Archive for July, 2015

15th July 2015: Session with National University of Singapore, New Delhi

July 30, 2015

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30th June 2015: Delhi MSME Summit

July 30, 2015
Delhi MSME Summit, 30 June 2015,  New Delhi

Delhi MSME Summit, 30 June 2015, New Delhi

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Modi government overhauling sister-city partnerships to attract foreign investment

July 29, 2015

The Modi government, with an eye on attracting foreign investment, is overhauling the sister-city arrangement that Indian cities have to add more teeth to the initiative and leverage partnerships for economic gains.

India has over 100 sister-city partnerships that have developed over the decades and remained largely ornamental, except for helping to foster closer cultural bonds. The BJP-led government, which has put the economy at the top of its foreign policy endeavours, hopes to transform these arrangements into tools for attracting investment, officials well-versed with the initiative told ET.

“What hitherto remained an arrangement for cultural exchanges and peopleto-people contacts will now be leveraged for economic goals,” Gopal Baglay, joint secretary in charge of the ministry of external affairs’ newly formed states division, told ET.

“The idea is to leverage sister-cities and sister-state partnerships and arrangements to bring investments, ideas for urbanisation and also find markets for products and businesses of respective cities and states. It is a work in progress and the effort is to provide a platform so that Indian states and cities can leverage twining arrangements for optimum benefits.”

The states division in the ministry is at the forefront of forming ideas and implementing the sister-city and sister-province arrangements. Over the past year, new sister-city arrangements have been launched with China, Japan and Nepal. When Prime MinisterNarendra Modi visited China last May, agreements were signed for three sister-city partnerships: ChennaiChongqing, Hyderabad-Qingdao and Aurangabad-Dunhuang.

It was also decided to establish state-level ties between Karnataka and the Chinese province of Sichuan. India also launched its maiden state leader’s forum with China. Such a forum will be formed with countries in Europe and Asia in the near future in the second stage of the initiative. Last year, Modi’s Lok Sabha constituency Varanasi entered into a sister-city cooperation agreement with the Japanese city of Kyoto with the aim of upgrading facilities of this major pilgrimage town.

Japan is actively involved in an industrial partnership with the town of Neemrana in Rajasthan. Recently, Gujarat chief minister Anandiben Patel led a business delegation to China to strengthen state-level partnerships.

Punjab is contemplating closer business ties with Chinese provinces. To boost the economy in the landlocked northeast, the plan is to pair cities in those states with cities inMyanmar. Officials described this state-level partnership in the spirit of cooperative federalism.

During Chinese President Xi Jinping’s visit to India last September, an agreement was signed to establish a sister-city relationship between Ahmedabad and Guangzhou. Gujarat and Guangdong became sister-provinces. In October 2013, three metros of India found sister-cities in China.

The pairs were Delhi-Beijing, Bengaluru-Chengdu and Kolkata-Kunming. Officials pointed out that China has mastered the sistercity and sister-province initiatives and leveraged it to the optimum for economic benefit. It’s learnt that China has over 2,000 sister-city arrangements with several countries.

Source: Economic Times

India equity fund inflows near record as retail investors return

July 27, 2015

Investment in Indian equity mutual funds by domestic retail investors has hit the highest since 2008, signalling the return of individual players drawn to a stock market that is outperforming physical assets such as gold and real estate.

Domestic net inflows into equity mutual funds in June were the second-highest ever – second only to January 2008 before the financial crisis took hold, according to data from the Association of Mutual Funds in India. Retail investors are now set to make July the 15th straight month of net inflows, fund managers say.

Retail investors are helping extend an almost two-year stock market rally just as India’s $100 billion social security and pension fund too begins to invest in equities for the first time. “Retail investors are finally coming back to the market, after almost five years of muted participation,” said Sundeep Sikka, chief executive officer of Reliance Capital Asset Management.

The increase in domestic investors, fund managers say, could help reduce price volatility, even if domestic retail investment flows remain a fraction of the size of foreign investment in India. This matters, at a time when an expected U.S. interest rate hike could lead to some foreign investors pulling out in the short term.

Mutual funds owned about 3.33 percent of India’s stock market capitalisation compared with 25.3 percent held by foreign institutional investors, as of March, according to an analysis of the constituents of the BSE 200 index by investment bank Kotak. But an outperformance by mutual funds, compared to the broader market, is helping to increase that proportion. The top 100 equity mutual funds, which manage a combined $42.1 billion in assets, gained about 21.4 percent over the past year, beating a 10 percent rise in the benchmark NSE index, Lipper data shows.

Source: Reuters

Wharton School to hold Economic Forum in India and in US

July 26, 2015

For the first time ever, Wharton School of the University of Pennsylvania will conduct its global India-focused conference — the Wharton India Economic Forum (WIEF) both in India and at its Philadelphia campus next year, to mark the 20th anniversary of the conference. The Wharton India Startup Competition, which will provide startups a platform to showcase their ideas, is a major part of the event.

“Over the years, we have realised that we are uniquely positioned to support India and Indian businesses by conducting WIEF in both India and in the US,” said Aditya Nair, an MBA from the class of 2016 and one of the organisers of the competition. The conference will bring together industry leaders, investors, government leaders and Wharton professors to discuss specific challenges facing the Indian economy and business. Wharton was in the eye of a storm in 2013, when it cancelled now Prime Minister Narendra Modi’s keynote address at the India Economic forum.

The startup competition, to be held in Mumbai on January 5 next year, will give out prizes in multiple categories for the best emerging startup, best established startup and best social impact startup in India. Select winners will be flown to Philadelphia to present their startup at Wharton in February.

The competition is open to any individual with a business idea or model incorporating products or services targeting the Indian market or Indian products or services targeting the US market.”The competition has grown to become a seminal event for startups aspiring to gain exposure to and funding in both India and in the US. Many startups have received funding offers at the competition itself,” said Nair.

Presha Paragash, a Wharton MBA from the class of 2014 and cofounder of an early stage investment firm focusing on Indian startups, Sol Primero, launched the competition in 2014 to raise awareness about the startup ecosystem in India. “There were good startups emerging out of India, but people were not too familiar with how exciting India was in the space,” he said. This year, the competition has received 250 applications, and Paragash expects the number to go up to 600-800 next year.

With the boom in ecommerce and startups and rising investor interest, global business school alumni are focusing on the space. Stanford alumni have launched a Stanford Angels and Entrepreneur chapter in India, and Harvard Business School alumni run HBS Alumni Angels India to bring together alumni as well as other investors to invest in early stage businesses. “It is a fantastic platform to bring alumni together to generate high quality deal flow for investors,” said Stanford alumnus and founder of EduKart Ishan Gupta, who has joined the Stanford group as an investor.

Wharton alumni have had informal discussions on launching a separate group for investors and entrepreneurs, said alumnus Anirudh Suri, founding partner at India Internet Fund.

Source: Economic Times

Govt may permit 100% foreign investment in white-labelled ATM operations

July 26, 2015

The government is likely to allow 100 per cent foreign direct investment (FDI) in white labelled under automatic route to promote financial inclusion.

A draft Cabinet note has already been circulated by the Commerce and Industry Ministry for inter-ministerial consultation, sources told PTI.

The move is aimed at increasing the number of automated teller machines (ATMs) in smaller cities and towns.

According to the current FDI policy, is allowed under the government approval route.

According to the guidelines, white labelled ATMs to be set up by non-bank entities would provide banking services to customers, based on cards (debit/credit/prepaid) issued by banks.

White labelled ATMs are set up by private non-bank companies that own and operate their own brand of ATMs.

According to the guidelines, the non-bank entities must have net worth of at least Rs 100 crore. According to sources companies including Ltd andbe benefited from the move.

Currently, there are over 1.82 lakh ATMs operated by 54 public, private and foreign banks in the country.

The government has already relaxed the in sectors including defence, railways and construction to boost foreign investment in the country.

In 2014-15, FDI into the country increased by 27 per cent to $30.93 billion.

Source: Business Standard

Baked goods industry to show promising growth at 3 per cent over next five years: Puratos Taste Tomorrow 2015 survey

July 25, 2015

The consumer wants to take control of what he eats, and how he does so. These and other new `Consumer Rules’ formed the theme for the launch of Taste Tomorrow 2015, an in- depth study into consumer behaviour, attitudes choices and future trends related to bakery, pastry, patisserie and chocolate,conducted by Puratos India, a subsidiary of the 90 years plus Puratos Group, a leading manufacturer of specialist products for the bakery, confectionery and catering industries.

Puratos formally released the results of its research study to its customers including representatives and senior level executives from the bakery and confectionery industries at an event held at the Hyatt Regency Hotel in Mumbai, recently. The research comprised a qualitative component conducted in seven trend-setting cities viz San Francisco, Sao Paulo, Paris, Istanbul, Moscow, Shanghai and Tokyo, while the quantitative component was conducted across 25 countries, including India, with11,000 plus respondents .

The India survey brought out some strong signals for the industry:
 62 per cent consumers believe that food will be more diverse in India by the year 2025
Upto 46 per cent consumers in India expect food to be of a better quality by 2025
46 per cent of consumers in India expect food to be healthier by 2025.
86 per cent Indian consumers find whole grains and whole meal to be healthy and 75 per cent feel it adds something to taste also.
76 per cent of consumers would appreciate a live bakery where they can see freshly baked items on the spot.

Speaking on the launch of the Taste tomorrow 2015 Report, Dhiren Kanwar, Country Head-India, Puratos told Hospitality Biz, “It is research and events like these that differentiate Puratos from its competitors.Our customers have two to three worries: Not knowing the future of our segment; what are consumers demanding form them. Any serious business person wants to know how his business is going to be impacted, what with the trends in this segment changing very fast, even every day. For example, today there is demand for combinations in baked goods so you have a townie , the combination of a brownie and a tart, bronuts etc, he explained.”

According to Kanwar, Taste Tomorrow 2015 is part of a series of events held every three years that take place in different parts of the world to provide unique global and local insight into emerging trends in the baked goods sector that help manufacturers with actionable information to enable them to adapt their product to current and future consumer needs.

The theme of the event Consumer Rules was chosen because the survey found that when consumers across the globe buy bread, pastry, chocolate or patisserie, their decisions are driven by three key criteria: freshness, healthiness and taste. Those three elements form the baked goods triangle.The industry needs to consider all three to meet consumer needs.

Asked about, why as ingredient manufacturers they are driven to conduct such surveys, Kanwar commented “We are not here just to sell ingredients. We look at the entire picture, the marketing, the technical services – wherein using our technology, our chefs actually create products creatively and showcase it to our customers which you will see during the workshops, where the chefs show them ways of actually using the ingredients and products. Agreeing with him, Puratos Marketing Director, Asia Pacific, Priscillia Ooi commented, “We translate,transform the data into the finished product. Following the finished good approach allows us to be solution providers as our customers can envision the actual product. Even though we are ingredient manufacturers, you will never see us bringing the raw ingredient, we will bring a bagel, cupcake, naan doughnuts etc.

Puratos’ belief is that it is important is to convey the concept to its customer and also translate it to the consumer “So while talking B to B we are constantly thinking B toC . Therefore we are the one’s to invest in knowing the Consumers to help our customers. We will continue coming up with innovative products and help our customers which is why 2,5 per cent of our profits into research”.

Talking specifically about the results of the Indian response to the survey, Ooi, said that there was much hope for the local industry as research indicated that “the baked goods industry was growing at a rate of 3 .5 to 4 per cent per annum as compared to 1-2 per cent in countries like Japan where the market was more saturated. ” She added that the Indian market is slated to grow at 3 per cent over the next five years which was good news for the Indian industry.”

Acc to Ooi, Puratos believes in investing a lot in market survey because consumer preferences are constantly changing, even every day, and it is important for consumers to lead demand rather than manufacturers simply presenting their products. “We have sessions for insights into Consumer behaviour like this for hotel industry F&B departments and we also go through the distributor,” said Ooi.

Explaining further how their products and surveys help their customers Kanwar said, “Our customers may be divided into three verticals. The first is industry. For instance, Britannia is one of our customers here.They wanted to create a liquid filling for their cake which would stay fresh or have a shelf life for three months. Because of our technology we were able to create a product for them, which was very successful too.Where could you have had something like this before? The second vertical is the Food service vertical where we have Subway, McDonalds , Burger King, KFC who use our products for burgers, buns, desserts,etc. The third is that of entrepreneurs or the artisan vertical- people who have one or two shops, non mechanized operations, one oven etc. We estimate about 80,000 different bakeries in India. These enterprises appreciate products like ours as they cut down on labour costs, increase operational efficiency and provide valuable insights into their customers’ behaviour.” he concluded.

The event also saw other speakers from the industry share their outlook and inputs, including Vishal Kapur, President Citymax Hospitality India Pvt Ltd, who have brought Krispy Kreme doughnuts to India, as well as Dr Sujata Udeshi, Clinical Nutritionist, who commented that the fact that a nutritionist was being invited to such a forum in itself spoke volumes about the beginning of health driving consumer behaviour and products in this industry in the future.Uday Varma, Commercial Director, Tesco and Kiran Hazari, VP Sales, Puratos were other speakers.

Some Observations of the Study: The study presented Four Key Observations to better understanding the new‘Consumer rules’ The first was what Puratos calls The Age of Abundance : The survey indicated that the consumer today demands and is searching for innovation in products, diversity and variety, with hybrid products becoming the need of the day with examples like a combination of a doughnut and a croissant called a Cronut, and other combinations of Doughnuts and muffins, Brownie and Doughnut- a bronut,etc as also an interest in ‘Green Velvet’ cakes etc, all of which indicates a demand for a dynamic confectionery market.

It was also found that consumers wanted their products to match their on- the- go lifestyles – with preferences for smaller sizes, food that can be eaten with one hand etc. To go along with busy lifestyles and an insistence on convenience. ‘Simple, snacking, easy to eat, pops, were some key phrases that stood out. As a solution to layered cakes that are difficult to consume on the go, is the Layered- cake- in- a- jar concept. Cupcake trucks in the US, Japanese food vending machines are all responses to this demand.

Food Under Pressure : the next observation reveals that consumers believe that food quality and healthiness are under pressure and that food in the future will be of a lower quality, less healthy, less fresh, less natural and more expensive. This feeling of pessimism was across the board,with those in Asia Pacific, showing more optimism than others. As far as India is concerned, only 46 per cent expected food to be of a better quality by the same year. Preferences are thus veering towards fresh, healthy and organic with a growing number expecting food to be more natural, sustainable and fresher by 2025. 46 percent also expect food to be healthier by 2025 .

 Lost in Translation, as the the third observation was named has to do with the general confusion that consumers feel with conflicting message available through different media regarding what is good and not good, healthy and not etc and who or what to believe. Myths abound in such circumstances about food so that consumer beliefs are based on perceptions and not facts, the survey revealed. In India people were more optimistic and do believe that baked goods do have a health component,which gives much hope to Indian manufacturers, said Puratos.

What came across strongly was that Consumers want to take control, and have a say in what they eat. Therefore open kitchen concepts are getting popular where customers can actually see what is going on in the bakery, or for example, choose their own ingredients for bread, choose their own toppings etc.

 My Sustainability: the fourth observation- and the Puratos survey found this to be a critical factor for the baked goods manufacturers- deals with sustainability from the consumers own perception. 44 per cent were in favour of increased waste management. It was found that if any of the three elements of the triangle, freshness, taste and health were found to be inadequate, customers simply throw away the product, leading to much waste and ultimately this affects all stakeholders in the industry.

Therefore key take-backs from the survey for baked goods industry were:The consumer wants more diversity, innovation, better taste, freshness, healthier options and more convenience in food products.The peep into the psychology of its consumers will be of great help to industry to strategize better for new product development and to win consumer confidence.


Simply Put: Taking a composite view of foreign investment in India

July 25, 2015

Foreign investment can take multiple forms, and involve multiple investor classes. An overseas investor can buy directly into a company involved in manufacturing, infrastructure development, banking, insurance, retail, etc. If the investment is 10 per cent or more of a company’s equity, it is classified as Foreign Direct Investment (FDI) as per OECD norms. Foreign Institutional Investors (FIIs) or Foreign Portfolio Investors (FPIs) purchase a company’s stock through the stock markets. Foreign Venture Capital Investors (FVCIs) put money mainly in new or relatively new ventures from which conventional investors stay away, given the risks involved. Then, there are investments by Non-Resident Indians (NRIs). These overseas investments can be in the form of equity capital, Foreign Currency Convertible Bonds or FCCBs (even though these become foreign investment only when the bonds are actually converted into shares), or investment in shares of Indian companies when they are listed in overseas exchanges through the issue of American Depository Receipts (ADRs) or Global Depository Receipts (GDRs).

The government’s traditional approach

India needs foreign investment especially to finance its current account deficit — a broad measure of trade in goods and services. Its foreign investment policy has long been designed to encourage more of FDI, which is considered to be more enduring because it manifests itself in plant and machinery on the ground, besides helping to develop skills, create jobs, and diffuse technology and global production practices.

Policymakers have been less welcoming of FPI, as it is considered relatively ‘fickle’. The facts don’t always bear this out, though. Cumulative net FII investment flows into India since November 1992 (when they were first allowed) have amounted to $ 227 billion — $ 169 billion in equity and the rest ($ 58 billion) in debt. FIIs have generally remained invested in India; the few episodes of selloffs have largely involved debt rather than equity. FIIs have typically sold shares only to reinvest in fresh purchases.

There are investment caps or ceilings on specific sectors. While 100% foreign investment is allowed in many sectors from food processing to railway infrastructure to non-banking finance companies, there is a 74% cap in private banks, and 49% in insurance, defence and commodity exchanges, clearing corporations, stock exchanges and depositories.

Within the overall cap, there have been sub-ceilings for various categories of foreign investors. So in commodity exchanges, for instance, FDI is capped at 26%, while combined FPI cannot exceed 23%, which applies to even stock and power exchanges or depositories. And even when FIIs are allowed to invest 23% or more in certain sectors, an individual FII or FPI can invest only up to a maximum of 10%.

The change in government’s policy now

The approval of the so-called ‘composite cap’ has no effect on the

sectoral ceilings. Thus, foreigners cannot own more than 49% in any insurance or defence venture. But the current distinctions between FDI, FPI and other categories of foreign investors have been abolished. The colour of the mice (or cats!) does not matter so long as these are foreign, and so long as they don’t own more than the prescribed limit, if any, in a particular sector.

Composite cap applicable to all sectors except two

The proposed composite cap will be applicable to all sectors except defence and banking. So for private banks, portfolio or FII investment can go up to a maximum of 49%, and the overall limit will be 74%. For public sector or state-owned banks, nothing changes — as the foreign investment limit was restricted to 20% much earlier. In the defence sector, within the 49% investment ceiling, foreign portfolio limits will continue to be 24%. The change will be reflected more in investments in commodity, stock and power exchanges. Prior to the composite cap, portfolio investment was capped at 23% in these segments — it can now go up to the full sectoral limit of 49% without any distinctions.

A potentially significant decision

A composite cap helps remove uncertainty for both investor and investee companies. It provides greater clarity and legal certainty, eliminates inconsistencies, lowers transaction overheads, and does away with the costs of complying with multiple sets of rules and dealing with multiple regulators and authorities. It should boost overall investment flows, especially in sectors with multiple caps or ceilings such as commodity, power and stock exchanges, besides credit information companies. Foreign investors such as the Government of Singapore, which has a few investment arms in India, may not have to worry now about breaching limits while buying into companies as FDI or FII.

There are some concerns

Concerns in the defence sector relate to national security, and in the banking sector to ‘hot money’ flows — or the threat of volatile capital — and to the potential risk of a group of investors joining hands, especially through the portfolio route, to take control of banks. The RBI had flagged the latter concern in the case of a few old private banks — therefore, even now any investment of 5% or more in the banking sector has to be approved by the central bank. There are also worries about laundered money or terror funds coming into certain sectors, apart from attempts to ‘round-trip’ money back into the country.

But composite cap isn’t an altogether new idea

Finance Minister Arun Jaitley announced the government’s intentions in his Budget speech in February. Earlier in 2013, then Finance Minister P Chidambaram had said that the government would remove the ambiguity over FDI and FII, and follow global best practices. And back in its Budget of 2002-03, the NDA government had said that portfolio investment would not be subject to sectoral limts except in specified sectors. For well over a decade, several official committees have addressed the issue of boosting foreign investment: in 2002, the then Planning Commission member N K Singh headed an inter-ministerial steering group on FDI; there was the Ashok Lahiri Committee in 2003-04; the U K Sinha Committee in 2010 and, finally, the Arvind Mayaram Committee which submitted its report in 2014.

Source: The Indian Express

Taiwan to participate in Make In India campaign

July 24, 2015

Taiwan is exploring investment opportunities in India in a big way, said its trade envoy here.

Guann Jyh Lee, head of their missions’ economic centre in India, told Business Standard: “For the past decades, Taiwanese investors contributed a lot in China’s growth story and they were also the largest FDI (foreign direct investment) contributor. Despite present trends, China will still grow but how fast it will continue the growth needs to be seen.  However, India  is expected to be the second largest and the world’s fastest growing economy in the next five years. Taiwan is looking at the global supply chain and, therefore, in addition to China, it is targeting some potential destinations, including India, for increasing the presence of Taiwanese companies.”

Lee said the Chinese government continues to provide incentives to attract investment. However, the Modi government here shows more determination and energy in the development of markets.
Lee, here at a function to showcase new products, cited some hurdles — infrastructure bottlenecks, consistency in regulations and cultural barriers — which needed to be removed. “There should be consistent implementation and interpretation about regulations,” he opined.

Further, Lee said Taiwanese investors had concerns over the ease of doing business in India. They want the government to be a facilitator and a simplification of procedures.

Source:Business Standard

Life insurance market clocks 20% growth in Q1

July 24, 2015

After witnessing de-growth since 2010, the life insurance industry rebounded in the first quarter of the fiscal recording a robust 20 per cent growth in new premium income.

The sector mopped up Rs 23,570 crore during the April-June period riding on group single premium policies.

The industry as a whole sold 60 per cent more group single premium policies, mopping up Rs 12,861 crore in the quarter as against Rs 8,016 crore in the same period last year.

Group single premium income contributed a whopping 54.6 per cent to the total new business for the industry.

The higher overall growth came despite the largest private sector player ICICI Prudential Life recording a negative growth.

Similarly, Reliance Life, Max Life and India First have also shown negative growth in the first year premia during the quarter.

The life insurance industry consisting of the market leader LIC and 23 private sector players mobilized Rs 23,570 crore in new premia, up 20 per cent from Rs 19,702 crore in the year ago period, as per the Life Insurance Council data.

The June quarter is usually considered a lean period, while the March quarter, the best, as salaried class normally buy policies in the last quarter to save on tax.

The higher growth was led by LIC which clipped at over 31 per cent in the quarter, mopping up over Rs 5,700 crore in new premium, while from the private sector side HDFC Life and BajajAllianz Life reported growth of 35 per cent and 71 per cent, respectively in new premium income.

Growth was also aided by a massive 60 per cent surge in group single policies in new sales.

However, it has recorded a negative growth in other segments like individual single, individual non-single and group non-single.

In terms of sale of policies too, the industry sold 46,44,333 in the reporting period, up 22 per cent as against 38,19,547 polices sold in the same period a year ago.

This is the first time in the past five years that the industry has reported growth in new premium business.

Industry leader LIC had witnessed a degrowth of 14 per cent in terms of new business premium in 2014-15, which also pulled down its market share to a tad over 69 per cent in the year.

While LIC earned a total premium of Rs 16,430 crore in June quarter, up 17 per cent over the year ago period, the private sector players gathered a premium of Rs 7,145 crore in the reporting period, up 26 per cent.

LIC, whose number of new policies had gone down by 40 per cent in 2014-15, sold 36,63,310 crore policies in the quarter, up 28 per cent, while the private sector insurers led by SBI Life sold 98,10,23 policies, up 3 per cent.

“We do see growth in new business premium in the range of 12-15 per cent in the current fiscal,” Life Insurance Council secretary general V Manickam told PTI.

SBI Life mobilized premium of Rs 1,042 crore and sold 1,45,289 policies in the period.

“Our sales were very strong last year as well, especially in the second half of the year. Our growth in new business premium was 42 per cent and individual new business premium grew at 29 per cent in Q1,” SBI Life MD and Chief Executive Arijit Basu said.

When asked whether he is confident of maintaining the robust growth rate, he answered in the affirmative.

“We managed this growth rate by activating our internal sales force and distributors, especially at the bank level,” Basu said, adding both Ulip and even traditional products contributed to higher sales.

Source: Times of India