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INDIAGLBALBUSINESSOnlinePrintEventsPublishedbyMarch2015IndiasoutboundinvestmentmagazinePage14HOTSPOTINDIAINC.INTERVIEWIndiasettoovertakeChinain2015NobelPrizewinnerKailashSatyarthispeakstoIndiaInc.onCSRPage6Page24Budget2015JaitleylaysoutIndiaschancetofyCooperativefederalismmeansmorefundsforstatesPOLICYINDIAPage26 ManojLadwaPublisherCEOIndiaInc.manojladwaonMay16thlastyearwitharangeofmessageslikeMakeInIndiaandDigitalIndia.TheBudgetmarksabolsteringofthatcondencebuildingprocesswithhard-nosedpolicybacking.IwouldliketoseemoreofMrJaitleyhisministerofstateJayantSinhacommerceministerNirmalaSitharamanandothersgoingouttotheinternationalmarketsandtalkingaboutthisBudgetandtheopportunitiesitprovidesforeigninvestorsrepairingsomeofthedamagecausedinthepast.ItisthisveryaimthatrunsthroughasthecentralthemeoftheMarcheditionofIndiaGlobalBusinessbesidesourusualrangeofinterviewspolicyupdatesanddealtracking.TheEyeonBudgetsectiongoesbeyondthebasicfactsandgurestopresentaneruditeanalysisofwhatsomeofthenewannouncementswouldmeaninthelongterm.Wealsohaveanin-depthinterviewwithNobelPeacePrize-winnerKailashSatyarthiPage24wherehespeaksabouttheGlobalIndiandividendwhichcanbecashedinforsocialcauses.AmongsomeoftheIndiaInc.PickswelookintotherecentMAdealsPage11thathelpedclockarecordyearforIndiain2014andamega1-billionboostforPrimeMinisterModisMakeInIndiadrivePage40.InthiseditionwealsohaveaspecialChinaFocussectionPage34-35andaSpecialReportontheIndiangovernmentscrackdownonso-calledtaxterrorismPage10.SoletstakestockofthebigBudgetmonthgonebyandreadonforawide-angleview.PUTTINGITINCONTEXTLeavingbehindalostdecadeABudgetforAllTheIndianBudget2015-16wasoneofthemostanticipatedeconomicstatementstocomeoutofIndiaeversincetheNarendraModiledgovernmentcametopowerin2014.AfteralostdecadewheretheIndianeconomyconstantlyfellshortofexpectationsalleyeswereonnanceministerArunJaitleysplanofaction.Andhecer-tainlydidnotdisappoint.ThisyearsBudgethasbeenwidelywelcomedaspro-reformandpro-growth.Themostimportantaspecthoweveristhedeterminationitreectstowardsachievingsustainablegrowth.Theemphasisisdividedevenlyacrossstabilityconsistencyandtransparencystrikingtheappropriatetonefortheworldsfastestgrowingeconomy.FromtheperspectiveoftheinternationalinvestorcommunitykeenlywaitingonthesidelinesforyearsforclarityonarangeofissueslikeretrospectivetaxationandwhathassometimescometobedescribedastaxterrorismtheJaitleyBudgetpressesalltherightbuttons.Infactoneoftherelativelyunder-playedaspectsoftheBudgetIwouldliketohighlightaresomeveryambitiousmovesintherenewablessector.Therevisedtargetforrenewableenergycapacityisnow175GWby2022anditincludes100000MWsolar60000MWwind10000MWbiomassand5000MWsmallhydropower.ThismarksamajorturningpointinthefortunesofacountryworkingtowardstakingitsrightfulplaceontheglobalstageandwithPiyushGoyalinchargeenergywillcertainlynotbelackinginthatministry.ThecrucialcondencebuildingprocesswaskickedoffthemomenttheModigovernmentwaselected IT8AlibabaTwitterleadMakeInIndiaboostRailwayBudget2015ReformistagendawinsoverpopulismIndiacracksdownonanti-transparencyIndiasettoovertakeChinain2015Page22Page38Page6INDIAINC.PICKSSECTORFOCUSHOTSPOTANALYSISINFRASTRUCTUREENERGYGUESTCOLUMN11IndianMAdealsathighestindecade401billionboostforMakeInIndiadrive29IndiainnovatestospurinfrastructurefundsBANKINGMANUFACTURE30UnlockingdigitalinIndiabyShwetaBajpai41ObamaModiThegreatcommunicatorsbyHarjivSingh33IndiaonlistofHSBCtaxevasionlist36TataSteellaunchesnext-gentubeinEurope9IndianautormstrikesUSsolarplantdealINDIAGLOBALBUSINESSefocusofthiseditionofIndiaGlobalBusinessisontheglobalimpactoftheIndianBudget2015-16oneofthemostanticipatedpolicyannouncementscomingoutofIndiainrecenttimes.Budget2015JaitleylaysoutIndiaschancetofyPage14CONTENTS ChiefExecutiveManojLadwaSeniorEditorAditiKhannaChiefOperatingOfcerShamitGhoshEventsManagerDinaLadwaOperationsRajviSinghiSalesAdvertisingJenniferFrancisProjectCoordinationNomitaShahDigitalMarketingExecutiveDarshanKhantGraphicDesignerAnkurSaxenaOperationSupportSaurabhBrahmbhattAccountsAdminBhavinThakorIndiaInc.Limitedallrightsreserved.Reproductioninwholeorinpartwithoutourwrittenpermissionisprohibited.ViewsexpressedbyourcontributorsaretheirownanddonotnecessarilyrepresenttheviewspoliciesofIndiaInc.WhileeveryeffortismadetoachievetotalaccuracyIndiaInccannotbeheldresponsibleforanyerrorsoromissions.www.indiaincorporated.comOnlinePrintEventsSPECIALREPORTEYEONBUDGETCHINAFOCUSINTERVIEW26Cooperativefederalismmeansmorefundsforstates24ForcedCSRnotasolutionIndiaInc.InterviewwithKailashSatyarthi10Indiatakesactionagainsttaxterrorism16Budget2015Businessseesprospectofbigboom34IndiaoffersChinaanopenmarketAsianCentury35ModiinChina20billiondealsatstake27RelianceGrouptogetsmartwithdefence42BanksgetbehindIndiassolardreamINOTHERNEWS18SmallStepsforBigBankbyDrRajivKumar20FinancialTransactionTaxesorShortTermCapitalGainsTheParadoxoftimebySidharthAcharyawww.indiaincorporated.com INDIAGLOBALBUSINESS6IndiasettoovertakeChinain2015Indiaislikelytocapthe2014-15nancialyearwhichendsonMarch312015asthefastestgrowingmajoreconomyintheworld.Indiaexpandedat7.4percentforthefullyearandovertookChinagurescollatedusinganewmethodandreleasedbythegovernmentsaid.Chinaislikelytogrowat7.3percentthisyear.TheguresshowedthatGDPgrowthfortheOctober-Decemberquarterwas7.5percent.Thenewmethodincludesactivitieslikelivestockinthehandsoffarmerstomassiveinfrastructureprojectsandalsotrackssalesofitemssuchassmartphonesandhigh-endTVsetsthathavetraditionallybeenunderrepresentedinGDPcalculations.Thenewmethodwhichuses2011-12asthenewbaseyearhadrevisedGDPgrowthfor2013-14fromsub-5percentto6.9percent.Thegrowthratefor2012-13hasalsobeenrevisedupwardsto5.1percent.ThebaseyearforcalculatingGDPgrowthisrevisedHOTSPOTMarch2015WedoneedtospendmoretimetounderstandingtheGDPnumbers.RaghuramRajanRBIGovernor www.indiaincorporated.com7HOTSPOTperiodicallytofactorinchangesinthestructureoftheeconomyandbetterreectthemacro-economicbigpicture.ThenewmethodologywasinitiatedbythepreviousUnitedProgressiveAlliancegovernmentandhasbeenintheworksforabouttwoyears.AnalystshoweverquestionedthedataasseveralotherfactorsthattypicallyaccompanyrisingGDPsuchasincreasedbankcreditandhigherconsumerspendingdidnotsupportthegures.AlsoindustrialoutputgrowthasmeasuredbytheIndexofIndustrialProductionhasbeenpatchyanddoesnotindicatesustainedgrowth.ThedifferencemaybeattributedtotheGDPbeingbasedonvalueaddedconceptwhileIIPisbasedonproductionthoughthetwoshouldideallyconvergecreditratingagencyCaresaidareport.Whilethesenumbersreinforcetheviewoftheearlierseriesofimprovementthenumbersgetmagniedsignicantly.ThereforeoverallperceptiononeconomyshouldnotbechangingCAREsaid.AlleyesarenowontheBudgetthatFinanceMinisterArunJaitleywillpresentonFebruary28forcuesonhowthegovernmentplanstosteertheeconomy.RBIgovernorRaghuramRajanwillalsostudytheguresandtheBudgetannouncementscarefully.OnFebruary3hehadsaidthatthecentralbankwillscrutinisethenewdataclosely.WedoneedtospendmoretimetounderstandingtheGDPnumbershehadsaid.March2015 INDIAGLOBALBUSINESS8March2015SECTORFOCUS-ITPrimeMinisterNarendraModisMakeinIndiainitiativereceivedabigboostwhenfourlargeglobaltechcompaniesfromChinaTaiwanandtheUSannouncedinvestmentandexpansionplansforIndia.ChineseonlinemarketinggiantAlibabaUS-basedTwitterTaiwanesecontractmanufacturerIventecwhichmakesXiaomiphonesandChinesetelecomequipmentmakerHuaweiannouncedmajorplansforinvestmentsinIndia.AntFinancialServicesAlibabasnancialarmannounceditwasacquiringa25percentstakeinOne97CommunicationswhichoffersmobilecommercesolutionsthroughtPaytmfor500million.Paytmwillusethefundstogrowitsmobilepaymentsecosystemandfurtherboostitscommerceuserbase.ThedealrepresentsAntFinancialsrst-everinvestmentinanIndiancompanythecompanysaidinastatement.ThedealwillgivePaytmaccesstotechnicalandoperationalexpertiseandalsogivethecompanyinternationalexposure.AlibabafounderJackMahadsaidduringhisvisittoIndiaafewmonthsagothathewaskeenoninvestinginthiscountry.ThenTwitterwhichacquiredIndianonlinermZipDiallastmonthfor40millionwilluseitsfacilityinBangaloreforamongotherthingsdriveRDoutofIndia.ThiswillbeTwittersrstdevelopmentcentreoutsidetheUS.ThecompanyisworkingatintegratingitsnewacquisitionintotheTwitterecosystem.FurtherTaiwaneseOEMIventecwhichmakesphonesforXiaomiannouncedthatitwouldsetupaplantinChennaitomanufacturecomponentsforthephonesitmakesfortheChinesemobilephonemaker.InitiallytheTaiwanesecompanywillmakecomponentsandalsoassembleXiaomismartphonesinaleasedfactoryandbringinlargerinvestmentsinphases.Itdidnotspecifythequantumofinvestmentsplanned.Andnallythe45-billionHuaweiannouncedtheopeningofits5000-seatdevelopmentcentreinBangaloreitslargestfacilityoutsideChina.Thecompanyhasinvestedmorethan150milliononthisunitwhichwilldevelopsoftwarecontentandapplicationsforitsproducts.AlibabaTwitterleadMakeInIndiaboostJackMahadsaidduringhisvisittoIndiaafewmonthsagothathewaskeenoninvestinginthiscountry. www.indiaincorporated.com9March2015US-basedSunEdisontheworldslargestrenewableenergycompanyandBrakesIndiaLimitedBILhavestruckadealtoinstallasolarpowerplantthatwillgenerate7.72megawattsofelectricity.TheplantwillcomeupatthefacilitiesoftheIndianmanufacturerofautomotiveandnon-automotivebrakingsystemsandferrouscastingsatMunanjipattiinthestateofTamilNadu.PashupathyGopalanpresidentofSunEdisonAsia-PacicsaidWeareproudtobeworkingwiththeleadingautomotivesupplierBrakesIndiatolowertheircarbonemissionsandelectricitycosts.SolarisagreatwayforcommercialconsumersinTamilNadutogeneratereliablelowcostelectricity.ThissystemalsohappenstobethelargestsolarpowerplantbuilttodateundertheGroupCaptiveSchemeinIndia.SunEdisonwillprovidenancingandinstallthesolarsystemwhichfeaturesadvancedtrackersandhighefciencysolarpanelstomaximisetheamountofelectricitygenerated.Thesystemwillgeneratemorethan14millionkWhofelectricityayearwhichwilloffsetmorethan6percentofBrakesIndiaselectricityuse.ThesystemisbuiltinaccordancewiththeGroupCaptureSchemelegislationthatwasintroducedbytheElectricityActof2003whichallowscustomerstopurchaseelectricitydirectlyfromanindependentpowerproviderwithoutinvolvingthelocalenergydistributioncompany.S.KesavanCEOofBrakesIndiasaidSunEdisonwasanobviouschoiceforBrakesIndiawhenwebeganoursearchforprocuringsolarpower.SunEdisonssizescaletechnologyandtrackrecordofdeliveringworry-freesolarwereallveryconvincingfactorsinourdecision.ThisSunEdisonsystemisbuiltwithstate-of-the-arttrackerswhichwillallowustoharnessmoreenergyfromthesun.ThiscollaborationwithSunEdisonstronglysupportsourcommitmenttocleanandrenewableenergy.BrakesIndiaapproachedSunEdisontodevelopthisprojecttobeincompliancewiththeSolarPurchaseRequirementsetoutbyTamilNaduElectricityRegulatoryCommissionTNERCandtheTamilNaduGenerationandDistributionCorporationLimitedTANGEDCOwhichstatesthathightensionwirecustomersmustsource6percentoftheirenergyusefromsolar.IndianautormstrikesUSsolarplantdealSolarisagreatwayforcommercialconsumersinTamilNadutogeneratereliablelowcostelectricity.ThissystemalsohappenstobethelargestsolarpowerplantbuilttodateundertheGroupCaptiveSchemeinIndia.SECTORFOCUS-Energy March2015INDIAGLOBALBUSINESS10SPECIALREPORTPrimeMinisterNarendraModisMakeinIndiainitiativewhichenvisagesturningIndiaintoaglobalmanufacturinghubisfacinganunexpectedroadblock.TheIndiantaxmancontinuestocreatehurdlesinthepathofbothinwardandoutwardinvestmentstoandfromIndia.Overthelastthree-fourmonthstheIncomeTaxdepartmenthassentatleast30noticestoforeigninvestorsquestioningtheirinvestmentsinIndiansubsidiariesanddemandingtaxesonthesame.ThiscomesdespiteFinanceMinisterArunJaitleysclearinstructionstoavoidsuchtaxdemandsandhisassurancesoncreatinganon-adversarialtaxregime.Hethencoinedatermtaxterrorismtodescribesuchdemands.Butobviouslyhisdirectiveshaventreachedthelowerrungsofthetaxbureaucracyassessingofcerswhomakeroutineenquiriesandsendoutnotices.ThelawallowsIncomeTaxofcerstoaskforthesourceoffundsandtheidentityoftheinvestors.Buthowcantheyquestioncaseswheretheinvestorisawell-knownglobalmultinationalandtheinvestmenthasbeenclearedbytheReserveBankofIndiaaseniortaxconsultantataBig4consultingrmquestioned.ThetaxauthoritieshavealmostsinglehandedlyruinedIndiasimagebeforetheglobalinvestorcommunityaseniorgovernmentofcialsaidonconditionofanonymity.TobefairthispracticeisalegacyofthepreviousCongress-ledUnitedProgressiveAlliancegovernment.In2012thegovernmenthadretrospectivelyamendedthelawstotaxVodafonesacquisitionofHutchisonWhampoasIndiantelecomoperationsafterlosingthecaseintheSupremeCourt.Thematteriscurrentlyinarbitration.InanotherunrelatedmattertheBombayHighCourthadrecentlyruledthatthegovernmentwasnotentitledtotaxVodafonesinvestmentsinitsIndiansubsidiary.Inkeepingwiththepromiseofunsheringinanon-adversarialtaxregimethenanceministryonthelegaladviceoftheAttorneyGeneralIndiastoplawofcerhaddecidednottoappealthatorderandhadissuedinstructionsforthatjudgmenttobecomethetemplateforallothersimilarcases.Thesecaseshavenotyieldedasinglepaisainrevenues.AlltheyhavedoneisgiveIndiaabadnameJaitleyhassaidonseveraloccasions.InthecaseofoutboundinvestmentfromIndiathetaxmaninseveralcaseshasdeemedthesharepremiumamounttobeadeemedloanandleviedtaxesonthedeemedinterestonsuchloans.HowwillIndiancompaniesacquireassetsabroadifthetaxdepartmentplaysspoilsportlikethisTheIndiantaxmancontinuestocreatehurdlesinthepathofbothinwardandoutwardinvestmentstoandfromIndia.Indiatakesactionagainsttaxterrorism March2015www.indiaincorporated.com11INDIAINC.PICKSThetotalnumberofmergerandacquisitionMAdealsstruckbyIndiancompaniesin2014roseto1177thehighestinadecadewiththemomentumsettopickupfurtherin2015.MAdealscontributedcloseto38billionfrom573dealsandprivateequityPEdealscontributed12billionfrom604dealsaccordingtoareportbyadvisoryrmGrantThornton.E-commercewithintheinformationtechnologyITspacewasthemajorcontributorforPEinvestmentswitharound4billionbeingraisedfromover100deals.BundeepSinghRangarchairmanofLondon-basedadvisoryrmIndusViewsaidLastyearsdealvalueat50billionhasbeenafantasticyearfordealmakingwithaverystrongforeigninvestorinterestinIndia.Itisexpectedthat2015deal-makingtoreachevenhigherlevels.Modiandhisgovernmenthavebroughtinthepastsixmonthsthebeliefthatchangecanhappen.Whatinvestorslookforisconsistencypredictabilityandtransparency.DomesticMAdealsarelargelyridingonaconsolidationwavewithSunPharmaacquiringRanbaxyKotakmergingwithINGVysyaFlipkartloopinginMyntraandafewlargepowersectorMAs.Accordingtothereporttherewereeightdealsinthebillion-dollarcluband54dealsvaluedover100millioneachwhichmarksasignicantincreaseoverthepastdecade.Around20IndianrmshadsignedMAdealsintheUSin2013whileone-fourthofthetotal268outboundacquisitionsweremadeintheUSbetweenOctober2013andDecember2014.InEuropeIndiancompaniesinvested1.3billionintheUKalonein2011.MAdealscontributedcloseto38billionfrom573dealsandprivateequityPEdealscontributed12billionfrom604deals.IndianMAdealsathighestindecadeAccordingtothereporttherewereeightdealsinthebillion-dollarcluband54dealsvaluedover100millioneachwhichmarksasignicantincreaseoverthepastdecade. Bigboomavouredoverbigbangasthebudgetwaswidelyseenaspro-investmentandpro-business.Indiasimageasacountrywhereeaseodoingbusinessisnolongeraconcerngotaboostwithsimplifedprocedurestoattractoreigninvestmentssinglewindowregulatoryclearanceandspeedydisputeresolution. March2015INDIAGLOBALBUSINESS14Budget2015JaitleylaysoutIndiaschancetoyFinanceMinisterArunJaitleyshunnedthepopulismandvotebankpoliticsthatcharacterisedmanypreviousbudgetstodeliveronethatissharplyfocusedongrowthandonrevivingthestalledinvestmentcycle.PrimeMinisterNarendraModihadraisedexpectationswhenhecalledforatransformationalbudgetafewmonthsago.JaitleybudgetwasjustthatwithincreasedspendingonpowerplantsrailwaysinfrastructurethatwillcreatemillionsofjobsaspromisedintheBJPselectionmanifesto.Iftherewasoneareaofdisappointmentitwasthathedidntannouncethemuchanticipatedincometaxreliefsforthemiddleclassbuthedideaselifesalariedindividualsbyprovidingtaxbreaksonoldagepensionandinsurance.Inanefforttomakelifeeasierfortheindustryandtoincentiviseinvestmentsthenanceministerannouncedaphasedreductionincorporatetaxratesfrom30percentto25percentoverfouryears.ThenheannouncedamassiveRs20000-crore3.3billionfundforsmallandmicroentrepreneurswhohavethusfaroperatedoutsidetheformalbankingchannels.ThecredibilityoftheIndianeconomyhasbeenreestablished.TheworldispredictingthatthisisIndiaschancetoyJaitleysaidinhisspeech.StronglyrebuttingtheclaimsofthosewhopredictedthatthegovernmentwasplanningtocutbackonwelfareschemesinheritedfromthepreviousUPAgovernmentJaitleynotonlymaintainedtheallocationtotheMahatmaGandhiNationalRuralEmploymentGuaranteeSchemetheworldslargestguaranteedjobprogrammehealsoenhancedtheallocationbyalmostabilliondollars.EYEONBUDGETJaitleygoesbeyondpopulismtodeliverModistransformationalvision March2015www.indiaincorporated.com15EYEONBUDGETToarrestIndiasfallinginvestmentrateafunctionofbothlowerenthusiasmfromthecorporatesectoraswellasthepropensityofIndianstohordegoldratherthaninvestinnancialinstrumentsJaitleyannouncedaschemewherebyindividualscouldearninterestontheirgoldholdingsthusbringingthismassivehordegrowingby800tonsperannumintotheinvestmentpool.Healsoannouncedataxfreebondschemeforthetroubledandnanciallystrappedinfrastructuresector.ThisisinadditiontoanadditionalinvestmentofRs70000crorealmost12billiontorebuildIndiascreakinginfrastructurebackbone.Anewcodetoquicklyresolvebankruptcyissuesandastringentnewlawonblackmoneywerealsoannounced.TheFMalsotookstepstocorrectIndiasinverteddutystructurewhereinnishedgoodsimportsattractedlowercustomsdutythancomponentsthusplacingdomesticmanufacturersatadisadvantage.Puncturingtheoppositionchargethatthegovernmentispro-richanti-poorandanti-minorityJaitleylaunchedauniversalsocialsecurityschemeforallIndianswelfareschemesforseniorcitizensandaspecialeducationschemeforminorityyouthcalledNaiManzil.TherewerespecialincentivesforModispetschemeMakeinIndiawhichenvisagesturningIndiaintoaglobalmanufacturinghubthatwillcreatejobsformillions.TheFMannouncedthathewasdeferringthecontroversialGeneralAntiAvoidanceRuleGAARbyanothertwoyearsbutstoppedshortofscrappingit.HealsodidntscrapthecontroversialretrospectivelegislationthattheUPAgovernmenthadintroducedin2012butsaiditwouldbeusedsparingly.ThestockmarketswelcomedthebudgetwiththebenchmarkBSESensexclosing141pointsor0.5percenthigherafteravolatiledaystradingonSaturday.Investorsandindustrialistswerehappywiththebudget.AlleyesnowshiftbacktoReserveBankofIndiagovernor.Ifheobligesandcutsinterestratesfurtherthelastpieceoftheeconomicjigsawpuzzlewillfallintoplaceandsetthestagefortheeconomytostartexpandingatafastcliponceagain.ThecredibilityoftheIndianeconomyhasbeenreestablished.TheworldispredictingthatthisisIndiaschancetoyArunJaitleyFinanceMinisterofIndia March2015INDIAGLOBALBUSINESS16EYEONBUDGETTherehasbeenanall-roundsenseofcheerintheaftermathofIndiannanceministerArunJaitleysbudgetstatementfor2015-16inParliament.TheglobalIndianbusinesscommunityalsocelebratedthestridesmadeinthesphereofeaseofdoingbusiness.IndiaInc.hascollatedsomeofthekeyvoicesthatcapturetheoverallmoodofabuoyantbudgetthatseemedtofavourlong-termboomoverashort-termbigbang.Budget2015BusinessseesprospectofbigboomUnionBudget2015isabudgetwithaclearvision.Itisabudgetthatisprogressivepositivepracticalpragmaticprudent.NarendraModiPrimeMinisterofIndiaUScompaniesstandreadytopartnerwiththegovernmentofIndiaonpriorityini-tiativesincludingSmartCitiesMakeinIndiaJanDhanYojanaNationalFinancialInclusionMissionCleanIndiaandDigitalIndia.ThisBudgetprovidesuspositivestepsforwardinstrengtheningthispartnership.MukeshAghiPresident-USIndiaBusinessCouncilUSIBCThisisabudgetwhichstruckacleverbalancebetweenbringpro-businessandbeingseentobeawareofsocialneeds.Overallwebelievethisbudgetshouldgivecomforttoinvestorsbothdomesticandforeignandsetthesceneforare-vivaloftheeconomybyboostinginvestmentsandmanufacturing.RichardHealdCEOUKIndiaBusinessCouncilUKIBCThisbudgethaslaiddowntheroadmapfortakingIndiatodoubledigitgrowth.Wenotonlyseeacleardirectioninwhichtheeconomyisgoingtobesteeredbutalsothekeymilestonesthatweneedtocrossontheway.Thereareseveralpositivesnotjustfortheindustrybutforeverysectionofsociety.DrJyotsnaSuriPresidentFederationofIndianChambersofCommerceandIndustryFICCIAforward-lookingcounter-cyclicalandpragmaticdocumentthebudgetreas-suresinvestorsandbuildsconsumercondence.TheBudgetwouldstrengthentheinvestmentcycleandbuildthesavingspipelinewhilealsochannelisingfundsintomuch-neededinfrastructure.ChandrajitBanerjeeDirectorgeneralConfederationofIndianIndustryCII March2015www.indiaincorporated.com17Factle-Budget2015EYEONBUDGET March2015INDIAGLOBALBUSINESS18SmallstepsforbigbankDrRajivKumarisaSeniorFellowattheCentreforPolicyResearchDelhiandDirectorPahleIndiaFoundationatwww.pahleindia.org.Heisawell-knownIndianeconomistwhohasauthoredofseveralbooksontheIndianeconomyandIndiasnationalsecurity.TherstfullbudgetoftheNDAgovernmenthasallthepositivesignsofbeingateameffort.ItfollowstheleadgivenbyPrimeMinisterModioverthelastninemonthswhilereectingtheFinanceMinistersownpreferencefornotbeingbeholdentoanyscaldogmaandremainfocusedsharplyonraisinggrowthandinvestment.Sowhilehehasstucktothescaldecittargetof4.1percentin2014-15hehasgivenhimselfmorescalspaceforthenexttwoyearsbyadoptingahigherscaldecittarget.Thiswasneededasahedgeagainstaslowerthanexpectedrecoveryinprivateinvestorssentimentsbothdomesticandforeign.ItwouldbeNDAshistoricalachievementifby2019itwouldraisepublicsavingstoactuallyeliminatepublicsectorborrowingsandstarttoreducethepublicdebt.Currentlyinterestpaymentsabsorbnearly50percentoftotaltaxrevenues.Thisconstraintsgovernmentsdevelopmenteffortandshouldbebroughtdown.Themosteffectivemethodwouldbetoeliminateassoonaspossiblethegovernmentsrevenuedecitwhichcurrentlyamountsto2.8percentoftheGDP.ThiswillbeinlinewithPMModispromiseofmoreefcientandeffectivegovernance.TheModi-JaitleyMJteamhasdonewelltomakethisagrowthandinvestmentorientedbudgetwhileatthesametimeretainingandindeedincreasingoutlaysonsocialwelfaremeasuresasreectedinthehighesteverallocationofRs.34699croreforMNREGA.AnotherRs.5000croreispromisedifthescalsituationpermitsthat.ItwillhoweverbeessentialtoensurethatMNREGAallocationsareutilisedforcreatingdurableassetsandcapacitiesratherthanbeingwastedonpublicworksandsufferfromextensiveleakages.ThebudgetrepresentsoneoftheboldestandcomprehensiveattemptsatgivingtherequiredpushtoPrimeMinistersMakeInIndiaprogram.Thefollowingmeasuresstandoutinthisregard.FirsttheemphasisoninfrastructureinvestmentbyincreasingbudgetaryallocationsbyRs.70000croretheestablishmentoftheNationalInvestmentandInfrastructureFundandissuingoftaxfreeinfrastructurebondsforrailsroadsandirrigation.SecondthebudgetsfocusonimprovingthebusinessenvironmentespeciallyforthemicrosmallandmediumenterprisesMSMEislaudable.ThisincludesthesettingupoftheMUDRAbankwithseedcapitalofRs.20000croreandaRs.3000crorecreditguaranteecorpusforimprovingaccesstoformalEYEONBUDGET March2015www.indiaincorporated.com19nancingforthe57millionMSMEs.Thirdthelaunchofane-bizportalwhichintegrates14regulatorypermissionsatonesource.Thiswillgreatlyreducethetimetakenforregulatorypermissions.HopefullythiswillbefurtherbuttressedbyotherregulatoryliberalisationbytheDepartmentofIndustrialPolicyandPromotion.FourthanExpertCommitteeisbeingsetuptosuggestadraftlegislationforreplacingmultiplepriorpermissionswithapre-existingregulatorymechanism.Boththesemeasureswillsubstantiallylowertransactionscostsforthesmallentrepreneurswhohavetobearthebruntoftheproceduralcomplexitiesandtheinspectorshighhandednessthatcomeswiththese.FifththeFinanceMinisteracceptedmysuggestiontogivetheworkersinsmallerorganisationstheoptiontomoveoutoftheEmploymentProvidentFundOrganisationEPFOtoNewPensionSchemesandhaveachoiceofoptingformedicalinsuranceplansinsteadofthemandatoryenrolmentundertheEmployeeStateInsurance.Theimportanceofthesereformsinformalisingtheinformalsectorwillhopefullybeevidentsoon.ThesewillslowdowntheexpansionofcontractlabourandhelpminimisethewidespreadbutunacceptabledualismthatcurrentlycharacterisesIndianindustry.Sixththebudgethasalsogiven1stApril2016asthexeddatefortheinceptionoftheGoodsandServiceTax.Thiswillbeahistoricalstepwhencompletedandwillcreateauniedpan-Indianmarketthatwillhugelyfacilitatetheowofgoodsandservicesacrossstatesandregions.Businessmenhavebeenaskingforthismeasureforlongerthanadecade.Thesesixmeasureswillsignicantlyimprovetheenvironmentfordoingbusinessinthecountryforbothdomesticandforeignentrepreneurs.IamawarethatothermeasuresarealsointheofngandtogetherthesewillhelpraiseIndiasrankingintheWorldBanksdoingbusinesssurvey.ThisisaMakeinIndiabudget.ThereareseveralotherreformsuggestionstuckedawayintheSpeech.TheseincludethemovetowardsestablishingaHoldingCompanyforPublicSectorBankssettingupaPublicDebtManagementAgencyandtakingthefunctionoutoftheRBImovingtowardsamonetarypolicycommitteeforbringingtheRBIandthegovernmentinsynconmonetarypolicyreductionoftaxrateonroyaltypaymentsfrom25to10percenttoencourageyoungerentrepreneurswhoarelookingfornewtechnologyanddoingawaywiththeobnoxiouswealthtaxwhichgeneratedapittanceofRs.1000croreasrevenuesbutwasregularlymisusedbytaxofcialstoharasstaxpayersandholdaDamoclesswordoverthem.OtherstepstofurtherrationalisethedirecttaxregimeandmakedirecttaxadministrationmorefriendlyandfocusedonimprovedtaxcomplianceareinthepipelinewiththeprocessingoftheTaxAdministrationReformsCommission.Thiswillagaingoalongwayinimprovingthebusinessclimate.IwishthattheFinanceMinsterhadsimplydoneawaywithretrospectivetaxationandwiththemuchcriticisedGARRGeneralAntiAvoidanceRuleratherthanleavetheformeronthestatutebooksandshelvingthelatterfortwoyears.FurtherthemeasuresforshiftingboththefertiliserandfoodsubsidiestodirectcashtransferusingtheJAMJanDhanAadharandmobiletelephonymechanismthatwasspelledoutintheEconomicSurvey.HopefullythesestepswillbetakenbythenextbudgetbywhichtimetheMJteamwouldhavegreatercondenceandalsodemonstratedtheirpro-commonmanapproacheconomicmanagement.TheMJteamhasunequivocallydemonstratedthatthetradeoffbetweengrowthandpovertyeliminationismisconceived.Bothhavetobeandwillbeachievedsimultaneously.TheModi-JaitleyMJteamhasdonewelltomakethisagrowthandinvestmentorientedbudgetwhileatthesametimeretainingandindeedincreasingoutlaysonsocialwelfaremeasures.EYEONBUDGET March2015INDIAGLOBALBUSINESS20FinancialTransactionTaxesorShortTermCapitalGainseParadoxoftimeSiddharthAcharyahasdonehisLawfromGovernmentLawCollegeMumbaiandcurrentlypursuingCorporateCommercialPracticeinlawrmOasisCounselandAdvisory.HehaswrittenpapersonmuchneededreformsintaxationandamendmentsrequiredinsecuritieslawofIndia.Alsoheisadocumentarylm-makerandhislmonKashmirhasreceivedaccoladesfromallacrosstheworld.ItwasrecentlyscreenedatHouseofCommons.ApartfromaddressingtheothertaxconcernstheBudget2015willalsobelookingatrationalisingthenancialtransactiontaxeswhichgeneratearound1.6billionrevenueayear.Theuncertaintyonthefutureofthesetaxeshascertainlyrisentoaclamor.ThereisbuzzthatFMJaitleymightconsiderremovingthesetaxes.PChidambaramsbrainchildSecuritiesTransactionTaxSTThasbeenconsideredasthemostefcienttaxstructureinthemoderndaysecuritiestransactionsfromanadministrativeandcollectionpointofview.STTisbasicallyataxaninvestorpayswhenbuyingorsellingequitysharesaslong-terminvestmentslikeMutualFundsandEquityorientedunits.Thegovernmentreducedthistaxinthe2013budgetafteralotofprotestsforyearsbythebrokersandthetradingcommunity.CurrentlytheSTTis0.1percentofthetransactionvalue.STTisnotapplicableincaseofpreferencesharesGovernmentsecuritiesbondsdebenturescurrencyderivativesunitsofmutualfundotherthanequityorientedmutualfundandgoldexchangetradedfundsandinsuchcasestaxtreatmentofshort-termandlong-termgainsshallbeaspernormalprovisionsoflaw.TransactionsofthesharesoflistedcompaniesontheoorofthestockexchangeorotherwisemandatedundertheregulatoryframeworkofSEBIsuchastakeoverbuybackdelistingoffersetcalsodoesnotcomeunderSTTframework.Theoff-markettransactionofsecuritieswhichentailschangesinownershiprecordsatdepositoriesalsodoesnotattractSTT.Ithasverylimitedambit.CommoditiestransactiontaxCTTisataxsimilartoSecuritiesTransactionTaxSTTleviedinIndiaontransactionsdoneonthedomesticcommodityderivativesexchanges.Ithasquietsimilarhistoryintermsofinitialupheavalsasitwaswithdrawnbutlaterre-introducedintheUnionBudget2013-14howeveronlyfornon-agriculturalcommodityfuturesattherateof0.01percent.CTTisleviedattherateof0.01percentofthetransactionvalueonthesellerfortradinginallnon-agriculturalcommoditiessuchasgoldsilvercrudezinccopperandaluminum.AseparateprovisionforCTThasbeenmadeintheFinanceAct2013ChapterVII.Marketparticipantsandcommodityexchangeshavepointedoutthatthesetaxeswerecominginthewayofmarketsgainingdepthsastheyincreasetransactionscostwhichreducesmarketparticipationandlowersliquidity.EYEONBUDGET March2015www.indiaincorporated.com21ThistaxsystemisconsideredasBrokersAchillesheelandhadbeendemandedtoabolishthissothattheycanoffsetitwithshorttermscapitalgainsortaxesgeneratedonincome.ThereisalotofpressurebuildingontheCentralGovernmenttoremoveitandSecuritiesExchangeBoardofIndiaSEBIandForwardMarketCommissionFMChadalsodemandedforremovalorrationalisationoftaxes.SebihasdemandedremovalofSTTonatleastonelegoftransactionstockpurchases.FMChasalsoaskedthegovernmenttoremoveCTTonsuchtransactionsbesidesbarringfewprocessedfoods.Toresolvetheissueahigh-levelexpertpanelheadedbysenioreconomicadvisorinthenanceministryDSKolamkarhaspitchedforallowingbanksnancialinstitutionsandforeignrmsparticipateincommodityfuturestradingtodeependomesticmarketsbutthefaithcanonlyberestoredifthesetransactionsarerestrainedfromsuchtaxesandtoallowfreeeconomy.Mostoftheemergingeconomieshaveabandonedsuchtaxstructures.Howeverthesupportersofsuchtransactiontaxesmayreducespeculativetradingandexcessmarketvolatility.Theargumentrestsontheassumptionthatthereisapositiverelationbetweenshort-termspeculationandexcesspricevolatility.Inanancialmarkettherearetwotypesoftradersinvestorsandspeculatorsmainlynoisetraders.Investorsbuystockswhenmarketpriceisbelowthefundamentalvalueandsellstockswhenmarketpriceisabovethefundamentalvalue.Thisvalue-basedtradingisassumedtoreducestockpricevolatilitybypushingstockpricesbacktowardestimatesoftheworthofthecompany.Converselyshort-termspeculatorsnamelynoisetradersactonthebasisofeitherthetrendsinpastpricemovementsortheresultsoftechnicalanalysisofstockmarketdataitself.Theybuystockswhentheyexpectmarketpricestoriseandsellwhentheyexpectafallinmarketprices.Thistypeoftradingbasedonfeedbacksfromeithertrendinmarketpricesortheirtechnicalanalysisisbelievedtodestabilisemarketsbecausemarketpricesarenotinfrequentlydrivenawayfromestimatesoffundamentalvaluesandthuscreatesexcessivepricevolatility.TheneedofthehouristhatexpertsshouldconsiderthatretailinvestorsandForeignInstitutionalInvestorsshallbewelcomedandmarketparticipationneedstobeencouraged.TheGovernmenttowinbrokersandinvestorscondence.EYEONBUDGET March2015INDIAGLOBALBUSINESS22RailwayBudget2015ReformistagendawinsoverpopulismIndianrailwayministerSureshPrabhupresentedareformistrailbudgetrecentlythateschewedthetraditionalpopulismofpreviousrailbudgetsandfocusedonputtingitsnancesandcreakinginfrastructurebackontherails.Inthepastrailwayministershaveusedthebudgettoannouncenanciallyunviabletrainsfactoriesandschemestowootheirownandotherpoliticallyimportantconstituenciesandtreatedthedepartmentasaplatformtowootheirrespectivevotebanks.Prabhusbudgetrefrainedfromraisingpassengerfaresbuthikesfreightratesofsomecommoditiesandgoodsby3-10percent.TherailwayministeratechnocratwhohadpreviouslyreformedthenancesofthepowerministryinhisearlierstintasaministerintheAtalBihariVajpayeegovernmentsaidhisgoalwastoreformthemonolithicdepartmentthatincurredlossesofmorethan4billionlastyear.Itwilltaketimetoneutralisethelegacyofthepast.Itcannotbebusinessasusualhesaid.IndianRailwaystheworldsfourthlargestiskeytoPrimeMinisterNarendraModisplansofboostingtheeconomy.Italsoindicatedthegovernmentsplanofincreasingpublicexpendituretokickstarteconomicgrowth.Therailwaysalsounveiledavisionoftappingcheapmoneyfromforeignpensionfundsandmultilateraldevelopmentbankstonanceitsexpansionandreformistplans.InlinewiththisPrabhuprojecteda52percentriseincapitalexpenditureagainsttheaverageof10percentineachofthe4-5previousyearsandalsoallocatedamassive10percentoftotaloutlayonexpenditureonthededicatedfreightcorridorwhichseekstounclogIndiaslogisticsnetworkandimproveconnectivityfromthehinterlandtotheports.ThoughherefrainedfrommindlesspopulismPrabhudidofferahostofgoodiestopassengerstoimprovetheiroverallexperience.Heannouncedplanstoprovidewiat400stationsCCTVsintrainsandprovisionsforpassengerstobookticketswithin5minutes.Healsoannouncedplanstolaunchnewtrainsthatwillrunat160kmph.TherstfewtrainsetswillbeimportedbutthesewillsubsequentlybemanufacturedinIndiaunderthePMsMakeinIndiainitiative.Therailbudgetisfuturisticandpassenger-centricandlaysoutaclearroadmaptomakethenationaltransporterthekeydriverofthecountryseconomicgrowthcombiningaclearvisionandadeniteplantoachieveitModitweetedafterPrabhusspeech.InasignthateventheoppositioncouldntndtoomuchwrongwiththerailbudgettheCongresssaidRailBudget2015isverydisappointingtheyareonlypresentingoldUPAsinitiativesrevamped.Goalwastoreformthemonolithicdepartmentthatincurredlossesofmorethan4billionlastyear.Itwilltaketimetoneutralisethelegacyofthepast.ItcannotbebusinessasusualSureshPrabhuRailwayMinisterofIndiaANALYSIS March2015www.indiaincorporated.com23NEWSINBRIEFJapanspeaksoutforitsrmsTataplansnewJLRplantinUSIndiaseaseofdoingbusinessimagetookafurtherbeatingastheJapaneseambassadortothecountryspokeoutovertheproblemsfacedbyrms.TakeshiYagitoldaConfederationofIndianIndustryCIIconferencethatalthoughthereispotentialtoenhancebilateraltradeandinvestmentbetweenthetwocountriesthereisastagnationintheprocessduetoroadblocks.HesaidJapanesecompaniescontinuetofaceseriesofproblemsoncustomstaxationandinfrastructure.Westronglyhopethatthenewpoliciesandcampaignsandinitiativeswhichhavebeenlaunchedbythenewgovernmentwillbematerialisedaslawsandadministrativemeasureswillbematerialisedontheground.ManymoreJapaneseinvestorsarejustaroundthecorner.IndiaslargestautomotivegiantTataMotorsisconsideringsettingupaplantinNorthAmericafortheproductionofitsJaguarLandRoverJLRbrands.JLRexecutiveshadrecentlymetthegovernorofGeorgiatodiscussthepossibilityofbuildingtheplantinthestate.ATataMotorsspokespersonsaidNaturallyaspartofourwiderglobalexpansionplansNorthAmericaisanoptionalongsideotherlocationsasafuturepotentialmanufacturinglocation.Nodecisionhasbeentakenonfuturemanufacturinglocations.Butwewillcontinuetoevaluateopportunitiestoincreaseourinternationalmanufacturingfootprintprimarilyinmarketswithgrowthpotentialandcustomerdemand.TheBritishluxurybrandsJLRarenowasubsidiaryofTataMotorsaftertheIndiancompanyacquiredthemfromFordMotorCompanyin2008. March2015INDIAGLOBALBUSINESS24INTERVIEWForcedCSRnotasolutionIndiaInc.InterviewKailashSatyarthiisanIndianactivistwhowontheNobelPeacePrizein2014forhisrelentlessghtagainstchildlabour.HegaveupalucrativecareerinelectricalengineeringinfavourofachildrightsmovementandfoundedtheBachpanBachaoAndolanorSavetheChildhoodMissioninIndia.Hehasbeenattheforefrontoflobbyingnationalandinternationalorganisationsgovernmentbodiesandcorporatestogetbehindhisdevelopmentmission.IndiaInc.caughtupwiththecampaignerashehelpedlaunchanewmulti-milliondollarAnti-TrafckingFundinLondonfortheBritishAsianTrustanddelvedintohisviewsonhowbigbusinesscancontributetowardsasustainablesocietyandwhatmoreglobalIndianscandotojoinintheIndiangrowthstory.QIscorporatesocialresponsibilityCSRaneffectivetoolfordevelopmentForcedCSRcouldbeabeginningbutitisnotasolution.CSRshouldbeaculturenotanimpositionbecausesocialresponsibilityissomethingwhichhastobeembeddedincorporatebehaviournotjustthroughlaw.Butmaybesincemostofthecorporateswerenotwillingtolistenitperhapsledthegovernmenttomakeitlaw.Imnotagainstthelawbutitshouldbepartoftheirculture.Anunethicalcorporateisnotasustainablecorporate.Ethicsandsocialresponsibilityandprotmustgohandinhand.QWhatmorecanglobalIndiansdofortheIndiagrowthstoryGlobalIndianscanplayanimportantrolenotonlyin March2015www.indiaincorporated.com25Indiabutglobally.ButmaybetobeginwithinIndiabecausetheyfeelmoreemotionallyconnectedwithIndiansociety.Theyhavetoshowtheleadershipintakingriskssometimesdespitesomeofthered-tapismortrustdecit.TheyhavetogoamilefurtherinidentifyingthemostpreciousissuesbecauseifthelargestdemocracyintheworldishavingchildslaverytrafckinglabourthenwecannotthinkofashiningimageofIndia.Itsamoralobligationtoensurefreedomandchildhoodforourchildren.QWhatmoreshouldtheIndiangovernmentbedoingThepresentgovernmentundertheleadershipofPrimeMinisterModiistakingseveralboldinitiativesonthesocialagendamayitbeSwachhBharatorCleanIndiaormayitbeBetiBachaoBetiPadhaogirlchildrights.TheseareveryveryfundamentalsocialinitiativeswhicharebeingtakenbythegovernmentandthePMhimselfandarequitesignicant.IhavespokentothePMinthisregardalsothatwhilewearestrivingatmakingaCleanIndiaoraprosperousIndiaitcanbesustainableonlywhenwemakeitachild-friendlyIndia.Asustainablesocietyandprotectionofchildrenaretwosidesofthesamecoin.Ifweinvestonchildrennowwemakesocietysustainableforever.OnethingIamwaitingveryeagerlyforisthattheIndianParliamentpassesalawtoamendthepresentchildlabourlaw.Itisinthepipeline.Itcallsforatotalbanonallformsofchildlabouruptotheageof14andbanonworstformsofchildlabourinvolvinghazardousworkuptotheageof18.Alsorehabilitationmustbeensuredinlaw.ThenitwillbesynchronisedwiththeexistinginternationalILOconventions.Thatwouldatestofthepresentgovernmentandwhethertheytaketheissuesofthemostexploitedchildrenintheirpoliticalpriority.QWhatcanbedoneataworldwidelevelItisamatterofconcernthatdifferentissuesrelatedtochildrenareseenandaddressedincompartmentsglobally.Thereisnoholisticthinkingpolicyandapproach.Itisnecessarythatvariousagenciesandministriescoordinatecloselyforthosechildrenwhoarevictimsofmultipleissues.Ithinkthatwehavetore-denethenotionofviolenceagainstchildrenandtrytobringvariousaspectsofabuseandexploitationunderoneumbrellaofviolence.Sowehavetoprotectourchildrenfromallsortsofviolence.ThatswhygovernmentsandUNagencieshavetoworkmorecloselytowardsaholisticthinkingonsuchissues.Achildhasafullidentityfullentity.Achildisnotafragmentedpersonbecauseoffacingmultipleproblems.Theotherimportantaspectistobuildtrustandpartnershipsbetweencivilsocietyorganisationsandcorporatesandgovernments.Itisimportantthatthephilanthropistsseetheworkthatisbeingdoneonthegroundandvice-versaasattimescivilsocietyorganisationsarequitecriticalofgovernmentsandcorporationsinsteadofbuildingbridgesoftrust.Sucheffortswillhelpaddressthetrustdecit.QDidwinningtheNobelPrizelastyearmakeyourghteasierNowtheissueofthechildasawholegloballyisverymuchinthespotlightpeoplearepayingmoreattentiontothecause.Theissuehasgotthebiggesteverrecognitionwhichisveryimportant.Ordinarychildrightsactivistsaroundtheworldarefeelingempowered.Iveneverseenthatenthusiasmspiritandhope.OnereasonisthattheycanassociatethemselveswithmeeasilythatIamoneoftheveryordinaryactivistsastheyare.EmpowermentoftheentirechildrightsmovementgloballyismostvitalbecausethiswasthersttimetheNobelPeacePrizewasconferredonachildrightsactivist.Equallyimportantisthatgloballeadersarelisteningtosuchissuesthroughmewhichhasneverhappenedbefore.IhadmetPresidentObamaandUNsecretary-generalBan-kiMoonandtheywereverysupportiveoftheagenda.Theywereveryopentotalkandequallypositiveincarryingitforward.Thatgivesmemoreoptimism.INTERVIEW March2015INDIAGLOBALBUSINESS26InahugeboosttoPrimeMinisterNarendraModisoft-repeatedcredoofcooperativefederalismthe14thFinanceCommissionrecommendedandthegovernmentacceptedaproposaltoincreasetheshareofthestatesinthecentralgovernmentspoolofrevenuesfrom32percentto42percent.Thiswillgivethestatesadditionalfundsofalmost30billioneveryyear.TheFinanceCommissionisabodysetupunderArticle280oftheIndianConstitutiontosuggestaformulaforsharingofrevenuesbetweenthecentralgovernmentinNewDelhiandthestates.Itisconstitutedonceeveryveyears.The14thFinanceCommissionisheadedbyformerReserveBankofIndiagovernorYVReddy.TheCommissionalsorecommendedcappingIndiasscaldecitat3.6percentofGDPin2015-16and3percentthefollowingyeartokeepinationincheckandtomaintainmacro-economicstability.RecognisingthatthescalenvironmentshouldbeconducivetoequitablegrowthwerecommendthattheUnionandallthestatesshouldtargetimprovingthequalityofscalmanagementencompassingreceiptsandexpenditureswhileadheringtotheroadmapthereportsaid.WritingtothechiefministersthePrimeMinistersaidthegovernmenthadacceptedtherecommendationofgivingstatesahighershareofrevenuesinordertoprovidethemwiththefreedomtoplantheirowndevelopmentstrategieseventhoughthemovewillnaturallyleavefarlessmoneywiththecentralgovernment.Howeverwehavetakentherecommendationsofthe14thFinanceCommissioninapositivespiritastheystrengthenyourhandindesigningandimplementingschemesasperyourprioritiesandneedsthePMslettersaid.AschiefministerofGujaratModihadoftenspokenoutagainstthehighhandedapproachandmeaslyhandoutsfromtheCentrewhichdictatedtheschemesthestateswereexpectedtofollow.EmphasisingthattheoldonesizetsallapproachtodevelopmenthadoutliveditsutilityModisaidstateswouldhavethefreedomtotailorschemestosuittheirlocalneeds.TheacceptanceoftheCommissionsrecommendationonincreasingthestatesshareofcentralrevenuesisexpectedtoactasacondencebuildingmeasureaheadoftherolloutoftheGoodsandServicesTaxwhichsomestateshaveopposedasittakesawaymostoftheirpowersoftaxationandreplacesitwithonomnibustaxacrossthecountry.RecognisingthatthescalenvironmentshouldbeconducivetoequitablegrowthwerecommendthattheUnionandallthestatesshouldtargetimprovingthequalityofscalmanagement.CooperativefederalismmeansmorefundsforstatesPOLICYINDIA RelianceGrouptogetsmartwithdefenceTheIndianconglomerateledbyAnilAmbaniismakingamajorplayfortwooftheNarendraModiledgovernmentsagshipprogrammesSmartCitiesandMakeInIndia.TheIndianconglomerateledbyAnilAmbaniismakingamajorplayfortwooftheNarendraModiledgovernmentsagshipprogrammesSmartCitiesandMakeInIndia.TheRelianceGroupplanstobidformorethan20billionworthofdefencecontractsinthenextfewyearsandisintalkswithglobalaerospaceanddefencecompaniestostrikepartnershipstomanufactureanarrayofequipment.TheplangoeshandinhandwiththegroupsambitiontocreatethecountrysrstDefenceSmartCitytohouseafully-integrateddefenceandaerospaceinfrastructurefacility.Nearly100-billionworthofopportunitieswillbeupforgrabsintheeldandthermisallsettotakepoleposition.Theso-calleddefencesmartcitywillsupporttheimportofcomponentssystemsandsubsystemsasalsoexportofnishedproductsalongwithafullydevelopedaireldandroadconnectivitytothenearestport.Besidesitwillprovidearangeofauxiliaryunitsacrossavionicsandforging.ThegroupwillmakeitsentryindefencewithRelianceDefenceAerospaceRDAawholly-ownedunitofRelianceInfrastructureLimitedandbidforupcomingtendersfor387ArmyReconnaissanceSurveillanceHelicoptersand100NavalUtilityHelicopters.Weareverynewinthisdefenceindustrybutwehavethecapabilitiesofmanaginglargebusinessventureswhichhavelong-gestationperiodRajeshDhingrapresidentofRDAtoldTheWallStreetJournalWeareverynewinthisdefenceindustrybutwehavethecapabilitiesofmanaginglargebusinessventureswhichhavelong-gestationperiodRajeshDhingraPresidentofRDAINOTHERNEWS March2015INDIAGLOBALBUSINESS28NEWSINBRIEFFacebookinReliancetie-upCiplastrikesMoroccanJVInternationalsocialmediagiantFacebookInc.hastiedupwithAnilAmbaniledRelianceCommunicationsLimitedtoofferfreeaccesstosomeonlineservicesinIndia.ThemoveispartofFacebookscampaigntoboostInternetuseinthedevelopingworldandmakesIndiatherstcountryinAsiatogetthenewInternet.orgappwhichtargetsmobilephoneusers.Theappaimedatlowincomeandruraluserswillofferaccesstomorethan30webservicesincludingjoblistingshealthcareandeducationsitesaswellasFacebooksownsocialnetworkandmessagingservices.ItwillbeprovidedviatheAndroidoperatingsystem.ThisisthersttimethatFacebookhasextendedtheappsfreeservicesbeyonditsownwebsite.TheservicecomestoIndiaafteritslaunchinZambiaTanzaniaKenyaGhanaandColombia.IndianpharmaceuticalmajorCiplahasinkedajointventureagreementwithMorocco-basedSocieteMarocaineDeCooperationPharmaceutiqueCooperPharmaandthePharmaceuticalInstitutePHItoenhanceitspositionintheAfricancountry.CiplaEULimitedUKawholly-ownedsubsidiaryoftheMumbai-baseddrugrmclinchedthedealwithMorocco.ThisJVwillenableCiplatoestablishafrontendpresenceinMoroccospharmaceuticalmarketbecomingthelaunchvehicleforCiplasportfoliowhileleveragingthecommercialstrengthsofpartnersCiplasaidinastatement.TheinitialfocusoftheJVwillbeonrespiratoryandneurologyproductsbutitwillalsoinvestinsettingupamanufacturingfacilityinMoroccoitadded.AspertheagreementCiplaEUwillhold60percentstakeintheJVandCooperPharmaandPHIwilltogetherholdtherest. March2015www.indiaincorporated.com29IndiannanceministerisbelievedtobeconsideringprovidingtaxandotherincentivestospurfundraisingbyIndianinfrastructurecompaniesespeciallyintheroadsportspowerrenewableenergyandconstructionsectors.TheNarendraModigovernmenthasembarkedonanambitiousinitiativetobringIndiascreakinginfrastructureatparwiththebestintheworld.Thetotalbillaccordingtosomeestimatescouldbeashighas5trillion.Indianbanksaresaddledwithhighlevelsofnon-performingassetsNPAsloansonwhichcompanieshavedefaultedonrepaymentswhilemanyIndiancompaniescomingoutastubbornthree-yearslowdownareover-leveraged.Theseconditionshavemadeitdifculttoraiseresourcesthroughtraditionalroutes.Onthecardsisapossiblere-classicationofloanstothesesectorsasprioritylendingwhichentailseasierproceduresandlowerinterestrates.IndianbankshavebeenwaryoflendingtotheroadsandpowercompaniesasthesesectorsarehighlyleveragedwithlargeloansthatareonthevergeofbeingdeclaredNPAs.Thenthegovernmentmayalsointroducenormsforsector-specicbondswithbuilt-intaxincentivesandlongrepaymenttenurestomatchthelong-termfundingneedsofinfrastructurecompanies.FortheModigovernmentwhichswepttopowerinMaylastyearwithamandatetoregeneratetheIndianeconomyandcreatejobsforthe12-15millionarmyofyouthwhojointheworkforceeveryyearcreatingaworldclassinfrastructurebackboneiscritical.Innovativesector-specicinfrastructurebondsarealsoexpectedtoprovideIndianandforeigninvestorswithanewattractiveinvestmentoptionandcouldhelpweanIndianhouseholdsawayfromgoldandraisethesavingsratewhichhasfallenfrommorethan35percentveyearsagotoabout30percentnow.Thistooiscriticalforraisingtheinvestmentratewhichisalsohoveringataboutthe30percentmarkandspureconomicgrowth.IndiainnovatestospurinfrastructurefundsTheNarendraModigovernmenthasembarkedonanambitiousinitiativetobringIndiascreakinginfrastructureatparwiththebestintheworld.SECTORFOCUS-INFRASTRUCTUREIndianbankshavebeenwaryoflendingtotheroadsandpowercompaniesasthesesectorsarehighlyleveragedwithlargeloansthatareonthevergeofbeingdeclaredNPAs. March2015INDIAGLOBALBUSINESS30UnlockingdigitalinIndiaShwetaBajpaiisaPrincipalintheNewDelhiofceofTheBostonConsultingGroup.ShespecialisesinconsumerbehaviouronthedigitalplatformacrossmediaecommerceandothertopicsandhasauthoredtworeportsonthedigitalphenomenoninIndiaBuzztoBucksandIndiaDigital.Bharat.Everybodyfocusesonthenumbersandtheyareimpressive.Almost200millionconnectedconsumersnowanother200millioninthenextfewyears.SomeestimatesputthetotalnumberofIndianInternetusersatmorethan500million40percentofthepopulationby2018.Howeverthereisalotthatneedstobedonetorealisethesenumbersandtranslatethistoasubstantialbusinessopportunity.Threefactorsexpandingreachmoreaffordableaccessandimprovedawarenesswillbetheprimarydriversofonlinegrowth.FirstnetworkavailabilityneedstocatchupwiththeexpectedincreaseintheinstalledbaseofInternet-enableddevicesmeaningthatthecurrentuniversalcoverageof2Gnetworksinurbanareasisreplicatedinthecountrysideandasimilarimprovementtakesplaceinthepenetrationof3Gand4Gservicesinmajorcities.Secondthereneedstobeanuptrendintheavailabilityoflow-costInternet-enableddeviceswhichshouldalsoallowforuserstoaccessalargerrangeoffunctionalities.CostofaccessisexpectedtocontinuetoexpandwiththenumberofhouseholdsthatcanaffordInternetconnectivityprojectedtorisefrom56percentin2013to67percentby2018.ThecontinuingfallindataplanspricesalsohashelpedmakeInternetconsumptionmoreaffordable.Thethirdbigvariableissimpleawareness.AccordingtoanIMRB-IAMAIstudyondigitalconsumersinruralareas70percentofnon-usersarecurrentlyunawareoftheInternetandthebenetsitoffers.Thislackofunderstandingrepresentstheforemostbarriertoonlineadoptionwithmorethanhalfofthenon-usersintownsandsmallercitiesdonotyetseeanyvalueinusingtheInternet.GUESTCOLUMN March2015www.indiaincorporated.com31GUESTCOLUMNSolvethesebarriersandenabledigitaltoreachitsfullpotentialattentionneedstobegiventosixspecicareas.Increasingaccessthroughexpandingnetworkreachandbringingmoreaffordabledevicesandmobileplanstomarket.Facilitatingdigitaltransactionsandeasingpayments.Developingaregulatoryframeworkthatfacilitatescontentdevelopmentanddoesnothindergrowthlocalapplicationsservicesandcontentsector.DevelopinganInternetgovernanceandregulationsystemthatdoesnotconstrainprivatesectorinnovationandenablesallstakeholderstofunctioneffectively.Enablingentrepreneurialventuresthrougheaseofnancingmentorshipprogramsanddevelopmentofaskilleddigitalworkforce.FacilitatingcreationofalocallanguagevernacularInternetcontenttoboostusageinnon-urbanareas.ThesoonertheseprioritiesareaddressedthefasterthedevelopmentofIndiasInterneteconomywillbeandthequickermoreconsumerswillbegintoparticipateinthebenets.Thiswillleadtomoreopportunitiesforgrowthandprotforforward-lookingcompaniesthatcapitaliseonthedevelopingsourcesofdigitaldemand.123456 March2015INDIAGLOBALBUSINESS32NEWSINBRIEFInfosysinDutchinsurancedealRILraises750minoverseasnotesIndiansoftwaremajorInfosyshassecuredaninformationtechnologyservicesdealwithDutchinsuranceservicesrmA.S.R.tosupportitsback-ofceoperations.TheBPOservicesarmoftheBangalore-basedrmInfosysBPOwillsupplyback-ofceservicesfortheA.S.R.labelledpensionsadministrationsystemfromApril12015Infosyssaidinastatement.A.S.R.s87employeeswillbetransferredtoInfosysBPOandthecontractwassignedattheendofJanuarybetweenA.S.R.CEOJosBaetenandInfosysBPOCEOandmanagingdirectorAnupUppadhayayInfosyssaid.A.S.R.offersarangeofnancialproductscoveringnon-lifelifeandincomeprotectioninsurancegroupandindividualpensionshealthinsuranceandtravelandleisureandfuneralinsurance.Italsoinvestsindevelopingandoperatingrealestate.BaetensaidTosupportourvisiononcontinuousimprovementofourclientservicesandtobemorecosteffectivewehaveselectedInfosysBPOtorunourpensionsback-ofceadministration.IndiaslargestprivatesectorcompanyRelianceIndustriesLimitedRILissuetoraisefundsinoverseasmarketsthrough30-year750-millionofseniorunsecurednoteswassubscribed3.07timesover167accounts.ThenoteshavebeenassignedaratingofBBBSPandBaa2Moodys.InJanuarythecompanyhadraisedanother1000millionintheoverseasdebtmarketthroughanunsecurednoteprogramme.Thecurrenttrancheofnoteshavebeenpricedat262.5basispointsoverthe30-yearUSTreasuryNoteatapriceof98.865toyield4.948percent.ThenoteswillbedenominatedinUSdollarsandwillbearxedinterestof4.875percentperannum.Thefundsraisedwillbeutilisedforthecompanysongoingcapitalexpenditure.Geographicallythenotesweredistributed47percentinAsia8percentinEuropeand45percentintheUSmostlytoinsurancecompaniespensionfundscentralandprivatebanksandsovereignwealthfunds. March2015www.indiaincorporated.com33FormerandcurrentpoliticiansfromIndiaareamonginternationalclientshelpedbyBritishbankinggiantHSBCtoevadetaxwithoffshoreaccountsinSwitzerlandaccordingtoleakeddocumentsrevealingtheinnerworkingsofHSBCsSwissprivatebankingarm.TheNarendraModiledgovernmentinIndiahadmadeitanelectionpledgetotraceandbringbackthemissingmillionsheldcorruptlyinSwissaccounts.ThelistofIndiansontheleakedlisthandedovertothegovernmentisbeingestimatedinthousands.ThelatestdocumentsalsorevealthatHSBCprotedfromdoingbusinesswitharmsdealerswhochanneledmortarbombstochildsoldiersinAfricabagmenforThirdWorlddictatorstrafckersinblooddiamondsandotherinternationaloutlaws.Thedocumentsstolenin2007byacomputerexpertworkingforHSBCinGenevacontaindetailsofmorethan100000clientsfromaroundtheworldandwasobtainedbytheFrenchnewspaperLeMonde.InajointinvestigationthedocumentshavenowbeenpassedtotheInternationalConsortiumofInvestigativeJournalistsICIJandmorethan50mediaoutletsaroundtheworld.ThesecretlesareaversionoftheonestheFrenchgovernmentobtainedandsharedwithothergovernmentsin2010leadingtoprosecutionsorsettlementswithindividualsfortaxevasioninseveralcountries.NationswhosetaxauthoritiesreceivedtheFrenchlesincludetheUSSpainItalyGreeceGermanyBritainIrelandIndiaBelgiumandArgentinasaystheICIJreport.ClientswhoheldHSBCbankaccountsinSwitzerlandincludeformerandcurrentpoliticiansfromBritainRussiaUkraineGeorgiaKenyaRomaniaIndiaLiechtensteinMexicoLebanonTunisiatheDemocraticRepublicoftheCongoZimbabweRwandaParaguayDjiboutiSenegalPhilippinesandAlgeriaitadds.ICIJclaimsthatHSBCwhichisheadquarteredinLondonandhasofcesin74nationsandterritoriesonsixcontinentsrstinsistedthatthedatabedestroyedbeforeissuingastatement.ItsaidWeacknowledgethatthecompliancecultureandstandardsofduediligenceinHSBCsSwissprivatebankaswellastheindustryingeneralweresignicantlylowerthantheyaretoday.ThebankhastakensignicantstepsoverthepastseveralyearstoimplementreformsandexitclientswhodidnotmeetstrictnewHSBCstandardsincludingthosewherewehadconcernsinrelationtotaxcompliance.AsaresultofthisrepositioningHSBCsSwissprivatebankhasreduceditsclientbasebyalmost70percentsince2007.ThebanknowfacescriminalinvestigationsintheUSFranceBelgiumandArgentinaandsaysitiscooperatingwiththeauthorities.IndiaonlistofHSBCtaxevasionlistTheNarendraModiledgovernmentinIndiahadmadeitanelectionpledgetotraceandbringbackthemissingmillionsheldcorruptlyinSwissaccounts.SECTORFOCUS-Banking March2015INDIAGLOBALBUSINESS34CHINAFOCUSIndianexternalaffairsministerSushmaSwarajhasstruckanoteofequitablegiveandtakeduringhervisittoBeijing.WewillmakeiteasierforChinesecompaniestodobusinessinIndiaandexpectthatsimilarencouragementwouldbegiventoourcompaniestoexpandtheirbusinessinChinawasherclearmessagetotheneighbouringgianteconomy.ShealsospeltoutanagendatoworkwithChinatorealisethedreamofanAsianCentury.InheraddresstotheIndia-ChinaMediaForumshesaidChinaistodayourlargestpartnerintradeingoods.Thetwoeconomiesaremovingtoinvestineachother.Seriousdiscussionsonenhancingconnectivityhavebeeninitiated.Onthatfoundationwearenowseekingtotakeoureconomiccooperationtoaqualitativelynewlevel.Asignicantnewareaofcollaborationhasbeenidentiedastherailwayssectorwherethetwocountriesarecooperatinginareassuchasheavyhaulagespeedupgradationstationdevelopmentandcapacitybuilding.AnotherthrustisinestablishingindustrialparksinIndianstatestocontributetotheMakeinIndiainitiative.EveninthelasteightmonthsitisalreadyevidentthatdramatictransformationsareunderwayinmycountrythatwillaccelerateourjourneytomodernityshesaidinreferencetoIndiasnewNarendraModiledgovernmenttakingoverlastyear.Chinahaspromisedtoaddressthe38billiondecitinover70billionbilateraltradein2014andtheissuewillfeatureheavilyduringSwarajstalkswithChineseleaders.WeexpectthatthemomentumthathasbeensetinthelastfewmonthswouldnotonlybekeptupbutacceleratedevenfurtheratvariouslevelsSwarajsaid.Shealsolaunched2015VisitIndiaYearinChinaasaboosttotourismties.Asbothourcountriesplayalargerinternationalroleourcontactsanddialoguesmustcommensuratelygrow.AsthetwomajorcivilisationalpowersofAsiaweshouldhavecondenceineachothertobuildonoursharedinterests.Iexpectdiscussionsduringthisvisittocontributetothisobjectiveshesaid.WewillmakeiteasierforChinesecompaniestodobusinessinIndiaandexpectthatsimilarencouragementwouldbegiventoourcompaniestoexpandtheirbusinessinChina.IndiaoersChinaanopenmarketAsianCentury March2015www.indiaincorporated.com35CHINAFOCUSIndiaandChinaaremovingfasttoincreaseanddeepentheireconomicengagement.WhenPrimeMinisterNarendraModivisitChinalaterthisyearhecanexpecttopresideoverthesigningofdealsworthabout20billion.InaninterviewtoaleadingIndiannewspaperChineseAmbassdortoIndiaLeYuchengsaidIhopethesameamountofMoUsmaybesignedduringtheModivisitaswassignedduringChinesePresidentXiJinpingsvisittoIndialastSeptember.LastyearChinesecompanieshadsigneddealsworth20billionduringPresidentXisvisit.FirmssuchasAlibabaXiaomiandHuaweiareallincreasingtheirinvestmentsinIndiahesaid.ApartfromthesehighproleinternationallyknownbrandscompaniessuchasBeiqiFotonMotorCorporationissettingupanindustrialparkinPuneinthewesternIndianstateofMaharashtraataninvestmentof5billion.Whencompleteitwillgenerate100000jobsandanannualoutputofabout20billion.ThentheChinaDevelopmentBankwillnancethesettingupofanotherindustrialparkinGujaratPrimeMinisterModishomestateataninvestmentof1.8billionthatwillgenerate10000jobsandmorethan3billioninrevenues.TheseparkswhichwillattractChinesecompaniestoinvestinIndiaarepartofalong-termprogrammethatwillhelpbalancethetradebetweenthetwocountrieswhichisheavilyskewedinfavourofChina.ButissuessuchasstringentvisarulesforChinesenationalssecurity-relatedfearsonChinesecompaniesinvestinginIndiastechnologyandinfrastructuresectorsandthegeneralreluctanceoftheIndiangovernmenttoallowgreateraccesstoChinesecompaniesaremajorimpedimentstotheimprovementofbilateraltradetiesLesaid.ChinawhichhasbuilttopclassinfrastructurerivalingthebestintheworldiswillingtoofferIndiaitsexpertiseinthiseldasNewDelhipushestorampupthiscountryscreakingroadrailurbanandcoresectortointernationalstandards.WedohaveconsiderableadvantagesinthespheresofcapitaltechnologycostandconstructionwhichareinlinewiththeactualdemandinIndiatheambassadortoldthenewspaper.InrecenttimesunderModiIndiahasshownawillingnesstoshedsomeofitspastcoynesstowardsChineseinvestments.HisvisittoBeijingmaywellsetthestageforadeeperengagementbetweenthetwoAsiangiants.WedohaveconsiderableadvantagesinthespheresofcapitaltechnologycostandconstructionwhichareinlinewiththeactualdemandinIndiaModiinChina20billiondealsatstake March2015INDIAGLOBALBUSINESS36SECTORFOCUS-ManufacturingIndiansteelmajorTataSteelhaslaunchedaninnovativeandstrongerstructuralsteeltubeproductinEuropewhichcanspeedupthecon-structionofnewbuildingsandreducetheweightofmachineryorlargevehicles.Celsius420whichisbeingdescribedasthenext-generationsteelhasbeendevelopedinconjunctionwithconstructioncustomersprimarilyforuseindemandingbuildingprojects.HenrikAdamTataSteelschiefcommercialofcerinEuropesaidOurCelsiusrangeisalreadyverywellestablishedinthestructuralhollowsectionsmarket.Butweknowourcustomersareconstantlyonthelook-outfornewmaterialswithenhancedpropertieswhichiswhywefocussomuchoninnovationtodevelopnext-generationproducts.InCelsius420werebringingtomarketanentirelynewrangeofhot-nishedhollowstructuralsectionsthatwethinkisinaclassofitsown.Thenewproductclaimstooffersignicantweightsavingsenablingconstructionteamstousesmallerfoundationsandfewertemporarystructureshelpingtocutconstructiontimeandcostsonsite.Celsius420alsohaspotentialforuseinmechanicalproductssectorssuchasindustrialmachinesagriculturalvehiclesandvehicleaxlesthecompanysaidhereonMonday.ThespecialchemicalpropertiesofCelsius420steelensureitcanbeeasilyweldeddespiteitsadditionalstrengthitadded.JonathanClemensheadofmarketingconstructioninfrastructureforTataSteelsEuropeanoperationsaddedBeingahot-nishedweldedproductwithaddedstrengthCelsius420offerscustomersbigadvantagesthroughlowermaterialcostsgoodweldabilityandimprovedperformancebecauseofthehighdegreeofuniformityinwallthickness.Customerscanreducetheweightofthematerialtheyusewhichgivesadditionalbenetsintermsofreducedbuildinginfrastructurerequirements.AddedtothistheproducthasexcellentsustainabilitycredentialsthatcomefromthesteelsendlessrecyclabilityaswellasitsfulltraceabilityaspartoftheresponsiblesourcingattributesassociatedwithTataSteelsBES6001accreditation.TheCelsius420rangeofcircularsquarerectangularandellipticalhollowsectionsenteredproductionlatelastyearandiscurrentlyundergoingcustomertrials.ThesectionsaremadefromstripproducedatTataSteelsplantsinSouthWaleswhichisformedintohot-nishedtubesatthecompanysHartlepoolandCorbymillsintheUK.TataSteellaunchesnext-gentubeinEuropeInCelsius420werebringingtomarketanentirelynewrangeofhot-nishedhollowstructuralsectionsthatwethinkisinaclassofitsown. March2015www.indiaincorporated.com37NEWSINBRIEFUnileverputsmoneyonCleanIndiaMercedeslinesup15modelsforIndiaConsumergoodsmultinationalUnileverplanstoscaleupitssanitationinitiativesinIndiaaspartofPrimeMinisterNarendraModisCleanIndiacampaign.Thecompanywillspendabout100millionbetweennowandtheendofthedecadesaidUnileverCEOPaulPolman.SpeakingonthesidelinesofthecurtainraisertotheDelhiSustainableDevelopmentSummithesaidHindustanUnileverhasalreadyreached65millionIndiansthroughthehandwashingcampaign.OneofthethingsweneedtodoinIndiaforthecleanIndiacampaignistoscaleupourinitiativetoreach200-300millionpeople.puttingtogetherallourbrandslikeDomexLifebuoyandPureit.Itisatremendousopportunityandwewillbefocusedonmajorcitiesineachofthestates.PolmanmetModitodiscussissuessuchastheCleanIndiacampaignandhowthecompanycanleverageitsbrandstopartnerwiththegovernment.Mercedes-BenzhaslauncheditslatestC-ClassdieselintheSouthIndianmarketstartingwithHyderabad.Itoutlinedplanstolaunch15modelsin2015tofurtherconsolidatetheIndianmarket.EberhardKernmanagingdirectorandCEOofMercedes-BenzIndiasaidthatthecompanyhasanumberofcarssetforlaunchduringtheyearandthedieselC220wouldbeattractiveforbuyersinthecountryparticularlySouthIndiawheredieselcarsaccountforamajorchunk.WiththelaunchoftheC220CDIwenowpresentthecompleteportfolioofthenewgenerationC-ClassinSouthIndianmarkets.ThecommencementofthelocalproductionofthenewC220AvantgardepetrolwithinthreemonthsofitsIndiadebutreiteratesourcommitmentofprovidingourcustomersfascinatingproductswhicharemadeinIndiahesaid.Thecompanyclockeduptotalsalesof10201unitsin2014registeringagrowthof13perover2013inaluxurycarmarketwhichclosedlastyearwithamodestgrowthof3percenttocloseat32000units. March2015INDIAGLOBALBUSINESS38Indiacracksdownonanti-transparencyTheNarendraModigovernmentmadeamassivestatementonitscommitmenttowardstransparencyandgoodgovernancebycrackingdownonawelloiledanddeeprootedcorporateespionageracketwhichinvolvedtheleakageofclassiedgovernmentdocumentstoconsultantsactingonbehalfoflargecompaniesinIndiasoilandgassector.Firstthefactsofthecase.DelhiPoliceannouncedthatithadarrestedtwolow-levelgovernmentemployeesandthreeoftheirassociateswhowereusingforgedidentitypapersandduplicatekeystogainaccesstotheofcesofthepetroleumministryandstealingtopsecretdocumentsongovernmentpolicy.Thefollowingdaythepolicealsoarrestedtwoconsultantswhoweretheallegedrecipientsofthedocuments.Theseconsultantsthepolicesaidprocuredthedocumentsfromthearrestedgovernmentemployeesonbehalfoftheirclientsinthecorporatesector.Fivejuniorandmid-levelemployeesofsomeofIndiaslargestcompaniesRelianceIndustriesAnilAmbanisRelianceGroupCairnIndiaJubilantGroupandEssarwerealsodetainedforquestioning.ThescandalblewthelidofNewDelhisworstkeptsecretthatthegovernmentwasleakinginformationlikeasieveandthatcompanieswereroutinelygettingaccesstosensitiveinformationinabidtoscoreovertheirrivals.Ithascometolightthatthisrackethasbeengoingonforyearsifnotdecades.UnlikepreviousANALYSISOverthelastninemonthstheModigovernmenthastakenseveralstepstoimprovetransparencyingovernmentdecisionmaking March2015www.indiaincorporated.com39ANALYSISgovernmentstheBJP-ledNDAdecidedtoinstallCCTVcamerasinsidetheofcetotryandcrackdownonthis.Bydoingsothegovernmenthasmadeastatementthatwhileitispro-businessitisnotpro-businessmen.ThisdistinctionisimportantespeciallyinthelightFinanceMinisterArunJaitleysstatementthatthegovernmentispro-businessasthegovernmentcangeneratejobsonlybyencouragingbusinessestoinvestmore.Itisalsoasignalthatitwontbebusinessasusualanymore.Individualbusinessmencanexpectafavourablebusinessenvironmenttoconducttheirbusinessesbutwillgetnospecialfavoursbasedonproximityandaccesstothecorridorsofpower.Itwillalsoanswerthecriticismleveledbynon-otherthanReserveBankofIndiagovernorthatcronycapitalismiseatingawayattheinnardsofIndiascorporateculture.SincecomingtopowerninemonthsagotheModigovernmenthasfacedtrenchantcriticismfromvariousoppositionpartiesonitsperceivedclosenesstosomeindustrialhouseswhichtheyallegedhadbankrolledtheBJPselectioncampaign.BycrackingdownwithaheavyhandonaracketthatallegedlybenettedsomeofthoseverycorporategroupsthePrimeMinisterissendingoutaclearsignal.Companiesfundpoliticalpartiesineverydemocracy.Butitdoesntmeanthatthepartywillremainbeholdentothemforever.Wewonourmandatein2014onthepromiseofcleangovernanceandhigheconomicgrowth.ThismovethecrackdownisinlinewithourmandateaseniorbutunnamedBJPleaderwasquotedastellingaleadingnewspaper.OverthelastninemonthstheModigovernmenthastakenseveralstepstoimprovetransparencyingovernmentdecisionmakingbyremovingdiscretionarypowersinthehandsofofcialswhichcanbemanipulatedtobenetoneortheothercorporatehouse.Ithasputseveralclearancesonlineandlaidoutclearcutguidelinesforapprovalsandinformationdisseminationthatindustrialistsacknowledgehascutdownonredtapeandcorruption.MostseniorministersarehonestandafewwhomightotherwisehavebeentemptedtostrayoffthestraightandnarrowpatharestayingoncourseoutoffearofthePrimeMinistersaidaseniorindustrialist.Heacceptedthatministersandbureaucratsnolongerexpectfavoursinreturnforsignaturesandsaidthepaceofdecisionmakinghaspickedupconsiderably.Theprobeintotheespionageracketinthepetroleumministryisnowbeingwidenedtocoverthenancecoalandtelecomministriestoseeifanythingsimilarhasbeengoingonthere.IfModicancleanupthesysteminNewDelhiashedidinGujarathewillhavedeliveredonacriticalaspectofgovernancethatcangoalongwayinmakingIndiaaneasierplacetodobusinessin. March2015INDIAGLOBALBUSINESS40INDIAINC.PICKSPrimeMinisterNarendraModisMakeinIndiainitiativereceivedalliprecentlywhenleadingmultinationalssuchasPanasonicGEBoschandTejasNetworksamongothersannouncedinvestmentsofaboutRs6500crore65billionintheelectronicmedicalautomotiveandtelecommanufacturingclustersinIndia.BriengthemediaIndiantelecomministerRaviShankarPrasadsaidthesecompanieshavesubmittedrmproposals.OthermajorcompaniesonthelistincludeNidecContinentalMothersonSumiCalsonicKanseiTissolTataSEDamongothers.Wehavereceived57investmentproposalsofoverRs19000croreover3billionofwhichapprovalhasbeengrantedto30proposalsworthRs6500crore65billionhesaid.Thesemultinationalsproposetoinvestunderaspecialincentiveschemewhichprovides25percentsubsidyoncapitalexpenditureinanon-SEZareaand20percentwithintheSpecialEconomicZonesalongwithotherincentivesandlong-termtaxbenets.Thegovernmenthasalsolauncheditsmuch-vauntedmulti-billiondollarElectronicDevelopmentFundtosupportelectronicsmanufacturinginthecountry.PressTrustofIndiaquotedTejasNetworksMDandCEOSanjayNayakassayingWewillinvestaboutRs1700crore17billionintelecomequipmentmanufacturing.WehavejustgotinvestmentapprovedbygovernmentforrsttwophasesofRs760crore7.6Billion.Wewilldotherestinthenextphase.WewillinvestRs750crore7.5billioninanassemblytestingmarkandpackagingplantoverthenextthreeyearsTessolveSemiconductorco-founderVVeerappantoldtheagency.Boschplanstoinvestabout80millioninIndia.ThesuccessoftheMakeinIndiainitiativeiscriticalforthegovernmentsplanstoincreaseGDPgrowthratestaketheshareofmanufacturinginIndiasGDPmixfrom17percentnowto25percentin10yearsandgeneratejobsforthe12-15millionyoungsterswhojointheworkforceeveryyear.ThesuccessoftheMakeinIndiainitiativeiscriticalforthegovernmentsplanstoincreaseGDPgrowthrates.1billionboostforMakeInIndiadrive March2015www.indiaincorporated.com41GUESTCOLUMNObamaModiegreatcommunicatorsHarjivSinghisco-founderco-CEOofGutenbergCommunicationsaglobalstrategiccommunicationscompanywithofcesinNewYorkSiliconValleyNewDelhiMumbaiBangaloreHyderabadPuneandLondon.AserialentrepreneurHarjivhasovertwodecadesofexperienceinthecommunicationstechnologynancialservicesandrealestateindustries.TheUS-IndiarelationshipwasresetafterPresidentObamasvisittoNewDelhilastweek.Therelationshiphadbeeninthedoldrumssince2008.Aseriesofmisstepsmisunder-standingsandmissedopportuni-tiesonbothsideshaddoggedtherelationshipoverthelastsevenyears.Strongpersonalleader-shipfrombothPresidentObamaandPrimeMinisterModiaddedarenewedvigourtotheUS-Indiarelationship.Theresethappenedbecausebothleaderswenttheextramileincommunicatingtheirintentionofbringingtherelationshipbackontrack.PresidentObamatookPrimeMinsterModitotheMartinLutherKingmemoriallastSeptemberwhentheymetinWashingtonDC.OnhispartPrimeMinisterModibreakingfromprotocolpersonallyreceivedPresidentwithahugandawarmwelcomeatDelhiairport.ObamaandModiarebothgreatcommunicators.Bothleadersinstinctivelyunderstandcommunicationsandtherolesymbolismcanplayinimpartingtheirmessage.Theyshareapreferenceforcommunicatingdirectlytotheiraudiencesusingtheirownsocialmediachannelstoreachmillions.Betweenthembothleadershavenearly65millionfollowersonTwitterandover72millionlikesontheirFacebookproles.Theirabilitytodirectlyreachsuchlargeaudienceswouldbetheenvyofanymediacompany.Bothareexcellentoratorstoboot.InNewDelhitheircommunicationsstylewasinfulldisplay.OntopofitspoliticalrelevancetheeventcarriedanequallystrongmeasureofsymbolismfornotonlywasObamatherstUSPresidenttospeakatIndiasRepublicDaybutalsotherstsittingUSPresidenttovisitIndiatwiceinhistenure.OnhispartModiunderthewatchfuleyeofthemediawascapturedchattingandpouringacupofteafortheUSPresident.Itwasamomentsteepedinsymbolism.Modihadearlierinhiscareerworkedasateaseller.ItwasalsoanotsosubtlereminderofhissuccessfulChaipeCharcaConversationoverteaoutreachhedidtoreachIndianvotersduringhis2014electioncampaignforPrimeMinister.TheChaipeCharchawasabrilliantripostetoanelitistremarkbyanoppositionleaderwhoquestionedtheabilityofateasellertorunIndia.ThesummitbetweenObamaandModiwastermedahugesuccessbythemediaacrossIndiaandtheworld.Itshowstheimportanceofgoodcommunicationsandsymbolismtoestablishorreinforcetiesbetweennationsandpeople. BanksgetbehindIndiassolardreamCompaniesfromChinatheUKUSandGermanyhaveexpressedinterestinsettingupmanufacturingfacilitiesforsolarpowerequipmentaswellassolarpowerplantsinIndia.ThisshouldcomeasgoodnewstocompaniesintheUKChinaGermanyUSandIndia.Seventeenpublicsectorprivatesectorandforeignbankshavegiventhegovernmentacom-mitmenttofund72000MWofsolarpowerprojectworthRs500000croreover80billionatcurrentexchangerates.AtarecentmeetingwithIndianpowerministerPiyushGoyalthechairpersonofStateBankofIndiathecountryslargestlendermadeacommitmenttofund15000MWofsolarpowerprojects.At1millionpermegawattthiswouldtranslateintoprojectsvaluedat15billion.Otherbanksalsomadesmallercommitments.IndividualbankswillnanceprojectsdependingontheirnancialviabilityandthecredentialsofthecompaniesconcernedaseniorofcialoftheIndianBanksAssociationtheapexbodyofIndianbankssaid.CompaniesfromChinatheUKUSandGermanyhaveexpressedinterestinsettingupmanufacturingfacilitiesforsolarpowerequipmentaswellassolarpowerplantsinIndia.Britaininfacthasaskedforadedicatedsub-quotawithinthegovernmentstargetof100000MWtobereservedforBritishcompanies.SincecomingtopowerinMaylastyeartheNarendraModigovernmenthasfocusedonincreasingtheshareofrenewableenergyinIndiasenergybasketfromlessthan10percentto40percent.AttherecentlyconcludedRenewableEnergyConferencethegovernmentreceivedcommitmentsforsettingup266000MWofsolarwindandbio-mass-basedpowerprojects.ToensurethatthesecommitmentstranslatedintoactualprojectsonthegroundGoyalheldacloseddoormeetingwiththeCEOsofthecompaniesandtoldthemtorevertwithrmplans--andrevisedtheirtargetsiftheyhadover-committedbeyondtheircapacitywithinaweekafterwhichhewouldholdthemtotheirword.InarelateddevelopmentCabinetSecretaryAjitSethheldameetingwith13departmentalsecretariestoensurethattherewerenoregulatoryorotherdelaysinimplementingtheprojectsoncethermcommitmentswerereceived.INOTHERNEWS www.smartandhra.indiaincorporated.comDigitalAndhraInfraAndhraEnergyAndhraDiscoverIndiasveryownsiliconcorridorAlandofunlimitedopportunitiesDevelopingasmartenergyportfolioForbusinessdevelopmentopportunitiespleaseemailinfoindiaincorporated.comLondon4402078732386India9107940063339IndiaIncorpindiaincorporatedcompanyindia-incN.ChandrababuNaidu www.indiaincorporated.comUK78PallMallLondon-SW1Y5ESINDIAC210TitaniumCityCentreSatelliteAhmedabad-380015GETINTOUCHinfoindiaincorporated.comUK4402078732386INDIA9107940063339INDIAGLBALBUSINESSIndiaincorpindiaincorporatedcompanyindia-incindiaincorporated