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Published by the Embassy of India, Vienna Year 5 • Issue 50 • February 2015


India Newsletter • 1

Embassy of India, Vienna

The new Government has prepared a five pillar strategy to drive India’s growth, which offer multiple avenues of collaboration and investments

■■ Infrastructure Development

■■ Manufacturing Growth

■■ Skill Development

■■ Energy Sufficiency

■■ Improved Business Environment 2 • India Newsletter



Foreign tourist arrivals (FTAs) into


Public cloud services revenue in


Gross direct tax collection in India

India during the calendar

India is expected to reach

year 2014 stood at 7.46

US$ 838 million in 2015,

reach Rs 546,661 crore (US$

million, growing by 7.1 per

growing by 33 per cent year-

cent year-on-year.

on-year (y-o-y).

88.43 billion) during April-



India’s domestic air traffic grew strongly

December 2014 as compared

The Indian microfinance sector

by over 14 per cent in

has raised US$ 276 million

November 2014 as compared

through private equity (PE)

to the same month in 2013.

deals so far in 2014-15,


recording the highest equity

The HSBC Services P u r c h a s i n g

Managers’ Index (PMI) stood at 51.1 in December 2014.


Car sales in India grew by 15.26 per

inflow in the past five years.


Bengaluru received US$ 2.6 billion in

132,524 units in December


In 2014, 2.5 million passenger vehicles

were sold, making India as the sixth biggest car market

Rs 14.65 trillion (US$ 241.15 billion), growing by 4.02 per




Indian hotel occupancy growth is

expected to range between 7 per cent to 9 per cent in



State Bank of India) now figure in a list of the top 50

with the maximum number of billionaires across the

12 overall

Steel consumption in India stood at





The of

number telephone

subscribers in India increased

2014. Two Indian banks (HDFC Bank and


India is among the top three countries

55.24 million tonnes (MT)


cent y-o-y in dollar terms,






during the same period last

making it the fifth largest

in December 2014 from




recipient globally during the

Cumulative exports from India reached

to Rs 484,063 crore (US$

venture capital in 2014,

cent to reach 152,743 units


grew by 12.93 per cent to

The top eight cities of India recorded net



from 964.20 million at the end of November 2014 to 970.97 million at the end of December 2014.

17 services

Indian information technology (IT) exports


global banks in terms of

absorption of 32.5 million

expected to grow by 10-12

market capitalisation.

square feet in 2014.

per cent in 2015-16. India Newsletter • 3

Embassy of India, Vienna

NEWS ARTICLES At 7.4%, India is the world's fastest growing big economy


ndia’s economy will likely grow at 7.4% in 2014-15, the government forecast, under a new formula that covers a raft of activities from farmlevel livestock to mega infrastructure projects and trendy smart-phone sales. Revised statistics showed “real” or inflation-adjusted economic growth rate for October-December 2014 was at 7.5% making India the fastest growing major economy in the world, overtaking China’s 7.3% growth. According to the new method, real growth rate of India’s gross domestic product (GDP)—the measure of the total value of goods and services produced in the country—was 6.9% in 2013-14, higher than the earlier estimate on the basis of old series was 4.7% after factoring in new data on output and spending of underrepresented items such as LED televisions. The growth rate for 2012-13 has also been revised upwards to 5.1% according to the new series which uses 2011-12 as the new “base year” from 4.5% estimated using 2004-05 as the base year. The base year of the national accounts is changed periodically to factor in structural changes in the economy and present a more realistic picture of macroeconomic aggregates. The new series, which has been in the works for a couple of years, includes data on unorganised manufacturing and services and income from public private partnership (PPP) projects, among others. Experts were, however, cautious in reading the new data as signs of definite turnaround. There are anomalies as manufacturing shows an estimated growth of 6.8% for 2014-15, which under the index of industrial production data for factory

4 • India Newsletter

output will probably be between 2-3%. “The difference may be attributed to the GDP being based on value added concept while IIP is on production – though the two should ideally converge,” CARE, a credit ratings and research firm, said in a report. Likewise, the finance sector growth will likely expand 13.7% while growth in deposits and credit appears to be tardy. “While these numbers reinforce the view of the earlier series of improvement, the numbers get magnified significantly. Therefore, overall perception on economy should not be changing,” CARE said. GDP in market prices for 2014-15 has been pegged at Rs. 126 lakh crore, somewhat lower than the level assumed in the budget. "This would make the task of restricting the fiscal deficit at 4.1% of GDP slightly more stringent," said Aditi Nayar, senior economist, at credit rating and research firm ICRA.

India set to become world's fastest growing e-commerce market


ndia is on route to becoming the world’s fastest growing e-commerce market, if current projections are anything to go by. This growth story is being driven by robust investment activity in the sector and the rapid increase in internet users. Internet users in India have gone up from 50 mn in 2007 to 300 million in 2014. Last year, smart phone shipments doubled to 80 mn from a year-ago period. The prospect of connecting 1.24 billion people to the internet may be an opportunity in itself. But what analysts are excited about is the prospect of selling products and services to this digital population. Investment banks believe India is on

way to becoming one of the largest internet markets in the world, with implications for consumers and investors. Morgan Stanley expects the size of the Indian internet market to rise from $11 bn in 2013 to $137 bn by 2020 and market capitalisation of these internet businesses could touch $160-200 bn from the $4 bn at present. Currently, only three internet companies are listed in India but with the pace at which venture capital (VC) firms and private equity (PE) firms are pumping money into India, several internet companies could possibly look at listing in the next couple of years. India’s internet market was at $11 bn (gross merchandise value) in 2013, of which $11 bn was online travel and e-commerce was $3 bn. As the market matures and more companies get listed, the market cap of internet companies will expand too. Analysts at Morgan Stanley believe that India's internet market can grow to $137 bn by 2020 (a CAGR of 43 per cent) and e-commerce will form the largest part of the internet market at $102 billion. In relatively more advanced markets like China and the US, top 30 listed internet companies account for 12 per cent and four per cent, respectively, of the total market capitalisation. Internet commerce tends to account for more than 50 per cent of the market cap among listed internet firms. Morgan Stanley expects India’s e-commerce market (revenues) to grow from $2.9 bn in 2013 to over $100 bn by 2020, making it the fastest growing e-commerce market in the world. The basis of this argument is the kind of equity investments made by PE and VC firms in 2014. The total equity investments made in Indian internet companies is $4.5 bn. The growth in internet businesses will also give a fillip to other related businesses like logistics and payment solutions.

India has the fifth-highest number of think tanks

India already a world leader in 'Space': Dr Jitendra Singh


Union Minister of State (Independent Charge) of the Ministry of Development of North Eastern Region (DoNER), MoS PMO, Personnel, Public Grievances & Pensions, Atomic Energy and Space, Dr Jitendra Singh said that even as India is making rapid strides towards achieving the goal of becoming a world power within next one decade, it has already attained the position of a world leader in "Space" technology through some of the recent landmark achievements. Dr Jitendra Singh expressed these views at a meeting of Space Department officials accompanying Dr A.S.Kiran Kumar, Secretary, Department of Space, Chairman, Space Commission and Chairman, Indian Space Research Organisation (ISRO), during the first visit to New Delhi by the Secretary after assuming office. Dr Jitendra Singh said, in more ways than one, ISRO and the Indian space activities truly illustrate Prime Minister Shri Narendra Modi’s “Make in India” concept. In this regard, he referred to “Mangalyaan” and the successful launch of “Mars Orbiter Mission” (MOM) which was developed and executed through 100% indigenous sources, material and equipment, making India the first nation which had succeeded in its maiden attempt and ISRO, the first Asian agency to reach Mars orbit. Similarly, India has achieved the distinction of providing cost effective launch pads for commercial satellites for several developed countries, he added. Today ISRO conducts a variety of experiments for foreign nations, said Dr Jitendra Singh and informed that till December 2014, India had already launched over 30 foreign satellites for 19 countries. Its telecommunication satellite network is one of the largest in the world, he claimed. Some of the world acclaimed scientists at the ISRO beginning from Vikram Sarabhai and Satish Dhawan to contemporaries like Dr U.R.Rao

ith 192 think tanks, India has been ranked fifth on a list of countries with the highest number of such entities, according to a report by the University of Pennsylvania. Only the US (1,830), China (429), the UK (287) and Germany (194) were ranked above India. The rankings were published in the annual Global Go-To Think Tank Index, compiled by the Think Tanks and Civil Societies Program of the University of Pennsylvania. Brookings Institution (the US), Chatham House (the UK) and Carnegie Endowment for International Peace (the US) were ranked the top three think tanks. Prominent Indian entities mentioned on the list were the Centre for Civil Society (ranked 50th), Institute for Defence Studies and Analyses (100th), Indian Council for Research on International Economic Relations (105th) and Energy and Resources Institute (107th). The Centre for Science and Environment (CSE) was ranked 17th on a global list of top environmental think tanks. This list was topped by World Resources Institute (the US), Stockholm Environment Institute (Sweden) and Worldwatch Institute (the US). Sunita Narain, director-general of CSE, said: "This recognition for CSE comes at an important period in global environmental policy-making and climate negotiations. Today, there is a clear need for Southern voices to reflect perspectives on climate change. That CSE has been acknowledged also indicates our voice counts and must count more. The challenge will be to go higher on this list." The index ranks pre-eminent regional and international think tanks and takes into account their role in influencing policy worldwide.

and Dr K.Radhakrishnan have not only done the nation proud but have also inspired generations of youth in this country, said Dr Jitendra Singh. The Minister added that today, the space achievements of ISRO team are looked up by the whole world with great respect. Dr A.S.Kiran Kumar, gave a resume to the Minister of some of the projects of ISRO in the near future and said that the ISRO plans to carry out a Mission to the Sun during the next one year and Chandrayaan-II Mission to the Moon around 2016-17. Similarly, Astronomy Satellite Missions as well as Multimedia Broadcast Satellite Missions will also be carried forward to a higher functional level in the times to come, thus further raising the graph of ISRO capabilities in the international arena, he added.

JBIC Survey Ranks India as No. 1 Destination for Future Investments


n July 2014, Japan Bank for International Cooperation (JBIC) conducted a survey of 1000 companies for Japanese manufacturing sector. Based on this research, India has been ranked as the No.1 destination for future investments followed by Indonesia (ranked No.2) and China (ranked No.3). In October 2014, the number of Japanese companies in India had reached 1209, which is 13% higher over the same period last year with a CAGR of 13.67% (for the last five years (2010 to 2014)). Some Japanese companies are seriously contemplating their future investment plans in India amounting to about Rs 75,000 crores (approx. US$12 billion) in next 2-3 years. During the period June 2014 to September 2014, FDI inflow from Japan amounted to US$ 618 million against US$ 273 million for the corresponding period in 2013. FDI inflow of US$103.14 million took place in October 2014. The Government has set up Japan Plus, a special management team, to India Newsletter • 5

Embassy of India, Vienna

facilitate Japanese investors. The team is actively interacting with Japanese companies and handholding them through various approval processes, as and when required. Also, the issues related to the State Government of Rajasthan concerning Sojitz, working for Dedicated Freight Corridor (DFC), has been resolved. One of the mandates of Japan Plus is to help develop Japanese Integrated Industrial Parks. For this, discussions are going on with Japanese companies and the State Governments concerned.

India is poised to become the world's fastest-growing economy in two years: IMF


ndia is set to become the world's fastest-growing major economy in about two years from now, as China slows after tearing along at speeds in excess of 10 per cent at times over the past three decades or so, according to latest projections by the International Monetary Fund in the World Economic Outlook. The IMF's flagship publication said India's gross domestic product is likely to grow at 6.3 per cent, marginally down from 6.4 per cent projected in October, in the next fiscal year and 6.5 per cent in year to March 2017, which will be the third year of the Narendra Modi government. The World Bank had said last week that it sees China being dislodged by its neighbour to the south in calendar 2017. Stocks ended at record levels following the IMF data release with the BSE Sensex closing at 28,784.67 points, up 1.85 per cent, and the NSE Nifty rising 1.7 per cent to 8,695.6. The likely role switch comes amid the Chinese economy stumbling on bad loans from excessive spending and investment drying up. While India's growth forecast is broadly unchanged, that of China has been slashed by half a percentage point from October projections. Official Chinese government data released showed it posted growth of 7.4 per cent last year, missing the official

6 • India Newsletter

target and slumping to a 24-year low, although this was better than the 7.2 per cent expectation. In India, weaker external demand has been offset by the boost to the terms of trade from lower oil prices and a pickup in industrial and investment activity after policy reforms, the IMF said. In its global outlook released on January 13, the World Bank projected India to edge past China in 2017, clocking 7 per cent growth compared with China's 6.9 per cent. IMF's World Economic Outlook said global prospects, barring that of the US, remain bleak with growth projected to tumble to 3.5 per cent in 2015 from 3.8 per cent forecast in October. In 2016, the world is expected to grow by 3.7 per cent as against 4 per cent projected in October. The report sees low crude prices providing some succor but the global economy may be undermined by other factors. "Global growth will receive a boost from lower oil prices, which reflect to an important extent higher supply. But this boost is projected to be more than offset by negative factors, including investment weakness as adjustment to diminished expectations on medium-term growth continues in many advanced and emerging market economies," it said. The Modi government has rolled out several measures to perk the economy and lift overall business sentiment since coming to power in May. Various projections put India's growth in 2014-15 at 5.5 per cent after slumping to decadal lows of below 5 per cent in the past two financial years. The forthcoming budget is expected to build on reform momentum to put the country back on the path to high growth. IMF deputy director Gian Maria Milesi-Ferretti termed the new government's plans as promising but said it's the speed of implementation that will have to be seen. The revised projection reflects a reassessment of prospects in China, Russia, the euro area and Japan as

well as weaker activity in some major oil exporters because of the sharp drop in oil prices. The US is the only major economy for which growth projections have been raised, the IMF said. China's period of rapid economic growth began after reforms were put in place by Deng Xiaoping in the late 1980s.

Indian CEOs more optimistic about growth


t a global level, fewer CEOs than last year think world economic growth will improve in the next 12 months, but that isn’t true of Indian executives. Some 59% of Indian CEOs believe global economic growth will improve over the next year; 62% are very confident of their company’s growth in the next 12 months—13 points up on last year and 23 points above this year’s global average (39%). These are the findings of the 18th annual global CEO survey by PricewaterhouseCoopers released at the opening of the World Economic Forum annual meeting in Davos, Switzerland.

India to become fastestgrowing economy in PM Narendra Modi government's 4th year: World Bank


ndia is set to become the fastestgrowing big economy in the world in the fourth year of Narendra Modi's government, edging past China. It's set to clock a 7% rise in GDP in 2017 compared with 6.9% for bigger rival China, the World Bank said in its flagship publication, Global Economic Prospects. India will recover to 6.4% in the current calendar year itself on the back of higher export growth and bolstered investor confidence with the election of a reform-minded government at the Centre, according to the report. Global growth is expected to rise moderately to 3.0% in 2015 from 2.6% in 2014 and further increase

to 3.3% in 2017, the report said, pointing out that there will be significant divergence in trends and that the "oil price collapse will result in winners and losers". Risks to the outlook "remain tilted to the downside" because of weak global trade, financial market volatility as interest rates in major economies rise, strain on oil producers and a risk of prolonged stagflation or deflation in the euro area or Japan."In this uncertain economic environment, developing countries need to judiciously deploy their resources to support social programs with a laser-like focus on the poor and undertake structural reforms that invest in people," World Bank president Jim Yong Kim said in a statement. "In India, export growth has been robust, and investor confidence has been bolstered by election of a reform-minded government. The current account deficit and elevated inflation—both persistent vulnerabilities—have declined considerably. Over the mediumterm, growth is expected to rise steadily to 7% as reforms begin to yield productivity gains. This is expected to benefit other countries in the region which receive remittances from India," the World Bank said in its report.

Indian subsidiaries of foreign firms eligible for SFIS benefits


n a relief to Indian subsidiaries of foreign companies, the Delhi high court held that such companies cannot be denied the benefits of the Served from India Scheme (SFIS) framed under the Foreign Trade Policy (2009-14) only on the grounds that they are units of overseas entities. The decision came on pleas by Yum Restaurants India Pvt. Ltd, the owner of KFC, Pizza Hut and Taco Bell in India; Nokia Solutions and Networks India Pvt. Ltd and EI DuPont India Pvt. Ltd, whose applications under the scheme had been rejected at different points of time between

2009 and 2012. The Director General of Foreign Trade (DGFT) had denied the benefits of the scheme to these companies as according to it, they were not “Indian brands” and did not contribute in creating a powerful and unique “served from India brand”, in line with the objective of the scheme, which was to accelerate growth in export of services from India. Terming the DGFT’s decision “unsustainable”, justice Vibhu Bakhru has held that “the expression ‘all service providers’ cannot be interpreted to exclude service providers, which are subsidiaries of foreign entities” and the DGFT had introduced a completely new concept in the eligibility criteria of the scheme by limiting the incentives only to companies with trade names that reflect their association with India. The judgement said “the expression ‘served from India brand’ must be read in the context of the object to accelerate growth in export of services from India”. SFIS entails providing duty credit scrips equivalent to 10% of free foreign exchange earned during the current financial year—as an incentive—to eligible service providers. Yum declined to comment without perusing the judgement. Email queries to DuPont remained unanswered. Nokia could not be reached for comment.

India, Germany to set up two working groups: Prakash Javadekar


inister for environment and forests (MoEF) Prakash Javadekar said India and Germany had decided to set up two working groups—one on circular economy and other on water management— after a meeting with German environment minister Barbara Hendricks. After the meeting, the two sides announced that the focus of the working groups would be on restoration of water bodies, waste

management and more efficient use of water resources.

‘US to source technology from Indian cities’


he US said that US companies will make Bengaluru and Hyderabad “important sources” for cutting-edge technology as co-development and co-production of defence articles was the new course for collaborative partnership between the two countries. The US also said that talks between President Barack Obama and Prime Minister Narendra Modi last month have sowed the seeds that have the potential to make US-India partnership the “defining counterterrorism relationship for the region in the 21st century”. Talking about the way forward in India-US ties, US ambassador to India Richard Verma said that perhaps the truest test of a friendship between countries is the degree to which their armed forces trust and collaborate with each other. “Ties between the US and Indian defence establishments took immense strides forward during President (Obama)’s visit,” he said at a seminar at the Vivekananda International Foundation in New Delhi. Verma wondered if anyone could have imagined a few years back that the US and India would have agreed to establish a joint working group on aircraft carrier technology. “No example better illustrates the new course of our collaborative relationship than the decision by the US and Indian defence establishments and private sectors to pursue co-development and co-production of defence articles,” he said, adding that such type of defence collaboration was only done with the closest partners. “The US defence industry will now make Bengaluru and Hyderabad important sources for cutting-edge technology,” he said. Talking to reporters, Verma said that identifying four “pathfinder projects” India Newsletter • 7

Embassy of India, Vienna

under Defence Trade and Technology Initiative (DTTI) during Obama’s visit, besides agreeing on a working group on aircraft carrier technology is a very significant and exciting moment in ties between the two militaries. “So let’s get these going. I think to the extent we can address other agreements that are still out there, we will continue to keep those on the agenda,” he told reporters when asked if India will have to rethink its policy of not signing the three “foundational agreements” if it wants high-end technology transfer from the US and their joint production. Terming the India-US Defence Framework Agreement and the DTTI as very important development in defence ties, he said, “We are going to be focussed on that in the coming weeks and months”. During Obama’s visit, the two countries had agreed on four “pathfinder projects”. However, India is seeking more than just these. What India wants is co-development and co-production of high-end technology and both sides had during Obama’s visit agreed on a joint working group to explore aircraft carrier technology besides designing and development of jet engine technology. However, India and US are still not on the same page when it comes to three key pacts, often referred to as “foundational agreements” for greater defence technology cooperation. The three agreements have been pending for over five years and the US has been pushing for bringing them into force. Of the three, two agreements—the Communications Interoperability and Security Memorandum of Agreement (CISMOA) and Basic Exchange and Cooperation Agreement for Geospatial Cooperation (BECA)— enhances the capacity of military equipment already bought from the US. The third agreement, the Logistics Support Agreement (LSA), would enable cashless supplies to each other’s armed forces on credit.

US, India to expand 8 • India Newsletter

cooperation on climate change, clean energy


he US and India will seek to expand cooperation in climate change and clean energy, especially in solar and wind power, during US President Barack Obama’s second visit to India and talks with Prime Minister Narendra Modi. The plan is to widen the ambit of a 2009 memorandum of understanding (MoU) aimed at enhancing “cooperation on energy security, energy efficiency, clean energy and climate change”. “In last few years, the agreement has allowed the two countries to share their experiences and best practices. The idea now is to broaden the horizon of that agreement. The effort is to work out new areas in climate change component of the MoU,” a environment ministry official said on condition of anonymity. “With new central government, efforts towards climate change mitigation and adaptation have received a definite push. Climate change has become important and thus last year we also got a joint IndiaUS climate change working group… The focus thus now would be explore what they are going to do in next five years,” he said. The official explained that the two countries will cooperate in putting in place climate change adaptation measures, and join forces to tackle urban pollution, and reduce emissions from deforestation and forest degradation, among other things. Tackling the effects of climate change and reducing the emission of greenhouse gases is at the top of the agenda of the Modi government, which has in fact renamed the ministry of environment and forests the ministry of environment, forests and climate change. When he was Gujarat chief minister, Modi authored a book on climate change. In November, Obama pledged deeper cuts in greenhouse gas emissions and China said it will for the first time set a target for capping carbon emissions

under an agreement between the world’s two biggest economies—a pact they said would help push other nations to negotiate a global pact this year in Paris. Investment in clean energy and cooperation in renewable energy, especially solar power, will find a place in the Modi-Obama discussions in light of the Indian government increasing its solar power generation target to 100,000 megawatts (MW) by 2022, from 20,000MW, said Manish Bapna, managing director of the World Resources Institute (WRI), a global research organization which spans in more than 50 countries, with offices in the US, China, India, Brazil, Indonesia and more. Their work focuses on six critical issues at the intersection of environment and development-climate, energy, food, forests, water, and cities and transport. US ambassador to India Richard Verma said that the two countries are looking at partnerships in clean energy and climate change infrastructure. He also said efforts are underway to help India become a low-carbon economy by cutting carbon emissions by 25% from 2005 levels by 2020. During Modi’s US visit last year, Obama and Modi had agreed to a new and enhanced strategic partnership in energy security, clean energy, and climate change.

RBI notifies 100% FDI in construction sector under automatic route


eserve Bank of India (RBI) notified 100% foreign direct investment (FDI) under automatic route in the construction development sector. The new limit is effective since 2 December 2014, RBI said. The new limit is subject to conditions such as a minimum area developed of 20,000 sq. metre. The company receiving the investment will have to bring in at least $5 million worth of FDI within six months from the commencement of the project. Subsequent tranches of FDI can be

brought in over a period of 10 years from the commencement of the project or before the completion of project, whichever expires earlier, RBI had said on 8 December. On 3 December 2014, the ministry of commerce and industry had said in a statement that it had approved raising the FDI limit in townships, housing, built-up infrastructure and construction-development projects, (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure) in order to catalyse investment in a vital infrastructural sector of the economy. FDI up to 100% but with prior government approval already exists for development of integrated townships including housing, commercial premises, hotels, resorts, the government’s statement had said.

Investing in India’s Emerging Wine Industry


ndia’s expanding wine industry is in the midst of a vital transition. Last year, the country’s wine production hit a record 17 million liters, with export sales rising 40 percent yearon-year to reach US$4.4 million in the first 7 months. With a rapidly growing export sector, expanding domestic consumer market and increasing industry support in major wineproducing States, the Indian wine industry has potential to be a global market competitor. This year, the Indian Government, in conjunction with the newly formed Indian Grape Processing Board (IGPB), is aiming to finalize the harmonization of Indian wine standards with the International Organization of Vine and Wine (OIV) guidelines. Set to be a catalyst for state reform, the new standards are good news for producers, investors and traders alike, who have eagerly anticipated the industry’s rise for the past decade. ■■ A Decade of Success

Since the early 2000’s, India has been hyped as an important emerging market for wine. The country has the optimum climate for grape cultivation and its main wineproducing states, Maharashtra and Karnataka, are leading producers of world class high-quality grapes. In 2001, implementation of the ‘Maharashtra Grape Processing Policy’ stimulated a boom in the State’s wine production from 712 kiloliters in 2002 to over 20 million liters in 2008-09. In 2008, the ‘Karnataka Wine Policy’ simplified the process for, and reduced the cost of, obtaining a winery license to significantly expand the market. In addition, to further promote investment and production, the States established a number of integrated wine parks which provide basic infrastructure facilities and offer incentives for new units such as: a 100 percent exemption from excise duty for 10 years, relief in sales tax levels and subsidies for production duties. As a result, many new wineries have since commenced production. However, industry competition remains low, with 80 percent of the market occupied by three major players. In recent years, several additional measures have been taken to facilitate production, improve quality, increase awareness and encourage investment. State governments have begun to promote viticulture as an economic development tool and a tourism revitalization tactic, highlighting foreign investment as the key to honing industry potential. In addition, the IGPB has assisted producer participation in several international Wine Fairs and the National Research Centre for Grapes has undertaken numerous projects to develop improved production technology and management techniques. ■■ Existing challenges Further industry growth is hampered by a complex system of excise taxes, licensing processes and distribution procedures, which serve to dramatically increase retail prices

on imports and limit interstate trade. In addition, the market is constrained by inadequate storage options and an enduring consumer preference for hard liquor. Furthermore, India’s grape processing facilities are inadequate and feature poor price realization on produce. The international demand for adherence to quality parameters, coupled with a severe lack of infrastructure to support the high investment crop, has seen many producers suffer severe economic loss due to an overexpansion in supply. As a result, many domestic wine companies are struggling to recover, with over 50 percent of Maharashtra’s wineries closing, lying dormant or reverting to the production of table grapes. ■■ Rising Export Sector & Progressive Retail Market In 2013, India exported almost 1.8 million liters of wine, rising 41.82 percent year-on-year to reach US$6.88 million. Last year, the wine total production estimate for the states of Maharashtra and Karnataka was 14.2 million liters (1.58 million cases). Furthermore, production in Karnataka was predicted to increase to 5 million liters (555,000 cases), a rise of 1.3 million liters (145,000 cases) year-on-year. In addition, supermarket sales are increasing as high-end chains have begun to allocate spaces for fine wine. However, sales are largely of domestic wines, as imported wines suffer from high retail prices due to import tariffs and consumer unfamiliarity. ■■ Broadening Consumer Palate Indian wine drinkers are largely upper income earners with high levels of disposable income. Thus, wine is primarily an urban drink with the States of Maharashtra and Karnataka, the Delhi metro area and Goa accounting for approximately 75 percent of consumption. Despite the touted emerging market, growth in domestic wine consumption has been gradual. India is the world’s largest whisky market, with over 200 million consumers of hard liquor. Indian consumers invariably prefer sweeter drinks with India Newsletter • 9

Embassy of India, Vienna

higher levels of alcohol. Encouraging the transition to wine will therefore be no easy feat. ■■ India’s Whiskey Brands Report Good Times Ahead for Industry However, over the next five years, 100 million consumers will reach the legal drinking age of 25 and, by 2017, Indian wine consumption is estimated to rise to 2.1 million cases of wine per year, increasing 73 percent from 1.21 million in 2013. In addition, wine is becoming increasingly popular among younger generations and women. Furthermore, the recent education push has led to a growing awareness of health issues surrounding consumption of hard liquor. Therefore, while only a very small percentage of India’s total population has the right combination of religious views, age, location, income and exposure, this amounts to 24 million people, a significant and potentially lucrative emerging market. ■■ Prospects for Foreign Investment Indian State Governments have exclusive competence to levy excise duties on alcohol and determine their rates. As a result, each state has differing and complex licensing, taxation and registration procedures with regard to manufacturing, labeling, registration, distribution and sale of wine. Furthermore, in many states wine is grouped with other alcoholic beverages such as spirits with regard to taxation and prohibition. Consequently, foreign investment in the industry is marred by difficulty in navigating the fragmented market. However, India is on track to reduce barriers to investment in wine-producing States in the coming years. Promotion of foreign direct investment (FDI) in India’s wine industry is on the rise, and international cooperation can provide vital market solutions in the form of capital, technology, and expertise. India’s viticulture industry currently allows 100 percent FDI through the automatic route. Access to 10 • India Newsletter

reasonably priced quality wines is considered by some to be the key to speeding the development of a wine culture in India. Consequently, some local wineries are working to produce inexpensive sweet wines to cater to the palate of the Indian consumer and expand the market to those with moderate incomes. While significant challenges remain, investors can expect the industry to become increasingly inviting in the short to medium term and should prioritize the Indian consumer in any attempt to enter the market.

India ahead of China in readymade garments exports


mid concerns over several larger overseas buyers seeking reduction in prices in the wake of a drop in cotton prices, here's some silver lining for garment exporters. Export of readymade garments from India has grown faster than those shipped from China for a bulk of 2014, although the rise is on a much smaller base. According to UN Comtrade data, during January-October 2014, India's garment exports rose 14.6% to $14 billion. In contrast, exports from China were 6.5% higher at $145 billion, which in value terms is 10 times higher. The news will come as some sort of a relief to Indian exporters, many of whom have been asked to reduce costs by 6-8% by their overseas buyers, who want a share of the higher margins due to a steep fall in cotton prices, which account for a major chunk of the overall costs. The strong growth in recent months has, however, made the exporters confident that the garment sector will grow by around 20%. "If we go by this projection, our garment exports will be reaching an ambitious target of achieving exports of $ 37.3 billion by 2018-19. In this financial year (April- December 2014), India's garment exports kept growing at the rate of 15%. This impressive growth is a clear cut indication that India is emerging as one of the top sourcing

and compliant destinations for the buyers in the world," AEPC chairman Virendra Uppal said.

Ericsson sees India in its top two markets


ricsson expects India to become one of its top two markets by sales in the next two to three years, as the telecom equipment maker awaits more contracts for managed services, including operations and business support systems, IP network and cloud to come in over 2015. The projection is based on increasing demand for mobile data, which is set to move from second generation to third and LTE, a fourth-generation technology, Chris Houghton, head of India region at the Swedish company, told ET. For the company, India as a market climbed up a rank to No. 3 in the past year, and was tied with Japan by contributing 4 per cent to its global revenue in 2014. The US is its top market, followed by China. Ericsson's outlook comes at a time when the International Monetary Fund is predicting India's economic growth to likely outpace that of China by 2016. "I already see the potential in the country and I will place my bets on India," Houghton added. Its India revenue rose 20 per cent from a year earlier to $289 million in the quarter ended December. India was the fastest growing market in the past quarter and revenue was the highest ever for the company in a quarter from this country. For the full year, India sales rose 25 per cent, driven by investments by operators in mobile broadband infrastructure, as increased smartphone usage drove growth in mobile data. Ericsson has won several equipmentsupply deals in a stabilising Indian telecom market, which has seen a return of pricing power amid reduced competition that led operators increase capital expenditure.

India’s Prime Minister Narendra Modi inaugurated GE’s multi-modal manufacturing facility at Chakan


peaking on the occasion, Modi said that there were immense possibilities for manufacturing in India. India’s demographic dividend was a magnet to attract investment. Government was working towards creating a skilled talented workforce which would attract the world to India. Global technology (Vishwa Dhan) and the talent of Indian youth (Yuva Dhan) could together result in a win-win situation for all. “The world is taking note of India’s GDP growth, which has risen to 7.4%. Experts are now describing India as the fastest growing economy in the world. And we expect this to rise even further, and that the 21st century would be Asia’s century, with India playing a key role in it,” noted Modi. The Prime Minister also said that the Government was working towards predictability in policies and laws that would boost confidence of investors. “Our Government is working towards improving “ease of doing business,” added Modi. He complimented the Maharashtra Chief Minister Devendra Fadnavis for doing a lot to improve ease of doing business, and reducing drastically the number of permissions required for setting up industry. Prime Minister Modi congratulated GE for the state of the art manufacturing facility they had set up, and welcomed GE’s announcement for further investment. He said this was a big boost to the ‘Make in India’ initiative. The Prime Minister stated that in India, water, land and sky – jal thal aur nabh – all had great possibilities in manufacturing. He invited GE, which is already present in land and sky, to also invest in water – implying shipbuilding. He invited GE to invest in defence manufacturing, where FDI has been raised to 49%.

“Pune – now being called the “Detroit of India” – has immense potential to emerge as a hub of defence production. Also, the railway sector could become an engine of economic growth,” concluded Modi.

“MAKE IN INDIA – beyond Zero Defect Quality”: ACMA


he Automotive Component Manufacturers Association of India (ACMA) for the first time organizing the ACMA Centre for Technology (ACT) Summit. Started, February 16, 2015, the two day summit encompassed the overarching prospects for ‘Make in India’ – moving beyond zero defect quality. The event was graced by Chief Guest Anant Geete, Minister for Heavy Industries & Public Enterprises, Government of India. The ACT summit aimed to drive excellence in the Indian automotive component manufacturing by delving on best practices and exploring the next. This platform is being organized for the first time as part of ACT’s strategic intent which will also witness the release of select

publications by ACT on global best practices. At the event various sessions were held with a focus on improving quality and drive zero defects while also keeping in mind the aspect of environment & sustainability. The sessions were addressed by noted industry luminaries. In addition to this, winners of the ACMA Gold Award 2014 in the area of manufacturing, technology and exports shared their experiences. The summit has also organized ACT Case Study competition on manufacturing excellence. A total of 674 case studies were received out of which 20 have been shortlisted for the competition. The event culminated with a set of presentations by ACT Cluster Companies, viz. ACT SME Cluster, ACT Foundation Cluster, ACT Advance Cluster and ACT Engineering Cluster on their journey of excellence, followed by prize distribution. India Newsletter • 11

Embassy of India, Vienna

MAKE IN INDIA Summary ■■ 4th largest rail freight carrier in the world. ■■ USD 1,000 Billion worth of projects to be  awarded through Public Private Partnership. ■■ 1.3 Million-Strong workforce. ■■ World’s largest passenger carrier.

Reasons to Invest ■■ 100% FDI in the railway infrastructure segment has been allowed recently which has opened up opportunities for participation in infrastructure projects such as high-speed railways, railway lines to and from coal mines and ports, projects relating to electrification, high-speed tracks and suburban corridors. ■■ Indian Railways has begun exploring the PPP mode of delivery and aims to award projects worth USD 1,000 Billion through the PPP route. ■■ The sector aims to boost passenger amenities by involving PPP investments in provision of foot-over bridges, escalators and lifts at all major stations. ■■ Last-mile connectivity to boost business activity in and around ports and mines has been proposed through the formation of special purpose vehicle (SPV) companies under the Public Private Partnership (PPP) model. ■■ The Indian Railways aims to involve private equity through individuals, NGOs, trusts, charitable institutions, corporates, etc. to provide passenger amenities such as battery-operated carts to facilitate movement for senior citizens and differently abled, at stations. 12 • India Newsletter

■■ To strengthen rail connectivity with various ports, IR has floated SPVs under the PPP mode. Pipavav Rail Corporation Ltd., Bharuch-Dahej Railway Company Ltd., Kutch Railway Company Ltd., Hassan-Mangalore Rail Development Company, Obullavaripalle-Krishnapatnam Railway Company Ltd., and AnugulSukinda Railway Company Ltd., have been established. ■■ Three rail connectivity projects namely Gevra Road-Pendra Road new line, Raigarh-Bhupdeopur new line and Jaigarh Port connectivity projects are being implemented through the joint venture route.

Statistics ■■ The Indian Railways network spans more than 64,600 kms, making it the world’s third-largest rail network. ■■ It is the largest passenger carrier and the fourth-largest rail freight carrier in the world. ■■ Increasing urbanisation coupled with rising incomes (both urban

and rural) is driving growth in the passenger segment. Growing industrialisation across the country has increased freight traffic over the last decade. ■■ Both passenger and freight traffic volumes have increased steadily in the past five years. While passenger traffic witnessed a CAGR of 5.2% during 2008–13, freight traffic has registered a marginally lower CAGR of 4.9% during the same period. ■■ The sector runs 12,617 trains, carrying over 23 Million passengers daily and connecting more than 7,172 stations. The Indian Railways runs more than 7,421 freight trains, carrying about 3 Million Tonnes of freight every day. ■■ The sector’s total track length is 116,000 km. It also comprises 63,870 coaches, more than 240,000 wagons and 1.3 Million employees. ■■ FDI in railway-related components stood at USD 559 Million, for the period April 2000 to May 2014.

Growth Drivers ■■ The long-term strategic plan of the Ministry of Railways is to construct six high-capacity, highspeed dedicated freight corridors along the Golden Quadrilateral and its diagonals. ■■ The sector has taken up port connectivity on priority, through the PPP mode of funding in tandem with the Sagar Mala Project of Port Development. Railways will facilitate connectivity to new and upcoming ports through private participation. So far, in principle, approval has been granted for building rail connectivity to the Ports of Jaigarh, Dighi, Rewas, Hazira, Tuna, Dholera and Astranga under the Participative Model Policy of the Indian Railways, amounting to INR 40 Billion. ■■ The 2014–15 Union Budget envisages a diamond quadrilateral network of high speed rail, connecting major metros and growth centres of the country. ■■ The development of identified stations to international standards with modern facilities and passenger amenities on the lines of newly developed airports, through PPP mode. ■■ Private investment in railway logistics is to be encouraged — the IR proposes to modernize its logistics operations by setting up logistic parks that provide for warehousing, packaging, labelling, distribution, door-to-door delivery and consignment tracking in order to achieve better efficiency, mechanisation of loading and unloading will be given top priority. ■■ A scheme for private participation in parcel movement will be launched shortly whereby procurement of parcel vans or parcel rakes by private parties will be facilitated. ■■ To develop a network of freight terminals, the Policy of Private Freight Terminals on the PPP model is being further refined. ■■ A proposal is in place to harness solar energy by utilizing rooftop spaces of railway stations, other

railway buildings and land, through the PPP mode. ■■ During the period of 2012-17, Mass Rapid Transit Systems (MRTS) projects are being planned in Ahmedabad, Bengaluru, Hyderabad, Chandigarh, Chennai, Delhi, Jaipur, Kochi, Kolkata, Mumbai, Patna, Pune, Lucknow and Surat through the PPP model. ■■ The share of private investment in MRTS projects is expected to increase from 13% during 2007-12 to 42% during 2012-17. ■■ Rail tourism is on the anvil, with emphasis on the introduction of eco-tourism and education tourism in the North-eastern states, the identification of special pilgrim circuits such as the Devi Circuit, the Jyotirling Circuit, the Jain Circuit, the Christian Circuit, the Sufi Circuit, the Sikh Circuit, the Buddhist Circuit, and the Temple Circuit. Specially packaged trains for these circuits have been proposed and private participation will be encouraged.

Financial Support For manufacturing activity: ■■ STATE INCENTIVES: ■■ State governments offer additional incentives for industrial projects. Incentives are in areas such as rebates in land cost, relaxation in stamp duty on the sale or lease of land, power tariff incentives, concessional rates of interest on loans, investment subsidies/tax incentives, backward areas subsidies and special incentive packages for mega projects. ■■ EXPORT INCENTIVES: ■■ Various kinds of incentives on exports are available under foreign trade policy. ■■ AREA-BASED INCENTIVES:

FDI Policy

■■ Incentives for units in SEZ/NIMZ as specified in respective Acts or setting up of projects in special areas such as the North-east, Jammu & Kashmir, Himachal Pradesh & Uttarakhand.

100% FDI under automatic route is permitted for the following:


■■ Construction, operation and maintianence of sub-urban corridor projects through PPP.

■■ Industry/private sponsored research programs: a weighted tax deduction is given under section 35 (2AA) of the Income Tax Act. Weighted deduction of 200% is granted to assesses for any sums paid to a national laboratory, university or institute of technology, or specified persons with a specific direction, provided that the said sum would be used for scientific research within a program approved by the prescribed authority.

■■ High speed train projects. ■■ Dedicated freight lines. ■■ Rolling stock including train sets and locomotive/coaches manufacturing and maintenance facilities. ■■ Railway electrification. ■■ Signaling systems. ■■ Freight terminals. ■■ Passenger terminals. ■■ Infrastructure in industrial parks pertaining to railway line/siding including elctrified railway lines and connictivities to main railway line. ■■ Mass Rapid Transport Systems.

Sector Policy ■■ Indian Railways Vision 2020. ■■ Participative Policy of December, 2012.


■■ Companies engaged in manufacture, having an in-house R&D centre. Weighted tax deduction of 200% under section 35 (2AB) of the Income Tax Act for both capital and revenue expenditure incurred on scientific research and development. (Expenditure on land and buildings are not eligible for deduction). India Newsletter • 13

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Investment Opportunities

7. Freight terminals operations.

Agencies for Contact

■■ Manufacture of components. ■■ Infrastructure projects: 1. High speed train projects. 2. Railway lines to and from coal mines and ports. 3. Projects relating to electrification, high-speed tracks and suburban corridors. 4. Dedicated freight corridors. 5. The re-development of railway stations. 6. Power generation and energysaving projects.

8. Setting up of wagon, coaches and locomotive units.

■■ Indian Railways ■■ Container Corporation of India Ltd. ■■ Dedicated Freight Corridor Corporation of India ■■ Rail Vikas Nigam Ltd. ■■ Railtel Corporation of India Ltd. ■■ Rail India Technical and Economics Services Ltd. ■■ IRCON International Ltd. ■■ Rail Land Development Authority ■■ Mumbai Railway Vikas Corporation Corporation Ltd.

9. Gauge conversion. 10. Network expansion.

Foreign Investors ■■ Airbus EMD (USA) ■■ Bombardier (Canada)


■■ GE (USA) ■■ Siemens (Germany) ■■ Alstom (France)


14 • India Newsletter

PERSPECTIVES ON INDIA AMW - Made in India to Global Standards by Anirudh Bhuwalka, MD & CEO AMW MOTORS LIMITED MW is one of the recent success stories coming out of India in the automotive industry. Mr Anirudh Bhuwalka, MD & CEO at AMW Motors Limited shares the journey and future plans for the company in an exclusive interview with IBEF. Edited excerpts: Can you share with us the journey of Asia MotorWorks and future plans? AMW - Made in India to Global Standards. AMW Motors Ltd (AMW) is one of India’s leading medium and heavy truck manufacturers offering innovative design, product development, manufacturing and customer support solutions for India’s transportation sector. AMW’s product range covers the full range of M & HCVs for haulage and standard as well as specialized vehicles for the core and infrastructure segments. AMW has over 40,000 trucks on Indian roads in less than seven years and the fully Indian company is run by a mix of young professionals and industry experts who have helped it to bring fresh, new approaches to truck manufacture and customer service. The Company’s entry into the then largely traditional trucking industry was based an innovative business model that put the Total Cost of Ownership (TCO) at the center of its strategy, by giving the owner higher productivity and profitability. Achieving this while building in international features in safety and driver comfort gave customers fresh and more productive choices. AMW was the first in India to offer fully built air-conditioned cabins and introduce the practice of building specialized products for niche applications besides standard product offerings. AMW vehicles have won several awards for innovation, design and overall


performance. The company has a widespread and growing dealer and service network across India with over 120 dealerships and 1,500 touch points. The Company’s after market operations include sales and service centers, authorized service outlets, mobile vans, workshops and a 24x7 helpline which ensures a rapid response to customer needs. AMW vehicles are exported to countries in South Asia, Middle East and East Africa. The company’s state of the art, fully integrated manufacturing facility in the highly industrialized state of Gujarat, is spread over 2 million sq. meters and produces vehicles for a wide range of civilian and defense applications. The plant has a capacity of 50,000 commercial vehicles per annum, besides tippers and other specialized vehicles for mining, road and highways and other infrastructure sectors. AMW also manufactures components for the automotive and general engineering industries. The company manufactures world-class wheel rims for cars, trucks, tractors and several other vehicle categories. It also manufactures skin panels, inner panels and compressor shells. The wheel rim plant is one of India’s largest single-location facilities, with an installed capacity of 15 million wheel rims per year. What is your view on Brand India and its relevance for global economy? The way the world perceives India today is very different, but we need to do much more to be viewed by the world as a serious economic power. Building on our traditional strengths with new skills, harnessing the power of youth in an increasingly borderless world and creating world class infrastructure need to be key areas for Government, industry and the country as a whole. In many ways, companies like AMW represent the aspirations of a new India.

Synergising equity with economic growth by Aparna Dutt Sharma, CEO Indian Brand Equity Foundation rivate equity (PE), and the transformational impact it brings to companies and the overall economy in the long term has been a critical subject of research across the globe. In India as well the industry analysis indicates that PE firms have played a key role in driving corporate earnings, economic growth and even social inclusion. Since the turn of this century in particular, PE firms have taken a keen interest in the India growth story. India has received a total foreign direct investment of US$ 209.8 billion between April 2000 and December 2013, of which the share of PE investments was around US$ 78.3 billion or 37 per cent. They have funded more than 4,000 businesses. Over the past five years, Indian companies have raised twice the amount that they have raised through IPOs via the PE route. Apart from capital, they have brought in their global expertise and experience that has helped companies like Bharti Airtel, Hero MotoCorp and HCL Technologies to scale up and be globally competitive. A comparative study indicates that employment in PE backed companies has grown by 12 per cent, around four times as compared to non-PE backed firms. Research also indicates that they have contributed significantly to tax revenues and also towards increasing exports from India. The year 2014 has seen a decisive surge in PE interest in the country. The year witnessed investments of around US$ 12 billion across 604 deals (volume highest over the last decade), representing an increase by 34 per cent year-on-year in terms of volumes and 23 per cent year-onyear in terms of value. Combining PE and M&A figures, the year saw 1,177 deals that were valued at over US$ 50


India Newsletter • 15

Embassy of India, Vienna

billion, the highest figure since 2011. The largest share of PE investments was garnered by the IT & ITES sector with investments of US$ 5.07 billion followed by banking & financial services (BFSI) with US$ 1.36 billion and infrastructure management with US$ 887 million. The year also saw more than 100 exits, which is a record, for aggregate valuations exceeding US$ 5 billion. This is expected to further boost interest of PE firms in the Indian economy, and PE exits are also expected to be critical drivers for the primary market in the coming years. Going forward, PE firms believe that IT/ ITES, retail & consumer sectors will continue to see upward trend, while BFSI, real estate, infrastructure and pharmaceuticals could be some of the sectors to look out for in 2015. New growth drivers could also get interesting from the PE point of view, including manufacturing, digital and internet of things (IoT). With a stable government at the centre, projections of higher economic growth and a steady maturing of the PE market in India over the years, PE investments in the country are expected to accelerate further in the coming years. Industry estimates project that India has the potential for attracting around US$ 40 billion in PE investment in the year 2025.

Smart cities, a smart way of living by Aparna Dutt Sharma, CEO Indian Brand Equity Foundation ising urbanisation is one of the critical challenges most economies across the world are facing today. In this context, development of 100 smart cities in India is amongst the most prominent initiatives taken by the Government of India. A smart city uses technology to run itself and manage resources efficiently. Be it governance, public transport network, water distribution or waste-management systems, all the support pillars are expected to use technology to provide better services to residents and make efficient use of resources. The project is not only integral to improving the physical, social, institutional and economic infrastructure across the country but is also expected to provide the right quality of life, employment and investment opportunities beyond metropolitan cities. The urban population is currently 31 per cent of the total population in India contributing over 60 per cent of the nation’s GDP. The contribution is expected to go up to 75 per cent of the national GDP over the next 15 years. Considering the relevance of these engines of economic


growth, the government plans to develop satellite towns of larger cities and modernise the existing mid-sized cities. “…India is at a point of transition where the pace of urbanization will speed up. It is for this reason that we need to plan our urban areas well and cannot wait any longer to do so,” according to the draft concept note from the Ministry of Urban Development. Over 10 countries, including US, Japan, Sweden, Singapore, Australia and Germany have already shown interest in building smart cities in India. For instance, Japan has pledged to help turn Varanasi into a smart city whilst US companies are expected to help improve facilities in Aurangabad, Ajmer and Visakhapatnam. In fact, work on 2030 cities is expected to begin in the next financial year following one of the three approaches (retrofitting, redevelopment and greenfield development). Public-private partnerships and adoption of the right set of technologies across segments are expected to be a critical component in development of these smart cities in India. Expected to become the new face of a modern India, these smart cities are expected to play an important role in establishing India as the economic powerhouse in the world.

INDIAN EMBASSY LIBRARY EMBASSY’S LIBRARY ■■ The Embassy’s library is opened daily from 10am to 1pm without appointment. ■■ Our collection contains more than 2000 titles in dozens of categories. ■■ For scheduling an appointment outside the opening hours or to inquiry on a book or topic of interest in our collection, please contact the information assistant under infoasstt@ or 01 505 8666 33 ■■ Download our latest catalog of books under EmbassyLibrary.pdf 16 • India Newsletter

EXPERT BUSINESS ADVICE The article below was extracted from Dezan Shira & Associates’s publication entitled “India Briefing”. For further corporate assistance, consider contacting 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 Mrs. Gujan Sinha under or visit

Sourcing and Procurement: Key Considerations As touched upon previously, there are numerous advantages a company can gain by global sourcing. These advantages can be viewed as the objectives of a sourcing operation in India and ist success can subsequently be measured against them. Broadly speaking, a company should ask whether their operation: ■■ Reduces operational costs; ■■ Enhances efficiency; ■■ Stabilizes the supply chain in the long term; ■■ Minimizes risk; ■■ Allows access to an appropriately skilled workforce. ■■ INDIRECT AND SOURCING MODELS


■■ Locating a Sourcing Partner There are two principal options available to foreign companies seeking to enter and establish a sourcing platform in India. The first is to find and agree terms with a local partner, who would act as a company’s primary representative for their operation in India. This option is certainly the easiest to execute, as exporting from India without maintaining a personal footprint there will bypass the need to go through the legal processes that are necessary for establishing a foreign presence.

■■ Considerations Choosing a sourcing partner can be a difficult process, as the choice will invariably have a direct impact on the quality of a company’s products and, consequently, its reputation. It should therefore be approached and conducted in a very careful manner. Key considerations include: ■■ The potential partner’s level of experience (have they exported from India before?); ■■ The location of the partner and where the goods are being produced (will they be operating in an SEZ and thus qualify for ■■ tax benefits?); ■■ Where the partner is based (are they near the coast? How muchadded cost will there be to procure the necessary materials?) ■■ Locating and Screening a Sourcing Partner There are a number of ways a company can go about finding a sourcing partner, with the most common means being hiring a professional sourcing agent, consulting official government databases, and searching on various sourcing websites, such as and GlobalSources. com. Once a list of candidates has been selected, the potential partners should be screened. The obvious downside of taking this route is the lack of direct control a foreign company would have over its

operations. Although a deep pool of skilled workers exists in India, leaving a company’s platform indirectly supervised can negatively affect the rate and quality of production. Using a sourcing partner in India can therefore be seen as an ‘indirect’ way of managing a sourcing operation. Whilst it is comparatively simple and cheap, the lack of direct involvement makes it harder to ensure that all sourcing objectives are being met. This should always be born in mind when choosing to handle sourcing operations in India without a personal footprint in the country. ■■ Establishing an Office on the Ground The second option is to actually establish a local presence within India. Although creating an office on the ground inevitably necessitates a greater financial and legal burden for the company in question, it is an effective means of ensuring higher performance levels for a sourcing platform in India. First of all, the company must decide on what sort of entity they want to establish, from which they will be able to manage their sourcing operation in India by varying degrees of control. On the following page, we compare the two most relevant options. India Newsletter • 17

Embassy of India, Vienna

■■ Production and Geographic

that a sourcing platform uses will


impact not only the quality of its

The raw materials and equipment

goods, but also the total

18 • India Newsletter

expenditure of the operation itself. These will therefore further inform a company’s decision on where to locate their sourcing platform.

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 to get more information about possible assistance/subsidies.

India Newsletter • 19

Embassy of India, Vienna

INVEST INDIA Federation House, Tansen Marg New Delhi—110 001 0091-11-23765085, 23487278


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

20 • India Newsletter

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.

TOURISM Ajanta: The Caves of Beautiful Contradictions by Hugh & Colleen Gantzer In the heat of a Maharashtrian summer, we climbed a cliff, trudged into caves, and stepped into a challenging ancient world. The quandaries of the Ajanta caves are complex, contradictory and very creative. Were they monasteries which became art galleries? Or were they art galleries designed as monasteries? Or did they serve an entirely different purpose, originally? And why was this particular, horseshoeshaped cliff chosen? According to the Archaeological Survey of India’s booklet The caves are cut out of amygdaloid trap rock In other words the rock is hard, solidified, lava which, when condensing formed amygdales which are small bubbles and balloons lined with amethyst, chalcedony and other beautiful quartz crystals. But though these glittering stones are still sold by shops not far from the cliff, scholars contend that gem mining was not the reason why the caves were made. They believe that these thirty caves were designed as monasteries and prayer-halls for Buddhist monks, and that they cover a period from the 2nd century BC to the 6th century AD, with a four century gap in between. Even more impressive than their age, however, is the fact that they are virtually, an art gallery revealing the lifestyles and attitudes of Indians at least on-and-a –half millennia ago. Clearly, they were not very different from ours. The strange thing is that though the caves were created for celibate monks, there is nothing austere about them. On both sides of the entrance to one of the caves, we saw sculptures of affectionate couples. Today, they would certainly have attracted the attention of our self-appointed ‘moral

police’ claiming that such public displays of affection went against our Ancient Cultural Heritage! Interestingly, however, the typical, horseshoe-shaped, chaitya window showed a strong traditional streak. It had been sculpted as if it had been made of wood though it had been carved from living rock. The monks were probably used to living in wooden buildings and would feel more comfortable with this mockwood design! In the early days of the religion, Buddha was depicted symbolically. Later, however, he was shown as a human. There are some statues of him placed at focal points in Ajanta, but the majority of the paintings and sculptures are based on the Jataka Tales: a rich collection of beliefs about the previous incarnations of the Buddha and the miracles associated with his birth. There is the tale of his mother dreaming that a white elephant had entered her body. This was interpreted by a court soothsayer as a prediction that if the child was born in a palace, he would be a king. But if he was born in a jungle, he would renounce the world and become a great spiritual teacher. His mother hurried to return to her father’s palace in Nepal but the child was born when she was journeying through a forest. Floral designs are a repetitive theme on the ceilings of the verandahs and residential halls, or chaityagrihas. More than that, however, is the amazing depiction of everyday, secular life. Voluptuous women gossip, traders buy and sell, rulers parade with pomp and circumstance, beggars importune, children gambol. When we first visited Ajanta, years ago, we had been told that the caves had been carved and painted by the monks and we wondered how such ascetic people could infuse so much passionate vitality into the paintings. But now that we learn that it had all been done by professional artists

and sculptures, it becomes clearer. Nevertheless, we still wonder why a group of monks who had renounced the world should surround themselves with such alluring worldly scenes. Why did the artists, for instance, paint the crowned and bejewelled, portrait of the famed Black Princess? There is the belief that she was the dusky Andhra Queen who was the favourite of the ruler. But if that is true, they why was her portrait painted on the wall of a monastery? Then there is the strange fact that, originally, the caves were not linked to each other. Each had its independent flight of steps down to the Waghora River as if every cave had been excavated independent of the others. Moreover, the floor levels of the caves vary. If the caves had been created by a single authority for the specific purpose of providing facilities for a unified body of monks who worked and prayed together, logic would dictate that they would not have been segregated and excavated at different levels. Or were the caves of Ajanta first excavated by individual gem miners who chose their sites depending on the richness of the yield? Ajanta is on the ancient trade route, so the export of the mined gems would be easy. When the mines were exhausted, were they, then, converted into cool summer retreats for the rulers? This would account for the massive and ornate chaitya gateway, the sensuous sculptures and the floral designs on the ceilings. Finally, when the authority of the rulers was being threatened, did they have the caves redesigned for the monks in order to earn spiritual brownie points? It’s a thought that will raise the hackles of many experts, but then virtually all reputed scholars of his age ridiculed Galileo when he defied conventional wisdom and said that the earth moves round the sun! India Newsletter • 21

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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, via email under marketingofficer@

Rab Ne Bana Di Jodi - Ein göttliches Paar ■■ Synopsis: Surinder is married to Taani but there is a huge age gap between them. There is no real romance in the marriage. Then, a dance reality show called “Rab Ne Bana Di Jodi” airs and Taani wants to participate but can’t because her husband is not hip and happening. She has a fear of losing, and she also fears that her friends will laugh at her. Surinder overhears her problem and decides to go in for a makeover. He watches some movies and learns to dance in order to woo his young wife. Throughout the show, Taani keeps falling in love to with this newand-improved Surinder without once realizing that he’s really her husband. ■■ Genre: Comedy/Romance ■■ Directed by: Aditya Chopra ■■ Starring: Shahrukh Khan, Anushka Sharma and Vinay Pathak ■■ Released: 2008 ■■ Duration: 167 Minutes ■■ Language: Hindi ■■ Subtitles: German ■■ Image Quality: HD

Showtime February 27th, 17:30 Indian Embassy Business Centre (1st Floor, Kärntner Ring 2, 1010 Vienna) India Newsletter • 23

Embassy of India, Vienna


Sabri Brothers Qawwal - The Prophets’ Chants (Saturday, 21. March, 2015, 19:00) Klangraum Krems Minoritenkirche Qawwali unites Persian and Indian musical traditions. The Indian Amir Khusro Dehlvi of the Chisti order of Sufis is credited with fusing the two traditions to create the dedicated chants of prophetic words. The roots of Qawwali can be traced back to the 8th century. For further information or ticket inquiries please go to www. or phone 02732 / 90 80 33. 24 • India Newsletter

Eintritt: freie Spende Indian Dance Workshop with Kaveri Sageder in YogaKula (Sunday, 8. March, 2015, 13:00-16:00) YogaKula Studio Bösendorferstrasse 9 1010 Vienna Es werden Grundschritte und –bewegungen aus dem KathakTanz erarbeitet und Einblicke in Rhythmik und Philosophie des Tanzes geboten. Weiters werden kurze Bewegungsabfolgen getanzt, aus dem klassischen Repertoire als auch eine kurze Kathak-Choreografie aus einem Bollywood-Film. Kosten: 30€ für Mitglieder (Halb- und Jahreskarte), 40€ für alle andere Karten Infos: India Newsletter • 25

Embassy of India, Vienna

NOTICE BOARD EMBASSY’S LIBRARY ■■ The EMBASSY’S library is opened DAILY from 10am to 1pm without appointment. NEW OPENING HOURS! ■■ For scheduling an appointment outside the opening hours, please contact the information assistant under or 01 505 8666 33

BUSINESS CENTRE ■■ The EMBASSY’S Business Centre is opened DAILY from 10am to 1pm. NEW OPENING HOURS! ■■ For scheduling an appointment outside the opening hours, please contact the commercial wing under the contacts given below. ■■ Marketing Officer: or 01 505 8666 30 ■■ Marketing Assistant: 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

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 6000 followers mark! ■■ ‘Like’ our facebook page and be the first to know! 26 • India Newsletter

India Newsletter 02 2015  

India Newsletter published by the Embassy of India, Vienna

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