increasing since 2006.

One reason for this is that recruiting judges takes time. According to one estimate by Diksha Sanyal and others of Vidhi Centre for Legal Policy, appointing a civil judge takes more than a year in several states.

Over the years, various commissions have laid out several recommendations to tackle the issue comprehensively. For instance, the 11th Finance commission in 2005 had recommended the formation of fast-track courts to expedite cases. More recently in 2014, the 245th Law Commission recommended setting up special courts adjudicated by recent law graduates to hear more trivial cases (such as traffic offences) and raising the retirement age of judges in lower courts. Last year, the Law Minister, Ravi Shankar Prasad had suggested implementing a centralized recruitment system for lower courts along the lines of the Union Public Services Commission. Some of these reforms, such as fast-track courts (used in the Kathua case), have been implemented, but others have not. Given how rising pendency hurts the Indian economy, more reforms are urgently needed.

This is the first in a two-part data journalism series on reforms in India’s law enforcement and judicial machinery.

2.2. Opinion | It’s time for Indian Railways to take the reform track

Livemint, 24 Jun 2019, Narayan Ramachandran

The railways need both administrative and engineering reforms for a $5 trillion Indian economy

Train travel is the stuff of romance and legend. The mere mention of trains gets middle-aged parents reminiscing about their student days and the serendipitous meetings they had with the most wonderful strangers.

Historians date rail movement back to 6th century BC when boats were moved across land on the Isthmus of Corinth in Ancient Greece. The track bed is believed to have been hard limestone, and the track, a groove shaped into that stone. The boats were pulled on the rails by men or animals. As tracks and motive power evolved, so did rail, moving from wooden tracks in the 16th century to metal tracks by the 18th century. A funicular is a rail car variant used over steep slopes made up of two cars with connected cables that go over a pulley wheel. India’s passenger funiculars operate today at the Palani temple in Tamil Nadu and the Saptashrungi temple in Maharashtra. Steam engines were replaced by diesel locomotives and, then substantially, by electric or diesel-electric hybrid engines over the last two centuries.

Indian Railways (IR) has the fourth-largest rail network in the world, behind only the US, China and Russia. It is a network of 70,000km, spanning 29 states, three Union territories and 8,500 stations. It runs about 21,000 trains, two-thirds of which are passenger trains, carrying 23 million passengers and 3 million tonnes of freight per day. This translates into 1.2 trillion passenger-kilometres travelled a year in India by 8 billion passengers. Using a metric of fatalities per billion journeys, rail is among the safest forms of travel. Measured by distance instead of journeys, air travel is safest, with rail and water travel reasonably safe.

IR easily makes the list of the top 10 employers in the world with nearly 1.3 million employees; the US, Chinese and Indian armies are on that same list, along with Walmart and McDonald’s. These employees are organized into 17 zones and 68 divisions for its activities. Each division has members from a dozen departments: signals and engineering to medical. Each zone is led by a general manager with operational and departmental responsibility, with employees in a matrix reporting relationship to functional heads at the Railway Board (RB). The RB itself was first constituted under the Railway Board Act of 1905. IR has been governed by an administrative structure that has been in place for nearly a century and run on infrastructure that has been upgraded only piecemeal over that period.

To ensure IR meets the requirements of a soon-to-be $5 trillion economy, it needs two types of reform: administrative, to improve services, safety and efficiency; and engineering, to improve cost and environmental effectiveness. Since independence, there has been a reform committee/commission of some type related to IR almost every two years–the famous ones include committees led by Prakash Tandon (1994) on organizational structure and management ethos, Rakesh Mohan (2001) on policy reinvention, Sam Pitroda (2012) on railway modernization, and the latest one by Bibek Debroy (2015) on railway restructuring.

While there are many different reform steps suggested, the various committees agree on two things: That the management organization needs to be radically simplified and that accounting should be in corporate-style, double-entry form. The problem appears to be the political will to get the decision implemented. The Debroy committee’s recommendation to separate the core functions (rail operations) of IR from the non-core (medical, schools, protection force, etc.) makes eminent sense. The Debroy committee also recommends a revised governance structure that is empowered to make decisions and create some distance from the government.

I would add one significant reform idea on railway pricing, and that is to sell passenger tickets at market prices while offering a fare subsidy to deserving passengers through a direct benefit transfer (DBT) system, akin to the cooking gas subsidy. This will permit a normalization of passenger fares for most travellers and an end to internal cross-subsidization by (ever increasing) freight prices. This passenger fare increase and other revenue enhancement measures, such as the utilization of IR’s assets (mobile and immobile) in a properly planned manner for advertisements and retail shops (including moving out ticketing from stations), will bring in much-needed resources for the engineering and safety upgradations required.

These include new signal systems, completion of the broad-gauging and electrification of tracks, dedicated sealed corridors for certain lines, and upgraded coaches and services. As a provider of logistics services for passengers and freight, IR needs a more imaginative supply chain plan for both inputs and output. Airports have done a great job of satisfying consumer demand by creating retail as well as food and beverage establishments; there is no reason why some stations cannot aspire to be retail destinations in themselves.

IR suffers less from a flow of new ideas and more from failures to get them implemented. Prime Minister Narendra Modi’s government can use an impressive parliamentary majority to finally put India’s much-needed railway reforms on track.

P.S.: “When I let go of what I am, I become what I might be," said the Chinese philosopher Lao Tzu.

Narayan Ramachandran is chairman, Inklude Labs. Read Narayan’s Mint columns at www.livemint.com/avisiblehand

3.1. Five policy reforms to jump-start growth

Livemint, 18 Jun 2019, Niranjan Rajadhyaksha

How India can put in place policy reforms to raise GDP growth without creating macroeconomic instability

Mumbai: The second Narendra Modi government has begun its innings in the midst of a sharp economic slowdown. Economic expansion in the fourth quarter of the previous financial year was at the lowest level in five years—and 2.2 percentage points lower than growth in the first quarter of that year. The recent loss in economic momentum will obviously be the dominant concern for new finance minister Nirmala Sitharaman as she puts the finishing touches to the Union Budget that is due to be announced on 5 July.

However, there are also deeper structural challenges that cannot be met with either fiscal or monetary stimulus to target aggregate demand.

The Indian economy is doing well if one makes a comparison with other major economies at this point of time, unless the recent slowdown deepens. That has led to a sense of premature hubris. The current economic momentum is less impressive when compared to the growth rates maintained by countries such as China or South Korea when they were at a similar stage of development. Average incomes in South Korea went from $2,180 in 1983 to $4,686 in 1988, i.e. in five years. Chinese average incomes rose from $1,966 in 2004 to $4,604 in 2008, i.e. in six years. On the other hand, Indonesia took 12 years to double its per capita income once it crossed the $2,000 threshold in 2007.

Will the doubling of average incomes in India from $2,000 to $4,000 move at Chinese or Indonesian speed?

The Indian economy will have to accelerate in the coming years if it has to move at East Asian rather than Indonesian speed. The experience of the past 10 years suggests that the growth rate that India can sustain within the constraints set by the other macroeconomic targets is 7% rather than 8%—or perhaps even lower. In other words, India finds it tough to grow at 8% while maintaining economic stability in terms of inflation, fiscal prudence and the current account deficit.

The tricky political economy decision for the government is whether to ease some of the economic stability constraints such as the fiscal deficit, the current account deficit and retail inflation in a bid to maintain economic growth at 8%; or continue to prioritize hard-won economic stability while facing the risk of social unrest as lower economic growth fails to provide the adequate number of jobs in formal enterprises; or put in place policy reforms that can help raise potential growth without creating periodic bouts of macroeconomic instability.

The most durable option is the third one. The failure to secure inclusive growth—either because of higher inequality or poor job growth—can lead to redistributive politics that eventually harms growth. The most likely political response in India is likely to be fiscal expansion through spending or monetary expansion to support a credit boom rather than redistribution via higher taxes on capital incomes. However, India needs structural reforms that can allow it to grow at a faster pace without high inflation, fiscal stress or balance of payments pressures. Here are five issues that need attention in the quest to increase India’s potential growth rate.

The investment cycle

India has seen weak investment sentiment through most of this decade as private sector deleveraging, weakened bank balance sheets and persistent excess capacity has hindered the ability of companies to invest in new capacity. The investment rate as a percentage of GDP is around ten percentage points below its 2007 peak. The fall in the investment rate directly affects potential growth.

There are now some initial signs of a revival in investment activity. A stronger revival will run into the problem of availability of financial resources. The gross domestic savings rate has also been falling since the North Atlantic financial crisis. More rapid growth could address a part of this problem. National savings tend to be pro-cyclical, in the sense that higher tax collections during periods of rapid economic expansion as well as higher retained corporate earnings during profit booms help improve government and corporate savings respectively.

However, the bulk of Indian domestic savings come from households (including unincorporated enterprises). Household savings are usually steady through economic cycles. But, these have also been falling as a proportion of GDP in recent years. Financial savings have come down in tandem. A private sector investment revival will thus be constrained at a time when the total public sector borrowing requirement is already in excess of 8.5% of GDP. The broader challenge is to reduce the cost of capital in India through a combination of lower interest rates, lower rates of corporate taxation and reducing the relative price of intermediate capital goods.

The home market question

An investment revival addresses the growth challenge from the supply side. A more recent theme in India is whether there are demand constraints that could send India into the middle income trap. Economic growth catering to the top 15% of the population has its limits, as Rathin Roy of the National Institute of Public Finance and Policy has been arguing recently.

This home market issue goes back to an older discussion whether anaemic Indian industrial growth in the 1970s could have been explained by inadequate domestic demand rather than controls. Both sides of the argument have profound links to the inequality question as well as the internal terms of trade between industry and agriculture.

The problem of a narrow home market is less acute in countries that succeed in exporting to the global markets, so that foreign demand picks up the slack generated by weak domestic demand. India has not had enough success on that score, unlike many Asian countries that have generated jobs by selling to the international market.

Global trade is dominated by trade in intermediate goods thanks to transnational supply chains. These supply chains could be reformatted because of two changes in China—the trade war with the US as well as rising Chinese wages. India has an opportunity here to enter the new transnational supply chains.

Fiscal modernization

The Indian state is fiscally constrained, given its constitutional commitments to provide public goods as well as welfare schemes. One reason has been the inability to collect enough tax—especially income tax from citizens. European nations moved from an elite income tax collecting 1% of GDP to a mass tax collecting 5% of GDP, as Tomas Piketty and Nancy Qian showed in a 2009 paper. This transition happened between 1914 and 1945, when most advanced European nations were at average income levels comparable to India today. Some of the fiscal modernization is also explained by the need to collect tax to fund the two world wars. Most citizens in European countries pay income tax.

China has begun making the transition to fiscal modernization because of rapid personal income growth as well as under-indexation to inflation, as compared to the frequent increases in tax exemptions limits in India. India has failed to increase its income tax base . Higher income tax collections will have another advantage. It can create fiscal space for reducing consumption taxes such as the goods and services tax (GST).

Internal trade

The introduction of GST is indeed a transformative moment—India’s free trade agreement with itself. It creates an economic union more than six decades after political union. The creation of a unified Indian market is expected to lead to efficiency gains as companies rewire their domestic supply chains.

However, the first version of the GST is messy—a reflection of the messy federal bargaining that preceded its introduction. There is now a strong case for GST 2.0 with fewer categories, a lower standard rate and wider coverage. There have already been moves to ease the onerous compliance requirements that were required when the new tax was introduced. The ideas embedded in the first recommendations about the GST structure are still relevant.

The internal market also needs to be strengthened by reducing domestic transaction costs. GST takes care of part of the problem. However, there is a whole range of policy action that needs to bolster the impact of the new tax on economic efficiency.

A new financial structure

A dynamic economy requires a robust financial system that allocates the capital efficiently. The Indian financial system has faced immense stress in recent years, mainly due to the ballooning of non-performing assets, and a lot of the policy action has been focused on the trifecta of recognition, resolution and recapitalization.

The new regulatory architecture built around the Insolvency and Bankruptcy Code shifts the balance of power from borrowers to creditors—and will hopefully change the credit culture in the country.

However, a broader conversation on the financial structure is needed. India chose the universal banking model after the 1991 reforms, moving away from the specialist financial institutions of the earlier era that had access to subsidized liabilities. Commercial banks were tasked with supporting all types of economic activity—from personal consumption to infrastructure development.

The Reserve Bank of India has already begun a modest move away from this model through differentiated licences for payments banks, small finance banks and wholesale banks. The problem becomes especially acute in the case of large industrial projects as well as infrastructure projects. The task of funding them cannot be left to commercial banks alone.

India needs specialist financial agencies to do some of the heavy lifting as well as an active corporate bond market. One possible option is to let commercial banks focus on loans to small and medium enterprises, while larger projects are funded by specialist banks and the corporate bond market.

Niranjan Rajadhyaksha is a member of the academic advisory board of the Meghnad Desai Academy of Economics. This essay is based on a paper published by IDFC Institute.

3.2. India’s police force among the world’s weakest

Livemint, 19 Jun 2019, Sriharsha Devulapalli, Vishnu Padmanabhan

Many of the issues with India’s understaffed, overburdened police could stem from the growing criminalization of politics and reluctance for reform

A brutal attack on a young doctor in West Bengal, allegedly by relatives of a patient who died on 10 June, triggered country-wide protests by doctors in the country. The incident highlights not just tensions in doctor-patient relationships but also points to a lack of respect for the rule of law in the country, which leads mobs to take the law into their own hands to deliver instant ‘justice’.

According to a 2018 survey of 15,562 respondents across 22 states on perceptions about policing, the Lokniti team at the Centre for the Study of Developing Societies (CSDS) found that less than 25% of Indians trust the police highly (as compared to 54% for the army).

A big reason for the distrust is that interactions with the police can be frustrating, time-consuming and costly. According to the latest available data, 30% of all cases filed in 2016 were pending for investigation by the end of the year. This combined with the pendency in the judiciary means securing justice in India can take a very long time. As in the case of the judiciary, pendency in the police is driven by a lack of resources. The sanctioned strength of the police across states was around 2.8 million in 2017 (the year with the latest available data) but only 1.9 million police officers were employed (a 30% vacancy rate). As a result, according to Mint’s calculations, there are only 144 police officers for every 100,000 citizens (the commonly used measure of police strength), making India’s police force one of the weakest in the world. India’s police-to-population ratio lags behind most countries and the United Nations-recommended ratio of 222.

Policing in India is a state subject which means there is significant variation across states. Uttar Pradesh, Bihar, Andhra Pradesh and West Bengal’s police forces are all extremely understaffed with less than 100 police staff for 100,000 population. The only states with police forces that meet the global standard are the police forces in the insurgency-affected states in the North-East and Punjab. Even filling the vacant police posts may not be enough to bring India’s police force up to speed with global standards. A fully staffed police force (with hiring up to the sanctioned strength of 2.8 million) would only increase India’s police-to-population ratio to 185. And even as states have increased the sanctioned strength of their police forces, their populations have increased by even more - especially in states such as Uttar Pradesh and Bihar.

Decreased spending on police in recent years is adding to the resource crunch. Between fiscal 2011 and 2015, states spent 4.4% of their budgeted expenditure on policing on average but this has reduced to 4% over the last four years, according to PRS Legislative Research. An under-resourced, overburdened police force means that both core police activities (enforcing daily law and order) and more long-term criminal investigations are compromised.

Exacerbating this is the bigger issue of accountability within the police. The Second Administrative Reforms Commission in 2007 had noted that politicians were unduly influencing police personnel to serve personal or political interests.

The rather obvious solution to this is to simply limit the political executive’s control over the police - a point underscored by various committees and the Supreme Court in their recommendations for police reforms over the years.

The first National Police Commission in 1981 delivered eight reports addressing a range of police issues. In 2005, the Police Drafting Committee drafted a Model Police Act to replace the existing and archaic Police Act, 1861. Most recently, last year, the Supreme Court issued new directives to state governments to implement the directives that the apex court had recommended in 2006. Thus, both the problems and potential solutions to India’s police problems are well-understood.

What has perhaps stymied the implementation of these reforms is the lack of political will, which in turn could be linked to the growing criminalization of politics. When lawmakers increasingly feature serious criminal charges in their resume, they have very little incentive to professionalize the police force.

In each successive Lok Sabha election over the past twenty years, the proportion of candidates with serious criminal charges has only grown.

The long-run trends in state assemblies are similar, with criminal candidates contesting and winning in greater numbers than before, the political scientist Milan Vaishnav noted in his 2015 book When Crime Pays: Money and Muscle in Indian Politics.

Vaishnav traces the roots of the criminal-politician nexus to the zamindari system in the country --- which established the legitimacy of the strongman who could settle disputes and dispense patronage --- but points out that it intensified during the Indira Gandhi era, which marked the decay of party and state institutions across the country.

The decay of party organizations made both the Congress party as well as its rivals dependent on assorted slumlords and gang-lords to reach out to an influential section of voters. And to protect these elements, the police force was thoroughly politicized, with even the appointment (or transfer) of junior police officers decided by political bosses. Low police salaries meant that they increasingly came to depend on kickbacks from criminals leading to a deep nexus between the three elements—criminals, politicians, and the police—which thrives to this day.

This is the concluding part of a two-part data journalism series on reforms in India’s law enforcement and judicial machinery. The first part examined the issue of pending court cases across the country

4.1. BHEL bags 200 MW solar energy worth Rs 800 cr, touches 1 GW mark in segment

PTI, Jun. 17, 2019

New Delhi: State-run engineering firm BHEL Sunday said it has won two orders worth Rs 800 crore for setting up solar energy capacity of 200 MW, and its solar photovoltaic portfolio has touched 1,000 MW mark with these orders.

Valued at over Rs 800 crore, the orders have been secured from the state-run power giant NTPC Ltd and Gujarat State Electricity Corporation Ltd (GSECL), a company statement said.

"BHEL Solar Photovoltaic (SPV) portfolio has surpassed 1 GW with the company winning two EPC orders for setting up SPV plants with a cumulative capacity of 200 MW," it said.

The NTPC order envisages setting up India's largest floating SPV plant of 100 MW capacity at NTPC Ramagundam in Telangana, while the GSECL order involves setting up a 100 MW ground-mounted SPV plant at Raghanesda Ultra Mega Solar Park in Banaskantha district of Gujarat.

BHEL offers EPC (engineering procurement and construction) solutions for both off-grid and grid-interactive SPV plants at various locations in India, including the Lakshadweep islands.

Out of its current portfolio of more than 1 GW of SPV plants, nearly 500 MW has already been commissioned.

The enhancement of its state-of-the-art manufacturing lines of solar cells and solar modules has further strengthened its presence in the SPV segment, the company said.

In addition, space-grade solar panels using high efficiency cells and space-grade battery are being manufactured at its Electronics Systems Division, Bengaluru.

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

4.2. EESL to spend Rs 800 cr to install solar rooftops in Mah

PTI, Jun. 18, 2019

Mumbai: Energy Efficiency Services (EESL) plans to install an aggregate 200 MW of grid connected solar rooftop across 5,000 state-owned buildings in Maharashtra in the next two years at a cost of around Rs 800 crore.

State-run EESL, which is a joint venture of four other PSUs including NTPC, Power Finance Corporation, Rural Electrification Corporation, and PowerGrid Corporation, will be installing rooftop solar on RESCO model in phased manner.

"Initially, we will be installing rooftop capacities across 2,000 buildings and we estimate a cost of Rs 450 crore.

This we plan to complete by end of this year," EESL Maharashtra Regional Manager Deepak Kokate told PTI here.

He further said the entire cost will be borne by EESL and state will have to pay only for the power generated.

EESL is already retrofitting government buildings in Maharashtra with energy efficient appliances, investing Rs 325 crore to enable them to achieve 39 per cent savings in annual energy costs.

Under this program, the company has already retrofitted 2,000 buildings with energy efficient appliances in the state and has successfully installed 1.75 lakh LED lights, 1.25 lakh energy efficient fans and 3,200 super- efficient ACs.

"We will soon have 3,000 more buildings retrofitted by the end of the year. By the same time, we will complete rooftop solar installation on those 2,000 buildings and once the internal energy efficient work on 3,000 buildings is completed, we will install rooftop solar on them. This will take almost two years to complete," Kokate added.

He further said the solar rooftop solutions will significantly reduce the lifetime energy costs of these buildings, as they will avail electricity at lower tariffs that will be determined at levelized rates over the next 25 years.

For the retroffiting in 3,000 buildings, EESL will replace about 7,000 energy efficient ACs, 11 lakh LEDs bulbs, six lakh energy efficient ceiling fans and also replace 14,000 streetlights in the state, contributing to energy savings of 100 million units per year.

Kokate further said with the help of the retrofitting program, Maharashtra has so far saved nearly 20.5 million units of electricity worth Rs 20 crore per year, avoiding 18,500 tonnes of CO2 emission to the atmosphere.

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

5.1. Adding 1,190 Megawatts (MW) of hydropower capacity by Government in 2019

IBEF, Jul. 03, 2019

India plan to add 1,190 megawatt (MW) of hydropower capacity in the current year, which will take its total capacity to more than 50,000 MW. The country currently has around 45,399 MW of large hydel plants and 4,594 MW of small ones.

A year ago, the legislature had focused on hydel limit expansion of 840 Megawatts MW however which figured out how to accomplish just 140 MW.

This year, central sector North Eastern Electric Power Corporation Limited (NEEPCO) goes for including the highest limit/capacity of 600 MW at Kameng Hydel Power venture in Arunachal Pradesh.

The government of Himachal Pradesh will include another 211 MW in the state. Which will incorporate three units of 33.33 MW by state government claimed Beas Valley Power Corporation Limited (BVPCL) and three units of 37 MW by Himachal Pradesh Power Corporation (NSE 0.84 per cent) Ltd.

Central Electricity Authority, the country is likely to cross the 50 GW installed capacity mark this month if NEEPCO manages to commission its proposed unit 1 and 2 of the Kameng project. These will have a generation capacity of 150 MW each and which were scheduled to be commissioned this month and the commercial operation is slated to start in the month of August 2019

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

5.2. Improvement in logistics, infra to boost exports to $1 trn in next 3 yrs: FIEO

PTI, Jun. 26, 2019

New Delhi: The government's focus to improve logistics, ease of doing business and modern trade infrastructure will help exports to touch USD one trillion in the next three years, exporters body FIEO said Tuesday.

Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta said India has huge potential to boost it's exports of goods and services from the current USD 535 billion.

"With steps like special focus on cutting logistics cost and time, further improvement in ease of doing business, proper implementation of government policies for exporters and timely refund of taxes will helps us touch USD one trillion exports in the next three years," Gupta said.

He said the logistics time, cost and inadequate trade related infrastructure are impacting the exports.

Reduction of logistics cost by 10 per cent will help boost the country's exports by about 5-8 per cent, Gupta added.

He also said that to develop logistics sector in an integrated way, it is important to focus on new technology, improved investment, skilling, removing bottlenecks, improving inter modal transportation, automation, single window system for giving clearances, and simplifying processes.

Gupta also that timely refund of taxes such as goods and services tax will help exporters deal with the liquidity crunch problem.

There is also a need to focus on export of GI products and the government should give adequate funds for marketing of these goods to push their shipments, he added.

A Geographical Indication (GI) is primarily an agricultural, natural or a manufactured product (handicrafts and industrial goods) originating from a definite geographical territory.

Typically, such a name conveys an assurance of quality and distinctiveness, which is essentially attributable to the place of its origin.

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. Deposits in Jan Dhan accounts cross Rs. 1 trillion mark ($139 bn)

IBEF, Jul. 11, 2019

Bank accounts opened under Jan Dhan scheme, which was launched about five years ago by the Modi-government, have crossed the Rs. 1 lakh crore (US$ 139 billion) mark in deposits.

According to the recent finance ministry data, the total balance in over 36.06 crore Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts was at Rs. 1,00,495.94 crore (US$ 139.68 billion) as on 3 July.

The account of the beneficiaries has seen a constant rise in deposits and was Rs. 99,649.84 crore (US$ 138.51 billion) on 6 June and Rs. 99,232.71 crore (US$ 137.93 billion) in the week before.

The yojna was introduced on 28 August 2014, with an idea to support universal access to banking facilities to the people in the country

Accounts opened under PMJDY are Basic Savings Bank Deposit (BSBD) accounts with supplementary feature of RuPay debit card and overdraft.

The number of zero balance accounts under PMJDY has seen a decline from 5.10 crore (US$ 0.69 million)(16.22 per cent of the total accounts) in March 2018 to 5.07 crore (US$ 0.70 million) (14.37 per cent of the total accounts) in March 2019, as per stated by finance minister.

There is no requirement of maintaining minimum balance in BSBD accounts.

The government boosted the accident insurance cover to Rs 2 lakh (US$ 2780) from Rs 1 lakh (US$ 1390) for new accounts opened after August 28, 2018. The overdraft limit has also been doubled to Rs 10,000 (US$ 139).

There has been shift in the attention on accounts from 'every household' to 'every unbanked adult'. Around 50 per cent of the Jan Dhan account owners are women.

The objective of PMJDY is to guarantee access to various financial services like availability of basic savings bank account, access to need based credit, remittances facility, insurance and pension to weaker sections and low-income groups.

The PMJDY also foresees directing all government benefits to the beneficiary accounts and promoting the Direct Benefit Transfer (DBT) scheme of the central government.

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

6.2. India's 2019-20 sugar production at 282 lakh tonnes

IBEF, Jul. 02, 2019

Industry body Indian Sugar Mills Association has pegged India's 2019-2020 sugar creation gauge 28.2 million tons, somewhere around 19 per cent more than 2018-19 for the most part because of decrease in region under stick in Maharashtra and Karnataka.

In the last piece of June 2019, the complete land under sugarcane in the nation is assessed to be around 4.93 million hectares in 2019-2020 Sugar Season (SS), which is over 10% lower than 2018-2019 SS stick zone of around 5.50 million hectares.

As per ISMA, during 2018-19 SS, till 30th June 2019, about 32.80 million tons huge amounts of sugar have been delivered and another 0.1 – 0.15 million tons is required to be created in the unique season till September, 2019 in Tamil Nadu and Karnataka, taking complete sugar generation in 2018-19 SS to around 32.90 – 32.95 million tons. In the current season 2018-19, about 295 million liters of ethanol produced using B substantial molasses/sugarcane juice have been provided to the OMC's up until this point. According to norms, this is proportionate to sugar redirection of around 0.3 million tons.

ISMA gauges creation of around 28.2 million tons huge amounts of sugar in the season 2019-2020, which is around 4.7 million tons lower than the current year 2018-19 SS production of around 32.95 million tons, down 14.26 per cent. The above is an estimate figure of sugarcane and sugar creation in 2019-20 SS.

The opening stocks as on 1st October 2019 is relied upon to be an unsurpassed high of around 14.5 million tons. When contrasted with a regularizing prerequisite of around 0.50 million tons on first October of any year as opening stocks, the industry is superfluously conveying around 9.5 million tons huge amounts of sugar stock.

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

7.1. Food service industry to touch Rs 5.99 lakh cr by FY23

PTI, Jun. 13, 2019

Mumbai: The overall Indian food service industry is estimated to be Rs 5.99 lakh crore by 2022-23, growing at a compounded annual growth rate of 9 percent, a National Restaurant Association of India (NRAI) report said.

It noted that the market size was Rs 4.23 lakh crore in 2018-19.

"The Indian restaurant industry employed 7.3 million people in 2018-19. The organised food service sector, which is only 35 percent of the total market, contributed a whopping Rs 18,000 crore as way of taxes in 2018-19. The number is expected to more than double if the unorganised sector becomes organised," NRAI President Rahul Singh said.

Pegging Mumbai's organised food service market at Rs 40,480crore, the report noted it was the highest amongst metros in the country.

The city has approximately 87,650 restaurants and employs over 4,28,000 people.

The average spend per month per household on eating out in the city is Rs 2,890, higher than national average of Rs 2,500, it said, while adding that the average frequency of consuming non-home cooked food in Mumbai is 4.2 times per month including dine-out, delivery and takeaways.

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

7.2. Sahyadri Farmer Producer Company’s report of a strong 2018-19 grape season has been accompanied by news about new varieties and retail expansion

Asiafruit, 5 jul. 2019, Liam O’Callaghan

Sahyadri Farmers Producers Company (SFPC), a farmers’ producer company comprising of more than 8,000 marginal fruit and vegetable farmers, exported 22,000 tonnes of grapes during the 2018-19 season, according to local news sources.

SFPC claimed this was equal to 15 per cent of India’s total grape exports for the season, a report from the Financial Express said.

The company, which is 100 per cent owned and run by farmers, also announced it had acquired exclusive production and marketing rights for India for Arra grape varieties.

The rights were awarded by European fresh produce company Jupiter Group after a successful trial. SFPC is now set to establish 40ha of Arra plants by the end of 2019 and will scale by an additional 2023ha by the end of 2023.

Vilas Shinde, chair of SFPC, told Financial Express these crops will include varieties of green, black and red grapes and commercial volumes of production are expected as early as 2020 for export to global markets.

The company also plans to expand its fresh fruit and vegetable retail chain, Sahyadri Farms. It currently has 10 stores open New Mumbai and Nashik, which it plans to increase to 200 in the next two years.

This continues a recent trend of significant growth for SFPC, from 2010, the group of farmers in the company quadrupled to 550 in 2013.

The company also has 6,000 tonnes of cold storage facilities and has the capability to pack 250 tonnes per day in its packhouse system.

8.1. Indian startups raise a record $3.9 billion so far in 2019

Livemint, 30 Jun 2019, M. Sriram

Deal-making has also broadened, across companies and sectors, moving away from a few large companies such as Ola, Paytm and Flipkart

The data defines venture capital investments as seed, or very early investments, to Series F deals in companies

MUMBAI: Startups in India have raised a record $3.9 billion from venture capitalists in the six months ended 30 June, as the world’s biggest investors doubled down on their bets in the country buoyed by the Flipkart-Walmart deal last year.

The investments this year across 292 deals is a 44.4% jump from the $2.7 billion received by domestic startups in the first half of 2018, showed data from Venture Intelligence, a startup data tracker.

The investments in 2019 are also comparable to the full-year investments of $4.2 billion and $4.3 billion in 2016 and 2017, respectively, indicating the surge of capital allocation in the past six months.

The data defines venture capital investments as seed, or very early investments, to Series F deals in companies that are less than 10 years old.

Terming 2018 a turning point for the market, Sandeep Murthy, managing partner at Lightbox Ventures, said “many companies that have been quietly building and solving truly unique problems have achieved scale".

“They are now being rewarded with capital that will allow these businesses to continue to grow… in many cases profitably," said Murthy, whose fund is an early backer of online furniture rental startup Furlenco and cloud kitchen firm Rebel Foods, best known for its Faasos brand.

While consumer internet firms have been continuing to raise large amounts of capital, business-to-business (B2B) companies in sectors such as logistics, software and marketplaces are also raising money now.

Murthy said “2019 has also been about the emergence of Tier II and III cities and B2B models, both of which had been historically underinvested in".

“Tiger Global has clearly indicated their interest in the B2B space, while Chinese investors seem to be pushing deeper into emerging cities across India," he said.

Recent deals, especially the $16 billion acquisition of India’s online retailer Flipkart by US retail giant Walmart last year, lured more investors to India. That deal saw investors in Flipkart make 1.5-10 times their investments, with billion-dollar exits for venture capital firm Accel Partners, Japan’s SoftBank Group Corp., South Africa’s Naspers and US-based Tiger Global Management Llc.

“Post the Flipkart exit, there is an increased confidence in the India market that you can get large outcomes and get liquidity. Till then there were always questions on whether money from India will come back or not. Flipkart investors made a healthy return and are investing again," said Mukul Arora, partner at SAIF Partners, an early backer of Paytm, BookMyShow and Swiggy, among others.

“We started seeing investments in late-stage tech becoming very aggressive, following which growth stage, series B and C deal-making also got aggressive. Now that is rubbing off into early-stage deals as well," said Arora.

Mint reported on 2 June that startup funding has seen a late-stage boom, with more deals of $100 million or above in the first five months of this year than in the first half of the last two years.

Deal-making has also broadened, across companies and sectors, moving away from a few large companies such as Ola, Paytm and Flipkart that used to top fundraising charts every year.

To be sure, valuations have risen in recent times, making some investors cautious, but most have been able to see gains stemming from firms despite higher valuations.

“I do believe valuations have gone up, not just at the top end of the market for large rounds, but also at the earlier stages... As an investor, I would rather pay a slightly higher price for a higher quality business than get a bargain valuation for an inefficient company," said Murthy at Lightbox.

8.2. Smart ways to reform the startup ecosystem

Livemint, 15 Jul 2019, Ravi Narayan

Here’s what India needs to do to keep pace with the changing demands of the startup sector

Union Budget 2019-20 had some bright spots. The enduring issue of angel tax for startups has been resolved to a large extent, perhaps completely. There are encouraging plans to get India skilled in the realm of artificial intelligence (AI), Internet of Things (IoT) and virtual reality (VR). And the critical gap in research to achieve the well-intentioned goals in the emerging fields of AI and IoT would hopefully be addressed by the setting up of a National Research Foundation, which was another major announcement in the budget speech.

While all of these are of course steps in the right direction, India needs to do more to keep pace with the changing economic demands of the startup sector. A few other issues faced by startups need urgent attention. The government has been trying to address some of them, such as funding, tax on employee stock option plan (Esop), intellectual property rights (IPR), and the official definition of accredited investors, but much more needs to be done.

With regard to funding, the government has established a ₹10,000 crore Fund of Funds for Startups (FFS) to extend funding support to innovation-driven startups. While it is a great initiative which began in 2016 under the aegis of the Startup India initiative, it is moving at a snail’s pace.

FFS is monitored by the Department for Promotion of Industry and Internal Trade (DPIIT) and operated by the Small Industries Development Bank of India (Sidbi) uses a network of registered Alternative Investment Funds (AIFs) to finally invest in DPIIT-recognized startups. As per the latest numbers released by the government, there are 19,351 such startups and 49 AIFs. Sidbi has committed ₹3,123.20 crore to these 49 AIFs, but only ₹483.46 crore has been drawn from FFS, so far, which is a fraction of the proposed ₹10,000 crore. Also, these AIFs have invested only in 247 startups till date.

The government is looking to sweeten the deal for startups on Esops. The DPIIT has begun discussions with the finance ministry on taxing shares granted by startups under Esop only at the time of sale. At present, Esops are taxed as income when employees exercise their options and convert them to shares. The finance ministry is examining the matter when it looks at proposals for the next budget. The government already has a special carve-out in the tax regime for recognized startups, which could be useful in making specific changes to their stock option framework. This should help in making it easier to attract great talent through grant of Esops by startups.

Albeit a slow start, I commend the government for these resolute moves after the announcement of the Startup India initiative in January 2016. It is a shot in the arm for the Indian startup ecosystem that has grown immensely and is among the top three in the world today. There is no doubt that startups deserve the attention.

Taxing matters

On the angel tax front, the government’s move to remove it as an impediment to angel investments is a good start, but more needs to be done to make it progressive. Here are some thoughts:

Can angel investors have an option to have some of their investments tax deductible or taxed differently?

As startups in the social impact space address more complex and intricate issues, and can also have large social impact, so, can we provide additional incentives for angel investments in startups operating in the social impact space?

To avail angel tax exemptions, startups need to register with the DPIIT online, submitting certificate of incorporation, providing a write-up about the business, etc. Can we ease this process even further?

Life is a stage

Most of our discussions around innovation focus on startup ecosystem and incentivising startups. This approach is like pushing a string. It will go only so far. We need to take a more holistic approach of building and incentivising innovation ecosystems. To explain it further, let me take the analogy of a theatre. When we look at the basic tenets of an innovation ecosystem, we find it analogous to the basic elements of a theatre. In the innovation ecosystem theatre setting, the startups are the protagonists. To enable them to do their act on stage, there are many folks backstage supporting them, i.e. government, academia and research centres.

Corporations, large and small, and the government are the audience and create the demand for the products and services. The investors provide financing for the theatre. In this way, the entire innovation ecosystem is created, making sure that all parts of the ecosystem are empowered and enabled to play their roles. The startups get to ultimately benefit in this healthy, robust ecosystem.

Undoubtedly, and encouraged by the thinking and doing of the government, we need a more comprehensive approach to creating self-sustaining clusters of innovation economies, rather than just restrict our focus to startup ecosystems. This is a natural corollary to the proposed innovation and smart city zones.

An effective innovation ecosystem is successful when it builds collaboration and desired capacity. Here are some of the measures that can help us achieve that.

Taxation for accredited Investors: Funds received by startups from accredited investors may be exempted from angel tax, subject to complying with certain net worth criteria. This provision is considered by the government as part of an exercise to define “accredited investors" with a view to increase investment flow in startups.

CSR for incubators and innovation ecosystem building: India’s new corporate social responsibility (CSR) law, which mandates that companies spend 2% of their profits on social development, positions Indian companies as innovators in corporate citizenship. We should explore using CSR funds for technology business, not only in the social impact space but also in non-social impact space. It could be used to increase innovation awareness, innovation education, innovation training and innovation hackathons, which help raise the innovation quotient of the society. This is becoming more and more essential in this economy.

Incubator stakeholder training: There has been much effort underway to fund incubators under several programmes. But, in addition, there needs to be concerted efforts to train key stakeholders, such as incubation managers, mentors, angel investors and service providers so that they can serve the startups and the innovation ecosystem better. Further, if these stakeholders are certified and investors accredited, it will help build ecosystems much faster and more efficiently.

Monitoring of incubators: In addition to investment in incubators and incubator stakeholder training, there needs to be clear investments in monitoring them. We need to monitor the level of activity inside and outside of the incubator. We need to measure the impact made by the incubator on the startups in the programme and those that graduated from the programme. This data is important to support and address emerging needs of the innovation ecosystem.

Deployment of FFS effectively: The DPIIT and Sidbi need to ensure that the ₹10,000 crore FFS is deployed timely and effectively to achieve the required impact on our innovation ecosystem. There have already been delays bringing it into existence from the time it was announced in January 2016.

Corporate Innovation

In the spirit of impacting the entire innovation ecosystem, it is important to help spur the demand for startup products and innovation through demand from corporations. Corporate innovation is perhaps the biggest priority to build an innovation ecosystem. Corporations create demand for the products and services of startups, and without that demand startups cannot reach their full potential. It is happening to some extent, mainly through programmes in multinational companies, but it is at a very small level.

In fact, less than 1% of corporations in India are working with startups and current projections of DPIIT in the “corporate adoption" space also paint a grim picture. This needs to move into a different orbit. Government needs to create an environment and framework that encourages corporations to collaborate with startups. For instance, the government should allow corporations to use their CSR budgets to fund their corporate innovation programmes; have a lower tax rate for revenue generated from corporate innovation programmes to encourage corporations to work more with startups; address tax deductibility for funds spent on corporate innovation programmes for payroll, working spaces, etc.; and make expenses on proof of concept by startups tax deductible.

While the government can create policy frameworks to develop a sustainable innovation economy, we need to unlock the potential for the government to be a consumer of startup products and services.

The government should evolve and implement effective procurement policies for purchasing through startups; grant goods and services incentives to startups; government “challenge grants" to seek innovative solutions from startups or cluster of startups; incentivise startups to use India Stack as an innovation platform.

Another aspect that the government needs to consider is having the right people with the right experience and background with startups in greater numbers. On 16 January 2016, when the Prime Minister Narendra Modi launched the bold initiative of Startup India, several agencies were entrusted with the responsibility to implement various programmes under this initiative.

In addition to evolving the structure and processes, the government needs to bring in the right set of people to help translate the intent of the programmes to progress on the ground.

An important source of such people with startup experience have been entrepreneurs, investors, corporate innovation managers, and thought leaders. A few such people have joined government agencies and provided the required impetus, but we need several more. They can translate the government’s intent to plans and execute them. Several countries around the world have developed great startup programmes and funded them generously. But most of these programmes have yielded mediocre to disappointing results because the right people were not leading and implementing them.

India has a real shot to emerge as a world leader in innovation over the next few decades. Dreams of a “New India" will materialize only when backed by adequate and effective policy measures.

Ravi Narayan is chief executive of T-Hub, Hyderabad

9.1. Indian Railways introduce easier Ticket Booking system

IBEF, Jul. 03, 2019

RailYatri entered in agreement with Indian Railway Catering and Tourism Corporation (IRCTC) to continue its e-booking services.

The development comes after Delhi High court said that “RailYatri” which is a popular e-ticketing service is an un-authorized.

Earlier in 2017, IRCTC filed complaint with Deputy Commissioner of Police, Railways and Crime, Delhi stating the illegal sale and meal service provided by the app and web portal of RailYatri. This was ruled out earlier in April 2019.

RailYatri got its license from IRCTC and now is an authorized e-booking services. This integration becomes important for the safety and to ensure passengers are not exploited to pay extra charges.

RailYatri paid licensing fee to IRCTC for this agreement.

RailYatri provides train-related information namely, PNR status, Live Train Status, Train between stations, seat availability and confirmation predictability. Additionally, it offers online bus tickets, meal-on-train services and has increased its convoy of IntrCity SmartBus to 12 cities across north and south.

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

9.2. Railways speeds up 261 trains under 'Mission Raftaar'

IBEF, Jul. 02, 2019

‘Mission Raftaar’ that was announced in Railway Budget 2016-2017 and foresees a goal of doubling average speed of cargo trains and increasing the average speed of all non-suburban passenger trains by 25 kmph in the next five years.

To increase the mobility of the system, Mainline Electric Multiple Units (MEMUs) and Diesel Electric Multiple Units (DEMUs) have been used to replace 141 short distance passenger trains, especially having reversal en route, by in 2018-2019.

The Indian Railways has speeded up 261 trains, by 110 minutes, spread across different zones as part of its Mission Raftaar in order to provide faster travel to passengers. This change will be updated in the new timetable and followed from July 1.

The new timetable will reflect 40 new services, extension of 21 previous services and increase in frequency of eight services.

Usage of rolling stock has also been maximised by Indian Railways.

Underlining travelers' solace and security, a sum of 411 sets of significant long separation trains are presently running with Linke Hofmann Busch (LHB) mentors by using 465 rakes.

Blurb: Indian Railways announced speeding up of 261 trains, by 110 minutes, over different zones across the country as a part of Mission Raftaar, that was announced in Railway Budget 2016-2017, to provide faster travel to passengers.

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

10.1. Vedanta plans to invest Rs 55,000 crore ($7,6 bn) in metals business

IBEF, Jul. 12, 2019

Vedanta Ltd, a natural resources conglomerate, plans to invest nearly half of its three-year capital expenditure of Rs 55,000 crore (US$ 7.6 billion) in its metals business. This comes after there was decline in prices over the past year.

Prices of base metals have declined in the last fiscal year. Copper prices fell 2.89 per cent, aluminium 4.72 per cent, lead 16.41 per cent and zinc 8.66 per cent. But this has not affected the performance of the company, Vedanta.

The company have a capex programme of Rs 55,000 crore (US$ 7645 million) in the next three years. Out of this, Rs 25,000 crore (US$ 3475 million) is in base metals, mainly in zinc, another Rs 20,000 crore (US$ 2780 million) in oil and gas, and Rs 10,000 crore (US$ 1390 million) in aluminium. Vedanta expects revenue to grow 60-70 per cent across businesses and at least 50 per cent in volumes. The capex will be almost exclusively funded from internal growths. During FY19, the company spent Rs 10,000 crore (US$ 1390 million) on capex.

India’s biggest aluminium producer, Vedanta, strategies to raise production by 50 per cent to up to three million tonnes of integrated aluminium. It also aims to become the world’s top zinc producer and among the top three silver producers.

Vedanta plans that the Union budget’s target of investing Rs 100 trillion in infrastructure over the next five years will help in urbanization and industrialization. In 2018-2019, Vedanta posted revenue of Rs 93,373 crore (US$ 1297.8 million) with earnings before interest, taxes, depreciation and amortization (EBITDA) margin of 31 per cent at Rs24,961 crore (US$ 3469 million). Free cash flow increased 47 per cent to Rs 11,553 crore (US$ 1605 million).

India presently has a resource import bill of US$ 465 billion. India’s geology is like that of Brazil, Australia and South Africa, where the natural resources sector contributes 8-10 per cent of the gross domestic product (GDP) whereas contribution in India is around 4 per cent.

At present, India imports around 80 per cent of its oil & gas requirements amounting to US$ 150 billion. Vedanta aims to double its existing contribution of 27 per cent of nation’s production. Vedanta is also the largest private property holder in the country with the acquisition of 53 new blocks under the new licensing policy. The company is expanding in Rajasthan’s Barmer block and planning to invest around US$ 3 billion

The company plans to re-open the Thoothukudi copper smelter in Tamil Nadu because of the need from local economy. The plant which produced about US$ 200-250 million in profit was shut more than a year back because of the police firing on protesters that killed 13 people.

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

10.2. From Accenture to IBM, IT hiring set to gain pace with 25,000 openings

Business Standard, Jun. 24, 2019

Bengaluru: After a lull in hiring by the IT industry seen during the election period, recruitment seems to have picked up in June, as around 25,000 openings have come up from major software services companies.

“Accenture has close to 6,600 openings, whereas it stands at close to 2,800 for IBM.

Despite the negative news flow, Cognizant has around 5,000 new openings,” said a person familiar with the recruitment process of major IT firms. “Similarly, Tata Consultancy Services (TCS) has more than thousand openings in the contractual hiring space.”

Another person in the know said most of these openings are for lateral hiring for people with 4-6 years of experience.

“The total number of openings, including tier-II firms, is around 25,000. Most of these are lateral job opportunities for people trained in both new age as well as traditional skill sets,” said a senior executive of a recruitment agency.

During the last financial year, most Indian IT companies had ramped up hiring, anticipating an uptick in demand.

For instance, the aggregate employee addition by the top three Indian IT services firms in FY19 jumped close to seven times, given these companies went into an overdrive of hiring fresh talent as well as rebadging employees of client organisations.

TCS, Infosys, and Wipro together added a net 64,805 (after taking into account the attrition) employees in the financial year ended March 2019, when compared to an addition of 9,864 in FY18 and 48,350 in FY17.

However, during the election months of April and May, there had been a substantial drop in hiring.

“Hiring was subdued during pre-election months as the managements of IT companies were waiting for certainty in policy direction. With the formation of a new government, the uncertainty is behind us, which can be seen as a factor behind the current uptick,” said Supaul Chanda, business head of recruitment firm TeamLease Digital.

“The ramping up of projects after initial agreements could be another reason for this pickup in hiring.”

Apart from these factors, replacement hiring is another major driver. “There is 7-10 per cent staff mobilisation every year, after the announcement of annual increments, given that employees leave owing to discontentment over salary hikes,” said Chanda.

Apart from hiring on a company's payroll, which is for permanent positions, even contractual hiring has picked up in recent months.

“Not only recruitment for permanent staffing, but even contractual hiring has gone up. Earlier, while IT firms were looking for contractual staff in the 2-4 years of experience range, engineers with 4-8 years of experience are also comfortable with contractual employment nowadays,” said the TeamLease executive.

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

- INDUSTRY, MANUFACTURE

11.1. Large-screen TV sales soar up to 100 pc as World Cup fever grips fans

PTI, Jun. 17, 2019

New Delhi: Rains may have washed out some keenly awaited contests in the ongoing cricket World Cup, but that has not deterred Indian fans from upgrading to high-end TVs to enjoy the matches.

Consumer electronics makers as Sony, Samsung, LG and Panasonic have reported up to 100 pc jump in sales of large-screen TVs (55-inch and above) compared to the same period last year.

Interestingly, the sales spurt has not been restricted to just the metros, as smaller cities such as Hubli, Jabalpur, Raipur, Ranchi, Kochi and Nagpur too have posted robust numbers.

Moreover, companies expect sales to pick up further as the tournament progresses towards the knock-out rounds, and have lined up attractive offers, including easy financing and cashbacks, to woo the fans.

"The World Cup started around 10 days ago and now we can see the largest screen sizes, particularly 55-inch and above 4K TVs, a sales jump of almost 100 per cent. This is twice what used to be in the same time last year," Sony India BRAVIA Business Head Sachin Rai told PTI.

Samsung India Senior Vice President, Consumer Electronics Business, Rajeev Bhutani said that as India progresses ahead in the competition, sales would increase.

"Cricket fans across India are upgrading to bigger TV screens to enjoy the World Cup. In the month of May, we saw sales of 55-inch and above TVs, which include our QLED TVs, double over last year. Sale of 75-inch and above TVs saw a 5X jump, indicating a rising demand for bigger screens this World Cup," he said.

According to Panasonic India Business Head (Consumer Electronics) Sharath Nair, after festive sales, sporting season is the major opportunity for companies to connect with customers and create engagement touchpoints.

"This is particularly relevant during the sporting season as the demand for a superior viewing experience is triggered and customers look for advanced features such as a large screen and enhanced sound quality," he said. "Following this trend, we are targeting 25 per cent growth in sales during the World Cup 2019 fuelled by the large screen sizes of 55 inches and above."

While none of the makers shared the number of units sold, they said the growth was much higher this year compared to the previous few seasons.

Large-screen TVs of established brands come in the price range of Rs 50,000 to Rs 1.75 lakh.

However, some models are priced even higher. Recently, Samsung launched 8K UHD TV in the price range of Rs 10.99 lakh to Rs 59.99 lakh.

The Indian TV market is estimated at around 12.5 million sets a year and about 15 per cent is contributed by large-screen sales.

LG is also witnessing a similar trend in its premium TV segment.

"For smart TV with ThinQ AI, we are targeting 35 percent growth and we are witnessing robust growth in sales. In fact, for OLED and NanoCell TV we are expecting 200 percent growth as consumers want best TV viewing experience to enjoy cricket season," an LG Electronics India spokesperson said.

Although offline channel's contribution is higher in this segment, online is also picking up.

"As far as large-screen sales are concerned, a larger portion of sale comes from offline. We are seeing big gains in offline but online is also gaining acceptance among consumers. We can see some sales jump happening on that side also," said Rai.

The companies are also investing in branding/promotions to keep the sales momentum going.

"As India progresses ahead in the tournament, we expect more people to upsize, which is why we have launched a host of offers for them including zero down payment finance options, 10-year no screen burn-in warranty on QLED TVs and two-year warranty on panels, up to 15 per cent cashback, free Amazon Echo Plus with the premium QLED TV range and Amazon Echo Dot with the 4K UHD TV range," Bhutani said.

Rai added, "We have offers, which would make easy for the customers to purchase a large-screen TV. We have very attractive finance options and extended duration finance offers."

The ICC World Cup, being played in the UK, started on May 30. The finals will be played on July 14.

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

11.2. Harley-Davidson, Hero gear up for India ride

Livemint, 20 Jun. 2019, Amit Panday

Harley-Davidson’s growing focus on India and similar markets comes amid tough conditions in its home market

Both firms are keen to explore a potential alliance that would make Harley-Davidson bikes cheaper in India

Mumbai: US-based Harley-Davidson Motor Co. is in talks with India’s largest two-wheeler maker, Hero MotoCorp Ltd, to outsource the production of 250-500cc motorcycles that the iconic motorbike maker plans to develop for emerging markets, four people aware of the matter said. The talks are still at a preliminary stage and both sides are keen to explore a potential alliance that would make Harley-Davidson motorbikes more affordable in India, these people said on condition of anonymity. Fully-built imported Harley-Davidson motorbikes attract customs duty of 50%. Building them in India will help bring down the price.

For Hero MotoCorp, which plans to build a full portfolio of premium products over the next three to five years, a potential tie-up will help it enter the premium segment.

“Harley-Davidson had approached Hero MotoCorp and has had preliminary talks with the Indian company for a possible partnership. Hero’s proven capability in sustainable and frugal manufacturing would make them an appropriate partner for Harley, which is looking for developing products in the lower engine capacity segments," said the first of the four people cited above.

In July 2018, Harley-Davidson had announced that it plans to develop more affordable, small-displacement motorcycles for emerging markets in Asia, and is scouting for a strategic partner in the region.

The strategy, called “More roads to Harley-Davidson", is part of its attempt to penetrate high-growth emerging markets.

A Harley-Davidson spokesperson from Milwaukee, replying to a Mint query, said, “When we are ready to announce something, we will certainly do that."

A Hero MotoCorp spokesperson said: “We do not comment on market speculation."

In the past year, Harley-Davidson has become a rallying point for the US government to push for reduction of import duty on American motorcycles. US President Donald Trump has on several occasions pointed to what he has described as high import tariff on Harley-Davidson bikes. In July, Trump once again expressed his displeasure on the matter, saying that even after India’s February 2018 tariff cut from 75% to 50% on completely built units (CBUs), the rate was still too high and not acceptable.

Meanwhile, a completely-knocked down (CKD) unit attracts 15% duty. Harley Davidson builds two models in India, imports 11 as CKDs, and four as CBUs.

Harley-Davidson’s growing focus on India and similar markets comes amid tough conditions in its home market where sales dropped from 173,994 units in 2014 to 132,868 units in 2018. Meanwhile, international sales fell from 96,920 units in 2014 to 95,183 units in 2018. Harley’s India sales dropped from 4,708 units in FY 2015-16 to 2,676 units in FY19.

“Harley’s lookout for a partner has led it to Hero MotoCorp, which, besides being the dominant player in India, is also looking at tapping into the growing trend of premium products and aims to build a full portfolio over next three to five years. The Pawan Munjal-led company sits on a well-established production capacity of 10 million units per year across six plants and also brings to the table a wide network of suppliers who are willing to climb up the value chain," the second person added.

As part of a heavy operational restructuring process, Harley recently shut one production unit each in the US and Australia, and opened a new assembly unit in Thailand. In India, it has a production facility at Bawal in Haryana, where it builds 750cc bikes and assembles models up to 1750cc engines.

A potential deal will benefit Hero MotoCorp, the first person said. “Having maintained its market leadership after separating from erstwhile partner Honda, and after rapidly expanding its global footprint and R&D capabilities, Hero MotoCorp has emerged as a prized target for global manufacturers to partner with in having a foothold in the highly competitive Indian market. In return, the partnership with the global player gives Hero access to regions where it is looking to expand its presence. This includes mature and evolved markets. It is, therefore, a win-win situation for both the companies. However, the talks are currently at a very preliminary stage."

12.1. Specialty chemical cos capex to jump 70% by 2020: Report

PTI, Jun. 19, 2019

Mumbai: With a healthy domestic demand and improving operating rates, the capital expenditure of specialty chemical manufacturers is expected to jump 70 per cent to almost Rs 13,000 crore combined in fiscals 2018 and 2020, the report said.

The capital expenditure of specialty chemical manufacturers stood at Rs 7,500 crore in fiscals 2017 and 2018, rating agency Crisil said in a note.

Domestic demand for specialty chemicals grew at 8-10 per cent between fiscals 2017 and 2019, on steady demand from end-user industries such as textiles, automobiles, paints, plywood, and personal care, it said.

The capacity utilisation surged to over 85 per cent in fiscal 2019, compared with 75 per cent in fiscal 2017, it noted.

"Utilisation rates of new capacities coming up will remain high over the medium term because of improving environmental compliance and cost competitiveness. As a result, the share of Indian specialty chemicals in global supply chain is seen rising 100 basis points to 5.2 per cent in fiscal 2022, from 4.2 per cent last fiscal," Crisil Ratings Senior Director Anuj Sethi said.

The agency noted that Indian players are also benefiting because of the closure or shifting of capacities in 50 chemicals manufacturing clusters in China, which has a about 20 per cent share of global specialty chemicals revenue.

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

12.2. Santoor 1st desi soap to hit Rs.2000Cr sales

IBEF, Jul. 01, 2019

"Santoor has developed reliably crosswise over urban and rural markets. It is currently among the Rs 2,000-crore in addition to buyer brands.

Santoor's all India market share of the overall industry in January-March 2019, at 15.1%, has surpassed Lux's 12.5%, yet is not exactly Lifeboy's 17.7%.

The urban market information, be that as it may, indicates Santoor (13.4%) in front of both Lux (12%) and Lifebuoy (13%). Kantar declined to remark on this information.

Also, the Santoor (9.3%) is the third-biggest brand after Lifeboy (13.7%) and Lux (12%) for January-March 2019. Whenever reached, a HUL organization representative stated, "Lux keeps on being the second-biggest cleanser brand in India after Lifebuoy. As an approach, we don't remark on pieces of the pie."

Santoor's infiltration is a lot higher than Lux in South and parts of West locales. In any case, at a national level, Santoor has a lot lesser entrance than Lux (34% against 60%).

Lux's entrance is driven by the Rs 10-pack (about 55g), with 60% of Lux-purchasing homes obtaining this pack. Then again, Santoor's infiltration is driven to a great extent by its 75g+ pack, with 70% of Santoor-purchasing homes acquiring this pack. As per the information from Worldpanel Division of Kantar, Santoor likewise has a higher number of purchasing events than Lux (Santoor purchasers buy about 45% a larger number of times than Lux purchasers). Accordingly, the general volumes of Santoor have ventured out in front of Lux in recent times.

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

13.1. Hyundai, all charged up, looks to drive in affordable electric vehicles to India

Livemint, 10 Jul. 2019, Malyaban Ghosh

Hyundai plans to set up an entire ecosystem for its mass market EV in India

The Kona, which Hyundai claims can run up to 452km on a single charge, is assembled from parts imported from South Korea

New Delhi: Hyundai Motor Co. is developing affordable electric vehicles for the Indian market, a senior company executive said, as the South Korean automaker plots to get a head start over its rivals in this nascent but potential growth market.

To push forward its plans, Hyundai is in talks with vendors in India to develop a parallel ecosystem for electric vehicles (EVs) in India, Seon Seob Kim, managing director and chief executive of Hyundai Motor India, said in an interview. Its current ecosystem, including the vendor base for traditional internal combustion engine vehicles, is based in Chennai.

The affordable electric vehicles project, underway in South Korea, is to develop the Smart EV platform that will spawn a range of vehicles for emerging markets like India.

Hyundai on Tuesday became the first company in India to introduce a long-range battery in its Kona sport utility vehicle (SUV), priced at ₹25.30 lakh. The Kona will soon face competition from MG Motor India, a unit of China’s SAIC Motor Corp., which is slated to offer its eZS electric SUV by the end of December.

So far, Mahindra and Mahindra Ltd has been the sole mass-market EV maker in India, though with limited volumes. Tata Motors Ltd has recently launched the EV version of its Tigor compact sedan that is aimed at commercial users. Maruti Suzuki India Ltd is expected to unveil the electric Wagon R, its first EV, in 2020.

“After launching the Kona EV, we are studying various options," Kim said. “Our initial study suggests that instead of introducing more global products, we should have an India-specific EV platform and that will be mass market. So, we are working on development of those vehicles now. It is at a very early stage. If we come up with a great solution to the industry and market, we can expect huge volumes with mass-market EVs as well."

Kim did not elaborate.

Hyundai’s plans follow the Union government’s nudge to automakers to produce eco-friendly vehicles and its move to unveil incentives in this year’s budget to accelerate the adoption of such vehicles.

In her maiden budget, finance minister Nirmala Sitharaman announced income tax rebates of up to ₹1.5 lakh to EV buyers on interest paid on loans to buy electric vehicles, with a total exemption benefit of ₹2.5 lakh over the entire loan period. The minister also announced customs duty exemption on lithium-ion cells to lower the cost of lithium-ion batteries in India as they are not produced locally. Makers of components such as solar electric charging infrastructure and lithium storage batteries will be offered investment-linked income tax exemptions.

Kim said producing mass market vehicles at affordable prices would be unviable without localization of major parts and components. The Kona, which Hyundai claims can run up to 452km on a single charge, is assembled from parts imported from South Korea.

“Our procurement division is at a very early stage of finding out the right partners to set up an electric vehicle ecosystem. It will be a different set of suppliers compared to the internal combustion engines. Right now, our teams are trying to contact them and understand them and may be work together to increase their capabilities and also improve the level of technology (for the particular parts). So, that is quite a priority item," Kim said.

He said the mass market EVs would be designed first for retail buyers and later supplied to ride-hailing platforms such as Ola and Uber.

The Kona will be initially sold by 14 dealers in 11 cities. Hyundai has tied up with Indian Oil Corp. Ltd to open charging stations with fast chargers at select fuel stations in Mumbai, Delhi, Chennai and Bengaluru.

13.2. Ola plans to design, develop electric vehicles at Palo Alto facility

Business Standard, Jun. 24, 2019

Bengaluru: Bhavish Aggarwal-led cab aggregator Ola, which sees an edge over rivals in electric mobility, has put in a lion’s share of its resources into designing and developing electric vehicles (EVs). According to sources in the know and going by the hiring plan for its Palo Alto-based Advanced Technology Center, the company intends to design and build electric mobility solutions as well as related accessories.

The plan is to collaborate with original equipment manufacturers (OEMs) and new-age EV makers.

The cab aggregator is planning to give a head start to its EV ambitions by hiring heads for its engineering and designing verticals, data scientists, and around 150 engineers for the US facility. The brief given by Aggarwal and Co-Founder Ankit Bhati is to mainly design and develop ‘practical’ EV solutions for the firm, which can be rolled out in the next two to three years.

Ola is now searching for a head of engineering, who would direct the research and development programme — from new product proposal to commercialisation of battery, chargers, vehicles, and retrofitted kits.

The job description also includes developing the programme to build vendor capability, produce products as per its specs as well as liaise with third parties, including OEMs, consultant, and vendors. The company is also looking for people who would head its autonomous driving programme. The immediate focus, however, is to roll-out its EV initiative.

According to sources, Ola was in talks with three to four of the biggest autorickshaw makers in the country to manufacture electric autos. “Ola wanted these makers to start full-fledged manufacturing lines for electric autorickshaws. While OEMs liked the plans, manufacturers said they wanted to wait longer till the time more on-ground infrastructure was developed. With non-availability of charging stations and erratic power supply, OEMs told Ola it was not the right time to start mass production of autorickshaw,” said a source close to the firm.

Much has changed since then. With government planning to convert all autorickshaws and two-wheelers under 150cc engine capacity to electric, Ola believes this is the right time to resume conversations with OEMs.

“One thing Ola has figured out that if they can get first movers advantage in the electric autorickshaw space, then they would be able to gain a whole new segment of mobility. That is the reason it has been in constant dialogue with the government pushing for e-mobility projects,” said the source. Apart from bringing out a yearly annual report on e-mobility, the company started an e-taxi pilot in Nagpur that was endorsed by the government.

The pilot was inaugurated by the Maharashtra Chief Minister Devendra Fadnavis and Union Transport Minister Nitin Gadkari in May 2017. The newly formed BJP government has also made it clear that it plans on

taking concrete steps to promote electric vehicles.

The firm has parked significant investments to push its electric mobility initiative forward. Ola Mobility Institute (OMI) is a policy research and social innovation think tank of the cab aggregator that is focused on developing knowledge frameworks.

The company’s plans for autorickshaws can also be seen in its latest mobility report. “Unlike western models, India may not easily kick-start its electric journey by deploying premium electric cars. Instead, it makes sense to focus on electrifying vehicles with the highest demand and utility in the Indian context: two-wheelers and three-wheelers.

The rickshaw is already proliferating in electric variants, suggesting it is both viable and practical. Thus, appropriate prioritisation of vehicle segments for electrification may prove to be critical to the adoption of e-mobility,” it stated in its report.

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

14.1. Premiumisation, internet drive growth of beauty industry in India: Report

Livemint, Jun. 20, 2019

New Delhi: India’s $14 billion beauty and personal care industry is on a roll thanks to online sales of beauty products, premiumisation, and an inclination towards organic and ethical brands. According to a report by research firm Euromonitor International, last year, with the presence of online retailers like Nykaa.com and Amazon.com, the beauty and personal care products category crossed $400 million in internet sales up from $100 million in 2014.

The high penetration of smartphones and easy access to the internet that exists on the fingertips of 560 million Indians (TRAI data for September 2018) today is driving the continued rise of the beauty and personal care industry in the country. With the number of internet users in the country expected to cross Europe’s population by 2025, it is no surprise that the beauty and personal care industry is enjoying rapid growth, accelerated by an increase in internet retailing.

According to the Euromonitor International report, since technology has been driving growth in most industries, including beauty and personal care, companies are rethinking the relevance of physical stores and revamping them. Businesses are developing ways to drive engagement as well as TO transform the in-store experience for consumers. "Physical stores continue to remain relevant in India with retailers focusing on enhancing the shopping experience by housing beauty studios with personalized beauty advisors who help consumers understand latest and trending make-up looks and regimes," the report said.

Internet connectivity has also caused a shift in consumers’ consumer’s traditional power structures, wherein recommendations from families and friends and independent consumer reviews have greater credence over mass marketing channels like celebrity endorsements, in-store advertising etc, according to the Euromonitor International Lifestyles Survey 2019.

Premiumisation, which essentially refers to the ability and willingness to spend on exclusive, superior quality goods, is of late becoming more popular with the Indian consumer. Indians are no longer afraid to put up extra bucks to purchase premium products. Such products come largely in partnership with a luxury or premium brand, like the lipstick launched by L’Oreal in collaboration with Indian couture designer Sabyasachi, or products personally formulated or customised in accordance to the specific needs of customers. Companies like Freshistry and Emcee Beauties produce customised products taking the needs of their customers into consideration, Euromonitor said.

Premiumisation has especially driven the demand for beauty and personal care products. The Euromonitor International study shows that in 2018, $774 million worth of premium beauty and personal care products were sold in India, with 63% share enjoyed by premium fragrances and hair care products. According to the study, with increasing disposable incomes, the per capita expenditure on premium personal care and beauty products is expected to show a CAGR of 15% from 2018 to 2023.

Meaningful consumerism has also been shaping the beauty and personal care industry as customer focus shifts towards conscious consumption and ethical living.

With India having 22 of the world’s 30 most polluted cities (2018 air quality data by Greenpeace), consumers are becoming increasingly aware of environmental degradation and switching to eco-friendly, organic AND , natural products. The Euromonitor International Lifestyles Survey (2019) shows that respondents have the greatest understanding of, and trust in(,) environmentally conscious and eco-friendly products (67%), followed by natural products (66%), and organic products (65%). Brands like SoulTree offer certified natural beauty and personal care products, while Ruby’s Organic offers organically made cosmetics. Many other companies are looking into creating recyclable products, or products that are free of any artificial ingredients.

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

14.2. Growth stage investments in Indian start-ups cross US$ 1 billion in January-June 2019

IBEF, Jul. 09, 2019

Growth stage investments in Indian start-ups set a new record by breaching the billion dollar mark as it stood at US$ 1.17 billion in first half of 2019, as compared to US$ 994 million from past year.

Series B and C rounds are generally considered as growth stage for start-ups. Indian start-ups set a record by breaking the billion-dollar mark in the first half of this year.

The start-ups have raised a total of US$1.17 billion in the first six months of 2019, rising from US$ 994 million in the similar period last year, and a 47 per cent surge from US$ 616 million in 2017, according to data from Venture Intelligence, a start-up data tracker.

However, there has been fall in number of deals from last year, 85 to 76 this year. This represents that deal sizes have grown in recent times, with the total investment increasing in the same period. The average deal size has increased from US$10.26 million in 2016 to US$ 15.44 million this year so far.

Until now, Series C round has reached as much as $72 million, emphasised by two-wheeler rental start up Bounce’s fundraise that took place last month, directed by US-based funds B Capital Group and Falcon Edge Capital. Stanza Living, student housing start-up, and Bounce’s rival Vogo, are in talks to raise about $50 million in Series C and B rounds respectively,

This has promoted the entry of new investors in growth stage deals alone.

Growth stage investors include Belgian firm Sofina, A91, Iron Pillar and Mirae, US-based Stead view Capital and Sands Capital, and Singapore’s Hillhouse Capital.

Despite the strong investments, the lack of strength in the growth stage market and extreme estimation concerns investors.

Financiers say the unfilled space is currently packed by overseas investors and over time will get accompanied and swapped by local funds. For India-based funds, the proposal would be that they are local and more dedicated and have more ability to add value.

Additionally, traditional growth stage investors, such as Sequoia Capital and Accel Partners, are now favouring early-stage deals, including Sequoia’s Surge, a dedicated fund for the seed stage.

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

15.1. Private equity funds pump in $1.1 billion in logistics, warehousing sector

Business Standard, Jun. 24, 2019

Chennai: The key factors driving PE players' interest in logistics and warehousing are government policies, strong economic fundamentals, and the growth in organised retail and e-commerce

Private equity (PE) funds have pumped in excess of $1.1 billion in the logistics and warehousing sectors between the first quarter of 2017 and the first quarter of 2019, as against zero investment in 2015 and 2016 combined.

Infrastructure status, the multi-modal logistics park policy, and implementation of the GST had all led to PE firms’ greater interest in the logistics and warehousing sectors.

Shobhit Agarwal, managing director and chief executive of ANAROCK Capital, said that Bengaluru, Chennai and Hyderabad saw maximum interest by investors, followed by Mumbai and Pune.

"The logistics sector had a massive jump-start in the first quarter of 2019, when PE players pumped in nearly $200 million into cities like Bengaluru, Chennai and Pune," said Agarwal, adding that there is immense opportunity, backed by the growing demand from e-commerce businesses in the last two years; the logistics and warehousing sectors are consequently upgrading to higher levels. This shift was visible in various small Grade B and C warehouses converting into large Grade A warehouses equipped with modern facilities — a transformation that has caught the eye of PE entities in the US, Canada and Singapore, to pump in funds, he said.

The key factors driving PE players’ interest in logistics and warehousing are government policies, strong economic fundamentals, and the growth in organised retail and e-commerce. The rapid ramping up of e-commerce activity has caused a corresponding rise in demand logistics and warehousing, in both Tier-I and II markets.

Private equity funds pump in $1.1 billion in logistics, warehousing sector

Among major deals, LOGOS India invested nearly $100 million in Casagrand Distripark in Chennai, Morgan Stanley Real Estate pumped in $50 million in KSH Infra in Pune, and Embassy Industrial Parks pooled in nearly $50 million into DRA Projects (Bengaluru), in 2019.

Warburg Pincus invested nearly $180 million in Embassy Group for a project in Bengaluru, while Proprium Capital Partners invested nearly $100 million in Musaddilal Projects in Hyderabad.

IndoSpace saw maximum inflow in 2017 — to the tune of $500 million from Canada-based CPPIB, for projects across cities such as Bengaluru, Chennai, Pune, Mumbai and Delhi.

A report by JLL indicated that the annual demand for the logistics and warehousing space of close to 32 million sq ft had outstripped the supply of 31 million sq ft — witnessed for the first time in the last four years.

With the January-March period of 2019 already witnessing absorption of 8.4 million sq ft, it is expected to clock an estimated 38 million sq ft by the end of 2019. Given the high demand, lease transactions have remained high, it added. Besides the rise in transactions, the share of Grade A space leases has also risen in the past four years, it said.

Of the total 32 mn sq ft of industrial and logistics leases in 2018, 56 per cent was concluded in Grade A spaces.

Sectors such as 3PL/logistics, engineering, auto and ancillary, e-commerce, FMCG, retail and telecom, and white goods have remained the biggest demand drivers. As a result of the high demand, the logistics sector is expected to grow to $215 billion by 2020.

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

15.2. Free digital learning course launched by TCS to build career skills

IBEF, Jul. 12, 2019

TCS iON, a unit of IT major Tata Consultancy Services (TCS), has collaborated with All India Council for Technical Education (AICTE) with an aim to offer students with a digital learning course to prepare them with career skills.

TCS iON has around 20 hour-career skills courses available freely. Courses are expected to cover issues like corporate etiquette, effective e-mail writing, impactful presentations and IT awareness that will be accessible to students through the duration of their degree course.

The course will be available to students present across 10,000 AICTE and will be opened on TCS iON Digital Learning Hub through any device.

This launch is to fill the gap in student’s capabilities in terms of career skills. While students may have strong academic performance but the lack of basic soft skills such as effective communication and interpersonal skills may result in students missing out on job opportunities.

Through the cooperation, TCS, together with educational institutions, aims to help students acquire better career skills.

Ramaswamy, TCS iON Global Head, said the company (TCS) had last year selected 63,000 students from over 2.8 lakh applicants through its National Qualifier Test, but could extend offer letters to only about 30,000. Many of those not selected lacked these career skills. Thus, to enhance the quality of talent pool this program has been launched.

The distinctive course will help enhance placement opportunities for AICTE institutions, thus introducing a strong start to the professional careers of the students. The guidance provided by TCS iON will prepare students for their professional careers and help nurture a highly qualified, knowledgeable, and skilled workforce.

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

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

16.1. Due to Jio, India is home to world's 2nd largest internet user base: Report

Livemint, 12 Jun. 2019, Nandita Mathur

According to Meeker, India’s internet growth story has largely come from Reliance Jio

Meeker's report also reveals that owing to the large base of services Jio offers, the data usage has doubled in 2019 to close to 18 exabytes

The company plans to use its more than 5,100 Jio point stores located in 5,000 cities and towns as delivery and collection points for its e-commerce venture.

New Delhi: More than half the world’s population is active on the internet, with India accounting for about 12% of them, retaining its second position, an annual report on internet trends by venture capitalist Mary Meeker said on Tuesday.

China has the largest base, accounting for 21% of all internet users globally, and the US comes third at 8%.

The number of people active online in 2018 was approximately 3.8 billion, or 51% of the world’s population. That compares with the previous year’s 3.6 billion people, or 49% of the world’s population.

The growth in internet users in India was driven by cut-price data plans introduced by Reliance Jio Infocomm Ltd and cheaper smartphones, the report said.

According to Meeker, Reliance Jio has created a hybrid, online-to-offline commerce platform by integrating Reliance Retail’s physical marketplace with Reliance Jio’s digital infrastructure and services, thus doubling its growth in a year to a total of 307 million subscribers.

“This platform will bring together 350 million customer footfalls at Reliance Retail stores, 307 million Jio connectivity customers and 30 million small merchants all over India who provide the last-mile physical market connectivity," the report cited Reliance Industries Ltd chairman Mukesh Ambani as saying.

Jio’s free voice call and cheap data plans have helped double data usage in a year, the report said.

In the online education and learning platforms segment, Meeker mentioned India’s Byju’s, a company that offers video-based classes for students in the 9-17 age group and has about 2 million subscribers.

Globally, the report claims that growth in e-commerce has quickened to 12.4% in 2018 from 12.1% in the previous year. E-commerce also accounts for about 15% of the share of US retail sales. Internet ad spending grew 22% in 2018, faster than the 21% in the previous year, with platforms such as Google and Facebook leading the pack. According to Meeker, Google’s ad revenue grew 1.4 times over the past nine quarters and Facebook’s grew 1.9 times, while the combined group of new players that included Amazon and Snapchat grew 2.6 times. Similarly, digital media usage has accelerated with 7% growth in 2018, the usage drivers being the growth of global internet and technology businesses where investment has remained robust.

The time spent on viewing videos globally has doubled in the last one year and according to the report, there are 1.5 billion monthly active users on video platforms such as Facebook, YouTube, Snapchat and TikTok. The number of interactive gamers worldwide grew 6% to 2.4 billion people last year, as interactive games such as Fortnite became a hit, reaching a user base of 250 million.

Podcasts have also grown, with roughly 70 million people globally listening to podcasts in the US, a figure that has doubled in about four years.

Also, the user base for voice-based devices like Amazon Echo grew, with Echo’s installation base doubling to 47 million in 2018.

Meeker also points out that seven of the top 10 companies in the world by market capitalization are technology companies, and four of the top six are US-based. These include Microsoft, Amazon, Apple and Alphabet. Interestingly, 60% of the most highly valued tech companies were founded by first- or second-generation immigrants and employed 1.9 million people last year.

The report also pointed out that cloud services revenues of Google, Amazon and Microsoft are collectively closing in on $14 billion in 2018, a jump of about 58% from the previous year.

More data is now stored in the cloud than on private enterprise servers or consumer devices.

16.2. RIL to infuse another Rs 20,000 crore into Jio

Livemint, Jun. 19, 2019

Mumbai: Reliance Industries Ltd (RIL) will invest Rs 20,000 crore in its telecom business, Reliance Jio Infocomm Ltd, to fuel its broadband and e-commerce play and enter 5G services in the future, two people aware of the matter said.

Reliance Jio will issue 4 billion non-cumulative optionally convertible preference shares to its parent at Rs 50 each for cash, the persons cited above said on condition of anonymity.

“The capital would be used to expand operations of Reliance Jio. The non-cumulative optionally convertible preference shares carry an interest rate of 9%," the first of the two people said.

Reliance Jio did not reply to an email seeking comment on Monday.

“Capital requirement for the telecom sector will stay high thanks to the constant infrastructure upgradation and the proposed 5G expansion. Jio is now focused on reaching out to India’s underserved homes and enterprise connectivity market. Its mobility services along with GigaFiber fixed-broadband services is where it is focusing now," said an analyst at a domestic brokerage.

Jio, which has borrowed to expand services, continues to invest to build capacity. As of 31 March, RIL has an outstanding debt of more than Rs 2.87 trillion, which increased by Rs 69,000 crore during the year due to investments in Jio. As against this, RIL had cash reserves of about Rs 1.33 trillion as of 31 March.

To cut debt, Jio has decided to transfer its fibre and tower arms to two infrastructure investment trusts (InvITs)—Digital Fibre Infrastructure Trust and Tower Infrastructure Trust—which will be offered to external investors. The transfer will help it not only reduce debt but also become an asset-light digital services company.

“In our view, the InvIT has effectively allowed RIL to replace Rs 710 billion of external debt with very-long-term (20-year) money and thereby remove any refinancing need on this amount of debt. It also gives more balance sheet flexibility and allows RIL to further increase spending across its consumer business if it chooses to do so," said JPMorgan in a 14 June report.

In less than three years of its launch, Jio has built a subscriber base of 306.7 million and a revenue market share (RMS) of 31.7% as of March, against Vodafone Idea’s RMS of 32.2%, and Airtel’s 27.3%.

Jio’s net profit in 2018-19 surged more than fourfold to Rs 2,964 crore, from Rs 723 crore in 2017-18. Standalone revenue from operations for the March quarter of fiscal year 2018-19 increased 7% to Rs 11,109 crore from Rs 10,383 crore in the December quarter.

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

17.1. IndiGo to buy jet engines worth $20 billion from CFM

Livemint, Jun. 18, 2019

New Delhi: Indigo, India’s largest domestic airline by market share, on Monday said it is ordering jet engines worth $20 billion from CFM International, a joint venture of General Electric Co. and France’s Safran SA, to power 280 Airbus A320neo and A321neo aircraft operated by it.

The latest development sees India’s biggest buyer of Airbus’s A320neo planes moving away to a rival engine maker from Pratt & Whitney (P&W), following a series of glitches that grounded several of its planes and delayed aircraft deliveries, disrupting operations. IndiGo, which held a domestic market share of 49.9% in April, has ordered 430 A320neo family jets.

The airline, operated by InterGlobe Aviation Ltd, currently has a fleet of over 230 aircraft consisting of Airbus A320, Airbus A320neo and Airbus A321 planes.

The airline will add 53 narrow body aircraft, including 15 Airbus A321, during the current fiscal year, apart from taking delivery of 11 ATR aircraft.

“IndiGo has been a CFM customer since 2016 and currently operates a fleet of 17 A320ceo aircraft powered by CFM56-5B engines as part of a total fleet of 215 A320/A321 family aircraft. Delivery of the first LEAP-1A-powered A320neo is scheduled in 2020," IndiGo said in a statement.

The CFM engine order by IndiGo is a huge blow to Pratt & Whitney, a division of United Technologies Corp., which has been beset by delivery delays and groundings in India after spending $10 billion to develop its fuel-efficient geared turbofan for single-aisle jets.

On the other hand, the deal strengthens CFM’s presence in India, the world’s fastest growing aviation market last year, with Vistara and state-run Air India Ltd already using its engines. “We are pleased to partner with CFM for our next batch of Airbus A320neo and A321neo aircraft," said Riyaz Peermohamed, chief aircraft acquisition and financing officer, IndiGo.

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

18.1. Public cloud revenue in India likely to grow 24% this year: Gartner

Business Standard, Jun. 19, 2019

Public cloud services revenue in India is projected to total $2.4 billion in 2019, an increase of 24.3 per cent from 2018, according to Gartner.

India ranks among the nine countries whose growth rate will be higher than the global average growth rate (16 per cent).

India is also on track to record the third-highest growth rate in 2019 after China (33 per cent) and Indonesia (29 per cent), taking into consideration that its (India’s) revenue base is much smaller than the mature markets.

“The shift from the ‘cloud first’ to the ‘cloud only’ model is pushing organisations in India to increase their spending on public cloud services to advance their digital business initiatives,” said Sid Nag, research vice-president at Gartner.

Although India’s revenue will represent only 1.2 per cent of the global public cloud services in 2019, the growth will largely be driven by investments of enterprises in increasing data analytics.

While all the top Indian large-cap and mid-cap IT providers currently have partnerships with the top public cloud providers like Amazon Web Services, Microsoft Azure and Google Cloud, analysts have noted that a few companies or partnerships offer a differentiated offering right now. However, the market will mature further.

Cloud application services or software as a service (SaaS) will be the fastest-growing market segment in India in 2019, accounting for nearly half of the total public cloud services revenue year over year. SaaS revenue is estimated to grow 23 per cent in 2019 to $1.15 billion. It is followed by a cloud system infrastructure services (Iaas) spending, which is estimated to grow 22 per cent in 2019.

Among the high profile M&As in this space include Salesforce’s acquisition of Tableau in a $15 billion deal, Google’s acquisition of Looker and Pegasystem’s acquisition of Infruid Labs. The growth of SaaS spending is fuelled by increased end-user spending on customer relationship management (CRM), as organisations in India move away from commercial off-the-shelf and licence-based on-premises software to a subscription-based SaaS model to gain agility, innovation and cost efficiency.

CRM growth is also driven by the need for businesses to utilise their customer data to drive sales based on past behavior and an increasing access to online presence of Indian consumers.

Consequently, the move to cloud is also prompting an increase in targeted cyber attacks on Indian organisations. Gartner analysts recommend the use a mix of native and third-party controls. Furthermore, they should use technologies such as web application firewalls (WAFs), cloud access security brokers (CASBs), cloud workload protection platforms (CWPPs) and microsegmentation platforms like go-to options to secure cloud in their organisations.

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

18.2. Reliance Jio, BSNL drive telecom subscriber base to 1,183.77 mn in April

PTI, June 25, 2019

New Delhi: The country's telecom subscriber base grew marginally to 1,183.77 million in April on account of net mobile customers gain by Reliance Jio and state-run telecom firm BSNL, according to the Telecom Regulatory Authority of India's (Trai) report released Monday.

"The number of telephone subscribers in India slightly increased from 1,183.51 million at the end of March 2019 to 1,183.77 million at the end of April 2019, thereby showing a monthly growth rate of 0.02 per cent," Trai said in subscriber report for April.

Wireless subscribers grew by about half a million to 1,162.30 million in April from 1,161.81 million in March.

Though Reliance Jio and BSNL jointly added over 8.31 million customers, the growth was mitigated by loss of customers by Bharti Airtel, Tata Teleservices, Vodafone Idea, public sector telecom firm MTNL and Reliance Communications (RCom).

Jio led the market by adding over eight million customers alone taking its total subscriber base to 314.8 million. BSNL followed Jio by adding 2,32,487 new mobile customers taking its total mobile customer base to 115.89 million.

Bharti Airtel lost 3.28 million mobile customers, Tata Teleservices 2.95 million, Vodafone Idea 1.58 million, MTNL 4,170 subscribers and RCom 108 customers.

The landline subscriber base further declined to 21.47 million in April, from 21.70 million in March with BSNL 2,27,596 customers.

Bharti Airtel and Vodafone Idea gained 36,686 and 8,829 wireline customers during the month.

The number of broadband subscribers increased 1.53 per cent to 571.95 million in April from 563.31 million in March with mobile devices accounting for over 96 per cent of total connections.

Out of 317 broadband service providers, top-five service providers constituted 98.68 per cent market share of the total broadband subscribers April. This includes Reliance Jio with 314.81 million broadband subscribers, Bharti Airtel 115.71 million, Vodafone Idea 109.66 million, BSNL 22.29 million and Tata Teleservices 1.94 million broadband subscribers.

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

19.1. Indian pharma industry to grow at 11-13 per cent in FY20

IBEF, Jul. 08, 2019

As healthy demand from the domestic market, given increasing spend on healthcare along with improving access, the growth of Indian pharmaceutical industry is likely to grow at 11-13 per cent in FY20.

This along with moderation in pricing pressure for US market, new dispatches and market share gains for existing products and union advantages will drive growth in FY20

And, the growth would be compelled by administrative interventions, such as, value controls, mandatory genericisation and United States Food and Drug Administration (USFDA) oversight for assembling insufficiencies”.

According to an Icra report, covering a sample of 21 firms in the industry, the growth during FY2019 stood at around 12 per cent.

ICRA corporate ratings Vice President & Co-Head Gaurav Jain said, “the growth in FY2020 is relied upon to be upheld by 4.2 per cent WPI connected hike for National list of Essential Medicines (NLEM) portfolio.”

The credit metric of leading pharma companies is required to stay stable in perspective on future growth prospects in regulated markets and generally strong monetary records.

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

19.2. By this fiscal, Lupin purposes to launch new products across geographies

IBEF, Jul. 15, 2019

Addressing shareholders in the company's Annual Report for 2018-2019, Drug maker Lupin aims to launch its first biosimilar product and commercialise its first inhalation product in the US in the current fiscal and the new launches across the globe would help it to achieve sustainable growth, as per Lupin chief executive officer Vinita Gupta and managing director Nilesh Gupta.

The firm's first biosimilar Etanercept is approved for launch in Japan, while the European approval is awaited. As Lupin launched its 22 new products in the US market last fiscal.

Now, Lupin plan to bring its first biosimilar to market, commercialise its first inhalation product in the US, continue the growth drive in its US generics business and launch their injectables portfolio.

"With more than 157 Abbreviated New Drug Application’s (ANDAs) at present pending endorsement with the US Food and Drug Administration’s (USFDA), we have a rich pipeline tending to a total market size of over USD 52 billion”.

The Mumbai-based organization's different manufacturing plants have come under the US Food and Drug Administration’s (USFDA) scanner for different consistence issues.

Lupin’s first biosimilar Etanercept is permitted for the launch in Japan, whereas the European endorsement is awaited.

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

20.1. Indian realty market going strong with mergers: PropEquity

IBEF, Jul. 08, 2019

Indian property market is going through a noteworthy changes as half of real estate developers working in 2011-12 across the top nine urban cities have left the business or tied up with huge builders due to a muti-year request slowdown and administrative compliance, as indicated by data analytic firm PropEquity.

Big corporate houses like Tata, Mahindra, Godrej, Piramal and Adani entering in the real estate business and acting as major catalyst for this process.

As stated by PropEquity, the number of developers in nine major cities - Gurugram, Noida, Mumbai, Thane, Pune, Bengaluru, Hyderabad, Chennai and Kolkata - have shrunk by 51 per cent to 1,745 in 2017-2018 from 3,538 in 2011-2012.

There has been a gigantic amalgamation with over 50 per cent of the total developers that was in 2011-2012 leaving the market by 2017-2018, PropEquity said.

Customers are presently searching for engineers with phenomenal track records as far as quality and execution. This will further refine the designer market dependent on their maintainability as far as conveyances and reasonable practices.

As per the data, the number of developers has deteriorated by 70-80 per cent in Gurugram, Noida, and Chennai during the period under review.

Financial agony of small developers, lack of execution competence, oversupply of inventory, GST, demonetization, extreme land banking, lack of understanding of the demand supply dynamics, unfair price appreciation, lack of social and physical infrastructure in emerging markets are all distress creating factors but when seen together are harmful in nature.

This problem has led to consolidation of developer number across the country. The unorganised workers have not been able to adjust accordingly and have suffered having impact on RERA that insists on regulatory compliances.

These small workers have either left the market or have joined hands with larger groups.

Introduction of new RERA have led to transformation of industry for betterment.

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

20.2. Amazon to introduce specified centres in Patna, Guwahati

IBEF, Jul. 08, 2019

To increase the speed of its delivery, Amazon India is adding two new warehouses in Patna and Guwahati. This move will lead to expansion of its capacity in existing specialised fulfilment centres (FCs) in cities like Delhi and Mumbai.

The specialised warehouses are different from traditional warehouses, they have highly automatic pick, pack and shipping process making it possible for fast and safe delivery. This automatic process also allows the e-commerce company to handle large appliances and furniture.

Amazon will launch specialised FCs in two new cities, Patna and Guwahati, and add more storage capacity to its existing specialised FCs in New Delhi, Mumbai, Bengaluru, Hyderabad, Kolkata, Ludhiana and Ahmedabad, among other cities.

Amazon India will now have a network of specialised FCs with close to 9 million cubic feet of storage space, an increase of close to 40 per cent from December 2018. There is also increase in specialised delivery network from 60 to over 80 delivery stations this year.

This expansion will guarantee faster deliveries to close to 14,000 pin codes, a 2X increase from 2018, and customers from over 60 cities can now receive next day deliveries in these categories (large appliances and furniture).

With these launches, Amazon will now have more than 50 FCs with more than 20 million cubic feet of storage space and over 200 delivery stations.

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

INDIA AND THE WORLD

21.1. Opinion | An Indo-European partnership can be a winning combination

Livemint, 11 Jul. 2019, Chitra Subramaniam

Prime Minister Modi said India’s trade and foreign policy moves would be seen and felt. We should begin with Europe

Ambition, intellectual stamina, footwork, mental agility and a capacity to read and enable trends are foreign policy basics. If India can ride them, converting everything into self-interest, we’re in business. At peak performance, it’s called “strategic leverage" in diplomatic parlance, something that is best used sparingly, ideally unseen.

If India does not seize the opportunity now opening up, the myopia will hurt. Both the Congress-led United Progressive Alliance and the Bharatiya Janata Party-led National Democratic Alliance must agree on the course ahead and it is Prime Minister Narendra Modi’s responsibility to consult, construct and lead. An ordinary Indian like most of us, he must cut through 70 years of Congress misrule. Rise. We voted for you.

For too long, India’s foreign policy has been Pakistan-centric, right down to beating them at organizing better birthday parties. Facetious? No, real. Entire generations of diplomats and journalists have made careers out of Pakistan-bashing in international forums like adolescents scoring debating points. “India slammed Pakistan" and “India thrashed Islamabad" are some examples of this silliness. New Delhi said it never wanted to make Kashmir an international issue but by repeating that ad nauseam, it did just that. It’s high time that changes. Pakistan has now boxed itself into a corner. Nations recognize it as a necessary evil with terror being its sole ATM. Secure your interests, India, but move on.

There’s moving on to do. There are many reasons for this, the most important one being economic. Post-war multilateral systems are failing and questions are being raised about whose interests the Bretton Woods organizations serve if not that of the richest. Why do some countries remain permanently frozen in a spiral of under- development and poverty for decades? Does the United Nations (UN) serve the world?

This century is Asia’s and India is poised to make a push. Poise must not be mistaken for posturing. I refer to power and the capacity to go out and secure what’s best for India at every opportunity. That’s what intelligent foreign policy is—direction and deftness that follow clarity of purpose, a clear understanding of whom New Delhi can trust when push comes to shove and the wisdom to keep enemies closer than friends. As trade and commerce clash with the rights and responsibilities of nations, developing a deeper relationship with the US government should be a priority, not dependence. The world’s strongest free market needs the world’s largest free market in a relationship of mutual respect.

In tandem, New Delhi must decide where its key poles of focus for growth and prosperity are. Oil is a case in point. India has been under US pressure to stop buying Iranian oil in a demand that is as ridiculous as it is petulant. For now, India is holding its own. The next few months will speak to that resolve. The world is watching.

Largely unreported in the Anglo-Saxon media, Eurasia is on the move. Russian President Vladimir Putin is playing a long and deep game, as is his habit, as is China’s Xi Jinping, and both giants are linking each other’s territories where convenient by land and sea, road and rail. It’s a fascinating weave and I suggest our mandarins get an inside track on that. India has to be part of every process in and around it. The time to sulk is over. Beijing is now dictating European policy via Greece, and most recently, Italy broke ranks with the G-7 to hold hands with China in a move that had dollars written all over it. “Money talks, wealth whispers" is not a string of smart words. It’s foreign policy.

India competing with China is futile. Beijing is on another plane economically, politically and militarily, as is Russia, and both are not democracies. However, there’s one area India can occupy in Eurasia—that of global mindspace to push for a world order that better reflects today’s world, a coming together of a comity of nations where self-interest and related regional interests intertwine. It is possible to be enlightened even if that means making a virtue out of a necessity.

Modi said India’s trade and foreign policy moves would be seen and felt. Good. May I suggest, sir, that we start with a Europe eager to partner with India? Why not strengthen India’s relationship with the European Union (EU)? The EU is one of India’s largest trade partners, accounting for some 12.9% of total Indian trade. For the EU, India is one of its top ten traders. This is behind China and the US, but all gains in diplomacy are not monetary. Confidence building and leadership count as much. Trade between India and the EU has increased by 72% in the last decade. More is possible. Ten EU countries have a trade surplus, while 18 have deficits, and among these, the largest deficits are of the UK, Spain and the Netherlands. In the service sector, India is the fourth largest exporter to the EU, while for Brussels, India is its sixth largest destination. The EU’s investments in India are growing and balancing out a belligerent US and dense China could be among the reasons.

Critical issues of global governance, including sustainable development, technology and innovation, international peace and security as well as strategic alliances in Eurasia are cards India must garner and use. India’s strongest card is its democracy. Europeans understand that as much as they do the price of peace and economic stability, their strongest unifier. An Indo-European leadership could be a winning combination.

India’s two self-inflicted problems must go. The absence of genuine ambition and its corollary in lack of confidence. We don’t know how to sell ourselves with dignity and quiet pride and swirl in fishbowls of brashness and bravado. Foreign policy is hard work, most of it underground, with flashes visible only when strategically necessary. Please learn.

New Delhi’s path is clear. Don’t give Pakistan more importance than it deserves. Induct talent in the foreign office that is young and free. Finally, be steadily ambitious. Without that, foreign policy will be files and resolutions and self-defeating Pakistan-bashing at the UN.

Chitra Subramaniam is an award-winning journalist and author

21.2. Cabinet approves signing of morandum of understanding between India and Russia in the field of Railways

Press Information Bureau, Jun. 13, 2019

New Delhi: The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, was apprised of a Memorandum of Understanding on the cooperation between Research Designs and Standards Organisation, under the Ministry of Railways, India and Railway Research Institute, Russia and Research and Design Institute for Information Technology, Signalling and Telecommunication on Railway Transport, Russia.

The MoU will facilitate exchange of information, expert meetings, seminars, technical visits and implementation of jointly agreed cooperation projects.

The MoU was signed in April, 2019.

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

22.1. Three Indian universities about to make it to QS top 150

IBEF, Jul. 03, 2019

Three Indian Universities have made it to the Quacquarelli Symonds (QS) Top 150 ranking – Indian Institute of Technology (IIT) - Guwahati, OP Jindal Global University and Anna University in Chennai.

Academic reputation, references per personnel, understudy workforce proportion, worldwide staff and global understudies are the variables which are mulled over while choosing the foundations

Past the rank 50, the organizations are assembled in groups. Indian Institute of Technology (IIT)- -Guwahati is positioned at the band of 71-80 while Anna University and OP Jindal are in the 101-150 band.

Academic Reputation, references per workforce, student-faculty proportion, international faculty and international students are the factors which are thought about while choosing the institutes. Beyond the rank 50, the institutes are gathered in bands. IIT-Guwahati is positioned at the band of 71-80 while Anna University and OP Jindal are in the 101-150 band. Singapore's Nanyang Technological University has topped the list pursued by The Hong Kong University of Science and Technology.

As Australia is the most- represented location in top 50, along with the nine featured universities, and University of Technology Sydney is in 11th spot. “They are focusing on the social sciences, arts, humanities and professional studies. They have stayed away from pure sciences, engineering and medicine which will make this achievement even more special”.

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

22.2. Opinion | Let’s step up efforts to get professionals in governance

Livemint, 02 Jul 2019, Parth J. Shah, Gaurav Goel

The question is whether the country has an ecosystem in place to ensure a steady supply of public policy professionals

Over the last few years, the landscape of governance in India has been undergoing several interesting changes. One such change is the increasing number of professionals, apart from career bureaucrats, working with the central or state governments. This openness of governments to leverage external talent has coincided with a greater interest among professionals—who did not take the civil services route—to engage with public policy and governance. The motivation among them to create an impact has meant that not only are recent graduates looking at public policy as a career choice, even working professionals are switching over from other sectors to this space.

But even as the idea of a career in public policy gains credence, there is much about this territory that is uncharted and needs to be understood.

We try to understand where the demand for public policy professionals stems from and whether there is adequate supply of such talent within the country. Let us first look at the different ways in which professionals are engaging with public policy and governance in India.

A small fraction of professionals are joining the bureaucracy as lateral entrants in fairly senior roles. However, if we were to focus on relatively younger professionals, several of them are engaged as advisers, consultants or officers on special duty (OSDs) in various ministries or government institutions such as the NITI Aayog, National Skill Development Corporation and Quality Council of India, among others.

Several others are engaged as fellows with central or state governments. States such as Haryana, Maharashtra and Chhattisgarh have experimented with recruiting chief minister’s fellows to work closely with the main administration, help deliver tangible outcomes and act as catalysts for change.

At the Centre, similar examples include the recruitment of Swachh Bharat preraks (inspirers) by the ministry of drinking water and sanitation, and young professionals by the NITI Aayog. The success of these fellowship programmes vary, based on how well they are structured, empowered, managed and embedded in the system.

A third category of professionals are working with private organizations focused on improving governance, such as Samagra, Vidhi Centre for Legal Policy and PRS Legislative Research, or think tanks such as the Centre for Civil Society, Centre for Policy Research and Observer Research Foundation.

But what exactly is fuelling this demand among professionals to be a part of, or work with, the governance system?

To begin with, a combination of hard skills and an approach focused on achieving outcomes. Their willingness to think out of the box and bring in a fresh perspective helps in solution design, especially as governance becomes more and more complex. The low capacity of the system, especially at the junior and middle levels, further makes professionals attractive. That they are largely free of vested interests also helps.

Over the coming years, the acceptance of and need for professionals in governance is only expected to increase. The question therefore is: Does India have an ecosystem in place to meet this demand for public policy professionals?

Further, while it may be easy to attribute the low number of professionals in direct decision-making roles in government, as opposed to advisory roles, to a pushback from career bureaucrats against “outsiders", there is merit in asking if there is a pool of professionals who have adequate training and understanding of governance to take on more responsibilities in government.

Currently, most professionals learn on the job. They don’t have any prior experience or training in public policy. Many of them have worked in other sectors or are graduates from other disciplines and have decided to change their career path, often driven by a desire to help the country.

If they do have degrees in public policy, they are usually from foreign universities. As such, the education and training they have acquired is not contextualized in the complexities of Indian politics, administration or development challenges. While some Indian colleges do offer public policy courses, their rigour and depth cannot be said to be at par with their counterparts abroad.

Given these challenges, there is a need for a premier Indian public policy training institution to emerge that can attract the best talents and equip people with the necessary skills and knowledge that can be applied in the Indian context.

Just as India can boast of having some of the best engineering and management training institutions, the time has come to establish a public policy school that can meet the demand for quality professionals in the domain. Whether the professionals who gain admission to such an institute work in the government or elsewhere, they need to be provided a combination of theoretical and experiential training to understand and engage with the realities of policymaking and implementation in India.

As the public policy landscape in the country opens itself to external talent, the time is ripe to take stock, evaluate and channelize the nascent interest in policy and governance among professionals into viable career tracks. India would eventually gain much from such an exercise.

Parth J. Shah and Gaurav Goel are, respectively, director of Indian School of Public Policy and founder & CEO of Samagra

23.1. Internet monopolies: India’s trust deficit

Livemint, 10 Jul 2019, Mihir Dalal

Regulators are waking up to the threat posed by the dominance of internet firms to competitors. About time too

Bengaluru: In June, the Competition Commission of India (CCI) announced that it was conducting a market study on e-commerce in India. While doing so, the antitrust regulator gave perhaps the first public indication about the novelty of challenges posed by the internet and giant platforms that it enables.

“In view of the rapid growth of electronic commerce and the rising importance of online trade in a large number of goods and services in India, the study will allow the commission to develop a better understanding of the functioning of e-commerce in the country and its implications for markets and competition," the CCI said at that time. The antitrust regulator made sure to add that the study does not form part of any investigation or inquiry but was “necessary given the novel issues and challenges that digital markets bring forth for competition regulation".

This is the closest the CCI has come to admitting that the present competition laws may not be equipped to deal with the shape-shifting, confounding challenges posed by the nature of internet platforms to competition regulation.

Globally, regulators and legislators have been waking up to the threat posed by the dominance of internet platforms to competitors. Over the past two months, various US publications have reported that Alphabet Inc.’s Google, Facebook Inc. and Amazon.com Inc. are all being investigated about competition-related matters. A candidate for the US presidency, Elizabeth Warren, has even called for the breakup of the largest tech companies and proposed a list of measures that would limit their power. In Europe, regulators have introduced laws that seek to rein in internet companies and have fined Google and Facebook billions of dollars for antitrust violations.

The offices of Facebook in India

Google in a spot

In India a number of internet platforms including Google, Facebook, Walmart Inc.-owned Flipkart, Amazon, Uber Inc. and Ola Cabs (ANI Technologies Pvt. Ltd) enjoy dominant positions in their respective niches. So far, while cases have been brought at the CCI against the likes of Google, Flipkart, Uber and Ola, the regulator has only found merit in one complaint against Google. In February 2018, Google was fined ₹136 crore for abusing its “dominant position" in search by the CCI in response to a complaint filed by Matrimony.com Ltd and Consumer Unity and Trust Society.

But recently, the regulator has increased its scrutiny in the space. Apart from the market study on e-commerce, the CCI has ordered another investigation to determine whether Google, which owns Android, has misused its dominance in the mobile software space.

In response to a query about the ongoing CCI investigation, a Google spokesperson said in an email that Android has “enabled millions of Indians to connect to the internet by making mobile devices more affordable", and that the company will demonstrate to the CCI that Android has “led to more competition and innovation, not less". The CCI didn’t respond to an email seeking comment.

The offices of Ola in India

The new ballgame

However, experts said Indian competition law needs to be upgraded to even recognize the nature of challenges posed by internet platforms. Indian competition law was made to curb anti-competitive practices by large industrial conglomerates in the last century. These companies could be evaluated using traditional metrics like revenues and asset size. Such measures are ill-suited to the internet space where metrics like gross merchandise value, number of users, time spent on the platform are often more relevant indicators of supremacy and future impact.

“Unless there are new guidelines and a new framework, it will be tough for the CCI to understand and evaluate competition practices of internet companies in a comprehensive manner," said Avimukt Dar, partner at law firm Indus Law. “Especially where M&A (mergers and acquisitions) is concerned the current triggers, turnover and asset size, may not apply in internet deals. Internet companies are very nimble when it comes to M&A and they often acquire startups that may not have revenues or sizeable assets but these acquisitions could still affect competition activity significantly."

What makes it tough to act against internet companies, as regulators in the US and Europe have found, is the consumer welfare principle that lies at the centre of antitrust regulation. Traditionally, antitrust regulation has focused on practices by dominant firms of predatory pricing, price collusion and others that finally cause harm to the end consumer. Often it is hard to argue that the practices of internet companies cause any direct financial harm to consumers. Many services such as Google and Facebook are free while others such as Amazon, even after they have attained dominance, continue to push prices lower.

The consumer welfare principle, however, does not take into account the nature of internet platforms, which are not only service providers to shoppers but also to other businesses. For instance, Ola and Uber serve both drivers and cab riders. Amazon delivers goods to shoppers but it also hosts third-party sellers. In the case of internet platforms, experts said the consumer welfare principle needs to be expanded to consider businesses that deal with internet platforms.

“The current competition law is focused on consumer welfare but as far as internet companies are concerned their sellers are also, in a sense, consumers, and the law has no provision to deal with this," said Anupam Manur, assistant professor at the Takshashila Institution.

Question of dominance

There are other major deficiencies in the competition law when it comes to understanding internet companies, Manur said. “Without establishing that a company is dominant, the CCI cannot take any action. But we haven’t clearly defined what the relevant markets are for internet companies. Are Ola and Uber the two largest cab companies? Or are they small players in a very large transportation market that included cabs, metros, trains, etc?" This is one of the defences used by internet companies—that their relevant market isn’t restricted to the internet space. For instance, Google and Facebook argue that they are small players in the larger advertising market, online and offline.

Additionally, because of automated technology and artificial intelligence there could be room for price collusion on internet platforms that may not be visible to outsiders, Manur said. As it stands, the competition law is not even equipped to detect some of the antitrust issues in the internet space, added Manur, an antitrust regulation researcher.

To be sure, the CCI has made some moves to bolster its ability to check the growing power of internet companies. In the recent past the CCI has discussed introducing a new metric of transaction value in acquisitions in addition to the turnover and asset triggers, one person familiar with the matter said on condition of anonymity. The regulator is also aware of the possibility of price collusion by internet platforms and their automation technologies, the person said.

In the internet space the CCI takes its cues from European competition regulators, this person said. Every year the CCI officials meet with their counterparts from Europe and exchange notes about the latest developments in the regulation of internet companies, among others.

Antitrust law is just one component in an interlinked, seemingly overlapping world of internet regulation where matters of data privacy, sovereignty-related matters, smartphone addiction all converge. In the US, some have even called to regulate internet firms the way tobacco companies were reined in at the end of the last century. Such an approach, however, may not be suited to a largely-poor country like India where increasing the adoption of the internet is considered the preponderant objective that dwarfs the problems created by internet companies.

For now regulators will have to demarcate clearly each of the regulatory spheres in the internet space and introduce updates to existing laws if they are to curb the excesses of internet companies while retaining their positive impact on consumers. “Antitrust law does not need a major overhaul but certain tweaks are needed in order to deal with the challenges posed by online platforms," said Nisha Kaur Uberoi, national head of the competition law practice at Trilegal.

“It should ideally include Big Data as one of the factors for determining dominant position. Certain changes are also needed to existing merger regulation provisions in order to deal with acquisitions of small, but successful startups with a quickly growing user base and significant competitive potential by dominant platforms. There is a need to introduce provisions making acquisitions in the digital space notifiable to the CCI based on transaction value and not the current turnover and asset threshold," said Uberoi. She added that acquisitions in the internet space should be scrutinized by the CCI on a case-by-case basis rather than adopting a blanket approach to evaluate M&As.

Manur said it was imperative to add the data footprint of an internet firm as one of the metrics in considering the impact on competition. “The consumer data owned by an internet company is one of the most important indicators of its dominance and impact. In gauging M&As in the internet space this factor needs to be added to the list of considerations."

Reliance on the future

Apart from the present internet platforms, there is another major player in the internet space that could soon be relevant in considering competition regulation: Reliance Industries Ltd (RIL).

Mukesh Ambani’s RIL, which owns Reliance Jio Infocomm Ltd, has announced aggressive plans to expand its footprint in the internet space including in online retail, content and business-to-business commerce. Over the past year RIL has bought several startups including music app Saavn, chatbot platform Haptik, online education provider Embibe and logistics service Grab A Grub. RIL also owns the media firm Network18.

In January, Ambani announced that RIL will roll out its e-commerce platform to more than one million retailers and store owners in Gujarat as part of a nationwide plan. RIL didn’t respond to an email seeking comment.

Along with the dominance of internet platforms, the interplay of Jio with RIL’s media business and its fast-expanding digital presence may in the future test the ability of competition regulation to cope with the challenges of the internet era.

23.2. OYO Hotels partners China's Meituan

PTI, Jun. 28, 2019

New Delhi: OYO Hotels and Homes Thursday said it has signed a year-long strategic partnership with Meituan, China's leading e-commerce platform for services.

In the first phase of the partnership, OYO Jiudian (Hotels) - its Chinese subsidiary - will list 8,000 of its standardised accommodations on Meituan Hotels platform, a statement said.

This will further assist OYO Hotels in driving consumer traffic, data operations and brand promotion, it added.

This partnership combines OYO Jiudian's capacities in innovative transformation, business development, management and operations with Meituan's supplementary advantages in platform, open ecosystem, user base, traffic and technological innovation, the statement said.

"We are pro-actively delivering on China's focus on reforming the supply sector and are always open to partner with like-minded and customer-focused organisations that are contributing to the development of the travel and hospitality industry," OYO China COO Sam Shih said.

This partnership with Meituan is a reflection of OYO's commitment to providing quality living spaces to consumers and creating higher value for small- and medium-sized standalone hotel owners across China, he added.

OYO Jiudian is present across 337 cities in China, including Hangzhou, Xian, Nanjing, Guangzhou, Chengdu, Shenzhen, Xiamen and Kunming, among others with five lakh rooms as a part of its chain in the country.

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

24.1. Trump issues a fresh tariff threat to India before trade talks this week

Livemint, 09 Jul. 2019, Asit Ranjan Mishra

Officials from the US and India are set to meet this week to break the trade impasse

In March, the US decided to withdraw GSP benefits to India after talks between the two broke down

New Delhi: Ahead of official-level trade talks between India and the US this week in New Delhi, President Donald Trump has again warned India that its high tariff regime is not acceptable to the US.

“India has long had a field day putting Tariffs on American products. No longer acceptable!" Trump tweeted on Tuesday.

India has imposed retaliatory tariffs on 28 US products, including almonds and apples, starting 5 June, a year after announcing them to counter the increase in steel and aluminium tariffs by the US and the withdrawal of duty-free benefits to Indian exporters. Following the move, the US raised the dispute at the World Trade Organization (WTO). India also raised customs duties on a host of products, including alloy steel and auto parts, in the budget presented on 5 July.

Assistant US trade representative (USTR) Chris Wilson and USTR deputy assistant Brendan Lynch are expected to meet Indian officials to break the deadlock in trade ties.

Jayant Dasgupta, India’s former ambassador to WTO, said this could be a ploy on Trump’s part to put pressure ahead of the trade talks to extract more from India. “Trump also tweeted on similar lines ahead of his talks with Modi last month. It is now following a pattern," he added.

On 27 June, ahead of his meeting with Prime Minister Narendra Modi on the sidelines of the G20 meeting in Osaka, Trump tweeted: “I look forward to speaking with Prime Minister Modi about the fact that India, for years having put very high Tariffs against the United States, just recently increased the Tariffs even further. This is unacceptable and the Tariffs must be withdrawn!"

Briefing reporters on 5 July, external affairs ministry spokesperson Raveesh Kumar confirmed that trade was one of the key issues discussed in the Modi-Trump bilateral at Osaka. “I think it is important to understand that in any relationship, which is multidimensional like India and the US, there are bound to be certain differences, there are bound to be perspectives where we share a different approach. How we handle it is the key and flowing out of that meeting what we agreed was on all these issues w e will continue to talk," he said.

Dasgupta said India should take the US complaints in an objective manner without compromising its larger interest. “We should try to find solutions where possible. Similarly, the US should also accommodate our market access issues with a helpful attitude," he said.

Trump has often termed India a “tariff king" and repeatedly pointed to the 50% duty it imposes on imports of Harley-Davidson motorcycles.

Last month, commerce minister Piyush Goyal said India accepted the decision of the US to withdraw GSP benefits to its exporters “gracefully", and would work towards making exports competitive.

In March, the US announced its decision to withdraw the preferential duty benefits to India after talks between the two sides broke down.

However, the US had deferred the withdrawal of GSP as Indian elections were underway. This had raised hopes that the two sides would re-engage to try and resolve their differences after the Modi government took charge. On 1 June, though, Trump issued the presidential proclamation and withdrew GSP benefits given to India, effective 5 June.

24.2. Turning the spotlight on Zambian emeralds

Livemint, 28 Jun 2019, Sohini Dey

Indian jewellery brand Diacolor has acquired the Inkalamu, a 5,655-carat emerald unearthed from Zambia’s Kagem Mines, the world’s single largest producer of emeralds

Zambian emeralds have becomes increasingly popular in recent years, with luxury brands like Chopard, Fabergé’s and Bulgari incorporating the gemstones in their designs

Walking into the Diacolor boutique at Delhi’s DLF Emporio mall could make even seasoned jewellery buyers feel like a kid in a candy shop. Tiered necklaces fringed with tourmalines, floral earrings studded with sapphires, diamonds everywhere you look, all paired with exquisitely jewelled De Grisogono watches. But the brightest baubles in the boutique are eclipsed these days by the Inkalamu, a 5,655-carat emerald, which is the most expensive single emerald rough ever sold by mining company Gemfields. Acquired by Diacolor in November during the Gemfields emerald auction in Singapore, the gemstone, whose name means “lion" in the Zambian language Bemba, was unveiled in India earlier this month.

The Inkalamu comes from Zambia’s Kagem Mines, at present the world’s single largest producer of emeralds. According to Gemfields, which acquired a 75% stake in the mines in 2008, Kagem accounts for approximately 25% of global emerald production. The Inkalamu isn’t even the biggest find from the mines—in 2010, Gemfield unearthed a 6,100-carat emerald which it christened Insofu (meaning baby elephant). The Insofu too is part of Diacolor’s collection of enormous gemstones, acquired in 2017.

A High Jewellery necklace by Bulgari

“It’s the rarity (of the gemstones) that stands out the most—in certain cases it’s the size, in others it’s the colour, and sometimes it’s a mix of both," says Rishabh Tongya, creative director, Diacolor. Since he acquired a large diamond from South Africa about 13 years ago, Tongya has been building a collection which encompasses emeralds, Mozambique rubies, fancy coloured diamonds, and sapphires, including a pair of yellow sapphires approximately summing up to 300 carats. Tongya sees major potential for gemstones, especially emeralds. “India has been, in general, a gold-consuming society in the last 150 years, but if you rewind the story about 500 years ago, then the Mughals and Indian maharajas were the (biggest) connoisseurs of emeralds," he says, adding that the green gems will continue to be popular for the foreseeable future. “We see a demand for emeralds across the board—from someone who wants to wear a ring for rashi ratan (a gem corresponding to their sun sign) to those who want to make an investment."

The Inkalamu.

The most precious emeralds have historically come from Colombia, whose valuable mines were thrown open to the world with the Spanish conquest of the region in the 16th century. Zambian emeralds are comparatively newer, but increasingly found in the designs of some of the world’s most hallowed jewellery and watch brands. “We are experiencing strikingly increased demand for high- quality Zambian emeralds from the major brands, particularly in Europe," Elena Basaglia, Gemfields’ London-based gemologist, told the press in October, when the Inkalamu was unveiled.

Notable pieces include Fabergé’s Lady Libertine II watch, composed of a central cabochon Kagem emerald surrounded by smaller carved emeralds with diamonds and mother-of-pearl, Chopard’s Palm D’Or-inspired jewellery and watch for its Green carpet collection in 2016. Bulgari also incorporates the gemstones extensively in its high- jewellery collections. Closer home, brands like Amrapali, Zoya by Tanishq and Ganjam have incorporated Zambian emeralds in their creations.

Fabergé Lady Libertine II watchGreen Carpet earrings by Chopard

In the face of growing demand, one of the major challenges in collecting gemstones today is ensuring ethical and sustainable sourcing. “It’s not just about having stringent policies, but even just as a human being one doesn’t want to be working with people affiliated with mining malpractices," says Tongya, who works with organizations like Eco-Age, a UK-based sustainability and communications consultancy firm. “We are associated with transparently-run companies and follow the best practices in the industry to ensure the provenance and origins of the gemstones. Today, people want to be sure that their jewellery is coming from the right sources."

But there’s more to do, particularly for the Zambian community that mines these gemstones. Speaking to the media during the Inkalamu’s unveiling in Delhi, Zambian high commissioner Judith K.K. Kan’goma-Kapijimpanga urged the Diacolor team to build a local polishing unit in Zambia, which she said would elevate the financial status of miners. Tongya’s father, the brand’s founder, Rajkumar Tongya, has promised to help. As for the Inkalamu, Tongya hopes to collaborate with museums in the country to showcase the gem along with other rare pieces from his collection. “We want to promote awareness about emeralds and their consumption story in India," he says.

25.1. Veracruz invests in almond growth: Group is planting 2,000ha of almond trees in Beira Baixa, Portugal, at a cost of €50m

Fruitnet daily news, Carl Collen, 4 Jul. 2019

Portuguese-Brazilian group Veracruz is launching what it has described as a "mega almond plantation" in Portugal, at a cost of some €50m.

Veracruz is currently planting 2,000ha of almond trees in Beira Baixa, seen as one of the most promising regions in the Interior of Portugal, with the goal of reaching 5,000ha.

According to the group, the project also includes the installation of a shelling and processing plant for almonds.

Once completed, there will be more than 3m almond trees on 2,000ha of land, spread over five farms located in two counties of the Portuguese interior, Fundão and Idanha-a-Nova.

The investment is one of the largest agricultural projects ever carried out in the district of Castelo Branco, and has been recognised by the Portuguese Government as a PIN (Potential National Interest), a directive that highlights enterprises with relevant impact in the country and which promote economic, social, technological and environmental sustainability.

When the plantation is fully installed and production is fully up and running, the fields will produce 4,000 tonnes of almonds, all of them traditional Mediterranean varieties.

This is the first phase of Veracruz's investment which, in the future, and through the opening of capital to other investors, should reach 5,000ha of almond trees planted.

"One of our missions is to make Portugal an important player in the sector of nuts in Europe," sid said David Carvalho, co-founding partner of the company that expects to export about 70 per cent of production. "Due to its soil and climate characteristics, Portugal has great potential to become an important reference for almond cultivation, which currently is concentrated in California, accounting for 80 per cent of total production.

"On the other hand, because of its geographical location, we are very close to consumers, since Europe accounts for more than 40% of global consumption," Carvalho continued. "It is possible to enhance the reputation of the 'almonds of Portugal' brand, similar to what has happened in the wine and olive oil sectors."

The venture also foresees, by 2021, the installation of a shelling and processing plant for almonds in the same region, with an investment of €6.5m.

25.2. India to overtake Japan to become 3rd largest economy in 2025

IBEF, Jul. 15, 2019

India will this year overtake the UK to turn into the world's fifth greatest economy and is ready to surpass Japan to be the third largest in 2025.

In May 2019, the re-election of BJP government which is led by Prime Minister Mr Narendra Modi to second term of office, in economic survey 2019-2020, the Ministry of Finance has allocated an economic roadmap to 2025.As per the Survey, the major goal is to transform India from a US$ 3 trillion economy in 2019 to a US$ 5 trillion economy by 2025.

Indian GDP will reach US$ 5.9 trillion in 2025, once the India will overtake the UK to become the world’s fifth largest economy in 2019, surpassing Japanese GDP to make India the world's third-largest economy.

India was positioned 77 out of 190 countries that are incorporated on the World Bank's Ease of Doing Business Index for 2019. The role of investment is viewed as a basic empowering influence for development, rapid productivity growth and new innovation, boosting employment growth.

The size of the Indian buyer market is forecast to increase from $1.9 trillion in 2019 to $3.6 trillion by 2025.

But to accomplish this goal, the country's new economic roadmap features the significance of making a virtuous cycle of investment, funds and exports in order to maintain rapid economic growth over the next five years.

"Despite the wide range of economic challenges facing the country, in second term of BJP government- led by Modi, the economic outlook looks positive, with GDP growth forecast to average around 7 per cent per year over the 2019-2023 period”.

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

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Friday 19 July 2019

NEWSLETTER, 20-VII-2019

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

– INDUSTRY, MANUFACTURE

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

NEWSLETTER, 20-VII-2019

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

- AGRICULTURE, FISHING & RURAL DEVELOPMENT

- INDUSTRY, MANUFACTURE

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

INDIA AND THE WORLD