india economic news consulate general of india february 2016 … · india economic news consulate...

India Economic News Consulate General of IndiaFebruary 2016 Munich

Key Features of Budget 2016-2017:

INTRODUCTION:

Growth of Economy accelerated to 7.6% in 2015-16.

India hailed as a ‘bright spot’ amidst a slowing global economy by IMF.

Robust growth achieved despite very un-favourable global conditions and two consecutive years shortfall in monsoon by 13%

Foreign exchange reserves touched highest ever level of about 350 billion US dollars.

Despite increased devolution to States by 55% as a result of the 14th Finance

Commission award, plan expenditure increased at RE stage in 2015-16– in contrast to earlier years.

CHALLENGES IN 2016-17:

Risks of further global slowdown and turbulence.

Additional fiscal burden due to 7th Central Pay Commission recommendations and One Rank One Pay (OROP).

AGRICULTURE AND FARMERS’ WELFARE:

Allocation for Agriculture and Farmers’ welfare is Rs.35,984 crore

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‘Pradhan Mantri Krishi Sinchai Yojana’ to be implemented in mission mode.

28.5 lakh hectares will be brought under irrigation. A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about Rs 20,000 crore

Promote organic farming through ‘Parmparagat Krishi Vikas Yojana’ and 'Organic Value Chain Development in North East Region'.

Unified Agricultural Marketing ePlatform to provide a common emarket platform for wholesale markets

Allocation under Pradhan Mantri Gram Sadak Yojana increased to Rs.19,000 crore. Will connect remaining 65,000 eligible habitations by 2019.

To reduce the burden of loan repayment on farmers, a provision of Rs. 15,000 crore has been made in the BE 2016-17 towards interest subvention

Allocation under Prime Minister Fasal Bima Yojana Rs. 5,500 crore.

Rs. 850 crore for four dairying projects -‘Pashudhan Sanjivani’, ‘Nakul Swasthya Patra’, ‘E-Pashudhan Haat’ and National Genomic Centre for indigenousbreeds

RURAL SECTOR:

Allocation for rural sector- Rs. 87,765 crore.

Rs 2.87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municipalities as per the recommendations of the 14th Finance Commission

A sum of Rs. 38,500 crore allocated for MGNREGS.

300 Rurban Clusters will be developed under the Shyama Prasad Mukherjee Rurban Mission

100% village electrification by 1st May, 2018.

District Level Committees under Chairmanship of senior most Lok Sabha MP from the district for

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monitoring andimplementation of designated Central Sector and Centrally Sponsored Schemes.

EDUCATION & SKILL DEVELOPMENT :

62 new Navodaya Vidyalayas will be opened

Regulatory architecture to be provided to ten public and ten private institutions to emerge as world-class Teaching and Research Institutions

Higher Education Financing Agency to be set-up with initial capital base of`1000 Crores

Allocation for skill development– Rs 1804 crore.

1500 Multi Skill Training Institutes to be set-up.

GoI will pay contribution of 8.33% for of all new employees enrolling in EPFO for the first three years of their employment. Budget

provision of Rs 1000 crore for this scheme.

100 Model Career Centres to operational by the end of 2016-17 under National Career Service.

INFRASTRUCTURE AND INVESTMENT:

Total investment in the road sector, including PMGSY allocation, would be Rs.97,000 crore during 2016-17

To approve nearly 10,000 kms of National Highways in 2016-17.Allocation of Rs 55,000 crore in the Budget for Roads. Additional Rs 15,000 crore to be raised by NHAI through bonds.

Total outlay for infrastructure – Rs. 2,21,246 crore.

Amendments to be made in Motor Vehicles Act to open up the road transport sector in the passenger segment

Action plan for revival of unserved and underserved airports to be drawn up in



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partnership with State Governments.

To provide calibrated marketing freedom in order to incentivise gas production from deep-water, ultra deep-water and high pressure-high temperature areas

Comprehensive plan, spanning next 15 to 20 years, to augment the investment in nuclear power generation to be drawn up.

Reforms in FDI policy in the areas of Insurance and Pension, Asset Reconstruction Companies, Stock Exchanges.

100% FDI to be allowed through FIPB route in marketing of food products produced and manufactured in India.

MAKE IN INDIA:

Changes in customs and excise duty rates on certain inputs to reduce costs and improve competitiveness of domestic industry in sectors like Information technology hardware, capital goods, defence production, textiles,

mineral fuels & mineral oils, chemicals & petrochemicals, paper, paperboard & newsprint, Maintenance repair and overhauling [MRO] of aircrafts and ship repair.

SIMPLIFICATION AND RATIONALIZATION OF TAXES:

13 cesses, levied by various Ministries in which revenue collection is less than Rs.50 crore in a year to be abolished.

For non-residents providing alternative documents to PAN card, higher TDS not to apply.

Revision of return extended to Central Excise assesses. Customs Act to provide for deferred payment of customs duties for importers and exporters with proven track record.

Customs Single Window Project to be implemented at major ports and airports starting from beginning of next financial year.



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Increase in free baggage allowance for international passengers. Filing of baggage only for those carrying dutiable goods.

(For more information on Indian budget 2016-17 please visit. ww.indiabudget.nic.in)

Narendra Modi launches Make in India Week; vows no retrospective tax:

Launching the largest-ever manufacturing summit ‘Make in India Week’ in Mumbai, Prime Minister Narendra Modi announced that the government was swiftly working towards a transparent and predictable tax regime to make the country a global manufacturing hub. Addressing the largest business exhibition attended by heads of state, foreign delegates and industrial captains, Modi said the country would not resort to retrospective taxation. Modi said the government was trying to remove the bottlenecks that were affecting investments and growth. Make in India is the current government’s flagship

initiative, launched by the prime minister in September 2014, to encourage international companies to manufacture their goods in India. Make in India Week as the flagship event had been conceived to provide greater momentum to the Make in India initiative, and to showcase to the world the achievements of the nation in the manufacturing sector.

'Make in India Week' gets Rs 15 lakh crore (US$ 220 billion) investmentcommitment:

According to Government sources, India's biggest manufacturing promotional till date at home - the Make in India Week - concluded with investment commitments of over Rs 15 lakh crore ($220 billion). The event saw participation of 890000 visitors; 8245 B2B, B2G and G2G meetings; 1245 national and international speakers; 215 exhibitors and 102 nations. According to Maharashtra Chief Minister, Mr. Devendra Fadnavis said that over half of the investment commitments were for Maharashtra. Of the


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total investments committed here, 30 per cent are from foreign investors. The Maharashtra government had signed pacts worth Rs.6 lakh crore, which included large commitments from Mahindra and Mahindra, Mercedes , Panchshil, JSW Jaigarh Port and RCF Chemicals, among others.The state government has also received commitments from retail players like Future Group , Trent Hypermarket, D-Mart , Metro Shoes , Shoppers Stop (Rs 50 crore) and Major Brand.Karnataka received Rs 9,700 crore of investment proposals on Wednesday at the Make in India Week.The event, inaugurated by Prime Minister Narendra Modi on February 13, saw many corporate houses announce their plans to Make in India, notably, Mahindra and Mahindra, the Sajjan Jindal Group, Mercedez-Benz, Godrej, Posco, Vedanta, Ikea and Tatas.

Government panels clear infra projects worth Rs. 9,672 crore:

According to a Finance Ministry statement, concerned Government committees have

approved seven infrastructure projects envisaging an investment of Rs.9,672 crore (equivalent to approx. Euro 1290 million). The Public Private Project Appraisal Committee (PPPAC) and the Empowered Committee (EC) both chaired by Secretary, Department of Economic Affairs has cleared six road projects and one ports sector project with estimated project cost totaling Rs.9672.12. The projects include four national highway projects, one each in Maharashtra and Himachal Pradesh and two in Uttar Pradesh, and one port project in the coastal state of Goa.

India ranks 4th in number of think-tanks, after US, China and UK:

India ranks fourth on the list of nations with the most number of think-tanks, with nearly 100 new ones taking the country's total to 280 in 2015. Last year, India ranked fifth with 192 think-tanks. The US tops the list for 2015 with 1,835 think-tanks, followed by China and the United Kingdom, according to the 'Global Go To Think Tank Index Report (GGTTI) 2015'. Among the 6,486 think-tanks



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worldwide, the US-based Brookings Institution emerged on the top for the eighth consecutive year. Six Indian think-tanks figure in the global top 175 list. The report classifies and ranks think tanks in various ways, including by region, area of specialization and even on aspects such as use of social media.

Apple's Tim Cook confirms intent to set up retail stores in India:

CEO of Apple, Mr. Tim Cook has confirmed that Apple has applied to the government to set up its stores in India. Cook has singled out India as one of Apple's most important growth areas for the next decade, underlining its importance given its favorable demographics and surging smartphone sales. India is the world's fastest growing smartphone market, having surpassed the US in 2015 as the second largest by unique active users worldwide. This would make a strong case for Apple's famed retail stores, distinct for its look, feel and customer experience, to come up as the brand enjoys a very strong aspiration value,

especially among the youth. Apple has applied for the single brand retail license, which once granted, will allow it to open its own stores here. Currently, Apple sells its iPhone, iPad, Mac and other products through third-party resellers in the country. But with the government easing up foreign investment rules on single brands and relaxing mandatory local procurement conditions for high-tech companies, the doors are now open for Apple to make a direct foray.

Ratan Tata, University of California partner to fund Start-Ups in India:

RNT Associates, the privately held investment firm of Ratan Tata, and the Chief Investment Officer’s Office of the University of California have partnered to jointly fund start-ups and enterprises in India over the next 10 years. Ratan Tata, chairman emeritus of Tata Sons Ltd, has invested in more than 25 start-ups in the last two years across sectors such as healthcare, automotive financial inclusion and e-commerce. According to Mr. Jagdeep Singh Bachchar, Chief



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Investment Officer, University of California, the intention is to give runway and opportunity to interesting opportunities across sectors, be it healthcare or alternate energy. Though investment targets or corpus details were not divulged at this stage.

Intel to invest Rs 1,100 crore in Bengaluru campus:

Karnataka has cleared a proposal by chipmaker Intel Corp to invest Rs 1,100 crore (approx. Euro 147 million) in an eight-acre facility in Bengaluru, which could generate 3,000 jobs in the tech city. Intel has presence in Bengaluru building new fabless chips and contributing to semiconductor programmes for the company. The firm already employs 7,000 professionals in the city. Intel has invested $2 billion in India so far. Additionally, Intel Capital, which manages investment for the US chipmaker, has made strategic investments in firms to help stimulate technological innovation in India.

Mobile Internet users in India to grow to 371 million by June 2016: Report:

The number of mobile Internet users in India is projected to grow 21% to reach 371 million by June 2016 from 306 million in December 2015, according to a report released by the Internet and Mobile Association of India (IAMAI) and market research firm IMRB International. The study reveals that the share of mobile Internet spending out of the average monthly bill for mobile phones has increased to 64% in 2015 as compared to 54% in 2014, while the overall average monthly bill came down by 18% to Rs.360 in 2015 as compared to last year. This indicates that consumers are engaging more through the data for connectivity in order to cut the money spent on voice data. According to a recent report by market research firm Counterpoint, India has surpassed the United States to become the second largest smartphone market in the world.

India's economy will grow 7.6% in 2015-16, faster than last year:



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The Indian economy will likely grow at 7.6% in 2015-16, faster than the previous year’s 7.2% but nearly one percentage point lower than earlier forecasts, Government data showed, mirroring the possible impact of two successive drought years and plunging exports. The country’s “real” or inflation-adjusted gross domestic product (GDP) a measure of the value of all goods and services produced also grew at a slower 7.3% during October to December from 7.4% in the previous three months, data released by the Central Statistics Office (CSO) showed. India, however, will remain the world’s fastest growing major economy outpacing China.

We make in India for the world: Oracle CEO Safra Catz:

Emphasising that India is a great source of intellectual capital for the company, Safra Catz, global Co-CEO of Oracle Corporation announced a further expansion of the India operations. On her maiden visit to the country post her elevation as the CEO, Catz said that close to 40,000 of the

Oracle's global employee base of 1,30,000 people are stationed in India. While speaking at the Nasscom India Leadership Forum, Catz said that the reason behind the company's focus on India was the strong developer skill set. Catz who shared the CEO's position at Oracle along with Mark Hurd focused a significant part of her address on the future of the technology which lies in cloud, equating the disruption being caused by cloud to the one caused by the Internet at the turn of the century. Catz also called Prime Minister Narendra Modi's make in India and Digital India project not just ambitious but also inclusive

Honda starts world's largest scooter plant in Gujarat:

Gujarat is now home to the world's largest scooter manufacturing site, as Japanese two-wheeler giant Honda Motorcycle and Scooter India (HMSI) started its fourth plant in India at Vithalapur, a scooters’-only facility in Gujarat. Spread over 250 acres, the facility has come up in just 13 months with an investment of nearly



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Rs 1,100 crore (approx. Euro 147 million). Initially, the plant would produce around 600,000 scooters per annum which would be scaled up to 1.2 million scooters per annum by mid 2016. With the Gujarat plant commencing full production, HMSI's net installed capacity in India would be scaled up to 5.8 million units per annum in 2016 from 4.6 million units at present. HMSI claimed that its fourth plant in India has created job opportunities for 3,000 people (directly and indirectly).

Indian e-commerce market to grow fastest globally over 3 years: Morgan Stanley:

India received $6.6 billion in venture capital and private equity investment in 2015, a 50% increase from the previous year, which probably contributed to a steep growth

in the gross merchandise value for ecommerce companies, Morgan Stanley said in its report. The GMV of the country's top three e-commerce companies exceeded that of the top 10 offline retailers last year, it said. The key growth drivers will be greater Internet penetration, a rise in the number of online shoppers and an increase in per capita income.. It estimates India will have almost 320 million online shoppers by 2020 compared with 50 million in 2015.

***DISCLAIMER

This newsletter is a compilation of news articlesfrom various business e-newspapers and in no

way is an endorsement or reflection ofviews of Consulate General of India, Munich.

For queries contact:



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Mr. Asheesh Gupta, Consul (E & C), Consulate General of India, Widenmayer Strasse 15, 80538 Munich, Germany. Email: [email protected] , Web: www.cgimunich.com


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