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INDIAGLBALBUSINESSOnlinePrintEventsPublishedbyFebruary2015IndiasoutboundinvestmentmagazinePage18HOTSPOTINDIAINC.PICKSIndiatopsJapanslistofinvestmentsEUliftsbanonIndianmangoimportsIndiagivesupVodafonetaxappealSECTORFOCUSTELECOMPage6Page37Page15PersonalchemistrycreatesanewIndia-USbond www.smartandhra.indiaincorporated.comDigitalAndhraInfraAndhraEnergyAndhraDiscoverIndiasveryownsiliconcorridorAlandofunlimitedopportunitiesDevelopingasmartenergyportfolioForbusinessdevelopmentopportunitiespleaseemailinfoindiaincorporated.comLondon4402078732386India9107940063339IndiaIncorpindiaincorporatedcompanyindia-incN.ChandrababuNaidu whichsuitgeo-politicalambitionsnotalwayswithsoundbusinessrationale.UKTIisineffectajointventurebetweentheDepartmentforBusinessInnovationSkillsandthepreviouslyratheraloofForeignCommonwealthOfceFCO.UKTIsmandateistobatforBritishbusinessglobally.TolendthesupportthenetworkandwherenecessarydiplomaticmuscletoensureBritishbusinessseekoutthebestopportunitiesandreceivetherightsupportin-country.Indiancompaniesarehithertolefttofendforthemselvesforthegreaterpartespeciallyinsensitiveareassuchasdefencesupplychainsandotherhighendtechnologyacquisitionsofnationalimportance.PrimeMinisterModihasshownthatgovernmentandbusinesscanbeateasewithoneanother.TheIndianForeignServicesmuchneededreformalreadymootedbyModiduringhiselectioncampaigninglastyearmustequallybringaboutaseachangeinapproachandattitudetosupportingIndianbusiness.IamhopefulandindeedcondentthatJaishankaristhemanforthejob.ThisissueofIndiaGlobalBusinessisinevitablydominatedbythehugelysuccessfulvisitoftheUSPresidentawell-roundedanalysisofwhatwasachievedandthekeyaspectsthatwilldenethenewbondstruckbetweenObamaandModi.ItalsolooksatsomeofthemajorheadlinesofJanuaryincludingIndiasdenitivesteptowardstaxreformsandaround-upofIndiaInc.sDigitalIndiaRoundtableinWashingtonDC.TheNewYearhascertainlygotofftoagoodstart.ManojLadwaPublisherCEOIndiaInc.manojladwaPUTTINGITINCONTEXTAmorestrategicpushforIndianbusinessinvestingoverseasMuchhasalreadybeenwrittenandsaidbynowaboutPresidentObamasrecentvisittoIndia.Yesitwasunprecedentedinmanymanywaysincludingthefactthatbothleaderswereabletonallybrokeradealonthecivilnuclearissue.Nowthatthetrustdecithasbeenbridgeditisofcourseforbusinesstoseekouttheopportunitiesandbothgovernmentstobedeterminedfacilitators.ButaboveallthevisithasdrawnarmlineunderIndiasNon-AlignedreadNon-Committalworldview.ItwasaworldviewthatwastosaytheleastfrustratingtootherleadingdemocraticworldpowersandtomanyinIndiawhobelievedthatIndiasplacebelongedrmlyalignedtothefree-world.Sonomoreshadowboxing.TheUSisafriendIndiacanbringhomeandshowoff.AndifChinascreamssobeit.After-allbothIndiasConstitutionandthatoftheUSstartwiththesamethreeevocativewordsWeThePeople.AllthisincludingtheswiftandtimelyelevationofS.Jaishankar-thehugelypragmaticandequallystrategicdiplomatasIndiasnewforeignsecretarywillinmyviewsendtherightsignalstoIndianbusinessgoingglobal.PrimeMinisterModiisagoforitmanandIndianbusinessesarebeingencouragedtodoexactlythat.ThecommerceministerNirmalaSitharamanwhohasdemonstrablyshownshesharesthePrimeMinistersvisionwillbeapleasedlady.IngoingglobalwhatIndianbusinessneedespeciallyIndiasincreasinglyambitiousSMEsectorisamorestrategicsupportmechanismsimilartothatoftheUKGovernmentsTradeInvestmentarmUKTI.TheotherextremeisChinasstatediktatstoitsindustrytomakeacquisitions IT8ZomatomakesmegaUSacquisitionMassiveheadroomforRajantocutratesfurtherIndiaUSsketchcontoursofanAsianNATOIndiatopsJapanslistofinvestmentsPage34Page20Page6SECTORFOCUSHOTSPOTANALYSISBANKINGTELECOMEYEONBUDGET201533RationalisingsubsidiestopsJaitleyagenda9TwitteracquiresBangalorestart-up26ECBstimuluspackagetoboostIndianeconomytoo27RBStooffshorerolestoIndiaAUTOGUESTCOLUMN12ShareValuations-MythsandRealitiesbyRobertHolland42TowardsVibrantStates...andaVibrantIndiabySidharthBirla41TataaddsmoreUKjobsatJLRplant15IndiagivesupVodafonetaxappealINDIAGLOBALBUSINESSiseditionofIndiaGlobalBusinesstracksthebrandnewpartnershipforgedbetweentheUSandIndiabesidestakingalookatsomeofthehighlightsofaNewYearwhichkickedowithabangforIndiaInc.PersonalchemistrycreatesanewIndia-USbondPage18CONTENTS ChiefExecutiveManojLadwaSeniorEditorAditiKhannaChiefOperatingOfcerShamitGhoshEventsManagerDinaLadwaOperationsRajviSinghiSalesAdvertisingJenniferFrancisProjectCoordinationNomitaShahDigitalMarketingExecutiveDarshanKhantGraphicDesignerAnkurSaxenaOperationSupportSaurabhBrahmbhattAccountsAdminBhavinThakorIndiaInc.Limitedallrightsreserved.Reproductioninwholeorinpartwithoutourwrittenpermissionisprohibited.ViewsexpressedbyourcontributorsaretheirownanddonotnecessarilyrepresenttheviewspoliciesofIndiaInc.WhileeveryeffortismadetoachievetotalaccuracyIndiaInccannotbeheldresponsibleforanyerrorsoromissions.www.indiaincorporated.comOnlinePrintEventsSPECIALREPORTINDIAINC.PICKSINTERVIEWPOLICYUPDATE35Indiane-tunestaxreformstoattractFDI36Indiakicksoffdivestmentplanswithcoal30UKbiggestmakerinIndiaIndiaInc.InterviewwithLordLivingston24ObamapromisesIndia4bninloansinvestment14Indiastrikesnetneutralitykey32Indiasetsuniversalbankaccountrecord28SurpriseratecutplugsintoIndiaoptimism40GlobalIndianstakecentre-stageinIndia38FallingoilpricestohelpJaitleybalancehisbooks37EUliftsbanonIndianmangoimportsDIGITALINDIA-ROUNDTABLEOPINION10DigitalIndiaRoundtable-201543Will2015trulybeahappyonebyDeepakSamVarghesewww.indiaincorporated.com January2015INDIAGLOBALBUSINESS6IndiatopsJapanslistofinvestmentsIndiahasemergedasJapansmostattractivedestinationforforeigndirectinvestmentFDIaccordingtoanewsurvey.TheJapanBankforInternationalCooperationJBICconductedthesurveyamong1021Japanesemanufacturingrmslastyearandfoundthatcomparedto213companiesin2013229JapanesecompaniesvotedinfavourofIndia.ItsndingsindicatethatIndiawasthebestdestinationforinvestmentsinthemediumtermorinthenextthreeyears.AccordingtoofcialguresJapanesecompanieshavemadeaninvestmentof15.36billioninIndiabetweenApril2000andDecember2013accountingfor7percentoftotalFDIinowintoIndiaduringtheperiod.TheimportanceofoverseasbusinessisincreasingforJapanandwithoverseasproductionandsalesratiosestimatedat40percentlevelrespectivelyoverseasinvestmentsplayakeyroleintheJapaneseeconomy.About80percentofcompaniesthattookpartinthesurveyplantoexpandtheiroverseasbusiness.ThiswilltwellintotheNarendraModiledgovernmentsActEastpolicyofbuildingstrongpartnershipswithkeystatesintheAsia-Pacicregion.LastyearIndiaandJapanannouncedtheIndia-JapanInvestmentPromotionPartnershipIJIPPaspartoftheTokyoDeclarationforIndia.UnderpartnershipJapanhasofferedtoinvestinIndiaapproximately3.5trillionYenaround33.5billionoverthenextveyears.TheIndiangovernmenthasestablishedJapanPlusaspecialmanagementteamtofacilitateJapaneseinvestorsintheirbusinessdealingsinIndia.ThiswilltwellintotheNarendraModiledgovernmentsActEastpolicyofbuildingstrongpartnershipswithkeystatesintheAsia-Pacicregion.HOTSPOT January2015www.indiaincorporated.com7NEWSINBRIEFBioconplanstolistSyngeneSuzlontosellGermanarmIndianbiotechmajorBioconwilllistitsresearchservicesbusinessarmSyngenebysellingaround15percentinapublicoffer.BioconhadpreviouslysaiditplannedtolistSyngenebuthadnotgivenatimeline.Thecompanysboardhasapprovedtheprocessoflistingandhiringmerchantbankerstosellbetween10-15percentfromBioconsmajoritystakeintheunitinthepublicoffer.Syngeneoffersintegrateddrugdiscoveryanddevelopmentserviceswithcapabilitiesinmedicinalchemistrybiologyinvivopharmacologyandtoxicology.Ithasateamofover2300scientistsand1millionsqftofbuilt-uplaboratoriesequippedwithinfrastructuretosupporttheRDprogrammesofglobalpharmabiotechandnutritioncompanies.BioconalsoagreedwithGileadSciencesInc.tolicenceitschronichepatitis-CproductrangetheBangalore-headquarteredcompanysaidinastatement.IndianwindturbinemakerSuzlonGrouphasinkedabindingagreementwithUS-basedCenterbridgePartnerstosell100percentstakeinitswholly-ownedGermansubsidiarySenvion.Thedealisestimatedataround1billionequityvalueinanall-cashtransactionandfutureearnoutofuptoanadditional50million.ThetransactionissubjecttoregulatoryandclosingconditionsandisexpectedtoclosebeforetheendofthecurrentnancialyearinMarch.TulsiTantichairmanoftheSuzlonGroupsaidThisdevelopmentisinlinewithourstrategicinitiativetostrengthenourbalancesheet.Theproceedswouldbeusedfordebtrepaymenttherebyreducinginterestcostandaugmentbusinessgrowth.WewillfocusonhighgrowthmarketslikeIndiaUSAandotheremergingeconomymarkets.SenvionwillgiveSuzlonlicenceforoff-shoretechnologiesfortheIndianmarketwhileSuzlonwillextendSenviontheS111-2.1MWlicencefortheUSmarket. SECTORFOCUS-ITJanuary2015INDIAGLOBALBUSINESS8IndianrestaurantsearchservicesproviderZomatohastakenagiantleapinitsglobalstrategywiththeacquisitionofUS-basedUrbanspoonforanestimated60million.ItmarksoneofthebiggestoverseasdealsbyanIndianstartupsettingthermontracktoraisearound100millioninfreshfunding.TheacquisitionofUrbanspoonwhichmarksZomatosentryintotheUnitedStatesCanadaandAustraliawillresultinitspresencein22countriescoveringmorethanonemillionrestaurantsZomatosaidinastatement.CompanyCEODeepinderGoyalnalisedtheacquisitionwithdigitalmediacompanyInterActiveCorpownersofUrbanspooninanall-cashdeal.Zomatostrafcwillmorethandoubletomorethan80millionvisitorsprobablymakingusthelargestrestaurantonlysearchcompanyintheworldsaidPankajChaddahcofounderofZomato.ThecompanysaggressiveexpansionstrategyacrossoverseasmarketshashelpedboosttheattractivenessofZomatovaluedat660millioninitslastfundingroundwhenearlyinvestorsInfoEdgeSequoiaCapitaljoinedVyCapitaltoinvest60millioninthecompany.Thestartupisexpectedtobevaluedataround1billionaftercompletingitsfreshroundofinvestment.Thecompanyexpectstoderiveatleast60percentofitstrafcfromtheUSasaresultofthelatestdealandboostitsrestaurantlistingstoonemillion.Urbanspoons50-memberteamwillbeintegratedwithZomatosworkforceof900globallybytheendofMarch.Seattle-basedUrbanspooncompeteswithYelpIncapopularwebsitethatletsusersreviewandraterestaurantsandotherservices.ItwillproveZomatosbiggestcompetition.TheIndianstartuphasbeenonarollacquiringcompaniesinItalyTurkeytheCzechRepublicSlovakiaNewZealandandPolandlastyear.ZomatomakesmegaUSacquisitionSeattle-basedUrbanspooncompeteswithYelpIncapopularwebsitethatletsusersreviewandraterestaurantsandotherservices.Zomatostrafcwillmorethandoubletomorethan80millionvisitorsprobablymakingusthelargestrestaurantonlysearchcompanyintheworld.PankajChaddahCo-founderofZomato January2015www.indiaincorporated.com9Theworldsmostpopularmicro-bloggingsiteTwitterhasstruckadealtoacquireBangalore-basedmobilemarketingandanalyticsplatformZipDial.ThebuyoutofZipdialwhichwasoneofitsproductpartnersinIndiamarksTwittersrstacquisitioninthecountry.WhiletheexactvalueoftheacquisitionhasnotbeenreleaseareportbytechnologynewsportalTechCrunchsaidthattheCalifornia-basedsocialmediacompanymayhaveshelledoutbetween30millionand40millionfortheacquisition.ChristianOestlienvice-presidentproductatTwittersaidOverthenextseveralyearsbillionsofpeoplewillcomeonlineforthersttimeincountrieslikeBrazilIndiaandIndonesia.FormanytheirrstonlineexperiencewillbeonamobiledevicebutthecostofdatamaypreventthemfromexperiencingthetruepoweroftheInternet.TwitterinpartnershipwithZipDialcanmakegreatcontentmoreaccessibletoeveryone.Foundedin2010bySanjaySwamyValerieWagonerandAmiyaPathakZipDialisacloud-basedmobileandanalyticsplatformwhichallowscompaniestomarkettotheirtargetaudiencethroughso-calledmissedcalls.ZipDialsplatformhasengagednearly60millionuserswithhundredsofmarketingclientsincludingsomeoftheworldsleadingbrandsandmediacompanies.OverthepasttwoyearsZipDialandTwitterhavecollaboratedonavarietyofcampaignsincludingtheIndianelectionsandBollywoodlmpromotions.ValerieWagonerfounderandCEOofZipDialsaidMorethanhalfoftheworldspopulationliveinemergingandnewlydevelopedmarketsandtheseconsumersusetheirmobilephonesdifferently.Webuildforthem.ZipDialsinnovativeplatformhasalreadyscaledacrossSouthAsiaSoutheastAsiaandAfricawhereweoperate.WearethrilledtoexpandourimpacttoagloballevelwithTwitter.TwittersaidtheacquisitionwillsignicantlyincreasethecompanysinvestmentinIndiaandalsobringanewengineeringofceinBangalorewitharound40engineers.TwitteracquiresBangalorestart-upThebuyoutofZipdialwhichwasoneofitsproductpartnersinIndiamarksTwittersrstacquisitioninthecountry.OverthenextseveralyearsbillionsofpeoplewillcomeonlineforthersttimeincountrieslikeBrazilIndiaandIndonesia.Formanytheirrstonlineexperiencewillbeonamobiledevice.ChristianOestlienVice-PresidentProductatTwitterSECTORFOCUS-IT January2015INDIAGLOBALBUSINESS10DigitalIndiaRoundtable-2015IndiaInc.madeadecisiveplaytomakePrimeMinisterNarendraModisDigitalIndiavisionarealityandtooktheagendafurtherwithasuccessfulDigitalIndiaRoundtableinWashingtonDConJanuary16.Formoreinformationpleasevisithttpwww.usa.indiaincor-porated.comdigital-indiaHonbleMinisterShriRaviShankarPrasadaddressingthedelegatesviaVideoattheDigitalIndiaRoundtable.DIGITALINDIAROUNDTABLE-2015HEDrS.JaishankarR.S.SharmaSecretaryDietYattheDigitalIndiaRoundtable2015.CharlesRivkinattheDigitalIndiaroundtable2015. January2015www.indiaincorporated.com11HEDrS.JaishankarManojLadwalaunchingtheJanuary2015editionofIndiaGlobalBusinessMagazineattheDigitalIndiaRoundtable2015.PowerbreakfastattheDigitalIndiaRoundtable2015.DeanGareldCEOPresidentInformationTechnologyIndustryCouncilspeakingattheDigitalIndiaRoundtable2015.DIGITALINDIAROUNDTABLE-2015 January2015INDIAGLOBALBUSINESS12ShareValuations-MythsandRealitiesRobertHollandisManagingPartnerandalsoanAuditandAssurancePartneratJamesCowper.AsManagingPartnerRoberthasoverallresponsibilityforthestrategicdirectionanddevelopmentofthermandourpeopleimplementingmeasuringandreningthestrategiestohelpensureourcontinuedsuccess.InhisroleasAuditandAssurancePartnerheadvisesawiderangeofbusinessesincludingmanyofthermsListedandinternationalclients.Robertisalsoaspecialistauditandsharevaluerandlooksafteraportfolioofbusinessclients.AsasharevaluationexpertheoftenactsindisputesandappearsinCourtasanexpertwitness.ItwasmyfriendDeepathataskedthequestionthatliesattheheartofthisarticle.Iwasexplainingtoherhowaparticu-larcompanyshouldbevaluedatsixtimesitsearningsnetofdebtwhensheaskedButwhyisitvaluedthatwayshesaid.Andofcoursetherealansweristhatitisgenerallyanearningsmultiplevaluationthatisthebestwecandowiththeinformationthatslikelytobeavailable.LetslookunderneaththatWhyinmoredetail.Anearningsvaluationforacompanyisgenerallycalculatedatsomemultipleofameasureofearnings.Commonlybutnotalwaysearningsarestruckbeforetaxinterestanddepreciationandwhenthisismultipliedbyamultiplesomethingcalledanenterprisevaluationisderived.Fromthisanydebtinthecompanyisdeductedtogeneratethenalvaluationresultforthecompany.Inanidealworldearningswouldnotbeusedatallasitisthecashthatabusinesscangenerateinthefuturethatisdistributedtoshareholdersthatgivesashareholdingvalue.Howevercashowsareonlyrarelyusedasamethodofvaluationforprivatecompanies.Thisisbecausefuturecashowsareinherentlyuncertainandthedatatogeneratethemwithanysortofcertaintyisgenerallynotavailable.Earningsarethereforeusedasasubstituteforcash-afterallearningswillhopefullyturnintocashatsomepointeventually.Intermsofearningsthevalueofearningsoverthelastfewaccountingperiodsaregenerallylookedatandamendedtoproduceanestimateoffutureearnings.Thisisanareawheremanypeoplecangowrong.ThisisbecauseFutureeconomicconditionsarelikelytobedifferent-forexampletheUKeconomyacoupleofyearsagowasinamuchlessoptimisticplacegenerallythanitisnow.Alsothingschangewithincompanies-signicantneworlostclientsnewacquisitionsre-organisationsandsoonneedtakingaccountofgoingforward.Merelyusinghistoricdatawithoutreectionandappropriateamendmentwillnothelpyougettotherightanswer.Oneoffeventsanddiscontinuedpartsofthebusinessalsoneedtobeadjustedfor.AnimportantareathatisoftenGUESTCOLOUMN January2015www.indiaincorporated.com13GUESTCOLOUMNforgottenaswelliswherebusinessownersdonotrunthebusinessonastrictlyarmslengthbasis.Forexampletheywilloftenpaythemselvesbywayofdividendratherthanasasalaryandsounderestimatethetruecostbaseofthebusiness.Similarlytheownercanoftenownthebusinesspremisesusedaswellandeithernotchargerentorelsechargerentthatwasanarmslengthcostatsomepointinthepastbutwhichhasntbeenupdatedtoreectcurrentconditions.Intermsofamultiplethesewillmostlyliebetweentwoandeighttimespre-taxinterestanddepreciationearnings.Whereearningsareconsistentandrelativelycertainthemultiplewillbehigherandtheoppositewillbethecasewheretheyaremoreuncertain.Finallysurplusassetsshouldbetakenaccountofaswell.Thesereectassetsheldbythebusinesswhicharenotusedorneededonadaytodaybasis.Themostcommonoftheseiscashbuttheycanoccasionallyincludeavarietyofassetssuchasvillasboatsracehorsespaintingsandsoon.Thereareotherfactorsthatneedtobeconsideredaswellandthewholeareacanbequitesubjective.Ofcourseintherealworldabusinessisonlyvaluedatwhatsomeoneispreparedtopayforitbutinthenalanalysisthatsomethingreectsthefuturecashthatcanbederivedfromthatinvestment.Neverthelesstherearenormsthatsharevaluersuseandsotheuctuationscanoftenbelessthanyoumightthink.SowhyisitvaluedthatwayDeepaGenerallybecausethatisthebestwaywecangettoanapproximationofthefuturebenetyoucangetfromthepriceyoupay. January2015INDIAGLOBALBUSINESS14INDIAINC.PICKSInarstofcialindicationofthegovernmentsthinkingIndiantelecomministerRaviShankarPrasadhassaidhisministryisinfavourofmain-tainingNetneutralityastheinternetisaninstrumentforthemasses.Theinternetmustpromotelocalaswellasglobal.ForIndiaNetneutralityisveryimportantaleadingdailyquotedPrasadastellingvisitingUSundersecretaryofstateCatherineNovelli.NetneutralitymeanstelecomserviceproviderstreatalltrafcontheNetequallyandnotchargemoreforparticularclassesofconsumersappsorcontent.IndiasleadingtelecomserviceproviderBhartiAirtelhadkickedupastormlastmonthwhenitimposedhigherchargesformakinginternet-basedphonecalls.Thebacklashfromconsumersandonsocialmediaforcedittobacktrackwithindays.ThecompanywouldwaitfortheconsultationprocessbegunbytheTelecomRegulationAuthorityofIndiaTRAIthecountrystelecomregulatoritsaid.SeveralIndiantelecomoperatorsareupsetatappslikeWhatsappandserviceslikeSkypethatofferfreecallingandmessagingservicesthateatintotheirrevenuesandhavecalledforregulationstoensurethattheygetcarriagefees.AsfarasgovernmentarchitecturetodealwiththisissueisconcernedIndiaisstudyingthisanddiscussingitwithstakeholdersthesamepaperquotedPrasad.TRAIisworkingontheissueofnetneutralityandwillissueaconsultationpaperonthesubjectlaterthismonth.NetneutralityiscriticaltotheNarendraModigovernmentsDigitalIndiainitiativethatenvisagestakinggoodgovernanceandseveralgovernmentservicestothehomesofeverycitizenviaanationwidebroadbandbackbone.VariouscompaniesincludingmultinationallikeMicrosofthavemadepresentationsonhowthiscanbeachievedinthemostcost-effectivemanner.NetneutralitymeanstelecomserviceproviderstreatalltrafcontheNetequallyandnotchargemoreforparticularclassesofconsumersappsorcontent.Indiastrikesnetneutralitykey January2015www.indiaincorporated.com15AdayafterUSPresidentBarrackObamaleftIndiatheNarendraModigovernmentmovedtosoothethefrayednervesofinvestorsandbeganactingonPrimeMinisterNarendraModispromisetousherinanon-adversarialtaxregime.AtameetingoftheCabinetthegovernmentdecidednottoleanappealagainsttheBombayHighCourtorderwhichhadheldthatVodafonewasnotliabletopayRs3200crore510milliontaxonsharesalebyanIndiansubsidiary.TheIncomeTaxdepartmenthadclaimedthatthedomesticsubsidiaryofVodafonehadallottedsharestoitsparentatamassivelyundervaluedpriceandhadslappedthetaxnoticeontheallegedundervaluationholdingthistobeadisguisedtransferofvaluetotheparent.ThustheI-Tdepartmentclaimedthistransactioncameundertheambitoftransferpricingnormswhichguidetransactionsbetweentwodivisionsofthesamecompany.Thelawstatesthatsuchtransactionshavetobemadeatanarmslengthpriceieatthesamepricewhichthesellerwouldtransactwiththirdparties.Thecourthadstruckdownthisinterpretationasthelawclearlyexcludestheallotmentortransferofshareswhichconstitutesinvestmentandnotasalefromthepurviewoftransferpricing.BriengthemediaITministerRaviShankarPrasadsaidthegovernmentwantstoavoidfruitlesslitigation.TheCabinetdecisionwillsetatresttheuncertaintyprevailinginthemindsofforeigninvestorsandtaxpayersinrespectofpossibletransferpricingadjustmentsinIndiaandtherebyimprovetheinvestmentclimatehesaid.EarlierFinanceMinisterArunJaitleyhadsaidthatsuchaggressivetaxadministrationhasnotyieldedasinglerupeeinrevenues.Allithasdoneisgivethecountryabadnamehehadsaid.TheCabinetdecisionislikelytoproviderelieftocompaniessuchasShellwhichhasalsogotasimilarfavourablerulingfromthecourtsinanothersharetransfercase.ItwillalsohaveimplicationsforsimilarcasesinvolvingNokiaIBMandothermultinationals.Vodafoneisinvolvedinanother2-billiontaxdisputewiththegovernmentoveritspurchaseoftheIndiantelecomoperationsofHutchisonWhampoa.Thatmatteriscurrentlyinarbitration.IndiagivesupVodafonetaxappealTheNarendraModigovernmentmovedtosoothethefrayednervesofinvestorsandbeganactingonPrimeMinisterNarendraModispromisetousherinanon-adver-sarialtaxregime.SECTORFOCUS-TELECOM ItwashypedasavisitomanyfrstsasBarackObamabecamethefrstUSPresidenttobeinvitedasChieGuestoIndiasprestigiousRepublicDayparadeandthevisitdidnotdisappoint.HealsobecamethefrstAmericanPresidenttovisitthecountrytwiceduringhistenureandwasgivenaroyalwelcomeinNewDelhistartingwithawarmhugromIndianPrimeMinisterNarendraModi.TeimportanceothevisitwasobviouswhenModibrokewithprotocoltopersonallyreceivetheObamasatDelhiairport. January2015INDIAGLOBALBUSINESS18PersonalchemistrycreatesanewIndia-USbondTheoperationalisationofthecivilnucleardealwhichisseenasthecornerstoneofIndia-USrelationstherenewalofthe10-yeardefencecooperationagreementpactstomanufacturedefenceequipmentinIndiaandtobuildthreesmartcitiesandanunderstandingtocarryontalksonclimatechangewerethehighlightsofUSPresidentBarrackObamassecondvisittoIndiaasUSPresident.Therstdayofthethree-daypresidentialvisitwasmarkedbygreatpersonalchemistrybetweenModiandObama.TheIndianPrimeMinistergreetedhisguestwithahugattheairportwherebreakingprotocolhehadgonetoreceivehim.Theyhuggedatonatleasttwomoreoccasionsandfrequentlyreferredtoeachotherbytheirrstnames.AnalystssaiditwasthispersonalrapportthatpromptedtheUSPresidentcalledPOTUSPresidentoftheUnitedStatesbytheUSsecretserviceandcuriouslyonthistripbytheIndianmediaaswelltousehispresidentialpowerstowaivethelaststickingpointinthecivilianN-dealtheUSdemandthatitshouldbeallowedtotracktheenduseofallequipmentincludingthosesourcedfromthirdcountriesusedatN-plantsbuiltwithUShelp.ThebilateralIndo-UScontactgroupnegotiatingtheN-dealinLondonintherun-uptoObamasvisithadbeenunabletoreachanagreementonthispointandwithIndiaunwillingtorelenttoanythingbeyondpreviouslyacceptedinternationalinspectionsofitsciviliannuclearfacilitieswhichlookedlikebecomingadealbreaker.ANALYSISTherstdayofthethree-daypresidentialvisitwasmarkedbygreatpersonalchemistrybetweenModiandObama. January2015www.indiaincorporated.com19ANALYSISButObamawaivedthisconditionandthedealwassigned.TheotherstickingpointIndiasliabilitylawthatholdssuppliersliableinperpetuityforanynuclearaccidentwasresolvedamicablywithIndiaagreeingtosetupapartiallystate-fundedinsurancepoolof250milliontotakecareofanyliabilitypaymentsthatsupplierswouldbecalledupontopay.ThetwogovernmentssaidtheoperationalisationoftheN-dealhangingreforoversixyearswouldpavethewayfornuclearcommercebetweenthetwocountriesbutn-equipmentsuppliersinbothcountriesreactedcautiously.Welcomingtheagreementinprincipaltheysaidtheywouldcommentonlyaftertheneprintoftheagreementwasreleased.BriengthemediaontheneprintofthedefencedealsIndianforeignsecretarySujathaSinghsaidthetwocountrieshadidentiedfourprojectsforthegovernmentsagshipMakeinIndiaprogramme.TheyincludemakingtheRavenshortrangeUAVsinIndiaandroll-onroll-offkitsfortheUS-suppliedC-130transportplanes.Thetwosideswillalsoexplorethepossibilityofdevelopingaircraftcarriersandjetengines.Weagreedtodeepenourdefenceandsecuritycooperation.AnddefencetechnologyandtradeinitiativeswillallowustojointlydevelopandproducedefencetechnologiesObamasaidatajointpressconference.Modisambitiousplanstobuild100smartcitiesacrossIndiaalsoreceivedaboostfollowinganagreementonsettingupthreesmartcitiesinAjmerinthewesterndesertstateofRajasthanAllahabadinUttarPradeshinnorthIndiaandVishakhapatnaminAndhraPradesh.TheagreementinkedbytherespectivestategovernmentsandtheUSTradeDevelopmentAgencyUSTDAenvisagesthelatterprovidingpartofthefundstoconductfeasibilitystudiespilotplansstudytoursandtrainingprogrammesinthelead-uptotheactualprojecttobuildthesecities.ThentheUSTDAwillcoordinatewithotherUSgovernmentdepartmentsandagenciessuchastheDepartmentofCommerceEXIMBankandotherbodiestopromoteinfrastructureinIndiaincludingsmartcities.Weagreedtodeepenourdefenceandsecuritycooperation.Anddefencetechnologyandtradeinitiativeswillallowustojointlydevelopandproducedefencetechnologies.BarackObamaPresidentofUnitedStates January2015INDIAGLOBALBUSINESS20IndiaUSsketchcontoursofanAsianNATOFieldMarshalClaudeAuchinleckthelastBritishcommander-in-chiefoftheIndianandPakistani-armieswasthemilitarymasterofavastswatheofrealestatefromtheGulfofAdenandtheeastcoastofAfricainthewesttotheMalaccaStraitsintheeastandeverythinginbetween.TheBritishEmpireleveragedIndiasuniquegeo-strategiclocationtogreatadvantageandthishelpedperpetuateitshegemonyinwhatlatercametobecalledtheAsiaPacicregion.NewDelhiwasthefulcrumaroundwhichBritishpowerrevolvedatleastinthispartofheworld.IndependentIndiathesuccessorstatefritteredawaythisadvantageduetoavarietyofnancialandmilitaryconstraintsaswellasideologicalreasons.TheIndo-USjointstatementissuedduringPresidentBarrackObamasvisittoIndiacouldmarktherststeptowardsaresurrectionofthatvisionwhichinformedtheBritishstrategicdoctrineinAsia.Thejointstatementsaysamongotherthingsthatthetwolargestdemocraciesintheworldwillresolvetobuildapartnershiptosupportbroad-basedprosperityfromAfricatoEastAsia.InanotherpartofthedocumentitalsotalksofallcountriesrespectingthelawsonfreedomofnavigationintheSouthChinaSea.ThisistheclearestindicationofIndiananxietyatChinasincreasingassertivenessagainstitsneighboursanditsmuscleexingaroundAsiaincludingintheIndianOceanwhichNewDelhiseesasitssphereofinuence.ANALYSIS January2015www.indiaincorporated.com21ANALYSISItisnosecretthatChinasdiplomaticforaysintoNepalthedockingofaChineseattacksubmarineinaSriLankanportitspursuitofaMaritimeSilkRoutespanningtheAsia-PacicandAfricaanditseffortsatbuildingabluewaternavyarealldesignedtoprojectispoweracrosstheregionandasaconsequenceundercutIndiasinuence.ItisalsonosecretthattheUSandtheAseancountrieshavelonglookedtobuildIndiaupasacounterweighttoChina.ButunderthepreviousCongress-ledUnitedProgressiveAlliancegovernmentIndiastillnominallyguidedbytheresidualvestigesofitsnon-alignedpolicyashorthandforeconomicisolationismmarriedwithColdWar-eramostlyanti-Westernrhetoricappearedunableorunwillingtoplaythatrole.ItisstillnotclearifPrimeMinisterNarendraModiwillgothewholehogandmakecommoncausewiththeUSandothersinabidtocounterChinabutitisevidentthatIndiaisnowwillingtosheditsplease-allforeignpolicyinthepursuitofwhatitfeelsareitsstrategicinterests.AlsorelevanthereistheparagraphinthejointstatementinwhichthetwocountriescommittostrengtheningtheEastAsiaSummittopromoteregionaldialogueonkeypoliticalandsecurityissues.ItwasJapanesePrimeMinisterwhohadarticulatedhisvisionforanarcofdemocracyfromEastAsiatoIndiainhisrsttermasPMwhohadproposedmakingtheEastAsiaSummitthecenterpieceofanewAsiansecurityarrangementatthe2014ShangriLaDiaglogueinSingapore.SoareweseeingtherstcontoursofanAsianNatoemergingwithJapanAustraliaandIndiasupportedbytheUSplayingtheleadrolesemergingItistooearlytocallbutalotwilldependonhowModicansteerIndiaseconomytothepromisedhighs.Onthatcountalsotheagreementsontradedefencenuclearenergyandsmartcitiesholdsoutmuchpromise.SowillIndiareclaimitsneglectedgeo-strategicinheritanceActIIofthisrivetingdramawillbecomeevidentinthemonthstocome.Thejointstatementsaysamongotherthingsthatthetwolargestdemocraciesintheworldwillresolvetobuildapartnershiptosupportbroad-basedprosperityfromAfricatoEastAsia. January2015INDIAGLOBALBUSINESS22WhenIgobackIamgoingtotellthemthatIndiaisasmagnicentastheyimagined.Itisareminderofwhatyousaidearlierfocusongettingthingsdone.Governmentsandleaderscannotsimplytrytogovernorrulebyatop-downstrategy.ManyoftheeffortsthatIampromotinginsidetheUnitedStates.arethesamekindsofissuesthatPrimeMinisterModiIknowcaressodeeplyabouthere.seekGodthroughserviceofhumanity.Thesameistrueformethenotionthatateasellerorsomebodywhosborntoasinglemotherlikemecouldendupleadingourcountriesisanextraordinaryexampleoftheopportunitiesthatexistwithinourcountries.INOBAMASWORDSMannKiBaatPresidentObamaandPMModisharetheairwavesINOBAMASWORDS January2015www.indiaincorporated.com23FACTFILESomehighlightsofthehistoricObamavisittoIndiaFACTFILE January2015INDIAGLOBALBUSINESS24USPresidentBarackObamaannounced4-billiongovernment-backedinvestmentandlendingprogrammetohelpIndiaachieveitsambitionofgenerating100000MWofsolarpowerby2022increasebilateraltradebyvetimesto500billionandtoencouragesmallandmediumindustriesinIndiascaleup.Addressingindustrycaptainsfromthetwocountriesattwoback-tobackmeetingsattheTajMahalHotelinNewDelhiObamasaidinthepresenceofIndianPrimeMinisterNarendraModithattheUSExportImportBankwillnanceUSexportstoIndiaof1billion.SincealargeportionofthiswillbeintheformofcapitalgoodsexportsitwillhelpIndiaaddcapacityexpanditseconomyandcreatejobs.ThentheUSTradeandDevelopmentAgencywillprovide2billionforrenewableenergyprojectsinIndia.FurthertheUSOverseasPrivateInvestmentCorporationwilllendIndianSMEs1billiontoscaleupoperations.TheUSPresidenthoweverremindedhishoststhatandoverbearingbureaucracytoomuchredtapeandintrusiveregulationswereimpedimentstogreaterUSinvestmentsinIndia.Therearestillbarriershesaid.ForhispartModipromisedapredictableandnon-adversarialtaxregimeandabusiness-friendlyenvironment.YouwillndanenvironmentthatisnotonlyopenbutalsowelcomingModisaid.Youwillndaclimatethatencouragesinvestmentandrewardsenterprise.Itwillnurtureinnovationandprotectyourintellectualproperty...Wewillguideyouandwalkwithyouinyourprojects.TheprimeministerreiteratedhispromisetomakeIndiaamongthe50easiestplacestodobusinessinamassivetaskconsideringthecountryscurrentrankof142outof198countriesintheWorldBanksEaseofDoingBusinessIndex.Youwillndataxregimethatispredictableandcompetitive.Wehaveremovedsomeoftheexcessesofthepast.WewillnowsoonaddresstheremaininguncertaintiesModitoldtheindustrycaptains.HoneywellchairmanDavidCotePepsiCochairpersonIndraNooyiMasterCardpresidentAjayBangaTataSonschairmanCyrusMistryandRelianceIndustrieschairmanMukeshAmbaniwereamongthosepresentatthemeeting.Modipromisedapredictableandnon-adversarialtaxregimeandabusiness-friendlyenvironment.ObamapromisesIndia4bninloansinvestmentSPECIALREPORT January2015www.indiaincorporated.com25NEWSINBRIEFVodafoneIndiagetsnewCEOTechMahindraacquiresUSrmSunilSoodVodafoneIndiasChiefOperatingOfcerCOOwilltakeoverasthecompanysMDCEOfromMartenPietersfromAprilthisyear.Soodiscurrentlyresponsibleforthecompanysday-to-dayoperationsandPLmanagementalongwithnewbusinessdevelopmentinitiativesincludingthelaunchandexpansionofmobilecommerceactivities.SoodwhojoinedVodafoneIndiaspredecessorbusinessHutchin2000heldvariousrolesinthecompanyandalsoleditsoperationsinGujaratKolkataandChennai.EaliertheHarvardBusinessSchoolAdvancedManagementProgramgraduatehasworkedforPepsiinarangeofIndianandinternationalleadershiproles.PieterswillcontinuetoremainontheBoardofVodafoneIndiainanon-executivecapacityastatementbyVodafonesaid.IndiansoftwareserviceproviderTechMahindrahasacquiredLightbridgeCommunicationsCorpLCCaUS-basednetworkserviceprovider.ThedealisamongthebiggestforeignacquisitionstheIndiancompanyhasevermadeatanenterprisevalueof240million.Theall-cashdealwillbefundedthroughinternalaccrualsandissubjecttoregulatoryapprovals.TechMahindrawillbring20-30clientsandwillabsorball5700employeesofLCCacross50countriesgivingitentryintothefast-growingsegmentofnetworkservicesatcheapvaluations.Thedealisalsopartofthecompanysstrategytobecomea5-billioncompanybythefourthquarterof2014-15.Lightbridgehelpstelecommunicationsclientsdesignandoptimisetheirnetworksandhasovertheyearsgrowntobecomethelargestindependentproviderofwirelessengineeringservices.Ithasbuilt350networksanddesignedmorethan350000cellsitesforover400customersworldwide.Thecompanyisexpectedtogeneraterevenuesof430millionin2014. January2015INDIAGLOBALBUSINESS26TheannouncementofastimuluspackagebytheEuropeanCentralBankECBcouldnthavecomeatabettertimefortheIndianeconomy.TheIndianstockmarketscontinuetosoarwiththebenchmarkBSESensexscalinganewpeakof29000helpedinnosmallmeasurebyexpectationsrealisedbylateeveningofatrillioneurostimulusfromtheECBtolifttheeconomiesofwesternEurope.ThoughIndianstockmarketshavesoaredoverthelastyearandaquarteronhopesofPrimeMinisterNarendraModigivingeconomicreformsapushtoliftgrowthratessomeinvestorswereworriedthattheunwindingoftheUSstimuluspackagecalledQE3andtheexpectedincreaseinUSinterestrateswouldsuckoutmoneyfromemergingeconomiesincludingIndiathusnegativelyimpactingtheIndianeconomy.WithatleastapartoftheECBstimuluspackagelikelytoowintoIndiaitwilloffsetanyimpactofdecliningfundsowsfromtheUS.ThemassiverallyinIndianstockshasmainlybeenfuelledbyforeigninvestorswhohavebuiltupmassivepositionsinanticipationofaburstofreformspropellingtheeconomybacktotheheadydaysof2008-10whenitgrewat8percentplus.Overthepastyeartheyhaveinvestedmorethan15billion.ThefearwasthatanysuddenexitoffundsfollowingariseinUSinterestratescouldhavedeatedtherallyandpuncturedthefeelgoodfactorthathasre-emergedfollowingModiselectoralvictoryinMaylastyear.ExpertssayitistooearlytoassesstheexactimpactoftheECBdecisionorquantifythefundsthatwouldowintoIndiabuttheywereunanimousthatitwouldbepositive.WithModitellingFinanceMinisterArunJaitleytopresentatransformationalBudgetonFebruary28theprospectofadditionalfundsowsintoIndiawillonlybuoytheeconomyfurther.ECBstimuluspackagetoboostIndianeconomytooExpertssayitistooearlytoassesstheexactimpactoftheECBdecisionorquantifythefundsthatwouldowintoIndia.WithatleastapartoftheECBstimuluspackagelikelytoowintoIndiaitwilloffsetanyimpactofdecliningfundsowsfromtheUS.SECTORFOCUS-BANKING January2015www.indiaincorporated.com27SECTORFOCUS-BANKINGRoyalBankofScotlandRBSistocutaround160jobsintheUKandoffshoresomeoftherolestoIndia.Britainslargeststate-ownedbankhasbeencuttingbackitsretailoperationsandthelatestjobcutsarealsopartofsomeofthecost-cuttingmeasures.AccordingtoUnitetheUnionwhichrepresentsthebankstaffaround60back-ofcerolesaretobemovedtoIndia.WewilldoeverythingwecantosupportstaffincludingseekingredeploymentopportunitieswhereverpossibleandensuringthatcompulsoryredundanciesarekepttoaminimumtheEdinburgh-headquarteredbanksaidinastatement.Thesechangeswillmeanourrelationshipmanagementteamscandothingsmoreeffectivelyandefcientlyandprovidethebestservicetoourcustomersitadded.HowevertheunionisfuriousatthejobcutsandsaiditischallengingtheBritishtaxpayerbackedbankovertheimpactthiscostcuttingexercisewillhaveoncustomerserviceandthejusticationforoffshoringwork.Experiencedandskilledstaffwhichservicethebusinesscustomerrelationsteamswilltodaybedevastatedbynewsthattheirjobscouldbelost.ItisafurtherinsultthatRoyalBankofScotlandasataxpayerbackedbankwillbesending60roleswhicharebeingdoneintheUKoffshoretoIndiasaidUnitenationalofcerRobMacgregor.TherolesimpactedtodayarevitaltotheservicebusinesscustomersenjoywithlocalsupportteamsandUnitehasarealconcernthatsuchalosswillbedetrimentaltocustomerserviceheadded.StaffwillbeleavingfromMaytoAugust2015fromacross54locationsintheUK.RBShadreceiveda46-billionbailoutpackagefromtheUKgovernmentforan81percentmajoritystateatthepeakofthenancialcrisisin2008-2009.Ithassincebeenworkingtowardsaturnaroundinfortunes.RoyalBankofScotlandtooshorerolestoIndiaAccordingtoUnitetheUnionwhichrepresentsthebankstaffaround60backofcerolesaretobemovedtoIndia.WewilldoeverythingwecantosupportstaffincludingseekingredeploymentopportunitieswhereverpossibleandensuringthatcompulsoryredundanciesarekepttoaminimumtheEdinburgh-headquarteredbanksaidinastatement. January2015INDIAGLOBALBUSINESS28TheReserveBankofIndiaRBIsentmarketssoaringwithasurpriseinterestratecutwhichwillmakethecostofborrowingcheaperinIndia.InanannouncementbeforethestockmarketsopenedfortradingthecentralbanksaidinationarypressureshavebeeneasingsinceJulyandthepathofinationhasbeenbelowtheexpectedtrajectory.Initsrstratecutsince2013RBIcuttherepurchaserateby25basispointsto7.75percentfromthecurrent8percentbutkepttheCashReserveRatioCRRunchangedat4.0percent.BanksarelikelytolowerlendingratesasaresultoftheRBIaction.BundeepSinghRangarchairmanofLondon-basedconsultingrmIndusViewexplainedOilimportingcountrieslikeIndiaChinaBrazilTurkeyIndonesiaandSouthAfricawillbethebigwinnersasoilpricescontinuetoweakenin2015.Whatiscriticalisfornationstousethiswindowtousherinscalandstructuralreformswhichcanboostlong-rungrowthandinclusivedevelopment.Indiaimports85percentofitscrudeoilrequirement.Netoilimportsat95billionaccountedfor21percentofIndiastotalimportbilland64percentofthetradedecitin2014.InitsaccompanyingpolicystatementRBIsaidthatinationmomentumhassignicantlyreducedandhouseholdinationexpectationshaveeasedtosingledigitforthersttimesinceSeptember2009.Ontheinationoutlookthecentralbanksaidoncurrentpolicysettingsinationislikelytobebelow6percentbyJanuary2016.IntheDecemberpolicystatementtheRBIhadguidedforachangeinthemonetarypolicystanceinearly2015includingoutsidethepolicyreviewcycleifinationdatawassupportive.ThemovewillcomeasadecisivepushtowardsgeneratinginvestmenttoseethesuccessoftheMakeinIndiamantraofPrimeMinisterNarendraModi.Initsrstratecutsince2013RBIcuttherepurchaserateby25basispointsto7.75percentfromthecurrent8percent.SurpriseratecutplugsintoIndiaoptimismINDIAINC.PICKS January2015www.indiaincorporated.com29NEWSINBRIEFBulgarire-enterswithIndiastoreDanishrminIndiadruglaunchItalianjewelleryandluxurygoodsmakerBulgarihasopeneditsrststoreinIndiaafterithadmadeanexitthreeyearsago.ThecompanyrecentlygotthegoaheadfromIndiasForeignInvestmentPromotionBoardFIPBtosetupsinglebrandretailstoresunderajointventure.ThedetailsofitsIndianpartnerarenotavailablehoweverBulgarihasamajoritystakeintheJV.IthasopeneditsrstboutiquestoreinNewDelhiatDLFEmporiothathousesmanyotherluxurybrandssuchasLouisVuittonFendiandDior.TheLVMHownedbrandwillopenitsnextstoreinthecountywithin18-24monthsasitscoutsdesirableluxuryretailspaces.BulgariplanstotakeadvantageofIndiaspenchantforgoldandndsthatIndiansarewillingtospendonluxurygoods.BulgariisknownforitsRoman-baseddesignsanditproducesandmarketsseveralproductlinesincludingjewellerywatchesfragrancesaccessoriesandhotels.Denmark-basedpharmaceuticalrmNovoNordisklauncheditscombinationdiabeticdrugRyzodegforpeoplewithtypeIIdiabetesinIndia.ApartfromIndiaRyzodeghasbeenapprovedformarketinginArubaBrazilChileCostaRicaElSalvadorEUHongKongIcelandIsraelJapanKazakhstanMacedoniaMexicoNorwayRussiaSouthKoreaandSwitzerlandNovoNordisksaid.NovoNordiskCorporateVPforBusinessAreaAfricaGulfandIndiaMadsBoLarsensaidIndiahascloseto65.1millionpeoplewithdiabetesstandingsecondintheworldmap.WeareextremelypleasedtohaveintroducedRyzodegreinforcingourcommitmenttoprovidebestofhealthcaresolutionsfortheuseofdoctorsinIndia.AsRyzodegisacombinationproductitrequiresfewerdailyinjectionsthanadministeringbasalandmealtimeinsulininseparateinjectionsthecompanyclaims. January2015INDIAGLOBALBUSINESS30UKbiggestmakerinIndiaIndiaInc.InterviewQHowdoyoudefneIndia-UKtiesTheUKisalreadyamajoreconomicpartnerofIndia.TheUKisthebiggestmakerinIndiawith10percentofallinvestmentintoIndiasincetheturnofthecentury.BritishcompaniessuchasRolls-RoyceJCBDiageoandUnileverhaveahugepresencehere.IndiatooinvestsmoreintheUKthanintherestoftheEUcombined.OneofthebiggestemployersinUKmanufacturingtodayisIndiasveryownTATAfromthecarswedrive-JaguarLandRover-totheteawedrink-Tetleys.Wewanttobuildonthispartnership.TheGREATCollaborationscampaignistheUKrespondingtothePrimeMinisterscalltoMakeinIndiatheUKandIndiamakingGREATthingstogetherinanunbeatablecombination.QHowdoyouseebilateraltradedevelopingPrimeMinisterModihascommittedtoreplicatethesuccessofGujaratincreatingavibrantbusinessenvironmentacrossIndia.SoIamdelightedtobeherehelpingUKcompaniestofurtherthisrelationship.BetheyinconstructioninenergywhereBPandReliancehaveinvestedover7billionsofarandarekeentoprogresswithafurther10billionpotentialinvestmentorLordLivingstonistheUKministerofstatefortradeandinvestmentandwasrecentlyattheVibrantGujaratGlobalInvestorsSummit.IndiaInc.coverssomeoftheelementsofhisvisitwhyhefeelsGujaratisanimportantstateforUKbusinessandhisviewsonbilateraltradetiesbe-tweenIndiaandtheUK.INTERVIEW January2015www.indiaincorporated.com31inawholeseriesofothersuccessesacrossIndiafromhealthcaretoautomotivepartstoretailandrestaurants.MeanwhilethroughthenewUK-IndiaFinancialServicesPartnershipwewillbehelpingtobringtheworldscapitalandcapabilitiestoIndiathroughtheCityofLondon.QHowdoesGujaratstandoutwithinthelargerlandscapeItisaphenomenallyimpressivestateinawonderfulcountry.AssomeonewhohasdonebusinessinIndiaformanyyearsemployingthousandsofpeopleandworkedinpartnershipwithmanygreatIndiancompaniesIamdelightedtohaveledtheUKslargesteverdelegationtoVibrantGujarat.GujaratembodiesIndiasaspirationsandGujarat-UKrelationsmirrorthestrengthofIndian-UKties.Gujaratisleadingthewaywithitspro-businessgrowthstrategywhichtheUKhasalsoputattheheartofitsrapideconomicrecovery.PerhapsthatkindredspiritiswhysomanyGujaratishaveprosperedintheUKhometooneofthelargestGujaratidiasporapopulationsintheworld.PerhapsitisalsowhytheUKandmanyBritishrmshavechosenthisstateasapartnerandaplacetoinvest.TheUKwillbeopeninganewDeputyHighCommissioninAhmedabadtofurtherstrengthenourlinkswiththisstateQWhatmorecanbedonetostrengthenIndia-UKtiesOfcourseitcanwork.Anditwillwork.WewillmakeWewanttosupportPrimeMinisterModisreformprogrammefromtaxationtoeducation.Ithinkwecanshareexperiences.MygovernmenthascreatedafundsupportingIndian-UKtechnicalcollaborationtohelpdeliverPrimeMinisterModisambitionforEaseofDoingBusiness.IfsomeofIndiasregulationwasoriginallyinheritedfromtheUKthentheleastwecandoisoffersomehelpinremovingthoseregulationsthatareoverduetheirretirementIntheUKwebelievethatopennessanddiversityaretwoofourgreatestassets.WecontinuetoextendawarmwelcometoIndianbusinessesweareproudofthemandtheirachievements.TheUKisexpectingarecordnumberofinternationalstudentsatouruniversitiesnextyear.WelookforwardtostrengtheninganddeepeningourpartnershipwithIndia.Whatwecanachievetogetherinpartnershipisgreaterthananythingwecanachieveonourown.INTERVIEW January2015INDIAGLOBALBUSINESS32IndiahasachieveduniversalbankingcoverageieeveryIndiannowhasabankaccountthankstothePradhanMantriJanDhanYojanawhichhasopened115millionnewbankaccountsoverthepastvemonths.Thisfeatwillenablethegovernmenttotransfermorethan8billioninsubsidiesandotherbenetsdirectlytotheintendedbeneciariesinthecomingnancialyearplugmassiveleakagesinIndiasmassivewelfareprogrammessavethegovernmentbillionsofdollarsthatwouldgetsiphonedoutofthesystemandleadtoanimprovedscalsituation.MostofIndiaisincludedinthebankingsystemFinanceMinisterArunJaitleyannouncedatamediaconferenceonTuesday.TheGuinnessBookofWorldRecordrecognisedtheachievementofopeningmostbankaccounts18millioninoneweek.WhenPrimeMinisterNarendraModiannouncedtheschemeinhisIndependenceDayspeechfromtherampartsoftheRedFortthe16thcenturyMughalcitadelitwasmetwithscepticism.ThedeadlineofJanuary262015IndiasRepublicDayforachievinguniversalbankingwasunrealisticthenaysayerssaid.Itwouldtakedecadestoachievethetarget.Provingscepticswrongthegovernmenthasachieveditstargetwithaweektospare.Thegovernmentisalreadyintheprocessoftransferringbenetsdirectlytobeneciaries.Morethan45millionruralbeneciariesin300districtshavealreadyreceivedabout2.5billionundertheMahatmaGandhiNationalRuralEmploymentGuaranteeSchemeMNREGStheworldslargestsuchprogramme.FinancialservicessecretaryHasmukhAdhiatoldreportersthatfullrolloutofMNREGSpayoutsundertheJanDhanschemewasexpectedinthecomingnancialyearbeginningApril1andwouldleadtoabout100millionruralpoorreceivingmorethan5.5billiondirectlyintheiraccounts.Besidesgovernmentscholarshipscookinggassubsidiesandotherbenetswouldalsohenceforthbecrediteddirectlyintotheaccountsofbeneciaries.TheideaistomovetowardsbecomingacashlesssocietyinthelongrunJaitleysaid.MostofIndiaisincludedinthebankingsystemconrmsIndianFinanceMinisterArunJaitley.IndiasetsuniversalbankaccountrecordSPECIALREPORT January2015www.indiaincorporated.com33EYEONBUDGET2015InanindicationofwhattoexpectinthecomingBudgetfor2015-16nanceministerArunJaitleysaidheisinfavourofrationalisingsubsidiesandincreasingpublicspendingtoimprovethehealthofgovernmentnancesandhelprevivetheeconomy.LPGcookinggassubsidiesarebeingroutedtoconsumersdirectlythroughbanksfromJanuary1.WehavetograduallyrationaliseallsubsidieshesaidatafunctionorganisedbyapexindustrybodytheConfederationofIndianIndustryinChennai.TheGovernmentofIndiaspendsabout63billioninsubsidiesonoilproductsfoodandfertiliserseveryyear.Apartofthisdoesnotreachtheintendedbeneciariesasthemiddlemenalongthesupplychainsiphonoffthebenetsandaninefcientandcumbersomesystemincreasescostsandleadstosub-optimaloutcomes.ExpertssaidthiswasperhapstheclearesthintofwhattoexpectintheBudgetdueonFebruary28thatPrimeMinisterNarendraModihaspromisedwillbeatransformationalone.OneoftheearlysuccessesoftheModigovernmenthasbeentoachieveuniversalbankingcoverageunderthePradhanMantriJanDhanSchemewhichhasresultedintheopeningof100millionnewbankaccountstowhichsubsidiesandotherbenetswillbedirectlytransferred.Simultaneouslythepetroleumministerhaslaunchedaprogrammetoconvincewell-offsectionsofthepopulationtovoluntarilysurrendertheirsubsidisedcookinggasconnections.Thiswillensurethatthebenetsofsubsidiesgoonlytothosewhoneeditandalsofreeupresourcesforspendingonmorepressingneeds.ThenthegovernmenthasincreasedexcisedutiesonpetrolanddieseltogenerateresourcesapartofwhichwillbespentonIndiasstalledhighwaydevelopmentprogrammeaswellasotherpublicprojects.TheGovernmentofIndiaspendsabout63billioninsubsidiesonoilproductsfoodandfertiliserseveryyear.RationalisingsubsidiestopsJaitleyagenda January2015INDIAGLOBALBUSINESS34MassiveheadroomforRajantocutratesfurtherReserveBankofIndiagovernorRaghuramRajanhasobligedIndianindustrywitha25basispointsratecutloweringthecostofcapitalandprovidingalliptogrowth.ButindustrybodieswhilewelcomingthechangeinpolicystancefromghtinginationtoencouraginggrowthsaiditwastoolittleandthatitwouldntmakemuchdifferenceonthegroundasthecostofmoneyinIndiaisstilltoohigh.AvailabledataandRajansownstatementfollowingtheratecutsuggeststhathehasconsiderableheadroomtoaccommodatemoresubstantialcutsinthereporatethatbanksuseasabenchmarkforsettingtheirloananddepositrates.Rajanhasrepeatedseveraltimesthatlowandstableinationisthebestpre-conditionforsustainedgrowth.Withglobalcrudeoilpricestradingataround45perbarrelandexpectedtoremainsubduedthrough2015amajordriverofinationhasbeentakenoutoftheequation.Thendomesticfoodandvegetablepricesarealsorulingatlowsandareexpectedtoremainthatway.Rajanhimselfsaidasmuchinhisstatementwhenhesaidheexpectsinationtostaywithin6percentthroughtheyear.Thenhisotherconcernscalconsolidationisalsobeingaddressedbythegovernment.FinanceministerArunJaitleyhascommittedtomaintaintheredlineof4.1percentforthescaldecittarget.AndthegovernmentsaggressivepushingofthedirectbenettransferschemeunderwhichsubsidieswillbetransferreddirectlytothebankaccountsofbeneciariespromisestoplugmanyoftheleaksthathobbleIndiasmassivebutunwieldysubsidyprogramme.Industrialistsandfundmanagersarealsounanimousintheirviewthatmoreratecutsareontheirway.ThusIndianindustrymaywellgetitsway.ItsovertoRajannow.ANALYSIS January2015www.indiaincorporated.com35POLICYUPDATETheIndiangovernmentisnallytakingsomermactiontoimprovethecountrysimageamongforeigninvestorswhomayhavebeenputoffduetouncertaintaxnorms.InthewakeofaBombayHighCourtorderdismissingtheIncomeTaxdepartmentsclaimofaround510millionfromBritishtelecomgiantVodafonethenanceministryhasinstructedthetaxdepartmenttodropsimilarclaimsandendtheongoingcycleoflitigation.InwhatcouldproveamajorboosttoforeigndirectinvestmentFDIfrominternationalcompaniessofarhesitanttoinvestinIndiaasmanyas26taxdisputescouldcometoanend.ItcoulddirectlyaffectcompaniessuchasShellIndiaIBMNokiaandCairnIndiaamongothers.ThetaxdemandswereseentobebasedonsimilarlinesasthatappliedinthecaseofVodafone.TheIncomeTaxdepartmenthadclaimedthatthedomesticsubsidiaryofVodafonehadallottedsharestoitsparentatamassivelyundervaluedpriceandhadslappedthetaxnoticeontheallegedundervaluation.IthadsoughttotaxthetransactionusingtransferpricingnormsachainoflogicrejectedbytheBombayHighCourtwhichsaidcapitalreceiptscannotbetaxed.InviewoftheacceptanceoftheabovejudgementitisdirectedthattheratiodecidendiofthejudgementmustbeadheredtobytheeldofcersinallcasesherethisissueisinvolvedsaystheletterfromthenanceministrytotheCentralBoardofDirectTaxes.Itclearlydirectstheboardtoapplysimilarrationaletoallotherlinkedcases.TheIndiangovernmenthadsaidbackin2013that27internationalcompaniesunderpaidtaxesinthescalyear2011-12aftertheysoldsharestotheiroverseasarmstoocheaply.Theyallinvolvedtransferpricingwhichisthevalueatwhichrmstradeproductsservicesorassetsbetweenunitsacrossbordersaregularpartofdoingbusinessforamultinational.Thelateststepstakenbythegovernmentareintendedtomendthedamagedonetothecountrysimageduetoaperceivedambiguoustaxstructureinneedofurgentreform.InthewakeofaBombayHighCourtorderdismissingtheIncomeTaxdepartmentsclaimofaround510millionfromBritishtelecomgiantVodafoneIndiane-tunestaxreformstoattractFDI January2015INDIAGLOBALBUSINESS36POLICYUPDATEIndiaslargestdisinvestmentexercisethesaleofa5percentgovernmentstakeinthepublicsectorCoalIndiaLtdCILkickedoffinasalethatisexpectedtonetthegovernmentaboutRs23000crore3.8billion.TheNarendraModi-ledNationalDemocraticAllianceNDAgovernmenthassteppedupeffortstocompletethesaleofcloseto7billionworthofgovernment-ownedsharesinseveralpublicsectorcompaniesbeforetheendofthecurrentnancialyearonMarch31.Meetingthissell-offtargetiscriticalformeetingFinanceMinisterArunJaitleysscaldecittargetof4.1percentofGDP.ThegovernmenthassetaoorpriceofRs3585.9persharewhichisslightlylowerthanThursdaysclosingpriceofRs375.15.Thegovernmentwillsell316millionsharesthroughanofferforsaleOFSorauction.Sixtythreemillionsharesor20percentoftheOFShavebeenreservedforretailinvestorswhowillalsogeta5percentdiscountonthenalpriceoftheoffer.IfsuccessfultheCILdisinvestmentwhichwillmakeitthelargestsharesaleeverbyanyIndiancompanywillenablethegovernmenttomeetmorethanhalfitsdisinvestmenttargetfortheyear.Thegovernmentcurrentlyownsan89.65percentstakeinCILwhichwaslistedinOctober2010.ThegovernmentthenraisedRs15200croreabout2.8billionatthethen-prevailingexchangerateatapriceofRs245each.TheIPOhadbeenoversubscribed15times.Sofarthegovernmenthasnettedjustunder300millionfromthesaleofa5percentstakeinpublicsectorsteelmakerSAILthisscal.ButitismovingaheadwiththeproposedsaleofstakesinpublicsectoroilexplorerONGCNationalMineralDevelopmentCorporationpowerequipmentmakerBharatHeavyElectricalsLtdBhelaswellasgovernment-controlledstakesinprivatesectorbankAxisBankandthediversiedconglomerateLarsenTourbro.Thesaleofa5percentgovernmentstakeinthepublicsectorCoalIndiaLtdCILkickedoffinasalethatisexpectedtonetthegovernmentaboutRs23000crore3.8billion.Indiakicksodivestmentplanswithcoal January2015www.indiaincorporated.com37TheIndianmangoindustrywonamajordiplomaticbattleastheEuropeanCommissiondecidedtoreverseitsbanontheirimportacrossEurope.TheEUaccountsformorethan50percentoftotalexportsoffruitsandvegetablesfromIndia.TheUKwhichisthemaindestinationfollowedbytheNetherlandsGermanyandBelgiumhadbeenlobbyingtheEUeversincethebanwasimposedlastyear.BritishPrimeMinisterDavidCameronsaidNotonlyisthisgoodnewsfortradebetweentheUKandIndiaitsalsogoodnewsforthemanyconsumersandhard-workingsmallbusinessesintheUKwhowereaffected.IamdelightedtheBritishGovernmentwasabletoplayitspartinhelpingtogetthebanlifted.TheEuropeanUnionstemporarybancameintoforceonMay12014andwastoremaineffectiveuntilDecember2015afterauthoritiesinBrusselsfoundconsignmentsinfestedwithfruitiesthattheyfearedcoulddamageEuropeansaladcrops.HowevraEuropeanCommissioncommitteevotedtoliftthebanthisweeksayingIndiahadmadeimprovementsinplanthealthcontrolsandcerticationsystem.Importsoffourotherproducts-auberginesbittergourdssnakegourdsandpatraleaves-remainsuspendedsubjecttosustainedimprovementsinplantpestcontrol.BritishPrimeMinistersUK-IndiaDiasporaChampionPritiPatelwhowaspartoflobbyteamsaidManyIndiansintheUKwereleftconfusedanddisappointedbythewaytheEuropeanUnionandthisunelectedandunaccountableCommissionerswereabletoarbitrarilybantheimportofthesemangos.ThiscasehashighlightedtheneedfortheEUtobereformedandforvoterstohaveareferendumonourmembershipoftheEUwhichissomethingthatonlyaConservativeGovernmentcandeliver.TheUKimportsaround6.3-millionworthofIndianmangoesperyearoutofaUKmangomarketworth68millionintotal.EUliftsbanonIndianmangoimports.IamdelightedtheBritishGovernmentwasabletoplayitspartinhelpingtogetthebanliftedsaidBritishPMDavidCameron.EUlisbanonIndianmangoimportsINDIAINC.PICKS January2015INDIAGLOBALBUSINESS38IndianFinanceMinisterArunJaitleywillbegreatlyhelpedinhiseffortstobalancehisbooksbythefallinglobalcrudeoilpriceswhichhavecrashed60percentfrom115-120perbarrellevelstoabout45perbarreloverthelastsixmonths.Indiawhichspentabout23billioninfuelsubsidieslastyearwillseeadrasticfallinoutgoonthisaccount.Withtwomonthsstilltogofortheendofthecurrentnancialyearsubsidiesonaccountofpetroleumproductswillfallto8billiongivingthenanceministeramuchneeded15-billioncushion.ThenIndiawhichistheworldsfourthlargestoilimporterpaysabout145billionannuallytobuy190milliontonnesofcrude.Every1fallinglobalcrudepriceswillbringdownthecountrysoilimportbillby600million.Abackoftheenvelopecalculationshowsthatthe60-65perbarreldeclineincrudepriceswillsavetheexchequer40billion.Indiastotalsubsidybillfor2014-15onoilfoodandfertisliersisexpectedtotouch63billionaccordingtobudgetestimates.Itwillnowbesubstantiallyless.Jaitleywillhavesaveagrossamountof55billiononaccountoffallingoilpricesenablinghimtocomfortablymeettheredlineof4.1percenthehaddrawnforthescaldecittargetwhichwasinitiallythoughttobedifcult.ItwillalsogivethegovernmentthespacetoembarkonstructuralreformsofIndiascomplexoilpricingandsubsidyregimewhichwouldhavebeenpoliticallyunpopularifpriceshadremainedhigh.Theresmoregoodnewsstemmingfromlowoilprices.Withcrudeforecasttoremaininthe35-45perbarrelrangethrough2015inationisexpectedtoremainbenignmuchbelowtheReserveBankofIndiastargetof6percentbyJanuarynextyear.ThiswillenableRBIgovernorRaghuramRajantocutratesfurtherprovidingalliptobothconsumerspendingandindustrialexpansion.Indiawhichistheworldsfourthlargestoilimporterpaysabout145billionannuallytobuy190milliontonnesofcrude.FallingoilpricestohelpJaitleybalancehisbooksSPECIALREPORT January2015www.indiaincorporated.com39NEWSINBRIEFMinisterpromisesmoreeaseinIndiaIndiatoovertakeChinaby2017IndiascommerceandindustryministerNirmalaSitharamanpledgedhergovernmentscommitmenttowardscontinuedeasingofconditionsforforeigncompaniesinIndia.Speakingtobusinesspeoplegatheredatthe10thJointEconomicandTradeCommitteeJETCOmeetinginLondonthisweekshesaidthatIndiawithits5percentgrowthrateremainedafarmoreattractiveinvestmentdestinationthanpartsofEuropeincludingGermanyorBritishbusinesses.Shepointedtotheover40changestotherulesoftheCompaniesAct2013effectivesinceApril2014thatherministryhadbroughtin.ThegovernmentwascommittedtoensuringIndiasswiftriseintheWorldBanksease-of-doing-businessindexshestressed.Indialingersat142ndinthelastindexpublishedinOctober2014.ShealsoreiteratedtheNarendraModiledgovernmentscommitmenttosimplifythetaxframeworkintheforthcomingbudgetandavoidtheuseofanyretrospectivetaxationrulestoboostgovernmentrevenues.AnewWorldBankreporthasprojectedIndiaovertakingChinaastheworldsfastestgrowinglargeeconomyby2017.AccordingtotheWashington-basedWorldBanksGlobalEconomicProspectsGEPreportIndiasgrossdomesticproductGDPthatgrewby5.6percentlastyearisexpectedtozoomto6.4percentthisyearbeforehittingthe7percentmarkin2016.Ifthatiskeptconsistentin2017IndiaissettoovertakeChinaasitdeceleratesto6.9percent.HowevertheWorldBankwarnedthatforIndiaAnyslackeninginthereformmomentumcouldresultinamoremodestorslowerpaceofrecovery.Bangkok-basedUNEconomicandSocialCommissionforAsiaandthePacicESCAPinaseparatereporthasalsoprojectedtheIndianeconomysgrowththisyearat6.4percent.Chinaseconomywhichhasbeenonafasttrackforseveralyearsisexpectedtoslowdownto7.1percentthisyearfromlastyears7.4percentanddecelerateto7percentnextyearand6.9percentin2017. January2015INDIAGLOBALBUSINESS40INDIAINC.PICKSIndiasmegacelebrationofglobalIndianpowerbroughttogethervoicesfromacrosstheboardonthecountrysdevelopmentagenda.The13thPravasiBharatiyaDivasbeingheldintheGujaratcapitalofGandhinagarhasbeenhardatworktoidentifywaystoenhancecooperationbetweenbusinessesinIndiaandthoseinthecountrywhereoverseasIndianachieverswerebased.IndianexternalaffairsministerSushmaSwarajhailedtheIndianexpatriatecommunitytheworldssecondlargest.FromprofessionalstoentrepreneursandcommunityleaderswhoprojectIndiaintherightperspectiveandadvanceitsinterestsabroadoverseasIndianshaveservedasabridgeoffriendshipandcooperationbetweenIndiaandtheiradoptedhomes.SomeprominentIndianexpatriatessharedtheirsuccessstoriesandexperiencesattheevent.ShowkutallySoodhunVicePrimeMinisterofMauritiussaidthatitwasanemotionalmomentforhimashismaternalgrandfatherhailedfromIndiaandvisitingGujaratwaslikehomecoming.HeaddedthatwithhardworkanddedicationhewasabletocarveanicheforhimselfinthepoliticalsphereofanothernationandnowwantedtodeepenthebondbetweenMauritiusandIndia.DatoSeriUtamaS.SamyVelluspecialenvoyofthePrimeMinisterofMalaysiaoninfrastructuretoIndiaandSouthAsialeda250-strongdelegationfromhiscountry.HefeltIndianeedstorevampitstertiaryeducationsubsidisecoststopromotecutting-edgeresearchanddevelopmentdevelopaconduciveecosystempromotePrimeMinisterNarendraModiscallforMakeinIndiaandmakeemigrationnormsexibletoaccelerateIndiaseconomicgrowth.BaronessUshaPrasharfromtheHouseofLordsintheUKsaidthattheDiasporawasapowerfulforceandhadimmensepotentialtomakeanimportantcontributiontoIndiasdevelopment.NewZealandMPKanwaljitBakshihighlightedhowmanyIndiansweredoingexceptionallywellinNewZealandandHindiwasthefourthmostspokenlanguageinthecountry.NewZealandhesaidwantedtocollaboratewithIndiaandshouldnotbeseenasacompetitor.SomeprominentIndianexpatriatessharedtheirsuccessstoriesandexperiencesatthePravasiBharatiyaDivas2015.GlobalIndianstakecentre-stageinIndiaINDIAINC.PICKS January2015www.indiaincorporated.com41SECTORFOCUS-AUTOTataMotorsownedJaguarLandRoverJLRannounced1300newjobsatitsUKplanttobuildanewcarmodelwhichwillhittheroadin2016.TheadditionalworkforceintendedforitsSolihullplantintheWestMidlandsregionofEnglandcoincideswithJaguarsentryintothesportsutilityvehicleSUVsector.Theluxurycar-makerunveileditsall-newJaguarF-PaceattheDetroitautoshowtheproductionversionoftheC-X17conceptSUVrevealedin2013.JLRCEORalfSpethsaidTodaysannouncementsonceagaindemonstrateourcommitmenttotheUKandtheadvancementofahigh-techhighskilledmanufacturing-ledeconomy.JaguarLandRoveriscommittedtodeliveringmoregreatproducts.Itisthatinnovationandrelentlessquestfornewtechnologiesthatsetsourproductsapart.WewanttooffercustomersgreaterchoicewithevenmoreexcitingvehiclescraftedwiththatspecialBritishair.WewanttoimprovethequalityoflifeforourcustomersandforourownemployeescreatingopportunitiesformorepeopletobepartoftheJaguarLandRoverexperience.TheSolihullplantcurrentlybuildstheRangeRoverRangeRoverSportLandRoverDiscoveryandtheDefender.MostrecentlythesitewelcomedtherstJaguarinitshistorywiththeintroductionofthenewJaguarXEso-calledbabyJagwhichbeginsproductioninafewmonths.JLRpostedprotsof2.5billioninitslatestnancialyearandconrmeditsfthconsecutiveyearofsustainedgrowthunderTatasownership.Itrevealedrecordfull-yearretailsalesin2014of462678doublethatof2008andup9percentfromthepreviousyear.A2014-15scalyearinvestmentof3.75billioninproductcreationhasseentheintroductionofahostofnewandexcitingproductsandbusinessexpansion.Thecompanysheadcounthasincreasedto3200010000morethanwereemployedjustfouryearsagothecompanysaidinastatement.AndyGossJLRGroupSalesOperationsDirectoraddedIn2015wewillcelebrateJaguars80thyear.WehavestarteditbyannouncingourrstperformancecrossoverwhichweconsidertobetheultimatepracticalsportscaracarthatbuildsonthemarquesfoundingidealsofGracePaceandSpacetobecomeoneofthemostinnovativeJaguarsweveeverdeveloped.TheF-Pacehasnowbegunitsengineeringanddevelopmenttestingprogrammeaheadofthenewmodelgoingonsalein2016.In2014LandRoversoldmoreRangeRoversRangeRoverSportsandRangeRoverEvoquesthaneverbefore.Jaguarsaleswerealsoup6percentfortheyearretailing81570vehiclesmarkingthebrandsstrongestfull-yearperformanceinnearlyadecade.ItsnewestJaguarF-PacemodelisbeingdescribedasatrueperformancecrossoverwhichisexpectedtotbetweensisterbrandLandRoverssmallestmodeltheEvoqueandtherangeRoverSport.JLRwasboughtoverbyTataMotorsfromFordbackin2008andcurrentlyemploys30500UKstaff.Overthepastyearthecompanyhasinvestednearly1.5billioninnewproductionfacilitiesatitsSolihullplant.InOctober2014thecompanyalsolaunchedanewengineplantintheWestMidlandsregionwhichisexpectedtogenerateatotalof5500jobsinthesupplychain.TataaddsmoreUKjobsatJLRplantAnnouncementsonceagaindemonstrateourcommitmenttotheUKandthead-vancementofahigh-techhighskilledmanufacturing-ledeconomy. January2015INDIAGLOBALBUSINESS42GUESTCOLOUMNTowardsVibrantStates...andaVibrantIndiaAged57yearsMrSidharthKBirlaisaCompanyDirectorandEntrepreneurChairmanofXproIndiaLimitedandDigjamLimited.HeholdsanMBADegreefromIMDSwitzerlandandisalsoanAlumnusoftheHarvardBusinessSchool.ProactivemarketingofinvestmentjurisdictionswaswitnessedearlyinthisNewYear.EvenasVibrantGujaratcapturedheadlinesduetoitssheersizeandefcacyitisimportanttoreectonwhathasbeenseenelsewhereandalsoconnectthiswithwhatthePrimeMinisterhimselfsays.Manufacturingandinfrastructurearecentralpillarsforeconomicgrowthandjobsbesidesagriculture.Howeverthersttwoelementsdependwhollyoninvestmentsbothfromdomesticandforeignplayers.TheCentralGovernmentcorrectlyseesitsessentialroleasoneofgeneratingcondenceandformulatingprogressivepoliciestocollectivelyprovideanenablingenvironmentforinvestmentcompetitivenessanddemandstimulation.ItisreallythejoboftheStatestomarketthemselvesasinvestmentdestinationsbyleveragingtheirownstrengthsandcircumstances.ThisraceiswhatthePrimeMinistertermsascompetitiveco-operativefederalism.ThisiswhatwillpropelIndiatobecomelargerthanthesumofitsparts.Ahigh-decibeleventthatprecededthedinofVibrantGujaratwastheWestBengalGlobalInvestmentsummitwhichIattendedasanexistinginvestorintheState.ItwassignicantthatputtingasidepoliticalovertonestheFinanceMinisterMrArunJaitleygracedtheSummitarticulatingthattheracetoattractinvestmentscreatesconstructivecompetitionbetweenstatesatthesametimetobenetfromalargerpositiveeco-systemthestatesneedtoco-operateonkeyissuesofcommonandnationalinterestbeittheGoodsServicesTaxGSTormanyotherslikeenvironmentandlandpolicies.Iamsurethiswillhappenandthiswillalsotriggerapositivecompetitionforbuildinginfrastructuretoattractindustryaswellasimprovethelivesofandprovidejobstothelocalpopulation.WestBengalhadfallenofftheinvestmentradarofmostbusinessesathomeandabroadforavarietyofreasons.Thereforeitwasallthemoreimportanttobeginatoughclimbtogetbackintotherace.Manyexistinginvestorsweremorethanpleasantlysurprisedbythekindofresponsetheeventthrewup.Notjustthesizeoftheaudiencebuttheveryqualitywasworthnoting.Yestherewereannouncementsofintent-typicalatallsuchSummits-andtherealtestwillbetheirimplementation.ThelatterwillcallforawillthathadnotsofarbeendemonstratedinBengalbutchancesarerealthatlapsesifanywillbeanexceptionratherthantherule. January2015www.indiaincorporated.com43OPINIONDeepakSamVarghesefounder-directorofMoonbeamAdvisoryisacareerbankerwithnearlytwodecadesofexperienceinretailandprivatebanking.Heisaspecialistinbankingservicesandwealthadvisoryandhasbeenadvisingdomesticandnon-residentIndiansNRIinMumbaiDelhiDubaiSingaporeandLondonwherehewasbased.NowBangalore-basedhisspecialemphasisisonnancialadvisoryinrealestatetransactionsadvisinginvestorsanddevelopersinkeyIndianmetros.Will2015trulybeahappyoneAfterexpectingaratecutbytheReserveBankofIndiaRBIfornearlythreemonthsRBInallycutkeyinterestratebyatoken25basispointsandthewidermarketincludingtheIndianrealtymarkethaseruptedintoacheer.Themarketnowexpectsa100basispointratecutthroughaseriesofcutsin2015.Theslackinsalesintheresidentialandcommercialsectorhasbeenoneofthewidestinthepastsixmonths.Ithasbeenfeltacrosssegmentsaffordabletoluxuryandacrosscities.Theburdenofborrowinghasbeenheavyonthedevelopersandcombinedwithinputmaterialsinationtheyhavejustnotbeenabletodroporevenholdpricestomakeitattractiveforend-userstobuy.Indiabeinganoilimportingcountryhashadatremendouspsychologicalimpactduetoslidingoilrateseventhoughthefullbenetofdroppingoilpriceshasnotbeenpassedontotheendconsumer.Ithasinsteadbeenfunnelledintoexciseratehikeswiththehopethatthissurpluswouldgointobridginggapsofdecitatmacrolevels.Howeverthemoodhasstartedturningpositiveonthebackofreducedoilpricesandnowaratecutsendsoutpositivesignalswhichhopefullywillchangethebuyersentimentandkick-startahomebuyingtrend.Inanycasemid-Januaryuntilmid-Aprilisatraditionalhomebuyingandleasingperiodbeforethesummerholidays.ThecommercialleasingmarkethasbeenveryselectivebutinthehopeofincreasedconsumptionspendsselectmarketslikeBangaloreandGurgaonhavestartedseeingapositiveuptrend.Amongstdevelopersmezzaninedebttransactionsaregainingavourwhereinterestcouponratesarebeinglimitedtotherangeof12-14percentwithanequitycomponentbeingbuiltintoapre-determinedsquarefeetsaleprice.WhilethelendinginstitutionfundIRRsremainunchangedthedeveloperisusingthistobooksalesandenhanceliquiditytherebyachievingnancialclosureoncosts.TheabilitytoachievehigherpriceswillbeclearonlyovertimeastheimpactofthemezzaninestructuresequitycomponentwillbefeltbyDecember2015early2016.IftheabovemoodelevatorsofoilratecuteandmezzaninestructurecanstartanelevatedbuyingtrendallthemarketneedsinFebruaryisafeel-goodBudgetifnotatrulygoodoneandthenitwillreallybeaHappy2015ThecommercialleasingmarkethasbeenveryselectivebutinthehopeofincreasedconsumptionspendsselectmarketslikeBangaloreandGurgaonhavestartedseeingapositiveuptrend. www.indiaincorporated.comUK78PallMallLondon-SW1Y5ESINDIAC210TitaniumCityCentreSatelliteAhmedabad-380015GETINTOUCHinfoindiaincorporated.comUK4402078732386INDIA9107940063339INDIAGLBALBUSINESSIndiaincorpindiaincorporatedcompanyindia-incindiaincorporated