INDIA NEWSLETTER Published by the Embassy of India,Vienna Year 2 | Issue 24 | December 2012
Feature
What Are My Options for Investment into India?
India Newsletter | 1
News
QUICK FACTS
Snapshot of last month’s Highlights
I
ndia’s exports from Special Economic Zones (SEZs) grew by 36 per cent year-on-year to US$ 43.73 billion during July-September 2012.
I
ndian economy is set to grow at the fastest rate across the globe over the 50 year period between 2011-2060.
D
omestic pharmaceutical sales in India grew by 18.4 per cent in October 2012 as compared to 12 per cent growth in September 2012.
I
I
ndia accounted for 30 per cent of global jewellery demand in terms of volume during the third quarter of 2012.
R
ural spending in India has outpaced urban spending between 2009-10 and 2011-12 for the first time in 25 years. he Government of India’s direct tax collections reached Rs 265,417 crore (US$ 47.95 billion) till November 15, 2012.
T
ndia is world’s one of the highest ith 5,174 comremittances receivpanies listed ing country, receiving US$ 64 billion on its platform, BSE has extended its lead annually
D
W
as the world’s top exchange in terms of the number of listed he direct sell- companies.
igital financial services market in India will grow eight times by 2020, to reach US$ 70 billion from the current levels of US$ 8 billion.
T
he Indian economy is expected ing industry in T to grow at an average of 7.7 per India is estimated cent during 2012-16. to reach Rs 7,120 ndia overtook crore (US$ 1.3 bilThailand to belion) by the end of come top rice ex2012-13. porter in the world. ersonal computer market ship-
P
ments to India stood at 2.99 million units during the third quarter (July-September) in 2012, up 4.9 per cent over the previous quarter. 2 | India Newsletter
I I
ndia’s foreign exchange reserves increased by US$ 1.45 billion to reach US$ 294.98 billion for the week ended November 23, 2012.
EXPRESSION OF INTEREST (EoI) for ARCHITECTURAL DESIGN COMPETITION Nalanda University invites Expression of Interest (EoI) from qualified architects/ architectural firms for the Master Plan of the campus and architectural design of buildings and facilities in the first phase of development of their campus in Rajgir, Bihar. Successful applicants will be prequalified to participate in a single stage design competition. Interested architects/ architectural firms may download the full Expression of Interest & Prequalification document from the official web site of the university – www.nalandauniv.edu.in between the 21st of November and 27th of December 2012. Hard copies of the EoI document can also be collected from the University office between the 26th of November and 27th of December 2012.
The university will be located on a campus of 450 acres, in Rajgir, at a distance of approximately ten kilometres from the site of the ruins of the ancient Nalanda. The last date for the submission of EoI is the 8th of January, 2013
MoRE INFO UNDER http://www.nalandauniv. edu.in/campus.html
Articles
Indian Business Group Networking Event India in Austria
I
nviting representatives from Indian Business Community in Austria, the Embassy of India, Vienna, organized the “Indian Business Group Networking Event” on 28th November 2012 in order to foster integration, interaction and for networking at the Indian Embassy Business Centre, Kärntner Ring 2, 1st Floor, 1010,Vienna. The programme started with welcome Notes by Mr. P. R. Nayak, Second Secretary (Commercial). During his introductory remarks, H.E. R. Swaminathan , Ambassador of India to Austria presented the overall trade situation between India and Austria; investment in both directions and the technology transfer possibilities in the light of the recent visits of Austrian delegations to India; India’s launching of the Austrian satellites and emphasized the collective responsibility to expand and enhance commercial relationship
overcoming the impediments; suggested for a continuous interaction with the Embassy, making use of the Facebook facilities available with the Embassy Website, the film shows once a month and the usage of the Embassy Business Centre for developing the Indian talents for furthering the commercial, cultural relations between both the countries. The participating business persons introduced themselves and expressed their appreciation, positive impressions and willingness to cooperate on this kind of initiatives further. M/S Karma Group, M/S Prosi Exotic Super Market and M/s Mulackal Handels GmbH made presentations on their business activities; whereas some others pointed out difficulties faced, for e.g. importing of Ayurveda products from India and requested Embassy’s support.
China for free trade agreement with India International Relations
China is very keen to have free trade agreement with India to strengthen further the economic cooperation and trade. This was revealed by a key member of the visiting Chinese delegation while briefing about the changes effected during the recent 18th Communist Party Congress in Beijing. Speaking at an interaction on “Implications of the Change in Leadership in PRC: Internal and External Dimensions” at Observer Research Foundation (ORF), Mr. Zhang Yansheng, Secretary General, Academic Committee, National Development and Reform Commission, said both the countries “should consider a Free Trade Agreement at the right time” to strengthen further the economic cooperation between the two most populous and fastest developing countries of the world. Noting that already the two-way trade between China and India is around 73.9 billion US dollars, he said this would also help to achieve a model for South-South cooperation and greater role for both the countries in the global economy. He said China is for “a new type of global
partnership” and India and China can work together. Mr. Zhang Yansheng said China is shifting from investment and exports driven market to innovation driven market to double the GDP as well as the per capita and residential income of its people. He said the role of the government is also being shifted to focussing on providing public service, national security and social stability. Mr. Huang Huaguang, Director General, Research Office, International Department of the CPC, said “the world is not as stable as we want and expect. There are many problems. Global financial crisis has brought many risks and uncertainty to many countries”. He asked not to overlook the “risks and challenges” and hegemony of politics and interventions through force or threat of force. “We don’t think it is possible to deal with it under existing order,” Mr. Huang Huaguang said, calling for reforms in the financial system so that globalisation can be universally beneficial”. Describing the rapid rise of India and China as a world phenomenon as they are the most populous countries in the
world, Mr. Huang Huaguang said both the countries should strengthen strategic communication and coordination and improve economic and trade cooperation and people-to-people contacts. “At different and various world fora, we should work together to build a new type of international relations and further development and better global governance,” he said. Mr. Li Junru, leader of the delegation and former Vice President, Central Party Schgool of the CPC, said China is working to double its GDP by 2020 and per capita and residential income by 2030 from what it was in 2010. He said the 18th Congress has also decided to shift the focus to more harmonious development between man and nature while continuing to work harder to improve the life of common people with emphasis on more inclusive growth and better facilities to rural people. He said they would strengthen public undertakings as well as commercial industry. India Newsletter | 3
Articles
Investment by Foreign Companies in SME Foreign Direct Investment Caps
T
o promote capital investment by foreign multinational companies in small and medium enterprises, the Foreign Direct Investment (FDI) in micro and small enterprises (MSEs) has been raised to 100 percent from 24 per cent. However, FDI in MSMEs is subject
to sectoral caps and other relevant sectoral regulations.
in availability of better products for consumers.
Enhanced capital investment by foreign multinational companies will create an environment of healthy competition among MSMEs whether financed by foreign investment or otherwise, resulting
This information was given by the Minister of State (Independent Charge) for Micro, Small and Medium Enterprises, Shri K. H. Muniyappa in a written reply to a question in the Lok Sabha.
100% FDI Permitted for Cold Storage Facilities Foreign Direct Investment Caps
A
ll India Coordinated Research Project on Post-harvest Technology (ICAR) conducted a study at national level and published the report in September, 2012. As per the study, estimated monetary value of harvest, postharvest losses of horticultural, agricultural and livestock produce, in the country was Rs. 44143 crore at price and production value for the year 2007 - 08
in ‘back-end infrastructure’ within three years of the first tranche of FDI, where ‘back-end infrastructure’ will include capital expenditure on all activities, excluding that on front-end units.
In order to increase Foreign Direct Investment (FDI) in cold storage sector, Government has permitted 100% FDI under automatic route as per the extant FDI policy. This policy mandates minimum investment of US$ 100 million with at least 50% of total FDI being invested
• National Horticulture Mission.
4 | India Newsletter
The Government is implementing following schemes which have components for increasing cold storage capacity aimed at checking wastage of horticulture and agriculture produce:
• Horticulture Mission for North East and Himalayan States.
• National Horticulture Board. • Scheme of Ministry of Food Processing Industries.
• Scheme of Agricultural Processed Food Products Export Development Authority.
• National Cooperative Development Corporation. Further, Government has included capital investment in creation of modern storage capacity including cold chains and post-harvest storage as an eligible sector for viability gap funding under “support to public private partnership in Infrastructure scheme”. This information was given by Shri Tariq Anwar, Minister of State for Agriculture and Food Processing Industries in written reply to a question in the Lok Sabha today.
Articles
BILATERAL Investment Promotion & Protection Agreements Signed with 82 Countries Bilateral Investments
G
overnment of India has signed Bilateral Investment Promotion and Protection Agreements (BIPA) with 82 countries, of which BIPAs with 72 countries have come into force. The list of all the 82 countries with whom India has signed BIPA along with the text of 72 BIPAs, which are currently in force is available at http://finmin.nic.in/ bipa/bipa_index.asp. The text to the BIPA signed with Austria can be seen under http://finmin.nic.in/bipa/Austria.pdf . These Agreements are intended to promote bilateral investment flows by assuring fair and equitable treatment to investments on post establishment basis. These agreements contain provisions relating, inter-alia, to National Treatment, Most
Favoured Nation Treatment and mechanism for dispute resolution on reciprocal basis. These Agreements require the concerned Governments to handle a dispute notice by a foreign investor from the other country, covered by the Agreement, in terms of the provisions of the Agreement, which may also entail international arbitration. In view of the dispute notices received by the Government of India recently, Government has been taking steps to handle the specific dispute notices, in terms of the provisions of the applicable Agreement and the facts of the case. The generic issues arising from the said dispute notices are also being handled appropriately.
This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Lok Sabha.
India to be 2nd largest manufacturing country By Deloitte Touche Tohmatsu (Deloitte)
I
ndia is expected to be the second largest economy in manufacturing in next five years, followed by Brazil as the third ranked country, consulting major Deloitte Touche Tohmatsu (Deloitte) has said. China will retain the numero uno position. “The competitiveness of each nation’s manufacturing innovation ecosystem will continue to be a focus area for policymakers, business leaders and much of society,” the 2013 Global Manufacturing Competitiveness Index
report done by Deloitte said. It said the main reason will be the recent restrained growth in China, changes in the US, a dark cloud over much of the Euro Zone, trade wars in South America, an ongoing malaise in Japan and the percolating but elusive rise of India. “Brazil’s jump from eighth to third is the largest jump expected over the next five years. And, Vietnam moves into the top 10 as the tenth most competitive nation,” it said. According to the Deloitte’s report, five
developed economy nations that were ranked in the top 10 as of this year were Germany (second), the US (third), South Korea (fifth), Canada (seventh) and Japan (tenth). Five emerging economy nations were also ranked in the top 10 including China (first), India (fourth),Taiwan (sixth), Brazil (eighth) and Singapore (ninth). The report included over 550 survey responses from Chief Executive Officers around the world collected throughout 2012.
incentives to achieve $320 billion export target Indian Exports
T
he Commerce Ministry indicated that it may provide incentives to exporters in order to achieve the USD 320 billion exports target for the current financial year.
ment will provide, he said it could be tax incentive or market promotion scheme. “The end game is to make exports more profitable,” he said.
“Since the European Union and the US markets are in doldrums, we are making our best efforts to achieve as much as we can.
A recent FICCI survey said it is feared that the export target of USD 320 billion for FY13 is unlikely to be met due to the global demand slowdown.
“We need special efforts that could be in nature of incentives, additional markets and making more efforts on market promotions,” Commerce and Industry Additional Secretary Rajeev Kher told reporters on the sidelines of a pharma event.
The rising cost of raw materials and weak demand from overseas are primary factors that are bothering members of the export community, it said.
On what kind of incentives the govern-
“Until now Europe and the US have been the primary export markets for us. The
new strategy should be targeting other countries like Africa and the Middle East to take the next leap forward,” he said. Trade deficit with China has also risen to USD 40 billion and we need to export more to that country, he added. “Our exports target for the current year is USD 320 billion...with only five months left, we are making best efforts to achieve the target,” he said. Sounding optimistic about the pharma sector, Kher said the sector will be able to achieve the export target of USD 25 billion by 2014. India Newsletter | 5
Articles
Govt clears National Pharmaceuticals Pricing Policy Pharmaceutical Industry
T
he Government of India has cleared the National Pharmaceutical Pricing Policy. The policy aims to bring 348 essential drugs under price control, which will lead to average reduction of around 20 percent in prices. “The National Pharmaceutical Pricing Policy has been approved by the Cabinet with an objective to put in place a regulatory framework for pricing of drugs to ensure their availability at reasonable prices,” as per an official source. Currently, prices of 74 bulk drugs and their formulations are controlled by the
Government of India with the help of the National Pharmaceutical Pricing Authority (NPPA). Earlier, the fix prices based on weighted average of brands which have more than 1 per cent market share was proposed by the Group of Ministers (GoM), headed by Mr Sharad Pawar, Union Minister for Agriculture and Food Processing Industries.The Government has also considered providing sufficient opportunity for innovation and competition to support growth of the Indian pharmaceutical industry.
“Pharma industry allows for an increase in prices of 2-3 per cent every year. If an average 20 per cent reduction in prices of essential drugs happens, it means buying at 2004 prices. This will benefit consumers,” as per Ameesh Masurekar, Director, All Indian Origin Chemists & Distributors Ltd (AIOCD). The scope of the policy is estimated to be around 17 per cent of the total pharmaceutical market, while coupling it with the existing medicines under price control, the coverage increases to around 30 per cent.
GE to invest in research & engineering Investments in India
G
equipment for the energy sector, said Gopichand Katragadda , MD, GE India Technology Center (John F Welch Technology Centre).
The investment, which is focused on expanding the technology centre here includes setting up experimental labs and its infrastructure includes leading-edge research and engineering in areas of critical importance, the company said.
The centre, established in September, 2000, is GE’s first and largest integrated multi-disciplinary R&D and engineering centre outside the US. Investing heavily in advanced IT-enabled laboratories, the centre is among the leading engineering innovation across GE’s diverse businesses.
The centre would conduct research and engineering in cancer treatment and radiochemistry and other technology applications in healthcare, locomotive engines, heavy earth moving equipment and
The GE’s John F Welch Technology Centre is set to touch 5,000 employees by the end of the year, according to Katragadda. Meanwhile, over the last decade, the Centre alone has contributed to over
E, adding 400 people every year for 10 years at the John F Welch Technology Center (JFWTC), will be expanding the capabilities of the centre at an investment of Rs 331 lakh ($60 million).
1,850 patents being filed by GE. GE has been trying to get to 15-20 per cent savings in many of the devices it has been manufacturing. According to industry sources, the cost savings on many of the products through defeaturing has been to the tune of 50 per cent or more in many products. The company has particularly been aggressive in the healthcare sector. It has been able to remove twothirds on the costs in the case of many devices. Meanwhile, the company is investing about $200 million in a manufacturing facility in Pune.
Unilever opens technology center in Bangalore Investments in India
C
onsumer products maker Unilever announced it has opened a technology support and innovation center in Bangalore to provide IT services for its global operations as well as explore innovative ways of using technology to improve its business. The 220,000 sq ft center in the outskirts of Bangalore, which currently houses 1400 staff, will be its largest technology center. Unilever, which operates in India as Hindustan Unilever Ltd that sells popular brands such as Lipton, Sunsilk and Lux said the new center will provide services
6 | India Newsletter
such as IT and information management services to both Unilever as well as its Indian arm. Unilever owns 52% stake in BSE-listed HUL , which also makes Kwality Wall’s ice creams and Close Up toothpaste. Unilever CEO Paul Polman said the Bangalore center will leverage the information technology ecosystem in India. The company said it plans to further scale up the capacity of its Bangalore center. The IT services from the center include building and supporting global SAP platforms for both companies. Some of Unilever’s existing IT services
vendors such as Infosys and Accenture will continue to support the company and will have their staff based at the new center. Unilever had recently shut four of its plants and cut close to 800 jobs in the UK. Last month, the Anglo-Dutch company had reported its third quarter revenues 13.4 billion, aided by strong sales from developing markets. Emerging markets, which includes India, China, Indonesia etc, contribute about 55% of Unilever’s revenues at present.
Articles
INDIAN IT solutions FOR Lufthansa Cargo AG India in the World
L
eading IT solutions provider to the aviation industry, IBS Software, has entered into a contract with Lufthansa Cargo AG for the implementation of its air cargo solution, iCargo. The air cargo solution will manage the entire air cargo movement of Lufthansa Cargo AG worldwide. Lufthansa Cargo AG is the airline cargo service provider in the Lufthansa Group.
The deal worth Rs 700 crore has three segments and IBS Software has major share of the contract.The contract is one of the largest IT system deals by Lufthansa Group, the spokesmen of IBS Software and Lufthansa Group said in a joint press conference at Thiruvananthapuram. “IBS being an IT product company, we consider this as a landmark agreement”, V K Mathews, executive chairman of IBS said. IBS was selected from among 400
solution providers after a selection process that lasted 18 months, he pointed out. The contract is for a period of ten years. IBS Software’s new generation iCargo will be deployed globally across 100 stations and will have user base of over 4000 staff members. Lufthansa Systems will provide comprehensive consulting services during and after the implementation phase. IBM is in charge of system integration.
Remittances to India expected to reach US$ 70 billion By World Bank Data
I
ndia is expected to receive remittances worth US$ 70 billion in 2012, emerging on top of the list of developing countries which are expected to receive a total of US$ 406 billion remittances in 2012, according to the World Bank.
billion), US$ 14 billion each for Pakistan and Bangladesh, followed by Vietnam (US$ 9 billion) and Lebanon (US$ 7 billion) are the other large recipients of remittances.
China will stand second with US$ 66 billion, followed by Mexico and Philippines with US$ 24 billion each, as per the latest report by the Bank.
The total worldwide remittances—including high income countries—is expected to reach US$ 534 billion in 2015 and including those to high-income countries, are projected to grow to US$ 685 billion in 2015.
Nigeria (US$ 21 billion), Egypt (US$ 18
The true size of remittance flows, includ-
ing unrecorded flows through formal and informal channels, is believed to be significantly larger, the report highlighted. “Compared to private capital flows, remittance flows have shown remarkable resilience since the global financial crisis, registering only a modest fall in 2009, followed by a rapid recovery. The size of remittance flows to developing countries is now more than three times that of official development assistance,” as per the Bank.
Bangalore emerging as a major city of ‘organic brands’ Biofach India 2012
B
ioFach India, an offshoot of World Organic Trade Fair BioFach in Nurnberg, held its organic fair in Bangalore from November 29 to December 1. The fourth edition of BioFach India 2012 by Nuremberg Messe was supported by the Karnataka Department of Agriculture and the International Competence Centre for Organic Agriculture (ICCOA). “The fair is to facilitate organic production, manufacturing, trade and it is the single platform where various stake-holders in the organic value chain congregate to network,” said International Competence Centre for Organic Agriculture (ICCOA) Executive Director Manoj Kumar Menon. Talking about trends in the organic food consumption in Bangalore, Menon said, “The city has emerged as a prominent organic brands city in the country.” “Compared with other cities which have only a few of them, Bangalore has brands in black pepper, ginger, turmeric and cof-
fee etc. The city has also attracted major crops to do good volumes on a daily basis,” he added. Menon expressed confidence that the BioFach India will further boost the organic farming as well as organic trade in Karnataka. At the last year’s fair organic cotton and jaggery had fetched some business. He explained that the previous edition of international organic trade fair held in Bangalore had seen a total business transaction of Rs 17.5 crore. The major chunk of this had gone to Karnataka as the home state had accounted for a business of Rs 11 crore.
Meena said country accounted for 10.9 lakh hectares of crops under certified organic cultivation including 51,500 hectares in Karnataka. In 2011, the exports of organic crops had earned revenue of Rs 600 crore for the country while the domestic sales had fetched Rs 300 crore, he noted. In a bid to encourage organic agriculture in the state, the Agriculture Department had taken up a plan to promote organic farming in about 100 acres of land in each taluk.
Karnataka Principal Secretary Agriculture Department Bharatlal Meena said 141 exhibitors including 16 international players participated in the event. Similarly, various States including Kerala, Maharashtra, Andhra Pradesh, Tamil Nadu, Himachal Pradesh, Sikkim and Mizoram were participating in the event being held at the Bangalore Palace Grounds. India Newsletter | 7
Articles
German as the first foreign language at 1000 Indian schools As published in Der Standard pg. 8, 14 November 2012.Translated by Lucas Kajagi.
B
y 2017, German is to be introduced as the first foreign language at 1000 public schools in India. In order to implement this project that was initiated by the Goethe Institute, a sufficient number of teachers who speak the language – at least to a degree – are needed in India. (by Christine Möllhoff from New Delhi) “Guten Morgen”, Sanjoli Jain greets the sixth class. “Guten Morgen”, 52 children greet back in unison. Sanjoli doesn’t waste any time; the lesson in the class lasts for only 35 minutes after all. The 24-yearold teacher begins with the articles right away. “Küche”, she says. “Die” (note: this is the German definite article indicating feminine gender; it is pronounced “dee”), the children shout. What seems to be an everyday German class at first glance is in fact a tiny revolution and could bring the two nations India and Germany, which are located thousands of kilometres apart, closer together. Sanjoli teaches at a public school in R.K. Puram in southern Delhi. The school belongs to the public Kendriya Vidyalaya chain (KV for short) and is a pioneer of a project that probably has no equal in the world: By no later than 2017, German is to be introduced as the first foreign language at the 1000 KV schools. This means: In ten years, one million Indian school children will possibly have learned German, or at least possess some basic skills. In addition to the official languages Hindi and English, only the time-honoured Sanskrit has been a part of the curriculum so far. It was only two years ago when the responsible ministry decided to introduce foreign languages at the public school chain. And they did
not choose Spanish, Chinese, Russian or French – they selected German. Other languages are to be introduced later. This coup has been achieved by the Goethe Institute that has been promoting the German language and culture in India for decades. Puneet Kaur is the head of the project “German at 1000 schools” at the Goethe Institute. Now, she has three to five years time to pull out 1000 German teachers out of the hat, or to be more precise: find them in big wide India. So far, 250 to 300 schools have the staff they need. However, India is huge. Some of the schools are located in such remote areas that even the Indian Kaur has to check where exactly they are on the map. It is not easy to find teachers for these remote areas. In part because the salary – 20,000 Rupees (approximately 290 Euros) – is not that generous. In expensive megacities such as Delhi or Mumbai, few find this offer attractive. Many graduates of language studies prefer joining the economy where they earn more.
And so Kaur cannot set the standards too high when it comes to hiring teachers. Some of the German teachers are still learning German – the only important thing is that they are one year ahead of the students. The German offensive, which is being subsidised by the foreign office, is not an end unto itself. The Germans are currently trying to deepen the relations with India in nearly all fields. “The rising India is one of the central future markets for companies. There already is a high demand for German-speaking Indian experts”, says Michael Steiner, Germany’s new Ambassador to India (since July). Conversely, the location Germany will need talented students and workforce from abroad if it wants to fill the university lecture halls and cover its demand for experts in the future. And India disposes over a “large reservoir of excellent experts”. And more: Being an export country, Germany needs new markets – such as India with its population of 1.2 billion.
India set to join talks for world’s largest trade bloc India Internationally
I
ndia is set to join talks for creating the world’s largest trade bloc, the Regional Comprehensive Economic Partnership or RCEP, comprising Asean members and three manufacturing giants — China , Japan and South Korea — after a committee headed by Prime Minister Manmohan Singh endorsed the move. 8 | India Newsletter
The 16 members who will launch talks in Phnom Penh later this month account for over a quarter of the world economy. The decision by the Trade & Economic Relations Committee (TERC) signals the government’s intent to drive down import duties further in the coming years. In return, the government is hoping to get a
sweeter deal for Indian nurses, teachers and auditors who want to work in any of the 16 initial members of the proposed RCEP, which will also have Australia and New Zealand. Of course, this will come with the promise of allowing overseas companies easier access by giving them more flexibility in FDI rules.
Articles
Govt plans easier funding for solar, wind projects Renewable Energy
T
he Government is looking at adopting the viability gap funding model for the second phase of the National Solar Mission, said Gireesh B. Pradhan, Secretary, Ministry for New and Renewable Energy. Implementing this model would mean a developer will be asked to state the amount the com-
pany would require to meet the designated tariff, Pradhan said at an industry event organised by the Centre for Science and Environment. The draft policy for the second phase of solar mission would be released soon, Pradhan said. The solar market in India can reach 68 GW by 2022, unlike the Jawaharlal Nehru
National Solar Mission target of 20 GW, said Alan Rosling, Chairman and Founder of Kiran Energy. In addition, the MNRE is also in the process of unveiling an incentivised package for wind energy. The Government is looking at increasing the generation-based incentive for wind energy producers, Pradhan indicated.
India ranks 4th on renewable energy market potential Renewable Energy : by Ernst & Young
I
ndia ranks fourth on Ernst & Young’s renewable attractiveness index after China, the US and Germany. It ranks second on the solar index, and third on the wind index, says the latest study by Ernst & Young – UBM India.
India had around 26 GW of installed renewable energy capacity as on August 31, 2012 and plans to more than triple its renewable energy capacity in the next 10 years, driven mainly by wind and solar, the study said.
India has been consistently ranked among the top five countries (globally) in terms of its market potential for renewable energy.
Solar energy sector continues to be an attractive alternative for investors wanting to shift their focus from Europe’s declining solar sector and has attracted investments worth $4.2 billion in 2011 – growing nearly seven-fold from 2010.
With power generation from renewable sources on the rise in India, share of renewable energy in country’s total energy mix increased from 7.8 per cent in financial year 2008 to 12.1 per cent in financial year 2012.
The report stated that investments in clean energy in India had increased by 54 per cent year-on-year, representing the highest growth rate across any significant
global economy, to reach $10.2 billion in 2011. The wind energy sector attracted investments amounting to $4.6 billion, while the solar energy sector witnessed investments of $4.2 billion, it said. Sanjay Chakrabarti, Partner & National Leader – Cleantech, Ernst & Young, said at the 6 {+t} {+h} Renewable Energy India 2012 Expo, where the report was released, that renewable energy is expected to play a vital role not only from an environment angle but more importantly from the energy security perspective.
India to have 54,000 MW renewable energy capacity by end of 12th Plan potential Renewable Energy
I
ndia would take its new and renewable capacities to 54000 MW by 2017, the terminal year of the 12th Five-Year Plan, Gireesh B. Pardhan, Secretary of the Ministry of New and Renewable Energy, said. Currently, the country has around 27,000 MW of renewable energy capacity. India produced solar energy at an average tariff of Rs 18 a unit in 2009, which now stands at Rs 7.40 per unit, Pardhan said at an industry event organised by FICCI. “This fall in tariff for solar energy witnessed in such a short period has encouraged policy makers to explore great-
er possibilities to harness solar energy at a faster pace,” he added. At the same time, India is not in favour of a proposal for setting up of a SAARC Regional Grid to cement energy co-operation among the member nations. The Secretary said these countries should strive to build blocs for bilateral cooperation with the adoption of a bottom-up approach rather than seeking to establish a SAARC regional grid which seemed impractical. In July 2004, the SAARC endorsed the concept of an ‘Energy Ring’ of intercon-
nected energy systems in the region. Vikramjit Singh Sahney, President of the SAARC Chamber of Commerce and Industry, said the member nations should identify commodities of common interest and begin to enhance their trade for mutual benefit. According to Sahney, the ongoing move on the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline could be a model for public-private partnerships in mega infrastructure projects in the SAARC region.
India Newsletter | 9
Articles
What Are My Options for Investment into India? Foreign investment into India - By Dezan Shira & Associates Liaison Offices A foreign company can open a liaison office in India to engage in the following activities:
• Representing in India the parent
• Representing the foreign parent
•
company/group companies;
• Promoting export/import from/to •
•
India; Promoting technical/financial collaborations between parent/group companies and companies in India; and Acting as a communication channel between the parent company and Indian companies.
A liaison office is not allowed to commence any commercial, trading or industrial activities, directly or indirectly, and is required to sustain itself out of private remittances received from its foreign parent company through usual banking channels. To establish a liaison office, a foreign parent company should have a net worth of no less than US$50,000 and have a threeyear profit-making track record in its home country. Applications to establish a liaison office are sent to the Reserve Bank of India (RBI) and a license to operate is generally given for three years (after which it needs to be renewed). When operating a liaison office in India, care should be taken not to trigger Permanent Establishment (PE) status, as this status subjects the liaison office to treatment as a foreign entity. PE status is triggered when a direct business connection is established between the liaison office and its foreign parent company. If a parent company’s plans for the liaison office are likely to trigger PE status, a branch office, project office or limited liability company could prove to be a more appropriate choice. Branch Offices Foreign companies engaged in manufacturing and trading activities outside India may open branch offices for the purposes of:
• •
• • • •
company or other foreign companies in various matters in India, such as acting as buying and selling agents; Conducting research in which the foreign parent company is engaged, provided the results of this research are made available to Indian companies; Undertaking export and import trading activities; Promoting technical and financial collaborations between Indian and parent or overseas group companies; Rendering professional and consultancy services; Rendering services in information technology and development of software; Rendering technical support to the products supplied by parent/group companies; or In the case of foreign airline/shipping companies.
A branch office’s allowable scope of activities is broader than for a liaison office, however branch offices are still generally forbidden from engaging in retail trading, manufacturing or processing activities within India. The major exception to this rule is in special economic zones, where branch offices can be established to undertake manufacturing and service activities without RBI approval if conditions are met. Only companies engaged in manufacturing or trading activities abroad are permitted to open a branch office in India. To qualify to open a branch office, the foreign parent company should have a net worth not less than US$1,000,000 and a profit-making track record for the preceding five years. Similar to a liaison office, applications to establish a branch office are sent to the RBI and a license to operate is generally given for three years (after which it needs to be renewed). Project Offices The project office, essentially a branch
office set up with the limited purpose of executing a specific project, allows companies to establish a business presence for a limited period of time. Project offices are particularly common among foreign companies engaged in turnkey construction or installation. A business must secure a contract from an Indian company in order to execute a project in India and thus establish a project office. This project must be:
• Funded with remittance from abroad directly;
• Funded by a joint or multilateral financing agency;
• Cleared by an appropriate authority; or
• Based on a contract awarded by a company or entity in India which in turn is funded by a public financial institution or bank in India.
If the project does not meet the above criteria, the entity must obtain special approval from the RBI. Project offices are permitted only for activities to execute the project under approval; all unrelated activities are forbidden. Wholly Owned Subsidiaries and Joint Ventures For a foreign enterprise to engage in activities that fall outside the limits of liaison, branch and project offices, wholly owned subsidiaries or joint venture companies can be established. Wholly owned subsidiaries and joint ventures are set up as private limited companies. Private limited companies are the most suitable and widely used form of business enterprise for foreign investors in India because they allow total control over business operations, provide limited liability, and have fewer restrictions on business activities than liaison offices and project offices. Both wholly owned subsidiaries and joint venture companies have independent legal status as Indian companies distinct from the foreign parent company.
This article was extracted from Dezan Shira & Associates’s new guide, titled “An Introduction to Doing Business in India.” In this guide, they introduce the basics of setting up and running a company in India and some of the key issues investors should pay attention to. 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 india@ dezshira.com, or visit www.dezshira.com 10 | India Newsletter
Interview
LARGE INVESTMENT PLANS IN INDIA Interview with American Tower Corp CEO James D Taiclet
T
he overhang of uncertain regulatory environment is making global telecom investors jittery.With $800 million already invested in and one-fifth of his company’s total asset base in India, James D Taiclet, chairman, president and CEO of American Tower Company - the largest independent tower company in India - has a lot at stake.Taiclet, who plans to invest more than $750 million in the next five years in India, feels that transparent and clear cut regulatory policies will go a long way in making India a favourable investment destination for tower companies. Q: Over one-fifth of ATC’s total tower base is in India. What are the growth targets for next 3-5 years? A: We have got into the first stage of 10,000 towers and we want to grow beyond that. We do not know what the end number is going to be, but we hope it is a significant increase. We will build between 1,000-1,500 or more towers a year over the next few years. So, just on its own, the organic growth will cause us to double in the next five to six years, but beyond that we would be very interested in strategic transactions. If we build 1,500-2,000 towers a year, we will end up spending a $100-150 million a year; for five years; it could be $750 million. So, we are committed to this pace, if something does not significantly turn down in this country, but on top of that we would seek to invest more with the right regulatory environment and the right opportunity. Q: Recently, the government extended infrastructure status to telecom companies. Will the move help investors like you? A: I think it will help the telecom industry if it’s treated as it should be, which is a core infrastructure or core basic service, that’s needed to develop an economy in a pervasive and effective way. India has an opportunity to leverage technology and move more quickly than say, Germany or the US has done in the past. We think treating the telecom industry as infrastructure is a sensible thing to do, first of all, and it will help in bringing telecom in alignment with other sectors that are treated in a similar regulatory financing and tax fashion. Q: Trai has proposed a revenue share
with the government for tower companies under a unified licence regime. Do you think it’s fair? A: The licence fees or revenue sharing back to the government that the operators pay is for the right to continue to use the spectrum that they have been granted and paid for. We are not involved in that activity at all. So, we do not really understand why a licence fee should be required when we are already paying real estate taxes and other fees for the real estate. Q: Given that ATC has invested nearly $800 million in India till now, how do you view the rapidly changing telecom regulatory environment in India, as an investor? A: We have invested $800 million and that was FDI from our company into this country. We see the opportunity to make telecom more efficient through the shared real estate and that is why we have invested here. So, we are hopeful that the government uses this kind of investment, and would not do anything, to make us question further investments. Q:Another change that Trai has proposed is to limit FDI in local tower companies to 74%. Since ATC is the only independent foreign-owned tower company, how do you view that?
“
A: This is not a good development for us. We are a global company as you know, and we are looking at investments in developed markets and developing markets like in Africa. So, if the rules are more stable in a country such as South Africa or Ghana, it will be a little easier to move some of our investments there versus other places where the rules are not stable. Q: How does the ATC board view this entire Indian telecom regulatory, to-andfro? A: With some concern I must say, and that has not diminished their enthusiasm for the market. But it gives them pause on how much do we invest and what is the required rate of return on that investment as the rules might change later.
We see the opportunity to make telecom more efficient through the shared real estate and that is why we have invested here [India]. India Newsletter | 11
Industry
railway INDUSTRY Indian Industry Sector Close-Up
T
he railway service in India has proven itself as the forerunner in the transport sector as railways are extensively used for passenger and freight transfer. With thousands of railway stations across the country, Indian railway network is the most affordable, convenient and well-connected network. The Indian Railways network is spread over some 64,000 km, with 12,000 passenger and 7,000 freight trains plying each day from 7,083 stations carrying around 23 million travellers and 2.65 million tonnes (MT) of goods daily. Market Size The Indian Railways generated revenues of Rs 58,649.83 crore (US$ 10.92 billion) during April-September 2012-13 as against Rs 48,963.19 crore (US$ 9.11 billion) during the corresponding period last year, registering an increase of 19.78 per cent. While the total goods earnings increased by 24.30 per cent, total passenger revenue earnings grew by 11.15 per cent. The revenue earnings from other coaching amounted to Rs. 1,510.38 crore (US$ 281.11 million) during April-September 2012. The total approximate numbers of passengers booked during 1st April 30th September 2012 were 4,274.87 million as against 4,121.99 million during the same period last year, indicating a growth of 3.71 per cent. The cumulative foreign direct investment (FDI) inflow into the railways related components sector stood at US$ 246.57 million from April 2000 to July 2012, according to statistics released by the Department of Industrial Policy and Promotion (DIPP). Recent Developments
• Public sector miner Coal India Ltd
has planned to infuse Rs 7,500 crore (US$ 1.4 billion) to develop railway tracks and auxiliary infrastructure to extract coal from Chhattisgarh, Jharkhand and Odisha. The plan would help the company evacuate around 100 MT of additional coal from each of these States. The investment would be spread over 2012-2016
• Indian
Railways
12 | India Newsletter
has
recently
launched an application namely RailRadar which envisages an interactive map to allow users to track train movements on real-time basis. Such an application has been launched for the first time in India wherein any of the public transport system can be tracked on the internet and mobile. The application has been created by Indian Railways Center for Railway Information System (CRIS) and RailYatri.in
• The Railways and the Indian Railways
Catering and Tourism Corporation (IRCTC) have joined hands to open 20 multi-cuisine restaurants at several stations, including New Delhi. The one at the Capital would cost around Rs 5-7 crore (US$ 930, 639.67 – US$ 1.3 million)
• Indian Railways has also launched a
new luxury train called ‘Royal Rajasthan on Wheels’ which would cover tourist destinations across three states – Madhya Pradesh, Rajasthan and Uttar Pradesh. Touted as India’s most luxurious train — it is a joint venture (JV) between Rajasthan Tourism Development Corporation Ltd (RTDC) and the Indian Railways. Promising to deliver a truly royal endeavour, the train, having 35 coaches, has on board a spa, gymnasium, specials suites, deluxe saloons and two restro-lounges
• In order to enhance interaction and
facility, Railways have included all trains under its online train tracking service, trainenquiry.com, providing updated information about their movements. In addition to that, train movement can also be tracked by sending SMS to 139. All that one has to do is type ‘SPOT’ and send it to 139
Government Initiatives The Government of India has envisaged The Indian Railways Vision 2020 which aims to tackle infrastructure obstacles and deliver best services while building capacity. The Government has signed a US$ 150 million-loan agreement with the Asian Development Bank (ADB) as the first tranche of railway sector investment
programme, aimed at improving rail freight services and passenger transport routes. ADB will also co-operate on improving operational and financial efficiency at Indian Railways. Installation of new signals, reduction in fuel consumption and enhancement of overall railway performance would be the major focus areas under the programme. The total cost of the railway sector investment program is US$ 1.45 billion, out of which loan assistance from ADB is US$ 500 million dollar (in four tranches) and the Government’s commitment is US$ 644.6 million. Furthermore, owing to the initiatives taken by the Prime Minister’s Office (PMO) to speed up the implementation of various key infra projects, a technical feasibility study for the Elevated Rail Corridor in Mumbai has been completed and a draft State Support Agreement has been agreed upon between the Maharashtra Government and the Central ministry. The Railways Ministry will now form a Project Steering Group (PSG) and the operations would be executed under the public-private partnership (PPP) model. The Ministry of Railways has also envisaged an intense expansion plan for the railway network in Karnataka on a costsharing basis with the state government to achieve the twin objectives of connectivity to the villages and inclusive economic growth. The ministry and Karnataka Government would invest around Rs 6,000 crore (US$ 1.12 billion) wherein the state government will provide Rs 3,600 crore (US$ 670 million). Road Ahead Indian Railways aim to modernise the entire railway network system and bring it par with the international standards. The objectives set under the Railway Vision 2020 aim to improve the operating ratio (OR) to around 75 per cent by 2017 while clocking year-on-year (y-o-y) growth of 8-10 per cent. Moreover, in order to meet burgeoning requirements in the years to come, the Ministry of Railways has decided to set up new coach and wagon factories at Odisha, Kerala, Gujarat and Karnataka during 2012-13.
Trade Shows & Events
INDIA SEMICONDUCTOR ASSOCIATION VISION SUMMIT Product Innovation, Global Collaboration and Policy Agreement.
India Newsletter | 13
Trade Shows & Events
INDIA’S LARGEST INTERNATIONAL ENGINEERING SOURCING SHOW Indian Engineering Sourcing Show (IESS) is India’s largest display of Engineering Products and Services and focuses on building global partnerships for India. IESS is recognized as the only sourcing event in India – a showcase of the latest technology, and a preferred meeting place for buyers and sellers from all over the world. International companies keen to enter Indian markets find IESS as an ideal event for product launches, India distributor / partner search etc.
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 marketingofficer@indianembassy.at to get more information about possible assistance/subsidies.
14 | India Newsletter
Info Board
Expanding the economic engagement of the Indian diaspora with India
For details contact: Ms. Sujata Sudarshan, CEO, OIFC, and Director – CII 249-F, sector 18, Udyog Vihar, Phase IV, Gurgaon —122015, Haryana, INDIA Tel: +91-124-4014055/6 | Fax: +91-124-4309446 Website: www.oifc.in
The EMBASSY’S Business Centre is opened tuesdays and FRIDAYS (NEW!!) 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: marketingofficer@indianembassy.at or 01 505 8666 30 Marketing Assistant: marketingassistant@indianembassy.at or 01 505 8666 31
India Newsletter | 15
Tourism
JHARKHAND Indian State Profile
T
he hype, the glitter, the urban settings and even five star hospitality are conspicuous by its absence in this state. Not with standing all these, the ripple of the falls as they cascade down steep mountain slopes seem as mighty as Lord Shiva’s Tandav. History stands still amidst the serenity of hundreds of years old rich teak forests of Saranda that have witnessed the rise and fall of the British Empire. Jharkhand, formerly a part of United Bihar became the 28th State of India on 15th November 2000. The capital of Jharkhand is Ranchi.
Jharkhand is a mineral rich state, having most of big industries of United Bihar. There are two major steel plants- Tata Steel at Jamshedpur and SAIL at Bokaro, several coal mines fields, Heavy Engineering plant at Ranchi, a big fertilizer plant at Sindri and several industrial establishment based on minerals in this state. Jharkhand state is full of evergreen forests, wild life sanctuaries, lakes, waterfalls, health and holiday resorts and a wide range of scenic beauty for tourists. The State’s Chota Nagpur plateau presents a rolling hills area, dense forests, several waterfalls and many springs with mineral waters. Jharkhand state is not only a state of abundant evergreen forests or wildlife or waterfalls but also a state of important pilgrimage destinations. The famous places of pilgrimage are Rajrappa, Parasnath, Sun Temple, Baidyanathdham (Deoghar), Jagannathpur Temple and Hill, Anjangram and many more. Jharkhand also is developing Ecotourism and Organic Farming destinations, where quite a few villages are turning as eco tourism destinations, and farms being converted to Organic Farming.
India Tourism Frankfurt Baseler Str. 48 / D-60329 Frankfurt  Tel: +49 (69) 242949-0 Fax: +49 (69) 242949-77 www.india-tourism.com info@india-tourism.com 16 | India Newsletter
India in Austria
INDIAN MOVIE EVENING: EIN STERN AUF ERDEN (Taare Zameen Par) Friday, December 14th, 18:00 | Indian Embassy Business Centre (1st Floor, Kärntner Ring 2, 1010 Vienna) 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 or via phone at +43 1 505 866633 (Ms. Lily John). Genre: Drama Directed by: Aamir Khan Starring: Darsheel Safary, Aamir Khan, Tisca Chopra,Vipin Sharma Released: December 2007 Duration: 164 Minutes Language: Hindi Subtitles: German Synopsis: Ishaan Awasthi is an eight-yearold whose world is filled with wonders that
COMPETITION: INDIA IS... GLOBAL VIDEO CHALLENGE 2013 Find out more and submit your video to the video challenge under http://www.youtube.com/realindiais
The India Is Campaign kick started in September 2011 as a Global Video Challenge. The ‘India Is Global Video Challenge 2011’ successfully highlighted the abundance of ‘soft power’ prevalent in India. In its first year, the challenge invited individuals to create a short film (under 3 minutes), based on their perspective of India, and share it with the world. India Is celebrated the ideas, thoughts, expressions, motivations and creativity of all the filmmakers and individuals. Through the course of the challenge, talented individuals from multicultural backgrounds were able to capture, highlight, showcase and delve deeper into the essence and core of India. In 2012, ‘India Is’ back with several new additions, partners, themes, prizes and a lot more! Visit the website to find out more!!!
no one else seems to appreciate; colours, fish, dogs and kites are just not important in the world of adults, who are much more interested in things like homework, marks and neatness. And Ishaan just cannot seem to get anything right in class. When he gets into far more trouble than his parents can handle, he is packed off to a boarding school to ‘be disciplined’. Things are no different at his new school, and Ishaan has to contend with the added trauma of separation from his family. One day a new art teacher bursts onto the scene, Ram Shankar Nikumbh, who infects the students with joy and optimism. He breaks all the rules of ‘how things are done’ by asking them to think, dream and imagine, and all the children respond with enthusiasm, all except Ishaan. Nikumbh soon realizes that Ishaan is very unhappy, and he sets out to discover why. With time, patience and care, he ultimately helps Ishaan find himself
BOOK: “Indovation: how to innovate for India” By Austrian writer Wolfgang Bergthaler More Information under www.indovation.de
In the last ten years, the Indian market for consumer and industrial goods has grown dramatically. This trend offers huge sales potential for European companies. Global marketers focus more and more on India. Today, no company can afford to neglect the Indian market! Ironically, only a few European companies have suitable offer for the Indian market. The book “Indovation: how to innovate for India” represents a compact guide to successful product development and marketing for India. Furthermore it also includes numerous case studies and guest articles from well-known marketing-experts, scientists, journalists, investors and entrepreneurs.
OTHER EVENTS More Information below
Talk-Series ‘Zu Gast bei Elisabeth Al-Himrani’ Dina Thacker, Fashion Designer for Ishka
When: December 13th, 19:00 Natya Mandir - Börseplatz 3/1D, 1010 Vienna www.austro-indian.at
India Newsletter | 17