INDIA NEWSLETTER www.indianembassy.at
Published by the Embassy of India, Vienna Year 4 • Issue 38 • February 2014
FEATURED INDUSTRY INDIAN AUTOMOTIVE SECTOR
India Newsletter • 1
Embassy of India, Vienna
The mutual fund industry in India stood at Rs 8,780 billion (US$ 140.84 billion) in 2013, growing by 11 per cent from Rs 7,930 billion (US$ 127.21 billion) a year earlier.n
The overall supply of organised retail real estate space in India has increased by 78 per cent year-on-year in 2013, due to improving demand from retailers.n
F o r e i g n institutional investors (FIIs) have invested around Rs 19,000 crore (US$ 3.02 billion) into the Indian debt market so far in 2014.n
Domestic airlines carried 5.58 million passengers in December 2013, a growth of 3.36 per cent year-on-year.n
Bengaluru in India is expected to attract the second highest demand for office space in 2014 among the top 30 cities in the Asia-Pacific region.n Strong growth in the Indian agriculture and services sector has helped push up bank credit growth to 7.2 per cent during April-November 2013.n
The number of foreign tourists visiting India grew by 4.1 per cent to touch 6.85 million during 2013, as compared to 6.58 million in 2012.n
The overall office space absorption in the top seven cities of India grew by 35 per cent in fourth quarter of FY14 at nearly 8.2 million square feet (MSF) against 6 MSF in the previous quarter.n
C e m e n t consumption in India is expected to rise by 8-9 per cent over the next year, taking estimated consumption to about 280285 million tonnes (MT).n 2 â€˘ India Newsletter
Under the High Altitude Balloon Development Project (HAA) a 61,000 cubic meters balloon indigenously developed in India at the Balloon Facility, Tata Institute of Fundamental Research (TIFR), Hyderabad penetrated into the mesosphere for the first time in India.n
Iron ore exports from India reached 3.75 million tonnes (MT) during the quarter ending December 2013, growing by 253 per cent year-on-year.n
Export of Indian cashew kernels has grown by 16 per cent to touch 90,244 tonnes in the first nine months of 201314.n
Indiaâ€™s mobile handset market is expected to grow to 326 million units by 2016, from the current 250 million handsets.n
Exports from India during December 2013 were valued at Rs 163,109.25 crore (US$ 26.52 billion), registering a growth of 17.24 per cent higher in rupee terms.n Spices exports from India stood at US$ 1.39 billion during AprilNovember 2013, registering a 28 per cent increase in volume and 32 per cent in dollar terms y-o-y.n
Total steel exports from India during April-December 2013 reached 4.13 million tonnes (MT), a growth of 9.5 per cent, as against 3.77 MT during the corresponding period last year.n
Foreign direct investment (FDI) in the Indian food processing sector reached US$ 2.14 billion during April-October 2013.n
The share of engineering goods increased to 30.7 per cent in FY13, from 26 per cent in FY03, in the total merchandise exports from India.n
NEWS ARTICLES India's trade jumps 5-fold to USD 792bn over 9 years: Govt
ndia's merchandise trade rose over five-fold to USD 792 billion over last nine years, the Commerce Ministry said. "This was achieved through robust policy announcements, which provided crucial support to struggling enterprises, especially labour intensive industry to ensure their global competitiveness," the Ministry said in a statement. It said that over the last nine years, the total merchandise trade increased to USD 792 billion from USD 142 billion. "India's external economic engagement has been considerably enhanced over the last nine years. The Foreign Trade Policy is focused on arresting and reversing the decline in exports," it added. The ministry said the market diversification strategy to enhance exports has yielded positive results. Due to demand slowdown in its traditional markets, the government provided incentives to exporters to explore non-traditional destinations such as Africa, Latin America and Asia. During April-December this fiscal, the country's exports aggregated USD 230.3 billion and imports USD 340.3 billion, translating to a trade deficit of USD 110 billion. In 2012-13, exports stood at USD 300.6 billion as compared to USD 63.8 billion in 2003-04, it said adding that the total trade of goods and services stands at around USD 1 trillion annually, which comes to 56 per cent of the GDP. Further, it said that exports from Special Economic Zones(SEZs) have increased to USD 87.55 billion in 2012-13 fiscal. In the past four years, exports from SEZs have grown four-fold. SEZs at present are providing direct employment to about 11,50,000 persons, it said. The Ministry said implementation of free trade agreements have also
helped in boosting the country's total trade. "We are at an advanced stage of concluding an ambitious Broad based Trade and Investment agreement with EU. We expect that as a result of these agreements, Indian exports will be able to gain significant market access in newer territories".n
Economy growing at 5%, no need to ring alarm bells: Montek Confident about India's growth story, Planning Commission Deputy Chairman Montek Singh Ahluwalia said the next government will have to take forward the process of fiscal consolidation to keep the economic momentum intact. He said there is no need to ring alarm bells for the Indian economy as it was already growing at 5 percent and the rate would improve further. "Ringing alarm bells is not right for a country that is already growing at 5 percent and has potential to grow over 6 percent and even 7.5 percent in the long term," Ahluwalia said. He was addressing a breakfast session organised by industry chamber CII and BCG (Boston Consulting Group) on the sidelines of the World Economic Forum (WEF) Annual Meeting. "The next government will have to take forward the fiscal consolidation process. When we talk about what is the real growth potential of the country, especially when we talk about having grown over 9 percent some time ago, I can see there were other factors and some overheating at play as well earlier... The long term growth potential can easily be around 7.5 percent," Ahluwalia said. Hoping that the electorate would "vote sensibly" in the upcoming Lok Sabha elections, he also emphasised that there should be continued focus on infrastructure development and investments.
"Whatever government comes to power I am sure that the reform process would continue, although priorities about sectors and areas may change," Ahluwalia said. According to him, a lot is being done to reduce liquidity mismatch, a problem which, if overlooked, could likely make it difficult for banks to do business."From India's point of view, we are not counting too much on bank credit and we are instead counting on foreign direct investments," he stated. Further, Ahluwalia said that emerging markets would need to focus more on FDI and bonds among other measures to make up for the fall in bank credit. Meanwhile, at the session 'Economic Outlook for Asian Emerging Markets - Opportunities, Challenges and Risks', IMF's Deputy Managing Director Min Zhu said emerging market economies have shown strong progress in the last decade, but potential growth rate has come down from the previous 10 years.n
India's growth projected to rise to 7.1 percent by 201617
ndia's growth is projected to rise to over six percent in fiscal 2014-15, increasing to 7.1 percent by fiscal 2016-17 with the world economy expected to strengthen this year, according to the World Bank. Growth is picking up in developing countries and high-income economies appear to be finally turning the corner five years after the global financial crisis, says the World Bank's Global Economic Prospects (GEP) report. The firming of growth in developing countries is being bolstered by an acceleration in high-income countries and continued strong growth in China, the report said. However, growth prospects remain vulnerable to headwinds from rising India Newsletter â€˘ 3
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global interest rates and potential volatility in capital flows, as the US Federal Reserve Bank begins withdrawing its massive monetary stimulus, it said. Growth in South Asia expanded a modest 4.6 percent in 2013, reflecting weakness in India amid high inflation, and current account and government deficits, the GEP noted. More recently, regional exports have recovered, because of strengthening external demand and the earlier depreciation of the Indian rupee. Regional growth is projected to improve to 5.7 percent in 2014, rising to 6.7 percent in 2016, led mainly by recovering import demand by highincome economies and regional investment. The projected pickup, however, will depend on macroeconomic stability, sustained policy reforms, and progress in reducing supply side constraints, the report said. The main risks to the outlook in South Asia are fiscal and policy reforms going off-track; uncertainties related to elections in Afghanistan, Bangladesh and India; entrenchment of inflation expectations; and a disorderly adjustment of capital flows in response to US tapering, it said. Global GDP growth is projected to firm from 2.4 percent in 2013 to 3.2 percent this year, stabilising at 3.4 percent and 3.5 percent in 2015 and 2016, respectively, with much of the initial acceleration reflecting stronger growth in high-income economies. Amongst high-income economies, the recovery is most advanced in the US, with GDP expanding for 10 quarters now. The US economy is projected to grow by 2.8 percent this year (from 1.8 percent in 2013), firming to 2.9 and 3.0 percent in 2015 and 2016, respectively. Growth in the Euro Area, after two years of contraction, is projected to be 1.1 percent this year, and 1.4 and 1.5 percent in 2015 and 2016, 4 • India Newsletter
respectively. "Global economic indicators show improvement. But one does not have to be especially astute to see there are dangers that lurk beneath the surface," said Kaushik Basu, senior vice president and chief economist at the World Bank. "The Euro Area is out of recession but per capita incomes are still declining in several countries," he said with the Bank expecting "developing country growth to rise above five percent in 2014, with some countries doing considerably better, with Angola at eight percent, China 7.7 percent, and India at 6.2 percent". "But it is important to avoid policy stasis so that the green shoots don't turn into brown stubble," Basu said.n
India set to become top automotive R&D hub
ndia has become an R&D hotbed and in keeping with the global R&D trend of last year, the country is now a preferred destination for automotive R&D, according to a study on the Global Top 500 R&D spenders done by Zinnov, a globalisation advisory and market expansion firm. “With strong potential for growth in areas such as engineering analytics and significant talent located in the ‘Deccan Triangle’ region – encompassing Pune, Bangalore and Hyderabad – India is poised to become an auto R&D hub,” the study observed. Increasing headcount In particular, the automotive sector with its focus on creating differentiated offerings for global markets and appetite for investment, is an attractive industry. However, while cost arbitrage continues to be a key driver for R&D globalisation, there is a pressing need for Indian MNC R&D companies to take on big technology bets to drive innovation from here, according to Zinnov. The study says that close to 50 per cent of the G500 companies present have over 10 per cent of the global
R&D headcount in India. Zinnov announced the results of the study on the Global Top 500 R&D spenders, showing the Automotive industry’s leadership across sectors in R&D spend in 2013. It said that the Auto industry spent $110 billion globally last year, the highest among the Top 500 R&D spenders in the world. Further, the automotive industry was also among the top three spenders in each region, across North America, Europe, APAC and Japan, with the total spend in the sector rising by 5 per cent over the previous year. Who’s in, who’s out India's position is highlighted by the fact that 874 MNCs have set up 1,031 centres and 45 per cent of the top 500 global R&D spenders have a presence here. Of the auto R&D centres located in India, the highest – 26 – are headquartered in the EU. In fact, BMW is the only automotive company among the Top 50 R&D spenders that hasn’t yet entered India for R&D. And, out of the 26 companies whose global R&D spend has increased by over 20 per cent during the last year, only two in the auto sector - Porsche and Rolls-Royce – do not have an India presence. In fact, in the last five years, the automotive companies have shown growth leading to R&D intensity of almost 6-7 per cent. Tracking growth nations The released Zinnov study brings to light that within the automotive sector, Japan contributed to 40 per cent, followed by 37 per cent from Europe, 13 per cent from North America and 12 per cent from the Asia Pacific region. Volkswagen was the highest R&D spender demonstrating a 32 per cent increase over last year. Bosch increased its spend by 14 per cent. Interestingly, China has the highest number of auto R&D centres, with 55. In comparison, India has 30 and the Bay Area in the US has 20. According to the report, the Top 500 R&D spenders contribute over USD 577 billion with the Top 100 R&D spenders alone contributing almost
66 per cent to the global R&D spend. 40 per cent of the overall R&D spend is from organisations headquartered in North America, followed by 34 per cent from Europe, 18 per cent from Japan, and 7 per cent from AsiaPacific.n
India re-emerging as investment hub, says PM
rime Minister Manmohan Singh claimed that the government’s economic reforms had already started creating an impact (on the world) and India was re-emerging as an attractive investment destination. “…our decisions are already beginning to make an impact and India is re-emerging as an attractive investment destination. I am confident you will see the evidence clearly in the next few months,” Dr. Singh said inaugurating the 12th Pravasi Bharatiya Diwas (conference of Indian expatriates) organised by the Ministry of Overseas Indian Affairs. Indian economy had done well over the past decade and in the nine years since 2004 it had “averaged a healthy growth rate of 7.9 per cent per year.” Though there was a slowdown in the recent past, “we will probably end this year at the same level as last year with 5 per cent growth.” A number of international as well as domestic factors had contributed to the economic slowdown. “Despite these challenges, our economic fundamentals remain strong. Our savings and investment rates are still over 30 per cent of our GDP and the entrepreneurial spirit in India is very much alive and kicking.” Dr. Singh said that in the recent months, the government had taken a very wide range of decisions to accelerate implementation of mega infrastructure projects, reform tax administration, improve fiscal management, liberalise FDIs and rationalise the system for allocation and utilisation of natural resources. With greater political support, the government could have legislated deeper reform measures.
There was a perception in some quarters outside India that the country was losing its momentum of the past decade. “This is also amplified by the political contestations here in India, which are inevitably louder in the election season that is now on the horizon,” Dr. Singh said. “I wish to assure you that there is no reason to despair our present or worry about our future…. We are heading into better times ahead.” Overseas Indian Affairs Minister Vayalar Ravi recalled the various schemes introduced for Indian expatriates like Overseas Citizen of India Scheme, voting rights for NRIs and the scholarship programme for Diaspora youth.n
Kirloskar Brothers installs world’s largest water pumping system
luid management company Kirloskar Brothers Ltd (KBL) has collaborated with Tata Power to install the world’s largest circulating water pumping system for the latter’s Ultra Modern Power Plant (UMPP) at Mundra. Coastal Gujarat Power Ltd, Tata Power’s wholly-owned subsidiary, which has implemented the 4,000 MW UMPP, requires massive amounts of water to condense the heat generated while producing power. Around 10.5 million litres of water is circulated by the pump sets per minute. Ravindra Ulangwar, AVP & Head, Power Sector, KBL, said, “The Mundra UMPP is India’s first and most energy efficient coal-based thermal power plant using supercritical technology to create lower greenhouse gas emissions and its main power generation equipment is sourced from Japan and Korea.” The pumping system is designed to take care of fluctuations in the sea water level due to tidal variations. The Mundra UMPP will meet 2 per cent of India’s power needs and 16 million domestic, industrial and agricultural consumers in Gujarat, Rajasthan, Maharashtra, Haryana
and Punjab will benefit from this project.n
India ranks among top investment destinations
ndia has received total foreign investment of USD 306.88 billion since 2000 and 94% of this amount has been received during last 9 years. India’s Foreign Direct Investment policy has been progressively liberalised to make the investment regime more investor friendly. In a recent review of the policy the government has amended the sectoral caps and/or entry routes in some sectors viz. petroleum & natural gas; commodity exchanges; power exchanges; stock exchanges, depositories and clearing corporations; asset reconstruction companies; credit information companies; tea sector including tea plantations; single brand product retail trading; test marketing; telecom services; courier services and defence. The review of FDI policy is done with a view to boost investor confidence thereby stimulating FDI inflows and contributing to accelerated economic growth. The government approved liberalisation of FDI norms in a number of sectors, including 100 percent in telecom and higher caps in insurance and defence sectors. FDI in multi-brand retail has been allowed up to 51%. The minimum foreign investment requirement is US$ 100 million, at least 50% of which shall be invested in 'backend infrastructure' within three years of the induction of FDI. The FDI limit in Single Brand Retail has been enhanced to 100%. It was also decided to allow 49 percent FDI in single brand retail under the automatic route and beyond through the Foreign Investment Promotion Board (FIPB) route. While the FDI cap in defence sector remained unchanged at 26 percent, it was decided that higher limits of foreign investments in 'state-ofthe-art' technology manufacturing would be considered by the Cabinet Committee on Security. India Newsletter • 5
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The result of the liberal foreign investment policies is that India has been consistently rated amongst the top three investment destinations globally by all international bodies including World Bank, UNCTAD. This is also mirrored in the foreign investment data. Between 19992004, India received US$ 19.52 billion of foreign investment which increased to US$ 114.55 billion between 2004-09, and increased further to US$ 172.82 billion between 2009- September 2013. FDI inflows have a positive impact by supplementing domestic capital, technology and skills of existing companies including in the aviation sector, as well as through establishment of new companies. It has indirect multiplier effect on other related sectors also, and thereby stimulates economic growth. FDI inflows also have a positive impact on the current account balance. When it comes to the impact of FDI in retail trading towards the consumers, it is beyond doubt that they have gained a lot from organised retail on multiple counts. Studies in comparable situations have revealed that lower income consumers saved more. Farmers too have benefited significantly from the option of direct sales to organised retailers. The profit realisation for farmers selling directly to organised retailers is about 60 per cent higher than that received from selling in the mandi. Small manufacturers will benefit from the safeguard pertaining to a minimum of 30% procurement from Indian small industries. This would provide the necessary scales for these entities to expand capacities in manufacturing, thereby creating more employment and also strengthening the manufacturing base of the country. They will also derive the benefits of technology upgradation, which will provide a fillip to productivity and local value-addition, thereby raising the profitability and earnings of the small manufacturer. The sourcing condition will also enable the 6 • India Newsletter
small enterprises to get integrated with global retail chains, thereby enhancing their capacity to export products from India. Small retailers would continue to be able to source high quality produce, at significantly lower prices, from wholesale cash and carry points. The young population joining the workforce will benefit from the creation of employment opportunities, in the entire range of activities from the backend to the frontend retail business, as also from the skills imparted to them by the prospective investors. Price stabilisation and inflation control could be achieved through direct buying from farmers, improving supply chain inefficiencies to lower transit losses, improved storage capabilities to control supply/demand imbalances, better quality and safety standards through farmer development and increased processing of produce. FDI in retail may thus be an efficient means of addressing this issue as this would bring in large investments required for the back end infrastructure & value chain and requisite technical &management know-how.n
Czech company sets up plant in Pune
zech Group Gearspect has set up a plant in Pune to manufacture gear measuring equipments and gear cutting machines for the auto, aeronautics, heavy engineering, construction equipment and defence sectors. Jiri Horacek, CMD, Gearspect Group a. s., said that this will be the only company to manufacture Gear Lead Profile Pitch Inspection Equipment in India. It also plans to assemble gear cutting machines in two years and later manufacture them. The facility involves an initial investment of Rs 6.5 crore.n
India & UK signs MoU to enhance the collaboration within the framework of UKIERI A Memorandum of Understanding has been signed between Department for Business Innovation and Skills (BIS) and Ministry of Labour & Employment (MoLE) to enhance the collaboration within the framework of UK India Education and Research Initiative (UKIERI) . The signing took pkace in New Delhi after a bilateral meeting held between the delegations led by Minister of State (L&E), Government of India Shri K. Suresh, and Minister Mr. Matthew Hancock, Minister of State for Skills & Enterprise, United Kingdom. The key points of the memorandum are as follows: ■■ Focus of this MOU is to collaborate and build partnership in the area of Skills Development and Employment Services. The MoU will be the guiding document for overall collaboration under which the following activities will be supported: ■■ Institutional capacity building of UK and Indian officials and institutes handling skill development and employment services ■■ Sharing of technical expertise, building linkages and identification of gaps in the areas of skill development and employment services, improvement in curriculum, benchmarking of assessment, certification and training methods. ■■ Supporting development of employment services in India on the lines of National Careers Service, UK. ■■ Other beneficial projects, in the area of skill development and employment services, mutually agreed. As a first step, UKIERI will facilitate partnership of Indian stakeholders with the existing Career Services in the UK. Best practices from the UK will be shared with MoLE and other stakeholders to help develop the Indian model. A workshop in this regard would be jointly organized by
MoL&E and UKIERI in February 2014. This initiative will be jointly funded by MoLE and UKIERI. India and the UK will partner on Mentor Councils in the identified priority sectors in responding to the skills demand in the sector and would cover an entire spectrum viz. restructuring of courses, curriculum development, identification and development of good teaching and learning aids, training of trainers with quality, devising assessment mechanisms, improving on the job training etc. UKIERI will support in providing UK experts for the Mentor Councils for upto 10 sectors through institutional partnership between the MCs set up by MoLE and the National Skill Academies in the UK. Each partnership will be jointly funded by MoLE and UKIERI.n
Indian retail market set to touch $865 billion by 2023
oreign direct investment (FDI) by multinational food processing companies has shot up to $2.14 billion in the country between April and October 2013, and continues to increase significantly. The Indian retail market, currently estimated at $490 billion, is project to grow at a compounded annual growth rate of 6 per cent to reach $865 billion by 2023. The opportunities in food and grocery retail in India are immense, given that it constitutes about 69 per cent of India’s total retail market, according to panel members at the seventh Food and Grocery Forum India. Head honchos of top food and grocery brands spoke on the opportunities that lay ahead for the growth of modern retail. In a session anchored by Shivnath Thukhral, Group President of Essar Group, retail CEOs, experts and consultants shared their insights on the business of food production in the country and some consumption patterns. The Government on FDI in food processing:
Union Ministry for Food Processing Joint Secretary J.P. Meena said the food processing sector is growing annually at 7.2 per cent compared with 3.9 per cent in agriculture for the last five years, ending 2013. Growing at a faster rate than the agriculture sector, more and more agriculture produce is getting processed, he said, adding that investment in the food processing sector has been increasing annually at 21.66 per cent. Foreign direct investment has also been increasing significantly at the rate of average inflow of $117 million for 11 years ending 2011-12. In 2012-13, it was $401 million, the Minister said. He added that exports were increasing at the rate of 20.4 per cent per annum. Heads of various food and grocery brands: “Consumers shopping at modern trade have grown from 54 per cent last year to the current 68 per cent, driven by increasing consumption, comfortable shopping experience, new categories, wide variety of brands under a single roof and attractive prices”, said Devendra Chawla, CEO of Food Bazaar. He noted that a whopping 55 per cent of the modern trade shoppers actively seek promotional deals, 35 per cent of them make bulk purchases, of which 30 per cent are male customers. Jamshed Daboo, CEO of Trent Hypermarkets, added that the country is moving at a fairly fast pace and that consumers are creating their own opportunities and are becoming exposed to information. The challenge, he noted, lies in serving this change. While Mark Ashman, CEO of Hypercity, added that consumer demand had seen the growth of Hypercity to the current 15 hypermarkets pan India, since operations started in 2006. Ajay Kaul, CEO of Domino’s added that a good 50 per cent of the market continued to sit on the sidelines, and that there was a huge opportunity
in the migration of traditional to modern trade. Nestle’s Vice President, Sales of Organised Trade, A.S. Chadha, said mass media has a big role in bringing the rural market to the center-stage, which is setting the actual consumer aspiration. “The key element to be focused on is the supply chain and infrastructure in the Tier-II cities. The potential of these cities can be tapped only by facilitating supply chain and logistics,” he added. Sharing Chadha’s view, Sumit Chanda, Chief Merchandising Officer of Aditya Birla Retail, said, “Before we talk about consumer engagement, we need to measure consumer’s adaptability and spending power in the Tier II cities. Around 5-6 years ago, television soaps captured the lifestyle of the metros, whereas today all the soaps are showcasing Tier-II and Tier-III cities. This proves that there is a huge aspiration level among the people in these cities which the retailer has yet to tap.”n
Innovation Hub at National Science Centre, Delhi launched
he Union government has taken yet another step to promote innovation through science and technology by establishing innovation hubs across the country. Shri Sam Pitroda, Chairman, National Innovation Council & Adviser to the Prime Minister on Public Information Infrastructure and Innovations inaugurated an ‘Innovation Hub’ at the National Science Centre, New Delhi. It provides a unique opportunity for children of various age groups to work at the facility during the week-ends to develop their ideas on various aspects of Science & Technology. Membership is available for interested students for long-term hands-on and mindson engagement in creative activities in science & technology. Over 40 students have already sought membership of the new facility. The Innovation hub has been equipped with components namely, Hall of Fame with stories India Newsletter • 7
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of Inventions and Inventors; Innovation Resource Centre with online access to innovation-centric resources; Innovative Laboratory to carry out activities, experiments and projects; Tech Lab for Robotics & Microprocessor Programming; Tod-Phod-Jod (Break & Remake) for students to open gadgets and reassemble them on their own; Kabad Se Jugad (Build from Scrap) for students to develop things from scrap and low-cost materials and an Idea Box for children to propose ideas and create an idea bank. The best ideas will be chosen for experimentation, model making and project work. In addition, children are encouraged to identify real life problem/investigatory projects and work on for solutions under the guidance of experts/mentors. While delivering the keynote address, Shri Sam Pitroda announced that the National Innovation Council along with the Ministry of Culture and the Planning Commission is working on the scheme to launch 100 such innovation hubs across the country. Similar hubs have been launched at the Bangalore and Kolkata Science centres under the Council of Science Museums, an autonomous body under Ministry of Culture. The basic idea is to encourage children to imagine and explore. He suggested that all Science centres must engage with the local community and create local ecosystems to own, support and nurture these innovation hubs. He also suggested that every science centre must have members of the local community including businessmen, scientists, professionals, academicians, and members of the civil society in its governing board.n
World's 1st biosimilar drug for breast cancer
angalore-based biopharmaceutical company Biocon on Saturday launched the world’s first biosimilar (developed in an organism) Trastuzumab injection for the treatment of breast cancer here. This is the first drug developed by
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Biocon in partnership with US-based generic drug maker Mylan. The new drug, CANMAb, will be used to treat HER2-positive advanced breast cancer. Kiran Mazumdar-Shaw, chairperson and managing director, Biocon, said the company would also launch the injection in other emerging markets. The CANMab injection will compete with Roche’s Herceptin. Herceptin’s global sales were $6.4 billion in 2012 and Indian $21 million. The drug has been jointly developed out of five molecules with Mylan, since a partnership was signed in 2009. Mylan will also launch CANMab under a different brand in India. The injection is available in 150mg and 440mg doses at Rs 19,500 and Rs 57,500, respectively. The 440mg dose costs a fourth less than competing drugs, Mazumdar-Shaw said. Biocon has set up a factory in Bangalore to make the new injection for itself as well as Mylan. Mylan will source its requirements from Biocon for both Indian and developed markets, a senior company official said. Biocon entered into partnership with Mylan for joint development of a series of drugs for the treatment of various cancers in 2009. At present, four other drugs are under development, clinical trials of which will begin later this year, said Abhijit Barve, president (research and development), Biocon. Mazumdar-Shaw said breast cancer was the most prevalent cancer among Indians and CANMAb would offer a cheaper option. About 150,000 new patients are diagnosed with breast cancer every year in India, of which nearly a fourth of the cases are HER2-positive and eligible for treatment with CANMAb. Lack of cheap treatment has limited the extent of HER2 testing and it is believed that the proportion of HER2-positive patients is probably higher, she said. “Biocon intends to make a significant difference in the treatment
paradigm for HER2-positive breast cancer in India by enhancing access to more affordable treatment with CANMAb, which offers the same level of safety and efficacy as the reference product. The launch of CANMAb in India is an important milestone for our biosimilars programme and demonstrates our ability to deliver on our promise of affordable innovation with a high quality, world- class product,” the Biocon chief said. Biocon aims to capture about 15 per cent of the market for anti-breast cancer drugs in India in a year. The market is estimated at Rs 130 crore a year, set to double in 2014.n
Facebook acquires Bangalore based Little Eye Labs
he news is out. Facebook has acquired Banglore based Little Eye Labs, a company building performance analysis and monitoring tools for mobile app developers. The acquisition has been confirmed on the website of Little Eye Labs. The acquisition is an obvious indicator of Facebook's mobile ambitions, which have been on the strategy tables since 2013. When it comes to access via mobile devices, Facebook has lagged behind rivals like Twitter. This is the first Indian acquisition by Facebook, and is being touted as a door opener. "We're acquiring Little Eye Labs, a company that produces world-class technology to help developers build more efficient products with Android, " said Facebook engineering manager Subbu Subramanian. He said Facebook is focused on producing useful and engaging mobile apps. "The Little Eye Labs technology will help us to continue improving our Android codebase to make more efficient, higherperforming apps," said Subramanian. Other acquisitions Facebook has made to strengthen its mobile products include Parse, a mobile-
backend-as-a-service startup it bought in April 2013. Facebook also recently made an unsuccessful attempt to buy instant messaging firm Snapchat, which reportedly turned down Facebook's $3 bn offer. Both the companies did not reveal the financial details of the transaction, but according to people familiar with the development, the deal is worth Rs 62 crore-Rs 93 crore. Little Eye Labs team will move to Facebook's headquarters in Menlo Park, California, where it will build analysis tools to help develop apps. About Little Eye Labs Little Eye Labs was founded in May 2012 by four Bangalore-based technology professionals--Giridhar Murthy, Kumar Rangarajan, Satyam Kandula, Lakshman Kakkirala after working at companies such as Apple, IBM, HP and Yahoo. "This has been a fun and exciting journey. We're eager to be working alongside the incredible team at Facebook,"said Kumar Rangarajan, chief executive of Little Eye Labs. "And together, we'll continue on our mission of building awesome analysis tools to aide in the development of brilliant apps." Little Eye Labs has received seed round of funding from GSF Superangels and VenturEast Tenet Fund. Good news for Indian tech startups "This acquisition is a transformative deal for not only the Indian startup ecosystem but also for the whole of the emerging world," said Rajesh Sawhney, founder of GSF Accelerator."This validates GSF's core tenet that Indian product startups are now ready for a global play." Experts hope small-size technology ventures in India will attract the attention of larger firms. "This acquisition is an indication of what will be happening this year. We will see many sub $40 million (Rs 248 crore) kind of deals," said Sharad Sharma co founder of software product think-tank iSpirt. "Smaller exits are the life blood for healthy startup ecosystems like in
Israel and US," said Sharma who is running an active M&A Connect Program at iSpirt that is curating a list of several dozen companies. In 2013, there were 100 merger and acquisition deals across the India's information technology industry. Of this, 31 whose value was announced were worth $1,906 million (Rs 11,807 crore), according to research firm Venture Intelligence.n
Delhi airport emerging hub for global flyers
he Delhi airport, with the share of its transit passengers in total annual traffic nearly doubling in three years to about 18 per cent, appears to be transforming itself into an international hub. Delhi International Airport Ltd (DIAL) has estimated the number of transit passengers for the airport to hit 6.59 million by the end of March, 17.77 per cent of its projected 37.08 million annual traffic. Buoyed by Air India’s Star Alliance induction, expected to add scale to the airline’s global flight plans, DIAL expects transit passengers’ share in total to increase to 25-26 per cent by 2015-16. That would put Delhi in the league of global airport hubs like Chicago and Hong Kong (where transit passengers account for 26 per cent of total) and Bangkok (around 40 per cent). Airports like Singapore and Dubai, which hardly have any domestic business, have more than 50 per cent of their business coming from transit passengers. DIAL, the GMR Infra-led consortium that operates the Delhi airport, also expects full-service carriers like TataSingapore Airlines to start longhaul flights using Delhi as a hub, especially with the government planning to remove the restrictions — such as five years of operational experience and a fleet of at least 20 aircraft — on domestic carriers flying abroad. “The number of transit passengers at Delhi’s T3 (Terminal 3) has gone up substantially in the past three years. With Air India moving into
Star Alliance, we expect a lot of partner airlines to make India the hub. We expect transit traffic to account for 25-26 per cent of passengers by 2015-16,” said Kiran Jain, head of airline marketing and route development at DIAL. According to data available with International Air Transport Association (IATA), transit passengers constituted 16 per cent of the Delhi airport’s total passenger traffic last financial year, compared with 12.74 per cent in 2011-12. In 201213, DIAL saw 5.47 million transit passengers using the airport — the growth in transit passengers came even as total passenger throughout declined around seven per cent to 34.39 million. “The share of transit passengers in the total traffic is around 19.6 per cent. Most of these passengers come from neighbouring countries like Nepal, Bangladesh and Sri Lanka. But, with Air India starting direct flights to Birmingham, Sydney and Melbourne, we see passengers from Europe transiting in Delhi before travelling to Australia. At least 12 per cent of the passengers on Air India-Birmingham flights will transit at Delhi to go to Australia every day. Also, many will come from Birmingham and transit to domestic destinations and neighbouring countries. The total transit passengers on this route is 75 per cent,” said Pradeep Panicker, chief commercial officer (aero), DIAL. In 2013-14, DIAL expects a transit traffic of 6,598,268 - an increase of 20.6 per cent from the previous year. Air India accounts for a little over 41 per cent of transit passengers at the Delhi airport. The staterun carrier, which feeds traffic at the airport from Indian cities and regional international destinations going to Europe, US and Australia, is followed by Jet Airways and IndiGo. Also, China Airlines flies from Taipei to Rome, transiting from Delhi and Ethiopian Airlines flies from Adis Ababa to Beijing via Delhi. Industry experts expect the proportion of transit passenger India Newsletter • 9
Embassy of India, Vienna
in the total to go up substantially after Tata-SIA starts operations. "SIA could use New Delhi to launch new flights to North and South America, alongside its Indian subsidiary, while picking up domestic feed traffic, thereby remedying SIA's network deficiencies," said Hong Kong-based aviation analyst Daniel Tsang.
According to Centre for Asia Pacific Aviation (Capa), about 40 per cent of international traffic out of India travels to its final destination through an intermediate offshore airport. As much as half of such traffic is captured by hubs in West Asia. With Tata-SIA starting domestic operations, the Delhi airport is
likely to get a boost in realising its potential. "Delhi airport's position as a global hub will get a boost with both Air India and Tata-SIA using it as a hub for long-haul flights," said Amber Dubey, partner & head (aerospace and defence), KPMG.
INTERVIEW New technology and products are set to
those in rural India. Our global R&D
reliability, after last year’s grid collapse
drive the Indian power sector, according
and engineering centre, located in
in North India. There is a lot of focus on
to Subir Pal, who heads Country Business
Bangalore, is helping develop products
grid reliability by agencies like PGCIL
Development and Marketing at ABB
suited for the domestic market. It
(Power Grid Corp of India Ltd). So,
India Ltd. In an interview, Pal talks about
also allows us to carry out constant
smart grids are being driven by both
the new opportunities and challenges
upgrades of our existing products. We
the Centre and the States. The value
for the power and equipment company
have about 1,000 engineers working in
of contracts we are seeing for setting
in the country. Excerpts:
both Bangalore and Chennai centres.
up smart grids range between Rs 100
Q: What are the challenges and
Q: Are there any new products
crore and Rs 200 crore.
opportunities for ABB in India?
coming out of your manufacturing
Q: Are there enough skill sets
available in India for smart grids and
not performing as it should because
A: We are constantly churning out new
intelligent network rollout?
products from our manufacturing
A: This is of course a constant challenge.
plants in India. We plan to manufacture
The young graduates who come out
GIS (gas insulated switchgear) of up to
of engineering colleges need to be
400 KV, which are huge space-savers.
trained before they can imbibe all these
We are also going to make dry type
technologies. As we have technology
transformers, which are normally
centres in the country, we have a huge
used in data centres as they are safer,
amount of expertise available to train
especially in buildings, compared
people. So, this is not a very significant
with oil cooled transformers. Dry type
challenge for us.
Q: What type of technological
transformers are more expensive
innovations has ABB carried out in
but are preferred more.Q: How have
State governments responded to
A: The company has developed solar
the adoption of smart grids in the
pump invertors locally — these were
tested in Rajasthan. This has huge
A: Gujarat and Maharashtra have
implications. We hope States will adopt
it in a major way. Taking this product
initiatives and floated some projects
There is a large uptake of gear in the power distribution segment
abroad may not happen soon because
on a pilot basis. There are also Central
the conditions are different from
A: While we believe the industry is have
there is a large uptake in the power distribution segment and slight upturn in the grid stability space. We hope 2014 will be a better year than 2013 with more stability in governance and policy-making, which will help companies perform better.
10 • India Newsletter
Subir Pal, Country Business Development and Marketing at ABB India Ltd.
INDUSTRY The Indian Automotive Sector
utomobiles production increased at a compound annual growth rate (CAGR) of 12.2 per cent over FY05-13, while the export volumes increased at a CAGR of 19.1 per cent. Strong demand growth due to rising incomes, growing middle class, and the young population is likely to propel India among the world’s top five auto-producers by 2015. India has significant cost advantages; auto firms save 10-25 per cent on operations in India as compared to Europe and Latin America. A large pool of skilled manpower and a growing technology base are some of the leading factors. The government aims to develop India as a global manufacturing as well as research and development (R&D) hub. There has been a wide array of policy support in the form of sops, taxes and FDI encouragement. Under the Union Budget 2013-14, the government has also proposed to allocate US$ 2.7 billion for Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to bolster sales volumes of Medium and Heavy Commercial Vehicles (MHCV). The world’s cheapest car (Tata Nano) has directed focus towards the lowincome market. Bajaj Auto, Hero Honda and Mahindra & Mahindra (M&M) jointly plan to develop a technology for two-wheelers to run on natural gas. Electric cars are likely to be a sizeable market segment in the coming decade. India represents one of the world’s largest automobile industries. Easy availability of finance and rising income levels are encouraging the middle class population to upgrade their two wheelers to a car. Besides, the growing organised used car market has also been a positive growth factor in the used car market of the country. Driven by the above factors, the used cars market is
anticipated to grow at a compound annual growth rate (CAGR) of 16 per cent during 2013–17, highlighted the RNCOS report titled, ‘Booming Used Car Market in India Outlook 2017’. India is quietly becoming a production hub of high-end vehicles meant for export to China. The USbased motorbike maker Harley Davidson, Austrian motorcycle manufacturer KTM and Mahindra & Mahindra have also preferred to set up manufacturing facilities in India than in the relatively low-cost China and export the output. Furthermore, India is set to become Mercedes Benz’s fastest-growing market worldwide ahead of China, the US and Europe, according to internal projections. We expect growth rates to be the fastest in India globally, and expect sales to move up by 10 per cent over the next five years or so, as per Mr Matthias Luhrs, Vice-President (Global Sales), Mercedes Benz Cars. Key Statistics The passenger vehicles production in India touched 3.23 million units in 2012–13 and is expected to reach 10 million units by 2020–21. The industry is estimated to grow at a CAGR of 13 per cent during 2012–2021. In addition, the industry recorded exports worth US$ 9.3 billion in 2012–13 and is projected to touch US$ 30 billion by 2020–21, according to data from Automotive Component Manufacturers’ Association (ACMA). The cumulative foreign direct investment (FDI) inflows into the Indian automobile industry during April 2000 to October 2013 was recorded at US$ 9,079 million, amounting to 4 per cent of the total FDI inflows (in terms of US$), as per data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce, Government of India. India is also expected to emerge
as a centre for producing compact superbikes as Indian customers progress to the next level of biking. Several global and Indian bike makers plan to utilise India’s massproduction base of 16 million twowheelers to roll out sports bikes in the 250 cc capacity. More so, the demand for premium sports utility vehicles (SUVs) will continue to grow. The market size of premium SUVs was estimated to be around 25,000 units annually in India. Major Developments & Investments ■■ Tata Motors Ltd plans to invest about £30 million (US$ 49.17 million) in the National Automotive Innovation Campus (NAIC) for research and development (R&D). The investment would be made through its subsidiary Tata Motors European Technical Centre (TMETC) at the University of Warwick campus, UK. ■■ Volvo India Pvt Ltd plans to set up truck and bus manufacturing facility in Malur, Karnataka, with an investment of Rs 974 crore (US$ 158.32 million). The facility is expected to give employment to about 2,125 people. ■■ Manufacturing companies in Japan continue to view India as the top destination for investments— over China, Thailand, Vietnam, Brazil and Indonesia—in the next three years, according to Mr Masanori Nakano, Consul General of Japan in Chennai. ■■ Tata Motors-owned Jaguar Land Rover (JLR) has entered into an agreement with the state of Rio de Janeiro to build a manufacturing plant in Brazil with an investment of Rs 4,626 crore (US$ 751.95 million). JBM Auto has formed a joint venture (JV) with Italian bus maker BredaMenarinibus to manufacture luxury buses in India. The Indo– Italian venture plans to set up a plant at Kosi, near Faridabad in Haryana, and produce 2,000 buses every year India Newsletter • 11
Embassy of India, Vienna
initially, at an investment of Rs 500 crore (US$ 81.27 million). ■■ Mahindra & Mahindra (M&M) plans to develop the world’s first hybrid technology that can be deployed in vehicles with manual transmission and enhance fuel efficiency by almost 20 per cent. ■■ Amtek Auto has signed an agreement to buy Germany-based Kuepper Group of companies for about €200 million (US$ 272.73 million) in its second big European acquisition in 2013. ■■ Honda Cars India will use the Ennore Port to export cars to South Africa. The infrastructure for car exports at Ennore Port is attractive and cost effective. Government Initiatives
points: ■■ The period of concession available for specified part of electric and hybrid vehicles till April 2013 has been extended up to March 31, 2015. ■■ The basic customs duty (BCD) on imported luxury goods such as high-end motor vehicles, motor cycles, yachts and similar vessels was increased. The duty was raised from 75 per cent to 100 per cent on cars/motor vehicles (irrespective of engine capacity) with CIF value more than US$ 40,000; from 60 per cent to 75 per cent on motorcycles with engine capacity of 800 cc or more and on yachts and similar vessels from 10 per cent to 25 per cent.
The Government of India plans to introduce fuel-efficiency ratings for automobiles to encourage sale of cars that consume less petrol or diesel, as per Mr Veerappa Moily, Union Minister for Petroleum and Natural Gas, Government of India.
■■ In addition, an increase in excise duty from 27 to 30 per cent has been allowed for SUVs with engine capacity exceeding 1,500 cc, while excise duty was decreased from 80 to 72 per cent, in case of SUVs registered solely to be used for taxi purposes.
The Union Budget 2013–14 added some incentives to the industry. The analysis by Deloitte on the Union Budget highlighted the following
■■ An exemption from BCD will be provided to lithium ion automotive battery for manufacture of lithium ion battery packs for supply to
12 • India Newsletter
manufacturers of hybrid and electric vehicles. ■■ The excise duty on chassis of diesel motor vehicles for transport of goods reduced from 14 per cent to 13 per cent. ■■ The Government of India allows 100 per cent FDI in the automotive industry through automatic route. Road Ahead The vision of Automotive Mission Plan (AMP) 2006–2016 expects India, “to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion; accounting for more than 10 per cent of the gross domestic product (GDP) and providing additional employment to 25 million people by 2016.” With special focus on exports of small cars, multi-utility vehicles (MUVs), two and three wheelers and auto components; the automotive sector’s contribution to the GDP is expected to double reaching a turnover worth US$ 145 billion in 2016, according to the AMP 2006– 2016.
PRESENCE OF A CLEAR LEADER IN EACH MARKET SEGMENT
MAJOR PLAYERS IN THE POWER SECTOR
NOTABLE TRENDS IN THE INDIAN AUTOMOTIVE INDUSTRY
India Newsletter • 13
Embassy of India, Vienna
Auto Expo 2014 ends with hope of car demand revival
compared with 1,73,449 units a year earlier.
Motors presenting bikes and electric vehicles.
Annual car sales in India declined for the first time in 11 years in 2013, posting a 9.59 percent dip, as the auto industry reeled under a prolonged demand slump due to the economic slowdown. Buyers were deterred by rising fuel prices and high loan rates.
The glamour quotient at this year’s auto show was led by Bollywood superstars Priyanka Chopra, brought in by Jaguar, Kareena Kapoor at DC Design, John Abraham at Yamaha, Akshay Kumar at HMSI and Ranbir Kapoor at Hero MotoCorp.
he curtains came down on the 12th edition of India’s flagship automobile show, Auto Expo, with the industry hoping that positivity around the spectacle will spark a revival in demand after a prolonged slump in sales. The week-long show witnessed 70 unveiling, of which 26 were global models. A total of 5.61 lakh people visited the show, with 90,000 attending on the last day. The previous edition of the expo held at Pragati Maidan in New Delhi in 2012, attracted 7 lakh people. “We had our qualms before the show but it has turned out to be much more structured compared to the ones we had at Pragati Maidan before. It is very well laid out here, with almost international standards and people could experience all the stalls in a better fashion,” Maruti Suzuki India Vice President (Marketing) Manohar Bhat told PTI. With the expo being held when the auto industry is struggling with declining sales, he said: “The positive response we have received here from the people gives an indication to the industry of what of lies ahead.” Expressing similar sentiment, Society of Indian Automobile Manufacturers (SIAM) Deputy Director General Sugato Sen said: “The 70 unveilings/ launches that we witnessed during the expo will excite the market. Let’s hope that we will be able to reap the harvest of what we have sown.” Car sales in India fell for the fourth straight month in January, declining 7.59 per cent and prompting SIAM to seek government support in the upcoming interim Budget. According to data released by SIAM, auto companies sold 1,60,289 cars in the domestic market last month 14 • India Newsletter
Asked if the India Expo Mart here would become the permanent venue for the Auto Expo, considering the positive response from both exhibitors and the general public, Sen said it is too early to finalise a decision on that. Among the key launches at the show was Maruti Suzuki’s hatchback Celerio, which boasts of an automatic gear shift and is priced between Rs.3.9 lakh and Rs.4.96 lakh in Delhi. The company also unveiled two concept models -- Ciaz sedan and the crossover SX4 S-Cross -- to meet growing demand for sedans in India, China and elsewhere. . Hyundai Motor India Ltd, the second-largest car maker in the country, expanded its product portfolio with the launch of a new generation sports utility vehicle, Sante Fe, priced at between Rs.26.3 lakh and Rs.29.2 lakh (ex-showroom Delhi). The flavour for this year was the compact sedan segment, with many players planning to make a foray into the category. While Hyundai showcased its Xcent, Ford displayed its Figo Concept and Tata Motors announced plans to launch Zest later this year, apart from a new hatchback Bolt. On the second day of the show, superbikes hogged the limelight with companies such as Harley Davidson, Triumph, DSK Hyosung, Hero MotoCorp and Japan’s Terra
Sachin Tendulkar also sent the crowd into a tizzy when he appeared for BMW on the first day. The first two days of the expo, which started on February 5, were reserved for media and the general public was allowed from February 7. Unlike in the past, the 12th edition of Auto Expo was split into two parts due to space constraints, with the motor show at Greater Noida and the auto components exhibition at Pragati Maidan. On the last day, the crowd started trickling in from morning and reached a peak by the afternoon. While many left with good memories at the end of the day, some who came late were disappointed as they could not see all the exhibits that were on display. “I took half-day off from office and drove all the way from Faridabad. I could not enter the hall where Toyota and Honda displayed their vehicles as they closed the gate by 5 pm,” said a disappointed Abhishek Kumar, a trainee engineer with a leading automobile company. He, however, had a lot of praise for the organisers, SIAM, the Confederation of Indian Industry and the Automotive Component Manufacturers Association of India. “This is my third Auto Expo. The crowd management at Pragati Maidan was very bad and here it was very good,” Kumar said, adding that the distance to the India Expo Mart here wasn’t a deterrent for an auto enthusiast like him.
EXPERT BUSINESS ADVICE The article below was extracted from Dezan Shira & Associates’s publication entitled “India Briefing”. For further corporate assistance, consider contating Dezan Shira & Associates, a specialist in foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. For further details or to contact the firm, please email Mr. Olaf Griease under email@example.com or visit www.dezshira.com
Payroll Calculation in India
ayroll or employee compensation management is a multifaceted process. As part of payroll, businesses generally compute and withhold government taxes like social security and individual income taxes from employee salary. Many companies also have benefit plans like health insurance, which include deductions of premiums from employee salary according to employee customization, adding another layer of activity for payroll processing. To help shed some light on this complicated process, in this article we discuss: ■■ Salary ■■ Allowances (including housing and leave travel assistance) Salary Section 17 of the Income Tax Act defines salary to include: ■■ Wages ■■ Pensions or Annuities ■■ Gratuities ■■ Advance of Salary ■■ Any fee, commission, perquisites or profits in lieu of or in addition to salary or wages ■■ Any encashment of leave salary ■■ Any amount of credit to provident fund of employee to the extent it is taxable Salary also generally includes what
is known as a “dearness allowance.” A dearness allowance is a type of allowance provided for the highercost of living in particular cities or states. While this allowance is most important for government employees, certain private companies also offer it at their own discretion. As a result, “salary” includes basic salary, encashment of leave salary, advance of salary, various allowances such as dearness allowance, entertainment allowance, house rent allowance, and also includes perquisites by way of free housing, free car, free schooling for children of employees, etc. For income to be treated as salary: ■■ There must be an employeremployee relationship between the payer and receiver of income; ■■ Salary income must be real and there must an intention to pay and receive salary; ■■ Salary may be from more than one employer and may be received from not just the present employer but also a prospective employer and (in some cases even from a former employer, as is sometimes the case for pension). Salary can be charged in the year received or in the year earned, whichever is earlier, i.e. if the salary has been received first, then it will be taxable in the year of receipt. If salary has been earned, but not yet received, then it will be taxable in the year earned. Salary income is
taxable in the hands of individuals only. No other type of person, such as a firm, or company can earn salary income. Salary tax rates are shown in the accompanying table. An employer is required to deduct tax at source on a monthly basis from a salaried employee and to make additional contributions to a provident fund and insurance. Wages vary considerably, depending on industry, company size and region. There is a national minimum wage. Companies use both time and piece rates to set compensation for their employees. ■■ Time rates are more common in organized-factory industries, such as engineering, chemicals, cement, paper and glass. Rates may be per hour, day, week or month. ■■ Piece rates, which the government has encouraged in order to boost productivity, are usually paid monthly, though casual workers are paid on a daily basis. Some industries (especially metal extracting, metal rolling, electrical machinery and glass) pay production premiums. In the organized sector, salaries are often set by settlements reached between trade unions and management. Base pay typically contains benefits such as provident funds, pensions and bonuses, which account for up to 30 % – 42 %. India Newsletter • 15
Embassy of India, Vienna
Allowances Allowances are categories of expenditures in India that are not taxable, provided they match certain specifications and do not exceed a certain amount. Allowances in India include those for: ■■ House Rent ■■ Transport ■■ Medical ■■ Meal Coupons ■■ Leave Travel ■■ Education ■■ Special Allowance House Rent If a company chooses to provide House Rent Allowance (HRA) to its employees, the amount of this allowance exempt from tax is the lowest of three numbers: ■■ 1) 50% percent of salary in metropolitan areas (40% percent non-metropolitan) ■■ 2) Total rent paid over 10 percent of salary ■■ 3) House received
Transport Transport payments of up to INR800 (US$14.22) per month for an employee commuting between residence and place of work are exempt from tax.
■■ Reimbursement of expenses sustained by an employee and family members in approved hospitals, etc. ■■ Premiums paid by the employer towards medical insurance on the health of an employee ■■ Reimbursement by the employer of premiums paid by the employee towards insurance on his health or of that of his family
Leave Travel Leave travel is remunerated for meeting
incurred by an individual and family members (this includes only the spouse, two children and dependent parents, brothers and sisters) while on holiday in India. The amount excluded depends upon the mode
■■ Expenditure incurred by the employer on medical treatment of the employee whose family is outside India
■■ Travel and housing abroad of the employee or his family including one attendant accompanying the patient for medical treatment
an individual does not use their
■■ Group medical insurance for an employee and family members or reimbursement of premium paid by an employee for medical insurance. For medical treatment abroad, the actual expenditure incurred includes the travel and stay abroad of the patient and one attendant (if permitted by the RBI). The ceiling for the gross total income excluding the amount to be reimbursed is INR200,000 (US$3,898). The following medical facilities provided to an employee are exempt from income tax: ■■ Treatment of an employee or his family in any hospital maintained by the employer
Two journeys in a block of four calendar years (current block runs from 2014-2017) are exempt. If exemption, said exemption can be carried over to the next block and used in the calendar year immediately following that block. Other Allowances In addition to those listed above, the subsequent allowances are exempt from tax: ■■ Uniforms (not merely clothing) ■■ Books and Periodicals (unlimited) ■■ Work-related
expenses; ■■ Cost of travel on tour or on transfer; ■■ Daily ordinary charges incurred by the employee on account of absence from his normal place of duty during a tour;
■■ Reimbursement of any medical expenditure actually incurred by the employee for himself or his family
■■ Expenditure on a helper engaged
encourage academic research and
■■ Treatment in any hospital maintained or approved by the government
An exemption for medical expenses is allowed for:
■■ Reimbursement up to INR15,000 (US$266.66) for medical treatment of the employee and family members
Lunch and refreshments that the employer provides to the employee at free or concessional rates is not taxable.
the purchase or maintenance of
In the case of blind or orthopedically handicapped employees, INR1,600 (US$28.61) per month is exempt from tax.
16 • India Newsletter
in office duties; ■■ Allowances
training in educational and research institutions; and incurred
uniforms necessary for in office duties.
TRADE FAIRS INTERESTED IN VISITING A TRADE SHOW IN INDIA? In case your company is interested in visiting a tradeshow/B2B event in India, be it one listed here or another one that came to your attention, get in contact with us via firstname.lastname@example.org to get more information about possible assistance/subsidies.
India Newsletter â€˘ 17
Embassy of India, Vienna
18 â€˘ India Newsletter
INVEST INDIA Federation House, Tansen Marg New Delhi—110 001 0091-11-23765085, 23487278 email@example.com www.investindia.gov.in
nvest India is the country’s official agency dedicated to investment promotion and facilitation. Set up as a joint venture between FICCI (51% equity), DIPP (35% equity held by the Department of Industrial
policy and Promotion, Ministry of Commerce & Industry) and State Governments of India (0.5% each), its mandate is to become the first reference point for the global investment community. It provides granulated, sectorspecific and state-specific information to a foreign investor, assists in expediting regulatory approvals, and offers hand-holding services. Its mandate also includes assisting Indian investors make informed choices about investment opportunities overseas.
India Newsletter • 19
Embassy of India, Vienna
TOURISM Indian Properties inscribed on the World Heritage List Cultural ■■ Agra Fort (1983) ■■ Ajanta Caves (1983) ■■ Buddhist Monuments at Sanchi (1989) ■■ Champaner-Pavagadh Archaeological Park (2004) ■■ Chhatrapati Shivaji Terminus (formerly Victoria Terminus) (2004) ■■ Churches and Convents of Goa (1986) ■■ Elephanta Caves (1987) ■■ Ellora Caves (1983) ■■ Fatehpur Sikri (1986) ■■ Great Living Chola Temples (1987) ■■ Group of Monuments at Hampi (1986) ■■ Group of Monuments at Mahabalipuram (1984) ■■ Group of Monuments at Pattadakal (1987) ■■ Hill Forts of Rajasthan (2013) ■■ Humayun’s Tomb, Delhi (1993) ■■ Khajuraho Group of Monuments (1986) ■■ Mahabodhi Temple Complex at Bodh Gaya (2002) ■■ Mountain Railways of India (1999) ■■ Qutb Minar and its Monuments, Delhi (1993) ■■ Red Fort Complex (2007) ■■ Rock Shelters of Bhimbetka (2003) ■■ Sun Temple, Konârak (1984) ■■ Taj Mahal (1983) ■■ The Jantar Mantar, Jaipur (2010) Natural ■■ Kaziranga National Park (1985) ■■ Keoladeo National Park (1985) ■■ Manas Wildlife Sanctuary (1985) ■■ Nanda Devi and Valley of Flowers National Parks (1988) ■■ Sundarbans National Park (1987) ■■ Western Ghats (2012) 20 • India Newsletter
■■ Agra Fort
■■ Hill Forts of Rajasthan
■■ Nanda Devi and Valley of Flowers National Parks
India Newsletter â€˘ 21
Embassy of India, Vienna
REPUBLIC DAY CELEBRATIONS AT THE EMBASSY
he Embassy organized an Indian Cultural Evening on the occasion
of the Republic day on 26th January in the Groser Fest Saal (the ceremonial hall) of the University of Vienna. The event comprised of a fusion of Indian dances and music with styles from North, South, East and Western parts of India. Bharatnatyam was performed by a group of Austrian artists (Dr. Radha Anjali and her students) from the Natya Mandir, a dance school which celebrated its 30th anniversary in 2013. An Austrian Sitar artist Mr. Perry Wurzinger and
Kintaert ( table) performed selected ragas of North Indian Classical music. The eastern part of the country was represented by a group of Odissi dancers of Austrian origin (Dr. VeraViktoria Szirmay and group), who performed an Odissi dance piece about dashavataras. We had a Konkani Medley – a mixture of old Goan folk songs with Portuguese influence, which was performed on piano by Dr. Marialena Fernandes, accompanied by Hotel Palindrone a group of Austrian Folk artists. The event also had a painting exhibition
of Dr. Marcella Wallner, an artist from
widely travelled in India and has painted about her experiences in India. Permanent Representatives, Ambassadors and dignitaries from Austria and the United Nations in Vienna attended the event. 22 • India Newsletter
INDIAN MOVIE EVENING AT THE EMBASSY Due to limited capacity, seats will be given on a first come, first served basis. Therefore, you are highly encouraged to reserve your seats online at www.indianembassy.at, via email under infoasstt@indianembassy or via phone at +43 1 505 866633 (Ms. Lily John).
arhan Qureshi and Raju Rastogi want to re-unite with their fellow
collegian, Rancho, after faking a stroke aboard an Air India plane, and excusing himself from his wife - trouser less - respectively. Enroute, they
Chatur Ramalingam, now a successful businessman, who reminds them of a bet they had undertaken 10 years ago. The trio, while recollecting hilarious antics, including their run-ins with the Dean of Delhi’s Imperial College of Engineering, Viru Sahastrabudhe, race to locate Rancho, at his last known address - little knowing the secret that was kept from them all this time. ■■ Director: Rajkumar Hirani ■■ Stars:
Aamir Khan, Madhavan,
Mona Singh ■■ Genre: Comedy ■■ Duration: 170 min ■■ Release Year: 2009 ■■ Language: Hindi ■■ Subtites: German
Showtime February 28th, 18:00 Indian Embassy Business Centre (1st Floor, Kärntner Ring 2, 1010 Vienna) India Newsletter • 23
Embassy of India, Vienna
NOTICE BOARD EMBASSY’S LIBRARY ■■ The EMBASSY’S library is opened mondays and wednesdays from 11am to 1pm without appointment. ■■ For scheduling an appointment outside the opening hours, please contact the information assistant under firstname.lastname@example.org or 01 505 8666 33
BUSINESS CENTRE ■■ The EMBASSY’S Business Centre is opened DAILY from 11am to 1pm without appointment. ■■ For scheduling an appointment outside the opening hours, please contact the commercial wing under the contacts given below. ■■ Marketing Officer: email@example.com or 01 505 8666 30 ■■ Marketing Assistant: firstname.lastname@example.org or 01 505 8666 31
STUDENTS WELFARE OFFICER ■■ Mr. Pawan T. Badhe, Third Secretary in this Embassy has been designated as Officer to look after welfare of Indian Students in Austria and Montenegro. ■■ His contact details are: 0043 1 505 866 15 and email@example.com
MINISTRY OF EXTERNAL AFFAIRS GOES MOBILE Now you can... ■■ Avail services : passport, visa, consular assistance ■■ Ask your Minister : on the go, anytime, anywhere ■■ Follow your PM : on his visits abroad ■■ Find the nearest Indian Mission/Post : for emergency consular assistance ■■ Be informed : about India’s Foreign Relations on the move and form your own opinions ■■ Know more : about how to undertake Kailash Manasarovar Yatra and Haj Pilgrimage ■■ Download and watch : pictures & documentaries on India ■■ Play and Personalize : what you need, when you need ■■ Share and contribute : your views, pics & suggestions All this & much more on your smartphone Ministry of External Affairs proudly presents “MEAIndia” – an integrated smart app for mobile and other hand held devices ‘MEAIndia’ is now available for download on App Store and Google Play Store..
FACEBOOK ■■ Our Facebook page targets the India-Austria community and covers subjects such as Business, Culture, Embassy News, India-related events and programmes in Austria, and much more. ■■ We have reached the 1300 followers mark! ■■ ‘Like’ our facebook page and be the first to know!
www.facebook.com/IndianEmbassyVienna 24 • India Newsletter