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Health Ministry to launch n++Mission Parivar Vikasn++ in 145 High Focus districts for improved family planning services
Sep 23,2016

Ministry of Health and Family Welfare will soon launch n++Mission Parivar Vikasn++ in 145 high focus districts having the highest total fertility rates in the country. These 145 districts are in the seven high focus, high TFR states of Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, Chhattisgarh, Jharkhand and Assam that constitute 44% of the countrys population. The main objective of Mission Parivas Vikas will be to accelerate access to high quality family planning choices based on information, reliable services and supplies within a rights-based framework.

These 145 districts have been identified based on total fertility rate and service delivery (PPIUCD and Sterilization performance) for immediate, special and accelerated efforts to reach the replacement level fertility goals of 2.1 by 2025. Recent data suggests that these 145 districts have TFR of more than/equal to 3.0 (56% of the 261 districts in the 7 HFS) and are home to 28% of Indias population (about 33 Crores). However, only 22% of Indias protected couples and 40% of Indias couples with unmet need reside in these districts. These districts also have a substantial impact on maternal and child health indicators as about 25-30% of maternal deaths and 50% of infant deaths occur in these districts Moreover, 115 of these districts (79%) have high percentage of adolescent mothers.

The key strategic focus of this initiative will be on improving access to contraceptives through delivering assured services, dovetailing with new promotional schemes, ensuring commodity security, building capacity (service providers), creating an enabling environment along with close monitoring and implementation.

The Mission will be implemented in all the 145 districts at one go.

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Government decides to shift the issue date of the Sovereign Gold Bonds 2016-17 Series-II from September 23, 2016 to September 30, 2016
Sep 23,2016

The Government of India in consultation with the Reserve Bank of India(RBI), had notified the issuance of Sovereign Gold Bonds, 2016-17 Series II vide Notification F.No.4(7)-W&M/2016 dated August 29, 2016. The tranche was open for subscription from September 01, 2016 to September 09, 2016. The bonds were to be issued on September 23, 2016.

Large number of applications have been received by banks and post offices. To enable smooth uploading of applications into RBIs E- Kuber system, particularly by the post offices, it has since been decided to shift the issue date of the Sovereign Gold Bonds from 23rd September,2016 to 30th September, 2016.

All other terms and conditions of the above Notification remain unchanged.

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Assure that GST will be applicable from April 1, 2017 across India: Arjun Ram Meghwal
Sep 23,2016

The union government is abiding by the target date for implementing the goods and services tax (GST) to ensure that it is applicable from April 1, 2017 across India, Minister of State for Finance, Mr Arjun Ram Meghwal said at an ASSOCHAM event.

n++I can assure you that 1st April, 2017 is the target date for implementing GST in India and we are abiding that particular target and I can assure that 1st April 2017, GST will be applicable in the country,n++ said Mr Meghwal while inaugurating an ASSOCHAM Global Investors India Forum.

He said that all the issues relating to the states - whether pertaining to the standard rate, area-based exemption, product-based exemption, slab in the GST rate all will be decided in the GST Council after detailed discussion with the states.

n++We will deliberate the issues and definitely decide in the interest of the nation,n++ said Mr Meghwal.

The Union Minister added that the GST is a major initiative that can take Indias GDP growth to double digit level i.e. up to 10 per cent from current level of over seven per cent.

Highlighting that the Government is slowly moving towards the goal of - one nation, one tax, he said, n++We will consider all aspects and to promote ease of doing business and ensure success of Make in India program, we can also consider slab related issues.n++

He also said that government was working on the process to curtail black money generation. n++We are in the planning stage to curtail the black money in the generation process as we do not want black money to be generated.n++

Conceding that India is grappling with challenge of low private investment, Mr Meghwal said, n++I think, this is the biggest challenge before the government.n++

On the success of Skill India initiative, he said that the initiative will not succeed if it is not able to go as per the industrys requirement. n++We will take the input from you, though we are running Skill India program along with states, but we will definitely take the initiative and input from the industry.n++

The Minister also emphasised that unless agriculture, housing and rural sectors are improved, Indias GDP will not grow as per governments desire.

n++From 1952 we have been fixing the target that we will grow agriculture sector at four per cent, now this present government has taken so many initiatives like Pradhan Mantri Fasal Bima Yojana, simplification of KCC (Kisan Credit Card), Soil Health Card, increasing irrigation facilities, so I hope that the target of growth for agriculture growth will be achieved,n++ said Mr Meghwal.

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NHAI Awards Contract for 4-Laning of Panchkula-Yamunanagar Section of NH-73 (new NH-344) in Haryana.
Sep 23,2016

The National Highways Authority of India (NHAI) has issued Letter of Award (LOA) for development of following section in the state of Haryana under NHDP Phase-III:

NH No.SectionLengthTotal Project CostConcessionaires NameNH-73 (new NH-344)4 Laning of Panchkula-Yamunanagar Section from km 157.192 to km 176.40019 kmRs. 249 croreM/s Gawar Construction Ltd.

Panchkula and twin cities of Jagadhari and Yamunanagar are important commercial and industrial centres of Haryana.  Development of Panchkula-Yamunanagar Section from km 157.192 to km 176.400will improve connectivity to various villages and towns and confer boost to the economy of the area by way of providing access to various places of business and tourist importance.

The existing 108 km long stretch of NH-73 (New NH 344) between Panchkula to Yamunanagar connects Haryana to state of Uttar Pradesh and passes through Barwala, Sahjadpur, Saha, Jagadhari cities. This highway passes through Khol-hi-raitan wild life sanctuary at two section from km 175.350 to km 176.00 & 177.090 to km 177.500 and leads to Saharanpur and Roorkee.

The project has been divided into three packages.  Package-I and Package-II have already been awarded on EPC mode.  The balance length of 19 km has now been awarded on EPC mode which starts from km 160.356 near Barwala town and ends at km 179.249 at Panchkula.  The project would be completed  in 24 months from the date of commencement of the project. 

It will have 4 major Bridges, 3 major Junctions, 25 minor Junctions, 1 Flyover, 1 Vehicular Underpass, 1 Pedestrian Underpass, 2 Overhead Bridges for crossing, 10 Bus Bays and 9 km long service road on both sides.

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Uttarakhand one of the transparent states in doing business: Chief Minister, Uttarakhand
Sep 23,2016

Uttarakhand is one of the most transparent states in ease of doing business, provide conducive environment for industrial growth, said Chief Minister of Uttarakhand, Mr Harish Rawat said at an ASSOCHAM event.

Uttarakhand has a lot of potential in infrastructure development and hospitality industry and there is an ample scope for expansion. The power generation is one the major thrust areas. We are focusing on the development of small hydro power plants. Some of the important projects are Tankul, Bhilangana-II and Painagad etc, said Mr. Rawat while inaugurating an ASSOCHAM conference on 2nd Global Investors India Forum (GIIF).

n++Uttarakhand is the policy driven state.n++ We are also providing the cheapest power in the country. He further said that Uttarakhand is one of the most transparent states to do business.

We have land availability and the climate for investment is very good in Uttarakhand. We are working on infrastructure development and there is an ample scope for expansion, said Mr. Rawat.

He further mentioned that the Uttarakhand has very attractive MSME policy linked with the Start-up policy. The Government has implemented a Start-up policy to provide a platform to the students emerging from the Educational Institutes of the state to help them grow as entrepreneurs.

To invite investment in Uttrakhand from pioneer IT industries of CMM I level V to provide firm platform for new entrepreneurs. The incentives under the policy are land/ space coast, capital subsidy, power subsidy, stamp duty etc.

Now, we are attracting a lot of people from small investors in the micro and small power projects and we are ahead to formulate our IT policy also.

We are also improving the connectivity. We are also coming out with new airport and I am hopeful that soon it will be connected with other major towns of the country and with new policy of government of India from regional connectivity, we have already three small airports and which will be develop further, said Mr. Rawat.

In hospitality sector, there are lot of prospects in our state and request you all to look into that area and which have lot of potential.

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Government targets doubling food processing levels to 20%
Sep 23,2016

The Government has set a target of doubling food processing levels in the country to 20% by 2019. Union Minister for Food Processing, Ms. Harsimrat Kaur Badal, who was in Mumbai today, to inaugurate the Annapoorna : World of Food 2016 International Expo & Conference, said the n++food processing industry is a sunrise sector ready for exponential growthn++. She said despite all odds, the food processing sector has been able to register a 7.6 per cent growth, much higher than the agricultural and manufacturing sector growth.

The Minister however lamented that despite India being one of the largest food producing countries, the level of processing is a paltry 10%, while it is 70-80% in some of the South East Asian countries like Thailand, Malaysia and Vietnam. n++We have drawn up plans to double the level of processing from 10% to 20% by the time the 5 year term of the government is overn++, she said.

Ms. Badal said her ministry is facilitating ease of doing business and creating investor friendly policies and schemes to give a boost to the sector. She said the governments decision to permit 100 per cent FDI in trading, including through e-commerce, in respect of food products manufactured or produced in India is expected to provide a major impetus to investments, employment and job creation in the food processing sector.

The Minister also informed that a Rs 2,000 crore corpus has been created to disperse cheap credit through NABARD for the food processing sector and several tax and duty concessions are being extended to food processing industries in 42 Mega Food Parks planned across the country.

Ms. Badal said that her recent trip to the UK has been successful and lot of international retail and food processing companies have evinced interest to enter India through joint venture with Indian companies.

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Record Production of Kharif Foodgrains estimated at 135.03 Million Tonnes
Sep 22,2016

Union Agriculture and Farmers Welfare Minister, Shri Radha Mohan Singh today released the 1st Advance Estimates of production of major Kharif crops for 2016-17. On the occasion Shri Singh said that as per 1st Advance Estimates for 2016-17, total production of Kharif Foodgrains is estimated at 135.03 million tonnes which is a new record. This year production is higher by 11.02 million tonnes as compared to last years Kharif foodgrains production of 124.01 million tonnes. Further, Kharif foodgrains production is also higher by 7.65 million tonnes than the last five years (2010-11 to 2014-15) average production of 127.38 million tonnes.

As per 1st Advance Estimates, the estimated production of major crops during Kharif 2016-17 is as under:

n++ Foodgrains - 135.03 million tonnes (record)

n++ Rice - 93.88 million tonnes (record)

n++ Coarse Cereals - 32.45 million tonnes

n++ Maize - 19.30 million tonnes (record)

n++ Pulses - 8.70 million tonnes (record)

n++ Tur - 4.29 million tonnes (record)

n++ Urad - 2.01 million tonnes (record)

n++ Oilseeds - 23.36 million tonnes

n++ Soyabean - 14.22 million tonnes

n++ Groundnut - 6.50 million tonnes

n++ Castorseed - 1.73 million tonnes

n++ Cotton - 32.12 million bales (of 170 kg each)

n++ Sugarcane - 305.25 million tonnes

The cumulative rainfall (1 June to 07 September, 2016) during the current monsoon season has been excess / normal in 29 and deficient in 07 out of 36 meteorological sub-divisions. As a result of favourable monsoon rainfall, area and yield of most of the Kharif crops is expected to be higher. Consequently, estimated production of most of the crops during current Kharif season is estimated to be higher as compared to their production as per 4th Advance Estimates for 2015-16. However, these are preliminary estimates and would undergo revision based on further feedback to be received from the States.

Total production of Kharif rice is estimated at 93.88 million tonnes which is a new record. This year rice production is higher by 1.1 million tonnes than previous record production of 92.78 million tonnes achieved during 2011-12. Production of Kharif rice is also higher by 4.16 million tonnes and 2.57 million tonnes over the average production of the last five years and the last years Kharif rice production respectively.

Total production of coarse cereals in the country is estimated at 32.45 million tonnes as compared to 27.17 million tonnes during 2015-16 (4th Advance Estimates). Production of Maize is estimated at record level of 19.30 million tonnes. This year production of Kharif maize is higher by 4.05 million tonnes than that the last years production.

As a result of significant increase in the area coverage and productivity of tur and urad, total production of Kharif pulses estimated at record level of 8.70 million tonnes which is higher by 3.16 million tonnes than the last years production of 5.54 million tonnes. The production of kharif pulses is also higher by 2.54 million tonnes than their last five years average production.

Total production of kharif oilseeds in the country is estimated at 23.36 million tonnes which is significantly higher than the production of 16.59 million tonnes during 2015-16. This year production of Kharif oilseed is also higher by 2.33 million tonnes than the average production of last five years.

Production of Sugarcane is estimated at 305.25 million tonnes which is lower by 46.92 million tonnes than the last years production of 352.16 million tonnes. Despite lower area coverage, higher productivity of Cotton has resulted in to higher production of 32.12 million bales (of 170 kg each) as compared to 30.15 million bales during 2015-16. Production of Jute & Mesta estimated at 10.41 million bales (of 180 kg each) is marginally lower than their production of 10.47 million bales during the last year.

The assessment of production of different crops is based on the feedback received from States and validated with information available from other sources.

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Ministry of Shipping Proposes New Model Concession Agreement for Port Sector
Sep 22,2016

The Ministry of Shipping has proposed a new Model Concession Agreement (MCA) for the Port Sector. The proposed MCA will replace the existing Model Concession Agreement which came into existence in January, 2008. The proposed MCA has taken into account the suggestions provided in various reports by Member Planning Commission (2010), Indian Ports Association (IPA-2015) and Kelkar Committee Report (2015).

The objectives of the revised Model Concession Agreement are following:

a) More equitable allocation of project risks.

b) Provisions to handle unforeseen circumstances.

c) Removing ambiguity in existing provisions.

d) To attract more private sector investment.

The salient changes proposed in the Revised Model Concession Agreements are:

1. Change in equity holding to provide exit route: The revised MCA has proposed that the Concessionaire shall hold 51 per cent equity until 3 years after Commercial Operation Date (COD) and 26 per cent thereafter for another 3 years. Hence, the private party would be free to exist after 6 years from COD. The Concessionaire may approach the Concessioning Authority to waive the equity holding requirement during the second 3 year term if performance parameters have been achieved during the first three year period.

2. Providing for refinancing provision in MCA: This amendment is aimed at facilitating availability of low cost long term funds to Concessionaire so as to improve the financial viability of the projects and is based on the Model Triartite Agreement approved by Department of Economic Affairs. Under this, the Concessionaire can issue Bonds on completion of one year of operation for refinancing of debt, this will in result in optimization of the finance cost of the projects.

3. Amendment in Definition of n++Change of Lawn++: As per the current MCA, change in law excludes

(i) Imposition of standards and condition arising out of TAMP guidelines, Environmental Law & Labor laws, and

(ii) Increase and imposition of taxes, duties, etc. for compensating the Concessionaire. As these can materially affect the viability of the project the proposed MCA states that the Concessionaire shall be compensated for all changes in law except imposition of n++New Direct Taxn++. This will help the Concessionaire to get compensation for all material changes in law.

4. Provision for mid-term review of concession: It is proposed that concessions may be reviewed by a Review Board (or any such competent authority) under applicable laws at the end of 15 years from COD to arrive at required mitigation measures. The triggers and nature and quantum of mitigation measures will be as per guidelines issued by the Government in this regard.

5. Approval of Discounts on Ceiling Rates for the Purpose of Recovery of Revenue share: Presently, revenue share is payable on Gross Revenue, calculated as per tariff ceilings even if Concessionaire has to allow discount to keep the charges competitive. With a view to have a balanced risk allocation, it is proposed that Concessionaire shall be entitled to approach Port to consider and approve discounts on ceiling traffic and revenue share shall be paid on the approved discounted tariff of the approved revenue share. Cargo storage charges will be excluded while computing Gross Revenue for the purpose of Revenue Sharing.

6. Provision for Commercial Operations before COD: It is proposed to permit operations before COD on project specific terms and conditions about level of operations and payment to the port; this will lead to better utilization of assets provided by the Port in many projects.

7. Improved Utilization of Project Assets and Higher Productivity: Presently, Concessionaire is required to operate the Project as least as per scope of work. In order to avoid any ambiguity, its now been specified that the Concessionaire is free to deploy higher capacity equipment/facilities for higher productivity and improved utilization of Project assets.

8. Grievance Redressal System: The proposed MCA will have a Grievance Redressal System where the Concessionaire shall create a Grievance Redressal Portal in their website with adequate monitoring system and timelines for redressal.

9. Applicable Tariff Guidelines: This provision is to give an option to Concessionaire to adopt changed/revised Tariff guidelines as and when issued by the Government. It is proposed that private party will have option to adopt new or revised guidelines within 90 days of publication in official gazette.

10. Provision for Additional Land, Utilities & Services: Presently the charges payable by the Concessionaire for additional land, utilities and services are equal to 200 per cent of the scale of rates, as per the proposed MCA provisions have been made for providing additional land, utilities and services during operation period and required for Project Operations on payment of 120 percent of the applicable scale of rates.

11. Replacement of n++Actual project Costn++ with n++Approved Project Costn++: Presently, if the Actual Project cost, certified by statutory auditors, is higher than the earlier estimates, Concessioning Authority may increase the project cost. However, the procedure for the same is not prescribed. It is proposed to replace the Actual Project Cost with Approved Project Cost and prescribe procedure for approval. The Concessionaire shall summit statement of actual capital cost incurred on the project as certified by statutory auditors within a period of 90 days of issue of completion certificate. If the cost is more that the Estimated Project Cost or cost incorporated in Financing Plan, it shall be referred to the Independent Engineer for his comments on (i) reasonability of expenditure and (ii) need of expenditure to provide project facilities and services as per Scope of Work. The Concessioning Authority will take a decision on approving the enhanced cost taking into account the Report of the Independent Engineer.

The proposed changes in the Model Concession Agreement have been uploaded on the official website ( of the Ministry of Shipping for seeking comments of the stakeholders.

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Indias fuel product consumption jumps 11.4% in August 2016
Sep 22,2016

Indias fuel product consumption or sales increased 11.4% to 15.80 million tonnes (mt) in August 2016 over a year ago. Diesel sales jumped 13.2% to 6.14 mt, while petrol sales galloped 24.9% to 2.20 mt. Sales of LPG advanced 19.2% to 1.84 mt and petcoke improved 9.5% to 1.68 mt. Consumption of fuel oil gained 14.0% to 0.61 mt, while that of ATF moved up 10.3% to 0.55 mt. The consumption of bitumen also gained 9.8% to 0.26 mt, lubricants 8.7% to 0.27 mt and light diesel oil (LDO) 31.7% to 0.04 mt. However, the consumption of others declined 6.9% to 0.56 mt, naphtha 3.7% to 1.15 mt, and kerosene -13.3% to 0.50 mt in August 2016.

The consumption or sales of fuel product increased 9.3% to 80.37 mt in April-August 2016 over April-August 2015. Sales of petcoke increased 31.0%, diesel 5.7%, petrol 13.9%, and LPG 10.3%. Consumption of fuel oil also moved up 18.3%, bitumen 15.5%, ATF 12.3%, lubricants 9.4% and LDO 16.8%, but declined for others 0.2%, naphtha 0.3% and kerosene 9.9% in April-August 2016.

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Indias natural gas production declines 5.7% in August 2016
Sep 22,2016

Indias natural gas production declined 5.7% to 2.67 billion cubic meters (bcm) in August 2016 over a year ago. Natural gas output of ONGC fell 0.6% to 1.85 bcm, while that of private and JV companies declined 20.8% to 0.58 bcm. Meanwhile, the natural gas production of Oil India rose 0.6% to 0.24 bcm in August 2016.

Natural gas output declined 4.2% to 13.12 bcm in April-August 2016 over April-August 2015.

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Indias crude oil refinery production rises 2.5% in August 2016
Sep 22,2016

Indias crude oil refinery output increased 2.5% to 19.75 mt in August 2016 over August 2015. The output of public sector refineries improved 4.2% to 10.21 mt, while the output of private refineries also rose 0.8% to 8.09 mt. The refinery output of public-private JV refiners moved up 1.0% to 1.45 mt in August 2016.

Among public refineries, the output of Chennai Petroleum Corporation jumped 87.8% to 0.92 mt, while the output of Bharat Petroleum Corporation moved up 6.1% to 2.06 mt, and Indian Oil Corporation 4.7% to 4.63 mt in August 2016 over August 2015. The output of Mangalore Refineries also inched up 2.4% to 1.26 mt, but that of Numaligarh Refineries declined 12.4% to 0.23 mt, and Hindustan Petroleum Corporation 23.7% to 1.12 mt in August 2016.

Among private refiners, the output of Reliance Petroleum increased 0.7% to 6.39 mt, while that of Essar Oil improved 1.5% to 1.70 mt in August 2016 over August 2015. Among JV refineries, the output of Bharat Oman declined 0.6% to 0.57 mt, while the output of HPCL Mittal rose 2.0% to 0.88 mt in August 2015.

The cumulative refinery output increased 7.3% to 99.17 mt in April-August 2016. The output of public refineries increased 10.3% to 52.95 mt, while that of private refineries rose 3.7% to 39.31 mt. The refinery output of JV refineries moved up 6.0% to 6.91 mt in April-August 2016.

Among public refineries, the output of Numaligarh Refineries improved 27.8% , Indian Oil Corporation 14.2% , Hindustan Petroleum Corporation 12.4% , Chennai Petroleum Corporation 12.3% , Bharat Petroleum Corporation 3.6% and Mangalore Refineries 0.5% .

The overall capacity utilization was lower at 103.4% in August 2016 compared with 107.7% in August 2015, while it was higher at 105.5% in April-August 2016 compared with 105.2% in April-August 2015.

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Indias crude oil production declines 3.9% in August 2016
Sep 22,2016

Indias crude oil production declined 3.9% to 3.07 million tonnes (mt) in August 2016 over August 2015. Crude oil output of ONGC fell 3.3% to 1.87 mt, while that of Oil India also declined 1.4% to 0.27 mt. Further, the crude oil production of private and joint venture (JV) companies dipped 5.8% to 0.93 mt. ONGCs offshore output declined 5.3% to 1.36 mt, while onshore production rose at 2.5% to 0.50 mt.

Crude oil output fell 3.1% to 15.15 mt in April-August period of the fiscal year ending August 2017 (April-August 2016), snapping marginal 0.5% rise recorded in the corresponding period of last year. Output of ONGC eased 1.7% to 9.23 mt, while that of Oil India declined 3.3% to 1.34 mt and private companies fell 5.9% to 4.58 mt in April-August 2016 over April-August 2015.

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Government announces enhanced support under Merchandise Exports from India Scheme (MEIS) of the Foreign Trade Policy
Sep 22,2016

In the backdrop of the continued challenging global environment being faced by Indian exporters, Department of Commerce has extended support to certain new products and enhanced the rate of incentives for certain other specified products under the Merchandise Exports from India Scheme (MEIS). This has been implemented through DGFT public Notice No 32 dated 22 September 2016.

The following are the major highlights of the support:-

Addition of new products -

2901 additional products falling under different product categories have been added. These include items in the following areas:

Many items of traditional medicines like Ashwagandha herbs and its extracts, other herbs, extracts of different items.

Certain marine products, sea feed items.

Onion dried, processed cereal products and other value added items of plastics, lather articles, suitcases etc

Industrial products under different categories, including engineering goods, fabrics, garments, chemicals, ceramics, glass products, leather goods, newspapers, periodicals, silk items, made ups, wool products, tubes, pipes etc.

Increase in MEIS rates -

Rates of 575 product items falling under 11 products categories have been increased. These product include products of iron and steel, handicrafts, moulded and extruded goods, rubber, ceramic, glass, auto tyres and tubes, industrial machinery engineering items, IC Engines, machine tools / parts, items of wood, paper, stationary, footwear, auto seats, steel furniture, prefabs, items under the category of butter, ghee and cheese, dried egg albumin and rubber products

With this the total number of items covered under the scheme has been increased from 5012 to 7103. The total support extended by Government of India under the scheme has been enhanced from the present Rs 22,000 crore to Rs 23,500 crore per annum.

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Tyre Sector Volumes to Grow Around 7% in FY17
Sep 22,2016

India Ratings and Research (Ind-Ra) expects the overall tyre volumes (in numbers) to grow around 7% in the FY17 (FY16 Ind-Ra estimates: around 4%) due to a steady demand from original equipment manufacturers (OEMs) and an improvement in replacement demand. However, revenue growth for sector companies might be lower than the overall growth in volume demand due to an increase in imports as well as pricing pressure.

Among the key segments, volumes in the truck & bus segment (T&B) are expected to grow around 4% yoy (FY16: around 1%) in FY17, driven by an improvement in replacement demand and strong growth in the T&B radial segment, while volumes in the passenger car radial segment are expected to grow around 10% yoy (FY16: around 8%) with growth in OEM auto volumes. Two-wheeler volumes are expected to grow around 6% yoy (FY16: around 4%) in FY17, driven by higher volume growth in the scooter segment (around 15%) along with an improvement in volumes in the motorcycle segment (around 3%). Ind-Ra expects volumes in the truck & bus radial segment to grow around 16% higher than the overall T&B segment. The growth in tonnage volume would be lower due to a higher contribution of low tonnage two-wheeler tyres (around 50%) to the overall volumes for the industry.

Rising imports trend could continue increasing the pressure on the volumes of domestic manufacturers in FY17. Import volumes in both passenger car radial and truck & bus radial segments grew 22% and 40% yoy, respectively, in 1QFY17. The T&B segment accounts for around 55% of the industry revenue and a continued increase in imports in this segment could lead to a revenue decline for domestic tyre companies. Domestic T&B production declined 2% yoy in FY16 to 16.8 million tyres, driven primarily by the decline in production in the truck & bus bias (TBB) segment. Ind-n++Ras analysis indicates that 20%n++30% of the revenue of the top players in the industry is contributed by the TBB segment. Increased radialisation due to lown++-cost imports could lead to these companies seeing a rapid volume and revenue decline in this segment. Lower capacity utilisation of the existing domestic TBB capacity could exacerbate the pricing pressures in the segment.

The revenue growth of major tyre manufacturers is likely to be in the range of 3%-6% (FY16: below negative 2.5% to positive 2.5%) in FY17, with higher volume growth negating the year-on-year decline in pricing. Companies could see a moderation in EBITDA margins, due to the recent increase in input costs as well as pricing pressures. EBITDA margins reached historical peak levels in FY16. The recent increase in rubber prices is likely to impact the profitability of tyre companies on a quarterly basis. But, the trend of increase in prices is unlikely to be sustained and prices will stabilise at the current levels due to the prevailing rubber demand-supply dynamics. Crude oil prices have also increased from the low levels seen in February 2016, but are unlikely to increase further. Thus, tyre companies will not face increased input pressure over the next 12 months. Marginal deterioration in the credit profile is likely for some companies undertaking capex.

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SBI index shows decline in growth in September 2016
Sep 22,2016

The yearly SBI Composite Index for September 2016 is indicating a downward momentum and is at 50.2 (Low Growth), compared to last months 52.7 (Moderate Growth), and above the benchmark level of 50. The Monthly Index declined to 50.8 (Low Growth) in September 2016 from 49.9 (Low Decline) in August 2016.

The credit off-take (YoY) is at 9.8% in 02 September 2016, in single digit.

The bad thing is that Debt Weighted Credit Ratio worsens in FY2016 (All Rating Agencies) - the ratio declined below 1 in FY2016 - from 1.24 to 0.79 in FY2016. Hopefully, there should be a medium term course correction.

The SBI Economic Research Department expect that the credit cycle will turn for the better in a gradual manner. The good thing is that a part of the slowdown in corporate credit growth in the current fiscal is because of deleveraging by corporates and subsequent repayments. Retail credit growth continues to be strong. Additionally, about 48% of the credit upgrades in H2FY2016 was due to better order book / healthy demand, improvement in profit margins and efficient management of working capital.

Overall, demand still remain a significant laggard in the system. With the pay commission arrears implemented from August 2016, bank deposits have shown a sizeable growth in September (over 20% of the incremental addition in current fiscal is attributable to such). This will lead to increased consumer demand ahead of festive season. The SBI Economic Research Department is penciling in a 50 bp rate cut by RBI MPC in current fiscal.

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