India Newsletter 08 2016

INDIA NEWSLETTER Indian Embassy, Vienna

Published by the Embassy of India, Vienna Year 6 • Issue 68 • August 2016

MAKE IN INDIA ■■SPACE TECHNOLOGY ■■SPECIAL REPORT ON THE INDIAN SPACE PROGRAMME

India Newsletter • 1

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The Digital India programme is a flagship programme of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy Digital Infrastructure as a Core Utility to Every Citizen

Governance and Services on Demand

Digital Empowerment of Citizens

www.digitalindia.gov.in 2 • India Newsletter

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The Government of India has prepared a five pillar strategy to drive India’s growth, which offer multiple avenues of collaboration and investments

■■ Infrastructure Development

■■ Manufacturing Growth

■■ Skill Development

■■ Energy Sufficiency

■■ Improved Business Environment

www.makeinindia.com India Newsletter • 3

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Prime Minister Narendra Modi had announced the ‘Startup India, Standup India’ initiative in his Independence Day address last year. Last January 16th, PM Modi unveiled the action plan for startups in the country. He announced a self-certification scheme in respect of nine labour and environment laws and said there will be no inspection during the first three years of launch of the venture. Addressing the first conference of start-up entrepreneurs, Modi announced an action plan to boost such ventures which are seen as key to employment generation and wealth creation. Around 40 top CEOs and startup founders and investors from Silicon Valley attended the event.

Here are the top takeaways from the prime minister’s speech.

■■ 1. Compliance regime based on self certification The objective of compliance regime based on self certification is to reduce the regulatory burden on startups. This self-certification will apply to laws like payment of gratuity, contract labour, employees provident fund, water and air pollution acts.

■■ 2. Startup India hub A startup India hub will be created as a single point of contact for the entire startup ecosystem to enable knowledge exchange and access to funding.

■■ 3. Simplifying the startup process A startup will be to able to set up by just filling up a short form through a mobile app and online portal. A mobile app will be launched on April 1 through which startups can be registered in a day. There will also be 4 • India Newsletter

a portal for clearances, approvals and registrations

■■ 4. Patent protection The government is also working on a legal support for fast-tracking patent examination at lower costs. It will promote awareness and adoption of Intellectual Property Rights (IPRs) by startups and help them protect and commercialise IPRs. ■■ 5. Funds of funds with a corpus of Rs 10,000 crore In order to provide funding support to startups, the government will set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over four years. The fund would be managed by private professionals drawn from the industry while LIC will be a co-investor in the fund. The credit guarantee fund for start-ups would help flow of venture debt from the banking system to start-ups by standing guarantee against risks.

■■ 6. Credit Guarantee Fund A National Credit Guarantee Trust Company is being envisaged with a budgetary allocation of Rs 500 crore per year for the next four years.

■■ 7. Exemption from Capital Gains Tax Currently, investments by venture capital funds in startups are exempt from this law. Now, the same is being extended to investments made by incubators in startups.

■■ 8. Tax exemption for startups Income tax exemption to startups announced for three years ■■ 9.

Tax exemption on investments above Fair Market Value

■■ 10. Startup fests Innovation core programs for students in 5 lakh schools. There will also be an annual incubator grand challenge to create world class incubators ■■ 11. Launch of Atal Innovation Mission Atal Innovation Mission started to give an impetus to innovation and encourage the talent among the people ■■ 12. Setting up of 35 new incubators in institutions PPP model being considered for 35 new incubators, 31 innovation centres at national institutes ■■ 13. Setting up of 7 new research parks Government shall set up seven new research parks - six in IITs, one in IISc with an initial investment of Rs 100 crore each.

■■ 14. Promote entrepreneurship in biotechnology Five new bio clusters, 50 new bio incubators, 150 technology transfer offices and 20 bio connect offices will be established.

■■ 15.

Innovation focused programmes for students There will be innovation core programs for students in 5 lakh schools.

■■ 16. Panel of facilitators to provide legal support and assist in filing of patent application ■■ 17. 80 per cent rebate on filing patent applications by startups ■■ 18. Relaxed norms of public procurement for startups ■■ 19. Faster exits for startups

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INDIAN DIASPORA & INDIAN STUDENTS ABROAD MADAD (‘MEA’ in Aid of Diaspora in Distress) - a new Consular Services Management System from the Government of India to the Indian Diaspora The Government of India has launched an online portal: MADAD (‘MEA’ in Aid of Diaspora in Distress), a Consular Grievances Monitoring System.

Consular grievances regarding compensation, court

cases, domestic helps, imprisonment abroad, transportation of mortal remains, repatriation, salary dues, tracing the whereabouts can be lodged under this portal. Grievances relating to visa and passport, travel documents, attestation of documents will not be entertained in this portal. To register and to monitor the status of your grievances please visit the MADAD portal under madad.gov.in Please register as MADAD user if

you have any grievance related to consular s e r v i c e s o f f e r e d by Indian Missions/Posts abroad or are an Indian student studying/planning to study abroad.

MADAD enables online logging and tracking of grievances, and submission of course/contact details of students.

India Newsletter • 5

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NEWS FLASHES

01

Engineering Export Promotion Council (EEPC) of India, the apex organisation of the engineering exporters, has stated that India has achieved a landmark milestone of economic reforms, which will likely boost manufacturing in the country.

02

The combined net profit (adjusted for exceptional items) of around 1,002 companies in India increased by 5.3 per cent year-on-year during AprilJune 2016 quarter, based on pricing power and lower input costs.

03

The Government of India has adopted an inflation target of 4 per cent under its monetary policy framework for the next five years, which is expected to help in maintaining inflation at moderate levels and contribute to macroeconomic stability.

04

Investments in the Indian financial technology (Fintech) firms have reached an all-time high of Rs 1,245 crore (US$ 186 million) so far in 2016.

05

Production of flower crops in India reached 2.158 million tonnes of flowers during FY2015-16 owing to favourable agroclimatic conditions in the country.

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11

07

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The Rajya Sabha has passed the constitution amendment bill for the Goods and Services Tax (GST), which is expected to bring down tax evasion, empower the states, increase revenue, and provide a boost to the Indian economy.

India’s top 200 companies by market capitalisation are set to outperform their Chinese counterparts primarily driven by increased spending by the Indian government through its ‘Make in India’ initiative, according to a report by S&P Global Ratings, a US based credit ratings and research company.

08

India’s core sector grew by 5.2 per cent year-on-year to 180.4 in June 2016, based on robust growth in coal and cement production.

09

The Indian auto c o m p o n e n t industry is expected to grow five-fold by 2026 from its current market size of US$ 40 billion.

10

Zee Entertainment E nte r p r i s e s Limited (ZEEL), one of the India’s leading media conglomerate, has launched Zee.One, a dedicated Bollywood movie channel for the German market.

Railway Minister of India outlined Government of India’s plans of investing over Rs 7,000 crore (US$ 1.04 billion) in FY2016-17 to develop its network in the northeastern region for better connectivity.

I n d i a n agrochemicals market to reach US$ 6.3 billion by FY2020.

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Angel investment in Indian start-ups grew by 62 per cent year-onyear to reach a five-year high of Rs 113.6 crore (US$ 16.94 million), across 69 deals, during FY2015-16.

14

India’s gross domestic product is expected to grow by 7.9 per cent in FY2016-17 with agricultural sector growing at 4 per cent, following normal rainfall so far and expectation of a surplus monsoon during the rest of the period, according to a report by CRISIL.

15

India’s car market will likely become the fourth-largest market in the world by reaching 5 million units in annual sales by 2020.

16

Fitch Ratings Inc has affirmed India’s sovereign ratings at BBBwith a stable outlook and projected the economic growth rate to accelerate to 7.7 per cent in FY 2016-17.

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IMPORTANT ANNOUNCEMENT FOR AUSTRIAN CITIZENS e-Tourist Visa (e-TV) for Austrian citizens The Government of India has extended e-Tourist Visa (e-TV) scheme to the citizens of Austria w.e.f.

26th February 2016. Under e-Tourist Visa scheme, citizens of Austria may now apply online (https:// indianvisaonline.gov.in/visa/tvoa. html) four days in advance to obtain the Electronic Travel Authorisation for travelling to India.This facility is in addition to the existing Visa services. This facility is also available to the citizens of Montenegro as well.Queries related to e-TV; for any assistance call 24x7 Visa support centre at +91-11-24300666 or send email to indiatvoa@gov.in.

INDIA-AUSTRIA NEWS ARTICLES Ambassador Rajiva Misra welcomes Mr. Naveen Rabelli to Vienna who is on tour from India to London Mr. Naveen Rabelli started off in February 2016 from Cochin, a coastal town in Kerala in his custom designed solar tuk-tuk. He traveled

to Mumbai in TEJAS (the tuk-tuk) from where he traveled by ship till Bandar Abbas in Iran. His journey further continued through villages in Iran, Turkey, Greece, Bulgaria, Serbia, Hungary and Austria. He reached Vienna today. He will continue further through Germany, Switzerland, France, to reach the

United Kingdom in September 2016.

He intends to spread the message of using sustainable solutions and to use clean energy like solar energy. His project is supported by the Government of Telangana.

To know more about the project please visit :http://www.solartuktuk. com/#mission

India Newsletter • 7

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Austria Stall at the WIRE & CABLE Fair in India 2016 Seven Austrian companies (listed below) will be exhibiting in the upcomingWire & Cable Fair in Mumbai Companies Ebner Industrieofenbau GmbH Eder Engineering GmbH MAG - Maschinen und Apparatebau AG Mali GmbH, Niederlassung Wien Medek & Schörner GmbH Rosendahl Nextrom GmbH

Verband österr. Draht- und Kabelmaschinen-Hersteller - VÖDKM, AWCMA

on October 5th and 6th, 2016. The Austria Stall is being organized by Austrian Trade Commission in Delhi, the Indian branch of ADVANTAGE AUSTRIA, a network with about 110 Business opportunity

Category

Drawing die processing machines, wire drawing die tools Wire enamelling plant, machines for enamelled wire

Wanted: Direct Customers

early on in the region. This expansion

Greiner Packaging is continuing to broaden its international market position by expanding in India. This move will make Greiner Packaging India Pvt. Ltd., a joint venture with the New Delhi-based Century Ultrapack, one of the leading providers of plastic packaging in the Indian dairy industry.

abroad,” says Axel Kühner, chairman

On the heels of its expansion in Turkey last year, Greiner packaging is thus taking another step toward the growing Asian markets. “We see a very high development and growth potential in India, where food packaging is concerned. It is important for us to take a leading role 8 • India Newsletter

Wanted: Direct Customers

Cable Marking Systems - Optical FiWanted: Direct Customers bre Coding Systems Rosendahl Nextrom manufacturing Wanted: Direct Customers solutions for the global wire & cable industry AWCMA/VOEDKM (Austrian Wire Wanted: Co-operation Partners and Cable Machinery Manufacturers´ Association)

Austrian Greiner Packaging establishes Joint Venture with Indian Packaging Manufacturer

Greiner Packaging is establishing a joint venture with the successful Indian company, Century Ultrapack.

The new venture is doing business under the name Greiner Packaging India Pvt. Ltd., Greiner Packaging has acquired majority ownership.

offices in over 70 countries, providing a broad range of intelligence and business development services for both Austrian companies and their international business partners.

allows us to systematically pursue our globalization strategy and gives us even more opportunities to respond to the wishes of customers from of Greiner Group. The acquisition reflects the company’s medium-term strategy to grow beyond the borders of Europe in the future.

CONTRIBUTING

TO

IMPROVED

PRODUCT QUALITY AND SAFETY The goal of the joint venture is to be able to offer Greiner Packaging’s high standards in India as well. This will make it possible to supply large multinational

customers

in

the

country for the first time, greatly improving

product

quality

and

safety, and focusing on hygiene and production by modernizing the available infrastructure. In the first year alone, investments will also be made in a significant expansion of production capacities using Western technology.

“This new partnership in India

underlines the successful international path that we are currently moving along together with Greiner Packaging. Customers of both companies will profit in the region in the future, thanks to an efficient international site network, supply reliability, technology advancement, and the utmost strength in innovation,” says Manfred Stanek, CEO of Greiner Packaging International.

CENTURY ULTRAPACK Headquartered in New Delhi, Century Ultrapack was established in 1980 and is owned by the Bajaj family.

Altogether, a total of 135 employees, 62 of them temporary workers, are working for the company, which is among the leading suppliers of plastic packaging in the Indian dairy industry. To date, it has most notably been supplying customers such as Mother Dairy, Amul or Pepsico in the northern part of the country. Its portfolio includes over 250 different packaging products, mainly for milk products and ice cream.

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NEWS ARTICLES Zee Entertainment launches Bollywood movie channel in Germany Subhash Chandra-promoted leading Indian television broadcaster Zee Entertainment Enterprises (ZEE) has launched a dedicated Bollywood movie channel for the German market.

The new channel, Zee.One, will target women between the ages of 19 and 59 years. The content will be specifically adapted for the German market, the company said.

From autumn on, the channel plans to develop and produce its own show formats like magazine shows.

Zee.One will be receivable via satellite (Astra) and cable (Vodafone, Unitymedia, Telecolumbus) and will soon be available on more platforms in the German market.

Amit Goenka, CEO - International Broadcast Business, ZEE, said: “The launch of Zee.One in Germany is a step further as part of our international expansion strategy. We want to establish a lasting presence and of course, grow in the German television market.”

The channel will be available as a free-to-air service and broadcast a variety of movies spanning all genres including romance, comedy, and action among others. Series, music clips, as well as in-house productions will add to the schedule.

India has achieved a landmark milestone of economic reforms EEPC India, the apex organisation of the engineering exporters, said India has achieved a landmark milestone of economic reforms, which would help the government’s flagship programme of Make in India giving boost to the manufacturing.

However, it said the GST implementation should be done in a manner to avoid procedural difficulties for exporters.

EEPC India Chairman Mr T S Bhasin congratulated the Prime Minister Mr Narendra Modi and Finance Minister for being able to create a political consensus on the GST Bill and get it passed in Parliament.

“Instead of first paying the taxes and then claiming credit for the same, the proposed enabling GST law should exempt exporters from the taxation net since the country does not want to export taxes, “ EEPC India Chairman said.

He said the process of refund which shall take not less than 5/6 months and may go beyond any time. Even we consider 6 months on average the impact will be requirement of additional working capital.

The purchasers will now have to ensure that their vendors have robust IT infrastructure and compliance process, so that the vendors do not default on timely and appropriate payment of taxes.

India’s two-wheeler industry set to record fastest growth in five years in fiscal 2017 India’s two-wheeler industry is set to record its fastest growth in at least five years in fiscal 2017, boosted by plentiful monsoon rains that invigorated the key rural market and higher spending expected in cities because of a salary hike to government staff.

Industry players are predicting the market to grow at least in high single digit in current fiscal year through March 2017. If the monsoon rains continue to be plentiful, the rate may even break into double digits.

With softening fuel prices and easing interest rates, fundamentals are already in place to drive demand, they said. Two-wheeler sales last grew in double digits in fiscal 2012, when the increase was 14%. Since then, the growth has been between 3% and 8%.

India’s two-wheeler industry set to record fastest growth in five years in

fiscal 2017 “The prospective buyer has been deferring his purchase for way too long. He is expected to come back thanks to the improved macro-economic sentiment,” said YS Guleria, the head of sales and marketing at Honda Motorcycle & Scooter, the country’s second largest two-wheeler maker. “The festive season this year is going to be among the best we have seen in recent years. We expect the market to grow by 9-10%.” If the monsoon is good, growth may even exceed this forecast, he added.

The two-wheeler market grew 14% in the April to June period, the first quarter of the fiscal year, albeit on a low base. Scooter sales have grown at a rapid pace of 27.12% due to increased supply from Honda and with other companies getting aggressive in the segment.

The motorcycle segment, which has been a laggard in recent years, expanded 8%.

Motorcycle sales in the past four to five years had increased at less than 4%. Industry experts cite abnormal rainfall, which hurt the rain-dependent rural economy that drives motorcycle sales, for the weak performance.

This time, with a normal monsoon so far and the upcoming salary hike to government employees, both rural and urban folks are expected to have disposable income, and a part of that is expected to be spent on consumer durables. Two-wheeler makers, too, expect to benefit from this discretionary spending. Hero MotoCorp projected high single digit growth both for the company and the industry.

India to have 13.5% share in global smartphone market by 2019 As more people are shifting to smartphones due to rising affordability of such devices and indigenous manufacturing, India India Newsletter • 9

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is expected to have a total number of 180 million smartphones by 2019, claiming 13.5% of total global smartphone market, a report by Assocham-KPMG has said.

India’s share in global smartphone market is currently 7.6%.

The report said India is fastestgrowing market for mobile handsets and globally contributed nearly 7.6% to the global smartphone market in 2015 and is expected to touch 13.5% by 2019 with increasing popularity of smartphones, better availability of data services etc.

“Out of a total handset sale of 30 crore units in FY15, smartphones contributed 11.40 crore units i.e.

38%. This contribution is projected to grow to above 50% by 2020,” it added.

Boost in smartphone penetration is expected to cater to m-enablement of a variety of services such as mobile banking, e-commerce, mobile health, e-agriculture and services to small and medium scale businesses.

A key contributor to this growth is the decreasing price phones. The industry expects to leverage on the rural demand and assist the government in realising the digital dream.

The report said growth of Indian handset manufacturing companies has been nothing less than miraculous over the last five years.

India manufactured 11 crore mobile phones worth Rs 54,000 crore in FY16, showing a year-on-year growth of 83% and 186%, in volume and value terms, respectively. With the ability to provide feature rich yet affordable handsets, domestic manufacturers’ share of the handset market is slated to grow further.

This will be further enhanced by the increased penetration of telecom services in rural India.

The mobile handset sector is a key component in the overall telecom ecosystem and a key driver of the digital revolution in the country.

India is the second largest mobile market with over a billion 10 • India Newsletter

subscribers at the end of Feb 2016, with 608.4 million urban subscribers and 443.5 million rural subscribers.

Forex reserves at record US$ 365.5 billion India’s foreign exchange reserves rose $2.8 billion in the week ended July 29 to a record high of $365.5 billion, data from the Reserve Bank of India (RBI) showed.

The increase was led almost entirely by foreign currency assets as the central bank intervened in the market to accumulate dollars. In July, foreign portfolio investors bought a record Rs 7,000 crore of bonds and another Rs 11,000 crore in equities in the local market. RBI bought the resultant dollars even as rupee strengthened to close at 66.78 a dollar on Friday from its recent levels of above 67 against the dollar.

Data showed India’s foreign currency assets rose $2.79 billion.

India adopts inflation target of 4% for next five years under monetary policy framework India adopted an inflation target of 4% for next five years under the monetary policy framework as previously agreed and in line with the Centre’s focus on macroeconomic stability to boost growth while keeping prices in check.

The finance ministry has notified the consumer inflation target for RBI until March 31, 2021, with an upper tolerance level of 6% and lower limit of 2% that was finalised in consultation with Governor Raghuram Rajan, whose term ends next month. This prepares the ground for setting up Monetary Policy Committee that will set rates in keeping with this target. RBI currently sets the rate.

“Fixation of an inflation target while giving due emphasis to the objective of growth and challenges of an increasingly complex economy is an important monetary policy reform,” the finance ministry said in a release on Friday. Inflation based on the consumer price index (CPI) in June

was at 5.77%, close to the upper end of the band, which all but rules out a reduction in rates in the near term.

India adopts inflation target of 4% for next five years under monetary policy framework The next monetary policy review is set for August 9, the last that will be overseen by Rajan. The decision means there’s no change in the target included in the monetary policy framework agreement between the government and RBI in February last year — 4% with a range of +/-2%.

“In view of the powers conferred by Section 45ZA of the RBI Act 1934, the central government, in consultation with the bank, hereby notifies the inflation target beginning from the date of publication of this notification and ending on March 31, 2021,” said the government notification tabled in the Lok Sabha.

When the Reserve Bank of India fails to meet the inflation target, it will send a report to the central government stating reasons and remedial actions that will be taken.

A breach of the “tolerance level” for three consecutive quarters will constitute a failure of monetary policy. ET reported on July 23 that the government was likely to retain the target of 4%.

There had been some speculation about a higher inflation target being prescribed to create room for a reduction in interest rates to boost growth. Former RBI governor C Rangarajan said the monetary policy framework was appropriate.

“I have always maintained that the dominant objective of monetary policy is price stability and it is through price stability it plays a role in growth augmentation,” he said.

“This target is not very rigid as even up to 6% harsh measures may not be needed.”

ECONOMISTS PLEASED Economists welcomed the government’s adherence to the informally agreed number.

“The decision to retain the inflation target would impart continuity to

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policy setting amidst the impending shift towards a MPC-determined policy rate,” said Aditi Nayar, senior economist, ICRA Ltd. The finance ministry said the advantage of having a band is that it allows the MPC to recognise the short-run tradeoffs between inflation and growth but enables it to rein in prices in the long run and over the course of business cycles.

“This target also allows (it) to accommodate unanticipated shortterm shocks even while nudging public inflation expectations on the centre of the range, to which the monetary policy will return the economy over the medium term, leading to transparency and predictability,” the ministry said.

The range also accommodates data limitations, projection errors, shortrun supply gaps and instability in agriculture production, an important factor for CPI inflation.

Food articles account for a major weight in the indices.

STATUTORY BACKING The earlier agreement, in the form of a memorandum of understanding, has now been given statutory backing with the latest notification by an amendment to the RBI Act. The amendment lays down that the central government will, in consultation with RBI, determine the inflation target once every five years.

“The preamble in the RBI Act, as amended by the Finance Act, 2016, now provides that the primary objective of the monetary policy is to maintain price stability, while keeping in mind the objective of growth, and to meet the challenge of an increasingly complex economy,” the ministry said. “RBI would, accordingly, operate a monetary policy framework. Thus, now there is a statutory basis for a monetary policy framework and the Monetary Policy Committee.”

Balancing growth with price stability has previously led to conflict between RBI and the government, which usually wants lower interest rates that can provide a lift to

the economy. The government shouldn’t push to bolster growth at the expense of the inflation focus, State Bank of India economist SK Ghosh said.

“Since the government has acknowledged 4% as the inflation target, it should give full freedom to RBI to set the interest rates... There should not be any interference,” he said. “The government should know the consequences of this move because interest rates are unlikely to come down if prices continue to remain in this range.”

MONETARY POLICY COMMITTEE The amendment to the RBI Act provides for the creation of a sixmember MPC chaired by the RBI governor, who will have a casting vote in the event of a tie. Of the six, three will be from RBI — the governor, a deputy governor and another officer.

The other three members will be appointed by the central government on the recommendations of a search-cumselection committee. They will be chosen from experts in economics, banking, finance and monetary policy. A senior government official said the monetary policy panel will be set up soon.

4 Indian-origin people named in Forbes’ list of top US wealth advisors Forbes’ list of top 200 US wealth advisors includes four Indian-origin people, namely Mr Raj Sharma (17) and Mr Ash Chopra (129) of Merrill Lynch Private Banking & Investment Group, Mr Sonny Kothari (176) of Merrill Lynch Wealth Management, and Mr Raju Pathak (184) of Morgan Stanley Wealth Management. Wealth advisors affiliated with Morgan Stanley, Merrill Lynch and UBS dominate the top of the list and these 200 members on the Forbes’ list collectively manage US$ 675 billion worth of wealth. Forbes stated that all of the 200 advisors are well-trusted to handle the money of wealthy individuals and families because of their expertise and hence deserved a spot in the list.

Breakthrough cancer drugs all set for India launch Cancer patients in India are set to gain faster access to two of the world’s best known new generation drugs - Keytruda from US based Merck and Bristol Myer Squibb’s Opdivo - both used to treat melanoma, a form of malignant skin cancer and a life-threatening lung cancer.

According to a top health ministry official, while Keytruda has recently been granted approval by the Drug Controller General of India in line with recommendations of expert oncologists and a powerful apex committee, Opdivo has secured waiver from clinical trials a few months ago, paving the way for its marketing authorization.

Breakthrough cancer drugs all set for India launch The accelerated regulatory clearances cut the time lines for introductions of the two big brands which may be expected to be introduced by the end of the year, market sources indicated.

Ever since their approvals by the US FDA in 2014, the two drugs have set new standards in cancer care, raising hopes of more breakthroughs in managing cancer patients. While most existing drugs aggressively attack cancer cells and in the process risk harming healthy tissues, Keytruda and Opdivo work differently, helping the immune system identify and selectively combat only the cancerous cells.

While Keytruda generated global sales of $566 million during 2015, Opdivo grossed $942 million, on course to reaching a blockbuster status.

Last November, a Subject Expert Committee (SEC) in India had granted import and marketing for pembrolizumab, branded Keytruda.

It said the drug may be granted waiver of local clinical trial but put a condition of conducting phase four study in Indian patients.

Railways plans Rs 7,000 crore investment in northIndia Newsletter • 11

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east Railway minister Suresh Prabhu on Sunday flagged off Tripura Sundari Express, the first passenger train that will connect Agartala with New Delhi. The train will run once a week with a journey time of 47 hours.

The railways will invest more than Rs.7,000 crore in the current fiscal year to develop its network in the seven north-eastern states, Prabhu said, adding, in 2014-15, only Rs.2,702 crore was spent for this purpose.

Initiatives for better connectivity in the region will result in all-round development in the north-east and gradually, the region will have the highest per capita income in the country, Prabhu said. The minister also announced plans to start an Agartala-Kolkata train service.

“Increase of inter-state connectivity and connectivity between the region and the rest of the country are being given the highest priority.

Available connectivity will boost the region’s economy,” Prabhu said.

At a function in Agartala, the minister also laid the foundation stone for a 15km rail link that will connect the capital of Tripura to Akhaura in Bangladesh.

If the facilities of the Chittagong port can be used, then trade and economy of both north-east India and Bangladesh will flourish, he said.

The minister added that India is keen to increase railway connectivity with Bangladesh.

The Agartala-Akhaura link will facilitate trade and people-topeople ties. It is also expected to facilitate transit from Chittagong and Mongla ports in Bangladesh to Tripura and the north-east.

Bangladesh railway minister Mazibul Hoque, who attended the function, said Prime Minister Sheikh Hasina had announced plans to revive all pre-1965 railway connectivity with India.

“We want very close connectivity between our two friends (India and Bangladesh) and closer people-topeople relation,” Hoque said, adding 12 • India Newsletter

Prime Minister Narendra Modi and Tripura chief minister Manik Sarkar had also agreed to help Bangladesh curb terrorism.

While lauding Bangladesh for cooperation and help in establishing the rail link, Prabhu said more options for connectivity with the country would be explored.

Referring to the problem of land acquisition for railway projects, he said the Agartala-Akhaura link is planned as an elevated line to minimize land acquisition.

Prabhu said the Indian Railways Catering and Tourism Corp. (IRCTC) would be advised to explore the possibility of developing tourist packages including in the northeast and Bangladesh to connect more people to the region.

Acknowledging the current fuel crisis in the state because of its poor road connectivity, the minister said he had instructed officials to take steps to bring more fuel through railways.

Cabinet increases the limit for foreign investment in stock exchanges from 5% to 15% The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for raising foreign shareholding limit from 5% to 15% in Indian Stock Exchanges for a stock exchange, a depository, a banking company, an insurance company, a commodity derivative exchange. The Cabinet has also approved the proposal to allow foreign portfolio investors to acquire shares through initial allotment, besides secondary market, in the stock exchanges.

The move will help in enhancing global competitiveness of Indian stock exchanges by accelerating/ facilitating the adoption of latest technology and global best practices which will lead to overall growth and development of the Indian Capital Market.

The approval is in pursuance of implementation of the Budget Announcement made by the

Finance Minister Shri Arun Jaitley while presenting the Union Budget 2016-17 regarding reforms in FDI Policy with respect to enhancement of investment limit for foreign entities in Indian stock exchanges from 5% to 15% on par with domestic institutions.

India is one of the fastest growing markets for Apple Apple CEO Tim Cook said the company is looking forward to open its company owned stores in India which has become one of the most important markets for the company.

In an analyst conference call after announcing Apple’s third quarter result on wee hours of Wednesday, Cook said: “We’re looking forward to opening retail stores in India down the road, and we see huge potential for that vibrant country.”

The remarks assume significance since Apple was studying the changes in norms for single brand retailers announced last month to set up stores in the country.

As per the new norms, foreign single brand retailers can comply with the controversial 30% local sourcing requirements over the first five years of its operations, and not from the first year, as was proposed in the earlier policy. It also said that these rules will not apply for the first three years of operations for foreign companies that sold products having ‘cutting edge and ‘state-ofthe-art’ technology.

Apple has sought clarification from the government on the definition of these terms and sourcing clause, as ET had reported earlier this month.

During the call, Cook said India is now one of the fastest growing markets for Apple.

“In the first three quarters of this fiscal year, our iPhone sales in India were up 51% year on year,” Cook said.

The Apple boss updated analysts that he was encouraged by the growth prospects in India and China during his visit during the quarter.

Apple continued to report double digit growth in iPhone sales during the quarter in its key markets which

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included India along with Japan, Turkey, Brazil, Canada and Sweden.

The company also reported “healthy growth” in revenue a number of markets which included India, Russia, Brazil, Trukey and Canada.

Cook said Apple has just launched a first of its kind design and development accelerator to support Indian developers creating innovative applications for its iPhone and iPad operating system, and opened a new office in Hyderabad to accelerate maps development.

Indian auto component industry to grow 5 times by 2026 Global auto component market is pegged to be around $1.75 trillion.

However, Indian auto component industry revenue stands at just $40 billion, which is just 2.3 per cent of the total Indian GDP and contributes $11 billion of exports.

“It is expected the market size and exports will grow by fives times according to Automotive Mission Plan (AMP) 2026. This would require an investment of $25-30 billion.

So we are not playing for today’s market, we are playing for 2026” said Arvind Balaji, President, ACMA. Top auto component manufacturers have invested $50 billion in the R&D and 50 per cent of innovation in the automotive industry is done jointly with auto component players.

According to industry leaders, the growth opportunities are tremendous and that is the reason everybody is looking at this market.

However, any opportunity comes with challenges. The first and foremost challenge is to deliver a better quality and technology products to OEMs. Also, industry sees a lag in scalingup, new technology implementation and shifty government policies which are impacting the business.

The reason that industry isn’t able to scale is that RBI guidelines don’t allow companies to borrow money to buy companies.

Due to this, consolidation is not taking place. However, the global

players can borrow money at 3 or 4 per cent to that enables them to consolidate and expand.

Further explaining the challenges, Balaji added, “At one hand, the government is talking about ‘Make in India’ but on the other hand, inverted duty structure is making cost of raw materials higher in India than anywhere else. So, the government say ‘Make in India’ but does not have policies in place for smooth functioning. The government is ready to listen, so we are giving them recommendations.

As we must have policies to promote manufacturing.”

At the same time, we are also recommending the government to encourage partners to invest in R&D. As government has removed some benefits in investing in R&D. Lastly, with new technology coming in, there is a huge danger if we don’t invest in increasing our capabilities.

In next 10 years, we will end up borrowing technology through some FTA scheme. We are hopeful the government will respond.

Air traffic continues to post double-digit growth in India Air traffic grew at double-digit pace in June, with airlines reporting robust occupancy figures, according to data released by the Director General of Civil Aviation (DGCA).

Airlines carried 7.97 million domestic passengers last month, an increase of 20.81% from June 2015. IndiGo had 37.9% of the market share— equal to the combined market share of Air India (15.5%), Jet Airways group (19.1%) and Vistara (2.8%).

SpiceJet (12.7%), GoAir (8.3%), Air Costa (0.8%), AirAsia India (2.2%) Air Pegasus (0.3%) and TruJet (0.4%) remained close to their May market share.

The overall cancellation rate of scheduled domestic airlines in June was 0.96%. Trujet, Air Pegasus, AirAsia India and Air Costa had the highest number of flight cancellations at 21.73%, 19.33%, 10% and 3.06% respectively.

Air India, GoAir, Trujet, Jet Airways

were the targets of the highest number of passenger complaints.

Bad customer service and baggage mishandling were among the main complaints by passengers.

SpiceJet had the highest flight occupancy at 93% followed by AirAsia’s 90.2%, GoAir’s 84.6%, Air India’s 82%, Air Pegasus’ 82.2% and TruJet’s 81%. IndiGo, Jet Airways and Vistara flew their flights less than 80% full at 77.9%, 79.1%, 79%.

JetLite’s occupancy rate was the lowest at 75.2%.

“The passenger load factor in the month of June 2016 has slightly decreased compared to previous month primarily due to the end of tourist season,” DGCA said in its report.

The second quarter of the fiscal year starting July is considered the lean season for travel, when most airlines lower their fares to attract passengers.

India to be a five million car market by 2020 Maruti Suzuki India Ltd, India’s largest car maker, said that the local car market will reach 5 million units in annual sales by 2020, making the country the fourth-largest market in the world.

The estimates were given by Maruti Suzuki chairman R.C. Bhargava at an auto parts conference.

“At five million cars by 2020, we will be just about number four (in the global pecking order),” Bhargava said in his address on Changing Trends in Automotive Supply Chain, organized by the Auto Components Manufacturers of India.

Maruti’s forecast is in line with the central government’s Auto Mission Plan II that forecasts the passenger vehicle (PV) market to more than triple to 9.4 million units by 2026 from 2.8 million now if the economy grows at an average rate of 5.8% a year. If the economy grows at an average yearly pace of 7.5%, the size of the passenger vehicle market is forecast to rise to 13.4 million units, making it the world’s second largest after China. Mint reported this first India Newsletter • 13

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on 2 September 2015 Bhargava added the Indian automotive sector is poised for solid growth and “demand for cars will grow faster than in the last two years” when a market slowdown impacted sales.

“Despite what NGT (National Green Tribunal) or others are trying to do, we’ll achieve higher growth than last year,” Bhargava said, referring to a recent order by the NGT that seeks to scrap diesel vehicles older than 10 years on Delhi roads.

To be sure, the NGT order is also likely to propel growth in vehicle sales as it will create a replacement demand in the market. As of 2014, Delhi had 8.9 million registered passenger vehicles. Of these, there are around 220,000 diesel passenger vehicles and 170,000 commercial vehicles that are more than 10 years old, according to industry estimates.

The process of de-registration of diesel vehicles in the National Capital Region will start with the scrapping of 15-year-old diesel vehicles.

Bhargava’s projections come at a time when the passenger vehicle sales are on a rebound in the country after the segment declined once and grew in lower single digits thrice in the last four years.

Sales have picked up largely because of a moderation in interest rates and lower fuel prices. Between July 2015 and June, car loan rates have come down by 65 basis points for public sector banks and 25 basis points for private banks.

One basis point is one-hundredth of a percentage point.

Hopes of faster growth have been fanned by predictions of betterthan-average monsoon rainfall. The India Meteorological Department (IMD) and private forecaster Skymet Weather Services Pvt. Ltd have predicted above-normal rain in the June-September south-west monsoon, after two consecutive years of drought. A pick-up in sales in rural areas however may take longer because of the extent of distress among farmers.

14 • India Newsletter

Latest data from IMD shows that the rainfall deficit in the entire country is now nil and that 75% of the country has received normal-to-excess rainfall so far this season.

Implementation of the recommendations of the seventh pay commission will also lead to a slight spike in demand.

Maruti Suzuki’s vehicle sales grew 11.5% to 1.3 million in 2015 -16, outpacing the Indian passenger vehicle industry’s aggregate 7.24% growth during the year. Including exports, Maruti sold a total of 1.42 million units.

For 2016-17, the car maker has forecast that sales will grow at lower double digits. Maruti’s car sales, including exports, grew just 2.1% to 348,443 units in the first three months of this fiscal because of a disruption in production.

Maruti will look to sell more than 1.5 million units in the current year.

With new production capacity being added through its manufacturing agreement with its parent Suzuki Motor Corp. in Gujarat, the car maker will be able to sell 1.75 million units in 2017-18, said another top Maruti executive.

“By 2020, Maruti should be doing 2 million units every year,” said Deepak Sethi, executive director (supply chain) at Maruti Suzuki.

India an island of calm in a choppy world India is an island of calm in a world beset by turbulence, said Jes Staley, CEO of Barclays, one of Britain’s biggest banks. PM Narendra Modi’s policy changes are making it easier to do business in India while Europe is wracked by Brexit and other emerging markets are shaky following the commodities collapse.

“The PM has had a dramatic impact on India and...the world,” Staley told ET in an interview. “I think with the challenges the globe is facing now, PM Modi is a source of stability and we need that around the world today.”

Staley joins global chief executive officers such as John Chambers of Cisco and Satya Nadella of Microsoft

who have endorsed Modi’s economic management although many local businesses grumble that things don’t seem to have changed much on the ground.

India is better protected against global uncertainty because its economy is not as dependent on export income and benefits from the decline in commodities, the Barclays CEO said.

India an island of calm in a choppy world: Barclays CEO Jes Staley “I am a buyer (of India),” said Staley.

“Economic prospects are very favourable. The government is working very hard to change laws so that India restructures itself to provide economic growth. India is not a developing country dependent on commodities almost uniquely. In fact, it’s one of the countries which benefits when commodities get cheaper. That I think is a very positive sign.”

Staley took over as Barclays CEO in December last year and has since announced a broad restructuring programme that involves shrinking operations in Asia, including India, where it shut the equities business.

But its back-office operation in the country is substantial, employing more than 16,000. Barclays plans to expand this, the CEO said.

“We have great intellectual capital in our bank in India. One-third of the executive committee of Barclays are now from India,” Staley said. “We will be done (selling down) by 2017 and we now need to focus on growth and helping to fund growth in places like India and elsewhere... We will not change the locations or the markets that Barclays operates in.”

The bank is gearing up for future growth in the country.

“It was a very relevant or important decision that we made that we want to stay committed as an investment and corporate bank to India and we will,” he said. “We hope to grow that business in the future.”

India debt-GDP ratio one of the lowest among emerging markets

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At 23% in 2015, India had one of the lowest foreign debt-to-GDP ratios among 83 emerging market countries, although it has risen from 17% in 2005 to the current level.

Also, among the Asian countries covered in an analysis by global ratings major Moody’s Investors Service, compared to an average Debt-to-GDP ratio of 47%, India’s is less than half that number.

According to the report, India experienced the second largest increase in external debt between 2010 and 2015. “India had $474 billion in external debt as of 2015, representing 16% of the Asia Pacific region’s total debt. India’s external debt has grown two to three times slower than China, at a five-year annual average rate of 8.4% and a ten-year annual average rate of 13.4%. As a result, the external debtto-GDP ratio in India has risen from

17% in 2005 to 23% in 2015, but is still one of the lowest globally,” it noted.

The analysis also found that BRICS block owns 37% of all emerging market external debt. In dollar terms, as of end-2015, China represented 17% of total emerging market external debt, Brazil 8%, Russia 6%, and India another 6%.

India’s GDP growth to expand about 8% in next two years International credit rating agency Standard & Poor’s (S&P) has struck a buoyant note, penciling in a 8% growth for India in the next two years.

“Growth quality in India continues to improve and we forecast its GDP expanding by about 8% in fiscal year 2017 and 2018,” S&P said in “APAC Economic Snapshots--July 2016”

released on Thursday.

This is much higher than forecast of other international agencies. IMF has forecast 7.4% growth in the next two years.

The rating agency has, however, put some condition before India can climb to this growth, including a good selection of Reserve Bank of India governor. Indian economy expanded 7.6% in FY16.

“That view is predicated on the steady, ongoing structural reform push, including GST passage, a good monsoon season this year, and a wise choice to head the Reserve Bank,” S&P said.

Along with India, the rating agency also had a more positive view of the Asia-Pacific reason. “China’s growth should continue to ease throughout the rest of this year, but we have raised our GDP forecasts to 6.6% this year and 6.3% next year,” it said.

INDIA PERSPECTIVES MAGAZINE ONLINE

www.magzter.com/publishers/meaindia

India Newsletter • 15

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MAKE IN INDIA Summary ■■ India’s space programme stands out as one of the most cost-effective in the world.

SPACE

■■ 33 countries and three multinational bodies have formal co-operative arrangements in place with the Indian Space Research Organisation (ISRO).

■■ 30 spacecraft in differing orbital paths.

Reasons to Invest ■■ Through the last four decades, India’s space programme has attracted global attention for its accelerated rate of development.

■■ India’s cost-effective space programme has launched 51 satellites for 20 countries to date and has the potential to serve as the world’s launchpad.

■■ The ISRO has forged a strong relationship with a large number of industrial enterprises, both in the public and private sector, to implement its space projects.

■■ With the ISRO undertaking the development of cutting-edge technologies and interplanetary exploratory missions, there is a tremendous scope in contributions to the realisation of operational missions and new areas such as satellite navigation.

■■ TECHNOLOGY TRANSFER ■■ The technologies licensed to industries for commercialisation include Multi-Layer Printed Antenna Technology and DDV 100 Resin system. In addition to this, industries have been shortlisted for the knowhow transfer of Dual Polarization LIDAR, Solid State Power Amplifier, Precision Tapping Attachment and EPY 1061 coating compound.

There are a number of technologies identified for know-how transfer from ISRO. These include various types of adhesives and polymers, 16 • India Newsletter

silica fiber and granule material, ceramics, pressure transducers, liquid level detectors, temperature sensors, silver plating and thermal control coating techniques, ground penetration radar, elastic Raman Lidar, Lower Atmospheric Wind Profiling radar etc ■■ TECHNICAL CONSULTANCY ■■ ISRO provides technical consultancy services to industries and R&D institutions in diverse areas of its expertise. Some recent areas where consulting services have been provided are: gold plating application on MMIC-based Kuband receiver and on aluminum boxes, fabrication of precision components, mechanical shock tests etc., to name a few

Statistics ■■ Space activities in the country were initiated with the setting up of the Indian National Committee for Space Research (INCOSPAR) in 1962.

September 1972.

■■ Polar Satellite Launch Vehicle (PSLV), in its 21st flight (PSLV-C19), launched India’s first radar imaging Satellite (RISAT-1) from Sriharikota on April 26, 2012 of which one orbited India’s Radar Imaging Satellite (RISAT-1) and the other a French Remote Sensing Satellite SPOT-6 and the Japanese satellite PROITERES. ■■ In its 22nd flight (PSLV-C21), PSLV successfully launched the French earth observation satellite SPOT-6, along with Japanese micro-satellite PROITERES from Sriharikota on 09.09.2012.

■■ India’s heaviest communication satellite, GSAT-10, was successfully launched by Ariane-5 VA 209 from Kourou, French Guiana on 29.09.2012.

■■ The ISRO was established in August 1969.

■■ PSLV, in its 23rd flight (PSLV-C20), successfully launched Indo-French Satellite SARAL along with six smaller foreign satellites from Sriharikota on 25.02.2013.

■■ The Government of India constituted the Space Commission and established the Department of Space (DOS) in June 1972 and brought ISRO under DOS in

■■ ISRO currently has a constellation of nine communication satellites, 1 meteorological satellite, 10 earth observation satellites and one scientific satellite.

Indian Embassy, Vienna

Growth Drivers ■■ THE INDIAN SPACE RESEARCH ORGANISATION (ISRO): ■■ The prime objective of ISRO is to develop space technology and its application to various national tasks.

■■ SPACE COMMERCE: ■■ Antrix Corporation Limited, the commercial arm of the Department of Space has undertaken a number of initiatives for the global marketing of space products and services.

Antrix has continued to expand its market base.

■■ There has been good progress in the provision of TTC support to international customers.

■■ LAUNCH VEHICLES: ■■ Satellite Launch Vehicle (SLV): Its first launch took place in 1979 with two more in each subsequent year, and the final launch took place in 1982.

■■ Augmented Satellite Launch Vehicle (ASLV): The first launch test was held in 1987, and three others followed in 1988, 1992 and 1994.

■■ PSLV is capable of launching Remote Sensing (IRS) satellites into sun-synchronous orbits. It can also launch small satellites into geostationary transfer orbit (GTO). The reliability and versatility of the PSLV is proven by the fact that it has launched 30 spacecraft (14 Indian and 16 from other countries) into a variety of orbital paths so far.

■■ Geosynchronous Satellite Launch Vehicle (GSLV): The Geosynchronous Satellite Launch Vehicle, known by its abbreviation GSLV, is an expendable launch system developed to enable India to launch its INSAT-type satellites into geostationary orbit and to make India less dependent on foreign rockets. At present, it is ISRO’s heaviest satellite launch vehicle and is capable of putting a total payload of up to five tonnes to Low Earth Orbit.

■■ SPACE SCIENCE PROGRAMME: ■■ Space science research activities are pursued at the Physical Research Laboratory (PRL), the Space Physics Laboratory (SPL), the National

Atmospheric Research Laboratory (NARL) and the Special Advisory Group (SAG) at the ISRO Satellite Center (ISAC). A number of space science research projects in the field of atmospheric science, astronomy and planetary exploration and science payload development activities are supported and implemented at various universities and research institutes by ISRO through the recommendations of ISRO’s Advisory Committee for Space Sciences (ADCOS).

■■ Mars Orbiter Mission is ISRO’s first interplanetary mission to Mars with a spacecraft designed to orbit Mars in an elliptical orbit of 372 kms by 80,000 kms. The primary driving technological objective of the mission is to design and realise a spacecraft with a capability to reach Mars (Martian Transfer Trajectory), then to orbit around Mars (Mars Orbit Insertion) over a period of nine months.

FDI Policy ■■ TForeign Direct Investment (FDI) up to 100% is allowed in satellitesestablishment and operation, subject to the sectoral guidelines of the Department of Space/ISRO, under the government route.

Sector Policy ■■ SATELLITE COMMUNICATION POLICY: ■■ A policy framework for Satellite Communication in India (approved

by Government in 1997).

■■ The norms, guidelines and procedures for implementation of the Policy Framework for Satellite Communications in India, approved by the government in the Year 2000.

■■ INSAT Co-ordination Committee.

■■ Remote Sensing Data Policy 2011..

International Cooperation ■■ Formal co-operative arrangements are currently in place with space agencies of 33 countries and three multinational bodies, namely, Argentina, Australia, Brazil, Brunei Darussalam, Bulgaria, Canada,

Chile, Egypt, European Centre for Medium Range Weather Forecasts (ECMWF), European Organisation for Exploitation of Meteorological Satellites (EUMETSAT), European Space Agency (ESA), France, Germany, Hungary, Indonesia, Israel, Italy, Japan, Kazakhstan, Mauritius, Mongolia, Myanmar, Norway, Peru, Republic of Korea, Russia, Saudi Arabia, Spain, Sweden, Syria, Thailand, the Netherlands, Ukraine, the United Kingdom, the United States of America and Venezuela.

■■ The areas of co-operation address mainly remote sensing of the earth, satellite communication, launch services, telemetry and tracking support, space exploration, space law and capacity building.

■■ Co-operative instruments signed during last year are: ■■ 1.

An implementation arrangement between ISRO and the National Oceanic and Atmospheric Administration (NOAA) of USA for collaboration of OCEANSAT-2 activities.

■■ 2.

Implementing arrangement between ISRO and the National Aeronautics and Space Administration (NASA) of USA for the collaboration of OCEANSAT-2 activities.

■■ 3.

Implementing arrangements between ISRO and NASA for co-operation on Global Precipitation Measurement and Megha-Tropiques.

■■ 4.

Memorandum of Understanding between India and Australia concerning cooperation in Civil Space Science, Technology and Education.

■■ 5. Cooperation Agreement among ISRO, CNES and EUMETSAT concerning the use of Near Real-Time Megha-Tropiques data.

■■ ISRO and the French National Space Agency (CNES) have worked in synergy to make available data products from Indo-French MeghaTropiques satellite to the global scientific community for validation activities.

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■■ India-USA space cooperation made significant progress during last year and several follow-up actions of the third meeting of India-USA Joint Working Group on Civil Space Cooperation held at Bangalore in July 2011 were actively pursued.

■■ The wind products derived from OCEANSAT-2 Scatterometer are disseminated globally since October 2012 for operational global applications through an arrangement with EUMETSAT. ■■ The processed data from meteorological satellites of other nations are made available by EUMETSAT to Indian scientific community through a system called ‘EUMETCast’.

■■ ISRO and the Canadian Space Agency (CSA) are working on the development of the Ultraviolet Imaging Telescope (UVIT) planned on ISRO’s multi wavelength astronomy satellite ASTROSAT. ■■ ISRO continues to share its facilities, expertise and services in the application of space technology through hosting of United Nations (UN) affiliated Centre for Space Science and Technology Education in Asia and the Pacific (CSSTE-AP).

As of now, there are more than 1100 beneficiaries from 52 countries.

■■ ISRO, on behalf of India, continues to play an active role

in the deliberation of the United Nations Committee on Peaceful Uses of Outer Space (UN-COPUOS).

■■ NLS.1 & NLS7.2:

Projects

■■ Mass: 15 kilograms

■■ GSLV III: It is designed to launch heavier communication satellites weighing 4500 to 5000 kg, it would also enhance the capability of the country to be a competitive player.

GSLV is designed to put satellites to geosynchronous transfer orbit, an intermediate orbit to which satellites ultimately destined for geostationary are normally taken by launchers.

■■ Chandrayaan II: India second moon mission, Chandrayaan II, set to be launched in 2016-17, will have a soft land over a wheeled robotic vehicle to explore the landing area.

■■ Manned mission to Space.

■■ Mars Orbiter Mission.

■■ PSLV: The PSLV is capable of launching 1600 kg satellites in 620 km sun-synchronous polar orbit and 1050 kg satellite in geo-synchronous transfer orbit.

■■ THE 5 FOREIGN SATELLITES: ■■ SPOT-7 ■■ Country: France ■■ Mass: 714 kilograms ■■ Objective: Earth Observation satellite, similar to SPOT-6. Will form part of the existing earth observation constellation.

■■ Objective:

■■ Country: Canada

Experiments

on

formation flying of two satellites which are very near to each other in orbit, using GPS. ■■ VELOX-1: ■■ Country: Singapore ■■ Mass: 7 kilograms ■■ Objective: technology satellite-based

Experiments demonstration cameras

of and

associated systems.

■■ AISAT: ■■ Country: Germany ■■ Mass: 14 kilograms ■■ Objective: A global sea-traffic monitoring system.

Agencies ■■ Department of Space ■■ Indian

Space

Research

Organization ■■ Antrix Corporation Limited

INDIAN SPACE PROGRAMME India in space, a low cost high value destination. ISRO dreams big, delivers big!

India’s success story in space technology seems to defy gravity, big time, since the Indian space agency the Indian Space Research Organisation (ISRO) has met with a string of spectacular achievements.

From completing India’s very own satellite based navigation system to launching the country’s pioneering mini space shuttle to making history by putting twenty satellites in orbit in a single launch. Coming soon a revisit 18 • India Newsletter

to the moon is among the romantic outings India has on its anvil.

On a hot and humid partly cloudy Wednesday morning on June 22, 2016, exactly at 9:26 a.m. an Indian rocket lifted off from the island of Sriharikota on the coast of the Bay of Bengal in Andhra Pradesh and in 26 minutes created history for the Indian space agency. The Polar Satellite Launch Vehicle (PSLV) in 26 minutes put in orbit 20 satellites.

This is no mean achievement. It is like dropping school children from a school bus that is travelling at a phenomenal velocity in space. ISRO

chairman Dr. A.S. Kiran Kumar, simply described the successful mission “A job done”.

The PSLV in its 36th launch weighed 320 tonnes, and was as tall as 44.4 metres, which is the average height of a 15 storey building. With this launch ISRO achieved 35 consecutively successful launches of India’s smaller rocket.

In 2008 ISRO had launched 10 satellites in a single mission, using the PSLV, creating a world record. Today the world record for successfully launching maximum number of

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satellites in a single mission is held by Russia, which in 2014, put in space 37 satellites.

In this record breaking mission ISRO lofted 17 satellites from foreign vendors which included, Germany, Indonesia, Canada and of these 17 birds, 13 satellites belonged to the United States of America. According to Dr. Jitendra Singh, Minister of State in the Prime Minister’s Office and in-charge of space affairs `through launch of these 17 foreign satellites, Antrix Corporation Ltd. has earned revenue of 10.24 Million Euros and 4.54 Million USD.’ This was the single largest number of satellites to be launched by an Indian rocket for America. Interestingly, for the first time India orbited a Google owned satellite. Terra Bella, a Californian company part of the global behemoth Google launched a 110 kilogram high-tech Earth viewing satellite SkySat Gen-2. This Google owned satellite, the company says will be used for mapping inventories. It should be noted that the launch contract for the Google owned satellite was negotiated with ISRO’s commercial arm the Antrix Corporation by a Bengaluru based start-up company Earth2Orbit for an undisclosed amount.

Increasingly foreign vendors are opting to launch their smaller satellites using Indian launchers, this is not surprising since it is estimated that it costs up to 50% less to launch satellites through ISRO. The PSLV has become a reliable, bankable and precision launcher which makes India an attractive destination for countries looking for a cheap and reliable option to launch satellite. Till date ISRO has launched a total of 113 satellites in space of which 74 have come from 20 different countries.

In the bargain ISRO has earned over $120 million in revenue for the country.

■■ ISRO’s finally grows wings!

The calm of a hot and sultry morning at Sriharikota was shattered exactly at 7 am on May 23, 2016 when India’s brand new rocket that carried India’s mini space shuttle into space blasted

off from India’s rocket port.

For the very time in its history ISRO actually grew wings as it embarked on a never before space flight that made history. The Indian space agency undertook the maiden launch of its very own indigenously made version of a `Space Shuttle’, a fully made in India effort.

Congratulating the scientist Prime Minister Narendra Modi said `the dynamism & dedication with which our scientists at ISRO have worked over the years is exceptional and very inspiring’.

Yes, the big powers abandoned the idea of a winged reusable launch vehicle but India’s frugal engineers believe the solution to reducing cost of launching satellites into orbit is to recycle the rocket or make it reusable. Scientists at ISRO believe that they could reduce the cost of launching stuff into space by as much as ten times if re-usable technology succeeds, bringing it down to $ 2000 per kilogram.

Re-usable Launch Vehicle – Technology Demonstrator (RLV-TD), was the first time ISRO launched a space craft, which actually had delta wings and after launch it was glided back onto a virtual runway in the Bay of Bengal after its nearly 13 minute flight.

The only countries that have attempted operational flights of a space shuttle are America, which flew its Space Shuttle 135 times and then retired it in 2011 and since then it lost its capacity to send astronauts in space on American made rockets.

The Russians made only a single space shuttle and called it Buran it flew into space just once in 1989.

After that The French and Japanese have made some experimental flights, from available literature it seems the Chinese have never attempted a space shuttle.

May be sooner than later the RLV should now be named the `Kalamyaan’ after India’s legendary former President APJ Abdul Kalam an aeronautics engineer par excellence who made top class rockets and dreamt big of India being propelled

to become a developed country.

For ISRO no dream is too big as it carefully forged ahead to have a fully `swadeshi space shuttle’.

■■ Signalling success!

Recently ISRO made a very special dash to complete India’s NAVIC – “Navigation with Indian Constellation” when the last of the seven satellites was successfully placed in the orbit by the Polar Satellite Launch Vehicle on April 28, 2016. The Indian satellite constellation is already providing day and night coverage of the navigation signal throughout the Indian region.

This is a unique achievement by ISRO. Modi took forward a germ of an idea from former Prime Minister Atal Bihari Vajpayee’s tenure when during the Kargil conflict with Pakistan, New Delhi was denied access to the best quality satellite based navigation system signals it desperately sought to annihilate with pinpoint accuracy the reinforced bunkers on the high hills made by the Pakistanis. The first round of the National Democratic Alliance government laid the foundation for the swadeshi GPS which Modi has fulfilled.

Other than India, globally, satellitebased navigational signals over South Asia are provided only by the American constellation of the Global Positioning System (GPS) and the Russian constellation that uses a system called GLONASS. It is ISRO’s claim that the Indian navigation system is superior to both these systems for the South-Asian region.

Moreover, the American and Russian systems use 4 times as many satellites for their systems, making NAVIC (like a lot of ISRO’s technology) very frugal, operating with just 7 satellites. It must of course, be clarified that the Indian NAVIC provides a regional signal while the American and Russian systems have global footprints.

When required India’s footprint can also be made global by augmenting the number of satellites.

NAVIC’s assured signal coverage extends over the country and about 1500 kilometres beyond Indian borders, and experts explain the rationale for this as being based on India Newsletter • 19

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the current threat perception that exists for the country.

Later this year ISRO is all set to test India’s monster rocket the Geosynchronous Satellite Launch Vehicle - Mark III capable of putting up to 8 tons in low earth orbit. Next year if all goes as per plan the country’s second mission to the moon Chandrayaan-2 will lift off which will among other things soft land India’s tricolour on the lunar surface, India reaching for the stars!

Taking baby steps towards reusable space shuttle ISRO achieved an important milestone with the successful testing of a reusable launch vehicle that will deliver spacecrafts into orbit and return to the earth’s surface Indian Space Research Organisation (ISRO), since its inception in 1972, has been experimenting with various fields associated with space sciences and rocket technologies. The key focus of the organisation is to ensure that India derives maximum benefits from its space programmes for its socio-economic development. As the country is essentially an agricultural economy, the emphasis of Indian space programmes is more towards receiving meteorological inputs, tracking various weather systems from Indian monsoon to movement of tropical storms, getting correct and relevant information for land and water resources management and knowing more about forest and other resources. Also, for all these years, India has been launching satellites for communications purposes and recently established its own regional navigational system.

Apart from focussing on core areas like meteorology, remote sensing, communication and navigation, ISRO focusses on areas with long-term scientific, technological and strategic relevance. To understand more about the planetary system, India has successfully undertaken missions to moon and Mars. Similarly, to know more about galaxies, the country has launched an astronomical satellite.

Apart from this, India is keen on developing systems which would 20 • India Newsletter

allow reducing the cost for launching satellites, to have the capability to launch satellites on demand and to prepare themselves for human missions to space. In order to develop this capability, India has taken a first step towards developing a Reusable Launch Vehicle (RLV) technology.

On May 23, 2016, ISRO successfully launched the Reusable Launch Vehicle-Technology Demonstrator (RLV-TD). This launch could be considered a step in the direction of launching a winged body, a spacecraft with delta wings, in future.

It is the first step towards realising the dream of developing an indigenous space shuttle. It may take around 10 years more to have a usable and operational space shuttle. The RLV — 6.5 m long — was launched by ISRO using a ninetonne Solid Rocket Motor (SRM) which burnt slowly for accommodating the vertical lifting f this winged body. It took five years for the team of 600 scientists at the Vikram Sarabhai Space Centre in Thiruvananthapuram to build this body that weighed around 1.75 tonnes. It is to be noted that normal space shuttles are around 55 m long and weigh more than 2,030 tonnes.

Indian RLV was flown up to 70 km and made to fall in the ocean (land on a virtual runway in the Bay of Bengal) on its return. Theoretically, such vehicles should land on runways and for any fully developed space shuttle, a 5 km long runway is required. ISRO had three main objectives for this RLV launch: to test the characterisation of the aerothermo dynamics of hypersonic flights; to test the autonomous mission management of hypersonic vehicles; and to test the necessary re-entry technology for the vehicles.

All these objectives were achieved.

During this test, ISRO tested guiding and navigational techniques and collected information that would assist them to design future missions.

ISRO is expected to move in a systematic fashion for actual realisation of this idea. They are expected to conduct tests like LEX (Landing Experiment), REX (Return Flight Experiment) and SPEX

(Scramjet Propulsion Experiment) in the coming few years. Also, a separate runway, along with a standby runway at a different location, would be required to be built.

Like all other ISRO programmes, this one also appears to be well thought of and ISRO would move in a systematic fashion to realise this dream. However, the time period for realisation of this programme is too long. It may take more than a decade to have an operational RLV available.

The question is, can India afford to wait? Today, privatization of space is happening in a big way. There are a few private players who have support of agencies like NASA and European Space Agency, and are making quick inroad in the space sector.

The global demand for launching of satellites is rapidly increasing. ISRO has made remarkable progress in the area and launched 74 satellites on commercial terms for various countries. Now, India is proposing to increase the frequency of the launches by having more Polar Satellite Launch Vehicle (PSLV) missions. However, this would cater only partially. It is important to have RLV technology in place at the earliest. For this purpose, the Government would be required to increase the budget of ISRO and the organisation needs to engage international partners and develop a model for active participation of domestic industry.

Eye in the sky Astrosat satellite mission endeavours for a detailed understanding of our universe To help scientists intensify space exploration efforts by studying distant celestial objects and conduct deeper analysis of star systems, India launched its maiden dedicated multi-wavelength space observatory, Astrosat, on September 28 from Satish Dhawan Space Centre on board a PSLV-XL vehicle.

After the success of satelliteborne Indian X-ray Astronomy Experiment, launched in 1996, Indian Space Research Organisation (ISRO) initiated the development of

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Astrosat as a full-fledged astronomy satellite in 2004. The mission took 11 years of dedicated research and aims to gather fresh data on the evolution of the universe. “This will herald a new era in astronomical research. Astrosat marks a new era in astronomical research. So far, scientists were dependent on data relayed by platforms manned by NASA or European Space Agency.

Now, India has its own eye in the sky to study radiation bands in space that tell us about what is going on out there,” said K Kasturirangan who had initiated the Astrostat project as ISRO chairman.

Astrosat had a liftoff mass of around 1,513 kg and was launched into a 650 km orbit inclined at an angle of 6 degree to the equator by PSLV-C30.

After injection into the orbit, the two solar panels of Astrosat automatically get deployed in quick succession.

The spacecraft control centre at Mission Operations Complex of ISRO Telemetry, Tracking and Command Network (ISTRAC) at Bengaluru will manage the satellite during its mission life. The `180 crore Astrosat will spew data gathered by five instruments on board. While the primary strength of Astrosat is in observing high energy events and objects through its strong X-ray toolkit, the instruments aboard Astrosat can observe a wider spectrum - from visible light to the ultraviolet and X-ray bands. This has been a limitation in most other telescopes set up in space by NASA also. The Astrosat telescope is not only more powerful but capable of gathering data within the X-ray bands - making it a perfect multitasker.

Till date, the Hubble Space Telescope, a NASA-ESA joint venture, has been the biggest space observatory in the world. Astrosat may only be onetenth in size compared to Hubble but it makes India only the fourth country (after USA, Russia and Japan) to have an operational space observatory for astronomical observations of its own.

Masters of the universe The world’s largest high-altitude and second largest gamma ray telescope,

installed in Hanle region of Ladakh, offers a unique insight into extreme phenomena of the universe Indian scientists have another reason to cheer about – the country has indigenously developed the world’s largest high-altitude and secondlargest gamma ray telescope. The giant 45 m high and 180 tonne telescope will enable scientists to closely study exotic objects like super nova remnants, active galactic nuclei and pulsars as also offer a unique insight into extreme phenomena of the universe. It will help scientists gain vital information on universe’s origin and cosmic rays that bombard space. At At present, the world’s largest gamma ray telescope with a diameter of 28 m, built by a consortium of European nations, is operational in Namibia. The `45 crore mammoth Indian gamma ray telescope, installed in Hanle region of Ladakh, has been built indigenously by Electronics Corporation of India Ltd in Hyderabad with designs supplied

by Bhabha Atomic Research Centre (BARC) and will be operational by early 2016. Once complete, the Major Atmospheric Cherenkov Experiment (MACE) will be the fourth gamma ray telescope globally. The other two gamma ray telescopes are in Spain and the US. The telescope, fitted with over 1,300 specialised diamond-turned mirrors, can capture gamma rays that hit the earth’s atmosphere from space more than 100 million light years away.

These rays, in turn, are captured by a 1088-pixel camera located at the structure’s tip to enable Indian scientists to study super nova rays, pulsar energy flashes and other unidentified sources of such energy in space. The diamond-turned mirrors have been developed in India for the first time and will prove beneficial in strategic applications like defence and space sectors. Meanwhile, the high resolution camera will help application in sectors like healthcare.

The MACE Telescope consists of a large area tessellated light collector of 356 sq m, made up of 356

indigenously manufactured mirror panels. A high resolution imaging camera weighing about 1,200 kilos for detection and characterisation of the atmospheric Cherenkov events forms the focal plane instrumentation of the telescope. The telescope is supported on six wheels which move on a 27m diameter track. It has an integrated imaging camera that contains 1,088 photo multiplier based pixels and all signal processing and data acquisition electronics. The camera communicates the acquired data to the computer system in the control room over optical fiber. Key features of the telescope include safe and secure operation remotely from anywhere in the world. With this, India will join the elite scientific community working in field of gamma ray study.

When sky is the limit...

Dr Tessy Thomas has sky-rocketed to unparalleled success in the field of missile technology She gets up at 6 am, goes for a walk, watches TV serials and cooks. In her spare time, she plays badminton and chess and one of her favourite hobbies is gardening. Sounds like the life of any ordinary Indian woman?

But Dr Tessy Thomas is definitely extraordinary. She spends 10-12 hours in office, working on some of the most powerful weapons of mass destruction. Popularly known as agniputri (daughter of fire), she was the project director for 5,000 km range Agni V in 2009, based at the Advanced Systems Laboratory, Hyderabad. Dr Thomas was associate project director for the 3,000 km range Agni III missile and project director for Agni IV. Her childhood fascination for math and science charted her future course of action with a school trip to Thumba Rocket Launching Station in Thiruvananthapuram serving as the perfect inspiration. She completed B Tech in Electrical Engineering and followed it up with M Tech in Guided Missiles and a course sponsored by Defence Research & Development Organisation (DRDO).

In 1988, she joined DRDO and was India Newsletter • 21

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posted at Hyderabad-based DRDO Lab, working with the navigation and guidance groups. “Then on, it has been a career of inspiration, opportunity and scientific support from colleagues and senior. As a result, I became a designer for longrange missile systems,” she says.

At present, Dr Thomas is director, Advanced Systems Laboratory, DRDO. As part of the Agni missile team, she was involved in modelling and simulation of missile systems.

“During the initial phase of my career, I participated in all technical reviews which helped me understand the system better,” says Dr Thomas who has been with DRDO for the past 27 years. “I have had moments of agony and ecstasy. Working with DRDO has given me both opportunities and courage to handle any problem,” she says. Inspired by Dr. APJ Abdul Kalam’s and goal-oriented approach, she keeps a firm hold on life, taking both successes and failures in her stride. “He introduced openness and teamwork and has been a role model for all of us at DRDO,” says Dr Thomas.

Despite her demanding career, she has managed to find the right worklife balance. “In life comes a phase where one needs to strike a balance between career and home.

Once we overcome it successfully, life gets easier and happier,” shares Dr Thomas. While family support has played a major role in her success, she admits facing difficult times on personal front when her son was in school and husband posted out of station. “But we all managed. Tejas, my son, has been understanding and cooperative. He completed his engineering recently,” she says.

Among other recognitions, she recently won the Y Nayudamma Memorial Award 2014 for her contribution in the field of missile technology.

TO MARS AND BEYOND India’s first Mars mission, a lowbudget project, marks country’s foray into an elite club of space powers In 2013, India became the first Asian country and the fourth nation in the 22 • India Newsletter

world to leap into the interplanetary space with its `4,500 million exploratory mission to Mars, about 400 million km (250 million miles) from earth. So far, only Russia, the US and the European Space Agency have undertaken such missions to Mars.

The 1,337 kg Mars Orbiter Mission (MOM) was launched on November 5 by Indian Space Research Organisation (ISRO) from Sriharikota off the Bay of Bengal, about 80 km from Chennai, onboard a 350-tonne rocket. The Mangalyaan, or Mars craft, was fine tuned on December 11 in the interplanetary space to stay on course on way to Mars. The spacecraft was 2.9-million km away from the earth when the trajectory correction was carried, and cruising at 32 km/second to reach the Martian orbit in mid-September 2014 for its geological exploration.

Scientists at the Deep Space Network of the ISRO at Bylalu, about 40 km from Sriharikota, are monitoring the orbiter’s odyssey and programming its computer for sending and receiving commands for its operations. According to ISRO’s spaceport director M.Y.S. Prasad, two of the three phases of the Mars mission have been accomplished.

“The third important phase will be capturing of Mars orbit in September 2014 at about 500 km from the red planet’s surface for the five scientific experiments,” Prasad said.

As the fourth planet from sun and behind earth, Mars is the second smallest celestial body in the solar system. Named after the Roman god of war, Mars is also known as red planet due to the presence of iron oxide in abundance.

India launched its first interplanetary mission to Mars with a two-fold objective—technological and scientific. The technological objectives include design and realisation of Mars orbiter with a capability to survive and perform Earthbound manoeuvres, cruise phase of 300 days, Mars orbit insertion/capture, and on-orbit

phase around Mars. It will also enable deep space communication, navigation, mission planning and management and incorporate autonomous features to handle contingency situations. The scientific mission will be to explore planet’s surface features, morphology, mineralogy and Martian atmosphere by indigenous scientific instruments.

Comparing Mangalyaan with the latest Mars mission MAVEN of the US, ISRO chairman K Radhakrishnan said the American Atlas V rocket has a payload capacity of 13 tonne to GTO (geo-transfer orbit), while the PSLVXL capacity is only around 1,300 kg.

“The American satellite, weighing around 2,500 kg, carries payload weighing around 65 kg and around 1,600 kg fuel. Our orbiter weighing 1,350 kg carries a payload of just 15 kg and fuel of around 850 kg,” he added.

What he did not compare is the cost incurred in both the missions. While India will be spending around $72 million, the US mission is budgeted at $671 million. Radhakrishnan reiterated that the Mars mission proves India’s capability to undertake such complex tasks.

The mission is soon to be followed by the launch of German, French, British and Canadian satellites by the organisation. “We will be launching EnMAP (Environmental Mapping and Analysis Programme) satellite, belonging to Germany. The satellite will weigh around 800 kg,” said Radhakrishnan. This apart, ISRO will be launching French satellite SPOT7 during the first quarter of 2014, Radhakrishnan said. “There will be four more small foreign satellites that would go along with SPOT-7,” he added.

ISRO plans to have at least one commercial launch every year using the Indian Polar Satellite Launch Vehicle (PSLV). According to Radhakrishnan, the PSLV rocket’s reliability has been underlined once again with the launch of MOM in a precise manner despite the challenges.

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EASE OF DOING BUSINESS Radical FDI changes make India most open economy in the world With the Centre radically liberalising the FDI regime by permitting 100 per cent foreign direct investment under government approval route for almost every sector, including defence, Prime Minister Narendra Modi said the initiative makes India the most open economy in the world for FDI. “Key reform decisions were taken at a high level meeting chaired by the PM, which makes India the most open economy in the world for FDI. Centre has radically liberalized the FDI regime, with the objective of providing major impetus to employment and job creation in India,” the Prime Minister’s Office said.

The PMO in a series of tweet said

that India has been rated as Number 1 FDI Investment Destination by several International Agencies.

“This is 2nd major reform after the last radical changes announced in November 2015. Now most of the sectors would be under automatic approval route,” the PMO said.

“Reform measures undertaken by the Government have resulted in increased FDI inflows at US$ 55.46 billion in financial year 2015-16 as against US$ 36.04 billion during the financial year 2013-14,” it added.

The Office also noted that now been decided to permit 100% FDI under government approval route for trading, including through e-commerce in respect of food products manufactured or produced in India.

The key changes include allowing 100 percent FDI under government approval route for trading, including

through e-commerce, in respect of food products manufactured or produced in India and permitting up to 100 per cent FDI in defence sector.

The other sectors that have benefitted include the broadcasting, pharmaceuticals, civil aviation, single brand retail among others.

The ruling BJP-led NDA Government has brought major FDI policy reforms in a number of sectors like defence, construction development, insurance, pension sector, broadcasting sector, tea, coffee, rubber, among others in last two years.

The FDI inflow into the country has increased at $ 55.46 billion in 201516 as against $36.04 billion during 2013-14.

This is the highest ever FDI inflow for a particular financial year.

THE CHANGES INTRODUCED CAN BE CLASSIFIED INTO THE FOLLOWING HEADS INCREASE IN PRE- EXISTING SECTORAL CAPS

SECTORS BROUGHT UNDER AUTOMATIC ROUTE

LIBERALIZATION OF SECTORAL CONDITIONS

Pharmaceuticals Airports Civil Aviation Private Security Agencies

Food Products Broadcasting

Defence Manufacturing Animal Husbandry Single Brand Retail Trading Branch/Liaison/ Project Office

INDIAN EMBASSY LIBRARY ■■ The Embassy’s library is opened daily from 10am to 1pm without appointment.

■■ Our collection contains more than 2000 titles in dozens of categories.

■■ For appointments outside the opening hours or other inquiries, please contact us under info.vienna@mea.gov.in or 015058666 33 ■■ Download our latest catalog of books under indianembassy.at/pdf/ EmbassyLibrary.pdf

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PERSPECTIVES ON INDIA Making SMEs bankable and banking on SMEs

By Mr. R. Narayan, Founder & CEO, POWER2SME India is considered a “bright spot” in the gloomy, global economic scenario today. The country with a GDP growth of 7.6% (in 201516) has topped the World Bank’s growth outlook for the financial year 2015-16 for the first time. A closer look at the performance of the Indian economy in past few years certainly showcases some glimpses of structural reforms with a shift of focus towards high potential sectors – manufacturing MSMEs, and startups. It is clear that as an economy, we are banking upon the MSME sector and the start-up community to push the frontier of nation’s growth. (world bank) Over the years, manufacturing MSMEs have shown steady growth and the sector has come a long way. Today, the sector has created a position for itself and is now known for the manufacturing of a variety of sophisticated and niche products like electronic control systems, electro medical equipment, microwave components, etc.

The manufacturing MSME sector contributes 8% to India’s GDP, 45% to India’s total output and 40% towards total exports (Govt. of India data). These numbers may seem magnificent but if compared with other countries, like China where SMEs contribute 60% to nation’s GDP, it reveals that India that has largest SME base (38 million) after China (52 million) has untapped potential that needs to be explored. But, what is stopping our manufacturing SMEs in utilizing their full potential, becoming bankable?

Challenge in procurement of good quality raw materials: On an average, raw material procurement amounts to about 70% of the recurring costs of a manufacturing SME. Add to that the highly biased 24 • India Newsletter

and unstructured nature of the market. An SME has to compete with large and established enterprises, which get easy access to high quality raw materials owing to the volume/ quantity of purchasing power.

Owing to their small size and lower demand for raw material, SMEs have to spend huge amount for sourcing good quality raw materials from trusted suppliers. This raises two prime concerns for the SMEs: ■■ Limited access to high-quality raw materials ■■ High procurement cost Lack of access to working capital: Although they contribute significantly to the economic growth, SMEs still struggle to get sound financial backing. In fact, majority of the banks fail to analyse the credit worthiness of the SMEs – that is, whether the SMEs have the capacity to payback the debt in loan on time. Unless the SMEs have strong financial backing with easy access to long term working capital, the sector cannot be termed as a bankable one. Thus in order to have a SME sector that can be banked upon, India need to make it bankable and financially stable.

There are various reasons why SMEs do not get enough financial support: ■■ Ticket size of loan & high transaction cost– The SME sector suffers from challenges of small ticket size of loan, low revenue per client, and incur high transaction cost due to which the traditional banking institutions refrain from financing these small ventures.

■■ Higher risk perception – Banks consider SMEs as a high risk sector owing to low or nil credit rating, higher rate of diversion of the funds, and low turnover, among others.

■■ Lack of collaterals - SMEs often fail to raise enough funds due to lack of collateral. Banks and other financing institutions prefer to give loans to entities with best collaterals and

security such as residential property, thus crushing the efficiency and scope of growth of the small firms. # Government initiatives to help SMEs While the challenges are deeprooted, the government is resolving to address the key issues. For instance, the establishment of MUDRA bank, under the Pradhan Mantri Mudra Yojana (PMMY), to disburse loans of smaller amounts is a great move. As of May 2016, the Mudra bank has managed to disburse Rs 1.32 lakh crore to about 3.48 crore beneficiaries and has set a target of Rs 1.8 lakh crore has been set for the current financial year, 2016-17. The PMMY has managed to reinstall an air of optimism in the SME sector with its effort towards refinancing micro units - small individual and enterprise borrowers – who seldom get loans from banks.

However, the demand of such loans is humungous in the market to be absorbed by a single entity. The International Finance Corporation (IFC) has reported that the MSME sector has a severe capital shortage of Rs. 32.5 trillion along with a debt shortfall of Rs. 26 trillion.

FINANCIAL INSTITUTIONS AS CUSTODIANS Given the situation, various NBFCs (Non-banking financial companies) and private banks have come forward with specialized loan services for SME players. This is seen as a welcome move by the SME sector and many players are opting to secure working capital loans from NBFCs or private banks as against the private lending concept that comparatively has the highest rate of interest in the market. Presently for many SMEs, lending from private banks and NBFCs is proving to be a viable and convenient option. Over the past few years, NBFCs have become a major source of working capital for small and mid-sized companies.

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NEW-AGE LENDERS – FIN-TECH/ DIGITAL FINANCE FIRMS Avant-garde NBFCs like Vistaar Finance and others, with their online presence also made it easier for the asset light SMEs and entrepreneurs to receive loans. These NBFCs analyse the credit worthiness of the sellers using analytics and other scanning metrics like their sales and fulfilment records and can disburse loans in less than 48 hours.

The new age NBFCs, with help of technology are creating disruption in the industry, and for good. The trend is picking up at a faster pace as the SMEs find this option very convenient to access funds easily and quickly. In fact some of the banks like Bank of Baroda is also partnering with new age lending players in order to expand their reach especially in the SME sector.

HOW CAN SMES AND BANKS WORK TOGETHER? Major efforts are under way in making the India SMEs bankable as the sector is being exposed to innovative credit facilities, online lending platforms which offer alternative modes of financing for small businesses.

■■ Focus on bright ideas and not size of assets - There is a need for banks and financial institutions to evaluate the credit worthiness of SMES on the basis of the merits of

the project and ideas rather than focusing on size of collaterals – this would be a game changing scheme in the MSME sector, that is known to drive innovation and competition into key economic sectors.

■■ Performance driven incentives by government: Again, we need to focus on improving the performance of our SMEs and ensure that a good idea or product should not face mortality due to lack of funds. The government, along with public banks must introduce performance incentives basis business activities of SMEs. Incentives can be given in form of lower rate of interest on loans, or sponsoring SME’s participation in global trade fairs or rebate on certain taxes, or in any other way that promotes ease of doing business.

■■ Resolving the information asymmetry – One of the major reasons why banks refrain from lending to SMEs is lack of reliable financial information. Efforts need to be made in supporting SMEs in generating reliable financial information. India can take cue from the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR), under United Nations Conference on Trade and Development recommendation for implementation of a standard

accounting system for SMES. Such a standard system promises flexibility to accommodate growth, reduces information asymmetry and also evaluates an SMEs accountability and ability to furnish information based on their business skills.

■■ Working with third party players other than rating agencies: The main purpose of collecting information is to analyse the credit worthiness of a player. The same can also be analysed by tying up with companies that are directly working with SME players.

This can help banks get an insight into payment history, behaviour and performance of an SME player which can play crucial role in deciding the credit worthiness of SMEs. The MSME sector has still a long way to go before it is identified as a bankable and dynamic sector.

Although the government has come up with substantial policies and reforms to boost the SME sector, there is a need to address the challenges that affect the SMEs at the grassroots level.

Unless SMEs are made truly stable and profitable, banking on them remains a question. To augment the government initiatives further, prominent industry bodies and other stakeholders should join hands to promote more activity in the sector and help create more demand for its goods and services.

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INDIAN STATE ECONOMIC PROFILE TELANGANA Telangana, the 29th state of India, was formed in June 2014, with Hyderabad as its capital. The state was formed as a result of the split of erstwhile Andhra Pradesh state. The state is land locked by (new) Andhra Pradesh to the south and east, Maharashtra and Karnataka to the west, and Odisha and Chhattisgarh to the north.

Telangana’s gross state domestic product (GSDP) expanded at a compound annual growth rate (CAGR) of 13.5 per cent to US$ 71.1 billion between 2004-05 and 2014-15. At a CAGR of 14.1 per cent, services has been the fastest growing sector among agriculture, industry and services from 2004-05 to 2014-15. During 2014-15, services sector accounted for 57.1 per cent share in the overall GSDP. As of January 2016, Telangana had a total installed power generation capacity of 10,251.78 megawatt (MW).

The capital city of Hyderabad (also the capital for earlier larger Andhra Pradesh state) is a hub for information technology (IT) and pharmaceutical sectors. During 2014-15, export of IT products of Telangana was US$ 10.99 billion which reflects a growth of 15.7 per cent as compared to previous year.

Leading IT companies like Facebook, Google, IBM and Microsoft hold significant presence in Hyderabad.

Hyderabad also accounts for approximately 20 per cent of India’s total pharma exports. The state government plans to set up a pharma city and promote public private partnership to develop the state’s pharma sector.

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The central government recently announced formation of an Information Technology Investment Region (ITIR) near Hyderabad. With the establishment of the ITIR, the government plans to generate 1.5 million direct and 5.3 million indirect jobs in the IT sector in the next five years.

In June, 2015, the Government of Telangana introduced a new industrial policy to attract domestic as well as international investments in the industrial sector of the state, with emphasis on core manufacturing sectors.

Telangana stands 13th among Indian states in rankings based on ease of doing business and reforms implementation, according to a study by the World Bank and KPMG. Some of the major initiatives taken by the government to promote Telangana as an investment destination are: ■■ As of March 2015, a new textile policy has been introduced in Telangana. The purpose of this policy is to provide special incentives to the textiles sector. Moreover, under Integrated Textile Park scheme, the state government proposed to set up two textile parks in Warangal and Sircilla cities.

to purchase 1,000 MW power in 2014-15.

■■ The Telangana government plans to promote an industrial corridor between Hyderabad and Warangal, which would also boost employment opportunities in the state.

■■ The state government is formulating policies and a single window clearance system among others for attracting investments, thereby enhancing the industrial infrastructure in Telangana.

■■ In December 2014, the state government of Telangana announced plans to establish a pharmaceutical manufacturing industrial park. The park is proposed to be established on 11,000 acres at Mucherla location and is expected to create employment opportunities for 70,000 people.

■■ The state government recently proposed setting up a separate company named Telangana State Tourism Development Corporation Limited (TSTDC) to promote tourism.

■■ The state government is in talks with Steel Authority of India (SAIL) for setting up a steel factory involving an investment worth US$ 5 billion on the Khammam-Warangal border.

■■ In June, 2015, the Government of Telangana introduced a new industrial policy to attract domestic as well as international investments in the industrial sector of the state, with emphasis on core manufacturing sectors.

■■ In 2014, the state government announced that it will set up super speciality hospitals in each district of Telangana. The government has announced an investment of US$ 16.58 billion for the establishment of these hospitals till 2019.

■■ In order to meet the increasing demand for power, the Government of Telangana signed an agreement with the Chhattisgarh government

Telangana government also released a Solar Power Policy 2015 to promote regionalised and dispersed generation of solar energy.

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INDIAN TRADE FAIRS INTERESTED IN VISITING A TRADE SHOW IN INDIA? In case your company is interested in visiting a tradeshow/B2B event in India, be it one listed here or another one that came to your attention, get in contact with us via maoffice.vienna@mea.gov.in to get more information about possible assistance/subsidies.

Asia’s largest Gifts & Handicrafts Fair

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INVEST INDIA Federation House, Tansen Marg New Delhi—110 001 0091-11-23765085, 23487278 investindia@ficci.com www.investindia.gov.in

I

policy and Promotion, Ministry INVESTMENT of Commerce & Industry) and State Governments of India (0.5% The National Investment and Infrastructure Fund(NIIF)

■■ Objective: ■■ To maximize economic impact mainly through infrastructure development in commercially viable projects, both Greenfield and Brownfield, including stalled projects.

■■ Other nationally important projects in manufacturing, if viable commercially ■■ Structure: ■■ The NIIF will be established as one or more Alternate Investment Funds (AIF). It refers to any fund established or incorporated in Indian in the form of a Trust or a Company or a LLP or a body corporate. AIF shall raise funds only through private placement 38 • India Newsletter

nvest India is the country’s official agency dedicated to investment promotion and facilitation. Set up as a joint venture between FICCI (51% and cannot accept from any equity), DIPP (35%funds equity held investor (Indian or Foreign) whose by the Department of Industrial value is less than 1 crore Indian Rupees and is prohibited from making application to public for subscription to its securities. AIF can be of three categories; ■■ Category I: Investment in Start-ups, SMEs, infrastructure or social ventures ■■ Category II: Investment in private equity and debt funds

■■ Category III: Primarily for hedge funds, which use complex strategies or leverage to invest in unlisted derivaties and trade with a view to make short-term returns

each), its mandate is to become the first reference point for the global investment community.

It provides granulated, sectorspecific and state-specific information to a foreign investor, assists in expediting regulatory approvals, and offers hand-holding services. Its mandate also includes assisting Indian investors make informed choices about investment opportunities overseas.

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TOURISM High, Cool, Green, Serene: Munnar

by Hugh & Colleen Gantzer.

Softly, very softly in the dawn, came the sounds of silence: three streams gossiping.

They chortled and gurgled and spluttered and gushed like a trio of teenagers swapping school secrets.

We couldn’t see them, hidden in the green valley; but the misted breeze brought the sounds of their triple burbling. Mun is the word for three in the rolling Malayalam tongue, and ar is stream: together they formed the name of this quiet little hamlet .. Munnar.

And, as always happens, we fell in love with Munnar all over again. .

Around us, like green guardians, gently quilted slopes of tea hunched giving Munnar its sequestered and protectively verdant character. As long as these tea gardens cover the gentle folds of the High Ranges of Kerala, Munnar will be determinedly verdant; the dust and abrasion of urban ‘civilization’ will be kept at bay; and we will find the freedom

to stretch our city-constricted wings and listen to the sounds of silence.

But Munnar has not always been such a manicured and serene place.

In the 1800s it was covered in the dense shola forests of the southern mountains. If travellers were not attacked by wild animals, they were felled by the biting anopheles mosquito injecting deadly malaria parasites into their blood-streams.

Then it was discovered that the bark of an Andean plant, cinchona, produced the drug quinine that kept malaria at bay. Shola forests were felled and cinchona plantations spread. With the clearing of the shola, however, stagnant pools in which the anopheles had bred, vanished.

Malaria decreased dramatically. Cinchona plantations gave way to the increasingly popular, and greatly profitable, tea plantations. The Kanan Devan Hills Products company was born, The tea plantations of Munnar spread over the rounded hills and, to this day, Munnar has maintained much of the mannered Victorian character of that 19th century era.

Planters still stride around in khaki

shorts; older domestic staff still tend to address men as ‘Master’ and women as ‘Mum’; and, every morning, long lines of tea pluckers stream into the tea gardens to harvest the delicate ‘two leaves and a bud’. They look, from a distance, like colourful microdots on a huge green sponge. We make it a point to visit a tea factory, breathing in the heavy herbal aroma of oxidizing tea leaves. Retailed packaged teas are blended: a mixture of leaves from many estates much like most retailed whiskies. Factory outlets, however, sell the tea equivalent of single malt whiskies: the product of a single batch from a single factory. They will have more a distinctive taste, much more character, than your usual breakfast cuppa. We lay in a stock of our preferred tea: Kolukkumalai.

It’s labeled as The World’s Highest Grown Tea, and one of us treasures this as the most delicately flavoured of all teas. And then we drive down to the bazaar that huddles in a fold of the manicured hills. Here we shop for the wide range of fresh spices that are grown in these hills.

After this we do what is done so

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effortlessly in Munnar: we unwind.

We amble or drive around slowly, absorbing the genteel, timeless, atmosphere of this undemanding hamlet. There are many spots that give unfolding views of what can only be described as Disneyscapes.

Little cottages nestle in green and cushioned slopes backed by azureblue mountains. The scene changes as we move on. On the other side of a little river, cattle graze on a meadow. A visiting Brit couple exclaimed “This looks so much like home!” and the old planters must have felt a tug of nostalgia when they came here. But though a sense of déjà vu must have gripped those expats, the lurking reality of the High Ranges was never far from view. We’ve seen many places in our wanderings around Munnar where the disciplined emerald corduroy of the tea plantations is edged by the dark old shola forests, waiting to take over the slopes if the planters ever relaxed their grip.

The sholas are rain-trapping forests and the cascades and waterfalls of Munnar still gush crystal clear. Taking advantage of this, the planters made successful efforts to turn them into trout streams. Many years ago we visited a trout hatchery run by the KDHP company in a well watered valley. Here they bred trout under carefully controlled conditions and released them in the streams of Munnar. Angling, however, is a solitary and rather lonely pastime and the last time we were in Munnar people seemed very reluctant to talk about the trout hatchery. They could have been disinterested and reluctant to admit their ignorance.

But anglers might be interested in driving down to the very traditional Munnar Club and making enquiries.

The Club is steeped in traditions and is, possibly, still a living relic of the Old Munnar. One of their customs was to celebrate Hogmanay, the Scottish New Year’s Eve festival, complete with a piper in a kilt.

40 • India Newsletter

Another of the KDHP’s activities has now become a major attraction for visitors. When the company established themselves in the High Ranges, the beautiful Ibex, the Nilgiri Tahr, roamed in great herds in these mountains. Gradually, however, hunters decimated their numbers till they were listed in the Red Book of the world’s endangered species. At this critical stage the KDHP decided to do something about this superb wild goat. They set apart a large tract of their grass-covered hills as a sanctuary, appointed local tribal people as guards, and enforced a strict ban against harming these animals or even disturbing them. Their farsighted conservation efforts paid off. Gradually, the numbers of the Nilgiri Tahr increased. Today, visitors to the sanctuary can see these

proud animals at close quarters but they must never attempt to feed them or make a noise when the Tahr approach.

Munnar, after all, is really meant for those who want to soak in the living serenity of the wide green spaces, and to revel in the deeply rejuvenating sounds of silence.

■■ QUICK FACTS Getting there: Air – 110 kms. from Cochin Airport then by road. OR Rail – 130 kms. from Cochin (Ernakulam) Station then by road.

Accommodation: A selection – TEA COUNTY – KTDC’s Resort, Munnar – Tel:04865-230460/230969 EADASSERY EASTEND, Temple Road, Munnar – Tel:04865-230451 CLUB MAHINDRA LAKEVIEW MUNNAR, Chinnkanal – Tel:04868-249224

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