November 17-November 23, 2015 WEEKLY ... - India in...

NEWS FEATUREModi govt clears clutch of moves to revive projects, boost revenueThe government announced a clutch of measures – including a stake sale on Coal India, revival ofstalled projects, and interest relief for exporters, – aimed largely at propping up sagging revenues in theface of a global demand slump.

Modi government goes high on reforms; new bankruptcy law, subsidy rules on anvilThe foreign direct investment policy liberalisation and power reforms package announced before Diwaliwere just the beginning of a series of executive actions to perk up investment sentiment and give the econ-omy a push.

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Come, invest in India’s growth, open economy: ModiPrime Minister Narendra Modi asked the global investment community to set up shop in India and benefitfrom its fast growth, strong fundamentals, constant reforms and a welcoming environment.


China’s Baidu, Alibaba & Tencent scouting for Indian startups to invest inA new group Chinese investors is poised to step in as investors of choice for Indian startups, taking theplace of some of the country’s biggest venture capital firms that are becoming more cautious aboutwriting large cheques.

OVERSEAS INVESTMENTS

ITP Division Ministry of

External Affairs Government of India

Issue No 650 INovember 17-November 23, 2015

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TRADE NEWSRice exporting companies rally as Iran opens up market for IndiaThe share price of companies engaged in basmati rice rose 18 per cent, following the news that Iran haslifted the ban on import of Basmati from India. Iran contributes one-third of India’s overall basmati ex-ports.


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SECTORAL NEWSModi government working to offer incentives to industry on tech upgradeThe Centre is working on an action plan to offer incentives to industry, encourage them to upgrade all the tech-nologies and wherewithal needed to match up with the best global standards and help stay in competition inthe increasingly global market.


NEWS ROUND-UPPM Modi’s Singapore Visit to Elevate Ties to Strategic PartnershipPrime Minister Narendra Modi’s visit to Singapore next month will elevate India’s ties with this country to astrategic partnership, Finance Minister Heng Swee Keat said today, welcoming Indian government’s efforts tosimplify regulations and introduce tax reforms.


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Issue no 650 INovember 17-November 23, 2015

>> NEWS FEATURE

Modi govt clears clutch of moves to revive projects, boost revenueThe government announced a clutch of measures – including a stake sale on Coal India, revival of stalled projects, and inter-est relief for exporters, – aimed largely at propping up sagging revenues in the face of a global demand slump.

At a time when markets remain volatile due to global cues, the Cabinet cleared a 10% disinvestment in the Coal India Ltd(CIL), besides approving an initial public offer (IPO) for Cochin Shipyard, power minister Piyush Goyal said in a post-Cabinetmeeting briefing.

The move came at a time when the govern-ment is finding it hard to raise even half of thebudgeted Rs 69,000 crore from disinvestmentand strategic sales.

The government will also address the prob-lems of at least 34 road projects that are cur-rently stalled. All projects that were not stuckdue to developers’ problems would be re-started again. Besides, to meet the rising com-pensation of land for road projects, thegovernment will divide the road cost into civilconstruction and capital.

It will also restart the long-stalled project,since at least 1997-98 and one that has seenconsiderable demand locally, to build a rail-cum-road bridge over the Ganga river in Bihar. The project is estimated to cost Rs 27,774 crore.

The government also acquiesced to a long-pending demand of merchandise exporters to restore a 3% interest subventionin a bid to arrest falling exports. Indian exports declined for the 11th month in a row in October, a period longer than what waswitnessed even in the aftermath of the 2008 financial crisis.

The subvention will be available for both pre-shipment and post-shipment credits, Goyal said. The government had earlierannounced revamped Merchandise Exports from India Scheme (MEIS) and hiked duty drawback rates for various products tohelp exporters.

Source : Business Standard

The foreign direct investment policy liberalisation and power reforms package announced before Diwali were just the be-ginning of a series of executive actions to perk up investment sentiment and give the economy a push.

Among measures on the cards are single-window clearance for multi-storey buildings, a monetary policy framework,a new bankruptcy law and subsidy reforms asthe Modi government seeks to maintain themomentum on policy change

“This (FDI liberalisation) was not a one-offmeasure,” said a senior government official.“There are more steps in the pipeline... Work ison in many areas.” The department of indus-trial policy & promotion (DIPP) is alreadyworking on a key proposal aimed at simplifica-tion of the overall framework entailing all in-dustrial sectors.

DIPP has proposed to marry industrialcodes with the FDI policy, bringing about sig-nificant clarity in the overall foreign invest-ment framework. will spell out the FDIframework for each industrial sector in a sin-gle line.

The FDI policy is being linked with the National Industrial Classification code of 2008. A discussion paper has beenposted for stakeholder consultations. “The FDI reforms were a perfect example of that (reform) intent just before thewinter session of Parliament starting November 26,” Citi’s Samiran Chakraborty and Anurag Jha said in a note.

“The back-to-back announcements of state electricity board reforms and FDI liberalisation puts the developmentalagenda back on track.”

The measures are expected to be rolled out before the opening of Parliament, when the government will try and con-vince other parties to approve the constitutional amendment needed to implement the Goods & Services Tax (GST). Thegovernment is sticking to its April 1 deadline on GST.

The finance ministry has also put the rollout of a bankruptcy code on the fast track to provide for easier exits for busi-nesses and to ensure protection to lenders and investors. The new monetary framework that has inflation-targeting as akey element is expected to be taken up by the Cabinet soon, an official said. The finance ministry will also seek Cabinetapproval for the proposed Monetary Policy Committee (MPC) on which it has reached an agreement with the ReserveBank of India.

Strategic Sales Also on Agenda The government is also working on a system headed by the Cabinet secretary to get strategic sales moving. ET re-

ported last week that a comprehensive package to address non-performing loans of banks was also under consideration. With ease of doing business in mind, the government is working on single-window clearance for multi-storey buildings.

Currently, these need approval by the ministries of civil aviation and environment besides a host of other permits re-quired at multiple points. This simplification is set to be announced this month.

The government is also expected to take LPG subsidy reforms forward by excluding those in the high-income bracket.

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Modi government goes high on reforms; newbankruptcy law, subsidy rules on anvil

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Direct benefit transfer for kerosene is expected to be taken up on a pilot basis in five districts of each state. PetroleumMinister Dharmendra Pradhan has already written to chief ministers on this.

Other steps will be aimed at reviving manufacturing, seen as crucial to creating jobs. The government has streamlinedenvironment clearances as also other processes, leading to India jumping 12 places on the World Bank’s ease of doingbusiness index.

Indian Railways has given GE a $2.6-billion order to build locomotives in the first significant FDI in the sector, to spurmanufacturing. Efforts are also on to give defence manufacturing a boost with a new procurement procedure this month.The government is looking to achieve as much as it can without seeking parliamentary approval. The main OppositionCongress had stalled the functioning of the Upper House, where the ruling coalition doesn’t have the requisite numbers,in the last session.

Source : The Economic Times

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>> OVERSEAS INVESTMENT

A new group Chinese investors is poised to step in as investors of choice for Indian startups, taking the place of some of thecountry’s biggest venture capital firms that are becoming more cautious about writing large cheques.

Baidu, Alibaba Group and Tencent Hold-ings, collectively known as BAT, have beenscouting in India for a year for startups to in-vest in, to take advantage of potential op-portunities in the world’s third-largestsmartphone market, several investors andentrepreneurs ET spoke to said.

While Alibaba and Tencent have alreadyploughed in millions, questions, however,have stacked up about their focus and in-vestment strategies for Asia’s second-largest economy.

“India is the last big frontier for the globalmobile Internet,” said Vikram Vaidyanathan,managing director at Matrix Partners India. “BAT as global heavyweights will definitely play a role in shaping this ecosys-tem. Given their investment track record and deep sector expertise, I think many Indian startups would welcome their par-ticipation.

The growing interest in India comes at an opportune time for BAT, with venture capital investors realigning their portfo-lios as several startups are struggling to sustain or grow.

Baidu declined to comment for this story while Alibaba and Tencent did not reply to email queries. Venture capital firms pumped in a record $4 billion (Rs 26,000 crore) in Indian startups between January and Septem-

ber this year, but the deals are becoming fewer and smaller—investments dropped from 43 deals worth $604 million inJuly to 30 deals worth $255 million in September.

US-based Tiger Global Management, the most prolific backer of startups in India, has decided to tone down its aggres-sive style in the country, in a reflection of the limits of its strategy so far as well as the changing investor mood, ET re-ported on November 20.

Alibaba Group, China’s largest ecommerce firm, invested $680 million in Noida-based online retailer Paytm in Septem-ber, a month after pumping in $100 million to $125 million in Snapdeal, India’s secondlargest online marketplace by sales.

Alibaba Group, China’s largest ecommerce firm, invested $680 million in Noida-based online retailer Paytm in Septem-ber, a month after pumping in $100 million to $125 million in Snapdeal, India’s secondlargest online marketplace by sales.

“(Alibaba Group) has invested close to $1 billion (in Indian startups), which is the largest from China,” said Vijay ShekharSharma, founder and chief executive of Paytm. “They have the sharpest focus among the three.”

Shenzhen-based Tencent, which owns mobile app WeChat, in August invested in online healthcare startup Practo aspart of a $90-million funding round. Baidu, China’s largest internet search company, is in talks to invest in Mydala, an on-line coupon and discount marketing firm, ET reported on November 10.

“Each of them will likely invest here, and will invest in sectors that are close to their core business,” said a fund managerwith a venture capital firm, on condition of anonymity. “Commerce and wallets for Alibaba, social and mobile consumer forTencent, and mobile consumer and commerce for Baidu.”

China’s Baidu, Alibaba & Tencent scouting for Indian startups to invest in

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Some believe ecommerce will not be the only port of call for the big three Chinese investors. “Travel, real estate and ed-ucation could also turn out to be attractive picks for the three Chinese investors.

I don’t see them limiting themselves to ecommerce as other sectors also present large markets,” said Mayank Khan-duja, principal at investment firm SAIF Partners. “They are prolific venture investors in China... I don’t think they’ll adoptone dominant strategy for India.”

Mahendra Swarup, India managing director of private equity firm Avigo Capital, said Baidu, Alibaba and Tencent arelikely to seek active roles in the companies they invest in. “They’re strategic investors, and they want to drive their portfoliocompanies by taking a majority stake in them.”

Alibaba and its affiliate Ant Financial hold over 40 per cent in Paytm, according to people aware of the matter. Baidu,too, is looking to pick up a controlling stake in Mydala. Tencent’s stake-holding in Practo is undisclosed.

“With Alibaba, it was always about such a large, significant ownership combined between Alibaba and Ant Financialfrom day one,” said Paytm’s Sharma. “This was so that they can commit various resources and help to the company, be-yond just a pure financial stake.”

Source : The Economic Times

Prime Minister Narendra Modi asked the global investment community to set up shop in India and benefit from its fastgrowth, strong fundamentals, constant reforms and a welcoming environment.

Starting his first set of engagements here during his five-day, two-nation visit to Malaysia and Singapore, the prime min-ister also announced a $1-billion credit line to expand trade with Asean and promised electronic visas soon for the nation-als of its 10 members.

He also called for concerted global action against terrorism and asked the leaderships of Brunei Darussalam, Cambodia,Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam to participate in the solar alliance hehas proposed among 122 countries.

“By almost every major economic indicator India’s doing better than when we took office 18 months ago,” Modi said inhis first regional meeting, the India-Asean Business Summit, and said this was visible in growth, inflation, interest rates,deficit, foreign capital inflows and tax revenues.

“Obviously, this did not happen by accident. The world economy is not exactly doing well. This success is the result of aseries of concerted policies,” he said, adding the idea was not to reform alone but to reform for transformation.

“Most of the Asean economies have done their bit for Asia’s resurgence. Now it is India’s turn,” Modi said to loud ap-plause after his arrival here in the early hours of Saturday for the 13th Asean-India Summit and the 10th East Asia Summit.

“We know that our time has come.”Addressing the Asean-India Summit, Modi said he was pleased to see bilateral trade grow to $76.5 billion in 2014-15

after some decline, adding the regional grouping was India’s largest partner for investment in both directions.He also raised the issue of climate change, ahead of the crucial 12-day global meet in Paris from November 30. “India

has ambitious clean energy plans: 175 GW of additional capacity of renewable energy by 2022, and 40 percent of energythrough non-fossil fuel by 2030,” he said.

“I have also proposed an international solar alliance of 122 solar-rich countries, which French President (Francois) Hol-lande and I will launch in Paris on November 30. We look forward to your participation in the launch and the alliance.”

The prime minister also had several bilateral meetings on the margins of the summit, notably with Chinese Premier Li

Come, invest in India’s growth, openeconomy: Modi

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Keqiang and his Japanese counterpart Shinzo Abe, who hosted him for lunch. In both meetings, held separately, the lead-ers said there was much to gain in their bilateral ties.

“India-Japan ties have the greatest potential of any bilateral relationship in the world,” said Abe. Premier Li, on his part,said India and China have more common interests than divergences, with compatible development strategies that have thescope for further consolidation.

At the business summit, the Indian prime minister outlined a host of measures taken to make his country an investment-friendly destination, notably through campaigns such as “Make in India”, “Digital India” and “Skill India”.

“I invite you to come and see the winds of change in India,” he said, adding: “Winds take time to cross the borders. That iswhy I am here to invite you, personally.”

Modi said his government was working hard to cut complicated procedures and making them available on one platform,preferably online, besides simplifying paperwork on a war footing. “That’s how we have jumped up by 12 ranks in the WorldBank’s Ease of Doing Business Report of 2016.”

This, he said, has also resulted in foreign investment inflows growing 40 percent this year, and the country jumping sixplaces in Unctad’s ranking of investment attractiveness and the World Economic Forum’s Global Competitiveness Index,besides an outlook upgrade by Moody’s.

Listing some recent initiatives, he said foreign equity caps were eased in some key sectors such as insurance, defenceand railways, permissions for approvals were placed under automatic route, foreign portfolio investment norms were re-laxed and the regime of retrospective tax had ended.

“These are just a few examples. Almost on a daily basis, we are trying to remove the bottlenecks that were affecting ourgrowth process. Even early this month, we took very dynamic steps to further open up the economy for foreign direct in-vestment,” he said.

“With this round of reforms, we are among the most open economies in the world.”The prime minister also sought to address some of the concerns the global investors had. “Going further, I want to as-

sure you India is committed to protecting intellectual property rights,” he said, adding: “We’re moving fast to make sure ourtax regime is transparent and predictable.”

He assured that genuine investors will get quick, fair decisions on tax matters.Source : Indo-Asian News Service

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Rice exporting companies rally as Iranopens up market for IndiaThe share price of companies engaged in basmati rice rose 18 per cent, following the news that Iran has lifted the ban onimport of Basmati from India. Iran contributes one-third of India’s overall basmati exports.

Kohinoor Foods’ shares jumped 17.75 per cent toclose at Rs 51.40 apiece on Tuesday on the BSE. LTFoods and KRBL reported 13.12 per cent and eightper cent increase, respectively, to close at Rs260.30 and Rs 224.7 a share, respectively.

Iran had invoked self-declared restriction on im-port of basmati rice from India following high im-ports in the past few years. The Iran governmenthad stopped issuing rice import permits from India.While Indian exporters continued to execute pastorders, new orders dried up, resulting in sharp de-cline in India’s rice exports to Iran.

“It is a very good development as India wouldagain see a sharp increase in basmati rice exportsto Iran, the world’s largest importer for aromaticrice,” said Gurnam Arora, joint managing director of Kohinoor Foods, the producer and exporter of Kohinoor brand bas-mati rice.

Data compiled by the Agricultural and Processed Food Products Export Development Authority showed India’s ex-ports of basmati rice to Iran declined to 940,000 tonnes in 2014-15 from 1.44 million tonnes (mt) in the previous finan-cial year.

Trade sources attribute the decline in Iran’s rice import from India to bitter political relations between the two coun-tries. Last year, Iran had turned to Pakistan for import of basmati rice. “Iran’s comeback to Indian market would boostIndia’s basmati rice exports,” said Rajan Sundareshan, executive director, All India Rice Exporters’ Association.

Reports said Iran faced one of the worst droughts in the last monsoon season, resulting in estimates of lower rice pro-duction. According to Food and Agricultural Organization data Iran’s total rice output in 2015 rose to 1.7 mt, from 1.6 mtin the previous year.

Iran’s rice import is forecast to increase to 1.3 mt in 2015 versus 1.2 mt in 2014. But, with the drought estimated todamage standing crop, Iran’s import of rice could increase proportionately this year.

Source: Business Standard


Crores of investment in Rajasthan’spharma, plastic sector on cardsRajasthan is likely to see crores of rupees being invested in the pharmaceuticals and plastic sectors in the next couple ofyears, union Chemicals and Fertilizer Minister Ananth Kumar said.

Speaking at the Resurgent Rajasthan partnership summit, Ananth Kumar said: “National Institute of PharmaceuticalEducation and Research (NIPER) would be set up in Jhalawar area of Rajasthan on which an investment of Rs.500 croreis likely to be made.”

The international-level institute is likely to come up in next two years, he said.NIPER is the first national-level institute in pharmaceutical sciences with a proclaimed objective of becoming a centre

of excellence for advanced studies and research in pharmaceutical sciences. The central government has declaredNIPER as an ‘Institute of National Importance’.

He was speaking at the two-day Resurgent Rajasthan Partnership Summit that was inaugurated by union FinanceMinister Arun Jaitley on Thursday.

Ananth Kumar also promised to set up a plastic park in Bhiwadi and a medical devices park in the state subject to theavailability of land.

Source : Indo-Asian News Service

‘Interest Equalisation Scheme will boostcotton textiles exports’The Interest Equalisation Scheme announced by the Government will provide the much-needed boost to exports of cot-ton textiles, Cotton Textiles Export Promotion Council (Texprocil) Chairman has said.The much-awaited Interest RateSubvention Scheme on pre-shipment and post-shipment schemes has been approved by the Cabinet Committee on Eco-nomic Affairs last week.

The scheme, which will now be called as Interest Equalisation Scheme, will be effective from April 1, 2015 for a pe-riod of five years. It will be evaluated after three years.”The scheme will provide the much-needed boost to exports ofcotton textiles as all categories of fabrics and made-ups have been covered under the scheme”, Texprocil chairman R KDalmia said in a statement issued here.

Interest rates on export finance is very high in India as compared to competing countries like Bangladesh, Pakistan,Sri Lanka and Vietnam. And exporters were keenly looking forward towards the announcement of this scheme as theyare facing depressed market condition and declining exports.The scheme has however excluded cotton yarns. Further,the scheme is also not made available to the merchant exporters.

The scheme has however excluded cotton yarns. Further, the scheme is also not made available to the merchant ex-porters.Dalmia pointed out that cotton yarn export is currently reeling under difficult market conditions, especially inChina and this product should be covered under the scheme to enable yarn exporters to reduce costs and remain com-petitive in these difficult times.

He said, in the present business scenario, the differentiation between manufacturers and merchant exporters is di-minishing and there is no reason as to why merchant exporters should be denied the benefit of concessional rate of in-terest on export finance as long as they contribute towards exports.He urged the Government to consider includingcotton yarn under the scheme and also to extend the benefit of the scheme to the merchant exporters.

Source : Press Trust of India

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Govt announces 3% interest subsidy toboost exportsConcerned over continuous decline in exports, government announced 3 per cent interest subsidy scheme for exporterswhich will have a financial implication of about Rs 2,700 crore.

The decision to help boost overseas shipments was taken at a meeting of Cabinet Committee on Economic Affairsheaded by Prime Minister Narendra Modi.

The CCEA has given its approval for “Interest Equalisation Scheme (earlier called Interest Subvention Scheme) on Preand Post Shipment Rupee Export Credit with effect from 1st April, 2015 for five years”, an official statement said.

The rate of interest equalisation would be 3 per cent, it said, adding that it will be evaluated after three years.Financial implication of the proposed scheme is estimated to be in the range of Rs 2,500 crore to Rs 2,700 crore per

year, it said.However, it added that the actual implication would depend on the level of exports and the claims filed by the ex-

porters with the banks. Funds worth Rs 1,625 crore in the non-plan head of account are available under Demand ofGrants for 2015-2016 and would be made available to the Reserve Bank, it said.

The scheme would be available to all exports of Micro, Small and Medium Enterprises (MSME) and 416 tariff lines.But it would not be available to merchant exporters.

“We believe that this will give a big boost to exports particularly for the MSME sector, handicraft, agri-products andfood processing,” Power Minister Piyush Goyal said after the Cabinet meeting.

He said the previous government had discontinued the interest subvention scheme, which has made the country’s ex-ports uncompetitive. Under the scheme, exporters get loans at affordable rates, which helps them ship more goods toforeign markets. India’s exports remained in the negative territory for the 11th month in a row in October, registering adip of 17.53 per cent to USD 21.35 billion due to a demand slowdown, although trade deficit showed some improvement.

The scheme would be implemented through funds available with the Department of Commerce under non-plan dur-ing 2015-16 and the restructured scheme would be funded from plan side from 2016-17 onwards.

It said that the Commerce and Industry Ministry may place funds in advance with RBI for requirement of one monthand reimbursement can be made on a monthly basis through a revolving fund system. “On completion of three years ofoperation of the scheme, Department of Commerce may initiate a study on impact of the scheme on export promotionand its further continuation,” it said adding the study may be done through one of the IIMs.

The operational instructions of the scheme would be issued by RBI.The scheme will help the identified export sectors to be internationally competitive and achieve higher level of export

performance. It covers mostly labour intensive and employment generating sectors like processed agriculture/fooditems, handicrafts, handloom products, coir, jute, readymade garments, sports goods, paper and stationary, leather,medical instruments, auto components and engineering.


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The Centre is working on an action plan to offer incentives to industry, encourage them to upgrade all the technologiesand wherewithal needed to match up with the best global standards and help stay in competition in the increasinglyglobal market.

This was indicated by Sudhanshu Pandey, joint secretary, Union commerce and industry ministry at the RegionalStandards Conclave held here on Friday.

“This is part of our efforts to bring greater awareness among industry members and other stakeholders about the im-portance of ‘Standards’ in the changing scenario of global trade,” said Pandey at the conclave organised by the UnionMinistry of Commerce & Industry in association with CII and Export Inspection Council (EIC) of India.

The government, said Mr Pandey, has identified about 400 products and is currently working on building mandatorystandards for the items. According to him, since the exercise entails inter-ministerial interactions and collaborations, thewhole process is time-consuming. It will require the Cabinet approval, Mr Pandey said, adding that mandatory standardsfor the identified products are expected to be ready by 2016-17.

The government is also looking to put in place independent testing, inspection, accreditation and certification sys-tems, he said, adding that hospitals located in Kolkata receive a lot of medical tourists from Bangladesh and Nepal, butsince accredited hospitals are few and far between, high-end of medical tourists prefer Singapore and Thailand toKolkata.

Standard, Mr Pandey said, is a very dynamic process, and industry needs to realize that there is an increased competi-tion across the globe. “Unless industry is in sync with the global reality, it will be extremely difficult to survive, especiallyfor MSMEs. Export market for India will also shrink as a result. The mandatory standardisation of products that matchinternational norms is necessary for creation of overseas market access for Indian exporters, he said, adding that it willalso protect the Indian market from becoming a dumping ground of substandard products, including chemicals and fooditems.

Mr Sumanta Chaudhuri, principal secretary of West Bengal fisheries department said time has come to realise thatstandard is not just for the government, but other stakeholders, too, including industry. “When you have a large domesticmarket, we must go in for standards even if that means that cost will rise. India is after all a country where the middleclass is swelling and rural income is increasing,” said Mr Chaudhuri.

Source: The Economic Times

Modi government working to offer incentives to industry on tech upgrade

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Government plans tax sops for companiesto create jobsThe government is contemplating offering tax incentives to companies in the manufacturing sector, including tax deduc-tions on emoluments paid to new employees, to encourage firms to step up hiring and create jobs under its Make in Indiainitiative.

The government said it is inviting more suggestions by 2 December on other incentives that it can offer to boost em-ployment generation in the manufacturing sector.

It put up suggestions that it has received internally from various government departments and other stakeholders onthemygov.in website.

Suggestions being considered by the government include financial incentives, tax incentives under the Income-tax Act,1961, and subsidies for equipping employees with job skills, and upgrading and improving employment exchanges.

Proposals include tax deductions on several accounts, such as salaries paid to employees whose total emolumentsare less than Rs.6 lakh per year on hirings exceeding a threshold that’s less than the 10% workforce expansion for whichthe tax break is available now.

This incentive will be offered for three years from the time a new employee is hired.The workforce expansion threshold is proposed to be interpreted liberally; if a company exceeds the threshold in a

particular year, it would be carried forward to support eligibility for the tax break in a subsequent year when it falls shortof the threshold.

The National Democratic Alliance government, which came to power last year promising to step up employment gen-eration for the millions who enter the job market every year, has made the manufacturing sector a key priority.

The Make in India initiative is aimed at attracting investment in manufacturing.A government statement said economic growth and the Make in India programme’s prospects would depend on steps

it takes to ensure that the investors are incentivized for creating jobs and upgrading the skills of India’s workforce.“The Government of India is taking several measures for promoting the growth of the manufacturing sector in India.

The Make in India campaign has been initiated with the view of driving investment in this sector by creating an environ-ment suitable for sustained growth of manufacturing, which will lead to all-round economic benefits including employ-ment generation and income growth,” it added.

Ajay Dua, a former secretary with the ministry of industry and commerce, said that given the manufacturing sectorhas not been able to increase direct employment to the extent it had been expected to, despite the availability of cheapercapital, the proposed tax breaks are worth trying.

“This shows the nature of exemptions are changing. The government seems to be trying to achieve the goal of em-ployment growth through fiscal measures, which is desirable,” he added.

The government is also examining the possibility of changing an existing condition which requires a worker to havebeen on the payroll of a company for at least 300 days in a year for the employer to receive the tax break; the number ofdays may be reduced to 240 days.

It is also willing to provide weighted tax deduction for training and skill development, and examine the possibility ofreducing an employer’s contribution to social security benefits of new employees for a limited period under which theemployer’s contribution could rise from 0% to 100% in a phased manner.

It has also proposed sharing data and results of government recruitment examinations to other employers if the appli-cants agree.

Opening government-controlled employment exchanges to public-private partnerships or to the private sector byamending the Employment Exchange Act is also an option.

Source : Livemint

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Rail, logistics, infra stocks rally on policy pushShares of policy related sectors such as railways, logistics and infrastructure are in focus, after the cabinet committeeon economic affairs (CCEA) took a slew of decisions, including its nod for investments on rail freight lines in three statesand new steps to revive the infrastructure sector.

Titagarh Wagons, Texmaco Rail Engineering, Kalindee Rail Nirman, Stone India and Cimmco from the railway relatedcompanies; KNR Constructions, IRB Infrastructure Developers and Gayatri Projects from the construction and engineer-ing sectors are trading higher by up to 13% on the Bombay Stock Exchange (BSE) in noon deals. All highway projectswith construction cost less than Rs 1,000 crore, as per the recent CCEA decision, will be approved by the secretary andthe ministry of road transport and highways; while projectswith construction cost above Rs 1,000 crore will be approvedby the economic affairs secretary and the Union cabinet.

“These are steps in the right direction. We know that thecost of capital in India is significantly higher. As a result, our ex-ports at times become unviable, especially when we competeagainst countries where they have either interest rate subven-tion or interest rate subsidies. By giving interest rate subven-tion, sectors such as autos, auto ancillary, textiles, chemicalsetc should benefit,” said Vinay Khattar, associate director andhead of research at Edelweiss.

Meanwhile, the hope of GST bill getting Rajya Sabha’s ap-proval in the upcoming winter session of Parliament tookshares of logistics companies, such as Patel Integrated Logistics, Gati, Snowman Logistics, VRL Logistics and AllcargoLogistics 3% - 14% higher on the BSE.

Stock strategyGiven the government’s focus on road development, analysts remain bullish on the prospects of this sector. The key

beneficiaries of this change, analysts say are asset-light E&C firms with good balance sheets and select asset-owners.“The present administration plans to scale up road capex and has launched a multipronged approach, by creating new

programmes, while enhancing funding and organisations tasked with implementing the schemes. There is a $78 billionpipeline of projects coming up for bidding and the prospects are good for road builders and asset owners,” point outBharat Parekh and Aayush Parwal of CLSA in a November 18 report.

“In addition to our BUY-rated initiations on high-growth plays J Kumar Infra and Outperform rating on Nagarjuna, wealso highlight compelling asset-owner IRB Infra. Further, non-rated KNR Construction and MBL are pure and inexpensiveideas on the construction-cycle rebound. Larsen & Toubro (BUY) could also see 10% of its orders come from roads. IRBand J Kumar Infra are potential double baggers on a three-year view,” it adds.

Deven Choksey, MD and CEO, K R Choksey Shares and Securities also believes that the move will benefit the sectorsand companies where the work has been halted due to lack of adequate clearances, particularly in the roads sector.

“The measures will also unlock a lot of stuck capital for the banks as well. While the economy stands to gain as a wholefrom these measures, from a market perspective, banks would be one of the key beneficiaries. However, one needs to be se-lective in buying infrastructure and rail related stocks and the dynamics will differ from company-to-company,” he says.

Khattar of Edelweiss likes companies in the logistics space, and says there will be opportunities for these companiesonce the GST comes in. “The roads sector, too, is playing out well. As regards railways, we expect the benefit to kick-inwith a lag effect - that is once we see more order for wagons etc,” he adds.

Source: Business Standard

13



Government to start portal for innovatorsInnovators seeking government help to transform their ideas into reality can now turn to a dedicated web portal to beset up for them, a minister said..

“I have decided that there will be a separate, dedicated portal of my ministry dedicated to the innovators of India,” ITMinister Ravi Shankar Prasad said at the Intel DST Innovate for Digital India Challenge event here.

“Anyone can put their innovation on the portal, and my department will follow them up,” Prasad said. “I will person-ally monitor the progress of how these ideas are being followed up.”

Lauding “jugaad”, or the frugal innovation India has come to be known for in the course of its development, Prasadsaid the government plans to double the number of Common Service Centres (CSC) or information and communicationtechnology (ICT) access points created under the National e-Governance Project.

“We propose to double the number of Common Service Centres that number 126,000,” the minister said.“There is a plan to convert the existing 125,000 post offices across the country into common service centres,” he

said.“Frugal innovation along with government support will result in the turning of India,” he added.The purpose of the CSC project is to provide much-needed information and services to under served Indians in rural

areas.Speaking earlier at the event, senior vice-president of Intel Corporation Gregory R. Pearson said: “The Intel mission is

to use the power of Moore’s Law to bring smart connected devices to every person on earth.”“Besides the democratisation brought on by digital, now it has also become affordable,” he added.The Intel and India’s Department of Science (DST) Innovate for Digital India Challenge, which on Thursday awarded

10 such innovations, was created to attract innovators to develop easy-to-use solutions to drive technology adoption.According to Intel, in order for the Digital India programme to be successful, it is essential to “digitise” rural India.

Source : Indo-Asian News Service

14


WEEKLYECONOMIC BULLETIN >> NEWS ROUND UP15


PM Modi’s Singapore Visit to Elevate Tiesto Strategic PartnershipPrime Minister Narendra Modi’s visit to Singapore next month will elevate India’s ties with this country to a strategicpartnership, Finance Minister Heng Swee Keat said today, welcoming Indian government’s efforts to simplify regulationsand introduce tax reforms.

“We will have the pleasure of welcoming Prime Minister Modi in Singapore next month. With this, we can look forwardto an ever greater sharing of ideas, friendship, investment and trade between Singapore and India,” Mr Heng said at theopening of the 10th international conference on South Asia organised by the Institute of South Asia Studies (ISAS).

Addressing some 250 delegates at the two-day conference themed ‘Politics and Economics of Land in South Asia’, MrHeng underlined the strong bilateral relations between the two countries, going back to 50 years when Singapore gainedindependence.

He highlighted the benefit of Comprehensive Economic Cooperation Agreement (CECA) which boosted bilateral tradeto SGD 24.6 billion last year from SGD 5.9 billion in 2003.

The CECA came into effect in August 2005. “We hope that CECA would widen the road for Singapore and India to en-gage, deepen linkages between South East Asia and India, and catalyse a bigger trade liberation movement,” said MrHeng.

The Singapore Minister also applauded Prime Minister Modi’s effort to make India the manufacturing hub of the world.“The world has noted India’s enhanced focus in infrastructure investment, with increased investment in infrastructure,

and the setting up of the Rs. 20,000 crore (SGD4 billion) National Investment and Infrastructure Fund (NIIF).“Also, significant efforts are being made to simplify regulations and introduce tax reforms, such as through a compre-

hensive bankruptcy code, and efforts to implement a national GST (Goods Services Tax),” he observed.Touching on the South Asia region, he said the countries are also becoming increasingly integrated within the region,

as well as with the rest of the global architecture.“Momentum for economic cooperation has been building within South Asia. India and Pakistan have revitalized minis-

terial level negotiations on expanded trade. India and Bangladesh have also enhanced bilateral ties, including in powertrade. This bodes well for South Asia, which is posed to be an engine of global growth,” Mr Heng said.

ISAS, a think tank of the National University of Singapore, annually holds the conference with focus on South Asiancountries.

On October 12, External Affairs Minister Sushma Swaraj and her Singaporean counterpart Vivian Balakrishnan co-chaired the 4th Joint Commission Meeting during which they discussed ways to boost maritime cooperations, trade tiesand cyber security among other strategic issues, setting a stage for PM Modi’s visit from November 23.

During the discussions, the two sides outlines a ‘five S’ strategy to ramp up bilateral ties - Scaling up trade and invest-ments, Speeding up of air, maritime connectivity, Skill development, Smart city and urban rejuvenation and State focusin enhancing cultural ties.


Reforms must to transform India, Moditells ASEANPM Modi vowed to provide a transparent and predictable tax regime as well as protection to Intellectual Property Rights.

With a slew of measures aimed at putting back the economy on track, Prime Minister Narendra Modi on Saturday saidreforms are “just a way station” to transforming India and vowed to provide a transparent and predictable tax regime aswell as protection to Intellectual Property Rights.Speaking at the ASEAN Business and Investment Summit here, he saidthe government’s actions in the past 18 months have led to bringing down inflation while at the same time leading tohigher GDP growth and foreign investment.

“Reform is not an end in itself. Reform for me is just a way station on the long journey to the destination. The destina-tion is the transformation of India,” he said.

When the BJP-led government took office in May 2014, the economy faced serious challenges in high fiscal and cur-rent account deficit, stalled infrastructure projects and persistent inflation.

“It was obvious that reforms were needed. We asked ourselves the question - Reforms for what? What is the aim ofreform? Is it just to increase the measured rate of GDP growth? Or is it to bring about a transformation in society? Myanswer is clear: we must ‘reform to transform’,” he said.

The fruits of development have to be taken to the margins of geography and to the bottom of demography. “We haveto touch lives, while reaching for the sky,” he said.

Action during the last 18 months has ensured that “GDP growth is up and inflation is down, foreign investment is upand the current account deficit is down, tax revenues are up and interest rates are down, thee fiscal deficit is down andthe rupee is stable,” the Indian Prime Minister said.

Stating that a series of concerted steps including structural and institutional reforms have initiated, the Prime Ministersaid the government was “moving fast” to make sure tax regime is transparent and predictable where genuine investorsand honest tax payers get quick and fair decisions.

“Going further, I want to assure you that India is committed to protect Intellectual Property Rights of all innovators.We have taken several initiatives for transparency and online processing in IP administration. A comprehensive NationalIPR policy is expected by the end of the year,” he said.

“To re-vitalise the flow of investments, the second wave of structural and financial reforms have been launched. “Weare trying to further open up the economy and introduce an element of predictability and stability in taxation system,” hesaid.

While productive public investment has been substantially increased, carbon taxes on fossil fuels has been imposed toshow India’s commitment to climate change.

Source: PTI





G20 endorses India’s concerns over delays in implementation of IMF reformsThe G20 communique backed India on the issue of quota reforms of the International Monetary Fund and called for earlyreforms, and expressed disappointment with the delay.

“We remain deeply disappointed with the continued delay in implementing the IMF quota and governance reformsagreed in 2010. The 2010 reforms remain our highest priority for the IMF and we urge the United States to ratify thesereforms as soon as possible,” the G20 communique issued at the end of the two-day summit, said.

Prime Minister Narendra Modi had expressedhope, earlier in the day, that the US would ratify thequota reforms of the International Monitoring Fund,a key demand of the developing countries.

Modi on Monday told the G20 leaders at theworking session on resilience, “IMF should remain aquota based institution and not depend on borrowedresources. I hope that the ratification of the reformsof 2010 in the United States would be completed atthe earliest.”

Mindful of the aims of the 2010 reforms, the G20communique said, “We ask the IMF to complete itswork on an interim solution that will meaningfullyconverge quota shares as soon as and to the extent possible to the levels agreed under the 14th General Review of Quotas.The 14th Review should be used as a basis for work on the 15th Review, including a new quota formula. We reaffirm ourcommitment to maintaining a strong, quota-based and adequately resourced IMF. We reaffirm our agreement that theheads and senior leadership of all international financial institutions should be appointed through an open, transparent andmerit-based process and we reiterate the importance of enhancing staff diversity in these organisations. We reaffirm thatthe Special Drawing Rights (SDR) basket composition should continue to reflect the role of currencies in the global tradingand financial system and look forward to the completion of the review of the method of valuation of the SDR.”

IMF reviews members’ quotas once in five years and the last such review took place in December, 2010. India hasagreed to its quota increase under the review.

Once the review takes effect, India’s share will increase from the current 2.44 per cent to 2.75 per cent, followingwhich the country will become the eighth largest quota holder at the IMF, up from the 11th position.

Emerging economies, like India, China, Brazil and Russia have been asking for increased voting rights in IMF, whichwould reflect their growing share in world economy. The IMF quota reforms are aimed at giving more voice and votingpower to the emerging economies with regard to the functioning of the multilateral body.

Appreciating the G20 for its successful efforts to build a more resilient and open global financial system, he said, “It isan essential foundation of growth and stability in the global economy.”

In India, he said that the government and the Central Bank, are taking steps to further strengthen the financial andbanking sector.

“We should bear in mind that higher capital requirements should not become a constraint on promoting financial in-clusion or functioning of the banking sector in developing countries,” he said, adding that effective supervision and betteruse of technology can reduce capital requirements.

Source : The Financial Express

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