INDIA NEWSLETTER www.indianembassy.at
Published by the Embassy of India, Vienna Year 3 • Issue 36 • December 2013
FEATURED INDUSTRY INDIAN AUTOMOBILES SECTOR
India Newsletter • 1
Embassy of India, Vienna
Tea production in India grew by 12.59 per cent to 156.70 million kg in September 2013.n
The total number of telecom subscribers in India stood at 899.86 million as on September 30, 2013.n
Net direct tax collections during April-October 2013 grew by 13.33 per cent to touch US$ 45.37 billion, as against US$ 40.04 billion during the same period last year.n
India witnessed FII inflows worth US$ 748 million during the last week of October 2013, the highest among emerging markets.n
India Inc’s mergers and acquisitions (M&A) activity during January-October 2013 stood at 411 deals amounting to US$ 25.48 billion.n
India’s merchandise exports in October 2013 grew to US$ 27.27 billion from US$ 24.03 billion during the same month last year, an increase of 13.47 per cent.n
Indian Railways posted revenues of Rs 77,235.64 crore (US$ 12.12 billion) during AprilOctober 2013, increasing by 12.53 per cent year-onyear.n 2 • India Newsletter
Coffee production in India is expected to grow by 9 per cent during 2013-14 to 347,000 tonnes.n
F o r e i g n institutional investors (FIIs) have invested US$ 638.37 million in the Indian equity market during October 2013, taking the total foreign investment in stock market to US$ 14.82 billion in 2013.n
Domestic airlines in India carried 5,008,000 passengers in the month of October 2013, growing by nearly 10 per cent year-on-year.n
Indian Railways carried 593.25 million tonnes (MT) of revenue earning freight traffic during April-October 2013, a growth by 6.77 per cent year-on-year (y-o-y).n
The Reserve Bank of India (RBI) has received US$ 22.7 billion till date under its special concessional window for swapping foreign currency non-resident (bank) deposits and overseas foreign currency borrowings.n
Investments into the Indian share market through participatory notes (P-Notes) touched a two and a half year high of Rs 1.84 trillion (US$ 29.19 billion) in October 2013.n
Premiums collected by general insurance companies in India registered a growth by 14 per cent year-on-year during the first half of the current fiscal year.n
The British Council has declared around 370 scholarships in India worth almost Rs 10 crore (US$ 1.6 million) for 260 undergraduate and postgraduate courses in England, Scotland Wales and Northern Ireland.n
The denim market in India is projected to reach Rs 13,000 crore (US$ 2.08 billion) in 2017, nearly twice its size in 2012.n
The top eight cities in India have seen residential unit launches of 132,000 units during January to September 2013, a five per cent increase yearon-year.n
Gross Domestic Product (GDP) of India is expected to be 5 per cent in 2013-14.(IBEF)n
dia’s foreign exchange (Forex) reserves have increased by US$ 2.7 billion in the week ending November 22, 2013, to reach US$ 286.264 billion, a five-month high. n
NEWS ARTICLES India surpasses China as most attractive investment destination: Survey
ndia has overtaken China as the most attractive investment destination according to a survey conducted by Ernst & Young (EY) a global professional services firm. The top three investing countries into India, as per this survey will be United States of America (USA), France and Japan. As per the government's statistics relating to Foreign Direct Investments (FDI) over the past years â€” April 2000 to August 2013, these three countries were among the top ten investing countries in India. FDI inflows from USA, France and Japan during this period were: Rs 53, 673 crore; Rs 17,718 crore and Rs 71,870 crore respectively. India has emerged at the top of the list of most attractive investment destinations, according to EY's ninth bi-annual Capital confidence barometer, encompassing insights culled from a survey of 1,600 senior executives across more than 70 countries. The observation underscores the long term confidence that investors continue to maintain India as an investment destination. While India moved up to the top slot of the attractive investment destination list, China was down to the third slot as Brazil closely folloowed India. With sharp currency depreciation and opening up of FDI in various sectors, India has become an attractive destination for foreign investors. This has created a large opportunity for foreign players vying for a greater role in the Indian market. Sectors with the highest level of anticipated deal-making include Automotive, Technology, Life Sciences and Consumer Products. Results showed that 38% of the respondents believe that Merger and Amalgamations (M&As)
volumes in India are expected to improve over the next 12 months, while 30% feel that it will remain stable. Indian companies also reflect a concerted focus on job creation as well as optimising operations to deliver cost reduction, as per the findings. "The investor outlook for India remains positive, despite the challenges the country's economy has faced in the recent past. At the same time, the improved condition of the world economy has helped increase confidence amongst deal makers, prompting them to take a bolder stance toward executing transactions. Also, the Fed's reassurance on not pulling back stimulus in the near term has boosted confidence in the board rooms," says Amit Khandelwal, National Leader & Partner - Transaction Advisory Services, EY. The global executives' sentiments have shown improvement, specifically with regard to plans for acquisitions and deals and is at two-year high with credit and cash available for deals. Almost 70% of global executives expect deal volumes and deal sizes to improve over the next 12 months. 35% of global executives are planning acquisitions up from 25% a year ago - mature markets are expected to lead revival and confidence is rising for emerging markets. The positive outlook around dealmaking globally, stems from a growing economic confidence, which has risen dramatically over the last 12 months â€” 65% expect the global economy to improve, compared to just 22% a year ago. Growth is now a global imperative as almost 60% of companies say they plan to accelerate their growth strategies over the next 12 months. In India, it is noteworthy that the recent slowdown in emerging markets and steadily improving
economic situation in developed markets has shifted the focus of Indian investors in favour of the latter. Indian corporate entities have started looking at developed markets for making acquisitions, with three of the five destinations being developed economies. After two years, European countries (UK and Germany) have made a comeback on the potential investment destinations list for Indian companies. Over the past 12 months the focus of leading corporates' capital agenda has shifted. The appetite to invest has increased by more than a third, while the intention to preserve capital has halved. "This does not mean we will see a return to boom-time deal-making. However, deals will continue be the best route to meaningful growth. Barring any further significant economic or geo-political shocks, we should see the resuscitation of a global M&A market which has flat-lined in recent years," adds Khandelwal.n
India to have third-largest GDP by 2030: Montek Ahluwalia India will become the third-biggest economy in the world by 2030, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia said. "By the year 2030, India will have the third-largest GDP in the world. China will be No. 1, the US will be No. 2 and India will be third," he said in a speech delivered at the convocation of the 125th course of the National Defence Academy at Khadakwasla near here. "The challenge of defence forces is to defend and protect the interests of the nation that will have the thirdlargest GDP in 17 years. When the size (of the economy) increases, the challenge also increases," he said. India Newsletter â€˘ 3
Embassy of India, Vienna
Underlining the importance of safeguarding India's access to energy supplies in the context of West Asia, he said, "Our oil import dependence will increase, especially if our growth rate and GDP go up." Ahluwalia said "the real challenge for us is to redefine the defence challenge we face in a world which will be much more multi-polar." India, with a GDP of $1.84 trillion, was ranked the 10th-largest economy in 2012, according to the World Bank. The US, at $15.6 trillion, is the largest economy.n
Japanese firms prefer to invest in India Manufacturing companies in Japan continue to see India as the top destination for investments over the next three years, according to Masanori Nakano, Consul General of Japan in Chennai. Despite the global economic slowdown India continues to grow at about 5 per cent. Japan’s manufacturing sector chooses India over China, Thailand, Vietnam, Brazil and Indonesia as a choice of immediate investments, he said while addressing an automobile components fair jointly organised by Automobile Components Manufacturers Association (ACMA) and Japan External Trade Organisation (Jetro). Nakano said the event, to explore procurement possibilities by the Japanese automobile industry, is a part of the India-Japan initiative to strengthen trade ties. Hidehiro Ishiura, Director-General, Jetro-Chennai, said over a 100 companies, including 46 from Japan, are participating in the fair. Japan’s Emperor Akihito and Empress Michiko visited India in November as a part of a week-long programme. 4 • India Newsletter
At 1,200 kV WardhaAurangabad will be world’s most powerful transmission line
riven by need and denied help, India developed its own super computers, learnt to put satellites in space and mastered the pressurised heavy water reactor nuclear technology. While these do not make India a scientific super power, they do fetch the country a measure of respectability. Now, the same need is driving India to the cutting edge of technologies in another field — power transmission. The 400-km distance between Wardha and Aurangabad may not be very long, but the cables which connect the two cities in Maharashtra will, in a couple of years, have the distinction of being the world’s highest capacity power transmission line. At present, it is “charged to 400 kV” but when the Power Grid Corporation of India is ready, the capacity of the line will be raised to 1,200 kV. Nowhere in the world does a 1,200-kV line exist, partly because other countries do not need such high capacity lines. China, another country of distances, which does need ultra high voltage transmission, has a 1,100 kV line in commercial operation. The Wardha-Aurangabad transmission system takes off from a 2 km-long pilot line that the public sector PGCIL has been experimenting in Bina, Madhya Pradesh. The pilot was to study how electrical systems behave when a current of 1,200 volt zips through them. The ultra high voltage (UHV) systems have one significant advantage — they can carry more power. This is crucial in a country where laying new lines is a challenge because of ‘right of way’ problems. “UHV is an evolving technology, specially initiated by countries with large surface areas like China and India,” says John Yesuraj, Deputy General Manager, Design and Technology, Crompton Greaves Ltd.
“India’s ambition of 1,200 kV system, which would be a step greater than China’s 1,100 kV, is now widely discussed in international technical forums across the world,” Yesuraj told Business Line. Cromption Greaves recently announced the setting up of a Rs 40-crore ‘UHV lab’ to test how well the various transmission equipment can withstand electrical stress when current of very high voltage, up to 1,600 kV, passes through it. The lab will enable local manufacture of UHV products, substituting costly imports. In the meantime, Power Grid Corporation is all set to begin research into superconducting transmission systems. Superconductivity has been in physics books for long, but is yet to come into reality. Basically, if you pass electricity through a wire, the wire resists the flow and this resistance heats up the wire and some energy is lost as this heat. A superconducting system keeps the cable under extremely low temperatures, so low that making it possible at temperatures of -135 degrees Celsius is called ‘high temperature super conductivity’. The challenge is, of course, to keep the cable so cold but if you get it right, there will be practically no transmission losses. Power Grid Corporation will soon set up a research centre in collaboration with IIT Kharakhpur, the company’s Director-Operations, I. S. Jha, said.n
India gets on the highway to growth in Southeast Asia
s India readies to sign the free trade agreement on services and investment with the Association of Southeast Asian Nations (Asean), taking bilateral trade relations to the next level of a comprehensive economic partnership agreement, the focus is on the laying out of a massive road connectivity plan to tie the region together to boost economic objectives. To start with, India has proposed extending the trilateral highway
project connecting India, Myanmar and Thailand to neighbouring Cambodia and Vietnam. The idea is to set up special economic zones along this highway and provide seamless connectivity through these countries by 2016, by when the projects are expected to become operational. Right now, work is on to repair and strengthen 71 bridges that link this stretch. To ensure greater success of this highway project, Prime Minister Manmohan Singh proposed an Asean-India Transit Transport Agreement (AITTA) at the IndiaAsean Summit in Brunei Darussalam last month. Once the agreement comes into force -likely by 2015- vehicles from association countries will be able to cross international borders without much documentation. Total bilateral trade between Asean and India reached $75.6 billion in 2012, surpassing the target of $70 billion. Now, with the implementation of the IndiaAsean comprehensive economic partnership, the target for two-way trade has been set at $100 billion by 2015, for which an integrated transport network would be the key. At present, the market is fragmented and the patchy road network is a stumbling block for free flow of goods and services. This, along with administrative and technical barriers, increases costs and leads to transportation delays, says a study by New Delhi-based think tank Research and Information System for Developing Countries on AseanIndia connectivity. While road links are being developed, the proposed AITTA will make crossing the border easier. "AITTA will allow vehicles to move seamlessly across international borders or regional and international trade transportation purposes. AITTA should be in position before the trilateral highway is operationalised in 2016. Potentially, it can be a game changer which will allow us to reap the full benefit of India-Asean free trade agreement,
regional comprehensive economic partnership and enhanced connectivity," says Ashok Kantha, secretary (East), ministry of external affairs. The master plan on Asean road connectivity was adopted at the India-Asean Summit in 2010. The benefits from the highways, which are scheduled to be completed by 2016, are manifold. They would improve connectivity, bring India closer to Asean, reduce trade costs, help exploit the country's comparative advantage in certain products, expand markets, as well as reduce poverty and improve the quality of life for the people in the region. A smooth road network would also provide substantial benefits to other countries, particularly to landlocked and island nations by giving them low-cost access to a wider market outside, the report said. India already has a goods agreement in place. It came into force in August 2011 and provides tariff-free access to a range of products, including textiles, pharmaceuticals, chemicals, engineering goods, processed food and auto parts. The likely addition of services and investments to this list of free-trade items in the not too distant future would open up new opportunities for Indian IT and healthcare professionals, designers and researchers. In addition, India is also contemplating expansion of rail network into Myanmar. The rail head terminates at Jiribam in Manipur. A project to connect Jiribam to the capital Imphal is under way and is slated to be completed by 2017, while proposals on connecting Moreh (Imphal) to Tamu-Kalay (Myanmar) is being considered by the external affairs ministry. At the same time, work is also on for developing soft infrastructure such as trade facilitation centres and telecommunication, necessary for any economy to function and thrive. Boosting maritime connectivity is on the agenda as well. India has proposed the establishment of a
Maritime Transport Working Group between India, Myanmar, Thailand, Cambodia and Vietnam to examine the feasibility of shorter shipping routes. This idea was initially mooted by Thailand which wants a more direct sea transport route to India via the Dawei port in Myanmar, which is a deep sea port. Right now ships have to be routed via Singapore to reach India. "It is important that we identify economic activities that can be pegged to these corridors, which could attract private sectors from both Asean and India, including from India's Northeast," says a foreign ministry official. Another project that India has shown interest in is the MekongIndia Economic Corridor (an offshoot of the trilateral highway) to link Myanmar, Thailand, Cambodia and Vietnam with India. The corridor- which might be funded by Asian Development Bank -will extend from Ho Chi Minh City in Vietnam to Dawei in Myanmar via Bangkok (Thailand) and Phnom Penh (Cambodia) and then on to Chennai in India.n
India, EU sign pact to facilitate competition law
ndia and the European Union have inked an agreement to facilitate development and nondiscriminatory enforcement of competition laws. The MoU was signed by Ashok Chawla, Chairman of Competition Commission of India, and Joaquin Almunia, Vice-President for Competition, European Union, on the sidelines of the ongoing BRICS International Competition Conference. The MoU also provides for meetings between two sides to discuss current issues, experiences and new developments of mutual interest with respect to competition policy development, legislation and enforcement or the operation of the present MoU, exchange of non-confidential information India Newsletter â€˘ 5
Embassy of India, Vienna
on the competition environment in economic sectors of common interest; exchange views with respect to multilateral competition initiatives. CCI and European Commission’s DG (Competition) would take steps to minimise any potentially adverse effects of one side’s enforcement activities on the other side’s interests in the application of their respective competition laws. The two sides will exchange non-confidential information, experiences and views pertaining to competition policy and enforcement, operational issues, multilateral initiatives, advocacy and technical co-operation.
Adani Ports signs MoU with Belgian Port of Zeebrugge
dani Ports & SEZ Ltd (APSEZ), India's largest private port developer, signed a memorandum of understanding (MoU) with the Belgian Port of Zeebrugge, to get access to European markets. "The MoU over a period of time will help in an enhanced movement of traffic to and from APSEZ into Europe and beyond," Adani Ports said in a statement. Adani Ports will explore joint business opportunities between the two ports along with other forms of trade, shipping, railway infrastructure across India and Europe, the statement added. Karan Adani, Executive Director, said Adani Ports was keen to jointly explore marketing initiatives and strategies to promote IndoEuropean trade relations across both the ports via shipping lines.n
India, Belgium agree to enhance cooperation in renewable energy India and Belgium have agreed to work on signing an MOU to enhance cooperation in renewable energy. This was discussed at a bilateral meeting between Dr. Farooq Abdullah, Minister for New and Renewable Energy, Government 6 • India Newsletter
of India and Her Royal Highness Princess Astrid of Belgium. Princess Astrid visited India as head of the Belgian Economic Mission to India. She is accompanied by Mr. Didier Reynders, Deputy Prime Minister and Minister for Foreign Affairs, Foreign Trade and European Affairs and Mr. Kris Peeters, President of the Region of Flanders and Flemish Minister for Economic, Foreign Policy along with a large business delegation. Dr. Abdullah briefed the visiting delegation on the energy situation in India and the rapid growth of the renewable energy sector in India. He spoke of India’s plans to add over 30 GW of renewable energy to its energy mix in the next 5 years. He dwelt on the success of the wind programme as well as the significant cost reductions in solar energy through the Jawahar Lal Nehru National Solar Mission (JNNSM). He also highlighted India’s conducive and investor friendly policy framework for promoting renewable energy in a big way. Dr. Abdullah suggested that India and Belgium had great potential for enhancing cooperation in promoting renewable energy and offered to provide all possible assistance for the purpose. The Belgian delegation recognized India’s considerable achievements and strengths in renewable energy and noted that India had made large strides in this field. The business delegation accompanying the official delegation also made brief presentations on their activities and reciprocated India’s desire for enhanced energy cooperation between the two countries. After detailed discussions, the two sides agreed to start work on a Memorandum of Understanding (MoU) in the field of Renewable Energy between the Ministry of New and Renewable Energy of the Government of India and the Government of Belgium in order to strengthen, promote and develop renewable energy cooperation between the two countries on the basis of equality and mutual benefit. Both countries also agreed to
explore possibilities of coordination in renewable energy through joint Research and Development programmes of mutual interest.n
Germany keen on Indian investments East Germany offers good prospects to Indian investors and is ideal for investments, according to Stefan Weckbach, Consul-General, German Consulate. Speaking at a meet on ‘Tapping Germany’s Business Potential: Opportunities for Indian Companies in Eastern Germany’, he said an increasing number of Indian companies were investing in East Germany. “East Germany has excellent infrastructure in the form of educational institutions, industrial research and development centres, etc. It is a fertile ground for investors,’’ he said. The bilateral trade between India and Germany stood at $17.6 billion in 2012. B. Ashok Reddy, President – Global HR, Infotech Enterprises Ltd, said after much consideration, his company chose Germany as the headquarters of its European operations. While acknowledging that there were cultural differences between India and Germany, Reddy said Infotech was organising frequent trips to India for its German workforce and vice versa for its Indian professionals. “We are also examining organic and inorganic approaches for growth in Germany,’’ he added.n
Glass industry to touch Rs 340 bn by 2015: Assocham
ndian glass market is estimated to increase at a CAGR of 15% over the next three years Fuelled by growth in sectors like real estate, infrastructure, retail, automotive and food & beverages, the country's glass industry will acquire a market size worth Rs 340 billion by 2015 from Rs 225 billion at present, according to a study by industry body Assocham. "Indian glass market is estimated to increase at a compound annual growth rate (CAGR) of 15% over
the next three years. The glass consumption growth is expected in construction (10-12%), automotive (20), consumer goods (15-20) and pharmaceuticals (15-18) sectors," Assocham Secretary General D S Rawat said. The organised glass sector is dominated by large players like ASAHI Glass India Ltd, Hindustan National Glass & Industries ltd, Piramal Glass, Saint-Gobain India, HSIL, Owen Corning, Triveni Glass, Borosil, Nippon Electric glass, Gujarat Borosil and Sezal Glass. The organised glass industry employs 30 lakh people directly and provides indirect employment to 5 lakh people whereas the unorganised sector employs around 5-6 lakh people. Moreover, 70% of the total glass production in the unorganised sector in India is contributed by Firozabad glass industry, which is India's biggest glass cluster. About 75% of the total glass industries are concentrated in Uttar Pradesh, Maharashtra, Gujarat, Karnataka and Andhra Pradesh. The highest share in the number of factories of the glass industry is Uttar Pradesh with a share of 36.9%, followed by Gujarat at 15%, Andhra Pradesh and Tamil Nadu at 5.6% and Karnataka with 4%. The highest employment in the glass industry is in Gujarat followed by Uttar Pradesh, Maharashtra and Andhra Pradesh. The per capita glass usage in India is 1.2 kg compared with 8-9 kg in developed countries and 30-35 kg in the US, the study found. The major export destinations of the glass industry are the US, China, Brazil and Germany. The countries from which the glass industry mainly imports are China followed by USA and Germany.
Cadbury’s largest plant in Asia-Pacific to come up in AP
adbury India signed a memorandum of understanding with the Andhra Pradesh
Government that will see it set up its largest manufacturing plant in the Asia-Pacific region. The proposed plant, which is to come up on a 134-acre site in SriCity, Chittoor, with an initial investment of Rs 1,000 crore, will be functional by mid-2015. Part of the $35-billion Mondelez International Inc, Cadbury India plans to develop the project in four phases by 2020, eventually increasing its annual production capacity to 250,000 tonnes. Manu Anand, President-India & South Asia, said the plant will be able to serve the southern region and possibly other markets as it gets implemented in phases. India is rated among the top 10 markets in the company’s global business. The MoU was signed by Anand and K. Pradeep Chandra, Andhra Pradesh’s Industries Principal Secretary, in the presence of Chief Minister N. Kiran Kumar Reddy and others. “The plant will employ about 1,600 people when fully developed and account for nearly 50 per cent of Cadbury’s overall capacity (it currently has six plants). Cadbury manufactures products under five broad categories: chocolates, powder beverages, gum, candy and biscuits,” said Anand. Typically, some of the suppliers, too, set up plants where Cadbury locates its facilities, he added. The Chief Minister said Chittoor being the home of dairy companies has capacity to supply Cadbury about 500,000 litres of milk per day, initially, and possibly 100,000 litres per day by phase two of the project. And the demand of about 200 tonnes of sugar per day could boost the prospects of sugar mills. He said that in the three years since he took over as the Chief Minister, he had cleared proposals worth Rs 1.35 lakh crore, covering 75 factories, making AP a favoured destination for investments.n
JBM Auto forms a joint
venture with Italian bus maker BredaMenarinibus to manufacture luxury buses in India
elhi-based auto component makerJBM Auto has formed a joint venture with Italian busmaker BredaMenarinibus to manufacture luxury buses in India. The IndoItalian venture will set up a plant at Kosi, near Faridabad in Haryana, and produce 2,000 buses every year initially, as part of a 500-crore investment plan, people with knowledge of the development told ET. The facility will go on stream in the next few months, they added. JBM Auto is part of the $1.2-billion JBM Group, which has 35 manufacturing plants and four engineering and design centres across 18 global locations. BredaMenarinibus has been manufacturing buses for about 90 years now. Nishant Arya, executive director of the JBM Group, confirmed the development. "We have been in discussion for a long period and the final stages of the agreement have been reached based on the needs of the Indian commercial vehicle industry," he said. JBM Auto supplies auto parts to carmakers like Ford, and Fiat. It is now looking to tap the country's top-end bus market, where it will have to compete with Volvo, Isuzu and Scania. If the deal goes through, JBM will become the first Indian auto parts maker to graduate to full-fledged vehicle manufacturing. The persons cited above said JBM plans to unveil its buses at the auto fair scheduled for February 2014. In India, about 50,000 buses are sold every year across cities, towns and rural areas. People in the know said it will initially produce 60-seater CNG city buses and diesel-powered coaches, which will be high on local-sourced parts. A second manufacturing facility of the joint venture is likely to come up in the industrial cluster of Ballabhgarh, also in Haryana, they India Newsletter • 7
Embassy of India, Vienna
added. On use of locally produced parts, Arya said, "We are working out the details with our partners to source the critical parts of these buses. We will share the fine points close to the signing of the deal. We are in talks with many players for this partnership to strike the right alliance and deliver the right products for the Indian market." People close to the development said JBM's buses will have a monocoque system, disc brakes and an independent front suspension, among other features. The development comes at a time when the government is planning to procure 10,000 new buses under phase 2 of the Jawaharlal Nehru Urban Renewal Mission. Notwithstanding the current downturn in the commercial vehicles segment, JBM Auto is bullish about its bus venture as the sector is beginning to see demand from state governments and urban municipal bodies for buses.n
FIPB approves Swedish major H&M’s Rs 720-cr proposal
he Foreign Investment Promotion Board (FIPB) approved Swedish clothing major Hennes & Mauritz AB (H&M)’s proposal to open 50 stores across the country. The proposal involves an investment of Rs 720 crore. However, FIPB did not take up British telecom giant Vodafone’s Rs 10,141-crore proposal to raise stake in its Indian arm, as it didn’t receive inputs from all the entities concerned. Key entities whose comments are required for the proposal to go through include the Department of Telecommunications, the Department of Economic Affairs, Department of Industrial Policy and Promotion (DIPP) and the home ministry. H&M’s proposal was cleared by DIPP, the nodal agency for foreign direct investment (FDI), in September. In April, the company had presented 8 • India Newsletter
an application to enter the country’s single brand retail market. According to its application, H&M, endorsed internationally by the likes of supermodel Gisele Bundchen and footballer David Beckham, would invest Rs 100 million in the first phase, through a wholly-owned subsidiary. Earlier, DIPP had questioned whether the company would be able to strictly adhere to the sourcing norms dictated by the FDI policy in single-brand retail. The department was also concerned about the brand’s licensing norms. Stockholmbased H&M had replied to all these queries, putting the concerns to rest. The apparel company is already believed to be in advanced stages of negotiations to book 25,000 sq ft at a major mall here. The brand operates 3,000 stores in 53 markets around the world, including the popular outlet at London’s Regent Street. Earlier this year, the Cabinet Committee on Economic Affairs had cleared a Rs 10,500-crore proposal by furniture-maker IKEA, a Swedish brand registered in The Netherlands.n
GE to make India a manufacturing hub for its global markets
S-based diversified conglomerate General Electric Co says the huge talent pool and lower manufacturing costs in India will drive the company’s plan to make the country a manufacturing hub for its global markets. Banmali Agrawala, President and CEO, GE South Asia, said its coming plant at Chakan, Pune, is the first major step towards this direction. "The Chakan plant is expected to be operational by the middle of next year. We will use the facility to manufacture a range of products for our global markets," he told reporters. The Rs 1,000-crore plant will produce diversified equipment for
the aviation, energy, oil and gas and transportation sectors. The $150-billion revenue multinational, which has interests in capital goods, technology and financial services, is now present in 164 countries, earning more than $1 billion revenue each from at least 40 countries and more than $100 million from 60 countries. Agrawala said GE will also start exporting healthcare devices from its Bangalore plant as part of the strategy to make India a manufacturing hub. The Bangalore plant will make an array of “super-value products”, including ultrasound machines, ECG units, maternal and infant care equipment, which will be exported to Africa, Europe, Latin America and Asia. He is of the view that India can become a global manufacturing hub, provided the government takes certain policies and cuts regulation. “We have enough talents here. The government should not see India as a manufacturing hub for India alone, but for the world. “It should accordingly change its policies and not have excessive regulation. It should play the role of a facilitator.”
Knorr-Bremse sets up truck braking systems plant in Pune
erman manufacturer KnorrBremse has set up a new plant in Pune to make complete braking systems for trucks. It has also established a technology centre for engineering design in the city. Set up with an investment of €14 million, the facility will address the needs of the domestic market as well as serve as the leading plant worldwide for automatic slack adjusters, said Klaus Deller, a board member at Knorr Bremse. Deller is responsible for the commercial vehicle business globally. The greenfield plant can build braking systems for 80,000 trucks per year, and production is scalable, Deller said. Referring to the current
slowdown in the Indian CV segment, he added: “We don’t care exactly when the demand will pick up, but we know it will pick up. And when it does, we will be there.” India, at present, accounts for 2 per cent of the company’s global revenue. The target is to double this in the next three years, Deller said. Knorr-Bremse’s Technical Centre India will have over 200 engineers working on global development projects for both truck and rail systems. The building also houses a software centre for the company’s rail division. The German company’s entry into the Indian CV component market was via a joint venture with Tata Auto Components (TACO). The alliance was broken around five years ago with the former buying out TACO’s stake. Following this, it has set up its own expanded manufacturing facility. Later this week, Knorr-Bremse is set to open its greenfield plant for railway systems in Faridabad.n
India's netizens set to be world's second-biggest internet user base
y June 2014, Indians might outnumber American internet users to become the world’s secondlargest online community after China, said a report released by the Internet and Mobile Association of India (IAMAI) and market research firm IMRB International. According to the report, India is expected to have 213 million internet users by December and
243 million by June 2014. Its netizen strength stood at 205 million in October and 190 million in June this year. At present, China is at the top with a little over 300 million internet users, while the US (an estimated 207 million) is a distant second. “The internet user base in India took more than a decade to move from 10 million to 100 million but only three years to double from there to 200 million. From here on, we can hope to develop a robust internet ecosystem, with a multitude of local and global players and a thriving internet economy. Internet is now, clearly, mainstream in India,” said IAMAI Chairman Rajan Anandan. According to IAMAI President Subho Ray, internet penetration in India, given its population, is still low. That’s the reason for the growth rate here to be much higher than that in the US. “The growth in the US was slow, as it already had more than 200 million of its 300 million population using the internet. India, on the other hand, has a large addressable crowd. So, the growth rate is much higher here,” he added. Interestingly, rural India has seen a 58 per cent year-on-year growth in the number of active internet users since June 2012. The rural base, 68 million in October, is estimated to reach 72 million by December. The report further finds that more than 50 per cent of the urban internet users access internet daily. Remarkably, however, this high-
frequency usage is not restricted only to the youth and the working men. The habit of accessing the internet daily is seen among other demographic segments as well, including older men and nonworking women, it shows. In urban India, the report found, college-going students had overtaken young men in usage and now accounted for 29 per cent of all active internet users. Young men now accounted for 28 per cent. However, the most phenomenal growth was seen in the working women segment, which grew 43 per cent over last year and now accounted for a tenth of the active internet users. According to the IAMAI report, much of the growth of internet user base in India is on account of increasing penetration of mobile internet. As of October this year, India had 110 million mobile internet users. This number is expected to reach 130 million by the end of December. “Mobile internet, as of June 2013, had a penetration of 65 per cent among the 108 million active internet users in urban India. Going by the trend, it would not be long before mobile internet will become the primary platform for accessing the internet,” added Ray. In rural India, according to the report, 32 per cent of the active users access the internet only on their mobile phones, while 70 per cent both mobiles and computers for the purpose. The community service centres and cyber cafes are the main points of access for 40 per cent of them. n
AUSTRIA IN INDIA The foreign trade department of the Austrian Chamber of Commerce, Advantage Austria, has recently released in their website a new list of Austrian subsidiaries in India. The list emcompasses details on more than 120 Austrian companies for reference The latest file of Austrian subsidiaries in India can be found for download under: http://www.advantageaustria.org/in/oesterreich-in-india/news/local/Austrian_Companies_in_India.en.html
India Newsletter • 9
Embassy of India, Vienna
SPEECH Speech by Shri P CHIDAMBARAM, Finance Minister, at the Delhi Economic Conclave 2013 on December 11th, 2013.
ood Morning, Ladies and Gentlemen, I welcome you on behalf of the Economics Division of the Ministry of Finance, Government of India, to the Delhi Economics Conclave 2013. I am very happy to see amongst this distinguished gathering and on the list of speakers Prof. Nathan Nunn, Prof. Romain Wacziarg, Prof. ShangJin Wei, Prof. Renato Baumann, Prof. Ruth Kattumuri and Prof. Gita Gopinath. I welcome all of them. I may begin by congratulating the officers of the Economics Division, led by Shri HAC Prasad, Senior Economic Adviser, for their untiring efforts to put together this conference. I compliment them for the choice of subjects and the choice of speakers. The conclave is about looking to the future. I recall the saying that all predictions are suspect, especially about the future. In this case, we have been asked to look ahead for the next five years. I can speak only in a guarded manner on the world economy or what it will be like in the next five years. There are incipient signs of recovery. They are too tentative, too few and too scattered. The three engines of growth are the US, the Eurozone and China. I hope we can add India to this list, given India‟s size, population and potential. Of these, China is the obvious champion, but for reasons that are domestic and political, it is possible that China may wish to moderate its growth rate. If the US economy achieves a growth rate of 3 percent or more, that could trigger a worldwide recovery. The Eurozone faces many challenges. Germany‟s Finance Minister summed it up when he said that Europe, given
10 • India Newsletter
its ageing and stable or declining population, cannot aspire to 2 growth rates of more than 1 to 2 percent. That leaves India and I shall speak about India presently. We may therefore conclude that global growth over the next five years is likely to be moderate. As far as India is concerned, I may recapitulate, briefly, the events of the last five years. We may start with September 2008. The Great Recession impacted India like it did every other country. India‟s response was traditional and strictly according to the text books. What stand out are the three sets of stimulus measures. After declining to 6.7 percent in 2008-09, GDP growth revived in 2009-10 and 2010-11, but as Governor Rajan pointed out a few days ago “While the stimulus did help growth initially, it eventually led to an overheated economy, high inflation and wage growth, and consequently deficits widening to uncomfortable highs – CAD rising from 2.8 percent in 2010-11 to 4.8 percent in 2012-13 and the centre‟s fiscal deficit rising from 2.5 percent in 2007-08 to 5.7 percent in 201112.” The task before India is to reverse these unintended consequences
and lay the ground for faster, more inclusive and sustained growth over the next five years. The agenda, therefore, will be obvious. At the top of the list is fiscal consolidation. There can be no compromise – and I speak for the Government when I say there will be no compromise – on the decision to walk on the path of fiscal prudence and contain the fiscal deficit, step by step, year by year, until we reach the goal of 3 percent of GDP in 2016-17. As we progress towards greater fiscal consolidation, we must pay attention to the revenue deficit as well. Borrowing should largely finance investment and not consumption. Along the way, the current account deficit would also need close attention. India cannot finance a current account deficit of the order of USD 88 billion as we did in 201213. Nor can India afford to pay for import of gold in the order of 3 USD 50 billion or more. Nor should India import coal when it has coal in abundance. Nor should India tie itself in policy knots and be forced to import goods and commodities that it has the capacity to manufacture or produce.
Next on the list is tackling inflation. It is common knowledge that the Government of the day will pay a price for high inflation, especially if inflation persists over a long period of time. The current high inflation – measured by the CPI or the WPI – is driven by high food prices, especially prices of fruit, vegetables, meat, fish, eggs and milk. Sometimes, pulses and edible oils also witness sharp spikes in prices. Here, I would like to say a few words on farm gate prices and rural wages. The UPA Governments have given higher prices for wheat, paddy, other cereals, cotton etc – more than any previous Government. I believe that was the right policy. I believe that farmers who grow these commodities are entitled to fair and remunerative prices so that they do not abandon farming and they continue to produce the foodgrains that are required by 1.3 billion people. Likewise, the UPA Governments have, through MNREGA, influenced rural wages. I believe that that was also the right policy. The landless labourer and rural workers are entitled to a fair wage. The argument that inflation must be contained by suppressing farm gate prices or rural wages is a specious argument that ignores the needs of the poor and deserves to be rejected. It is widely accepted that while monetary policy is an instrument to contain inflation, it is a rather blunt instrument, although the only one available to the monetary authority. It is also widely accepted that monetary policy has little impact on food prices. The answer to inflation, therefore, especially inflation in food articles, is to increase supplies and to radically transform the manner in which commodities and food articles are stored, transported, distributed and sold in the various markets,
especially urban markets. There is also a need to deal wisely with harvesting and marketing and deal strictly with hoarding and profiteering. Laws in this behalf are entirely in the domain of the State Government. Two laws stand out: one is the 4 Agricultural Produce Markets Act and the other the Essential Commodities Act. The powers of notification and enforcement under these Acts are with the State Governments, yet State Governments are loathe to take action under these Acts. I think it is necessary to highlight the inaction of the State Governments in this behalf, even while accepting that the Central Government must do all it can, within its powers, to moderate inflation. The next item on the list – and this will be the last on which I shall speak today – is financial sector reforms. Financial sector reforms have been undertaken regularly over a long period. In recent months, we have crossed several important milestones. These are: 1. The submission of the FSLRC report 2. Enactment of the new Companies Act, to replace a law of 1956 vintage 3. Passage of the PFRDA Bill and making the Pension Regulator a statutory authority 4. Placing commodity futures market regulation under the Ministry of Finance When fully rolled out and operationalized, these will have profound implications for the Indian financial sector. The impact of the new Companies Act will be beyond the financial sector. The other developments are directly related to financial sector regulatory and instutional changes. Measures of legislative and institutional reforms have been undertaken in the financial sector more regularly than
in many other areas. Steps have been initiated to improve the regulatory governance process. Discussions are also underway on the non-legislative steps recommended by the FSLRC. The legislative parts need to be pursued after due consultations and taking everyone on board and charting and sequencing the actions required in implementing big institutional changes. Financial sector reforms can be game changers. We know what they are. They include GST, the Direct Taxes Code, the Insurance Laws Amendment Bill and the Uniform Financial Code. Each one of them requires the building of a broad consensus. My experience has been that consensus is built after several months of hard work and then the consensus crumbles when it is hit by a seizure of political opportunism. 5 To conclude, we must remember that our ultimate goal is faster, more inclusive and sustained growth. We must refocus energy on human development issues. Let me recall that the number of poor declined from 407 million in 2004-05 to 270 million in 2011-12. Between 2004-05 and 2011-12, the average decline of the poverty ratio was 2.2 percentage points per year, which is about three times higher than the rate of decline in the poverty ratio during the period 1993-94 to 2004-05. A „faster, more inclusive and sustained growth strategy‟ will continue to be on the agenda over the next five years. Let me once again congratulate the organisers for bringing together a galaxy of academics and experts from different areas and different parts of the world at this conclave. I wish them a very pleasant stay in Delhi. I have great pleasure in formally inaugurating the Delhi Economics Conclave 2013. Thank you. India Newsletter • 11
Embassy of India, Vienna
n a tactical shift from its primary business of consumer products, diversified Japanese conglomerate Hitachi is now focussing on providing solutions in the sphere of infrastructure, IT and heavy industry, more so for the emerging economies. In an interview, Hitachi president Hiroaki Nakanishi explains the groupâ€™s new approach and its India plans. Edited excerpts: Q: Why this change in your approach from consumer products to heavy industry and allied areas? A: Our original business is social infrastructure. Of course, the main market for this has been Japan but, if you look, we have exported social infrastructure such as electric generators, pumps and some products in telecommunications and IT segment. In addition to this, we were into to semiconductors, televisions, air conditioners, what we call the commodity segment. So, in a sense, we can say we are going to our original business. But the reason for this change is that business environment globally now is completely different, and if we need to expand our global operations; we have to get into areas where we can provide high level of engineering capability, design plan and even some time finance. Q: Where does India fit into this social innovation approach? A: India is a huge country and when we had our first board meeting outside Japan, it was in India. We aim to invest around 70 billion yen (Rs 4,500 crore) by 2015-16. At present, we have three manufacturing plants in the automotive sector. But exporting
12 â€˘ India Newsletter
products is not our case. We want to set up a full body chain, which will mean procurement, designing, manufacturing, quality assurance, delivery and maintenance.
required, also price competiveness is very serious. We, however, are very positive on India. Besides, we want to set up India as a base for our African and Middle East operations.
Banking is one sector where our social innovation approach seamlessly fits in the Indian context. So, not only we are looking to provide the ATM machines but the whole IT system including cash dealing services.
Q: What are the priority sectors for you?
Q: There have been concerns over large infrastructure projects being stalled in India due to regulatory issues. Does that deter you from taking exposure in infrastructure segment? A: The Indian economy is growing, but yes, recently, not so good and our operations of construction machinery are relatively large, hence, we are little affected by economic slowdown. May be some of this is because of the impending elections...some of the decisions were derailed. But you see all the Asian economies are somewhat shaky. In infrastructure context, we have participated in bids in some areas; we have not succeeded so far, as in some cases local manufacturing is
A: IT is definitely priority. At the moment, it constitutes just 1% of Hitachiâ€™s Indian revenues, but we have various projects, some in the software design segment, also in outsourcing area. As I said, we have to set up a full body chain, and India has the human capital for that in the sense of excellent software engineers. We would like to set India as base of data analysis, cloud services and other similar segments. We have fixed an India strategy till 2015-16 and target to treble our revenue from India to 300 billion yen (about Rs 20,000 crore).
We aim to invest 70 billion yen in India by 2016 Hiroaki Nakanishi, Hitachi president
INDUSTRY The Indian Automobiles Sector
utomobiles production increased at a compound annual growth rate (CAGR) of 12.2 per cent over FY05-13, while the export volumes increased at a CAGR of 19.1 per cent. Strong demand growth due to rising incomes, growing middle class, and the young population is likely to propel India among the world’s top five auto-producers by 2015. India has significant cost advantages; auto firms save 10-25 per cent on operations in India as compared to Europe and Latin America. A large pool of skilled manpower and a growing technology base are some of the leading factors. The government aims to develop India as a global manufacturing as well as research and development (R&D) hub. There has been a wide array of policy support in the form of sops, taxes and FDI encouragement. Under the Union Budget 2013-14, the government has also proposed to allocate US$ 2.7 billion for Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to bolster sales volumes of Medium and Heavy Commercial Vehicles (MHCV). The world’s cheapest car (Tata Nano) has directed focus towards the lowincome market. Bajaj Auto, Hero Honda and Mahindra & Mahindra (M&M) jointly plan to develop a technology for two-wheelers to run on natural gas. Electric cars are likely to be a sizeable market segment in the coming decade. With the increasing growth in demand on back of rising income, expanding middle class and young population base, in addition to a large pool of skilled manpower and growing technology, will propel India to be among the world’s top five autoproducers by 2015. India is also one of the key markets for hybrid and electric medium-heavyduty trucks and buses. India is an extremely important
market for Hyundai. The Indian automobile sector is poised for steady and strong growth in the future. The Indian automobile industry holds good growth potential for the midterm and long term horizon, as per Mr Bo Shin Seo, MD and CEO, Hyundai Motor India Ltd (HMIL). Moreover, Ford Motor Co plans to convert India into global production centre for compact cars, once its Sanand plant in Gujarat comes on stream in 2014, under a project codenamed B562 that may induce three different compact cars from the same platform.n
he Indian automobile industry produced a total 1.69 million vehicles including passenger vehicles, commercial vehicles, three wheelers and two wheelers in August 2013 as against 1.56 million in August 2012, registering a growth of 8.18 percent over the same month last year. The cumulative foreign direct investment (FDI) inflow into the Indian automobile industry during April 2000 to July 2013 was recorded at US$ 8,932 million, amounting to 4.5 per cent of the total FDI inflows (in terms of US$), as per data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce. The overall automobile exports grew by 2.03 per cent during April-August 2013. Furthermore, the production of passenger vehicles in India was recorded at 3.23 million in 2012-13 and is expected to grow at a compound annual growth rate (CAGR) of 13 per cent during 2012-2021, as per data published by Automotive Component Manufacturers’ Association of India (ACMA).n
Major Developments & Investments ■■ Hero MotoCorp plans to establish 20 manufacturing and assembly
facilities to expand its presence across 50 countries by 2020 ■■ Nissan Motor India, the Indian unit of Japanese auto maker Nissan Motor Co Ltd, has entered into an agreement with Ennore Port Ltd (EPL), to export at least 60,000 cars a year through the port for the next 10 years ■■ TVS Motor Co plans to launch two new motorcycle models in the Kenyan market. These motorcycles will be specific to the Kenyan markets in terms of usability, reliability and durability. Moreover, the firm also plans to set up a two-wheeler assembly line in Uganda and will also launch two motorcycle models in the African nation ■■ HMIL has invested US$ 2 billion in two state-of-the-art passenger car manufacturing facilities in India. Moreso, India contributes 25 per cent of the firm’s global sales ■■ Mahindra & Mahindra (M&M) plans capital expenditure and investments worth Rs 10,000 crore (US$ 1.63 billion) over the next two years ■■ Maruti Suzuki India Ltd (MSIL) is setting up an operational integrated research & development (R&D) centre in Rohtak, Haryana. The test tracks at the new facility would be longer and considerably enhanced in technical capabilities than the ones at the Suzuki Motor Corp (SMC) facility in Japan ■■ Tech Mahindra has signed an agreement withVolvo Car Corporation. The IT company will provide Volvo with a service to maintain and develop a range of applications that can increase efficiency and reduce costs ■■ Isuzu Motors India plans to start contract manufacturing of its sports utility vehicles (SUV) and pick-up trucks at Hindustan Motors’ (HM) Chennai plant from December 2013 ■■ Daimler India Commercial Vehicles (DICV) has expanded its network across the country. The company plans to establish dealership facilities in over 100 identified locations across India Newsletter • 13
Embassy of India, Vienna
India by 2014
he Government of India plans to introduce fuel-efficiency ratings for automobiles to encourage sale of cars that consume less petrol or diesel, as per Mr Veerappa Moily, Union Minister for Petroleum and Natural Gas, Government of India. The Union Budget 2013-14 added some incentives to the industry. The analysis by Deloitte on the Union Budget highlighted the following points: ■■ The period of concession available for specified part of electric and hybrid vehicles till April 2013 has been extended upto March 31, 2015 ■■ The basic customs duty (BCD) on imported luxury goods such as high-end motor vehicles, motor cycles, yachts and similar vessels was increased. The duty was raised from 75 per cent to 100 per cent on cars/ motor vehicles (irrespective of engine capacity) with CIF value more than US$ 40,000; from 60 per cent to 75
14 • India Newsletter
per cent on motorcycles with engine capacity of 800 cc or more and on yachts and similar vessels from 10 per cent to 25 per cent ■■ In addition, an increase in excise duty from 27 to 30 per cent has been allowed for SUVs with engine capacity exceeding 1,500 cc, while excise duty was decreased from 80 to 72 per cent, in case of SUVs registered solely to be used for taxi purposes ■■ An exemption from BCD on lithium ion automotive battery for manufacture of lithium ion battery packs for supply to manufacturers of hybrid and electric vehicles ■■ The excise duty on chassis of diesel motor vehicles for transport of goods reduced from 14 per cent to 13 per cent The Government of India allows 100 per cent FDI in the automotive industry through automatic route. The Government also plans to accelerate the supply of electric vehicles over the next eight years. It is expected that there will be a demand for 5-7 million electricity-operated vehicles by 2020.
With special focus on exports of small cars, MUVs, two & three wheelers and auto components; the automotive sector’s contribution to the gross domestic product (GDP) is expected to double reaching a turnover worth US$ 145 billion in 2016, according to the Automotive Mission Plan (AMP) 2006-2016.n
ndia is probably the most competitive country in the world for the automotive industry. It does not cover 100 per cent of technology or components required to make a car but it is giving a good 97 per cent,” highlighted Mr Vicent Cobee, Corporate Vice-President, Nissan Motor’s Datsun. The vision of AMP 2006-2016 sees India, “to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion; accounting for more than 10 per cent of the GDP and providing additional employment to 25 million people by 2016.” n
Policy and Promotion
he Indian government encourages foreign investment in the automobile sector and allows 100% FDI under the automatic route. It is a fully delicensed industry and free imports of automotive components are allowed. Moreover, the government has not laid down any minimum investment criteria for the automobile industry. Besides offering a liberal FDI regime, the government has made successive policy changes that allow for stronger growth in the automotive sector. Major among these are: ■■ Automotive Mission Plan: Prepared by the Ministry of Heavy Industries and Public Enterprises, the Automotive Mission Plan aims to accelerate and sustain growth in the sector over the period 2006 to 2016. Under the plan, it is aimed to make India a global automotive hub, with special emphasis on the export of small cars, MUVs, two- and three-wheelers and auto components. The plan also aims to double the contribution of the automotive sector to the country’s GDP by taking its turnover to USD 145 billion and providing additional employment to 25 million people by 2016. ■■ National Automotive Testing and R&D Infrastructure Project: This is a USD 388.5 million initiative of the Government of India and various state governments; it is aimed at creating a state-of-art and dedicated testing, validation and R&D infrastructure across the country. Apart from the policies introduced by the government for the auto industry, another positive step taken by the Government of India has been the tax relief provided in the 2012 budget. According to the new tax laws, excise duty on specified parts of hybrid vehicles has been reduced to 6% from 10%. Excise duty on lithium ion battery packs for supply to electric vehicle or hybrid vehicle manufacturers has also been reduced to 6% from 10%. Besides, the full exemption from basic customs duty and special countervailing duty
(CVD) with concessional excise duty or CVD of 6% on some parts of hybrid vehicles is being extended to specified additional items and lithium ion batteries imported to make battery packs for electric or hybrid vehicles. Therefore, the reduction in excise duty on specific parts supplied to manufacturers of electrical and hybrid vehicles will promote the growth of environment-friendly cars.n
Major Players The size and high growth potential of the Indian car market has attracted several foreign players, such as Mercedes Benz, BMW, Volkswagen, Toyota, Honda, Ford, Hyundai and General Motors, among others. Several of these players have expanded operations in India. Here is a quick look at some of the major foreign players who have been ramping up investments in India. ■■ Hyundai Hyundai Motor India Limited (HMIL) is a dominant passenger car manufacturer in India, controlling 14% market share in the passenger vehicles segment. It is the largest passenger car exporter and the second-largest car manufacturer in India. The company sold a total of 6,16,039 vehicles 2010– 11. It has a fully integrated, state-ofthe-art manufacturing plant near Chennai and has also set up a modern multi-million dollar R&D facility at Hyderabad. HMIL currently exports cars to more than 115 countries across the EU, Africa, the Middle East, Latin America and Asia-Pacific. It further plans to invest USD 250 million by 2013 — its cumulative investment in India by then will touch USD 1 billion. Another success story is Honda Siel Cars India Limited (HSCIL). The company was incorporated in December 1995 as a joint venture between Honda Motors of Japan and Siel Limited, an Indian company. The total investment made by the company in India until now is INR 1,620 crore in a plant at Greater Noida in Uttar Pradesh and INR 784 crore in its Tapukara plant, in the state of Rajasthan. HSCIL’s first state-of-theart manufacturing unit at Greater
Noida was a greenfield project spread across 150 acres (over 600,000 sq. m.). The annual capacity of this facility is 100,000 units. The company’s second manufacturing facility at Tapukara is spread over 600 acres and is expected to have an initial production capacity of 60,000 units per annum. ■■ Mercedes Benz The high-end luxury car maker Mercedes Benz is also growing at a healthy pace in India, being driven by demand for its C-Class and E-Class vehicles. It sold 7,430 units during the period January 2011 to December 2011. The strong sales in 2011 of SLS AMG at INR 2.5 crore, G 55 AMG at INR 1.1 crore and the new SLK 350 and E-Class Cabriolets reaffirms the high demand for sports cars from the Mercedes-Benz portfolio and also the growing preference for the brand among Indian consumers. ■■ Nissan Nissan has doubled the production its small car Micra to 500 units/day and further plans to invest USD 1 billion in its Chennai plant, which has an annual production capacity of 0.4 million units. ■■ General Motors GM has expansion plans for its factory in Gujarat which is worth USD 250 million; it aims to launch five new car models in India. The major Indian companies present in the automobiles market include Tata Motors, Maruti Suzuki India, Mahindra & Mahindra, Ashok Leyland, Hero MotoCorp and Bajaj Auto. Tata Motors is India’s largest automobile company; the company manufactures commercial and passenger vehicles, and is the world’s fourth-largest truck manufacturer and the secondlargest bus manufacturer. Maruti Suzuki is India’s largest passenger car company, accounting for 45% share of the Indian car market. Hero MotoCorp is the world’s largest twowheeler manufacturing company in the world. Its market share in the Indian two-wheeler segment is 41%. Bajaj Auto is the world’s fourth-largest two-wheeler and three-wheeler manufacturer.n.n India Newsletter • 15
Embassy of India, Vienna
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ndia is fast emerging as a global trade dynamo with its vast natural resources and huge supply of skilled labor. Undertaking considerable industrial deregulation and other structural reforms, regulators in India recognizes that strong exports are critical for overall economic growth and poverty reduction. As such, export-led growth has become a key driver of trade in India – one of the most important trailblazers in the recent enormous expansion of international trade. Indian trade has grown exponentially over the past few years, with exports rising at a rate well above the pace of growth of worldwide exports. In this atmosphere, opportunities have never been greater, and starting a trading business in India has never been easier.
Establishing a Trading Business in India
tarting an export-import business with the right strategies can render a business very profitable. However, the long term success and profitability of an import business depends greatly on the importer’s knowledge and understanding of international procedures in addition to a keen analysis of the foreign and procedure-centric market in India. So, to execute a successful dive into the pool, one must follow a timetested and exact set of steps, which are generally rigid and absolutely necessary. Furthermore, it is 16 • India Newsletter
important for prospective investors looking to start an export-import business in India to obtain all of the necessary information with regard to matters associated with foreign trade agreements, which thus requires a lot of preparation time. Here is a short flowchart detailing the process below: ■■ Establish your company following guidelines provided in the Companies Act; ■■ Apply for an Importer Exporter Code (IEC) from the relevant regional office of the Director General of Foreign Trade (DGFT); ■■ Obtain an Import License; ■■ Register with the regional office of Export Promotion Council and relevant tax authorities, including the Sales Tax Office and Export Credit Guarantee Corporation; ■■ Obtain an Export License and Certificate of Origin for export purposes from the Chamber of Commerce; and finally ■■ Begin trading.
Registering a Company in India
n order to register any kind of company in India, the proposed director(s) of the company must first apply for a Director Identification Number (DIN), which can be obtained by submitting an application to India’s Ministry of Corporate Affairs. To receive the number, the individual applicant
must also submit his/her proof of residence, proof of identity and a current color photo. Once the number has been obtained, the director may then begin the process of incorporating the company. In order to legally register and incorporate a company, an application must be filed with the Registrar of Companies (ROC) of the state in which the company is proposed to be incorporated. Afterwards, a registration application, which should be accompanied by the names of the company’s directors, Memorandum of Association, Articles of Association and the following relevant documents, must be submitted to the ROC as well. In total, the documents to be submitted include: ■■ Memorandum of Association; ■■ Articles of Association; ■■ Company agreement, if any, which includes all individual appointments (i.e., director, manager, etc.); ■■ A copy of the letter of the Registrar of Companies documents certifying payment of prescribed registration and filing fees; ■■ All documents evidencing directorship and company structure; and ■■ Registered Office Forms and Declaration of Compliance with theRequirements of the Companies Act.
When the above requirements have been fulfilled, the Registrar of Companies will register the company and issue a formal Certificate of Incorporation. Once the company has been registered and incorporated as an Indian company, it can then begin proceedings for export and import-related matters. The entire registration procedure takes about three months.
Registering with the Director General of Foreign Trade
n the Government of India, the Ministry of Commerce and Industry is the largest and most important agency concerned with the promotion and regulation of the foreign trade in India, and has an elaborate organizational structure aimed at the facilitation of the various aspects of trade. There are two departments under the Ministry of Commerce and Industry. The first one is the Department of Commerce (DoC) and the second is the Department of Industrial Policy & Promotion (DIPP). In India, exports and imports are regulated by the Foreign Trade (Development and Regulation) Act, 1992, which provides the government with significant control of export-import policy and procedures. In terms of interaction with investors, however, one of the most critical and active bodies concerned with the import and export of goods in India is the Director General of Foreign Trade (DGFT). Operating as an arm of the Ministry of Commerce and Industry’s Department of Commerce, the DGFT is the agency responsible for virtually all matters related to India’s export/import policies. Some of its major resources are also devoted to the execution of all foreign trade laws passed by the central government and the maintenance of an up-to-date database of all of India’s exporters and importers. For all first-time exporters or importers, Indian law requires that you register with the DGFT – which
in turn will provide your business with a unique IEC Number. The IEC Number is a ten-digit code required for both exports and imports, and it will be checked by Indian Customs during every single import/export transaction. To apply for an IEC number, you must submit the required document – called the “Aayaat Niryaat Form” (ANF2A) – to the nearest regional authority of the DGFT. This form can be submitted online, via post or in person. Further, in order to obtain the code, the entity seeking to export or import goods must submit the following items as well: ■■ Two passport-size photographs of the legally responsible person; ■■ Permanent account number (PAN); ■■ Current bank account number; and ■■ Banker’s Certificate. The PAN is another ten-digit code that is necessary for many financial transactions in India, and it can be obtained by submitting an application accompanied by the applicant’s proof of residence and identity. The other two documents are obtained simply by opening a bank account. For almost all import businesses, an IEC number is absolutely necessary; however, certain exceptions do exist. If you are importing items from Nepal, Myanmar (through the border), China or a small number of selected ports & locations around India, then an IEC number is not mandatory, provided that the value of individual consignments does not exceed Rs. 25,000.
Registering with the Export Promotion Council
fter completing your initial registration, the next step is to register with the Export Promotion Council (EPC). The EPC, which has branches all over the country and offers procedures based on provincial laws, is a nonprofit organization established to promote various goods exported
from India in international markets. The EPC also works closely with the Ministry of Industry and Commerce, acting as a platform for interaction between the exporting community and India’s central government. Given ist function, exporters should regard the need to obtain a registration and membership certificate from the EPC as paramount. In order to apply for registration from the Council, a certified copy of the alreadyprovided IEC number is required. Further, those wishing to register with the EPC will also be required to submit a membership fee (which varies by location).
Registration with Tax Authorities
t is to a company’s advantage to identify and register with all of the relevant local tax authorities if it wishes to receive all of the possible benefits associated with exports and imports. For instance, all goods exported from India may enjoy exemptions from value added taxes and sales taxes if properly registered. In order to enjoy the maximum level of benefits, your business should register with all of the relevant authorities, such as the regional Sales Tax Department and the Export Import Credit Guarantee Corporation – both of which have different procedures that vary from state to state. Additionally, if a business intends to export goods, then the business must undertake to register with the relevant regional branch of the Indian Chamber of Commerce. The major export-related function of the Chamber of Commerce for exporters is to issue Non-Preferential Certificates of Origin to Indian exporters, in accordance with Article II of the International Convention Relating to Simplification of Customs Formalities, 1923, which requires certification that the exported goods originated in India. Aside from Certificates of Origin, the Chamber of Commerce and other India Newsletter • 17
Embassy of India, Vienna
bodies also offer exporters and importers many other promotional initiatives, some of which can be very valuable to businesses unfamiliar with the local systems. For instance, once the actual process of exporting goods has begun, many other requirements must be met in order to keep India’s standards high. These requirements include finding air and maritime insurance for the exported products, adequate warehousing, and quality control resources. The various entities set up to deal with EXIM business can assist with these steps, and registering with them will also provide your business with valuable information resources and contacts that may prove invaluable in getting to know the Indian market.
Application for an Export License
o determine whether a license is needed to export a particular commercial product or service, an exporter must first classify the item by identifying its ITC (HS) Classification. ITC (HS), also known as Indian Trading Clarification based on a Harmonized System of Coding, is India’s chief method of classifying items for trade and export-import operations. The ITC-HS code, issued by the DGFT, is an 8-digit alphanumeric representing a certain class/category of goods, which allows the exporter/importer to follow regulations concerned with those goods. ITC-HS codes are divided into two different sections, or “schedules.
18 • India Newsletter
“The first of these, ITC(HS) Import Schedule I, deals with the rules and guidelines related to import policies, and is comprised of 21sections in total. These 21 sections, further divided into 98 chapters, provide detailed guidelines for classification of imported goods and regulations regarding specific items. Schedule II, called Export Policy Schedule II, deals with the regulations surrounding export policy and other issues surrounding certain exports. Export Policy Schedule II of the ITC-HS code contains 97 chapters, all of which provide thorough information about export procedures and policies, and also provide regulatory information on different classes of export items. For those wishing to find regulatory or trade-related information about any item in Schedules I and II, the DGFT maintains an up-to-date database containing codes for all items. Should the exporter find that a license is indeed necessary for the product in question, then the exporter must file an application for the relevant license to the DGFT. The Export Licensing Committee under the Chairmanship of Export Commissioner is responsible for the consideration of such applications. Additionally, the DGFT occasionally releases public announcements, timed to coincide with the implementation of new laws, noting that certain specified goods that are not included in the ITC (HS) Classifications of Export and Import items may be exported without a license. These announcements also detail conditions for the export of
these items, which may include a minimum export price registration with the relevant specified authorities, quantitative ceilings and compliance with other relevant laws, rules or regulations.
Obtaining an Import License
ndia’s import-export laws are not considered highly restrictive by any standard, and the vast majority of goods making their way in and out of India are license-free, making them easy to administer, and profitable. That said, Indian customs laws do prohibit the import of certain items, and they also restrict the import of certain items by way of placing import conditions on them. To deal with such regulations, laid out in some of these laws, the importer must apply for an import license, which is issued by the relevant governmental import authorities. Without the necessary documents, imports run the risk of being declared unauthorized – which may subject them to confiscation or refusal of entry into the country. Import licenses, which are renewable, are typically valid for 24 months for capital goods and 18 months for raw materials components, consumable and spares. Further, two copies of each import license is to be issued - one will be considered the Foreign Exchange Control Copy, which is used to certify compensation for the foreign seller of the goods; and the second will be presented to the relevant customs authority for import clearance purposes.
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 email@example.com to get more information about possible assistance/subsidies.
India Newsletter â€˘ 19
Embassy of India, Vienna
20 â€˘ India Newsletter
To open the calendar of events, scan the QR-code with your smartphone or access
India Newsletter â€˘ 21
Embassy of India, Vienna
INVEST INDIA Federation House, Tansen Marg New Delhi—110 001 0091-11-23765085, 23487278 firstname.lastname@example.org www.investindia.gov.in
nvest India is the country’s official agency dedicated to investment promotion and facilitation. Set up as a joint venture between FICCI (51% equity), DIPP (35% equity held by the Department of Industrial
22 • 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.
he Partnership Summit, the annual flagship event of Confederation of Indian Industry (CII), organized in association with the Ministry of Commerce and Industry, Government of India, started in 1995 to commemorate the Confederations centenary year. With over 19 of active engagement and collaboration of India with the rest of the world, the Partnership Summit, from the very onset, provided a platform to stimulate discussions among all key stakeholders - political, institutional, business, media and academia - on the best strategies and policy to help the countries overcome obstacles to improving competitiveness and achieving inclusive growth.
India Newsletter â€˘ 23
Embassy of India, Vienna
TOURISM Music and Dance
(compassion), bhibasta (disgust),
Bharatnatyam: This is one of the
adhbhuta (wonder), bhaya (fear),
oldest and most popular forms of
dance in southern India. Movement,
classical arts with traditions that
mime and music are given equal
date back several centuries. The
Kathak: This dance form traces its
importance in this dance.
uniqueness of Indian classical dance
origins to the nomadic bards of
Kuchipudi: The themes of this
ancient northern India, known as
dance are mostly derived from the
Kathaks, or story tellers.With the
scriptures and mythology.
.They are also performed to express
advent of Mughals, Kathak was
a person’s moods and emotions.
introduced in the King’s durbar, thus
Today, Indian classical music can be
moving this art from devotion to
classified into two broad traditions,
north Indian and south Indian. The
Odissi: The traditional dance was
north Indian tradition is known as
performed in temples as a religious
Hindustani sangeet. The different
offering by the temple dancers.
forms of Hindustani music are
Chhau (picture below): The Chhau
Dhrupad, Dhamar, Khayal, Tappa
is a popular dance performed in
Orissa, Bihar and West Bengal. It
The south Indian tradition of music
is basically a martial dance where
Folk Dances of India
is called Carnatic sangeet. Indian
the mask holds the dominant Rasa
Almost every village has its own folk
music is based upon two pillars. They
while the body creates, projects, and
dances performed on every possible
are the ‘raag’, which is the melodic
develops the moods.
occasion.The Kud, Bhangra, Lahoor
form, and the ‘taal’, the rhythmic
usic and dance in India are amongst the oldest forms of
is that they that are
all mostly devotional
form.The instruments used in Indian classical music are of four types. They are Tantru (stringed), Susir (wind), Avanada (percussion) and Ghana (gongs, bells and cymbals).India is extremely rich in folk music as well. It resonates with the vibrant diversity of the land. Some important forms of music include Ghazals, Qawwali, Abhung and Bhajans. There is sculptural evidence from all parts of India that underlines the rich tradition of dance that flourished over a thousand years ago. All dance forms were structured around the nine ‘rasas’ or emotions. They are hasya (happiness), shoka (sorrow), krodha (anger), karuna 24 • India Newsletter
Kathakali: It is a combination of
dance and drama where the
Indian mythology, mainly from the Ramayana and the Mahabharata. Mohiniattam: dance,
Essentially a solo
it is performed only by
women. This dancece depicts love and devotion to the gods.
and Hazagiri are some of the dances
performed to celebrate the harvest
the Raas Leela, which depicts the
season.There are elaborate dances
cosmic dance of Lord Krishna and
to mark important events like
the cowherd maidens.
weddings the birth of a child.
The Indian Museum, ca. 1905
India Newsletter â€˘ 25
Embassy of India, Vienna
INDIAN MOVIE EVENING AT THE EMBASSY Due to limited capacity, seats will be given on a first come, first served basis. Therefore, you are highly encouraged to reserve your seats online at www.indianembassy.at, via email under infoasstt@indianembassy or via phone at +43 1 505 866633 (Ms. Lily John).
Ek Main Aur Ekk Tu - Hochzeit mit Folgem
he Kapoors have always wanted their only son Rahul (Imran Khan)
to be a go-getter and have groomed him appropriately since childhood. But when Rahul is sacked from his new job in Las Vegas around Christmas, he is compelled to visit a psychotherapist to give vent to his insecurities. There he meets Riana Braganza, a hair stylist who has recently broken up with her boyfriend. Riana and Rahul bond over drinks and paint the town red on Christmas eve. The next morning, they discover that during their drunken spree last night, they got married. They decide to annul the marriage but due to Riana’s inability to pay rent, her landlord evicts her and she lands up with Rahul again. Then a friendship develops between them over the course of the next few days which includes a trip to India. ■■ Director: Shakun Batra ■■ Stars: Kareena Kapoor, Imran Khan, Boman Irani ■■ Genre: Comedy/Drama/Romance ■■ Duration: 107 min ■■ Release Year: 2012 ■■ Language: Hindi ■■ Subtites: German
Showtime December 20th, 18:00 Indian Embassy Business Centre (1st Floor, Kärntner Ring 2, 1010 Vienna) 26 • India Newsletter
INDIA IN AUSTRIA Satyajit Ray - The First Decade & To India! Projections from Europe and America
throughout the world.”The same year saw the beginning of the Academy’s Satyajit Ray Preservation Project, an ongoing effort to preserve and restore his entire filmography.
Legendary Indian filmmaker Satyajit Ray celebrated at Film Museum (Vienna)
When the producers of the Oscar® telecast, in 1992, were gathering clips for the presentation of the Award, they discovered the poor state of Ray’s film materials existing in the U.S. The Academy decided to create a catalog of the surviving elements of all Ray’s films to assess whether any were in danger of being lost. The final report was chilling and prompted resolute action. For its preservation efforts, the Academy has collaborated closely with the Satyajit Ray Society; a group of producers who worked with Ray; the National Archives of India; the Merchant and Ivory Foundation; the Film Foundation; and the Satyajit Ray Film and Study Center at the University of California, Santa Cruz. This teamwork has ensured that every element that still exists can be accessed to make the best restorations possible. To date, the Academy Film Archive has preserved eighteen of Ray’s feature films and one short subject. The latter (Two, 1964) was restored in collaboration with the Austrian Film Museum.
he Film Museum is proud to partner with the Academy of Motion Picture Arts and Sciences in a major international celebration of legendary Indian filmmaker Satyajit Ray, featuring newly restored prints from the Academy Film Archive. From December 4, 2013 to January 8, 2014, the Film Museum will present a complete overview of Ray’s early works – his first full decade as a film director (1955-65), including the canonical Apu Trilogy (Pather Panchali, Aparajito and Apur Sansar) and other classics such as Jalsaghar (The Music Room), Devi (The Goddess) and Charulata (The Lonely Wife), as well as several lesserknown, but equally groundbreaking films. In 1992, after a career spanning more than three decades, Ray received an Honorary Academy Award “in recognition of his rare mastery of the art of motion pictures, and of his profound humanitarian outlook, which has had an indelible influence on filmmakers and audiences
Alongside Satyajit Ray: The First Decade the Austrian Film Museum
will present two further series in December and January, adding other perspectives on the concept of “world cinema.” To India! European and American Projections relates to works made by Western filmmakers about post-independence India (including films by Marguerite Duras, Robert Gardner, Fritz Lang, Pier Paolo Pasolini, Powell & Pressburger, Roberto Rossellini, Alain Tanner and many others). The third series celebrates the achievements of Martin Scorsese’s World Cinema Project – an organization founded in 2007 to ensure the survival and restoration of major works in the history of African, Asian and Latin American cinema. ■■ When: Dec 2013- Jan 2014 ■■ Where: Austrian Film Museum, Augustinerstrasse 1, 1010 Vienna ■■ More Info: www.filmmuseum.at
India Newsletter • 27
Embassy of India, Vienna
SEMINAR Conservation And Research Today India-Austria Cooperation in the field of conservation -------------------------------------------------------------------------------------------------------------------------------------------The Embassy of India, Vienna, cordially invites the Indian community and friends of India to attend the seminar “Conservation And Research Today: India-Austria Cooperation in the field of conservation” on January 10th, 2014 at the Indian Embassy Business Centre. AGENDA 18:00-18:05 Welcome Note by Embassy Official 18:05-18:15 Welcome Address by Prof.Dr. Wolf-Dieter Rausch, President, Eurasia Pacific Uninet. 18:15-18:30 ntroduction to the collaboration between the University of Applied Arts Vienna, Austria and the National Museum Institute, New Delhi, India by Prof. Dr. Gabriela Krist 18:30-18:45 Studies on Conservation Issues of Acrylic Paintings by Ms. Tanushree Gupta, National Museum Institute, New Delhi, India 18:45-19:00 Indo-Islamic Carpets: A study of Materials, Techniques and Motifs from Conservation Perspective by Mr. Ali Nasir, National Museum Institute, New Delhi, India 19:00-19:15 Conservation of Leather and Experience in Vienna by Mr. Nitin Kumar, National Museum Institute, New Delhi, India 19:15-19:30 Questions and Answers 19:30 onwards Refreshments ■■ When: January 10th, 2014 ■■ Where: Indian Embassy Business Centre (1st Floor, Kärntner Ring 2, 1010 Vienna) ■■ More Info: www.indianembassy.at
28 • India Newsletter
NOTICE BOARD EMBASSY’S LIBRARY ■■ The EMBASSY’S library is opened mondays and wednesdays from 11am to 1pm without appointment. ■■ For scheduling an appointment outside the opening hours, please contact the information assistant under email@example.com or 01 505 8666 33
BUSINESS CENTRE ■■ The EMBASSY’S Business Centre is opened DAILY from 11am to 1pm without appointment. ■■ For scheduling an appointment outside the opening hours, please contact the commercial wing under the contacts given below. ■■ Marketing Officer: firstname.lastname@example.org or 01 505 8666 30 ■■ Marketing Assistant: email@example.com 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 firstname.lastname@example.org
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 just reached the 1000 followers mark! ■■ ‘Like’ our facebook page and be the first to know!
www.facebook.com/IndianEmbassyVienna India Newsletter • 29