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Fitch Assigns HPCL-Mittal Energy BB IDR, Rates Proposed USD Notes
Apr 18,2017

Fitch Ratings has assigned India-based HPCL-Mittal Energy Limited (HMEL) a Long-Term Issuer Default Rating (IDR) of BB. The Outlook is Stable. The agency has also assigned HMELs proposed senior unsecured US dollar notes an expected rating of BB-(EXP).

The final ratings on the notes are contingent upon the receipt of documents conforming to information already received.

Fitch assesses HMELs standalone credit profile at BB-, reflecting its robust refining operations supported by its highly complex refinery, strong profitability and expectations of high leverage on account of the large capex plans for its proposed petrochemical expansion. The IDR of BB benefits from a one-notch uplift for its parent - Hindustan Petroleum Corporation Limited (HPCL, BBB-/Stable) - given the moderate linkages. HMELs IDR will benefit from an additional notch uplift in the case of any weakening of its standalone credit profile below the current level of BB-, provided its linkages with HPCL remain intact.


Strong Refining Operations: HMELs refining operations are supported by its robust asset quality. Its refinery is highly complex (Nelson Complexity Index of 12.6), which enables the company to optimise its crude diet and supports strong margins. HMELs utilisation rate has also been high (year ending March 2016 (FY16): 119%) with a throughput of 10.7 million metric tonnes per annum (mmtpa) - given the strong demand-supply dynamics in north India, where the refinery is located.

HMEL expects to complete its refinery expansion to 11.3 mmtpa (from 9 mmtpa) during 1HFY18. We expect margins to benefit from higher volumes, an improved product slate, ability to process acidic crude oils, and cheaper fuel alternatives in the near to medium term. HMEL also benefits from its take-or-pay agreement with HPCL for its liquid hydrocarbon production (about 75% of total), and also incentives from the state of Punjab.

Locational Benefit, Strong Profitability: HMELs refinery-utilisation rate benefits from the strong demand for petroleum products in India - and particularly in the north. HMELs land-locked refinery benefits from the favourable demand-supply dynamics in the region and minimal competition. This is likely to result in utilisation rates remaining high (FY16: 119%) over the medium term. The off-take agreement with HPCL for its liquid hydrocarbon further minimises the off-take risk and supports the high utilisation rates. The company also has a strong marketing infrastructure for its solid products, including polypropylene, which is likely to support its enhanced downstream operations following completion of its planned petrochemical expansion.

Large Capex Plans: HMEL plans to improve its downstream integration by setting up a petrochemical plant. The company estimates to spend around INR215 billion over the next five years starting in FY18. Increasing downstream integration should benefit HMEL in the long-term as a result of the petrochemical expansion. However, we expect HMELs FCF to be negative over the medium term on account of the high capex; HMEL is likely to fund its capex partly from its operating cash flows and balance with debt.

Leverage to Rise: FCF turning negative after FY18 and the long lead time to revenue generation (after FY22) leads us to expect net leverage (net adjusted debt/ operating EBITDAR) to rise and remain between 4x-5x over the medium term. This may stay temporarily above our downward net leverage guideline of 5x over FY21-FY22 just before the completion of the petrochemical capex. Fitch takes a positive view of the take-or-pay off-take agreement with HPCL, which provides minimum payments to cover HMELs debt obligations and ensures that the debt service coverage ratio (DSCR) is always maintained at or above 1.0x. However, net leverage is likely to improve once the petrochemical project starts operations, expected in FY23.

Uplift for Parent Support: HMEL benefits from a two-notch uplift from its standalone credit profile, to reflect moderate linkages with its 49% parent - HPCL - as assessed under Fitchs Parent Subsidiary Rating Linkage Criteria. HMELs IDR of BB includes a one-notch uplift, while its IDR will benefit from one more notch in the case of any weakening of its standalone credit profile below the current level of BB- - provided these linkages with HPCL remain intact. Similarly, HMELs IDR will also benefit from one more notch in the case of any improvement in HPCLs standalone profile - again, provided the linkages with HPCL remain intact.

These linkages factor in HMELs strategic importance and operational linkages with HPCL. HPCL has a product off-take agreement with HMEL (valid until 2026) to buy all liquid products of HMEL, which also supports its debt-servicing capacity. Liquid products constituted over 75% of HMEL total output and about 80% of HMELs revenues in FY16. HMELs capacity will constitute over 40% of HPCLs total refining capacity, after expansion, to 11.3 mtpa. HMEL is also accorded first priority by HPCL for sourcing its product requirement in north India - where it is its only refinery.

Notching for Secured Debt: Fitch has rated HMELs proposed senior unsecured debt one notch below its IDR, due to the high proportion of secured debt in its capital structure. Secured debt comprised nearly 88% of HMELs total consolidated debt as of FYE16. The proportion of HMELs secured debt is likely to come down after the proposed US dollar note issuance. However, we expect HMELs secured debt/EBITDA to remain above 2.5x over the medium term, resulting in the notching.


[HMELs IDR of BB includes one notch uplift for linkages with its parent - Hindustan Petroleum Corporation Limited (HPCL, BBB-/ Stable). HMEL ratings will benefit from one more notch in the case of any weakening in its standalone credit profile - provided the linkages with HPCL remain intact. HMELs standalone credit profile of BB- reflects its strong refining asset quality which is likely to drive its strong cash flows and expectations of high leverage, in light of its large capex. HMELs standalone credit profile of BB- is one notch higher than that of Swedens Corral Petroleum Holdings AB (CPH, B+/ Stable), due to HMELs better asset quality, stronger profitability and presence in the high-growth Indian market. CPH has larger scale and some integration into fuel retailing, while its ratings are constrained by its presence in the mature European market with expected excess refining capacity, a structural decline in fuel consumption, stiff competition and high leverage despite manageable capex. Indian Oil Corporation Ltds (IOC, BBB-/ Stable) large scale, dominant position as the largest refiner and fuel retailer in India, integration into fuel-retailing and petrochemicals, average asset quality and relatively better financial profile explain the two-notch differential with IOCs standalone credit profile of BB+. IOCs IDR is equalised with that of the sovereign (BBB-/ Stable), die to the strong linkages.]


Fitchs key assumptions within our rating case for the issuer include:

- Crude oil price (Brent) of USD52.5 per barrel (bbl) in FY18, USD55/ bbl in FY19 and USD60/ bbl in FY20, in line with Fitchs crude oil price deck

- Moderation in the industry-wide gross refining margins, though remaining strong.

- Refinery throughput of 11 mmtpa in FY18, 12.3 mmtpa in FY19 and 11.7 mmtpa in FY20.

- Capex of over INR80 billion during the next three years starting FY18.


Future Developments That May, Individually or Collectively, Lead to Positive Rating Action

- Any improvement in HPCLs standalone credit profile, provided the linkages remain intact

- We do not expect any positive action on HMELs standalone rating over the next medium term, given the expectations of increasing leverage on account of the large capex.

Future Developments That May, Individually or Collectively, Lead toNeg

Fitch: Waiver Scheme May Raise Indian Tractor Loan Delinquencies
Apr 18,2017

Delinquencies on tractor loans could rise in several Indian states as a result of political pressure for farmers to be granted waivers on agricultural loans, says Fitch Ratings. Media reports that farmers loans may be waived are likely to create moral hazard and credit discipline issues, given that there will be an incentive for farmers to skip loan repayments pending greater clarity on the potential policy. However, the negative impact of any potential rise in tractor loan delinquencies on Fitch-rated ABS transactions is likely to be minimal, given the low exposure.

The newly elected Uttar Pradesh (UP) state government has already announced farm loan waivers, with a cap of INR100,000 per farmer, for small and marginal farmers. Tractor loans were not included, but farmers may expect this position to change in future announcements. Moreover, there is a lack of clarity over whether tractor loans will be included in potential loan-waiver programmes in Maharashtra, Punjab and Haryana. These four states account for around 30% of Indias population.

We would expect the delinquency rate on agricultural loans to take several months to return to normal following the announcement of policy details. The crop season is currently in its harvesting period in most parts of India, a time when most farmers earn the bulk of their income. If the farmers postpone loan repayments and use the money earned elsewhere, it could take at least until the next harvest in six months time to cure delinquencies.

The introduction of government support might help cure delinquencies faster, but only if state governments compensate lenders quickly - which is unlikely, given the usually slow workings of state bureaucracy. A compensation timeline for UP states farm loan-waiver programme is yet to be announced. Servicers effective collection practices and customer-education programmes could, however, help to contain the potential rise in delinquencies.

Indian ABS transactions are unlikely to be significantly affected, even if tractor loan delinquencies do rise. We do not expect any significant stress or rating impact and we have a stable rating outlook on these transactions.

Tractor loans accounted for a relatively significant 10%-21% of the securitised pool in six of the 21 Fitch-rated ABS transactions, as per their original pool characteristics. They accounted for 5%-10% in another 11 transactions. However, the maximum exposure to tractor loans from these four states was 3% among the securitised pools.

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Ind-Ra: Fall in Operating Performance of Weak Entities to Drag Down Overall EBITDA Recovery in FY18
Apr 18,2017

India Ratings and Research (Ind-Ra) does not expect a broad-based recovery in FY18, given decelerating EBITDA growth of corporates with weak operating performance. Corporates with strong financial profiles are likely to witness a marginal positive EBITDA growth in FY18 (9MFY17: 6%; FY16: 8%) compared with corporates with weak financial profiles (EBITDA growth: 9MFY17: negative 19%; FY16: negative 22%), which are likely to witness a significant decline in EBITDA growth in FY18.

EBITDA Growth of Top 365 Corporate Borrowers in FY18

Ind-Ra expects FY18 earnings (EBITDA) growth of the top 365 corporate borrowers (excluding public sector units and banking and financial services providers) to be 9%-12%, driven by a slow but improving consumption and a recovery in exports. The level would be the highest since FY15 (8%). Therefore, the number of corporates showing an improvement in operating performance is likely to be higher than that in FY17. Ind-Ra expects FY17 EBITDA growth to be lower than the previously estimated 5%-6% owing to demonetisation in 4QFY17. However, the impact of demonetisation is likely to be transitory on the FY18 corporate performance.

Sectoral Outlook Indicates Divergent EBITDA Growth

Ind-Ras expectation for FY18 remains in line with the FY17 trend. The agency expects the EBITDA growth of capital-intensive- and commodity-linked sectors, including infrastructure and power, to decelerate in FY18.

The steel sector registered positive EBITDA growth for 9MFY17, driven by an increase in commodity prices and base effect. Ind-Ra expects the steel sectors profitability in FY18 to remain under pressure, as companies ability to fully pass input prices to customers would be limited owing to muted demand and overcapacity.

Meanwhile, the telecom sector registered flat EBITDA growth for 9MFY17. Ind-Ra expects the sectors EBITDA growth to decelerate in FY18. Ind-Ra has a negative outlook for the telecom, steel, power and infrastructure sectors for FY18.

In the oil and gas sector, downstream companies could witness a moderation in EBITDA margin in FY18 on an increase in crude prices. On the other hand, upstream companies are likely to benefit from benign prices. However, the agency expects consumption- and export-driven sectors such as pharmaceutical to register positive EBITDA growth for FY18.

The auto sectors EBITDA growth in FY18 is likely to moderate. Meanwhile, automotive suppliers are likely to benefit from an increase in commodity prices and an improvement in exports. Ind-Ra has a stable outlook for the auto and automotive supplier, oil and gas, and pharmaceutical sectors for FY18.

Divergent EBITDA Growth Trend Reflected in Rating Categories

EBITDA growth decelerated across the rating categories. However, it remained positive for the majority of investment-grade issuers (rating scale of IND BBB- and above) in 9MFY17. Nearly 70% of the total number of investment-grade registered positive EBITDA growth over FY14-9MFY17. On the other hand, a large number of non-investment grade issuers (rating scale of IND BB+ and below) registered negative EBITDA growth in at least three of the last six years. Nearly 60% of the total number of non-investment grade issuers recorded a negative EBITDA growth over FY14-9MFY17. Thus, any meaningful recovery would be conditional on a strong economic recovery or structural changes such as consolidation, deleveraging and non-performing asset resolution.

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Ind-Ra: Northern Millers to Perform Better than Southern Counterparts
Apr 18,2017

India Ratings and Research (Ind-Ra) has assigned a stable outlook on the sugar sector for FY18 as the agency believes that production recovery in sugar season October 2017 to September 2018 (SS18) is likely to constrain any further increase in the commodity price from 1HSS18 (October 2017-December 2017). With average domestic sugar price expectation of INR37-40/kg (6% higher than expected FY17 prices) in FY18, high cane procurement costs are likely to constrain EBIDTA below FY17 levels. This is likely to result in credit profiles of sugar companies remaining largely similar or marginally worse-off than FY17.

Industry reports estimate that global sugar deficit is likely to contract in SS18 with India registering production of 25 million metric tons, amid improving acreage levels in Maharashtra and Karnataka. The stock-to-use ratio for SS18 is likely to improve to 14.7%, following an anticipated decline to 13.7% in SS17 (October 2016 to September 2017) and 28.3% in SS16. In the agencys assessment, lucrative cane prices and normal monsoons would drive production gains in the country.

Ind-Ra expects UP-based millers to fare better than their southern and western counterparts, despite assuming a higher cane costs (10% yoy increase in state advisory prices for SS18). Ind-Ra expects the profitability of UP-based sugar companies to be 10%-15% lower in FY18 than the estimated FY17 level, due to higher cane costs (premium over and above state-advised price to farmers). In the absence of major working capital changes and capex plans, the credit metrics for FY18 for UP-based millers is likely to maintain or improve from estimated FY17 level.

Ind-Ra expects millers to produce higher distillery volumes in SS18. The ability to divert the same towards ethanol, and the consequent achievement of a higher blending rate for FY18 would largely depend on the pricing of alternative fuels.

Outlook Sensitivities

Recovery in Sugar Cycle: Higher-than-anticipated global sugar production due to sharp production recovery levels at end-SS18 may rapidly transform the current scenario to a high surplus one. In such an event, sugar prices could be under pressure resulting in lower margins thereby impacting credit profile of sugar companies.

Favourable Policy Changes: Pan-India changes in the regulatory policies i.e., linking of raw material cost (cane prices) to the sugar and by-products realisations would help millers gain better control over their profitability and balance sheets. This is because the profitability would depend on individual operational efficiencies, thus positively impacting their credit profile.

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WPI inflation eases to 5.7% in March 2016, rebounds to 3.7% in 2016-17
Apr 17,2017

The Wholesale Price Index (WPI)-based inflation dipped to 5.7% in March 2017 from 39-month high of 6.55% in February 2017, while snapping consistent rise for last three straight months. The WPI inflation dipped in March driven by fall in inflation for all three major sub-groups - primary articles, fuel and power group as well as manufactured products group in March 2017.

Inflation of primary articles declined to 4.6% in March 2017 from 5% in February 2017. The inflation for fuel items eased to 18.2% in March 2017 from 21.0% in February 2017. The inflation for manufactured products fell to 3% in March 2017 from 3.7% in February 2017.

The WPI inflation has turned positive at 3.7% in financial year 2016-17 from sub-zero level of (-) 2.5% in 2015-16. The primary articles inflation surged to 4.8% in 2016-17 from 0.3% in 2015-16, while that for fuel products rebounded to 5.6% from (-) 11.7%. The inflation for manufactured products also bounced to 2.6% in 2016-17 from (-) 1.1% in 2015-16.

As per major commodity group-wise, inflation declined for foodgrains, milk, egg, meat & fish, spices, oilseeds, raw rubber, flowers, metallic mineral, crude petroleum, mineral oils, grain mill products, sugar, edible oils, tea and coffee products, wine, fertilizers, grey cement, ferrous metal, and metal products in March 2017. On the other hand, inflation of vegetables, fruits, fibres, oil cakes, textiles, paper products, rubber and plastic products, chemical products, and transport equipment and parts increased in March 2017.

Inflation of food items (food articles and food products) declined to 4.4% in March 2017 from 4.8% in February 2017 level. Meanwhile, inflation of non-food items (all commodities excluding food items) also eased to 6.3% in March 2017 from 7.3% in February 2017.

Core inflation (manufactured products excluding foods products) declined to 2.1% in March 2017 from 2.4% in February 2017.

The contribution of primary articles to the overall inflation, at 5.7%, was 131 basis points (bps) in March 2017 compared with 142 bps to 6.55% in February 2017. The contribution of fuel product group was 266 bps against 303 bps in February 2017, while that of manufactured products was lower at 170 bps compared with 209 bps.

The contribution of food items (food articles and food products) to inflation fell to 137 bps in 5.7% in March 2017 compared with 152 bps to 6.55% in February 2017. Meanwhile, the contribution of non-food items (all commodities excluding food items) was 432 bps in March 2017 compared with 501 bps in February 2017.

As per the revised data, the inflation figure for January 2017 was revised up to 5.5% compared with 5.3% reported provisionally.

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Power Purchase Agreement for Rewa Ultra Mega Solar Power Project signed
Apr 17,2017

Union Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines, Shri Piyush Goyal, presided over the signing of Power Purchase Agreements (PPA) between Delhi Metro Railways Corporation (DMRC) & Madhya Pradesh Power Management Company (MPPMC) with Rewa Ultra Mega Solar Limited, the implementing agency for the worlds largest singlen++site solar power project, the Rewa Ultra Mega Solar Power Project (UMSPP, 750MW) in Bhopal today. Other dignitaries present on the occasion were Union Minister for Urban Development, Housing & Urban Poverty Alleviation and Information & Broadcasting, Shri M. Venkaiah Naidu and Shri Shivraj Singh Chouhan, Chief Minister of Madhya Pradesh.

Addressing the gathering, Shri Naidu said that Madhya Pradesh is a special state having huge resource base that is being harnessed under Shri Chouhans leadership. Taking a huge step towards realizing Prime Minister Shri Narendra Modis vision of 24x7 Affordable, Quality Power for All, Madhya Pradesh has successfully brought down the rate of solar power to Rs. 3.30/ unit, which is a huge revolution in its own right, Shri Naidu noted. The Minister said that seven cities in the State qualified as smart cities in the first round comprising a total of 20 cities. This has been made possible only through peoples active participation and the dynamic leadership in the State, Shri Naidu said.

In his address, Shri Chouhan said that the Madhya Pradesh government has set 3 guiding principles of its performance - equitable growth, social empowerment and sustainable development. The Chief Minister noted that a decade ago even water, electricity and roads used to be challenges in the State but now due to the dynamic development model being implemented, the year on year agricultural growth will touch 25% this year and milestones like the cheapest solar power in the country are being achieved in Rewa. Madhya Pradesh has become the leading state in renewable energy sector in India, the Chief Minister said.

Congratulating Shri Chouhan on his unrelenting efforts in the direction of achieving the unprecedented scaling up of the renewable energy sector in the State, Shri Piyush Goyal informed that the Rewa UMSPP had achieved historic results with a record low first year tariff of Rs 2.97 per unit of electricity and a levelised tariff of Rs 3.30 over the term of 25 years, in the marathon online auction, which lasted 33 hours between biggest of the Global solar companies. The Rewa UMSPP becomes the first power project to conduct interstate sale of solar power to Delhi Metro. There would be huge savings to the Delhi Metro because of per unit cost of power reducing from over Rs. 4.50 to Rs. 3.30, Shri Goyal informed.

Shri Goyal also mentioned that with Prime Minister Narendra Modis leadership and cooperation of all Chief Ministers of various States, in the last 3 years, renewable energy has seen a growth of over 370 %. As compared to 2,600 MW of installed solar power capacity in 2014, today in India there is a total of 12,200 MW of installed solar power capacity and the country would achieve the 20,000MW solar power capacity target 5 years ahead of schedule by the end of 2017, the Minister noted.

Shri Goyal appreciated the proactive way in which the Madhya Pradesh Government provided financial guarantees to make the Rewa PPAs viable. The Minister further informed that the Rewa PPA has been accepted by the central government as a standard model for all other state governments to emulate and achieve lowest electricity tariff rates through competitive bidding.

Listing out the factors responsible for the success of the Rewa UMSPP, Shri Goyal included partnership of all stakeholders; outcome-oriented decisive leadership; root cause analysis of causes of failure on previous bids; time-bound execution; innovative financial model like partnering with International Finance Corporation (IFC); focus on transparency and technology including green energy corridor for evacuation of solar power; assigning responsibility and fixing accountability of implementation at each step.

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Nation-wide training programme launched for Elected Women representatives (EWRs) of Panchayats
Apr 17,2017

A comprehensive module for capacity building of Elected Women Representatives (EWRs) of Panchayats and a training program for Trainers of women panchayat leaders across the country was launched by the Ministry of Women and Child Development in collaboration with the Ministry of Panchayati Raj. The training program seeks to empower EWRs of panchayats by enhancing their capacity, capability and skill in governance and administration of villages.

Addressing the select women trainers/women sarpanches of Jharkhand at the video conference today, Smt Maneka Sanjay Gandhi said that inspite of 33% reservation for women in the panchayat bodies, the EWRs continue to remain ineffective since they do not have appropriate knowledge and skill to administer the village, and the show continues to be run by their husbands.

These women representatives will have to be trained in order to ensure that they take up the responsibility of all the tasks entrusted upon them on being elected, Smt Maneka Gandhi said. The Minister explained that it is due to this reason, the WCD Ministry has initiated this countrywide program of training the women sarpanches and other women representatives at the grassroots level in various areas like engineering (building of roads, drains, latrines etc.), finance, social development, education, health, and environment among others. Similarly, several new schemes have been launched by the Prime Minister , Shri Narendra Modi which bring benefit to the common man especially those in distress and the under privileged. The women sarpanches can be helpful in taking these schemes to the people at the grassroots level, the Minister said. These schemes include Fasal Beema Yojana, Pradhanmantri Awas Yojana, Suraksha Bima Yojana, Sukanya Samridhi Yojana, maternity benefits schemes among others. Apart from this, the training programme will help to raise these women to the next level of leadership , said Smt Maneka Gandhi.

The WCD Minister said that safety of women, education of the girl child, health of women, creation of assets under MGNREGA, immunization and ensuring nutrition through lakhs of Anganwadis of the country have become important issues at the grassroots level in which the women sarpanches can play a pivotal role in effective delivery. The Minster suggested that the women sarpanches should form a whatsapp group and share their good practices as well as assist one another in finding solutions to common problems.

Speaking on the occasion, the Union Minister for Panchayati Raj, Rural Development and Drinking Water and Sanitation, Shri Narendra Singh Tomar said that under the 14th Finance Commission, the Panchayats will get Rs 2 Lakh crore in 5 years as against the earlier amount of Rs 30,000 crore for the overall development of the villages. He underlined the need for greater accountability, honesty and transparency in the execution of the developmental projects like building of roads, drainage system, toilets, farm ponds and dwelling units which he hoped will be ensured by the newly trained women representatives.

Shri Tomar laid stress on advance planning by the Gram Panchayats to free their villages from scourges of poverty and malnutrition. He said that women Sarpanches can form groups in the villages to spread social awareness on schemes like Swachh Bharat Abhiyan, Pradhan Mantri Aawas Yojana, Immunisation, school enrolment, various insurance schemes for farmers and common man, benefits for pregnant women and BHIM App for cashless transaction. The training programme will lead to the empowerment of Women Sarpanches for the overall development of their villages and the country, explained the Panchayati Raj Minister.

The Chairperson, National Commission for Women, Smt Lalitha Kumaramangalam said that the training program will be closely monitored to ensure proper learning by the sarpanches and EWRs. Smt Lalitha Kumaramangalam also expressed hope that the EWRs will emerge as future leaders of the country.

In the first phase, 40 master trainers of Jharkhand will be trained at the State institute of Rural Development, Ranchi. In the second phase, approximately 3000 EWRs will be trained by these master trainers in the three districts of Simdega, Pakur and Chatra of Jharkhand.

Starting with Jharkhand, similar training programs will be organised in different states throughout the country with the help of National Institute of Rural Development, State Institutes of Rural Development and Panchayati Raj Departments of the States to train EWRs throughout the county. There are currently around 13 lakhs EWRs in panchayats across the nation.

The module has been prepared by the National Commission for Women of the WCD Ministry in collaboration with TISS. The module contains training guidelines, timeline, implementation guidelines, training schedules and monitoring and evaluation. The training will be participatory with group discussions, brainstorming lectures, demonstrations, field visits, case studies, games, exercise, role play, small workshops and individual assignments. The module discusses various topics like What is an ideal Panchayat, composition of the Gram Panchayat, development schemes and programmes, resources of panchayats and their utilization, laws for protection of the vulnerable sections among others.

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E-commerce term may be misinterpreted in GST; fear commodity exchanges may be brought in: ASSOCHAM
Apr 17,2017

The scope of the e-commerce definition as given in the Goods and Services dispensation has been left so wide that it could go well beyond Amazon or Flipkart marketplace platforms and may even cover the commodity exchanges, the ASSOCHAM has said, seeking a clarity from the government so as to remove uncertainty among businesses, as the GST is set for a roll out.

n++The scope of the terms electronic commerce is very wide and does not restrict itself to cover electronic marketplace service providers like Amazon, Flipkart. It covers all businesses where the supply of goods / services is through a digital or electronic network,n++ the ASSOCHAM said in communications to different concerned ministries.

It said since the term e-commerce covers all businesses where the supply of goods / services is through a digital or electronic network, there is a possibility of n++unwarranted interpretationsn++ which may lead to Future and Commodity Exchanges being treated as an electronic commerce operator in respect of commodity derivatives which result in actual delivery of the goods.

n++In our opinion such an interpretation will not be in consonance with the object and intent of special provisions for the electronic commerce business n++There are distinguishing legal and operational factors between ecommerce operators and commodity exchanges. The commodities exchanges cannot be treated as electronic commerce operator in their legal capacity as well as in common parlancen++, the chamber pointed out.

As the GST is set for a roll out either in July or latest by September this year, the ASSOCHAM has also sought clarity with regard to the implementation of the most important tax reforms. A great amount of clarity has been sought with regard to treatment of GST relating to banking, telecom, banking services, exports, gems and jewellery and MSME sectors, among others.

n++The ASSOCHAM would like a seamless and flawless roll out of the GST to infuse a sense of confidence among the consumers, trade and industry. Eventually, the GST should become a showpiece of our reforms,n++ said chamber Secretary General Mr D S Rawat.

Mr Rawat said the chamber, is doing its bit to reach out to the stakeholders and holding a large number of workshops and training seminars for the industry and trade in different parts of the country.

The chamber said the Central GST is silent on the exemptions which are currently provided for interest on loans. The exemption under services tax which exempts interest should be replicated under GST

From a macro perspective GST is unification of multiple indirect taxes into single law. Hence, it is presumed current exemption would be continued for banking and other financial institution including nonbanking financial company (NBFC) as these exemptions creates the basic foundation for taxing services provided by them.

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Sharp rise in ACs, power back up devices this summer: ASSOCHAM
Apr 17,2017

Onset of early summer with sudden rise of temperature in most parts of India has given a big boost to Air conditioner (ACs), inverters, generators and air coolers with demand estimated to be going up between 35-45 per cent this season as compared to last year, an ASSOCHAM survey has indicated.

In all the major cities, the demand for AC has seen a sharp pick up in the last three weeks with the trend growing up by the day, as heat and dust goes up, particularly in northern, western and eastern parts of the country. According to the market survey based on feedback from the retailers and distribution chain, the ACs market is expected to increase by 40-45% this year. The apprehensions of deficient rains because of possible El Nino would add to the demand for the electric gadgets including the power back up devices like generators and inverters, reveals the ASSOCHAM latest paper.

Seizing the opportunity, the consumer finance companies are offering tempting offers claiming zero interest options, adding to the demand surge, the survey noted.

In bigger markets and well off areas, the demand for split air conditioners is witnessing a sharp rise , though the base remains low. As the window space is an issue in growing cities, the split ACs are preferred. Besides, the segment has caught the imagination of the better off and upper middle class people, though the price differential between the window and split is upward of 30 per cent, ASSOCHAM Secretary General Mr D S Rawat remarked.

The survey noted that the customer is lot more conscious about energy saving devices thanks to high cost of electricity. The awareness about the star ratings for the electric devices is on the rise , which is a good sign, said Mr. Rawat.

With the increase in demand for electricity and peak hour shortages still seen in several states like UP, Punjab, Haryana, Rajasthan, Tamil Nadu, Karnataka, among others, the demand for the power back up devices like invertors and generators is expected to rise by 20-25 per cent this summer over the same period last year. Such devices are in more in demand in tier-II and tier-III cities.

Though air coolers are giving way to air conditioners, the product design for the former has really seen quite an improvement. Some of the high end air coolers are coming in compact design and shape. However, the key lies in their difference in pricing and power consumption as compared to ACs.

While people sweat it out, the business opportunities in the ongoing summer are there for asking, the ASSOCHAM survey said.

AC maintenance companies reported a 100 per cent jump in demand over the past week alone while residents grappled with stifling conditions in homes and offices, reveals the survey.

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Government extends the time line for availing TRQ benefit (duty free) of 5 Lakh MT of raw sugar import from 12th June to 30th June, 2017
Apr 17,2017

Based on representations received from sugar mills/trade associations, Government has extended the time line for availing TRQ benefit (duty free) of 5 Lakh MT of raw sugar import from 12th June to 30th June, 2017. This would mean that prospective mill/refiner can complete the import of raw sugar on or before 30th June, 2017. Further, to facilitate the imports from logistic point of view, Vishakhapatnam (Andhra Pradesh), Gangavaram (Andhra Pradesh) and Karaikal (Puducherry) ports in the South Zone have been added. However, the zone-wise import quantity restrictions shall remain unchanged. In order to ensure timely availability of sugar in the country and to maintain domestic price at reasonable level, the importing mills/refineries have been given a time line of two months from the date of bill of entry or the date of entry inwards, whichever is later, to convert raw sugar into white/refined sugar in their respective mills/refineries.

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Pradhan Mantri Mudra Yojana (PMMY) crosses the target of Rs. 1.8 lakh crore for 2016-17
Apr 17,2017

Loans extended under the Pradhan Mantri Mudra Yojana (PMMY) during 2016-17 have crossed the target of Rs. 1,80,000 crore for 2016-17. Sanctions currently stand at Rs. 1,80,087 crore with final data still awaited from some of the smaller non-banking lenders. Of this amount, Rs. 1,23,000 crore was lent by banks while non-banking institutions lent about Rs. 57,000 crore. Data compiled so far indicates that the number of borrowers this year were over 4 crore, of which over 70% were women borrowers. About 20% of the borrowers were from the Scheduled Caste Category, 5% from the Scheduled Tribe Category, while Other Backward Classes accounted for almost 35% of the borrowers.

The achievements of both public sector banks and private banks have been extremely encouraging. The robust growth in bank loans to unfunded and underfunded segments is an indication of the emergence of this category of borrowers as a key driver of demand for credit.

The Union Budget has announced a target of Rs. 2.44 lakh crore for Mudra Loans during 2017-18. There would be a special focus within the Mudra Scheme on convergence with other government schemes, deepening connect with borrowers and meeting credit requirements of trainees completing skilling course.

Mudra Loans are available for non-agricultural activities upto Rs. 10 lakh and activities allied to agriculture such as Dairy, Poultry, Bee Keeping etc, are also covered. Mudras unique features include a Mudra Card which permits access to Working Capital through ATMs and Card Machines. Evaluation studies show that banks have been proactive in identifying and disbursing loans to first time borrowers thereby weaning them away from money lenders. Borrowers particularly value three attributes of Mudra Loans viz, non-insistence on guarantor or collateral, simple documentation and quick processing.

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Business Reform Action Plan 2017 released
Apr 17,2017

The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, in partnership with the World Bank Group, released the Business Reform Action Plan (BRAP) 2017 for implementation by States/UTs on 13.04.2017.

The BRAP includes 405 recommendations for reforms on regulatory processes, policies, practices and procedures spread across 12 reform areas, that is, labour regulation enablers; contract enforcement; registering property; inspection reform enablers; single window system; land availability and allotment; construction permit enablers; environmental registration enablers; obtaining utility permits; paying taxes; access to information and transparency enablers and sector specific reforms spanning the lifecycle of a typical business.

This year there are 103 new set of reforms (out of 405) focusing on central inspection system, online land allotment system, online single window system for granting construction permits, registration under Inter State Migrant Workmen (RE&CS) Act, 1979, approval for boiler manufacturer and boiler erector etc. BRAP 2017 also includes two new sectors i.e. Healthcare and Hospitality. The last date to implement the reform is 31.10.2017.

DIPP will carry out a comprehensive business-to-government (B2G) feedback exercise this year whereby feedback will be taken from businesses on the quality of implementation of the reforms claimed by the States and UTs. For each State/UT, the scores will be aggregated over all the surveys conducted to yield an overall score for the State/UT.

The feedback scores will be used to generate a ranking of States/UTs in terms of reform implementation. Such a ranking will be different from the last years ranking, which was a ranking of de jure reforms (or reforms based on evidence submitted by States).

The online portal shall soon be enabled to allow States/UTs to upload the reforms implemented along with the evidence.

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PPLC policy is to encourage suppliers and service providers to progressively adopt Make in India practices and add value to their goods and services
Apr 17,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved signing of Framework of Understanding (FoU) on Cooperation in the Hydrocarbon Sector with Bangladesh, setting up of Indian Institute of Petroleum and Energy (IIPE) at Visakhapatnam in Andhra Pradesh as an Institute of National Importance through an Act of Parliament and also approved the Policy to provide Purchase Preference (linked with Local Content PP-LC) in all Public Sector Undertakings under Ministry of Petroleum & Natural Gas on 12th April, 2017.

The Secretary for Petroleum and Natural Gas, Shri K D Tripathi said that the Make in India initiative was launched by Prime Minister in September, 2014 as part of a wider set of nation-building initiatives devised to transform India into a global design and manufacturing hub. In tune with the campaign, the Government has decided to incentivize the growth in local content in goods and services while implementing oil and gas projects in India through a policy for providing Purchase Preference to the manufactures/services providers who meet the local targets in oil and gas business activities.

Under the policy, progressively increasing targets of Local Content are being stipulated for procurement of goods, services and EPC contracts for oil and gas business activities. The manufacturers/service provider who meet the local content targets and whose quoted price is within 10% of lowest valid price bid, would be eligible for 10% purchase preference for a stipulated portion of the purchase order, on matching such price. For example, Drilling/Workover Rigs/WSS units construction in the onshore sector the local content would be pegged at 50% in the first year and progressively increased to 60% in the next two years and they to 70% in last two years. Similarly, for premium bids as wells as specialized drilling and completion services the local content stipulated is 10% in the first year and progressively increased to 15% in the next two years and then to 20% in the last 2 years.

He added that the policy is expected to encourage suppliers and service providers to progressively adopt Make in India practices and add value to their goods and services within the country. It will facilitate growth of activities related to manufacturing, services and EPC in the Indian economy. This will boost productivity and help in growth of employment at all levels in the oil and gas sector.

Shri Tripathi said that this policy is applicable to all the Public Sector Enterprises and their wholly owned subsidiaries under the Ministry of Petroleum and Natural Gas; Joint Venture that have 51% or more equity by one or more Public Sector Enterprises under the Ministry of Petroleum and Natural Gas; attached and subordinate offices of MoPNG.

The Cabinet had approved a Framework of Understanding on Cooperation in the Field of Hydrocarbons. This was first discussed during the visit of Petroleum Minister Shri Dharmendra Pradhan to Dhaka in April 2016 with the objective to work as an umbrella framework to initiate, monitor and pursue activities of mutual interest in the oil and gas sector. It will give an institutional mechanism for our engagement with Bangladesh in the Hydrocarbon sector.

Salient Features of the proposed Framework document include -

n++ Promotes the energy trade and integration of oil and gas grids of the two countries

n++ Promotes investments in each others countries as well as in third countries, technology transfer, R&D, conducting joint studies and capacity building of human resources.

n++ Provides increased trans-border economic cooperation and connectivity.

n++ Promotes bilateral cooperation at the sub-regional and regional levels

n++ Exchange of information to energy policy formulation in the region.

n++ This Framework of Understanding shall remain in force for a period of five years, and shall be automatically renewed thereafter for a period of every five year.

The visit of PM Sheikh Hasina which took place on April 8-10 has given a further impetus to the Indo Bangladesh relations, as 22 documents were signed, including many in the field of oil and gas. Minister of State (I/C) for Petroleum and Natural Gas, Dharmendra Pradhan had visited Bangladesh during 18-19 April, 2016 and in the last two years there have been at least 7 meetings between him and his counterpart in Bangladesh. There is an institutionalised Energy Dialogue at the level of Secretary which met last month in Dhaka.

The comprehensiveness of the relationship between India and Bangladesh comes from the fact that we are already engaged in Supply of HSD from Siliguri to Parbatipur, Setting up LNG Terminal at Kutubdi island, Setting up LPG Terminal in Chittagong / Kutubdi island, Providing gas for the Khulna Power plant in Bangladesh, Working of gas grid connectivity, Refurbishment of refineries, Building of pipelines and Upstream activity in Bangladesh by Indian companies etc.

India and Bangladesh have signed three Documents: Sale Purchase Agreement between Numaligarh Refineries Ltd (NRL) and Bangladesh Petroleum Corporation for supply of High Speed Diesel to Bangladesh; Setting up of an LNG terminal in Kutubdia Island by Petronet LNG Ltd and Setting up of an LPG Terminal by IOCL in partnership with Petrobangla. In addition to these Honble Prime Minister Shri Narendra Modi along with Prime Minister of Bangladesh flagged off the Rail Rake carrying 2200 MT of HSD from Radhikapur in India to Parbatipur in Bangladesh. The rail rake travelled on the newly constructed rail route. The length of the new route is around 260 kms, almost half of the old route.

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Agencies to continue with domestic procurement of pulses till 22nd April 2017: Consumer Affairs, Food & Public Distribution Minister
Apr 17,2017

Shri Ram Vilas Paswan, Union Minister of Consumer Affairs, Food and Public Distribution said that in view of the bumper production and arrivals, all procuring agencies have been directed continue with domestic procurement of pulses till 22nd April 2017 instead of 15th April 2017. Shri Ram Vilas Paswan said that all procuring government agencies will buy the pulses direct from the farmers on MSP rate. Shri Paswan informed that the government has procured around 18.10 lakh tonnes of pulses including 4 lakh tonnes of imports towards building the buffer stock of pulses of up to 20 lakh tonnes.

Shri Paswan further said that considering the quantity of sugar available with the carry over stock of 77 lakh tonnes and estimated current seasons production of 203 lakh tonnes is sufficient to meet the domestic consumption requirement at reasonable prices. The domestic demand of sugar consumption is 240-250 lakh tonnes. Shri Paswan said that in order to address regional production gaps and also to maintain domestic prices at reasonable levels, Government decided to allow import of a restricted quantity of only 5 lakh tonnes of raw sugar at zero duty through open general license. Government also extended the time line for availing TRQ benefit (duty free) of 5 lakh tonnes of raw sugar import from 12th June to 30th June, 2017.

Consumer Affairs Minister said that there cannot be two MRPs except in accordance with the law. NCDRC is taking necessary action on the complaint of dual MRP. Shri Paswan said that the Department of Consumer Affairs has directed state governments and union territories to stop the practice of dual MRP on packaged water. Shri Paswan informed that the BCCI has complied with the directions and issued an advisory to all state cricket associations/stadiums to sale packaged mineral water on single MRP (all brands) during cricket match with immediate effect.

The Minister reiterated that the hotels and restaurants are following the practice of charging service charge is an unfair trade practice. The service chargesn++ are discretionary/ voluntarily and a consumer dissatisfied with the services can have it waived off. Shri Paswan further stated that the Department of Consumer Affairs has framed an advisory on the issue of service charge, which is in the final stage.

Shri Paswan said the government does not want to fix the quantum of food that needs to be served by hotels and restaurants. There is no plan to impose any advisory, act or law, the Union Minister added.

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Indian Academy of Highway Engineers signs MoU with UNSW for establishing Centre of Excellence in Smart Transportation
Apr 17,2017

In line with the Ministry of Road Transport and Highways vision to influence and adopt global innovation into the transportation sector, a Memorandum of Understanding was signed between the Ministry through the Indian Academy of Highway Engineers and University of New South Wales (UNSW) to set up a Centre for Advanced Transportation Technology and Systems (CATTS). The MoU was exchanged between the Director of IAHE Mr. V L Patankar and Vice Chancellor of UNSW Prof. Ian Jacobs on April 10th, 2017 in the presence of Simon Birmingham, Australian Minister for Education. The vision for CATTS is to:

n++ Accelerate the evaluation and adoption of new transportation technologies and explore market opportunities for them in India and Australia.

n++ Conduct research, development and training in the areas of transport system modelling and data for smart cities.

This would be the worlds first transportation centre involving two countries committed to seeing technological innovation for economic development through improved safety and reduced congestion.

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