WEEKLY ECONOMIC BULLETIN - India in...

NEWS FEATUREGovernment announces enhanced support under MEIS of the Foreign Trade PolicyIn the backdrop of the continued challenging global environment being faced by Indian exporters, Depart-ment of Commerce has extended support to certain new products and enhanced the rate of incentives forcertain other specified products under the Merchandise Exports from India Scheme (MEIS).

After IT boom, India’s next big thing will be IoT: Jim Morrish, Machina ResearchBy 2020, the world will see more than 34 billion devices connected to the Internet, of which, 24 billion will ac-count for IoT-connected devices. This will herald the next industrial revolution.

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French power major EDF plans $2 billion green bet on IndiaFrench state-run power major EDF will invest heavily in renewable energy in India, with projects worth $2billion in the pipeline, and is bullish about the sector, where it sees electricity tariffs falling 30% in five years,EDF Energies CEO Antoine Cahuzac told ET.

OVERSEAS INVESTMENTS

India leads overseas inflow chart among EmsListed funds invested $1.3 billion in the Indian markets in August, the highest among emerging markets (EMs)and the largest so far in 2016.


ITP Division Ministry of

External Affairs Government of India

Issue No 694 I September 20-26, 2016

p. 02/04

TRADE NEWSExports support increased to Rs 23,500 crore a yearAmid a challenging scenario of exports, the central government has enhanced its incentives support underthe Merchandise Exports from India Scheme (MEIS) from Rs 22,000 crore to Rs 23,500 crore per annum,said an official statement.


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SECTORAL NEWSRailways will spend 100% outlay this fiscal: Manoj SinhaThe government on Friday said that Indian Railways will meet 100 per cent expenditure target by theend of the current financial year.


NEWS ROUND-UPGovernment appoints monetary policy committee to help RBI set interest ratesThe government appointed three members to the monetary policy committee (MPC), putting the seal on India’s newarchitecture for setting interest rates and ending the Reserve Bank of India governor’s role as sole arbiter.


WEEKLYECONOMIC BULLETIN

WEEKLYECONOMIC BULLETIN 2

Issue no 694 I September 20-26, 2016

>> NEWS FEATURE

Government announces enhanced supportunder MEIS of the Foreign Trade PolicyIn the backdrop of the continued challenging global environment being faced by Indian exporters, Department of Commercehas extended support to certain new products and enhanced the rate of incentives for certain other specified products underthe Merchandise Exports from India Scheme (MEIS). This has been implemented through DGFT public Notice No 32 dated22.09.2016.

The following are the major highlights of the support:-Addition of new products –2901 additional products falling under different product

categories have been added. These include items in the fol-lowing areas:

Many items of traditional medicines like Ashwagandhaherbs and its extracts, other herbs, extracts of differentitems.

Certain marine products, sea feed items.Onion dried, processed cereal products and other value

added items of plastics, lather articles, suitcases etc Indus-trial products under different categories, including engineer-ing goods, fabrics, garments, chemicals, ceramics, glassproducts, leather goods, newspapers, periodicals, silk items, made ups, wool products, tubes, pipes etc.

Increase in MEIS rates –Rates of 575 product items falling under 11 products categories have been increased. These product include products of

iron and steel, handicrafts, moulded and extruded goods, rubber, ceramic, glass, auto tyres and tubes, industrial machineryengineering items, IC Engines, machine tools / parts, items of wood, paper, stationary, footwear, auto seats, steel furniture,prefabs, items under the category of butter, ghee and cheese, dried egg albumin and rubber products With this the total num-ber of items covered under the scheme has been increased from 5012 to 7103. The total support extended by Government ofIndia under the scheme has been enhanced from the present Rs 22,000 crore to Rs 23,500 crore per annum.

Source: Press Information Bureau

WEEKLYECONOMIC BULLETIN >> NEWS FEATURE3


After IT boom, India’s next big thing will beIoT: Jim Morrish, Machina ResearchBy 2020, the world will see more than 34 billion devices connected to the Internet, of which, 24 billion will account for IoT-connected devices. This will herald the next industrial revolution. In an interview with ETtech’s Aritra Sarkhel and Vikas SN atthe sidelines of the IoT Congress held recently, founder of Machina Research and member of the Global Advisory Body of IETIoT, Jim Morrish talks about the opportunities with IoT in India, itssecurity ramifications and how the concept of ‘fog computing’will impact IoT.

Will IoT, like any other industry buzzword, fizzle out soon?IoT is about opening ways of combining data from multiple

sources. It’s the next industrial revolution and depends signifi-cantly on devices. One of the drivers for IoT is the falling costs ofdevices. The cost of computing capabilities in end devices andthe processing needed to analyse data -which comes from a sen-sor and mechanical probes -are becoming a lot cheaper. This willactually help in the rise of an interconnected environment.

Internet-of-things technology will give rise to a lot of automa-tion. How is it likely to impact jobs?

IoT is a huge opportunity for India. According to our research done on American firms, 43% of the IT budgets will be spenton IoT projects and solutions by 2020. For example, in the BPO industry in India, some of the lower-skilled jobs will become au-tomated in the coming days, but the trick for India is to remain at the forefront of it so that they can deliver those solutions. It’sabout upskilling because that is how economies progress.India Inc should look at retaining these people and training them.

This opens up the scope of personal progression within industries as people will move from lower to higher-skilled jobsthat are more rewarding.

How is the industry looking at inter- operatability standard issues?I think IoT needs to be conceived within the context of traditional societal boundaries and corporate governance. There will

be some success in establishing those standards, but I think it will always be a game of catch-up. There is a long way to gobefore all levels of connected devices respect a single uniform standard.

The industry will get standardisations supporting a level of interconnectedness across industries.There will be a level of de facto standards and beyond that, many levels of free fragmented standards across individual

companies. But some of those standards will be definitely inconsistent at the same time.Why open source matters to the IoT market?A lot of the internet is based on the open source software, but customising it are supported by distributers, so it’s not com-

pletely a naked code. It is pretty much synonymous with the emergence of standards. So, there is going to be that underlyingcore of open source code that will emerge in the same way it does in the internet today.

With the number of IoT devices increasing and a huge amount of data being collected, do you think privacy will be anissue?

It is an issue. There are various countries, which are establishing guidelines on privacy.But it’s a difficult concept to prescribe in regulations because it depends on the context of the information. The only way of

effectively managing it is to bring in a trusted third party. We will need a more complex mechanism that pushes the conceptof privacy into a commercial and competitive context than something regulated.

Source: The Economic Times

India saved 55.7 million units of energythrough UJALAThe ministry of power’s initiative Unnat Jyoti by Affordable LEDs for all (UJALA), has already resulted in 55.7 million units ofenergy savings and has reduced carbon emissions over 45,000 tonnes.

UJALA has benefitted more than 5 crore citizens across 18 states and 4 union territories. This has been possible onlythrough robust distribution and awarenessmechanisms. The government has also en-sured that awareness of its UJALA pro-gramme reaches every beneficiary,irrespective of their social and economic back-ground.

Nevertheless, there are four states wherethe scheme has not taken off owing to neces-sary state government approvals. The govern-ment is engaging with the respective stategovernments and ensuring that the scheme isrolled out soon.

The ministry of power, along with the stateinformation departments, distribution compa-nies and several other partners have ensuredthat the common man is made aware of thescheme through various platforms and in respective local language of the state.

In every state where the scheme is functional - traditional media such as television, radio and newspapers; out of homemedia such as hoardings, communication vans, posters and digital platforms such as website, social media, mobile app andmicrosite have been used to spread awareness about distribution of these bulbs

In order to make sure the scheme takes off the power ministry has developed and has actively promoted a dashboard,which provides real-time update of number of bulbs distributed in cities, towns, villages the scheme is presently operational.

Also, each distribution centre is geo-tagged for consumers to ascertain its exact location. The dashboard can be viewed atwww.ujala.gov.in or downloaded from Google or Apple store. It details all the publicity material released by the government.

In fact, the government actively directs consumers to UJALA website for queries received on Twitter and Facebook aboutthe location of distribution kiosks. The Ministry has also urged consumers to visit the dashboard and identify the location ofthe nearest distribution centre along with lodging complaints to the ministry on any challenges faced, including faulty bulbs.


WEEKLYECONOMIC BULLETIN >> NEWS FEATURE4


French state-run power major EDF will invest heavily in renew-able energy in India, with projects worth $2 billion in the pipeline,and is bullish about the sector, where it sees electricity tariffsfalling 30% in five years, EDF Energies CEO Antoine Cahuzac toldET.

India is among the few countries EDF has chosen for a signifi-cant expansion of its global portfolio of renewable energy be-cause the country has a huge demand potential, power scarcityand “fantastic” quality of wind and solar radiation, Cahuzac said.

EDF is also interested in nuclear energy, for which it has initialagreements with Nuclear Power Corp, but regulatory issues arestill under discussion, he said. EDF also has interest in hy-dropower generation in India and is looking at a few prospects, hesaid.


WEEKLYECONOMIC BULLETIN >> OVERSEAS INVESTMENT5


French power major EDF plans $2 billiongreen bet on India

Listed funds invested $1.3 billion in the Indian markets in August, the highest among emerging markets (EMs) and thelargest so far in 2016. India and Taiwan attracted the highest inflows among EMs from listed funds with the latter getting$1 billion during the month.

Passively managed EM funds saw larger inflows com-pared to their actively managed peers. Passively managedEM funds or exchange traded funds (ETFs) saw inflows of$845 million during the month. EM-dedicated ETFs regis-tered inflows of $4.9 billion in the last four weeks. Fundstracking the MSCI India index recorded inflows of $327 mil-lion over the last one month.

Total inflows into India from listed funds came at just$545 million so far in 2016. This was due to large outflowsfrom active funds. Actively managed funds registered out-flows of $1.68 billion during the year. ETFs, however,recorded inflows of $2.2 billion in 2016, data compiled byKotak Institutional Equities showed.

Foreign portfolio investors (FPIs) also continue to remain bullish on India with sovereign wealth funds (SWFs) betting bigon equities. SWFs share in FPI assets under custody has jumped to around 11% in July from 8% a year ago.

FPIs, who made net investments of about $4.8 billion in the first seven months of 2016, bought shares in industrials, con-sumer staples, consumer discretionary and financial services sectors in a big way. The industrials segment was thefavourite for FPIs and accounted for 34% of their share purchases in value terms during the period. FPIs offloaded health-care and telecom stocks. They sold shares in healthcare firms to the tune of $1.07 billion during 2016. Telecom came sec-ond with share sales in the sector by FPIs coming at $272 million.

Allocations to India and China constituted more than one-third of the average Asia dedicated funds (excluding Japan)portfolio. Asia (excluding Japan) fund allocations to India remained at around 14%, data showed. Global EM funds allocated11.6% of their assets to India. Actively managed global EM funds however reduced their India exposure to 13.2% from 13.4%in June.

Source: The Times of India

India leads overseas inflow chart among Ems





Electronics and IT Minister Ravi Shankar Prasad today said foreign direct investment (FDI) in electronic manufacturing hastouched an all-time high of Rs 1.23 lakh crore in 2016 on the back of enabling policies of the government and its Make in India

initiative.The FDI stood at Rs 11,000 crore in 2014, the Minister

added.Speaking during an event here, Prasad said it was important

to develop electronics manufacturing in India as a study hadpredicted that by 2020, the country’s import bill of electronicsitems would surpass the fuel import bills.

The Minister said the government had set up electronicsmanufacturing clusters in different parts of the country for en-hancing manufacturing and when it comes to mobile manufac-turing, the volume has reached 11 crore units in 2015-16.

In value terms, mobile phones worth Rs 54,000 crore weremade in India and this is likely to touch Rs 94,000 crore in 2016-17.

Apart from electronic manufacturing clusters, the government is offering better tax regime and incentives of MSIPS forelectronic manufacturing. The government had removed basic customs duty (10 per cent) and special additional duty (four percent) proposed on charger, adaptor, batteries and wired headsets.

Source: Business Standard

Rs 1.23 lakh crore FDI in electronic manufacturing

WEEKLYECONOMIC BULLETIN >> OVERSEAS INVESTMENT

Foreign portfolio investors (FPIs) see Indian markets offering immense potential for investment, and whatever concerns theyhave over taxation and other issues will be looked into, Economic Affairs Secretary Shaktikanta Das said here on Tuesday.

“The FPIs are looking at bigger opportunities for investing inthe Indian market. So the overall outlook is very, very positive,”Das said after a meeting with some 40 top foreign funds, alongwith key financial sector regulators.

“Suggestions were made both in terms of process simplifica-tion. Some new suggestions have also come. Some taxation is-sues were also raised,” Das said, adding: “We will examine andlook at all the suggestions they have made.”

The top finance ministry official said that the issues raisedwould be discussed internally with officials from the Departmentof Revenue, the Securities and Exchange Board of India (SEBI)and the Reserve Bank of India -- all of which were represented atthe meeting.

A similar exercise is expected with domestic funds.Source: Indo-Asian News Service

Foreign funds positive, issues will be addressed: Finance Ministry

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WEEKLYECONOMIC BULLETIN >> SECTORAL NEWS9


The government on Friday said that Indian Railways will meet 100 per cent expenditure target by the end of the currentfinancial year.

Minister of State for Railways Manoj Sinha saidthis while addressing an Assocham conference on“2nd Global Investors India Forum” (GIIF), whichwas held here.

“The reforms will take time, and Make in Indiainitiative will yield result in the coming year,” Sinhasaid.

Sinha elaborated that NPAs (Non PerformingAssets) are a result of old legacy.

“There has been massive corruption in infra-structure sector,” he alleged.

The minister said that development of Dedi-cated Freight Corridor (DFD) is on schedule.

He also mentioned that trains with speed of 200km per hour will be seen in India.

“Talgo has been advised to make changes to suit overnight journey,” Sinha added.Sinha’s remarks came after Spain’s Talgo train completed its successful trial run between New Delhi and Mumbai

within 12 hours.Source: Indo-Asian News Service

Railways will spend 100% outlay this fiscal:Manoj Sinha

India will be hosting the 6th meeting of BRICS member nations on Agriculture and Agrarian Development here fromThursday, an official statement said.

During the two-day meet, the crucial ministeriallevel meeting will be held on Friday 23 while thefirst day will see only interactions among officials,the statement said on Tuesday.

Among other issues, detailed discussions willalso be held on the BRICS Agricultural ResearchCentre which is likely to be set up in India, and in-tended to be a forum for academicians, scholars,researchers and students for agricultural advance-ment in these countries.

The discussion will focus on priority areas of co-operation in the BRICS (Brazil, Russia, India, China,South Africa) Action Plan for 2012-2016, an officialstatement said.

The areas of cooperation will include creating basic agricultural information exchange system, strategy for ensuringaccess to food for the most vulnerable population, reducing negative impact of climate change on food security andadaptation of agriculture to climatic changes.

The member nations would also work enhancing agricultural technology cooperation, trade and investment promo-tion, the statement said.

Source: Indo-Asian News Service

Stage set for BRICS meet on Agriculture





About 22 airports to get connected under regional connectivity scheme in the first phase, Airports Authority of India(AAI) Chairman G P Mohapatra told media persons today.

“In the first phase, there are 22 airports that are alreadyin place and flights can start as and when airlines plan to,”said Mohapatra.

About 22 airports include one is in Andaman Nicobar,three in Assam, two each in Gujarat, Uttar Pradesh, Punjaband Rajasthan.

As part of the plan, the government plans to connectthese underserved airports to key airports through flightsthat will cost Rs 2,500 for per hour flight.

The government plans to provide subsidy to airlines tooffer these fares.

Mohapatra also said that AAI would invest Rs 17,500crore in upgrading airport infrastructure over a period till2019-20.

The amount we will invest will be generated through internal accruals. We may require to need money at a later stageand may raise money from outside,” he added.

The money to be spent will be on upgrade in building airport terminals and expanding runways at many existing air-ports.

The money would also be invested in upgrading 30 smaller airports for regional flights.Source: The Economic Times

22 airports to get connected under regionalconnectivity scheme: AAI

WEEKLYECONOMIC BULLETIN >> TRADE NEWS

Amid a challenging scenario of exports, the central government has enhanced its incentives support under the Merchan-dise Exports from India Scheme (MEIS) from Rs 22,000crore to Rs 23,500 crore per annum, said an official state-ment.

The Department of Commerce increased the range ofitems covered under the scheme from 5,012 to 7,103. The2,901 new products fall under categories such as tradi-tional medicines, certain marine and processed cerealproducts and other value added items of plastics, leatherarticles, suitcases, etc.

Under the scheme, which is implemented through Di-rectorate General of Foreign Trade, the Ministry alsoraised incentives rates of 575 products.

These products fall under 11 categories namely iron andsteel, handicrafts, moulded and extruded goods, rubber,ceramic, glass, auto tyres and tubes, industrial machinery engineering items, IC Engines, machine tools, items of wood,paper, stationary, footwear, auto seats, etc.


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Exports support increased to Rs 23,500crore a year

WEEKLYECONOMIC BULLETIN >> TRADE NEWS13


At a time when most sectors in India are complaining about Chinese dumping, tea producers from the two countrieshave joined hands to promote sustainable tea production and consumption.

The United Planters’ Association of SouthernIndia (UPASI) and China Tea Marketing Associa-tion (CTMA) signed a Memorandum of Under-standing (MoU) in this regard here on Thursday.Global sustainability organisation SolidaridadNetwork – which is backed by governments ofthe Netherlands, Norway, Switzerland, Irelandand partners like International Finance Corpora-tion – would provide the technical and financialsupport to implement the MoU.

Nico Roozen, executive director of Solidaridadtold Business Standard that the Western con-sumer pays 32 times more for a litre of cokethan for a litre of tea. The cheap tea bags or bottled tea that dominate the Western markets may have a sustainabilityseal on the packs, but they don’t support tea producers to make continuous improvement. A sustainability label is nolonger a product differentiator.

“So – like the coffee sector – we need to work towards a market that is increasingly characterised by price differentia-tion based on origin and high quality,” Roozen added.

According to N Dharamaraj, president of UPASI, this MoU is the first step towards greater regional cooperation be-tween Indian and Chinese tea industries, which produce and consume the highest volume of tea in the world. Both par-ties will support each other in technological innovation with the aim of expanding the worldwide consumer base forhigh-quality tea.

A working group has been formed comprising UPASI, CTMA and Indonesian Tea Traders Association to develop aclear road map. The funding support for this region would be around €15 million by 2020, said Roozen. The aim of theagreement is to achieve relevant United Nations-mandated Sustainable Development Goals, while building an inclusive,sustainable and resilient future for the tea sector.

Wang Qing, executive vice-chairman of CTMA, said: “Close regional cooperation on tea matters within Asia, includinginternational trade, can foster an economically diversified global tea sector. It would enhance the economic and socialdevelopment of tea-producing countries, the development of tea output, consumption, and improve business relationsbetween tea exporting, importing countries.”

Source: Business Standard

India, China to jointly promote tea production & consumption

WEEKLYECONOMIC BULLETIN >> NEWS ROUND UP14


Government appoints monetary policy committee to help RBI set interest ratesThe government appointed three members to the monetary policy committee (MPC), putting the seal on India’s new ar-chitecture for setting interest rates and ending the Reserve Bank of India governor’s role as sole arbiter. Its first policyreview is scheduled for October 4.

The three are academics — Chetan Ghate, as-sociate professor at Indian Statistical Institute;Pami Dua, director, Delhi School of Economics;and Ravindra H Dholakia, professor of econom-ics at Indian Institute of Management (IIM),Ahmedabad. They will be joined by three Re-serve Bank members, making up a total of six,with Governor Urjit Patel having a casting vote.The other two members are R Gandhi, deputygovernor in charge of monetary policy, and ex-ecutive director Michael Patra.

The government nominees will have a four-year term “or until further orders, whichever isearlier”, the finance ministry said, announcingthe appointments on Thursday.

Although appointed by the government, the three will function as independent members, a top finance ministry officialsaid. “Nominated MPC members enjoy arm’s-length distance from the government,” the official said.

The new framework should see a lowering of friction that has at times arisen between finance ministry and the cen-tral bank, which is often regarded by the government as ignoring the need to nurture growth in the drive to quell infla-tion. Rajiv Kumar, who was a member of the panel that picked the three government nominees, said the MPC shouldtake a broad view. “They have a tough task ahead of them,” he said. “They should take real economy issues into accountand not view inflation in isolation of other macroeconomic concerns such as employment.”

The committee will be guided by the consumer inflation target the government has set in discussion with the RBI —4% with a margin of two percentage points for the five years ending March 2021. The next monetary policy review willalso be the first after Patel took over as governor from Raghuram Rajan earlier this month.

Expectations are that the policy rate will be cut by 25 basis points following a sharp moderation in consumer inflationto 5.05% in August from 6.07% in the month before. A basis point is 0.01 percentage point.

The committee will decide interest rates through a majority vote, with each member having one vote. In the case of atie, the governor has a casting vote. At least four members will have to be present for the quorum to be complete.

Ghate has previously been on the five-member technical advisory committee that the RBI governor consulted ahead ofeach policy review. He was also a member of the expert group that suggested the switch to a committee-based mone-tary management system with an explicit inflation target. DK Joshi, chief economist at Crisil, welcomed the diversity onthe monetary policy committee.

“It is a rich MPC because it doesn’t comprise pure monetary economists but those with a broad set of experiences,”said Joshi. “It is a move towards modernisation of monetary policy making and participatory decision making.”


WEEKLYECONOMIC BULLETIN >> NEWS ROUND UP15


India’s satellite launch order book standsat Rs 280 croreIndia has a satellite launch order book of around Rs 280 crore for third parties. The country is also in discussions withothers for contract manufacturing of meteorological satellites, said top Indian space officials here on Monday.

The officials spoke to the media here after the suc-cessful launch of eight satellites-three Indian and fiveforeign-with an Indian rocket Polar Satellite LaunchVehicle (PSLV).

“Our order book size for launching foreign satel-lites stands at around Rs 280 crore. This will take usaround two/three years to exhaust,” said of AntrixCorporation’s Chairman-cum-Managing Director S.Rakesh. Rakesh said discussions are on with severalparties for orders worth a similar amount.

The Antrix Corporation is the commercial arm ofthe Indian Space Research Organisation (ISRO).

According to Rakesh, the company closed last fis-cal with a turnover of Rs 1,923 crore crore and is ex-pected to close the current fiscal with a revenue of around Rs 2,000 crore. He said the company is looking atconsolidating the performance and achievements of ISRO.

On making satellites for others, ISRO Chairman A.S. Kiran Kumar said: “Our meteorological satellites have excellentcapabilities which, barring the US, others do not have.” He said India is in discussions for making meteorological satel-lites for others.

According to Kumar, ISRO will look at the possibilities of contract manufacturing satellites for others along with In-dian industry as it has to cater to the country’s needs first.

He said there are opportunities and converting them into actual orders depends on various factors.Queried about ISRO’s plans to make six-tonne satellites, Kumar said the focus now is to get the same output from

four-tonne satellites instead of going for a six-tonner. The move will save sizeable sums for India as it pays to launchheavier satellites through the European space agency’s rocket Ariane.

Asked about the launch of Saarc satellite, Kumar said the satellite is being readied, adding that while Pakistan hassaid it is not interested in the India-built Saarc satellite, discussions are on with Bangladesh and Afghanistan.

India on Monday morning successfully put into orbit its own weather satellite SCATSAT-1 and seven others -- five for-eign: three from Algeria (Alsat-1B 103 kg, Alsat-2B 117 kg, Alsat-1N 7 kg), and one each from Canada (NLS-19, 8 kg) andthe US (Pathfinder, 44 kg); and two Indian: Pratham (10 kg) built by Indian Institute of Technology-Bombay (IIT-B) andPisat (5.25 kg) from PES University, Bengaluru, and its consortium.

With this, India successfully completed yet another multiple-satellite launch in a single rocket mission and is march-ing towards the milestone of 100 foreign satellite launches. Till date, India has successfully launched 79 satellites for in-ternational customers. Interestingly, this was also PSLV’s longest launch spread over two hours and 15 minutes.

The Indian space agency ISRO also put into commercial use its multiple-burn technology in its rocket Polar SatelliteLaunch Vehicle (PSLV). Simply put, multiple-burn technology is the switching off and switching on of a rocket’s engine inspace mainly to deliver satellites in two different orbits.


WEEKLYECONOMIC BULLETIN >> NEWS ROUND UP

India signs deal with France to buy 36 Rafalefighter jetsIndia on Friday signed a Euro 7.87 billion (about Rs 59,000 crore) deal with France to buy 36 Rafale fighter jets that willmeet the Indian Air Force’s critical operational requirement for a multi-role combat aircraft and enhance its strategicreach, especially in context of arch rival Pak-istan.

Defence Minister Manohar Parrikar and hisFrench counterpart Jean-Yves Le Drian signedthe inter-government agreement for purchaseof the fighter jets in fly-away condition that arecapable of carrying nuclear weapons.

The deal for fighter jets, which are equippedwith latest missiles and weapon systems, waspreceded by tough negotiations over the priceand will cost India about 7.87 billion euros.

The deal also includes obligations underwhich the French industrial suppliers will dis-charge offsets for 50 percent of the value of theprocurement. Soon after the deal was signed,Parrikar said in a tweet: “Will significantly improve India’s strike and defence capabilities.”

The tough price negotiations led to a delay in the finalisation of the deal, which covers delivery of 36 planes, sparesand weapons. The first fighter plane agreement in about two decades was inked almost 16 months after Prime MinisterNarendra Modi announced the decision to buy the jets during his visit to France in April last year.

The fighter plane will be equipped with Meteor, a beyond-visual range air-to-air missile expected to considerably ad-vance IAF’s capability in aerial combat. Sources said the missile has a range in excess of 150 km and is of much highercapability than the 80 km range of such weaponry with Pakistan.

Sources said tht IAF has authorisation for 42 squardons of fighter aircraft but its present strength is less than that.Rafale is a multi-role fighter aircraft capable of undertaking all types of missions with a capability to simultaneously

perform both air defence and ground attack roles in a single mission. It will have features like advanced electronicallyscanned array radar, mid-air refuelling and advanced electronic warfare equipment.

The Rafale fighter jet would be delivered within the next 36 to 67 months in fly-away condition along with weapons,training simulator, associated equipment and Performance Based Logistics(PBL) support. Sources said that the sched-ule is better than the delivery schedule proposed earlier by the French side.

India will purchase 28 single-seater Rafale fighter jets while eight jets will be two-seaters. The price of aircraft alone is about 91 million euros each for a single seater and about 94 million Euros for a two

seater aircraft. The sources said the jets would arrive in India in batches, with the first two coming in the next few months.India had decided to ink the deal for 126 Rafale jets in 2012 during the previous United Progressive Alliance govern-

ment. The deal was estimated to cost $10.2 billion and the plan was to acquire 18 aircraft in fly-away condition and man-ufacturing the rest in India.

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WEEKLYECONOMIC BULLETIN >> NEWS ROUND UP

However, during Modi’s visit to France in April last year, India conveyed that it would like to acquire 36 Rafale jets infly-away condition as quickly as possible in view of the IAF’s critical operational necessity for the multi-role combat air-craft.

A Memorandum of Understanding was signed with France in January this year for the purchase of 36 Rafale. Sources said the version of Rafale aircraft supplied to India will have better operational capabilities than the Rafale

being operated by other air forces in terms of better radar, better detection and survival features and will have capabili-ties for operations from higher altitude airfields.

The maintenance support for 36 Rafale will be provided through Performance based logistics which also includes ad-vanced training of three IAF pilots, one engineer and six technicians by the French Air Force.

The sources said the 36 Rafale procurement supports the ‘Make in India’ initiative of the government through offsets. Thales, a technology firm and a member of Rafale team alongside Dassault aviation, welcomed the signing of the

agreement. It said in a release that the contract will create hundreds of jobs on Thales manufacturing sites.Source: Indo-Asian News Service

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Ministry of SteelGovernment of India :::�-1(-%67))/);32�-1

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