WEEKLY ECONOMIC BULLETIN
Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN p. 02/07 ITP Division Ministry of External Affairs Government of India NEWS FEATURE Huge potential for enhancing business ties with Russia: President Underlining the huge potential for enhancing commercial and investment exchanges between India and Russia, President Pranab Mukherjee has said that new opportunities arising between the two economies should be fully tapped. Modi bats for ‘Team India’ of centre and states Pitching for a “Team India” of the centre and states for the country’s development, Prime Minister Narendra Modi on May 11 credited his government’s economic policies for making India the world’s fastest growing Anation. More in this section p. 08/11 OVERSEAS INVESTMENTS Make in India drove FDI up by 56%: Data As the government struggles to maintain investor confidence, foreign direct investments (FDI) into India has surged by 56% in five months since the Make in India programme was launched on September 24, official data revealed. Delhivery gets $85 million booster shot from US company E-commerce logistics company Delhivery has raised close to $85 million in a new round of funding led by venture capital firm Tiger Global Management Llc, giving a fresh boost to the Gurgaon-based start-up that is looking to expand in India and tap international markets. More in this section p. 12/13 TRADE NEWS China proposes joint mining of Indian Ocean with India Ahead of Prime Minister Narendra Modi’s visit here next week, China has said it is “eager to cooperate” with India on deep seabed mining in the Indian Ocean where its deep diving vessel reported to have discovered large deposits of precious metals like gold and silver. More in this section p. 14/17 SECTORAL NEWS Govt approves Rs5,000 crore tax-free bonds to support solar mission The ministry of new and renewable energy (MNRE) has approved the sale of tax free-bonds worth Rs.5,000 crore to support the government’s solar mission. More in this section p. 18/21 NEWS ROUND-UP India tops China in number of tech venture capital deals In a sign of the rising opportunities in India, the country outpaced China in the number of deals struck by venture capital (VC) funds in the first quarter of 2015. More in this section Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 2 >> NEWS FEATURE Huge potential for enhancing business ties with Russia: President Underlining the huge potential for enhancing commercial and investment exchanges between India and Russia, President Pranab Mukherjee has said that new opportunities arising between the two economies should be fully tapped. Speaking at a reception hosted on May 9 by India’s ambassador to Russia P.S. Raghavan for the Indian community here, Mukherjee said the last 15 years have seen a qualitative change in India’s relations with Russia. “With the signing of a declaration on IndiaRussia strategic partnership in October 2000, India established perhaps its closest institutionalized ties with any foreign country. This association has since continued to grow and diversify into newer areas,” an official statement on Sunday cited Mukherjee as having said. Mukherjee said India today terms its relationship with Russia as “a special and privileged strategic partnership” in recognition of the multi-faceted bilateral engagement. He said the Indian community in Russia has contributed significantly to development of close ties between India and Russia. The president noted that interaction between the two countries at the people-to-people level have always been warm and friendly. “This has been exemplified by Russian interest in Indian cinema, culture and heritage and the popularity in India of Russian literature, arts, circus and sciences.” He said total trade between India and Russia was $6 billion annually, which is less than one per cent of India’s total trade of $765 billion. FDI inflows into India in the past 15 years have been to the tune of $246 billion, out of which only $1 billion has come from Russia. “Given the size of the economies of both the countries, there is huge potential to enhance commercial and investment exchanges. The synergies and new opportunities arising between the two economies should be fully utilized,” he said. Mukherjee said that Indian community in Russia, “as repositories of unique information and insights about India and Russia”, can play an important role in propelling economic ties between the two countries to a higher trajectory. Source: Indo-Asian News Service Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 5 >> NEWS FEATURE PM dedicates India’s largest blast furnace plant to nation Prime Minister Narendra Modi on May 10 dedicated to the nation the upgraded IISCO Steel Plant (ISP), that houses the country’s largest blast furnace and has been modernised by the central government at a cost of Rs.16,000 crore. After modernisation, the plant’s production capacity has increased from 0.85 million tonnes per annum (mtpa) to 2.9 mtpa. “With immense joy I dedicate to the nation the modernised and expanded IISCO steel plant in Burnpur,” Modi said at the function, attended by West Bengal Governor K.N. Tripathi, Chief Minister Mamata Banerjee, union Minister of State for Steel Narendra Singh Tomar, union Minister of State for Urban Development Babul Supriyo, senior bureaucrats and eminent persons. Describing the prime minister together with all the chief ministers as “Team India”, Modi said the plant showcased that centre and states together can solve all issues. “This modern plant is an example of how Team India will take the country forward. This plant which was sick, is now standing powerfully on its feet. If the chief minister (Banerjee), the state (West Bengal) government had created hurdles, this wouldn’t have been possible. “This is the effort of team India that we are dedicating this plant to the country,” said Modi at the function held at Asansol Polo Ground in Burdwan district. Tomar said ISP has been reborn. “(It) has the nation’s largest blast furnace with a capacity to produce 2.9 million tonnes of steel. In times to come, the capacity of this steel plant will be increased,” he said, adding India plans to attain a capacity to produce 300 million tonnes of steel by 2025 to meet industry demand. “SAIL has set a target to achieve a production capacity of 50 million tonnes. As its capacity increases, West Bengal will benefit from it,” he said. The minister said the Durgapur steel plant of SAIL in the same district is also very old. “When the expansion and modernisation phase of the Durgapur plant starts, there will be an investment of Rs.35,000 crore in West Bengal.” Banerjee urged the central government to speed up the process of expanding SAIL’s operations in Durgapur. She recalled that there were talks of privatising IISCO in the past.”This made the IISCO workers very downcast. In 1998, when we were supporting from outside the first NDA government of Atal Bihari Vajpayee, we had asked for a Bengal package. There we demanded that IISCO be modernised. It was then that the project was approved. The work that began in 2006-7 has now been completed.” Banerjee’s Trinamool Congress said on its official Twitter handle that the state government has given 3,000 acres of land for the modernisation of the IISCO plant and another project by SAIL. Indian Iron and Steel Company (IISCO) was taken over by the central government in 1972 as part of a nationalisation drive and made a fully-owned subsidiary of SAIL in 1978. It was thereafter renamed ISP. The revamped plant in Burnpur is spread across 953 acres. It is the fifth integrated steel plant of SAIL. A statement from SAIL said: “The modernised and expanded plant would produce high quality steel rebars including earthquake-resistant grades, wire rods and universal sections, including parallel flanged beams, for fulfilling the need of India’s growing infrastructure and construction sector.” Source: Indo-Asian News Service Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 6 >> NEWS FEATURE Aim to empower poor as Tagore wanted: Modi at new schemes launch Expressing his government’s resolve for “empowering the poor instead of aiding them”, Prime Minister Narendra Modi on May 9 launched three ambitious social security schemes, relating to the insurance and pension sector and intended at widening the process of financial inclusion. On his first visit to West Bengal after taking over as prime minister, Modi kickstarted the “Pradhan Mantri Suraksha Bima Yojana” (accident insurance), “Pradhan Mantri Jeevan Jyoti Yojana” (life insurance) and “Atal Pension Yojana” at a programme in Nazrul Manch here. Governor K.N. Tripathi, Chief Minister Mamata Banerjee, and union ministers Jayant Sinha and Babul Supriyo attended the function where Modi inaugurated a plaque by pressing a remote button to launch the schemes. The initiative was simultaneously launched throughout the country from 115 locations. An film was then shown highlighting salient features of the three schemes. Modi then handed out certificates to the first three subscribers - maid Sonali Dhar, farmer Nitai Mondal and widowed shop owner Ruma Chakrabarty. Claiming that 80-90 percent of the country’s population did not have any insurance or pension cover, Modi asserted the new schemes were meant for empowering the poor to enable them to fight poverty. Describing himself as the prime servant, Modi asserted the schemes were not aimed at votes or political gains. “I am not a politician, only the pradhansevak (prime servant). Unlike others who launch schemes for votes, these schemes are not meant for political gains. After 20 years or so when people will reap the benefits of the pension scheme, they will say, Modi did some good work,” he said. Launched on the day marking the 154th birth anniversary of Rabindranath Tagore, Modi said the new schemes targeted at the poor and workers from the unorganized sector, were reflective of the Nobel laureate’s vision for empowering the poor. “Tagore in his poem ‘Atmadan’ in 1906 has observed that the poor don’t need support, they need to be empowered. His words are relevant even today. Today our resolve is to carry out that order of Gurudev,” he said. Stressing on his government’s commitment towards poverty alleviation, Modi said the new initiative was an extension of the Jan Dhan Yojna in which over 15 crore bank accounts have been opened across the country. He also claimed that over Rs.15,800 crore have been deposited by the beneficiaries under the Jan Dhan Yojna, and said the initiative has helped in plugging pilferage of lakhs of crores of rupees given in subsidies. He said over five crore people including 42 lakh from Bengal have enrolled for the three schemes since enrolment process’ trial run began May 1. “It’s a myth that big corporates usher in economic revolution... the country’s financial system is run by the small entrepreneurs. Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 7 >> NEWS FEATURE “Those who sell vegetables on the street junction.. the washerman, tea stall owners.. in India, there are 5.5 crore such people, who give momentum to our financial system. Big industrial ventures give employment to very few people. “But these 5.5 crore smalltime businessmen provide living for 14 crore people,” said Modi stressing on the importance of the target population of the new schemes. He requested people to enlist the poorer section of the society under these schemes which will help them secure their future and family. “Give Rs. 12 from your own pocket to insure your driver, cook, liftman, housemaid or sweeper for their benefit. (If you do so), will they ever leave you,” he said. The accident insurance scheme envisages cover of Rs.200,000 for accidental death or permanent total disability at an annual premium of Rs.12. It is available to those aged between 18 to 70 years with a savings bank account, giving their consent to join and enabling auto-debit on or before May 31 for the coverage period - June 1 to May 31 - on an annual renewal basis. The life insurance scheme will offer a renewable one year life cover of Rs.200,000 to all savings bank account holders aged 18 to 50, covering death due to any reason, for an annual premium of Rs.330 per subscriber. The pension scheme focuses on the unorganised sector and provides subscribers a fixed minimum pension of Rs.1,000, Rs.2,000, Rs.3,000, Rs.4,000 or Rs.5,000 per month starting at the age of 60 years, depending on the contribution option exercised on entering at an age between 18 and 40 years. Thus, the period of contribution by any subscriber under APY would be 20 years or more. The benefit of fixed minimum pension enjoys sovereign guarantee. The government contribution will be for those joining the scheme before Dec 31, 2015, not being members of any statutory social security scheme and not being income tax payers. Estimates say that the unorganised sector workers, constituting 88 percent of the total labour force of 47.29 crore, as per the 66th Round of NSSO Survey of 2011-12, do not have any formal pension provision. India Inc has hailed the schemes saying they widen the financial security net to the unorganised and underprivileged sector. Source: Indo-Asian News Service Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 8 >> OVERSEAS INVESTMENT Make in India drove FDI up by 56%: Data As the government struggles to maintain investor confidence, foreign direct investments (FDI) into India has surged by 56% in five months since the Make in India programme was launched on September 24, official data revealed. The inflow into the manufacturing sector alone saw a jump of 45% at $6.9 billion from $4.8 billion in the corresponding period a year ago. “India received $21.2 billion in inflows overall during the five-month period, against $13.5 billion in the same period last year.If this surge continues, then as per our estimates, 2015-16 would be the year with the second highest FDI ever received by the country since 2000 (when maintenance of data started),” the official said. The highest FDI inflow into India was in 2010-11, at $45 billion. FDI inflows in April-September 2014 were to the tune of about $16 billion. Of the five months under consideration, December and January saw the highest FDI inflows, the officials said. Industry experts say that the Make in India campaign has been a game-changer for the investment climate. Said CII president Sumit Mazumdar: “Make in India has worked a lot for India. The recent Hannover fair was a classic example where every investor was excited and wanted to know more about the campaign to plan their investment in India accordingly.” According to data for April 2014-February 2015, Mauritius ($8.44 billion or Rs. 50,640 crore), Singapore ($6.42 billion), the Netherlands ($3.29 billion), Japan ($1.72 billion) and the US ($1.69 billion) were among the leading investors. Source: Hindustan Times Delhivery gets $85 million booster shot from US company E-commerce logistics company Delhivery has raised close to $85 million in a new round of funding led by venture capital firm Tiger Global Management Llc, giving a fresh boost to the Gurgaon-based start-up that is looking to expand in India and tap international markets. A top company executive said existing investors Multiples Alternate Asset Management, Nexus Venture Partners and Times Internet Ltd participated in this round as well. The funds, co-founder and chief executive Sahil Barua said, would be used to expand e-commerce enabling services such as cataloguing, warehouse management and shipping to West Asian and African markets as well as India’s immediate neighbours in South Asia. The funding, which comes less than eight months after the company raised $35 million in a Series C round, has bolstered the logistics provider’s valuation to $350400 million, two persons close to the development said on condition of anonymity. Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 9 >> OVERSEAS INVESTMENT Delhivery will also look at acquisitions in the e-commerce value chain to complete its suite of services, apart from investing in technology. “We are at an advanced stage of discussion with a few companies in the e-commerce enablement space,” said Barua, suggesting that the company is eyeing 4-5 potential acquisition targets over the next eight months. Lee Fixel, a partner at Tiger Global, said Delhivery had reached its market-leading position through a combination of innovation and expansion of its logistics infrastructure, fulfilment and transportation services. Delhivery, run by SSN Logistics Pvt. Ltd, has raised close to $125 million since its inception in 2011. It works with 1,500 online retailers, including Flipkart, Snapdeal, Paytm and Myntra, and 200 offline retailers, providing logistics and last-mile delivery. The company expects to double its Indian presence from 250 cities to 500 by December 2015. The company has gone in for top-level management hires to bolster its growth plans. It brought on board former FedEx Corp. executive Suraju Dutta and Bain and Co.’s Sandeep Barasia as managing directors. Dutta, who comes with over two decades of experience, will help Delhivery expand its domestic and international footprint. Barasia will lead Delhivery’s consumer products and services business. The rapid growth of e-tail in India—expected to touch $50 billion by 2020, according to a report by UBS Securities—has led to a surge of business for and investor interest in allied sectors such as logistics. The 14 April report by UBS Securities, titled Is India in an e-commerce bubble?, suggested that the revenue pool for logistics service providers, including both in-house and third-party, is likely to grow from under $500 million in 2014 to $5.3 billion in 2020 and $13.7 billion in 2025. So it’s no surprise that the sector is a hub of activity. Earlier this year, online marketplace Snapdeal, owned by Jasper Infotech Pvt. Ltd, said it would pick up a stake in logistics firm GoJavas. In September last year, Gurgaon-based Ecom Express Pvt. Ltd, founded by former Blue Dart employees, raised close to Rs.75.5 crore. While speciality e-commerce logistics companies are the flavour of the season, traditional logistics companies such as DHL and FedEx aren’t sitting on the sidelines. In August last year, DHL, owner of Blue Dart, announced that it was investing €100 million over two years on building infrastructure and warehouses, as well as options for delivery and payment, to cater to e-commerce companies. Some e-commerce firms have launched their own logistics arms, but Anand Ramanathan, director at KPMG in India, believes what is needed is more specialists with the bandwidth to cover the smallest of markets. “The biggest constraint in e-commerce as we speak is clearly logistics,” said Ramanathan. India has over 40,000 pincodes that need to be serviced and the top e-retailers service only reach 15,000. “Supply of logistics has not been in step with demand generated by e-commerce companies,” added Ramanathan. Source: Mint Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 10 >> OVERSEAS INVESTMENT Nivea opens first plant in India, invests Rs 850 crore Personal care products maker Nivea India Pvt. Ltd on May 6 opened its Rs.850-crore plant at Sanand in Gujarat, its first in the country. It will help the company raise the development and production capacity for India and the South Asian Association for Regional Cooperation (Saarc) markets, the Indian affiliate of German personal care major Beiersdorf AG said in a statement. The 72,000 sq. m. land to build the plant at the Gujarat Industrial Development Corp. (GIDC) industrial park was acquired by the company last year. While the company did not reveal latest sales figures, in 2013 Nivea India sold about 6070 million units, importing nearly 60% of this. The company expects to reduce imports by half once the factory goes on stream, its company officials had said during the ground breaking ceremony in June 2014. Currently, the factory has about 200 employees. The plant has a capacity to produce about 80 million units a year, including creams and lotions in tubes, jars, tins and bottles. The plant will make Nivea and Nivea Men brand products for India and neighbouring countries. “German companies have been making in India for a long time. Beiersdorf is present since almost a century. And it is great that Beiersdorf now not only invests over Rs.850 crore here in Sanand, but also teams up with authorities to boost skill development—a field where India and Germany are ‘natural partners’, as PM Modi has rightly put it,” said Michael Steiner, German Ambassador to India. The new unit also houses a regional development lab to focus on innovations especially for Indian consumer needs and for catering to neighbouring markets. “The idea is to get closer to the consumer and to respond faster to market needs. We can focus on local insights with greater flexibility and develop products that are suitable for Indian skin care needs. Our aim will be to provide products of the highest quality that are aspirational yet accessible for the growing Indian middle class consumer,” said Stefan De Loecker, executive board member, Beiersdorf AG. Beiersdorf had sales of €6.3 billion in 2014. Nivea is the flagship brand in its portfolio, which also includes brands such as Eucerin, La Prairie, Labello, and Hansaplast. “This is Nivea India’s contribution to the Make in India initiative”, said Rakshit Hargave, managing director of Nivea India, highlighting the progress the company has made in India over the last few years. The skincare and deodorants market in India is about Rs.7,000-7,500 crore, according to the company. Source: Mint Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 11 >> OVERSEAS INVESTMENT Royal Enfield to invest Rs 500 cr in Chennai plant Royal Enfield is set to invest about Rs 500 crore towards developing new products and increasing the capacity at its Chennai manufacturing facility. Siddhartha Lal, managing director and CEO, Eicher Motors, said by 2014-end, the company was producing 30,000 units a month and by 2015end, the company is looking at 50,000 units a month. The company has reported a 44.5 per cent growth during the first quarter of this calendar year at 92,845 units as compared to 64,268 units a year ago. Royal Enfield’s exports grew 62 per cent to 2,342 units from 1,450 units a year ago. Lal said the company is developing new platforms on which it would develop multiple products for the next three years. “Our focus will be on (a product) that is having between 250 cc and 750 cc. The company is gearing up for a big launch next year. We will launch one big product every year for a few years.” The first quarter of 2015 has been the best quarter so far for Royal Enfield, with record sales of 92,845 units, a growth of 44.5 per cent against the first quarter of 2014. The record number of units produced in the March quarter has resulted in a significant increase in EBIT at Rs 232 crore in Q1 2015 as compared to Rs 136 crores in Q1 2014. Eicher Motors has been able to extract significant operating leverage in Q1 2015 and recorded its best ever operating margin (EBIT %) at 24.1%. Lal said that Royal Enfield has maintained a very strong volume growth in Q1 2015 and is moving ahead with an extremely healthy order book. “Royal Enfield is working on new platforms and products that will fuel our growth in the coming years. It is also expanding its footprint in India and in key markets across the world, to build its presence globally. We will continue to make higher investments into brand, distribution and globally relevant products that will be essential for us to achieve global leadership in the mid-size motorcycle category,” he added. Eicher is building its R&D centre on the new Mahabalipuram road at Chennai and a satellite centre at UK. Its engineering team, which consists of around 250 people, will be moved to the Chennai facility, while the UK satellite centre will have 20 people to start with. Source: Business Standard Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 12 >> TRADE NEWS China proposes joint mining of Indian Ocean with India Ahead of Prime Minister Narendra Modi’s visit here next week, China has said it is “eager to cooperate” with India on deep seabed mining in the Indian Ocean where its deep diving vessel reported to have discovered large deposits of precious metals like gold and silver. “With quickening oceanic development and increasing mineral exploration in the Indian Ocean, China is eager to cooperate with India on deep seabed mining,” the China Daily quoted China Ocean Mineral Resource R&D Association as saying. Terming India an ideal partner, deputy director of the association He Zongyu told the state-run daily that “China and India are both developing countries and contractors with the International Seabed Authority (ISA) so we have a lot in common and plenty of opportunities for further cooperation.” The association is China’s official organisation engaged in exploration and development of ocean floor and subsoil. Chen Lianzeng, deputy director of the State Oceanic Administration, visited India on April 20 and suggested the two sides enhance cooperation on oceanic research and development. “If we cooperate, we could share the costs, the risks and the benefits,” He said. Proposing the cooperation, He said China and India are on about the same level in terms of the development of deep seabed mining, which makes India an ideal partner. Deep seabed mining is high-cost and high-risk work, with costs for a mining site topping USD 1.6 billion, He said. Beijing’s proposal for India-China cooperation comes in the immediate backdrop of the completion of the 118-day voyage of the China’s deep-sea manned submersible Jiaolong in the southwest Indian Ocean here it reported to have discovered large deposits of precious metals like gold and silver. During the latest mission in March, Jiaolong successfully carried out 13 dives to observe different hydrothermal areas, the characteristics of hydrothermal fluids and deep-sea biodiversity, gathering a huge amount of data and more than 700 samples. The surprise proposal comes ahead of Modi’s three-day visit from May 14 during which he will hold formal and informal talks with Chinese President Xi Jinping and Premier Li Keqiang in Xi’an and Beijing. Deep-sea “chimney vents”, also known as hydrothermal sulfide, are a kind of seabed deposits containing copper, zinc and precious metals such as gold and silver. Those metals formed sulfides after chemical reactions and came to rest in the seabed in the form of “chimney vents,” staterun Xinhua quoted Chinese scientists as saying. China has already gained a 15-year approval in 2012 to explore a 10,000 sq km polymetallic sulphide ore deposit in an international seabed region of the southwest Indian Ocean. It has also obtained exclusive rights to prospect in a 75,000-square-km polymetallicnodule ore deposit in the east Pacific Ocean in 2001. Ahead of Modi’s visit, Chinese officials have been saying that China would like to address India’s security concerns about its mega Maritime Silk Road project over which India has reservations over its strategic significance in the Indian Ocean. China has made significant inroads in Sri Lanka and Maldives with billions of dollars of investments already. Source: Press Trust of India Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 13 >> TRADE NEWS ISM Dhanbad, Australian varsity to sign MoU on mining tech The Indian School of Mines, Dhanbad will ink a MoU with an Australian varsity for student exchange programmes targeted at cutting-edge technologies in open-cast mining, an Australian official said on May 5. “As part of an exchange programme for undergraduate, graduate, faculty members and research fellows, ISM, Dhanbad, will soon sign a memorandum of understanding (MoU) with Newcastle University in Australia,” said Stuart Rees, trade commissioner (acting), Australian Trade Commission and mentor, Mining and Energy Team, South Asia. Rees was speaking on the sidelines of an interactive session organised by CII Eastern Region here. He said the agreement will focus on cutting-edge technologies in open-cast mining. During Indian Prime Minister Narendra Modi’s meeting with his Australian counterpart, Tony Abott, in Brisbane in November last year, the two countries had stressed on the collective desire for cooperation in the resources sector which would be of significant advantage for both. “Moving on to market insights and opportunities for Australian METS (mining, equipment technologies and services) companies operating in India, we are well aware of the ongoing coal mine auctions, and we have learnt about significant similar auctions for iron, bauxite and manganese mines, which would be carried out by state governments under central government guidelines,” Rees said. “These auctions would provide significant opportunities for Australian METS companies which are positioned for the Indian market. Austrade would continue to organise profile-raising events both in India and Australia,” he added. Source: Indo-Asian News Service Australian expert visits India to boost links in mining education and research Professor Stephen Fityus, one of the foremost Australian experts in mining and geotechnical engineering from the University of Newcastle, is visiting India to tap opportunities for collaboration with prominent Indian higher education institutions, research centres and industry bodies. Professor Fityus has made contributions to a wide range of research areas including minesite geomechanics, geotechnical and geo-environmental engineering, and engineering geology. He is also the Principal Researcher in the Priority Research Centre for Geotechnical and Materials Modelling at the University of Newcastle. He will deliver lectures at the Indian School of Mines, Dhanbad; the Indian Institute of Engineering Science and Technology, Kolkata; the CSIR-Institute of Minerals and Materials Technology; the Society of Geoscientists and Allied Technologists, Bhubaneshwar; and Coal India Ltd. Welcoming the initiative, Australia’s High Commissioner to India, Patrick Suckling said: “Mining is an area of mutual interest to Australia and India. In particular, this visit will address both our Prime Ministers’ stated desire to explore partnerships with the Indian School of Mines in Dhanbad, as indicated in their joint statement during Prime Minister Modi’s visit.” The visit is taking place under the Australia India Education Council’s (AIEC) Eminent Researcher Lecture Program. The AIEC is a bi-national body co-chaired by the Australian and Indian Education Ministers, for driving the Australia India education, training and research agenda. h”Tis visit has enabled a deeper two-way understanding of the mining capabilities in our countries and I see immense potential in academic and research collaboration in this area between Australia and India,” Prof. Fityus said. Source: The Economic Times Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 14 >> SECTORAL NEWS Govt approves Rs5,000 crore tax-free bonds to support solar mission The ministry of new and renewable energy (MNRE) has approved the sale of tax free-bonds worth Rs.5,000 crore to support the government’s solar mission. Of this, the Indian Renewable Energy Development Agency (IREDA) is likely to raise Rs.2,000 crore through an issue of tax-free bonds in the next few months. The announcement was made by Tarun Kapoor, MNRE joint secretary, in a speech at the Solar Power Summit-2015 in New Delhi. IREDA is expected to use these funds to lend to solar energy developers at a lower interest rate of 10.5%. Developers, in turn, will use these loans to fund roof-top solar panel installations. Kapoor also announced a withdrawal of subsidies extended on targets of non-conventional power generation for industrial and commercial purposes. State-run NTPC Ltd is also soon expected to issue tenders for solar power projects of 15,000 megawatts, the PHD Chamber of Commerce said in a statement on Friday. However, Kapoor acknowledged that public sector companies are not likely to add non-conventional power capacities in a big way. “The government would want the private sector to play a major role to lighten the India through solar power initiatives,” he said. Source: Mint Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 15 >> SECTORAL NEWS Domestic car sales up 18.1% in April Domestic passenger car sales grew 18.14% to 1,59,548 units in April this year compared with 1,35,054 in the same month of 2014. According to the data released by the Society of Indian Automobile Manufacturers (SIAM), motorcycle sales last month were down 2.77% at 8,81,751 units from 9,06,909 in the same month of the previous year. Total two-wheeler sales in April 2015 slumped 0.16% to 12,87,064 units from 12,89,183 in the year-ago period. Total sales of commercial vehicles, however, jumped 6.48% to 45,872 units from 43,080 a year ago, SIAM said. Total sales of vehicles across categories registered a growth of 1.91% to 15,83,551 units in April 2015 as against 15,53,871 in the same month of 2014, it added. Source: Press Trust of India Future to merge retail biz with Bharti Retail The Kishore Biyani-led Future Retail announced its merger with the retail arm of Sunil Mittal’s Bharti on May 5, just a day after Aditya Birla Group made public its retail consolidation plans. This seemed almost like a replay of e-commerce major Amazon announcing a $2-billion investment for the India market a day after Flipkart raised $1 billion from a clutch of investors. Replying to a question, at a press conference, on whether it was by coincidence or design that this announcement was coming just a day after the Birlas’, Biyani jokingly said, ‘’We don’t do anything by design. Ask them why they made the announcement on a Sunday.’’ The deal came almost eight years after Bharti had entered a pact with America’s Walmart to do retail business together in India in August 2007. While Bharti and Walmart were in an equal joint venture for cash-and-carry or wholesale business, they had aspired to set up stores in the multi-brand category once the retail policy was relaxed. Bharti operated front-end retail stores, Easyday, on its own all those years, with the intention of Walmart joining hands at a later date. But, the two split up in October 2013, with Walmart going its own way on cash-and-carry and Bharti retaining Easyday. Future will now acquire a majority stake in the merged entity, with Bharti holding around 14 to 15 per cent in two entities - Future Retail and Future Enterprises. Both will be listed entities. Although it’s a share swap arrangement between Bharti and Future, the deal size is estimated at around Rs 750 crore. While Rs 500 crore will be towards buying of the stake, another Rs 250 crore is for a future allotment of preferential shares. Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 16 >> SECTORAL NEWS The overall debt of the venture will be around Rs 1,200 crore. Will the consolidation mean Future ruling the retail sector as an undisputed leader? Biyani said the merged entity at an estimated Rs 2,000 crore would make the retail business more formidable, but pointed out that it was ‘’not a race out here’’. Even as both Biyani and Rajan Mittal, who heads the retail business of Bharti, said it was a synergy to expand their geographical footprint and increase the number of stores, Bharti’s role in running the retail business is likely to be minimal in the venture. Future and Bharti stores will continue to run with their respective brand identities, they said. In the combined board, with eight members, Rajan Mittal is the only one invited to represent Bharti, thereby indicating the extent of the group’s direct involvement. However, a committee has been formed to look at the final structure of the board. The merger is likely to be completed in six to eight months, with permissions to be secured from Competition Commission of India (CCI) , Securities & Exchange Board of India (Sebi), and stock exchanges. An integration panel with eight members is monitoring the modalities. Biyani said the merged entity would look at having around 4,000 small stores by 2021. Currently, the partnership would mean 571 retail stores in multiple formats in over 240 cities covering 35.5 million square feet. Separately, Bharti has around 200 Easyday stores, mostly in northern India, and Future has around 370 outlets. Future had recently acquired the Nilgiris chain in the south of India, and the latest move implies a pan-Indian footprint for the group. Bharti had stopped store expansion after the end of 2012 over a lack of clarity on government rules in the retail sector and differences with the then partner Walmart. Source: Business Standard Bill soon to declare 101 waterways as national waterways The central government is expected to table a bill soon to convert 101 waterways into National Waterways in a bid to boost waterways traffic. In March this year, the union cabinet gave its approval for a law to declare 101 inland waterways as national waterways, officials said. The 101 waterways cover almost all the major river/canal systems. The proposed law would enable the central government to develop the waterways for navigation. While the usage of water, land ownership, sand and minerals would continue to be under the state government, the development and regulation would be with the central government. The plan is to develop inland waterway transport as well as taking away sizeable road traffic. The cost per km of waterways transportation is cheaper than that of road and railways. Till date five waterways have been declared national waterways. Speaking at a meeting of the Parliamentary Consultative Committee of the ministry of shipping on April 9, Road transport, Highways and Shipping Minister Nitin Gadkari said the development of waterways found feasible for navigation would commence from 2016-17. Source: Indo-Asian News Service Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 17 >> SECTORAL NEWS L&T seeks mining lease from Odisha government Global engineering and construction giant Larsen & Toubro (L&T) on May 4 urged the Odisha government to grant mining lease (ML) for two bauxite deposits in Kalahandi and Rayagada districts. The appeal was made in the light of the amended Mines and Minerals (Development and Regulation) Act, 2015. Since L&T already has a prospecting license (PL) over Sijimali and Kutrumali bauxite mines located in the two districts, the company is hopeful to get the two deposits in the state. “Since we have the PL, L&T is eligible to get mining rights over the two bauxite deposits under the new MMDR Act,” L&T’s group’s executive chairman A. M. Naik told media persons after meeting Chief Minister Naveen Patnaik here. “We have requested the state government to recommend mining lease in our favour and also expedite permissions for our alumina refinery project,” he added. Naik also met chief secretary G. C. Pati and steel and mines secretary R. K. Sharma. Sources said, L&T had won PL for Sijimali and Kutrumali bauxite mines with a total deposit of close to 300 million tonnes, in 1992. But two years later after the expiry of PL, the state government denied ML to L&T since it had no end-use plant. In 2005, L&T through a joint venture with Dubai Aluminium (Dubal) had proposed a Rs.30,000 crore alumina refinery of three million tonne per annum (mtpa) capacity at Rayagada. Though a special purpose vehicle (SPV) called Raykal Aluminium was formed for the purpose, the project remained a non-starter. However, Vedanta Aluminium Ltd (VAL) bought 24 percent stake in the project in 2012 after Dubal walked out of the SPV. Now, the grant of ML to L&T over the bauxite deposits can come in handy for VAL, which is running its refinery and smelter projects at 25 percent capacity in the state, said sources. Vedanta’s bid to secure alternate bauxite supply for its Lanjigarh refinery through the joint venture with L & T has received a shot in the arm with several legal luminaries ruling out any legal hurdle in realisation of the proposal. The Odisha government had initiated legal consultation with senior lawyers of the Supreme Court and the Advocate General to get their opinion about whether to grant ML or not. Supreme Court counsel Uday U. Lalit, now a Supreme Court judge, in July 2013 had opined that L&T has a preferential right to be granted ML as per provisions of the Mines and Minerals (Development & Regulation) Act 1957. Source: Indo-Asian News Service Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 18 >> NEWS ROUND UP India tops China in number of tech venture capital deals In a sign of the rising opportunities in India, the country outpaced China in the number of deals struck by venture capital (VC) funds in the first quarter of 2015. India saw 69 deals happening in the first quarter as against China’s 66, according to a report by CB Insights, a New York-based firm that tracks VC funding. India saw the most deal growth among Asian countries, at 60% compared to the first quarter of 2014, when the number of deals stood at 43. China was still ahead of India in terms of deal value at $2.99 billion. India’s funding stood at $1.35 billion. For India, this was a rise of 225% over the same quarter of the previous year. Both countries reported a drop in the quantum of money raised from the last quarter of 2014. Japan saw 28 startup deals by VCs during the first quarter. Overall the top 3 countries in Asia accounted for 66% of all deals to VC-backed tech companies in Asia in the first quarter of 2015. Sunil Rao, country head of the startup programme in Google India, said India is on the same trajectory that China was in 2007-08 with respect to the number of startups emerging from the country and the number of internet users. “The country will reach 500 million internet users in two-three years and the gap won’t be much now. Even the GDP growth rates are around the same levels,” he noted. According to the CB Insights, Chinese startups constituted 12 of the top 15 startup deals in Asia while India startups constituted the rest. For the first time, India has raised more than $1 billion for three consecutive quarters. Rao said China would continue to see larger valuations as it is a much larger market. Mohan Kumar, partner, Norwest Venture Partners, said one quarter is too early to say anything about a trend. “Having said that, China has recorded $3 billion in annual investment in the last five years. There are a few positives on the Indian side with the economy picking up steam. If we can replicate China’s growth in the last decade by growing at 10%, the catch-up could be possible in a few years. We have to give it 3-4 quarters before saying India is beginning to outshine China,” he said. Sequoia Capital was the most active investor in India in the quarter, the CB Insights report said. The VC firm participated in three of the six largest deals of the quarter - FreeCharge, CarDekho, and NewsHunt. Tiger Global Management was the second most active investor, with multiple early-stage deals to companies including Grofers, News in Shorts, and MoonFrog Labs. “After a big Q4 2014 which featured six $500-million plus rounds, Asian VC-backed tech companies came slightly back down to earth, raising $4.8 billion on 247 deals. The funding total is still the second highest total since 2013, up 95% versus the same quarter a year prior,” the report said. Source: The Times of India Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 19 >> NEWS ROUND UP Government aims at 2% share of global tourist arrivals by 2025 The government wants to make India an attractive tourist destination so that the country’s share in world tourist arrivals rises to 2% by 2025 from the present 0.68%, according to the draft of a new tourism policy released on May 1. The tourism ministry has invited comments from the public on the national tourism policy by 10 May. The policy outlines the vision, mission and objectives that the country wants to achieve in the travel and tourism segment as well as detailed delivery mechanisms, product development, infrastructure requirement and the skill development that are required. The move to float a new policy, which will replace the one in place since 2002, is in line with the National Democratic Alliance (NDA) government’s aim to make tourism a major driver of economic growth. The contribution of travel and tourism to gross domestic product (GDP) is expected to rise by 7.3% a year to Rs.1,658.7 crore in 2025, accounting for 7.6% of GDP, from Rs.764.25 crore, or 6.7% of GDP, in 2014, as per data compiled by World Travel and Tourism Council, an industry body. Foreign tourist arrivals in India increased from 2.38 million in 2002 to 7.7 million in 2014, while global international tourist arrivals are expected to grow from 1.1 billion to 1.8 billion by 2030, according to United Nations World Tourism Organization. The draft policy aims to strengthen India’s position as a welcoming, safe, secure, clean, hygienic and sustainable destination for both foreign and domestic tourists as well as enhance the brand image “Incredible India”. One of the key areas the policy looks at is to “foster and develop a coordination mechanism between the centre and the states and Union territories, and between the various ministries and departments” to create a framework that will also include and engage local bodies to drive the national tourism agenda. It will also promote lesser known places and destinations based on India’s unique civilization, heritage, and culture rather than just focusing on gateway cities. The government also plans to set up a National Tourism Advisory Board, which will be chaired by the tourism minister and have a dedicated secretariat and a corpus to undertake various promotional activities, according to the proposed policy. Source: Mint Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 20 >> NEWS ROUND UP India becoming one of world’s fastest growing economies: IMF India’s growth rate is expected to rise to 7.5 percent this year and next, making it one of the fastest growing economies in the world, according to the IMF’s latest economic health check. The other Asian giant China’s economy is slowing to a more sustainable pace - 6.8 percent GDP growth in 2015, and 6.3 percent in 2016, according to the International Monetary Fund’s Regional Economic Outlook for Asia and the Pacific. Growth in Asia and the Pacific will continue to outperform the rest of the world, and is expected to remain steady at 5.6 percent in 2015, easing slightly to 5.5 percent in 2016, said the report released Thursday. Growth will be driven by domestic demand, underpinned by healthy labour markets, low interest rates, and the recent fall in oil prices. The global recovery, while moderate and uneven, will continue to support Asia’s exports, says the report. The IMF’s Regional Economic Outlook calls for a strong push for structural reforms across most, if not all, economies in the region. The report notes that in addition to boosting productive capacity, structural reforms can help rebalance growth toward consumption, which remains a priority for some major Asian economies. Major reform areas include measures to address supply-bottlenecks in India, state-owned enterprises, and financial liberalisation in China, and initiatives to raise services productivity, and labour force participation in Japan. Maintaining flexible fiscal and monetary policies to effectively manage aggregate demand will remain important in the future, say the report’s authors. The report noted that lower oil prices have provided an opportunity to undertake further fiscal reforms aimed at lowering energy subsidies, and measures have been taken in a number of countries, including India, Malaysia, and Indonesia. Financial and macro-prudential policies should continue to address financial sector risks. This will be particularly important to increase resilience to shocks, and to contain the buildup of systemic risk associated with shifting financial conditions, and volatile capital flows, the report said. Asia, which accounts for nearly 40 percent of global output, but contributes nearly two-thirds of global growth, will remain the global growth leader, even though potential growth-the economy’s speed limit-is likely to slow, it said. But the outlook could be vulnerable to adverse events, says the report. Most Asian policymakers have in place broadly appropriate interest rate and fiscal policy settings, although the risk of renewed financial volatility may warrant a somewhat tighter monetary policy stance in some countries, it said. Source: Indo-Asian News Service Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN 21 >> NEWS ROUND UP India’s e-learning market second largest after US, says report India has become the largest market for e-learning after the US, and the sector is expected to receive a boost from the government’s Rs.1.13 trillion Digital India initiative, says a recent report by the UK-India Business Council. While the existing educational infrastructure is inadequate to meet the current and future needs of the country, the Digital India initiative will increase Internet access, which in turn will help take quality education to large parts of the population that have been hitherto neglected, says the report. India’s e-learning sector is expected to grow at a compounded annual rate of 17.4% between 2013 and 2018, twice as fast as the global average. “Education providers from various countries are aggressively targeting the Indian market and the competition is stiff. For instance, Germany is strong on centres of excellence and education as part of its development agenda. The Australian model is based on government-sponsored assessment programmes. It has gained popularity because the certifications issued are recognised by Australian authorities,” the report says. Many business in India are developing e-learning content for markets such as the US, Australia, the UK and Europe. This content is not being deployed locally because of infrastructural and technological inadequacies, says the report. E-learning also has a role to play in providing the required skillsets to future job market entrants. By 2022, the country faces a potential shortage of 250 million skilled workers across sectors. The report said the tourism and hospitality sector is a critical areas for skill development, apart from the manufacturing. India is the world’s third largest market by Internet users, behind China and the US, but it has only achieved 16% Internet penetration as compared with 45% in China, and 84% in the US, according to industry estimates. Meanwhile, emerging technologies including cloud, big data and the Internet of Things are changing the way e-learning content is being produced and consumed. “Technological advances are affecting the way we learn and work and disrupting the education sector globally. Big data allows for greater customisation of learning solutions, in the way that Amazon tailors its products to consumers’ needs. This opens up endless possibilities for education providers,” says the report. Source: Mint Issue no 622 I May 5-May 11, 2015 WEEKLY ECONOMIC BULLETIN DISCLAIMER This newsletter is compilation of news articles from various business-e-newspapers and in no way is an endorsement or reflection of Ministry of External Affairs views. Designed & Developed by IANS Publishing
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