7th April 2015

Modi, Merkel to inaugurate Germany's Hanover Fair 2015
Prime Minister Narendra Modi and German Chancellor Angela Merkel will jointly inaugurate the Hannover Messe 2015 fair on April 12, where India is a partner country, said a commerce ministry statement here on March 23. "By adopting the theme of Make in India, the country is branding strongly in the forthcoming fair in Germany during April 2015," Commerce Minister Nirmala Sitharaman told reporters here on March 23. "Large scale participation is being made by India in Hannover Messe 2015, by branding the Make in India slogan of the government in a widespread manner in Germany and other neighbouring European countries," she added. The Hannover Fair, which attracts nearly 200,000 global leaders in business, technology, industrial scientists and policy makers, will be held April 13-17, the statement said. In a Make in India networking event last week in Frankfurt with the German corporate sector, the Indian consul general invited companies to visit and do business with India. Germany is the eighth largest foreign direct investor in India. German FDI in India during the period 1991-2014 was valued at $7.57 billion.

Three-nation tour focused on economy: PM
Prime Minister Narendra Modi said on March 28 his visit to France, Germany and Canada is centred around supporting India's economic agenda and creating jobs. "France, Germany and Canada visit is centred around supporting India's economic agenda and creating jobs for our youth," Modi said in a tweet. "Will discuss strengthening India-France economic cooperation and visit some high-tech industrial units outside Paris. In Germany, Chancellor Merkel and I will jointly inaugurate Hannover Messe where India is a partner country," the prime minister said. "Looking forward to enhancing ties with Canada and interacting with leaders, captains of industry and diaspora in Canada," Modi said in another tweet. Modi will first travel to France on April 9 and from there he will leave for Germany on April 12. On the third and final leg of the tour, he will visit Canada from April 14-16.

India launches fourth navigation satellite
India successfully put into orbit its fourth navigation satellite with its own rocket on March 28 evening in copybook style. Exactly at 5.19 p.m., the rocket - Polar Satellite Launch Vehicle - (PSLV-C27) standing about 44 metres tall and weighing around 320 tonnes, roared into the bright blue clear evening sky trailing an orange plume. The expendable rocket had a single but important piece of luggage: the 1,425 kg IRNSS-1D. The rocket blasted off from the second launch pad at the Satish Dhawan Space Centre here, around 80 km from Chennai. For onlookers the rocket resembled an inverted flare/torch with a long handle as it gathered speed amidst the cheers of the Indian Space Research Organisation (ISRO) officials and the media team assembled at the rocket port here. At the rocket mission control room, Indian space scientists at ISRO were glued to their computer screens watching the rocket escaping the earth's gravitational pull. The PSLV-C27 ejected the IRNSS-1D around 20 minutes into the flight. Immediately, scientists at the mission control centre were visibly relieved and started clapping happily. Soon after ejection into orbit, the satellite's solar panels were deployed. The satellite's control was taken over by the Mission Control Facility (MCF) at Hassan in Karnataka. The MCF will manage the satellite's orbit raising operations by firing the on-board motors till it is placed in the circular geosynchronous orbit. The system is similar to the global positioning system (GPS) of the US (24 satellites), Glonass of Russia (24 satellites) and Galileo of Europe (27 satellites), China's Beidou (35 satellites). While GPS and Glonass are fully functional global systems, the Chinese and the Japanese systems offer regional coverage and Europe's Galileo is yet to be operational. The IRNSS will provide two types of services - standard positioning service and restricted service. The former is provided to all users and the later is an encrypted service for authorised users. With this success, India moved closer towards joining a select group of nations with its own satellite navigation system. President Pranab Mukherjee and Prime Minister Narendra Modi congratulated Indian scientists on the successful launch of the country's fourth navigation satellite. In his message to ISRO Chairman A.S. Kiran Kumar, Mukherjee said: "My heartiest congratulations to you and your entire team at the Indian Space Research Organisation for the successful launch of PSLV-C27, carrying the IRNSS-1D." "I am very happy to know that this is the fourth in the series of seven satellites of the Indian Regional Navigation Satellite System. I understand the IRNSS-1D will provide navigation, tracking and mapping services which will take us closer to setting up our own navigation system." The nation is proud of this achievement which has demonstrated, yet again, India's increasing space capabilities, he said. The prime minister also congratulated the scientists. "Launch of satellite IRNSS-1D is yet another manifestation of the exemplary efforts and utmost brilliance of our scientists. Congrats to them," Modi said.

Govt to scout for overseas asset acquisition to reduce energy bills
Government is trying to create a conducive environment, both in terms of taxation and ease of doing business, as investments won’t come just by opening doors, said Finance Minister Arun Jaitley. The new government has endeavoured to restore credibility of the Indian economy and the decision making process in order to boost investments, domestic as well as foreign, he said addressing investors at the ‘Urja Sangam’ conference. The government, he said, is focusing on “quick and effective decision making”, as the country needs huge amount of investments. “Investment has to be both domestic and international and for that we have to in the first instance open our doors for that investments. But merely by opening doors, investments won’t come,” Jaitley said. The Finance Minister, who presented his first full year budget last month, said investors expect a conducive environment and a reasonable return. “…and for that conducive environment, what we popularly call ease of doing business slowly but surely we have been taking steps in that direction,” he said. The Finance Minister stressed on rationalisation of subsidy regime. “At some point of time, India will have to take a decision as to distinguish between those who can afford to pay and those who cannot afford to pay. And those who cannot afford to pay must get benefit of state support,” he said while referring to subsidy on cooking gas. Jaitley said the government will have to make efforts to rapidly reduce dependence on energy imports as suggested by Prime Minister Narendra Modi. “…so our own exploration programme, within the resource available, our own efforts for acquisition of assets internationally are all areas we will have to look at…,” he said. Jaitley further said that the government is undertaking some of the most significant taxation reforms. He told the gathering that in the second part of the Budget Session, starting April 20, the government intends to go ahead with the Constitutional Amendment Bill on the GST, an ambitious indirect tax reform. “I already said with regards to taxation, direct or indirect, the regime of enacting retrospectively or taking people by surprise is now over. Our effort is to make direct taxation system not only non-adversarial but also globally compatible,” he added. Talking about the slump in global oil prices, Jaitley said both the government as well as the domestic oil companies have taken “very responsible positions”. “Huge benefits have been transferred to consumers. This in turn helped us in containing inflation, which in turn has reversed the need of the increasing interest rates, at least we had two reductions (by the RBI…,” Jaitley added. As part of making taxation system globally compatible, Jaitley said he has announced a roadmap for next four years to bring down the corporate tax from 30 per cent to 25 per cent in a phased manner and do away with exemptions. The new government has taken several steps to attract investors, which include raising FDI ceiling in defence and insurance sectors, in addition to opening the railway infrastructure segment, to foreign investors. Earlier in the day, while referring to India’s 77 per cent dependence on energy imports, Modi said the effort should be to reduce it by 10 per cent by 2022, when India will celebrate 75 years of Independence.

DMRC plans to export rakes for Queensland and Sydney Metros
The sustained indigenisation efforts of Delhi Metro Rail Corporation (DMRC) have helped them to achieve the milestone of manufacturing 90 per cent of Delhi Metro coaches in the country and it is now planning to export rakes to Queensland and Sydney Metros in Australia. "Delhi Metro's initiatives to indigenise manufacturing is in consonance with the 'Make in India' initiative of the central government and the establishment of three Metro coach manufacturing units in India to cater to the requirements of Metro market is a very positive development," said Mr Mangu Singh, Managing Director, DMRC. The contract conditions mandating indigenisation have resulted in major coach manufacturing companies setting up production facilities in India. The contract mandates a cap on upper limit of 25 per cent for production abroad while the balance is to be necessarily manufactured in India either through tie-ups or a wholly-owned subsidiary. Manufacturing units set up to supply coaches to DMRC are now engaged in manufacturing of rakes that will be exported to Australia for Queensland and Sydney Metros. Three Metro coach manufacturing units have already been established in Savli (Gujarat), Bengaluru (Karnataka) and  Sricity (Tamil Nadu). Besides manufacturing coaches, eighteen major sub systems of these coaches have also been indigenised. This has led to establishment of ancillary industry and skilled man power development in house. Window glasses, battery boxes, brake blocks, bogie frames, vacuum circuit breakers, propulsion among others are also being manufactured in India.

India to lead Asia’s economic growth: Asian Development Bank
The Asian Development Outlook 2015 projected Emerging Asian economies to clock average 6.3 per cent growth in both 2015-16 and 2016-17 fiscal, as in the current financial year. The growth would be supported by a strengthening recovery in the major industrial economies and soft global commodity prices. “The expected pick-up in India and in most members of the Association of Southeast Asian Nations (ASEAN) could help balance gradual deceleration in the region’s largest economy, China,” ADB said. The ADB has forecast that India’s growth will improve from 7.4 per cent in current fiscal to 7.8 per cent in 2015-16 and further to 8.2 per cent in 2016-17. As regards China, the ADB projected the economic growth to decelerate from 7.4 per cent in current fiscal to 7.2 per cent next fiscal and 7 per cent in 2016-17 as the government proceeds with its structural reform agenda and fixed asset investment slows. ADB said the growth in Asia would be aided by soft commodity prices and recovery in major industrial economies. It said India is poised to overtake China in terms of growth as government removes structural bottlenecks and lifts investor confidence. Besides, expected easing of monetary policy and pick up in capital expenditure would also boost growth. Developing Asia is making a strong contribution to global economic growth, ADB Chief Economist Shang-Jin Wei said. However, ADB warned of several risks to Asia’s growth outlook. “Risks to the outlook include possible missteps in the PRC as it adjusts to its new normal, less decisive action on reforms in India than anticipated, potential spill over effects on the global economy of the Greek debt crisis and the deepening recession in the Russian Federation,” it said. The impending rise in interest rates in the US may reverse capital flows to the region, requiring monetary responses to maintain stability, ADB said. “Falling commodity prices are creating space for policy makers across the region to cut costly fuel subsidies or initiate other structural reforms. This is a key opportunity to build frameworks that will support more inclusive and sustainable growth in the longer term,” he added.

Resurgent India driving Asian growth story: US official
With India-US relations stronger than ever since the election of Prime Minister Narendra Modi, the two countries have become drivers of growth across the region and around the world, according to a senior US official "If there is one overarching positive trend that is driving the energy and optimism across South Asia, it is the resurgence of India," Nisha Desai Biswal, Assistant Secretary of State for South and Central Asian Affairs, told a Congressional panel on March 24. This was "evidenced by their vibrant election last year, which was the largest such democratic exercise in history, she said testifying on "The US Rebalance in South Asia: Foreign Aid and Development Priorities." Asserting that less than one year after Modi's election as Prime Minister US "relations with India are stronger than ever," Biswal said President Barack Obama's historic Republic Day visit was critical beyond its symbolism. She listed "important outcomes in four key areas - advancing our strategic partnership, deepening our security cooperation, revitalizing the economic partnership, and advancing critical clean energy and environmental goals. "As we have energised bilateral relations with the new Indian government, there can be no doubt about the strength of our joint strategic vision," Biswal said. "Our two countries are indispensable partners in promoting peace, prosperity, and stability across the Indo-Pacific region," she said. "We are drivers of growth across the region and around the world. And we are net providers of security, together ensuring freedom of navigation and safeguarding the maritime domain," Biswal said. The US, she said, supported "India's economic rise, including its domestic economic transformation" because for "India to be a strong partner in the region and around the world, it must be strong at home." So Obama and Modi had agreed to "elevate our commercial and economic partnership as part of the Strategic and Commercial Dialogue to advance our shared prosperity." Biswal said the US was optimistic that the many challenges to creating the investment climate and innovation economy that will power India's growth in the 21st century can be overcome. Modi and Obama, she noted had agreed that the two "countries will continue to work together on our ambitious energy and environment goals by renewing and expanding a five-year MOU on Energy Security, Clean Energy, and Climate Change." They also committed to work together towards a successful climate agreement in Paris and pledged to work toward the goal of phasing down hydrofluorocarbons under the Montreal Protocol, Biswal said. US assistance programmes in India are a model for making "a little go a long way," she said noting "by leveraging the private sector and Indian resources, we are getting sizable outcomes out of small inputs." "Our programmes connect to India's public and private sectors to jointly achieve development gains in a cost-effective manner in India and in third countries, where India's achievements stand to jump-start development results," Biswal said. "This model of assistance - which positions India as a development lab with global reach - combines US and Indian innovation and best practices, which can be road-tested and refined in India and then exported to developing countries in Africa and Asia," she said. In keeping with both US and Indian priorities, the USAID programme focuses on four key areas: health, energy and environment, education, and food security, Biswal said. "With nearly 2 billion people, a growing middle class, an entrepreneurial culture, and a resurgent Indian economy, South Asia will play an increasingly important role in the Asian growth story," she said.

France promises $5 billion for insurance sector in India
With Parliament recently giving its nod for raising the cap on foreign direct investment in the insurance sector from 26% to 49%, India can look forward to $5 billion in investment from France in the sector, French ambassador to India Francois Richier said on March 23. According to Richier, in 2014, French investment flows into India were comparable with those into China. Richier was speaking at an event organised by the French embassy and the Federation of Indian Chambers of Commerce and Industry (FICCI) on the number of French companies in India. “When you compare the share of French FDI (foreign direct investment), India receives 6% whereas China receives 7% as of 2014. This shows that while China has GDP four times greater than India, the French investment is roughly the same. There is far more attraction to India than China due to the large market, wonderful workforce and cultural connection,” the French ambassador said. On Prime Minister Narendra Modi’s visit to France next month, Richier said he was sure that Modi would “carry a message so that it encourages companies to enjoy the ease of doing business in India”. In his comments, Amitabh Kant, secretary, Department of Industrial Policy and Promotion noted that there was a “new vibrancy and dynamism in India” with the Narendra Modi-led government “determined to ease the process of doing business in India”. In the past six decades, India had become a “very complex and difficult place to do business” with the addition of rules, regulations and paperwork. “Over the last six months, we have removed 40%-45% of them,” Kant said, citing the example of filling of forms for imports and exports for which 11 forms were required. “Now, we have brought it down to three. For setting up business, we have shortened procedures and cut down on the number of days,” he said. To further ease the experience of doing business in India, Kant said the government had created an e-business platform where 14 departments have been brought together and all approvals can be taken at one place. “Our objective is that over a period of time, we can link up all the state and central governments so that India becomes an easy place to do business.” Modi’s visit to France next month offers “a unique opportunity to promote market India create a huge awareness about India,” he said. Modi will be in France 9-12 April and in Germany 12-14 April and then head onwards to Canada. Referring to the Make in India campaign launched by Modi in September to encourage foreign manufacturers to invest in the country, Kant said this was aimed at integrating India into the globalized economy and making it part of the global supply chain. “The objective is to open up our economy to the maximum extent. In the last six to seven months, we have opened up railways, construction, medical devices, insurance, just about everything. Other than multi-brand retail, India is the most open economy in the world,” he said. India was also working to improve infrastructure, he said, adding the intention was to ramp up capacities in size and scale. “As India advances, one of the key lessons to learn from France is the process of urbanisation,” he said, adding 700 million people would be living in cities in the next five decades. Addressing the media separately in New Delhi, trade minister Nirmala Sitharaman said India would be showcasing its strengths at the 13-17 April Hannover Messe fair in Germany. “Prime Minister Narendra Modi would be reaching out to the global business and technology leaders on the new initiatives of the Indian government for doing business in India,” a statement from the commerce ministry said.

India, Taiwan to jointly chip in for Make in India
India Electronics and Semiconductor Association (IESA), an industry lobby, on March 24 said it signed a memorandum of understanding (MoU) with Taiwan Electrical and Electronic Manufacturers’ Association (Teema) to promote cooperation and investment between Indian and Taiwanese companies in the electronic system design & manufacturing (ESDM) industry. The partnership is targeted at “establishing strong India-Taiwan relationship” and “creating a differentiating proposition for India in the field of electronics and ICT (information and communication technology).” Under the pact, IESA said it will encourage Taiwan-based electronics companies to bring more investments and commitments to the ICT ecosystem in the country and also partner with Indian companies in technology and knowledge transfer. In September, IESA signed an MoU with Taiwan Computer Association (TCA) to promote investment in the sector as well as skill development. “India is positioned among priority destinations for electronics innovation, development and manufacturing, primarily due to its maturity of market, availability of talent and the expertise India can bring to the ESDM supply chain with components like designing, embedded system, very-large-scale integration (VLSI) etc.,” said M.N. Vidyashankar, president, IESA. “This partnership will speed up industry government relations promoting faster economic development.”

Honda to invest Rs965 cr to expand  capacity for cars, bikes
Japanese auto manufacturer Honda Motor Co. will invest Rs.965 crore in its two-wheeler and car businesses in India as it looks to increase production capacity. The plan is to increase manufacturing capacity by 600,000 units for two-wheelers and by 60,000 units for cars by 2016, Honda’s local units said in two separate statements. While Honda Motorcycles & Scooters India (HMSI) will invest Rs.585 crore in its third two-wheeler production plant in the Narsapura area near Bengaluru, Honda Cars India Ltd (HCIL) will invest Rs.380 crore in its Tapukara plant in Rajasthan. The expansion of the second plant will increase HCIL’s overall annual production capacity from the current 240,000 units to 300,000 units including the 120,000-unit capacity of its first plant in Greater Noida on the outskirts of New Delhi. HMSI’s annual production capacity will reach 6.4 million units, combined with that of its fourth plant, which is scheduled to become operational in the first half of 2016 in Gujarat. These investments will also require an additional workforce of 2,500 people, of which 1,900 will be employed by the two-wheeler maker. The fresh investments are intended to strengthen the company’s operations in India in deference to Prime Minister Narendra Modi’s Make in India campaign, according to Keita Muramatsu, president & chief executive, HMSI. “This investment will provide new opportunities for expansion of brand Honda in the largest two-wheeler market of the world,” he said. “Honda is strengthening its Make in India resolve through steady and strategic investments with a long term objective of creating 39% additional capacity within 3.5 years.” Modi launched the Make In India campaign in September to attract foreign companies to invest and manufacture in India and export to other countries after leading the National Democratic Alliance to victory in the April-May general election. India has set for itself an ambitious target of increasing the contribution of manufacturing output to 25% of gross domestic product (GDP) by 2025, from 16% now. In 2014, industry-wide motorcycle sales in India increased to 16 million units, a year-on-year increase of 10%. In the same year, Honda motorcycle sales increased to 4.2 million units, a year-on-year increase of approximately 30%. In 2014, sales of passenger vehicles in India increased to 2.55 million units, a year-on-year increase of some 3%. In the last 10 years, the market has grown around 2.5 times, making India the world’s sixth largest automobile market when sales of commercial vehicles are included. Honda Cars said the new investments are driven by strong sales momentum for its cars. “India has emerged as a very important market for Honda and holds great potential for future growth as well,” it said in its statement. HCIL is the fastest growing automobile company in India with a 44% increase in its domestic sales during April 2014- Feb 2015 with 166,366 units from 115,913 units in the year-ago period.

Ford opens Sanand plant to triple exports from India.
Detroit-headquartered Ford Motor Company’s Indian arm on March 26 inaugurated its second factory in this country at Sanand, 30 kilometres from Ahmedabad. The arm showcased its upcoming car from the site, a compact sedan, Ford Figo Aspire. The company said it had planned to establish India as an export hub. Also, it wanted to triple its exports from here over five years. Anurag Mehrotra, executive director for marketing, sales, and service, Ford India, said half of the combined production from their Sanand and Chennai units would be for export. The company, however, did not wish to put a figure to the target. Nigel Harris, the president of Ford India, said the Figo Aspire would be launched in the second half of the year. The initial production would be for the domestic market and the company would eventually focus on exporting the model. With 240,000 cars and 270,000 engines a year at the $1-billion (Rs 6,200 crore) factory here, Ford’s capacity in the country would rise to 610,000 engines and 440,000 vehicles annually. Mehrotra said it planned to launch three models in the Indian market over 12 to 18 months. Sanand, the company said, was one of its most highly automated plants across the globe. Mehrotra said the body shop was 95 per cent automated and the paint shop almost fully. "There are 125 stations along the production line that have been set up for quality checks," he said. “There were more than 437 robots at the facility.” Gujarat chief minister Anandiben Patel said the factory would create direct and indirect employment for more than 4,000, and the company's vendor park nearby would give employment to more than 6,000. Calling the 125 km Sanand-Hansalpur-Vithalapur belt, with the connected nodes of Kadi and Halol, a major automobile hub in the making for the Asia-Pacific region, she said an investment of about Rs 15,000 crore in all had already been committed by various companies, to create annual capacity of 1.25 million four-wheel and two mn two-wheeled ones. Another Rs 10,000-crore investment is awaited from Maruti Suzuki India and Honda Cars India, taking the installed capacity to 2.2 mn vehicles annually in the next six to eight years. A similar amount of investment has been readied by vendors of these companies. Around 100 of these have either set up facilities or are working on doing so. As for Gujarat, the CM said the government planned to take the share of automotive industries in its overall engineering output to 10 per cent by 2020, from a current 3.7 per cent.

India ready to resume talks on free trade pact with EU: Sitharaman
India was "ready to talk" with the European Union (EU) on the proposed bilateral free trade  agreement, Commerce Minister Nirmala Sitharaman said on March 23. "I have assured the EU ambassador and ambassadors of individual EU countries that we are ready to talk with the European community. They have been our traditional trading partners," Sitharaman told  reporters here. Negotiations on the FTA, officially dubbed the Broad-based Trade and Investment Agreement (BTIA) between India and the EU, were launched in June 2007 but have been facing hurdles with both sides having differences on crucial issues. No negotiation was held after both sides failed to bridge disagreements in May 2013 on crucial issues including data security status for the IT sector. Sitharaman said the agreement had been delayed for a very long time and several rounds of negotiations were held, but did not reach any logical conclusion. "This was stated by great concern and worry by the European community ambassador. We did ask the ambassador if their priority is till on an FTA with India, considering there is talk about a trans-Atlantic partnership going on and the ambassador said yes. The EU is looking forward to having an FTA with India and talks would be encouraging," she said. "We readily accepted and therefore we certainly and definitely want to engage with the EU on that," she added. Both sides are also yet to resolve issues related to tariffs and movement of professionals. Launched in June 2007, the negotiations for the proposed Broad-based Trade and Investment Agreement (BTIA) between India and the European bloc has witnessed many hurdles with both sides having major differences on crucial issues. The EU-India bilateral trade stood at $101.5 billion in 2013-14.

Net bids in India's spectrum auction at Rs.109,874 crore
The e-auction of radio frequency spectrum, or airwaves, for telecom operators concluded on March 25 after 19 days and 115 rounds of rigorous bidding with officials placing the provisional estimate of commitments at Rs.109,874 crore -- the highest ever. "At the end of 115th round, about 89 percent of the spectrum has been provisionally allocated to the bidders. The provisional amount committed by bidders at the end of 115th round is Rs.109,874 crore," an official statement said. This amount can be considered as a windfall for the government as it has surpassed the previous high of Rs.106,200 crore that it had received in the 2010 auction, which was spread over 34 days with 183 rounds of bidding. Officials said the names of the winners would not be divulged as yet since the Supreme Court, while allowing the auction to proceed, had directed that its consent be taken before awarding spectrum, due to litigations filed by interested parties. The court is to take a call on that Thursday. The eight companies that participated in the auction were: Reliance Communications, Reliance Jio, Bharti Airtel, Vodafone India, Tata Teleservices, Uninor, Idea Cellular and Aircel. The winners will have to pay around a third of the winning bid price within 10 days and the rest by 2027. On offer were blocks for 69 service areas at a total reserve price of Rs.80,277 crore, and the provisional allocation was announced for 63 of them at a winning price of Rs.109,874.91 crore. In 50 service areas, the winning bids went at a premium. A look at official data further, however, showed that there was short bidding for every block on offer. The maximum bids of 85 were for the Tamil Nadu circle, 10 short of the 95 on offer, in the 1,800 MHz band with a winning amount of Rs.45 crore per block. The second highest bids of 75 were received for Punjab circle with a winning amount of Rs.72.15 crore per block in the 900 MHz band. This circle also saw three less bids. The central government has budgeted for Rs.43,161.72 crore from e-auctions of spectrum for the current fiscal. The reserve price for the entire spectrum in the four bands on offer, across India, was around Rs.80,000 crore. The commitment for telecom spectrum comes over and above the Rs.200,000 crore that India Inc has already bid under two phases of auctions for award of coal blocks. But the proceeds from the auction of coal blocks will go to the respective state governments over 30 years. "I am glad the presumptions some people had, that spectrum is worth zero, have been belied," said Finance Minister Arun Jaitley, referring to the criticism India's official auditor faced when a notional loss of Rs.176,000 crore was assigned for handing over the airwaves without auctions. But his predecessor Kapil Sibal of the Congress said the auctions were flawed. "The telecom sector is hugely in debt to the extent of Rs.340,000 crore. Now, in paying for the high spectrum prices, there'll be no money for investment in infrastructure," Sibal told IANS just ahead of the conclusion of the auction. During the latest auctions, the total spectrum put up for bidding was 103.75 MHz in 800 MHz band, 177.8 MHz in 900 MHz band and 99.2 MHz in 1,800 MHz band for second generation (2G) telephony. Another 5 MHz was in the 2,100 MHz band for 3G services. A reserve price of Rs.3,423 crore per MHz was fixed for 800 MHz frequency, Rs.3,399 crore for 900 MHz band and Rs.1,425 crore for the 1,800 MHz band. The government also fixed a reserve price of Rs.3,511 crore per MHz for the frequency for 3G spectrum. Analysts were worried over the impact of the high bid price on the industry and customers. "The whole auction was designed by the government to extract maximum revenues from the operators. As a result, the industry is going to face financial needs," Rajan S. Mathews, director general of the representative body, Cellular Operators' Association of India, told IANS. Pointing to a financial indicator for the industry, analysts quoted GSMA's research body and said while the bidding in India was at global levels, the average revenue per user was already low for Indian operators at $2.55, against $17.65 for Germany, $29.30 for the Netherlands and $28.52 for Britain. "The spectrum auction outgo will impact on the rollout and quality of telecom network. In this competitive environment, operators will find it difficult to raise data or voice tariffs in the immediate term," said Arpita P. Agarwal, telecom leader for PriceWaterhouseCoopers.

PGCIL to develop 20K MW green corridor
State-owned Power Grid Corp (PGCIL) has been nominated to develop green transmission corridors for 20,000 MW of upcoming solar and wind power projects. While PGCIL was earlier selected on a nomination basis for the execution of the Bhuj-Banasthali-Chittor-Ajmer 765 kV green corridor to harness solar energy in Gujarat, officials said that for the next leg of this corridor, PGCIL — a utility with a near monopolistic presence in the transmission sector and having a 35 per cent institutional shareholding — has been asked to extend this corridor from Ajmer (Rajasthan) to Suratgarh and Moga (Punjab). For this leg of the project, PGCIL is learnt to be negotiating a soft loan through the Manila-based Asian Development Bank. Under the Tariff Policy, transmission projects are required to be awarded through a competitive bidding process. The only exceptions are those lines that need to be built within a compressed time schedule or under an exigency, where the Central Transmission Utility (POSOCO) can offer these projects on a nomination basis. The rationale for awarding these contracts to PGCIL on a nomination basis, thereby bypassing the competitive bidding route, is that the gestation period of transmission projects is much longer than building solar plants. Recently, PGCIL had won three projects through competitive bidding for the Vindhyachal, Gadwara and Feroze Gandhi Thermal Power stations, which will cost more than Rs 10,000 crore. PGCIL was the lowest bidder in all the three cases, with bids that were significantly lower than the next private sector bidder. The other companies that won five of the other six projects include Reliance Power Transmission, Essel Infra techno Electric, Patel-Simplex joint venture and Sterlite Technologies. Although the power transmission sector was opened to the private sector in 2010, PGCIL continues to command 99 per cent market share and garners 87 per cent of the total revenue realised from the use of inter-state lines, including state lines used for the purpose. In contrast, the power generation sector has private producers contributing well over one-third of the capacity after the Electricity Act, 2003, opened up the sector to private participation.

Defence buys worth Rs 8,341 cr cleared
With Prime Minister Narendra Modi heading to France, Germany and Canada next month, the Defence Acquisition Council (DAC) chaired by defence minister Manohar Parrikar cleared projects close to Rs 8,341 crore on March 28. The DAC gave its approval for buying two Airbus A330 planes for R5,113 crore for the Indian Air Force, the radar for which will come from the Defence Research and Development Organisation (DRDO). In fact, the DRDO has been the key player behind the IAF’s smaller Airborne Early Warning and Control System (AEWACS), which is based on the Embraer business jet from Brazil with AWACS systems (an Israeli airborne early warning and control (AEW&C) radar system developed by Israel Aerospace Industries and Elta Electronics Industries of Israel). European consortium Airbus Defence & Space had emerged as the sole bidder for a global tender for DRDO’s AWACS India programme. The tender — for six airborne early warning and control (AEW&C) system aircraft — was issued in March 2014. Interestingly, sources have indicated that the European player was the only company to have responded to a request for proposals linked to the project. As per officials, the commercial bids have yet to be opened for this programme, which is presently for two aircraft, of which four more could be bought, with an option of going up to 10. Now, Airbus would have to integrate the mission systems on the aircraft and gain certification that it is safe to fly with the radome. Company officials had indicated to FE that there have been regular discussions between the DRDO and Airbus about the technicalities involved in this programme, which is actually ‘semi-make’ in India. Though the defence ministry has given its approval for two of these aircraft from Airbus, once the contract is inked for the A330 as a platform for the Indian AWACS effort, it will be the first instance of the type being used in the AEW&C role. Airbus Defence & Space has also been involved in jointly reviewing New Delhi’s indigenously developed AEW&C system with India’s Centre for Airborne Systems, with the first Embraer EMB-145-based example likely to secure initial operational clearance later this year. Approval was also given for buying 22 Harpoon missiles for for HDW submarines for R913 crore. The government had sent a letter of request to the US administration for buying 22 Harpoon missiles for the Indian Navy’s Shishumar-class of submarines. The Indian Navy has already ordered 26 Harpoon missiles for eight Indian Navy P-8I Long Range Maritime Reconnaissance aircraft for an estimated $200 million and 24 Harpoon missiles for the Indian Air Force Jaguar aircraft in an order worth $170 million. While India’s Hindustan Aeronautics is to integrate the missiles on to the Jaguar, Boeing will integrate them on to the P-8I aircraft itself. Approval also was given for 1,512 mine ploughs for T90 tanks worth R710 crore and 30 weapon-locating radars from defence public sector undertaking Bharat Electronics for R1,605 crore.

India’s economic momentum could unlock corporate growth: Standard & Poor’s
India’s reform drive and economic momentum could give plenty of growth opportunities to India’s top corporates, according to three articles that Standard & Poor’s Ratings Services published as part of a special report, titled “India Credit Spotlight.” But many corporates are waiting for the government to put policy into action before investing further. “The key to corporate growth will be whether the government can deliver on its reform promises. If it does, we believe the top players will be ready to capitalise,” said Standard & Poor’s credit analyst Mehul Sukkawala. “In the meantime, we believe the Indian corporate sector will maintain its conservative stance toward growth rather than throw caution to the wind.” In the article titled “Myth Busted: India’s Top Corporates Are Hardly Regional Weaklings,” Standard & Poor’s analysed the operating, cash flow, and leverage data of India’s top 100 corporates, whose members are based mostly on market capitalisation. The article suggests that on these parameters, the Indian corporate sector is by no means a laggard to its Chinese and ASEAN neighbours. “The issues identified with Indian corporates–overindebted and underperforming companies–are concentrated in just a handful of Indian sectors, albeit critical ones: utilities and infrastructure, and metals and mining,” said Mr. Sukkawala. “Fixing the well-known problems within these sectors will predominantly require government decision-making and execution of regulations; the companies can’t do it themselves.” Overall, we believe the view of India as a global bright spot for investing appears fully justified from a credit risk perspective. However, in the article titled “India’s Private Sector Companies Adopt A Wait-And-See Approach To Capital Spending,” Standard & Poor’s forecasts that capital spending will take 12 more months to start recovering. “Companies are likely to consider new projects only after they can sense the operating environment in India is improving at the ground level. They would also need to be confident that current investments are likely to generate good cash flows before committing fresh investments. This is positive from a credit assessment perspective over the next 12 months, especially for companies with weak financial ratios and liquidity,” said Mr. Sukkawala. The new Indian government has promised to tackle some of India’s longest-festering problems that have kept the country’s enormous economic potential in check. The country’s favorable economic conditions and a strong central government give it the flexibility to pursue reforms. Initiatives include auctions of energy resources, such as coal, simplified tax regimes, and accelerated approval procedures to speed up the ease of doing business. In the article titled “India’s Reform Push Is An Encouraging Start For Corporates,” Standard & Poor’s suggests the government will need to turn its plans into actions, coordinate better with states, and remove bottlenecks across sectors to implement reforms. The government may have to dilute some of its reforms because of differing views of opposition parties and the hesitancy of some of its allies. “Overall, we are optimistic that the impact of government reforms will be positive in the next few years. The cumulative effect is likely to result in an improved economic and business environment for India’s corporates,” said Standard & Poor’s credit analyst Abhishek Dangra. Under Standard & Poor’s policies, only a Rating Committee can determine a Credit Rating Action (including a Credit Rating change, affirmation or withdrawal, Rating Outlook change, or CreditWatch action). This commentary and its subject matter have not been the subject of Rating Committee action and should not be interpreted as a change to, or affirmation of, a Credit Rating or Rating Outlook.

India's forex reserves up $4.26 bn
India's foreign exchange reserves increased by $4.26 billion to $339.99 billion for the week ended March 20, Reserve Bank of India (RBI) data showed. According to analysts, the Indian reserves are being build-up by the Reserve Bank of India (RBI) to absorb any future global financial shock that was witnessed in June 2013. "The RBI is building up the reserves to counter any future financial shocks like the one which was witnessed at the time of the tapering announcements were made. Apart from that the reserves will also act as a support to the Indian rupee," Anindya Banerjee, senior manager, currency derivatives, Kotak Securities told IANS. The RBI is cautious about the US Fed's stand that the rate hike might take place in the later part of the year. With higher interest rates in the US, the foreign portfolio investors (FPIs) are expected to be led away from the emerging markets such as India. The US Fed dropped an assurance to be "patient" in raising interest rates and signalled the hike could come by mid to late this year. "Just because we removed the word patient from our statement doesn't mean we will be impatient," Janet Yellen, US Federal Reserve Board chairman said at a press conference after a globally-awaited meeting of the policy committee on March 18. For the previous week ended March 13, the reserves had decreased by $2.06 billion to $335.72 billion. For the week ended March 6, the reserves had fallen by $286.3 million to $337.79 billion. The fell in reserves for the previous week (March 13) was attributed to rally in the US dollar and that major non-dollar currencies were trading at their weekly lows. The Indian reserves hold nearly 20-25 percent of the non-dollar currencies. According to the RBI's weekly statistical supplement, foreign currency assets, the biggest component of the forex reserves grew by $4.53 billion at $314.88 billion in the week under review. The foreign currency assets had declined by $1.97 billion at $310.34 billion in the week ended March 13. under review. However, for the week ended March 6, the foreign currency assets had risen by $122.4 million at $312.32 billion. The RBI said the foreign currency assets, expressed in US dollar terms, include the effect of appreciation or depreciation of non-US currencies such as the pound sterling, euro and yen held in reserve. India's reserve position with the International Monetary Fund (IMF) in the week ended March 20 decreased by $295.8 million and stood at $1.28 billion. The value of special drawing rights (SDRs) was higher by $18.2 million in the week under review at $3.97 billion. Gold reserves were static at $19.83 billion. The gold reserves had plunged by $346.2 million in the week ended March.

Cabinet approves Rs.4,500 crore National Supercomputing Mission
The Cabinet Committee on Economic Affairs on March 25 approved the launch of the visionary Rs.4,500 crore National Supercomputing Mission (NSM) aimed to steer India into the league of world class computing power nations. The centre said the mission will be implemented and steered jointly by the Department of Science and Technology (DST) and Department of Electronics and Information Technology (Deity) over a period of seven years. "These supercomputers will be networked on the National Supercomputing grid over the National Knowledge Network (NKN)... Academic and R&D institutions as well as key user departments and ministries would participate by using these facilities and develop applications of national relevance," an official statement said after the cabinet meet. The NKN is connects academic institutions and R&D labs over a high speed network. As per the government, implementation of NSM across 70 high-performance computing facilities will bring supercomputing within the reach of the scientific and technology community in the country and provide "significant qualitative and quantitative improvement in research and development" in science and technology. Under the present scenario, in the top supercomputing machines in the world, a major share is taken from advanced countries such as the US, Japan, China and the European Union (EU). "The mission envisages India to be in the select league of such nations. This will create requisite expertise to build state-of-the-art next generation supercomputing. The Mission supports the government's vision of Digital India and Make in India initiatives", it said. Centre for Development of Advanced Computing (C-DAC) and the Indian Institute of Science (IISc), Bangalore will also contribute in implementation of the initiative, it added.