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The Big China Hack
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INTERVIEW HOTSPOT GUEST COLUMN Striking a direct chord with real-time, Indian businesses of any size can Investing in the capital-starved personalised online content succeed in the US sectors of India Umang Bedi & Virendra Gupta Brian Lenihan Holger Rothenbusch President & Founder-CEO, Dailyhunt Acting Executive Director, SelectUSA Managing Director, CDC Group
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Tackling the Dragon in India’s cyber rooms
recently read a very disturbing piece in ‘The Times’ The question there is whether India is prepared to handle (London) about Russia allegedly “targeting British a concerted and determined attack on its social fabric via teenagers as part of a cover campaign to sow discord social media? My concern increases many folds when I Iamong young westerners”. read about the opaque dividing line between the Chinese Communist Party, the country’s government and its The report cites the example of the Kremlin allegedly big businesses. using fake celebrity posts to spread Russian propaganda with the intention of creating confusion about, among The Chinese security establishment’s tentacles run other things, the Salisbury poisoning. These tweets were deep into the country’s business houses, which are retweeted hundreds of thousands of times, spreading widely rumoured to further Beijing security and the fake news far and wide, the report said. That set strategic objectives. me thinking. Dubious intentions? Information control Nothing that I know, have read or have Chinese mobile phone companies JUST AS RUSSIA discussed with experts convinces me dominate the Indian market and its that China’s intentions towards India HAS UNLEASHED internet giants are buying-in big time are benign. Large Chinese companies into Indian start-ups in a variety of A DISINFORMATION such as Alibaba, Tencent, Xiaomi verticals, including social media. CAMPAIGN IN THE WEST and Oppo, which have become big TO FURTHER ITS OWN players in the Indian internet and Now, setting political correctness STRATEGIC GOALS, IT IS mobile telephony space can, thus, aside, I wondered if China could, if it QUITE PLAUSIBLE FOR wield, albeit unobtrusively so far, chose to, spread similar disinformation BEIJING TO DO THE SAME disproportionate influence over the in India. It is no secret that he who Indian mind-space. controls the flow of information wields IN INDIA AT A TIME OF ITS the most influence. CHOOSING. Just as Russia has unleashed a disinformation campaign in the West That is why totalitarian regimes to further its own strategic goals, it is around the world spend billions of dollars and have large quite plausible for Beijing to do the same in India at a time bureaucracies dedicated to spread official propaganda at of its choosing. home and disinformation abroad. In my view, it’s high time that effective measures to control Most strategic experts agree that India is China’s long- the possibility of a fallout of such a campaign, but as New term rival and that Beijing is doing everything in its power Delhi’s, and the world’s, struggles with Facebook and to ensure that India is denied its rightful place at the global WhatsApp show, it will be easier said than done. Hence high table. in addition to regulation, Indian business must step up their game through technology, and their own strategic Free run fears investments in indigenous platforms and striking friendly Despite my long-held belief in India’s systematic economic global alliances. liberalisation and opening to global competition, I question the prudence of allowing a free run in India’s buoyant There are too many points of potential conflict between the social media space. two countries; so, India can afford to treat this lightly only at great peril to itself, and indeed, its friends. The country has many fault lines that run across divides of religious, caste, regional, financial and social. These are regrettably exploited by groups sworn to destabilise India, Manoj Ladwa and much more easily these days through the explosion in Publisher & CEO, India Inc. social media usage. @manojladwa www.indiaincgroup.com October 2018 3 CONTENTS The Global Edition of 'India Global Edition' this time tackles the conundrum of Chinese investments into the Indian technology sector and the kind of balancing act that is required to ensure cyber security worldwide. A range of interviews and analyses delve into some of the other topics dominating the news in recent weeks.
COVER STORY 8 16 Guest Column: Investing in the capital-starved sectors of India Holger Rothenbusch, Managing Director, CDC Group
COUNTRY FOCUS
Dragon’s kiss: Chinese investments in Indian start-ups can compromise data security by India Inc. Staff 20 India-EU trade relations: At a crossroads by India Inc. Staff
FROM THE TOP 23 Lack of political will to conclude an India-EU free trade 3 Tackling the Dragon in agreement India’s cyber rooms Interview with Geoffrey Van Orden, by Manoj Ladwa, Britain’s Member of the European Founder & CEO, India Inc. Parliament for East of England
Interview SECTOR FOCUS
26 India’s e-mobility challenge: Mass adoption will take at least another decade by India Inc. Staff
13 Striking a direct chord with real-time, personalised online content by Umang Bedi & Virendra Gupta, President & Founder-CEO, Dailyhunt
4 October 2018 REGION FOCUS 44 Beyond the Headlines: The India-US tango by Harsh V. Pant, Professor, International Relations, King's College London
SOCIAL IMPACT FOCUS
46 Harnessing the true 31 Uttarakhand: An important investment power of corporate destination partnerships by India Inc. Staff Hitan Mehta, Executive Director, British Asian Trust Analysis
48 Special Report: Howzat! India takes cricket global by India Inc. Staff
36 Tough-talking India takes centre-stage by India Inc. Staff
HOTSPOT 50 Last Word: Modi’s actions speak louder than fake bluster on ‘crony capitalism’
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38 Indian businesses of any size can succeed in the US www.indiaincgroup.com by Brian Lenihan, Executive Director, SelectUSA © India Inc. Limited, all rights reserved. Reproduction in whole or in part without our written permission is prohibited. Views expressed INDIANS IN FOCUS by our contributors are their own and do not necessarily represent the views, policies of India Inc. While every effort is made to achieve total 41 Why trust is key accuracy India Inc. cannot be held responsible for to business in India: any errors or omissions. Lessons from Adam Editorial Smith to Jack Ma [email protected] Tarun Khanna, Jorge Paulo Advertising & Sponsorship Lemann Professor at PRICE £4.95 [email protected] PUBLISHED IN LONDON Harvard Business School
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The Big China Hack hina has invested to the tune to $9.2 billion if one considers the warned that India should closely of $10 billion in Indian start- period since 2014. monitor the flow of funds from China ups since 2014. This can into Indian companies and especially Cgive it access to data on hundreds Most top of the line Indian internet- the start-up eco-system. of millions of Indian consumers based start-ups like PayTM, Flipkart, and enable it to nudge the public Zomato, Ola and Gaana, among The ability and willingness of Chinese discourse in a direction it desires several others, have significant investors to write out large cheques and could acquire a critical strategic Chinese shareholding. while asking fewer questions than dimension in the years ahead. their US and European counterparts hough the Indian government has are the main reasons for their Chinese internet giants such as not taken any steps to stem this widespread penetration into the Alibaba, Tencent, Fosun and Baidu flow of Chinese funds into Indian Indian start-up and tech sector. But poured in as much as $5.2 billion start-ups – some officials have, in the real payoff they are looking for in Indian tech, especially internet- fact, actually welcomed it – several may be one to watch out for. centred start-ups last year, almost analysts and some Indian investors five-and-a-half times the figure of have expressed their apprehensions, Read on for a more detailed analysis $930 million in 2016. The figure jumps especially on data security, and of this conundrum. COVER STORY Dragon’s kiss: Chinese investments in Indian start-ups can compromise data security by India Inc. Staff
ndia and China may not see eye Gaana, among several others, have to eye on many things – especially significant Chinese shareholding. China has invested after the eyeball to eyeball Iconfrontation at Doklam near the Concerns over data security almost $10 billion in India-Bhutan-China tri-junction – but Though the Indian government has Indian start-ups since that has not stopped Chinese tech not taken any steps to stem this companies from investing in India, flow of Chinese funds into Indian 2014. This can give and Indian start-ups enthusiastically start-ups – some officials have, in it access to data on lapping up billions of dollars of fact, actually welcomed it – several hundreds of millions of Chinese investments. analysts and some Indian investors have expressed their apprehensions, Indian consumers and Chinese internet giants such as especially on data security, and enable it to nudge the Alibaba, Tencent, Fosun and Baidu warned that India should closely public discourse in a poured in as much as $5.2 billion monitor the flow of funds from China in Indian tech, especially internet- into Indian companies and especially direction it desires and centred, start-ups last year, almost the start-up eco-system. could acquire a critical five-and-a-half times the figure of $930 million in 2016. The figure jumps “Today, internal security issues are strategic dimension in to $9.2 billion if one considers the not restricted to military installations the years ahead. period since 2014. Most top of the and high-value targets. Information line Indian internet-based start-ups security and network security issues like PayTM, Flipkart, Zomato, Ola and are vital concerns. Any international
8 October 2018 COVER STORY participation in India should not have this led to a top secret but wider private Chinese technology giants as access to critical information that investigation that concluded that the an extension of the state apparatus is crucial to national security,” Ajeet offending microchip, which made it – mostly for security and spying Khurana, a serial investor and a easy for hackers to “look into” the missions. “The party is still in charge blockchain expert, has been quoted data storage systems of Elemental’s and the party is going to use them,” as saying. customers, had been installed at he adds. a couple of factories run by sub- “On the one hand, increased contractors of Elemental’s primary The US Committee on Foreign Chinese investment into India vendor in China. Investments, for instance, has taken is a clear indicator of the Indian several close peeks into allegations opportunity; on the other hand, Though the alleged victims of this that Chinese tech companies are India needs to ensure that we aren’t hack job – Amazon, Apple, the US effectively operating, at least in some surrendering our strategic interests in defence and strategic establishment domains, as arms of the state. the region,” he added. and 30 other leading US high technology companies – have denied For example, Tencent, which is Several other experts ‘India Global the report that first appeared in investing heavily in the Indian internet Business’ spoke to pointed to ‘Bloomberg Businessweek’, the well- start-up eco-system has an app allegations that UCWeb browser, respected media house has stood by called WeChat that enables users to which is owned by the Jack Ma- its story. Tellingly, none of the alleged obtain a digital ID, needed for several promoted Alibaba, had been stealing victims even sent it a legal notice, official purposes, by scanning their data from Indian users. This prompted giving rise to the belief that the story faces with the app. the government of India to step up was correct. checks on Chinese smartphone This offers a close look into the makers such as Xiaomi, Gionee and shadowy world at the intersection of Oppo, among others. The matter is Chinese big business and its ruling complicated by the fact that even CHINESE INTERNET Communist Party’s secretive and so-called Made in India phones are GIANTS SUCH AS powerful security establishment. assembled in Indian factories using ALIBABA, TENCENT, Fraser Howie, author of Red Made in China components. And FOSUN AND BAIDU Capitalism, calls these new age therein lies the rub. POURED IN AS MUCH AS Chinese companies “state overseen $5.2 BILLION IN INDIAN enterprises”. “Being non-state does New age spying not mean you are private. It was TECH, ESPECIALLY Most Indians haven’t heard of always a blurred line and it’s become Elemental Technologies, a company INTERNET-CENTRED, ever more so,” he adds. that makes software for compressing START-UPS LAST YEAR, massive video files for use in ALMOST FIVE-AND-A- In totalitarian China, it is obviously the devices such as laptops, iPads and HALF TIMES THE FIGURE party that has the upper hand in its smartphones. In 2015, Amazon OF $930 MILLION IN 2016. dealings with the country’s corporate was evaluating acquiring Elemental sector. That is why India ought to be to facilitate the expansion of careful about the flood of Chinese Amazon Prime Video, its video investments in a sector that could streaming service. The China-based vendor and its acquire a strategic dimension in the sub-contractors were all ostensibly years ahead. It was while conducting a routine privately-owned companies with security due diligence that a third- no apparent links to the Chinese Indo-Pacific game of poker party service producer discovered government or its security On the face of it, India is still decades a proverbial smoking gun – a rice establishment. But the microchips behind China on most important grain-sized microchip built into the had obviously been installed there at counts. The most important difference motherboard of the servers that the instance of the People’s Liberation is in the relative size of the two Elemental’s customers installed in Army (PLA), which runs a vast economies. China clocks a GDP their networks to compress the large economic empire in China with its figure of $12 trillion compared to videos. This microchip wasn’t part of tentacles spread over every field India’s $2.5 trillion. Then, China the original design and had obviously of activity. spends at least $150 billion annually been installed there for a purpose. on its military, while India spends less Since Elemental servers, made from Blurred lines than one-third that amount. motherboards produced by a San Bestselling author Duncan Clark, Jose company called Supermicro, who wrote ‘Alibaba: The House That It will need India to grow at more were used by the US Department Jack Ma Built’, says the Chinese than 8 per cent annually every year of Defence, the US Navy and the government often uses the reach for three decades to catch up with its Central Intelligence Agency (CIA), and networks of large ostensibly powerful northern neighbour. Despite www.indiaincgroup.com October 2018 9 COVER STORY
this asymmetry on almost counts of missile, which can hit targets across reluctant to take on China. conventional power, the world sees all of China, was in contravention of India as a potential counterweight UN rules. To counter the Dragon’s string of to the rise of a not-so-peaceful and pearls strategy to encircle India, clearly hegemonic China. Modi has made common cause with CHINA HAS LONG USED the US, Japan and some East Asian Beijing bristles at these comparisons ITS STATE-OWNED AND powers to push back on Beijing’s – it likes showcasing its similarities PRIVATE BUSINESS unilateral and historically untenable with, and superiority to, the US claim over almost all of South only – and misses no opportunity ENTERPRISES TO CARVE China Sea, which China views as to show India down by thwarting its OUT STRATEGIC AND its backyard. global ambitions, be it by stalling New MILITARY BEACHHEADS Delhi’s bid to gain membership into IN FOREIGN COUNTRIES. Then, the replacement of visibly the Nuclear Supplier’s Group (NSG) pro-China governments in Sri Lanka or by consciously stalling India’s bid and the Maldives with ones that for a permanent seat in the United India now a lot more assertive are more amenable to considering Nations Security Council (UNSC). This marks a decisive change in India’s sensitivities has considerably Then, strategic relationship with the China’s attitude towards India, strengthened New Delhi’s hands. US and Japan has clearly rattled especially since it has, in the past, China. Quite uncharacteristically, followed a policy of studied neglect Businesses as strategic it discussed India’s purchase of and occasional barbs. This is a direct beachheads sophisticated arms platforms from result of the Narendra Modi-led Indian China has long used its state-owned the US during President Xi Jinping government’s willingness to look and private business enterprises with US President Donald Trump and China in the eye and meet China to carve out strategic and military declared that India’s successful test head on, in stark contrast to previous beachheads in foreign countries. of the Agni V intercontinental ballistic Indian governments that appeared As Sri Lanka’s experience with
10 October 2018 COVER STORY
THE ABILITY AND WILLINGNESS OF CHINESE INVESTORS TO WRITE OUT LARGE CHEQUES WHILE ASKING FEWER QUESTIONS THAN THEIR US AND EUROPEAN COUNTERPARTS ARE THE MAIN REASONS FOR THEIR WIDESPREAD PENETRATION INTO THE INDIAN START-UP AND TECH SECTOR. the Hambantota Port, Maldives’ owned companies the wherewithal This gap will widen over the next experience with the Friendship to nudge and influence the Indian three years, says a recent report by Bridge and Pakistan’s experience public discourse in the direction their Google and KPMG. with the so-called China Pakistan leadership desires. Economic Corridor (CPEC) show, Western internet giants are still Chinese business focused mainly on India’s enterprises entering a English-speaking market and country are only the thin Indian start-ups still lack the end of the wedge. critical mass to fully exploit this massive market. India is a vastly larger and much more complex But Chinese internet giants country than the three have the financial muscle, mentioned above and is the technological prowess as unlikely to welcome large well as the patience to seed Chinese investments this market and wait for this in its strategic assets. market to grow profitable over That is why Chinese time. access to data of Indian consumers is raising It is because of fears of such eyebrows in many data being misused that quarters in India. the Indian government has directed Chinese cellphone Opportunity to spy on makers to store user data they Indians collect from Indian customers Today, more than half of in this country. all mobile phones sold in India are made by But apart from this Chinese companies. As stated above, Store data in India, says intervention, the Indian government, though many of them are nominally government which has made little secret of its made in India, they are actually For example, Chinese start-up news strategic only assembled in this country with aggregator Toutiao, which means reservations about China, has largely components shipped from China. today’s headlines, has developed welcomed this inflow of Chinese highly advanced algorithms that allow investments. This presents a golden opportunity for it to serve completely personalised the Chinese security establishment to and customised content to users. Large cheques the main attraction launch an Elemental-like operation in Toutiao has recently launched a social but… India – not to read secret government media app called Helo in India. The ability and willingness of Chinese files but to spy and collect big data on investors to write out large cheques ordinary Indians. Given the level of customisation while asking fewer questions than it has achieved in China, it is not their US and European counterparts Then, popular websites are massive inconceivable that it can achieve are the main reasons for their repositories of data on how India’s similar levels in India. And given widespread penetration into the live, work, shop and play. The social the close links that Chinese private Indian start-up and tech sector. media also influences popular businesses have traditionally had with opinions on a number of issues and the Chinese security establishment, But the real payoff they are looking for definitely sets the direction of it is quite probable for this data to be may be strategic in nature and may media coverage. mined for Beijing’s strategic use. not always be measurable in money Having access to, and sometimes terms. even a controlling interest in, the Of the estimated 400 million-plus decision-making levers of Indian internet users in India, only about 175 That is an issue India will do well to start-ups could give Chinese- use English language apps. The rest guard against. use vernacular apps and services. www.indiaincgroup.com October 2018 11 Capital. Commitment. Community. Conscience.
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12 October 2018 www.wgcworld.com INTERVIEW
Striking a direct chord with real-time, personalised online content Virendra Gupta, Founder & CEO of Dailyhunt, and Umang Bedi, the President of India’s mobile app-based news publisher and aggregator, give ‘India Global Business‘ an insight into the business model that caters to the demand for news in multiple languages across India and the world. The dynamic duo behind this news revolution believe the winning combination lies in the three Vs – Volume, Veracity and Velocity of fresh content. ow has the online media often described as millennials, are grown exponentially. A close look at space transformed in India always on the go, accessing online the latest statistics suggests digital in recent years? content via smartphones. media transformation over the past H few years. As per the FICCI-EY report Let’s first understand the key trends 'Re-imagining India's M&E sector', in emerging in the Indian market. There DAILYHUNT PLATFORM 2017, digital media grew 29.4 per cent has been a tremendous increase in USES UNIQUE MACHINE on the back of a 28.8 per cent growth the Internet user base year after year. LEARNING AND DEEP in advertising. Most importantly, it is With over 460 million Internet users, LEARNING TECHNOLOGY hard to ignore the growing penchant India currently ranks as the second- THAT ENABLES SMART for consuming digital content in largest global online market and these native languages. numbers are expected to increase to CURATION OF CONTENT 635 million by 2021. Secondly, as per AND TRACKS USER Industry reports suggest that three- a study by emarketer, more than a PREFERENCES TO fourth of the Internet users will be quarter of the population, nearly 337 DELIVER REAL-TIME, vernacular, which is close to 550 million people, will use a smartphone PERSONALISED CONTENT million out of the total 750 million by the end of 2018, clocking a growth AND NOTIFICATIONS. users, while English language users of 18 per cent — the highest growth will only be 199 million by 2022. rate of any country in the world. With increasing Internet penetration What are the kind of steps being Moreover, India is a very young and smartphone proliferation, taken by your company to combat country with a large majority of its the advent of 4G and the rise of fake news and data privacy population aged between 17 to 35 millennials demanding digital content, issues? years of age. These young minds, the online media space has also www.indiaincgroup.com October 2018 13 INTERVIEW Global investors should focus on supporting those digital platforms that capture the imagination of the real India that resides in Tier 2 and Tier 3 cities/towns, apart from the key metros aiming to achieve user traction and scalability by developing core understanding of the interests and preferences of the end users.
What are Dailyhunt’s expansion Dailyhunt, being a content aggregator application with over 225 million app plans going forward? platform rather than a creator, does installs offering 100,000 news articles not experience the challenges every day in 14 languages licensed The core focus of our business is and pertaining to fake news. In the last from over 1000+ publication partners. will always be on regional language one decade, Dailyhunt has managed As highlighted earlier, it’s unique content play as it plays a significant to curate content in 14 languages machine learning and deep learning role in bringing traffic across various licensed from over 1,000+ verified technology enables smart curation of verticals of Dailyhunt group. The publication partners. Our platform content and tracks user preferences company plans to capitalise on the boasts of high quality, reputable, to deliver real-time, personalised growth by essentially focusing on validated local language content from content and notifications. aggressive user growth via videos authoritative and authentic sources. – a content form which is extremely We would like to reiterate that our Dailyhunt’s partnership with 1,000+ popular among our TG. platform essentially represents the premium regional partners have three Vs – Volume, Veracity and already helped us reach the target Our expansion plans are largely Velocity of fresh content across audience residing in Tier 2 and Tier based on the premise that the single genres which makes it a winning 3 Indian cities. Moreover, with our biggest opportunity on the Indian combination. focus on personalisation technology Internet is “Local Language”. We
WITH INCREASING INTERNET PENETRATION AND SMARTPHONE PROLIFERATION, THE ADVENT OF 4G AND THE RISE OF MILLENNIALS DEMANDING DIGITAL CONTENT, THE ONLINE MEDIA SPACE HAS ALSO GROWN EXPONENTIALLY.
strongly feel that the future certainly that promises to provide a highly lies in winning the regional language As far as the issue of data privacy superlative user experience – a key audiences – we have the first-mover is concerned, it is important to note factor that ensures a loyal consumer advantage in understanding and that the Dailyhunt platform uses base, we believe, gives us long-term betting big on this segment. unique machine learning and deep differentiation vs the competition. learning technology that enables Additionally, we would also be smart curation of content and tracks What are the kind of opportunities focusing on exploring ways to user preferences to deliver real- available in this field for global augment the gallery of video content. time, personalised content and investors? This is essentially based on the notifications. The platform does not premise that the consumption of make it mandatory to share user’s As far as content-based digital videos has witnessed an all-time personal details such as phone businesses like Dailyhunt are high, across all niches. In fact, Video number, email ID, password therefore concerned, there are numerous constitute 60 per cent of overall the problem of data privacy does opportunities. It is evident that such mobile internet consumption in India, not arise. businesses are carrying a lot of making us the largest mobile data potential – purely due to factors such consuming market in the work at 1.4 What is the USP of the Dailyhunt as India’s demographics, mobile billion GB per month. model? Internet penetration and smartphone proliferation. Additionally, a large On a macro level, our core strategy Dailyhunt’s key differentiation lies in majority of users in India prefer short- stems from deep consumer and our ability to strike a direct chord with form/snackable online content, be it content (video) understanding, along the consumers in India. Dailyhunt has text or videos in regional with personalisation technology, and evolved to become India’s leading, Indian languages. these would constitute the building news and local language content blocks for market success.
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Investing in the capital-starved sectors of India by Holger Rothenbusch
A prominent global development finance institution weighs up channeling commercial investment to underserved Indian states in the North-East and to sectors that can deliver real development impact.
hirty years ago, CDC, the and evaluating the impact of those It’s clear that India’s economic UK’s government-owned 300 investments is central to the work powerhouses – sectors like IT and development finance institution, we do as a development finance regions such as the South and Tmade its first major investment in institution. Our analysis shows us the West of the country – have India. Since then, as India’s economy that those CDC-backed companies succeeded in attracting capital has changed beyond recognition, support around 350,000 direct jobs in from both leading Indian and we have helped to build some of the India and many more in their supply global investors. CDC’s focus as a country’s most important businesses chains. But we also know that our development investor means that and financial institutions, including impact is about more than just jobs. our priorities change as the need Apollo Tyres, UTI Bank (today We measure the local taxes paid by for capital in India changes. We’re Axis Bank), IDFC and Glenmark our Indian investee companies, which now more focused than ever on Pharmaceuticals. came to over $1.1 billion in 2017. getting commercial investment to the underserved and more capital-starved At a special event in Delhi in states like the North-East, and to October, we are marking both that SINCE THOSE FIRST those sectors that can deliver real 30-year milestone and the 70-year INVESTMENTS IN THE development impact. anniversary of CDC’s creation back in LATE 1980S, CDC HAS 1948 as the world’s first development With that in mind, we are announcing finance institution. We’re meeting key WORKED WITH INDIAN that CDC aims to invest around $1.7 business leaders and will hear from ENTREPRENEURS billion in India and its neighbouring government representatives about AND INVESTORS TO states over the next three years. how the UK can continue to work BUILD A $1.7-BILLION with India to support its economic PORTFOLIO OF OVER 300 What does this mean in practice; development. This is a country that and what type of investments will has enjoyed significant growth but INVESTMENTS IN INDIA. CDC make? Our objective is to make still has developmental challenges, investments that can combine both a country where CDC’s long-term And the work we do with financial financial return and social impact capital and expertise can make a institutions shows that they generated so our focus will be on finding huge difference. a loan portfolio in India of $45.2 opportunities that meet these criteria. billion, helping to provide finance We’ll invest in companies that aim Since those first investments in the for small businesses; unbanked to provide affordable and accessible late 1980s, CDC has worked with customers and many others who goods and services whether in Indian entrepreneurs and investors previously had little or no access to healthcare, energy or financial to build a $1.7-billion portfolio of over basic financial products. services. 300 investments in India. Measuring
16 October 2018 GUEST COLUMN
INDIA IS ALREADY AN IMPORTANT ECONOMIC PARTNER FOR THE UK AND AS WE MOVE TOWARDS A POST-BREXIT FUTURE THAT RELATIONSHIP WILL STRENGTHEN FURTHER.
Micro, small and medium-sized that need to mobilise more private job-creating sectors like infrastructure, enterprises are critical to economic capital; and in clean energy projects agriculture and affordable housing. In development in India but as many like our investment in Ayana October, for example, we’re launching as 90 per cent of these firms can’t Renewables Power that help India a $50-million investment pilot with access the finance they need to make its transition to low carbon the Kotak group that will increase grow, so we’ll back the microfinance power generation. affordable housing in many of India’s and non-banking finance companies lower-income states. that reach them. That will mean Our support for the Indian investment more investments like those we ecosystem will increase too. CDC India is already an important made in RBL Bank and IIFL Finance has played a crucial role in India’s economic partner for the UK and supporting microcredit, agribusiness, investment funds market since the as we move towards a post-Brexit affordable housing and SME loans. Or 1990s, backing 57 India-focused future that relationship will strengthen in Equitas, a Chennai-based finance investment funds, more than further. CDC is committed to playing company that reaches poor and any other Limited Partner in the a key role by bringing our capital and unbanked customers with a broader private equity space. We’ll focus expertise to the Indian entrepreneurs range of financial services. on both the mid-cap market and who are transforming the country’s on a venture capital programme business environment, opening up We intend to increase our direct designed to finance innovative and its markets and changing the lives of investments in job-creating industries high-tech firms. Our venture capital some of its poorest people. such as healthcare, particularly those approach will support funds that providers bringing new treatments to back technology firms providing Holger Rothenbusch is the market; finding new ways to serve affordable goods and services at Managing Director at CDC, a poorer groups by reducing costs; or scale in areas such as healthcare, UK-based development finance those that can train thousands of like our recent investment in Pi institution, and has built CDC’s healthcare professionals. We’ll also Ventures. And we’ll be committing new Debt business. back sectors like food & agribusiness more to investment funds targeting
www.indiaincgroup.com October 2018 17 NEWS IN BRIEF SUBSCRIBE NOW AT Asian, British investors Foreign companies in India eyeing indiaincgroup.com keen on India sizeable growth. The home of India-related foreign direct investment HOOQ to double India Ola raises $50mn from Diageo India eyes growth investments Chinese investors in Tier 2 towns Up-to-date insight into India’s accelerating globalisation story iageo India, the makers and the role India is playing on the global stage. of Johnnie Walker, Black & White and Black Dog Dwhiskies, is eyeing Tier 2 cities to fuel its growth in India. Incisive Content Engaging Leaders Impactful Events ingapore-based video-on- Abhishek Shahabadi, head of demand streaming service marketing for the luxury and HOOQ is doubling its India premium portfolio of Diageo Sinvestments and has changed India, said: “For the longest time, strategy to focus on Hollywood and we have been focused on the English premium video content to la, India’s largest cab- top 5-6 cities for selling premium take on Netflix and Amazon prime, hailing service, has scotch and premium whisky and drive growth in India’s highly raised $50 million at brands.” Oa valuation of roughly $4.3 The company is in the midst of competitive over-the-top (OTT) video market. billion from Hong Kong-based repurposing its advertising and Sailing Capital and the China- marketing spends to focus on Zulfiqar Khan, managing director at Eurasian Economic Cooperation the top 25-26 cities as growth in HOOQ India, told Indian media: “We Fund (CEECF), as part of the the sector is coming from smaller are doubling up on our investments SoftBank-backed start-up’s move towns like Indore and Guwahati. for India. We are investing in content, to raise fresh funds of at least $1 manpower as well as technology.” billion. The India unit of Diageo Plc On the new strategy, Khan said Hooq has about a 45 per cent volume has narrowed its focus on Hollywood Sailing and CEECF, a state- share in the three million case and English premium content, and it backed investment fund of per year scotch whisky market has started phasing out regional and China, will hold a combined and is growing at a rate of 8-9 Hindi content. stake of more than 1 per cent per cent. The growth rate in in Ola, implying that the latter’s non-metro towns, in early- mid India is expected to be among the top valuation has inched up since double digits, is outpacing the 10 OTT video markets in the world in its previous fund-raise, showed overall market growth rate, said four years and is growing at a CAGR regulatory documents filed by Shahabadi. of 23 per cent, according to PwC. A Ola with the ministry of corporate We deliver business opportunities separate report by Strategy Analytics affairs and sourced by business Penetration is also being driven “ said India's OTT video revenue is intelligence platform Paper.vc. by growing affluence and the and insights for our clients, by expected to grow at a CAGR of 30 younger consumer who is open The latest fund-raise from the per cent to reach $2 billion in 2022, to experimentation. Out-of-home “ compared to $529 million in 2017. two Chinese investment firms consumption accounts for 64 per engaging senior leaders, and comes at a time when Ola is cent of domestic sales. Khan said, “Every player wants the aggressively expanding outside producing incisive content and consumer to pay for content. That's and within India, while also The company is focused on the biggest challenge on how to get a building up a strong food-tech driving this by presenting scotch impactful events, globally. customer to pay. business to compete with Swiggy whisky with a whole range of new and Zomato, as the Bengaluru- experiences—like the Johnnie Manoj Ladwa, Founder & CEO, India Inc. “The focus is also to provide based company looks to fortify Walker Gourmet Experiences, customers with an easier way to pay. its lead against arch-rival Uber a curated tasting session where If that means working with a telco or Technologies in India. food is paired with financial partners, we will do that.” a drink.
18 October 2018 @IndiaIncorp /indiaincorporated /company/india-inc SUBSCRIBE NOW AT indiaincgroup.com
The home of India-related foreign direct investment Up-to-date insight into India’s accelerating globalisation story and the role India is playing on the global stage.
Incisive Content Engaging Leaders Impactful Events
“We deliver business opportunities and insights for our clients, by engaging senior leaders, and“ producing incisive content and impactful events, globally.
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www.indiaincgroup.com @IndiaIncorp /indiaincorporated /company/india-incOctober 2018 19 COUNTRY FOCUS
India-EU trade An analysis of the prospects of an relations: At a India-EU Free Trade Agreement (FTA) against the backdrop of the crossroads Indian President’s recent visit to three by India Inc. Staff European Union countries.
ndian President Ram Nath blocs makes perfect sense. Thanks organic chemicals, automobiles, Kovind’s three-nation tour to to its colonial past, India also has iron and steel, mineral fuels, and Central Europe — Bulgaria, historical ties with Europe and much pharmaceuticals while its major ICyprus and the Czech Republic of its federal structure of governance imports from the EU comprise of – in early September resulted in is borrowed from the developed machinery and equipment, gems the signing of 12 memoranda of economies of Europe. and jewellery, auto, plastics and understanding in the field of energy, organic chemicals. environment, defence production, Ground reality tourism, trade and investment and In the present tense as well, there The FTA has the potential to enhance financial services. Given that the is a lot to like. Already the EU is this relationship further, creating President is just a titular head in India India’s largest trading partner, with investment and jobs on both sides. and state visits are mostly cultural total bilateral trade of over $100 According to estimates by the and diplomatic in nature, the flurry billion. While nearly a quarter of it is European Parliament, an FTA can of MoUs underlines the importance accounted for by the UK, which post help expand EU’s GDP by 0.14 per of this trip. Yet, the visit did not, and Brexit will not be part of EU, Europe cent and India’s GDP by 1.3 per cent unsurprisingly so, alter the status quo would still remain important to India. a year. A trade sustainability impact on the India-EU free trade agreement. Excluding the UK, EU’s bilateral trade assessment of the FTA done back in with India is worth $77 billion, which 2009 had said India was expected to This agreement that was first initiated accounts for almost 12 per cent of gain €4.9 billion in the short run and in 2007, is one of the long-standing India’s total trade, 14 per cent of its €17.7 billion in the long run, while the enigmas of all global multi-lateral total exports and 10 per cent of EU was expected to gain €4.4 billion agreements that have been initiated total imports. in the short run and €1.6 billion in till date. At least on paper, an FTA the long run. A follow-up report to the between India, the world’s fastest India’s major exports to the EU study was never done so what those growing economy, and the EU, comprise of gems and jewellery, numbers would be like if the FTA is one of the world’s largest trading apparel and textiles, machinery, finalised today is anybody’s guess but
20 October 2018 COUNTRY FOCUS it would definitely be higher. Bilateral industry lobby group Confederation professionals) and also seeks data trade could potentially treble in a of Indian Industries in New Delhi. At secure status. Getting such a status decade from the commencement of the time, Prabhu also allayed any brings down the cost of compliance the FTA. fears that India too would get overly with the existing data protection laws conservative in the wake of rising and procedures that will benefit many of India’s backend service providers.
The EU, on the other hand, seeks further liberalisation of FDI in multi- brand retail and insurance, and opening up of the currently closed sectors such as accountancy and legal services. European banks have been eyeing India’s relatively under-tapped banking space, but are wary of the restrictive rules on priority sector lending and obligation on financial inclusion. EU also wants India to substantially lower its import duties on wines and spirits, dairy products and automobiles. India levies Stop-starts protectionism in global economy. one of the highest duties for imported Yet the FTA between the two “We have decided that we will be a luxury cars in its market which makes India-EU trade partners, officially referred to as country which will engage with all such cars from Europe one of the the Bilateral Trade and Investment our traditional friends and at the most expensive in the world. Agreement (BTIA), has been hanging same time start making new friends,” relations: At a in the air despite several rounds of he added. “Can you imagine owning a talks – 16 to be exact. Negotiations Lamborghini in India is 2.5 times have been stalled since May 2013 Europe for sure falls under the more expensive than owning it in any crossroads as both sides could not build a category of traditional friends but the part of Europe,” questions Sharad consensus on a range of issues. differences between the two sides Agarwal, Head, Lamborghini India. represent a bonafide tangled mess. It isn’t for lack of trying. Last year Elusive consensus in May, German Chancellor Angela The two sides have struggled to Merkel made a renewed push for ACCORDING TO arrive at a consensus on how much to the FTA while hosting Indian Prime ESTIMATES BY THE relent so that the other can also open Minister Narendra Modi. EUROPEAN PARLIAMENT, its markets. European companies “It’s important to us that we make AN FTA CAN HELP have traditionally struggled in the progress on the German-Indian, Indian market and are keen to get or rather EU-Indian free trade EXPAND EU’S GDP BY better access in a market that has agreement,” she said at a Berlin 0.14 PER CENT AND a population of 1.3 people so that business forum, where she shared INDIA’S GDP BY 1.3 PER they can effectively compete with a platform with Modi. “We will do a CENT A YEAR. the Japanese and Koreans. The major push in Brussels to ensure that Indian industry has been however these negotiations progress again.” opposed to any relaxation in the Key demands wines and spirits, dairy as well as True to her words, efforts were made What India seeks mainly is improved automobile sectors. to re-start negotiations during the market access for its IT professionals. year but they amounted to nothing. Currently, there are many barriers “Indian cars can already be exported However, in March earlier this year, to movement of professionals in at 10 per cent duty to Europe. India’s Minister for Commerce and Europe with unwieldy rules on work Obviously, India will not gain much by Trade Suresh Prabhu almost echoed permits, wage parity conditions, visa further reduction of EU duties for our her words and expressed his wish formalities and non-recognition of cars but if Indian duties are reduced that both sides should get back to the professional qualifications. Worse, by 50 per cent or even more, it will negotiation table. these rules are not harmonised be a substantial reduction in tariff. across Europe and different countries The gains will clearly be for the EU “We have started work on India-EU have different parameters. India industry," says India’s automobile FTA again. We have invited them wants a relaxed, harmonised and industry body Society of Indian and are looking at it,” Prabhu said preferential Mode 1 (ITeS/BPO/KPO) Automobile Manufacturers (SIAM). at an event organised by Indian and Mode 4 (movement of software There are other contentious issues
www.indiaincgroup.com October 2018 21 COUNTRY FOCUS as well. EU wants India to liberalise a significant player in the EU, UK’s of Commerce. “Also, most Indian professional services and strengthen exit meant the FTA had to be looked companies used to go to Britain intellectual property right (IPR) at with a new perspective. Sentiments as their entry point to Europe. With regime. While India may consider are at a new low and there is talk that them gone, they will now look at liberalizing professional services the FTA is a foregone conclusion. But a Germany, France and Belgium but changing its existing IPR regime there are positives spin-offs of Brexit so would hope for a trade deal to may have a critical impact on as well. facilitate investment and trade.” pharmaceutical and generic drug industry. Any concession by India in The demand for lowering duties on The lack of an FTA however is this would mean pharma companies wines and spirits for example, came affecting both partners. Since fiscal from European Union would stand largely from Scotch whisky makers 2012, bilateral trade declined for four to gain and their Indian counterparts of UK. With them gone, at least one consecutive years from $109.6 billion may have lesser scope. crease could be easily ironed out. to $ 88.5 billion in fiscal 2016. In the Further, Britain was also concerned next two fiscals trade improved to While the negotiations have been that a more liberal immigration regime $101.5 billion in fiscal 2018 but it is still stalled for some time, relations in EU would bring hordes of Indian an underachiever. between the two partners received a professionals to the UK. Already, UK fresh jolt in August 2015 when the EU has a robust Indian diaspora and is Brexit has complicated matters and, imposed a ban on 700 drugs clinically averse to adding to it substantially. at least for now, it looks like till the tested by GVK Biosciences, an Indian time the EU and UK can separate drug company. “It is not going to be easy considering themselves from each other, an FTA prickly topics like the tariff on cars with India for either or even closer Brexit effect and dairy products but there is a business relations would be difficult. Exactly a year later, the referendum bit more room for compromises But it has also opened new doors. on Brexit where UK decided to opt out now,” says Sunil Prasad, secretary They may not be fully ajar right now of EU exacerbated matters further. As general of Europe India Chamber but will be in due course.
22 October 2018 INTERVIEW Lack of political will to conclude an India-EU free trade agreement Geoffrey Van Orden is Britain’s Member of the European Parliament (MEP) for the East of England and Vice-Chair of the European Conservatives and Reformists (ECR) Group. In this interview, he tells ‘India Global Business’ what Brexit means for India-EU relations and why he fears the prospect of a free trade agreement (FTA) will continue to be hampered due to a mismatch in ambitions.
Is there any prospect of communique also suggests a India-EU FTA talks moving lack of urgency in talks. Within on to the next level? the 10-page, 53 paragraph document there was only There seems to be little one mention of the FTA likelihood of progress on the stating that “there was shared Free Trade Agreement in commitment towards timely the near future. So far this relaunching negotiations”. year there have been two meetings between the Chief In short, there is the intention Negotiators, most recently in to possibly start discussing June. These meetings have the possibility of a deal. seen no great breakthroughs. Language such as this does not fill me with optimism. There seems to be a mismatch of ambitions and Is Britain likely to lose out the same barriers that have to the EU on trade with India remained obstinate since following its exit from the negotiations began in 2007 bloc? continue to block progress. No. Over the past 14 years, There are currently no the UK has been the biggest further plans for meetings G20 investor in India, 270 between the EU and Indian British companies operate FTA Chief Negotiators. in India and employ nearly s Chairman of the European The senior official from the 800,000 people and Britain Parliament's Delegation for Relations European Commission’s imports approximately €8 with India, how do you see the India- trade directorate was to billion of goods a year from AEU relationship transforming in the context have met the new Indian India, more than any other EU of Brexit? Commerce Secretary in early country. September, but this meeting Britain has always been the driving force in has been postponed until At the same time, India terms of the EU relationship with India but many mid-November, in Brussels. invests more in the UK other European countries have now come to There doesn’t seem to be the than any other country understand the importance of that relationship. political will on either side for in the EU with some 800 an FTA to be concluded. Indian companies operating In the European Parliament, the India in Britain. Bilateral trade Delegation (the formal body for relations with The Comprehensive between the UK and India India) has 43 members – 12 per cent of which Economic and Trade has risen by 300% since are currently MEPs from Britain from across the Agreement (CETA) between 2000 and this continues to political spectrum. Canada and the EU was increase. The departure of concluded within five years. the United Kingdom from the However, MEPs from countries such as the Clearly when there is the EU leaves the UK free to sign Netherlands, Belgium, Italy and Romania and desire, agreements can a Comprehensive Economic many other countries take a close interest and be finalised in a smaller Partnership Agreement will undoubtedly become even more active. timeframe. The language used (CEPA) to strengthen this in the 2017 EU-India Summit economic relationship further. www.indiaincgroup.com October 2018 23 INTERVIEW
And I would like to see the concept of as many Indian parliamentarians to “strategic partnership” more precisely THERE SEEMS TO Brussels. defined so that it includes substantive economic, trade, environmental, BE A MISMATCH OF To raise awareness and help boost security and defence relations. AMBITIONS AND THE our relationship. we have organised SAME BARRIERS economic conferences and celebrated Britain should very naturally be THAT HAVE REMAINED events such as Diwali and World Yoga among India’s top three such strategic OBSTINATE SINCE Day, when we have been joined by partners. Sri Sri Ravi Shankar. I speak regularly NEGOTIATIONS BEGAN at the Raisina Dialogue in Delhi and What does India's relationship with IN 2007 CONTINUE TO shall be in India again in October and the EU mean on the ground? BLOCK PROGRESS. in January. It has been a very busy and fruitful period. In 2016, a migration and mobility agreement was signed which adopted In recent years there has been a Does the EU really take its a common agenda on migration general improvement in EU-India relations with India seriously? to help achieve better regulation relations. There were EU-India and reduce people trafficking. Summits annually from 2000 to 2007 For a country whose economy More recently, in October of last when negotiations on an FTA began. is already the sixth-largest in the year, agreements were reached on These continued until 2012 – then world, experiencing the fastest rate clean energy and climate change, there was a break and normal service of growth, shortly to become the combatting terrorism and smart and resumed in 2016. At the last EU-India world’s most populous nation, and sustainable urbanisation. Summit in Delhi in October last year, with possibly the fourth most powerful there were agreements on climate armed forces, the relationship is In terms of financial cooperation, in change and energy and smart and undoubtedly not given the attention it 2017 the European Investment Bank sustainable urbanisation, as well deserves. Within the EU institutions (EIB) provided €1.4 billion in loans to as counter terrorism. In 2017, the there are more debates, events and India. Part of this was a €500 million Parliament also passed an excellent reports looking at relations with other loan agreement to help fund the resolution on political relations with Asian countries such as Japan and Bangalore Metro Phase-II Project. India authored by my colleague China. And there has been almost India is also the largest beneficiary Cristian Dan Preda MEP. no progress over the last decade in of Erasmus programmes on higher securing an FTA. education to third countries. Currently I was elected as Chairman of the 50,000 Indian students are studying Parliament’s Delegation in 2014. There is great potential in the in over 400 universities in Europe as Our Delegation has already made relationship between the EU and part of this scheme. two visits to India to engage with India, however unless it is given more ministers and to see developments focus it will remain untapped. The With regards to the 2014-2019 on the ground in Delhi, Bangalore strong bilateral links between India term of the European Parliament, and Jaipur. We have welcomed the and many European countries, not how have you seen the EU-India Speaker of the Lok Sabha, as well least the UK, will of course continue dynamic evolve? to prosper.
24 October 2018 ‘100 UK India’ is an exclusive list of key influencers that enrich and make the UK-India relationship tick. The list is a result of painstaking research by our expert editorial team and profiles influential people in business, policy, the arts, culture and media.
Contact us : For Business Development & Advertising Opportunities Email: [email protected] www.indiaincgroup.com October 2018 25 SECTOR FOCUS India’s e-mobility challenge: Mass adoption will take at least another decade by India Inc. Staff
Indian and foreign car-makers are making the first large investments in setting up e-vehicle and battery manufacturing facilities in India. But battery charging infrastructure will have to be rolled out across the country and the upfront cost of electric vehicles (EVs) will have to fall significantly for these eco-friendly models to gain mass acceptance.
onsider this: one has to Since these vehicles have only 18- spend an average Rs 5-6/km 20 moving parts, or one hundredth Remember what happened to ($0.07-0.08) for fuel to drive a the number in regular cars running analogue films and Kodak? It Cpetrol car in India. Add the wear and on internal combustion engines, couldn’t survive the onslaught of tear, maintenance and occasional the maintenance costs, too, will be digital cameras (despite inventing replacement costs of about 1,800- much lower. The cars will, therefore, the device) as consumers shifted en 2,000 moving parts and you could be last much longer – up to, it has been masse to the new product despite its looking at a running cost of about Rs estimated, two million kilometres. higher price because of zero marginal 8-10/km ($0.10-0.14) over the lifetime costs. of the vehicle. EV PENETRATION IN Likewise, e-vehicles have the Now consider an electric vehicle (EV): advantage of almost zero, or at the cost of charging batteries would INDIA IS STILL VERY least extremely low, running costs come to less than 30 paise (less than LIMITED. AS OF DATE, compared to petrol and diesel cars. half a cent) per kilometre. Together THERE ARE ONLY ABOUT Then, there are other benefits such with the cost of replacing the battery 150,000 EVS IN INDIA, as zero emission, almost negligible maybe once every three to four MOSTLY THREE- AND carbon footprint and the associated years it will cost less than Rs 1 per benefits for the environment and the km (about one and a half cents) per TWO-WHEELERS. health of all living beings. kilometre.
26 October 2018 SECTOR FOCUS
Vision for the future – 7 Cs Cutting fuel consumption in India, Little wonder then that the world at therefore, will not only help fight “Electric vehicles attract 12 per large and India in particular are so climate change and meet India’s cent GST and no further subsidies excited at the prospect of ushering in targets under the Paris Accord but are needed and we don’t have any e-mobility. also reduce the import bill and help intention of subsidising personal the country economically. vehicles. The non-fiscal incentives The Narendra Modi government has that we will announce will increase announced that it will encourage Incentives galore sales of electric vehicles to 15 per e-vehicles though it seems to have EV penetration in India is still very cent of total sales. There is no need dropped its earlier proposal of limited. As of date, there are only for automobile companies to ask for phasing out all internal combustion about 150,000 EVs in India, mostly incentives any more. They should vehicles by 2030. three- and two-wheelers. That’s less rather develop a pool of drivers to than one-tenth of 1 per cent of the enhance skill development,” he said. Speaking at the first Global Mobility total number of vehicles plying on Summit in New Delhi recently, Modi Indian roads. Some of the other major initiatives to said: “My vision for the future of encourage EVs in India are: mobility in India is based on 7 Cs – common, connected, convenient, congestion-free, charged, clean, cutting-edge... We will soon put in place a stable policy regime around electric and other automated vehicles...Clean mobility powered by clean energy is the most powerful weapon in our fight against climate change.”
EVs help fight climate change India is currently the fourth-largest emitter of greenhouse gases (GHG) in the world. The transport sector accounts for 13 per cent of India’s energy-related CO2 emissions, according to INCCA (2010).
The automobile industry has grown at a CAGR 9.6 per cent in the decade from 2006-16 and its contribution towards GHG emission is expected to grow at a much larger pace, if business grows at the same pace going forward.
India also has the world’s third largest automobile industry and second- But the government is moving to largest two-wheeler manufacturer with improve this. Last year, it placed an • The Government plans to two wheeler production to rise from order for 10,000 electric cars with Tata introduce a new Green Urban 18.8million to 34 million by 2020. Motors, which emerged the lowest Transport Scheme with a central bidder, to replace its fleet of diesel assistance of about Rs 25,000 There were 192 million private on and electric cars. crore ($ 3.5 billion), aimed at the roads in 2016. The penetration of boosting the growth of low carbon private vehicles, however, was still Then, addressing the 58th annual urban transport. very low at about 30 per 1,000 people convention of the Society of Indian compared to countries such as the Automobile Manufacturers (SIAM) • Govt. established NEMMP US, which had about 800 vehicles recently, India’s Road Transport and (National Electric Mobility Mission per 1,000 people or even China, Highways Minister Nitin Gadkari said Plan) with corpus of Rs 14,000 which had 69 per 1,000 people. India his ministry plans to roll out non-fiscal crore ($1.9 billion) and created imported 202 million tonnes of crude incentives to ensure that EVs make TPEM (Technology Platform for oil last year amounting to 81 per up 15 per cent of vehicle sales in Electric Mobility) giving 60 per cent of total crude requirement. This India in five years. Further, electric cent subsidy to all eligible R&D accounted for almost 50 per cent of (and CNG) vehicles will not need road projects the country’s total import bill. permits, he announced. www.indiaincgroup.com October 2018 27 SECTOR FOCUS
• In 2015, the government their alternative powertrains when on Motors are already making EVs formulated Faster Adoption other roads. in India and Manufacturing of Electric and Hybrid Vehicles in India • Suzuki, Toshiba, Denso plan to (FAME) , under the National SEVERAL LARGE INDIAN make lithium-ion batteries for Electric Mobility Mission 2020 AND FOREIGN AUTO electric vehicles in India to encourage the progressive MAJORS ARE BETTING induction of electric and hybrid BIG ON EVS AND Investments in batteries vehicles in the country. FAME "We want to drive investments across provides demand incentives for INVESTING BIG BUCKS the value chain from batteries to EVs and hybrids—up to Rs 29,000 ON SETTING UP EV- smart charging to electric vehicle for 2-wheelers and Rs 61,000 for MAKING AND RELATED manufacturing," the Prime Minister 4-wheelers. The goal: have 6-7 FACILITIES IN INDIA. said at the Summit, adding: "India's million “EV+” vehicles by 2020. entrepreneur manufacturers are now • The Rs 5,500 crore ($750 million) poised to develop and deploy break- FAME II will take these incentives through battery technology." forward to drive faster EV adoption Auto majors bet on electric in India. vehicles At the Summit, Suzuki Motor Several large Indian and foreign auto Corporation Chairman Osamu … and some more majors are betting big on EVs and Suzuki announced plans to test of "I will give you all clearances on a investing big bucks on setting up EV- 50 EV prototypes in India keeping in platter... Clearances have been major making and related facilities in India. Indian traffic conditions, adding that hurdle causing delays in projects India needed proactive leadership to and resulting in cost overruns. Come • Ford Motor Co. plans to invest Rs ensure the speedy rollout of adequate forward for public transport system on 1,300 crore ($195 million) to build charging infrastructure to help the electricity or alternative fuel," Gadkari a global technology and business growth of EV adoption. told the Global Mobility Summit. centre in Chennai, which will be designed as a hub for product Significantly, he also announced that "I am ready for electric highways. development including e-mobility Suzuki would start making lithium ion We can put electric cables in a lane solutions and business services batteries, which power EVs, in Gujarat of Delhi-Mumbai expressway and for India and other markets. from 2020 and that he plans to launch 40-tonne capacity trucks can easily • Masayoshi Son, CEO of SoftBank electric vehicles in India that year in go on that. We will give right of way Group, has said Ola Cabs, a local partnership with Toyota. and clearances for the project. We Indian competitor to Uber, may have said if somebody wants to come introduce a fleet of one million Long road ahead then he or she is welcome. If anyone electric cars in partnership with an Despite these incentives and wants to run cable cars we are ready electric vehicle maker. investments it will take at least to give clearances and right of way," • Nissan Motor Co. is in discussion another decade before EV numbers he added. with the Government of India ramp up significantly to be taken to bring electric and hybrid seriously. The policy challenges The technology for electric highways technologies to India as the are being addressed. But the was developed in Sweden; it allows government plans to reduce air infrastructure and price challenges hybrid trucks to run on electricity pollution caused by vehicles. remain and will have to be overcome when on these highways and use • Mahindra & Mahindra and Tata before the potential is achieved.
28 October 2018 NEWS IN BRIEF
The country’s technology and cyber India’s tech sector space segment has seen a lot of takes centre stage activity in recent weeks.
Samsung opens its Microsoft to train Flipkart acquires Israeli biggest store in India Indian women in cyber analytics firm security nline retailer Flipkart has now turned overseas to make tech loftware major Microsoft acquisitions. The homegrown and Data Security Council Oplayer has acquired an Israel- of India (DSCI) launched a based analytics company Upstream Sprogramme to train 1,000 women Commerce in a bid to deliver real-time in cyber security for free over a pricing and product analytics to their period of next three years. Under sellers. the program 'CyberShikshaa', 1,000 science and engineering graduate Post the buyout, the 20-member amsung Electronics Co Ltd women between the age group of Upstream Commerce team, while a opened its biggest mobile 20-27 belonging to a family with an part of Flipkart, will continue to work store in the world in India as annual household income below out of Israel. This will also make Israel Sit tries to take pole position in the Rs 500,000 will be trained in cyber one of Flipkart’s global centres for world’s second-biggest smartphone security. future data science work. market amid fierce competition from Chinese brands. Anant Maheshwari, President, Kalyan Krishnamurthy, CEO, Flipkart, Microsoft India, said: "As India said: “With the Upstream acquisition, The South Korean tech giant’s leapfrogs into the next phase of we will now have tech and talent roughly 33,000 sq ft store in the growth, we see a multi-fold growth presence across Asia, US and Israel, southern tech hub of Bengaluru will of digital assets. This increases some of the key global hubs for help it extend its lead in India over the need for an enhanced cyber innovation.” global rival Apple Inc, which has yet security infrastructure and to open any flagship stores in the advanced security solutions. This country. will lead to the next wave of jobs.”
Samsung opened the world’s The first phase of the programme biggest smartphone plant outside will be rolled out across Noida, Indian capital New Delhi just two Patna, Hyderabad and Mohali. months ago. Flipkart already has an office in The CyberShikshaa curriculum will California to tap into the tech talent in “India is an extremely important comprise an interactive, 4-month the Bay Area. market,” Mohandeep Singh, senior training course with a combination vice-president, mobile business of theory, case studies and practical Anil Goteti, head of marketplace, at Samsung India was quoted as hands-on projects managed by Flipkart, said: “The company uses saying. The company plans to open a group of training partners led data science and analytics to provide more such stores in some of India’s by Centre for Development of insights to e-commerce platforms top 10 cities. Advanced Computing (C-DAC), a across the globe. company official said. “These stores...will really help us “We believe this acquisition will further consolidate our share as we It will also include mentoring strengthen our already existing move forward,” Singh said. sessions and workshops with capabilities of providing insights to our industry leaders, soft skills training sellers on both selection and pricing.” The new store will feature Samsung and technical sessions by Microsoft mobile devices but also showcase its employee volunteers. Campus The integration of this technology consumer electronics products and interviews will be organised for onto the Flipkart platform is expected latest innovations. It will also house students on successful completion to take place in the next few months. a service centre for phones. of the course. www.indiaincgroup.com October 2018 29 PREMIUM ROOMS AND SUITES WE ARE DELIGHTED TO LAUNCH OUR BRAND NEW SELECTION OF BEDROOMS AND SUITES.
St. James’ Court Hotel, A Taj Hotel 54 Buckingham Gate, Westminster, London SW1E 6AF www.stjamescourthotel.co.uk I +44 (0) 20 7834 6655
30 October 2018
cor or te 1 2 0 2018 10 8 20 REGION FOCUS
Uttarakhand: An important investment destination Proactive policies, stable politics and a clean administration has ensured that the small north Indian state of Uttarakhand has attracted major investments in food processing, automobiles, tourism, IT and other sectors from big names such as HP, Mahindra, Adani and Patanjali.
ttarakhand is better known to and generous tax benefits have led to Figures put out by the Department of the Indian public as a very massive growth in capital investments Industrial Policy & Promotion (DIPP) desirable tourism destination in the state over the seven to eight show that cumulative FDI inflows Uoffering a wide variety of options for years. The state has clocked a between April 2000 and June 2018 pilgrims, adventure seekers, wildlife compounded annual growth rate was $680 million. enthusiasts, nature lovers and those of 10.86 per cent between 2011-12 seeking wellness and rejuvenation. and 2017-18 to record a gross state Single window clearances domestic product (the state equivalent The Uttarakhand government has a But in recent times, it has also of the more popular GDP) of $33.21 single window clearance system for emerged as a hub of industry and billion. The net state domestic product approvals and licenses; the entire commerce, with thriving units in has grown at a faster clip of 11.07 per process is web-based and allows sectors such as automobiles, food cent over this period. investors to obtain necessary licenses processing, information technology, and permits without having to textiles, renewable energy, physically interact with any authority. biotechnology and horticulture, UTTARAKHAND, besides, of course, tourism. WHICH IS LOCATED AT This improves ease of doing business THE FOOTHILLS OF in the state and removes any Large Indian business houses such possibility of corruption or red tape. as Mahindra, Adani, Patanjali and THE HIMALAYAS, IS A survey by the National Council of Amul, among others, have announced FORTUNATE TO HAVE Applied Economic Research, a highly investments of Rs 70,000 crore ($9.5 ALMOST EVERY AGRO- respected independent non-profit billion) in the state at the recently GEO CLIMATIC ZONES think tank in India, on Perception of concluded Uttarakhand Investment MAKING IT ATTRACTIVE Good Business Climate ranks the Summit in Dehradun. FOR FLORICULTURE, state as the least corrupt in India. It was among five states – the others Growing faster than the national HORTICULTURE AND being Gujarat, Andhra Pradesh, average FOOD PROCESSING. Assam and Himachal Pradesh – Forward-looking industrial policies where more than 90 per cent of www.indiaincgroup.com October 2018 31 REGION FOCUS the respondents said they faced no amusements parks and new of 25,000 MW, of which only about problems in getting land. ropeways that would be exempt 3,500 MW has been harnessed. from payment of entertainment Another 12,500 MW has been Handholding support tax in order to promote tourism awarded to various private and To facilitate a seamless transition and develop it as a major source public sector companies, leaving an from concept to cash flow, the state of employment and revenue untapped potential of about 9,000 has set up an Investment Promotion generation in the state. MW. & Facilitation Centre (IPFC) as a one- stop-shop for the investors providing Locational advantage Then, its close proximity to India’s handholding support in a structured, Uttarakhand, which is located at the capital New Delhi and excellent road, focused and comprehensive manner. foothills of the Himalayas, is fortunate rail and air connectivity with the rest to have almost every agro-geo of the country makes it an attractive Investors, especially foreign investors climatic zones making it attractive investment destination. are often daunted by the convoluted for floriculture, horticulture and food and bureaucratic rules and regulations that govern the investment BENEFITS AND INCENTIVES process in India. To overcome this hurdle, the The state offers a wide range of bene ts in terms of interest incentives, Uttarakhand assembly nancial assistance, subsidies and concessions. The main attractions passed the Uttarakhand of the state are: Right to Service Act, 2011 and The Uttarakhand Availability of cheap and reliable labour Enterprises Single Abundant availability of water resources Window Facilitation Transparent land allotment processes and and Clearance Act, competitive prices 2012. These statutory World class integrated industrial estates provisions facilitate the Skilled manpower delivery of permissions, licenses and approvals to Sector-speci c policies providing scal and investors in a time-bound non- scal incentives manner. Other measures Proximity to the National Capital Region of Delhi to improve the ease of Handholding through investment promotion and doing business include: facilitation centre Well performing state in Ease of Doing Business • The Software with 98.10 per cent compliance Technology Parks of Good law and order situation; among the lowest India (STPI) earth station at Dehradun number of mandays lost due to industrial tensions ensures high-speed connectivity. • Uttarakhand Policy for Skill Development & processing. The state has more Political stability Entrepreneurship was launched than 175 species of rare medicinal, Uttarakhand is currently ruled by in 2018, which aims to increase aromatic and herbal plants. the BJP, which won 57 seats in its the employability of workers, 70-member Assembly last year. The competitiveness of enterprise As mentioned earlier, the state Indian National Congress (INC, aka and promotes inclusive growth. is a leading tourist destination in Congress), which had ruled the state • The single window system India with several major and minor from 2012-2017 won 11 seats. facilitates speedy clearances of hill stations, wildlife parks, Hindu projects under the Horticulture pilgrimage centres, mountain streams The state, which was formed in 2000, Mission for North East and and trekking routes. Over 34 million has a tradition of alternating between Himalayan States, National domestic tourists and almost 150,000 Mission on Food Processing, foreign tourists visited the state last the Congress and the BJP every five National Horticulture Board and year. years. The Congress formed the first Agricultural and Processed Food The abundance of rivers makes the government in the state in 2002 when Products Export Development state a key destination for hydropower it was carved out of Uttar Pradesh. Authority. generators. According to government The BJP formed the government in • Uttarakhand Tourism Policy, 2017 of Uttarakhand figures, the state has 2007 only to hand back power to the promotes the setting up of new a hydropower generation potential Congress in 2012.
32 October 2018 REGION FOCUS
Iconic yoga guru Swami Ramdev, construction of hydropower projects in Trivendra Singh Rawat of the BJP who also owns a vast Ayurvedic the state. Environmentalists assessed was elected Chief Minister of the FMCG empire under the Patanjali that rampant deforestation and state following the BJP’s victory in brand name has also announced unregulated development were the 2017. Rawat is known for his clean, investments of Rs 2,500 crore ($330 main causes. incorruptible image, austere lifestyle million) on education, food processing and administrative and political and wellness. The state’s ecology is very fragile, acumen. and this will have to be managed The Mahindra Group will invest Rs very carefully. So, industries will Investments pouring in 550 crore ($70 million) on setting have to follow stricter environmental The Adani group is investing Rs 6,500 up an automobile assembly plant, a norms than in most other states. crore ($900 million) in the state. Of tractor plant and resorts. The government will also have to this, almost 80 per cent will go into balance the needs of industrial growth a metro rail project, 15 per cent on Ecological challenges remain and development with the need to power transmission and the rest on Following the devastating floods maintain the ecological balance in setting up a logistics park. in 2013 which killed 5,700 people, the state. the Supreme Court has halted the
www.indiaincgroup.com October 2018 33 NEWS IN BRIEF
From start-ups to industry leaders, Indian Indian companies on enterprises are continued their march to a global mission enhance overseas impact.
Salesforce consulting partner in OYO hotel chain TVS Motor enters the Nordics in Europe marking the second acquisition under chief announces UK entry Mexican market executive officer (CEO) Salil Parekh, YO, India's fastest growing louth India's leading two- who took over nine months ago. hotel chain, is set to wheeler maker TVS Motor shake up Britain's budget Company announced their Finland-based Fluido is a privately Oaccommodation market with a Sassociation with leading distributor held firm that was founded in 2010. high-tech franchising and marketing in the Mexican region, Torino Infosys said it expects to close strategy to sign up 300 independent Motors, a subsidiary of Groupo the acquisition during October- hotels by the end of 2019. Autofin to participate in the December. growing North American market Marking its first expansion outside Ravi Kumar S., President and Deputy of Asia, the franchiser said it plans In the first year of the association, Chief Operating Officer, Infosys, to invest £40 million ($53 million) to Torino Motors will work with said: “Fluido will be an important launch in 10 UK cities over the next TVS Motor Company to open 40 addition to the Infosys family, 18 months through a smartphone- exclusive stores in the country for bringing a unique combination of based service aimed at both franchise the distribution of two-wheelers, market presence, deep salesforce owners and guests. the company said in a statement. expertise, agile delivery and training, that combined with our existing With over 40 years of experience capabilities will help companies in the region, Torino Motors reimagine and transform their specialises in automobile and businesses. This acquisition also retail finance. aligns with our efforts to invest in local capabilities in the regions in R Dilip, Senior Vice President – which we operate.” International Business, TVS Motor Company, said: “We look forward Bengaluru-based Infosys’s latest to the market knowledge that they acquisition is significant for three will bring on board. Their insights reasons, according to analysts. OYO is entering Britain's economy will allow us to personalise our hotel segment, which is led by offerings to suit the customers of First, Infosys through Fluido can Whitbread's Premier Inn chain. Mexico and their vast network of expect to generate more business distribution will ensure maximum from clients in the Nordic region Other branded operators include reach in the country.” comprising Finland, Denmark, private equity-backed Travelodge Sweden, Norway and Slovakia. and Holiday Inn Express, a unit of Jorge Garcia, CEO, Torino Motors, Intercontinental Hotels Group. said: “The range of offerings Second, the acquisition will help provided by the Company are very put the consulting arm back on the The company’s founder Ritesh well-suited for the local Mexican growth pedestal after more than two Agarwal said that OYO aims to select commuter and terrain. We are years of tepid performance. hotels from among Britain's 35,000- confident that this association will 40,000 independent operators, be very successful.” offering interior redesign and revenue Finally, Infosys’s second acquisition management services to help them after it spent $75million to buy compete. Infosys to buy Finnish WongDoody, the US-based ad firm for $76mn agency in April, suggests that Since its founding in 2013, OYO has the company is not shying away become South Asia's fastest growing Indian IT Services supplier especially after its three earlier failed hotel chain, with a network of 211,000 Infosys has agreed to spend acquisitions made under former CEO rooms in 349 cities. I$76 million to buy Fluido, a Vishal Sikka’s watch.
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© 2018 Infosys Limited, Bengaluru, India. www.indiaincgroup.com October 2018 35 ANALYSIS
Tough-talking India takes centre-stage at UN by India Inc. Staff Beyond the much-hyped clash with Pakistan, the 73rd United Nations General Assembly had a lot more on the cards for India.
ndian External Affairs Minister become the instrument of a few at the up to the General Assembly. Swaraj, Sushma Swaraj issued a rallying cost of the many would resonate with not one to mince her words, was cry for reform during her address many who share India’s view that the unequivocal in the country’s stance Iat the UN General Assembly in New current composition of the 15-nation on cross-border terrorism and the York at the end of September. At UN Security Council does not reflect frustrated peace process with the its heart lay India’s long-standing the changed global realities. neighbouring country. demand for the UN Security Council to reflect the realities of the 21st She said: “We are completely century. "IF THE UN IS engaged in fighting poverty; alas, INEFFECTIVE, THE our neighbour Pakistan seems only "Reform cannot be cosmetic. We engaged in fighting us. need to change the institution's head WHOLE CONCEPT OF and heart to make both MULTILATERALISM WILL “In our case, terrorism is bred not in compatible to the contemporary COLLAPSE." some faraway land, but across our reality," she said. border to the west. Our neighbour’s expertise is not restricted to spawning "If the UN is ineffective, the whole India-Pakistan clash grounds for terrorism; it is also an concept of multilateralism will While UN reform may have been at expert in trying to mask malevolence collapse," she warned. the heart of her address, the focus with verbal duplicity.” was understandably on the much- Her sentiment that the UN must not hyped India-Pakistan clash in the lead Beyond this tirade, she also urged
36 October 2018 ANALYSIS the UN to adopt the India-initiated Comprehensive Convention on International Terrorism (CCIT) in order to enshrine a clearer definition of terrorism worldwide.
“The CCIT was proposed by India in 1996. In 2016, despite the passage of two decades, we are yet to come to a conclusion. As a result, we are unable to develop a norm under which terrorists shall be prosecuted or extradited. Therefore, it is my appeal that this General Assembly acts with fresh resolve and urgency to adopt this critical Convention,” she noted.
Her underlying message was that though the international community has become increasingly aware of Pakistan’s role in promoting terrorism, the absence of an international agreement on the definition of terrorism allows Pakistan to characterise terrorists as “freedom fighters”.
Swaraj's appearance at the UN global stage came amid a particularly tense time in India-Pakistan relations, in the aftermath of the brutal murder of Indian soldiers in the Jammu region. Her snub to Pakistan Foreign Minister Shah Mehmood Qureshi on the target of generating 175GW of women across the world need,” sidelines of the General Assembly solar and wind energy by 2022 and she declared. was symbolic of this freeze in ties. reiterated that the International Solar Alliance (ISA) launched with Conclusion Economic and social France has been already signed by It was a busy time for the Indian transformation 68 countries. delegation at the UN meet, attended However, the Indian minister also by over 120 UN member states. used the global platform to highlight Requests for an estimated 30 bilateral some of the significant reforms "REFORM CANNOT meetings had been received for the being undertaken by the Indian BE COSMETIC. WE Indian External Affairs Minister. government, including the world’s NEED TO CHANGE THE biggest health insurance programme INSTITUTION'S HEAD Over the course of the week-long recently launched by Prime Minister deliberations, Swaraj tackled the Narendra Modi to benefit 5 million AND HEART TO MAKE issue of climate change, participated Indians as part of a pledge to build BOTH COMPATIBLE TO in the Non-Aligned Movement (NAM) a clean, healthy, educated and THE CONTEMPORARY Ministerial Conference on Palestine energised India. REALITY." and attended other meetings including the India-Brazil-South At the meeting on climate change Africa (IBSA); Brazil, Russia, India, convened by UN Secretary General “The alliance aims to mobilise China and South Africa (BRICS); and Antonio Guterres during the 73rd technology and finances to lower South Asian Association for Regional Session of the UN General Assembly, unit costs,” she said. The minister Cooperation (SAARC) meets. she highlighted India as the sixth- also informed the UN about steps India’s over-arching message to the largest producer of renewable energy, being taken towards women’s UN was loud and clear: "Step by and fifth-largest producer of solar empowerment, including the Ujjwala slow step, the importance, influence, energy in the world. scheme, under which 50 million gas respect and value of this institution connections have been provided so is beginning to ebb... The United As part of the country’s fight against far, and 26-weeks’ maternity leave. Nations must accept that it needs climate change, she flagged India’s “In India, we have implemented what fundamental reform." www.indiaincgroup.com October 2018 37 HOTSPOT
Indian businesses of any size can succeed in the US by Brian Lenihan The US-India economic relationship is built on bilateral investment, writes an American investment strategist. he economic partnership volume of exports between the The United States has entered a new between the United States two nations. era of economic growth. With fewer and India is a blueprint for regulations, a simplified tax structure, Teconomic prosperity. Expanding In the spring of 2019, “Trade Winds: and new infrastructure improvement bilateral trade and investment Indo-Pacific” will take place in New initiatives, American leaders are between the United States and our Delhi. This special trade mission will working to create an environment in allies is a top priority of the Trump bring US exporters together with local which all companies operating in the administration, and few countries decision makers and provide these United States can flourish. exemplify this better than India. companies with the opportunity to Indian businesses of any size can Together, our two countries are expand into one of the fastest-growing succeed here – large automakers, forming the foundation of the global economies in the world. Indian firms small software companies, energy economy in the 21st century. will, in turn, get a snapshot of the producers, service providers, Secretary of Commerce Wilbur Ross US investment climate. This event and everything in between have recently announced that India will be represents the next step in what found success in America – which moved into Tier 1 of the Department has long been a vibrant economic is one reason why the Global of Commerce’s Strategic Trade relationship. Entrepreneurship Index again ranked Authorization license exception, a the United States first of 137 countries designation comparable to NATO Just last year, Indian investment in in 2018. membership. This regulatory change the United States reached a record will enhance both the bilateral $13.1 billion, a number translating to Simply put, the United States is the defence and trade relationship tens of thousands of US jobs, while best destination for investment – between the United States and India, US investment in India crossed the your investment. The fundamentals potentially greatly increasing the $44 billion mark. that have made the United States a
38 October 2018 HOTSPOT great place to invest remain strong. help contribute to world-changing spend $114 million on research and From a diverse, highly educated, and innovation. development in the United States in skilled workforce to strong intellectual 2015 (latest available data). property protection, it’s easy to see Likewise, the United States is a Additionally, Indian firms exporting why millions of global business recognised leader in research and from the United States can reap investors continue to choose the development and has one of the benefits from the “Made in the USA.” United States. highest-acclaimed networks of brand premium (innovation, quality, universities and institutions in the and reliability). Largest Amount of FDI in the world world. This culture of innovation offers and growing an added competitive advantage to The SelectUSA Connection At $4 trillion, the total stock of foreign the business community and keeps SelectUSA is the US national direct investment (FDI) in the United the United States at the cutting edge investment-promotion program States is unrivalled. Last year alone, of new ideas, technologies, and that works to facilitate job-creating the flow of FDI into the United States prosperity. business investment and raise topped $277 billion. FDI in the United awareness of the important role States is not just growing, it’s also that FDI plays in the U.S economy. diversifying. Many of the fastest- JUST LAST YEAR, INDIAN SelectUSA serves as a single point growing sources of FDI are in Asia INVESTMENT IN THE of contact to help business investors and South America. UNITED STATES REACHED and US economic development organisations (EDOs) navigate the US leaders are focused on creating A RECORD $13.1 BILLION, federal regulatory system. Working an environment that attracts even A NUMBER TRANSLATING with US EDOs, the program more investment and removes the TO TENS OF THOUSANDS supports business investors hurdles that can distract companies OF US JOBS, WHILE US seeking information and guidance from their basic mission: to freely INVESTMENT IN INDIA about entering or expanding their operate. Recently, the corporate tax CROSSED THE $44 operations in the United States. rate in the United States was lowered Support from the SelectUSA team BILLION MARK. from 35 to 21 per cent, allowing helps businesses find inroads to companies to keep more of their investment opportunities and make profits to reinvest in their operations – the necessary connections to make a significant benefit for any business. Skilled, educated & diverse deals happen. Reforms like this are making the workforce United States more attractive than The US workforce is diverse, High-profile events like the annual ever as a business location. skilled, innovative, and mobile – and SelectUSA Investment Summit US workers are among the most facilitate many such connections, Epicentre of entrepreneurship productive in the world. In fact, enabling business to explore locations When companies select the United US workforce output per hour is across the nation in a matter of hours. States for investment, they are more than 30 per cent above the Investment Summit participants not only bringing well-paid jobs to Organisation for Economic Co- also hear about the US business communities across the country; operation and Development (OECD) and investment climate directly from they are also tapping into a market member country average. The US senior government officials and powered by innovation. With a education system is the foundation of industry leaders, and learn about deeply-rooted business culture of our competitive and skilled workforce. specific resources and tools to invest experimentation and evolution, wide Over 40 per cent of US adults have in the United States. access to capital, and other resources completed a level of education designed to help new ideas take beyond high school. Looking to the flight, there is arguably no better future, President Trump has prioritised Brian Lenihan is the Acting market than the United States for workforce development to ensure that Indian entrepreneurs and startups to the country is able to meet the needs Executive Director of experiment. of a 21st century economy. SelectUSA and also co- chairs, with the Director of World-changing innovation Made in the USA the White House National Entrepreneurs benefit from, and By selecting the United States, Indian Economic Council, the contribute to, a flourishing ecosystem companies can become essential SelectUSA Interagency for invention and inspiration, thanks parts of the cities and towns they are to the robust and comprehensive investing in. More than 56,000 US Investment Working Group protection of intellectual property jobs are directly supported by the US to promote business rights. In fact, the United States affiliates of majority Indian-owned investment and address registers more international patents firms. These affiliates contribute federal regulatory barriers. than any other country, patents that $1.5 billion to US goods exports and www.indiaincgroup.com October 2018 39 INDIA GROUP
SPECIALIST LEGAL ADVICE FOR BUSINESSES AND INDIVIDUALS Penningtons Manches has a strong track record of KEY INDIA CONTACTS RUSTAM DUBASH working with Indian companies investing in Europe Partner and head of India group and European companies entering the Indian market. T: +44 (0)20 7457 3176 E: [email protected]
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40 October 2018 INDIANS IN FOCUS Why trust is key to business in India: Lessons from Adam Smith to Jack Ma
The author of ‘Trust: Creating the foundation for entrepreneurship in developing countries’ presents a snapshot from his latest work to highlight the importance of a simple set of principles in achieving entrepreneurial excellence. by Tarun Khanna
n the past decade, India has create. Think of this as having to support for his radical ideas on how become the flavor du jour for invest in reassurance in environments to keep cows ‘happy’ with better investors, whether one uses where experience has conditioned technology monitoring, so that their Iportfolio flows or direct investment people to be naturally risk-averse yields would go up. That turned as a measure. As an academic and and cautious. That way, armed with out to be an important piece of the investor-entrepreneur in India, and ways to reassure others, you can get ecosystem to nurture talent that in other emerging markets, I often quality talent to gravitate towards you helped him, and others. try to regroup with my colleagues – why would a smart young person to ask ourselves, what do investors otherwise hold her career hostage to Unsurprisingly, investors were need to know about business models someone she can’t count on? – you suspicious of this ‘giving up IP in India? My new book ‘Trust’ is can get risk capital to take a chance (intellectual property) approach’ an attempt to synthesise some of on you, you can get business partners but we’ve seen glimpses of such my recent learnings, a moment of to co-invest in your vision, often by moves in the technology industry reflection in my continuing journey. literally underwriting the business, from which Shao had emerged, for or at least by backstopping it by, say, example, in open-source movements, Trust-building in the developing world, providing a guaranteed contract or in mandatory second-sourcing as ‘soft’ as it sounds, is the only purchase order or whatever else. agreements, and so on. After all, hard-headed, practical, solution for entrepreneurship often amounts to entrepreneurs to build sustainable creative reapplications of familiar enterprises amidst compromised MY POINT IS JUST THAT ideas to new contexts. institutional environments. INVESTING IN TRUST IS AS MUCH AN ISSUE OF So, in this example, the entrepreneur If you think that’s too strong, please A MINDSET AS IT IS OF had to embrace this mindset of read on! SPENDING CASH. creating the necessary enabling conditions, in parallel to building out A set of simple principles can help his technology, and to educate his the entrepreneur navigate towards a One example I’m fond of is that investors and even competitors of the trusted position in environments that of Charles Shao, an entrepreneur need to do this. more often than not evoke caution, building a high-tech dairy in China, reticence, and even outright mistrust. Huaxia, starting in Beijing and Now, folks say this sounds intriguing, Shanghai, which he ultimately but it’s impractical, it’s too costly. Foremost among these is a shift in sold successfully to a much larger That turns out to be incorrect. This mindset on the entrepreneur’s part. enterprise. Shao ended up specifically is the most practical way to go about As I put it in the book, as a would- investing in education programmes building amidst the infrastructure- be entrepreneur, you cannot just for others in the dairy industry – even deficit developing world. Without create, you have to (simultaneously) giving away his content and methods creating the groundswell for create the (enabling) conditions to for free -to build a groundswell of mobilising talent towards a tech www.indiaincgroup.com October 2018 41 INDIANS IN FOCUS future for dairy, he’d have struggled daily, possibly for years on end, to grow. This way attention paid to it early on paved the way for smooth growth and a successful exit. What’s not to like! Indeed, there are so many ways in which to invest in Trust, so to speak, depending on the country and product or service being provided – use of quality ombudsman to promptly address complaints, leveraging increasingly ubiquitous and decentralised technology to find opportunities to delight, investing in credible word-of-mouth dissemination when communication channels are limited or decrepit, and so on. My point is just that investing in trust is as much an issue of a mindset as it is of spending cash.
In ‘Trust’, I also emphasise that technology is not a panacea at all. It’s but one important arrow in the quiver for the entrepreneur to address the problems of development, but it’s themselves of the antagonistic government – have a better shot, I neither necessary nor sufficient, so mindset vis-à-vis the state, or the believe, at impact through scale. In to speak. In the same dairy industry patronising attitude that the state Trust, I contrast examples from Brazil for instance, Amul in India has built a always gets it wrong. and India to make this point. super successful brand of high quality milk and milk products by cleverly To juxtapose unlikely bedfellows, building on the social structure of TRUST-BUILDING IN Adam Smith in the 18th century the rural Indian community. I’m not THE DEVELOPING emphasised trust as “the hidden absolving Amul of the need to invest WORLD, AS ‘SOFT’ AS engine of economic progress,” in technology, far from it, they should IT SOUNDS, IS THE without quite saying how it should do much more on that front, just be cultivated. Fast forward some ONLY HARD-HEADED, centuries to Jack Ma of Alibaba fame, pointing out that there are many ways PRACTICAL, SOLUTION to address the entrepreneurial issue the school teacher from Hangzhou, of building a system that delivers FOR ENTREPRENEURS emphasising that the cultivation of affordable, high-quality dairy products, TO BUILD SUSTAINABLE trust is the key to how his company and that high-tech solutions aren’t the ENTERPRISES AMIDST has pioneered online commerce only ones, or even the most profitable COMPROMISED over the past two decades in China. Ultimately, it’s about creating the ones that enable this. INSTITUTIONAL conditions to create when these just ENVIRONMENTS. Merely the use of technology does don’t exist. not obviate the need for Trust. It might even exacerbate it. Technology can be enabling, of course, but can Remember that the objective function Tarun Khanna is the Jorge Paulo also be destabilising. And instability of the bureaucrat or politician is Lemann Professor at Harvard in already unstable parts of the necessarily somewhat different from Business School and the first developing world is a double whammy that of the private entrepreneur, director of the Lakshmi Mittal that doesn’t bode well for success that the state brings you something and Family South Asia Institute at of the entrepreneur. The ways in you can never achieve on your own Harvard. In 2018, he was named which the microfinance revolution has (huge scale!), and that a partnership by the Government of India to spread across parts of Latin America, requires a lot of bridge-building to a committee to select India’s Asia and Africa illustrate this amply in inspire confidence. In fact, those Institutes of Eminence, a handful several stories in the book. who invest in cultivating trust with of public and private universities the state – often resulting from an aspiring to achieve world-class Lastly, I think entrepreneurs in initiative taken by the entrepreneur excellence in the next decades. the developing world have to rid rather than by representatives of the
42 October 2018 www.indiaincgroup.com October 2018 43 BEYOND THE HEADLINES
The India-US tango by Harsh V. Pant A strategic expert looks back at the first-ever India-US 2+2 Dialogue to analyse its long- term impact on bilateral relations.
n the end, it was the strategic close partnership”. Such a dialogue outcomes of the dialogue: the signing logic of the bilateral partnership is important as it will keep the of the long-pending Communications that was on display at the Indo- conversation focused at the strategic Compatibility and Security Agreement IUS 2+2 talks. The ‘transactionalism’ level allowing the two to tackle more (COMCASA) and setting up of a of the Trump Administration, of tactical problems that will continue to hotline between External Affairs much concern to many in India, was bedevil the relationship from time Minister and Defence Minister with relegated to the margins, and for to time. their American counterparts. After good reason, and at least for the time being under consideration for more being, Washington and New Delhi than a decade, the Modi government can hail the upward momentum in the INDIA-US CONVERGENCE finally took the decisive action of relationship’s trajectory. It is clear that ON PAKISTAN WAS signing COMCASA, which will India and the US want to see their EVEN MORE STRIKING enable the transfer of communication relationship evolve into a more robust COMING AS IT DID AFTER security equipment from the US to India, facilitating “interoperability” strategic engagement. And both sides POMPEO’S SHORT are not shy of being ambitious. between the two defence forces as FIVE-HOUR VISIT TO well as with other militaries that use The format of the dialogue itself is ISLAMABAD, WHERE THE US-origin systems for secured indicative of a new maturity in the TENSION IN THE AIR WAS data links. relationship, which according to US PALPABLE. Secretary of State Mike Pompeo It is one of the four foundational seems to have entered “a new era,” agreements that the US signs with and is “symbolic of our increasingly This was underlined by the two main its close partners for enhancing
44 October 2018 BEYOND THE HEADLINES
AS INDIA’S ECONOMIC HEFT INCREASES, THE INDO-US BILATERAL RELATIONSHIP WILL TRANSFORM INTO ONE OF PEERS, SHAPED BY MUTUAL INTERESTS. interoperability between militaries in military support funds to Pakistan Innovation Unit (DIU) and the Indian and will facilitate access to advanced has unnerved the new government of Defence Innovation Organisation — defence systems, thereby allowing Imran Khan which was hoping to get Innovation for Defence Excellence India to more efficiently utilise its the benefit of doubt usually reserved (DIO-iDEX). existing US-origin platforms. After for new governments. But this was signing the General Security Of the second major US cut in security The larger strategic realities continue Military Information Agreement assistance to Pakistan this year, to shape Indo-US engagement. It (GSOMIA) in 2002 and the Logistics underscoring the reality that patience was evident when the joint statement Exchange Memorandum of with Pakistan is running thin in talked of the need “to ensure freedom Agreement (LEMOA) in 2016, the final Washington. And Pompeo rubbed it in of the seas, skies, uphold the one to be negotiated between India when he suggested that the Pakistan peaceful resolutions of the maritime and the US is the Basic Exchange government had been told in advance disputes, promote market-based and Cooperation Agreement for Geo- about the impending sanctions and economics and good governance spatial Cooperation (BECA). that the Trump Administration is yet and prevent external economic to see “the progress that we need coercion”. Though there are some While the two nations are taking their to see from them.” Where the US is divergences between the US and joint military training a notch higher still trying to settle old scores with Indian conceptions of the Indo- by deciding to conduct a tri-services Pakistan, Indo-US ties are about Pacific, the fundamental reality of joint exercise off the eastern coast of the future. the above statement makes the two India in 2019, the deployment real partners in their endevour of an Indian liaison officer at to promote a prosperous, free the US Naval Forces Central and equitable regional order. Command (NAVCENT), which is As India’s economic heft responsible for naval operations increases, the Indo-US bilateral in Afghanistan, Pakistan and the relationship will transform into oil-rich Gulf countries is even one of peers, shaped by mutual more significant. The message interests. to Pakistan was unambiguous with the Secretary of State The two issues on which there and Indian External Affairs was much discussion before Minister Sushma Swaraj calling the dialogue – Russia and Iran on Pakistan to ensure that – ended up being the footnotes their territory was not used to to the broader convergence launch terrorist attacks on other between India and the US. countries in their joint statement. Defence cooperation continues to While tensions remain in so far as As Swaraj underlined: “We have drive the relationship. US Secretary their resolution is concerned, it was discussed terror emanating from of Defence Jim Mattis made it clear evident from the 2+2 Dialogue’s first Pakistan and have agreed that that the US “will continue working edition that the world’s two major Pakistan needs to do a lot more to together, join hands and expand democracies are willing to bet on the curb terror originating from it” even India’s role as a primary major multitude of factors that bring them as they were unequivocal about their defence partner, to elevate our together as opposed to harping on support for an Afghan-led, Afghan- relationship to a level commensurate the few challenges on the way. owned peace and reconciliation with our closest allies and partners”. process. This assumes importance in And moving the defence engagement light of reports that the US has had a notch higher, the two nations are recent back channel talks with the now focused on enhancing closer Harsh V. Pant, Professor Taliban in Doha. private defence industry collaboration of International Relations which will help Indian defence at King's College London, India-US convergence on Pakistan manufacturers to join the US military is Director, Studies, was even more striking coming as supply chain, thereby boosting the and Head of Strategic it did after Pompeo’s short five-hour Modi government’s ‘Make in India’ Studies Programme, at visit to Islamabad, where the tension initiative. And innovation is at the in the air was palpable. The Trump heart of this defence collaboration the Observer Research administration’s recent announcement for which a Memorandum of Intent Foundation in New Delhi. that it would suspend $300 million was signed between the US Defense www.indiaincgroup.com October 2018 45 SOCIAL IMPACT FOCUS Harnessing the true power of corporate partnerships by Hitan Mehta
The Executive Director of British Asian Trust analyses how the private sector can be a tremendous source for good.
n the not-too-distant past, there Traditional charities tend to be more was a general assumption that the WE ALSO SEE THE old-fashioned in the way they work private sector was about making – focussing on philanthropy and Imoney, the public sector was about PRIVATE SECTOR AS fundraising to raise money that will the provision of basic services and FAR MORE IMPORTANT then be given as grants to local NGOs the charity sector was about doing THAN SIMPLY A FUNDER in-country. At the British Asian Trust, good. OF OUR PROGRAMMES we embrace different approaches – WE ENGAGE WITH THE – as has been widely reported, we This was certainly how many have just launched an $11-million people in the charity sector saw PRIVATE SECTOR, SEEK Development Impact Bond in India, the world – not recognising what TO INFLUENCE IT, WORK a hugely innovative instrument that a tremendous source for good the TOGETHER TO DEVELOP combines the worlds of finance, private sector can be. Most charities COMMON SOLUTIONS investment and development to bring saw “corporate partnerships” as AND SO ON. about massive change in education simply a way of getting money, as for hundreds of thousands of children. opposed to an actual partnership. And in international work, very few, if any, with HRH The Prince of Wales, we We also see the private sector as far charities saw the benefits of genuine have always thought and behaved more important than simply a funder partnerships with the private sector in in a more business-like manner – of our programmes – we engage with the countries where they worked. applying business principles to the the private sector, seek to influence way in which we work and embracing it, work together to develop common The British Asian Trust has always the role of the private sector in solutions and so on. thought very differently. Established bringing about positive social change 10 years ago by Asian business across South Asia. A great example of this is our anti- leaders and entrepreneurs, together trafficking work in Jaipur, India.
46 October 2018 SOCIAL IMPACT FOCUS However much we as a charity recently signed with BT (British new audiences in this important work. seek to have an influence on issues Telecom). In addition to BT’s role as such as child-labour, we know a corporate partner of the Development As with any truly effective partnership, big company can have a much Impact Bond, over the next three this collaboration draws on the stronger impact. This was the basis years the British Asian Trust will strengths and resources of both for our partnership with the John work with BT in India to deliver their parties. The British Asian Trust brings Lewis Foundation, with whom we digital and social impact programme, the expertise and resources of our are working to tackle child labour in which will use technology to empower women’s economic empowerment supply chains in India. Together, we adolescent girls in India. The programme in India, as well as our are engaging with key businesses programme aims to: ability to design and deliver innovative to make Jaipur a child labour free and impactful CSR programmes at city. This transformation requires • Address the isolation of scale. Meanwhile, BT provides profile, a united approach from business, 500,000 marginalised networks and technology, and wider government, and civil society to stop adolescent girls through resources – beyond their ability to the exploitation of children, and create awareness raising and fund this work – which will massively a demand and market for child labour outreach increase the impact of the programme free goods and services. overall. • Directly improve the lives The city of Jaipur is a major hub of 100,000 adolescent girls Both of these partnerships, with BT for arts and traditional handicrafts, through interventions that lead and with the John Lewis Foundation, with many shops and workshops to better education, health, are genuine cross-sector partnerships producing fine goods for domestic and economic outcomes that were co-designed and co- and international markets. In Jaipur’s developed. They are absolutely not workshops and factories, there are • Enable better learning British Asian Trust programmes that an estimated 50,000 children working outcomes for a further are simply funded by our private in hazardous conditions to produce 100,000 girls that will sector partners. They are based bangles, embroidery, sarees, carpets ultimately be better placed to on the premise that, by working and other handicrafts. The children make their own choices and together, we can leverage the skills are typically forced to work 15 hours access opportunities and expertise of both sectors to bring a day in confined spaces. Some of about far greater and more profound the children are local, but the majority change for even more people. come from the state of Bihar, more WE HAVE JUST than 1,000 Km away. They suffer LAUNCHED AN We have many more examples of damage to vision, burns, chronic $11-MILLION how corporate partnerships enhance coughs and even finger malformation. DEVELOPMENT IMPACT the good work of the charity sector BOND IN INDIA with not just funds, but the pooling of Together with the John Lewis resources and expertise to achieve Foundation, the British Asian Trust is monumental change. The future of the working with the business community The programme will focus on charity sector does indeed lie in truly to combat trafficking and child labour communities close to BT’s operations embracing these opportunities. within their supply chains by: in Delhi NCR, Bengaluru, Kolkata and Mumbai to leverage the skills • Identifying children in situations and expertise of BT’s employees. Hitan Mehta is Executive of exploitation and strengthening Together, we will focus on developing Director of the British the systems to remove them from innovative interventions to positively Asian Trust, an organisation production lines impact across four critical areas of founded by HRH The Prince an adolescent girl’s life: education, • Training and supporting adults health, agency (the ability to exercise of Wales. Hitan has played a to replace child labour in supply control over one’s own life choices) leading role in establishing chains and economic empowerment. the Trust, an organisation that backs sustainable • Engaging major companies in The programme will not only support solutions that enable people becoming child labour free direct project interventions, but test new ideas, pioneer innovative to unlock their potential, • Promoting the production and financing models, and galvanise and has touched the lives market of child labour free goods actors from across key sectors to of 4 million people across for domestic and international take this initiative forward and to South Asia. The Trust most markets scale. As such, thought leadership recently launched the and communications activities, in the Another excellent example of our UK and India, will form a key part of Quality Education India collaboration with the private sector the programme to share learning, Development Impact Bond. is the strategic partnership we have promote key messages and engage www.indiaincgroup.com October 2018 47 SPECIAL REPORT
Howzat! India takes cricket global by India Inc. Staff An Indian entrepreneur has taken the game of cricket into cyber space with a new mentoring app.
new smartphone-based their journey,” said Sharma, a prolific “We are delighted to take the covers mentoring app that gives batsman in the Indian cricket team. off our platform at Lord’s. The very budding amateur cricketers The new free-to-download app, simple format allows amateurs Athe chance to get direct access to initially available via an invitation-only anywhere in the world to have direct their cricketing heroes for advice referral code to control numbers, had access to their heroes. The aim is on how to improve their game was its global launch in September, when for this to work complementary to a unveiled at Lord’s Cricket Ground in it became available on Android and coach and we look forward to talents London recently. iOS via the Apple App Store as well being discovered through Proatar over as Google Play store. time,” Tanguturi said. Proatar, co-founded by Indian entrepreneur Srikanth Tanguturi The app allows keen cricketers to and Sri Lankan investor Christy THE APP HAS send in videos of their technique to Kulasingam, is designed as a A CHARITY AND one of around 30 cricketing greats on revolutionary new sports coaching- CORPORATE SOCIAL Proatar’s list, who then assess the cum-mentoring platform to help RESPONSIBILITY (CSR) techniques and respond with detailed passionate amateurs to get more out ELEMENT BUILT INTO suggestions to improve their game. of their game through insights and IT, OFFERING PEOPLE “Advice can sometimes come in one inspiration from the elites of the game. ear and out of the other, but when It has over 20 cricketing experts AND COMPANIES THE you draw on the amateur’s video and already signed up, including Indian CHANCE TO SPONSOR show the player whether they have cricketer Rohit Sharma and West BUDDING TALENT their leg straight when they shouldn’t Indian legends like Michael Holding FROM THE VILLAGES – that advice is likely to stick,” and Courtney Walsh. OF INDIA BY BUYING explained Holding. SESSIONS FOR THEM “I am really excited about sharing “Having taken a lot from the game, some of my cricketing knowledge AS A GIFT. it is time to give something back to and journey to inspire young kids on cricket,” added Sri Lankan cricketer
48 October 2018 SPECIAL REPORT
THE APP ALLOWS KEEN CRICKETERS TO SEND IN VIDEOS OF THEIR TECHNIQUE TO ONE OF AROUND 30 CRICKETING GREATS ON PROATAR’S LIST, WHO THEN ASSESS THE TECHNIQUES AND RESPOND WITH DETAILED SUGGESTIONS TO IMPROVE THEIR GAME.
and picture-in-picture analysis by the donations,” said Tanguturi, who has a Initial App squad elite is designed to help ambitious budding cricketer in his young son. players improve their game. Technical Andre Russell skills as well as non-technical query Amateur cricketers have the choice Charlotte Edwards videos, for example on captaincy, of selecting a team of mentors nutrition, strength and conditioning, for each aspect of the game that Courtney Walsh and the mental side of the game, interests them. Others, including ones can also be sent to a chosen elite. representing additional disciplines James Foster such as sports psychology, nutrition, Jason Gillespie The app has a charity and corporate strength & conditioning, and physio, social responsibility (CSR) element will also be made available on the Jason Holder built into it, offering people and platform in due course. companies the chance to sponsor Julian Wood budding talent from the villages of Proatar, which combines the terms India by buying sessions for them professional and avatar, has an initial Kumar Sangakkara as a gift. squad of elite mentors representing Mahela Jayawardene a broad mix of the game – current “The app philosophy takes the and former male and female players Michael Holding inspiration aspect seriously, adding as well as coaches from around the gifting options for those who want to world. Cricket is the starting point of Michael Hussey give a great moment and memory the mentoring platform, which the co- Mickey Arthur to passionate cricketers around founders say is easily translatable to them, and for corporations to provide other games such as tennis and golf Peter Moores consultations to deserving or under- over time. Phil Simmons privileged amateurs via gift certificate Sam Billings Tom Moody
Mahela Jayawardene.
The average price point of the app- based mentoring session is around $150 for a video consultation. Elites are priced at different levels, ranging from $100 to $400 per transaction. “This sounds like a big number, and it is a premium product, but when we consider how much it would cost to have a single one-on-one session with an elite, assuming first you have access to them, and the value they can add, we believe this is a good investment in an amateur’s game,” said Kulasingam.
Each paid video consultation is returned within 14 days by the elite chosen by the amateur. A tailored feedback video with a mix of annotations, voiceover commentary, www.indiaincgroup.com October 2018 49 LAST WORD Modi’s actions speak louder than fake bluster on ‘crony capitalism’ The Indian government’s decisive crackdown on corrupt practices sit uneasily with allegations of corruption in a French aircraft deal.
ndia’s Opposition are hell bent on – the defaulting companies under put the fear of god into such errant hanging the charge of corruption their watch – are auctioned off to the promoters and is yet another step and crony capitalism on Indian highest bidder or liquidated. by the Modi government to change IPrime Minister Narendra Modi, even the borrowing culture in the country. twisting and mistranslating emails Earlier, it had amended the IBC to bar and statements in French to “prove” promoters of defaulting companies that the Indian government helped from participating in the resolution industrialist Anil Ambani’s Reliance process. Group bag the offset contracts for the Rafale fighter aircraft deal. India still lacks a comprehensive law on personal bankruptcies and This allegation sits uneasily with the these latest moves signal that the Indian government’s move first to government is moving towards enact the Insolvency and Bankruptcy such regulations for individuals, Code (IBC) to recover unpaid loans proprietorship and partnership firms. from defaulting companies and bring Along with another recently enacted errant company promoters to book law on seizing the assets of defaulting and then working on rules to ensure promoters who flee the country that the personal guarantees given by leaving in their wake a trail of unpaid promoters are also invoked to make debts, it signals a determination good any shortfall in recoveries from to decisively clamp down on crony the bankruptcy proceedings. INDIA STILL LACKS A capitalism that was encouraged by COMPREHENSIVE LAW ON previous Indian governments. “We are working on rules and PERSONAL BANKRUPTCIES regulations to operationalise AND THESE LATEST Over the last few months, several insolvency of personal guarantors in MOVES SIGNAL THAT large well known business groups, companies. It will be possible to go THE GOVERNMENT such as Essar, Jaypee and Bhushan, after their property. Your company among dozens of others, have lost can’t be losing money while you fly IS MOVING TOWARDS control of their corporate flagships around in a jet or drive the latest SUCH REGULATIONS for defaulting on billions of dollars of luxury vehicle,” a recent ‘Times of FOR INDIVIDUALS, loans. India’ report quoted M.S. Sahoo, the PROPRIETORSHIP AND Insolvency and Bankruptcy Board of PARTNERSHIP FIRMS. Then, news reports in several Indian India (IBBI) Chairman, as saying. newspapers indicate that the fear of losing control over their companies Crackdown on corrupt practices In this context, the Supreme Court have forced hundreds of promoters to The IBC is a law that mandates of India has recently ruled that the settle more than $14 billion in unpaid a 180-day resolution process for moratorium that applies to defaulting loans. companies that default on their companies that are hauled up before loan repayment commitments. But the National Company Law Tribunal Experts are of the opinion that the in almost every case so far, the (NCLT), the designated bankruptcy impending rules on tightening the recoveries have been much less than forum, will not apply to those who screws on personal guarantors will the amount due, forcing creditors to have stood personal guarantees for force many more defaulting company take large haircuts. such loans. In India, it is common for owners to fall in line because losing banks and other creditors to insist on control of companies is one thing India also has thousands of examples personal guarantees from promoters but having one’s personal assets of promoters habitually defaulting on and directors of companies while such as residential houses, cars, jets loans they often siphon out of debtor sanctioning large loans. and jewellery publicly auctioned is a companies. Their personal assets are humiliation that few will be willing to seldom touched even though the IBC Tackling big borrowing risk. has ensured that their crown jewels This latest move will, without a doubt,
50 October 2018 INDIA GLOBAL BUSINESS
‘India Global Business’ is the flagship publication of London-based media and publishing house India Inc. The publication offers in-depth analysis, news and expert opinion on business, trade, policy initiatives and foreign direct investment in and out of India. The magazine has a readership of over 100,000 business and policy leaders worldwide.
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