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Civil Aviation Ministry Seeks Flexibility in RCS to Promote Intra- Regional Air Connectivity
May 24,2017

The Minister for Civil Aviation Shri P. Ashok Gajapathi Raju announced that his Ministry would soon be launching the second round of bidding under RCS-UDAN. The Minister informed that Airline Operators have shown keen interest in undertaking operations under the scheme and on the basis of the experience of the first round of bidding his Ministry wanted to make the process more simpler and attractive. He also informed that a stakeholders consultation meeting is being organized on 7th June, 2017, to discuss the proposed amendments and key aspects of the scheme for the second round of bidding. Following this, the stakeholders will be expected to submit their inputs and observations by 9th June, 2017.

The Secretary for Civil Aviation, Shri R.N. Choubey highlighted the six aspects of the scheme for which suggestions have been invited from stakeholders.

Under Aspect No.1 proposes to consider routes between two airports which are neither under-served nor un-served. This is being proposed to further encourage intra-regional connectivity.

Aspect No.2 deals with whether fixed wing aircrafts should be allowed to operate below 150 km for specific areas/regions.

Under Aspect No.3, the exclusivity clause is sought to be made more flexible depending upon operators and certain rules.

Under Aspect No.4, the Ministry has sought suggestions with regard to minimum number of RCS seats. Also whether the minimum number and maximum number of RCS seats could be stretched over a period of a week instead of a particular flight. Opinion have also been sought whether seasonal flights should be permitted under RCS.

Aspect No.5 asks stakeholders to see whether non-RCS routes should be included as part of the network proposal.

Aspect No.6 seeks suggestions from stakeholders to incentivized helicopter operations under RCS.

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Fitch: Disruptive Trends May Roil the Global Auto Industry
May 24,2017

The global auto industry is ripe for disruption as a result of changing global demographics, increased urbanization, heightened environmental awareness, growing safety concerns and rapidly evolving technologies, according to Fitch Ratings. These changes are likely to create winners and losers and as technologies advance, there is an increased probability that they will play a potentially significant role in the ratings of original equipment manufacturers (OEMs) and suppliers.

Fitch is placing more emphasis on issuers long-term positioning relative to these developing trends as the global auto industry evolves. The shifting landscape is unlikely to directly influence most issuer ratings in the near term, but a rapid change in the competitive environment could alter Fitchs view of an issuers market position, which could affect its ratings.

As technology evolves, the car is being recognized as an under-utilized asset. New market entrants and business models pose an increasing threat to incumbent players. Pressure from startups and from technology companies outside the traditional auto industry is forcing OEMs and suppliers to work on new technologies, such as automated driving, and leading OEMs to consider transportation in addition to manufacturing vehicles. The success of these trends is not guaranteed as widespread adoption will require significant advances in technology, accommodating regulations, answers to thorny legal and ethical questions, and customer acceptance of new technologies.

Vehicle electrification, driven by tightening emissions regulations in most major global regions, is leading to significant changes in vehicle powertrains. Not all vehicles will be electric, but Fitch expects the number of hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs) and fully electric vehicles (EVs) to increase significantly over the next decade.

Electrification will alter the playing field for OEMs, Fitch believes. EVs do not need to meet emissions requirements and their powertrains are relatively simple, which has helped prompt a large number of startup EV OEMs around the world. Most are likely to fail, and it remains unclear whether even Tesla will successfully evolve from a luxury vehicle maker into a mass-market OEM. However, a future automotive environment marked by high fuel costs or heavy regulation of internal combustion engines would support the EV startups, increasing their chances of competing with traditional OEMs.

The business potential of autonomous vehicles is tremendous, especially for taxi services. Some studies suggest removing the driver could reduce the cost of operating a taxi by more than 80%. As a result, driverless taxis could be cheaper and more convenient than owning a car, particularly in urban areas. This could reduce urban congestion and lessen the need to devote scarce urban property to parking lots. Autonomous vehicles also promise to open up personal transportation opportunities for people who are unable to drive themselves.

Fitch expects that it will likely be at least a decade before the general public will be able to purchase fully autonomous vehicles for personal use. In addition to the technological hurdles, cost will be a factor. While the significant additional cost of the technology might make sense in a taxi, private owners may find it harder to justify. Also, there are more than 250 million registered cars and trucks in the U.S. today, and even if all new vehicles had fully autonomous capabilities next year, it would likely be more than a decade before even the majority of vehicles on U.S. roads were autonomous.

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Indias total fisheries production could reach 16 MMT by 2019: ASSOCHAM study
May 24,2017

Urging the government to double the outlay of Rs 3,000 crore for development and management of fisheries sector, apex industry body ASSOCHAM said that India could achieve about 16 million metric tonnes (MMT) of inland and marine fisheries production by 2019-20 thereby adopting a target oriented approach to achieve eight per cent growth year-on-year.

n++Aided by governments efforts to bring systemic changes in processing sector, the domestic segment in raw and processed fisheries sector in value terms is expected to touch Rs 1.5 lakh crore by 2020 and total domestic retail market is forecast to cross Rs 61 lakh crore or almost triple in next 4-5 years,n++ noted a just-concluded ASSOCHAM study titled Fisheries in India: Potential & prospects; Reference state - West Bengal.

n++Thus coupled with exports, fisheries sector in India should aim at a target of Rs two lakh crore by 2020 in value terms,n++ added the study conducted by Agri & Food Processing Division of The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

n++Both direct and indirect employment in entire fisheries sector in India is likely to reach 15.25 million from an estimated 14 million in 2014-15,n++ said Mr D.S. Rawat, national secretary general of ASSOCHAM.

n++However, most of the incremental fish production will have to come from aquaculture and Blue Revolution will provide necessary impetus in this direction,n++ said Mr Rawat.

n++Achievement of ambitious targets in increasing fish production is possible only through harnessing potential in aquaculture,n++ he added.

The study further noted that since India is endowed with over 8,000 kilometres (kms) long coastline, exclusive economic zone of over two million square kms of continental shelf, there is scope to increase marine catch, which has turned sluggish lately.

Global fish production is likely to grow by about 1.5 per cent during 2015-2020 and reach a total of about 183 MT (million tonnes), while with value added/downstream products the trade in this sector could cross $200 billion by 2025, this despite the sluggish growth in exports, highlighted the ASSOCHAM study.

n++Marine/capture fisheries is set to hover around 93 MT and aquaculture production (89 MT) could overtake by 2021-22,n++ it said.

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Swachh Bharat App Launched in National Museum
May 24,2017

n++Swachh Bharat Appn++ has been launched in National Museum under Ministry of Culture by the Minister of State (I/C) for Culture & Tourism Dr. Mahesh Sharma yesterday. The main focus of this n++Swachh Bharat Appn++ is to basically involve people actively to become part of Swachh Bharat Abhiyan (Clean India Movement).

At present, this App is available for Android Mobile phones which can be downloaded from Google Play Store. In this App the concept of Physical web is implemented. When you are in the monument or Museum it will deliver you the message about Swachh Bharat Abhiyan and ask you to report the garbage around you. All you need is to enable the Bluetooth of your mobile device. Even if you did not have the App installed then also you will be delivered the message by Google about the Swachh Bharat Abiyan and which will give you the link to install the App. Once you start the App it will ask to take photograph of the garbage and write the comment and just submit. It will be reported to the authority on the backend.

The App will be monitored by the Ministry of Culture and will play an important role in cultivating the significance of cleanliness to the citizens.

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Hazardous wastes mounting at the rate of 2-5 % per year-ASSOCHAM-PwC
May 24,2017

In India, about 10 to 15% of wastes produced by industries are hazardous and the generation of hazardous wastes is increasing at the rate of 2 to 5% per year, according to the joint study brought out by ASSOCHAM and PwC.

As per the estimates, annually around 7.46 mn metric tonnes (MT) of hazardous waste is generated from 43,936 industries in the country, of which land fillable waste is 3.41 mn MT (46%), incinerable 0.69 mn MT (9%) and recyclable hazardous waste is 3.35 mn MT (45%), according to a study on Waste Management in India-Shiting Gears, jointly conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and PwC.

Hazardous wastes (HW) produced from various industries in India. The major HW generating industries in India include petrochemicals, pharmaceuticals, pesticides, paint and dye, petroleum, fertilisers, asbestos, caustic soda, inorganic chemicals and general engineering industries. HW from these industrial sectors contains heavy metals, cyanides, pesticides, complex aromatic compounds and other chemicals, which are toxic, flammable, reactive, and corrosive or have explosive properties, adds the study.

The Ministry of New & Renewable Energy (MNRE) along with the Ministry of Environment and Forests (MoEF) are the 2 nodal central ministries influencing the Waste to Energy Programme legislation and incentives. The Program on Recovery of Energy from Waste is a part of the National Master Plan for Development of Waste-to- Energy in India. The key objectives of the program are as follows are to accelerate the installation of energy recovery projects from industrial wastes with a view to harness the available potential by 2017. To assess and upgrade various conversion technologies; create a conducive environment for the development of the sector in the country.

The Hazardous Waste Management Rules, 2016, have recently been notified by the Government of India considering the factors of Ease of Doing Business (EoDB) and Sustainability/Conservation of Environment. The rules recognise hazardous waste and other waste, categorising that other waste can be considered as resource and must be used for recycling and reuse, supplementing industrial processes and reducing the load on the virgin resources in the country.

Stringent management procedures but simplified procedures to be followed. Standard operating procedures pertinent to safe management and disposal, safeguarding health and environment has been prescribed that needs to be followed for stakeholders or applicable parties. Single window clearance for setting up of hazardous waste disposal facility and import of other wastes, highlighted the joint study.

The approval process for co-processing of hazardous waste to recover energy has been streamlined and put on emission norms basis rather than on trial basis. Revision of list of waste regulated for import/export. The import of metal scrap, paper waste and various categories of electrical and electronic equipment for re-use purpose has been exempted from the need of obtaining Ministrys permission. Responsibilities of State Government for environmentally sound management of hazardous and other wastes have been introduced.

The suggested methods to manage hazardous waste Collection and Transportation (C&T): Hazardous waste transporters are individuals or entities that move hazardous waste from one site to anothern++usually from the source of generation to its storage and disposal predominantly by road, rail, or water. Transporters accepting hazardous waste from a generator or another transporter may need to hold waste temporarily during the normal course of transportation; hence they require the necessary infrastructure to manage the waste. The C&T activity entails the generator to handover waste in a specified fashion having necessary authorisation, packaging, and labelling to transport waste.

Responsibility of transportation lies with waste generator, the coprocessor, who utilises the waste (in case of coprocessing) and transporter, who transport the waste from generator to coprocessor. The waste generator should ensure that waste is packaged avoiding handling related accident during transport. The waste and the transport vehicle needs to be adequately labelled with necessary clearances from the State Pollution Control Board during interstate transport.

A lot of effort is now being made to recover value out of the hazardous waste generated in the industries. While the conventional management method of land filling and incineration are still the preferred ones, methods by coprocessing of compatible hazardous waste in cement kilns is slowly picking pace. The method is being researched adequately by the Central Pollution Control Board and is recommended as one of the safest ways to manage the hazardous waste.

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Have new NPA norms for Wholesale Long Term Finance Bank: ASSOCHAM to RBI
May 24,2017

ASSOCHAM has approached the RBI with a plea that the provisioning criteria for the non-performing assets (NPAs) in the case of proposed Wholesale Long-Term Finance (WLTF) banks should be based on stress tests of each of the funded projects, unlike the present standard provisioning norms due to a different nature of the long term, big ticket industrial or infrastructure projects to be covered by WLTF lenders.

n++In the long gestation projects like infrastructure there may be various reasons for which the project may get delayed-- governmental policy changes, court orders, land or environmental issues... Monitoring and assessment of such projects would require a structured working; Therefore, provisioning must be based on a stress test for the specific project, the ASSOCHAM said, submitting its feedback to a discussion paper of the RBI on the proposed WLTF banks.

It said a stress test- based provisioning would be more prudent way of resolving the NPA issues, than the present standard provisioning norms for other loans. Therefore, the standard provisioning norms should not be applicable to WLTF banks

Describing the move to allow WLTF banks as timely and prudent, the chambers letter to RBI Governor Dr Urjit Patel said the minimum capital requirement be kept at Rs 500 crore and not Rs 1000 crore.

As the proposed banks would be focussed on infrastructure projects, their business would be less risky. Unlike a security-based lending methodology of universal banks, WLTF Bank will be lending against cash-flow of an infrastructure assets for long term, implying more visibility of cash-flow than normal manufacturing projects.

Besides, the proposed lender should be exempt from requirements like SLR, CRR and rural branches and other priority sector norms, the chamber added.

In addition to following the existing rules of on-tap licensing of universal banks, converting existing NBFCs or NBFC held by another NBFC be allowed to be converted into WLTF Bank. This would allow seamless transition of an existing NBFC into a WLTF Bank.

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ASSOCHAM moots plan for comprehensive industrial policy for SMEs
May 24,2017

Apex industry body ASSOCHAM has mooted a proposal to the newly elected government of Punjab for announcement of comprehensive industrial policy to bring back the glory of Sher-E-Punjab hub for small medium enterprise (SMEs) and value addition to agriproducts.

The policy should focus on activities relating top reservation, farm products, horticulture, livestock products like milk and other dairy items, cotton and textiles etc. which have strong backward and forward linkages in the states economy.

According to the paper, Punjab needs to promote less-water guzzling crops like pulses, oilseeds, cotton, maize, millet, vegetables and fruits - by providing improved seeds and ensuring that farmers get a fair price for these crops through a market support mechanism. The area under paddy cultivation should be reduced and high value crops like cotton, fruits, vegetables, canola, menthe, turmeric etc. should be grown to raise their share of cropping area from 3.4%.

Ad-hoc policies like ban on export of food grains, limits on private stocking and tax on purchase of food grains (14.4%) should be revisited and withdrawn wherever possible. The fertilizer subsidy policy needs to be revisited to achieve balanced use of nutrients and subsidy should be transferred directly to the farmers.

Incentivise technology like direct seeding of paddy and drip irrigation which saves 30-50% of water. More investment needed in production and promotion of organic manure, bio-pesticides to cut down use of chemical pesticides linked to the spread of cancer. Also, Implement National Policy for Crop Residue 2014 which suggests suitable legislation, adoption of technical measures and training on crop residue management to eliminate crop residue burning.

To reduce farmers indebtedness, private moneylenders should be registered and regulated and instead of debt waiver schemes, state should find ways to expand institutional credit facilities; APMC Act should be amended to allow farmers to sell directly to food processing industry while ensuring that no hoarding of essential items take place. Punjab should join National Agriculture Market which provides e-mandis across the country to ensure better price realisation and soil testing facilities

The financial incentives - like exemption or concessions in stamp duty, property tax etc. - should be extended to existing units which are fighting for survival. Also bring parity in tax structure and match financial incentives offered by rival states like Himachal Pradesh, Maharashtra, Gujarat, Madhya Pradesh to become more competitive, adds paper.

Develop labour intensive technologies suitable for growth of MSMEs and support with adequate infrastructure to overcome problems of poor labour productivity and obsolete technologies. The state needs to take advantage of natural resources to promote farm products, horticulture, livestock products, manufacturing of textiles, machinery, motor vehicle, food processing etc. since these have strong linkages with the states economy, noted the ASSOCHAM study.

The power policy should be reviewed. Octroi and cow cess should be withdrawn and cheaper power available to new industries should be extended to the existing ones. IT and ITeS industries should be developed in Amritsar, Jalandhar and Ludhiana as proposed and fast-tracked.

A petrochemical hub around Bhatindas refinery and bio-technology parks and incubators in and outside Mohali should be developed as new growth drivers. Single-window and IT-enabled mechanism should be set up for administrative clearances, extending various services and availing various incentives, adds the joint study.

Fiscal Incentives for Industrial Promotion 2013 should be amended to provide incentives to proposed ITeS hub in Jalandhar which has necessary infrastructure. There is a huge potential for financial services -capital market services, private banking to HNIs, brokerage and insurance etc. The state should take help of financial institutions to spread financial literacy.

The state has no clear and defined health policy despite the alarming level of cancer and drug addiction and high cost of hospitalisation etc. The health expenditure needs to go up to Rs 5,000 per capita by 2030 from current level of Rs 1,015 (2014-15). The public health infrastructure needs drastic restructuring at sub-centre, PHC and CHC levels to ensure adequate healthcare coverage, including treatment for cancer and drug addiction.

IT solutions should be developed to check rampant absenteeism of medical personnel and to record and report health transactions. The curriculum and vocational training programme for tourism should be developed at school level particularly targeting high dropouts in districts of Pathankot, Muktsar Sahib, Fatehgarh, Mansa and Sangrur.

The state needs to set up skill development/training institutes either on its own or with private participation since the current skilling programme has been taken over by industries for in house training and is not benefitting general labour force. A strategic road-map needed for skill development in districts with low penetration of vocational education-Gurdaspur, Sangrur, Barnala, Muktsar, Jalandhar and Mohali.

More funds should be mobilised to set up commercial dairy farms, poultry farms etc. and provide marketing infrastructure to help such farms garner maximum benefits rather than middlemen. Proposed district haatcentres in Amritsar, Jalandhar, Ludhiana, Patiala, Ferozpur and Mohali should be completed on a priority basis.

The state should focus on building a dedicated rail freight corridor and add more dry ports for a double-digit growth; Need to step up efforts to induct IT into agriculture and agri-processing. Policy should be changed to provide free power to only small and marginal farmers, while power to middle and big farmers could be charged at market rates (or slightly subsidized). In addition to renewable energy like solar power, plans should be worked out for harvesting bio-energy to use bio-mass generated.

Total number of housing shortage is 7,46,798 units which includes shortage of urban housing of 2,80,050 units. A perspective plan for housing should be made at the state and city levels to address the shortfall in housing; about 20-25% of developed land in urban areas should be reserved for urban poor. To prevent slum formation, industries and builders should be persuaded to provide reasonable accommodation equipped with basic services to their workers.

The states growth is driven by the services sector which has grown disproportionately. Interestingly, however, analysis of sub-sectoral data shows that the only sub-sector which has been growing is banking and financial services. The rest are slowing down, including trade and hotel which contributes the most (23.5%) to the services sector. The banking penetration is high but there is a potential for expanding financial services like capital market services, private banking to HNIs, brokerage and insurance services etc. The state would do well to focus on financial literacy with the help of banks and other financial institutions.

Tourism is another area which has huge potential but remains neglected. Health services too have been neglected which is strange given the high incidence of drug addiction and cancer and high cost of hospitalisation. The health infrastructures like PHCs and CHCs, availability of doctors etc. have witnessed sharp decline. There is a need to substantially increase public investment in health but the new government should better form a comprehensive health policy for the state first.

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GST to be biggest achievement of Modi Govt; fin inclusion, digital other big milestones: ASSOCHAM
May 24,2017

As the Narendra Modi government is about to complete three years in office, its biggest achievement on economic front would be the Goods and Services Tax (GST) which is near a roll-out, while financial inclusion, digitisation and public investment on infrastructure like railways and power distribution are perceived as other credible steps for structural changes in the economy, the ASSOCHAM has said.

Based on a perception among its members, the ASSOCHAM has noted that benign inflation both at the retail and wholesale levels is among the other positives for the government. Of course, the fall in inflation was supported by a sharp correction in international commodity prices and good monsoon in the last season. As the price rise remained within the target of four per cent, set by the Reserve Bank of India, the central bank has also been able to keep the interest rates low, though the credit off-take in the private sector still remains a challenge.

Prices of pulses, onion and other essential commodities which used to hit the headlines, have come down significantly in the last 12-18 months.

The implementation of GST in the next few weeks would cap other major initiatives of the government. The focus on improving ease of doing business through measures like GST and other taxation reforms has also been noted as one of the major achievements of the NDA Government, said the chamber President Mr Sandeep Jajodia.

Clean-up of the subsidy disbursal which had reached the proportion of bottomless pit, is yet another big plus of the government which is pursuing linkages of Aadhar ID with every bank account holder. Helped by favourable crash in the crude oil prices, elimination of subsidy on petrol and diesel and significant reduction in other fuels ,including cooking gas, have brought a great improvement in the balance sheets of the oil marketing companies.

Taking a look at other macros, it goes to the credit of the government that Indias foreign exchange reserves have touched an impressive high of USD 372 billion, giving a muscle to rupee. While exporters have shown some concern, strong rupee is helping tame inflation further.

Thanks to several measures to open up the Foreign Direct Investment (FDI) regime in key areas like defence, insurance, infrastructure, the country has received record net FDI of USD 100 billion in the last three years, while foreign funds are pumping in huge liquidity in the stock market.

Riding on ample liquidity and confidence of the global fund managers, Indias market capitalisation has crossed a massive USD two trillion, so much so that some kind of caution is needed to handle such inflows.

While, a high level of non-performing remains an area of concern, the government has taken some decisive measures like empowering RBI to set up Oversight Committees and refer the toxic assets for insolvency and all these should help resolution of the nagging problem.

Other priority areas , going forward, should be focus on some of the stressed sectors like metals, construction and real estate, telecom and power generation while allocations for health and education needs to be lifted. Also , increased focus on agriculture must continue with enough allocations for rural and agri infrastructure like irrigation. However, a lot of work of work has been done in revival of the domestic fertiliser units.

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Domestic market can make up job losses for overseas biz for IT: ASSOCHAM
May 24,2017

Indias USD 155 billion IT and Business process management (BPM) industry which is facing heat from the unfolding disruptions in the key markets of the US and Europe and is forced to rationalise its workforce, can create more jobs on net basis if it seriously gets involved in fast expanding domestic market , riding on governments financial inclusion programmes like Jan Dhan Yojana and Aadhar based service delivery models, said ASSOCHAM.

n++It is time our IT and BPM industry bellwethers looked a bit inward now. It is also time to redraw strategy that gives a good look at the home market, which can more than make up , at least in the short to medium term, for the possible dent on jobs in the disruptive overseas markets,n++ a chamber note said, after an interactive brain -storming .

It was brought out of the interactive consultations that there is no point being reactive to what is happening in the main global consuming centres for the IT and BPM industry, which employs about four million young work force in India in over 16,000 small or big companies.

n++A close look at the profile of our exports suggest that close to 60 per cent of the exports are accounted for by the banking-finance-insurance . Now , the kind of data base that is being generated by the Prime Ministers Jan Dhan Yojana and its linkages with the Direct Benefit Transfer (DBT) , can be a delight for different set of analytics , which then can be shaped into products for a whole lot of industries like fast moving consumer goods, automobile, telecom, insurance, agri-inputs and agri products, health and so on,n++ the ASSOCHAM note pointed out.

It said, there was a very strong case for a high level Task Force between the Government and the IT and BPM industry which can put their heads together. n++It would be a win: win for both. For the government, the Prime Ministers flagship progammes , including Digital India, would get expanded manifold , touching the lives of common citizens , delayering corrupt levels of intermediaries. For the IT industry, here is an opportunity , for converting raw data about new entrants into the financial system into value-added analytics. Further expanding on, industries across different verticals would then reach and penetrate into the untapped pyramids.n++

Mapping the potential, ASSOCHAM Secretary General Mr D S Rawat said, if all these steps are taken in a well-coordinated manner, lakhs of new jobs would be created which would far more than make up the possible losses on account of upheavals in the global markets, following emergence of new technologies like artificial intelligence, machine learning along with the changing political landscape in the US and Europe, by far the largest markets for the Indian IT and BPM industry.

After all, with close to 400 million internet users and India being the largest users of the internet, the market is only going to grow for the digital and financial products. For now, the government would be the biggest user of technology while the domestic industry which has won laurels in the rest of the world should start feeding the Indian market, as if they are dealing with global clients. The short to medium term bright outlook is at home, the paper added.

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Software Procurement Policy-Digital India
May 24,2017

The Digital India foot print is expanding day by day. It has been the consistent focus of Shri Narendra Modi Government, to improve Digital Governance as it is critical for faster delivery and effective monitoring of services.

The transformation happening under the overall Digital India initiative is creating huge opportunities for involvement of industry/private sector, mainly providers of IT/IT enabled systems and services. However, various concerns have been raised from time to time by the industry relating to their engagements (and contracts) with government funded projects. These issues include terms of payments, acceptance criteria, service level agreement and change management etc.

It is the consistent representation of NASSCOM, as also the major System Integrators like TCS, Wipro, Tech Mahindra, IBM etc, for the need of a model RFP to guide all the organizations across governments, so that all variations, vagaries and uncertainties may be avoided. Based on intensive deliberations with the industry and other stakeholders, this model RFP has been formulated.

The major features of Model RFP provides for,

1. Level playing field, to all stakeholders by defining appropriate pre-qualification and technical evaluation criterion.

2. Aligning legal terms and conditions with the requirements of the IT Industry

n++ Template for scope of work and service level agreements

n++ Change request mechanisms

n++ Dispute resolution

n++ Standard contractual terms & conditions

n++ Standardization of Intellectual property rights

n++ Capping the liability, penalty and liquidated damages

3. Making payment terms, objective and easier, for industry and Government Department

n++ Guidance on simplifying payment related conditions

n++ Incorporating the Exchange rate variations

4. Converging Government schemes like Make in India / Preference for Domestically Manufactured Electronic Goods (PMA), provisions for Start-ups and MSMEs

5. Leveraging latest technologies like cloud, mobiles, etc.

6. Aligned with the General Financial Rule 2017

7. Adherence to the latest standards

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Employment prospects in Indias IT Sector: Robust Outlook
May 24,2017

It is asserted that the employment potential and prospects in the IT and related sectors are robust and promising. Some of the reports to the contrary in the media space are highly exaggerated and unfounded.

Indian IT sector employment prospects, both in the near and long-term are expected to be broadly positive and encouraging for the future. India IT companies currently serve two thirds of the fortune 500 companies and have created 40 lakhs direct jobs in India

To present an objective and realistic potential of the employment scenario, the Ministry apart from its own feedback, has taken note of projections by NASSCOM, the principal Industry body, as well as of other well-known independent organizations and consultants working in this field.

NASSCOM has confirmed that the industry continues to be a net hirer and reports that:

n++ 2.5-3 million new jobs will be created by 2025.

n++ In FY 2017, the industry added 1,70,000 new jobs. NASSCOM has already publicly contradicted reports of large scale layoff

n++ IT industry added 600,000 in last three years and today, boasts of a total employee base of 3.9 million.

TeamLease analysis for 2017-18 reports that IT sector hiring sentiments is positive and is up by 4% in October 2016 to March 2017, compared to the previous six-month period.

The TeamLease analyses also indicates that e-commerce and technology startup sector hiring sentiments has increased by 2%, with projected 14.94% job growth. (This is despite recent challenges in these sectors.)

Recruitment and staffing firm Randstad projects (in December 2016), a cumulative growth rate of 9% in the IT / ITeS job market.

The Indian technology startup sector will offer strong and growing employment prospects to Indian IT professionals. According to NASSCOM, in 2016, Indian technology startups employed 95,000 to 100,000 IT professionals, across more than 4,750 startups (including ecommerce and hyperlocals).

Indias domestic IT market offers strong prospects for industry growth (consequently employment), even if global markets were to face challenges.

n++ Indias total software product market grew at 9.5% in FY2017 to reach USD 7 billion. (Exports grew 7.8% to reach USD 2.3 billion.) In comparison, the domestic market grew much faster, at 10.4%, reaching USD 4.8 billion.

n++ Indias overall domestic IT/BPM sector is expected to grow at 8.5% from USD 35 billion in 2016 to an anticipated USD 37 billion in 2017.

Other shining sectors of employment in the overall of IT Industry under Digital India, include, the following:

n++ CSC has generated 10lakhs local level employment by way of village level entrepreneurs.

n++ Total employment in IT/ITES Industry employees is 4 millions as direct employment and 1.3 Crores as indirect employment.

n++ State-owned Software Technology Park of India (STPI) has generated 50% of the employment generated by the Indian IT/ITES industry. It is to be noted that out of 56 STPI centres, 48 are located in tier-ii and tier-iii location, benefitting the qualified youth of such locations.

n++ To further promote the job creation, MeitY has come up with India BPO promotion scheme with an aim to provide employment to 1.45 lakh persons, mostly in the small towns. More than 48 thousand BPO seats in 2017-18 year. It is a matter of assurance that BPO through tendering has been finalized and is in its process of being set up in towns like Imphal, Guwahati, Siliguri, Patna, Muzaffarpur, Samastipur, Gazipur, Unnao, Amravati etc

n++ To encourage Northeastern part of India, MeitY has a separate Northeast BPO promotion scheme with 5000 seats and having employment potential of 15000 persons. This would go a long way to help the employment scene in northeast region of India.

n++ In Mobile phone manufacturing, 72 new mobile manufacturing units started only in last 30 months. It has created 1 lakh direct and 3 lakh indirect jobs in India. All major brands like Apple, Samsung etc. in the ICT sector are manufacturing or ready to manufacture in India.

The emerging and promising digital economy in the country is going create a very powerful potential for job creations.

The Govt is encouraging greater stress on cyber security and this will lead to greater focus on innovation, research and thus significant potential for job creation.

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Govt. of India launches Energy Efficient Buildings Programme EESL to invest Rs 1,000 crore by 2020 under buildings programme
May 23,2017

Shri Piyush Goyal, Minister of State (I/C) for Power, New & Renewable Energy, Coal and Mines, Govt. of India launched the Energy Efficient Buildings programme in a function jointly organized by FICCI and EESL. The scheme will be implemented by Energy Efficiency Services Limited (EESL), a JV under the administration of Ministry of Power, Government of India. EESL also signed a MoU with PWD Maharashtra to retrofit 1500 buildings under PWD in Maharashtra with energy efficient appliances.

Under the Energy Efficient Buildings programme EESL intends to bring investment to the tune of Rs 1000 crore covering more than 10,000 large government/private buildings in next 2-3 years. It is estimated that about 1 crore LED lights, 15 lakh energy efficient ceiling fans and 1.5 lakh energy efficient ACs will be retrofitted by EESL in these buildings. Apart from retrofitting, EESL also aims to widen its services in areas like centralized AC system, Energy Audits and New Generation Energy Management System in buildings.

Shri Piyush Goyal said, n++The National Buildings Energy Efficiency programme has the potential to reduce not only cost and energy consumption but significantly contribute to management of peak demand. There is no dearth of opportunities in energy efficiency and the Buildings programme is one such opportunity we should not let go. Maharashtra is a leader in managing the states power demand. We are confident that their ingenuity along with EESLs capability will exceed the project savings. The National Building Dashboard is also an effective tool to not only measure savings real-time but demonstrate the transparency in implementation of projects.n++

He added, that n++Today, India is coal surplus, power surplus and with the National Buildings Energy Efficiency programme, Maharashtra will lead the country in demand side management. No other state has taken up such a grand initiative to make buildings energy efficient.n++

Shri Chandrakant Dada Patil, who also chaired the event, said, n++All government buildings should be green buildings. We are very proud to be associated with EESL for retrofitting energy efficient appliances in 1500 buildings across the state. This is just the beginning and we will move to installing solar roof-top panels in these buildings.n++

The Energy Efficient Buildings Programme has two business models. The ESCO (Energy Servicing Company) model, where the entire upfront investment is done by EESL which is paid back by the building owner from the energy saving resulted by the intervention. The other model is PMC (Project management consultancy), where onetime payment cost of services is paid to EESL who then support the complete project implementation.

Mr. Jaspal Bindra, Chairman FICCI, Maharashtra State Council said, n++Not only is bringing in energy efficiency critical for the Power sector as a whole, but it contributes a long way towards meeting Indias climate change obligations, improving the financial health of end user entities, particularly electricity distribution companies.n++

Mr. Saurabh Kumar, Managing Director, EESL said, n++This is a momentous day for EESL where we are expanding our energy efficiency initiative to cover buildings. We have already started retrofitting numerous government buildings as a pilot to the programme. Through this programme we want to bring in uniformity and obviate the need for state/central governments to allocate capital expenditure for building upgrade. The money saved from this intervention can be used for social welfare. It has been established that energy efficiency is good for all and it is essential for manufacturing unit, large facilities and buildings where we can save energy in huge numbers.n++

The EESL agreement with PWD of Government of Maharashtra will attract an investment of about Rs 325 crore and is expected to complete between 2017-2019. EESL under this intervention will replace about 7,000 energy efficient ACs, 11 lakh LED lights and 6 lakh energy efficient ceiling fans, 14,000 streetlights which will lead to an energy savings of 100 MU, a 39 percent reduction in energy savings through retrofitting.

Shri SP Garnaik, Chief General Manager (Tech), EESL said, n++The launch of the Energy Efficient Building Programme is very timely as people around the world have realized that energy efficiency is the need of the hour. In India, the building sector accounts for approximately 30-35 percent of the total energy consumption and is growing at a rate of 8% annually therefore a big push is needed in this direction.n++

EESL is also looking at similar intervention in Odisha, Himachal Pradesh, Gujarat and Andhra Pradesh to retrofit energy efficient appliances in 2000 more buildings. EESL will further widen its activities in corporate buildings, government/private establishments, PSUs etc. Apart from projects in government buildings in about 10 states, works have been initiated in 868 railway stations by EESL to replace existing inefficient lighting, ACs and ceiling fans.

EESL has recently retrofitted energy efficient appliances in NITI Aayog, Nirman Bhawan, Sardar Patel Bhawan, Shastri Bhawan, J&K Assembly, Jammu Secretariat, Vidyut Bhawan, Rajiv Chowk Metro station etc. where LED lights, BEE rated 5-star ACs and ceiling fans etc have been retrofitted. EESL has so far installed about 94,000 LED lights, 3000 energy efficient ACs and over 400 energy efficient ceiling fans in these buildings.

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Ind-Ra: GST Transition to Disrupt Working Capital Cycle of India Inc; Easy System Liquidity Essential
May 23,2017

The transition to GST will disrupt the working capital cycle of businesses in the initial phase and thus easy liquidity in the system is essential for two to four months, says India Ratings and Research (Ind-Ra). The agency believes that in order to minimise the magnitude of such disruption at the earliest, and to absorb the sudden changes in requirement of short term finance, easy system liquidity is necessary. Ind-Ra studied a sample set of 11,000 corporates and estimates that the input credit lock up for this sample could be around INR 1 trillion of which about INR500 billion could be blocked for about two months which may result in higher short term working capital requirement for businesses in the near term.

Ind-Ras sample set of corporates showed that the task is humongous and can be gauged by the size of closing inventory of around INR11.2 trillion as at FY16, which are at various stages of production process and includes other inventory procured at various dates from different sources including CST, VAT and exempt purchases. The average excise duty of the sample set works out to around 5.5%. Further assuming that 25% of the over-all inventory is procured locally and is subject to an average VAT rate of 14%, the over-all input credit lock up will be around INR1 trillion for this sample and would be higher on an over-all basis. Even if 50% of this is not available for set-off during the transition phase, it would result in blockage of INR500 billion of input credit for about two months (although may not necessarily be used during the first two months). Moreover, service tax rates are likely to increase by a flat 3% to 18% as against 15%. These factors may put stress on the short term working capital requirement for businesses.

Ind-Ra believes that even if businesses are able to achieve this seemingly mammoth task and the amounts are credited to the electronic ledger on a provisional basis, it will be subject to variations in the near term as there could be litigations on eligibility and availability under the existing laws and under the GST regime which may lead to disruption of working capital for businesses. The impact on individual companies could however vary widely and Ind-Ras study suggests that around 85% of the blocked input credit will be with companies with greater than INR5 billion revenues. Ind-Ra believes larger companies whose credit profiles are relatively stronger will tide over the short term working capital disruption relatively easily as compared to the ones which have weaker credit profiles.

Focusing on the liquidity conditions, the system liquidity remained abundant- reflected in the liquidity adjustment facility (LAF) provided by Reserve Bank of India (RBI). On an average in May 2017 banks are parking over INR3 trillion (3% of net demand and time liabilities) under the LAF window, comparted to above INR5 trillion in March 2017. Currently, the high liquidity situation is owing to the lower amount of currency in circulation and a surge in foreign portfolio investments (FPI). The currency in circulation has now restored to INR14.5 trillion, compared to INR18 trillion, prior to November 2016. Additionally, net FPI investment in equity and debt has crossed INR1 trillion since the starting of 2017, an exogenous money creation.

The sloshing system liquidity has become a cause for concern, as it impacts the monetary policy objective and practices. The objective of monetary policy is to keep the overnight rate (O/N) and the shortest end of the yield curve anchored to policy rate (i.e. repo rate). During the months of March -April 2017, O/N rates were substantially lower than the policy rates and similarly short term yields were below the policy rate. To tackle such anomalies the RBI in its April 2017 monetary policy spelt out a detailed course of actions. And in line with the monetary policy communication, RBI has sterilised INR1 trillion of liquidity through Treasury bills (T- Bills) under the market stabilisation scheme. As a result, the O/N rates and short term rates have now realigned to RBIs objective, i.e. anchored to repo rates.

The ongoing dilemma is now, how RBI will tackle this sloshing liquidity surplus, or whether it is even necessary to sterilise such liquidity. Ind-Ra believes that such liquidity surplus need not be sterilised. The RBIs objective is to keep O/N rates close to policy rate, where liquidity is one of the tools. After issuances of T-Bills under the market stabilisation scheme at higher yield, overnight rates have now recalibrated to policy rate. And as more importantly, as per Ind-Ras prognosis the system liquidity should be at ease during the transition phase of GST. Thus in order to minimise the magnitude of such disruption at the earliest and to absorb the sudden changes in requirement of short term finance, easy system liquidity is necessary. However some fine tuning will be needed to maintain O/N rates closer to policy rates.

Thus Ind-Ra believes the changes of both fund flow and cash flow cycle may cause abrupt volatility in the working capital requirements during the initial phase of GST transition. The actual manifestation is expected to be visible in the volatility of system liquidity and short term rates. To tackle such a disruption with ease and so as to ring-fence short term fiancn++ market from a market failure, the easy financing option is critical. Thus an easy system level liquidity is essential to pursue these objectives. Since the overall credit offtakes is low and banking system liquidity is at its high level, banks will also be in a position to tackle any unanticipated volatility in fund requirements.

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Reserve Bank of India Outlines the action plan to implement the Banking Regulation (Amendment) Ordinance, 2017
May 23,2017

The Reserve Bank of India has outlined the steps taken and those on the anvil post the promulgation of the Banking Regulation (Amendment) Ordinance, 2017.

The amendments to the BR Act 1949, introduced through the Ordinance, and the notification issued thereafter by the Central Government empower RBI to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC). It also enables the Reserve Bank to issue directions with respect to stressed assets and specify one or more authorities or committees with such members as the Bank may appoint or approve for appointment to advise banking companies on resolution of stressed assets.

Immediately upon the promulgation of the Ordinance, the Reserve Bank issued a directive bringing the following changes to the existing regulations on dealing with stressed assets:

i. It was clarified that a corrective action plan could include flexible restructuring, SDR and S4A.

ii. With a view to facilitating decision making in the JLF, consent required for approval of a proposal was changed to 60 percent by value instead of 75 percent earlier, while keeping that by number at 50 percent.

iii. Banks who were in the minority on the proposal approved by the JLF are required to either exit by complying with the substitution rules within the stipulated time or adhere to the decision of the JLF

iv. Participating banks have been mandated to implement the decision of JLF without any additional conditionality.

v. The Boards of banks were advised to empower their executives to implement JLF decisions without further reference to them.

It was made clear to the banks that non-adherence would invite enforcement actions.

Currently, the Oversight Committee (OC) comprises of two Members. It has been constituted by the IBA in consultation with RBI. It has been decided to reconstitute the OC under the aegis of the Reserve Bank and also enlarge it to include more Members so that the OC can constitute requisite benches to deal with the volume of cases referred to it. While the current Members will continue in the reconstituted OC, names of a few more will be announced soon. The Reserve Bank is planning to expand the scope of cases to be referred to the OC beyond those under S4A as required currently.

The Reserve Bank is working on a framework to facilitate an objective and consistent decision making process with regard to cases that may be determined for reference for resolution under the IBC. Reserve Bank has already sought information on the current status of the large stressed assets from the banks. The RBI would also be constituting a Committee comprised majorly of its independent Board Members to advise it in this matter.

The current guidelines on restructuring are under examination for such modifications as may be necessary to resolve the large stressed assets in the banking system in a value optimising manner. The Reserve Bank envisages an important role for the credit rating agencies in the scheme of things and, with a view to preventing rating-shopping or any conflict of interest, is exploring the feasibility of rating assignments being determined by the Reserve Bank itself and paid for from a fund to be created out of contribution from the banks and the Reserve Bank.

The Reserve Bank notes that the proper exercise of the enhanced empowerment would require coordination with and cooperation from several stakeholders including banks, ARCs, rating agencies, IBBI and PE firms, to which end the Reserve Bank would be holding meetings in the near future with these stakeholders.

The Reserve Bank will issue further updates as may be deemed necessary at an appropriate time.

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GST will lead to lower tax burden in packaged cement, Medicaments, Smart phones, and medical devices, including surgical instruments
May 23,2017

The roll out of Goods and Services (GST) Tax will bring benefits to the consumers due to reduced tax rates on various commodities such as packaged cement, medicaments, smart phones, and medical devices, etc.

Packaged cement attracts central excise duty of 12.5% + Rs.125 PMT and standard VAT rate of 14.5%. At these rates, the present total tax incidence works out to more than 29%. If we include tax incidence on account of CST, octroi, entry tax, etc., the present total tax incidence would work out to more than 31%. As against this, the proposed GST rate for cement is 28%.

There will be lesser tax burden in case of Medicaments, including Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systemsalso. Medicaments, in general, attract 6% central excise duty and 5% VAT. Further, CST, octroi, entry tax, etc. are also applicable in general. At these rates, the present total tax incidence works out to more than 13%. As against this, the proposed GST rate on medicines, including ayurvedic medicines, is 12%.

Smart phone attracts 2% central excise duty [1% excise duty + 1% NCCD]. VAT rates vary from State to State from 5% to 15%. Weighted average VAT rate on smart phones works out to about 12%. Thus, the present total tax incidence on smart phones works out to more than 13.5%. As against this, the proposed GST rate for smart phones is 12%.

Similarly, medical devices, including surgical instruments, in general attract 6% central excise duty and 5% VAT. Along with CST, octroi, entry tax, etc., the present total tax incidence on them works out to more than 13%. As against this, the proposed rate under GST is 12%.

Puja samagri including havan samagri will be under the Nil category. However, exact formulation for the same is yet to be finalized.

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