MYSORE NovemberªÉÄʸÀÆgÀÄ - 2014 COMMERCE ªÁtÂdåEstd. 1916 FKCCI JOURNAL Estd. 1916 NOVEMBER 2014 Volume XXXV November 2014 Issue 11 Rs. 20 Business magazine from Federation of Karnataka Chambers of Commerce & Industry, Bangalore

Karnataka New Industrial Policy targets Rs 5 lakh crore investment

FKCCI Office Bearers interact with Mr. Siddaramaiah, Hon’ble Chief Minister of Karnataka on issues relating to industrial policy, attracting investments to Karnataka at his Residence 1 November - 2014

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2 November - 2014 Volume XXXV November 2014 Issue 11 Business magazine from Federation of Karnataka Chambers of Commerce & Industry, Bangalore Estd. 1916

Federation of Karnataka Chambers In this issue of Commerce & Industry President’s Desk 4 Federation House, K.G. Road Bangalore - 560 009. Karnataka Phone : 080 - 22262355 / 6, 22262157 Editor’s Desk 5 Fax : 080 - 22251826 E-mail : [email protected] Spotlight 6 Website : www.fkcci.org

Editorial Board FKCCI’s China Visit Yields US$ 1 Billion+Investment 7 President S. Sampathraman The way forward - rebooting Economy 10 Senior Vice President Tallam R Dwarakanath Karnataka industrial policy targets Rs 5 lakh crore investment 11 Vice President M.C. Dinesh A Holistic Industrial Policy-Aimed at Moving Imm. Past President From Red Tape to Red Carpet: FKCCI 12 R. Shivakumar

Secretary General Karnataka Government to spend Rs.700 Sudarshan Tirunarayan crore to fix roads in Bangalore’s IT Pockets 14

Secretary The next round of economic reforms 22 M. Lokaraj Features Financial inclusion is an evolution 27 Industrial Policy 13 New Monetary Policy 26 Registration of Properties 15 Economic Growth 26 Labour Law 15 SMEs as different verticals 29 Make in India has caught the imagination Aerospace Industry 16 Coal Sector 29 of India and foreign investors 28 Import duty for Rubber 20 Embrace China, not USA 30 Tumkur Food Park 20 Internet Revolution 31 Rural BPOs 21 Health 32 £ÀÆvÀ£À ¸ÀPÁðgÀ¢AzÀ zÉñÀªÁ¹UÀ¼À ¤jÃPÉëUÀ¼ÀÄ 34 Reviews New Indt. Policy 21 Achiever 33 Indian oil refiners 23 Photo Feature 36 FKCCI @ Work 42 Make in India 24 Intellectual Property 46 Smart Cities 25 Transfer Pricing 47

Powered by: Printed at: at [email protected] latest by 20th the Articles are of the Authors and not Corporate Comm India Omkar Offset Printers of every month. Kindly note that only of the organizations they represent. 3A, Casamiller, 96, Nandidurga No.3/3, 1st Main Road Road, Benson Town, Bangalore New Tharagupet, Bangalore - soft copies will be accepted. Any Every possible care has been taken to - 560 046. Karnataka 560 002. Karnataka article received after this date will ensure the accuracy of information, Web: www.corpcomm.in Web: www.omkaroffset.com not be considered for publication. however, FKCCI, its team and service E-mail: [email protected] E-mail: [email protected] Ph: 080-41156483 / 9591100992 Ph: 080 - 26709026 / 26708186 All photographs, unless otherwise providers do not take responsibility for indicated, are used for illustrative any commission of errors. We welcome Articles in English and Kannada, not exceeding purposes only. such errors to be brought to our notice 2000 words may be mailed to President, FKCCI, Please note that the views expressed in for correcting the records.

3 November - 2014 President’s Desk

Estd. 1916 Narendra Modi dividend may push up growth, economy set to grow by 6.4% in 2015-16 – World Bank

S. Sampathraman President Dear Members,

A ‘Modi dividend’ could lift India’s economic growth to 6.4% in 2015-16, the World Bank has said, referring to a possible boost to the animal spirits of entrepreneurs due to the coming to power in May 2014 of a government perceived to be more market-friendly than the previous one. The Indian economy, 80% of the (South Asia) region’s output, is set to grow by 6.4% in 2015-16 after 5.6% in 2014-15. India is benefiting from a ‘Modi dividend’, noted the World Bank’s bi-annual report, South Asia Economic Focus. Apart from the rather unusual personalisation of the sources of India’s economic growth, the report is otherwise along conventional lines.

China’s Growth Will Slow to 7.2% Karnataka has launched the new The World Bank calls for structural reforms and prudent macroeconomic management Industrial Policy 2014-2019 for a better medium-term outcome. “The Modi effect is definitely playing out as far as and the policy looks vibrant with capital inflows are concerned. Inflation needs to trend downwards, but the external and fiscal positions look very promising,” growth initiative in terms of jobs The current year’s growth could turn out to be higher than the 5.6% estimated by skill development and incentives the World Bank. As far as India’s giant neighbour is concerned, the World Bank has and simplification of approvals. estimated that China’s growth will slow to 7.2% next year, a cut from the 7.5% estimated in April this year. The bank also does not see any threat for India because of the likely The policy is aimed towards withdrawal of US monetary stimulus over the rest of 2014 and 2015, as the economy the inclusive development is now stronger in terms of its ability to manage current account. India’s economic growth will accelerate to touch the 7% mark in 2016-17, according and growth of Industries in the to the report, which took note of recent policy measures undertaken. These include State of Karnataka encouraging liberalisation of foreign direct investment in railways and defence, disbanding of the women entrepreneurs in setting Planning Commission and its replacement by an economic advisory body, financial inclusion as well as actions to simplify land acquisition and reform labour laws. up the industries in exclusive India’s economy turned around sharply in the first quarter of 2014-15 to grow at 5.8%, industrial areas. The creation of bucking the dismal sub-5% growth of the last two years. “India’s growth performance quality infrastructure focusing remains strong vis-a-vis emerging market peers,” the World Bank said. Private investment is expected to pick up thanks to the new government’s business orientation on provision for comprehensive and declining oil prices should boost private sector competitiveness, it added. The facilities and with a thrust on ‘Modi Dividend’ is coming out from the positive sentiment, as reflected in the stock Human Resource and Skill market. All economic indicators look positive, aided by the base effect and actual recovery in Development and upgradation some areas. But there is a lot of resolution shown by the government in areas like fiscal is a positive step in growth deficit and current account deficit. We expect economy to see an all round recovery verticals and expected to soon. Progressive thinking with a positive attitude to support the trade and industry is the enhance the industrial growth need of the hour and the blocks are being laid now for larger vision share for the state and also in attracting fresh to occupy the top slot in the country. investments for the state.

S. Sampathraman

4 Editor’s Desk November - 2014

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The turning point in the state

M C Dinesh Vice President Dear Members,

The launch of the new industrial policy 2014-2019 is expected to propel the required momentum for the state to grow faster towards industrialization leaping into the next phase is put into place in the right time. The government both at the centre and the state are stable and is expected to be very growth oriented helping the industry and trade to glitter in terms of growth and social distribution of wealth.

Karnataka’s new industrial policy will set the new trend to accelerate the growth to 20% every year leading to creation of nearly 15 lakhs jobs in the state. The clarity and the path are The entrepreneur temperament with complimentary and supplementary efforts of the visible and is expected to have state government, I have no hesitation to believe that with the new industrial policy, the wide reach in short span. the Karnataka will attract an investment 5 lakh crores. What is more satisfying to see The direction and the delivery that the state government is also gearing itself for making infrastructure as one of the top most priorities in its agenda so as to create an environment for the growth and approach is showcased by these development of the industries. in redefining the objectives pushing beyond the stagnated For the first time I have seen a sense of a satisfaction from all the stake holder on the industry policy just laid by the state government more so from the small and medium boundaries. enterprises. The industry and trade expectations are high and the The clarity and the path are visible and is expected to have the wide reach in short span. The direction and the delivery approach is showcased by these in redefining the new strategic capabilities is objectives pushing beyond the stagnated boundaries. expected to mark the beginning for such an evolution. The The industry and trade expectations are high and the new strategic capabilities is expected to mark the beginning for such an evolution. The commitment and the commitment and the passion is passion is the business agenda for the next five years making the impossible possible. the business agenda for the next The support is sought from the governments for these in this entrepreneurial journey. five years making the impossible This news letter has undergone some changes to make it more informative in all the possible. The support is sought fronts with articles covering on economy trade industry banking and hope you enjoy from the governments for these reading all these articles. in this entrepreneurial journey. I would like to thank the editorial team who toiled to put all these together, many of our clients who have advertised in this make it to look authentic in all respects.

Wish all the members and readers a very happy prosperous deepavali.

Sincerely Yours

M C Dinesh Vice President

5 November - 2014 Spotlight

Estd. 1916 What needed in FDI today …. Commitment to Change the mindset

apital connectedness is calculated from measures of on voting rights to ensure that foreign direct investment (FDI) and foreign portfolio management control of an insurance equity investment into the stock market of the firm doesn’t shift to a foreign entity. C country concerned. India’s decent performance on Concern of loss of management Sudarshan Tirunarayan capital connectedness is primarily on account of the huge money control is of much less importance Secretary General that has come into the Indian stock market from abroad in the compared to sacrifice of economic last decade and big outward FDI flows in the form of overseas growth. Considering the potential of FDI to spur growth, India’s acquisitions by Indian corporates. ambivalence toward FDI is completely misplaced. If India wants The government, faced with an unsustainable current account to accelerate growth, it is imperative that the country attracts deficit (CAD), has been trying to encourage FDI into the country FDI in large, really large amounts. to firm up the rupee. The effects of foreign direct investment on To put India’s track record in attracting FDI in an international local firms in developing and transition countries context, it’s been at best a trickle compared to FDI into suggests that foreign investment robustly countries like Mexico and China. In the last 10 increases local productivity growth. years, Mexico has attracted $247 billion In the case of India, if the government’s of FDI net inflows and China $2 trillion, goal is to grow the economy faster, compared to India’s $229 billion. then it’s important to recognise the From the standpoint of an average necessity of FDI. There is no point citizen, the comparison is worse because in being cagey in its efforts to Mexico is far less populous than India or attract FDI. The naysayers should China. What matters to an average citizen recognise that FDI hasn’t harmed is per-capita investment. On a per-capita other countries that have attracted basis, FDI net inflows for Mexico, China FDI, including Japan, South Korea, and India are $2,017, $1,531 and $183, Mexico and China. For the last 10 respectively. No wonder the per-capita years, global FDI net inflows have GDP of Mexico is $10,300, China totalled nearly $15 trillion and even $6,800 and India $1,500. countries with populations that are So how much FDI would be needed to fractions of India’s are making noticeable make a meaningful difference in India’s contributions to that figure. Brazil, with a economic growth rate? What is the effect population less than a fifth of India’s, has seen of FDI on growth? Each 1% increase in $461 billion in FDI net inflows in the last FDI adds about 0.4% to a country’s GDP decade, while Turkey, nearly one-20th India’s growth. So, to boost GDP growth by about size, has seen $135 billion in FDI. 2%, India will need FDI of about 5% of India offers only a hesitant welcome GDP. Put another way, at the current level to FDI. It seeks investment in several of GDP of almost $2 trillion in India, about industries, including manufacturing, $100 billion of FDI is required to boost construction, telecommunications and GDP growth by 2%. financial services, but not in others like multi- For a massive increase in the growth rate by brand retail. 4% to GDP, $200 billion of FDI would be needed — this is about Growth results from domestic investment from savings, eight times the level of GDP India currently attracts in FDI. Also, from productivity improvements and from foreign investments. as the economy expands, the dollar amount of FDI will have to Countries like China that have grown rapidly in recent decades grow proportionately. Obviously, this becomes a challenge. For have taken advantage of all three sources of economic growth. China, it’s already a challenge to attract ever-growing sums of India, on the other hand, has tried to achieve growth without FDI that would enable China to sustain a high rate of growth. much FDI. China’s growth rate should continue to taper off and become However, India’s approach to growth is like bringing a knife to modest—a life-cycle phenomenon. a gunfight it’s destined to fail relative to other countries’ growth Proclamations of a simplified or streamlined process for FDI strategies, which take advantage of FDI. To transcend from 5-7% into India are not enough to attract investment. Real changes and growth to 10-12% growth as projected, FDI is essential. commitment, as well as incentives to states and bureaucrats for Often, regulation allows only a minority investment for fear actually receiving FDI, are needed. The mindset has to change of losing domestic management control. For example, FDI in to judging the success of FDI policies on the basis of amount of insurance companies is permitted up to 49% with restrictions investment attracted.

6 Special Report November - 2014

Estd. 1916 FKCCI’s China Visit Yields US$ 1 Billion+Investment Yunnan to set up Industrial Park near Bangalore AND in Kunming Exclusively for Indian Companies

- M.C. Dinesh, Vice President, FKCCI

hat do business delegates from India talk about on a long flight to China? China versus India! Team FKCCI led by Sampathraman, President, W comprising me, M.C. Dinesh, Vice-President, and others on the flight to Kunming, Yunnan Province, China, were likewise engaged in a similar bout of intellectual gymnastics, but the twist in the story was in what we ended up discussing on our return flight to Bangalore, viz. Not India versus China, but India AND China! That, in short, defined the success of our 4-day tryst with China, from September 24-28, undertaken at the behest and Invitation extended by the Governor of Yunnan. The China visit was a blockbuster success for the FKCCI and Karnataka and so the story deserves to be told as it unfolded.

* * *

We arrived at Kunming airport - and the very first mile of our journey took our breath away. September Instantly, everything seemed to be working 24 with clockwork precision: The hosts picking us at the airport, taking us in a chauffeured car, and chaperoning us with tail cars in tow, to our destination, a seven- star hotel. Kunming, the capital of south-west Yunnan province of the that in your Chinese language, the word for “problem” and People’s Republic of China, revealed itself, bit by tantalizing bit, “opportunity” is the same ! beckoning us to bask in its charms. Aptly described as the ‘City It was an ice-breaker moment! Soon, they quickly got around of Eternal Spring’, it has an eternal smell of flowery flagrance to sharing with us their plans to set up a R&D center for software about it, and naturally so, because it is the chief producer of and also open a slew of Telemedicine Centers in Karnataka. fresh flowers. Reminiscing about Kumming reminded me of In terms of numbers, Yunnan Sunpa spoke of investing between what Napoleon once said of China: ‘Let China sleep, for when Rs.300-500 crore in the telemedicine segment, and anchoring China wakes up, she will shake the world’. And how she has. No Chinese-led investments of around $1 billion in the state. other country, no other economy, at no other time in history, has With a sense of Mission Accomplished, we visited a few R&D invested nearly half of its entire GDP. and manufacturing centres in Kunming, and the Kunming Haikou Our first visit on the first day in Kunming was a meeting with Industrial Park. We also got to know of the Dounan Flower SUNPA Chairman and his team at their Telemedicine Center. Market in suburban Kunming, said to be the largest in China with SUNPA has 5000 medical specialists, 50 000 physicians, 700 daily sales of US$300,000 from the 2 million sprays of flowers. professional technicians and 700 operational sites! The dinner that day showed us why the Chinese are perfect hosts. The multi-course spread would have made a mogul blush, Telemedicine giant eyes Karnataka with one particular dish said to be costing as much as several Mr Liu Yong, MD, Chairman, SUNPA Group, and his team, thousand dollars… Phew!! impressed us deeply with their profound interest and knowledge Not surprisingly, we slept like a baby that night. about the industry landscape of Karnataka. our hosts quickly sized up the status of FKCCI as the first and most predominant * * * stakeholder in any business tie-ups with our State on their radar. Incidentally, my own interactions with the Chinese in the “Today is the critical part of our visit,” said past and at Kunming, had revealed that when it comes to doing Sampathraman giving a pep talk to all of us, “Our business, no one does the homework better than them. September Chief Minister has reposed a lot of faith in us and While conversing with the SUNPA team about their investment 25 the next few hours are going to test our hard-sell plans, I casually intervened and told them, “There may be a few tactics to the hilt. The Chinese are smart operators small problems here and there, but you know better than anybody and so let us remember, the game is about prescription, not just

7 November - 2014

Estd. 1916 description. We have to exploit the long tail and not look at just one blockbuster success.” Two to Tango Rejuvenated and recharged by his words, we were off for our meeting with the Development and Reforms Commission Officials, Advantages from Bangalore Kunming Technology in a clean-as-a-whistle SUV chauffeured with tail cars in tow like Park in China: state guests! • Invitation for Indian IT and ITeS companies to gain The Yunnan Council Vice-Chairman, the political head of the foothold in China. province along with other senior officials from the Development • IT Park developed by China within 4 kms from the and Reforms Commission, received us warmly and without wasting new international Airport at Kunming. much time, took the agenda ahead, viz. fostering greater and • Assistance provided for land building, low interest better business and cultural ties between Yunnan and Karnataka. finance Lease, Rent subsidies. The iron is hot, and it’s the perfect time to strike, Sampathraman • Opening of Chinese Market for their Services. whispered to me, and we went for the jugular, giving a quick presentation on the iconic status of Bangalore as India’s - and Advantages from Industrial Park near Bangalore: the world’s - IT hub, and on Karnataka’s established status as • Industrial Park to come up in around 100-250 acres one of the most progressive and industrially advance states of to house at least 20-25 companies. the country. We also pointedly recalled the good vibes that the • Increased FDI inflow from Chinese investment with Chinese delegation enjoyed during their visit to the FKCCI when assured investment of US$ 1 billion from Yunnan their interest in collaborating with Karnataka was first kindled. Province companies. True to their renowned business acumen, the Chinese responded • R&D Centres for various sectors, Healthcare and with the formalizing of a brilliant proposal that was a win-win for Telemedicine Centres, fertilizer plant near a port, both Yunnan and Karnataka, viz. Set up a Bangalore Kunming to be set up by Chinese companies. Possible areas Technology Park in Yunnan for Indian IT and ITeS companies of cooperation in diverse sectors such as IT/BT, high to touch base with the local Chinese market, complemented by tech R&D & Healthcare. an Industrial Park to be set up near Bangalore exclusively for Chinese companies wishing to invest in Karnataka. The Yunnan government intends to invest around 100-250 A series of high-level meetings were held with the Yunnan acres of land for the Industrial Park, which is to be facilitated by Development and Reforms Commission officials, viz. the the Karnataka government along with supply of water, power and Director, Deputy Director, Director of High Technology Reforms good road connectivity. The industrial park promoters expressed Commission, etc, followed up by a meeting with the Directors of their confidence of the Industrial Park attracting $1 billion Changgong New Area Administration Committee. We also took investment in four to five years from various verticals like food this opportunity to felicitate the Director Mr XILIANG WANG. processing, electronics, fertilizer and telemedicine sector. Later we went on a tour of the Industrial Parks, viz. the Kunming The latest development on this front is, besides Bangalore, the Information and Industrial Park, the Kunming Medical Treatment state government is exploring possibilities of allocating land for and Industrial Park for Healthcare, the Cultural Tourism new investors in Tumkur, Gauribidanur, Kolar, Mulbagal, among Industrial Park, the Dounan International Flower Industrial other locations. A trade delegation from Yunnan Province will Park and the Ecotourism Industrial Park, and also the site of the soon arrive in Bangalore to hold further discussions on this with proposed KUNMING BANGALORE TECH PARK earmarked for the state government. Indian companies. The government has already put up display

8 November - 2014

Estd. 1916 boards clearly showing that it is earmarked for Indian companies. Visiting this site revealed to us a text book example of Chinese precision in planning and project management.

* * *

Starting your day sipping tea is a mundane daily chore, right? Wrong! Not in Kunming! We September discovered this at our charming little hotel - and 26 there is history wrapped in this little ritual too. Like everywhere else in China, the Yunnan Province has its own quaint tea drinking ceremony. While we didn’t get to actually take part in one, we got a taste of it sipping our morning tea, in a tea set that seemed so perfectly made that even this inanimate part seemed to animate the tea in it. Mr Long Jiang, the DG of Science & Technology, Yunnan, and his colleagues listened raptly to our showcasing Karnataka’s traditional prowess in science & technology, and expressed their keenness to collaborate and engage with us in the areas of latest scientific techniques and cutting edge technologies, agriculture, horticulture, chemicals and fertilizers, bio-technology and other related areas. Responding to our invitation, Mr Long Jiang said he will very soon (in November) be leading a high-level business delegation to Bangalore, to take up the collaboration forward. I have to confess here that we were able to strike an excellent rapport with our hosts. Maybe one should credit this to the soft touch of our President! When I gently told him this, he laughed and then added on a more serious note, “Actually, the credit should be given to our CM because our hosts see us as his ambassadors.” All the officials we engaged with, right from the Director General, Province of Yunnan China; Director & President of China Development Bank (CDB), Chairman and Vice-Chairman voices weaving ancient melodies in the frosty air. And on this, let of Yunnan Development and Reform Commission, Director me add my own two-bit about the dinner that followed. General of the Technology Park, and Mayor of Kunming City, clearly showed their serious intent on investing in Karnataka and * * * over and above that, seemed to be eager about setting the ball rolling at the earliest. It was a Saturday and as befitting the occasion, A word about going round Yunnan on-the-go. With lush green we were all caught up in a bit of the weekend valleys nestled amidst rustic and rugged lines of peaks, the September spirit! The Chinese say, the journey of a thousand mountains seem like they are singing a soundless song in thousand 27 miles begins with a small step. Well, our own journey of a thousand miles ended with a small - but unforgettable - weekend experience! Kunming has a thousand touristy spots and we had picked two among them - the Stone Forest and the Dianchi Lake. As it turned out, we had chosen right, though making the choice was akin to finding a needle in a haystack! Located in the east of Kunming City, Yunnan Province, Stone Forest is a unique natural phenomenon. Thousands of differently- styled giant stones scattered in random fashion give it the appearance of a deep and serene forest. The crescent-shaped lake is serenaded by mountainous peaks on all its sides and its shoreline is equal to the distance all the way from Bangalore to Nanjangud - about 163 km in all! Winding up our final day in China at the Dianchi Lake was a perfect end to a dream tour - literally and metaphorically. For in the outcome of this lies the realization of the dreams of Karnataka’s future economic growth.

* * * 9 November - 2014 Economy

Estd. 1916 The way forward - rebooting Economy The fact that even today saving and investment rates are at high levels despite having declined from a much higher level reassures us that if we are able to find ways to complete projects speedily, we shall be able to usher in rapid growth in income even in the short run.

he sharp decline in corporate investment rate has attracted much attention. The decline has been attributed to many factors. T The weakening of investment sentiment is traced to Given the high level of inflation, the monetary certain policy decisions and more particularly to the one relating authorities had little choice. It is overlooked to the retrospective application of tax changes. This particular decision has weighed heavily on the corporate that in a period of declining ratio of household sector. Strong efforts are needed to allay unnecessary fears. saving in financial assets, higher fiscal deficit Rebuilding confidence has to be an important part of policy. A automatically puts pressure on interest rate. second reason attributed is the tight monetary policy. Given the high level of inflation, the monetary authorities As inflation comes down, the monetary had little choice. It is overlooked that in a period of declining authorities may have greater room for ratio of household saving in financial assets, higher fiscal deficit relaxing. A decline in the efficiency of the use automatically puts pressure on interest rate. As inflation comes down, the monetary authorities may have of capital is evident. With an investment rate of greater room for relaxing. around 30 per cent of GDP and an incremental capital output ratio of 41 which has been the observed ratio in the recent past, the growth rate should have been around 7-5 per cent.

A delay in the completion of projects will mean that output is not flowing even after significant amount of investment has been made on a project. The delay in the generation of output out of investment made in one sector may also be caused by the lack of adequate investment in related or complementary sectors. For example, an increase in capacity creation in the power sector must be matched by appropriate increases in investment in the coal sector. In adequate output out of investments could also be due to non-availability of critical inputs. Many power plants, for example, remain idle because of the non-availability of gas. An early completion of projects will also demand certain policy decisions. Issues relating to environment and land acquisition have assumed greater urgency. Obviously we cannot ignore environmental concerns but we A decline in the efficiency of the use of capital is evident. need to work out a suitable compromise between the compulsions With an investment rate of around 30 per cent of GDP and of growth and concerns for environment. an incremental capital output ratio of 41 which has been the The fact that even today saving and investment rates are at high observed ratio in the recent past, the growth rate should have levels despite having declined from a much higher level reassures been around 7-5 per cent. us that if we are able to find ways to complete projects speedily, On the other hand, the actual growth rate turned out to be below we shall be able to usher in rapid growth in income even in the 5 per cent. Obviously, this implies a steep rise in the incremental short run. This should enable us to grow between 7 and 7.5 per capital-output ratio. cent in the short run. This may be because projects have not been completed in time However, only a return to higher levels of saving and investment or complementary investments have not been made. can take us back to the growth rate of 9 per cent.

10 Cover Story November - 2014

Estd. 1916 Karnataka industrial policy targets Rs 5 lakh crore investment

The policy proposed to form at least five industrial areas every year over an area of 5,000 to 8,000 acres. The proposed industrial corridors are expected to become the engines of economic and industrial development over a period next 10 to 15 years.

of funds for overall development of the region. It provides for all energy projects including renewable energy projects to be treated as industry and will be eligible for all incentives as any other industry, Siddaramaiah said. The policy proposes to associate with Union Government in implementing the Chennai-Bangalore-Chitradurga Industrial Corridor (CBCIC) and Bangalore Mumbai Economic Corridor (BMEC) with the help of external assistances from Japan and United Kingdom, he said. In order to take the maximum benefit from industrial corridor, the state has arnataka aims to attract will get enhanced package with a ceiling proposed four more industrial corridors, investment worth Rs.5 lakh limit of 125 per cent of the fixed assets which will be located in Dharwad- crore in the next five years created,” he added. Koppal-Raichur, Chitradurga-Haveri- K under a new industry policy. The policy also gives special attention Karwar, Raichur-Bagalkot-Belgaum The policy is targetting an industrial to MSMEs by proposing almost double and Tumkur-Shimoga-Hassan sectors, growth rate of 12 per cent annually and the fiscal incentives as compared to the Siddaramaiah said. seeks to enhance the contribution of previous policy, Siddaramaiah said. “The proposed industrial corridors manufacturing sector to the state GDP It focuses on encouraging are expected to become the engines of from 16.87 per cent to 20 per cent. entrepreneurs belonging to SC and STs, economic and industrial development The New Industrial Policy for 2014- minority community, backward classes over a period next 10 to 15 years,” he 19 was at a function here released by and ex- servicemen. said. Karnataka Chief Minister Siddaramaiah Women also have been given special The policy aims at balanced growth who said it will contribute for the attention to induce them to take up more moving beyond Bangalore with conscious economic development and employment and more industrial ventures not only for effort to reach out the nook and corner generation in the state. their livelihood but also for providing of the state and also aims at addressing The policy proposed to form at least employment opportunities to others, issues of concerns of the industries, the five industrial areas every year over an Siddaramaiah said. Chief Minister said. area of 5,000 to 8,000 acres, he said. Two exclusive industrial estates and He said that after taking charge of In order to encourage large areas for women entrepreneurs and a this department five state high-level investments across the state, the policy reservation of five per cent in all the clearance committee meetings had been has adopted a very liberal location based industrial estates/areas for women conducted and proposals worth more fiscal incentive package, Siddaramaiah entrepreneurs had been proposed in the that Rs.50,000 crore approved. said. policy. “Special package of incentives and It also proposes net VAT plus CST The policy also provides adequate concessions have also been announced based interest free loans for a longer attention to Hyderabad Karnataka for mega industries,” he said. duration and higher ceiling limits. region with a view to create a strong “Anchor industries and focussed sector industrial base with equitable allocation - Source - PTI

11 November - 2014

Estd. 1916 A Holistic Industrial Policy - Aimed at Moving From Red Tape to Red Carpet: FKCCI The assurance from the Chief Minister that he is industry friendly has sent the right signals to investors in the State and abroad. The policy aims at holistic development of the State and looks beyond Bangalore with equitable distribution of industries all over State.

positive step ushering in attracting fresh investments. The declaration of large industrial areas and estates in townships is expected to ease the congestion and the development of the same under PPP mode is unique leading to faster growth pace. The focus on sector industries development as public utilities is a booster much awaited for the growth of the industry in the state. The constitution of MSME facilitation councils is appreciated as the same is expected to meet the long demand of the trade fraternity. Reduction of road tax and registration tax in order to encourage manufacture and use of green hybrid and electrical vehicles is expected to move towards the concept of ‘GREEN ENVIORNMENT’ is a fresh buoyant idea in combating the pollution. The need to consider all the power projects, including renewable energy, as manufacturing industries is expected to give a fillip to renewable energy sector. ri. S. Sampathraman, President, FKCCI reacting The special emphasis to increase the capacity utilization of ports to the launch of the New Industrial Policy 2014-19 in the state is expected to boost the export trade opportunities has welcomed the policy as most progressive and and making the ports thereby as the gate way to the world. S a key driver of employment and innovation with a The establishment of knowledge corridors and the proposed clear direction in making Karnataka the brand offer to non-resident Kannadiagas to invest in propelling and to be the key state in the country The immediate necessity state is welcome as the same is expected to bring scaling growth to new horizons. The policy in the overseas fund for the development. unveiled has innovative features that will make of provision of creation of The tax related incentives for mega investments the state a leader in the country. quality infrastructure is and the incentive of interest free loans in the He said attracting investment is dependent on relevant considering the form of retention of VAT collected for 10 years, providing the right environment to run a business current demand and is a exemptions in stamp duty, entry tax, shows the efficiently. Administrative and procedural issues keenness of the government to revive investments which result from regulatory and institutional positive step ushering in in the state. All industry subsidies have been arrangements play an important role in attracting attracting fresh investments. increased substantially. There is a separate investments and the simplification procedures policy for MSMEs. like e-filing and status on online are some of the good features. But, land prices are higher compared to other states. This The policy unveiled has come at the right time considering the increases cost of doing business. 99 years lease deed needs major ‘Make in India’ concept of the Central Government. amendments which the Additional Chief Secretary has promised The assurance from the Chief Minister that he is industry to do. MSME should get land upto 2 acres on ‘Lease cum Sale’ friendly has sent the right signals to investors in the State and basis. abroad. The policy aims at holistic development of the State and The proposal to abolish trade license as promised by the Chief looks beyond Bangalore with equitable distribution of industries Minister is a welcome measure. Total abolition needs to be all over State. considered for all Industries and Trade covered by Factories Act The growth projected at 12% looks achievable considering the and Shop & Establishments Act. State as the investment destination followed by creation of new The policy pronouncements made by the Hon’ble Chief Minister employment is a industry friendly step as it benefits the creation is in tune with the growth agenda in placing the state in the top of wealth and employment. investment destinations in the country. Much remains to seen on The immediate necessity of provision of creation of quality the process of implementation as rightly said by Hon’ble Minister infrastructure is relevant considering the current demand and is a S.R. Patil.

12 November - 2014

Estd. 1916 Stakeholders welcome Karnataka’s new new industrial policy industrial policy aims to boost local manufacturing A facilitation council for Micro Small and Medium Enterprises (MSMEs) at Mysore has been The policy is also looking at building infrastructure welcomed. Local stakeholders say this helps for promoting industries, an issue which all the in redressal of grievances regarding delayed business associations have been vocal in their payments to MSMEs by the government. meetings with the government authorities.

he new industrial policy (2014-19) unveiled by the arnataka government has come up with a new State government recently has been welcomed by industrial policy that aims to grow other cities in the local stakeholders, but there is scepticism regarding state, increase the push for local manufacturing and T the implementation of some of the provisions. K also generate Rs.400,000 crore worth of software A major demand of Mysore industrialists to bring local exports by 2020. industrial areas under Industrial Township Authority has been The policy, which has been in the works since last November approved in the policy. But, the key issue of amending the law to aims to address the slowdown faced in the IT sector that in turn implement the provisions of the policy remains. has impacted job creation over the last few years. To achieve this Suresh Kumar Jain of Mysore Industries Association (MIA) stated objective, the Karnataka government is rolling out the red told The Hindu that the new policy has proposed to declare large carpet to corporates to form Public Private Partnerships (PPP) industrial estates in the State as Industrial Township Areas across all industries from IT to toy manufacturers. and this includes the industrial areas in Mysore. However, the The policy has a stated objective of growing at 12 per cent implementation of the proposal calls for amendment of section every year, powered by manufacturing and also has an eye on 364-A of the Karnataka Municipalities Act 1964, and establish creating around 15 lakh jobs in the state. “We had already industrial township authorities to manage the local industrial thought of a manufacturing policy much before the centre and are estates. “This may take years though the policy document has looking at getting investments of Rs.5 lakh crore by 2019,” said enunciated in clear terms its constitution,” Mr. Jain said. CM Siddaramiah. If implemented, it will obviate the need for local industries The policy is also looking at building infrastructure for to pay tax at multiple points and the township authority will be promoting industries, an issue which all the business associations entrusted to collect the taxes. Besides, it will also be obliged to have been vocal in their meetings with the government authorities. improve the civic infrastructure in the industrial areas. Though “Five industrial areas every year, covering an area of 5000-8000 the industries pay taxes to the local bodies, the revenue collected acres, with the support of power and water in these regions will is not ploughed back for developing industrial land. There have be provided,” he added. been instances of local industrial associations collecting funds to The Karnataka government is also looking at PPP in establishing repair road or install street lights, Mr. Jain said. this industrial zones. There were goodies for the Micro, Small and If notified, Hootagalli, Metagalli, Belwadi and Hebbal will Medium Enterprises (MSME), which contributes 8 per cent of come under the industrial township authority and will be out of India’s GDP. “Special attention has been given to MSMEs and purview of the local bodies. This will accelerate provision of civic we propose to double the fiscal incentives when compared to the amenities to the industrial estates, which are now languishing in previous policy,” Siddaramiah said. Also, the government has neglect. earmarked 22.5 per cent of allotable land to SC-ST entreprenuers The MIA has also welcomed the new policy guideline which and two exclusive industrial estates for women entreprenuers and facilitates the entry of private players into industrial area a reservation of 5 per cent has been proposed. development. “This is an acknowledgement that the Karnataka Stating cateogorically that many mining-related projects, Industrial Area Development Board (KIADB) has failed to take which got a nod in the earlier Global Investor Meet have been up development works like roads, sanitation and provision of stalled for a lack of clear policy of the state with regard to mining, drainage,” Mr. Jain said. said Siddaramaiah. A facilitation council for Micro Small and Medium Enterprises The government has also proposed industrial corridors all over (MSMEs) at Mysore has been welcomed. Local stakeholders say the state and also laid emphasis on ease of doing business, such this helps in redressal of grievances regarding delayed payments as reducing inspections, online submission of forms to boost the to MSMEs by the government. investment morale in the state.

- Source - Business Line - Source - Business Line

13 November - 2014 State Business News

Estd. 1916 Karnataka’s Siddaramaiah government to spend Rs.700 crore to fix roads in Bangalore’s IT Pockets

ll those living on the outskirts of Bangalore might criticism. “We want to give a facelift to them. We want to soon see their roads get a facelift. Karnataka’s complete the work by April-May next year, well before the Siddaramaiah government wants to shift the onset of monsoon,” Reddy said. A focus a little bit away from core Bangalore areas, The government is also spending Rs.200 crore on the Tender and improve the condition of major roads and important link SURE (Specifications for Urban Road Execution) project in roads in the outer areas of the city by spending Rs.700 crore 12 important roads, and another Rs.600 crore on making on them. six major corridors including the one between Whitefield and Some of the areas that will benefit from this approach MG Road, signal free. “We will complete both Tender SURE, will be information technology pockets of Bommanahalli and signal-free projects by mid-2015,” Reddy said. and Mahadevapura besides Dasarahalli, KR Puram, Rajarajeshwarinagar, Yeshwanthpur, Byatarayanapura, Signal-free Corridor in West Yelahanka, the Bangalore South assembly segment, and The BBMP has taken up an eight-lane signal free corridor parts of Anekal. connecting the western parts of the City with the central “Last year, we had spent more on the roads in the core business district at a Rs.115 crore cost of the corridor will areas. This time we want to improve the conditions of roads help residents of areas such as Rajaninagar, Mahalaxmi in the peripheral areas that are within the Bruhat Bangalore Layout, Basaveshwara Layout and Vijayanagar reach KR Mahanagara Palike (BBMP) limits,” Transport Minister Circle within minutes. The project involves use of some Ramalinga Reddy, who is also overseeing Bangalore affairs, railway land, and hence got delayed. told Economic Times. ”This will help improve roads in places “This project will take about 18 months to complete,” like Electronic City that have large presence of IT firms, Reddy said. and Peenya which has several industries.” Chief Minister After DV Sadananda Gowda took over as the railway Siddaramaiah has directed the finance. minister, he directed the railway authorities to clear all hurdles for this project. More funds for parks & footpaths The funds, according to the transport minister, will be released under the Chief Minister’s Nagarothana project. “We will use another Rs.300 crore for improving other facilities like parks, playgrounds and footpaths all over the city.” The government, Reddy said, has set up a high-power committee under the chairmanship of Additional Chief Secretary D Satya Murthy. Once the Cabinet approves release of funds, the road revival proposal does not have to go before the BBMP council. The committee will straightaway approve it paving way for tendering of projects. The roads on the peripheral city areas have been damaged, and had invited lot of media

14 November - 2014

Estd. 1916 about 30-60% higher than guidance values in Bangalore. “We are aiming to bring it to a standard 30%. Revised value will Realty primer: There’s a huge difference between the guidance value and market value of property in several areas of Bangalore, as also in other major cities and towns of the state. The central fetch Rs.2K cr more valuation committee has been continuously working to bridge the gap. This revision is uncalled for. The market is still recovering from On paper, most properties are transacted at the guidance value, last year’s sluggish growth. We thought the new government which money changes hands at the higher market value. would offer some solace, but it’s only coming up with a deterrent. FKCCI welcomes proposed amendment exempting small factories from labour law perview

The exemption on inspections and the allotment of identification number eases the administrative hassles and the reforms in this regard is well appreciated.

egistration of properties is among the top three revenue generators for the state, and the government is keen to tap this revenue source. R The state treasury received Rs.6,100 crore from stamp duty and registration charges during the last fiscal, and two-third of this came from registration of properties. With new guidance values in place, the government expects to raise an ri S. Sampathraman, President FKCCI welcoming additional Rs.2,000 crore. the recent proposed amendment exempting the small Realtors unhappy: The real estate industry is obviously not factories from the labour law purview said that the amused. Realtors said increasing guidance values to bring them S recent draft amendment announced by the Labour on par with market values in one go would scare away prospective Ministry will protect the small industries from the cumbersome buyers, especially from the middle-income group, as properties legal procedures including the industrial disputes act and will become unaffordable. minimum wages act. “This revision is uncalled for. The market is still recovering Small factories will heave a sign of relief as unions cannot from last year’s sluggish growth. We thought the new government force unnecessary closure of the unit on frivilious grounds. This would offer some solace, but it’s only coming up with a deterrent,” has been a bane for the SSI units as many units have closed the The realtors are not against increasing guidance values, but operations due to the unethical tactics of the labour unions. concerned about how it is evaluated. The government doesn’t The exemption on inspections and the allotment of identification have a scientific way to fix guidance value as it simply goes by number eases the administrative hassles and the reforms in the thumb rule of satisfying the state treasury. It would be wise this regard is well appreciated. The proposed amendments are to take the current market situation and bank rates and other expected to be compatible and beneficial to the labourers in the factors into consideration, before deriving the guidance value for present scenario in the industrial sector. The improved safety of each area. workers and doubling the provision for overtime are welcome However, revenue officials said current market values are features.

15 November - 2014

Estd. 1916 Aerospace industry - A review India’s current MRO market size is estimated to be around USD 750 million. As per Boeing itself, the market is expected to grow at 7% CAGR for the next 7 years to reach USD 1.2 billion by 2020.

ndia, with its growing aircraft fleet size, strategic work on Indian‐registered aircrafts, in locations such as the UK, location advantage, rich pool of engineering Germany, France, Romania, Jordan, Israel, the UAE, Sri Lanka, expertise, and lower labour costs has huge potential China, Singapore, Malaysia and Australia, while the plans by I to be a global MRO hub. some of the large global MRO players to set up base in India are At present, Airlines operating in India get nearly 90% of yet to materialize. their MRO done abroad, mainly due to cost advantages resulting from the comparatively high tax burden, cumbersome operating Recommended initiatives that could boost the Indian procedures, and the inadequate MRO service facilities available MRO industry: in India. • Review the collective implications of various taxes imposed India’s current MRO market size is estimated to be around by the Central and State Governments especially VAT on USD 750 million. As per Boeing itself, the market is expected MRO industry. to grow at 7% CAGR for the next 7 years to reach USD 1.2 • Review the procedural hurdles faced by MROs in importing billion by 2020. With the fleet size likely to double by 2020, the spares, using the services of foreign experts, creation of need for a strong domestic MRO industry is critical and not just necessary infrastructure etc. and address issues immediately desirable. to put Indian MROs on the growth trajectory. • Review the Aircraft maintenance engineering courses A strong MRO industry could achieve the following available in India for their suitability in meeting the skill benefits in next 10 years: sets required by the industry. • Create thousands of Jobs for Aerospace engineers and other • Encourage setting up of comprehensive MRO facilities in professionals. India to take care of the growing requirements of aircrafts • Save and earn foreign exchange by attracting national and operating in India. international carriers to Indian MROs. The government would earn significantly larger revenues from • Reduce dependency of Indian carriers on other countries for the multiplier effect of MROs, generation of local employment their MRO requirements. and the growth of ancillaries. The State government would • With the induction of more aircraft in India every year earn VAT on every rupee spent by employees on consumption and the existing ones getting aged, the opportunities for goods plus get a share of the income tax, excise duty, and employments, saving in foreign exchange, and the revenue service tax paid by such employees to the Central government. earned by taxes will increase every year. Every incremental job yields incremental revenue for the State • Make India an attractive MRO hub in this part of the world. government. Central Government, State Governments, and various other agencies imposed taxes and levies on the Indian MRO industry Some of the positive measures taken by the government at various points in time without considering the overall impact over the past few years: of these on the development and growth of the industry. • Extension of time period for consumption/installation of At present Domestic scheduled carriers outsource most of parts, and testing equipment imported for Maintenance, their MRO activity to third‐party service providers outside the Repairs and Overhaul (MRO) of aircraft by MRO units from country. It’s a matter of major concern that Indian carriers find 3 months to one year. it more cost effective to fly empty aircrafts and crew to overseas • MRO industry for the first time is allowed to go in for ECB. MRO hubs for maintenance of their fleet. At present, Indian • The Royalty charged by the AAI, from MRO, reduced from MROs are mainly equipped for Line maintenance. We need to 36.3% to 13%. build more sophisticated facilities and upskill our workforce to • Testing equipment can now be imported duty-free by the do the heavy maintenance work which is mostly outsourced now. MROs. Very recently even Air India, like all private Indian carriers While the above measures have helped the industry, it started depending on MRO facilities located in South Asia, South needs more support to capitalize on the enormous business East Asia, and the Middle East. MRO business worth nearly opportunities available. USD 450 million has been estimated to be outsourced by the scheduled carriers to other countries in FY 12. This is a colossal Some of the important corrective measures suggested loss of revenue, employment, and loss of revenue through taxes are: to the government which also foregoes the corporate tax on the • Review of the VAT charged on MROs with a view on the profits of these overseas MRO service providers. sustainability of the business when VAT is paid along with In the absence of a well‐developed MRO base in India, there other taxes and levies. are currently around 40 overseas MRO providers approved by • States should consider extending benefits like exemption the Directorate General of Civil Aviation (DGCA) to conduct from State electricity duties, Stamp Duty, land benefits, etc.

16 November - 2014

Estd. 1916 to attract MROs. at the airports. These Parks could be dedicated for MRO • Review of the Service tax imposed on MRO industry and aerospace manufacturing activities with unrestricted considering the fact that when MRO work is done abroad, access to the runways. The government should accord the Airlines need not pay any tax at all. Special Economic Zones (SEZ) status for such Parks, treat • Airline industry is primarily a ‘service’ industry, thereby, full goods and services produced therein as ‘deemed exports’ Cenvat credit for MRO activities should be extended to the and provide full tax exemptions. airlines without any restriction since airlines, at times may • Develop globally competitive skills and capabilities: Given not be in a position to claim full credit. the industry challenges, not many MRO players in India • Rationalize the Customs duty exemption on import of MRO possess globally competitive end‐to‐end capabilities. Very tools and consumables: The existing Customs exemption few players have global certifications from USA’s Federal covers only parts and testing equipment for MRO operations. Aviation Administration (FAA) or European Aviation Safety • Review of royalty charged by AAI on MRO: The Airports Agency (EASA) or UAE’s General Civil Aviation Authority Authority of India (AAI) charges 13% royalty from Indian (GCAA) to undertake heavy maintenance works on Airbus MROs, which renders them uncompetitive. This is over and and Boeing jets. The Government of India may consider above the rents that MROs pay to AAI for use of the airport reimbursing 30‐50% of the cost of obtaining global premises. A royalty over the rent is only making Indian certifications as an incentive to the industry. MROs more uncompetitive. • Simplify and standardize the Customs requirement to At present Domestic scheduled carriers outsource produce certificates from end-user airlines for import of aircraft parts: Under Customs law, MROs are granted most of their MRO activity to third party service exemption from Customs duty for import of aircraft providers outside the country. It’s a matter of spares, subject to submission of requisite documents in major concern that Indian carriers find it more the prescribed manner to the satisfaction of the Customs authorities. While importing spares, Customs authorities at cost effective to fly empty aircrafts and crew to different airports have varying requirements of documents, overseas MRO hubs for maintenance of their fleet. many of which are tedious and impractical. • Customs should allow 24x7 clearance of aircraft parts at six Finally: major airports: Unlike for air cargo at major airports, the • A strong MRO industry is critical to the growth of the Customs department has fixed working hours for clearing aviation sector in India. It produces employment, and aircraft spares. This further leads to delays in custom revenue to the government through taxable outcomes. clearance which is critical in quick turnaround especially in India has a huge potential to be a global MRO hub due to situations like ‘Aircraft‐on‐Ground’ (AOG). A 24x7 window its growing aircraft fleet size, strategic location advantage, for custom clearance of aircraft spares would go a long way. rich pool of engineering expertise, and lower labour costs. • Distinguish MRO as a separate category through amending • It is a matter of major concern that Indian carriers find Aircraft Rules: MROs have been clubbed with Ground it more cost effective to fly empty aircrafts and crew to Handling Agencies (GHA) for security and other related overseas MRO hubs than to get them serviced in India. procedures at the airport. There is no distinction made This is because Indian aircrafts can simply fly to competing between these two very distinct services. This causes countries, buy spares and get the maintenance done, and fly avoidable issues related to airport passes, etc. and back, without paying any taxes to the Indian government. subsequently delays. MRO, by definition, should be declared • A coordinated effort by the government, airlines, airports a separate category by the Government, through amendment and the Indian MROs to strongly promote the Indian MRO of Aircraft Rules, 1937. industry is the need of the hour. Civil Aviation Ministry may • Accord infrastructure status to MRO industry: The MRO appoint a Inter Ministerial Group to support the MROs in is an integral part of the airport infrastructure. The facing the challenges and capitalize on the opportunities government may consider extending tax benefits on lines of available. 80IA to MRO. India, with its growing aircraft fleet size, strategic location • Encourage airports to support MRO as a strategic activity: advantage, rich pool of engineering expertise, and lower labour The MRO facility has to be located at the airport itself - costs has huge potential to be a global MRO hub. there’s no choice! The Government should take a holistic At present, Airlines operating in India get nearly 90% of view and should ensure that adequate space is mandatorily their MRO done abroad, mainly due to cost advantages resulting allocated at Indian airports for MRO. Else certain airport from the comparatively high tax burden, cumbersome operating operators may take a narrow view of the same and allocate procedures, and the inadequate MRO service facilities available precious airport land for other commercially attractive in India. activities. Globally, all major airports have dedicated MRO India’s current MRO market size is estimated to be around hubs that also lead to higher revenues for the airport by way USD 750 million. As per Boeing itself, the market is expected of higher aircraft movements and hangar rentals. to grow at 7% CAGR for the next 7 years to reach USD 1.2 • Provide SEZ status to MRO hubs: The government should billion by 2020. With the fleet size likely to double by 2020, the encourage Indian airport operators and Indian carriers to need for a strong domestic MRO industry is critical and not just partner with MRO providers and develop Aerospace Parks desirable.

17 November - 2014

Estd. 1916

expansion plans in the State. Aerospace players are looking to Karnataka to be an aerospace hub for manufacturing and for Karnataka MRO activities and are - • Entering into joint ventures with overseas players • Establishing captive R&D and manufacturing centers Aerospace Industry • Providing components, landing gear, IT design and outsourcing services, etc. to global aerospace majors Aerospace players are looking to • Establishing Special Economic Zones to harness the State’s Karnataka to be an aerospace hub for inherent advantages manufacturing and for MRO activities.

arnataka is becoming one of India’s most dynamic states! The State government is positioning Karnataka as an Aerospace Karnataka as a major investment destination for a K range of industries that include IT, auto, steel and Hub - Advantages aerospace. While Karnataka’s economy largely depends on agriculture The Government-funded Indian Space Research Organization with 71 percent of the population engaged in farming, the State is headquartered in Bangalore, and shares good synergies has become a key contributor to industrial growth given the presence of several industries, such as aerospace, manufacturing, with other firms operating in aviation and aerospace sector. electronics, software, biotechnology, small and medium scale industries, etc. To embark upon balanced regional development, ith the establishment of Hindustan Aeronautics the State government plans to utilize infrastructure initiatives to Limited (HAL) in Bangalore in 1940, Karnataka help further boost growth and employment. has come to be regarded as a pioneer in the Bangalore, referred to as India’s Silicon Valley, accounts W aerospace industry. The State is positioned as an for approximately 38 percent of India’s software exports. The aerospace destination due to the activities of numerous aerospace software industry is expected to generate USD 20 billion by companies and PSUs engaged in manufacturing, design and 2010. Karnataka earned USD 17 billion (INR 74,929 crore) development, and Maintenance, Repair and Overhaul (MRO). In from software exports last fiscal (2008-09) as against INR addition, several educational, scientific and technical educational 60,800 crore the previous year, registering a 23 percent growth institutions are fostering domain expertise in IT, engineering and in rupee terms and 21.5 percent in dollar terms. design skills that can be leveraged by aerospace majors. Another industry that the State Government is focusing on is the aerospace sector. This industry continues to draw large Presence of scientific and technical institutes investments in the aerospace sector as it prepares to meet The presence of scientific and academic institutions, such rising global demand. The sector will see robust growth due to as the Indian Institute of Science and Indian Institute of a combination of positive macroeconomic factors, the presence Management, enable the development of well qualified of aerospace skill and expertise, favourable Government policies, technical experts who can be absorbed into aerospace majors’ and domestic and global aerospace majors’ investment and operations. (Almost 1,500 acres are being provided to the

18 November - 2014

Estd. 1916 Indian Institute of Science to set up its second campus in the focused on component manufacturing, tooling and testing Chitradurga district.) The city also boasts of other prestigious equipment, and assembling. These companies meet the demand colleges and research institutions. of HAL, NAL and ISRO in addition to global aerospace firms.

Deep aerospace expertise Government support • The Karnataka UdyogMitra’s paper entitled Aerospace • The State Government is investor-friendly and has simplified Industry in Karnataka (March 2010) puts forth that most procedures and fast tracked approvals through Single of the development of India’s aerospace sector has been Window Mechanism. concentrated in Bangalore. The CII report entitled Vision • Companies can also receive assistance from Karnataka 2015: Karnataka—A Global Aerospace Hub supports this UdyogMitra. by saying that the establishment of HAL in Bangalore in • The Government is building airstrips and helipads in almost December 1940 by WalchandHirachand and the Maharaja all districts. of Mysore heralded the beginning of Karnataka’s aerospace • Karnataka is one of the most progressive states in terms of industry. Other important organisations include - the business environment for international investors. • Indian Institute of Science and Council for Scientific Industrial Research that offers opportunities in research and training for aeronautical graduates. • The Government-funded Indian Space Research Organization is headquartered in Bangalore, and shares This industry continues to good synergies with other firms operating in aviation and draw large investments in the aerospace sector. • The Aeronautical Society of India formed a platform where aerospace sector as it prepares engineers, industrialists and professionals could work together for the industry. to meet rising global demand. • Major aerospace organisations are located around The sector will see robust Bangalore, including HAL, National Aerospace Laboratories (NAL), QuEST Global, Taneja Aerospace and Aviation growth due to a combination of Ltd, Dynamatic Aerospace, Air Works India Engineering Pvt. Ltd., The Society of Indian Aerospace Industries and positive macroeconomic factors, Technologies, etc. An existing supply chain ecosystem has the presence of aerospace been developed by these organizations. • India’s flagship aircraft manufacturing and aviation research skill and expertise, favourable organizations are located in Karnataka, including: • Hindustan Aeronautics Limited (HAL) Government policies, and • National Aeronautical Laboratory (NAL) domestic and global aerospace • Aeronautical Development Agency (ADA) majors’ investment and IT expertise and skill sets Since independence in 1947, Bangalore has developed into expansion plans in the State. one of India’s major economic hubs and is today known as the Silicon Valley of India. Karnataka boasts the presence of major IT companies such as HCL, Infosys, Tata Consultancy Services, Wipro, QuEST, etc. Karnataka-based professionals Opportunity for related services have developed deep IT domain experience. Bangalore is the Bangalore operates one of India’s busiest airports as reported world’s fourth-largest technology cluster. in the CII report entitled Vision 2015—Karnataka: A Global Aerospace Hub. As such, there is tremendous potential for Manufacturing expertise activities in MRO and ground handling, and the manufacture Bangalore is a leader in heavy manufacturing due to the of ground support equipment. presence of PSUs, software companies, aerospace companies, telecommunications companies, machine tools manufacturers, Other advantages heavy equipment manufacturers, defence establishments, • Bangalore has a location advantage in terms of talent etc. Bangalore serves as headquarters to several public availability in IT, engineering and aerospace, proximity manufacturing heavy industries such as HAL, NAL, Bharat to industrial hubs like Pune, Hyderabad and Chennai, and Heavy Electricals Limited (BHEL), Bharat Electronics connectivity to road, rail and air. Limited, Bharat Earth Movers Limited (BEML) and Hindustan • Fairly peaceful multi-cultural State that embraces different Machine. cultures. • Favorable climate, congenial environment for private Proximity to vendor base investors, cosmopolitan lifestyle, excellent health care and There are approximately 2,000 small and medium enterprises education facilities.

19 November - 2014

Estd. 1916 Rubber growers in Karnataka Work on food park at seek hike in import duty Tumkur in Karnataka completed: Rinac

ubber growers in Karnataka have urged the Centre to increase the import duty on natural rubber to 75 per cent from the existing 20 per cent. R To discuss various issues related to rubber growers in Karnataka, a State-level conference of rubber growers will be held at Puttur in Dakshina Kannada district on September 5.

Price crash Addressing presspersons, Gopalakrishna Bhat, president of the organising committee of the conference, said the price of natural rubber has come down from Rs.220 a kg in August 2012 to Rs.128 a kg now. One of the reasons for the crash is the import ngineering solutions company Rinac India has duty on natural rubber. announced the completion of an Integrated Food He said the import duty on rubber is 20 per cent or Rs.30 a kg, Park at Tumkur in Karnataka. whichever is lower. Such a low entry barrier leads to the import E The food park was commissioned by the Future of poor quality rubber into the country, affecting the prospects Group at an overall cost of Rs.18.6 crore and the project was of domestic rubber growers. The government should increase the inaugurated by the Prime Minister Narendra Modi. import duty to 75 per cent, he said. “The Food Park is the first of its kind, and a state-of-the-art facility with farm to fork capability. The park offers facilities Rise in imports for dry and wet processing with collection centres and fruit & Giving details about the import of natural rubber into the vegetable processing centres under the same roof,” Rinac India country, Bhat said India imported 81,545 tonnes of natural said in a statement. rubber in 2008-09, which rose to 3.25 lakh tonnes in 2013-14. The park has been established in the 9,000 sq meters and The country imported 1.61 lakh tonnes in the first three comprises of pressurised fruit ripening chambers, packing, months of 2014-15. Around 42,500 tonnes of natural rubber was grading facilities, ready-to-eat processing facility, quick freezer, imported in August 2014 alone, Bhat said. chill and frozen Warehouse, pulp storage area and other facilities Going by the current trend, the country would import around also, the statement added. 4-6 lakh tonnes during 2014-15, he added. This facility is compliant with global industry certifications Stating that the annual demand for rubber is around 15 lakh such as US Food and Drug Administration (FDA) and Good tonnes in the country, Bhat said one-third of it is met by synthetic manufacturing practices (GMP). rubber and the remaining by natural rubber. “The Food Park has been set up as a public-private participation The country produces around 8.4 lakh tonnes of natural rubber venture by our Future Group and the Centre and the Karanataka against the demand of 10 lakh tonnes, he said. Government. The Food Park will act as the back-end kitchen and ‘Farm-to-Fork’ link for the Group’s food business,” Future Group Planters’ body Chairman Kishore Biyani said. N Sharath Bhandary, president of the Rubber Producers’ Rinac an integrated engineering solutions company deals in Association, Puttur, said rubber planters in Karnataka do not warehouses, rack assisted storage, mezzanine assisted storage have an organisation to take up their issues. and others. The conference of rubber growers in the State at Puttur is The company is currently in the process of executing another expected to form All-Karnataka Rubber Planters’ Association, two food parks and six integrated cold chain projects across the he added. country.

- Source - Business Line - Source - Business Line

20 November - 2014

Estd. 1916 Karnataka drafts policy on President FKCCI rural BPOs; Cabinet nod soon reviews new industrial policy The creation of quality infrastructure focusing on provision for comprehensive facilities and with a thrust on Human Resource and Skill Development.

he Govt of Karnataka is drafting a new Rural The New Industrial Policy BPO Policy in tandem with stakeholders such as industry body Nasscom and rural BPO majors such 2014-19 approved by the T as DesiCrew Solutions Pvt Ltd and RuralShores Business Services Pvt Ltd. Karnataka cabinet would “We will be presenting the Rural BPO Policy that we are help in the inclusive preparing with inputs from all stakeholders to the Cabinet for approval very soon. The policy will help to revive Rural BPOs” development and growth said Tanusree Deb Barma, Director, Directorate of IT&BT. She told reporters at an event to announce the decision to co host ITE. of Industries in the State biz with CeBit India. of Karnataka. She said, of the 36 Rural BPOs that were given incentives to start operations by the State, only five are functional today, because the rest were unable to sustain the cost of operations - S Sampathraman after the government incentives ran out.

Bangalore ITIR project ready for take off The Bangalore Information Technology Investment Region (ITIR), which has not taken off since it was announced a few Sampathraman, President, Federation of Karnataka years ago, is all set to take shape with the State Govt convening a Chambers of Commerce and Industry (FKCCI) has meeting to take the project forward. said that the New Industrial Policy 2014-19 approved “We convened an important meeting to discuss the ITIR S by the Karnataka cabinet would help in the inclusive project which is spread across 10,500 acres of land near the development and growth of Industries in the State of Karnataka. Kempegowda International Airport and have made up our mind In a statement to media in Bangalore, Sampathraman said to complete the ITIR project as per schedule. We have already the policy also encourages women entrepreneurs in exclusive given in-principle approval to 30 companies that have registered industrial areas. “The creation of quality infrastructure focusing for the ITIR and are processing hundreds of applications from on provision for comprehensive facilities and with a thrust on companies who want to register for the same. We are targeting to Human Resource and Skill Development and upgradation is a complete I Stage of ITIR by 2020 and II Stage by 2032. When positive step in growth verticals and expected to enhance the ready, the ITIR will generate 40 lakh jobs (direct and indirect), industrial growth and also in attracting fresh investments,” he today Karnataka’s IT industry already employs 40 lakh people” added. said S R Patil, Minister for IT, BT, S&T, Govt of Karnataka. Members of the FKCCI have said that the new policy highlights He said the State is targeting to produce $40 billion worth some areas wherein the PPP model for the establishment of of electronics locally, which constitutes 10 per cent of the $400 Industrial areas are given encouragement followed by ease on billion import bill on electronics that the country will incur from allotment of land for Industrial Development through KIADB. electronic imports by 2020. Government originally came out with a change in the policy of allotting land only on lease basis for 30 years period, said a - Source - Business Line member.

21 November - 2014 National Business News

Estd. 1916 The next round of economic reforms The recent flurry of policy decisions comes at a time when there were questions being raised whether Modi could actually convert his impressive rhetoric into action.

is possible only if the states partner with New Delhi. Many areas that need policy attention are constitutionally the responsibility of the states. A new report by Neelkanth Mishra of Credit Suisse points out an interesting fact: the election results from Maharashtra and Haryana mean that the Bharatiya Janata Party (BJP) now rules states that collectively account for nearly half of the total output of the Indian economy. The Congress controls states that account for barely a tenth of Indian gross domestic product. Modi has the political opportunity to push through reforms in at least the most important states in terms of economic dynamism if not political heft.

The first budget of the Modi ndia has a new political from easing hiring and firing. Yet, the government lacked policy direction. geography providing direction is clear. Much of the initial work done by the economic reformers a unique The recent flurry of policy decisions new government was administrative, I opportunity comes at a time when there were The Narendra Modi government questions being raised whether Modi with projects being rescued from the has taken many welcome steps in the could actually convert his impressive policy quagmire that the previous past few days. Diesel prices have been rhetoric into action. The splendid rally in regime left behind. freed. Gas prices have been increased equities that began after the first opinion to attract the private investment that is polls showed Modi in the lead had A look at the political map of India essential for India to reduce its energy begun to lose momentum. The research shows an interesting new geography: dependency. There have been small but reports published by various investment the old divide between the northern important steps towards labour market banks over the weekend suggest that the and southern states seems to have been reforms. The coal ordinance could financial markets have once again begun replaced by a new alignment of western be an initial move towards eventual talking about a reforms push. versus eastern states. The BJP is now denationalization. Direct cash transfers The first budget of the Modi the main political force along almost the to consumers of subsidized liquefied government lacked policy direction. entire western half of the country, which natural gas are back. There is some Much of the initial work done by the new also happens to be the more economically discussion on how to restructure the government was administrative, with dynamic part. Another way to look at rural jobs scheme. projects being rescued from the policy this new political geography: the BJP There is a pattern here. The Modi quagmire that the previous regime left now controls almost the entire belt along government seems to be using its political behind. The work done in the first few which then prestigious Delhi-Mumbai capital judiciously. The focus does not months should be seen as the first stage industrial corridor is being built. Of seem to be on the sort of dramatic of getting the Indian economy back on course, it has still to form a government reforms that many had expected after track. But that alone could never have in Maharashtra while Delhi, where the the national elections. The new gas price sufficed. The recent policy decisions BJP is the largest party, continues to be is clearly a compromise, and rightly so should then be seen as the next stage. The under president’s rule. since a doubling of gas prices would finance minister is out of hospital, a new The fact that the BJP is now the main have given a price shock to an economy team is in place in his ministry and two political force in the western half of the in which inflation has just begun to drift important state elections are over. The country—which is also more prosperous down. The changes in the labour laws months leading to the next budget should and urbanized—provides a unique will help loosen the grip that inspectors hopefully see more policy changes. opportunity for the Modi government to have on factories but they are still far Modi has often said that change step on the policy accelerator.

22 India to take Moscow route to channel oil payments to TehranNovember - 2014 Estd. 1916 ndia oil refiners’ payments to Iran, which continue to be stymied by sanctions on Tehran despite interim Indian oil refiners’ combined dues leniency shown by the US and five other world I powers to the Persian Gulf country, may finally get to Iran currently stand at close to $6 easier with Moscow agreeing to play intermediary. Russia, which recently signed an agreement with Iran for oil purchases from the billion. Frozen oil revenues from India West Asian country, would institute an oil swap mechanism with India that will mean that practically New Delhi will have to pay and elsewhere have been a problem Russia for Iranian oil with Moscow assuming the risk of routing for Iran for the last few years. the funds to Tehran. The new arrangement, sources said, may be part of a package deal encompassing defence and energy sectors that India and funds in rupees in an Indian bank, which is later utilised by Iran Russia are slated to negotiate in detail during President Vladimir to pay for its imports from India. Putin’s visit to India in December. India’s immediate payment to PSU refiner Mangalore Refinery and Petrochemical (MRPL) Iran of $900 million in two tranches beginning next week will be consumes most of the Iranian crude oil in India, followed by the made through the existing mechanism where Indian oil companies Ruias-promoted Essar Oil. The country’s biggest refiner Indian deposit funds in rupees in an Indian bank. Oil Corporation uses little volume of Iranian crude oil. Iran then appropriates the money based on a series of back- After the sanctions on the Islamic country by Western powers to-back transactions in different currencies that are initially for its alleged nuclear activities in 2012, India has reduced its channelled through the Reserve Bank of India (RBI). imports from Iran and started buying more from other suppliers Indian oil refiners’ combined dues to Iran currently stand at such as Colombia, Mexico and Venezuela. In FY14, India bought close to $6 billion. Frozen oil revenues from India and elsewhere 11 mt of crude oil from Iran and volumes are likely to remain the have been a problem for Iran for the last few years. same in the current financial year. The difficulty in making payments has also resulted in India In 2009-10, Crude oil imports from Iran were to the tune of cutting down its oil purchases from Iran drastically in recent 21-20 mt, which reduced to 18-50 mt in 2010-11; 18.11 mt in years: Of India’s total oil imports of 189 million tonnes (mt) last 2011-12; and 13.14 mt in 2012-13. year, just 11 mt or 5.8% came from Iran. India had imported India’s proposed payment of $900 million to Iran will be on top over 21 mt of crude from Iran in 2009-10. of $1.65 billion it had paid in June-July this year. Iran and the According to sources privy to the discussions between India US, China, France, Germany, Britain and Russia agreed in July and Russia, the idea is to streamline payments for oil shipments to extend a six month interim accord until November 24 as they from Iran. They added that energy security, besides defence trade, could not meet a July 20 deadline for concluding a long term deal will be topping the agenda of Putin’s visit to India. “Both sides to end their nuclear dispute. are working on a ‘vision document’ that will be released during the summit where energy security will be a highlight. It will be dealing with three major areas: gas pipeline; oil pipeline and most importantly getting the Iranian crude oil to India through Russia,” said an official. As per the current mechanism for payment that has seen many alterations due to the sensitivity of the matter, India deposits the

23 November - 2014

Estd. 1916 A clean-up for Make in India A web of policies, laws, rules, regulations and variable practices, have earned India a poor ranking of 134 out of 189 countries in the World Bank’s Ease of Doing Business in India index. This report highlights the fact that regulatory hurdles, red tape and corruption provide little incentive to the private sector to invest in innovation.

t’s time to sweep away the pervasive red tape that Bank-Economist Intelligence Unit’s Creative Productivity Index, makes India one of the most difficult places in which we are 14th in a list of 24 economies. This report highlights the to do business. fact that regulatory hurdles, red tape and corruption provide little I The Clean India campaign can serve as an incentive to the private sector to invest in innovation. Without inspiration and a metaphor. After all, we also need to clean up innovation, there cannot be manufacturing growth. the maze of regulations to enable a success of the Make in India Other than the regulatory burden there are issues, such as campaign. Both need a blitzkrieg approach. infrastructure, fiscal matters, education, health, civil service A web of policies, laws, rules, regulations and variable practices, reforms, labour, and land and economic regulation which need have earned India a poor ranking of 134 out of 189 countries in the to be addressed. But World Bank’s Ease of Doing Business in India index. A mammoth one major issue task such as building millions of toilets can be achieved if there is to enable is a regulatory clean-up across all levels of government — Central, State and local.

As with the Clean India project, the Make in India project entrepreneurs to start new factories and run them without the requires will, a national campaign and a huge change in mindset. hurdles they face on a daily basis. For SMEs it is a huge task; big This includes getting rid of fears surrounding the endeavour to investors are able to overcome hurdles more easily, given their industrialise, create jobs and entrepreneurs, and ameliorate deep pockets. poverty. We need big investment which creates opportunities for SMEs upstream and downstream. FDI policies are being liberalised, Pervasive red tape yet there are many hurdles. We also need to ensure that Indian The strong will demonstrated by Prime Minister Narendra investment is domesticated, rather than flee abroad. After the Modi and supported by his ministers, needs to percolate to the recent Supreme Court order cancelling all captive coal mining grassroots. This energy is percolating to our States and local licences, one CEO remarked: “It is not the time to Make in bodies, but in driblets. The challenge for the Central Government India…It’s time to run from India.” is to orchestrate a sustained national campaign, handholding the States in this endeavour. This would, in turn, involve getting the ‘Three brooms’ needed States to handhold the local bodies. Ease of doing business will not improve automatically. It needs We have set a target to increase the share of manufacturing a structural revolution, and what better way than to create a from 15 per cent to 25 per cent by 2025, but there is little clutch of brooms to improve the macros and clean up the red progress as of now. On the other hand, our competitiveness has tape as well. tumbled to 71 in 2014 from 60 among 144 countries, according The first broom is to clear reservations about trade and to a World Economic Forum report. On the Asian Development investment liberalisation. We need to get into global value chains,

24 November - 2014

Estd. 1916

We have set a target to increase Smart cities have to be the share of manufacturing from inclusive and equitable 15 per cent to 25 per cent by places to live in

2025, but there is little progress io de Janeiro has invested about U.S.$14 million to monitor the city in real time. Data from 30 as of now. On the other hand, our agencies stream into an operation centre from where R responses to emergencies and accidents are efficiently competitiveness has tumbled to coordinated Madrid plans to invest about U.S. $20 million in a technology platform to manage a range of public services such 71 in 2014 from 60 among 144 as street maintenance, lighting and waste management. Using a sophisticated supplier management model, it pays each service countries, according to a World provider according to the level of services provided. Many cities have focused on reducing energy consumption and offering Economic Forum report. convenient transport service. Some like Tokyo are experimenting with technology to help the visually challenged to move safety. Special white canes to move safely. Special white canes with as over 60 per cent of international trade takes place through embedded sensors, which pick up signals from electronic tags and this route. Our international trade is not really enmeshed into markers placed at strategic places in the city, help the disabled value chains. That can happen only if we open our borders to navigate. foreign trade and investment, and not just for our consumption. Simultaneously, we need to strengthen our regulatory regimes Large investments through an optimal approach rather than a heavy-handed Such smart city programmes require large investments and a approach, to ensure that gains are not cornered by a few. thorough integration of various systems. Industry and cities have The second broom, or a set of them, would have to clean up red to come together and introduce innovative products. Against tape. This requires a multi-pronged and multi-level approach. The these complex demands, how will the proposal to set up smart first step is to invite businesses and other stakeholders to share cities fare? their views on the hurdles faced by them on a website created at First, the sum allocated in the budget for the programme about the Centre and in each State and offer incentives for them to do it. Rs.70 crore a city is grossly inadequate. Unless the amount The second is to collate the same, prepare a map and publicise the provided is only seed money to kick-start the programme, and effort. The awareness generated will lead to a mindset change. The more funds are to be sanctioned later, the smart city project third step is to carry out regulatory impact assessments (RIAs) would be non-starter. Second, without the promise of good central with cost benefit analysis of the changes proposed. Of course, one funds, the State governments, too, may not take this initiative will have to deal with vested interests in the process. seriously. Since land development is a State subject, enthusiastic participation of the State is crucial. If the plan is to enable the Thinking out of the box private sector to participate in a big way, then the State has to put A business development and reforms commission at the Centre in place a detailed framework to guide investment and demarcate and in the States headed by cabinet ministers and armed with responsibilities. Funds are only one part of the problem. The RIA instruments can push out-of-the-box thinking and action. key challenge would be to overhaul urban governance and The third set of brooms will be needed to clean up the mess in our infrastructure, both physical and digital. local government. For example, India ranks very low in the area of construction permits. Clearing this jungle will lead to better Expensive real estate? governance. For the low ranking on contract enforcement, the There is also a potential danger in the Indian approach to smart judiciary needs to be incentivised to cut the delays in settlement cities. The government views them as small Greenfield enclaves of disputes. on the outskirts. This has probably been done for convenience, Like drivers being the major cause of road accidents, lawyers but they have the danger of turning into expensive and exclusive are mainly responsible for judicial delays. The Chief Justice gated communities. should look into the matter. If the state overlooks the existing city and privileges new Finally, changing mindsets will need a campaign from the enclaves, the cities will be split into two unequal halves, and the top leadership at all levels. Indian bureaucracy lacks a sense smart city project would turn out to be an expensive real estate of proportion. For instance, allowing a used after-shave bottle meant to serve a few. Smart cities cannot only be about displaying of 103ml in the hand baggage when checking in for a flight as technology and delivering services; fundamentally, they have to be against the rule of 100ml will not cause a catastrophe. inclusive and equitable places to live in. But to get ahead in these areas, we need radical and structural The urban future depends on making cities intelligent, and that reforms in our civil service and systems. applies equally to both new and old parts of the city.

25 November - 2014

Estd. 1916 Finance Ministry, RBI to Economic growth is unveil new monetary picking up, says Rajan policy framework by Feb 1 8-member panel has been finalized by the Finance Ministry to complete the formalities for implementation of the new Monetary Policy Framework Agreement by February 1. However, it will be left to the Reserve Bank of India to decide on the date of implementation. The proposed framework aims to change the monetary policy formulation and will also focus on inflation targeting. Traditionally, the monetary policy formulation is a closed-door affair in the RBI. But, with the new system, an eight-member Monetary Policy Committee will now he economic growth is picking up and fundamentals take a call on the policy, and the central bank will then implement of economy are good, according to Reserve Bank of it. India (RBI) Governor, Raghuram G Rajan. “The Finance Ministry is writing to the RBI seeking its T “We are expecting 5.5 pc growth this year which comments on the proposed policy. The proposal will then be go up little more to 6 pc next year to touch 7 per cent later,’’ the placed in the public domain before finalising the agreement,” RBI Governor said while interacting with the students at Indian according to a senior Finance Ministry official. The RBI is likely School of Business (ISB). to be asked to respond by October 31. The endeavour is to sign The Current Account Deficit had come down and some pick up the agreement by February 1, 2015, to show that one of the key was seen in the industrial growth though the shutdown of Nokia Budget announcements has been implemented, the official added. manufacturing unit in Chennai had adversely impact the Index of Finance Minister Arun Jaitey, in his Budget speech on July 10, Industrial Production (IIP) to some extent. had said, “It is also essential to have a modern monetary policy “Though the gold had gone up a little last month, it was mainly framework to meet the challenge of an increasingly complex due to the festival season and the non-oil and non-gold exporters economy. Government will, in close consultation with the RBI, were still doing well. The RBI and Govt were successful in put in place such a framework.” controlling inflation as indicated by bonds,’’ Rajan said. The proposed framework is based on a combination of “When asked on sustainability of growth rate and the likelihood recommendations by FSLRC (Financial Sector Legislative of reaching the growth targeted by Prime Minister Modi, he said: Reforms Commission) and the Urjit Patel Committee, along with The Prime Minister has an ambitious agenda for India. In the US, inputs from the Rajan Panel on Financial Sector Reforms. I was told by the investors about the buzz he created. The level of “It is one of the biggest non-legislative actions on the expectations is high. But to sustain growth we need to think how suggestions given by FSLRC,” the official added. to reform the system.’’ As recommended by the FSLRC, the committee would comprise On the implementations of the recommendations of the the Governor and a Deputy Governor (in-charge of monetary Financial Sector Legislative Reforms Committee (FSLRC) report policy), besides five members from outside and a Government and perceived threat to the autonomy of RBI he said the apex nominee. The decision will be based on the majority view to be bank had cardial and friendly relationship with the Government. established through voting. However, the Government nominee The RBI was presently discussing a host of issues with the will not have voting right and will simply provide inputs from the Government including the monetary policy framework, the ways to Government. make the objectives of the central bank more effective in inflation The official said once the draft framework is finalised, an control and the modalities of determining various processes. agreement will be signed between RBI and the Finance Ministry. This will be the second agreement for a big shift after both sides Interest Rates signed an agreement for ways & means in 1997. Responding to a question on whether the tweaking of interest The proposed policy framework has also drawn inspirations rates to tame inflation was a blunt policy tool, the Governor from the UK. It also prescribes the proceedings of Monetary responded by agreeing that it was blunt tool but indicated that Policy Committee to be made public with a time lag and proper there was no better option available. Both monetary policy and attribution. fiscal policy were important to control inflation.

26 Taxation and corporate November - 2014

Estd. 1916 Financial inclusion is an evolution The new NDA government wants to distribute banking facilities to vulnerable sections of people. Under the Pradhan Mantri Jan Dhan Yojana, each customer will get a RuPay debit card, with an in-built accident insurance cover of Rs.1 lakh and an overdraft facility of Rs.5,000.

bank accounts have been active in the last quarter. The financial inclusion programme may add a few million more inoperative accounts which may invite frauds. Instead of incentivising people, the banks should access the potential of different sectors and devise effective products to activate credit cycle. The real financial inclusion will happen if people have the pleasure of earning surplus income from their hard work. For that, the government has to control inflation as high inflation in food items erodes people’s surplus. There is an urgent need to look at India’s 47.4 lakh artisans who still have the potential to earn foreign currency.

Financial inclusion is more an evolution than a targeted he banks should access witnessed a huge entrepreneurship the potential of different loss across the country due to political mission. It happens when sectors and devise effective interference in the day today economic, the common man is able T products to activate credit cultural and social life of the villagers. to generate surplus from cycle. Loan mela, loan waivers and freebies Financial inclusion is more an distribution has already created an entrepreneurship. Financial evolution than a targeted mission. It iceberg of idle energy which cannot inclusion takes root when happens when the common man is able to be dismantled easily. Besides, the generate surplus from entrepreneurship. repayment ethics among people has honest extension service Financial inclusion takes root when deteriorated due to populism. officials provide quality honest extension service officials provide The new NDA government wants services to people. quality services to people. This evolution to distribute banking facilities to takes shape when the policeman allows vulnerable sections of people. Under an illiterate villager to lodge an FIR the Pradhan Mantri Jan Dhan Yojana, What they need today is the basic against the village bully and when the each customer will get a RuPay debit training how to market their product judges deliver justice to make innocent card, with an in-built accident insurance directly in global craft bazaars. India’s people feel there is no jungle raj. cover of Rs.1 lakh and an overdraft export of handicraft and luxury items The evolution happens when the basic facility of Rs.5,000. Giving Rs.5000 OD grows at around 16 per cent per annum. amenities like health centre, schools, facility each to 75 million people may Here, the young generation does not roads, market and transportation etc create a wilful default size of Rs.37,500 want to pursue their family profession contribute to extend the productivity crore. The cost of maintenance of each due to low return and lack of social hours of people. In fact, financial savings bank account including issue recognition. If an artisan can work hard inclusion coheres around people’s of ATM cards and pass books will be for five years to learn bidri or silver productivity. Providing banking products around Rs.350 per year which will cost filigree craft he can quote any price for and services without creating a climate banks Rs.2625 crore per annum. As per his product. If 121 crore Indians make a for entrepreneurship is like putting the RBI, there are already more than 10 habit of using a few handicraft products, cart before the horse. million inoperative accounts. The recent it would generate employment to the Post-independence, India has inter-media survey found only half the tune of lakhs and good foreign currency.

27 Make in India has caught November - 2014 the imagination of India and Estd. 1916 foreign investors

Faith in delivery of India’s biggest industrialists. There is also the belief that this So what do we want? Growth or administration will deliver on its promise jobs? Manufacturing or agriculture or to cut red tape, somehow rein in an services? Of course, one could argue activist judiciary, control its taxmen and that we want all of them. We want more overall, reduce the intrusive presence high-paid manufacturing jobs. We want of government in business. Never mind to make more of the stuff that we pay to that there has so far been little concrete import now here. We want agriculture to The ‘Make in India’ idea action on any of these fronts. grow and we want services to grow. is fine and it has got off This is actually a good thing. And one could also argue, with some Expectations always drive outcomes. justification, that these wants are to a dream start. But now, Set expectations to positive and you achievable. After all, over the past two the Government needs to are going to get positive outcomes. So decades in particular, our services sector prioritize and set the right I don’t really have any problems with has exploded, out manufacturing sector goals. Growth or jobs? We the idea of ‘Make in India’ or the sales has grown, and so has agriculture. If it need to pick. job that has been done with it. By all isn’t broke, why fix it? means, let us roll out the red carpet for is grand vision of turning investors, give them the incentives and Time to fix it India into a global the infrastructure needed to make their Because it is breaking down. Before manufacturing hub, along investments succeed and grow. it came into power, the BJP successfully H with the promise to ease red But what are we, as a country, getting made a meal out of the UPA’s two-tenure tape, develop key infrastructure and ease out of this? What are the desired tract record of ‘jobless growth’. The clearances and other factors which have outcomes of this campaign? This is spectacular surge in growth seen during kept India at the bottom end of the global where greater clarity is required from the the golden period of post-reform India ‘ease of doing business’ rankings, have Government. What is needed is a clearer saw near double digit growth without a served to rekindle hope that the promise prioritization of goals. Are we looking for corresponding upsurge in jobs millions that India showed in the early years of more foreign investment, which will help of jobs were lost, in sectors as diverse the millennium will still be fulfilled. cut our current account deficit? Are we as plantation to textiles, as the economy The ‘Make in india’ campaign is in aiming to ratcher up our GDP growth a shifted its demand supply topography. fact, outstanding marketing. Look at the few notches? Or are we looking for more India’s wide, horizontal base of small achievements; there is already near-total jobs for the millions who are joining the and medium scale enterprises, which is national consensus that manufacturing workforce every year? the actual backbone of industrialization growth is the way to go for a better in India, has been decimated by reforms. future. Those muttering about climate Confusing signals Unable to compete with cheap imports, change and environmental impact are This is where the signals get more unable to attract the capital to invest already dubbed negativist cassandras. confusing. Speaking to the diasporain to enable it to compete, and unable to There is also consensus that for Madison Square Garden, Modi appeared attract the talent to scale up its quality this growth to happen, there has to be to indicate that growth is primary and innovation. What is quality and substantial investment infrastructure. objective. If you want human resources innovation. What is their place in ‘Make The whole tortured hand-wringing over and low cost production”, come to India. in India’? ‘inclusive’ growth, and social sector The objective reproduce the China story The ‘Make in India’, website offers spending witnessed during the latter in India. Make India a manufacturing an attractive buffet of investment part of the UPA regime has already been hub, and transform the face of the opportunities. From automobiles to forgotten. country from a predominantly rural one biotechnology to renewable energy So much so, economics are already to a predominantly urban one, with a to yoga and wellness, it showcases pleading with the Modi administration 100 new ‘smart cities’. The idea to push investment opportunities and highlights to not water down the National Rural the share of manufacturing in India’s the growth prospects in these sectors. Employment Generation Scheme - national output from the current 15 per Most of them have the potential for arguably the most successful of the cent to around 25 per cent. attracting large investment in high- various wealth transfer schemes any Back home, at the investors’ meet in technology areas. But how many of these government has attempted over the years, Indore, the message was different, India sectors will result in the kind of scaling once which has played a significant part needs to create jobs, he stressed. In fact, he up of jobs that Modi hopes for, and in the secular growth in rural incomes said, creating job opportunities for youth indeed, the country needs? witnessed over the past decade and one is the ‘biggest goal; of the Government. The ‘Make in India’ idea is fine and of the real drivers of the India growth We have to create maximum jobs. This it has got off to a dream start. But now, story. It’s back to (though not overtly is a nation of the youth. The agriculture the Government needs to prioritize and articulated) Reaganomics will take care industry and service sectors have to get set the right goals. Growth or jobs? We of28 the rest. equal importance. Which included some need to pick. November - 2014

Estd. 1916 Centre may treat medium, small business FKCCI says Government units as different verticals falls short of reforms The Government may do away with a single definition of MSMEs and is considering defining these units on the basis of different for coal sector verticals, a long-standing demand by a section of the industry. A welcome move is that it will assist private players o enable medium, small and micro enterprises to bring in new technology and modernize coal mines (MSMEs) to grow, there is a need to look at different verticals,” said MSME Secretary which will go a long way in reducing coal shortage. “T Madhav Lal, addressing the two-day CII Global SME Business Summit. The summit, attended by 400 delegates, including 13 foreign ones, also saw the release of a report on an ‘Action Agenda’ for MSME growth by the Confederation of Indian Industry (CII). Lal, however, said a decision on revising the definition would only be taken after consulting all stakeholders, including State Governments, industry associations and experts.

Changes in the Act He said changing the definition would require a change in the MSME Act 2006, adding that despite ‘definitional issues’, the sector has shown impressive growth through the years, contributing about seven per cent to the country’s GDP. At present, all MSMEs in the manufacturing sector are defined by a single definition - investment in plant and machinery of up to Rs.25 lakh as micro, up to Rs.5 crore as small and up to Rs.10 crore as medium enterprises. For the services sector, the limit is Rs.10 lakh, Rs.2 crore and Rs.5 crore, respectively. Once the definition is revised, the capital investment limit, turnover and employee number etc, may be higher for units engaged in, say, auto ancillaries, aerospace, defence sectors among others, than those making garments, furniture etc. r S Sampathraman President FKCCI said that the On the Rs.10,000-crore venture capital fund (VCF), announced Cabinet clearance to e-auction of coal blocks to in the Budget, the MSME Secretary said it will basically flow end users is a step in the right direction. This is from the shortfall with banks in priority sector lending. M particularly so because end users in the first round Talks are on with the Finance Ministry and SIDBI and the of e auctions will be power, steel and cement units. It is gratifying fund’s contours will be ready in a month, he added. that government has left an enabling provision in the ordinance by Earlier, in his keynote address to the delegates, RC Bhargava, which it can decide on additional commercial use at a later date. Chairman, Maruti Suzuki India, said it was only because of Unfortunately the government has fallen short of its big bang SMEs that the car-maker existed today. “When we started, not a reforms for coal sector by not touching issues of coal linkages single component was made here. Now, 75 per cent of our inputs and pooling of fuel prices and just restricting to e-auction of coal are brought to our vendors.” blocks. There is also no preferential treatment to existing owners who are set to lose their blocks. Boosting growth A welcome move is that it will assist private players to bring Bhargava urged the Government not to club all MSMEs under in new technology and modernize coal mines which will go a long a single definition if it is looking at boosting manufacturing way in reducing coal shortage. A decision on linkages for power growth in line with the Prime Minister’s call for ‘Make in India’. plants where no letter of assurance has been signed and linkages “Business cannot be improved through subsidies. The level are not in place is a big lacuna. of competitiveness has to be raised,” he said, adding that there was need to segregate industries that will contribute to modern manufacturing.

29 November - 2014 International Business News

Estd. 1916 The lack of progress is indicative of different world visions of the two countries. The US wants to maintain its dominance in world Embrace China, economy while India wants greater share of the pie in conformity with her growing prowess. Basic question is of distribution of global income between the developing and developed countries. not USA Presently, about 25 per cent people living in the developed countries get 75 per cent of the global income while 75 per cent people living in the developing countries—including China and India—get about 25 per cent of the global income. Reduction of incomes of The advent of colonialism led to reduction of China’s share to two per cent and India’s share to one per cent at the time of our the developed countries is independence. We have been able to make only small progress in last 60 years of “win-win” cooperation with the developed necessary to increase our share countries. India’s share of the global income has seen a paltry increase from one to two percent. Reason for this slow progress is and this will only be possible if that we have been trying to increase our share without seeking a reduction in their share. China and India join hands At this pace of win-win approach, it will take many thousand years for us to get our legitimate share of 75 per cent of the world income. Reduction of incomes of the developed countries is necessary for us to increase our share and this will only be rime Minister Narendra Modi has been trying to bring possible if China and India join hands. foreign investment from NRIs and multinational America has advanced technologies while China has cheap corporations—from the United States in particular. labour and large savings. We can access advanced technologies P But the bonhomie is superficial. The standoff on by befriending America. On the other hand, we can gain through major contentious issues continues. The US has not relented on manipulation of the world markets by befriending China. We have the increase in fees for H1B visas. A permanent solution to the to assess whether advanced technologies will be more beneficial food subsidies being given by the developing countries has not for us or manipulation of the world markets. been found. America’s technological supremacy is eroding. That country has not been able to make any major commercially viable invention after the internet. Moreover, America has transferred most of the advanced technologies to India and China through FDI. We have been able to generate desi version of certain technologies that were denied to us by America.

India’s advantages The supercomputer and cryogenic engines for our space missions are case in point. Research work too is being increasingly transferred to India to avail of the low wage rates of the scientists here. Future technological inventions are more likely to take place in India. India will have some access to these even if the patents are held by foreign companies. Surely, America still has control of some advanced technologies like the patriot missiles and stealth aircrafts but these are few and getting fewer. Correspondingly the benefit to be derived by us from friendship with America will become progressively less. Benefits from friendship with China are of an altogether different nature. China and India have the winning combination of advanced technologies and cheap labour. American companies This has held up progress in the WTO. There is no softening of are unable to compete with us. America’s exports are declining. stand by US companies on making investments in Indian nuclear The US government is running massive budget deficits. America power sector. Obama has not agreed to pressurise Pakistan to has had to borrow huge amounts of money from us to keep its refrain from abetting cross-border terrorism. Neither has he economy afloat. China has a comfortable foreign exchange given a concrete assurance of supporting India’s case for a reserve of US Treasury Bonds. Our holdings of these bonds is also permanent seat on the UN Security Council. Modi has not only substantial though about one-fifth of China’s. China and India failed in securing anything concrete or substantial from President can sell their holding in the open markets. That will lead to a Barack Obama, nor has he been able to soften him up on the crash of the US dollar. continuing standoffs. Perhaps the US is riled by Modi’s decision It will not do to run after the PIOs. These gentlemen have to buy increased quantities of oil from Iran. abandoned their motherland and are reaping benefits from the

30 November - 2014

Estd. 1916 The Network revolution! Internet of Things (IoT)

mart economy is now becoming a reality!! We can track office appointments on our smart kitchen glass table, our smart sensors on vehicles S provide navigation and also help us with safety solutions and infotainment, smart devices have revolutionized health care and made it more affordable. The world economy is operating at real time information and is changing the IT landscape and thereby business. While data intelligence is one of the key drivers, security of data is the key focus of worldwide businesses across sectors. Among the many supply chain models that are experimented, Internet of Things (IoT) model is the most closest to reality. Though IoT started with the factory automation, it has evolved into a smart technology solution to reduce human error, save time, improve efficiency, conserve resources and optimize the performance of a physical system. The many sectors that find use with the IoT technologies are the logistics and supply chain, healthcare, manufacturing, crime investigation, traffic monitoring, etc. Smart cities and communities with an improved daily life index (DLI) is one of the products of IoT technology. London has embraced smart technology to lessen carbon-dioxide emissions in residential and commercial buildings. Spain uses soil-humidity sensors to allocate and manage water storage levels. This helps in detecting as well as new revenue-creating products and services. when the land requires irrigation for sustainable water use. Korea India, the 3rd largest Asian economy is on a smart city spree uses smart solution to detect and prevent crime in the continent. as well !! The Government has recently announced developing In a recent report, the McKinsey Global Institute considers the 100 smart cities with increased connectivity, lifestyle and ease Internet of Things to be one of the most disruptive technology of doing business opportunities across the country. About 7 mid- trends of the next decade, with sweeping implications for sized well connected urban spaces including Tumkur are identified businesses and policymakers. The report estimates the potential in Karnataka for the smart city project. economic impact of the Internet of Things to be US$2.7 to $6.2 trillion per year by 2025 through improved operational efficiencies - To be continued anti-India policies implemented by the US. The PIOs gain when the US increases H1B visa fees. They will face less competition GUIDING from newer immigrants from India. The PIOs will get more jobs in the US farm sector if India dismantles her food subsidies. PIOs will get more jobs in the US nuclear power companies if India dilutes her Nuclear Liability Act. ENTERPRISES Win-win cooperation is not possible with the US. Instead of looking west, we must look east and seek cooperation of China TO A BETTER WAY FORWARD on following issues. One, we must make a common strategy for using our holdings of US. Treasury Bonds and making America to bow to our demands. Two, we must make cartels for the export of natural resources like ores, timber, potash, etc. Three, we must make a call for removing the patents regime from the WTO. Lastly we could ask for free movement of natural persons. Resources of the world belong to all the people of the world. Every human being should have the right to enter any other Estd. 1916 country. National governments may require the immigrants to follow the culture and spirit of their country but they should not FEDERATION OF KARNATAKA CHAMBERS have the right to bar their entry. These agreements will lead to the establishment of a just world order and also provide huge OF COMMERCE & INDUSTRY benefits to India.

31 November - 2014 Health

Estd. 1916

Home Remedies for Allergies

Common allergy symptoms include sneezing, runny or stuffy nose, itchy irritated eyes, or fever, which can last several days. Most remedies, prescription and homemade, will reduce symptoms without curing the allergy.

ith the arrival of spring, allergies increase • Keep plenty of fish in your diet, enjoy at least three times dramatically. The best known, and most a week, opting at least once for oily fish like salmon and widespread, allergy is to pollen, often called sardines that provide anti-inflammatory omega-3 fatty W seasonal allergy. We can fight them naturally, acids. and cope with most symptoms. Sometimes it’s necessary to • Enjoy onions, leeks, and garlic to enhance breathing. consult your doctor, who may refer you to an allergist for In some cases, allergies cause nasal congestion, eating a complete examination to determine the degree and causes these foods helps fight that. of allergies. You may respond well to medications if needed. Common allergy symptoms include sneezing, runny or stuffy Tips to try to relieve allergy symptoms: nose, itchy irritated eyes, or fever, which can last several days. 1) Breathing steam using herbs like chamomile, lemon Most remedies, prescription and homemade, will reduce balm, or eucalyptus help open breathing pathways. symptoms without curing the allergy. 2) Eat chili peppers, capsaicin is in garlic and hot peppers, One guideline for reducing allergies is to avoid weakness it stimulates nasal secretion which helps get rid of the in the immune system. It can help to strengthen the body’s stuff clogging your nose. defenses to better respond to the attacks. 3) Avoid being outdoors for extended periods of time • Eat at least the recommended amount of vitamin C during seasonal changes, especially on windy days and according to the FDA, it’s found in fruits and vegetables in the morning. including kale, oranges, grapefruits, strawberries, 4) If you’re allergic to mold keep your home clean and dry, pineapple, lemons, berries, and tangerines. It’s better fix water leaks when they happen, and regularly clean to eat the whole fruit rather than synthetic capsules of refrigerator gaskets, which can accumulate fungi. vitamin C whenever possible. 5) Skin allergies can be caused by make-up, soaps, and • Enjoy probiotics like kefir and yogurt. We have over detergent. 400 bacterial species in our bodies, most in our large Drink plenty of water, dehydration causes fluid retention intestine, many of which play an important role in which increases mucus. preventing a wide range of disease. Probiotics are live microorganisms in food that have a beneficial effect on To relieve and reduce swelling aloe vera works wonders, health. Kefir is made from fermented milk, bacteria, and and is healthy, fresh, natural, and affordable. yeasts that help reduce allergic symptoms and strengthen the immune system. These are what is commonly known Courtesy as good bacteria. PositiveMed-Team

32 Achiever November - 2014

Estd. 1916 Achiever acclaimed - Success Stories to Inspire I thought of starting something in software services. I settled on building a platform for businesses to display their products via dedicated Web pages. I named the venture, IndiaMart InterMesh. The idea was to help the small and medium enterprises in the country market their products and services.

he idea was to help T-shirts highlighting our brand. the small and medium We offered businesses free listings enterprises in the on our platform. Once their T country market their company profile was on the Web, products and services, says Dinesh it would start generating business Agarwal-CMD of Indiamart. queries from potential customers I come from a family of from across the globe. We would businessmen, but I had no plans of monitor the response and our sales becoming one. So, after acquiring our business started growing, we a B.Tech degree in computer had to deal with several issues and science from the Harcourt Butler the most irksome among these was Technological Institute, Kanpur, I looking for bigger office space. This took up a job as systems analyst at is the reason that between 1996 HCL Technologies. and 1999, we changed four offices. For five years, I worked with Besides, for every employee who other firms in India and then was hired, we had to invest nearly moved to the US, where I worked Rs.50,000 since it involved the for three years with CDOT. I was purchase of a new computer and drawing a good salary and leading relevant accessories, which proved a very comfortable life, but I rather expensive. Though most of could not picture myself doing the queries related to our clients’ the same job all my life. I felt like businesses would come to us via starting my own venture. As all my emails, very few clients. So we had relatives and friends were based in to save the query, take a printout India, I decided to return in 1996. and fax it to the respective client. Since I was a computer analyst It was quite cumbersome, but we and among the early Internet managed. users, I thought of starting In 1998, we opened our second something in software services. I office in Mumbai. By 1999, we settled on building a platform for had added around 1,000 clients businesses to display their products to our list. The firm had a staff of via dedicated Web pages. I named nearly 100. One of the things that the venture, IndiaMart InterMesh. has helped our business grow is The idea was to help the small and Mr. Dinesh Agarwal, CMD, Indiamart the dedication of our employees. medium enterprises in the country Several of the staffers who had market their products and services. I had purchased a flat in joined us at the launch of the company are still with us. After the Delhi while I was working and set up my office in the flat in 1996. US terror attack on 11 September 2001, our business revenue I had a saving of Rs.40,000 and it was invested in the business. fell by nearly 40 per cent. It was tough to pay salaries. I faced several challenges. The computers were costly and few In 2007, we invested Rs.7 crore to purchase a two acre plot in businesses used them. So, convincing customers to first buy Noida and build a new office. We have around 1 crore products computers, which, in turn, would help in the promotion of their and almost 15 lakh suppliers. As many as 1 crore buyers visit the business was quite a task. Besides, the Internet speed was very company’s platform every month. Building on the platform for slow in those days. Uploading and downloading small files would suppliers, we also created a buyer-dedicated forum in 2011. A take several hours. Still, we managed to get fast-food chain, buyer can post his requirement on the platform and our search Nirulas, as our first client. The deal was to develop and manage technology can help him find the right supplier. We see a huge their website for an annual fee of Rs.32,000. potential in this venture. I employed a few marketing and sales personnel to help In 2013-14, the company generated a turnover of around generate business. We came up with an innovative way of Rs.200 crore. marketing. We began holding exhibitions at Pragati Maidan, in We are growing at an year-on-year average of 30 per cent and New Delhi, to showcase our services, with the staffers wearing are hopeful of maintaining this growth momentum.

33 November - 2014 Road Map

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AiÀÄĪÀPÀ AiÀÄĪÀwAiÀÄgÀÄ «zÉñÀzÀ°è PÉ®¸À ªÀiÁqÀÄwÛzÁÝgÉ. PÁgÀt ºÀtUÀ½PÉ, «zÀÄåvï, ¸ÁjUÉ, ©vÀÛ£É ©Ãd, gÀ¸ÀUÉƧâgÀ, EvÁå¢ ¸Ë®¨sÀåªÀ£ÀÄß MzÀV¹PÉÆqÀĪÀÅzÀÄ, £ÀªÀÄä zÉñÀzÀ°èAiÀÄÆ ¸ÀºÀ GvÀÛªÀÄ ªÀÄ»¼ÉAiÀÄgÀÄ, ªÀÄPÀ̼ÀÄ, ªÀÈzÀÞgÀÄ ªÀÄvÀÄÛ ºÀjd£À-Vjd£ÀgÀ PÀ¯Áåt, C®à¸ÀASÁåvÀgÀ DyðPÀ £ÉgÀªÀ£ÀÄß ¤ÃqÀĪÀ GzÉÆåÃUÀ C©üªÀÈ¢ÞUÉ PÁAiÀÄðPÀæªÀÄUÀ¼ÀÄ, ¥ÀæªÀÄÄRªÁV ¹ÛçÃAiÀÄgÀ ªÉÄÃ¯É £ÀqÉAiÀÄÄwÛgÀĪÀ CvÁåZÁgÀ, ¸Àȶ×AiÀiÁUÀĪÀAvÉ ¤UÁªÀ»¸À¨ÉÃPÀÄ PËlÄA©PÀ ±ÉÆõÀuÉAiÀÄ£ÀÄß ¸ÀA¥ÀÇt𠤪ÀÄÆð®£É ªÀiÁqÀĪÀ°è ¢lÖ ºÉeÉÓAiÀÄ£ÀÄß ªÀÄvÀÄÛ CAvÀºÀ G¢ÝªÉÄUÀ½UÉ ºÉaÑ£À EqÀ¨ÉÃPÀÄ. C¸ÀAWÀnvÀ PÁ«ÄðPÀgÀ PÀ¯Áåt, GzÉÆåÃUÁªÀPÁ±ÀzÀ ¸ÀȶÖ, ªÀÈwÛ¥ÀgÀ §AqÀªÁ¼ÀªÀ£ÀÄß MzÀV¸À¨ÉÃPÀÄ. EzÀPÉÌ EA¢£À ¸ÀPÁðgÀ ‘ªÉÄÃPï E£ï EArAiÀiÁ’ ¸ÀªÀÄÄzÁAiÀÄUÀ¼À D©üªÀÈ¢Þ. »ÃUÉ ¸ÁªÀiÁ£Àå £ÁUÀjÃPÀ£À ¨ÉÃrPÉUÀ¼ÀÄ CªÀgÀ »rvÀPÉÌ ¹PÀÄ̪À JA§ ¥ÀjPÀ®à£ÉAiÀÄ zsÀ餬ÄAzÀ §AqÀªÁ¼À ºÁUÉ PÉÃAzÀæ ¸ÀPÁðgÀ AiÉÆÃd£ÉAiÀÄ£ÀÄß gÀƦ¸ÀĪÀÅzÀgÀ eÉÆvÉUÉ CzÀgÀ ¥ÀjuÁªÀÄPÁj ºÀÆrPÉzÁgÀgÀ£ÀÄß PÉʩù PÀgÉAiÀÄÄwÛzÉ. C£ÀĵÁÖ£ÀªÁUÀĪÀ ºÁUÉ ¸ÀPÁðgÀ PÁAiÀÄð¤ªÀð»¸À¨ÉÃPÀÄ JA§ÄzÀÄ F ªÀUÀðzÀ D±ÀAiÀÄ. ºÁUÁV «zÁåªÀAvÀ d£À ¸ÀªÀÄÄzÁAiÀÄPÉÌ CªÀgÀ N¢UÉ vÀPÀÌ GzÉÆåÃUÀªÀ£ÀÄß ¤ªÀÄÆð®£ÉUÉ UÀA©üÃgÀ ¥ÀæAiÀÄvÀß EAvÀºÀ ¸ÁªÀiÁ£Àå ¤jÃPÉëUÀ¼À£ÀÄß d£À PÀ°à¸À¨ÉÃPÀÄ. ªÉÊeÁÕ¤PÀ PÉëÃvÀæzÀ°è ºÉaÑ£À £ÀqɸÀ¨ÉÃPÀÄ. zÉñÀzÀ £ÁåAiÀiÁ®UÀ¼À°è §AiÀĸÀÄvÁÛgÉ. §qÀvÀ£À ¤ªÀÄÆð®£É, D«µÁÌgÀUÀ¼ÀÄ £ÀqÉAiÀĨÉÃPÀÄ. ¨sÁgÀvÀzÀ ªÁådåUÀ¼ÀÄ ²ÃWÀæªÁV EvÀåxÀðªÁUÀĪÀAvÉ ºÉƸÀ ºÉƸÀ GzÉÆåÃUÀ ¸Àȶ×, PÀȶ gÀ¥sóÀÅÛ ¤ÃwAiÀÄ£ÀÄß ¸ÀÄzsÁj¹, ¨sÁgÀvÀzÀ°è ªÀåªÀ¸ÉÜAiÀÄ£ÀÄß ¸ÀÄzsÁj¸À¨ÉÃPÀÄ ªÀÄvÀÄÛ EzÀPÉÌ ªÀÄvÀÄÛ PÀȶ DzsÁjvÀ ZÀlĪÀnPÉAiÀÄ£ÀÄß vÀAiÀiÁgÁUÀĪÀ PÉÊUÁjPÁ GvÀà£ÀßUÀ¼À ¨ÉÃPÁzÀ ¤AiÀĪÀiÁªÀ½AiÀÄ£ÀÄß gÀƦ¸À¨ÉÃPÀÄ, C©üªÀÈ¢Þ¥Àr¸ÀĪÀÅzÀÄ, ªÀÄÆ®¨sÀÆvÀ ªÀÄvÀÄÛ PÀȶ GvÀà£ÀßUÀ¼À gÀ¥sóÀÛ£ÀÄß C©üªÀÈ¢Þ £ÉgÉ gÁµÀÖçUÀ¼À ¨ÁAzsÀªÀåªÀ£ÀÄß ºÉaѹ ¸Ë®¨sÀåUÀ¼À C©üªÀÈ¢Ý, ²PÀët, GzÉÆåÃUÀ, ¥Àr¸À¨ÉÃPÀÄ. EAzÀÄ £ÀªÀÄä zÉñÀ zÉñÀzÀ d£ÀvÉAiÀÄ£ÀÄß ¨sÀAiÉÆÃvÁàzÀ£ÉAiÀÄ DgÉÆÃUÀå, ¨sÀæµÁÖZÁgÀ ¤ªÀÄÆð®£É, ¸Á¥sóïÖªÉÃgï PÉëÃvÀæzÀ°è GvÀÛªÀÄ ¸ÁzsÀ£É PÀ¦ªÀÄĶ׬ÄAzÀ gÀQë¸ÀĪÀAvÀºÀ PÀæªÀÄUÀ¼À£ÀÄß CAvÀjPÀ-¨ÁºÀå ¨sÀAiÉÆÃvÁàzÀ£ÉAiÀÄ£ÀÄß ªÀÄvÀÄÛ CzÀgÀ vÀAiÀiÁjPÉAiÀÄ°è vÀ£ÀßzÉà vÉUÉzÀÄPÉƼÀî¨ÉÃPÀÄ. ¤ªÀÄÆð®£É ªÀiÁqÀĪÀÅzÀÄ. MmÁÖgÉ zÉñÀzÀ DzÀ bÁ¥À£ÀÄß ªÀÄÆr¹zÉ. CzÀ£ÀÄß G½zÀAvÉ £ÀªÀÄä CªÀÄzÀÄ ¤ÃwAiÀÄ£ÀÄß ²æøÁªÀiÁ£ÀågÀ ŒfêÀ£ÀzÀ UÀÄtªÀÄlÖzÀ ¯Á¨sÀzÁAiÀÄPÀªÀ£ÁßV¸À¨ÉÃPÀÄ. ¸ÀÄzsÁj¸À¨ÉÃPÀÄ, zÉñÀzÀ DyðPÀvÉAiÀÄ£ÀÄß (quality of life) ¸ÀÄzsÁgÀuÉAiÀiÁUÀ¨ÉÃPÀÄ ¨sÁgÀvÀ LwºÁ¹PÀ ¥ÀgÀA¥ÀgɬÄAzÀ ºÉaѸÀĪÀAvÀºÀ AiÉÆÃd£ÉUÀ¼À£ÀÄß J£ÀÄߪÀÅzÀÄ zÉñÀªÁ¹UÀ¼ÀÄ £ÀÆvÀ£À PÀÆrzÀ zÉñÀ. E°è «±Àé ¸ÀªÀÄÄzÁAiÀĪÀ£ÀÄß gÀƦ¸À¨ÉÃPÀÄ. zÉñÀzÀ ªÉÄÃ¯É DUÀÄwÛgÀĪÀ ¸ÀPÁðgÀ¢AzÀ ªÀÄvÀÄÛ £ÀÆvÀ£À DPÀ¶ð¸ÀĪÀ ºÀ®ªÁgÀÄ ¥Àæ¹zÀÞ ¸ÁA¸ÀÌöÈwPÀ CPÀæªÀÄtPÉÌ §®ªÁzÀ PÀrªÁt £ÁAiÀÄPÀvÀé¢AzÀ §AiÀĸÀĪÀ ¤jÃPÉë. ¥ÀæªÁ¹vÁtUÀ½ªÉ. «zÉò ¥ÀæªÁ¹UÀgÀ£ÀÄß ºÁPÀ¨ÉÃPÀÄ. ¥Àj¸ÀgÀ gÀPÀëuÉ, R¤d ¸ÀA¥ÀwÛ£À EwÛÃZÉUÀµÉÖ £ÀÆgÀÄ¢£ÀUÀ¼À£ÀÄß ¥ÀÇgÉʹgÀĪÀ ªÀÄvÀÄÛ «zÉò «¤ªÀÄAiÀĪÀ£ÀÄß ¸ÀÄzsÁj¸ÀĪÀ ¸ÀzÀâ¼ÀPÉ, zÉòÃAiÀÄ PÀgÀPÀıÀ® PÉëÃvÀæPÉÌ MvÀÄÛ ¸ÀPÁðgÀ ªÀÄÄA¢£À ¢£ÀUÀ¼À°è ªÉÄÃ¯É ¸À®ÄªÁV ºÁUÀÆ ¥ÀæªÁ¹UÀgÀ£ÀÄß ¤Ãr CzÀ£ÀÄß gÀQë¸ÀĪÀ ªÀÄvÀÄÛ ¨É¼É¸ÀĪÀ ºÉüÀ¯ÁzÀ ¤jÃPÉëUÀ¼À£ÀÄß FqÉÃj¸ÀĪÀ°è vÀ£Àß DPÀ¶ð¸ÀĪÀ ¸À®ÄªÁV ¥ÀæªÁ¹ ¤nÖ£À°è PÉ®¸ÀªÁUÀ¨ÉÃPÀÄ. ¥ÀæªÀÄÄRªÁV PÁAiÀÄðªÉÊRjAiÀÄ£ÀÄß gÀƦ¹ vÀ£ÀÆä®PÀ vÁtUÀ¼À£ÀÄß CAvÀgÁ¶ÖçÃAiÀÄ ªÀÄlÖPÉÌ ¥Àj¸ÀgÀ ¸ÀAgÀPÀëuÉUÉ ºÉaÑ£À MvÀÄÛ¤ÃqÀ¨ÉÃPÀÄ. d£ÀgÀ ¨sÀgÀªÀ¸ÉAiÀÄ£ÀÄß ¸ÁPÁgÀUÉƽ¸À° C©üªÀȢݥÀr¸À¨ÉÃPÀÄ. ¸ÀtÚ ªÀÄvÀÄÛ ªÀÄzsÀåªÀÄ »ÃUÉ MAzÀÄ zÉñÀzÀ ¸ÀªÀiÁðAVÃt ªÀÄvÀÄÛ F §ÈºÀvï PÉ®¸ÀzÀ°è zÉñÀzÀ PÉÊUÁjPÉUÀ¼À D©üªÀÈ¢ÝUÉ AiÉÆÃd£ÉUÀ¼À£ÀÄß C©üªÀÈ¢ÞUÉ ¸ÀPÁðgÀ zÀÄrAiÀĨÉÃPÀÄ. dªÁ¨ÁÝjAiÀÄÄvÀ ¥ÀæeÉUÀ¼ÁzÀ £ÁªÀÇ PÉÊ gÀƦ¸À¨ÉÃPÀÄ. ªÀÄÄRåªÁV ªÀÄÆ®¨sÀÆvÀ ‘3r’ PÀ®à£É §ºÀ¼À ¸ÀÄAzÀgÀªÁzÀzÀÄÝ. eÉÆÃr¸À¨ÉÃPÁzÀzÀÄÝ £ÀªÉÄä®ègÀ PÀvÀðªÀå. 35 November - 2014 Photo Feature

Estd. 1916

FKCCI Office Bearers participation in the unveiling of the new Courtesy Call on Mr. Shamanur Shivashankarappa, statue of Mahathma Gandhiji at Vidhana Soudha Hon’ble Minister for APMC, GoK

Economic Lecture on Energy Savings - A Low Hanging Fruit for SME’s

FKCCI Office Bearers Deepavali wishes to Mr. Siddaramaiah, Interactive Meeting with Mr. S R Venkatesh, KAS, Hon’ble Chief Minister of Karnataka at his Residence Controller of Legal Metrology, GoK at FKCCI

36 November - 2014

Estd. 1916

President & Members of the Managing Committee of FKCCI visited the FKCCI Stall at Mysore Dasara Exhibition, Mysore

FKCCI President & Mr. M Maheshwar Rao, IAS, Commissioner for Industrial Development, GoK at the National Foundation Day of the Republic of Korea & inauguration of the Korea Business Centre, Bangalore.

Workshop on e-initiatives under K-VAT Act with reference to uploading of purchase & Sales

37 November - 2014

Estd. 1916

Members & Officer Bearers of Mysore Chamber of Commerce & Industry felicitated Mr. S Sampathraman, President, FKCCI at Mysore.

Mr. S Sampathraman, President, FKCCI addressing the Delegates at the Inauguration of Transcending Asian Borders - TAB 2014 & Launch of Indo Japanese Skills Development Council organized by Asian Arab Chamber of Commerce at Bangalore

Release of New Karnataka Industrial Policy 2014-19 at Vidhana Soudha

38 November - 2014

Estd. 1916

Mr. S Sampathraman, President & Mr. R Shivakumar, IPP, FKCCI Mr. S Sampathraman, President, FKCCI discussing with interacting with Ms. K Ratna Prabha, IAS, Add. Chief Secretary, I&C Mr. Siddaramaiah, Hon’ble Chief Minister of Karnataka Dept & Mr. Siddaramaiah, Hon’ble Chief Minister of Karnataka

Courtesy Call on Mrs. Nirmala Seetharaman, Hon’ble Union Minister of State for Commerce, GoI at Bangalore

Courtesy Call on Mr. Gaurav Gupta, IAS, Mr. M C Dinesh, Vice President, FKCCI inaugurating the Commissioner for Industrial Development, GoK Seminar on Rotary-Industry Interface at Hubli

39 November - 2014

Estd. 1916

Interactive Meeting with H.E. Gulliermo Rubio Funes, El Salvador Ambassador to India at FKCCI

Release of Business Sustainability souvenir at Oxford College of Engineering at the seminar

NPA Standing Committee meeting by Rajya Sabha Members organized by Canara Bank & Corporation Bank at Bangalore

40 November - 2014

Estd. 1916

FKCCI delegates along with other Industry’s Association representatives attending the Meeting with Chairman & Members of the Committee on the petitions of Rajya Sabha at Bangalore

Lighting the Lamp by Sri Sri Shivakumar Swamiji, Siddaganga Matt, Meeting with Mrs. Nirmala Seetharaman, & Mr. Tallam R Dwarakanath, Sr. VP, FKCCI at the Grain Merchants Hon’ble Union Minister of State for Commerce, GoI at Bangalore Association Annual General Meeting at Tumkur

Mr. Sudarshan TN, Secretary General, FKCCI released the souvenir of the Conference on Innovations in Indian Financial Sector towards Economic Growth organized by Workshop on Total Quality Management by Dr. Manjunath, Dean, Maharani Ammanni College for Women, Bangalore Nitte Institute of Technology organized by FKCCI

41 November - 2014 FKCCI Event Reports

Estd. 1916 Interactive Session on band-aid and long term structural interventions in education can serve considerably in bridging it. Approach has to be to “Enhancing Employability Quotient” create an ecosystem to help identify employability gaps, provide quantitative and qualitative feedback at various levels be it an 15th October 2014 at the Cabinet Hall, FKCCI individual, institutional, regional or national level to help bridge the employability gap in a constructive manner. Vocational and skill based courses also help enhance niche skills required in corporates that are typically looking for specific skills. On the other hand, aptitude, language and personality skills vary across roles within the same industry too. A student aware of his or her strengths and areas of improvement can work in the right direction to enhance their employability quotient. The interaction session saw participants from various institutions and corporates. Couple of students also participated in the interactive Session. Mr. Jeba Kumar - Co Chairman - HR Committee, Mr. Srinath Birur, Co-Chairman - Skill Committee, Mr. Suresh Babu, CEO & MD, iTwine Technologies were the others who provided innovative insights on the modes to enhance employability.

Interactive Session on Enhancing Employability Quotient & Signing of MoU at FKCCI Awareness Programme

FKCCI organized an Interactive Session on “Enhancing Employability Quotient” on 15th October, 2014. Mr. Ramkumarr on e-UPaSS Seshu, Chairman - Skill, Education & HR Committee, Mr. B P Shashidhar, Chairman, MSME Industry, Mr. Jeba Kumar - Co Chairman - HR Committee, Mr. Srinath Birur, Co-Chairman - Skill Committee Mr. Suresh Babu, CEO & MD, iTwine Technologies were among the distinguished guests. Sr. Vice President, FKCCI Mr. Tallam R Dwarakanath welcomed the guests with a bouquet and inaugurated the Session. In his inaugural address he highlighted on the current trends on employability and the increasing number of talents being produced in the country every year across domains. He stressed on the seriousness of the above scenario, the various reasons for poor employability, the approaches and the awareness to be taken by the students, institutions and the employers. Mr. B P Shashidhar, Chairman, MSME Industry laid importance for students these days to understand and realise the structural gaps in the system and also their personal inefficiencies. He stressed on the fact that without a strong foundation and stability An Awareness Programme on E-UPaSS was organised by our neither the employer nor the employee can achieve a win-win affiliated Assn., viz., The Bangalore Wholesale Food Grains & situation. Pulses Merchants Assn. at APMC Yard on 17th October 2014. Mr. Ramkumarr Seshu, Chairman - Skill, Education & HR Dr. B.V. Muralikrishna, JCCT (e-Audit), ACCT, CTO, LVO 050, Committee quoted a couple of his experiences during his earlier GoK and Mr. B.T. Manohar, Chairman, State Taxes Committee, days while recommending the Students to be “Future Ready”. FKCCI, were the Guest Speakers at the programme. With a clipping on the current mindsets of the country’s youth, During the interactive session e-UPaSS with reference to he quoted that the responsibility lies with the HR to identify dealers dealing in exempted goods not covered by C Form were the right kind of people. Students also need to understand the discussed. importance of structured assessments and appropriate guidance Mr. Ramesh Chandra Lahoti, President, The Bangalore to move in the right career path. Wholesale Food Grains & Pulses Merchants Assn. presided over Mr. Ram also stated that, the talent evaluation or employability the programme. testing can never be a standalone project and is credible only Tax Practitioners & Auditors were participated on behalf of when performed on a national benchmark. their clients. There are no short cuts to bridging this gap. Immediate Members of the Association were also actively participated in identification and quantification of the gap, short term vocational the discussion.

42 November - 2014

Estd. 1916 Workshop on “Continuous Improvement practices (Kaizen) & Problem Solving Tools”

FKCCI organized a one day workshop on “Continuous Improvement practices (Kaizen) & Problem Solving Tools” on 17th October, 2014. Dr. Manjunath, Professor and Director of Nitte School of Management, Yelahanka, Bangalore was the resource person. Secretary General, FKCCI Mr. Sudarshan T N inaugurated the workshop. In his inaugural address he highlighted the importance of TQM and its relevance today even though it was developed in Japan immediately after Second World War. He quoted the contributions the great TQM Gurus Deming and Juran and spoke about advantages of TQM to business organizations. He welcomed the resource person and participants from various organizations. Dr. Manjunath explained in detail the basic concepts and TQM and the evolution of TQM philosophy. He explained how TQM transformed Japanese economy. The workshop focused on seven tools of quality, namely Check sheets, Pareto Diagram, Histogram, Cause-Effect Diagram, Control charts, Scatter Diagram and Flow Charts. Each tool was discussed in detail and the resource person explained the participants how these were also made to work in group activities to understand how the tools can be used for solving day to day operational problems by tools can be effectively used. The session was highly interactive quality circles and quality improvement teams. The participants with many participants participating in discussions.

Economic Lecture on Energy Saving - A Low Hanging Fruit for SME’s Mr. Ramesh Shivanna, Chairman, Energy Committee, FKCCI Ltd, in his address said that better understanding & awareness extended a hearty welcome to all the dignitaries and said that of our environment, energy generation and consumption could energy is a basic requirement for development in all the sectors lead to minimizing the carbon emissions especially by the Small of the economy - agriculture, industry, services, transport, and Medium Enterprise. He explained the usefulness of Energy commercial establishments, and residences. Consequently, with Audits by which enterprises may be able to make substantial the tremendous progress in technology, our surrounding has reduction in their energy consumption by adopting simple been expanding exponentially and consumption of energy in methods. different forms of energy has been steadily rising all over the Mr. Subodh Kumar, Executive - Programmes, Friedrich country which has increased our dependence on fossil fuels and Naumann Stiftung Fur Die Freiheit, briefed about their role in electricity. climate change initiatives. He said this topic is increasingly being Saving energy doesn’t mean to stop all activities. Saving brought up and there are genuine concerns to address this issue. energy means decreasing the amount of energy used while Dr. A Selvraj, Chairman, TANSTIA - FNF Service Centre achieving a similar outcome of end use. Using less energy has gave an over view of TFSC and importance of climate change lots of benefits he added. activities. He said that the aim of this program was the simple Mr. M G Prabhakar, Advisor, Energy Committee said that the ways that could lead to a better and efficient use of energy in rising energy costs can lead to higher production and distribution the units of SME’s. costs for businesses, eroding competitiveness and profitability. Through this programme, FNF has been able to reach a SMEs are particularly vulnerable due to limited resources and wider audience from the private sector and create awareness tight operating margins. on the importance of saving energy, thereby contributing to the Mr. S Kannan, Managing Director, Amset Energy systems Pvt reduction of carbon emissions in the environment in Karnataka.

43 November - 2014

Estd. 1916 Interactive Meeting with Mr. Harsha P.S. IPS, MD, KSTDC & Mr. B J Hosmath, IFS, MD, Jungle Lodges & Resorts Ltd.

Development Corporation (KSTDC) in his address said that Karnataka State Tourism Development Corporation (KSTDC) is an entity was set up by Government of Karnataka to promote tourism within the state. The aim of KSTDC was to provide infrastructure, conveyance and other facilities to tourists visiting Karnataka. Part of mission is also to promote unknown tourist spots in Karnataka. The corporation conducts tours - tours of predetermined places at predetermined times. The KSTDC owns some hotels and guest houses which are on par with the best private hotels, he added. He informed that “Hunar se Address by Mr. Harsha P S, IPS, Managing Director, KSTDC and Mr. B J Hosmath, Managing Director, Jungle Lodges & Resorts Limited. Rozgar tak” scheme in association with Institute of Hotel Management was initiated to empower rural youth (both Address by Mr. Harsha P S, IPS, on carrying capacity and sustainability boys & girls) and encouraged to join Managing Director, Karnataka State principles for which professional the hospitality industry which in turn Tourism Development Corporation and agencies should be employed. A special improve employment opportunities. Mr. B J Hosmath, Managing Director emphasis should be given in creating He requested the members of FKCCI Jungle Lodges and Resorts limited was rural tourism clusters and tourism to come forward to adopt public toilets held on 21st October, 2014 at 5:00 p.m. parks by adopting strategies based on and amenities in & around tourist in the Cabinet Hall of FKCCI. convergences of resources he added. destinations in the State to make these Mr. S Sampathraman, President Mr. B Amaranath, Chairman, Tourism destinations more tourists friendly. He FKCCI, in his welcome address extended Committee, FKCCI, in his observation also said that it would be a great if a warm welcome to Mr. Harsha P S, IPS, made the following points. FKCCI could join its hand in creating Managing Director, Karnataka State He urged to give representation to necessary infrastructure for the Tourism Development Corporation and the chambers in KSTDC and JLR. He development of Tourism in Karnataka to Mr. B J Hosmath, Managing Director also requested to provide the minimum attract more tourist. He also mentioned Jungle Lodges and Resorts limited and basic civic amenities like approach that government is willing pay the for said that Tourism plays an important role roads, sanitation, drinking water, maintenance of tourist destination in economic development and creation healthcare facilities, safety and security provided if stake holders come forward of jobs in India. The Approach Paper and protection to the visiting tourists. to take up this opportunity. of the 12th Five Year Plan prepared by He mentioned that to attract the large Mr. B J Hosmath, IFS, Managing the Planning Commission highlights the number of tourists it is quite essential to Director, Jungle Lodges & Resorts need to adopt “pro-poor tourism” for provide them all the latest and modern made a presentation on Eco Tourism. increasing net benefits to the poor and communication facilities like; bus-stand He said that conservation of natural ensuring that tourism growth contributes with advance reservation facilities for resources was major concern and they to poverty reduction. Tourism plays a journey by roads, Railway and Airways encouraged the guest in their lodges & key role in socio-economic progress further, ATM facilities and safe custody resorts to adopt measures to minimize through creation of jobs, enterprise, of their belongings of the tourists. the deterioration of nature. He also said infrastructure and revenue earnings. He informed that FKCCI has proposed that conservation of water, energy was The Planning Commission has identified to organize the a National Seminar on major area of concern especially in eco tourism as the second largest sector in “Role of Swachatha in developing Indian tourism. the country in providing employment Tourism” at Bangalore and requested After a lively interaction the meeting opportunities for low-skilled worker. for the support of Tourism Department. concluded with vote of thanks by Mr. He also mentioned that the tourism Mr. Harsha P S, IPS, Managing Tallam R Dwarakanath, Senior Vice infrastructure should be developed based Director, Karnataka State Tourism President, FKCCI.

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Estd. 1916 Interactive meeting with Mr. S R Venkatesh, KAS, Congratulations !!!! Controller of Legal Metrology, GoK Dr S Phillip Lewis has been awarded the Regional Supplier award by BOSCH INDIA Bangalore.

Sri Tallam R. Dwarakanath, Senior Vice President, welcomed the Chief Guest and thanked him for agreeing to participate in the Interactive Meeting in spite of his busy schedule. In his welcome address the Sr. Vice President raised various general issues relating to Legal Metrology which is prevailing in Karnataka. It is seen that the legal metrology department plays a vital role in verification of stamps, weights and measures, auto rickshaw meters, petrol and diesel bunk stations etc. The department ensures that the public interest is safeguarded by ensuring fair price and delivering correct quantity of goods and supplies. Sri Bharath Kumar R. Shah, Chairman, Internal Trade & APMC Committee in his observation raised key issues which require immediate attention relating to the Acts, namely, Standards of Weights and Measures Act, 1976 and the Standards of Weights Dr S Phillip Lewis CEO of Electro Mech Corporation is receiving the and Measures (Enforcement) Act 1985, are mainly focused on “Regional Supplier award 2014” by BOSCH INDIA Bangalore. ensuring that all weights or measures used for trade or commerce, for industrial production or for protection of human health and safety are accurate and reliable so that users are guaranteed Dr S Phillip Lewis CEO of Electro Mech Corporation of their performance and quality as well as the consumer gets Bangalore has been awarded the “Regional Supplier award the right quantity which he pays for. He also mentioned that the 2014” by BOSCH INDIA Bangalore. major multinational companies are not strictly following the colour code combination of “Red” and “Green” on the packings, which signifies whether the product contains any animal product A self made man Dr Phillip Lewis is /extract. Sri S.R. Venkatesh, KAS, Controller of Legal Metrology, GoK., in his address mentioned that it is planned to provide new accredited with many number of International auto meters to the auto rickshaws very shortly to curb cheating and National awards for Innovation, quality, by the auto drivers to its passengers. He also mentioned that invention, holding price line to name a few. there are more than 1 lakh autos in the city, and it is not possible to install tamper proof meters to all these existing meters, He is the Past President of FKCCI. however all new autos coming on the road will be installed with the tamper proof meters. He also said that in petrol bunks the metering is tamper proof, however the customer should be alert A self made man Dr Phillip Lewis is accredited with many in ensuring that the meter is zero while the petrol is being filled. number of International and National awards for Innovation, He said that there is no provision to control problems relating quality, invention, holding price line to name a few. He is the to E-commerce with the present rules. Govt. of India has started Past President of FKCCI. working on controlling problems on E-commerce. FKCCI is proud to congratulate him on his receiving the award He mentioned that if people feel that they are cheated and his visions will inspire the industry fraternity greatly. in weights and measures by the traders they can lodge the complaints with the department.

45 November - 2014 Intellectual Property

Estd. 1916 For the greater common good The scope of the competition and intellectual property regimes may be starkly different from one another, but in the industrial set-up today they surely coincide. Intellectual property driven by the goal of innovation seeks to serve this end by defining legal boundaries of the property and allowing the owner to appropriate rents by excluding others.

armony between intellectual property rights and to continue to enjoy monopoly rents, they can hugely impact the competition law can ensure economic and social consumers by restricting access and compromising affordability. welfare. This dreaded impact motivates the CCI to dig deeper into such H Earlier this month, the Competition Commission agreements for the first time in India. of India (CCI) revealed its intentions of bringing under its Apprehending an adverse impact on the competitive market scanner the patent settlement deals between Swiss drug-maker process and the resulting impact on consumers, the Commission F Hoffmann-La Roche and Cipla over a lung cancer drug and has reportedly revealed its intentions to examine the impact of between US multinational Merck Sharp and Dohme Corp (MSD) injunctions that were obtained over the past year by Novartis and Glenmark Pharmaceuticals concerning a diabetes drug. and Merck against many domestic drug-makers directed at This move was preceded not too long ago by a case involving preventing them from selling copies of diabetes drugs. complex issues of licensing of standard essential patents. This trend evinces the Commission’s willingness to venture IPR and competition into a divergent regime of intellectual property, which focuses The scope of the competition and intellectual property regimes on producer gains driving dynamic efficiency through innovation. may be starkly different from one another, but in the industrial set-up today they surely coincide. Intellectual property driven by Consumer welfare the goal of innovation seeks to serve this end by defining legal Modern competition law adopts an approach based on boundaries of the property and allowing the owner to appropriate economic effects. In the Indian context, this is termed as the rents by excluding others. ‘appreciable adverse effect’. If the protected intellectual property is necessary for the The effect is measured in terms of efficiency and welfare production of a good, it gives the owner the right to exclude standards. While it is often easy to mistake the underlying others from producing this good, which ultimately subverts the objective of the competition law to be regulation of anti- competitive process in the given market. The curbing of the competitive business behaviour, this is but a means towards anti-competitive impact of such legally-conferred monopolies is meeting the ultimate end of understood and has evolved well maximisation of consumer under the doctrine of essential welfare. In India, consumer facilities. welfare is one of the underlying An essential facility is goals of the competition understood as an input or legislation. factor of production that Consumer welfare is has no economically viable defined as the maximisation substitute(s) so that the owner of consumer surplus realised of the input is able to exercise through economic benefits market power in the output. received by consumers of a This concept rose to prominence particular product as measured with the case of dominance by its price and quality. Hence, of Microsoft’s Windows as the an effective competition law is de facto operating system for one that prevents increases in computers all over the world. consumer prices and restriction The European Court of of output or deterioration of quality which are often a result of Justice (ECJ) in its 2004 ruling on Microsoft held that the rent-seeking anti-competitive conduct of monopolies. Microsoft’s refusal to disclose interoperability information Accessibility and affordability are two of the core functions created significant barriers to market entry, owing to indirect of the competition law. And this is where the competition law network effects, and is thus an abusive conduct. Therefore, the significantly interfaces with the intellectual property regime to interoperability decision was seen as the remedy to the denial of address the impacts of the exclusions conferred by intellectual an essential facility to other operating system developers. property laws. In India, even though the doctrine does not find explicit Global drug-makers have been increasingly entering into mention, the Indian Competition Act has sufficient structure for negotiations with generic companies to keep their drugs off the judiciary to invoke it. Similar to the European legislation, the the market. While such agreements are not illegal, if they end Act has clauses that prohibit the abuse of a dominant position. up stifling domestic competition allowing the brand owners Section 4 (c) asserts that denial of market access to others by a

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Estd. 1916 dominant player would be an abuse of dominant position.

Two to tango Sensible Ruling on The CCI recently took up such a matter on a complaint by Micromax Informatics against Swedish telecoms equipment maker Ericsson for alleged abuse of dominance in the licensing Transfer Pricing of its standard essential patent. Much like an essential facility, if a company’s patented product becomes an established standard, then the patent is known as a Standard Essential Patent (SEP). There exist no non-infringing alternatives; which means it faces no competition from other patents until that patent becomes obsolete due to new technology/inventions. Companies with SEPs that possess such market power have the ability to engage in exclusionary or exploitative practices harmful for their competitors as well as consumers. To this end, standard setting organisations require owners of patents covered by the standard to grant licences on fair, reasonable and non-discriminatory (FRAND) terms. The complaint filed by Micromax alleged that Ericsson who was a holder of an SEP was licensing this patent at exorbitant and unfair terms. The Commission not only directed the matter for further investigation but tried to determine applicable royalty rates — a herculean task in itself. he Vodafone verdict brings greater tax certainty. The Bombay High Court has done well to strike down the tax demand on Vodafone that arose from Economic efficiency measured in terms T treating a seemingly underpriced rights issue of shares as a transfer pricing irregularity. The ruling brings more of static (short-run) and dynamic (long- clarity and certainty to India’s transfer pricing regime that had run) is an indicator of welfare and this is spooked foreign investors and is, therefore, welcome. Rules require all cross-border transactions between group companies where the two systems digress. to be valued at arm’s length – or as if the transaction is with an unrelated company – to ensure that multinational companies do not use transfer prices to shift profits out of India to countries While these exercises were in their preliminary stages, that have zero or low tax rates. Vodafone’s dispute with the tax they were commendable. Both intellectual property and department is on whether the issuance of shares gives rise to competition interface with varied yet significant consequences income. for consumers — be it the innovative IT markets often featured In 2008, Vodafone India issued equity shares at a premium by standardisation and the creation of network effects in the to its holding company in return for influsion of funds for its interest of consumers, or the pharmaceutical markets where telecom operations. The company said it’s a capital account both social concerns and potential innovations are imperative transaction and, hence, doesn’t affect its income. However, both considerations. the tax department and the dispute resolution panel held that Two fundamental questions for both are determining how the income tax law does not prohibit charging a tax on capital welfare should be defined and how the welfare goals should be receipts. That’s plain wrong. The high court receipts. That’s plain implemented. Producer welfare rises as the amount producers wrong. The high court has made it clear that a capital receipt receive exceeds the costs incurred. is not income, unless it is capital gains. This means only profits Consumer welfare rises with the difference between the made from the sale of shares or assets can be charges to tax, not amount consumers must pay and the amount they are willing to the issuance of shares. Other technicalities become redundant. pay. Economic welfare is typically the sum of the two. Economic The ruling removes ambiguity and helps resolve over two efficiency measured in terms of static (short-run) and dynamic dozen similar transfer-pricing disputes. The government should (long-run) is an indicator of welfare and this is where the two not challenge the present ruling in the Supreme Court. Clear tax systems digress. While the competition law focuses largely rules and a modern tax administration without arbitrariness will on enhancing static efficiency, intellectual property seeks to strengthen India’s case against profit shifting by MNC’s. MNC’s promote dynamic efficiency. To this end, one is seen as curbing today can choose between safe-harbour rules and advance- monopolies (economic) and the other as promoting monopolies pricing agreements to compute transfer prices and transactions (legal). Needless to say, intellectual property and competition within group companies, and taxmen will accept the prices are essential tools of economic welfare. declared by the company. However; our tax officers would need What is needed is for regulators to recognise this intensive training to deal with the transfer-pricing regime as complementarity and work together towards finding the optimal transactions within group companies are becoming increasingly balance on which economic growth is hinged. complex in a globalization economy.

47 November - 2014 Membership

Estd. 1916 Welcome New Members! Applications received towards Ordinary & Patron Membership for the month of October - 2014

Sl. Category Name of the Name & Address Area of Business No. Membership Representative Small Scale Manufacturing Activity 1 M/s. Mill Master Machinery Pvt Ltd Rice Processing Manufacture Mr. Jayakumar B K Bangalore - 560 091 Machineries Small Ordinary Director E-mail: [email protected] 2 M/s. Phytotech Extracts Pvt Ltd Standardised Manufacture Mr. Venkitachalam H, MD Bangalore - 562 149 botanical extracts Small Ordinary Mr. Kanchana Hariharan E-mail: [email protected] Director 3 M/s. Rossell Techsys, Mnfrs. of Wire Manufacture Mr. Prabhat Kumar B, COO (A Division of Rossell India Ltd) harness Small Ordinary Mr. V Srinivasan B’lore - 66, E-mail: [email protected] Sr. Vice President 4 M/s. Universal Surgicals Mnfrs. of Export of Manufacture Mr. Pavan D C, Partner Bangalore - 560 091 Surgical Sutures Small Ordinary Mr. Shivagangaiah K G Partner Large Scale Manufacturing Activity 5 M/s. Merrick Industries Pvt Ltd Mnfrs of Coal Feeder Manufacture Mr. Yeshwant Chorpade Bangalore - 560 058 Large Managing Director E-mail: [email protected] Ordinary Mr. A Giridhar, Director 6 M/s. S3V Vascular Technologies Pvt Ltd Mnfrs of cardio Manufacture Mr. N G Badari Narayan Mysore - 570 017 vascular stents Large Dr. Vijaya Gopal E-mail: [email protected] Ordinary Kalindhi Narayan All Directors 7 M/s. Vishwas Concrete Products Pvt Ltd Mnfrs.of Ready Mix Manufacture Mr. B R Vishwas Bangalore - 560 002 Concrete Large Managing Director E-mail: [email protected] Ordinary Mr. Usha Reddy, Director 8 M/s Vishwas Construction Industries Pvt Ltd Mnfrs.of Processors Manufacture Mr. B. R. Vishwas, MD Bangalore - 560 002 & Suppliers Large Dr. H P Madhusudan E-mail: [email protected] Ordinary Director Small Scale Trading Activity 9 M/s. Dexler Holdings Private Limited Flower Export Trade Small Mr. Noolu Dilip Kumar Bangalore - 560 071 Ordinary Business Development E-mail: [email protected] Manager Mr. Advait Choudhary Business Development Manager 10 M/s. Perfect Liners Medical Equipments, Trade Small Mr. Najathulla Kalim Shimoga - 577 201 automobile spare Ordinary Proprietor E-mail: [email protected] parts & iron ore Supplier 11 M/s. Shree Glass & Plywood Trading in Plywood, Trade Small Mr. Kalpesh Parekh, Partner Bangalore-10, E-mail:[email protected] Glass Ordinary Mr. Neeta Parekh, Partner 12 M/s. Sri Vinayaka Bar & Restaurant Bar & Restaurant Trade Small Mrs. Latha Venugopal Bangalore - 560 038 Ordinary Partner E-mail: [email protected] Mr. A.R. Raghupathi, Partner 13 Sri Vinayaka Wines Retail Wine Business Trade Small Mr. A.G. Venugopal Bangalore-38, E-mail: [email protected] Ordinary Proprietor

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Sl. Category Name of the Name & Address Area of Business No. Membership Representative Small Scale Service Activity 14 E2E Projects Pvt Ltd, Bangalore - 560 102 I T Services Service Small Mr. Swapnil Jain, Director E-mail: [email protected] Ordinary Sujitdas Biswas, Director Large Scale Service Activity 15 M/s. Dithi Infrastructure Private Ltd. Logistics Service Large Mr. B. R. Vishwas, MD Bangalore - 560 002 Ordinary Dr. H P Madhusudan E-mail: [email protected] Director 16 M/s. Vigneshwar Filling Station Petroleum Dealers Service Large Mr. Manjunath G Bangalore - 562 123 Ordinary Partner E-mail: [email protected] Large Scale Service Activity Patron 17 M/s. CADABAMS Health Care Services Service Large Mr. Cadabam M Ramesh Bangalore - 560 082 Patron Director E-mail: [email protected] Mrs. Sudha R Cadabam Director Mr. Sandesh R Cadabam, CEO Profession 18 M/s. ALMT Legal IP & Legal Services Profession Mr. Rakesh Prabhu, Partner Bangalore - 01, E-mail: [email protected] Mr. S.R. Arun, Senior Partner

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blue print of the dream what is going to be. If you know the what way then it is called “expectation”. Arivu The aspiration and expectation has lot of difference. CjªÀÅ... Aspiration leads to creating mode. Whereas - Ramesh Shivanna, Chairman expectation leads to begging mode. Aspiration is the Energy (Conventional & Renewable) Committee, FKCCI basic element of experiencing the growth, where as expectation is the basic element for embracing the Pride without aspiration is like King without sorrow. Kingdom. When you expect, you tend to depend on other, What we are today is because of the aspiration When you aspire it will inspire within. Aspiration of yesterday. Without aspiration we wouldn’t have is an inner nature that is seeking its outer reached where we are now. I am not from the expression. Aspiration leads to fulfillment. Even if business family, but my success in my business as it is not pleasing, aspiration will be satisfying. But an entrepreneur, educationist and social services is expectation is unsatisfying. Expectation is an enemy because of my aspiration. of life for it makes beggar not a creator. Where as My understanding is, “aspiration” is need not be the aspiration makes you a creator. achievable. Aspiration is the dream, which I don’t Aspiration is the key to beautiful and holistic life. know what way it is achievable. But, I could see the Always aspire in the life, don’t have expectation.

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Services offered by FKCCI

• Certification of Export Documents including Certificate of Origin andVisa Recommendation letters for business promotion visits abroad. • Expert advice on diverse subjects such as industrial growth, monetary and fiscal policy, exchange rate policy, economic planning, taxation and corporate laws. • Redressal of general / common problems of members at Central / State Government levels and other institutions. • Access to FKCCI periodicals / publications like the FKCCI monthly bulletin ‘Mysore Commerce’. etc.

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55 Registered KARBIL No.67459/97 (Regn. No. CPMG/KA/BGS-343(2012-14) Posted at Mail Business Centre, Bangalore GPO, Bangalore - 560 001 on 5th of every month, Pages 52+4=56 November - 2014

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Printed by Sri P.S. Venkatesh Babu, Edited & Published by Sri N.S. Srinivasa Murthy, FKCCI, owned by Federation of Karnataka Chambers of Commerce and Industry, Published56 from Federation House, K.G. Road, Bangalore - 560 009 and Printed at Omkar Offset Printers, No. 3/4, 1st Main Road, New Tharagupet, Bangalore - 560 002.