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THE TATANIC Navigating Troubled Waters

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THE BIG INTERVIEW SECTOR FOCUS BIRD’S EYE VIEW London is determined to be a top Big reforms underway but Indian India emerges as world’s big choice for Indian businesses banking still a long way away defence spender Exclusive with Sadiq Khan, from good health Rahul Roy-Chaudhury, Senior Fellow Mayor of London by India Inc. Staff South Asia, IISS, London

16 March 2018 £4.95 www.indiaincgroup.com ISSN 2516-3930 The UK-India Awards 2018 The UK-India Awards 2018 (June 22) are produced to celebrate mutual and individual achievements within the UK-India dynamic.

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Luther Rahman Binita Modi #UKIndiaAwards Vice President, Sales Guest Relations Manager [email protected] [email protected] www.UKIndiaAwards.com FROM THE TOP

Tata Group: Navigating Troubled Waters

have admired the for almost as long as I a welter of accusations and counter-accusations but most can remember. I took great pride when Tata acquired accounts agree that the Tata Trusts used their special marquee British brands such as , Corus powers, vested in them around the time Tata demitted I(renamed Europe) and Jaguar . office, to oust Mistry. Such a significant decision and its And I celebrated when the group emerged as the UK’s manner impacting the $140-billion group ought to have largest manufacturing sector employer. It helped prove my been a lot more sensitive and transparent. consistent argument that Indians are “job makers, not job takers” when investing abroad. There are now serious allegations about the Tata Group’s investments in Air Asia India being in breach of foreign The UK-India Awards 2018 Not only was the Tata Group riding a crest, it was also investment norms. Tata must confront these charges basking in the global attention bestowed on its fabled head on, and place in the public domain all material facts ethical management standards, including introducing an instead of taking refuge behind legalese. That’s what the The UK-India Awards 2018 (June 22) are eight-hour work day at Tata Steel years before it became world has come to expect of the Tata and any deviation mandatory in much of the West and the launch of a from its own high behavioural benchmarks is bound to produced to celebrate mutual and individual provident fund for workers, three decades before it was raise eyebrows. achievements within the UK-India dynamic. mandated by law in India. There are also similar imputations of impropriety in the decision to keep Tata But following the sudden unceremonious TATA’S GROWTH Motors’ Nano production line in operation sacking of as Chairman, the WAS THE EASY PART despite mounting losses. public domain began to fill up with stories BUT CULTURALLY about alleged governance breaches and INTEGRATING DISCRETE As the messy legal battle meanders conflicts of interest at or near the top of PARTS SPREAD ACROSS through the Indian courts, the merits of Tata’s hierarchical pyramid. These are the case won’t matter to the public but now matters for the Indian courts. THAILAND, SOUTH a perception that something is not right KOREA, THE UK, THE US may gain currency. Given the public’s Tata’s growth was the easy part but AND LARGE PARTS OF general lack of faith these days in culturally integrating discrete parts spread AFRICA SEEMS TO HAVE Indian business houses, the good name across Thailand, South Korea, the UK, TAKEN THEIR TOLL. of the Tata runs a big risk of getting the US and large parts of Africa seems to tarnished. That will be a sad day for have taken their toll. Indian businesses and overseas Indians such as myself who have often used the Tata Group’s Here, I am not even getting into the issues faced by achievements as a proxy for the global successes of India. , which is now being merged with ThyssenKrupp’s steelworks in a 50:50 joint venture. Therefore, if there is an amicable settlement in sight, and Allowances have to be made for a business decision that this a big ‘if’, then both parties must for the sake of all its did not pan out as planned. It has happened to the most stakeholders, make that extra effort. That will save the hallowed names in global business and will doubtless group any further beating and can, arguably, help it regain happen many times again. some lost ground in the global brand sweepstakes. Otherwise this epic feud, increasingly playing out like In one of our articles last year, we had been critical of David versus Goliath, will continue to be a drag on all another iconic Indian business leader, Infosys founder concerned. And, as in many past instances of such N.R. Narayana Murthy, for not being able to let go of his corporate battles, history may ultimately judge Cyrus “baby” even after formally retiring from all executive and Mistry better. But there are much bigger stakes for Brand non-executive roles. India here also. Contact us Tragically, , another equally iconic Indian Manoj Ladwa business titan, has done the same. The exact sequence Luther Rahman Binita Modi Publisher & CEO, India Inc. #UKIndiaAwards of events leading up to that sad denouncement is lost in Vice President, Sales Guest Relations Manager @manojladwa [email protected] [email protected] www.UKIndiaAwards.com www.indiaincgroup.com March 2018 3 CONTENTS

The first Global Edition of ‘India Global Business’ is a nod to women’s achievements across different fields to mark International Women’s Day this month. Besides, the Sector Focus is on India’s vigorous banking reforms and the Hotspot country this time is Brazil. COUNTRY FOCUS COVER STORY 8 20

India-Canada: A missed opportunity by India Inc. Staff

SECTOR FOCUS

Tata Group has to get the wind behind its sails by India Inc. Staff 24 Big reforms underway but Indian banking still a long way away from good health by India Inc. Staff FROM THE TOP STATE FOCUS 3 Tata Group: Navigating Troubled Waters by Manoj Ladwa, Founder & CEO, India Inc.

The Big Interview

30 From laggard to leader, the journey has just begun for UP by India Inc. Staff

33 India emerges as world’s big 13 London is determined to be a top choice for defence spender Indian businesses by Rahul Roy-Chaudhury, Senior Exclusive with Sadiq Khan, Mayor of London Fellow, South Asia, IISS, London

4 March 2018 HOTSPOT REALTY CORNER

46 Budget 2018: Populist or watershed? by Deepak Sam Varghese, Senior Director – Colliers International

36 Investing in Brazil

SPOTLIGHT

48 SOFT POWER: Around the world with the Indian Navy

50 Last Word: The Goldilocks moment for interest rates in India is here 39 INDIANS IN FOCUS: Indian female entrepreneurship makes its global mark Published by Incorporating

41 India makes firm strides on women in the workplace by Shuchita Sonalika, Director and Head UK, Confederation of Indian Industry (CII) www.indiaincgroup.com © India Inc. Limited, all rights reserved. Social Impact Focus Reproduction in whole or in part without our written permission is prohibited. Views expressed by our contributors are their own and do not necessarily represent the views, policies of India Inc. While every effort is made to achieve total accuracy India Inc. cannot be held responsible for any errors or omissions. Editorial [email protected]

Advertising & Sponsorship PRICE £4.95 44 Indian innovation is key to solving the [email protected] PUBLISHED IN LONDON globe’s vision-related disabilities by James Chen, Founder, Clearly www.indiaincgroup.com March 2018 5 INDIA GROUP

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TEJA PICTON-HOWELL Consultant, corporate T: +44 (0)20 7457 3002 E: [email protected] Penningtons Manches LLP - your partner in law LONDON BASINGSTOKE CAMBRIDGE GUILDFORD OXFORD READING SAN FRANCISCO www.penningtons.co.uk HOUSE OF TATA: TRANSITION TIME n many markets around the world As yet unproven allegations about also contributed to this decline. and certainly to many watchers conflicts of interest and still not of Indian business, the House established concerns about alleged The Tatas will have to address Iof Tata is synonymous with all that gaps in governance have undoubtedly these issues squarely and there are is good about Indian industry. So, dented the image and value of the indications that the top leadership is it is a matter of concern not only group that has, over the last one-and- aware of this. for Tata shareholders, but all Tata a-half centuries established itself as stakeholders, which means pretty the gold standard of Indian business. Our Cover Story takes a deep dive much most of India, that the value of into the Tata empire to examine the its brand has fallen a fair bit over the And steroid-charged global top line issues as the group transitions from last few years, taking its ranking in the growth, a lot of it inorganic, and its most messy succession while global brands pecking order from the indifferent financial performance in charting out its future direction. Top 50 to below 100. some key domestic industries have

www.indiaincgroup.com March 2018 7 COVER STORY Tata Group has to get the wind behind its sails by India Inc. Staff

The Tata Group is the best-known Indian business house in the world, but it has to address several issues to maintain its position as the gold standard of the country’s industry.

he Tata brand remains India’s ranking was a 21-position decline a lesser decline than between 2015 most valuable and also the from the previous year’s ranking of and 2016, when brand value fell 11 best-known global calling 68. The Tata Group’s brand value has per cent. Tata is present in a number Tcard of Indian industry. But in 2017, been pegged at $13.1 billion, down of industries in which operating it fell out of the list of the world’s 100 from a peak of $18.1 billion in 2013. conditions are very challenging for top brands for the first time since In each of the two years before it all participants. 2007, clocking a rank of only 103. reached its peak valuation, the Tata This marked a 14-position decline brand was ranked among the “In this context, the slight decline compared to the previous year, world’s top 50. can be seen as a stabilisation according to Brand Finance, a global in challenging times. As Tata’s consultancy that publishes an Incidentally, Apple is the world’s new chairman, Natarajan annual list of the world’s most leading brand with a value of $145.9 Chandrasekaran, settles in valuable brands. billion, according to the same Brand and attempts to streamline the Finance study. And other Indian conglomerate’s activities, we expect Many experts have attributed this brands among the global top 500 are Tata to return to brand value growth fall to the controversy over the bitter Airtel, Life Insurance Corporation of soon,” the CEO of Brand Finance, exit of Cyrus Mistry as Chairman India, Infosys, State Bank of India, David Haigh, said in a statement soon of the group. There is no doubt that Reliance Industries, Indian Oil after the report was released. the unceremonious departure of the Corporation, HCL Technologies former chairman has dented the Tata and L&T. The Tata Group has long been reputation but to be fair, the fall in the considered the gold standard of standing of the brand had begun even “The brand value drop of 4 per cent Indian business not just in India before feud became public. The 2016 is clearly not positive. However, it is but also globally. So, any erosion in

8 March 2018 COVER STORY its brand value may also affect the of our businesses have got huge synergy, but we are going to standing of Indian businesses across potential to scale. So, this theme be careful.” the world. This is a matter of concern will be applicable irrespective of for everyone who tracks Indian the segments we look at,” he told a Impressive though these figures business going global. It follows then leading business news channel in are, when juxtaposed against the that some nifty housekeeping must be an interview. $50-billion increase in group M-cap in order at the House of Tata. during the three-and-a-half preceding Investors give a thumbs-up years, when Cyrus Mistry was at A blow to Tata image The investor community, which had the helm, it points to a continuation The group has its work cut out. Over beaten down Tata stocks in the of a trend rather than a dramatic the last year and a quarter, serious aftermath of Cyrus Mistry’s exit, improvement in performance. allegations have been made about seems to have regained confidence governance standards and alleged in the intrinsic worth value of these The outside insider conflicts of interest at or near the top companies. The Tata Group has always been of the Tata Group pyramid. These headed by a Parsi who was either a matters are being adjudicated by the Tata or related closely to the promoter courts and so ‘India Global Business’ EVERY COMPANY OR family. Even Mistry is actually related will refrain from discussing them here. to the Tatas. His sister is married to GROUP OF COMPANIES, former Chairman Ratan Tata’s half- Till these issues are resolved, they ESPECIALLY ONE AS OLD brother Noel. will continue to be discussed in the AND DIVERSIFIED AS THE public domain and if it drags on for TATAS, HAS A STRONG Chandrasekaran, on the other hand, too long, will prove to be a drag on the INTERNAL CULTURE THAT has no Parsi or Tata connection with Tata image and can possibly continue MAKES IT RESISTANT the exception of his professional ties. to have a downward bearing on its He has also never worked in any non- TO BIG BANG CHANGES. brand value. IT vertical and is a complete stranger AT THE SAME TIME, to businesses like steel, power, Then, there are concerns over the OSSIFICATION LEADS TO automobiles, consumer durables, profitability of some of major group CERTAIN DEATH. jewellery and the myriad other sectors companies such as Indian Hotels, that the Tata Group is present in. which runs the Taj Group of Hotels, and . Since February 21 last year, when Having spent all his life in the IT Chandrasekaran assumed charge industry, he is, however, credited with New man at the helm as the new Tata Chairman, the engineering TCS’ steroid-powered Following the very public falling market capitalisation of all the listed surge to the top ranks of India’s out between Cyrus Mistry, whose companies of the group have risen m-cap sweepstakes – TCS alone family at over 18 per cent are the a cumulative $20 billion. TCS, which accounts for more than half the largest private shareholders in the he headed before being promoted to group’s $135 billion-plus market value. group holding company – , the group’s corner office, had made the group brought in TCS veteran investors wealthier by about $12 New team Chandrasekaran to do precisely billion. Tata Steel, which had been Like Ratan Tata and Mistry before that – stabilise the diversified a bit of a laggard since the Corus him, Chandrasekaran is also building business house, which has about 100 purchase turned sour, has added $4 a new core team of leaders, mostly companies – 25 of them listed – in its billion to its M-cap. However, another in the 45-50 years age group, to take fold. Among the marquee brands in group flagship, Tata Motors, has on leading roles across the diversified its portfolio are , seen its market value fall by a fifth to group, which makes everything from Taj Group of Hotels, Tata Steel, Tata about $19 billion in the first year of bottled water to branded jewellery to Motors, Titan watches, range Chandrasekaran’s reign at the top of steel, cars, salt, software and a lot of jewellery and a lot more. India’s largest business group. more in between.

Chandra, as Chandrasekaran is “We look at simplification in all And like his two immediate known to his Tata Group insiders, has dimensions in each of the seven or predecessors, he has selected more focused on consolidating businesses, eight areas in which we operate,” than half of his new team from outside cutting losses and ensuring Chandrasekaran said in the the Tata Group, an implicit admission, profitability. interview. “Synergy is something perhaps, that the group’s internal that is significant in terms of bench strength isn’t as strong as he “We cannot boil the oceans. We productivity, in terms of consolidation might have wanted it to be. have got to pick the big areas and of procurement, technology and then go after them. These are areas businesses. There are many different For example, he has recruited in which we are working on. Many dimensions in which we can get Saurabh Agarwal, who in his previous www.indiaincgroup.com March 2018 9 assignment as Head of Strategy at the Aditya Birla Group had driven the merger of group companies Aditya Birla Nuvo and Grasim. He also oversaw the merger of Idea and Vodafone and the takeover of Jaypee’s cement business by UltraTech, as Group CFO, and Materials brought in Shuva Mandal from law firm Fox & Mandal as Group General Counsel. And he has shifted some Services Engineering of his senior colleagues from TCS to important group-wide positions. HOUSE OF These have been accompanied by a few high-profile exits as well. TATA: ACROSS Anil Sardana has quit as Managing Director of Tata Power and Brotin 7 VERTICALS Banerjee as Managing Director of Tata Housing. Both companies have Energy Consumer been placed under Banmali Agarwal, products former Country Head of GE in India, who also heads the group’s new defence industry vertical. Then, Rajiv Sabharawal, former banker and Partner at True North Managers, has been brought in as Managing Director of Tata Capital. Chemicals Communications and IT Commenting on these changes, the group told a newspaper: “We want across the conglomerate. around, it staunched any further to drive a culture of agility and high losses and it saved the Tata Group performance within the group. To This is clearly an area of concern the potential embarrassment of achieve this, it is important to have for a group that has, historically, having to lay off hundreds of people to right people in the right roles groomed, nurtured and promoted in the event of having to close the across functions.” many stalwart leaders such as company down. , Sumant Moolgaonkar, This is not to say that internal talent F.C. Kohli and Darbari Seth, among Then, he also gave the finishing has been given the short shrift dozens of others. touches and finalised the joint venture entirely. T.V. Narendran, head of Tata agreement with ThyssenKrupp Steel’s Indian operations has been How the new management handles for the business operated by Tata named the company’s global CEO this critical issue will have a bearing Steel Europe (formerly Corus), and even the European business, on the group’s future. which had been weighing down the which is being merged into a 50:50 steel company’s balance sheet and joint venture with ThyssenKrupp’s Resolving sticky issues preventing it from expanding in India. steel business, will report to him. Soon after taking over as group The goal seems fairly clear and is a chairman, Chandrasekaran With its European operations no continuation of a process begun by announced a resolution of its dispute longer an Albatross around its neck, Ratan Tata to bring the loosely-bound- with Japanese partner Docomo Tata Steel is now focusing once again together group he inherited into one, and the sale of its mobile telephony on consolidating its position in India. with a stronger core that exercised business to Bharti Airtel – for free. The company is almost certain to absolute control. He also paid back about $2.6 billion clinch the acquisition of the bankrupt that the telephony business owed Bhushan Steel for about $5.6 billion Bench strength concerns creditors with funds infused by and position it to regain its position as The series of moves does seem to Tata Sons. the largest domestic steel producer indicate that the group’s internal talent in India. pool is a little stretched and that it This deal was certainly the result of lacks sufficient numbers of senior some out-of-the-box thinking. At one The group, which already runs two managers who could be groomed go, the group got rid of a bleeding – Air Asia India and to take up critical leadership roles asset that had no possibility of turning – in the domestic market, has also

10 March 2018 made it known that it will consider bidding for Air Goodwill and brand recognition Many companies are India, which was promoted stressed Huge network of dealers, and run by J.R.D. Tata suppliers and stakeholders Not enough internal before it was nationalised, research when it is put up for Large shareholder base, disinvestment. Though red strong balance sheet Too diversi ed flags have been raised, Global presence Law suits on governance as murky allegations of It has a lot and control issues breaches by Tata of India’s strict restrictions on foreign going for management and control it, but… continue to swirl, and are the subject of acrimonious court proceedings. Presence across many Recent troubles in top value chains leadership

In the automotive sector, Strong presence in fast Too much power there are signs that the growing Indian market resting with too few group’s domestic passenger individuals car business is turning Early days yet companies and take a dispassionate around. Tata Motors has clawed its The Tata Group is in the throes of decision on which ones fit into the way back into the ranks of India’s change led from the very top. In some bigger picture and which ones don’t. top five passenger car companies by ways, the process will have to mirror sales in recent months and its recent what is being done to , And finally, it will also have to decide launch, the Tiago, is among the top 10 its iconic head office in ’s on how much control the trusts, best-selling cars in India – a first for a Flora Fountain area. The 94-year old which own two-thirds of Tata Sons, Tata Motors car in almost six years. building is having a complete internal should exercise over the operating makeover in keeping with the needs companies, most of which are Teaching an elephant to dance of a leading 21st century global widely held. Every company or group of business house while retaining its companies, especially one as old and heritage façade with all its external The House of Tata is a massive ship diversified as the Tatas, has a strong trappings and embellishments. and making changes mid-course, internal culture that makes it resistant even minor ones, will take elaborate to big bang changes. At the same Lots to fix planning, time and lots of energy. It time, ossification leads to certain The group has its mission cut out. As has to do this to get the winds behind death. A good leader, therefore, has this report points out, building bench its sails. to calibrate pace of change to ensure strength and grooming middle level that the resulting shock doesn’t kill it. managers to occupy senior positions In the meantime, the questions and and senior managers to assume concerns will persist. Teaching an elephant to dance is leadership roles is a crucial never an easy task… Teaching an old gap that the new leadership THE TATA STORY dog new tricks is even more difficult… has to focus on. because a leopard never changes its spots. Then, addressing the many Tata is a strong player both governance concerns in India as well as the 1 international market That is what the Tata Group is flagged in the public domain attempting to do. To be fair to will also test the mettle of the Mistry, this is precisely what he too group’s top leadership, not attempted, but his efforts obviously least because it will have to didn’t find favour with the Tata Trusts, maintain, and even improve public Trusts which control Tata Sons, Has built a strong brand that upon, the rich legacy Tata has maintained leadership over the holding company of the group. legacy of transparency and 2 more than a century and a half good governance. The new group chairman has also embarked on a similar course of The conglomerate may also action – only, this time with what have become too unwieldy many believe is the express blessings and large. It has become Will continue to play an important of group patriarch Ratan Tata, who role in India’s economic imperative to take a hard 3 development for decades to come effectively controls the Trusts. look at its portfolio and www.indiaincgroup.com March 2018 11 THE BIG INTERVIEW

London is determined to remain a top choice for Indian businesses Sadiq Khan, Mayor of London, tells ‘India Global Business’ about his determination to keep London as the top choice for Indian talent and businesses.

12 March 2018 THE BIG INTERVIEW ow would you describe In recent years, too often the debate there, it came as no surprise that they your India visit in December around the relationship between the share many of our concerns about 2017 in terms of closer UK and India has been solely around the future of the UK’s economy and Hpartnerships struck for the city of boosting trade. Of course this is vital, its relationships with countries around London? but there are so many other areas the world. There is no doubt that where we can work together to speed Britain’s vote to leave the European The longstanding relationship up innovation and to tackle some of Union and the British government’s between Britain and India plays the shared challenges we face. misguided approach to visas has a big role in modern London, and caused uncertainty and concerns. the huge contribution of the Indian That’s why when I was in India last community to London’s success over year I was proud to announce London My job is to reassure everyone many decades is part of the fibre of and Bengaluru will lead a new air in India that London remains – our city. It has played a vital role in quality partnership, with the aim and will always remain – open to shaping the culture and economy of of working with other key cities in business, trade and people from the our capital. India and across the world. To solve subcontinent. Now, more than ever, these major health and economic I am working to ensure the world There is a strong, enduring bond challenges, which are becoming knows that London is an outward- of friendship and collaboration that ever more common to major cities looking city that embraces talent exists between Britain and India – around the world, it is important and entrepreneurship and welcomes and I want this special relationship that politicians, policy-makers and people from all corners of the world. to grow even stronger. But we can’t business leaders create deeper city- escape the fact that this relationship to-city partnerships. What steps are you taking to has changed: countries and cities ensure London’s supremacy around the world are now competing What are the kind of transport as a financial centre for Indian to trade with India and to access links London and Indian cities can companies? India’s great pool of talented people. benefit from? As the Mayor of London, I’m Attracting talented people from determined to fight to ensure my city Shortly before I visited India, Jet around the world is part of London’s remains a top choice for people of Airways become the first international DNA – and this is what the city’s

AS THE MAYOR OF LONDON, I’M DETERMINED TO FIGHT TO ENSURE MY CITY REMAINS A TOP CHOICE FOR PEOPLE OF INDIAN ORIGIN WHO WANT TO WORK, STUDY AND DO BUSINESS OUTSIDE OF INDIA.

Indian origin who want to work, study carrier to operate three daily direct businesses come back to time and and do business outside of India. flights between London and Mumbai time again when outlining their – this is a clear sign that businesses concerns about the UK leaving the What are some of the key sectors are looking to meet the growing European Union. We have always of collaboration? demand for air travel between our been a beacon of entrepreneurship, countries. This is good news for innovation and enterprise and have I know there is a huge amount we members of the Indian diaspora welcomed with open arms people can learn from each other and that living in our city, good news for seeking new opportunities and there is scope for even greater Londoners who want to visit India as looking to be a part of the great collaboration. I’m passionate about tourists, and good news for London’s London success story. deepening the relationship we have companies who want to do business across a wide range of areas – from with their counterparts in Mumbai and Ambitious Indian businesses looking trade and business to tourism, elsewhere in India. I look forward to to expand internationally should look technology, education, sport, culture seeing more and more transport links no further than London and take and the arts. between London and the great cities advantage of our status as one of of India developing as time goes on. the world’s leading financial centres I believe that through a new focus and Europe’s largest technology hub. on smart city initiatives, we can not Is Brexit a big worry among Indian Since becoming Mayor, I’ve met many only take big steps forward in creating businesses? Indian businesses, including leading greener and more sustainable companies such as Tata, and cities, but also transform the way we Brexit is dominating our political HCL Technologies. design public services and deliver conversations here in London and the infrastructure to improve everybody’s rest of the UK – and when I visited Not only do we want to attract more quality of life. India and spoke to business leaders investment to London from India www.indiaincgroup.com March 2018 13 THE BIG INTERVIEW and to see more businesses setting On a personal note, how would up offices in our capital, we want to you characterise the significance share ideas and expertise in new and WHEN I WAS IN INDIA of your visit to both India and exciting sectors. LAST YEAR I WAS PROUD Pakistan? TO ANNOUNCE LONDON I was delighted to appoint Deepak AND BENGALURU Spending time in these incredible, Parekh as the first member of my historic countries felt very special to WILL LEAD A NEW AIR International Ambassadors Network: me: my grandparents and my parents as a highly respected Indian business QUALITY PARTNERSHIP were born and raised in India before figure, his experience and profile moving to Pakistan. The welcome will be invaluable as we build on the I received in both countries was excellent relations London already Rajesh Agrawal – as part of my very moving and I’m truly grateful has with India. I was also really International Business Programme, for the hospitality I was shown pleased to lead a trade mission of 20 which has secured £120 million of throughout. The trip was memorable business people to India – alongside investment and created over 400 in many ways and will leave a lasting my Deputy Mayor for Business, additional jobs since I took office. impression on me.

14 March 2018 CINEMA SUITE The glamour of the red carpet and the thrill of Hollywood and Indian Cinema

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1 1 22022018 1120 NEWS IN BRIEF

From consumer goods to nuclear energy, Indian companies there was a wide sector coverage of India’s eye new markets interests across the globe.

Japan’s Sumitomo eyes commercialised early next year. Britannia to scout for Indian JV Britannia’s Nepal plant would start in new markets the fourth quarter of the next fiscal as ndian Consumer packaged it is awaiting environmental clearance goods major Britannia there. Industries Ltd has plans to Ilaunch around 50 new products Bharti Airtel explores under its existing as well as new categories by the end of the next IPO of Africa unit fiscal as part of efforts to be a total food company.

okyo-based diversified con- In view of its growth strategy, the glomerate Sumitomo Corpo- Kolkata-headquarteredcompany ration is set to form a joint will launch dairy products by Tventure with an Indian company to October-November and croissants build integrated township projects through its joint venture with across the country. Greek cakes and confectionery ndian telecom operator Bharti major Chipita by March 2020. Airtel Ltd said the unit managing The Japanese company is at an its Africa operations is considering advanced stage of finalising the Besides, the company will Ia potential initial public offering (IPO). structure of the venture and, as its continue with its strategy of first project, it may start a large- adding new countries in its In a stock exchange filing, Bharti scale integrated township, including list and scout for new markets Airtel said the board of Bharti Airtel a condominium development. This in Africa, while foraying into International (Netherlands) BV has will be the first time that a Japanese Bangladesh and Myanmar. authorised the management to begin company will participate in Indian real non-binding exploratory discussions estate space. Britannia is looking to diversify in with banks and intermediaries to bakery and non-bakery segments evaluate the possibility of a Sumitomo would develop large-scale and also focussing on snack public listing. projects across the country and not items. confine itself to any particular region. The company added: “The above The company is in the process discussions are at an exploratory/ India currently allows 100 per cent of putting up a manufacturing preliminary stage and at this juncture, foreign direct investment (FDI) line with its JV partner Chipita for there is no certainty of any final under the automatic route in the croissants, which is expected to decision or outcome.” construction development segment, come up by the third quarter of which includes townships, housing, the coming fiscal. The company’s aggregate customer built-up infrastructure and real estate base in Africa has increased from broking services. The company is also in the 84.1 million as of December end process of setting up a Rs1,000- from 76.9 million in the corresponding International real estate developers, crore ($156-million) plant at quarter last year, an increase of 9.4 especially Chinese developers such Ranjangaon, Pune which would per cent. It offers 3G services and as Wanda Group, have been showing be an integrated food park, Airtel Money across 14 countries interest in Indian real estate. Most of he said, adding two plants in in Africa and 4G services in four these companies are interested in Guwahati and export-oriented countries in the continent. building large-scale projects across unit at Mundra SEZ would be the country. Bharti Airtel entered Africa in 2010

16 March 2018 NEWS IN BRIEF when it purchased Zain’s operations in the continent for $10.7 billion. Taiwan seeks business India, Russia & Over the past few years, it has been Bangladesh in nuke pact trying to capture the African market partnerships in India through local deals. It has made three small-ticket acquisitions in aiwan is likely to lead Uganda, Congo Brazzaville investments of more than and Kenya. $10 billion to make India its Tbusiness partner, as an attempt to Petronet in Sri Lanka JV counter Chinese investments. with Japan firm James Kuo, Deputy Executive etronet LNG Ltd, India’s Director, Taiwan External Trade biggest importer of gas, and its Development Council, said: “A Japanese partners will invest large Taiwanese chemical firm P$300 million to set up Sri Lanka’s first alone is setting up a $10 billion liquefied natural gas (LNG) terminal investment in the southern part of near Colombo. India, to make polypropulene raw materials for making plastic.” ndia signed a tripartite agreement The Indo-Japanese partnership will with foreign partners Russia set up a 2.6-2.7 million tonnes a year and Bangladesh for civil nuclear floating LNG receipt facility off the Icooperation last week. island’s western coast, bigger than the previously envisaged 1.5-2 million Nuclear Power Cooperation of India tonnes a year facility. Limited (NPCIL) will play a key role in building a nuclear power plant on Petronet will hold 47.5 per cent stake foreign soil with the proposed supply in the project while Japan’s Mitsubishi of equipment and material for a and Sojitz Corp will take 37.5 per cent power station being built by Russia in stake. The remaining 15 per cent will Bangladesh. India is also extending be held by a Sri Lankan entity. Kuo said that alongside support for capacity building and has investments by firms in the been training Bangladeshi nuclear chemical sector, Taiwanese scientists for the project. companies are also seeking ‘Indian partners’ for investments Russia’s civil nuclear body Rosatom in sectors like Information and is constructing nuclear power Communications Technology plant in Bangladesh on a turnkey (ICT), virtual reality (VR), shoes, contract basis. The scope of work and even in the manufacturing of includes design, production and iPhones by Foxconn, the Taiwan supply of equipment, construction, based iPhone manufacturer. installation, pre-commissioning and commissioning. Prabhat Singh, CEO, Petronet, said: India and Taiwan have an annual “We are in the process of signing bilateral trade which currently The Memorandum set a framework MoU with the Sri Lankan government stands at $3 billion per annum. for the interaction of the Russian for setting up of the LNG terminal.” Kou said that this is expected Contractor, Indian and Bangladeshi to multiply on the back of fresh experts in the implementation of the Sri Lanka has plans to build a Taiwanese investments and project. The parties will cooperate 300-mw gas-fired power plant in exports to be generated out in the field of personnel training and Kerawalapitiya, on its west coast, of India. mentoring, exchange of experience adjoining an existing power plant. and provision of consulting support. The existing plant, which uses oil Aiming to seek out capable to generate power, will also be partners in India, Taiwanese This is first occasion where will converted to LNG once the terminal is businesses are going to participate be involved in a civil nuclear project set up and gas imports start. in three trade expositions to be on foreign soil marking India’s global held across India. One of them, entry into a strategic sector. It will also The terminal in Sri Lanka is part Computex, is already reputed boost the Make in India initiative amid of Petronet’s vision to own 30mt to be the best technology show a proposal by Delhi to Moscow for per annum of LNG import and around the world. manufacturing of some nuclear power regasification capacity by 2020. reactor equipment in India. www.indiaincgroup.com March 2018 17 and India and transform it into a runway for a smooth take-off of closer ties. • The UK-India Leadership Conclave 2018 (June 20-21) is designed to open dialogue and debate around the future of the bilateral relationship. Held over two days in a luxurious manor in the English countryside, the conclave will provide the inside track on India and the UK. • The High Commissioners' Cup (June 19) is innovation and technology in healthcare, an exclusive golf day for the revitalised including the official inauguration of the DICE Commonweath community to brainstorm and Health and Wellness accelerator. power network amid some light-hearted banter. On the Indian side, we witnessed some • The UK-India Awards 2018 (June 22) are concrete steps to cut red tape and roll out the designed to celebrate mutual and individual red carpet to attract more foreign direct achievements within the UK-India dynamic. investment (FDI). Commerce Minister Suresh Prabhu's visit to London threw India's interest The year 2018 has seen an electrified burst healthcare programmes. The timing for the in renewables, clean technology and the of activity in the UK-India corridor. Two trade mission led by the UK’s National Health Commonwealth as a potential trading bloc into months into 2018, and already we have a Service (NHS) England chief, Sir Malcolm the spotlight. The Indian minister urged UK and flurry of Indo-British activities. Grant, could not have been more apt. Indian businesses to take the lead in transforming an ailing Commonwealth into a The recent UK-India Createch Summit, which trade bloc, promising Indian government hosted a delegation of 62 UK businesses in support for such an initiative. Mumbai, saw deals worth £58 million signed in collaborative projects between UK and Indian businesses in sectors across India Inc. has designed the UK-India Week technology, transport, healthcare and more. 2018 to take matters forward, as part of the wider vision of nurturing bilateral relations through our annual events The year 2018 so far appears to be the year of strengthening the living bridge • The UK-India 100 (June 22) is an exclusive Narendra Modi as key to the bilateral The year 2018 so far appears to be the year of relationship. the UK-India relationship tick. Indian Prime Minister Narendra Modi as key to the bilateral relationship. The UK-India Week 2018 brings together a The healthcare mission to India is another Even British royalty was getting in on the India string of A-list, invitation-only events. Use promising development in the action, with the British Asian Trust, founded by India Inc. has designed the UK-India Week this link to register your interest in time. UK-India dynamic, coming on Prince Charles, celebrating its 10th anniversary 2018 to take matters forward, as part of the the back of Indian Finance of working with South Asian charities with a wider vision of nurturing bilateral relations Nominations for the UK-India 100 Most Minister Arun Jaitley’s proposed launch of a new Development Impact Influential in UK-India Relations as well Budget unveiling one of Bond for education in India. The Earl of series of events in June this year will be aimed and UK-India Awards 2018 will be closing the world's largest Wessex's visit to India saw a focus on at fortifying the living bridge between the UK soon.

CONCLAVE

High www.indiaincgroup.com Commissioners’ Cup 20-21 JUNE BUCKINGHAMSHIRE and India and transform it into a runway for a smooth take-off of closer ties. • The UK-India Leadership Conclave 2018 (June 20-21) is designed to open dialogue and debate around the future of the bilateral relationship. Held over two days in a luxurious manor in the English countryside, the conclave will provide the inside track on India and the UK. • The High Commissioners' Cup (June 19) is innovation and technology in healthcare, an exclusive golf day for the revitalised including the official inauguration of the DICE Commonweath community to brainstorm and Health and Wellness accelerator. power network amid some light-hearted banter. On the Indian side, we witnessed some • The UK-India Awards 2018 (June 22) are concrete steps to cut red tape and roll out the designed to celebrate mutual and individual red carpet to attract more foreign direct achievements within the UK-India dynamic. investment (FDI). Commerce Minister Suresh Prabhu's visit to London threw India's interest The year 2018 has seen an electrified burst healthcare programmes. The timing for the in renewables, clean technology and the of activity in the UK-India corridor. Two trade mission led by the UK’s National Health Commonwealth as a potential trading bloc into months into 2018, and already we have a Service (NHS) England chief, Sir Malcolm the spotlight. The Indian minister urged UK and flurry of Indo-British activities. Grant, could not have been more apt. Indian businesses to take the lead in transforming an ailing Commonwealth into a The recent UK-India Createch Summit, which trade bloc, promising Indian government hosted a delegation of 62 UK businesses in support for such an initiative. Mumbai, saw deals worth £58 million signed in collaborative projects between UK and Indian businesses in sectors across India Inc. has designed the UK-India Week technology, transport, healthcare and more. 2018 to take matters forward, as part of the wider vision of nurturing bilateral relations through our annual events The year 2018 so far appears to be the year of strengthening the living bridge • The UK-India 100 (June 22) is an exclusive Narendra Modi as key to the bilateral The year 2018 so far appears to be the year of relationship. the UK-India relationship tick. Indian Prime Minister Narendra Modi as key to the bilateral relationship. The UK-India Week 2018 brings together a The healthcare mission to India is another Even British royalty was getting in on the India string of A-list, invitation-only events. Use promising development in the action, with the British Asian Trust, founded by India Inc. has designed the UK-India Week this link to register your interest in time. UK-India dynamic, coming on Prince Charles, celebrating its 10th anniversary 2018 to take matters forward, as part of the the back of Indian Finance of working with South Asian charities with a wider vision of nurturing bilateral relations Nominations for the UK-India 100 Most Minister Arun Jaitley’s proposed launch of a new Development Impact Influential in UK-India Relations as well Budget unveiling one of Bond for education in India. The Earl of series of events in June this year will be aimed and UK-India Awards 2018 will be closing the world's largest Wessex's visit to India saw a focus on at fortifying the living bridge between the UK soon.

CONCLAVE

High www.indiaincgroup.com Commissioners’ Cup 20-21 JUNE BUCKINGHAMSHIRE COUNTRY FOCUS India-Canada: A missed opportunity by India Inc. Staff

or two economies as culturally Canadian Prime Minister Justin interlinked as India and Canada, Trudeau’s seven-day state visit to the intensity in trade ties have India in February was expected to Falways flattered to deceive. In 2017, impart the required thrust in nurturing bilateral trade between the two trade ties between the two countries. nations stood at $8.4 billion with India The two nations are negotiating having a trade deficit of approximately a bilateral investment treaty, the $2 billion. Trade has grown since Bilateral Investment Promotion and 2010, when it was just $3.21 billion, Protection Agreement (BIPPA), and a but it still does not reflect the true free trade agreement, Comprehensive potential. India accounts for only 1.95 Economic Partnership Agreement The recent India visit of per cent of Canada’s global trade. (CEPA), but progress on both fronts Canadian Prime Minister has been tardy. These are underwhelming numbers Justin Trudeau failed in the face of deep cultural roots that Cold shoulder? to hit the right note for the two countries share. The Indian Right from the moment Trudeau and diaspora is now a sizeable part of his entourage, which included his investment potential. Canada’s demography and accounts family of five, touched down at the for over 3 per cent of the country’s Indira Gandhi International Airport population. It is also well represented in Delhi on February 17, the trip was in federal Parliament and provincial marred by a diplomatic standoff legislatures. In the present House that refused to ebb for the better of Commons (elections in October part of the seven days he spent 2015), there are 21 MPs of Indian in the country. He was received at origin (up from nine). Four of them the airport by a minister of state for now hold Cabinet berths – up agriculture, who is not even part of from two Ministers of State in the the Indian Cabinet. While it does not last Cabinet. flout any protocol, in many cases,

20 March 2018 COUNTRY FOCUS Prime Minister Narendra Modi has time, India gave less time to Canada time in negotiations and did not want himself received heads of states at to comply with the new fumigation to protract anymore. India now wants the airport. norms compared to the other both BIT and CEPA to be finalised countries like the US and Australia. simultaneously for a more balanced Some also perceived this cold outcome. shoulder treatment was further India has been the largest market for extended at the Canadian Prime Canadian pulses, peas and lentils. “The most critical thing is to get Minister’s visit to the Taj Mahal, Traditionally a net importer of pulses, a deal signed. Everything else is where the state chief minister Yogi India has since last year received a semantics,” says Dr Vivek Dehejia, Adityanath failed to turn up. The bumper crop in pulses and is unwilling Assistant professor of Economics and grapevine went into overdrive to to import the staple food, to protect Philosophy at Carleton University in speculate on the reason for this domestic farmers. Ottawa. “A CEPA would cover farm apparent snub. Trudeau’s Liberal products in general, agricultural Party’s perceived ties with those The controversy over tariffs on pulses products and restrain one country who support the Khalistan separatist may just be a passing thing but it from unilaterally slapping high tariffs movement of the 1980s in India, and does highlight the moribund state of on the other.” an invitation sent out to Jaspal Atwal, affairs between the two nations. a convicted Khalistani terrorist, to “The deal wasn’t going anywhere a pair of high level receptions were before this visit, but now it’s certainly bandied around for the frostiness. THE CONTROVERSY dead. I think it would be a miracle OVER TARIFFS ON if [CEPA] sees the light of day at India steadfastly refuted any PULSES MAY JUST BE this point, given the low ebb of the suggestion of a less than warm A PASSING THING BUT relationship,” Dehejia said. “Even if welcome being extended to the the trip had been neutral, and the visit Trudeaus and the Canadian IT DOES HIGHLIGHT THE had gone ahead with no mishaps, administration itself apologised for the MORIBUND STATE OF there would have been some Atwal incident and the invitation was AFFAIRS BETWEEN THE glimmer of hope. But now, it is promptly rescinded. Yet, the needless TWO NATIONS. really pessimistic.” controversies did cast a rather long shadow on the Canadian visit. By the Road ahead time Trudeau met Modi on February Trade deals It isn’t however, as pessimistic 23, the last day of his visit, the The negotiations for a Canada India as it may sound. India’s growing controversies had cooled off but a Economic Partnership Agreement prominence on the global stage bitter aftertaste lingered. (CEPA) trade deal for example has has largely not reflected on its ties not moved an inch even after 10 with Canada but things have begun Joint statement rounds of talks over at least seven to change in the last few years. In The biggest take away from the years. Talks on CEPA began at the his only visit to Canada in 2015, joint statement issued after the end of 2010 after Prime Minister Prime Minister Modi had secured a meeting was the promise to finalise Stephen Harper visited India and landmark nuclear energy deal with “mutually acceptable technological a joint study forecast a deal would Canada for supply of 3.2 million protocols” within 2018. The seemingly produce a GDP gain of $6-15 kilograms of uranium over a five- innocuous statement has far reaching billion for Canada. The following year period. It had formally ended implications in the current scenario year’s throne speech declared the a long-standing moratorium on as it could enable export of Canadian government’s intention to complete Canadian exports of nuclear to India. pulses to India free from pests of negotiations on the deal in 2013. In the 1970s, India used Canadian quarantine importance. technology in its nuclear programme Similarly, the two countries have not and came 45 years after Canada had India’s decision in November to been able to arrive at a consensus banned uranium exports to India. raise import duties on pulses by up over the relatively more tangible to 50 per cent and putting stringent BIPPA. India was close to signing The political rumblings aside, fumigation requirements impacted an agreement in 2014 but following Canada’s open economy and ease Canada the most, which supplies the election of the Narendra Modi of doing business has always lured pulses of around $1 billion to India government, a draft BIT (bilateral Indian companies to invest there. every year. Canada had been investment treaty) was brought in The cumulative India FDI, as per exempted in the past from any that diluted provisions like investor-to- Statistics Canada in 2016, was $2 fumigation requirement as the cold state dispute settlement mechanism billion as against Canadian FDI of climate there was not conducive for and asked all partner countries to $0.9 billion in India. Indian companies the pests to survive. That exemption renegotiate such existing treaties. have invested especially in the IT, expired last September and has This put Canada in a spot as it had software, steel and natural not been renewed yet. At the same already spent substantial energy and resources sectors. www.indiaincgroup.com March 2018 21 Substantial operations in Canada the Canadian government across the The Birla Group — which already include Aditya Birla Group, Essar country I think is something that is a owns pulp mills in Ontario and New Steel, Tata Consultancy Services, true delight for an investor. Someone Brunswick— has plans to expand in Tata Steel Minerals Canada, three areas in Canada, in fibre, Tech Mahindra, WIPRO, carbon black and aluminum Infosys Technology, Jubilant products. Life Sciences, Abellon At over 1.2 million, Indians Energy Inc, IFFCO and account for the second-largest Gujarat State Fertilisers and immigrant community in Canada. Chemicals Limited (GSFC). Over 124,000 students also land Two banks – State Bank of on Canadian shores every year India and ICICI – also have for education. Thanks to the seven and nine branches large Indian community there, respectively in Canada. Canada is also a favourite tourist destination. “We are very happy investors,” said Kumar Trudeau’s visit may not have Mangalam Birla, chairman, achieved much, but with so Aditya Birla Group at the much going for it, the inertia in start of his meeting with trade between the two countries Trudeau. “I think just the ease of doing who’s tasted that will always want to is bound to be temporary at best. business, the business friendliness of come back for more.”

Justin Trudeau’s India visit 2018

Canadian and Indian companies signed 66 new contracts worth $1 billion in total during Prime Minister Justin Trudeau’s seven-day visit to India in February. A quarter of this will be Indian 1 companies investing in Canada and the bulk $750 million is the other way around.

More than half the Canadian investment in India comes from Toronto’s Brookfield Asset 2 Management $480-million deal to buy a 1.25 million sq ft office complex in Mumbai.

Another $200 million comes from Fairfax India Holdings Corp. of Canada, which acquired a 51 per cent stake in the Catholic Syrian Bank in Kerala. This is the first time a foreign firm has been 3 allowed majority shareholding in a domestic bank by the RBI.

The investments from India include a new operation in Canada from telecom equipment manufacturer Valiant Communications, a Canadian manufacturing facility to produce natural health products by Clarion Pharmaceutical and an Ontario operation for Vision Controls, 4 which works on automation.

Jubilant Life Sciences will spend $100 million to expand its existing facility in Kirkland, Quebec, 5 which manufactures medical devices.

India’s fifth-largest IT services firm, Tech Mahindra will invest $79 million over five years to 6 set up a centre of excellence in artificial intelligence (AI) and blockchain at Toronto.

7 The deals struck during the Trudeau visit are expected to create at least 5,800 jobs in Canada.

22 March 2018 www.indiaincgroup.com March 2018 23 SECTOR FOCUS Big reforms underway but Indian banking still a long way away from good health by India Inc. Staff The Narendra Modi government and the Reserve Bank of India (RBI) have taken major steps to bring recalcitrant promoters to book and clean up the $210-billion bad loan crisis plaguing the Indian banking system. These can address the issue for now but privatisation is not politically feasible.

he scandal over fugitive siphoned them out and then got are also on the block. billionaire Nirav Modi friendly politicians to write them off… flying away to an unknown only to start the process all over The days of politically connected Tdestination leaving behind unpaid again. But the Modi government and industrialists skimming off public loans of $1.8 billion has brought the RBI signalled the end of business as money to enrich themselves at festering bad loan crisis in the Indian usual by not only passing a stringent the cost of society are now banking system to a boil. law to bring defaulters to book but decisively over. also directing lenders to pull the plug Public sector banks in India are on the so-called dirty dozen, 12 large Opportunity for foreign investors sitting on a massive pile of bad loans companies that account for a fourth of “The whole world is looking at aggregating to about $210 billion. all bad loans. India now,” Edwin Wong, the This has crippled lending as banks Chief Investment Officer of Hong are in no position to advance credit Kong-headquartered SSG Capital and large corporate houses, many Management and an ex-Lehman of whom are in the dock for unpaid Brothers Holdings Inc. banker was loans, are in no position to borrow. quoted in the Indian media as saying. Result: Private investment is down “It could be a once-in-a-lifetime in India and this is preventing the opportunity.” economy from moving into a higher growth trajectory. He and several other global funds see massive investment opportunities as But much before the problem of RBI pushes banks to resolve the bad unpaid loans degenerated into a loan crisis by invoking the stringent political slugfest between the ruling bankruptcy law. BJP and the principal Opposition party, the Congress, the Narendra “It’s getting a lot of attention because Modi government and the Reserve there is a timetable for the bankruptcy Bank of India had begun the process At one go, the promoter families process,” the same article quoted of cleaning up the mess by passing of large companies such as Essar Wong as saying. “If the government the Insolvency and Bankruptcy Code Steel, Bhushan Steel, Binani Cement, sticks to what they say they will do, (IBC) in May 2016, which shifted the among others, lost control of their things have to happen.” balance of power from the borrowers crown jewels, which was handed over to the creditors and mandated a to a resolution professional, setting in RBI shows its teeth resolution of individual cases within motion the process of either selling In December, there were strong 180 days (270 days if 75 per cent of these companies to the highest rumours that the Mumbai-based lenders agree to extend the timeline) bidder or liquidating them piecemeal. Bank of India would shut down. The failing which the assets of the Recently, the RBI added another 28 immediate trigger was the RBI’s defaulting debtor would be liquidated. large companies, which account for decision to place it under the Prompt 40 per cent of outstanding loans, to Correction Action (PCA) framework. Big fish in the dock the list. Now, more big companies In India, unscrupulous businessmen such as Essar Projects, Orchid The Finance Ministry and the Indian have often defaulted on loans from Pharma, Ruchi Soya Industries, central bank had to step in to urgently public sector banks, misused or Nagarjuna Oil Refinery and Visa Steel quash the outbreak of public panic.

24 March 2018 SECTOR FOCUS Financial Services Secretary Rajeev the banks placed under the PCA A December 2017 IMF report also Kumar tweeted: “No question of framework meet the criteria for being points to the same danger. It says closing down any bank. Government shut down. But that tiny sliver of silver some of India’s mid-size and small is strengthening PSBs by 2.11 lakh lining is where the good news, such public sector banks are “highly crore recapitalisation plan. Do not as it is, ends. vulnerable to further declines in asset believe rumour mongers.” quality and higher provisioning needs”. The RBI, on its part, issued a RBI’s Financial Stability Report from statement saying: “The PCA December 2017 projects bad loans Brandishing the stick framework is not intended to constrain to rise further from 10.2 per cent of As briefly mentioned earlier, the normal operations of the banks for the advances in September 2017 to 10.8 Banking Regulations (Amendment) general public.” per cent in March 2018 and further Act 2017 and the IBC gave RBI the to 11.1 per cent by September 2018. powers to direct banks to initiate One-third of banking sector is sick The report, however, adds that the insolvency proceedings against Ten public sector banks – Corporation financial system will remain stable. defaulting borrowers and give Bank, Central Bank of India, directions for resolution of IDBI Bank Ltd, Oriental Bank of stressed assets. Commerce, Uco Bank, Indian Overseas Bank, Dena Bank, United THE DAYS OF Subsequently, the government Bank of India, Bank of Maharashtra, POLITICALLY CONNECTED amended the IBC to ensure that and Bank of India – have been placed INDUSTRIALISTS delinquent promoters and wilful under this framework. SKIMMING OFF PUBLIC defaulters were barred from participating in the resolution process. They account for 30.55 per cent MONEY TO ENRICH This was done to avoid the moral of total deposits in all public THEMSELVES AT THE hazard of defaulting promoters sector banks, 30.08 per cent of all COST OF SOCIETY ARE bidding for and winning back control outstanding loans and 30.44 per cent NOW DECISIVELY OVER. of their companies even as banks and of all banking assets. other creditors took big haircuts.

The writing on the wall is clear: The news gets worse here: The The RBI also got into the act, one-third of India’s banking sector is RBI projects that the capital to risk directing banks to provide 50 per suffering from problems and will need weighted asset ratio of as many as cent provisioning for secured assets surgery at the very least to survive. six of these banks could fall below and 100 per cent provisioning for the minimum level of 9 per cent if unsecured ones in cases that came The framework macro conditions deteriorate by the up for bankruptcy resolution. PCA, which was introduced in end of the current month. If conditions 2002 when the Atal Bihari Vajpayee don’t deteriorate, as they haven’t, the Cleaning the Augean Stables government was in power, was prognosis is for two banks to have The Nirav Modi fraud has brought revised in 2017. The framework looks CRARs of less than the minimum the chickens home to roost, but it is at three things – capital through prescribed level. This, and a general only the tip of the iceberg, the most the capital adequacy ratio, asset decline in the health of banks will prominent among several such cases. quality through the ratio of capital to bring down the CRAR of the Indian promoter Vijay risk-weighted assets and net non- banking to 11.2 per cent at the end of Mallya had earlier escaped to the performing assets and profitability March 2018 from 13.3 per cent a year UK leaving behind unpaid loans and through return on assets. It also ago, a precipitous 210 basis points interest of about $1.5 billion as well as tracks the debt levels of banks. thousands of unpaid employees.

The framework has graded risk More cases, such as those involving thresholds, each of which mandate the promoter of Rotomac Pens and a particular course of corrective Simbhaoli Sugars, have also come action. Any bank that breaches the 1/3rd to light in recent weeks. Reuters third and highest threshold is either obtained RBI data through the Right amalgamated with another bank or of banking sector to Information Act to show that over wound up. a period of five years to March 2017, Crossing either of the lower risk red under severe public sector banks reported 8,670 lines also leads to penal action that strain cases of loan fraud involving an includes restraining the bank from amount of $950 million. declaring dividends, placing fetters Recapitalisation and reforms on expansion and capping senior In October last year, the government management salaries. announced that it will infuse $35 (bps; 100 bps = 1 percentage point) billion into public sector banks in Bad loans to rise further in one year, the December 2017 order to help them out of the bad loan The good news is that none of report says. crisis they were facing and lift credit www.indiaincgroup.com March 2018 25 growth in the Indian economy, which enact a law, called Fugitive Economic had fallen to a 25-year low on account Offenders Bill, to seize assets of the twin balance sheet problems. and recover dues from bank loan defaulters who leave the country Of this amount, more than half will be without paying back their loans. A in the form recapitalisation bonds, the Special Court has been proposed details of which will be announced by to deal with cases of such fugitive 10 state banks the Finance Ministry soon. This will corporate defaulters. under Prompt have to be accompanied by several far reaching and deep reforms like Need for fewer, larger banks Correction Action strengthening the boards of banks, And finally, the Modi government has resolving the issue of NPAs and given public sector banks in-principle changes in systems and procedures clearance for state-owned banks to to ensure that similar problems don’t amalgamate through an alternative recur in future. mechanism. A panel comprising Railways & Coal Minister Piyush the RBI to clean up the mess in “Reform agenda is the highest Goyal and Defence Minister Nirmala Indian banking but have warned that priority, which has to be implemented Sitharaman under the chairmanship any overkill will stifle lending and be along with capitalisation. A whole lot of Finance Minister Arun Jaitley has counter-productive. of reforms will come so that genuine been set up to vet proposals from borrowers don’t suffer and get hassle- banks in this regard. This panel They point out that the decision to free, need based credit,” Rajiv Kumar, will report on the proposals to the inspect all NPAs above $5.5 million Financial Services Secretary in the Cabinet every three months and seek can cause panic among bankers Ministry of Finance, told Indian media, approvals for the same. and prompt them to stop lending adding that these reforms would focus altogether. A few high profile arrests specially on ensuring adequate flow of senior bankers as well as more of credit to micro, small and medium routine investigations by government enterprises, job creation and financial RBI’S FINANCIAL agencies have affected the inclusion. STABILITY REPORT functioning of some banks.’’ FROM DECEMBER 2017 The RBI’s directive to banks on PROJECTS BAD LOANS This could be one of the reasons why recognising NPAs and provisioning public sector bankers seldom agree to for them has increased the amount TO RISE FURTHER take haircuts to settle bad loans. They of bad loans in public sector banks FROM 10.2 PER CENT can never be sure when investigative by 250 per cent between March 2015 OF ADVANCES IN agencies will open or reopen an old and June 2017. SEPTEMBER 2017 case of lending on charges of fraud TO 10.8 PER CENT IN or favour. The government has also asked all Therefore the proposed reforms must public sector banks to check all NPAs MARCH 2018 have strong safeguards protecting more than $5.5 million and directed bankers so that they are able to take them to address all their technological commercial decisions without fear. and operational risks within a given RBI Governor Urjit Patel had hinted timeframe. Public sector banks have at this on April 25 last year when he Governance norms in public sector also been directed to rationalise their said the Indian banking system would banks also need to keep pace with foreign operations. be better served by consolidating and developments in the sector. The merging banks to deal with the issue P.J. Nayak Committee on banking Further, the government will soon of stressed assets. reforms had said in its 2014 report: “Government officers and regulators “As many have pointed out, it is not may not possess the skills to appoint clear that we need so many public the top management of commercial sector banks. The system could be banks. Banking is a very specialised better off if they are consolidated into activity, and top management needs fewer but healthier banks,” Patel said to combine strategic foresight with 8,670 at the Kotak Family Distinguished a good commercial knowledge Lecture at Columbia University, of sectors to lend to, prudent risk cases of adding that “some banks can be management and human merged, as a quid pro quo for timely resource skills.” government technical injection”. loan fraud This is critical and needs to be What to avoid addressed along with the other Experts had lauded the initiatives proposed reforms. taken by the Modi government and

26 March 2018 Privatisation not politically feasible whether the government will be Many of the problems faced by public able to build a consensus across sector banks – political interference in India’s political fault lines to insure appointments and lending decisions these reforms against future political (earlier rampant but thankfully interference from rival political parties. at a minimum under the Modi dispensation), slow decision-making They also say it will be difficult to processes, fear of action by the $950mn inculcate a “private sector mindset”, Central Vigilance Commission and if privatisation is not possible, in a other investigative agencies – can be fraud-hit amount sector that has long been used to addressed by privatising public working under the thumb of the ruling sector banks. party at the Centre.

But as Jaitley has publicly admitted, But they also add that if the any move in this direction needs a announced reforms are carried out broad-based political consensus that to their logical conclusion, it will is currently not possible to achieve. up India’s banking sector and set make the Indian banking sector the stage for higher growth in much healthier and, in future, lead Well begun but long road ahead the economy. to the emergence of Indian banking Experts are unanimous that the behemoths that can match their initiatives taken by the Modi But they caution that the road ahead global counterparts in size as well as government and RBI can clean is full of potholes. They question financial heft.

www.indiaincgroup.com March 2018 27 NEWS IN BRIEF Blockchain, There was considerable activity within India’s cryptocurrency banking and finance sector in recent weeks. on Indian radar

NASSCOM teams up be specifically aimed at helping Reliance Jio planning its with Blockchain Institute grow the digital ecosystem in the own cryptocurrency state of Telangana. ndia’s National Association of Software and Services Compa- Fairfax India to buy nies (NASSCOM) is partnering Iwith the Blockchain Research Institute Catholic Syrian Bank (BRI) to help spur a digital economy stake within India. airfax India Holdings NASSCOM will work with BRI Corporation announced researchers backed by the Canadian that it has entered an Fagreement to invest Rs 12.1 billion government to help developers learn more about blockchain platforms in (approximately $186 million) for preparation for creating and launching a 51 per cent equity ownership tools within the nation. in Kerala-headquartered Catholic ollowing various free offers and Syrian Bank Ltd. (CSBL). The hyper-competitive tariffs, Reli- The two groups have signed a investment is subject to customary ance Jio Infocomm Ltd plans to memorandum of understanding closing conditions and is expected Fcreate its own cyptocurrency, JioCoin. (MoU) establishing a financial to close in the first half of 2018. and research partnership. Each With Mukesh Ambani’s elder son organisation will invest in webinars Akash Ambani leading the JioCoin and other types of seminars whereby project, Reliance Jio plans to researchers within the BRI can share build a 50-member team of young their knowledge using case studies professionals to work on blockchain with Indian government departments technology, which can also be used and other entities. to develop applications such as smart contracts and supply chain Raman Roy, Chairman, NASSCOM, management logistics. said that while he is delighted to launch a research initiative, he Prem Watsa, Chairman of Fairfax The company plans to hire 50 young understands that encouraging India and Chairman and CEO of professionals with an average age blockchain use in the country will Fairfax Financial Holdings Limited, of 25 years for Akash Ambani to be a long-term effort, rather than said: “We have great admiration lead. There are multiple applications something they could plug and play for the legacy and tradition behind of blockchain (for the company). they could do later. Catholic Syrian Bank, an adored The team would work on various brand across the South of India. blockchain products. The MoU splits the research push For almost a century, the bank into two parts. BRI’s Don Tapscott has been a pillar of support for the Blockchain is a digital ledger for explained: “We need to create an community. storing data including, but not limited awakening in India, showcase the to, financial transactions. The most power of blockchain and we can do “Under the able leadership of popular application of the technology this by looking at incentives/discounts Mr C.V.R. Rajendran, based in has undoubtedly been cryptocurrency. to organisations that do this. That’s Thrissur, we intend to take Catholic phase one.” Syrian Bank to great heights Reliance Jio also aspires to get through our re-capitalisation as well into Internet of Things (IoT), where Phase two would be to build a as a long-term orientation towards Blockchain technology will come in blockchain institute in India, which will management.” handy.

28 March 2018 P

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From laggard to leader, The Yogi Adityanath government has set its ambitions very high. But its goal the journey has just of transforming Uttar Pradesh into an industrial powerhouse shows early begun for UP signs of promise. by India Inc. Staff

rogressing from pauper to achieve the trillion-dollar economy our new industrial policy, which will prince is the stuff of dreams. tag, then at least to push his state encourage investments in Uttar So, when Indian Prime Minister into the ranks of India’s Pradesh,” Dinesh Sharma, Deputy PNarendra Modi asked at a recent powerhouse provinces. Chief Minister of Uttar Pradesh, said investor summit whether Uttar at a roadshow for the summit. Pradesh, India’s most populous state Change of image with a population of 200 million, could The state government recently “Our focus will be on development compete with Maharashtra to try organised an investor summit on the of under-developed regions of the and become India’s first trillion-dollar lines of the Vibrant Gujarat Summit, state. Logistics, textiles, information state, there were polite smiles which has attracted billions of dollars technology, dairy and tourism are all around. of foreign and domestic investment some of the areas in which we look into Modi’s home state, to kick-start for expertise from Gujarat,” he said. That’s because Uttar Pradesh is still that effort and change the image of to live down its status as a BIMARU Uttar Pradesh. Readymade platform state, a grouping of four traditionally Despite its reputation as a crime- backward Indian states comprising “There was an image of crime prone economic laggard, Uttar Bihar, Madhya Pradesh, Rajasthan and corruption connected with Pradesh hasn’t done too badly for and UP. Bimaru is also the Hindi word Uttar Pradesh earlier. But with our itself. It has the second-largest gross for illness. government’s approach of ‘zero state domestic product (GSDP), $220 tolerance’ to crime and corruption, we billion in 2017-18 (estimated), among Only time will tell whether the state have been able to create a fearless all Indian states after Maharashtra, can rise to the challenge but Chief environment for investors. After which leads the pack with a GSDP of Minister Yogi Adityanath is determined considering and studying policies of $308 billion in 2016-17 (the current to give it his best shot – if not to various states, we have formulated year’s estimates haven’t been

30 March 2018 STATE FOCUS announced yet). And it is growing at “Of the two defence industrial Industry bets on Uttar Pradesh 8 per cent, which is faster than the corridors mentioned in the budget, Investors Summit 2018 national average. one is proposed in the Bundelkhand region of the state, which will Attracted by the opportunities, Agriculture has a share of 25 per cent bring an investment of Rs 20,000 large business houses such as in the state’s GSDP, manufacturing crore ($3 billion). This will lead to the Tatas, Reliance Industries, the 24 per cent and services 51 per cent. industrialisation of the Bundelkhand Aditya Birla Group, Adani Group and However, it comes in at a poor 25th region at a faster pace and generate Mahindra Group announced massive place among Indian states with a per employment avenues for 2.5 lakh investments in the state. capita income of only $1,300 (2017- people,” the Prime Minister said. 18, estimated). • “Tata Consultancy Services Ltd has India’s food basket a very strong presence in UP and we Incidentally, Morgan Stanley had Uttar Pradesh, which is situated in are committed to setting up a new predicted last year that the Indian the middle of the uber-fertile Ganga- campus of 30,000 people here. We economy will grow from $2.56 trillion Yamuna plains, is the country’s will also open an IT-enabled services in 2017-18 to $5 trillion in 2025. So, largest food grains producer, and centre in soon,” Narayan the projected fast pace of India’s accounted for a sixth of the country’s Chandrasekaran, Chairman of the growth should augur well for the total food grains output in 2016-17. Tata Group, announced. states, including UP. Rice, wheat, maize, millet (bajra), gram, pea and lentils are the major • Mukesh Ambani, Chairman of Rich in resources items produced in the state. It is also Reliance Industries, said he will invest Uttar Pradesh is blessed with the largest producer of vegetables more than $1.5 billion over the next adequate reserves of coals, in India. three years on the operations of his precious stones, sulphur, silica sand, Jio telecom network in the state and magnesite and limestone, among That year, it also produced a sixth of also create 10 million “sustainable many other minerals. India’s milk output. livelihood opportunities” across the three other verticals that Reliance is Noida, in the National Capital Region A firm votary of value addition and present in – petroleum, polyester (NCR) of the state, has emerged as a the food processing industry, the and retail. major base of the IT-ITeS industry in Prime Minister told the investor recent times because of its large base summit: “Uttar Pradesh has values • Committing investments of $4 of skilled labour. The city is also fast and virtues, but it also needs value billion in the state over the next becoming a hub for India’s nascent addition,” while lauding the concept of five years, Kumar Mangalam Birla, semi-conductor industry as many ‘One district one product’ introduced Chairman of Aditya Birla Group, domestic and international companies by the Yogi government that he said said he plans to expand his cement, have set up offices and R&D could prove to be the game changer chemicals and financial services centres there. for the state. operations in UP.

Then, Uttar Pradesh is among the Incentives for growth • The Chairman of the Adani Group, top 10 Indian states in the ease of Under the Industrial and Service Gautam Adani, promised to build doing business rankings for Indian Sector Investment Policy, 2004 and 600,000 tonnes of farm produce states by the Department of Industrial Infrastructure & Industrial Investment capacity in the state and also also Promotion and Policy and the World Policy, 2012, the government of Uttar invest in multi-modal logistics Bank, occupying the 10th position and Pradesh, offers several incentives and infrastructure and cold storage also comes in at No. 5 in complying subsidies to encourage industries facilities. “We have lined up plans for with labour regulations, according to set up shop in the state while developing road and Metro projects to a study by the World Bank and simultaneously providing proactive in Uttar Pradesh,” he said, adding that global consultancy firm KPMG. It is policy support for a wide range of he plans to invest almost $6 billion also home to the Taj Mahal and many industries such as IT, manufacturing, on these projects. important Hindu pilgrimage spots, food processing, tourism and aviation, thus, making it a magnet for domestic among others. • Lauding UP’s size, its wide railway and foreign tourists. In 2016, more network and rich human resources, than 3.1 million foreign tourists visited The Yogi government in the state has Anand Mahindra, Chairman of the Agra where the Taj Mahal is located. charted out an ambitious path for Mahindra Group, said the state Further, Modi announced that one of itself. And though it is only just setting should be competing with other the two planned defence industrial out on its journey to transform itself nations instead of merely pitting corridors would be in the state’s from laggard to leader, the effort, itself against other states. Mahindra Bundelkhand region, which is among if not yet the result, needs to & Mahindra proposes to build an the most backward. be commended. electric three-wheeler manufacturing plant in UP. www.indiaincgroup.com March 2018 31 “A LANDMARK BOOK”

32 March 2018 BIRD’S EYE VIEW India emerges as world’s big defence spender by Rahul Roy-Chaudhury India’s defence budget overtook the UK for the first time in 2017; to be counted among the world’s top five.

Navy in the Indian Ocean, between the two since their entail the modernisation war in 1962, the possibility and enhancement of the of escalation of tensions operational capability of the between these two nuclear armed forces. weapon states through misadventure, misperceptions India has strengthened or misunderstandings its military capabilities in remain high. select areas: its first nuclear weapon-armed submarine China’s economy is five Arihant is operational; the times larger and its defence second, the Arighat has budget is assessed to be been launched; the first of 36 three times more than India’s. French-built Rafale medium The Chinese army has combat aircraft are to be over 600,000 more active deployed into the Indian air personnel than India; it has force next year; and for the nearly 1,200 tactical aircraft first time in 30 years India compared to India’s 785, and ordered (in November 2016) 55 more cruisers, destroyers artillery systems (145 BAE and frigates than India. Systems M777 lightweight India’s traditional influence artillery guns from the US). over the Indian Ocean is also being challenged by India’s geo-strategic China’s shipbuilding. Since realities 2000, China has built more ndia’s actual spend of $52.5 billion (including However, the reality of submarines, destroyers, defence pensions) in 2017 makes it the fifth- defence spending is sobering frigates and corvettes than largest in the world, overtaking the UK to when seen in the context Japan, South Korea and India Ireach the ‘Top 5’ slot for the first time, according of neighbourhood military combined. According to IISS to the authoritative annual ‘Military Balance balances and defence analysis in this year’s ‘Military 2018’ published last month by the International spending/GDP as well as Balance’ report, Chinese Institute for Strategic Studies (IISS), the London- the budgetary and policy military technologies do not based think-tank I work for. challenges the Indian simply seek to catch up with armed forces face in their the West, but to challenge According to the IISS, India’s actual spend in modernisation and traditional Western defence is the largest after the United States expansion plans. military dominance. ($602.8 billion), China ($150.5 billion), Saudi Arabia ($76.7 billion) and Russia ($61.2 billion). India shares a long disputed Limits on military Since Prime Minister Modi took charge, it has land border with its largest modernisation risen from $45.2 billion in 2014, when it was and more powerful neighbour India’s defence budget the eighth-largest, to become the fifth-largest China, with which it has for 2018, announced on 1 in 2017. This jump in ranking primarily reflects a primarily adversarial February 2018, indicates a relative decrease in defence spending by the relationship. Last June, a nominal increase of 9.3 UK, France and Japan; in 2017, for example, tensions were sparked per cent (including defence the UK’s defence spend decreased to $50.7 during a 73-day military pensions) to $57.38 billion. billion from $61.8 billion in 2014. Tense relations ‘stand-off’ in the disputed But, in view of the personnel- with India’s two largest neighbours, China and Doklam area leading to intensive nature of India’s Pakistan, requiring preparation for a ‘two front’ jostling between Indian and armed forces, fixed-costs conflict as indicated recently by India’s Army Chinese troops. Although revenue expenditure chief, as well as an expanded role for India’s no shots have been fired (including defence pensions) www.indiaincgroup.com March 2018 33 BIRD’S EYE VIEW comprises three-quarters of the total armed forces, and to reduce defence budget, leaving only a quarter for the imports. capital acquisition required for India’s military modernisation. This year’s India was the world’s largest arms relatively low 9.5 per cent increase on importer between 2012 and 2016, and the capital side, just about covers 5 the intention is to drastically reduce per cent inflation/rupee depreciation, the level of imports. The November resulting in a real increase of less 2016 BAE Systems M777 deal, for than 5 per cent. This will need to example, provided the establishment cover payments for some recent of a final assembly, integration and major deals, including the Rafale testing facility for the artillery system fighters, C-130J transport aircraft, in partnership with the Mahindra AH-64 attack helicopters and M-777 Group, a first by any foreign defence howitzers, leaving little funding for company in India. new procurements.

This essentially means that, as INDIA’S ACTUAL SPEND noted in by ‘Military Balance 2018’, IN DEFENCE IS THE the Indian armed forces will not significantly be able to enhance LARGEST AFTER THE defence, “foreign procurements are their overall capability through UNITED STATES ($602.8 no longer a last resort”, he writes. modernisation, alongside the BILLION), CHINA ($150.5 However, going forward, a useful replacement of ageing equipment or BILLION), SAUDI ARABIA model for implementation could be a overcoming shortages of ammunition government-to-government sale with ($76.7 BILLION) AND possibly a Make in India component – and spare parts. According to a recent RUSSIA ($61.2 BILLION). EY (India) report, this also “reflected like the M777 acquisition. uncertainties for the speedy progress of some of the big ticket programmes However, foreign defence companies Higher growth rates on the anvil”. This is accentuated by still need to overcome significant A key factor influencing defence India’s focus on agricultural and rural Indian bureaucratic hurdles to gain spending is the rate of economic spending in a pre-election year. formal government approval for growth. A fast-growing economy investments beyond the 49 per cent provides additional resources for This harsh reality comes at a time threshold. Indeed, the single proposal defence spending; the opposite is true when India’s armed forces are “over- by a French naval company seeking for a slow-growing economy. India has stretched” in their mandates and such a higher FDI was reportedly an advantage in this respect. In 2018, responsibilities to ensure the defence rejected by the government. it is expected to once again overtake of the state. The Indian Air Force’s According to official Indian figures, China to become the world’s fastest- current strength of 33 squadrons is since the launch of the ‘Make in India’ growing major economy. only three-quarters of the required programme on 25 September 2014, strength of 42 squadrons; the number only 12 foreign investment proposals The International Monetary Fund of the Navy’s submarines are in had been approved in the defence (IMF) has forecast an increase in decline with no follow-on acquisition sector. Not surprisingly, in March 2018 India’s economic growth from 6.7 per programme; and there is a real India’s Minister of State for Defence, cent in 2017 to 7.4 per cent in 2018 shortage of artillery equipment. Subhash Bhamre, stated that FDI in and 7.8 per cent in 2019, compared defence from April 2014 till December to a slowdown in China from 6.6 per As a means to overcome this marked 2017 had only been a paltry $0.18 cent in 2018 to 6.4 per cent in 2019. deficiency, the Indian government’s million. This has significantly hindered This suggests that India’s defence ‘Make in India’ policy in defence aims India’s defence manufacturing policy. expenditure (excluding defence to strengthen the defence-industrial pensions) will still be only 1.59 per base through measures including My colleague Antoine Levesques, cent of projected GDP in 2018- reforming the cap on Foreign Direct IISS Research Associate for South 19, the lowest in decades. It also Investment (FDI), and, most recently, Asia, also notes another key indicates that India’s economy is set the announcement of two defence challenge. With the notion of the to overtake the UK as the fifth-largest industrial corridors. By seeking Indian defence market changing global economy this year. greater levels of FDI in the defence under the Modi government, there is sector, New Delhi hopes to encourage now greater interest in “government- Rahul Roy-Chaudhury is Senior indigenous manufacturing of defence to-government defence contracts Fellow for South Asia at the equipment in partnership with foreign set in the context of India’s most International Institute for Strategic companies to provide modern important strategic partnerships”. Studies (IISS), London. equipment and services for its In effect, despite ‘Make in India’ in

34 March 2018

Fast forward thinking.

In an industry that’s accelerating at an ever-increasing pace, here at Rolls-Royce we’re always one step ahead in the development of power systems on land,in the air and at sea.

Building on a partnership of over 80 years, we continue to contribute to India’s substantial growth through best-in-class supply chains, excellent engineering capability and effective manufacturing infrastructure.

Our belief in India’s engineering and innovation capabilities, coupled with our commitment towards the government’s ‘Make in India’ initiative to develop India’s aerospace and infrastructure sectors, helps us shape the future together. And finally, to co-design, co-develop and co-manufacture with our highly skilled strategic partners, is as much an honour, as it is a great opportunity.

So here’s to a fantastic future at an ever-increasing pace.

www.indiaincgroup.com March 2018 35

RRC_India_Fast Forward_203wx266h_vFNL_2.indd 1 02/05/2017 19:25 HOTSPOT

Investing in Brazil

Apex-Brasil, one of Brazil’s leading investment bodies, lays out points of attraction for Indian businesses to invest in Brazil.

razil has been a top investment with a wide array of opportunities care and R&D. Brazil is home to a destination for many years, across multiple productive sectors, competitive industrial sector, including and it still is, despite the generates exciting possibilities for Latin America’s largest aerospace, Bvolatility generated by the recent many investors, seeking to develop automotive, oil and gas, mining, crisis the country went through. Since their business in such a vast and capital goods, medical equipment and 2010, Brazil has remained among dynamic market. chemical industries. the world’s 10 main foreign direct investment (FDI) recipient countries. Sectors of interest Last year (2017), nearly $75 billion BRAZIL’S LARGEST One good example is the wide range in FDI were received by the country. CITIES ARE of opportunities in the renewable This year, close to $80 billion are CONSOLIDATING energy sector. The country is the third expected. largest global market and the largest THEIR POSITION AS Latin American market for renewable The size of Brazilian domestic market GLOBAL INVESTMENT energies. Brazil’s share of non-hydro is relevant for investors: Brazil has the HEADQUARTERS renewables in its electricity matrix is fifth largest population in the world, expected to increase from 16.5 per with 208 million people – a third of cent in 2015 to 53 per cent in 2040. all Latin American population. The There are numerous opportunities, country is also the seventh largest especially in areas where the country Also in the energy sector, Brazil has economy in the world, with a GDP of most needs investments, such as one of the largest petroleum reserves $ 1.796 trillion (2016). infrastructure. However, there are and is home to one of the biggest also prospects in sectors as energy, oil discoveries made in the Western Brazil’s open and diversified economy, oil and gas, automotive, health Hemisphere in the past 30 years:

36 March 2018 HOTSPOT the ultra-deepwater oil finds off the Brazil is also a permanent member Apex-Brasil country’s southeast coast, known as of the free trade agreement with the The Brazilian Trade and Investment ‘pre-salt’ oil. In addition, Brazil is one largest markets in South America, Promotion Agency (Apex-Brasil) of the top producers and exporters known as South American Common is a not-for-profit governmental of ethanol biofuel in the world. Both Market (Mercosur). Agency linked to Brazil’s Ministry of sectors have plenty investment Foreign Affairs (MRE), and works opportunities for foreign companies. One important reason for Brazil’s to promote Brazilian products and constant need for investments is services abroad, and to attract foreign There is also a huge opportunity the fact that the country currently investment to strategic sectors of the in the agribusiness sector. There invests about 2 per cent of its Brazilian economy. is an increasing demand to feed GDP in infrastructure. However, an the growing global population, investment of at least 3 per cent of Apex-Brasil organises several expected to reach 9 billion by 2050. GDP would be necessary just to initiatives aiming to promote Brazilian Brazil became one of the world’s avoid the depreciation of the existing exports abroad. The Agency´s efforts largest agricultural producers and infrastructure. comprise trade and prospective exporters in the last two decades, missions, business rounds, support becoming one of the greatest global Public-private partnerships for the participation of Brazilian food suppliers. As mentioned by the Therefore, the Brazilian government companies in major international World Food Organization (FAO), is seeking private partnerships trade fairs, arrangement of technical Brazil will be fundamental for the and changing rules to grant more visits of foreign buyers and opinion world’s food security by 2030. Due to attractiveness and security for foreign makers to learn about the Brazilian that, new investments in technology investors. This effort for private productive structure, and other select (Agritech) and agribusiness-related money resulted in the launch of activities designed to strengthen the infrastructure are fundamental and the “Crescer (To Grow) - Building country’s branding abroad. represent an important opportunity a Brazil of Opportunities” program, niche for foreign investors. designed to organise concessions Apex-Brasil also plays a leading role

BRAZIL’S OPEN AND DIVERSIFIED ECONOMY, WITH A WIDE ARRAY OF OPPOR- TUNITIES ACROSS MULTIPLE PRODUCTIVE SECTORS, GENERATES EXCITING POSSIBILITIES FOR MANY INVESTORS

and privatisation of infrastructure in attracting foreign direct investment Investment climate projects in highways, railways, ports, (FDI) to Brazil, by working to identify Companies seeking to invest in Brazil airports, mining, oil and gas, and business opportunities, promoting should have in mind that the country electric power. strategic events and lending support has abundant natural resources, to foreign investors willing to allocate ranking as a major global player in Out of 145 projects qualified for resources in Brazil. All services raw materials. It is a major producer the program, 56 already have provided to investors are free and exporter of agricultural products been auctioned or renewed, which of charge. and mining products (especially iron accounts for an execution of nearly 39 ore), to name a few. Its forests are a per cent of the schedule established To strengthen and expand vast source of wealth. The country is by the Concessions Program of the communication with investors, Apex- also water-rich, estimated to hold the Federal Government. The estimate Brasil launched the brand “Invest in biggest fresh water reserves in the of investments with auctions exceeds Brasil”, which identifies the investment world. the amount of R$ 133 billion, and the promotion initiatives of Apex-Brasil grants total R$ 28 billion. regarding the FDI attraction. Moreover, Brazil’s largest cities are consolidating their position as global Last, but not least, it is important to With a focus on sectors that investment headquarters, not only highlight that one of the main reasons are strategic for developing the for Brazil but for the entire Latin for Brazil to continuously receive competitiveness of Brazilian American region, since the country foreign direct investment and attract companies and the country, Apex- shares land borders with Argentina, leading and innovative international Brasil is one of the private sector’s Bolivia, Colombia, Guyana, Paraguay, businesses is the country’s robust main partners regarding the analysis Peru, Suriname, Uruguay and investment protection legislation, and implementation of productive Venezuela, as well as the French enforced by an independent judiciary investments in Brazil. Overseas Region of French Guiana. and a fair regulatory environment, which provides security for investors. www.indiaincgroup.com March 2018 37 38 March 2018 INDIANS IN FOCUS

Swati Pandey Indian female entrepreneurship makes its global mark Two Indian women entrepreneurs have bagged $30,000 each as the finalists of the 2018 Cartier Women’s Initiative Awards with their innovative environmentally- friendly business concepts.

ne has created an applications from over 130 countries have a positive impact on the society environmentally-friendly for the awards created in 2006 as a and economy in India, as well as the sweetener and the other joint partnership project initiated by ecosystem. Omarkets 100 per cent biodegradable Cartier, McKinsey & Company and sanitary napkins, and what they INSEAD business school. The natural sweetener uses less both have in common is that they water and land but reportedly delivers have been short-listed for one of “With a growth in both the quantity the same level of sweetness as sugar. the world’s coveted global female and the quality of the businesses The company employs local farmers entrepreneurship awards. applying, the initiative has become who could see their income potentially a transformative step in the lives of double in five years due to Stevia’s Swati Pandey of Arboreal Agro women entrepreneurs,” said Cyrille higher cash profitability per acre. Innovations, which oversees the Vigneron, CEO of Cartier – the production of an innovative, high- French luxury goods conglomerate. “Stevia is the next generation, yielding variety of Stevia sweetener, zero calorie, 100 per cent natural and Kristin Kagetsu of Saathi Inc, Delhi-based Swati Pandey’s business sweetener,” Pandey claims. which uses banana fibre to create was selected for its a triple focus Incidentally, India also has the highest sanitary napkins, were announced as on achieving economic, social and number of diabetics in the world. the Asia-Pacific finalists of the awards environmental value. Inspired by her Diabetes and Obesity are new age set up to honour and support women mother who suffers from diabetes, epidemics, with people suffering entrepreneurs. This year’s finalists the entrepreneur is confident that the from diabetes having increased from were selected from around 2,800 use of Stevia instead of sugar can 180 million in 1980 to 422 million www.indiaincgroup.com March 2018 39 INDIANS IN FOCUS

Kristin Kagetsu in 2014, according to World Health on average, 3.4 grams of plastic Her discovery was quite an Organisation. It is also predicted that each. They make up 150,000 tons of accidental one. When Kagetsu increased consumption of added waste, which is generally disposed decided to move to India, with her sugar calories leading to diabetes will of by burning, with each sanitary Mechanical Engineering degree be the seventh leading cause of death pad releasing 23.4 grams of carbon from the Massachusetts Institute in 2030. dioxide in the process. Saathi Inc’s of Technology, Saathi planned to 100 per cent biodegradable sanitary develop and sell machines that Arboreal was originally conceived pads are made of banana fibre, produce sanitary pads. However, on as a social venture idea that was a natural by-product of banana arrival in India she quickly decided presented to a jury at the end of a farming, which is converted into a soft to focus on the production of sustainability focused programme absorbing pad via a patent-pending environmentally-friendly sanitary pads at Imperial College London. One fibre-processing technology. instead. professor was so impressed by the potential impact, he invested in “We wanted to make an impact on Swati’s idea then and there with a “WITH A GROWTH IN women, but realised there was an $7,000 cheque. Swati followed it up BOTH THE QUANTITY even greater opportunity to combine with further market research and AND THE QUALITY the solution to two problems at once,” overtime the idea transformed into a OF THE BUSINESSES she says. plant biotechnology company with a clear focus on Stevia. APPLYING, THE INITIATIVE “In 10 years, we want Saathi to be a HAS BECOME A leading example in the industry, as a “I was driven by a sense of conviction TRANSFORMATIVE STEP sustainable and ethical manufacturing that our generation must build upon IN THE LIVES OF WOMEN business. But right now, we know the sacrifices of our parents, by taking ENTREPRENEURS,” SAID that Saathi has the potential to make up risks and building global ventures CYRILLE VIGNERON, CEO serious environmental and social that will solve some of the biggest progress,” she adds. challenges facing India and the OF CARTIER world,” says its founder. The Indian finalists will join 16 others from around the world in For Ahmedabad-based Kristin “For the consumer there is a health Singapore to participate in an Kagetsu, her discovery was born benefit because it is a completely awards week programme, including out of being confronted with the chemical-free process and we are business workshops and coaching environmental challenges India using all-natural materials,” said sessions, in April. The award-winner, was facing as conventional sanitary Kagetsu, who is also working on to be unveiled on April 26, will be pads commonly used in the country ensuring access to the product across receive $100,000 and one-to-one contain toxic chemical agents and, rural India. personalised business mentoring.

40 March 2018 BEYOND THE HEADLINES

India makes firm strides on women in the workplace by Shuchita Sonalika Against the backdrop of International Women’s Day on March 8, an Indian industry expert weighs up the role of women in the workplace and the road to achieving women’s economic empowerment.

ccording to UN Women, when of India’ hailed ‘Agniputri’ broke Twitter the gender gap in the workplace, more women work, economies as the first woman to head an Indian which is 60 per cent higher than grow. The McKinsey Global missile project. Indeed, we welcomed business-as-usual! AInstitute (MGI) finds that $12 trillion Ms Shobana Kamineni as the first could be added to global GDP by female President of the Confederation Aren’t we all guilty of disempowering 2025 by advancing women’s equality. of Indian Industry (CII) in its 123-year women at some stage? From Even after decades of progress history! If you are in need of more taking domestic work for granted, towards making women equal inspiration, I highly recommend ‘First to encouraging women to be risk- partners with men in the economy Ladies’, a remarkable publication of averse, selecting male colleagues and society, the gap between them India’s Ministry of Women & Child for leadership roles, being indifferent remains large. Welfare. to gender pay gaps, commenting on women’s appearance and attitude instead of their work, and so on. India has made strides in advancing INDIA HAS MADE STRIDES women in the workplace; the Every bias contributes to an ever- year 2017 especially has been a IN ADVANCING WOMEN widening gender gap. transformational year. We have a IN THE WORKPLACE; record number of women in the Indian THE YEAR 2017 But there isn’t a “silver bullet” to close government today, including the first this gap. There is an important role for ESPECIALLY HAS BEEN government, business, civil society, female Minister of Defence, Nirmala A TRANSFORMATIONAL Sitharaman. Though at six out of 27, academia – and women, themselves we have some way to go. A little- YEAR – to effect change. A recent meeting I known fact to highlight: in April 2017, attended at Wilton Park, a think tank all Chief Justices at India’s four major of the UK Foreign & Commonwealth High Courts (Delhi, Bombay, Calcutta Challenge ahead Office (FCO), looked at creating and Madras) were women. While men No doubt, there are tremendous an enabling environment through may jeer at our driving skills, India systemic constraints and challenging strategic initiatives and partnerships boasts the maximum number of pilots, social norms in India which inhibit the and focused on three areas for with 12 per cent female commercial full and equal economic participation impact: opportunities for financial, pilots against a global average of 5.5 of women. At 17 per cent, India has a digital inclusion and entrepreneurship per cent. lower share of women’s contribution for women-owned and women-led to GDP than the global average of 37 enterprises; addressing adverse Dr Neelu Rohmetra became the per cent, which is the lowest among norms, discriminatory beliefs and first woman ever to head an Indian all regions in the world. India stands limiting practices that affect women’s Institute of Management (IIM). Dr to gain the most with the potential of economic participation; and the Tessy Thomas, the ‘Missile Woman bringing an additional $2.9 trillion to unrecognised care economy. annual GDP in 2025 by fully bridging Bridging the gap www.indiaincgroup.com March 2018 41 BEYOND THE HEADLINES Today, drawing from the depth of knowledge and insights of more experienced women and mentors, I can now reflect that the business community has a huge role to play in bridging this gap. Indicators suggest that gender parity at work influences and enables greater parity in society. The first step in this challenge is recognising that this is not a “women’s issue”. Rather, this is a business issue, an economic issue, a social issue, a local, regional, national and a global issue. You don’t need a huge infrastructure or a women’s division to bring about a more level playing field. Here is an attempt to distil some thoughts for practical, business use.

So, what can we do? How can we learn and adopt best practices to enable, encourage and empower women in business? Where are our role models? And on the ground-level, what can businesses do? Apparently, a lot. many times I have experienced an Indian Women Network this. It is belittling, disrespectful (IWN), a network for them • Self-audit: One of the first and annoying. If you do this, to discuss their experiences things you can do is start check yourself. and challenges to become asking the right questions. better professionals at work; Just ask. In other words, • Meeting Timings: This is one as well as to emphasise the do a self-audit. What is the of those limiting practices that importance of creating gender male-to-female ratio in your don’t even cross our minds. parity for women in Indian organisation? Is there a male/ Is the timing of meetings business and society. female pay gap for the same conducive to enabling women jobs in your organisation? I participation? Do you do early • “You can’t be what you can’t recently asked at a meeting breakfast meetings or late- see”: This was my favourite with at least 20 businesses, night receptions (I’m not saying phrase from Wilton Park and “Do you have women in senior this is how it should be, but has stuck with me since. Let’s management or leadership these are times when women, not underestimate the role of roles in your organisations?” largely more often than men, role models. We have dynamic and I was met with pin- must head home to fulfil family women on the global stage, drop silence with all male commitments, getting mornings but what about women around representatives looking at each organised for the family or you? Take a moment to identify other, trying to find the best preparing dinners or tucking women that you can look up answer. Asking makes you kids in bed)? to – who may be a few steps aware. ahead of you, who you can • Support Network: When relate to, and you can aspire • No ‘Manels’ and No you look around – is the work to be. Ask to be mentored. Interruptions: No more all- environment around you And also ask how you can be male panel discussions. We calibrated towards enabling a mentor to others. There is a have seen that a bit too often. male and female participation? raft of resources that can come And I am guilty of doing this As businesses, we can floating your way myself, as charged! “There create support networks to aren’t any women” is a lazy help women learn from each excuse. Make an effort to other and from other men. By identify and incorporate women doing this, you are instilling Shuchita Sonalika is in your panel. Your discussion a corporate culture, which will be richer for it. Also, stop Director and Head – UK, enriches the work environment Confederation of Indian interrupting or cutting women to be more respectful, short when they are making inclusive and diverse. It is for Industry (CII). a point. I cannot tell you how this reason that CII started

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Contact us : Binita Modi – Event & Guest Relations Manager [email protected] www.indiaincgroup.com www.indiaincgroup.com March 2018 43 SOCIAL IMPACT FOCUS

Indian innovation is key to solving the globe’s vision- related disabilities by James Chen

Poor vision, as the world’s largest unaddressed disability, requires investment to prevent its crippling impact on economic growth.

rime Minister Modi created The nation’s booming innovation and creative business models waves at this year’s World environment is no accident – Modi’s providing the health sector in India to Economic Forum, when he government has invested heavily in display unrivalled leadership. Pannounced that India’s economy, creating a digital infrastructure that’s already the fifth-largest in the world, allowed paperless, cashless services A global oversight would double to $5 trillion by 2025. to thrive: allowing digital payments Over the last 12 years, my work has to boom and facilitating the success focused on an issue that often fails Though met with some scepticism, of flagship biometric ID scheme to make the agenda of events like Modi’s optimism is not without ‘Aadhaar’. Davos: poor vision. grounds; with infrastructure spending on the rise and global consumer However, India’s tech success has Poor vision is not a life-threatening brands from Unilever to Samsung also been born out of necessity. condition, and in comparison to global benefiting from the country’s growing threats like HIV Aids or Malaria, it middle class. Despite the economic giant’s growth, has historically failed to garner the India still faces a range of significant attention, investment or funding of India’s tech sector is offering the challenges to its ambitious growth more pressing health crises. most potent promise for the country’s projections – from continually low economic growth and social levels of financial inclusion to a However, the Vision Impact Institute development. India is home to one systemic shortage of hospital beds estimates that there are 2.5 billion of the world’s most active start- and medical staff, a lack of teachers people around the world suffering up ecosystems, now boasting 10 and little growth in university places. from poor vision, with no means of ‘unicorns’ (companies valued over correcting it – making it the largest $1 billion) and attracting over $20 However, I have seen first-hand that unaddressed disability in the world. billion in investment over the past those challenges have also created three years. new spaces for technology innovation Current rates of uncorrected poor

44 March 2018 SOCIAL IMPACT FOCUS vision are a crippling impediment a significant necessity. with the products its customers need to economic growth, in developing most – from reading glasses to solar- economies from Brazil to Bangladesh. I came across two such vital powered lanterns. innovations two years ago, when we The Vision Impact Institute estimates launched The Clearly Vision Prize, Visionary Leadership that 550 million people in India, or a global competition to find the tech These two ‘frugal’ or simple roughly half the population, suffer start-ups with the innovation and innovations present vital innovations from poor vision but have no means ingenuity to overcome the existing to help overcome the barriers to to correct it. Across the country, India barriers to diagnosis and distribution, diagnosis and distribution that well is estimated to lose $37 billion in that prevent glasses getting to the help us tackle this global health crisis. annual productivity as a result. people who need them. However, solving But the effects of this issue on a poor vision are national, as well felt far beyond as global, scale economic losses. will require the A recent report sort of connected by India’s Union leadership that Ministry of has facilitated Road Transport the growth of and Highways the nation’s tech showed that ecosystem. It 80 per cent will require us to of drivers integrate new eye involved in car care technologies accidents had into Prime Minister an uncorrected Modi’s flagship visual new ‘Modicare’ impairment. The services, to World Health encourage fast- Organisation (WHO) estimates that growth consumer technology giants 200,000 people are killed in road The first was the Folding Phoropter; like Amazon to include eye testing traffic accidents in India a year – the created by the Srujana Centre for for their thousands of truck drivers to second highest rate in the world. Innovation at L V Prasad Eye Institute, increase road safety. the Phoropter is a paper device made Perhaps most surprisingly, however, using simple origami. It takes just In April, Prime Minister Modi it is estimated that 90 per cent of all a few minutes to construct and can will reportedly return to another cases of poor vision could be solved accurately test for refractive errors, global leadership forum at this with a simple pair of glasses – an like short or long-sightedness – even year’s Commonwealth Heads of invention created some 700 years the most remote locations. Government Meeting (CHOGM) in ago. London. Six of the globe’s leading eye health organisations, including ‘Frugal Innovators’ INDIA’S TECH SECTOR Clearly, are calling on leaders to However, despite the lack of global IS OFFERING THE MOST commit to delivering “vision for attention around the issue, India’s POTENT PROMISE everyone”. tech ecosystem is already leading a FOR THE COUNTRY’S wave of innovations vital to tackling I hope Prime Minister Modi this global health challenge. ECONOMIC GROWTH AND recognises the vital need to tackle this SOCIAL DEVELOPMENT. systemic issue – and the opportunity About five years ago, spurred on for India’s technology sector to lead by a landmark piece of research once again, and solve a global health by NESTA, and embodied by the The second was Essmart, a start- crisis. country’s $75-million mission to Mars up connecting the technologies with (the cost of four Bollywood movies, as the capacity to change lives with James Chen is founder one commentator put it) India earned the people that need them. Essmart a reputation for ‘frugal innovation’. have created a digitally-enabled local of Clearly and author of market place for vital technologies, ‘Clearly: How a 700 Year The term referred to below-the- by supplying local family-owned retail Old Invention Can Change radar inventors – devising low-cost stores (which account for 90 per the World Forever’. solutions to local problems – borne of cent of India’s total retail spending) www.indiaincgroup.com March 2018 45 REALTY CORNER Budget 2018: Populist or watershed? by Deepak Varghese

Indian property market expert analyses the Budget for 2018 to see what it has in store for the sector.

he stakes were high for the But if one considers some of to the government’s ambitious government, which steam- the wise voices, it is a Budget policy of Affordable Housing for all rolled its way through demon- directed at the heart of reforms – by 2022 under the Pradhan Mantri Tetisation, Goods and Services Tax agriculture, healthcare for millions Awas Yojana (PMAY), this year an (GST) and Real Estate Regulation of Indians, education and job Affordable Housing Fund has been Authority (RERA). creation – especially rural job established under the National creation. This combined with a push Housing Bank. Setting a target to For a central government that for infrastructure investments that build 10 million rural homes by end of looked steadfast on its way without would create jobs in rural India, the FY 2018-2019 (5 million in FY2017-18 compromise, irrespective of the key impact would be felt not just in plus 5 million in FY 2018-19) seems Budget that they presented, it was companies that were linked to rural quite a long-term measure at creating expected that the Budget would be infrastructure but companies that economic activity at the rural level directed at the 2019 elections. So supplied goods to these infrastructure that could help slow down population throwing caution to the wind, the key companies. And a possible shot at migration to urban India. policy announcement for the year slowing down the growth in urban seems to have done just that. Might areas, which is crumbling under the To further boost the rural economy, as well get accused of being populist, influx of economic migrants. the allocation for export of agri- seems to have been the attitude. commodities has been doubled this That being said, have we considered year to Rs 1,400 crores ($20 million). that this might actually be a THIS BUDGET HAS Along with creating employment watershed budget, if implemented in opportunities for the rural population, good faith? PROBABLY FOR THE this will further provide impetus to the FIRST TIME RECOGNISED warehousing and cold storage sectors As the budget was being announced REALTY AS A SECTOR in Tier 2 and Tier 3 cities. on February 1 by the Finance Minister THAT REQUIRES of India, Arun Jaitely, the most INDIRECT STIMULUS Healthcare impetus common cry was that agriculture was RATHER THAN DIRECT The National Health Policy proposed getting the maximum attention, and by the government provides STIMULUS FOR ITS then came the cry that healthcare healthcare coverage for 50 crore for the masses was completely LONG-TERM GROWTH (500 million) Indians and proposes unthought-of fiscally – where would PROSPECTS. to establish 150,000 facilities to the government find the funds. Some deliver the same, is another winning even accused the Budget of being an stroke. Finally, India is in line with Aam Aadmi Party (APP) statement Housing sector other developed countries which are presented by Bharatiya Janata After the push in last year’s Budget providing similar healthcare facilities Party (BJP). of providing infrastructure status to its masses. But setting politics

46 March 2018 REALTY CORNER

aside and looking through a real Infrastructure boost and good weather. estate development lens, this will The above measures, if implemented provide the much-needed push to the well, would mean a good boost to Other infrastructure initiatives healthcare sector along with attracting infrastructure linked industries like proposed are operationalising 56 public and private investors into Tier 2 cement, steel, paint, sanitary ware, unserved airports along with national and Tier 3 cities. pipes and others. highway development. All these measures will further boost real The salaried segment barely received A holistic infrastructure uplift has estate development in the country any relief except a negligible standard been proposed in the Budget, where by providing impetus to commercial, deduction on income. The micro, whopping Rs 50 lakh crore ($780 retail, hospitality and logistics sectors. small and medium enterprises billion) has been proposed for road, The proposal to revenue by (MSMEs) earning up till Rs 250 crore rail and inland waterways. In a recent investing in the top 10 iconic heritage ($38.5 million) received reduced scenario where the railways budget cities for tourism is a smart move tax benefits of 25 per cent from the has been combined with the financial by the government. This proposal previous 30 per cent, which brought budget – the highest budgeted capital will mould the social and physical about a lot of cheer. This relief comes expenditure was for the railways landscape of the cities, coupled after the much harm caused after the infrastructure at Rs 1.48 lakh crores with economic activities, and drive implementation of GST and slowing ($23.1 billion). In a first, no new sectors such as retail, hospitality and sales in 2017. trains have been introduced as focus F&B along with generating massive has been on strengthening existing employment. Some quarters of the investing and new infrastructure. This is quite segment believed that the imposition contrary to a typical pre-election In the long term, if the Budget proves of 10 per cent of long term capital Budget. a boost to economic activity, the realty gains tax on gains from investments sector will thrive. That the Budget has from the equity markets, where profits A specific boost has been given to the no specific relief for the realty sector, exceed Rs 100,000 in a financial year, railways of Mumbai and Bengaluru to a subject of complaint from various would mean a shift of investments the extent of Rs 17,000 crore (nearly quarters, can be disproved only by the from the equities market to real estate $3 billion) – sums quite unheard passage of time. market. The past track record would of. Political commentators believe show that the three preceding years that the allocation to Bengaluru is This Budget has probably for the first have been an interesting phase for a ploy to buy votes in the lone state time recognised realty as a sector the equity markets, while the real that is standing tall against the that requires indirect stimulus rather estate markets have been at best flat. central governments potency. But than direct stimulus for its long-term Such a charge on long-term capital pragmatists look at it as a welcome growth prospects. gains would, in some views, help in investment into the Silicon Valley of cooling off a heated equities market India that will change the economic and prevent flight of hot money which and infrastructure landscape forever. would mean that funds chasing This will most likely catapult it into the Deepak Sam Varghese is a longer-term investment horizon league of a first world developed city Senior Director – Colliers would find the Indian markets more by way of infrastructure, besides just International. attractive. a city with world class human capital www.indiaincgroup.com March 2018 47 SOFT POWER

are lost into its mesmerising beauty, such as our awe when we witnessed the Auroras – the southern lights… only a lucky few get to witness this at sea,” said Lt. Aishwarya, who has been cataloguing the group’s experiences.

Make in India The indigenously-built INSV Tarini is a 56-foot sailing vessel, which was inducted in the Indian Navy last year. The voyage by the women officers is described as a perfect showcase of the ‘Make in India’ initiative on an international forum.

The vessel and the crew experienced rough weather and stormy winds during their passage across the Pacific Ocean, which spanned 41 days. This was coupled with the extremely cold climatic conditions of the region and strong winds.

The expedition, titled ‘Navika Sagar Parikrama’, was flagged off by Sitharaman as part of a national initiative aimed at empowering women to attain their full potential. It also aims to showcase “Nari Shakti” on the Around the world with world platform and help revolutionise societal attitudes and mindset towards women in India, by raising the Indian Navy the visibility of their participation in An Indian Navy sailing team is out to make history as the challenging environs. first-ever voyage by an all-woman crew to circumnavigate The vessel, which set off for Cape the globe. Town in South Africa last month, is scheduled to return to Goa in April. ix women officers from the Indian Commander Vartika Joshi, with The expedition is being covered in Navy have been navigating her crew comprising Lieutenant five legs, with stopovers at four ports. choppy ocean waters since they Commanders Pratibha Jamwal and The first port halt was at Fremantle, Swere flagged off by Indian defence P. Swathi, and Lieutenants S. Vijaya Australia, in October 2017, the minister Nirmala Sitharaman from Devi, B. Aishwarya and Payal Gupta. second at Lyttelton, New Zealand, Goa in September last year. They are in November 2017, then Port Stanley on a mission to make history as the in the Falkland Islands in January- first-ever voyage by an all-woman February this year, and finally Cape THE VOYAGE BY THE crew to circumnavigate the globe and Town in South Africa – where it will recently departed from Port Stanley, WOMEN OFFICERS be docked before the journey back to the capital of Falkland Islands – a IS DESCRIBED AS A India. British Overseas Territory. PERFECT SHOWCASE OF THE ‘MAKE IN INDIA’ Data collection INSV Tarini had entered the port The crew has also been collating INITIATIVE ON AN and updating meteorological, ocean after covering approximately 15,000 INTERNATIONAL FORUM. nautical miles since setting off and wave data on a regular basis from India, crossing the Equator, for accurate weather forecast by the Cape Leeuwin and Cape Horn. The “It is always a surprise when nature India Meteorological Department vessel is captained by Lieutenant catches you unaware just when you (IMD). They are also charged with

48 March 2018 SOFT POWER monitoring marine pollution on the the Warship Overseeing Team, Goa. state-of-the-art open ocean racing high seas. They have been interacting sail boats. extensively with the locals, especially The ship’s hull is built of wood-core children, during their port halts to and fibreglass sandwich and it has Tarini is similar to its predecessor, promote ocean sailing, the spirit of six sails, including mainsail, genoa, Mhadei, which has travelled over adventure and Make in India. stay, downwind and storm sail. The 115,000 nautical miles during her vessel is capable of sailing in extreme eight years of service. Several “During our stay in New Zealand conditions, something the all-women improvements were incorporated in we also celebrated Navy Day and team have been attempting to the latest ship, based on experience dressed Tarini for the occasion demonstrate with their unique voyage. gained from operating INSV Mhadei. and were fortunate to talk to our The mast, custom built by Southern Tarini is fitted with advanced features honourable defence minister who Spars, is about 25 meters tall. such as satellite communications and conveyed her best regards to us,” Raymarine navigation suite. says Lt. Aishwarya. Naval history The Indian Navy operates four sailing The crew has successfully navigated INSV Tarini was constructed at vessels capable of open ocean the vessel across rough Monsoon Aquarius Shipyard at Divar in Goa deployments – Tarangini, Sudarshini, seas and heavy winds, displaying and after undergoing extensive sea Mhadei and Tarini – all four of which its agile handling capabilities. Their trials, the vessel was commissioned have been built at shipyards in Goa. passage through the Indian, Pacific to Indian Navy service in February The female globe-trotting mission is and Atlantic oceans so far has last year. The construction, a highlight also an attempt by the Indian Navy witnessed winds in excess of 60 knots for the Indian government’s Make in to revitalise open ocean sailing. The and waves up to seven metres high. India programme, was overseen by Navy has plans to induct four 40-feet,

www.indiaincgroup.com March 2018 49 LAST WORD The Goldilocks moment for interest rates in India is here The Reserve Bank of India (RBI) is at a point when the country’s economic climate is just right – neither too hot, nor too cold.

n the well-known fairytale headline figures, it will be evident that play out fully but most economists say ‘Goldilocks and the Three Bears’, a the high rate of growth was driven that the main glitches have already little girl enters the house of three by the manufacturing sector, which been addressed. Ibears, tastes three bowls of porridge maintained its recent accelerated rate and declares that she likes the one of growth, expanding 8.69 per cent. Then, maverick US President Donald that is neither too hot, nor too cold… Trump’s fiscal stimulus could fuel in other words, the one that is Even more encouraging is the fact global inflation and his increasing just right. that the capital goods sector grew at resort to protectionism could not only a very robust 14 per cent, indicating hit India’s export growth, it could also Little children across English- that a broad-based industrial recovery make the country a destination for speaking countries are familiar with led by a revival in private industry dumping of goods desperately looking this story but are Reserve Bank of is underway. Just as encouraging is for alternatives to the American India’s (RBI) Governor Urjit Patel the 7.6 per cent growth in electricity market. and the five other wise men of the generation, which, again points to Monetary Policy Committee who sit rising activity in India’s sub-optimally Then, the higher minimum support around the table to decide the macro functioning factories. prices announced by Finance Minister rates that determine the cost of Arun Jaitley in his Budget could lead money in India? to a rise in government borrowings, WHEN THE SIX WISE MEN thus, squeezing out private sector ‘India Global Business’ is not being GATHER AROUND THE borrowers from the market, and the facetious here. For the Goldilocks TABLE AT THE RBI HEAD resulting higher prices of food could analogy is also applicable to national OFFICE IN MUMBAI ON fan the rate of inflation and force the economies that set a fast pace of RBI to increase the cost of money. growth accompanied by a low-to- APRIL 5 TO DECIDE ON moderate rate of inflation. INTEREST RATES, THE But all that is in the future. When the According to the latest numbers DATA THEY WILL SEE six wise men gather around the table released in March, India’s factory WILL BE JUST RIGHT – OF at the RBI head office in Mumbai on output, as measured by the Index THE KIND GOLDILOCKS April 5 to decide on interest rates, of Industrial Production (IIP) WOULD HAVE APPROVED. the data they will see will be just right expanded at a robust pace for the – of the kind Goldilocks would have third consecutive month, at 7.5 per approved. cent in January 2018 even as the Readers will recall that the reluctance Consumer Price Index, which tracks or inability of the Indian private sector But the central bank has, over the retail inflation, declined for the second to invest in expanding capacities has past four or five years, displayed a successive month to 4.4 per cent in hamstrung headline growth in the stubborn determination to only pursue February. The comparable previous Indian economy. its mandate to check price rise, month figures were 7.1 per cent for IIP completely ignoring its obligation to and 5.1 per cent for CPI. The lower rate of price rise was as also facilitate growth. result of falling prices of vegetables The unanimous inference of and fuel and electricity. A slight nudge from Patel and his economists, analysts and policy- associates at this point in time can makers is that the Indian economy If this trend sustains through the push India’s GDP growth rate into a has shaken off the effects of current quarter – and economists higher growth trajectory and set in demonetisation and the introduction are unanimous that it will – then the motion the market forces that have of the Goods and Services Tax growth rate for the full year will be felt stifled for long. (GST), two very necessary but highly around the 6.75 per cent mark as disruptive structural reforms. estimated by the Economic Survey. But will they pay heed to the cries of Indian industry? The road to magical If one takes a disaggregated look A few caveats will, however, be in 8 per cent plus growth could depend at the inputs that went into these order: The effects of GST are yet to on the answer to that simple question.

50 March 2018