india-netherlands in focus 2015

IndIa

i n f o c u snetherlands

2 0 1 5 e d i t i o n

C o n t e n t s

Disclaimer: 'India-Netherlands in Focus' is a special publication. The views expressed in this publication do not necessarily represent the position of the Embassy of India, the Hague, Netherlands, or the Government of India. The magazine has no

commercial value and is not for sale. It is for private circulation only.

Published by Diplomacy Media in association with Embassy of India, the Hague, Netherlands

Embassy of India: Buitenrustweg 2, 2517 KD The Hague, Netherlands Tel : 00 43 1 5058666 070-3469771 (General); 070-3469771 • www.indianembassy.nl

Diplomacy Media: B-7/17/1, Ground Floor, Safdarjung Enclave, New Delhi-110029, India Tel.: 91-11-4653 9323 • Fax : 91-11-4610 5603 • Email: [email protected]

Editor: Harun Riaz • Project Co-ordinator: R.K. Verma • Marketing Manager: Ajit Thakur • Layout: Hari Sharma • Printing: Rave India

Ambassador's Message ........................................................................................................................................ 4

netherlands trade Mission to India Boost economic ties ..................................................................................... 5

Make in India - Defence sector ............................................................................................................................. 8

Port of Amsterdam and Gujarat Maritime Board signs a Letter of Intent .............................................................. 10

How India Plays a strategic Role in the netherland’s It Industry ......................................................................... 11

Gujarat organizes ‘Interaction Meet' with Indian Diplomats in Delhi .................................................................... 12

economic and technical Derivatives of Diplomacy .............................................................................................. 14

Interview with Mr. Jeroen Plag the Chairman of Dutch trade & Investment Board, India ..................................... 18

From Proximity to Prosperity: Connectivity as a Resource for Development in a Globalised economy ................ 20

IsRo touches new Heights ................................................................................................................................. 22

India to Develop Inland Waterways ...................................................................................................................... 26

Make In India: Agriculture & Dairy sector ........................................................................................................... 28

Renewable energy Programmes Gets A new Impetus; Focus on Development of energy Infrastructure .............. 30

India’s Pharma sector and the Make in India opportunities................................................................................. 36

entry into eU via the netherlands can Lead to Cash Flow optimization ............................................................... 38

4IndIa-netherlands in Focus2015

Ambassador's Desk

H.E. Mr. Rajesh Nandan PrasadAmbassador of India

I am happy that Diplomacy Media is bringing out the 2015 Edition of the India-Netherlands in Focus.

Ties between India and the Netherlands go back to more than 400 years. Since the establishment of diplomatic relations between the two countries in 1947, India and the Netherlands have enjoyed friendly and cordial relations. Today, the Netherlands is a significant trade and investment partner of India. Bilateral trade is on the increase and holds promise for further increase in the future. There are also substantial investment flows in the future. There are also substantial investment flows on both sides. Almost all major Dutch companies are present in India and a large number of Indian companies are also present in the Netherlands, including all the IT majors. The substantial Indian Diaspora in the Netherlands is also playing a useful role.

India offers great opportunities in the areas of infrastructure development, inland waterway management, ports, shipping, agro industries, smart cities, digital economy for Dutch companies. We also look forward to dutch technology and knowledge in agriculture, food processing, logistics, water and waste management, renewable energy etc. where the complementarities are fairly obvious and there is potential to take the bilateral relations to a higher level.

I hope that this publication will help in increasing awareness all round about the potential for Indo-Dutch commercial and economic relations and will contribute to further intensifying engagements between the two countries.

R.N. PrasadAmbassador of India

India offers Great opportunities

5 IndIa-netherlands in Focus2015

netherlands trade Mission to India Boost economic ties

By Sarbani Bhattacharya*

at removing trade barriers between the two countries and increase cooperation. “With regular visits we keep the ties warm and the doors open, something that entrepreneurs can benefit from,” she said. There are greater opportunities for Dutch entrepreneurs here since Prime Minister Narendra Modi took office in May this year, Ms Ploumen said.

“Prime Minister Modi is working on economic re forms and thus to ensure growth and job creation. There is a lot of scope for collaboration,” Minister Ploumenadded.

Indian and Dutch companies recently concluded trade deals worth Euro 250 million.

Netherlands’ Minister for Foreign Trade and Development, Ms Lil ianne Ploumen, met her Indian counterpart Ms Nirmala Sitharaman and business leaders during a day's visit to New Delhi on November 7, 2014 to kick start her country’s trade mission with the new Indian Government headed by Prime Minister, Mr. Narendra Modi.

The Dutch Embassy in New Delhiin a Press release, said that Ms Ploumen told Ms Sitharaman that Netherlands would look

T h e t r a d e m i s s i o n t h a t accompanied the Dutch minister andDeputy Director General, Marten van den Berg, Ministry of Foreign Affairs comprised 30 companies and knowledge institutions, mainly from the agricultural, food and health sector, and yielded a number of new collaborations. During the trade mission, eight contracts were signed by Dutch firms with Indian partners which were worth 250 million euro.

Currently, the annual bilateral trade with India amounts to over 5.8 billion euro and the Netherlands is the fifth largest investor in India.

The Netherlands Minister for Trade and Development Cooperation, Ms. Lilianne Ploumen meeting the Minister of State for Commerce & Industry (Independent Charge), Finance and Corporate Affairs,

Mrs. Nirmala Sitharaman, in New Delhi on November 05, 2014

Bilateral Ties


Ms Ploumen also met Minister of Women and Child Development, Ms Maneka Gandhi, and raised the issue of economic development benefits for women and children in India. After the meeting, the minister said: "The Netherlands and India share the desire to improve the position of women and children."

the sectors and the opportunities in India presented by KPMG (Healthcare) and Rabobank (Agri).. The sector groups then proceeded to visit the leading industrial sights, sourcing units, hospitals and Government representatives from the Ministry of Health and Agriculture. There were insightful roundtables and

hospital facilities). What is refreshing and important to note was the positive attitude towards foreign trade and investment and a genuine interest to make a difference by be t te r execut ion o f projects, responsibility and accountability of the civil servants and a sense of urgency to show results. What is also relevant is that Government tenders follow a standard process and are typically suited to large companies with an Indian base.

2. Private hospital chains: there has been a recent mushrooming of private corporations entering the healthcare business with a view to providing primary, secondary and tertiary health care. This is not under the purview of the Government for funding or regulation. With the issues around land acquisition and the need for individual healthcare financing ( little or no insurance cover); such chains are also looking at public private partnerships to expand further.

3. Digitization: All healthcare providers spoken to were currently in the process of revamping their IT systems, including the Government. Patient records are seldom digitized and the current move towards transparency and efficiency makes this a priority. The Dutch Government’s management of the healthcare sector in the Netherlands and the success with PPP initiatives are models that could offer solutions.

4. Health and sanitation: there is a new sense of awareness about the prevailing conditions in urban and rural areas and the lack of sanitation, waste management and preventive health. This is a huge opportunity for Dutch

The Netherlands Minister for Trade and Development Cooperation, Ms. Lilianne Ploumen meeting the Indian Minister for Women and Child

Development, Mrs. Maneka Sanjay Gandhi, in New Delhi on November 05, 2014

key note speeches from the leaders in the industry as well as impressive presentations from the Confederation of Indian Industry and the Ministry representatives.

Highlights of the health sector group programcan be summarized as follows:

1. Meeting with theHealth Commissioner, Municipal Commiss ion o f Greater Mumbai andthe Joint Secretary Ministry of Health, New Delhi and their operational teams. The numbers stated were mind boggling. (27million vaccines against malaria, 45 million dollars in purchase of imported drugs andinvestments of 5 billion dollars in six more

Bilateral Ties

Earlier, the mission was kicked off with a preparatory session led by DDG Maarten van den Berg and members of the Netherlands Enterprise Agency (RVO), at a session hosted by KPMG in Amstelveen on 21st October. After an inspiring talk on India by former Ambassador to India, Mr. Eric Niehe, the two focus sectors identified and the briefing given by the Healthcare task force, Netherlands and the NAFtech leadership to ensure that the members were prepared to meet the Indian companies and Government representatives to discuss future co-operation.

The mission started off in New Delhi with a brief introduction to


technology and expertise in this sector.

5. Insurance: Personal, life and medical insurance is almost non-existent. The Government has boosted this industry by reducing the FDI norms, and all foreign entrants are looking to expand in this market. This calls for a long term view and specialized products to suit the Indian market. Investment funds particularly in real estate will also flourish to support the growing health care industry.

*The pharma industry was not covered in this mission.

Highlights of the Agri-food sector program can be summarized as follows:

1. The cold chain is the most important part of the infrastructure which urgently needs to be improved or rather set up. There are NO significant means of refrigerated t ranspor t ac ross the nation or even in individual states which can guarantee the temperature of items. The recent years have seen many attempts to set up PPPs but few have been successful given the huge investment needed by several stakeholders, the involvement of the disintegrated agri-sector in India and the dependence on many State Governments.

2. Rabobank has been playing a major role in supporting rural development through their agricultural development fund and is playing a significant role in developing this sector. Many European Investment funds have set up investment

funds for this sector and are looking to encourage foreign investors. Micro finance and insurance are growing.

3. There is an urgent call for PPPs or Foreign Direct Investment in the processing industry both to preserve fresh food and to process agriculture, farm produce, milk and horticulture. There are several mid-size Indian companies and intermediaries who are looking for foreign partners

looking to make their maiden entry and the coming year will be the opportune moment to do so. There is enough information available on setting up companies but to make successful trade and investments, expert knowledge, particularly around the financial planning and fiscal structure, is needed. The Netherlands should reach out to the ministries and organizations like the FICCI to start this dialogue.

The mission delivered in terms of opening doors in the two key sectors and above all, opening eyes on the seemingly limitless opportunity that India has to offer. Quotes from a debrief session:

• deals s ignedworth 250 million• todobusinessinIndia you really need an Indian partner• theNetherlandshas the innovation, technology and spirit to add value to Indian industry.

A successful mission is one where the existing business relationships can be enhanced while investing in the new ones. This miss ion surely met these criteria.

To be or not to be in India is NOT the question; how the Netherlands can partake in the imminent exponential growth, is the question.

Here is a link to a two minute video on Mission to India http://goo.gl/8AvGFq

*The writer Sarbani Bhattacharya is

the Director, Financial Services and

Head of the India Practice, KPMG

Netherlands. She is an active member

of the Indo-Dutch network.

YES BANK, India’s fourth largest private sector bank and the Netherlands Agro, Food & Technology Centre (NAFTC) – India, a nodal Dutch agency entered into a

strategic partnership on 5th November in the presence of Ms. Lilianne Ploumen, Minister for Foreign Trade and

Development Cooperation, Netherlands

for technology and finance. The Indian Government also has several incentives for development of this sector. The Dutch Government has been supporting projects (also financially) and would be happy to support any collaboration or investment ideas clients have.

Many entrepreneurs, mid-size businesses and large corporates already have an established base in India. Many more are

Bilateral Ties


Achieving self-reliance and reducing dependence on foreign countries in

defence is a necessity today rather than a choice, both for strategic and economic reasons. The Government in the past has created production capabilities in defence in form of Ordnance Factories and Public Sector Undertakings to cater to the requirements of our Armed Forces. However, there is a need to enlarge the role of Indian private sector as well to develop capabilities and capacities for production of various defence equipments.

Our Prime Minister has taken a very important initiative in form of ‘Make in India’ to promote and encourage domestic manufacturing of various items. The requirement for domestic production of defence equipment is more than for any other sector because it will not only save precious foreign exchange but will also address the national security concerns.

Government being the only consumer, ‘Make in India’ in defence sector will be driven by our procurement policy. The Government policy of promoting domestic defence industry is adequately reflected in the Defence Procurement Policy, wherein preferential treatment is given to ‘Buy (Indian)’ and ‘Buy and Make (Indian)’ categories of acquisition over ‘Buy (Global)’. In the days to come, import is going to be the rarest of the rare option and first opportunity would be given to the Indian Industry to develop and manufacture the required systems. As Indian companies presently may not have adequate capabilities in terms of technology, they are encouraged to partner with foreign companies for joint ventures, technology transfer arrangements and tie-ups.

If we look at the profile of Acceptance of Necessity (AONs) granted by Defence Acquisition Council (DAC) in the last couple of

months after the new Government has come to power, proposals worth more than Rs.65,000 crores have been categorized under ‘Buy (Indian)’ and ‘Buy and Make (Indian)’. The process of further orienting the Defence Procurement Procedure towards procurement from domestic industry will continue in future as well. The procurement process would be made more efficient, time bound and predictable so that the industry can plan its investment and R & D well in advance to meet the requirement of our armed forces.

Till now, there were many entry barriers for the domestic industry to enter into defence sector in terms of licensing, FDI policy restrictions etc. In the last six months, the Government has taken several policy initiatives to ease the process of entry into defence manufacturing. The most important is the liberalization of the FDI policy regime for Defence sector to encourage

Make in India - Defence sector*Manohar Parrikar

The Prime Minister, Mr. Narendra Modi addressing at the Aero India-2015 Air Show, in Bangalore on February 18, 2015. The Governor of Karnataka, Mr. Vajubhai Rudabhai, the Chief Minister of Karnataka, Mr. Siddaramaiah, the Indian Minister for Defence, Mr. Manohar Parrikar, the Union Minister for Chemicals and Fertilizers, Mr. Ananthkumar, the Indian Minister for Law & Justice, Mr. D.V. Sadananda Gowda and the Minister of State for Planning (Independent

Charge) and Defence, Mr. Rao Inderjit Singh are also seen.

Economy


foreign investment in the sector. FDI up to 49% is allowed through Government route (with FIPB approval). FDI above 49% is also allowed on a case-to-case basis with the approval of Cabinet Committee on Security wherever the proposal is likely to result in access to modern and state-of-the-art technology in the country. Restrictions in earlier policy related to Foreign Institutional Investment (FII) and majority shareholding to be held by single Indian shareholder have been removed.

Even though private sector industry was allowed to enter in defence manufacturing since 2001, after obtaining industrial licence under IDR Act, the process of obtaining industrial licence was very cumbersome and used to act as a major road block for the industry, particularly small and medium industry, who were in the business of making part, components, sub systems and sub-assemblies. The Government liberalized the licensing policy and now most of the components, parts, raw materials, testing equipments, production machinery, castings, forgings etc. have been taken out from the purview of licensing. The companies desirous of manufacturing such items no longer require industrial licence and will also not be subjected to FDI cei l ing of 49%. A comprehensive Security Manual indicating the security architecture to be followed by various class of industries has been put in public

domain, so that companies could easily access the same and follow it accordingly. The initial validity of industrial licence has been increased from two to three years.

For the first time, a Defence Export Strategy has been formulated and has been put in public domain. The strategy outlines specific initiatives to be taken by the Government for encouraging the export of defence items. It is aimed at making the domestic industry more sustainable in the long run as the industry cannot sustain purely on domestic demand. A Standard Operating Procedure (SOP) for issue of NOC for export of military stores has been finalised and has also been put in public domain. Requirement of End User Certificate (EUC) to be signed and stamped by Government authorities has been dispensed with for most of the defence items, particularly parts, components, sub-systems and sub-assemblies. This will largely ease out the export by the domestic industry. A web-based online system to receive applications for NOC for export of military stores has been developed and has been put in place.

There is a big opportunity in the defence sector for both domestic and foreign investors. We have the third largest armed force in the world with an annual budget of about US$ 38 billion and 40% of this is used for capital acquisition. In the next 7-8 years, we would be investing more than

Spectators enjoying the Aero India 2015 air show, at Yelahanka, in Bangalore on

February 21, 2015.

US$ 130 billion in modernization of our armed forces and with the present policy of MAKE IN INDIA, the onus is now on the industry to make best use of this opportunity for the benefit of both the business as well as the nation. Besides, under offset more than Rs. 25000 crore obligations are to be discharged in next 7-8 years.

W h i l e o n t h e o n e h a n d , Government is making necessary policy changes with regard to procurement, investment including FDI, licensing, export etc., the industry also needs to come up and accept the challenge of up-gradation in terms of technology and required investments. Defence is the sector which requires huge investments and technology and is driven by innovation. The industry, therefore, has also to change its mindset and think for long term rather than temporary gains. We need to focus more on Research and Development and state of the art manufacturing capabilities. The Government is fully committed to create an eco-system for the domestic industry to rise and to provide a level-playing field to all sectors of industry, both public and private.

*Mr. Manohar Parrikar is Indian Minister for Defence

Economy


During the Vibrant Gujarat 2015 Summit, H.E. Mr. Simon Smits, Dutch

Vice-Minister and H.E. Mr. Alphonsus Stoelinga, Ambassador to India, witnessed the signing of the Letter of Intent by Mr. A.K. Rakesh, IAS, Chairman of Gujarat Ports Infrastructure & Development Company Limited and CEO and Vice-Chairman of Gujarat Maritime Board and Mr. Anthony Van Der Hoest, Commercial Director-Logistics, Port of Amsterdam, to increase cooperation in the development of ports in Gujarat state. The cooperation entails actively sharing knowledge and experience in the field of port management and port development in the future.

Mr. Anthony Van Der Hoest said that this Memorandum of Understanding marks another significant milestone in the history of relations of the Port of Amsterdam and India. The Port of Amsterdam has had a presence in India in cooperation with Samsara Group for over 3 years. He added that they have selected India as vast number of opportunities are offered here. He mentioned that they plan to further intensify the efforts with GPIDCL and Gujarat Maritime Board.

GPIDCL is a subsidiary of Gujarat Maritime Board and is presently engaged in the business of setting up a maritime university and maritime cluster in Gujarat. GMB, the promoter company of GPIDCL, is engaged in the business of managing, controlling and administering 41 non-major

ports in Gujarat, in order to enhance and harness ports and international trade as vehicles for economic development in the region.

Port of Amsterdam is Western Europe's fourth largest port and plays a significant role in the transhipment and processing of energy products. The Port of Amsterdam region realized record transhipment in 2014 with an increase of 1.7% compared to 2013. Port of Amsterdam is represented by the Samsara Group in India.

Netherlands Vice Minister of Foreign Trade Mr Simon Smits met Chief Minister of Gujarat Smt. Anandiben Patel in Gandhinagar. The minister participated in

Vibrant Gujarat Summit 2015, with a delegation of more than 70 companies.

Mr. Smits shared that Netherland Companies in Gujarat are not only contributing in Make-in-Gujarat but moving one step further, they are working towards Research-in-Gujarat and Design-in-Gujarat.

Mr. Smits and CM Smt. Patel discussed about mutual interest in various sectors like water management, seed production and agro logistics.

Port of Amsterdam and Gujarat Maritime Board signs a Letter of Intent

Mr. A.K. Rakesh, CEO, GMB & Mr. Anthony Van Der Hoest, Commercial Director, Port of Amsterdam signing the MoU

Bilateral Ties


Business Story

For ages, India and the Netherlands have shared a strong business relationship. The bilateral trade

and partnership between the two countries includes a variety of key areas such as transport and logistics, infrastructure, water management, environment, agriculture and food processing, science and technology and information technology. In terms of investments, both the countries share an interesting equation as mentioned by Marten van den Berg, Deputy Director General, Foreign Economic Relations at the Dutch Ministry of Foreign Affairs. According to Van den Berg, “While the Netherlands is the 5th largest investor in India, India is the 5th largest investor in the Netherlands. Although we are both knowledge economies, we are in many ways complementary to one another.” He also makes a specific note about India’s need for medical research and agri-tech knowledge and the Dutch need for skilled IT-programmers.

Like many countries in the European Union, the Netherlands has been facing serious talent crunch in the field of software development. Apparently, many professionals have been seeking non-IT careers and this led to a void in smooth implementation of business vision and stunted the growth of several

software development companies. Especially in the last decade, the Netherlands has seen a rapid decline in the number of software professionals and this has prompted the Dutch to look for talent outside their country. For many, India became the destination of choice due to the vast talent pool of highly skilled software developers. According a research conducted in November 2013 by the Director of ICT at the Ministry of Economic Affairs, Agriculture and Innovation on the Dutch job market, there will be a shortage of 27,000 to 40,000 ICT professionals by 2015. For the same period, the Dutch ICT Market Monitor by Keala predicts a gap of 10,000 ICT practitioners.

The investor-friendly business ecosystem in India for IT companies, which is already being leveraged by top American and European software companies, provides an excellent opportunity to software companies based in the Netherlands. They can avail the benefits of Special Economic Zones created particularly for the IT sector, besides access to the large talent pool, the advantage

By Steven ten Napel, CEO, coMakeIT

Distributed Development Team at coMakeIT

of different time zones and the cost of labour in India. In fact, one of the earliest software companies that entered India was the Dutch software giant Baan Info Systems, way back in late eighties. Since then, many software companies that ventured into India for the quality labour and cost advantage, have moved higher in the value chain by setting up their development and delivery centers that focuses on R&D, product innovation, product design, architecture and marketing and sales. The fact that there is a growing trend in following the footsteps of these companies proves that the software developed and shipped from India meets global standards of quality.

However, it may not be possible for Small and Medium Enterprises (SMEs) or Independent Software Vendors (ISVs) and start-ups to take this path to expansion, even if they wish to do so, considering the operational and financial constraints. At the same time they would be keenly interested in collaborating with Indian counterparts and setting up joint ventures. In such a case, they may seek to partner with service providers who can set up dedicated development teams in an offshored environment. These teams are facilitated by the service providers but owned by the companies themselves and they work as natural extensions of their local development teams. By adopting this model, SMEs and start-ups stand to gain by way of quality talent and technology expertise in addition to extending their teams but being constantly connected thanks to the latest communication technologies.

About coMakeIT:coMakeIT partners with ISVs across the globe, extending their software R&D teams and facilitating set up and growth of highly productive offshore development centers. www.comakeit.com

How India Plays a strategic Role in the netherland’s It Industry


Gujarat organizes ‘Interaction Meet' with Indian Diplomats in Delhi

Business Opportunities

Hon'ble Chief Minister of Gujarat, Mrs. Anandiben Patel has urged Indian

Diplomats to fulfill Hon'ble Prime Minister's vision of 'Make in India' by bringing investments to the States. She added that it is good to see that for the first time, Ministry of External Affairs and State Governments have been brought closer and Indian Ambassadors will play a key role to bring investors, modern technology and better markets for India.

Addressing the Indian Diplomats at an 'Interaction Meet', organized by Government of Gujarat in Delhi, Hon'ble Chief Minister said that the government is keen to increase the quality of life of the citizens and Indian envoys can play an effective role in achieving this vision. She informed that to facilitate better communication, Gujarat will open a special portal for the Indian Ambassadors to explore new business opportunities. She requested them to play a supporting role in spreading the 'Khusboo of Gujarat' across the globe. With joint efforts of Union and State Governments, we will be able to realize PM's vision of 'Make in India'.

Mrs. Anandiben Patel also appealed the Diplomats to continue to play a pivotal role in creating long-lasting bonds between nations that are premised on trust and cooperation. Calling it a fusion of business and culture, she asked the diplomats to contribute towards India's development.

She fur ther sa id that the

government is in the process of amending the labor laws and state's role will be that of the facilitator and not regulator to reduce the Inspector-Raj. Gujarat has been an attractive investment destination because of its robust infrastructure. She added that Gujarat is the first State to bring a legislation to encourage private sector participation in

infrastructure. This has helped the state in modernizing ports and port-led development, becoming an energy-surplus state and developing as a petrochemical hub.

The Gujarat Chief Minister urged the Indian Ambassadors to help bring in Foreign Direct Investment and new technology to India,

Gujarat Chief Minister Mrs. Anandiben Patel addressing the 'Interaction Meet'


Business Opportunities

source raw materials for the manufacturing units, search market for the products including handicrafts, skill development of the youths through collaborators from abroad, and link up the MSME sector with foreign enterprises. This will provide employment and develop new entrepreneurs.

Mrs. Anandiben Patel added said that Global business community has shown great interest in investing in Gujarat and the state is keen to capitalize on the same. She added that Gujarat is committed to improve the quality of its Business Regulatory frameworks to attract foreign

investments. She informed that Government of Gujarat has come out with new Industrial policy for manufacturing sector, incorporating the vision of 'Make in India' programme. She mentioned that new sectors like 'Defense Manufacturing, Electronics, etc. have been added in this policy.

She said that Gujarat does not focus only on economic development, rather the aim is on socio-economic transformation. She also extended warm thanks to the Indian diplomatic fraternity for playing proactive role in making Vibrant Gujarat 2015 a grand success.

In his welcome addressed, Mr. D. J. Pandian, IAS, Chief Secretary, Government of Gujarat said that the foundation of growth of Gujarat has been laid on the vision and outlook of its leadership, enterprise of its people, sound financial acumen and good infrastructure. The growth of State also owes a lot to resilience and adaptability of its people, who have always overcome adversity. Gujarat's economic development has been often acclaimed as highly effective.

Mr. K. Kailashnathan, IAS, Chief Principal Secretary to Hon'ble Chief Minister, made an impressive presentation on Gujarat: The Global Gateway to India while a film on Growth Story of Gujarat was also shown during the 'Interaction Meet'.

M o r e t h a n 1 0 0 I n d i a n A m b a s s a d o r s a n d H i g h Commissioners participated in the meet.

Source: www.vibrantgujarat.com

She added that it is good to see that for the first time, Ministry of External Affairs and State Governments have been brought closer and Indian Ambassadors will play

a key role to bring investors, modern technology and better markets for India


economic and technical Derivatives of DiplomacyBy Ambassador (Retd) Mahesh Kumar Sachdev

In a different avatar nearly four decades ago, I would have sat on the other side

of this divide. I would have looked at the speaker in a semi-agnostic manner and wondered if Technology and Diplomacy had anything in common at all. If this chap can conjure a link between the two, what is he going to prove next - Phlogiston has negative weight?

No, I am not that ambitious! All I want to discuss is the interplay between technology and diplomacy and share my own experiences of being trained as a nuclear physicist at this institute and landing up practicing international make-believe - diplomatic equivalent of, say, appointing an international commission to investigate if Phlogiston was made of anti-matter.

In any case, I do hope IITK c o n t i n u e s t o u p h o l d i t s longstanding reputation of being last refuge of all orphaned theories. Let me begin by stating that diplomacy and technology are two fast expanding domains in contemporary era with an increasingly large overlap. When the two act in concert, they reinforce each other; when at cross purposes, they sow confusion or worse.

The discourse can be divided into two independent - albeit interrelated - channels: (a) How has technological advancement impacted upon diplomacy? - and, (b) How has diplomacy affected

technology? We may also look later at India’s specific case and try and venture into future interplay of these two. Without limiting our discussion to any specific time frame, we focus on the past two centuries which have seen rapid advances in both technology and diplomacy.

A study of technology’s impact on diplomacy is perhaps more tangible and easier of the two aspects. In general, technological progress has quickened the pace of diplomacy - but has simultaneously brought it outside the Ivory Tower it was earlier confined to. The following specific transformations in content and style of the diplomacy today can be attributed to technological inputs:

(a) Logistics: Gone are the days when the foreign envoys took weeks and months to arrive at their destinations on horseback or steamers. Thanks to faster transportation today, a diplomat can reach most capitals within 36 hours, while going to other outposts may take a bit longer. The travel is not only faster, it is more comfortable, even as other daunting barriers, such as consular and health restrictions often remain. However, the speed and relative ease is not all an unmitigated blessing. These also mean that a diplomat is not left alone as his or her minders from headquarters travel more often to breathe down his or her neck. Ease of travel has also added new complications

to the core diplomacy - from huge growth in People-to-People (P2P), Business-to-Business (B2B) contacts to greater mutual awareness at popular levels. For instance, nearly half a Crore Indians live in the Gulf countries. Our Gulf-based diplomats are understandably pre-occupied looking after the community-specific issues mainly related to consular, labour, education, etc., often to the distraction of traditional diplomatic tasks, such as reporting on the local geo-political developments. Internally, ease of logistics has pushed the diplomacy to become more involved and people-centric. Today’s ambassadors are expected to travel more extensively within countries of their accreditation and receive more people than would have been the case earlier. However, the progress in logistics has been uneven and commuting of travelling in much of Sub-Saharan Africa till remains as challenging as perhaps in ibn Batuta’s times.

(b) Communication: Two centuries ago, diplomatic envoys waited for weeks before instructions arrived from headquarters typically by the diplomatic bag. Arrival of the telegraph in 1850s was hailed as a great breakthrough. However, a lot has happened to communication technology since with radio, telex, fax, internet and its various avatars making communications instantaneous and more extensive. When I joined Indian Embassy to Syria in Damascus in 1980, our umbilical

Distinguished Lecture


cord was once a week diplomatic bag which brought everything from official correspondence, personal letters, newspapers, magazines and books. The day of the incoming diplomatic bag was full of anticipation. Similarly, the day of the outgoing diplomatic bag had its own deadline to be met. On other days, our contacts with headquarters and other Indian missions was only through a telex machine. IDD connectivity was quite tenuous and unreliable. But three decades later when I ended my diplomatic career last year in Nigeria, fibre optics based broadband internet had become the new umbilical cord we could not do without. The diplomatic bag frequency was reduced to once in a fortnight and it contained only one copy of Indian newspapers and magazines. Advent of mobile phones, internet and "hotlines” has dramatically reduced the time to minutes and hours. However, it’s not all good news. The ease of communication has also meant a huge surge in quantity of information exchanged. Today’s "Ambassador Extra-ordinary and Plenipotentiary” is often inundated with far too much information - and much of it is of marginal value. Sifting the information overload and focusing on the important developments is more of a challenge now than ever before.

( c ) M e d i a M a n a g e m e n t : Technology has been a bit of a spoiler of fun diplomats use to have with media. Till recent decades, a diplomat could get away with public utterances that were either absurd or damaging or both - as not many took notice. He could embellish his role and exaggerate his accomplishment because his minders had few independent sources to verify. His impunity grew with distance and obscurity of place of his assignment. Alas, those golden days are long gone and space

for mistakes or boastful claims has shrunk drastically - thanks to power of internet, social media, satellite television etc. Today’s Ambassador needs to constantly look over his shoulders: If it’s not a minion with latest cable of instructions, it is a competitor armed with more updated information. The latter may even be a news-hound with a trick question or an NGO out to catch his country on the wrong foot. With technology breathing down his neck, His Excellency has no place to hide! With media and many of his interlocutors having much the same access to the real time "news”, a diplomat’s earlier claim to be the only authentic articulator of his government’s policy stands eroded. Like Alice in wonderland, he has to run twice as fast to stand still. Moreover, some developed countries often use their preponderance over the news media and their faster access to the communication technology to arrogate themselves the role of sole articulators of the viewpoints of the "international community”.

(d) Int rus ion: Spying and snooping have always been constant threats to diplomacy; however, technological advances have taken this contestation to a much higher level. This cat-and-mouse game between encryption and code-breakers was best illustrated by the two recent high profile cases of "self-goals”: "Wikileaks” by Julian Assange in 2010 and so called "NSA-gate” by Edward Snowdon in June 2013. By releasing thousands of the seemingly credible US classified cables, these two cases caused deep embarrassment to Washington and annoyance to the friends and mirth to her foes. These cases not only created new paradigms, but also disclosed the extent to which technical means have been able to intrude into "secure” diplomatic communications. Purposively

created computer viruses have also been used not only to penetrate alien systems, but also cause serious harm and disability to strategic assets. These cyber-spies do not just target military or diplomatic secrets, they also try to steal technological and personal data. These activities are quite serious threats to the targeted victims in peace-time; so implications for such arsenal during actual hostilities can well be imagined.

(e) Military Technology: During the past two centuries, the destructive power of the military technologies have advanced from muskets to megaton nuclear warheads. The global destruction caused during the two world wars led to founding of the League of Nations and the United Nations respectively. Clear military technological superiority of one side in a conflict has often complicated diplomatic efforts towards its resolution. The unthinkability of global nuclear holocaust has spurred diplomacy towards containment and disarmament. Although it remains a controversial matter, major diplomatic efforts have been invested in creating bodies such as Nuclear Suppliers Group (NSG) and creating "Safeguards” as well as negotiating international treaties for Nuclear Test Ban, Non-Proliferation, Fissile Material Cut-Off etc. Other military technology-related issues from chemical and biological weapons to proliferation of small weapons with non-state actors, such as terrorists, have also posed challenges to international diplomacy, which has so far been only partially successful in mitigating these risks.

( f ) Cl imate Change: Man-made factors have been held largely responsible for causing earth’s climate to change over past two centuries, with such manifestations as global warming, ozone layer depletion, shrinking



of polar icecaps, environmental pollution, etc. While growing use of fossil energy for transportation and power is largely credited for such deterioration in global climate, other factors such use of harmful chemicals, growth in population and consumerism have also contributed. Over past two decades, the international diplomacy has repeatedly tried to put together a frame-work to arrest the causal factors, but even mild commitments under Kyoto Protocol have not been implemented by the industrialised countries which bear the historic responsibility for the climate change catastrophe. Meanwhile, technology has been marshalled by both sides to bolster their respective negotiating positions. While industrialised countries have used it to promise reduction in their energy intensity, making greener, alternate and renewable energy more viable and sustainable and bringing in innovations such as carbon sequestration. On other hand, the developing world, with average per capita energy consumption a fraction of the developed countries, has sought to dispel the "development vs. environment” argument and sought access to technologies which enable them to leap-frog over the polluting stage. Net result of this techno-gibberish has been more hot air - both literally and figuratively.

Having enumerated some ways in which technology has affected diplomacy, it’s now time to look from the opposite end of the periscope: What has been the impact of diplomacy on technology? The issues may look less weighty this time, but these are still quite substantive. The following segments are worth mentioning:

(a) Intellectual Property Protection: All scientific discoveries and technological breakthroughs are,

in essence, intellectual properties. It is necessary to acknowledge, reward and encourage them through protection mechanisms such as Copyright, Patents, Trademarks, Industrial Designs, Geographical Appellations, etc. These "Intellectual Property Rights” (IPRs) need to be enforced globally through international conventions. At the same time IPRs cannot be either absolute or till eternity so as to allow socio-economic development and market growth. The rise of "open-sourcing” of software, etc. is a case in point. Since 1867, the international diplomacy has been seized of this challenge and today a swathe of International organisations exists for this purpose. Most important of these is a United Nations’ Geneva-based agency called World Intellectual Property Organisation (WIPO) created in 1970. It supervises the work related to promotion and protection of IPRs as enshrined in a number of international ag r eemen t s such a Pa r i s Convention (1883) and Berne Convention (1886), etc. World Trade Organisation (WTO), the UN Educational, Scientific and Cultural Organisation (UNESCO) as well as other specialised international bodies also have some roles to play in this regard. A Patent Law Treaty (PLT), signed in 2000 is now in force, A more comprehensive Substantive Patent Law Treaty (SPLT) has been mooted. It aims at going far beyond formalities to harmonize substantive requirements such as novelty, inventive step and non-obviousness, industrial applicability and utility, as well as sufficient disclosure, unity of invention, or claim drafting and interpretation.

(b) TRIPS: Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international agreement administered by the World Trade

Organisation (WTO). It sets down minimum standards for many forms of intellectual property (IP) regulation as applied to nationals of all the WTO Members. This agreement, binding upon all WTO members, creates high comfort level for all stakeholders interested in monetising their intellectual property. It is one of the more tangible gains of the Uruguay Round trade diplomacy that created the WTO itself. However, at subsequent Doha Round, India and some other developing countries successfully created a caveat to TRIPS permitting exceptional treatment to the goal "to promote access to medicines for all." This episode illustrates the constant tussle between absolutist and development-priority strains of trade diplomacy.

(c) International S&T Cooperation and Regulation: As much of the current science and technology related pursuits are undertaken as an multinational effort or outside national borders, specialised international mechanisms are often required to codify them. Thus, special purpose scientific and technological platforms have been created to discuss and decide on terms and references. There are some well known international agencies such as International Atomic Energy Agency (IAEA), Organisation for the Prohibition of Chemical Weapons (OPCW), International Energy Agency (IEA). Additionally, other specialised bodies exist to collectively supervise cyberspace through Internet Corporation for Assigned Names and Numbers (ICANN), oceans through the International Maritime Organisation (IMO) and the UN Conference on Law of Seas (UNCLOS). International agreements such as Outer Space Treaty (1967), Moon Treaty (1979), and various treaties governing polar matters also exist. Moreover, diplomatic underpinnings have also facilitated



such international mega-projects as CERN, International Space Stat ion and ITER Nuclear Fusion Research, etc. In general, diplomatic negotiations to usher in such very elaborate and expensive projects are based upon the benefits or spin-offs being apportioned commensurate with member state’s commitment of resources. The Future: As we notice, synergy of technology and diplomacy is often greater than sum of the two. Depending upon the initial objective and motivation, it has mostly been a force for good and helped mitigate societal and economic challenges. However, opposite is often true as well.

L i k e m a n y o t h e r i n t e r -disciplinary issues, technical diplomacy requires expertise of both aspects involved and an out-of-the-box problem solving approach. This poses its own challenges of anticipation, team-work and consensus-building and negotiating an international agreement.

Going by the increasing interface b e t w e e n t e c h n o l o g y a n d diplomacy, we can safely expect this trend to continue in foreseeable future. New challenges such as environmental issues, food, energy, bio and cyber security, global epidemics, etc. would keep calling for this to happen. At the same time, technology and diplomacy would need to ensure that their mutual engagement is not used for partisan political ends.

How has India fared in synergising the technology and the diplomacy to serve her national interests? On face of it, India has world’s second largest technically qualified manpower. We do have proven capabilities in areas such as IT, bio-technology, agricultural research, Pharmaceuticals, nuclear technology and space. India also has significantly large diplomatic

profile. Yet, our footprint on technology related diplomatic space has been sub-optimal, though improving. There are a number of factors responsible for this state of affairs.

First is the paucity of human resource, esp. at diplomatic end. When I joined Indian Foreign Service in 1978, only four out of twenty recruits had post-graduate science background. Rest had studied other disciplines. Specifically, we had no engineers or doctors in our batch. However, thanks to subsequent changes in syllabus for entrance examination, the candidates qualified in technical and scientific disciplines now constitute a majority. This has created a large pool of technically savvy cadre in the Indian Ministry of External Affairs, albeit at junior to middle-rung levels. Simultaneously, need-based structures for such as Investment and Technology Promotion division, Public Diplomacy, Development Partnership Agency (DPA), etc. as well as assigned posts of Scientific Advisors in some missions abroad have been created that utilise cutting-edge technology. For example, Pan African e-Network (PAeN) is an over hundred million dollar programme gifted by India to all 54 countries of the African continent. It offers badly needed tele-education, tele-medicine and VVIP communication facilities to Africa. It is managed by pooling resources from MEA, TCIL and a number of Indian hospitals and universities. Secondly, India needs to attach higher priority to both creating cutting edge S&T capabilities and supporting them diplomatically. Better co-ordination and interface between various concerned stakeholders is required.

Th i rd ly , dabbl ing by our formidable "science bureaucracy” into diplomacy often adds scant

value to either. Apart from MEA, there are separate S&T set-ups for international cooperation in Ministries of Environment, Health as well as the Departments of Science and Technology, Atomic Energy, Space, Bio-Technology, Ocean Development, IT, etc. Although there is no need to over-centralised these structures, some changes are desirable. At official level, the fixation with signing cooperation agreements (which often remain only on paper) needs to be curbed. Instead, the objective should be clearly identifiable national interest. Other stakeholders and end-users outside govt-to-govt network need to be encouraged to contribute.

I wish to conclude by mentioning an important issue. During my assignments in developing countries, I have personally noticed how many of India’s technological juggad are more appropriate to third world countries than available western high tech alternatives, which are unsuitable for being costly and technology-demanding. Some of such Indian adaptations are fairly well known: generic medicines, bio-gas plants, Tata Nano car, three-wheelers, CNG-driven vehicles, etc. Yet, there is no Indian agency to promote, franchise and market such innovations abroad. On the other hand, many developmental problems abroad are looking for simple solutions - which our R&D labs can well provide. Such exchanges would not only reinforce relevance of our technology, but also boost our diplomatic profile.

The Author, a career diplomat was

Indian Ambassador to Algeria

(1999-2001) and Norway (2005-08)

and High Commissioner to Nigeria

(2008-13). The Distinguished Lecture

was given at the Indian Institute of

Technology (IIT), Kanpur (Author's

Alma Mater) on October 31, 2014.



"DtIB India is Looking for More opportunities" –Mr. Jeroen Plag

Excerpts from an exclusive telephone interview with Mr. Jeroen Plag, Chairman of the Dutch Trade and Investment Board India, by journalist Harun Riaz

Mr. Plag, can you describe how the Dutch Trade and Investment Board India has contributed to the promotion of Indo-Dutch business ties since its establishment?

The Dutch Trade and Investment Board (DTIB) India working group is a public-private platform between the Dutch government and businesses aimed at promoting trade and investment between the Netherlands and India. Over the past ten years DTIB India has witnessed a tripling of the trade volume; this is now close to 6 billion euros and there are many more opportunities. While it is best not to overestimate one’s role in promoting business, given that businesses are adept at finding their own entrées and opportunities, it is fair to say that the establishment of the DTIB India working group in 2004 has led to an increased

focus on India from both the public and the private sector.

Major highlights include the royal visit to India in 2007 and more recently the visit by the Dutch Minister for Foreign Trade and Development Cooperation. The DTIB India working group played a role preparing and setting the agenda for both these visits. In 2013 and 2014 I visited India for various promotional events and was involved in the visit of Chief Minister of Uttar Pradesh Mr. Akhilesh Yadav to the Netherlands.

With a new Indian government in place, led by Prime Minister Narendra Modi, we look forward to many more opportunities ahead.

Can you list some of the specific projects which have taken off with the assistance and guidance of DTIB India?

The following two projects are good examples. In the agri sector a few months ago DTIB India members Larive International, the initiator of FoodTech Holland (a public-private partnership comprising over 20 agri companies), and transport and logistics company Broekman Logistics launched a pilot involving the establishment of a ‘cold chain’ to cool crops during transit from the field to the supermarket shelves in order to preserve their freshness. The pilot project near Bangalore has proven that the chain works and now the initiators are looking for investors to scale up the project in order to make it economically viable.

In addition to this we are of course also following developments around the Ganga Rejuvenation project, launched last year by Prime Minister Modi. We think Dutch engineering expertise could add a great deal of value here. We have centuries of experience in dealing with the sea and rivers, not just in the Netherlands but also abroad. For example, Dutch engineering companies such as Royal Haskoning DHV, Arcadis, and Witteveen + Bos play leading roles in New Orleans, New York, Indonesia and Bangladesh.

Is the Netherlands a technology-driven and developed economy? If so, what specific business opportunities are available to Indian enterprises in 2015?

The Dutch are well known for their integrated approach. This is evident

Mr. Jeroen Plag, Chairman, Dutch Trade & Investment Board, India

Business Interview


in our hydraulic engineering works, but also in agribusiness (horticulture-energy) and the research collaboration between our three technical universities (Delft, Eindhoven, Twente) and the private sector in the shape of Technological Top Institutes.

We have identified a few specific sectors, such as agribusiness, water management and urban development as well as technology. Our efforts are aimed at both the domestic and the international markets. In terms of technology we normally rank in the global top ten. Being a small country we need to be highly innovative in order to stay ahead of the competition and so we cooperate with top Dutch universities to develop new technology and solutions in the agriculture, horticulture and energy sectors. The Netherlands is also putting a lot of emphasis on data centres, with large companies attracted by the capability and speed of the country’s internet. Google, obviously a big name, has based several data centres in the Netherlands. It also works the other way round: leading Dutch companies such as Philips and Shell have set up research and development centres in India, in Bangalore, with the Dutch entrepreneurs attracted by the highly trained Indian graduates, who are very knowledgeable and proficient in English.

Given that DTIB India is run in association with Dutch companies that have a presence in India, have you studied the business opportunities available in India? Can you name a few successful Indo-Dutch joint ventures?

Renewable energy is a primary sector in which the Dutch government is investing heavily as we know that coal is not a viable way of producing energy. Wind energy is already contributing to the Dutch energy sector. We have expertise in renewable energy, and India and the Netherlands are already cooperating in this area. India is looking at alternative ways of achieving energy security and is scouting around globally. More importantly, India is looking at renewable energy for environmental reasons. We all know that pollution is a major problem in Latin America, India and China; this means

that renewable energy is essential and Dutch technology can assist in this area.

Renewable energy is attracting a lot of attention in India. What role can DTIB India play in kick-starting renewable energy projects using Dutch technology, capital and continuing research?

The Netherlands has a strong R&D base for solar and wind energy. Research centres such as ECN and TNO are active in this field and contribute to the development of solar and wind energy worldwide, but mainly in the West.

The Dutch government is currently in discussions with various organisations and private parties to look at opportunities for Indo-Dutch collaboration. We need to bring down the cost of wind energy production by 40 per cent to make it a more sustainable source of energy that is able to compete with traditional sources of energy such as coal, oil and gas. I think this is a fantastic challenge for smart minds in India, the Netherlands and worldwide to take on. There is more much focus on renewable energy than there used to be. However, there are challenges to be faced, including the cost of production, rules and regulations, taxation, subsidies and a structure which can ‘stand on its two feet’ . Ongoing research is focused on these areas.

What role does DTIB India play in India’s agriculture sector? And are there opportunities in the Netherlands for Indian enterprises, including Indian farmers?

The role of DTIB India is to facilitate and support, as I described earlier. I have already given you the example of the Dutch ‘cold chain,’ which is

helping Indian businesses and farmers. But yes, the Dutch Embassy in New Delhi and the private sector have identified many more opportunities for Dutch and Indian companies in the agriculture sector. We are hopeful that there will be more opportunities for exporting Dutch agricultural produce to India. India is a big market that offers great opportunities. Dutch companies are looking at ways of improving rice and vegetable seed and the use of fertilisers and actively assist Indian organisations, companies and farmers.

There is also greater potential for the export of Indian food products to European markets. Since both India and the Netherlands have strong roots in agriculture, there is room for more cooperation. Wageningen University & Research Centre is just one of the parties working with Indian researchers on crop improvement specifically for India’s densely populated regions. This involves looking at smarter ways of producing and storing food.

Are you a regular visitor to India? If so, what are your views on growth in the Indian economy, job opportunities and sustainable development?

In the past five years I have visited India two to three times a year and have travelled extensively in the country. I have met with Indian companies wanting to do business with Europe and with the international clients of ING Bank in India. They are enthusiastic about the new government of Prime Minister Modi, which is helping to create an environment which is conducive to business. New policies are being announced and the government is serious about bringing changes to the Indian economy, such as developing smart cities, upgrading infrastructure, speeding up licensing and permits, and relaxing the restrictions on foreign direct investment. Companies are now looking at India as a serious investment opportunity.

Over the past ten years the trade between India and the Netherlands has tripled from 1.8 billion euros to 5.8 billion euros. We are hoping for even faster growth in the next five years.

Business Interview


From Proximity to Prosperity: Connectivity as a Resource for Development in a Globalised economy

By Shyam Saran

Ou r g l o b a l i s e d a n d inter-connected world today revolves around

connectivity in the broadest sense of that term. It includes physical infrastructure in terms of roads, railroads, waterways and sea ports that enable the carriage of goods, services, peoples and ideas both within and across national borders. In our digital age, there are also virtual highways that enable the efficient movement of physical goods and services. They additionally serve as transmission channels for provis ion o f services and the exchange of ideas which create value. But putting in place physical or digital infrastructure is not enough. We need accompanying software including policy, regulatory and procedural regimes to facilitate quick movement within the country as well as across national frontiers. Connectivity enables proximity and proximity is an asset which generates prosperity. Within national boundaries, connectivity is indispensable to the creation of a national market. Nations which are connected with each other in this larger sense are then able to participate in the regional and global value chains which are the hall-mark of modern global economy. If connectivity is missing or is inefficient, then the comparative advantage a country may have in producing

certain goods and services would be reduced or even wiped out because of higher transaction costs.

There is no doubt that India has made significant progress in recent years in linking different parts of the vast country through a more extensive and efficient transport infrastructure. For example, total length of roads in the country increased from 4 lakh kilometres in 1951 to over 4.6 million kilometres in 2013. This is the second largest road network in the world. However the quality of the roads is extremely varied with national highways constituting less than one-third of the total. Furthermore, cargo traffic on the highways is held up at a number of octroi stations at inter-state crossing points. A cargo truck travelling from Mumbai to Kolkata has to negotiate 36 checkpoints along the route. In the U.S., there is only one barrier to cross in the journey from San Franscisco to New York. While rail freight in our country is subject to fewer interruptions and volume wise cheaper, the rail network has grown much less than road transport and feeder services have not kept pace. The proposed high speed freight corridor which will run across the country from Mumbai to Delhi and then east to Kolkata is likely to bring about a major and

significant improvement in rail transportation within the country. Water borne transportation has fallen into disuse in our country though it is being revived. There is a World Bank assisted project to establish modern river transport in the Brahmaputra basin which would also reconnect Bangladesh and India.

In this context one should note the communication revolution which the mobile telephone has brought about in India. There are now over 900 million mobile subscribers in the country and this number continues to grow each year. They also constitute a platform for connectivity, creating new markets, connecting producers to consumers more efficiently and enabling vast amounts of data to flow seamlessly across communities. This can and is having a multiplier effect on economic activity through the closer proximity it creates.

Moving on to our sub-continental neighbourhood, it remains true that our countries are even less connected with each other today than in 1947. Several major transport arteries, including rail, road and water transport, were all interrupted after the partition of India in 1947. Even though some cross-border transport linkages are being re-established with both Bangladesh and Pakistan, they are not generating the benefits they

Expert Opinion


should because of cumbersome customs, immigrat ion and security procedures at border crossing points. Cargo movement is also held up due to lack of accompanying banking, testing and inspection facilities. These issues are now being addressed through an ambitious Indian plan to set up a network of Integrated Checkpoints (ICP) on borders with neighbouring countries. These ICPs which are being set up by the newly constituted Land Port Authority of India (LPAI), will incorporate, at one location, immigration, customs, security, warehousing, phyto-sanitary testing facilities as also banking and exchange facilities.

There would be adequate parking, boarding and lodging and health facilities for the welfare of traders, truckers and other categories of travellers. One such ICP has already been set up at Attari on the India-Pakistan border. Several others are in various stages of implementation on India’s borders with Nepal, Bhutan, Bangladesh and Myanmar. The ICP at the Tamu-Moreh border point on the India-Myanmar border is already under construction. The back-end linkages in terms of modern highways and, where necessary railway connections are also being put in place with these countries mainly through Indian funding.

Of special note in this regard are the proposed Trilateral Highway connecting India, Myanmar and Thailand and the Kaladan Multi-Modal Transport project linking the Myanmar port of Sittwe with Mizoram in our North-East and with Kolkata across the Bay of Bengal. Several highways across the India-Nepal and India-Bhutan borders are being upgraded and new rail links are planned. These transport links will bring closer the vision of a South Asia where there is a free flow of goods, peoples

and ideas transcending political boundaries.

Leaders of South Asia have declared the decade of 2010-2020 as the Decade of Connectivity in the region. That in itself is a major step forward because it represents a political consensus on the importance of connectivity for shared prosperity. Two landmark agreements have been negotiated and are ready for adoption. One is the Motor Vehicles agreement and the other is a Railways

transport projects are important because Myanmar is India’s gateway to South-East Asia. ASEAN has its own connectivity plan and India is working to align its own transport infrastructure development plans with ASEAN. These include cross-border rail and road connectivity, maritime, air and digital connectivity. These must be accompanied by better logistics and efficient border clearances. Only then would it be possible for India to participate in the regional and global value chains which are already highly developed in ASEAN and Asia-Pacific in general.

Ultimately what is required is a mind-set change in India. We must start looking at national boundaries not as impenetrable walls behind which we must protect ourselves from hostile influences beyond, but rather as “connectors”, bringing India closer to its neighbours and through them, the region and world. Cross- border links then become transmission belts for the free flow of development impulses. Transport corridors thus become economic corridors. Through much of its history, India was a flourishing civilisation, leveraging its geographical location at the cross-roads of the ancient caravan routes connecting to Central Asia. Thanks to its peninsular character, lying astride the Indian Ocean, India was also at the centre of the monsoon-driven ocean routes both to the East and the West. India flourished because it was a connected nation. India’s future lies in learning the lessons from its own cosmopolitan past.

(Shyam Saran is a former Foreign

Secretary, is currently Chairman of

the National Security Advisory Board

and RIS, as well as a senior fellow at

the Centre for Policy Research in New

Delhi)

Expert Opinion

Thanks to its peninsular

character, lying astride the Indian

Ocean, India was also at the centre of the

monsoon-driven ocean routes

both to the East and the West.

India flourished because it was a

connected nation. India’s future lies

in learning the lessons from its

own cosmopolitan past

agreement. When implemented, these agreements will go a long way in enabling the smooth movement of goods and peoples across national boundaries.

India has also given priority to its connectivity with ASEAN countries. The India-Myanmar


IsRo touches new HeightsBy Ashok Handoo*

On the 24th September 2014, India created history by becoming the

first country in the world to enter the Mars orbit in the very first attempt. Its Mars orbiter mission also called ‘Mangalyan’, was placed successfully in the orbit of the red planet on this day. India thus joined the elite club of the countries exploring Mars—US, Russia and Europe. It has also become the first Asian country to reach Mars planet.

While all other countries including the US and Russia, had to face initial failures, India did it in one go. The whole operation was watched keenly by the scientists across the world.

The Organ iza t ion beh ind achieving this fete is the Indian Space Research Organization, ISRO. To its credit, besides other achievements, is also the unmanned moon mission ‘Chanderyan 1’, which was

launched in 2008 for scientific exploration- to map the moon’s surface and look for precious metals. The head of the organization Dr. K.Radhakrishnan says that its second moon mission 'Chandrayaan 2', was also in the pipeline. "In this area of scientific exploration, we have of course the 'Chandrayaan 2', with the Indian lander and the Indian rover, which are to be put in place in another three years’ time,” he said. According to him “What we are now looking for is a major scientific mission and, when that can happen will depend upon the mission, could be 2018 or 2020.

No wonder then that ISRO has been chosen for this year’s Indira Gandhi prize for Peace, Disarmament and Development. It has been chosen for the award for strengthening international cooperation in peaceful uses of outer space.

India’s space activities which started in early 60’s from Thumba in Thiruvananthapuram have come a long way since then. The immense potential of space technology in national development was first realized by Dr. Vikram Sarabhai who firmly believed that this powerful technology could play a meaningful role in solving the problems of the common man. He had said “We are convinced that if we are to play a meaningful role nationally, and in the comity of nations, we must be second to none in the application of advanced technologies to the real problems of man and society”.

Initially, the space programme focused on achieving self- reliance by developing capability to build and launch communicat ion satellites for television broadcasts, t e l e c o m m u n i c a t i o n s a n d meteorological applications as also remote sensing satellites for

India's Space Science


management of natural resources. In keeping with objective of ISRO to develop space technology and its application to nation building, it has operationalized two major satellite systems. One is called Indian National Satellite (INSAT) and the other Indian Remote Sensing (IRS). The first one is used for communication services while the other is for management of natural resources. ISRO uses Geostationary Satellite Launch Vehicles (GSLV) for INSAT type satellites and Polar Satellite Launch vehicles for launching IRS type satellites. Its PSLV-C26 successfully launched IRNSS-1C, the third satellite in the Indian regional Navigational satellite system on October 16 from Satish Dhavan Space Centre, Sriharikota at which the Prime Minister Mr. Narendra Modi congratulated ISRO scientists. He described the occasion as a “matter of immense pride and joy”. IRNSS is an independent regional navigation satellite system designed to provide position information in the Indian region and 1500 km. around the Indian mainland.

On December 21st ISRO successfully test fired GSLV mark III to earn yet applause by the Prime Minister. With this launch, India is now capable of sending astronauts into the space. It can double the capacity of payloads which it can carry into

space and place up to 4 tonnes of communication satellites into space. India has thus become a major player in the multibillion dollar competitive market of commercial launch market.

Prime Minister Mr. Narendra modi has made it clear that he wants to expand the Indian space programme. Accordingly, the budget for space research has been increased by 50 percent to $ 1 billion this financial year. In June this year the Prime Minister had asked ISRO to develop a satellite that would serve all SAARC nations. During his Mayanmar visit he announced that the services of SAARC satellite will be extended to Mayanmar also. This will be beneficial, among others, in the fields of health, telemedicine, and long distance education.

In the words of K. Radhakrishnan India’s Mars Orbiter Mission (MOM), powered by smart satellites, has shown the world the way of doing things differently without making any sacrifice on the quality in space mission. Primarily a technological mission, Mars Orbiter Mission is India's first interplanetary mission to planet Mars. The orbiter craft has been designed to orbit Mars in an elliptical orbit. One of its

main objectives is to develop the technologies required for design, planning, management and operations of an interplanetary mission.

The success of the Mars Orbiter Mission has been lauded also for its low price tag of $74 million. The Chandrayaan-1 (India's first unmanned moon probe), which cost $79 million, was launched to map the moon's surface and look for precious metals. The ‘Mangalyan’ was built with most of its parts manufactured indigenously.

The application of satellites for human welfare has also been quite impressive. For instance, INSAT-3D, which became operational in January this year, played an important role in tracking Cyclone Hudhood which hit the east coast of India in October last. During Cyclone Phailin, which hit east coast at the same time last year, images from Kalpana played a vital role.

India’s space programme is thus set to move from one milestone to another and thus realize the dreams of Dr. Vikram Sarabhai – the father of country’s space programme.

*Ashok Handoo is a Senior Freelance Journalist.


The potential for Dutch companies in India is substantial and the same

applies for Indian companies in the Netherlands. Given the endless possibilities in many different sectors both in India and in the Netherlands, it is important that we don’t miss out on any opportunities. The Netherlands being the third largest investor in India and India the fifth largest investor in the Netherlands means that we should continue to nurture these business relations and facilitate where possible.

India is undergoing a transition, both in terms of investor percept ions o f i t s market potential and in reality. The Indian economy is registering around 6% growth amid uncertain global economic conditions.Furthermore, India’s economic liberalization is accelerating at a high rate, opening up new opportunities for business in India but also business between the Netherlands and India.This has been reflected in the launch of the

‘Make in India’ campaign, where Prime Minister Modi intends to attract businesses from around the world to invest and manufacture in India.

Attracted to these growing opportunities, many companies have already come to India and the Netherlands and continue to expand their businesses. Indian companies have become more and more active in the world market. It is not only the market opportunity that attracts companies, butalso India’s high skilled labour force which speaks English and is well informed about western culture and society, which is why foreign companies transfer parts of their activities to India. In addition,since 50% of the Indian population is under the age of 25, Dutch companies could benefit greatly from the abundance of young and highly educated professionals.

However, it’s not always easy to be successful in the Indian market. Particularly for first time investors, it is hard to fully understand the

process of investing or prospecting business opportunities in India. These difficulties may lie in the fact that the business culture might be difficult to understand and dealing with several lengthy procedures and regulations can be tough for foreign companies.

To overcome these challenges, the India Netherlands Business Association (INBA) Mumbai plays an increasingly big role. INBA Mumbai started in December 2010, on the initiative of the Indian and Dutch businesses and the Consul General of the Kingdom of the Netherlands. INBA serves the Dutch-Indian business community in Mumbai. The aim is to support Dutch business in the region and Indian business from this region to and with the Netherlands. In this respect INBA works closely with the Dutch Consulate General in Mumbai.

INBA Mumbai hosts regular (ne twork ing) events , wi th lectures and panel discussions by professionals from Indian and

Business Story

INBA November 2014 Event


Dutch markets on relevant topics. Members have the opportunity to attend business visits and share cross border trade experience and best practices between different industries. Furthermore, INBA participates in Dutch trade missions to the Greater Mumbai region.

INBA has an interesting mix of companies, as well as local Dutch entrepreneurs and Indian mid corps with strong business links to the Netherlands. This serves as an excellent stepping-stone for both Indian and Dutch companies, as well as entrepreneurs. It’s a great way to meet senior people for a wide range of companies and entrepreneurs who have taken the step to set up shop on both ends. For Dutch companies this can be very useful, as they can enter an existing network. They don’t have to start from square one and they can use the existing knowledge that lies within the INBA network. For Indian companies, it’s a very easy way to get in contact with the Netherlands. When becoming an INBA member, you will have the benefit of getting in touch with the right people without having set foot in the Netherlands.

INBA is constantly growing and therefore is very aware of

the recent developments in the market. It adapts its programs and events to the different types of sectors, so that all types of companies can benefit from INBA. One of the more recentprojects INBA is focusing on are the Small and Medium enterprises (SME’s). With the growing importance of SME’s, INBA is giving increased importance to this topic and is looking for ways how INBA can contribute. INBA therefore has planned to launch two new initiatives focusing on SME’s, namely a SME day and a mentorship program. Regarding the SME day, the aim will be to provide insights on doing business in India, which will greatly benefit Dutch SME’s. All the relevant topics will be discussed aiming to lower the hurdle for new Dutch SME’s in India and vice versa.With the mentorship program,

INBA can provide a more tailored approach. Due to the knowledge that lies in the members of INBA, matchmaking could be facilitated within its members between SME’s and larger firms.

INBA Mumbai f ee l s i t i s important to connect all the different chapters across India to optimise its network to its maximal potential by means of a PAN-INDIAN platform. Not only will the knowledge and expertise of your own chapter be available to you, but now the knowledge of all the chapters of India will

become available. The idea is that INBA members will remain linked to their local entity, but can attend events from other chapters as well if they happen to be interested. Due to the fact that more regional connections will be established and therefore each other’s members and events will be known, INBA will be able to actively promote visiting companies or persons in other regions, strengthening the ties between the Dutch and Indian business community. This will reinforce the INBA network and bridges can be built to connect all the INBA chapters together.

INBA is ready to assist where needed, so don’t hesitate to get in touch with them to discuss the possibilities as it will substantially facilitate the process of doing business between Dutch and Indian companies as well as start-ups. You can contact INBA on: [email protected]

Business Story

INBA Christmas Event Dec 2014


India to Develop Inland Waterways

The Government of India is taking the initiative t o d e v e l o p i n l a n d

waterways as a cost effective mode of transport of commercial goods, Visakhapatnam Member of Parliament and BJP State president K. Haribabu said.

A d d r e s s i n g m e d i a i n Visakhapatnam on 2nd January

2015, he said that the National Waterway IV that runs along the Coromandel Coast connecting Kakinada and Puducherry would be developed by the Inland Waterways Authority of India. A consultative meet on the subject under the leadership of Minister of Urban Development M. Venkaiah Naidu is being organised in Vijayawada.

Minister of State for Road Transpor t , Highways and Shipping P. Radhakrishnan and officials from departments concerned would participate in the consultation meeting and presentation. MPs from six coastal districts of the State through which the NW-IV would traverse have been invited for the meeting.

A Public Sector Enterprise consultant organisation WAPCOS has reported that there is scope for 11 million tonnes cargo to be carried by the NW-IV annually. It could transport cargo like coal, rice, food grains, cement, fertilisers, forest produce, salt and other bulk cargo at a fraction of the cost incurred in its transport through rail or road, he said.

WAPCOS had estimated that the project would cost Rs. 1,515 crore, which revised at present prices is likely to cost Rs. 2,400 crore.

The project is expected to not only provide an economical mode of transport but also catalyze the

Mr. Nitin Gadkari, Indian Minister, Ministry of Road Transport, Highway and Shipping, at the Ports & Highways Conclave 2014 in Kolkata

Govt Plans to Convert 101 Rivers into Waterways: Gadkari

Keen on promoting water transport to propel economic growth, the government has set an ambitious

target to convert 101 rivers across the nation into waterways, Mr. Nitin Gadkari said.

"Promoting waterways is the top-most priority of my Ministry. We have identified 101 rivers across the nation to be converted into waterways, which are a much cheaper mode of transport," the Minister for Road Transport, Highways and Shipping said.

Parliament nod would be sought on a bill in this regard for converting any river into a waterway, Gadkari told Press Trust of India. The government has so far declared only

five river stretches as waterways.

He said a slew of steps were underway to promote the sector as the country was yet to tap the potential of waterways despite being cost effective than road and rail transport adding that waterways could contribute s ignif icantly in propel l ing economic growth.

He said his Ministry was committed to reducing traffic burden from roads and promote water transportation where transportation cost is barely 50

paise a km in comparison to one rupee railways and Rs 1.5 a km through roads.

Inland waterways comprising rivers, lakes, canals, creeks, backwaters etc. Extend to about 14,500 km in the country. However, potential of this mode of transport has not been fully exploited so far.

The government has already decided to launch PM Jal Marg Yojna and projects for setting up dry and satellite ports, besides converting riverways into waterways.

Last month Gadkari has said, "Ninety per cent of the Exim cargo in India is transported through ships but the

Make in India


contribution of domestic cargo in it is only 10 per cent...In a bid to boost water transport, we have requested the

Prime Minister to launch PM Jal Marg Yojna, which will change the face of India."

Recently Inland Waterways Authority of India (IWAI) signed a pact with Odisha government, Paradip Port and Dhamra Port to develop commercially viable stretches of National Waterway 5.

In the National Waterway-5, East Coast Canal has been integrated with Brahmini river and Mahanadi delta rivers (588 km).

Also a project to develop National Waterways -4, Shol inganal lur-Kal lapakkam s t re tch o f South Buckingham Canal has been sanctioned.

The National Waterways-1, 2 & 3 have been made operational

Five of the river-stretches, which have been declared as National Waterways, include Ganga-Bhagirathi-Hooghly river system (Allahabad-Haldia-1620 km); river Brahmaputra (Dhubri-Sadiya-891 km); West Coast Canal (Kottapuram-Kollam) along with Udyogmandal and Champakara Canals-(205 km); Kakinada-Puducherry canals along with Godavari and Krishna rivers (1078 km) and East Coast Canal integrated with Brahmani river and Mahanadi delta rivers (588 km).

growth of the economy of the villages en route.

The MP listed out a number of projects that he had pushed through at the Centre for the development of the city and the region and noted that there was a need for greater push for the projects from the State government.

T h e M P i s o r g a n i s i n g a consultative meet on Monday on beach erosion calling academics, industries involved in maritime construction and representatives from Visakhapatnam Port Trust, Greater Visakhapatnam Municipal Corporation and Visakhapatnam Urban Development Authority. After the consultation a proposal with concrete suggestions for stopping beach erosion would

be submitted to the Government, he said.

Earlier in December 2014, while addressing a conclave in Kolkatta on on Ports & Highways, Minister for Transport, Mr. Nitin Gadkari said that the Indian Government will increase its focus on development of waterways for passenger traffic and goods movement.

“We should give more stress on development of waterways as it is a cheap mode of transportation,” Mr. Gadkari said at the Conclave organized by Indian Chamber of Commerce.

He said compared to China where 44 per cent passenger and goods traffic were transported through inland waterways, it was only

three per cent in India. He said the Government would notify more national waterways for which a Bill would be tabled in Parliament.

Chairman of Inland Waterways Authori ty of India (IWAI) Amitabh Verma said there were five notified national waterways in the country at present.

On the national waterway from Haldia to Varanasi, he said the World Bank had provided funds for maintaining a year-round draft of three metres along the entire stretch.

Mr. Verma said States should also make efforts to develop their waterways which would feed the national waterways to form an integrated grid.

Make in India


The Indian agriculture sector accounts for 18 per cent of India's gross domestic

product (GDP) and employs just a little less than 50 per cent of the country's workforce. This sector has made considerable progress in the last few decades with its large resources of land, water and sunshine. India is presently the world's largest producer of pulses and the second largest producer of rice and wheat.

The country is also the largest producer, consumer and exporter of spices and spice products in the world and overall in farm and agriculture outputs, it is ranked second. From canned, dairy, processed, frozen food to fisheries, meat, poultry, and food grains, the Indian agro industry has plenty of areas to choose for business.

The Department of Agriculture and Cooperation under the Ministry of Agriculture is the nodal organisation responsible for the development of the agriculture sector in India. Under it, several other bodies such as the National Dairy Development Board (NDDB) work for the development of the other allied agricultural sectors.

Market Size

The Indian agricultural services and the agricultural machinery sectors have cumulat ively attracted foreign direct investment (FDI) equity inflows to the tune of US$ 365.79 million in the period April 2000-September 2014, according to the Department of Industrial Policy and Promotion (DIPP).

In 2013-14 India achieved a record food grain production of 264 million tonnes (MT), beating the previous year's (2012-13) 257 MT, according to data provided by Department of Economics and Statistics (DES). Also, agricultural profitability has increased over the last decade with record increases in MSPs (minimum support prices) for agricultural produce for all covered crops.

India is the second largest producer of sugar in the world and the government has aimed to increase the exports from 1.3 MT in 2013 to an average of 2 MT in 2014 and 2015.

Spice exports from India are expected to reach US$ 3 billion by 2016-17, on the back of creative marketing strategies, innovative

packaging, strength in quality and a strong distribution network. The Indian spices market is pegged at Rs 40,000 crore (US$ 6.46 billion) annually, of which the branded segment accounts for 15 per cent.

India is the largest producer of milk since 1998 and accounts for about 17 per cent of the world's milk production. The average growth in milk production in the country in the last decade was 4.2 per cent as against the world average of 2.2 per cent, indicating a healthy trend.

The procurement target for rice during Kharif Marketing Season (KMS) 2014-15 has been finalised as 30.05 million tonnes (MT).

Investments

P r o m p t e d b y t h e I n d i a n government's initiatives, there has been various investments in the Indian agricultural sector. The major investments and developments in agriculture in the recent past are as follows:

Metahelix Life Sciences has launched a new variety of maize hybrid seeds for improved productivity. The new hybrid MM 2100 has plant structure with upright leaves that allows higher growth and the cob size does

Make In India: Agriculture & Dairy sector


not get reduced due to less gap between plants.

The International Crops Research Institute for Semi-Arid Tropics (ICRISAT) and Ramoji Film City (RFC) have signed a MoA (Memorandum of Agreement) on Sustainable Management of Water Resources and Sustainable Agriculture Development through the establishment of an Agriculture Theme Park at RFC.

Tata Global Beverages (TGB) has init iated research and development (R&D) under Project Sustainable Plant Protection Formulation (S-PPF) to evaluate the viability of biological or non-pesticidal methods for plant protection of tea crops. The project is a collaborative effort between TGB, Rallis and Tata Chemicals.

ICRISAT plans to invest US$ 5 million in upgrading research infrastructure in Africa. The funds will also be used for building scientific skills in sub-Saharan Africa.

The Agricultural and Processed F o o d P r o d u c t s E x p o r t Development Authority (APEDA) has signed a Memorandum of Understanding with Maharashtra State Warehousing Corporation (MSWC) for set t ing up of infrastructure for cold storage at

Gultekdi, the wholesale market yard in Pune. The proposed project involves facilities for cold storage, pre-cooling and blast freezing.

Government Initiatives

The Government of India has adopted and implemented several initiatives in the past few months. Some of the recent major initiatives are as follows:

The Ministry of Food Processing Industries has taken some new initiatives to develop the food processing sector, which will help to enhance the incomes of farmers and export of agro and processed foods, among others. It also includes the opening of Mega Food Parks and reduction in excise duties for Food Processing machinery.

The Government of Telangana has allocated Rs 4,250 crore (US$ 687.38 million) for the first phase of farm loan waiver scheme. The scheme is expected to benefit 3.6 million farmers who had taken loans of Rs 100,000 (US$ 1,617.37) or below before March 31, 2014.

The Government of India plans to launch a new insurance scheme to protect farmers and their incomes against production and price risks. The new insurance scheme

is expected to encourage farmers towards crop diversification.

The Ministry of Agriculture, Government of India, has signed a Memoranda of Understanding (MoU) with 52 countries to provide better agricultural facilities for cooperation in the field of agriculture and allied sectors.

India and Bhutan plans to strengthen strategic cooperation in the field of agriculture and allied sectors.

The Government of India plans to invest Rs 50,000 crore (US$ 8.08 billion) to revive four fertiliser plants and set up two new plants to produce farm nutrients. In addition, the government is also in talks with the Government of Iran to set up a 1.2 million tonnes per annum (MTPA) urea plant in Iran on the lines of India's joint venture (JV) with Oman.

Road Ahead

The government's liberal FDI policies have opened the doors for several foreign companies to set up operations in India. Also, there is scope for the use of genetically modified crops to increase the yield in farms. The 12th Five-Year Plan's estimates of expanding the storage capacity to 35 MT and the target of achieving an overall growth of four per cent will help in improving the growth of the agriculture sector.

Furthermore, Dairy Vision 2025 has been planned to take stock of the current situation across the dairy value chain and evolve strategies for increasing productivity and profitability of farmers.

Exchange rate used: INR 1= US$ 0.016 as on February 2, 2015Source : India Brand Equity FoundationReferences: The Economic Survey, Agricultural and Processed Food Products Export Development Authority (APEDA), The Union Budget 2014-15, Press Releases, Media ReportsDisclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

Make in India


These include providing support of Rs 1000 crore to Central Public Sector

units to set up over 1,000 MW grid connected solar photovoltaic power projects, setting up of 25 solar parks each with a capacity of 500 MW requiring financial support from the centre of Rs 4050 crore and setting up of over 300 MW of solar power projects by Defence and Para military establishments. With these decisions, India will emerge as a major solar power producing country as nowhere in the world solar parks are being developed on such a large scale.

The Government res to red Accelerated Depreciation benefit in the Union Budget 2014 to give much-needed relief to wind power developers and to ensure ramp-up of production. This will enable to kick start & ramp up wind capacity addition expeditiously. The Government amicably resolved the anti-dumping duty dispute. A whole host of measures have been undertaken to make India “Solar manufacturing” hub with priority for domestic players in line with “Make in India” programme. With these initiatives, domestic manufacturers will have greater visibility on order books,

have an opportunity to upgrade technologically and be able to reduce costs.

In order to facilitate speedy growth of renewable energy power generation in the country, the Ministry of New and Renewable Energy (MNRE) is preparing a Renewable Energy Bill. This apart, the Ministry is also preparing a scale up plan for the development of Solar in the next five years.

Outlining the new government’s priorities in the energy sector, President Mr. Pranab Mukherjee, while addressing the first session of both Houses of Parliament after the elections to the 16th Lok Sabha, said that the government will come out with a comprehensive National Energy Policy and focus on development of energy related infrastructure, human resource and technology. The aim of the government will be to substantially augment electricity generation capacity through judicious mix of conventional and non-conventional sources. It will expand the national solar mission and connect households and industries with gas-grids.

To showcase India's renewable energy potential globally, the MNRE in partnership with Indian Renewable Energy Development Agency Limited (IREDA), the Confederation of Indian Industry

Renewable energy Programmes Gets A new Impetus; Focus on

Development of energy InfrastructureGiving a fillip to the country’s renewable energy programme, the new

government led by Mr. Narendra Modi has taken a slew of decisions in a span of six months to boost “Clean Energy” in the country

Sustainable Development


(CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) is organizing the Global Renewable Energy Investment Promotion Meet (RE-INVEST) from 15-17 February, 2015 as a follow-up to the 'Make in India' initiative launched by the Prime Minister. RE-INVEST will enable the global investment community to connect with the renewable energy stakeholders in India.

The details of the major initiatives of Ministry of New and Renewable Energy to boost “Clean Energy” in the country are as follows:

1. Scheme for development of Solar Parks and Ultra Mega Solar Power Projects:

The Government has recently approved a Scheme for setting up of 25 Solar Parks, each with the capacity of 500 MW and above and Ultra Mega Solar Power Projects to be developed in next 5 years in various States and will require Central Government financial support of Rs 4050 crore. These parks will be able to accommodate over 20,000 MW of solar power projects. 12 states have so far given consent for setting up of Solar Parks. They are: Gujarat, Madhya Pradesh, Telengana, Andhra Pradesh, Karnataka, Uttar Pradesh, Meghalaya, Jammu & Kashmir,

Punjab, Rajasthan, Tamil Nadu and Odisha. The solar parks will be developed in collaboration with State Governments and their agencies.

2. Setting up of over 300 MW of Grid-Connected Solar PV Power Projects by Defence establishments and Para Military Forces with viability gap funding:

Under this Scheme over 300 MW of Grid-Connected and Off-Grid Solar PV Power Projects will be set up by Defence Establishments under Ministry of Defence and Para Mil i tary Force under Ministry of Home Affairs (MHA) with Viability Gap Fund (VGF) under the Jawaharlal Nehru National Solar Mission (JNNSM) in five years that is from 2014 to 2019. Under the Scheme there is a stipulation of mandatory condition that all PV cells and modules used in the solar plants set up under this Scheme will be made in India. To implement this Scheme a provision of an amount of Rs 750 crore for MNRE from the National Clean Energy Fund has been earmarked.

3. Implementation of Scheme for setting up 1000 MW of Grid Connected Solar PV Power projects by CPSUs and GoI organisations with Viability Gap Funding:

The Government has a lso approved the Scheme for setting up of 1000 MW of Grid-Connected Solar PV Power Projects with VGF (Viability Gap Fund) support of Rs.1000 crore, by CPSUs under various Central/State Schemes, in three years period from 2015-16 to 2017-18. The Scheme will have a mandatory condition that all PV cells and modules used in solar plants set up under this Scheme, will be made in India. The CPSUs and Government of India organisations like NTPC, NHPC, CIL, IREDA, Indian Railways, etc. are coming forward to set up solar power projects.

4. Classification of Renewable Projects from Red to Green Category:

On the request of MNRE, Ministry of Environment and Forests has decided that classification of Solar, Wind and Small Hydro Projects be out of Red Category to Green Category under Central and State Pollution Control Boards. CPCB has issued an amendment in the categories of industries, according to which the Wind and Solar power projects of all capacities and Small Hydro projects of <25 MW capacity have been put in Green category, i.e. the project developers to obtain clearance from SPCB to “establish and operate” only once in the beginning.



5. Continuation of Schemes for 12th Plan Period:

The Gove rnmen t approved the following schemes for their continuation during the 12th Plan period: (i) National Biogas and Manure Management Programme (NBMMP), (ii) Scheme to Support Promotion of Grid-Interactive Biomass Power and Bagasse Co-generation in Sugar Mills, (iii) Programme for the Development of Small Hydro Power, and (iv) Off-grid and Decentralized Solar Applications under JNNSM.

6. Enhancement in MNRE’s Budget by 65.8% in Regular Budget, 2014-15:

The Budget Estimate of the Ministry is increased by 65.8% to Rs.2519 crore in the Regular Budget passed by the Parliament in July from Rs.1,519 crore provided in the Interim Budget. Clean Energy Cess on coal has been increased from Rs 50 per tonne to Rs 100 per tonne so that adequate funds are available for financing Renewable Energy projects.

7. Restoration of Accelerated Depreciation (AD) Benefits to Wind Power Projects :

After significant harm was done to the wind sector due to withdrawal of AD with effect from 1.4.2012, it has been restored on 18.7.2014. This decision of the Government will help in creating a robust manufacturing base of wind turbines in the country.

8. Scheme for Development of Grid Connected Solar PV Power Plants on Canal Banks and Canal Tops :

MNRE launched a Scheme for Development of Grid Connected Solar PV Power Plants on Canal Banks and Canal Tops in the country during the 12th Plan period at an estimated cost of Rs. 975 crore and with Central Financial Assistance (CFA) of Rs. 228 crore. The objective of this scheme is to

achieve gainful utilization of the unutilized area on top of Canals and also the vacant Government land along the banks of Canals wherever available, for setting up Solar PV power generation plants for feeding the generated power to Grid and to set up a total capacity of 100 MW solar PV power projects.

9. Financing Roof top Solar PV:

The Department of Financial Services under the Union Finance Ministry has advised all banks to encourage home loan/home improvement loan seekers to install roof top solar PVs and include the cost of equipment in their home loan proposals just like non solar lighting, wiring and other such fittings. Apart from this, the RBI have issued instructions to all Scheduled Commercial Banks that the loans sanctioned by banks directly to individuals for setting up off-grid solar and other off-grid renewable energy solutions for households will be covered under Priority Sector lending.

10. Scaling up of a programme of Solar Pumps:

The existing programme of Solar Pumps has been scaled up to solarize one lakh solar pumps and supplementary guidelines to this effect have been issued. The target of one lakh pumps has been allocated amongst, 20,000 are allocated to Ministry of Drinking Water Supply and Sanitation (20000 pumps for drinking water), MNRE (solarizing 50,000 pumps for irrigation purpose through States) and to NABARD (30000 pumps) for innovative implementation

11. Improved Cook-stoves:

Unnat Chulha Abhiyan9uca) Programme with the objectives to develop and deploy improved

cook-stoves for providing cleaner cooking energy solutions in rural, semi –urban and urban areas using biomass as fuel for cooking launched. This will save rural women from the carcinogenic fumes emitted when traditional fuels are burned.

12. Obtaining/Extending Line of Credits for IREDA:

• The Agence F ranca i se deDevelopment (AFD) of France has decided to extend a Line of Credit (LoC) of Euro 100 million to Indian Renewable Energy Development Agency Ltd. (IREDA), for the tenure of 15 years without any guarantee from Government of India, for financing the Renewable Energy and Energy Efficiency projects in the country. An agreement to this effect was signed between AFD and IREDA on 22 May, 2014.

• Indian Renewable EnergyDevelopment Agency (IREDA) Ltd and Japan International Co-operation Agency (JICA) signed an Agreement for availing another Line of Credit (LoC) of JPY 30 billion for 30 years (including the grace period of 10 years) from JICA according to which IREDA shall utilize the funds for financing Renewable Energy projects in India.

• AMemorandumofUnderstanding(MOU) has been signed by IREDA and US Exim Bank with respect to cooperation on clean energy investment. As per MoU, US Exim Bank shall provide US $ 1 Billion medium and long-term guaranteed and/or direct dollar loans to finance U.S. technologies, products and services utilized during commercial development activities within the clean energy sector by IREDA.

13. Setting up a JVC for undertaking the First Demonstration Offshore Wind Power Project in the country along the Gujarat Coast:

An MOU was signed on 1st October, 2014 for setting up a Joint Venture



Company (JVC) to undertake first Demonstration Offshore Wind Power Project in the country along the Gujarat coast. The signatories of the MoU were Ministry of New and Renewable Energy (MNRE), National Institute of Wind Energy (NIWE), and Consortium of partners consisting of National Thermal Power Corporation (NTPC), Power Grid Corporation of India Ltd (PGCIL), Indian Renewable Energy Development Agency (IREDA), Power Finance Corporation (PFC), Power Trading Corporation (PTC), and Gujarat Power Corporation Ltd (GPCL). The JVC will undertake detailed feasibility study and necessary steps as deemed necessary for implementation of the first offshore demonstration wind power project.

14. Formation of an Association of Renewable Energy Agencies of States (AREAS):

To promote the interaction amongst the State Nodal Agencies (SNAs) implementing the renewable energy programmes to enable them to learn from each other's experiences and share their best practices, MNRE took an initiative in consultation with SNAs and formed an Association of Renewable Energy Agencies of States (abbreviated as "AREAS), registered as a society on 27 August 2014, under Society Registration Act 1860.

IN A NUTSHELL: MAJOR INITIATIVES TO BOOST CLEAN ENERGY IN THE COUNTRY

•Schemeforsettingup25solarparkseach with a capacity of 500 MW and above and Ultra Mega Solar Power Projects; to be set up during five years that is from 2014-15 to 2018-19 and will require Central Government financial support of Rs.4050 crore.

• Setting up over 300MW of Grid-Connected and Off-Grid Solar PV Power Projects by Defence Establishments and Para Military Forces with Viability Gap Fund (VGF) under JNNSM; Provision of an amount of Rs.750 crore from the National Clean Energy Fund (NCEF) for the purpose.

• Scheme for setting up 1000MW of Grid Connected Solar PV Power projects by CPSUs and GoI organisations under various Central / State Schemes / self-use / 3rd party sale / merchant sale with Viability Gap Funding under batch – V of Phase-II of JNNSM.

• Scheme for Developmentof Grid Connected Solar PV Power Plants on Canal Banks and Canal Tops ; to be implemented during the 12th Plan period at an estimated cost of Rs. 975 crore and with Central Financial Assistance (CFA) of Rs. 228 crore.

loan seekers to install roof top solar PVs

• Classification of Solar,Windand Small Hydro Projects be out of Red Category to Green Category.

• Existing programme of SolarPumps scaled up to solarize one lakh solar pumps.

•SettingupaJVCforundertakingthe First Demonstration Offshore Wind Power Project in the country.

• A g e n c e F r a n c a i s e d eDevelopment (AFD) of France extended a Line of Credit (LoC) of Euro 100 million to Indian Renewable Energy

• Enhancement in MNRE’sBudget by 65.8% in Regular Budget, 2014-15.

• Restoration of AcceleratedDepreciation (AD) Benefits to Wind Power Projects.

• Clean Energy Cess on coalincreased from Rs 50 per tonne to Rs 100 per tonne so that adequate funds are available for financing Renewable Energy projects.

• Banks advised to encouragehome loan/home improvement

Development Agency Ltd. (IREDA).

• IREDAandJapanInternationalCo-operation Agency (JICA) signed an Agreement for availing another Line of Credit (LoC) of JPY 30 billion for 30 years .

• An MOU was signed forsetting up a Joint Venture Company (JVC) to undertake first Demonstration Offshore Wind Power Project in the country along the Gujarat coast.



• 3rd largest pharmaceuticalsmarket by 2020.

• 20% of global exports ingenerics.

• USD45Billioninrevenueby2020.

• USD26.1Billion in genericsby 2016.

• USD200Billion tobe spenton infrastructure by 2024.

• 49%ofalldrugmasterfilingsregistered in the USA.

REASONS TO INVEST

• India is expected to rankamongs t the top th ree pharmaceutical markets in terms of incremental growth by 2020.

• India is the sixth largestmarket globally in terms of size.

• India’sgenericdrugsaccountfor 20% of global exports in terms of volume, making the country the largest provider of generic medicines globally.

• India’s cost of production issignificantly lower than that of the USA and almost half of that of Europe.

• Askilledworkforceaswellashigh managerial and technical competence.

• Economicprosperity is likelyto improve affordability for generic drugs in the market.

• Approvaltimefornewfacilitieshas been drastically reduced.

STATISTICS

• Thecountry’spharmaceuticalsindustry accounts for about 2.4% of the global pharma industry by value and 10% by volume.

• Industryrevenuesareexpectedto expand at a CAGR of 12.1% during 2012-20 and reach USD 45 Billion.

• ThehealthcaresectorinIndiais expected to grow to USD 250 Billion by 2020 from USD 65 Billion currently.

• The gener ics market i sexpected to grow to USD 26.1 Billion by 2016 from USD 11.3 Billion in 2011.

GROWTH DRIVERS

• Between 2011 and 2016,patent drugs worth USD 255 Billion are estimated to go off-patent leading to a huge surge in generic product and tremendous opportunities for companies.

• In 2011, India’s OTC drugmarket stood at USD 3 Billion and a rise to USD 6.6 Billion is forecast by 2016.

• With increasing penetrationof chemists, especially in rural India, OTC drugs will be readily available.

• Pharma companies haveincreased spending to tap rural markets and develop better infrastructure. The market share of hospitals is expected to increase from 13.1% in 2009 to 26% in 2020.

• Following the introductionof product patents, several multinational companies are expected to launch patented drugs in India.

• Thepurportedriseoflifestylediseases in India is expected to boost industry sales figures.

• OverUSD200Billionistobespent on medical infrastructure in the next decade.

• Risinglevelsofeducationareset to increase the acceptability of pharmaceuticals.

• India’spatientpoolisexpectedto increase to over 20% in the next 10 years, mainly due to the rise in population.

FDI POLICY

• 100%FDIisallowedundertheautomatic route for greenfield projects.

• For b rownf ie ld p ro jec tinvestments, up to 100% FDI is permitted under the government route.

• T h e g o v e r nme n t m a yincorporate appropriate c o n d i t i o n s f o r F D I i n brownfield cases, at the time of granting approvals.

• ‘Non-compe te ’ c l ausesare not allowed except in special circumstances, with the approval of the Foreign Investment Promotion Board.

• TheFDIissubjecttoapplicableregulations and laws.

SECTOR POLICY

The National Pharmaceutical Pricing Policy, 2012 (NPPP-2012) has been notified on December 7, 2012.

The salient features of the NPPP-2O12 are as under:

• The regulation of prices ofdrugs on the basis of the essentiality of drugs as specified under the National List of Essential Medicines (NLEM)- 2011.

• The regulation of prices ofdrugs on the basis of regulating the prices of formulations only.

• The regulation of prices ofdrugs on the basis of fixing the ceiling price of formulations through Market Based Pricing (MBP).

• Theprovisionofexemptionstodrugs manufactured through indigenous R&D from price control for 5 years.

• A Drug Price Control Order2013 has been notified in

India’s Pharma sector and the Make in India opportunities

Make in India


May 2013 to implement the provisions of NPPP-2012.

FINANCIAL SUPPORT

KEY PROVISIONS IN THE 2O14-15 UNION BUDGET:

• Creation of newdrug testinglaboratories and further strengthening of the 31 existing state laboratories.

• Full exemption from exciseduty is being provided for HIV/AIDS drugs and diagnostic kits supplied under National AIDS Control Programme funded by the global fund to fight AIDS, TB and Malaria (GFATM). The customs duties on the said drugs are also being exempted.

• AllocationofINR5000Millionto set up four more institutions of the stature of AIIMS in Andhra Pradesh, West Bengal, Maharashtra and U.P.

• Any of the following twodeductions can be claimed:

1 . I n v e s t m e n t a l l o w a n c e (additional depreciation) at the rate of 15% to manufacturing companies that invest more than INR 1 Billion in plant and machinery acquired and installed between 01.04.2013 and 31.03.2015 provided the aggregate amount of investment in new plant and machinery during the said period exceeds INR 1 Billion.

2. In order to provide further fillip to companies engaged in manufacturing, the said benefit of additional deduction of 15% of cost of new plant and machinery, exceeding INR 250 Million which is acquired and installed during any previous year ending up to 31.3.2017.

EXPORT INCENTIVES HAVE BEEN ENVISAGED IN THE FOLLOWING SCHEMES:

• Focusproductscheme.• Specialfocusproductscheme.• Focusmarketscheme.

• Export promotion capitalgoods scheme.

AREA-BASED INCENTIVES:

• Incentives for units in SEZ/NIMZ as specified in respective acts.

• Settingupofprojectsinspecialareas such as the North-east, Jammu & Kashmir, Himachal Pradesh and Uttarakhand.

UNITS IN CLUSTERS:

• Aschemeforthedevelopmentof common facilities like effluent treatment, testing centres etc.

STATE INCENTIVES:

• Besidestheabove,eachstatein India offers additional incentives for industrial projects.

• Incentives are in areas likesubsidised land cost, relaxation in stamp duty on sale/lease of land, power tariff incentives, concessional rate of interest on loans, investment subsidies/tax incentives, backward areas subsidies, special incentive packages for mega projects etc.

R&D BENEFITS:

Industry/private sponsored research programs:

• A weighted tax deduction isgiven under section 35 (2AA) of the Income Tax Act.

• Aweighteddeductionof200%is granted to assesses for any sum paid to a national laboratory, university or institute of technology, or specified persons with a specific direction provided that the said sum is used for scientific research within a program approved by the prescribed authority.

Companies engaged in manufacture having an in-house R&D centre:

• Weighted tax deduction of200% under section 35 (2AB) of the Income Tax Act for both

capital and revenue expenditure incurred on scientific research and development. Expenditure on land and buildings are not eligible for deduction.

• Anationalcentretohelpdevelopbulk drugs and facilitate their research is being set up in Hyderabad.

INVESTMENT OPPORTUNITIES

• India isexpectedtobethe thirdlargest global market for active pharmaceutical ingredients by 2016, with a 7.2% increase in market share.

• Indian pharma companiesregistered 49% of overall Drug Master Filings (DMF) filed in the US in 2012.

• The Contract Research andManufacturing Services industry (CRAMS) – estimated at USD 8 Billion in 2015, up from USD 3.8 Billion in 2012. The market has more than 1000 players.

• The formulations industry –India is the largest exporter of formulations with 14% market share and ranks 12th in the world in terms of export value. Double-digit growth is expected over the next five years.

FOREIGN INVESTORS

• TevaPharmaceuticals(Israel)• NiproCorporation(Japan)• Procter&Gamble(USA)• Pfizer(USA)• GlaxoSmithKline(UK)• Johnson&Johnson(USA)• OtsukaPharmaceutical(Japan)• AstraZeneca(Sweden-UK)

AGENCIES

• Department of Pharmaceuticals,M i n i s t r y o f C h e m i c a l s & Pharmaceuticals

• Indian Drug ManufacturersAssociation

• Bu lk Drug Manu fac tu re r sAssociation

• Pharmexcil• F e d e r a t i o n o f P h a r m a

Entrepreneurs• Con f ed e r a t i o n o f I nd i an

Pharmaceutical Industry• IndianPharmaceuticalAlliance.

Make in India


entry into eU via the netherlands can Lead to Cash Flow optimization

Over 800 multinationals supply their clients in Europe, Africa and the Middle East centrally from the Netherlands. Indian companies, such

as Godavari Biorefineries, Sudarshan Chemicals, Laxmi Organics, Aquapharm Chemicals and Aspinwall benefit from Dutch logistics expertise as well. The Netherlands is the ideal base for pan-European logistics operations. Below you will discover why. Indian companies are increasingly active in the European market. As a consequence of this sales and marketing channels and therefore supply chains are moving from indirect to (more) direct. In many cases, Indian companies consider holding stock in the European market to cater to their European clients needs, ie being able to deliver smaller order quantities more frequently with a shorter lead time (just in time).

When setting up or restructuring your company’s direct tax effective European supply chain, there are numerous considerations. Factors such as production/sourcing locations, inbound transport strategy, scale of the business, type of product, sales channel, location of customers, required lead-time to market and taxation influence the supply chain set up.

Tax effectiveness in the European supply chain

High levels of competition in the quest for market growth are forcing companies to scrutinize their costs and business processes. In some cases, this results in a strategic reorientation in terms of business location and logistic flows. The Dutch tax and customs authorities are known for being practical and proactive about facilitating international trade and optimizing procedures. This approach includes the opportunity for provisional court rulings, which may result in binding agreements that give foreign and domestic companies businesses clear information and certainty.

The Netherlands is known for its highly competitive tax structure, resulting from a corporate income tax rate of 25% (20% until Euro 200.000,-), an extensive tax treaty network, a system of bonded warehousing and a VAT deferment option at the time of import. Compared to neighboring countries, the Netherlands has one of the most favorable arrangements for cash flow optimization in relation to indirect taxes (ie duties and VAT).

Companies that are established in the Netherlands can apply for a so-called ‘Article 23 license’, which allows them

to defer the payment of import VAT until the moment of filing the periodical VAT return. The VAT can then be declared as payable on the return, whereby the same amount is immediately deducted as input tax. In sum, VAT does not have to be pre-financed. Without this license, import VAT would have to be paid immediately at the border, after which this VAT can be reclaimed via a refund application or via the periodical VAT return. As mentioned above, it can take weeks, months or sometimes even a year for this VAT to be refunded. An Article 23 license can be granted to businesses established in the Netherlands, and also to businesses that are not established in the Netherlands but have appointed a fiscal representative for VAT purposes in the Netherlands.

It can be concluded from the above that geographical and logistic factors are not necessarily the only valid reasons for importing via the Netherlands. The fact that import VAT does not have to be pre-financed can play a major part in the decision to route a flow of goods via the Netherlands.

Advantages of the Netherlands:

• Central location: The Netherlands is ideally located inNorthwest Europe, strategically in the middle of Europe’s main markets Germany, France and the UK and optimally situated to serve the pan-European market. Home to Europe’s largest seaport (the Port of Rotterdam) and Europe’s third-largest cargo airport (Amsterdam Airport Schiphol), the country features excellent multimodal access to the hinterland.

• Excellentinfrastructure:NoothercountryinWesternEuropeoffers such a convenient combination of both seaport and airport locations. Via the extensive network of inland connections, goods find their way quickly and efficiently to and from the European market at competitive rates by road, inland shipping, rail, pipeline, short sea or feeder. This, combined with the vast number of logistic service providers, ensures frequent onward connections, short transportation lead times and competitive pricing from the seaports, airports and distribution centers in the Netherlands to all the main destinations within Europe and beyond.

Additional information

Please contact HIDC/NDL (Holland International Distribution Council, www.hidc.nl) to receive customized information, free of charge. All information you provide will be handled with the utmost discretion and will remain strictly confidential.

KPMG IndiaAdvertisement

india-netherlands in focus 2015

Documents