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Investors Eye Acquisitions in the Highway Sector Worth INR245bn
Sep 20,2016

Investors are keenly looking to pick up stake in projects worth INR245bn of completed highways, with an average of six years of operational history, estimates India Ratings and Research (Ind-Ra). The agency notes that there has been a paradigm shift in the acquisitions - from developers to financial investors. Ind-Ra believes that this is a positive shift and it will give impetus and provide opportunities for the opening up of businesses in the operation and maintenance vertical. Ind-Ra estimates that deals which are yet to be sealed have a debt size of over INR164bn. The activity pipeline has been abuzz in the last three years and Ind-Ra estimates that the highway sector has witnessed transactions of around INR111bn in debt, during February 2013-June 2016.

Ind-Ra, based on publicly available information as well as further limited information received from the issuer, notes that the list of sellers or potential sellers include companies, namely, HCC Concessions, NCC Infrastructure, Soma Enterprises, Reliance Infrastructure Limited (IND A+/RWN) and GMR Infrastructure.

The Indian highway sector is witnessing an enhanced level of activity in the acquisition space, largely led by global marque funds and investors namely, I Squared Capital, Brookfield Asset Management, PSP Investments and Macquaries India Infrastructure Fund among others. These international funds have picked up stake or are in advanced stages of acquisition of around 2,900km length of national and state highway projects. Similarly, domestic financial investors namely, IDFC India Infrastructure Fund and other infrastructure companies such as, Tata Realty and Infrastructure Ltd. have made a mark by showing interest in deals of around 780km length of highways. With Infrastructure Investment Trusts gaining traction, Ind-Ra believes highways, as an asset class will further evolve and will set benchmarks.

Road projects worth over INR400bn, spanning around 3,600km, have either been sold off in the last three years or are currently in the process of being divested. This recent increase in investor appetite could well be sustained, with reports doing the rounds that the government is working towards clearing the roads to provide access for global sovereign wealth funds to invest into private highway projects.

Ind-Ra believes that the National Highway Authority of Indias (NHAI, IND AAA/Stable) 100% exit policy, which was cleared in mid-2015 and road developers bid to deleverage their balance sheet have both aided the momentum in the last year. Ind-Ra had highlighted this in June 2016 in the report Opportunities Manifest Despite Overt Limitations.

A study of the deals shows that out of a total of 40 deals, including the ones in the pipeline, only five projects have been or are likely to be acquired by another corporate house, while institutional investors mostly account for the balance. Barring one project, all the projects have operational history of over six years, which could well be one of the reasons for investors evincing interest, since such projects reveal actual traffic potential. National highways and toll road projects are the most in-demand projects, around 94% of highway projects in the fray are national highway projects and around 87% of the projects are toll-based projects, which normally have a higher potential of giving returns to the acquirer.

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11.8% growth in Foreign Tourist Arrivals in August 2016 over the same period in 2015
Sep 20,2016

11.8% growth in Foreign Tourist Arrivals (FTAs) in August 2016 over the same period in 2015. Bangladesh accounts for highest share of tourist arrivals followed by USA and UK in August 2016. Rs.12, 903 crore Foreign Exchange earned through tourism in August 2016.

Ministry of Tourism compiles monthly estimates of Foreign Tourist Arrivals (FTAs) on the basis of Nationality-wise, Port-wise data received from Bureau of Immigration (BOI) and Foreign Exchange Earnings (FEEs) from tourism on the basis of data available from Reserve Bank of India. The following are the important highlights regarding FTAs and FEEs from tourism during the month of August, 2016.

Foreign Tourist Arrivals (FTAs):

n++ FTAs during the Month of August, 2016 were 6.70 lakh as compared to FTAs of 5.99 lakh during the month of August, 2015 and 5.76 lakh in August, 2014. There has been a growth of 11.8% in August, 2016 over August, 2015.

n++ FTAs during the period January- August,, 2016 were 55.92 lakh with a growth of 10.2% as compared to the FTAs of 50.73 lakh with a growth of 4.6% in January- August, 2015 over January- August, 2014.

n++ The Percentage share of Foreign Tourist Arrivals (FTAs) in India during August, 2016 among the top 15 source countries was highest from Bangladesh (16.61%) followed by USA (12.59%), UK (10.57%), Sri Lanka (5.92%), Malaysia (3.41%), China (2.77%), Japan (2.75%), Canada (2.63%), Germany (2.57%),France (2.54%),Australia (2.40%), Oman (2.19%), Nepal (1.95%), Singapore (1.91%) and UAE (1.68%).

n++ The Percentage share of Foreign Tourist Arrivals (FTAs) in India during August 2016 among the top 15 ports was highest at Delhi Airport (28.38%) followed by Mumbai Airport (17.32%), Chennai Airport (10.17%), Haridaspur Land check post (9.10%), Bengaluru Airport (6.83%), Cochin Airport (5.08%), Hyderabad Airport (3.98%),Kolkata Airport (3.93%), Gede Rail (2.05%), Trivandrum Airport (1.72%), Ahmadabad Airport (1.68%),Tiruchirapalli Airport (1.64%), Ghojadanga land check post (1.07%), Amritsar (1.05%) and Attari-Wagh (1.05%).

Foreign Exchange Earnings (FEEs) from Tourism in India in Rs. terms and in US$ terms

n++ FEEs during the month of August, 2016 were Rs.12, 903 crore as compared to Rs. 11,411 crore in August, 2015 and Rs. 10,385 crore in August, 2014.

n++ The growth rate in FEEs in rupee terms during August, 2016 over August, 2015 was 13.1% as compared to the growth of 9.9% in August, 2015 over August, 2014.

n++ FEEs from tourism in rupee terms during January- August, 2016 were Rs. 1,00, 287 crore with a growth of 14.7% as compared to the FEE of Rs. 87,428 crore with a growth of 9.6% during January-August, 2015 over January- August, 2014.

n++ FEEs in US$ terms during the month of August, 2016 were US$ 1.927 billion as compared to FEEs of US$ 1.752 billion during the month of August, 2015 and US$ 1.706 billion in August, 2014.

n++ The growth rate in FEEs in US$ terms in August, 2016 over August, 2015 was 10.0% compared to the growth of 2.7% in August, 2015 over August, 2014.

n++ FEE from tourism in US$ terms during January- August , 2016 were US$ 14.922 billion with a growth of 7.8% as compared to the US$ 13.839 billion with a growth 4.9% during January- August , 2015 over January- August, 2014.

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Indian electronics products to touch $75 bn by 2017: ASSOCHAM-EY study
Sep 20,2016

The Indian electronic products industry in India is expected to grow at a CAGR of 10.1% to reach US$ 75 billion by 2017 from US$ 61.8 billion in 2015 with increasing penetration across consumer products especially in semi-urban and rural markets, along with government push for infrastructure development, locomotive and energy, there exists a significant opportunity for rapid expansion of this industry, adds the ASSOCHAM-EY joint study.

The electronic components industry in India was valued at US$13.5 billion in 2015, growing from US$10.8 billion in 2013 at a CAGR of 11%. The market is dominated by electromechanical components (such as PCB and connectors) which form 30% of the total demand, followed by passive components (such as resistors and capacitors) at 27% , according to an ASSOCHAM-EY study titled Turning the Make in India dream into a reality for electronics and hardware industry.

Indias attractiveness for manufacturers is growing due to availability of low-cost labor. Rising manufacturing costs in China and Taiwan are compelling manufacturers to shift their manufacturing base to alternate markets. In 2014, the average manufacturing labor cost per hour in India was US$0.92 as compared to US$3.52 of China, noted the study.

The Indian manufacturing ecosystem for electronics and hardware industry is still at a nascent stage and faces various demand side as well as supply side challenges are limited scale of operations and local component demand due to the nascent product manufacturing in India. Component demand in India is muted due to very limited value addition as primarily last-mile assembly takes place. Norms such as safety regulations for automotive, medical and industrial sectors have driven the uptake of electronic content globally.

However, manufacturers in India do not add high electronic content in the products due to limited industry-specific standards. The current market is dominated by secondary sales and primary sales are limited due to reduced disposable income in semi-urban and rural markets. The market penetration for most of the consumer appliances and electronics is currently lagging behind global average by up to 60% in certain categories and there lies huge untapped potential in rural markets (approximately 69% of Indias households).

Although global markets are witnessing rapid consumer uptake as electronic content increases across verticals (e.g., automotive with applications around safety, connectivity, infotainment, consumer electronics, smart homes, etc.); India has a slower adoption as consumers remain highly sensitive to even a marginal increase in product prices.

Due to nascent stage of electronics manufacturing in India, scale of operations is low, resulting in reduced cost competitiveness. Traditional electronics manufacturing destinations such as China, Taiwan and South Korea have built significant capacities across manufacturing value chain (SKD assembly, CKD assembly, Semiconductor Assembly & Testing Services). In addition, emerging (Malaysia, Vietnam) destinations have also built capacities. Although labor cost is low in India, labor productivity is lower than traditional destinations.

The basic infrastructure for any industry comprises good roads, power, water, telecommunications, ports and logistics. In India, availability of these facilities is not up to the mark, even in established industrial estates. While the Government has notified Greenfield Electronic Manufacturing Clusters, they still remain un-operational due to infrastructure issues.

The lack of proper roads and sales infrastructure results in distribution challenges for companies catering to markets in small semi-urban cities, rural areas and remote villages. Additionally, from both import and export perspective, there is port congestion due to unavailability of containers and long documentation process.

Availability of relevant manpower is crucial to the development of any industry. Since the electronics manufacturing industry has high dependence on skilled manpower, especially for highly specialized activities such as electronics system design, IC design and manufacturing etc., the availability of talent with relevant skill sets assumes considerable importance.

Both SKD and CKD are labor intensive and require delicate handling and process adherence during the manufacturing process. With changing technology, the labor needs to be constantly trained. However, the current labor scenario in India poses certain challenges.

According to National Skill Development Corporation (NSDC), the incremental human resource requirement in the electronics and IT hardware sector will be 8.9 million by 2022. The lack of training centers that administer courses relevant to the job functions in electronics sector is also a concern. Moreover, the country has strict labor laws including restrictions on overtime work, employee headcount and work timings for women employees, which act as a barrier for growth in the sector.

The high cost of working capital and capex-related financing (receivables and payables) due to high interest rates is a major challenge faced by domestic manufacturers, since it increases the overall cost of finance. Additionally, there is an increase in the cost of manufacturing (conversion costs) due to inadequate availability/reliability of power, high cost of real estate, etc. The cost of borrowed capital is 12%-14% in India as compared with ~5%-7% global average. Moreover, with the frequently changing energy efficiency norms, manufacturers need to make significant investments for products with a high rating.

Indias taxation system is complex, especially where indirect taxes are concerned. Currently, the base direct tax incidence in India stands at around 30%, whereas the corresponding tariff in other Asian countries is between 16% and 25%. Although, the Government has proposed the implementation of Goods and Services Tax (GST) for a state-of the-art indirect tax system, there are concerns that the industry faces in terms of the clarity on the revenue-neutral rate, non-creditable tax on inter-state movement of goods, status of existing state incentives granted and transition from existing taxation system to GST regime.

Procedural and regulatory clearances are time consuming and complex. According to industry sources, it takes up to a year to set up a manufacturing plant in the country and a new production line could take up to six months to become fully operational.

Additionally, the refund processes and clearances to avail benefits under tax are highly cumbersome and time-consuming. Procedure to claim concessional duty on many raw materials/ parts/components used in manufacturing of electronics products has been recently simplified in the Union Budget 2016-17 by introducing the concept of self-assessment.

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Indias external debt stock stood at US$ 485.6 billion at end-March 2016, increasing by US$ 10.6 billion over the level at end-March 2015
Sep 20,2016

The rise in External Debt was due to the rise in long-term debt particularly NRI deposits.

The Twenty Second Issue of the Annual Publication Indias External Debt: A Status Report 2015-16 prepared by the Department of Economic Affairs, Ministry of Finance, Government of India presents a detailed analysis of Indias external debt position at end-March 2016, based on the data released by the Reserve Bank of India (RBI) on June 30, 2016 and data and information available from other sources. Apart from analysing the trend, composition and debt service of Indias external debt, the Report provides a comparative picture of Indias external debt vis-a-vis other countries, particularly developing countries.

The salient features of the Report are:

-+Indias external debt stock stood at US$ 485.6 billion at end-March 2016, increasing by US$ 10.6 billion (2.2 per cent) over the level at end-March 2015.The rise in external debt was due to the rise in long-term debt particularly NRI deposits.

-+At end-March 2016, long-term external debt was US$ 402.2 billion, showing an increase of 3.3 per cent over the level of 2015 (end-March). Long-term external debt accounted for 82.8 per cent of total external debt at end-March 2016 as compared to 82.0 per cent at end-March 2015.

-+Short-term external debt declined by 2.5 per cent from US$ 84.7 billion at end-March 2015 to US$ 83.4 billion at end-March 2016. This was mainly due to the decline in trade related credits. The share of short-term external debt in total external debt declined from 18.0 per cent at end-March 2015 to 17.2 per cent at end-March 2016.

-+Government (sovereign) external debt stood at US$ 93.4 billion at end-March 2016 vis-a-vis US$ 89.7 billion at end-March 2015. The share of Government external debt in total external debt was 18.9 per cent at end-March 2016 vis-+-vis 18.8 per cent at end-March 2015.

-+Indias external debt has remained within manageable limits in 2015-16 as indicated by the increase in foreign exchange reserves to debt ratio to 74.2 per cent, the external debt-GDP ratio of 23.7 per cent, and fall in short term debt to 17.2 per cent. External debt of the country continues to be dominated by the long-term borrowings. Indias external debt position in recent years is given below:n++

Table: Indias Key External Debt Indicatorsn++(Per cent)At end March External Debt (US$ billion)External Debt to GDPDebt Service RatioForeign Exchange Reserves to Total DebtConcessional Debt to Total DebtShort-Term Debt to Foreign Exchange ReservesShort- Term Debt to Total DebtLong-Term Debt to Total Debt1234567892013-14 n++n++n++ 446.223.8n++n++n++n++n++n++n++ 5.968.210.430.120.579.52014-15 PRn++n++n++ 475.0 23.8n++n++n++n++n++n++n++ 7.671.98.825.018.082.02015-16 QEn++n++n++ 485.623.78.874.29.023.117.282.8PR: Partially Revised; QE: Quick Estimates.

A cross country comparison based on International Debt Statistics 2016 of the World Bank which presents the debt data for 2014, shows thatIndia continues to be among the less vulnerable countries with its external debt indicators comparing well with other indebted developing countries. Indias key debt indicators, especially debt to GNI and debt service ratios continue to be comfortable.

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IndiaGÖs external debt stock stood at US$ 485.6 billion at end-March 2016, increasing by US$ 10.6 billion over the level at end-March 2015
Sep 20,2016

The rise in External Debt was due to the rise in long-term debt particularly NRI deposits.

The Twenty Second Issue of the Annual Publication GÿIndias External Debt: A Status Report 2015-16 prepared by the Department of Economic Affairs, Ministry of Finance, Government of India presents a detailed analysis of Indias external debt position at end-March 2016, based on the data released by the Reserve Bank of India (RBI) on June 30, 2016 and data and information available from other sources. Apart from analysing the trend, composition and debt service of Indias external debt, the Report provides a comparative picture of Indias external debt vis-a-vis other countries, particularly developing countries.

The salient features of the Report are:

-+Indias external debt stock stood at US$ 485.6 billion at end-March 2016, increasing by US$ 10.6 billion (2.2 per cent) over the level at end-March 2015.The rise in external debt was due to the rise in long-term debt particularly NRI deposits.

-+At end-March 2016, long-term external debt was US$ 402.2 billion, showing an increase of 3.3 per cent over the level of 2015 (end-March). Long-term external debt accounted for 82.8 per cent of total external debt at end-March 2016 as compared to 82.0 per cent at end-March 2015.

-+Short-term external debt declined by 2.5 per cent from US$ 84.7 billion at end-March 2015 to US$ 83.4 billion at end-March 2016. This was mainly due to the decline in trade related credits. The share of short-term external debt in total external debt declined from 18.0 per cent at end-March 2015 to 17.2 per cent at end-March 2016.

-+Government (sovereign) external debt stood at US$ 93.4 billion at end-March 2016 vis-a-vis US$ 89.7 billion at end-March 2015. The share of Government external debt in total external debt was 18.9 per cent at end-March 2016 vis-+-vis 18.8 per cent at end-March 2015.

-+Indias external debt has remained within manageable limits in 2015-16 as indicated by the increase in foreign exchange reserves to debt ratio to 74.2 per cent, the external debt-GDP ratio of 23.7 per cent, and fall in short term debt to 17.2 per cent. External debt of the country continues to be dominated by the long-term borrowings. Indias external debt position in recent years is given below: 

Table: Indias Key External Debt Indicators (Per cent)At end March External Debt (US$ billion)External Debt to GDPDebt Service RatioForeign Exchange Reserves to Total DebtConcessional Debt to Total DebtShort-Term Debt to Foreign Exchange ReservesShort- Term Debt to Total DebtLong-Term Debt to Total Debt1234567892013-14     446.223.8        5.968.210.430.120.579.52014-15 PR    475.0 23.8        7.671.98.825.018.082.02015-16 QE    485.623.78.874.29.023.117.282.8PR: Partially Revised; QE: Quick Estimates.

A cross country comparison based on International Debt Statistics 2016 of the World Bank which presents the debt data for 2014, shows thatIndia continues to be among the less vulnerable countries with its external debt indicators comparing well with other indebted developing countries. Indias key debt indicators, especially debt to GNI and debt service ratios continue to be comfortable.

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Union Minister Mr Venkaiah Naidu lays foundation stone for Bharat Electronics Advanced Night Vision Products Factory in Andhra Pradesh
Sep 20,2016

Union Minister for Information & Broadcasting, Shri M. Venkaiah Naidu laid foundation stone for the Bharat Electronics Advanced Night Vision Products Factory at Nimmaluru, Pamarru (M) in Krishna District of Andhra Pradesh here today. The factory, which is coming up in 50 acres is likely to be completed by 2018 at a cost of Rs 300 crore and is likely to provide employment to over 1200 people. The factory also has a scope for further investment of up to Rs 1000 Crore. BEL factory is presently operating from a campus of five acres. Once completed the Advanced Night vision facility will have state of the art infrastructure like Assembly Hangars, ultra-high clean rooms for assembly of devices, modern optical workshops with precision SPDT, CNC optical fabrication machines and high performance durable thin film.

New products like IR seekers & missile warning systems, tank sights, weapons sights, thermal imager based multi-function sights, EO system for radar and AD guns, Border surveillances system un-cooled TI weapon sights, night sights for CQB carbine, compact multi-purpose stabilized systems for advanced light helicopters shall be designed and manufactured in this factory.

Speaking on the occasion , Shri Naidu urged the people to be cautious with those creating hurdles to the development of the State. He said that the Centre has focused on the development of State and is paying special attention to its progress by granting special financial assistance. n++People are more intelligent than the political leaders and they realise what is true and what is notn++. He urged the BEL management to provide employment to the locals in the new factory and assured that he would take up the issue with the defence minister. The Prime Minister has focussed on n++make in Indian++ products so that people get employment he said. The Union Minister further said that of the 28 demands made by the people of the State in the wake of bifurcation, the Centre has already agreed upon 27 demands except the special category status which is not possible as it was not included in the bifurcation bill and 9 more states are demanding it.

Andhra Pradesh State is to become hub for manufacturing of defence products with over Rs 6,600 Crore worth defence projects sanctioned, he said. He reiterated that the Centre had assured special package to the State which would be more than what Special status would give. He appreciated the efforts of the Chief Minister Mr Nara Chandrababu Naidu for earmarking 50 acres of land to the BEL management for establishing the factory. He also said that another defence project is in final stage of sanction to be set up Bobbili. The Union Minister pointed out that industrial development is as important as agriculture for development and they are like two eyes.

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Karnataka asked to Release 3000 Cusecs of Water Per Day from 21st to 30th September 2016
Sep 20,2016

The Cauvery Supervisory Committee in its seventh meeting held under the Chairmanship of Union Water Resources Secretary Shri Shashi Shekhar directed Karnataka to release 3000 cusecs of water per day to Tamil Nadu from 21st to 30th September 2016. The supervisory committee took into consideration the interest of all the participating states, the inflow position, rain fall picture, daily inflow of water in the reservoirs of Karnataka, the drinking water of needs Karnataka and the need of samba crop in Tamil Nadu.

The committee took a detailed presentation from the Chief Secretaries of Tamil Nadu, Karnataka, Puducherry and the representative from Kerala. The committee tried to reach to a conclusion but Tamil Nadu and Karnataka did not agree to a particular figure of release of water which was based on scientific facts.

It has also been decided that Central Water Commission will draw up a new protocol of online collection of data related to rainfall and flow of water on real time basis which may be shared simultaneously with all the concerned states. The cost of developing this protocol will be shared by the three states and UT of Puducherry.

The supervisory committee will meet frequently to access the situation and needs in the future. The next meeting will be held in sometimes in October. The committee will meet once in every month from February 2017 onwards.

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States should execute Central Schemes on a faster mode- Tomar
Sep 19,2016

The Centre today urged the States to speed up the execution of Central Schemes to achieve the goal of developed India. Addressing an All India Conclave of Rural Development and Panchayati Raj Ministers at Guwahati, Assam, the Minister for Rural Development, Panchayati Raj and Drinking Water & Sanitation Shri Narendra Singh Tomar said that development of India is intrinsically linked to development of villages. He lamented that despite 70 years of Independence, India is still lagging on several developmental parameters.

Shri Tomar said that first time since Independence, the NDA Government led by Shri Narendra Modi has fixed the target years for completion of several major Central scemes, otherwise these were being executed in routine fashion. Giving the example of a housing programme called Pradhan Mantri Aawas Yojana (PMAY) to be launched shortly, he said by 2019, one crore houses will be provided to the eligible beneficiaries after taking into consideration of SECC census, 2011 and 40 lakh incomplete houses will be completed under the old scheme of Indira Aawas Yojana. He added that by 2022, all the deprived sections of society will be given pucca houses under PMAY.

Similarly, speaking on the issue of Pradhan Mantri Gram Sadak Yojana, Shri Tomar said that that between the year 2011-2014, only 73 Kilometers of rural roads were built daily , while between 2014 to 2016, it has increased to 100 kilometers per day and this year up to 140 kilometers of roads are being built each day. He said that 15 percent of rural roads built under PMGSY are using Green technologies like cold mix, fly ash, geo-textiles, plastic and other waste materials and urged the States to use this technology on a larger scale. He urged the States to complete the road projects in timely fashion to avail the Central funds and incentives as budget is no constraint for PMGSY.

Shri Tomar said that apart from development of rural infrastructure, the programmes like Aajevika and skill development can transform the lives of rural poors, besides augmenting their income. He informed that there are 27 lakh Self Help Groups in the country with 3 crore women as members and they have availed about Rs 30,000 crore of bank loans to make local profitable products. Shri Tomar Said, about 15 crore family members are roughly covered under Aajevika Mission and he urged the State governments to help them find suitable markets to sell their products at profitable margins.

Speaking on the Swachh Bharat Mission, the Minister urged the State Governments to undertake campaigns on a large scale for behavioral change. He said, the Swachh mission should not remain a government programme, rather it should become a peoples movement. He informed that Sikkim is the first State which has become ODF( Open Defecation Free) and there are 19 Districts, 249 Blocks and more than 80,000 Villages which have become ODF. Shri Tomar reiterated that Shri Narendra Modi has set the target of making India clean by 2nd October, 2019, which is the 150th birth anniversary of Mahatma Gandhi and added that though the target is very tough, but still achievable, provided there is strong will to achieve the same.

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Availability and affordability of power is a key enabler to meet SDGs: Minister Piyush Goyal
Sep 19,2016

n++Electricity is key to achieving the Sustainable Development Goals (SDGs). India is a power surplus country and can generate 50 percent more power in relation to current production. Government of India is working on addressing last mile connectivity,n++ stated Mr Piyush Goyal, Minister of State (I/C) for Power, Coal, New & Renewable Energy and Mines, Government of India.

Mr Goyal stressed Indias commitment to its Intended Nationally Determined Contributions (INDCs) and to sustainable development and SDGs. He announced that the Government would shortly come up with a mandate for thermal power plants to utilize processed wastewater from a radius of 50 km and replace the fresh water utilization by treated wastewater.

He added that India is the only country which taxes carbon. Clean coal cess has been substantially increasing over past few years. Now it is time for the world to start looking at the consumption in terms of carbon footprint rather just exporting the pollution to other parts of the world. India is only contributing to 4 percent of the global GHG emissions while supporting 17 percent of world population, he noted, adding that the world must recognize the principle of polluter pays.

Mr. Yuri Afanasiev, UN Resident Coordinator & UNDP Resident Representative in India, said that given the size and complexity of social problems in India, the solutions to global challenges would be developed here over the next 10-15 years. India has come out with innovative solutions for developmental challenges like creation of 175 GW of renewable energy capacities, fulfilling Swachh Bharat targets etc. He stressed that the financial gap for meeting developmental goals can only be fulfilled by the private sector through sustainable and moderately profitable business models.

n++In the last few years, there have been great efforts, both at the global level as well as in India, to encourage industries to move towards sustainable business models,n++ said Mr. Ajay S Shriram, Past President, CII and Chairman & Senior Managing Director, DCM Shriram Limited. Mr Shriram lauded the governments efforts in increasing the share of renewable energy and mentioned that Indian industry has given green energy commitments of over 200,000 MW. He added that hydropower which has been an important source of energy in total energy portfolio should have faster environmental clearances particularly for small and micro hydropower projects.

Mr. Sanjiv Puri, Chief Operating Officer, ITC Limited, said that Indias INDCs have targeted lowering the carbon emission intensity to 33 to 35 percent by 2030 and proactive steps are required for energy security. Mr Puri mentioned the efforts of ITC to become water positive, carbon positive and positive on waste recycling.

Mr. S. Raghupathy, Deputy Director General, CII, said that CII through Indian Green Building Council has been able to achieve 3.9 billion sq feet of green building. Payback period of adoption of energy efficient technologies has come down to 4-5 years.

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Provision of Yatri Mitra Sewa for booking of wheelchair services cum porter services at Railway Stations
Sep 19,2016

With a view to provide support to old and differently abled passengers requiring assistance at the stations, Ministry of Railways has decided to introduce Yatri Mitras Sewa for enabling passengers to book wheelchair services cum porter services. The salient features of the Yatri Mitra Seva are as under:

1. Yatri Mitra

A Yatri Mitra can either be a Sahayak or any other person provided by IRCTC or the service provider appointed by IRCTC for this purpose.

2. Services to be provided by Yatri Mitra

Yatri Mitra shall provide Wheel chair cum porter services to differently abled, ailing and old persons.

3. Provision of Yatri Mitra Sewa

n++ The responsibility of providing Yatri Mitra Sewa has been entrusted with IRCTC. IRCTC may provide this service Free of cost through some NGO, charitable trust, PSUs etc under CSR. However, if this service cant be provided Free of Cost due to lack of response from NGOs, Charitable trust, PSUs etc, IRCTC may arrange this service on payment basis through a service provider or on its own.

n++ IRCTC may also arrange these services through existing Battery Operated Car (BOC) Operator, wherever, an agency is providing the service.

4. Booking of Yatri Mitra

The booking of Yatri Mitra can be done as under:

n++ The Yatri Mitra service can be booked on IRCTC e-ticketing website and 139 (IVRS and SMS) or through a mobile.

n++ A Mobile Application developed by CRIS would also be made available for booking of Yatri Mitra as and when it is developed and released by CRIS.

n++ A dedicated Mobile number for each station, where this service is available, shall be made available by the Service provider/IRCTC which would be displayed on IRCTC e-ticketing website and zonal websites of Indian Railways to facilitate booking of Yatri Mitra.

n++ Based on the station at which the facility is booked by the passenger, the booking details (Train Name and Number, date and time of arrival/departure, PNR number, Name of the passenger, Coach and berth number) will be sent by SMS both to the passenger and service provider/IRCTC along with the amount chargeable, if applicable, for the service.

n++ The mobile number of the Yatri Mitra shall also be sent to the passenger through SMS before the expected time of the arrival of the passenger so that the passenger can contact the Yatri Mitra.

n++ The Mobile Application developed by CRIS would have the facility for the service provider to update the status after providing the service. The passenger would also have the option to give feedback regarding compliance for his booking.

5. Operation of Yatri Mitra Seva

The Yatri Mitra Sewa shall be operated on following lines for arriving, transferring and departing passengers:

n++ Arriving/Transferring Passengers

o The IRCTC/service provider on receipt of SMS will ensure that the Yatri Mitra is arranged/positioned at the platform near the coach of the arriving passenger.

o The mobile number of the Yatri Mitra shall also be sent to the passenger through SMS in advance.

o On arrival of the train, the Yatri Mitra shall approach the passenger near his coach, greet him, show his mobile message which will be similar as sent to the passenger himself. On instructions of passenger, he will pick up his/her luggage and help him/her in sitting in wheelchair and take him to desired exit gate or any other platform in case of transfer passenger.

o In case of late running of train, the service provider shall contact the passenger on the mobile number given by the passenger at the time of booking and arrange the service as per expected arrival of the train at the station.

n++ Departing Passengers

o The IRCTC/service provider on receipt of SMS will ensure that the Yatri Mitra is arranged/positioned at the nominated entrance of the station building from where the passenger will be boarding the train.

o Yatri Mitra shall contact the passenger on the mobile number given by the passenger at the time of booking and confirm the expected time of arrival of the passenger and entrance gate of station.

o On arrival of the passenger at entrance gate of station, the Yatri Mitra shall approach the passenger, greet him, and show his mobile message which will be similar as sent to the passenger himself. On instructions of passenger, he will pick up his luggage and help him/her in sitting in wheelchair and take him to the platform where train has to arrive.

6. Storage/Parking of wheelchairs

The Railway shall provide space for storage/parking of wheel chairs as per requirement of number of wheelchairs and charging point if wheelchairs are battery operated. In case service is provided Free of cost, electricity for charging battery of wheelchairs shall be provided free. In case of paid service, the cost of electricity on consumption basis and connection shall be charged to the service provider as per extant practice.

7. Service Charges

The service charges, if applicable, shall be kept reasonable and affordable keeping in mind the objective of providing services to the needy.The service charges should be collected by the Service provider directly from the passenger.

8. IRCTC shall provide adequate number of wheelchairs at the station as per the requirement to be decided in consultation with SrDCM/DCM of concerned division. Preference should be given to battery operated wheelchairs.

9. The Yatri Mitra appointed by service provider shall be issued an ID card and permit to provide these services at the station by SrDCM/DCM of the concerned Division.

10. The service will be available at major stations.

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Central Banks Policies to Keep Markets Volatile
Sep 19,2016

The US Federal Reserve is unlikely to hike rates in this weeks policy, but may signal imminent rate normalisation in the near term, says India Ratings and Research. The rupee will stay volatile and could trade between 66.75/USD-67.40/USD (66.99/USD on 16 September 2016) through the week, while old 10-year G-sec yield trading could range between 7%-7.12% (7.05% on 16 September).

US and Japan Monetary Policy Reviews: Both the Bank of Japan (BoJ) and US Federal Reserve are scheduled to review their monetary policies this week (Wednesday). The Fed may choose to keep the rates unchanged. However, it may signal confidence in the underlying recovery with explicit communication to prepare financial markets for a potential rate action before the end of 2016. On the other hand, the BoJs policy decision will come against the background of ongoing negative rates and quantitative easing programme conundrum.

Open Market Operations and Domestic Macro Support Bond Dynamics: Net G-sec borrowing (adjusted for the Reserve Bank of Indias G-sec purchases and redemption) stands at around INR1.2trn - enabling favourable demand-supply dynamics. Additionally, the near 100bp monthly fall in retail inflation has stoked the rate cut expectation - supporting bond prices. The agency believes scope for a further rate action is skewed towards December than October as the regulator will await confirmation of inflation softness in the upcoming readings.

Bonds Set to Consolidate: The bond market movement in the near term will be a function of the outcomes of the Fed and BoJs policies, as risk appetite will remain a major determinant of yields.

Rupee to Face Headwinds: The pressure that has built up in global markets will have a trickle down impact on the rupee. While domestically, the currency has been anchored strongly on the back of healthy investment flows and a narrow current account deficit, sentiment in currency markets is likely to be cautious following jittery global sentiments.

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Emerging East Asian Bond Yields Decline Amid Subdued Global Growth
Sep 19,2016

Yields on bonds in emerging East Asian markets declined as inflationary pressures remained largely muted and persistently low global growth increased the attractiveness of East Asian bonds, the Asian Development Banks (ADBs) latest Asia Bond Monitor said.

While the Brexit vote created uncertainty and volatility, especially in the developed markets in the immediate aftermath of the vote, the markets in East Asia have largely regained calm,n++ said Shang-Jin Wei, ADBs Chief Economist. ADB research suggests that countries with capital flow management measures or a flexible nominal exchange rate regime are likely to be better prepared to n++deal with the risk associated with a future US interest rate increase, especially if they have adequate foreign exchange reserve as a cushion, which characterizes most countries in the region.

The report notes that yields for 2-year and 10-year local currency government bonds in emerging East Asia were mostly lower between 1 June and 15 August and stock markets in the region recorded gains as well, giving investor sentiment a lift. Over the same period, most East Asian currencies also appreciated against the US dollar, with the Korean won recording the biggest gain of 7.7%. The exception was the Chinese renminbi, which fell 0.9% during the period.

Emerging East Asias outstanding local currency bonds were up 6% quarter-on-quarter and nearly 22% year-on-year, reaching $10 trillion. Local currency bond issuance in the second quarter totaled $1.3 trillion, recording double-digit growth both on a quarterly and year-on-year basis. Bond issuance was led by the Peoples Republic of China which remains the largest local currency bond market in the region with outstanding bonds of $6.9 trillion at the end of June.

Moving forward, the report notes that while markets are calm, there are rising risks to East Asian bond markets. A hike of the interest rate by the US Federal Reserve could prompt foreign investors to cut their holdings of East Asian local currency bonds. Negative interest rates in markets such as the European Union and Japan, could increase capital inflows to emerging markets, jeopardizing financial stability in Asian markets. The report cautions that increased capital inflows could lead to currency appreciation, which would undercut economies heavily reliant on exports and contribute to deflationary pressures.

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Inflation in Manufactured Products May Intensify
Sep 19,2016

Manufacturing inflation may inch up further as consumption demand gets a fillip from a higher rural demand, 7th Pay Commission payout and the festival season round the corner, says India Ratings and Research (Ind-Ra). With consumption demand showing signs of improvement and commodity price cycle bottoming out, it appears that manufacturers are now raising prices, albeit gently, to test the water. The Wholesale Price Index (WPI) inflation increased to 3.74% in August 2016 from 3.55% in the previous month, because of an increase in manufactured product inflation and to a lesser extent fuel inflation. This is at variance with the moderation in retail price inflation for the same month.

Crop sowing data suggest while pulse prices are likely to soften further, sugarcane and cotton prices may remain firm with an upward bias. However, a third consecutive month of cereal price inflation in excess of 7% after a gap of 24 months, is an early warning that the fight against food inflation is far from over.

Fuel price inflation, which has a weight of 14.9% in WPI, came in at 1.6%, after 13 months of consecutive negative growth. Wholesale food prices, which had been the key driver of WPI, moderated to 8.23% in August from 11.82% in July 2016. Prices of fruits and vegetables declined to 7.0% in August 2016 from 22.3% in the previous month. This, however, was offset by an increase in manufacturing inflation to 2.42% in August from 1.82% in July 2016. Manufacturing inflation has clocked a modest but steady rise since April 2016, led by a price increase in manufactured food products. This suggests manufacturing inflation which had remained down and out due to (i) tepid demand and (ii) lower manufacturing input cost is finally inching up as manufacturers especially in the food products category are gradually passing on cost increases in input costs and/or have begun to exercise the pricing power. Prices of manufactured food products increased to 11.4% in August from 10.2% in July 2016.

Since manufactured products have nearly 65% weight in WPI compared to 14.3% for food articles, an accentuation of the price increase trend witnessed in the manufacturing inflation, since the beginning of this fiscal, is likely to push WPI inflation further. However, sustainability of this gradual increase in the prices of manufactured items would depend on the future consumption demand.

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Interest Rate Cycle Reaching the Bottom; LT Bond Issuance May Pick Up
Sep 19,2016

Inflation has bottomed out leaving the Reserve Bank of India (RBI) with less room to undertake further rate cuts, says India Ratings and Research (Ind-Ra). Ind-Ra believes that in such a scenario companies may lock in their long term funding at the current rates, before the cycle turns.

The shift in RBIs stance with respect to liquidity to neutral from deficit mode has had a significant impact on the yields of Government Securities (G-sec). Liquidity is no longer in the deficit mode, in fact in the last two months there has been net liquidity surplus in the system. The yield on the benchmark 10 year G-sec is presently hovering around 7% as against 7.5% in April 2016. Ind-Ra believes that the possibility for a further liquidity driven drop in the G-sec yield is limited. However, due to negative yields prevailing globally, demand from foreign participants can push yields down further.

One of the unstated objective of the outgoing RBI governor Raghuram Rajan was to maintain real interest rates (difference between risk free interest rate and Consumer Price Index) positive and in the range of 1.5% to 2%. Ind-Ra expects the new RBI governor Urjit Patel to also follow this approach. Real interest rate has remained positive since January 2014. It peaked at 4.91% in November 2014 and has declined since then to 2.06% in August 2016. It may be noted that the period when the real rate of interest was significantly in excess of 2% was also the period when RBI cut the policy rates. As the real rate of interest fell close to/lower than 2% from April 2016 onwards, RBI has maintained a status quo on policy rates.

Inflation appears to have bottomed out, however inflationary expectations have once again shown an up-tick. The RBI carries out a quarterly survey of about 5,000 households across 16 cities in India to assess inflationary expectations of households three months ahead and one year ahead. As per data released by the central bank, mean household inflationary expectations for three months ahead in June 2016 rose by 110bp to 9.2% from the March 2016 survey. The one-year ahead mean inflation expectation is even higher at 9.6% than the three-month ahead expectations, implying households expect the inflation trajectory to move further up.

Though global factors particularly low interest rates and fund inflows into emerging markets have remained favourable for a fairly extended period of time, the likelihood of interest rates moving up from hereon has strengthened - notwithstanding the fact that the US Federal Reserve may still take some time to resume hiking rates. With the backdrop of rising global yields, where global sovereign-bond yields have risen to the highest in almost three months, the Indian currency may come under pressure and push the RBI to turn hawkish.

Corporate India will keenly monitor the nominal GDP growth rate, since the soft trend over the last three years has significantly impacted earnings and debt repayment capacity. Ind-Ra highlighted in the report INR1.4trn Refinancing Requirement Could Put INR11.8trn Debt at Risk in FY17 that the total refinancing required by the top 500 Corporates in FY17 aggregates to INR2.1trn, with potential candidates which will be able to access the bond market being INR0.7trn. While it is early to signal a shift in the revenue trend line, corporates are likely to benefit from the current refinancing opportunities at low rates and will possibly lock-in long term funds since the downside to interest rates are limited/negligible.

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R-Com- Aircel Merger Spurs Telecom Consolidation, Steps Up Competition
Sep 19,2016

The merger of the wireless business of Reliance Communications (RCom) with Aircel (Aircel), is a key milestone in the ongoing consolidation in the telecom sector, says India Ratings and Research (Ind-Ra). Ind-Ra believes that the merger will enable the new entity RCom-Aircel to give strong competition to its peers in the backdrop of the disruption that the launch of operations by Reliance Jio Infocomm (RJio) has caused. The combined entity RCom- Aircel will now be the third largest telecom entity in India by subscriber base, thus moving ahead of Idea Cellular Limited (Idea). This development coupled with RJios penetration strategy will spur competition and in turn push tariffs lower.

Ind-Ra believes that the spectrum acquisition strategy, particularly around 4G, is an important driver for the consolidation in the telecom sector. This deal provides RCom access to the superior 800MHz band in eight circles with extended validity till 2033, as its own spectrum is scheduled to expire in 2021-2022. The merged entity will have 448MHz spectrum, which is about 17% of the total spectrum held,is the third largest spectrum holding, following 770MHz of Bharti and 596MHz of RJio.

The merged entity will offer strong competition to both Vodafone India (Vodafone) and Idea which are weaker placed, as far as 4G operations are concerned. Ind-Ra believes that the sector will now have five meaningful players namely, Bharti Airtel (Bharti), Vodafone, RJio, Idea and the merged RCom -Aircel- Sistema (with a new brand) as the industry moves towards data driven revenues.

The top five circles of Aircel are Assam, J&K, UP East, Bihar and Gujarat, while those of RCom are Bihar, Tamil Nadu and Chennai, Delhi, and Mumbai. The merged entity will be positioned as the second largest in the Bihar circle, after Bharti, and overtaking Vodafone and Idea, which were number two and number three respectively. In the Tamil Nadu and Chennai circle, the merged entity will vie for the second spot with Vodafone, which is ranked the second largest after Bharti. RCom has a wireless active subscriber base of 92.2m as on March 2016 (market share 9.8%), whereas Aircel has 63.3m subscribers (market share 6.8%), leading to a combined subscriber market share of 16.1% with 155.5m subscribers; which will rank forth after Idea with 19.6% subscriber share and Vodafone with 20.4% subscriber market share as of March 31, 2016. The merged entity could potentially have a revenue market share of 14%, given RComs existing revenue market share at around 11% in FY16 and Aircels 3% revenue market share.

Aircel reported revenues of INR55bn, with EBIDTA of INR8.06bn, and an EBIDTA margin of 14.5%, and net loss of INR14.5bn and cash loss of INR6bn in FY15. Aircel had a total debt of INR209bn in FY15. RCOM reported consolidated revenue of INR221bn, EBITDA of INR74bn and EBITDA margin of 33.6% in FY16 and debt of INR41bn. The combined entitys revenues are estimated at around INR250bn (for full year of operations), with EBITDA of around INR65-70bn.

However, both RCom and Aircel have significant debt and their ARPUs are below industry average, as evident from their low standalone revenue market share and Aircels presence in low ARPU generating circles. Aircel on a standalone basis is a highly leveraged entity (FY15 debt to EBIDTA 26x), whereas RCom had net leverage of 5.6x in FY16. Therefore Ind-Ra believes the merged entity will continue to depend upon the parents support for fund infusion for growth capex. Post the deal the merged entity will hold INR280bn of debt from its parents to start with.

The merger transaction is subject to regulatory and shareholder approvals.

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