The technology lag that once existed between India and other major technology markets continues to narrow, according to Gartner, Inc. The Gartner Hype Cycle for ICT in India, 2016 shows that more local vendors are entering both emerging and mature technology segments in India, including areas such as the Internet of Things (IoT) and software as a service (SaaS).
When comparing the technology entries for India and the rest of the world, we noticed that the overall technology lag - that is, global traction versus India traction - is gradually closing. India has evolved from an ICT environment that was about 18 months to two years behind global trends at the start of the decade, to one in which most trends are in sync with global trends, said Santhosh Rao, principal research analyst at Gartner. Its clear that many of the technologies on the 2016 Hype Cycle for ICT in India also appear in the global ICT Hype Cycle.
The Hype Cycle for ICT in India, 2016 identifies 25 key technologies at various states of maturity that are most relevant for information technology in India and positions them on the Gartner Hype Cycle. This provides a snapshot of technologies that CIOs and senior IT leaders in Indian enterprises should consider when transitioning to digital businesses.
Beginning its ascent of this years Innovation Trigger is DevOps. The rise of digital business is driving increased awareness among Indian infrastructure and operations (I&O) teams about DevOps which focuses on rapid IT service delivery. The fundamental principles of DevOps aim to build an agile and flexible bridge between the development and operations functions of IT. These principles encourage a culture of innovation, small and quick releases, failing fast and inexpensively, learning from failures and supporting systems of innovation in a pace-layered approach.
Just ahead of DevOps on the Innovation Trigger is Crowdsourcing. Crowdsourcing in India today manifests itself in four areas: crowdsourced communities for application development services; innovation platforms; hackathons and initiatives by local and central government. Crowdsourcing offers the potential to open up innovation efforts by stimulating and capturing creative ideas from outside an organization. This approach can dramatically increase the available human insight that can be applied to a task or challenge. Government organizations are particularly well-positioned to take advantage of the willingness of citizens to help in areas that reflect their local environments or special interests.
Poised just past the peak of this years Peak of Inflated Expectations, heading for the Trough of Disillusionment, is the IoT. The IoT can benefit Indian enterprises in multiple ways, but for successful IoT implementation, Indian organizations will first have to understand the business use case for which they want to use IoT. Success will also depend on aligning the IT and operation technology (OT) resources, processes and people carefully. Therefore, experimenting with pilot projects to understand the implications on people, process, technology and the business is an essential first step for Indian organizations.
The Indian economy is in good shape, and government initiatives such as Make in India and Digital India, are positive measures that are driving investment in India by multinational companies, said Pankaj Prasad, principal research analyst at Gartner. The computer software and hardware segments had a foreign direct investment (FDI) inflow of $5.9 billion during the period from April 2015 to March 2016. This is an increase of nearly 150 percent compared with the same period last year, and Gartner expects these investments to gather further momentum toward the end of 2016.
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Apex industry body ASSOCHAM has mooted a proposal to the Union Government to constitute an appropriate authority either at the Central or state level to fix the ceiling on road freight rates and breaking local monopolies.
n++Transporters charge exorbitant rates for movement of iron ore and other raw materials from mines and ports to steel plants, besides they also prevent free competition through their dominating presence in local areas,n++ said ASSOCHAM highlighting the double whammy being faced by the domestic steel sector.
ASSOCHAM also submitted various suggestions to the Union Steel Ministry to bring back Indias steel sector on growth trajectory.
n++There is an urgent need to withdraw import duty of five per cent imposed upon metallurgical coke and coking coal to restore competitiveness of the domestic steel industry,n++ ASSOCHAM highlighted in a paper submitted to the Union Steel Ministry highlighting various issues that are restricting growth of the sector.
It also urged the Steel Ministry to bring down rate of royalty on iron ore to reduce the cost of raw materials for steel plants.
n++About 15 per cent royalty rate on iron ore together with district mineral foundation (DMF) at 30 per cent translates into royalty burden on end user of 19.5 per cent of iron ore cost,n++ it noted.
The apex chamber requested to reduce the DMF rate for new mines from 10 per cent for captive consumption of iron ore.
Considering that higher transport costs result in higher costs of production of steel in India, there is an urgent need to bring down freight tariff rates by up to 25 per cent across all raw material and steel products to gain competitive edge.
It is also imperative to prevent import of cheap steel in India through a combination of minimum import price (MIP) and import duties/safeguard duties on a sustained basis.
ASSOCHAM has also suggested that inclusion of pig iron, sponge iron and billets in the list of products covered under MIP since protection for upstream primary reduction of iron is equally vital.
Further, banks should extend working capital loans to steel companies on a priority basis, especially those which have not defaulted on interest payment, while structural problems relating to high debts of various steel companies would take time to resolve.
There is also a need to create a special funding mechanism for providing capital for brown-field expansion of capacities at the existing steel mills, more so as commercial viability of brown field expansion of steel plants is significantly higher than greenfield plants.
Sharing certain budget proposals, ASSOCHAM has reiterated its demand to accord strategic industry status to steel sector. Besides it also suggested to bring import duty on coking coal and metallurgical coke down to zero.
A comprehensive package for steel sector should be unveiled encompassing special financing arm for providing capital for expansion of capacities, easy extension of working capital loans, long-term policy on freight tariffs and augmenting transportation infrastructure capacity to meet needs of steel production.
Besides it should also include total revamp of process for grant of statutory approvals for mines and steel plants, long-term policy to prevent cheap imports of steel products and security of raw materials.
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Food Processing Industries Minister Smt. Harsimrat Kaur Badal while addressing a press conference on the activities undertaken during the Swachchhta Pakhwada said that time has come to show by act and not only by words that cleanliness is next to godliness. Highlighting the objective of n++Swachchh Bharat Missionn++, the vision of Honble Prime Minister of India Shri Narendra Modi to make India clean by the year 2019; the year when we celebrate Gandhijis 150th birth anniversary, Honble Minister said that the goal of n++Ek Bharat Shreshtha Bharatn++ can not be achieved without ensuring total cleanliness of our offices, schools, colleges, villages, cities, rivers etc. She also exhorted everyone to contribute in achieving this goal. Smt. Badal further said that we are integrating swachchhata into our schemes and promoting the concept of swachchh abattoir in Shimla, which will be implemented in other projects in the coming time.
As a part of the Governments initiative to observe Swachchhta Pakhwada during 16-31 October, 2016, Ministry of Food Processing Industries also organized various special events during the Pakhwada through active involvement of the officials and other stakeholders of the ministry. A special Swachchhta Pledge taking event, Essay & Debate Competitions for employees of MoFPI and Special drive for weeding out of old files/papers as per the Government norms was organized by the ministry. In a meeting held in Panchsheel Bhawan that houses the ministry, Secretary, FPI, Shri Avinash Srivastava sensitized the promoters of Cold Chain Projects on the importance of Swachchhta and hygiene in their project area. NIFTEM, a deemed university under MoFPI, organized events like street vendors sensitization camps, cleanliness and hygiene drive in campus, hostel and a swachchhta awareness rally. IICPT at Thanjavur, another institution under the ministry, observed Swachchhta Pakhwada through cleanliness drive, beautification and tree planting activities within the campus and organized activities like Essay Competition, Workshops, Food Safety awareness camp for street vendors, skits etc., for highlighting benefits of swachchhta. Industry bodies like CII, PHD Chamber of Commerce and ASSOCHAM organised several programmes and workshops to create awareness on good hygiene practices.
The Minister also launched web based system for submission of documents for release of grant-in-aid under Scheme for Integrated Cold Chain and Value Addition Infrastructure. Launching the software, the minister said that this robust e- Governance tool for online filing of claim for release of grant to a project this is an important initiative towards n++Digital Indian++ campaign. Smt. Badal said that it will help in effective monitoring of progress of the project and also ensure transparency in disbursal of funds to implementing agencies alongwith reduction of supporting documents, paper-work. Earlier, in June, 2016, similar software was launched for the Mega Food Park Scheme. Based on the experience gained, the software has been upgraded and now launched for the Cold Chain scheme also. It is an investor friendly initiative taken by the ministry. The minister also launched the new look website of the Ministry.
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Ministry of Agriculture and Farmers Welfare has received a proposal from Government of Gujarat for procurement of Groundnut under Price Support Scheme (PSS) in Gujarat during current kharif season, 2016-17. In this regard, Agriculture Ministry, GOI has given approval on 2nd November, 2016 for implementation of Price Support Scheme for procurement of Groundnut in the State of Gujarat during the current Kharif season and directed NAFED and SFAC to initiate the procurement immediately at MSP + Bonus at Rs 4220/Qtl.
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CSIR has come out with a n++Game changing technologyn++ for enabling the Indian leather sector achieve the set target of USD 27 billion by 2020 by making leather processing environmentally sustainable. This n++Waterless chrome tanning technologyn++ is a first of its kind technology to reduce chromium pollution load.
The Union Minister for Science and Technology and Earth Sciences and Vice President CSIR, Dr. Harsh Vardhan, informed. The Minister highlighted the strategic role of CSIR in the exemplary growth of the Indian Leather industry.
Tracing the history of Central Leather Research Institute (CLRI) of CSIR, established in 1948, Dr. Harsh Vardhan said that this was a unique institute which from the very start had a strong academic and industrial linkage. A tripartite arrangement of industry-academy-research is a first of its kind, which is a role model for other sectors to emulate. The Institute represents the leather sector in all its planning and policy development. Over the years, the Institute is the global hub for transformation of a tradition bound industry into an innovation driven one. Technologies for bio-processing of leather, zero waste water discharge, value added materials from leather and indigenous chemicals for processing, are some of the highlighting features of this institute. CSIR-CLRI is a recognised Centre for testing of restricted substances, finished leather certification. CSIR-CLRI in association with other world bodies develops protocols for testing of restricted chemicals.
The Minister was proud to inform that CSIR Researchers today also adorn the position of Chairman of the BIS committees on leather, tanning materials etc. and footwear and also provide inputs to other committees as members. CSIR researchers are also members/chairmen for the relevant committees in International Standards Organization (ISO).
Through the Institute, Indian leather sector strives to achieve economic and environmental sustainability, leading to more than doubling of the annual turnover from the present in about 4 years. CSIR has been hand holding the industry since its establishment and has taken the export turnover of Rs.40 crores in 1960s to Rs.40,000 crores in 2015 through technological interventions, training and service. The re-enabling of the tanneries in Tamil Nadu in 1996 stands a strong testimony to the contributions of this organisation.
The Minister further elaborated that Chromium is the most sought after tanning agent with about 2.0 billion sq. ft. of leather being made in India. About 20 thousand tons of chrome tanning agent is discharged in the wastewater. CSIRs n++Waterless tanning technologyn++ has now found PAN INDIA acceptance, with tanners in all clusters enrolling for its adoption. Significance of this technology is that a) it completely eliminates two processes before and after tanning, b) eliminates the use of water in tanning, c) reduces the total dissolved solids in wastewater from this process by 20% and also d) brings down the usage of chromium by 15-20%, resulting in material saving. Efforts are now on to translate this technology both nationally and globally. Several countries including Ethiopia, South Africa, the Netherlands, New Zealand, Vietnam and Brazil have evinced interest in this CSIR technology.
Dr. Harsh Vardhan, then highlighted that such technological interventions in the leather industry will realise the vision of Make-in-India, in terms of development of first of its kind leather chemicals, environmental friendly leather processing, global fashion forecasting for colours, designs thus leading to increased trade and exports.
Growth of any industry strongly depends on the availability of associated skill as well. CSIR has a strong mandate to develop, train and re-train the required manpower for this sector. The Minister highlighted that Prime Ministers Skill India dream is realised through training programs of CSIR-CLRI. About 60% of the skilled manpower in leather industry is from CSIR-CLRI. Training comes at all levels, be it the technical degrees or vocational programs, the Institute has tailor made programs to suit the needs of the industry, from time to time including reaching the unreached and under-privileged sections of the society.
Dr. Harsh Vardhan informed that CSIR has prepared and submitted to the Government, a Technology Mission plan for Leather sector at a cost of approximately Rs.2400 crores. This initiative is a inter-ministerial project with M/o Small and Medium Enterprises, M/o Skill Development, M/o Environment and Forest, M/o Water Resources. Through this plan, it is envisioned to provide proactive measures to upgrade and expand the technologies and thus the capacity of CETPs, along with skill development required. The envisioned modules include
a. Systematic collection of raw hides/skins
b. Technologies for capacity utilization of tanneries
c. Enhanced environmental management
d. Framework for quality benchmarking and certification
Over the years, CSIR is the global hub for transformation of a tradition bound leather industry into an innovation driven one. CSIR-CLRIs role in R&D consultancy has the paved way for other sectors like metal, food, pharma and chemicals for similar interventions and positioning themselves globally.
The mission of CSIR through CLRI is to meet the requirements of global leather sector, relevant regulatory and statutory bodies and other stake holders with continual improvement in its services, while aligning itself to the National agenda through technology innovation led solutions for the sector.
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The International Air Transport Association (IATA) released data for global air freight markets in September 2016 showing that demand, measured in freight tonne kilometers (FTKs), rose 6.1% year-on-year. This was the fastest pace of growth since the disruption caused by the US West Coast seaports strike in February 2015.
Freight capacity, measured in available freight tonne kilometers (AFTKs), increased 4.7% over the same period. Load factors remained historically low, keeping yields under pressure.
Septembers positive performance coincided with an apparent turnaround in new export orders in recent months. Some unique factors also may have contributed, such as the rush replacement of Samsung Galaxy Note 7 devices during the month, as well as the early impacts of the collapse of the Hanjin marine shipping line at the end of August.
Demand for air cargo strengthened in September. Although with growth in world trade virtually at a standstill, the air cargo sector still faces some major hurdles. We did have some encouraging news. The conclusion of the EU-Canada Free Trade Agreement is good news for the economies involved and for air cargo. Growth is the way to overcome the worlds current economic challenges. The EU-Canada agreement is a welcome respite from the current protectionist rhetoric and positive results should soon be evident. Governments everywhere should take note and move in the same direction, said Alexandre de Juniac, IATAs Director General and CEO.
Airlines in all regions except Latin America reported an increase in year-on-year demand in September. However results continued to vary considerably.
Asia-Pacific airlines saw freight volumes increase by 5.5% in September 2016 compared to the same period last year. Capacity in the region expanded 3.4%.The positive Asia-Pacific performance corresponds with signs of an increase in export orders in China and Japan over the last few months. Seasonally-adjusted freight results for Asia-Pacific carriers are now trending upwards.
European airlines experienced a 12.6% increase in freight volumes in September 2016. Capacity increased 6.4%. The strong European performance corresponds with an increase in reported new export orders in Germany over the last few months.
North American carriers saw freight volumes expand 4.5% in September 2016 year-on-year, as capacity increased 2.6%. International freight volumes grew by 6.2% - their fastest pace since the US seaports disruption boosted demand in February 2015. However, in seasonally-adjusted terms volumes are still just below the level seen in January 2015. The strength of the US dollar continues to keep the US export market under pressure.
Middle Eastern carriers saw demand growth slow for the third consecutive month to 1.2% year-on-year in September 2016 - the slowest pace since July 2009. Capacity increased by 6.2%. Seasonally-adjusted freight growth, which had been trending upwards until the past year or so year, has now halted. This turnaround in performance is partly due to weaker conditions in the Middle East-to-Asia and Middle East-to-North America markets.
Latin American airlinesreported a decline in demand of 4.5% and a drop in capacity of 4.7% in September 2016, compared to the same period in 2015. The within South America market has been the weakest performing market so far this year with volumes contracting 14% year-on-year in August, the most recent month for which route specific data are available. The comparative strength of the US economy has helped boost volumes between North and South America with US imports by air from Colombia and Brazil increasing by 5% and 13% year-on-year respectively.
African carriers saw freight demand increase by 12.7% in September 2016 compared to the same month last year - the fastest rate in nearly two years. Capacity surged year-on-year by 34% on the back of long-haul expansion in particular by Ethiopian Airlines and North African carriers.
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A solid and accelerated upturn in incoming new business placed with Indian service providers led companies to scale up activity during October. Survey data indicated that this placed pressure on firms capacity as backlogs of work rose further, but employment levels were unchanged over the month. Input costs increased again, although at a marginal rate that was softer than in September. As for output prices, these were broadly unchanged.
At 54.5 in October, the seasonally adjusted Nikkei Services Business Activity Index recorded above the no-change mark of 50.0 for the sixteenth straight month, highlighting ongoing growth in the sector. Rising from 52.0 in September, the latest figure was consistent with an accelerated rate of expansion that was marked overall.
Manufacturing production also increased at a quicker rate, one that was the fastest in 46 months. Subsequently, the seasonally adjusted Nikkei India Composite PMI Output Index rose from 52.4 in September to 55.4 in October. This pointed to a marked pace of expansion in private sector activity that was the quickest in nearly four years.
Boosting growth of services output was a pick-up in new orders, which expanded at a solid pace that was faster than in September. According to panellists, the upturn was supported by greater client requests and improved demand conditions. Manufacturing order books also rose at a quicker pace, with growth climbing to a 22-month high.
October data highlighted ongoing pressures on Indian service providers capacity, as unfinished business volumes rose for the fifth consecutive month. Little-changed since September, the overall rate of backlog accumulation was solid. A similar trend was seen among manufacturers, where outstanding business rose solidly.
Service sector employment was unchanged over the month, with almost all survey participants reporting the same payroll numbers as in September. Likewise, manufacturing staffing levels stagnated in October.
Higher prices paid for petrol resulted in a further increase in average input prices facing services firms. That said, October saw cost inflation ease to a marginal pace that was much lower than the long-run series average. In fact, less than 2% of monitored firms reported rising cost burdens. Within manufacturing, purchase price inflation reached a 26-month peak.
Softer inflationary pressures assisted service providers with their pricing strategies. Amid reports of efforts to attract new customers, selling prices were left unchanged by around 98% of firms. Overall, a fractional reduction was recorded as the respective index recorded only just below the no-change mark of 50.0. Conversely, factory gate charges rose again, and at the quickest pace since April.
Indian services companies remained upbeat towards the 12-month outlook for activity, but the overall level of sentiment was at a four-month low. Those firms anticipating growth indicated that improved market conditions and aggressive marketing campaigns are expected to boost activity. Nevertheless, worries regarding fierce competition for new work restricted confidence.
Commenting on the Indian Services PMI survey data, Pollyanna De Lima, economist at IHS Markit, and author of the report, said:
The service sector joined its manufacturing counterpart in offering a more upbeat level of performance this month, providing reassurance in the sustainability of the upturn of Indias economy. Incoming new work was the main driver of output growth, with survey respondents highlighting strong demand and improved market conditions.
One underlying concern is the sustained stagnant trend in workforces, with both manufacturers and service providers showing some reluctance to hire. Hopefully, the added pressure on capacity shown in the PMI surveys will translate into job creation as we move towards the end of 2016.
Nonetheless, a healthy level of overall positive sentiment regarding future business opportunities was seen and, with competitive pressures offering just a minor bump in the road of confidence, the services economy looks set to maintain its strong performance in the near term.
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Kerala and Tamil Nadu have also rolled out the National Food Security Act (NFSA). With this, now the Act has been implemented in all the States and Union Territories. As a result, now 81.34 crore persons will get wheat at Rs. 2/ kg and rice at Rs. 3/ kg. This was announced by Union Minister of Consumer Affair, Food & Public Distribution, Shri Ram Vilas Paswan. Being an important initiative for ensuring food security of the people, the Government of India actively pursued with all the States/UTs for its early implementation.
Shri Paswan said now the Center will focus on further reforms in PDS, which will include end to end computerization of the system for which States/UTs are being technically and financially assisted. He said this is important for bringing in transparency in the functioning of the public distribution system (PDS), which is vital feature of NFSA, in order to check leakages and diversion of foodgrains.
Highlighting other initiatives taken by the Centre to make the PDS leakage proof, Shri Paswan said that the beneficiarys data base has been digitized in all the 36 States/UTs, wherein, information is available right upto beneficiary level and is in the public domain. Online allocation of foodgrains in being done in 28 States/UTs, and the entire foodgrain supply chain has been computerized in 18 States/UTs. 100 percent linkage of Ration Cards with Addhar, which is 71% at the moment, will be achieved. Foodgrains losses of FCI have been brought down to 0.04 percent and major FCI depots have been made online.
. In another significant step towards better targeting and leakage-free distribution of foodgrains, direct benefit transfer is being carried out in two different modes. In the first mode, food subsidy is being transferred in cash into the bank account of beneficiaries, who then have the choice to buy foodgrains from the open market. This has been started in UTs of Chandigarh, Puducherry and urban areas of Dadra & Nagar Haveli. The second mode involves automation of fair price shops, for distribution of foodgrains through an electronic point of sale (e-PoS) device which authenticates beneficiaries at the time of distribution and also electronically captures the quantum of foodgrains distributed to the family. As of 31.10.2016, e-PoS devices are operational in 1,61,854 fair price shops.
For smooth functioning of PDS, State Governments are also being provided Central assistance for meeting expenditure of intra-State transportation & handling of foodgrains and fair price shop dealers margin. The assistance for fair price shops dealers margin also contains a component of assistance for installation and operation of Pos devices at fair price shops. So far, Rs. 1874 crore has been released to State Governments by the Government of India in 2016-17.
At this current coverage, monthly allocation of foodgrains to States/UTs under the Act is about 45.5 lakh tons, with subsidy implication of about Rs. 11,726 core per month or about Rs. 1,40, 700 crore per year.
Regarding Sugarcane arrears, Shri Paswan said 2014-15 arrears which were Rs.21,000 at the peak have now come down Rs 205 crore. Prices of pulses except Chana have come down. Regarding wheat prices he said that Government has decided to release additional 10 lakh ton wheat for sale in domestic Market under FCI OMS scheme.
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India Ratings and Research (Ind-Ra) says that East North Interconnection Company (ENICL) is expected to record an availability of 98% for the upcoming months until the damaged section of its transmission line is fully restored, in accordance with the force majeure provisions. The force majeure event is credit neutral, subject to ENICL recording an availability of at least 98% - the target availability to realise full revenue according to the transmission service agreement. The company recorded an availability of 98.507% in August 2016 (source: Availability certificate from Eastern Region Power Committee (ERPC). The period of non-operation of Purnia-Bihar Sharif transmission line due to floods constitutes a force majeure event.
Ind-Ra rates ENICLs non-convertible debentures at IND AAA(SO)/Stable.
The transmission line was affected by flash floods in the Ganges and has not been operating since 23 August 2016. A transmission tower in the river bed was washed away and three adjacent transmission towers were also affected.
ENICLs bank statement confirms the cash availability of about INR450m, which is adequate to meet the estimated construction expenses and debt servicing. ENICL also expects to receive an advance payment from insurers. Insurance covers force majeure and revenue loss due to such events as well. Presence of bank guarantee covering six months debt service provides comfort regarding debt servicing.
In the conference call held on 21 October 2016 with the stakeholders, the company said restoration is expected to be completed by January 2017. The company also informed that contractors have been mobilised to carry out the restoration works. A reasonable time for restoration will be determined by ERPC, generally in discussion with the transmission licensee and delay in restoration beyond such timeline could affect the availability of the project.
The Power Grid Corporation Indias 400kV Patna - Kishanganj transmission line, crossing the Ganges in the same region, was also affected due to the floods. Force majeure was recognised for it, as well.
ENICLs revenue receipts remain unaffected till date. Availability certificate at 98.507% for August 2016 is in place. The company expects the deemed availability of 98% to be approved by ERPC from September 2016 to the time the line is charged and becomes operational again. ERPC has already approved the incident as force majeure and it is highly likely that ENICL will receive full revenue based on deemed availability till the line is made operational. Against this backdrop, the management expects the cash flow mismatches to be minimal and debt service coverage ratios not to be affected.
Ind-Ra would continue to monitor the availability of assets, revenue receipts, proceeds from insurance cover and progress in the restoration of transmission line to assess the impact on the rating, if any. Please refer the last rating rationale here.
ENICL, held by Sterlite Grid1 Limited and Sterlite Power Transmission Limited, has set up a 400kV double circuit transmission line for the import of surplus power from the north eastern and eastern regions to the northern region. The transmission line comprises two sections - from Bongaigaon in Assam to Siliguri in West Bengal (commissioned on 13 November 2014) and from Purnia in West Bengal to Bihar Sharif in Bihar (commissioned on 13 September 2013).
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Ministry of New and Renewable Energy (MNRE) issued Guidelines for transparent bidding process for implementation of Scheme for setting up of 1000 MW Wind Power Project connected to inter-state transmission system (ISTS).
As per Guidelines the Wind Power Projects will be selected through open and transparent competitive bidding followed by e-reverse auction and the capacity may go higher than 1000 MW, if there is demand from Buying Entities. The implementing agency SECI has already floated RfS document for selection of bidders under the Scheme.
Discoms of non-windy State and UTs and also the bulk consumers of any State/UTs who intend to buy 10 MW or more can buy wind power under the Scheme.
PTC India, trading company selected by SECI under the scheme, will sign Power Purchase Agreement (PPA) with wind projects at bidded tariff and back-to-back Power Sale Agreement (PSA) with Buying Entities at a pooled price of the total bids selected. The term of PPA and PSA will be 25 years.
Bidder can bid for a minimum capacity of 50 MW and maximum up to 250 MW. The selected bidder is required to injected wind power at ISTS interconnection point. Bidder is allowed to install 5% of additional rated capacity that will compensate auxiliary consumption and system losses up to interconnection point.
Provision relating to pass through of GST impact, part commissioning, efficiency in generation, performance monitoring have also been stipulated in the guidelines.
The Guidelines are available at http://mnre.gov.in/file-manager/grid-wind/Scheme-for-Setting-up-of-1000-MW-ISTS-connected-Wind-Power-Projects.pdf
Ministry sanctioned a Scheme for setting up of 1000 MW ISTS connected Wind Power Project on 14 June 2016.
The objective of the Scheme is to encourage competitiveness through scaling up of project sizes and introduction of efficient and transparent e-bidding and e-auctioning processes. It will also facilitate fulfilment of Non-Solar Renewable Purchase Obligation (RPO) requirement of non-windy states.
In order to facilitate transmission of wind power from these windy states to non-windy states provisions have been made in the Tariff Policy to waive the inter-state transmission charges and losses for wind power projects and Ministry of Power has already issued order in this regard.
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S&P Global Ratings affirmed its BBB- long-term and A-3 short-term sovereign credit ratings on the Republic of India. The outlook is stable.
The ratings on India reflect the countrys sound external profile and improved monetary credibility. Indias strong democratic institutions and a free press, which promote policy stability and predictability, also underpin the ratings. These strengths are balanced against vulnerabilities stemming from the countrys low per capita income and weak public finances.
Indias governing parties have made progress in building consensus on a passage of laws to address long-standing impediments to the countrys growth. These include comprehensive tax reforms through the likely introduction in the first half of 2017 of a goods and services tax to replace complex and distortive indirect taxes. Other measures include strengthening the business climate (such as through simplifying regulations and improving contract enforcement and trade), boosting labor market flexibility, and reforming the energy sector.
We believe these measures, supported by Indias well-entrenched democracy, will promote greater economic flexibility and help redress public finances over time.
Indias external position remains a credit strength. The country has a floating exchange rate and limited reliance on external savings to fund its growth. While India experiences modest volatility in its terms of trade, we expect it to record a moderate current account deficit of 1.4% in 2016 (2.1% in 2015), and to average similar levels through 2018. Our forecasts are partly informed by our view of enhanced monetary policy credibility. In addition, we expect India to fund this deficit mostly with inflows without adding to debt.
We forecast that Indias external debt net of public and financial sector external assets will average only 5% of current account receipts over 2016-2018 (our forecasts reflect the adoption of the sixth edition of the IMFs Balance of Payments and International Investment Position Manual). Although we expect some decline in Indias external liquidity metrics in the next three years as its banks increasingly turn to external financing, we project that Indias gross external financing needs will remain below its current account receipts plus usable reserves through 2018.
The Reserve Bank of Indias foreign reserves reached US$369 billion as of September 2016 (or four-and-a-half months of current account payments, US$352 billion, in September 2015). The authorities also maintain contingent financing facilities of US$68 billion through bilateral swaps and contingency reserve arrangements.
A rating constraint is Indias low GDP per capita, which we estimate at US$1,700 in 2016. That said, Indias growth outperforms its peers and is picking up modestly. We expect GDP growth of 7.9% in 2016 (6.6% in per capita GDP) and 8% on average over 2016-2018 (6.7% in per capita GDP). We believe domestic supply-side factors will increasingly bind economic performance, and the government has little ability to undertake countercyclical fiscal policy given its current debt burden.
This debt load and Indias overall weak public finances are additional rating constraints. India has a long history of high general government fiscal deficits (averaging 8.8% of GDP over the past 20 years and 7% in the past five years). The deficits have not closed Indias sizable shortfalls in basic services and infrastructure. The countrys fiscal challenges reflect both revenue underperformance and constraints on expenditure. Indias general government revenue, at an estimated 21% of 2016 GDP, is low among rated sovereigns. Its expenditure constraints are mainly related to subsidies (about 2% of 2016 GDP) for food, energy, and fertilizers. Although we expect the administration to pursue medium-term fiscal consolidation, we foresee that planned revenues may not fully materialize and subsidy cuts may be delayed. In the medium term, we expect improved fiscal performance primarily from revenue-side improvements brought about by the coming introduction of the GST and administrative efforts to expand the tax base.
Indias high fiscal deficits have led to the accumulation of sizable general government borrowings (about 69% of GDP, net of liquid assets) and debt servicing costs (over a quarter of general government revenue). We project net general government debt to decline only modestly over our forecast horizon. A high proportion of Indias resident banking sectors balance sheet is exposed to the government sector via loans, government securities, or other claims on the government (partly for regulatory requirements, as banks are required to invest 22% of their net demand and time deposits in government securities).
This implies that there may be limited capacity for Indias banks to lend more to the government without further crowding out private-sector borrowing. Indias government borrowings are mostly denominated in rupees, which mitigates the risks. The small portion of external government debt is mostly sourced from official lenders over long terms and at concessional rates.
These fiscal figures do not include losses of electricity distribution companies. Although we expect their operations to improve with lower oil prices, they will remain exposed to Indias terms of trade. Hence, overall, we believe public finances are set to remain key rating constraints for some time.
India has a divided banking sector. Its private sector banks (about one-quarter of banking system assets) have better profitability, higher internal capital generation, and capitalization with lower-stressed assets than government-owned banks. We estimate public-sector banks need capital infusion of about US$45 billion (2% of GDP) by 2019, given their weaker profitability, to meet Basel III capital norms. The government has committed US$11 billion (0.5% of GDP) to support public-sector banks. The government may have to increase the allocation if the banks are not able to secure capital from alternative sources, such as equity markets, additional tier-1 bonds, and insurance companies. We include this assessment in our assumptions of the sovereigns fiscal balances. Our Bank Industry Credit Risk Assessment for India is 5 (with 1 being the highest assessment and 10 being the lowest).
Combining our view of Indias government-related entities and its financial system, we view the countrys contingent fiscal risks as limited.
The Reserve Bank of India (RBI) has made progress in lowering CPI inflation following the introduction in February 2015 of its medium-term inflation target band (with 4% CPI inflation n++ 2% as the principal nominal anchor for monetary policy). We expect the RBI to achieve the inflation target of 5% by March 2017 as it advances along a glide path to the medium-term inflation target. Further steps to strengthen policy formulation are being taken through the introduction of a monetary policy committee, improved communication, and efforts to strengthen monetary policy transmission (such as through new guidelines requiring banks to determine their lending rates using marginal cost of funds).
We believe these RBI measures will support its ability to sustain economic growth while attenuating economic or financial shocks. We see some risks that strong inflows to the financial sector combined with higher inflation in India vis-n++-vis its trading partners could pressure the real and nominal effective exchange rates, which in turn could hurt competitiveness, if not matched by strong productivity growth.
The stable outlook balances Indias sound external position and inclusive policymaking tradition against the vulnerabilities stemming from its low per capita income and weak public finances. The outlook indicates that we do not expect to change our rating on India this year or next, based on our current set of forecasts.
Upward pressure on the ratings could build if the governmen
Sharp anomalies in the taxation rates and structure across different industries such as telecom, tobacco, textiles, food processing and tourism , should be addressed to as the country moves in a transition period for implementing the Goods and Services Tax, the ASSOCHAM-KPMG paper has said in a joint paper for the GST Council.
The exhaustive paper stated that taxation structure, say, for, tobacco industry should not be based on some emotive issues and be rational enough to check a huge amount of illicit trade which stays outside the taxation net. It said instead of subjecting the tobacco and tobacco products at a higher than the standard rate, the entire sector should be placed under the standard rate with the focus of bringing exempted items under the GST net to eliminate the rampant illicit trade. As per IMF report high rates of GST / VAT lead to manipulation and fraud.
Similarly, for the telecom sector, the paper cautioned that GST may negatively impact the working capital cost since initial landed price of purchases including imports may increase due to increase in tax rates. Cost of procurement of services may increase to more than 18 per cent from the current rate of 15 per cent, which will be a challenge for the industry, especially if CENVAT credit on passive infrastructure and fuel consumption is continued to be denied.
Likewise, the ASSOCHAM-KPMG also went into the impact of GST on the textile sector and suggested ways to find an ideal situation. It said in case, India opts for higher tax rates under the proposed GST regime, and then in the long-term, it will lose its market share to the developing and highly competitive economies.
Hence, it is recommended that India also implements policies that capitalize on the potential of its textile and apparel industry so that the country has a higher bargaining power in procuring export orders in the international trade vis-n++-vis other developing economies. Thus, the Government should make a conscious call to retain lower rate for this industry by introducing a special lower slab of 4 per cent to 6 per cent under the proposed GST regime along with full input tax credit of GST paid on goods and services used in the supply chain.
n++As we are in a transition period, several industry sectors are faced with challenges of adapting to new tax regime. While the GST is a path-breaking reform, its implementation should be calibrated in a manner to cause least disturbance to the existing taxation structure. The Government should unshackle its mind if it really wants to achieve the objectives of GST - Expanding the tax base, reduction in exemptions; mitigating cascading and double taxation, enabling better compliance through lowering of overall tax burden.
The Government should follow the recommendations of eminent economist like Dr. Vijay Kelkar and Dr. Arvind Subramanium, which suggest that moderate rate of taxes will expand the tax base resulting in high collections, which will be the success of GST. Otherwise it will be Old Wine in a New Bottle. n++ Mr. D S Rawat, Secretary General ASSOCHAM said.
Elaborating, the paper said the tobacco industry has been the second largest contributor to Indian excise revenue after the oil and gas sector. The combined tax revenue collected from tobacco industry (Centre and States) was more than Rs 29,000 crore in FY 2014-15. Tobacco products are being cultivated in an area of about 4.68 lakh hectares (0.24 per cent) of total arable land in the country with a production of 800 million kgs13. The tobacco industry provides employment to nearly 4.5 crore people in India comprising farm labourers, farmers, traders, etc. Thus, the sector gives livelihood to a considerable size of the population, particularly rural women, the tribals and labourers who are under stress with no employment alternatives especially when India is experiencing jobless growth for the last many years.
Under the GST regime, it is proposed to levy both dual taxes as well as higher rate of GST. The endeavor should be to tax the hitherto untaxed/ insignificantly taxed segments of the tobacco industry i.e. tobacco products other than cigarette as the consumption of such products is way higher than that of legal cigarettes. Thus, levy of standard GST rates with excise duty on a wider tax base will yield a higher tax revenue collection than continuing with levy of high rates of taxes on only one segment of the tobacco industry i.e. cigarettes.
For tourism sector, at present, different abatement schemes addressing different situations are available under service tax such as 30 per cent in case of composite package and 60 per cent for dining in a standalone restaurant. This is leading to ambiguity and complexity in determining the value on which service tax is payable. In order to overcome such situation, uniform tax treatment i.e. one standard rate dealing with all the situations should be introduced. The rates should be moderate to remain competitive.
Besides, in current regime, all the taxes cumulatively applicable to restaurants (i.e. VAT, Service Tax and other applicable taxes) increases the value on which tax is payable to more than 100 per cent. Such a situation increases the tax cost substantially. Therefore, a mechanism should be introduced whereby value on which GST would be applied should not increase 100 per cent in any case.
As for the food processing, the industry is taxed at a concessional rate/ zero rate. GST is likely to be based on minimal exemptions regime leading to increase in the tax cost for the food processing industry and inflation. A distinction needs to be made based on the necessity. Taking from the example of Canada the food products, which are essential for human consumption, should be taxed at zero rate. As food comprises a major part of the WPI, which is nearly 14.3 per cent, an increase in tax on food items will adversely impact WPI leading to higher inflation in the country.
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Union Agriculture & Farmers Welfare Minister, Shri Radha Mohan Singh brief the media about the outcome of Swachhta Pakhwada and initiatives taken by the Ministry. Shri Singh informed that as per the directions of Honble Prime Minister of India, the Swachhta Pakhwada was observed this year from 16th to 31st October, 2016 in all the three Departments under the Ministry of Agriculture & Farmers Welfare, namely Department of Agriculture, Cooperation & Farmers Welfare, Department of Animal Husbandry Dairying & Fisheries and Department of Agricultural Research & Education. Going out from the confines of the office premises Swachhta drive was carried out in Agricultural Mandis, Fish Markets & villages near each Krishi Vigyan Kendras (KVKs). During the Pakhwada focus was laid to put certain measures that are dynamic and to be continued beyond Pakhwada period. Some of the activities carried out are as under:
n++ Cleaning drives were undertaken in 271 Agricultural Mandis. Further, Swachhta Action Plan has been prepared in which it was decided to make provision of Rs.10 lakh for each mandi for setting up waste management plants under e-Nam scheme. It was also decided that under one flagship scheme, namely RKVY, managed by DAC&FW one percent funds will be spent on Solid and Waste Management. Besides this, various offices under the three Departments were cleaned involving, inter alia, installation of sensors in toilets, installation of motorized grinder and weeding out of unwanted records, removing encroachments and all junk lying in the offices. Honble Agriculture & Farmers Welfare Minister was involved in cleanliness & plantation drive at DAC&FW (Hq.) in Krishi Bhavan on 26.10.2016 and at Agricultural Mandi in Chandigardh on 18.10.2016. Centers of All India Soil & Land Use Survey of India (SLUSI), a subordinate office under DAC&FW, involved local MPs/ public representatives in the Swachhta Activities. Further, a Compost pit has been inaugurated in SLUSI, Kolkata. Compost Machines are being installed in the Mandis in coordination with States.
n++ The National Fisheries Development Board (NFDB), Fishery Survey of India (FSI), Central Institute of Fisheries Nautical and Engineering Training, (CIFNET), National Institute of Fisheries Post Harvest Technology and Training (NIFPHATT), Central Institute of Coastal Engineering for Fishery (CICEF), in coordination with State/UTs conducted the following major activities during the Swachhta Pakhwada:
i. Cleaning of 50 wholesale & retail Fish markets in 15 states was done and also awareness about maintenance of cleanliness was spread during this drive.
ii. Cleaning of Institute Buildings and premises by all the Subordinate institutes under Fishery Division.
iii. Awareness camps including Padayatra (procession) on hygienic Fish handling, maintaining cleanliness in fish markets, cleanliness in processing, cleanliness in marketing etc. and distribution of Pamphlets.
iv. Conducting of State level Workshops viz., (i) Recycling of waste through integrated fish farming for NE States at NFDB NE Center, Guwahati (ii) Waste Water Aquaculture, Nalban, Kolkata etc.
n++ Honble Members of Parliament, State Fisheries Minister from West Bengal, Mayors and Councilors from Kerala and Tamil Nadu, Senior officials from the State Fisheries Department, District Collectors etc. actively participated in the Swachhta Pakhwada activities. Minister of State for Agriculture & Farmers Welfare, Shri Parshottam Rupala also participated in cleanliness activities at Amreli (Gujarat). Also, the Fish vendors, retailers, net makers, students, staff and trainees of the institutes, members of fisherman associations and general public were also involved in the various activities under taken during Swachhta Pakhwada across the State/UTs. The awareness camps/cleaning drives were taken up across the country with the help of State/UT Governments. Some of the notable activities were held in Bilaspur and Durg in Chhattisgarh, Guwahati, Silchar, Cachar in Assam, Bishnupur in Manipur, Nellore in Andhra Pradesh Cuddalore and Nagercoil in Tamil Nadu and also in Kolkatta Bangalore, Lucknow , Ranchi and Kochi.
n++ Department of Agricultural Research & Education/ Indian Council of Agricultural Research, celebrated Swachhta Pakhwada during Oct 16-31, 2016. The ICAR Head Quarters in New Delhi, all the 102 Research Institutes and 648 KVKs took active part in the Pakhwada activities and conducted a wide range of activities which included, cleaning of campuses, residential areas, villages and localities in their vicinity in addition to conducting Seminars, awareness camps, rallies, street plays and expert talks. Through KVKs and institutes promotion of Swachhta activities was done in 3040 villages with the active participation of farmers and village youth. Efforts were made to promote clean farming technologies and package of practices and make best use of farm waste. Central and local leaders, Senior Officers from the Institutes and the ICAR Headquarters participated in the events organised at various places across the country during the pakhwada. IARI, New Delhi has set up a team of sanitation inspectors in each block of their residential complex who organise the dry and wet waste generated from each household separately and recycle it appropriately through the participation of households. On 27th October, 2016 a special Seminar on the topic n++Creating Wealth from Agricultural Wastesn++ was organised at KVK Shikohpur (Gurgaon) in which Minister of State of Agriculture and Farmers Welfare Shri Sudarshan Bhagat was the chief guest. Various technologies making best use of agricultural wastes like, preparation of bio compost, vermin-composting, whey utilization, straw enrichment, waste water recycling, cotton waste management, fisheries waste management and engineering technologies were showcased. More than 350 farmers and Scientists participated in the event. Based on the daily and final reporting of the swachhta activities, the awards shall be given to the outstanding performers in the competitions announced for offices in ICAR Head Quarters, ICAR Research Institute and KVKs and these awards will be given on the foundation day of the ICAR.
n++ In order to sensitize state governments, a video conference was held on 27.10.2016 with representatives of States/ UTs and they have been briefed about the n++Swachhta Pakhwada Activitiesn++. They have also been requested to make adequate provisions in their existing Schemes to prepare Compost from farm wastes. Further, DD Kisan has been asked to make two films- one of Solid Waste Disposal Technology of NCOF and the second on Liquid Waste Disposal technology developed by ICAR. DD Kisan will show these films in their existing programmes.
n++ Rivers play an important role in Swachh Bharat Abhiyan. Ganga is a symbol of cleanliness as well as purity since time immemorial in India. To make the Ganga clean again, it is imperative that organic farming should be promoted in the townships and villages along the banks of the Ganga to minimize the use of harmful pesticides, fertilizers and other chemicals in agriculture. This Ministry has signed a Memorandum of Understanding on 16th September 2016 with Ministry of Water Resources, River Development and Ganga Rejuvenation (MoU). Under this MoU, the people living in 1657 clusters of 1657 Gram Panchayats from Uttarakhand to West Bengal will be motivated to carry out organic farming to reduce use of polluting chemical fertilizers and pesticides to ensure that the Ganga is restored to pristine purity.
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Target Corporation (Target) the second-largest discount retailer in the United States terminated its contracts with Welspun India (WIL: IND AA-/Stable) which may result in a one-time hit to profitability in FY17, however the long term credit profile of the company remains stable, says India Ratings and Research (Ind-Ra). WIL has initiated the review of the entire supply chain and processes through Ernst &Young and is in the process to strengthen its end to end systems for specialised products, namely from cotton procurement to spinning to processing and finishing.
As per discussions with the management, there will be a one-time impact on profitability in FY17, in case WIL bears the cost of the product recall and replacement or discounting. Ind-Ra believes that the one-time cost will not materially impact the credit profile of the company in the long term. The management has confirmed to Ind-Ra that other customers have continued their relationship / contracts with WIL.
Ind-Ra estimates that WILs credit metrics will not breach the negative triggers, namely the net debt/EBITDA being sustained above 3.0x in FY17-18, even after factoring in the one-time payouts and the loss of revenues from Target. Ind-Ra draws comfort from WILs strong liquidity, with cash and cash equivalent of INR6.26bn as at end September 2016 and low debt maturity of INR710m and INR1,990m in 2HFY17 & FY18 respectively. WILs interest out go is also low since most of the term debt drawn in the past is for capex which is covered under the Central and State Technology Upgradation Fund Scheme. WIL also has adequate access to fund based lines of bank facilities to support its working capital requirements.
The reason for Target terminating the contract with WIL was following a product specification issue with respect to provenance of Egyptian cotton in bedsheets. Target contributed to around USD90m of WILs revenues in FY16 (around 10% of WILs revenues). The quality issue was with respect to Egyptian cotton in one of the program of bedsheets valued at around USD8.50m in FY16. WILs overall shipment to Target under the said programme was around USD19m during the period July 2014 to August 2016. In FY16, the US geography contributed 70% of WILs revenues, including sales through Welspun Global Brands Ltd (WGBL; IND AA-/Stable) its sales and marketing arm (Ind-Ra has taken a consolidated view of WIL & WGBL).
Ind-Ra will continue to monitor the development and outcome of Ernst &Youngs review and any other action that may impact the credit profile of the company.
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Debt and currency markets will focus on the slew of global data and on the outcomes of major central bank policy meetings. The 10-year G-sec yield could trade at 6.75%-6.85% (6.79% at close on 28 October 2016). The rupee is likely to trade at 66.55/USD-67.25/USD (66.78/USD at close on 28 October 2016).
Central Banks to Set Tone: A host of meetings of major central banks will set the market tone and determine investors risk appetite. The Bank of Japan kept its monetary policy unchanged. Global markets now await the US Federal Open Market Committees decision on 2 November 2016. Markets are pricing in only a remote possibility of rate movement this week (implied probability from federal funds futures rate probability at around 6%). The Bank of England meets for its monetary policy decision on 3 November 2016.
Bond Markets to Remain Range-bound: In the absence of any surprises on the global developments front, the domestic bond market will trade with a consolidation bias. Domestic investors are unlikely to heavily churn their portfolio ahead of global risks and may adopt a wait-and-watch approach. Foreign investors, on the other hand, have exhibited limited appetite for local bonds.
Risk Appetite to Drive Rupee Movement: The global risk appetite along with the markets ability to tide over FCNR (foreign currency non-resident) redemptions will have a deterministic impact on the rupee trajectory going forward. The near-term outlook for the rupee, against the backdrop of global developments, indicates potential volatility as investors reassess their outlooks. A clear indication by the Fed over its imminent rate hike could rein in any major appreciating bias of the rupee against USD.
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