cii agenda 2015-16

The CII Agenda 2015-16

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16 April 2015 : New Delhi

2© Confederation of Indian Industry

Economy & Reforms

© Confederation of Indian Industry

Recent reforms initiated by the government

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Since coming into power in May 2014, the new government has adopted several measures to reinvigorate investor interest and generate positive sentiment about the Indian economy

Categorization of reforms

More openness to Foreign

Investments

Easing the regulatory

environment for doing business

Non-adversarial and investor friendly Tax

system

Better Allocation of Natural Resources

Economic & fiscal

management

Foreign trade

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© Confederation of Indian Industry 4

FDI limit in the defenceand insurance were enhanced to 49%

100% FDI was allowed in railway infrastructure and

medical devices sector.

Real estate benefitted from easing FDI norms in the construction sector

Allowed innovative financing Instruments REIT’s and InvIT’s for

financing real estate and infrastructure

Recent reforms initiated by the government More openness to foreign investments


Launch of E-biz portal, IT based single window platform

integrating 14 government services at one source

Launch of web portal for online filing and monitoring of environment and forest clearance to ensure clearance in time

bound and transparent manner

Amendments to labour laws have also been initiated. Launched Shram Suvidha Portal for filing self-certified, single online return by industry for 16 central labour

laws

Introduction of computerized system of

inspections to reduce harassment

Constitution of an Expert Committee to Examine the possibility of replacing multiple prior permissions with pre-existing regulatory

mechanism

Recent reforms initiated by the government Easing the regulatory environment for doing business


Government assures to undertake Retrospective amendments to tax laws with extreme caution

Introduction of a “Roll Back” provision in the APA scheme

Introduction of range concept for determination of arm’s length price on transfer pricing regulations

Set up of a high level committee to interact with industry on regular basis and ascertain areas where clarity is required

Deferring GAAR by another 2 years

Recent reforms initiated by the government Non-adversarial and investor friendly Tax system


E-auction of coal blocks to private companies and

allotment of mines are currently under

process.

The MMDR Amendment Act has been passed making

auctions the sole method for granting mineral concessions and mining leases

Approval for innovative

mechanism( gas pooling ) for utilization of

stranded gas based generation capacity

Approval of new gas pricing formula and

guidelines

Recent reforms initiated by the government Better Allocation of Natural Resources


Roadmap for achieving FRBM targets for achieving the fiscal deficit of 3 % over the next three years

Set up Expenditure Reforms Commission in order to contain wasteful expenditure of the government in a

systematic manner every year

Diesel Price Deregulation to Phase out of subsidies for fuels

Use of JAM- trinity Jan Dhan Yojana, Aadhaar and Mobile numbers to offer subsidy support to poor households in a targeted and less distortive way.

Recent reforms initiated by the government Economic & fiscal management


A comprehensive five-year (FY16-20) export strategy, aims to nearly double the country's goods and services exports to

$900 billion by 2019-2020,

Focusses on supporting services and exports,

trade facilitation along with improving the

ease of doing business.

Takes steps for simplifying the system of rewards or incentives for exporters.

Two new schemes -- Merchandise Exports from India Scheme (MEIS) and

Services Exports from India Scheme (SIES).

5 different schemes of earlier FTP merged into MEIS. Rewards made payable in the form of duty credit scrip that are freely transferable and can be used to pay for customs and excise duties as well

as service tax.

To move to an online procedure to upload digitally

signed documents to promote Paperless trade in 24x7

environment.

Number of mandatory documents required for exports and imports

reduced to three, which is comparable with international

benchmarks.

Recent reforms initiated by the government Foreign Trade


Global environment remains soft

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A strong recovery remains elusive across the developed and developing world - US is recovering, Euro area showing some signs of growth while China and Japan continue to moderate

Rates of growth are not as strong as previously expected despite the global fall in crude oil prices, with the IMF projecting softer growth across economies’

Strong monetary stimulus being provided by central banks of Europe, Japan and China while US will probably delay its interest rate hike

Commodity prices including oil remain low

Impact on India

Moderation in input and output

prices

Softening of both exports and

imports

Risk appetite remains high in

financial markets


5.1

6.97.4

8.2Positive Scenario

2012-13 2013-14 2014-15* 2015-16**

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3.7

1.12.0

3.02.4

4.5

5.96.5 7.08.0

9.1

10.6 10.4 10.5

2012-13 2013-14 2014-15* 2015-16Base Case

2015-16PositiveScenario

Agriculture & allied activities Industry Services

India's GDP Growth (2011-12 Series) Sector-wise GDP Growth Rates (2011-12 Series)

Source: MOSPI, CII calculations

• India is currently the fastest growing economy in a global environment that remains soft

• industry and services to grow at a strong pace but agriculture could be a dampener

Economy Forecasts Short term

CII expects GDP growth to lie in the range of 7.8-8.2% in 2015-16


Economic Outlook Medium term

Focus on ‘Make in India” and labor-intensive services sectors such as education and tourism to unleash competitive potential of these sectors

Provide greater impetus to skill development to upgrade workforce from low skilled to more value added jobs and achieve faster growth, job creation and poverty reduction

Increase Investment in agriculture to remove supply bottlenecks in agri-marketing, warehousing infrastructure including cold storages and cold chains, irrigation, agri-rail networks etc. Implement “Single Agriculture Market”.

Expand infrastructure to create new capacity in roads, ports, airports and railways. Enhance capacities of ULB’s to create knowledge on smart cities

A multi-pronged strategy would lead to a medium-term growth rate of 9-10 per cent


Areas of opportunity

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Land

Companies Act

LabourTransparency, Governance &

Integrity

Corporate governance


Areas of opportunity Land

The ambitious goals set by the Government including ‘Make in India’, making India self-reliant

in defence, setting up Industrial Corridors and National Manufacturing Investment Zones

(NMIZs), Skill India, Affordable Housing to All and developing 100 Smart Cities, amongst others

are all dependent on large scale availability of land.

CII strongly supports the land ordinance which will exempt projects in key sectors from

mandatory Consent requirements and Social

Impact Assessment

CII believes that the legislation is supportive of farmers who

want to sell their land and receive good compensation; it will enable the government to

facilitate building of rural infrastructure

CII also believes that the ordinance route had to be

taken for quick decision making

CII will work with state governments and political

parties to advocate its view that land acquisition norms need to

be eased for greater industrialization to take place


Industry has been experiencing obstacles in its compliance with some of the provisions of the Companies Act, 2013 and its Rules. While the government has accepted many of the submissions made by industry, there are still many concerns being faced by industry.

CII continued sustained advocacy efforts to ensure that the new regulatory framework is pro-industry. Many tranches of detailed inputs on the Act and Rules are being submitted to the Ministry of Corporate Affairs.

Acceding to CII submissions, some of the issues with respect to related party transactions; confidentiality in business; loans; fraud reporting etc are slated to be settled with notification of the Companies (Amendment) Bill, 2014 - which awaits passage in the Rajya Sabha.

Other issues that have been recommended to MCA for resolution include provisions relating to onerous requirements for private companies and closely-held unlisted public companies and Section 8 and Government companies; related party transactions; CSR; amounts treated as deposits; loans to employees; criminalisation of offences; alignment with SEBI regulations, etc amongst others.

These amendments will help easier and wilful compliance and implementation of the Act thereby ensuring that the regulatory framework boosts business instead of acting as an impediment.

Areas of opportunity Companies Act


Simplification of Complex and Disparate labour laws. CII is

working with Ministry of Labour, DIPP and PMO on simplification of labour laws and make them

investor friendly.

For flexibility of engaging and deployment of labour

two most critical labour reforms need urgent

attention.

The Exit clause under the Industrial Disputes Act,

1947 and

Contract Labour Act especially the provision related to abolition of

Contract Labour

Special labour laws for MSME sector which has definite concerns and challenges in managing labour law compliances because of ever-

changing business and employment landscapes

CII is working to promote responsible Industrial labour engagement through regional pilot projects on engagement

parameters with contract labourers

CII is also working on the training of trade leaders to promote best practices in

industrial relations

CII will lead tripartite dialogue process between government ,industry and

labour

Areas of opportunity Labour


Areas of opportunity Transparency, governance & integrity

Post liberalisation, Indian industry finds itself in a highly competitive and regulated environment – both at home and abroad – which necessitates the adoption of good governance practices in order to avoid punitive actions.

CII has been the lead in the country in endeavoring to engrain values in

corporates replete with governance, accountability, transparency, ethics,

compliance and trust - fostering a culture of good governance and building

corporations of the future

CII will work with industry to curb corrupt practices among companies such as opaque procurement process, wining orders through

bribery, or taking illegitimate favours

CII to set up Centre of Excellence on governance

CII supports Amendment in the Prevention of Corruption Act which is required on the ground that the law makes bureaucrats

vulnerable to the risk of being prosecuted for even such decisions which could be fully

above board. The Act puts the onus on the bureaucrat to prove s/he acted in public

interest


Areas of opportunity Corporate governance

Work with the Ministry of Corporate Affairs in ensuring that the new Companies Act is truly enabling for industry

Work with SEBI to help remove discrepancies in Clause 49 of the Listing Agreement dealing with related party transactions; definition of independent directors; etc which need to be aligned with the Companies Act, 2013

Work with corporates to promote voluntary adoption of best practices and self-regulation without additional regulations, thus encouraging economic growth through creation of a facilitative streamlined and harmonized environment

CII would expand its work in the area of “Director’s Training” to help the availability of qualified Independent Directors


CII Theme for 2015-16

Build India: Invest in Development

A Shared Responsibility


Build India: Invest in DevelopmentThe enablers

• Manufacturing

• Entrepreneurship

• Integration with the World Economy

• Strengthening the Knowledge Economy

Promoting Growth & Competitiveness

• Education

• Skill Development

Developing Human Capital

• Infrastructure

• Public- Private Partnerships

• Clean Energy

Promoting Infrastructure Investments

• Women & Child Development

• Public Health & Sanitation

Encouraging Social Development

Development of Financial Sector

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CII Theme 2015-16 enablersPromoting growth & competitiveness

New initiatives of CII

Fast track sectoral policies:

National Steel Policy, National Policy on Capital goods, National Chemical Policy, National Textile Policy

Take the Ease of Doing Business

movement to the states

Create Single Window platform for all regulatory issues related to start-ups

CII Recommendations

CII Start-up Centre as a new Centre of Excellence of CII to scale up start-up ecosystem in India

Encouraging Industry –Academia linkages for innovations

Setting up Strategic Manufacturing Sector Skill Council


CII Theme 2015-16 enablersDeveloping human capital

CII-State government joint initiatives in strengthening

industry-academia collaborations

CII Skill Centres (Multi-skills) to be set up

Model Career Centres in Delhi NCR, Mumbai and Chennai to be created


Upcoming Education policy should de-regulate and provide greater autonomy to higher education

Announce the new National Policy on Skills

Issue Guidelines for Apprenticeship (Amendment)

CII Recommendations


The treatment of the infrastructure sector with respect to non-

performing assets (NPAs) should be different from that accorded to the

manufacturing sector.

At par with global practices, PPPs should have arrangements for re-negotiation

under an empowered Institutional Mechanism.

Government should “award” projects to private sector only after

FIRST securing key sovereign clearances.

As announced by the Hon’ble Union Minister for Finance in his Budget speech, ccontemporary PPP contracts should be

balanced to meet the requirements of the private and public sector stakeholders and

suitable liquidated damages against sovereign promises should be stipulated.

CII Theme 2015-16 enablersPromoting infrastructure investments


CII Theme 2015-16 enablersEncouraging Social Development – Women & Child Development

Source: UNDP- Human Development Report, 2014 Source: UN- World Population Prospects, 2012 revision

7957

135

91

118

85

52

127

37

94

Brazil RussianFederation

India China South Africa

HDI Rank GII Rank

985 984

929 933

2000 2010World India

HDI & GII Rank Sex Ratio (India vs. World)

India ranked at 127 out of 152 countries on the Gender

Inequality Index (GII)

The child sex ratio already low has further declined from 927 girls per 1000 boys in 2001 to

918 girls per 1000 boys in 2011

Security of women continues to be a major challenge and a

growing social menace

Context

The way forward

Engage and Partner the Beti bachao, Beti Padhaoinitiative

Launch Indian Women’s Network nationally and expand the foot fall : 12 states, 7 zones and 1400 direct members currently

Engage CII members in CSR projects for empowering women through CII Foundation

Create platforms to accelerate industry efforts towards safety & security of women


CII Theme 2015-16 enablersEncouraging Social Development – Public Health & Sanitation

Source: Harvard School of Public Health Study on ‘Costly non-communicable diseases on rise in developing world’

The absence of an effective public health network results in an

extraordinarily high disease burden

Economic burden of NCDs for India are estimated to be $6.2 trillion for

the period 2012-30

India’s gaping sanitation deficit, particularly in rural India with 68%

households without toilets

Source: WHO-UNICEF Joint Monitoring Program Report 2010

India, 638

Indonesia, 58

China, 50

Ethiopia, 49

Pakistan, 48

Nigeria, 33

Sudan, 17

Rest of the world, 255

Population practicing open defecation (Million)

The way forward

Context

Government’s effort to create a functional toilet

in every school

Strengthen CII’s efforts on Swachh Bharat : Swachh Vidyalaya

through Mission SoS(Sanitation of Schools)

Develop & Disseminate best practices on

Operation & Maintenance and

Behaviourial change under Mission SoS

Develop a sustainable PPP business model to

provide waste management solutions in Urban geographies


CII Theme 2015-16 enablersFinancial Sector

The Government must draw up a road map for a structural shift from a bank-dominated financial systemto a more diverse financial system to reduce burden on the banking sector

There is a need for the Government and the financial sector regulators to work in a concerted manner todevelop an integrated bond, currency, derivatives market at par with the equity market

The successful implementation of Jan-Dhan Yojana must go beyond to reduce India’s overwhelmingpreference for physical cash and promote its endeavor towards a cashless society

For deepening of Capital Markets, there is a need to revisit the investment norms of various domesticinstitutional investors like insurance companies and pension funds while also encouraging participationof retail investors

For addressing the issue of payment delays to EPC contractors, there is a need for the Governmentagencies to clear the genuine dues and expeditiously handle the claims of EPCs

CII Recommendations

CII with the Indian Banks’ Association (IBA) to launch the Financial Conditions Index of India

CII to work with all stakeholders to move Financial Inclusion to “Cash less”

Promoting Growth of Alternate Investment Funds (AIFs)

CII to institute a forum of Government & Industry stakeholders for enhancing financial viability of

Infrastructure Projects



Building India: A Shared ResponsibilityIndustry’s role in government’s priorities

1. CII National Mission on Smart Cities

Three pillars as the core of a Smart City

Creation of adequate employment opportunities

through economic activity in the city

Enhancement of human productivity through

efficient delivery of goods and services

Improving the vitality of public spaces which would in turn

improve recreational avenues for the citizens, give a boost

to culture, tourism , ecological sustainability etc.

To bring in global experiences and solutions for enhancing capacity of

ULBs through Japan, German and US

Technology Consortia.

To take up 3 pilot smart city projects which could

demonstrate the principles espoused by the Mission & methodology to implement

them on the ground.

To assist & handhold selected city authorities with knowhow and best

practices

To create a repository of knowledge on Smart

Cities for capacity development of ULBs

The way forward



2. CII National Mission on Digital India

To work with the State Governments to address the issue

of Right of Way (RoW)

To identify best practices capturing successful pilots under the Digital India initiative in the country and work towards scale.

Pilot projects in 4 villages to demonstrate viable business

models in rural area.

Key deliverables

Focus

Create an eco-system for enabling Broadband based

services as business

To prioritize, plan and put in place demonstrable strategies and models to roll out the digital implementation

plan

Share an outcome-based approach with Government to

enable adoption of newer technologies



3. CII National Mission on Sanitation in Schools

Under the ‘Swachh Bharat : Swachh Vidyalaya’

The Hon’ble Prime Minister in his

Independence Day speech last year

espoused the need for a mission on Swachh

Bharat.

The Prime Minister has especially called upon the corporate sector to give

priority to the provision of toilets in schools as part of

their CSR.

Towards accomplishing this national endeavor, CII has launched the Mission

Sanitation in Schools (SoS) to work together with its member companies on construction of 10,000 toilets in

government schools by March 2016.

Evangelising sanitation in schools.

Undertaking management of the initiative on a project mode through the CII Foundation.

Collating & sharing innovative practices, design & technology which is adaptable to the local needs, environmental friendly, cost effective, scalable and replicable.

CII will work with the state and central governments to resolve the sanitation related issues.

Way forward

cii agenda 2015-16

Economy & Finance

new government

new delhi1economy reforms

skill india

india selfreliant

government nonadversarial

regulatory environment

regulated environment

mediumterm growth rate