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this IssueInsideFocus story Taking the agenda ahead with B20 China in 2016 ............ 2

G20G20 Financial Leaders Meet In Shanghai ............................... 6B20 2016 special workshop held in Davos ......................... 7

INtErNAtIoNAL trADE cENtrEITC launches business guide on India’s Duty Free Tariff Preference Scheme for LDCs ................................................. 8Indian spice farmers train African farmers in cultivation practices .............................................................................. 8

ADBADB Loan to Improve Urban Services in Two Northeastern Capital Cities ....................................................................... 9

February 2016, Volume 3, Issue 7

Message from Mr Chandrajit Banerjee, Director General, CII

Over the years, B20 priorities have been clearly aligned with those of the G20 Summit

which focuses on major goals in global economic development - including financial

reforms, trade, investment, infrastructure, employment and anti-corruption policy. The B20

taskforces consult with the business community and devise list of recommendations for

G20 members. Since 2010, more than 400 policy recommendations have been proposed

and many of these have been incorperated into G20 communiques.

Based on the developments of the global economy and need of individual economies, the G20 will not only

address outstanding issues of the moment to mitigate short-term risks, but also develop forward looking and

creative policy ideas and take collective actions to steer the world economy into the future. In 2016, B20

China continues to support the commitments the G20 has made to promote financing and improving global

economic governance. China hopes that the international business community, international organizations,

consultancies and scholars will work closely to host a successful B20 which would thereby contribute boosting

innovative development, building an open world economy and enhancing global economic governance.

This edition of the newsletter focuses on the areas under the taskforces formed by the B20 China which are

important to us considering India’s socio-economic development and priorities of the government.

Chandrajit Banerjee

Multilateral

oEcDGlobal economy urgently needs a stronger and more coherent policy response to promote robust and inclusive growth .........10

EscAPNew ESCAP report shows disparity in Internet access and costs in ASEAN subregion .................................................................11

worLD BANKIndia Signs Financing Agreement with World Bank for US$3OO Million for "Madhya Pradesh Higher Education Quality Improvement Project .............................................. 12

NeWSletter

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In December 2015, China took over as the chair for G20. Subsequently, B20 China continues to support the commitments the G20 has made to promote financing and improve global economic governance. China hopes that the international business community, international organizations, consultancies and scholars will work closely to host a successful B20 thereby boosting innovative development, building an open world economy and enhancing global economic governance.

B20 2016 Taskforces

After considering the success of previous B20 taskforces, liaising with G20 members and affiliated business representatives and reviewing the statistics of three rounds of questionnaire surveys, the B20 China has established five taskforces namely

• Financing Growth

• Trade and Investment

• Infrastructure

• SME Development

• Employment

The Taskforces are also joined by a special forum focusing on anti-corruption.

CII is the sole Indian Industry body representing Indian Industry in G20-B20 deliberations. Being the secretariat for B20 in India, CII is fully committed to the G20-B20 process to get the necessary buy-in from the Indian Industry by giving industry inputs is a continuous on-going process through background research inputs and through events and visits.

CII has nominated members for the taskforces created by B20 China and is in constant touch with the China Council for the Promotion of International Trade (CCPIT) - the secretariat for B20.

Considering India’s socio-economic development and priorities of the ruling government, the most important areas within the existing TFs that are of India’s interest are as follows

Financing Growth

Roles and Restructuring of Multilateral Development Banks (MDBs)

Need of about $15-$20 trillion fresh investment over the next 15 years and India needs investment of about $1 trillion in new infrastructure over the next few years and innovative solutions were being sought for meeting this massive requirement.

FoCus story

Taking the agenda ahead with B20 China in 2016FOCUS STORY

Taking the agenda ahead with B20 China in 2016

In December 2015, China took over as the chair for G20. Subsequently, B20 China continues to support the commitments the G20 has made to promote financing and improve global economic governance. China hopes that the international business community, international organizations, consultancies and scholars will work closely to host a successful B20 thereby boosting innovative development, building an open world economy and enhancing global economic governance. B20 2016 Taskforces After considering the success of previous B20 taskforces, liaising with G20 members and affiliated business representatives and reviewing the statistics of three rounds of questionnaire surveys, the B20 China has established five taskforces namely • Financing Growth • Trade and Investment • Infrastructure • SME Development • Employment The Taskforces are also joined by a special forum focusing on anti-corruption. CII is the sole Indian Industry body representing Indian Industry in G20-B20 deliberations. Being the secretariat for B20 in India, CII is fully committed to the G20-B20 process to get the necessary buy-in from the Indian Industry by giving industry inputs is a continuous on-going process through background research inputs and through events and visits. CII has nominated members for the taskforces created by B20 China and is in constant touch with the China Council for the Promotion of International Trade (CCPIT) - the secretariat for B20.

Considering India’s socio-economic development and priorities of the ruling government, the most important areas within the existing TFs that are of India’s interest are as follows Financing Growth Roles and Restructuring of Multilateral

Development Banks (MDBs)

Need of about $15-$20 trillion fresh investment over the next 15 years and India needs investment of about $1 trillion in new infrastructure over the next few years and innovative solutions were being sought for meeting this massive

requirement.

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The $100 billion New Development Bank (NDB) would provide access to finance to South Africa, India and other emerging economies at more favorable terms. The Asian Development Bank (ADB) has financed $22.93 billion in 2014 in building / facilitating educational facilities, roads, access to clean water, sanitation, improved lands for irrigation, drainage, and flood management initiatives, pollution control and renewable energy.

With 50 member countries and subscribed capital of US$100 billion, the Asian Infrastructure Investment Bank (AIIB), a Chinese initiative has been aggressively pursuing infrastructure projects across Asia and other regions.

Measures to boost availability of capital for Ems

This is a real concern, as it could lead to capital flight and currency weakness. Recommendation would be to have an Emerging Market (EM) Fund that could counter large-scale outflows of capital.

India, along with other emerging economies, is concerned about the volatile capital flows resulting from quantitative easing of advanced economies, which are affecting economies of emerging countries and hence the burden should be shared. Indian is also in favor of defending the capital controls as legitimate and acceptable defence against speculative capital flows and press for creating an effective framework for the adjustment process.

TRADE AND INVESTMENT:

Uniform Standards Mechanism

India and emerging economies can use the G20 platform to develop a technical standards ecosystem globally and develop Uniform Standards Mechanism.

India needs to develop institutions to get large stakeholders in value chains and enhancing capacities of standards stakeholders. There is need for good investment in this area.

Based on India’s FTAs with other countries, we can select products and improve standards on them.

Uniform Taxation Structure

Renewed focus is needed to implement the BEPS project that aims at curbing tax avoidance by large multinationals.

Other critical areas need considerable discussions and are of immense importance from India’s point of view include harmful tax practices, preventing the inappropriate granting of treaty benefits, transfer pricing documentation and country-by-country reporting, improving the efficiency of mutual agreement procedures and dispute resolutions, etc.

Global Integration Strategy

India can align its “Act East” policy, “Connect Central Asia” policy, FTAs with ASEAN, negotiation for RCEP membership, a renewed focus on the neighbourhood policy, etc. with its much broader Global Integration Strategy.

India needs to develop two strategies - product and market diversification. The US and EU are India’s main export markets. India needs to diversify its export markets to other regions. Indian exports are highly concentrated on

FoCus story

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FoCus storypetroleum, gems & jewellery and other labour intensive products and less on manufactured items. India has to match its exports with the composition of global trade.

India’s product basket for the global market is very wide but relative value addition is considerably low. India has to do vertical specialization in its product basket and extend its expertise in high value manufacturing.

Connecting with GVCs

In 2011, nearly half (49%) of world trade in goods and services took place within GVCs, up from 36% in 1995. Moreover, economies with the fastest growing GVC participation have GDP per capita growth rates, about 2% higher than the average. This is of concern for countries that are largely excluded from GVCs, including India.

India and other emerging countries can capture more values by creating brands and adopting technology. Indian MNCs followed GVCs through Merger & Acquisitions (M&As).

SMEs from India and developing economies have a thin participation in the GVCs. SMEs are the backbone of any economy and hence their engagement in value chains are essential for Indian industry to raise their share in international markets.

Infrastructure

Attention should be paid to increase productivity of investments in infrastructure and green energy by encouraging application of best practices by setting up an “infrastructure network” to work with the G20 and other governments and developing a “PPP Toolbox”.

For efficient and effective functioning of PPP, there is need to clearly define the roles of both the partners and their institutional structure and the need to form special purpose vehicle (SPV) to attract private investment. The SPVs need to be project specific, investor friendly and also have commercial value.

A few Indian states have implemented the Infrastructure Development Enabling Act. The act is expected to provide for rapid development of physical and social infrastructure in the state, and attract private sector participation in the designing, financing, construction, operation and maintenance of the infrastructure projects. While it should be incorporated nationally, India needs learn from foreign countries.

Project risks need to be identified up-front. The risks should be distributed among stakeholders with mitigation mechanism.

Cross-Border Connectivity

Emerging countries including India is pursuing many cross-border connectivity projects. Two major projects to connect India with ASEAN include the India Myanmar-Thailand Trilateral Highway to be completed by 2018 and the Kaladan Multimodal Transit Transport Project.

ASEAN and India are also negotiating the India-Myanmar-Thailand Motor Vehicles Agreement and the ASEAN-India Maritime Transport Cooperation Agreement. An ASEAN-India Civil Aviation Task Force will soon be established to oversee optimization of air connectivity. Tier II and Tier III cities in India could also be connected with the tourist and business destinations in ASEAN countries.

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The Bangladesh, Bhutan, India and Nepal (BBIN) Motor Vehicle Agreement is a major initiative to connect four South Asian countries. There are ongoing discussions about two visionary projects - the SAARC Regional Railways Agreement and the SAARC Motor Vehicles Agreement.

SME DEVELOPMENT:

SMEs & MSMEs Competitiveness

Industrial Clusters are important means of growth and transformation for SMEs and

MSMEs. Clusters are important drivers of competitiveness and innovation. India and other emerging countries can leverage the G20 platform to build and exchange expertise on building Clusters.

Access to finance is a critical policy measure India and other emerging countries need to pay attention to. The G20 can help in fostering most advanced and relevant mechanisms including provision of special incentives for encouraging larger flow of

Venture Capital & Private Equity funds into the sector; more liberal “All-in-Cost Ceilings” for SMEs to raise low cost funds through the External Commercial Borrowing route; bringing legislation on ‘Factoring Services,’ etc.

EMPLOYMENT:

Skill Development

Global benchmarking - In order to ensure quality with quantity, it is necessary to benchmark the skills of Indian manpower with the developed skills ecosystems. There is a need to align the national framework with the international best practices.

Mode-4 / Movement of Natural Persons- Movement of natural persons is one of the important trade-in services agreed in the General Agreement on Trade in Services (GATS). Developing countries should be given the special and differential treatment (S&D) on mode - 4 (movement of natural persons) especially in areas of IT services, Legal services, Medical services, Business services, etc.

Indian professionals have developed higher competency in many areas. Providing movement of natural persons across borders will add economic value to improve local economies.

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Chinese policymakers discussed the country`s economic policies and reform agenda, reassuring the world that the government has enough policy tools to combat downward pressure as financial leaders from the Group of 20 (G20) nations gathered in Shanghai. On Saturday, financial policymakers from the world’s 20 major economies pledged to use all policy tools, including monetary, fiscal and structural ones, to strengthen global recovery amid growing concerns of further downward risks. “The global recovery continues, but it remains uneven and falls short of our ambition for strong, sustainable, and balance growth,” noted a communique issued after the two day G20 Finance Ministers and Central Bank Governors Meeting in Shanghai. The policymakers cited volatile capital flows, slumping commodity prices, escalated geopolitical tensions, a potential United Kingdom (UK) exit from the European Union, and increasing refugees as major vulnerabilities of the global economy. The gathering came amid weak global economic growth and increasing financial volatility that saw frequent and drastic falls in the stock markets across the world.

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G20 Financial Leaders Meet In Shanghai

G20

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B20

Business 20 (B20) 2016 Special Workshop was held in Davos on January 21, 2016 to introduce B20’s vision and discuss preparatory work of the high-profile business gathering. At the seminar, the Sherpa of B20 China, Mr Yu Ping, reviewed basic information about the vision and program of China’s presidency, and representatives of the five B20 2016 taskforces introduced their taskforce structures and priorities, respectively focusing on employment, small and medium-sized enterprise (SME) development, financing growth, infrastructure, and trade and investment.

The presenters included Mr Zhang Ya-Qin, president of Baidu, Mr Jack Ma, executive chairman of the Alibaba Group, Mr Zhang Hongli, vice-president of the Industrial and Commercial Bank of China, and Mr Hans-Paul Buerkner, chairman of the Boston Consulting Group. About 40 people from international organizations and enterprises took part in the seminar, including the International Chamber of Commerce, the World Economic Forum, Citi Bank, Giti Tire Group, Baker & McKenzie, and Italy’s Intesa Sanpaolo SpA.

The workshop was hosted by Mr David Daokui Li, dean of the Schwarzman Scholars Program and the Mansfield Freemen Chair Professor of the School of Economics and Management of Tsinghua University.

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B20 2016 special workshop held in Davos

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Businesses in Africa’s least developed countries can use the guide, produced under the SITA project, to export to India.

Entrepreneurs in least developed countries (LDCs) looking to boost exports can now take advantage of a business guide on India’s Duty Free Tariff Preference (DFTP) Scheme.

The guide – published under the International Trade Centre’s (ITC) Supporting Indian Trade and Investment for Africa (SITA) project – is designed to raise awareness and increase understanding of the preferential scheme among African businesses.

The goal is for more businesses to take advantage of the scheme, eventually resulting in increased trade and investment between India and African countries.

A reader-friendly guide

The business guide outlines key features of the scheme in a reader-friendly manner. Written in the format of ‘frequently asked questions’, it clarifies complicated issues that exporters and trade policy officials commonly face.

Topics include the rules of origin criteria, import regulations and standards requirements, which are often problematic for small and medium-sized enterprises and exporters in LDCs.

By reviewing the main concepts and step-by-step instructions in the guide, exporters in East Africa can gain a clear understanding of how to make use of the opportunities provided by the DFTP scheme and further benefit from trade relationships between the continents.

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A team of ginger and turmeric farmers and processors from Ethiopia and Rwanda are now equipped with skills to better cultivate their spices after training with Indian experts, through a workshop organized by the International Trade Centre (ITC).

Under ITC’s Supporting Indian Trade and Investment for Africa (SITA) project, the African farmers travelled to South India for a seven-day workshop to learn the best practices of ginger and turmeric cultivation. The trainings took place in Kochi, Kerala and Tamilnadu.

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ITC launches business guide on India’s Duty Free Tariff Preference Scheme for LDCs

Indian spice farmers train African farmers in cultivation practices

ItC

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ADB Loan to Improve Urban Services in Two Northeastern Capital Cities

ADB

The Asian Development Bank (ADB) and the Government of India signed an $80 million loan agreement to continue improving infrastructure in two northeastern state capital cities.

The loan is the third tranche of a $200 million financing facility under the North Eastern Region Capital Cities Development Investment Program, and will be used for investments in water supply, solid waste management and sanitation in Agartala and Aizawl. It will also support ongoing urban reforms, benefiting nearly a million people, in the two cities. Previous program tranches have provided assistance to five cities in the northeast—Shillong (Meghalaya), Aizawl (Mizoram), Kohima (Nagaland), Gangtok (Sikkim) and Agartala (Tripura).

The third tranche loan from ADB’s ordinary capital resources has a 20-year term. The Ministry of Urban Development is responsible for implementing the tranche 3 activities and overall program, which are both due for completion by June 2019.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.

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“Urban infrastructure and services in the northeast of the country are grossly inadequate and this third tranche loan will help Agartala and Aizawl improve and expand services, as well as strengthening the institutional, managerial, and financial capacity of service institutions,”

Teresa KhoCountry Director

ADB’s India Resident Mission

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oECD

Policymakers need to deploy broad-based reform plans that incorporate monetary, fiscal, and structural policies to stimulate persistently weak demand, re-launch productivity growth, create jobs and build a more inclusive global economy, according to the OECD’s annual Going for Growth report.

Going for Growth 2016 offers a comprehensive assessment of how government policy reforms affect economic performance and their citizens’ well-being. It identifies new priorities to revive growth and underscores the importance of synergies among policies in designing reform programmes.

This year’s edition of Going for Growth shows that a slowdown in the pace of reforms first observed in the 2013-14 period continued during 2015, notably in advanced economies, but also in emerging ones. New reforms are aimed at improving educational outcomes and lifting the labour force participation of women. But not enough is being done to boost innovation or streamline product and labour market regulation, which are critical aspects of today’s productivity and equity challenges.

Going for Growth 2016 notes that the pace of reforms has varied both across countries and policy areas. Among the highlights:

The slowdown in the pace of reform observed over the 2013-14 period has continued in 2015, even after ¾taking into account measures that are in the pipeline but that have yet to be fully implemented.

In Europe, Southern European countries —in particular Italy and Spain— have more reform achievement ¾than Northern European countries, which were less impacted by the global economic crisis.

Outside Europe, countries where a relatively high number of measures related to Going for Growth ¾recommendations have been taken include Japan, among advanced economies, and China, India and Mexico, in the case of emerging economies.

Relatively more actions are being taken to lift the labour force participation of women and to improve ¾educational outcomes, while fewer actions are observed in innovation policy, public sector efficiency or product and labour market regulation.

In countries where income inequality is a particular concern, the majority of reform actions taken would ¾help to narrow the income distribution.

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Global economy urgently needs a stronger and more coherent policy response to promote robust and inclusive growth

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United Nations. Economic and Social Commission for Asia and the Pacific

(ESCAP)

New ESCAP report shows disparity in Internet access and costs in ASEAN

subregion

Despite rapid ICT development in some member countries, the ASEAN subregion is still

facing formidable challenges in narrowing the digital divides and maximizing

socioeconomic benefits from ICT investments, according to a new report by the United

Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the

National Information Society Agency (NIA) of the Republic of Korea.

The Pre-Feasibility Study on the Asia-Pacific Information Superhighway in the ASEAN

Sub-region: Conceptualization, International Traffic & Quality Analysis, Network

Topology Design and Implementation Model was prepared to support the Asia-Pacific Information Superhighway, which promotes seamless broadband infrastructure

development in the region to narrow digital divides, create an enabling Internet

ecosystem and facilitate implementation of the Sustainable Development Goals (SGDs).

The Report shows that while countries with submarine cable landing points generally

enjoy more affordable, faster Internet access of good quality, inland countries are not

fully benefiting from the Internet bandwidth. As a consequence, the--- percentage of

households with Internet access ranged from 86 per cent in Singapore to 5.1 per cent in Lao PDR and 2.2 per cent in Myanmar in 2014.

The Report provides an overview of the ASEAN countries’ existing terrestrial fiber

connectivity, broadband penetration – fixed and mobile – and Internet traffic. Based on the analysis, the Report highlights the importance o-f trans-border terrestrial fiber

connectivity and the establishment of more Internet Exchange Points (IXPs) in the

subregion to manage Internet traffic and drive down costs. The report proposes that

regional IXPs are set-up to be operator-neutral to encourage competition and innovative services.

Click here for more information

New ESCAP report shows disparity in Internet access and costs in ASEAN subregion

Despite rapid ICT development in some member countries, the ASEAN subregion is still facing formidable challenges in narrowing the digital divides and maximizing socioeconomic benefits from ICT investments, according to a new report by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the National Information Society Agency (NIA) of the Republic of Korea.

The Pre-Feasibility Study on the Asia-Pacific Information Superhighway in the ASEAN Sub-region: Conceptualization, International Traffic & Quality Analysis, Network Topology Design and Implementation Model was prepared to support the Asia-Pacific Information Superhighway, which promotes seamless broadband infrastructure development in the region to narrow digital divides, create an enabling Internet ecosystem and facilitate implementation of the Sustainable Development Goals (SGDs).

The Report shows that while countries with submarine cable landing points generally enjoy more affordable, faster Internet access of good quality, inland countries are not fully benefiting from the Internet bandwidth. As a consequence, the percentage of households with Internet access ranged from 86 per cent in Singapore to 5.1 per cent in Lao PDR and 2.2 per cent in Myanmar in 2014.

The Report provides an overview of the ASEAN countries’ existing terrestrial fiber connectivity, broadband penetration – fixed and mobile – and Internet traffic. Based on the analysis, the Report highlights the importance o f trans-border terrestrial fiber connectivity and the establishment of more Internet Exchange Points (IXPs) in the subregion to manage Internet traffic and drive down costs. The report proposes that regional IXPs are set-up to be operator-neutral to encourage competition and innovative services.

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EsCAP

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A financing agreement for IDA credit of US$ 300 (equivalent) for the "Madhya Pradesh Higher Education Quality Improvement Project" was signed with the World Bank. The Financing Agreement was signed by Mr. Raj Kumar (Joint Secretary, Department of Economic Affairs) on behalf of Government of India and Mr. Onno Ruhl, Country Director, World Bank (India) on behalf of the World Bank. A Project Agreement was also signed by Mr. K K Singh, Principal Secretary, Department of Higher Education, Government of Madhya Pradesh and Mr. Onno Ruhl, Country Director World Bank.

The Objective of the project is to improve student outcomes especially of disadvantaged groups in selected Higher Education Institutions (HEIs) and to increase the effectiveness of the Higher Education System in Madhya Pradesh. The project has three components (1) Grants Support to Higher Education Institutions (2) State Level Initiatives and (3) Improving System Management.

The project has been designed as a result based financing programme, implying that funds will be released based on the achievement of specific results or disbursement linked indicators (DLls). The DLls have been designed to ensure outcomes such as increase in enrolment of full time students, increase in transition rate, achievement of NAAC accreditation criteria by participating HEls, better transparency in the affairs of participating institutions and strengthening of governance structure

The closing date of Madhya Pradesh Higher Education Quality Improvement Project is 31st August, 2021

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India Signs Financing Agreement with World Bank for US$3OO Million for "Madhya Pradesh Higher Education Quality Improvement Project

Copyright © 2016 by Confederation of Indian Industry (CII), All rights reserved.

No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the copyright owner. CII has made every effort to ensure the accuracy of information presented in this document. However, neither CII nor any of its office bearers or analysts or employees can be held responsible for any financial consequences arising out of the use of information provided herein. However, in case of any discrepancy, error, etc., same may please be brought to the notice of CII for appropriate corrections.

Published by Confederation of Indian Industry (CII), The Mantosh Sondhi Centre; 23, Institutional Area, Lodi Road, New Delhi-110003 (INDIA) Tel: +91-11-24629994-7, Fax: +91-11-24626149; Email: info@cii.in; Web: www.cii.in

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