InTouch_June 2011

Volume 25 – No.3 – June 2011

In this issue 4 President’s message 4 Chamber’s activities Seminar on Revised Schedule VI and XBRL Investment & Business Oppor tunities in the Piemonte Region (Italy) Round Table Discussion on Fiscal policies for low carbon investments

4 175th AGM of the Chamber An organization that has been in existence and, by all indications, thrived for 175 years clearly knows a thing or two about sustainability...P2

4 MCCI-MMA Video discussion on Middle Manager as Innovator 4 General Committee 4 Expert Committees 4 SPOT LIGHT National Manufacturing Policy 4 Policy Watch 4 Trade Fairs & Exhibitions 4 Economic Review

PRESIDENT’S MESSAGE

growth over the past decade and energy, in all its forms, underpins both past and future growth. For the economy to continue on this growth trajectory, India needs to address its energy challenges across all sectors, immediately. India is one of the fastest growing countries in terms of energy consumption and is currently the fifth largest consumer of energy in the world, and will be the third largest by 2030.

Dear members, It is a pleasure to greet you, through this letter, after the grand 175th Annual General Meeting of the Chamber, held recently. I take this opportunity to thank all of you for your support in the past year and I am confident that I shall continue to be as fortunate this year, as well.

You are all aware that the Chamber’s theme for the 175th year is “Sustainable Development”. We have been working around this theme and a number of initiatives and activities on the different components of Sustainable Development like energy, environment, skill and education, to name a few, are being pursued by the Chamber.

Perhaps one of the important elements of Sustainable Development is the whole debate around climate change and reduction of the carbon footprint.

Recently, the Chamber held a Round Table with the Climate Change Team of the British High Commission on the low carbon measures and initiatives. What is our role in this, as a responsible voice of industry?

As people engaged in businesses and also as responsible citizens of the country, two issues stare at us now.

On the one side, we have the grim reality of acute power shortages which have a direct impact on our business competitiveness as well as the quality of life. On the other side, there are the well articulated issues on climate change and sustainable development which are areas of concern for the entire world.

As is well known, the Indian economy has been experiencing tremendous

At the same time, the country is heavily dependent on fossil sources of energy for most of its demand. Green house gases, a by-product of fossil fuels, are stated to be causing global warming which refers to the earth heating up at a faster pace than before. Experts warn that the consequences of this global warming are likely to be devastating.

The obvious solution to both these problems seems to be developing and using green energy or clean energy.

The goal of green energy is stated to be creating power with zero or minimum pollution.

Today, India can well be identified as an energy guzzler. The demand for power is growing exponentially and the scope for growth of this sector is immense. India’s power supply-demand gap has averaged between 8 and 10 per cent over the last decade, where electricity access exists. By 2012, India’s energy requirements are projected to touch 975,222 MU (and peak demand 1,571,070 MU) an increase of 31.9% and 44.3% respectively from the current levels. India’s grid-connected power generation capacity will need to scale from 148GW currently, to 460GW by 2030 while the country’s primary energy demand is expected to grow from 400 million tons of oil equivalent to well over 1,200 million by 2030. It is feared that by 2030, the country will import 94% of its petroleum requirements. Clearly, renewable energy appears to be the answer, both from an economic and ecological perspective!

However, this requires a concerted and aggressive push for alternative energy sources - solar, wind, bio fuels, small hydro and more. The Government’s renewable energy target by 2030 is said to be 200 gigawatts, estimated

to require US$200 billion in capital investment. That seems Himalayan when you consider that currently, only 3.5% of installed capacity is in the renewable sector, producing 3700 MW and is projected to reach 10,000 MW by 2012.

On the positive side, the country has an estimated renewable energy potential of around 85,000 MW from commercially exploitable sources: Wind, 45,000 MW; small hydro, 15,000 MW and bio mass/ bio energy, 25,000 MW. In addition, India has the potential to generate 35MW per square km using solar photo voltaic and solar thermal energy. Wind energy has posted the highest growth and Tamilnadu is one of the leading States in wind energy production, with a share of more than 48% of the total wind energy produced in the country.

The Jawaharlal Nehru National Solar Mission under India’s Action Plan on Climate Change, was launched to make the country a world leader in solar energy and aims to ramp up capacity of grid-connected solar power generation to 1000 MW within three years of launch, by 2013.

India has tremendous potential to harness the much-needed energy from renewable sources and is considered one of the ideal investment destinations for renewable energy. However on the flip side, the prohibitive cost of setting up renewable energy plants like solar, the seasonality of sources like wind, non-availability of suitable technologies, economic viability and a host of other factors act as deterrents to the green energy movement. There is clearly a need for appropriate policies and political will, to go green in the energy sector while simultaneously encouraging energy efficient economic development.

There are difficult choices that we must make, not perhaps for ourselves, but for the future generations who shall inherit our planet.

With best Wishes

T T Srinivasaraghavan President

1

CHAMBER’S ACTIVITIES

4th June 2011

Mr S Venkatesan, Chairman of the

Schedule Vl. He said the old Schedule

Seminar on Revised Schedule Vl and XBRL

Expert Committee on Company Law/

Vl has stood the test of time. Between

Corporate Matters, MCCI, giving the

2006 & 2011 there have been lot of

Chamber’s observations said MCA

changes and the Companies Act is

The Madras Chamber organized a

has been very happy since things have

under total revamp.

Seminar on Revised Schedule Vl and

been happening too fast . The MCA

within a year, the new company law

XBRL to inform the corporates about the

website needs to be Visited daily,

will be in place. Before that, the

recent changes made by the Ministry

else you are going to miss something

Government wants to align to new

of Corporate Affairs. Mr.D.K. Mittal,

he said. Everyday new circulars are

business environment and hence the

Secretary, MCA who was to inaugurate

uploaded on the website. The pace

need for new Schedule Vl.

the Seminar could not make it at the last

at which changes are taking place is

moment.

making the corporates breathless he

Mr T Shivaraman, Vice-president of the Chamber in his welcome said there have been lot of changes happening in the procedures and accounting standards for the corporates. IFRS had been in the air for quite some time now.

We now have XBRL which stands to refer Extensible Business Reporting Language, which is a language for electronic communication of business and financial data. It is stated to help both suppliers and users of data. It

felt. Corporates have to take quick action to comply with these changes. MCA has been very pro-active and there are time bound implementations to be done.

As regards Schedule Vl and XBRL he felt sufficient time has not been given for the corporates to understand the changes. Some clarifications are needed; however, even the interim accounts will have to be filed in the new format.

He hoped that

He said the accounting standards are becoming dominant in the preparation of the financial statements. Schedule Vl is part of the Act as well as the Rules.

The balance sheet has to disclose more than what was required earlier. He said we are becoming global. Hence, we have to align with the world.

New Schedule Vl is not very complex.

There is no impact on basic records.

95% work gets undisturbed by new Schedule Vl. It will have impact on current ratio and debt equity ratio.

There is need to exercise due care and

is mandated now for certain class of

On XBRL he said the Institute of

understand so that the presentation is

companies to prepare their financial

Chartered Accountants of India has

done without any hitch.

statements according to the Taxonomy

taken this as number one priority for the

developed for this purpose. This is set to

current year. XBRL is more complex and

become the standard way of reporting

a technical one. A circular was issued by

and sharing business information.

MCA on 31st March indicating that it is

On the other side the revised Schedule

applicable for everyone.

Earlier schedule Vl was only for Balance sheet but now it applies to Profit & Loss account as well.

Summarising he said – it is better to remove the confusion between AS-4

Vl to the Companies Act, 1956 which

The Madras Chamber has already

deals with the Form of Balance sheet,

made a representation to MCA to

Profit & Loss Account and disclosures to

extend the time until the corporates

be made therein, is becoming applicable

were sufficiently educated. Though the

shortly. This introduces many new

Chamber’s voice is heard,

concepts and disclosure requirements

only slight postponement has been

and some of the classification

done. The Chamber will take it

Mr S A Murali Prasad, Director, SAM

requirements spelt out in the guidelines

up further with MCA the suggestions

Consultancy Services Ltd., made a

are apparently, more in line with IFRS.

emanating from this seminar to make

presentation on Analysis and Issues

Even the format of presenting the

the life of the corporates easier.

in XBRL. He explained XBRL to be

Balance Sheet and the P& L Accounts

Mr N. Ramanathan, Managing Director,

will be undergoing considerable

Ponni Sugars (Erode) Ltd., made a

changes.

presentation on Analysis & Issues in

2

and Schedule Vl. Clause 41 for listed companies needs to be amended.

Clarification from MCA or ICAI to be requested on many issues such as what is “current” and “non-current”, etc.

Extensible Business Reporting Language.

It is an open, royalty-fee, software specification, implemented by use of

CHAMBER’S ACTIVITIES

tools based on XBRL. How does XBRL work? He said XBRL makes the data readable with the help

for doing the required pre-validation

On adding new elements in XBRL

and checks before the documents are

statement he said generally XBRL

finally accepted by MCA portal.

taxonomy is extensible but MCA taxonomy may not be extensible.

of two documents – Taxonomy and

We need to insist on MCA that

instance document. Taxonomy defines

whatever change is required in XBRL

The following points emerged from the

the elements and their relationships

implementation, we should be able to

Seminar:

based on the regulatory requirements;

see the output before filing the XBRL

By using the taxonomy, users map the

document. He said XBRL implementation

elements in the reports and generate a

in other countries provides for it.

valid XBRL instance document.

While welcoming the move to implement XBRL, it was the considered view of the participants that it should be voluntary

He said the MCCI should ask the MCA

initially before making it mandatory. In

He said ICAI published a taxonomy two

to commission some corporates to

the other jurisdictions the corporate were

years back. What is filed with MCA is

produce simple software or a simple

given a longer testing time. It was also

an instance document – a document

tool.

their experience that errors were noticed

which has been prepared on the basis of taxonomy.

With regard to tools available, he said XBRL– aware accounting software

in XBRL filings on implementation. It is new to India and needs training in the tools for XBRL conversion/re-conversion .

Companies will have to write a software

products are becoming available which

to map it with taxonomy.

will support the export of data in XBRL

Unlike in other jurisdictions, our XBRL

form. These tools allow users to map

taxonomy is not iXBRL enabled, which

charts of accounts and other structures

would let the user see their filing in

of XBRL tags. Financial statements can

readable format like html etc. They are

be mapped into XBRL using XBRL softer

also not extensible by the user.

He further said the XBRL is truly global as it is used by several jurisdictions in regulating financial reporting. The last date for filing for the year 2010-11 has been extended up to 30th September 2011 without additional fee. He said a new taxonomy will have to be prescribed next year when the new schedule Vl becomes operational and

tools designed for this purpose. Tools can transform data in particular formats into XBRL e.g. excel, word, etc. Some of these are add-on products while some of them are free.

possibly the following year when the IND

He said the product is unlikely to be

AS becomes operational.

cheap as they are bundled with training

Coming to cost of compliance he said

and consultancy.

Keeping costs of compliance by corporates in mind, MCA should make available a basic, no-frill tool for converting data in word or excel format into XBRL – At present they have to incur significant costs for doing so.

XBRL as sought to be implemented now is based on old Schedule Vl and new

people in the corporates need to be

On how long will it take to upload the

Schedule Vl is applicable from 1/4/2011.

trained and it will take sometime.

first XBRL document, he said:

This will require new taxonomy to be

l time for the tools based on the

given.

As regards the tool, he said MCA is not implementing or recommending any particular software; vendors are developing such software and companies are free to choose the one that is suitable to them.

MCA taxonomy to be available in

the market. Tools presently

offered are based on other

taxonomies e.g. IFRS taxonomy.

Later Taxonomy has to be revised for IndAS standards (IFRS converged standards) to be implemented .

l Training the staff, time to evaluate

Investing in technology and training

the tools, doing the conversion;

in it every year with new taxonomy is

MCA has advised the stakeholders

validating against MCA validation

definitely costly and unavoidable.

and companies not to buy accounting

tool, and

software before final rules are made

In short it should be made voluntary

l Uploading window of MCA

available to avoid any inconvenience.

now and mandatory after 2 to 3

which will be available by

MCA website will host a validation tool

years after new taxonomy for revised

15th July.

Schedule Vl / Ind AS (IFRS converged

3

CHAMBER’S ACTIVITIES

standards) schedule Vl are prescribed.

As regards applicability, as per revised circular, MCA needs to clarify the wordings.

It is possible to interpret that subsidiaries

Financial sector is excluded, presumably

of listed entities having the paid up

because they may require a different

capital / turnover prescribed may be

taxonomy, but Housing Finance

required to file XBRL statements while

companies regulated by NHB should be

their listed parent companies are not

clubbed with NBFCs and Banks, as they

It is stated that it will apply to ‘listed

required if they belong to exempted

belong to the same category.

entities and THEIR subsidiaries with

sectors, which may not be the intention!

a paid up capital of Rs. 5 crore or

It should be clarified that it would

turnover of Rs.100 crore” - other than

apply to subsidiaries only where the

Banks, Insurance companies, NBFCs,

parent company is required to file XBRL

Power sector etc. It is inferred that all

documents.

The Chamber has sent a representation on this to the appropriate authorities.

conditions are cumulative.

16th June 2011

common in both our regions namely

beginning of November, there will be a

Investment and Business Opportunities in the Piemonte Region (Italy) – Meeting with Italian Delegation:

engineering, automotives, information

very important delegation of more than

technology, clean technologies, etc.

100 Italian companies visiting India. He

Tamilnadu is one of the fastest growing

said that will offer a bigger opportunity

economies and one of the most

for business for both the parties.

A high level delegation from Piemonte

Tamilnadu also is a leading player in

Ms.Stefanis Novelli

Region visited Chennai on the 16th June

sectors like IT, textiles, leather, non-

Invest in Tornio Piemonte on “Torino

and the Chamber organized a business

conventional energy like wind,

Piemonte, a welcoming region”

meeting with them. The Italian Trade

bio-tech etc.

In her presentation, Ms Stefanis said that

Commission and the Piemonte Agency

He said the team from Piemonte can

Piemonte is the first and unique Italian

partnered with the MCCI in organizing

advise on every aspect of starting

region to have created a dedicated

this progamme.

and running a business in Piemonte,

financial tool for FDI and over 600 local

Piemonte Agency was created by

providing assistance at every stage of

units of foreign companies are located

Piemonte Region in 2006 as a reference

the project.

in Piemonte. It has good infrastructure

point for companies wishing to locate in

Our Chamber is happy to provide a

Piemonte.

platform for interaction and identifying

Mr T T Srinivasaraghavan, President,

opportunities for both investment and

MCCI, welcoming the gathering said

business collaborations, whatever shape

today’s world is an integrated world.

of form they might take.

Businesses across the globe have

Delivering a special address, Dr Augusto

spread their wings. Alliances and

Di Giacinto, Italian Trade Commissioner

collaborations are the order of the

thanked the Chamber for organizing the

l The region’s competitive positioning

day and as a natural consequence,

seminar. He said Italian Associations

l The development of

Chambers like us have to act as bridges

for Leather have been working closely

between businesses of different regions.

with leather tanneries in India. He said

l The networking of new

He said there are leading sectors

there is lot more to be done. At the

4

industrialized and urban States. The auto and auto components industries sector is one of the most prominent players.

Presentations were then made by the Italian side as follows:

system and accessibility with 3 logistics hubs connected to the main European corridors. It has ecologically equipped production areas.

She said the goal of Invest in Torino Piemonte unit is to attract high added value investment through:

attractiveness factors investments; and

CHAMBER’S ACTIVITIES l The consolidation of foreign

training projects; link with universities

companies already active

and centres of excellence; pre-feasibility

in Piemonte

studies etc.

the automotive sector.

Mr Fabrizio Righetti, CEO of Magneti Marelli UM Electronic Systems Pvt Ltd.

Mr Gianfranco Di Salvo on Investment

Mr Giuseppe Barile, Director General,

on “Piemonte – India: our business

Opportunities in Piemonte

Webasto S.p.A on

experience”

He said Piemonte Agency is the

Webasto and the mechatonics sector in

Mr Righetti mentioned about Magnetic

unique, free reference point for foreign

Piemonte

Marelli, the international company

companies that want to locate in

Mr Barile made a presentation on

committed to the design and production

Piemonte, providing confidential,

success stories. Referring to the

of hitech systems and components for

responsive and tailored assistance

company Webasto – manufacturers of

the automotive sector.

through all the phases of the

roofing systems for various applications,

investment project.

he said the company has a presence in

It is the one stop shop for foreign

India – Webasto Motherson

companies providing advice on how to

Sunroofs Ltd.

set up a legal entity in Italy; support in

He also mentioned about Magnetic

identifying a location for manufacturing,

Marelli, the international company

services, research; selection of grants

committed to the design and production

and incentives for investment, R&D,

of hitech systems and components for

17th June 2011

Fiscal instruments and incentives have

The Chamber invited a cross section of

Round Table Discussion on Fiscal Policies for Low Carbon Investment:

been recognized as one of the important

people to have their Views. From the UK

tools for mitigating climate change by

side, Dr Philip Douglas, First Secretary,

various Governments.

Climate Finance and Technologies within

In response to a scientific consensus linking Greenhouse Gas (GHG) emissions from human activities to global climate change, many local governments globally have started

A round table discussion was therefore organized by the Chamber to explore interest in the following incentives offered:l capital investment subsidies

for installation of energy-saving

equipment

There was lively interaction during which the visitors replied to the many queries of the participants.The vote of thanks was proposed by Mr Bernard Prevete, Deputy Trade Commissioner.

The programme was followed by cocktail and dinner.

the joint British Commission – DFID India Climate Change and Energy Unit and Ms Rachel Brass, First Secretary, Climate Change and Energy in the cross governmental unit of FCO, DEC and DFID of the British Government were present.

Mr T T Srinivasaraghavan, President,

looking towards various opportunities to

l low interest rate loans to support

MCCI, welcoming the guests said this

reduce GHG emissions.

enterprises investment in energy

discussion is more relevant for the

saving technologies

Chamber which is in the midst of its

In the context of Government of India’s recent international commitment of reducing its GHG emission intensity of GDP by 20-25% between 2005 and 2020, it has become imperative for

l energy review subsidy –

reimbursement of fees towards

energy-audit and environment

audit and certification

all States in the country to individually

l Direct incentive for energy saving

chalk out their action plan to achieve

The aim of the discussion was to

this target within their jurisdiction to

facilitate climate friendly industrial

help the country as a whole achieve its

development in the State by developing

objectives.

suitable fiscal instruments.

175th year. We have chosen sustainable development as our theme and this fits into our theme well. He said the Chamber was happy to co-host this round table jointly with the Climate Change Department of the British High Commission. He said we can jointly explore new ideas.

5

CHAMBER’S ACTIVITIES

Mr P M Belliappa, (IAS Retd)

It was informed that the UK Government

an independent agency should be set

moderated the proceedings. He

has set apart 2.9 billion pounds for

up for this purpose.

said he had worked on environment

Low Carbon initiatives and that there

related subjects with the national and

will be good share of that available for

international bodies and was very much

countries like India to pursue some of

aware of the issues connected with it.

the initiatives in this regard. However

The speakers then explained in detail the subsidies offered by various energy related studies, capital investment subsidies, etc.

23rd June 2011 th

175 Annual General Meeting Business Session:

Dr Douglas indicated that the carbon credits are likely to continue beyond 2012.

since these findings are channelized

The Chamber was represented

from Government to Government,

by a good mix of climate experts,

there could be procedural hurdles and

management consultants, academicians

bureaucracy coming in the way of

and Government representatives.

speedier action. It was suggested that

gave an outline of the activities of the

add a substantial number of workers.

Chamber for the year. His address is

This is an opportunity to take over the

published at the end of this note.

mantle of the “factory to the world”

The theme of Dr Subir Gokarn’s address was “Economic Reforms for Sustainable

with hundreds of millions of relatively low cost workers producing goods that the rest of the world will consume.

The 175th AGM of the Chamber was held

Growth”. He said food, human capital,

on 23rd June at Sheraton Park Hotel &

infrastructure and financial sector

On Infrastructure the rapid growth

Towers. At the Business Session, Mr T T

development are critical areas for

has raised demand for infrastructure

Srinivasaraghavan, Managing Director,

reforms to achieve sustainable growth.

services far in excess of available

Sundaram Finance Ltd., was re-elected as the President while Mr T Shivaraman, Managing Director & CEO, Shriram EPC Ltd. was re-elected as Vice-president for the year 2011-12.

On food inflation, he said the enduring solution to the persistent demandsupply imbalances in food is to increase supply rapidly. Production of relevant items has to be increased, mostly

capacity. Meanwhile a combination of policy, regulatory and financial factors has slowed the pace of investment in infrastructure, leading to a persistence of the gap.

The list of those declared elected as

by increasing productivity. Cultivation

The impact of inadequate supply of

Members of the General Committee

risk has to be mitigated for farmers to

power and transport infrastructure,

appears in the proceedings of the

find these products more attractive.

among other things is quite significant

Business Session.

Transportation, storage and distribution

on manufacturing activity he said.

The Chairmen/Co-Chairmen were also appointed to the various Expert

efficiency has to be increased to keep losses and distribution margins down.

In a nutshell, the infrastructure problem has two dimensions – sectoral and

Committees of the Chamber. The

On human capital he said India is

geographic. Each needs distinct focus in

proceedings of the Business Session

the second most populous country in

order to arrive at meaningful solutions.

appear in the following pages.

the world and will become the most

Public Session:

populous in a couple of decades. It is also one of the youngest and will

The Public Session of the AGM was

remain so for some decades to come.

organized soon after the Business

This demographic dividend provides

Session. Mr T T Srinivasaraghavan,

an enormous opportunity. The Chinese

President, welcomed the Chief Guest, Dr

pool of workers is going to shrink as

Subir Gokarn, Deputy Governor, Reserve

the population ages over the next two

Bank of India and all those present and

decades during which period India will

6

Speaking about Financial sector, he said looking back over the past 20 years, there have clearly been massive changes in the financial sector, which have completely changed the nature of intermediation, the range of products and services available and the intensity of competition .

CHAMBER’S ACTIVITIES

Expanding the reach of financial

in September 2010, has evoked great

Logistic and strategic issues of the

services to those individuals who do not

interest and drawn wide appreciation

Chennai Port. Another important study

currently have access is an objective

from members. These discussions have

on the Entrepreneurial Eco System in

that is fully consistent with the people-

served to bring into sharper focus the

Tamil Nadu is also in the offing.

centric definition of sustainable growth.

burning issues of the day and helped

Going by the evidence there is a long

the Chamber reach out to a larger

way to go in achieving this objective.

audience. A number of spin off activities

He further said the Reserve Bank has

are being planned arising out of these.

An interesting and special task taken up during the year, was the commissioning of a Coffee Table book, which will be released at the conclusion of our 175th

been laying a great deal of emphasis

The flagship initiative of the Chamber

year celebrations in September this year.

on the expanding access to the banking

in its 175 year, is the establishment of

The Book traces the history and heritage

system. The broad objective is to ensure

a Skill Development Centre. It is a well

of the Chamber and its significant

access to all households in villages with

accepted fact that one of the major

contributions to the development of

a population of over 2000 by 2012.

problems faced by industry today, is

trade and industry in the region. The

the non -availability of manpower. As

Book is shaping up very well and I am

the debate on Unemployment versus

sure that it will be a collector’s item.

The full text of his address can be viewed from our website www. madraschamber.in

th

Employability continues, the stark reality is that there is a crying need

The vote of Thanks was proposed by

for formally trained manpower, to keep

Mr T Shivaraman, Vice-president of the

our factories running. It is in this context

Chamber.

that our Chamber has embarked on

Address by Mr T T Srinivasaraghavan, President:

an ambitious project to set up a Skill

Salutations,

Development Centre. Thanks to the foresight of my predecessors, we have the necessary land at a very strategic

It gives me great pleasure to welcome

location between Sriperumbudur and

you all for the 175th AGM of the

Thiruvallur. A significant amount of

Chamber. This is indeed a special

ground work has already been done

and momentous point of time, as we

towards this end and we are actively

commemorate 175 years of service to

talking to potential sponsors and donors

trade and industry. We have traversed

for setting up the facility. While, on the

a long and sometimes arduous road,

one hand, this would help our member

but through it all, we have remained

companies fill their manpower gaps, on

committed to the fundamental values

the other, it would provide meaningful

and objectives of the Chamber. Over the

career opportunities to young people

decades, the Chamber has come to be

from the neighbouring communities.

seen as a responsible and credible voice of trade and industry in Tamil Nadu.

Going back in history, the Chamber had been instrumental in the setting up

A number of important events such as India Corporate Week, All India Workshop on Indirect Tax Laws, Conference on Mainstreaming Green Energy, National Seminar on Emerging Role of Business – Not just for Profit, participation in high level discussions with Government authorities on GST and IFRS, the Parliamentary Standing Committee on Finance on DTC and the RBI Working group on NBFCs, improved networking and collaborative events with other organisations such as the British High Commission and Italian Trade Commission also marked the year.

The Chambers’ Expert Committees with true expertise on different subjects have been our pillar of strength and have acted as think tanks for different issues we took up from time to time.

The Chamber is also keeping updated with use of technology and our

The 175th year celebrations were

of the Chennai Port. Sadly, the port is

launched on September 29th last

today beset with several problems and

year, following which several new

has increasingly become a bottleneck

initiatives were flagged off. The ‘Food

for exporters and importers alike. The

For Thought’ (FFT) series, a monthly

Chamber has been active in voicing the

forum on wide ranging issues of

concerns of industry and has recently

In summary, I am pleased to report

topical interest, which we commenced

commissioned a study on the current

that the Chamber has had an activity

revamped website strengthens our links with the members and also provides a good platform to members to interact between them.

7

CHAMBER’S ACTIVITIES

packed year. We are also working on

which proves our fundamentals are

the immediate crisis. The further reforms

a grand celebration for the completion

strong. Indian growth story is positive

now have to expand to meet the goal

of our 175 year which falls on 29

and economic development ushered

of sustainable development. There are

September, 2011. We are indeed

in by the economic reforms is sure to

current challenges like rising inflation,

fortunate to be part of this moment in

continue.

wide spread poverty, rural urban divide

th

th

history.

What probably now the concern is the

etc. which are road blocks for the sustainability of our development.

I am confident that this momentum will

sustainable long term development.

take us far beyond September 2011. In

Economic Development has to be

As a Chamber we appreciate this fact

fact, this marks a new beginning and

inclusive, has to be balanced among

and we are concerned, and it is in this

together, we can lay the foundations for

sectors, regions and communities,

background we requested

the next 175 years!

has to foster present growth without

Dr Subir Gokarn, who is an economist

compromising on the future growth,

himself and also who is part of the

has to express concern for environment

policy makers, to address on Economic

and natural resources, has to improve

Reforms for Sustainable Growth. Dr Subir

the quality of human life. In all it has to

has been a friend of the Chamber and

strike an effective balance between

has been with us earlier in a different

various factors. We are now talking

capacity.

With a long term Vision for the Chamber as well as for the economy, we took the theme for the 175th Year as Sustainable Development and many of our activities now are woven around this. No doubt India is recognised as one of the fastest growing economies, with speculations that India will reach 8.5 to 9 % in the current fiscal. There is also optimism that we may overtake China in the next few years. Our aim of reaching the double digit growth is still to be achieved. We

about equitable development as a component of sustainable development.

Social infrastructures , Green businesses are gathering momentum and are

with us again on this important occasion and to address on this important theme.

becoming critical factors in sustainable

I am sure we are in for a Vibrant public

development .

session and I take this opportunity to

have also shown great resilience during

When we initially introduced economic

times of recession while the rest of the

reforms, the objective might have been

world still struggles to come to terms,

short term and limited – to overcome

CONGRATULATlONS The Madras Chamber congratulates Surana & Surana International Attorneys, a Member of the Chamber, on being conferred the International Financial Law Review’s (IFLR) “Law firm of the year – 2011 Chennai” award.

The Chamber also wishes them many more awards in the years to come.

8

We are very happy to have him

once again welcome you all for this meet.

CHAMBER’S ACTIVITIES 29th June 2011

not competent enough, we will be

l

keep up the motivational levels

MCCI-MMA Video Discussion – Middle Manager as Innovator

left behind. Hence there should be

l

provide incentives

innovation always. She gave examples

l

recognise at the end of the

of Intel Processors and Gillette blades

project

where they do not rest on the best

l

give them a patient hearing

The monthly video discussion

features of their products but keep on

l

celebrate success

programme in June was on the theme

innovating. She said innovation is the

l

accept mistakes; and

“Middle Manager as Innovator”. The

end result of creativity.

l

give them a free hand

video was based on the path breaking

The video related to two different

article by Rosebeth Moss Kantger, Ph.D.

companies – Data General Corporation

l

Comfortable with change

In this tough new business environment,

and New England Telephone Company

l

Clearly directed

innovation is the propeller for survival

– where the top management motivated

l

Thorough in their approach

and the aim of the discussion was

and nurtured their co-workers to

l

Participative and those

to learn the value of innovation, how

successfully complete innovative projects

to spot the opportunities and to get

under very different circumstances.

clear steps for achieving the increased

It was brought out that freedom should

involvement and implementation.

be given to the employees to innovate -

Ms Jerina Jahaffar, Consultant and

team work was important.

Corporate Trainer conducted the

It was also brought out that the quality

programme. She said the world is

of Managers should be :

changing every day and if we are

l

to protect his subordinate team

Successful innovators were those :

who are persistent

There is no specific time for innovation she said and no one is a genius innovator. On improving creativity, it was felt that one should take risks.

With a brief Q & A Session, the programme concluded.

members

Rishabh Academy Private Limited Presents One Day Intensive Seminar on Labour Laws

Date 30.07.2011 12.08.2011 26.08.2011

Place Hyderabad Bangalore Chennai

Participants will be given a complimentary book on “Encyclopaedia On Labour Laws” authored by our faculty Rajkumar S. Adukia B.Com (Hons), FCA, ACS, AICWA, LLB, MBA, Dip IFR(UK), Dip LL & LW Participation Fees: Rs.7500/- per person + Service Tax (Includes cost of lunch & tea and Background material) Payment mode: DD or Multicity Cheque should be drawn in favour of “Rishabh Academy Private Limited” payable at Mumbai.

For registration please contact Mr.Shiva Chaudhari +91 9773156653 / 8080240387 Meridien Apartments, Office 6, Building No. 1, Ground Floor, Veera Desai Road, Andheri (West), Mumbai-400058. Tel.No.022 26765506/65721420 Email: rishabhacademyindia@gmail.com, www.rishabhacademy.com

CHAMBER’S ACTIVITIES

175TH ANNUAL GENERAL MEETING PROCEEDINGS OF THE BUSINESS SESSION HELD AT 10.15 A.M. ON 23RD JUNE 2011 AT SHERATON PARK HOTEL & TOWERS, CHENNAI - 600018 PRESENT

The Food for Thought (FFT) series, a

He said the Chamber has a number of

Mr. T T Srinivasaraghavan

monthly breakfast meeting, which

plans on the completion of 175th year

President

focuses on current topical interests,

celebrations as well.

Mr.T Shivaraman Vice President

was one of the successful events.

Besides, the Chamber had organised many useful programmes such as

He then took up the agenda items for consideration.

Ms.K.Saraswathi

celebrating India corporate Week with

1. To adopt the Report for the year

Secretary General

the then Minister for MCA, Meeting

REPRESENTATIVES OF MEMBERS

with RBI Working Group on NBFCs,

The President referred to the printed

Representations on various issues to

Annual Report containing the activities

the Government, associating with the

of the Chamber during the year 2010-11

British High Commission and Italian

which had already been circulated to

Trade Commission for joint events,

the members. He informed the General

meeting the Parliamentary Committee

Body that the Report had been well

on DTC, etc. The Chamber’s premises

brought out with a new look and its

were also given a new look. Another

contents were informative and excellent.

important initiative by the Chamber is

The General Body also appreciated

establishing a Skill Development Centre

the Report. In the absence of any

in view of the difficulty in getting trained

queries, he proposed that the Report be

manpower. This is being planned at

adopted. Mr.G.V.Raman seconded the

MCCI’s own place at Koppur village

proposal. Put to vote, the general body

in Tiruvallur district which is one of the

unanimously adopted the Report.

M.V Ananthakrishna, R Anand, Bhavani Balasubramanian, R. Barath, Clynton Almeida, D P Devnath, K V V Giri, S Ganguly, N Ramadoss, K Vaitheeswaran, Rupa Gurunath, M C Kapur, N Vaishnavi, S Ramalingam, Srinivas Acharya, S Ravi, S Gopal, R Narasimhan, B Bhaskar, M V M Sundar, S Sasikumar, K L Parameswaran, N Srinivasan, P.K. Krishnakumar, V K Vijayaraghavan, M J Sivakumar, K V Rajendran, S. Subramanian, S Mohan, N Ramesh, V Sriram, A Sankarakrishnan, L Sabaretnam, G Srinivasan, M R Venkatesh, P R Sudhakar, J Krishnan, U Udayabhaskar Reddy, Vijay Chordia, G V Raman, R Mahadevan, S G Prabhakaran and S. Vaitheeswaran.

prominent industrial area. The Chamber had discussions with various corporate leaders, regulators, academic partners etc. and the project proposal is almost completed. Before converting the open land to a structured building for the training centre, the Chamber

2010-11

2. To adopt the Audited Statement

of Accounts for the year 2010-11

The President referred to the audited Statement of Accounts for the year 2010-11 sent to members as part of the Annual Report.

would be commencing soft skill training

Since there were no questions,

Mr. T.T.Srinivasaraghavan, President,

programmes near Sriperumbudur from

Mr.N.Srinivasan proposed that the

chaired the meeting and conducted

rented premises. It is the Chamber’s

audited statement of accounts for the

the proceedings. Before taking up

endeavour to start the soft skill

year 2010-11 be adopted. This was

the agenda items, he apprised the

programme before September 2011.

seconded by Mr.G.Srinivasan.

The President thanked the members for

The President thanked M/s RGN Price

their support and active participation

& Co. for auditing the accounts of the

in the various events being organised

Chamber.

members about the activities of the Chamber during the year. He said, the 175th year celebrations were started on September 29th, 2010 and following this, several new initiatives were planned.

10

by the Chamber and hoped that they would continue to render their support.

CHAMBER’S ACTIVITIES

3. To determine the Rates of

The Secretary General read out the

Mr.Vijay Chordia

subscription payable by different

names of the elected members for the

Stone Colour EXIM Pvt.Ltd.

classes of members for the year

year 2011-12 as follows:

2011-12

The President informed that there is no proposal to revise the subscription for the year 2011-12 and the rates as prevalent in the previous year would continue. He said that the Chamber had revised the subscription four years back

Mr.V.K.Vijayaraghavan

PRESIDENT

Auro Mira Energy Company Pvt.Ltd.

Mr.T.T.Srinivasaraghavan

Dr.Vinod Surana

Sundaram Finance Ltd.

Surana & Surana International Attorneys

VICE PRESIDENT

Mr.R.Vittal Raj

Mr.T.Shivaraman

Kumar & Raj

Shriram EPC Ltd.

The General Body congratulated the

and also collected one year’s additional

President and other members of the

subscription last year in view of 175th

MEMBERS OF THE COMMITTEE

year celebrations.

Mr.R.Anand

He then proposed that the present

Ernst & Young Pvt. Ltd.

rates of subscription be adopted for the

Mr.M.V.Ananthakrishna

year 2011-12. This was seconded by

M K Raju Consultants Pvt. Ltd.

The President informed that M/s RGN

Mr.G.S.Anil Kumar

Price & Co. have been auditing the

Jumbo Bag Ltd.

Chamber’s accounts for the last many

Mr.R.Anand.

4. To declare the election of

Members of the General

Committee for the year 2011-12

The President informed the General

Mr.R.Arjun Durai San Media Ltd

General Committee on their election for the year 2011-12.

5. To appoint auditors for the year 2011-12

years and the Chamber has been paying a sum of Rs.20000/- per annum plus out of pocket expenses. The

Body that the Chamber had so far 10

Mr.Gautam Venkataramani

President sought the concurrence of

members in the General Committee

India Pistons Ltd.

the General Body that the Auditors’

Mr.KVV Giri

remuneration be fixed at Rs.30000/-

Vaishnavi Freight Logistics Pvt.Ltd.

per annum plus out of pocket

including the President, Vice President and 8 members. Considering the growth of the Chamber in all areas and also considering that there has been

Mr.S.Gopal

increase in membership, this was the

Chemplast Sanmar Ltd.

opportune time to enhance and broad

Mr.Ishwar Achanta

base the General Committee to have

Viking Shipping (Chennai) Pvt.Ltd.

fruitful and sector specific discussions.

Further, the Chamber had approval from the General Body at the last AGM held in 2010, to increase the size of the General Committee from 10 to

Auditors for the year 2011-12.

The General Body unanimously accepted the revision of remuneration of Rs.30000/- plus out of pocket expenses

Mr.V.Murali

and also agreed for the re-appointment

Victor Grace & Co.

of RGN Price & Co. as Auditors for the

and 18 members of the Committee.

Neophyll Agrisciences Pvt.Ltd

overwhelming response from members.

General Body for their continuance as

I Sense Technologies P.Ltd.

Dr.K.V.Rajendran

Committee were called and there was

He also sought the approval of the

Mr.Joseph Eugene Uthaman

20 including President, Vice President Accordingly nominations for the

expenses from the current year 2011-12.

Mr.G.V.Raman Shriram Transport Finance Co.Ltd.

The President requested the Secretary

Ms.Rupa Gurunath

General to read out the names of

The India Cements Ltd.

the elected members of the General

Mr.A.R.Subramanian

Committee for the year 2011-12.

Schwing Stetter India Pvt.Ltd.

year 2011-12.

The motion was carried over unanimously.

6. To declare the appointment of members of the Expert Committees The President informed the General Body that the various Expert Committees have been a source of

11

CHAMBER’S ACTIVITIES

strength to the Chamber and the deliberations at their meetings have been fruitful. Under the auspices of the

Expert Committees, a number of

the year, including some programmes outside Chennai.

programmes were organised during

The Secretary General read out the names of the Chairmen and Co-Chairmen of the following Expert Committees appointed for the year 2011-12.

NAME OF THE COMMITTEE

CHAIRMAN

CO-CHAIRMAN

Company Law / Corporate Matters

Ms.Bhavani Balasubramanian Deloitte Haskins & Sells

Mr.S.Srinivasaraghavan Simpson & Co.Ltd.

Direct Taxes

Mr.Sriram Seshadri BMR & Associates

Economic Affairs

Mr.M.R.Venkatesh GSV Associates

Energy Mr.P.Krishnakumar

Orient Green Power Co Ltd.

Mr.N.Mani Shriram Capital Ltd.

Environment, Mr.R.Barath Pollution Prevention Wheels India Ltd. And Control

Mr.N.Ramadoss Industrial Waste Management Assn.

Financial Sector Ms.Subashri Sriram

Shriram City Union Finance Ltd.

Mr.V.Sriram ICRA Management Consulting Services Ltd.

HRD & CSR

Mr.S.Ganguly Larsen & Toubro Ltd. (ECC Division)

Mr.M.Ramakrishnan W S Industries India Ltd.

Indirect Taxes

Mr.K.Vaitheeswaran K.Vaitheeswaran & Co.

Mr.K.K.Sekar Ashok Leyland Ltd.

I ndustrial Development/ Infrastructure

Mr.S.Kanappan Larsen & Toubro Ltd. (ECC Division)

IT& ITES

Mr.Clynton Almeida Redington India Ltd.

Mr. Malli J.Sivakumar Sundaram Infotech Ltd.

Logistics

Mr.J.Krishnan S.Natesa Iyer & Co.

Mr U.Udayabhaskar Reddy Sanco Trans Ltd.

VAT Mr.P.R.Sudhakar

Brakes India Ltd.

Mr.P.R.Subramaniyan Larsen & Toubro Ltd. (ECC Division)

The President informed the General

efforts in organising programmes in

He sought the opinion of the

Body that the Chamber’s existing

many areas relevant to our members.

General Body and the General Body

expert committees have been doing

Hence, it was time to broad base the

unanimously accepted the proposal.

very well in their respective areas.

expert committees and recommended

After taking the Members’ approval, the

The membership of the Chamber has

that 3 more expert committees be

motion was passed to constitute the

increased substantially and about 60

constituted as follows:

above 3 expert committees.

new members have been enrolled

a. Education

during last year. Added to this, the

b. Health care & Pharma

Chamber has been pro actively taking

c. Manufacturing

12

CHAMBER’S ACTIVITIES

to send the same to the Chamber as 7. Any other business Code of conduct for General Committee

early as possible to enable the Chamber Secretariat to start the process.

The President informed the General

Forthcoming Programmes

The President informed the General

Body that the Chamber’s website has

27th July - 6.00 p.m. to 7.00 p.m.

Body that the Chamber’s activities were

been revamped and it provides a host

@ MCCI Conference Room

growing and presently the strength

of information to the members on its

of the General Committee has been

MCCI-MMA Video Discussion on

current activities; a separate page has

increased from 10 to 20. He said he was

been created titled “Ask the Experts”

“Between You and Me”

happy to note that representatives of

wherein members could post their

Faculty: Ms.Shripriya Srinivasan,

member companies have been taking

queries. He requested the members

Corporate Trainer

keen interest to serve on the General

to see the website and make use of

Committee. To maintain the standards

the same effectively and also provide

This video discussion uses

of the General Committee, members’

suggestions to improve it further.

participation, the smooth functioning of the General Committee, maintaining confidentiality etc. the President informed the General Body that the Chamber needs to adopt a Code of Conduct / Governance to become a member of the General Committee. He gave broad details of the code and sought the views of the General Body and after clarifying some of queries raised by the members , he asked the concurrence of the General Body for the adoption of the code of conduct to become a member of the General Committee.

He then informed the General Body that the Chamber is in the process of bringing out a Coffee Table Book which would be released on 29th September 2011 at the Chamber Day.

believable, realistic role-plays to help employees embrace teamwork and solve their own conflicts without management intervention.

Tea: 5.30 p.m

The book would explain the history of the Chamber right from its inception, the Chamber’s role in the development of railways, port, telecommunications, etc., and how it interacted with the Government and various stakeholders.

30th July – 9.00 a.m. (proposed) FFT on Land Acquisition Policy Raintree Hotel Anna Salai

It would also contain a number of photographs depicting the Chamber’s growth. He said the book would be a

19th & 20th August 2011

The General Body approved the

collector’s item and a great reference

Two day All India Workshop on

proposal and it would be suitably

point for the business community.

Indirect Tax Laws

Since there were no other issues to

Hotel Deccan Plaza

be informed to the General Body,

Participation fee:

incorporated in the Memorandum of Association.

Further, the President informed the

the President thanked the Members

General Body that the Chamber

of the Chamber, Members of the

will be bringing out a new Directory

General Committee, Members of the

Rs 4000 per delegate (Non-

of Members and the same will be

various Expert Committees and the

Member)

released on the Chamber Day on

Secretariat for the excellent work done

29th September 2011. The Chamber has

and requested their co-operation and

already sent circulars to all Members

support to the Chamber as hitherto.

27th & 28th August 2011(Proposed)

He then requested the Members to join

Employment Fair

seeking the required information for the Directory. He said some of the members have so far not responded.

The President requested the Members

Rs 3500 per delegate(Member)

the fellowship and attend the Public Session to be held at 11 a.m.

Chennai 27th June 2011

K.Saraswathi Secretary General

13

GENERAL COMMITTEE 23rd June 2011

taken on rent from 1st August. NTTF

the Act were discussed at

GENERAL COMMITTEE

has offered resource support. Others

the meeting.

The President welcomed the members to the meeting and said there was one unfinished agenda and that was about updating on the progress made with regard to the Coffee Table Book. He said Mr V Sriram, historian and the author of the book, has been invited to give the highlights of the book.

like Everonn, C-PAT are also being approached. So far the progress has been good.

Study of the Port Sector in Tamilnadu The President said the Port is one of the focus areas of the Chamber. Once the study is over, the Chamber will organise a Seminar in September to

The Vice-President who had presided over the meeting said it was a very good programme and the discussions were lively. The Vice-Consul, US Consulate informed about their Act “ No child Left Behind “. Comparing that with India, it was felt that not enough has been done in our country for primary education while higher education

Mr Sriram through his presentation,

discuss the recommendations

briefed the members about the

made by the Study and convey

current status and said the text and

it to the concerned Government

c. Seminar on Revised Schedule

picture sourcing, scanning, etc. has

Department/Agencies.

and XBRL

been completed. The printing will be done in July/August.

The President then reported on the various meetings organized by the

With regard to the title of the book,

Chamber since the last meeting of

he said for the time being it could

the committee as follows:

be “Championing Enterprise”

has been getting due attention.

This programme organised on 4th June was well attended. Mr D K Mittal, IAS., Secretary, MCA who had confirmed his participation as Chief Guest could not make it

a. MCCI-MMA Video Discussion on

due to unavoidable circumstances.

“The Miracle Man”

However, the programme

These joint programmes by the

was held as scheduled. Mr N

Chamber and MMA are going on

Ramanathan, Managing Director

every month and the response has

of Ponni Sugars (Erode) Ltd. and Mr

been quite good.

S A Murali Prasad, Director, SAM

b. FFT on Right to Education -

Consultancy Services made excellent

28th May.

presentations on Schedule VI and

Dr Vasanthi Devi, former Vice-

XBRL respectively.

Chancellor, Manonmaniam

Though the Chamber had already

Sundaranar University, Ms Aruna

made a representation to the

Rathnam, Education Specialist, Mr C

Government on these issues, a

Sathish, Senior Principal, RMK Group

number of issues emerged during

of Schools and Mr David Brock,

the Seminar and the Chamber

Vice-Consul, American Consulate

will be sending a further

addressed the meeting.

representation shortly.

on to do the soft launch of the

The salient features of the Right

The Committee felt that there is

project. A facility has been identified

to Education Act and also serious

no uniform format and this makes

near Thirumazhisai and it will be

concerns in the implementation of

with subtitle “The 175 years of The Madras Chamber of Commerce & Industry”. However, this will be finalised shortly since the Chamber has received a few suggestions from members.

The President said Mr Sriram’s commitment to this project has been extraordinary and thanked him for his presentation. Members appreciated the efforts put in by Mr V.Sriram.

Skill Development Initiative Progress The President said that efforts are

14

EVENTS IN PICTURES Public Session

175TH ANNUAL GENERAL MEETING Business Session

l to r: K Saraswathi, T T Srinivasaraghavan & T. Shivaraman

T T Srinivasaraghavan delivering the welcome address

T T Srinivasaraghavan welcoming Dr Subir Gokarn

Dr Subir Gokarn addressing

T Shivaraman proposing the Vote of Thanks

A view of the audience

15

GENERAL COMMITTEE 2011-12 PRESIDENT

VICE- PRESIDENT

Mr T T Srinivasaraghavan Managing Director Sundaram Finance Ltd.

Mr T Shivaraman Managing Director & CEO Shriram EPC Ltd.

Members

16

Mr R Anand Partner Ernst & Young Pvt. Ltd.

Mr M V Ananthakrishna Executive Director M K Raju Consultants Pvt. Ltd.

Mr G S Anil Kumar Director – Finance Jumbo Bag Ltd.

Mr R Arjun Durai Managing Director San Media Ltd.

Mr Gautam Venkataramani Executive Director – Corp. Affairs India Pistons Ltd.

Mr K V V Giri Managing Director Vaishnavi Freight Logistics (P) Ltd.

Mr S Gopal Managing Director Chemplast Sanmar Ltd.

Mr Ishwar Achanta Managing Director Viking Shipping (Chennai) Pvt. Ltd.

Mr Joseph Eugene Uthaman Director I Sense Technologies P. Ltd.

GENERAL COMMITTEE 2011-12

Mr V Murali Senior Partner Victor Grace & Co.

Dr K V Rajendran Advisor Neophyll Agrisciences Pvt. Ltd.

Mr G V Raman Executive Chairman Shriram Group of Companies

Ms Rupa Gurunath Director The India Cements Ltd.

Mr A R Subramanian Chief Financial Officer & Company Secretary Schwing Stetter India Pvt. Ltd.

Mr Vijay Chordia Director Stonecolour Exim Private Ltd.

Mr V K Vijayaraghavan Vice-President – Finance Auro Mira Energy Company Pvt. Ltd.

Dr Vinod Surana Partner & CEO Surana & Surana International Attorneys

Mr R Vittal Raj Partner Kumar & Raj

Ex-Officio

Mr Srinivasan K Swamy Chairman & Managing Director R K Swamy BBDO Pvt. Ltd.

17

EVENTS IN PICTURES Round Table on Fiscal Policies for Low Carbon Investment

Video Discussion on Middle Manager as Innovator

A view of the meeting

Ms Jerina Jahaffar making a presentation

Investment & Business Opportunities in the Piemonte Region (Italy)

A view of the dignitaries on the dais

T T Srinivasaraghavan welcoming the gathering

18

Ms Stefanis Novelli making a presentation

GENERAL COMMITTEE

it more complicated and costly.

High Commission-DFID India Climate

Further, it was suggested that the

Change and Energy Unit and Ms

Chamber should organise one more

Rachel Brass, First Secretary, Climate

programme with the participation

Change and Energy in the cross

of Secretary, MCA as this is an

Governmental Unit of FCO, DEC

important issue affecting the

and DFID of the British Government

corporates.

joined the round table discussion.

d. Investment and Business

Dr R Mahadevan who had attended

Opportunities in Torino Piemonte

the programme said that UK

- Meeting with the Italian

Government has set apart

Delegation – 16th June:

2.9 billion pounds for Low Carbon

The Italian Trade Commissioner

initiatives and that there will be

in Mumbai and senior officials

good share of that available for

from Government of Italy made

countries like India to pursue some

presentations on the investment and

of the initiatives in this regard.

business opportunities in Piemonte,

However since these findings are

India-Italy relationships, incentive

channelized from Government

schemes offered, etc. which were

to Government , there could be

impressive. The President said a

procedural hurdles and bureaucracy

bigger team will be visiting India

coming in the way of speedier

in November and the Chamber

action. It was suggested that an

should invite representatives of

independent agency should be set

TIDCO,SIPCOT, etc. to the meeting

up for this purpose.

which will be organised by the Chamber to learn from them some of the best practices in attracting investments to the State. e. Round Table discussion on Fiscal Policies for Low Carbon Investment This programme was held on 17th June in association with Climate Change Team of British High Commission.

Dr Philip Douglas, First Secretary, Climate Finance and Technologies within the joint British

b. Business Immigration – Getting a Green Card through Investment –EB5 immigrant visas This programme is to be held in association with Fox Mandal Associates at Hotel Savera commencing at 3.30 p.m. on 1st July.

The aim of the Seminar is to talk about securing a US Green card via EB-5 programme. The US Congress created the EB5 programme to encourage foreign investment in the US to create jobs and to provide expeditious US residency and citizenship to qualified foreign investors. Mr Gregory Win and Mr Satish Khalay will be making presentations. c. Chamber Day – 29th September 2011 The President informed that the closing of the 175th year celebrations will be on 29th September and this will be celebrated in a befitting manner.

Dr Douglas indicating that the

Code of Governance for Committee Members

carbon credits are likely to continue

The President stated that there is a

beyond 2012.

code for becoming members of the

Forthcoming Programmes

Chamber. However, there was no

He also mentioned about

Members were informed that the following programmes were scheduled to take place: a. MCCI-MMA video discussion: 29th June A joint video discussion by the Chamber and MMA on 29th June on “Middle Manager as an Innovator”. Ms Jerina Jahaffar will be the trainer for this programme.

such thing for becoming a member of the Committee. Assocham and other organisations follow a code of governance and it was time our Chamber also introduced this.

The draft code of governance was tabled and the President informed members that he will bring it before the Business Session of the AGM for adoption.

19

GENERAL COMMITTEE

EXPERT COMMITTEE

Assocham Managing Committee nominations

30th June 2011

The Secretary General informed

The first meeting of the reconstituted committee was held on 30th June. While discussing the terms of reference, members gave some suggestions which will be incorporated.

IT / ITES

that Assocham has called for nominations to the Managing Committee by 8th July and the Chamber would be sending its nominations shortly.

This being the last meeting before the AGM, the President thanked the Vice-President, Mr T Shivaraman and all the members of the Committee for their unstinted support during the year. He said their attendance and participation in the meetings made the proceedings of the Committee lively and purposeful. He sought their cooperation and support in the ensuing year as well.

Members of the Committee reciprocated the sentiments and expressed their happiness at the leadership shown by the President.

The Committee dwelt at length on its work plan for the year and decided as follows:l take the web portal to the next level and make it more inter active; also see how best the Chamber could market it l Increase the membership base by bringing in more IT/ITES companies l Identify 2/3 programmes for the year – first event to be held in the first quarter.

felt that IT programmes should be conducted in Tier II cities like Madurai, Coimbatore,Trichy,etc.

MCCI – revamped website – suggestions Members made a few suggestions as follows: l Members of the Chamber could be given 3-4 additional ids to enable them to view all the details l Online updation should be made possible l There should be an online directory of members l A s and when the bulletin is uploaded, a message could be constantly flashed l Most wanted question to be highlighted

The committee came out with a proposal to have an exclusive e-newsletter.

l Sectoral reports when uploaded will be for the use of members

only

The Committee felt that the Chamber should on its own, under the guidance of the Expert Committee, organize some programmes. The Committee also

l Job Board – only members could post their job requirements. l After 2 months, the website needs to be revisited

NATIONAL AWARDS FOR EMPLOYMENT OF PERSONS WITH DISABILITIES The Ministry of Social Justice and Empowerment has invited nominations of disabled persons for National Awards on the occasion of International Day for Disabled Persons falling on 3rd December 2011.

Various categories for these awards and other details can be seen on their website www.socialjustic.nic.in Companies/individuals who have done commendable work for the empowerment of lthe persons with disabilities and need to be recognised may send the nominations to the Ministry.

The last date for receipt of nominations is 16th August 2011.

20

SPOTLIGHT

NATIONAL MANUFACTURING POLICY The draft National Manufacturing

of manufacturing in GDP to 25%

and other services and required

Policy has received in principle nod

by 2022.

infrastructure will be located,

from the government. The policy is

l To double the current

and a non- processing area, to

aimed at creating 10 crore additional

employment level in the sector

include residential, commercial

jobs by 2025. The implementation

l To enhance global

and other social and institutional

is expected to increase the share

competitiveness of the sector

infrastructure. The processing area

of manufacturing sector in the GDP from the present 16 per cent to 25 per cent in the next 14 years.

The National Manufacturing and Investment Zones (NMIZs) would reap the benefits of co-

Extracts from National

sitting, networking and greater

Manufacturing Policy -

efficiency through the use of

Discussion Paper

common infrastructure and support

The discussion paper focuses on 1. National Manufacturing & Investment Zones: Concept 2. Exit Policy 3. Green Technologies: New Avenue of Growth 4. Incentives and Benefits for units in NMIZs 5. Simplified Clearances & Approvals for Setting up units in NMIZs 6. Skill development programme to cater to the needs of Manufacturing Sector.

services. They would have highclass infrastructure, and provide a competitive environment conducive

Economic Zones, Industrial Parks & Warehousing Zones, Export Oriented Units, DTA units duly notified under the relevant Central or State legislation or policy. All the benefits available under the relevant legislation or policy will continue to remain available to the said Zones

for setting up businesses. They

The internal infrastructure of the

would thus provide a boost to

NMIZ will be built and managed

manufacturing, augmentation

by a Developer, or a group of Co-

of exports and generation of

developers. The external linkages

employment.

will be provided by Government

CONCEPT OF NMIZ

of India and the concerned State government. The users of external

An area would be specifically delineated for the establishment of manufacturing facilities for domestic and export led production, along

1. National Manufacturing and

with the associated services and

Investment Zones( NMIZ) -

infrastructure.

Concept

may include one or more Special

as well as internal infrastructure will pay for its use, except to the extent that the government supports the service through budgetary resource.

The NMIZ would have a governing body, which would be in the form

The NMIZs would be a combination

OBJECTIVES

of production units, public utilities,

l T o promote investments in the

logistics, environmental protection

manufacturing sector and make

mechanisms, residential areas

the country a hub for both

and administrative services. It

domestic and international

would have a processing area,

markets;

where the manufacturing facilities,

l T o increase the sectoral share

along with associated logistics

of a Special Purpose Vehicle (SPV) formed with the constituents of that specific NMIZ. The SPV would have delegated authority from the State Government, Ministries in the Central Government and other Government Agencies for issuing necessary clearances, as may be necessary

21

SPOTLIGHT

for the inception and continuation of

companies in NMIZ will be obliged

state/ central government; and

business ventures inside the NMIZ.

to take a job loss policy from any

l ‘Best Green Unit’ awards to

insurance company.

encourage, recognize and raise

3. Green Technologies

greater awareness.

Indian manufacturing needs to

l If the SPV in a particular NMIZ

focus on four areas:

decides to have an IPP based

l E xplore opportunities in the

on renewable green technology,

rapidly growing carbon trading

an investment subsidy to cover

market.

the additional interest cost per

l Drive “greening of operations” to

mega watt may be considered.

reduce their carbon footprint.

4. Incentives and Benefits for

l E xplore opportunities in

units in NMIZs

“greening of products”.

The NMIZs would be a combination

l E xplore emerging “green

of production units, public utilities,

technologies” with opportunities

logistics, environmental protection

to build local and global

mechanisms, residential areas

leadership.

and administrative services. It

Special Incentives for Green

would have a processing area,

Technologies and Manufacturing for

where the manufacturing facilities,

units in NMIZs

along with associated logistics

l Low-interest loans for

and other services and required

manufacturing to invest in new

infrastructure will be located,

plans to produce clean /green

and a non- processing area, to

technology or invest in new

include residential, commercial

plants to produce green

and other social and institutional

products;

infrastructure. The processing area

l Creation of a central fund for

may include one or more Special

supporting research in the area

Economic Zones, Industrial Parks

of green manufacturing;

& Warehousing Zones, Export

l Mandatory to get a certain

Oriented Units, DTA units duly

percentage of its electricity mix

notified under the relevant Central

from renewables;

or State legislation or policy. All the

l Provides grants for workers

benefits available under the relevant

training that will lead to an

legislation or policy will continue to

expanded energy efficiency

remain available to the said Zones.

The key feature of the NMIZs would be a more business friendly policy, procedures and approval ecosystem, combined with superior physical infrastructure.

INSTITUTIONAL FRAMEWORK 1. The Department of Industrial Policy and Promotion (DIPP) will be the nodal department of the Government of India for the NMIZs. 2. A High Powered Committee constituted by the Government of India will scrutinize applications for setting up the NMIZ, and subsequently monitor and expedite the progress of implementation.

3. The SPV would be constituted for each NMIZ and will be responsible for its development and management. It will also be empowered to issue/expedite approvals and pre-approvals.

2. Exit Policy for units in NMIZs It is proposed that the closure of a unit in NMIZ should be made easier by settling the dues of the labour in time. There should be a fast mechanism for settling the assets of a sick company so that they are redeployed for production.

For settling labour dues independent of other creditors claim a sinking fund should be created for each NMIZ to be maintained by the SPV which would be built through a contribution out of the profits of all the units in NMIZ. Alternatively the

22

and renewable energy industry workforce;

General Incentives for units in

l Preference to green units/ green

the NMIZs

products during procurement by

l In order to encourage industrial

SPOTLIGHT

units in taking on training/

Wherever exemptions are possible

retraining of the workers, such

under the Act, the same should

expenditure be treated at par

be granted in NMIZ subject to SPV

with R&D expenditure.

having a self regulated alternative

l T ax exemption on expenditure

mechanism to achieve the objective

incurred in taking national

of the Act.

international process/product

Where exemption is not possible,

certification/approvals like

the authority under the Act should

ISO 9000, BIS 14000, BEE, IS,

be vested in the SPV or in a single

CSA, UL, VDE, etc.

designated agency.

l 5 0% of the expenditure incurred

6. Skill development programme

in filing international patents to

to cater to the needs of

be shared by the Government.

Manufacturing Sector

l S ubvention of interest on working

The SPV for the NMIZ will

capital by 4% to create parity

continuously review the requirement

with international counterparts.

of skilled manpower and take

l I n government purchases

necessary steps to meet the

preference be given to units

demand for skills at three broad

located in the NMIZs.

levels — a very large pool of

l I n order to encourage supply

minimally educated human resource,

chain development, Income Tax

a large pool of skilled persons,

exemption to suppliers in

and a small yet significant pool of

proportion to the supplies made

personnel with highly specialized

within the NMIZ.

skills. A training centre for the zone

l S pecial incentives for certain

would be set up as a Public-Private

crucial industries where import

Partnership initiative with courses

dependence is very high.

being tailored to the demand of

State levies

specific industries in the zone.

The State Government may also

Trained personnel would then

notify a package of incentives

be placed suitably in these units.

for the development of the NMIZ,

Appropriate technical assistance

including moratorium on all

tie-ups for the centre with agencies

municipal and other local taxes for

abroad would be facilitated for state

10 years, for the NMIZ developers as

of the art training infrastructure and

well as the units which are located

curricula.

in the Zone.

Full text of the discussion paper can

5. Simplified Clearances &

be had from

Approvals for Setting up units

dipp.nic.in/nmp_discussionpaper

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in NMIZs

23

SPOTLIGHT

INDIAN MANUFACTURING MUST LEVERAGE AUTOMATION

By Raja Bahadur V Arcot, Vice President & General Manager, ARC Advisory Group

Macro global forces such as

look upon automation as a business

include design and engineering.

globalization, emergence of

enabler and not as a technology

Companies are seeking design,

knowledge economy, the narrowing

enabler. It is necessary for Indian

operate, and maintain (DOM) inter

divide between developed and

manufacturing companies also to

operability. The DOM inter operability

developing economies, and

leverage automation for achieving

ensures continuous iterations to

demographic changes are ushering

overall business goals, and they

reduce costs by continuous review

manufacturing transformation.

cannot ignore the imperatives of

and evaluation mechanisms

While this transformation is taking

leveraging enabling technologies.

relating to products or processes,

place, consumers are increasingly

Manufacturing Transformation

operational and maintenance

demanding value for their money

strategies.

and instant gratification. While

From a historical perspective,

the influence of these forces may

manufacturing, which essentially is

vary from industry to industry and

a series of operations that transform

In the present day world, business

company to company, at the macro

inputs, such as raw materials/

is done at the speed of thought,

level almost all companies are

components by deploying human

and therefore it is necessary for

subject to time-to-market and cost

and financial resources through

manufacturing companies to be

pressures and other associated

processes, sprung up close to

agile both in spotting opportunities

challenges. Although the overall

demand or raw material centres,

and in competitively responding to

growth of the world economy

dictated largely by the value-

them. While opportunities are global,

continues to spur manufacturing,

addition criterion. As the global

in many manufacturing segments,

only companies which continually

economy expanded resulting in

the world is awash with excess

discover ways to reduce costs and

demand spurt, manufacturing

capacity, and in that scenario, what

tightly couple all activities along

responded by transforming itself.

is important for manufacturing

the value chain have a chance to

Whether it is process, hybrid,

companies is in achieving

succeed in the fiercely competitive

or discrete, manufacturing

‘availability-to-promise’.

world. Manufacturers are squarely

transformation is a continuous

Role of Automation

addressing these challenges

saga of change. Manufacturing

by thinking out-of-the-box to

companies are moving away from

The success of a manufacturing

optimize manufacturing processes

vertically integrated structure to

company will be determined by

and identify afresh controllable

horizontally linked network models.

their ability to become globally

cost centers. Global companies

Spanning countries and continents,

competitive and successfully

extensively leverage automation to

companies are becoming an

integrate with the emerging globally

ensure productivity, improve plant

extensive network of enterprises,

extended enterprises. Companies

availability, product consistency and

with networks extending beyond

wanting to become agile,

quality, and such others, and they

manufacturing supply chain to

competitive, and globally networked

24

Design-Operate-Maintain Model

must extensively deploy automation.

SPOTLIGHT

While the automation at the plant-

by Collaborative Production

opportunities through mergers and

level deals with real-time decisions

Management (CPM) Systems.

acquisitions. The pharmaceutical

that impact shop-floor operations,

Automation helps a manufacturing

industry has witnessed many M

automation at the enterprise-level

company to efficiently deploy

& A deals. These trends clearly

relate to business decisions that

its resources — men, material,

indicate that Indian manufacturing

are mostly transaction based. Since

and finances. Automation brings

companies are plugging themselves

today’s business is done at the

within the company’s sphere of

into global networks. Their success

speed of thought, the enterprise-

influence the factors that affect

will be largely determined by their

level support decisions have a direct

the deployment of these resources.

ability to achieve convergence

bearing on the production and

For achieving this, synchronized

among people, processes, and

scheduling decisions that cascade

actionable information

technology; and this convergence

down to the shop floor operations.

is the key.

is achieved through collaborative

Actionable Information and Realtime Per formance Management

Indian Manufacturing Landscape

automation.

Therefore, manufacturing companies

with a surging domestic demand

have to invest in automation to

and global growth opportunities

become more agile, gain visibility

are spurring India’s manufacturing

across the extended supply chain,

companies to expand. Let us take a

and synchronize their production

look at some of the manufacturing

and business decisions. They

verticals, where Indian companies

require synchronized actionable

are moving beyond targeting the

information which comes by

domestic market. These companies

deploying collaborative production

are going beyond exploiting factorial

management systems including

advantages and are seeking

manufacturing execution systems

sustainable competitiveness. And in

(MES) that link plant floor systems

these endeavours, automation has

to enterprise solutions. With

an important role to play.

actionable information at its command, the company can seek Operational Excellence (OpX) or Continuous Improvements (CI).

OpX is an on-going journey, and companies have to constantly work at it, year after year. Real-time Per formance Management (RPM) is the key to achieve continuous improvement or OpX. Real-time Per formance Management (RPM) is taking decisions based on Actionable Information provided

The booming Indian economy

The automobile industry in India is going at full throttle. Spurred by domestic demand, India, the third largest manufacturer of compact passenger cars and the fifth largest commercial vehicle manufacturer in the world, is emerging as a major automotive market. The automotive industry in India, with its industry hardened homegrown vehicle manufacturers, the large number of quality conscious auto component suppliers, abundant supply of knowledge workers, and management talent, facilitates the

Some companies in India, having

growth of automotive companies.

made a successful transition from

India is emerging as a global

operating in a sellers market,

manufacturing hub for compact

have emerged as global-sized

cars and auto components. The

world class companies capable

success of the automotive and auto

of competing in a free market.

component industry will largely

Examples, such as the recent

depend on companies’ ability to

take-over of Corus by Tata Steel

competitively design, engineer,

and the bid by India’s aluminium

make, and supply them on time.

major Hindalco for Novelis, show

Automation plays a crucial role in

how some of these companies are

the success of automotive industry

aggressively pursuing global growth

living up to the promise.

25

SPOTLIGHT

Globally Extended Enterprises The Indian steel industry, the ninth largest globally and producing around 38 million tons of steel per annum, is on the upswing.

Additionally with rich bauxite ores, the country is also a leading producer of aluminium. Indian

refining processes among others.

it is time for them to evaluate how

With some of the companies in

well they are leveraging automation

the refining segment emerging

technologies to achieve agility,

as significant exporters of refined

supply chain efficiencies, and

products, these companies have to

productivity improvements across

adopt automation in a major way

globally extended and networked

to manage their assets to maximize

enterprises.

profits.

Recommendations

companies in the metals segment

India’s pharmaceutical industry,

realize that the way forward for

presently ranking fourth globally in

them would be to segregate

terms of volume and thirteenth in

value chain into primary metal and

terms of value, is growing. Domestic

finished products. The demand for

pharmaceutical companies, keeping

high-value added finished products

abreast with global developments

is beginning to expand in Asia,

and adopting new technologies

while the production facilities for

with relative ease, have created

the same already exist in NA and

good manufacturing practice (GMP)

Europe. Their strategy is to integrate

compliant facilities to produce and

their facilities in India with the

formulate drugs. Although some

already existing finished products

of them have taken strides along

production facilities in the mature

the drug discovery path, their main

l The success of a manufacturing

markets where the demand still

forte continues to be generic drug

company will be determined

exists for finished products. While

market. With generics pipeline

by their ability to become

this strategy helps them to meet

worth around $30-40 billion

globally competitive and

the growing demand for finished

remaining full, India’s pharmaceutical

successfully integrate with

products in India and Asian

companies have ample growth

the emerging globally extended

countries by maximizing the return

opportunities. Wanting to seize

enterprises. Companies wanting

on existing assets by integrating

growth opportunities, some of the

to become agile, competitive,

them vertically, their ultimate

pharmaceutical companies in India

and globally networked must

success depends on integrated and

have taken the route of growing

extensively deploy automation.

synchronized automation across all

through mergers and acquisitions.

l Manufacturing companies have

geographically dispersed plants.

While Indian manufacturing have

to invest in automation to

The companies in the oil and

done well in adding production

become more agile, gain visibility

gas segment have challenges

capacities and building economies

across the extended supply

which include sourcing crude,

of scale, it is time for them to

chain, and synchronize their

its transportation, refining it and

evaluate how well they are

production and business

distributing the refined products.

leveraging automation technologies.

decisions.

They have to squeeze their margins

While they are extending their reach

by efficiently scheduling their crude

beyond the Indian shores with

supplies and by optimizing the

export earnings growing robustly,

26

l Global companies extensively leverage automation and they look upon automation as a business enabler and not as a technology enabler. Indian manufacturing companies have to leverage automation for achieving overall business goals, and they cannot ignore the benefits of leveraging enabling technologies.

POLICY WATCH

DEPB Scheme extended for three months The DEPB scheme has been in existence for the last 14 years and has been the most popular schemes especially engineering

This class of investors, called

in several segments including

qualified foreign investors (QFIs) but

agriculture, pharmaceuticals,

not FIIs will be able to invest money

dairy products, research and

in domestic mutual funds through

development, tourism and films.

unit confirmation receipts or through the depository participant route.

including automobile sector. The

QFIs could be individuals and

objective of the DEPB scheme has

bodies including pension funds and

been to neutralise incidence of

cumulatively they could invest up to

customs duty on import content of

$10 billion (about Rs 45,000 crore).

export product. Neutralisation has

EPFO-like body for small sector on the anvil

been provided by way of grant of duty credit against export product.

Seeking to address the concerns

NEW MEMBERS The Chamber extends a warm welcome to the following

According to reports, DEPB scheme

of the small scale sector, the

has been covering nearly 52 percent

Department of Policy and Promotion

of exports. This scheme was due to

(DIPP) is planning to come out with

end on 30 June 2011. Government

a strategy paper to evolve a

has recently extended the scheme

framework for privately-run body on

Business: Fruit pulp, concentrates,

for limited period of three months

the lines of the Employees’ Provident

juices, processed foods and

upto 30 September 2011.

Fund Organisation for managing

The implication of this amendment

retirement funds and insurance.

is that no DEPB shall be issued on

India-New Zealand FTA likely by 2012

th

th

export after 30th September 2011.

There is no change in the validity of DEPB as indicated therein, meaning the validity as stated in DEPB shall remain operative till its expiry.

Visiting New Zealand Prime Minister

new members:

Origin Foods Ltd., Chennai

canned fruits

Fiducial Insurance Brokers India Pvt.Ltd. Business: Insurance Broking

who arrived on a three day visit to India recently said that India and

Maveric Systems Ltd.

New Zealand were likely to sign the

Business: Software testing

Foreign investors can invest up to $10B in MFs

Free Trade Agreement (FTA) by early

The ceiling is subject to review

The negotiations for a New

depending on the response.

Comprehensive Economic

The Central Government has

Cooperation Agreement or popularly

announced that it was making a

known as FTA started last year. The

move to allow foreign investors,

Commerce and Industry Minister

other than foreign institutional

Mr Anand Sharma who visited

investors (FIIs) to invest up to $10

Auckland in May had said that

billion in domestic mutual funds.

the two countries could cooperate

next year.

iData Systemtech and Consulting Pvt.Ltd. Business: IT Consultants

27

TRADE FAIRS & EXHIBITIONS

Trade Fair Accenta, Ghent (Belgium) September 10th - 18th 2011 The India Trade Promotion Organisation is organising India’s national level participation in the above Trade Fair.

Trade Fair Accenta is a B 2 C multi Products Event and ITPO has taken an area of 468 sqm, in which 30 - 35 booths of 9 sqm each will be built. Rent for this event is expected to be around Rs.90000 + tax for a 9 sqm booth.

If you wish to participate in this Fair, please contact Mr V Narayanan, Manager, ITPO, Chennai at Tel: 28524655 email: itpochn@md4.vsnl.net.in

India Show – Toronto-Canada October 17th - 20th 2011

objective of the “India Show” is to

International Fair to be held at

promote India’s image and provide

Lagos (Nigeria) from November 4th

a platform for Indian organisations

-13th 2011. Lagos is a gateway and

to showcase their strengths and

commercial nerve center of Nigeria.

capabilities in a developed country

It is also the hub of Nigeria’s

like Canada.

business and economic activity as

“India Show” in Canada will be

well as the main port of entry.

organised in conjunction with the

The fair is likely to attract over 5

Canadian Manufacturing Technology

lakh visitors within and outside

Show (CMTS 2011). CMTS is a

the country which include

premier engineering exhibition

businessmen, investors, consumers,

in Canada and more than 600

top government officials and

companies from various countries

representatives of Nigeria, important

are expected to participate. India

trading houses and those seeking

has been declared a “Strategic

joint venture partnerships.

Partner” for the Show.

ITPO offers a package of services

EEPC India’s endeavour is to

which include fully constructed

showcase the SMEs of India.

stands, wall to wall carpeting,

For further details please contact Mr R Maitra, Executive Director, EEPC India – Phone: 011-23711124/25 email: ed@eepcindia.net

adequate lighting, furniture, standard display aids, visa recommendation and general publicity support. This event has been approved under MDA scheme of the Department

‘India Show” Canada is an initiative

of Commerce.

Show will be organised by EEPC

Lagos International Fair, Lagos (Nigeria) November 4th -13th 2011

India with the support of Indian High

ITPO is organising India’s national

Mobile: +91 98183 9922

Commission at Canada. The main

level participation at Lagos

email: vmalik@itpo-online.com

of the Ministry of Commerce & Industry, Government of India. The

For further details, please contact: Mr V P Malik, Deputy Manager, ITPO

The India Chamber of Commerce, USA invites businesses, officials and educational institutions to attend its Global Trade Summit, August 25th - 26th 2011 at the River Centre, Saint Paul, Minnesota, USA. This is an opportunity to reach the US markets, to meet with potential partners and distributors and to explore markets in Mexico, Brazil, Canada and other countries. For more information please visit the summit’s website http://www.indiachamber.org/GlobalTradeSummit/index.php

28

ECONOMIC REVIEW

ECONOMIC REVIEW ECONOMY Fuel price hike, duty cut to stem the cash losses faced by PSU oil Marketing companies India, US to expand trade and investment links India’s core industries output growth up 5.3 percent in May India’s Exports up 56.9% in May, trade deficit too widens to $14.9bn Food inflation declined sharply to 7.78%

CORPORATE Vodafone finalises India mobile subsidiary buyout

Economy Fuel price hike, duty cut to stem the cash losses faced by PSU oil Marketing companies

reduction of Rs.250 billion (US$5.5

government has ever funded,

bn) in FY12 losses, which could still

and can continue to pressure

be of the order of Rs.1.1-1.2 trillion

government finances. Unless the

(US$25bn). Given the nearly 58%

States agree to tax cuts, more retail

consumption of HSD, LPG and SKO

price hikes cannot be ruled out, if

The government on 24th June

of the total petroleum products

crude remains high.

increased the price of diesel (HSD)

consumption, the reduction in tax

by 8% (Rs.3 per litre), kerosene

collections (Rs.490 bn, US$11 bn

(LKO) by 16% (Rs.2 per litre) and

per annum) will be higher than the

domestic liquified petroleum gas

reduction in losses.

(LPG) by 16% (Rs.50 per cylinder),

However, the reduction in overall under-recoveries is a positive for all oil PSU companies. ONGC, OILI and GAIL should theoretically earn 33%

The Empowered Group of Ministers

of the reduction in under-recoveries.

(EGoM) under the chairmanship of

If benefits of only the retail price

the Finance Minister considered the

increases were passed on, ONGC’s

alarming situation arising out of

EPS would benefit by Rs.5 (16%),

projected massive under-recoveries

OILI’s by Rs.23.7 (18%) and GAIL’s

of the Oil Marketing Companies

by Rs.2.9 (9%) (at 33% upstream

(OMC) of Rs.1,71,140 crore for the

subsidy sharing). Also, at least the

year 2011-12 in the wake of high

four controlled products are currently

international crude oil prices and

priced on a trade parity basis,

finally passed a slew of measures

which relies on only an 80% parity

The government said that the retail

to stem the cash losses faced by

to import prices. The 5% reduction

price hikes should generate Rs.240

PSU oil companies on retail sales.

in crude and product duties should

excluding State levies such as VAT. Also, the excise duty on diesel has been reduced from Rs.4.6 to Rs.2 per litre. Moreover, the prevailing 5% custom duty on crude oil has been eliminated. The custom duty on all petro-products has also been reduced by 5 percentage points to 2.5% only.

billion (US$5.3 bn) in Financial Year 2011-12. On the other hand, the tax cuts do not generate additional revenue, but will lead to another

Despite these large retail price increases, residual FY12 underrecoveries are still the largest the

therefore lead to a small expansion in refining tariff protection, and should be a positive for stand alone

29

ECONOMIC REVIEW

refiners that sell into India.

had made significant progress in

commitments of both governments

India, US to expand trade and investment links

recent years. Over the past decade,

to work hard to expand deepen the

trade and investment between

trade and investment relationship

the two countries had expanded

was the most important outcome

across a variety of industries and

of the bilateral meeting. The joint

sectors. Between 2000 and 2010,

statement said that the United

Indian exports to the United States

States is committed to making the

had grown by nearly 180 percent

investments in technology, skills and

and American exports to India

infrastructure necessary to maintain

had increased over four times.

and enhance US competitiveness in

Meanwhile, the combined bilateral

the global economy.

India and the United States will work together to expand trade and investment links between their economies and will further develop and strengthen their financial systems. They will also work together in the G-20 on an effective mutual assessment process to bring about strong, sustained, and balanced global growth. This statement was declared in a joint statement at the Second meeting of the US-India Economic and Financial Partnership in Washington, D.C on 29th June 2011. The joint statement was signed by both U.S. Secretary of the Treasury Mr Timothy Geithner and Indian Finance Minister Shri Pranab Mukherjee.

The US wants India to become one of its top 10 trading partners, treasury secretary Timothy Geithner said as the two countries agreed on improving access to each other’s markets. India is currently the US’ twelfth largest trading partner, with bilateral trade of almost $50bn.

“In the United States, we aren’t just watching India’s rise as an economic power, we support it.

We encourage it. And we want to help advance it,” Mr Geithner said.

“India’s growth is good for us, just as our growth is good for India,” he added.

US-India economic relationship

30

US-India foreign direct investment had grown by nearly 165 percent between 2005 and 2009.

The meeting also discussed the challenges that both economies faced in ensuring a strong recovery

Despite this progress, and especially

and price stability in the short term,

given the size of the two respective

as well as the range of policies

economies, the joint statement

necessary to reach growth at their

recognized that there remained

full potential domestically. Moreover,

untapped potential and opportunity

both countries agreed to a robust

to expand trade and investment

roadmap for the coming year that

linkages to the benefit of both

included deeper engagement

countries.

in the partnership areas of

“American companies still face barriers in India in sectors such as banking, insurance, manufacturing, multi-brand retail and infrastructure,” Mr Geithner said. Mr Geithner added that not only were these barriers limiting growth, they were also a hindrance to job creation in both the countries. However, Mr Mukherjee said that given the political situation in India it was not easy to introduce reforms in key sectors. “We do not have a simple, single-party majority in legislature and in parliament,” he said.

macroeconomic challenges, financial sector reforms and infrastructure finance.

India’s core industries output growth up 5.3 percent in May The Index of Eight core industries having a combined weight of 37.90 per cent in the Index of Industrial Production (IIP) with base 2004-05 registered a growth of 5.3% in May 2011. However, the growth of eight key infrastructure industries slowed in May compared to 7.4% during the same year-ago period. During the period of first two months

Despite the limitations expressed

of this financial year (April-May),

by the Indian finance minister, the

growth in the core industries slowed

ECONOMIC REVIEW

to 4.3% compared to 7.9% in the

year. Petroleum refinery products

exports growth momentum that

corresponding period of the

registered a growth of 4.5 percent in

began last fiscal. However, the

previous year.

May, as against an increase of 7.7

imports too went up by 54.1% at

percent during the same month

US$40.91 billion during the month,

last year.

pushing up the trade deficit to

The key reason for the slowdown is the fall in output of natural gas and

US$15 billion during May 2011.

cement sectors. Cement has posted

The new entrant, natural gas

a decline for the second month in a

production fell 9.6 percent in May

The imports grew highest in the last

row. In the past, the RBI has raised

compared with a growth of 34.4

four years, as the country’s demand

interest rates 10 times since March

percent in May 2010. On the other

for oil, gold and industrial machinery

2010 to tame inflationary pressures.

hand, fertilizer production rose 7.3

soared. This also raised concerns of

Consequently, the sharp increase in

percent in May compared to a

widening the trade gap for the fiscal

borrowing costs has severely hurt

negative growth or contraction of

year despite a strong rebound in

investment plans of the industries.

6.7 percent in May 2010.

exports. According to the provisional

Also, the high global commodity prices have acted as a barrier to the industry‟s faster expansion.

In addition to fertilisers, the remaining three sectors also reported better growth during the

data released by the Commerce and Industry Ministry, crude oil imports in May rose 18.57 percent to US$10.1 billion from $8.5 billion in

The government has added two

month. Coal output registered

more sectors - natural gas and

a growth of 1.1 percent in May,

fertilisers to the existing six industry

2011, compared to 0.3 percent in

segments. With the inclusion

May 2010. The growth in Crude oil

of these two sectors, the core

production expanded by 9.7 percent

industries now cover the sectors

in May, compared to 5.8 percent

such as crude oil, petroleum refinery

expansion in the corresponding

Export growth in May led by

products, natural gas, fertilisers,

period of 2010. Also, the electricity

engineering as well as electronic

coal, electricity, cement and steel.

which account for maximum index

goods consignments which went up

Also, its weightage now account for

weightage of 10.3, showed an

by 120 percent. Export of petroleum

37.9 percent in the overall index of

improved output growth of 10.3

products grew by 75 per cent, while

industrial production, as compared

percent in May this year, as against

those of ready-made garments as

to 26.7 percent earlier.

6.4 percent in the same month of

well as yarn and fabric, which have

2010.

traditionally been strong export sectors for India, rose by about

cement contracted again by 2.3

India’s Exports up 56.9% in May -trade deficit too widens

percent in May this year, as against

to $14.9bn

For the fiscal year so far, the trade

According to provisional data released today, production of

a growth of 8.6 percent in the same month of 2010. Growth of finished steel production slowed down to 6.1 percent during the month under review, compared to 9 percent expansion in May last

India’s exports during May, 2011 grew by an impressive 56.9% year-on-year to US$25.9 billion (Rs.75730.31 crore). The rise in demand from Western markets (the US and Europe) help maintain the

the same month last year. Non-oil imports also went up by 71 percent to US$30.7 billion in the month under review from US$17.9 billion in the same period last fiscal.

50 percent.

deficit stood at US$23.9 billion.

During the first two months of 2011-12, exports increased by 45.3 percent to US$49.8 billion while imports grew 33.3 percent to US$73.7 billion. The sectors which

31

ECONOMIC REVIEW

registered healthy growth in the current fiscal include engineering (115 percent), electronics (80 percent), drugs (68 percent), petroleum (64 percent), gems and jewellery (23 percent), readymade garments (31 percent), and chemicals (44 percent).

However few segments like tobacco, iron ore and fruits and vegetables recorded negative growth.

each) have moved up.

The index for Non-Food Articles sub-group also declined by 0.4 per cent owing to lower prices of flowers and raw cotton (3% each), and cotton seed (2%). However, the prices of gaur seed (9%), sunflower (7%), copra (3%), and fodder (2%) have moved up. The index for

The deal that originally announced in March, ends a relationship with Essar that had become increasingly strained. The two firms had clashed publicly over plans by Essar to reorganise its ownership of the Indian business in a way that Vodafone claimed would not value the company correctly.

‘Minerals’ group also rose by

Essar had accused Vodafone of

Food inflation declined sharply to 7.78%

2.1 percent.

trying to force it out of the company,

India’s food inflation rate based

major category fuel, power, light &

on the Wholesale Price Index (WPI)

lubricants rose by 0.2 percent on

stood at 7.78 per cent (%) for the

account of higher prices of aviation

week ended June 18, 2011 as

turbine fuel (3%), naphtha (2%)

compared to 20.12 per cent during

and furnace oil (1%). However, the

the corresponding period of the

prices of bitumen (2%) declined.

previous year. Food inflation for

The annual rate of inflation under

the previous reported week was

this category for the week ended

recorded at 9.13 per cent on a year-

June, 18 stood at 12.98 percent as

on-year basis.

compared to previous week level of

Among the major groups, the index for Primary Articles‟ declined by

On the other hand, index for another

12.84 per cent.

while local Indian newspapers reported that the Indian partner had been trying to get Vodafone to pay more for its exit. Vodafone has faced a string of problems since entering the joint-venture in 2007 after it bought majority stake of Hutchison. It includes a £2.3bn write-down, about 25% of the business’s value due to rising spectrum costs, and US$2.6bn tax bill from the Indian authorities.

Commenting on the deal, which

Corporate

has given over $400 million dollars extra to Ruias, Essar Group

inflation for this group was 11.84 per

Vodafone finalises India mobile subsidiary buyout

cent, down from last week’s level of

Vodafone has finally agreed terms

12.62 per cent. It was 19.58 per cent

for the buy-out of its partner Essar

for the corresponding week of the

from its Indian mobile phone

preceding year.

business. The UK firm will pay

The index for ‘Food Articles’ sub-

US$5.46bn to its Indian counterpart

group declined by 0.8 per cent,

to take Essar out of its 33% stake

due to lower prices of poultry

in the Indian subsidiary. It will leave

chicken (4%), masur (3%), and tea,

Vodafone owning 74% of the Indian

condiments & spices and jowar (2%

business, while the other 26% will

each). However, the prices of egg,

be owned by Indian investors, in

gram, urad, ragi and fish-marine (2%

compliance with Indian law.

0.4 percent as compared to the previous week levels. Annual rate of

32

Chairman Shashi Ruia said, “We were one of the early entrants in the telecom space in 1995 and we are really pleased that VodafoneEssar has grown to become one of the premier telecom companies in the country with over 140 million subscribers.” “We have also enjoyed an extremely successful relationship with Vodafone and wish them success in the future.”

Source: Assocham