Archive for August, 2015

Conference on Education: Making Delhi the Knowledge Hub of India, 19th Aug, New Delhi

August 28, 2015

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Emerging Markets Network Meeting, 5th Aug, New Delhi

August 28, 2015

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Business Meet with Omani Delegation, 10th Aug, 2015

August 28, 2015

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India, Germany to focus on strengthening Economic Cooperation

August 28, 2015

Ahead of German Chancellor Angela Merkel’s visit to New Delhi in October, India’s External Affairs Minister Sushma Swaraj is looking to firm up an ambitious agenda to expand economic and strategic ties with Europe’s most powerful economy. During Prime Minister Narendra Modi’s visit to Germany in April 2015, a joint statement issued at the end of the visit had said the two countries have established a robust roadmap for expanding their multi-faceted and mutually-beneficial ties and to further strengthen strategic partnership.

Ms Swaraj who is on a two-day visit to Germany as part of her two-nation visit to Egypt and Germany will hold talks with her German counterpart Frank Walter Steinmeier and a number of other leaders. India and Germany are expected to review their bilateral relationship and focus on expanding their economic relations.

In the joint statement issued between both countries during PM Modi’s visit to Germany, it was decided that both sides would collaborate in areas such as manufacturing, skill development, urban development, environment, railways and renewable energy.

Collaboration in manufacturing is expected to give thrust to the Make in India campaign. Skill development is expected to improve employability of trainees and apprentices. Establishment of a working group on urban development will strengthen bilateral cooperation and also support development of urban planning and infrastructure in India. The support for modernisation of railways infrastructure would help in the setting up of semi high-speed and high-speed railways. Germany is also expected to support India’s proposed objective of 175GW of renewable energy by 2022 through technical and financial support for developing comprehensive solar rooftop and green energy corridor projects in India.

Among the EU countries, Germany is India’s largest trading partner and is among the top 10 global trading partners. Germany is the seventh largest trade partner and eighth largest foreign investor in India. Bilateral trade between India and Germany stood at 15.96 billion euros as of 2014-2015, leading to a drop from the previous year. India’s exports to Germany rose marginally to 7.03 billion euros in 2014, its German imports dropped to 8.92 billion euros from 9.19 billion euros in the previous year, according to the Federal Statistical Office. The dip in trade was largely due to domestic and international factors. The eurozone crisis only added to the trade decline between both countries. German FDI in India in 2014 was to the tune of USD 1.15 billion. There are more than 1,600 Indo-German collaborations and over 600 Indo-German joint ventures in operation. Indian investments in Germany have also increased in the last few years. Indians have invested over USD 6 billion in Germany, mainly through mergers and acquisitions.

The negotiations for the ambitious India-EU free trade agreement could also figure among the talks.

Source: Livemint

Incentives and Relief Offered to Exporters and Importers: ASSOCHAM

August 27, 2015

A number of incentives and other relief are being offered to exporters and importers, the details of which are as under:

  • Duty drawback to exporters to neutralize Customs, Central Excise Duty and Service Tax suffered on inputs/inputs services used in manufacture of export goods.
  • Benefit of rebate of Central Excise Duty paid on exported goods is allowed under Rule 18 of the Central Excise Rules, 2002. Goods are also allowed clearance for export under bond for the same purpose under Rule 19 of the Central Excise rules, 2002. Further, refund of Cenvat Credit of duty suffered on inputs used in the manufacture of exported goods is allowed under Rule 5 of the Cenvat Rules, 2004.
  • In order to boost exports in garment sector, Government has provided various support measures. One such measure is duty free entitlement for import based on export performance, wherein manufacturers of textile and leather garments registered with their respective Export Promotion Council are allowed to import certain specified items duty free of value upto 5 per cent of the FOB value of the textile garments or 3 per cent of the FOB value of the leather garments, exported during the preceding Financial Year for use in the manufacture of garments for export by such manufacturer. Similarly, the incentives are also provided to the exporters of handicrafts, leather products including footwear; handlooms, cotton and man-made textile made-ups etc.
  • Duty exemption schemes (Advance Authorization/Duty Free Import Authorizations and Export Promotion Capital Goods (EPCG) as well as the incentive schemes (Merchandise Export from India Scheme and Service/Export from India Schemes) extended to exporters administered by Director General of Foreign Trade (DGFT), Department of Commerce.
  • Section 10AA of Chapter VI-A of the Income-tax Act, 1961 allows 100% deduction on profits and gains derived from export of certain articles or things subject to fulfillment of conditions prescribed therein. Further, exporters and importers are also eligible for claiming deductions in respect of profits and gains derived from such business as per provisions contained in Part D of Chapter IV (profits and gains of business or profession) and Chapter VIA (deductions to be made in computing total income).

Certain representations have been received by the Government regarding delay in tax refund to exporters.

Timely issue of refunds has always been a matter of priority and concern for the Government. Field formations have been directed to ensure prompt and timely disbursement of rebate claims.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Rajya Sabha today (July 31, 2015).


This could be one of the best years for PE in India: Sri Rajan

August 25, 2015
When global management consultancy firm Bain & Company set up its office in India nine years ago, it looked for business from its multinational clients. But it found good business coming from promoter-led domestic companies that were looking for global practices. This helped it build its largest office in Asia with 240 people. Sri Rajan, part of the founding team in India, took over as chairman last month. He spoke to Abhineet Kumar on the economic challenges and how the rise in private equity investment this year is hinting at growth revival. Edited excerpts:

What are the broader challenges for economic revival and how is it affecting investment?

It is going to come down to getting the investment cycle going again. We have to find ways to improve the ease of doing business, make exports competitive, and get (more) foreign investment in India. Given our aspiration for 8-10 per cent annual growth, it is not going to come from domestic growth alone; we have to increase foreign investment in different sectors.

We need to get people comfortable that India is an attractive investment destination as well. We are certainly seeing that on the private equity (PE) side. India has clearly become a very attractive destination for PE with a very good first half in terms of deployment of funds. Based on the current trend, this could be one of the best years for PE in India in terms of investing. We are seeing a lot of interest in limited partners (LPs) that are willing to put money into India. It is primarily because India is a relatively better investment destination compared to other emerging market (EM) choices.

Why do you think India has become a better destination for PE investment?

First, improved sentiment over last year. The efforts of the government to improve the sentiment of foreign investors have played a big role. And, there is a belief that when India comes out of this downturn, it will have very attractive fundamentals. Strong demographics and a high consumption rate will play a very important role in India’s growth.

When you compare India with other parts of the world such as Russia, Brazil and even China, it is better placed for growth. Over past month, Chinese stocks have lost significant value. Because of that, people are looking for alternative investment destinations.

What kind of money is coming to India through PE and why are PE players not bothered about the execution challenges India has?

The money coming is long-term money. It is coming from pension funds in the US, Canada and elsewhere. Money is also coming from sovereign funds in West Asia and southeast Asia. These funds are investing in India because of their relative perspective. Look across the world — if you’re interested in investing in high-growth EMs, it is not that you have many choices.

What are the other emerging trends in Indian PE?

In the past year or so, a lot of money has gone from PE funds into e-commerce start-ups. So, we are seeing a significant increase in e-commerce firms’ valuations. This period is also different from 2007-08, when there was a large amount of activity in PE. At that time, it was going more into consumer, health care, financial services and information technology. We are still seeing money going into those sectors but a significant amount is also going into e-commerce.

The monsoon session of Parliament ended without passing the goods and services tax (GST) Bill. Do you see a correction in the industry’s expectations from the Narendra Modi government?

There is certainly an expression of impatience and we have seen instances of this over the past month. The industry wants not only the government to work, but different parties to come together to make things work. GST implementation has been the single-most important expectation from the government. So certainly, there is disappointment. And it is not only for Indian industry but also for foreign investors who are looking at movement in the regulatory framework to be favourable for doing business in India.

What is the trend you see in the kind of consultancy work you are getting from your clients?

When we started, our expectation was to meet the needs of many of our multi-national company (MNC) clients, who were looking for support in India. In the past nine years, we have seen significant interest from local companies for using our services. Many of these companies are trying to get global best practices to be competitive vis-a-vis MNCs.

A lot of the work in the beginning was around growth strategy, which has come down now. Then there was a phase when there was a lot of interest in outbound growth strategy. There is not much interest in moving out of India now. It could be because they are conserving management bandwidth to focus on India, or conserving capital. So a lot of work that we have done in the past few years is in the area of performance improvement. Some of this is to take out costs, but in many instances, it is about finding out a way to increase productivity.

Is Modi government’s target to increase solar power capacity to five-fold in seven years achievable?

August 25, 2015

Seven years from now, passengers looking out of planes flying over India shouldn’t be surprised to see swathes of land covered with shiny, black panels staring right back up at them. If the Narendra Modi government is successful, rows of these panels would have been mounted everywhere — on rooftops of buildings across cities, at airports, on trains, at railway stations and, of course, on vast expanses of land – quietly generating clean power tapped from the sun.

In June, the Union Cabinet approved a plan to increase India’s solar power capacity target five-fold to 100,000 megawatts by 2022, equivalent to roughly one-third of the country’s current total electricity generation capacity. Rooftop installations will account for a 40% chunk of this target and the remainder will come from medium and large grid-connected projects. No one would argue against the idea of generating 100 GW of solar power in a country like India, which is endowed with abundant sunshine. In most parts of the country, clear sunny weather is experienced for 250 to 300 days a year.

Some say the Modi government’s agenda is ‘overambitious’ and question whether the initiative, which requires an investment of Rs 6 lakh crore, will deliver. India’s current solar power base is 4,060 MW. The goal can be reached if an average of about 15,000 MW of solar power is added every year. The target is very achievable, Ajay Prakash Srivastava, Director of the Solar Energy Society of India, told ET. “The confusion may be because people think all of the 100 GW will be grid-connected,” Srivastava said. “There are, however, concerns over the tariff issue and how it could in the long term affect the quality of solar power and its reception by people and we feel the government must step in there.”

Is Modi government's target to increase solar power capacity to five-fold in seven years achievable?

Officials at the Ministry of New & Renewable Energy and the Solar Energy Corporation of India (SECI) are busy, if any indication is needed that serious business is under way. “In total, we should have commissioned solar power units to the tune of 12,000 MW by next year. Tenders worth 15,000 MW are in the works. NTPCBSE -6.93 % is expected to put together some 4,000 MW and SECI will bring in near 4,000 MW as well and 2,000 MW will come through turnkey solutions,” a senior MNRE official told ET on condition of anonymity.

India has started to make all the right moves, the Institute for Energy Economics and Financial Analysis said in a report this month. “A rapid ramp-up in India over several years is just as feasible…Much needs to be done still to turn this intent into action, but a number of recent developments give substance to the objective. As solar becomes more and more commercially viable, the step-up in Indian investment and employment, and the benefits of energy system diversity, will only add momentum,” the US institute said.

Other elements are unfolding in India’s solar revolution, most notably in the transport sector. The Indian Railways is looking at running its locomotives on solar power and installing panels across station platforms and on the large tracts of land it has.

The Indian Railways signed four agreements last week with the MNRE “to bring in a change in the energy mix and solarisation of railways.” The Delhi Metro Railway Corporation is on track to go completely solar — talks are on to supply it with 2,000 MW of solar power through the central transmission network.

The civil aviation ministry, too, is working closely on the solar model. Earlier this month, Cochin International Airport became the first in the world to operate entirely on solar power, a template that another 6-7 airports will follow.

On a larger scale, 27 “solar cities” have been identified for reducing the consumption of conventional energy by a minimum of 10% in five years by opting for power from renewable sources and adopting efficiency measures.

Solar rooftop systems have been targeted on the huge spaces available across government buildings, institutions and properties with public sector units. “Even if a part of this roof space is utilised for setting up rooftop solar power systems, thousands of MW of solar power can be generated, besides saving money for the concerned ministries/departments,” the MNRE said in a note to all central government departments, state governments, educational institutions and district collectors on August 10, 2015.

According to estimates of rooftop solar power potential drawn up by the MNRE, the Ministry of Consumer Affairs, Food & Public Distribution leads with 2,314 MW, followed by the railways at 1,369 MW. Other ministries with potential include Petroleum and Natural Gas (1,009 MW), Civil Aviation (620 MW), Human Resource Development (497 MW), Chemicals & Fertilizers (401 MW) and Defence (281).

As many as 13 states have come out with policies supporting solar rooftops. Government initiatives apart, solar power has found many voluntary takers, including religious institutions. The Radha Soami Satsang at Beas in Amritsar houses possibly the largest rooftop solar setup in the world at 7.5 MW.

A unique effort of the Centre is the push for “canal-top” solar plants. The idea is to gainfully employ the unutilised area above canals and also the vacant government land along the waterways.

A total capacity of 100 MW is planned under this scheme. So far, 12 canal top solar projects of almost 50 MW total have so far been sanctioned, with Punjab alone planning them at nine locations in Amritsar, Ludhiana, Bhatinda, Babbanpur and Patiala.

The Solar Energy Corporation of India is working on a one-of-its-kind hybrid plant to ensure power supply through the year to the remote settlement of Kaza in Himachal Pradesh’s Spiti Valley. A 2.5 MW solar power plant, clubbed with wind power during the monsoons and a large battery storage to boot, is in the works and a tender for this integrated project is expected to be out next month, officials said. The prospects of Solar Energy have attracted even Coal India LtdBSE -3.56 %, the producer of the “dirty fuel” that fires up 60% of India’s power generation capacity. CIL is working on a 600 MW solar power plant and plans to invest in upcoming solar parks. There are almost 300 companies in the fray for setting up solar projects. These include global companies, which may help meet 22% of the target, officials said. Other steps being taken to help India go solar in a big way are incentives such as tax free-bonds and bank lending of as much as Rs 15 crore for projects. The Department of Financial Services has advised public sector banks to provide funds for rooftop solar systems as home loan/home improvement loans.

“While all of these announcements have raised market sentiments, the Indian solar industry is looking for a streamlined auction process at regular intervals to better plan investments and manufacturing capacity,” Raj Prabhu, CEO and cofounder of Mercom Capital Group, said in comments to a report this week.

Source: Economic Times

Government weighs FDI in rubber, coffee plantation

August 24, 2015

The government is considering allowing foreign direct investment (FDI) in rubber and coffee plantation sectors with an aim to attract more FDI into the country.

A proposal to this effect is under consultation of the Commerce and Industry Ministry, sources said.

Currently, 100 per cent foreign investment is permitted through the government approval route in the tea plantation sector. However, FDI is not allowed in any other plantation sector or activity.

According to sources, foreign players could be allowed to engage in rubber and coffee plantation, engage labourers in plucking of coffee beans or collecting latex from rubber trees and processing of the raw material.

Permitting foreign investment will also help India reduce import bill of rubber and boost India’s coffee exports, they said.

India’s natural rubber import increased to 442,130 tonnes in 2014-15, the highest so far, from 3,60,263 tonnes in 2013-14 and 2,62,753 tonnes in 2012-13.

The production of natural rubber declined to 12-year low at 6,45,000 tonnes in 2014-15 as against 774,000 tonnes in 2013-14, down 12 per cent.

To boost domestic production of the crop, the government is in the process of formulating a national rubber policy.

Total rubber consumption by various industries, including tyre manufacturers, stood at 10,18,000 tonnes in 2014-15, 3.7 per cent higher than the previous year.

As per estimates, the country’s coffee output is pegged at 3,31,000 tonne for 2014-15 crop year (October-September), against 3,04,500 tonne last year.

India exported coffee worth USD 803 million in 2014-15 against USD 799 million in 2013-14.

Allowing foreign play in these two plantation sectors is part of the several steps from the Commerce and Industry Ministry to boost foreign investments.

In 2014-15, FDI into the country rose 27 per cent to USD 30.93 billion.

To pull in foreign investments, the government has raised the FDI cap in the insurance sector and defence. It has relaxed policy in railways, construction and medical devices sectors.

Foreign investments are considered crucial for India, which needs around USD 1 trillion in the next five years to overhaul its infrastructure such as ports, airports and highways to ramp up growth.

Growth in foreign investments helps improve the country’s balance of payments (BoP) and strengthen the rupee.

How PM Narendra Modi’s UAE visit offers a new strategic edge to India’s Middle East policy

August 24, 2015

This trip was not originally on the cards and has been suddenly put together on the PM’s urging. The parliamentary logjam and frustration about slow progress in domestic affairs must have propelled a tour of the United Arab Emirates (UAE), to be slipped in to showcase Modi in his strongest suit —firing up the substantial Indian diaspora, wooing wealthy Sheikhs in the Gulf to invest in the Indian economy, and protecting India’s national security interests.

Modi is setting foot in a theocratic Muslim country for the first time and that too a uniquely placed one with extensive Indian presence in migration, energy and economics. The third largest trading partner of India and the sixth biggest exporter of oil to India, UAE is religiously less conservative and more open compared to other Gulf monarchies.

Indian Connection

These factors have been magnets for Indian migrants, who now number a whopping 30 per cent of the UAE’s population and contribute 20 per cent of India’s total remittances. Modi’s address to a massive crowd of non resident Indians (NRIs) at the Dubai Cricket Stadium is a mega event meant to buoy the spirits of our workers who make up more than 40 per cent of the UAE’s labour force.

The expat worker model of the UAE’s economic development has been carried largely on the shoulders of NRIs, and Modi’s dialogue with the rulers of Abu Dhabi and Dubai will include the issue of improving their living conditions and lessening the exploitation of the blue collar category among them.

Many symbolic gains await an Indian PM belonging to the Hindu nationalist BJP which is strong in north India when he espouses the cause of NRIs in UAE — 75 per cent of whom are Muslims and Christians from the south Indian states of Kerala and Tamil Nadu. As Modi positions himself at the Centre of the ideological spectrum, his stepping into the Sheikh Zayed Grand Mosque in Abu Dhabi will be a special moment to lift spirits of our NRI brethren working in harsh circumstances and to project back in India that he respects each and every religion.

Not all the NRIs in the Gulf are engaged in lowpaying, backbreaking menial jobs. The UAE has transformed into what scholars term as a ‘dualistic economy’, where there are traditionally low-skilled profiles like domestic helpers and construction labourers but also an advanced white collar sector clustered around finance and informational technology.

28 per cent of high-skilled professionals entering the UAE happen to be Indians with technical and managerial backgrounds.

Modi will want to encourage this trend so that India’s image in the Middle East shifts from a cheap labour exporting nation into a provider of knowledge-based manpower that spurs economic growth in that region and ties it closer to India’s service sector.

Oil that Matters

The official leg of the PM’s UAE stay will be focused on tapping into Abu Dhabi’s humongous oil-financed sovereign wealth fund that has over $800 billion in assets. UAE’s investors have in the past been disappointed with India’s “legacy issues” that hobbled their star companies like Etisalat, TAQA, DP World and EMAAR. Modi will be in his usual reassurance mode to press home that India under him is far more conducive and profitable for foreign direct investment (FDI).

Positive coverage in the UAE news media that his foreign visits have “already generated $19.78 billion in FDI inflow from 12 countries” and that “it will not be a hard task for the Indian leader to lure more FDI” from the untapped surpluses of the Emirates have set the stage for a statistical blitz of new investment announcements while the PM is in Abu Dhabi.

Just as Modi inherited a mess with regard to India’s receptiveness towards FDI, he also carries the burden of a history of our less-then-optimal collaboration on counterterrorism with the UAE. Before he took over as PM, a top Indian Mujahideen (IM) Abdul Wahid slipped out of our hands after the UAE released him, reportedly “under tremendous pressure from Pakistan” and due to laxity of our own officialdom.

As many Indian citizens are still under captivity of the Islamic State (ISIS) and Pakistan remains intent to use the UAE as an offshore base for anti-India terrorism, Modi will present a reinvigorated India that is alert, alacritous and eager to partner with the Emirates to root out jihadist threats.

Geopolitically, Modi would aim to ramp up India’s Defence Cooperation Agreement with the UAE such that the western portion of the Indian Ocean is not conceded to the Chinese navy, which is prowling the waters there in the guise of countering maritime piracy.

Our deeper demographic and geographic connections to the UAE and also our contrasting closeness to Irangive Modi the platform to situate India as an ideal partner for stabilising the entire Gulf.

India second in cotton, silk production

August 20, 2015

is the second largest producer of cotton, cotton yarn, cotton fabric and silk after and far ahead ofand Vietnam, was told on Thursday.

However, India leads the world in jute production accounting for 52.3 percent of the total production followed by Bangladesh with 42.5 percent, Textiles Minister Santosh Kumar Gangwar told the Lok Sabha in a written reply.

He said India’s readymade garment exports amounted to 42.85 percent of the total exports vis-a-vis 94.2 percent for Bangladesh, 80.63 percent for Vietnam and 60.31 percent for China according to UN COMTRADE, a repository of official trade statistics and analytical tables.

He asserted India’s textile industry is not plagued with any financial crisis due to non-availability of funds.

To a question on the development of textile industry infrastructure, he said that the Scheme for Integrated Textile Parks (SITP) was launched in 2005 to provide the textile industry with state-of-the-art infrastructure facilities for setting up their textile units.

“New parks of international standards are set up under the scheme at potential growth centres to facilitate textile units to meet international environmental and social standards,” he said, adding the government has approved as many as 72 textile parks thus far which are in various stages of implementation.

Once operational, the textile parks will attract investments to the tune of Rs.30,000 crore and generate employment to nearly 4.5 lakh people, Gangwar added.

He clarified that there is no shortage of raw material and good quality cotton in specific to meet the rising demand of the Indian textile industry.

Source: Business Standard