India to invest $140 Billion in railways in next Five Year Plan

Jan 8, 2016 0

Indian_RailwayKOLKATA– The government has decided to pump in $140 billion in the railways in the next Five Year Plan as infrastructure investment, Railways Minister Suresh Prabhu said here on Friday.

“We have taken a decision to invest $140 billion in the railways in the next Five Year Plan,” he said at the Bengal Global Business Summit here.

Prabhu said that the dedicated freight corridor will be completed in another three years speeding up the movement of goods and ensuring direct linkages with ports.

The railways have awarded tenders of Rs.19,000 crore over the past six months and the amount will be doubled in the near future.

He said the proposed East-West metro, which links the satellite town of Salt Lake to Howrah, has been put on the fast track and is slated to be completed in two and a half years.

The first phase of the metro services would become operational in June 2018, said Prabhu.

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India and World Bank Sign $50 Million Project to Improve Education & Skills Training for Minority Communities in India

Jan 7, 2016 0

NEW DELHI – The Government of India and the World Bank have signed a US$ 50 million credit for the Nai Manzil: Education and Skills Training for Minorities Project to help young people from minority communities complete their education and gain from market-driven training programs with the aim of improving their employment outcomes.

At the signing - Michael Haney, Operations Advisor, World Bank, Raj Kumar, Joint Secretary, Department of Economic Affairs, Ministry of Finance and Dinesh Singh Bisht, Joint Secretary, Ministry of Minority Affairs

At the signing – Michael Haney, Operations Advisor, World Bank, Raj Kumar, Joint Secretary, Department of Economic Affairs, Ministry of Finance and Dinesh Singh Bisht, Joint Secretary, Ministry of Minority Affairs

The project will support the Government of India’s national Nai Manzil (New Horizon) Scheme, a comprehensive education and skills development program for youth from minority communities, launched in August this year. The project will reach out to disadvantaged youth from minority communities and support their enrolment in open schooling, as well as provide hands-on vocational training. It will also provide post-placement support to assist them in finding sustainable employment.

“The Nai Manzil Scheme is designed as an integrated education and training program that provides youth from minority communities skills that are needed for different tasks in a rapidly changing world. Interventions under this project will support the Nai Manzil Scheme in improving the employability and performance of minority youth in the labor market,” said Raj Kumar, Joint Secretary, Department of Economic Affairs, Ministry of Finance, Government of India.

The credit agreement for the project was signed by Raj Kumar, Joint Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India and Michael Haney, World Bank’s Operations Adviser in India, on behalf of the World Bank.

“India’s demographic dividend can be harnessed only if all young people from all sections of society are equipped with the education and skills needed to make them productive members of the economy,” said Michael Haney, Operations Adviser, World Bank, India. “This project reflects the government’s intent to provide opportunities for youth from minority communities to acquire the education and training that they might have missed out on. We hope it will improve the employability and earning capacity of youth, particularly that of women, in these communities.”

Twenty percent of young people (i.e. those between 17 and 35 years of age) from minority groups (notified minorities consist of Muslims, Parsees, Jains, Buddhists, Christians, and Sikhs) are out of the labor force, which is higher than their share of the youth population. While overall the trend has been for youth in India to receive more years of formal education, youth from certain minority communities are more likely to experience lower levels of education and are more likely to be unemployed. According to the National Sample Survey 2011-2012, Muslim youth have the lowest labor market outcomes. They earn 25-30 percent lower wages, are 50 percent less likely to be engaged in the formal sector and have higher rates of unemployment.

A recent World Bank study of select skills training programs in five states of India found that well designed skills training programs make a positive difference; beneficiaries were found to experience a seven percentage point increase in employment (with a stronger result for women than for men) and a 21 percent increase in their wages. In addition, formal education continues to shape employment outcomes and long-term productivity of the youth. Youth with primary education (or less) receive 12 percent lower wages than those with secondary education, the study found.

“The objective is to help these youth to extend their formal education and enter the labor market with better employment prospects. The project will also incentivize the education and training providers to provide placement support to these students, and track them for a certain period after they have completed the study or training program,” said Muna Salih Meky, Senior Education Specialist, World Bank and John D. Blomquist, India Program Leader, Inclusion and the World Bank’s Task Team Leaders for the project.

The credit is from the International Development Association (IDA) – the World Bank’s concessionary lending arm – the credit is on IDA terms with a maturity of 25 years, including a 5 year grace period.

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Mamata to woo investors at the Bengal Global Summit

Jan 6, 2016 0

KOLKATA– In a bid to give an image makeover to West Bengal as a “new business ready” state, the two-day Bengal Global Summit 2016 begins here on Friday, with the state government hoping to draw huge investment commitments from both domestic and international industry captains.

Months ahead of the crucial Assembly polls, the Mamata Banerjee led Trinamool Congress regime is showcasing the event in a grand manner to dispel the negative perceptions about Bengal in business circles and attract much needed big ticket projects that would in turn ensure jobs for a large number of unemployed youths.

Mamta Banerjee

Mamta Banerjee

The state, where the East India Company first set up base ushering in British colonial rule for two centuries, was known as an industrial hub till the first decades of independence.

However, militant trade unionism and what critics have called a deteriorating work culture saw a flight of capital and the industrial scenario turned bleak over decades.

Though the erstwhile Left Front government – that was in office for a record 34 years till mid 2011 – has been largely blamed for the decline, the scenario has remained unchanged, and even worsened to some extent, since Chief Minister Mamata Banerjee took over.

Her hands-off policy on acquiring land for industries, and widespread allegations of thriving extortion rackets have turned away prospective investors. Consequently, heads of India Inc’s big guns like the Tatas, Birlas and the Ambanis – regulars at the Vibrant Gujarat Global Investors Meet – have so far given a miss to the Bengal summit.

However, Reliance Industries chairman and managing director Mukesh Ambani attended Banerjee’s investment meet in Mumbai in 2013, and speculation is rife that he may be the star attraction in the upcoming summit.

State Finance Minister Amit Mitra who was camping in Mumbai to woo the country’s top industry mandarins, asserted the investment commitments in the coming summit would surpass last year’s figure of Rs 2.43 lakh crore.

“We will surpass last year’s investment commitments of Rs 2.43 lakh crore. Besides India Inc., you will see a lot of interest from foreign investors,” said Mitra, while not disclosing names of industrialists expected to be present.

In the run-up to the summit, the Bengal government had organised an investment road show in New Delhi in September.

Business delegates from a host of countries including the US, Britain, Japan, China, South Korea among others would participate in the summit that focuses on emerging areas like start-ups, design, intelligent cities, IT/ITes, financial hub and industrial infrastructure.

Besides Bhutan Prime Minister Tshering Tobgay, Union Finance Minister Arun Jaitley, Union Power Minister Piyush Goyal, Railways Minister Suresh Prabhu and Minister for Road Transport, Highways and Shipping Nitin Gadkari are expected to be present at the gala event. Bangladesh commerce minister Tofail Ahmed and British Minister of State for Employment Priti Patel are also scheduled to attend the summit.

Delhi Chief Minister Arvind Kejriwal,his Bihar counterpart Nitish Kumar and RJD supremo Lalu Prasad have also been invited by Banerjee. Kejriwal would be present at the inauguration ceremony, according to official sources.

With the opposition targeting her government over the poor industrial scenario and flight of capital from the state, Banerjee has been widely publicising the event inviting investors to “ride on the growth”.

Claiming that the state has outperformed the country on several economic parameters, Banerjee has been calling Bengal as “the destination for industries today”.

The event would include plenary sessions addressed by national and international entrepreneurs, sectoral breakaway sessions and business to business (B2B) and government-to-Business (G2B) interactions along with expositions and exhibitions.

Exuding confidence about the success of the summit ASSOCHAM President Sunil Kanoria stressed on the need for knowledge-based service industry hub.

“To arrest the ‘brain drain’ and convert it into ‘brain gain’ the state government should seriously consider positioning itself as a knowledge-based service industry hub by setting up more number of institutions for research,” said Kanoria.

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New FICCI chief bats for GST, rate cut, demand push

Jan 6, 2016 0

NEW DELHI– Lauding the government for pursuing reforms, new FICCI chief Harshvardhan Neotia lamented that banks were yet to pass on the interest rate cuts to industry while appealing to all political parties to ensure early roll out of the pan-India Goods and Services Tax (GST) regime.

FICCI chief Harshvardhan Neotia

FICCI chief Harshvardhan Neotia

Otherwise, he said, India’s superior macro-economic fundamentals, higher economic growth, declining inflation and the benefit from falling commodity prices have made foreign investors view Indian companies quite favourably.

“The GST can prove to be a game changer,” Neotia told IANS in an interview, emphasising that it was not only the most far-reaching reform in independent India’s tax regime, but also held potential to spur growth and make India a single market.

“We have to improve consumption, which means generating demand. So how do you spur demand? One is moderation of interest rate by making monthly instalment payments more attractive, and thereby, boosting demand.

“The full benefit of the reduction in the policy rates by the Reserve Bank of India hasn’t yet come through. It is one area that FICCI can help articulate concerns of industry,” said the new president of the 89-year old Federation of Indian Chambers of Commerce and Industry.

He said the proposed GST, stalled in the Rajya Sabha for the ruling NDA’s lack of majority in the upper house, will bring more people under the tax net, broaden its base and perhaps lower the effective rate, boosting consumption.

“I feel that the tax buoyancy will increase, compliance will improve and yet there will be some reduction in taxes and the impact of all these would be one to two percentage points rise in GDP,” said the 54-year-old Neotia — who also owns an Indian Super League football team along with former cricketer Sourav Ganguly.

Overall, he said, India’s superior macro-economic fundamentals, higher economic growth, declining inflation and the benefit from falling commodity prices have made foreign investors view Indian companies quite favourably, and has resulted in their premium valuation compared to those from other emerging markets.

“India’s economy is more insulated from a global slowdown being largely driven by domestic consumption,” said Neotia, who is chairman of Ambuja Neotia Group with business interests ranging from real estate, including housing, to hospitality, healthcare and education

Among his priorities as FICCI president, he said was following up on the Paris declaration on climate change talks about which industry is quite enthused.

“It is time for the industry to gear up in tackling the challenge of climate change in a renewed confidence. FICCI will engage in developing a viable mechanism by which green technology can be further encouraged in Indian industry,” he said.

In light of the Justice Lodha panel’s recent report recommending legalising betting in Indian cricket, Neotia said it is always better to have a situation where betting is regulated.

“Betting is there in India, so it is always better to have it brought in the mainstream and regulated,” he said.

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India’s scheme to turn the deprived into entrepreneurs

Jan 6, 2016 0

NEW DELHI– Targeting some 250,000 women and scheduled castes and tribes people, the government on Wednesday approved the “Stand Up India” scheme to foster entrepreneurship among them with a corpus of Rs.10,000 crore, and extend loans of up to Rs.1 crore for new projects.

The scheme, announced by Prime Minister Narendra Modi in his Independence Day 2015 address, was given the go ahead by a meeting of the union cabinet chaired by him here, with a mandate to the department of financial services to anchor it.

“The scheme is intended to facilitate at least two such projects per bank branch — on an average one for each category of entrepreneur. It is expected to benefit atleast 2.5 lakh borrowers,” an official statement said.

The expected date of reaching the target of at least 2.5 lakh approvals is 36 months from the launch of the scheme, it added.

As per the scheme, a refinance window through Small Industries Development Bank of India (SIDBI) will be created with an initial amount of Rs. 10,000 crore, along with credit guarantee norms via the National Credit Guarantee Trustee Company.

Borrowers will be provided handholding support both at the pre-loan stage and during operations. This would include increasing their familiarity with factoring services, registration with the online platforms and e-market places, along with sessions on best practices and problem-solving, the finance ministry said.

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India setting up Space Park for industry in Bengaluru

Jan 4, 2016 0

By Fakir Balaji

MYSURU– The Indian space agency is soon opening a 100-acre Space Park in Bengaluru where private industry players would be allowed to set up facilities to make subsystems and components for satellites, a top official said on Tuesday.

M. Annadurai

M. Annadurai

“The Space Park is coming up near Whitefield for the private industry. It is over 100 acres. It is likely to be inaugurated this month,” Indian Space Research Centre’s (ISRO) satellite centre director M. Annadurai told IANS at the science congress here.

With the space agency launching more satellites for various communication and earth observation services like remote sensing and navigation, the park will enable the industry to manufacture and supply their subsystems and vital components faster for spacecraft assembled at its satellite centre in the tech hub.

“We have told them (private firms) to increase their capacity building or join us at the Space Park and make components and other parts for our satellites, as they have been already using our own facilities,” Annadurai said

As India plans to launch at least 10-12 satellites a year using heavy rockets to deploy them in the earth’s lower or geo-stationary orbits for various applications and services, demand for subsystems and vital components for spacecraft to carry scientific instruments or transponders as payloads has shot up manifold.

“The space industry has to invest and build modular capacity to enable the country to launch as many satellites to meet the growing demand of the user industry, including the government, private organizations and overseas users,” said Annadurai.

The satellite centre also plans to allow the private industry to make satellites end-to-end, including integration and testing for launching them from its spaceport at Sriharikota in Andhra Pradesh, about 80 km northeast of Chennai.

“The Space Park will also contribute to the government’s ‘Make in India’ initiative, as the private industry and (state-run) firms like HAL (Hindustan Aeronautics Ltd) have been helping us in making rockets and satellites over the years,” Annadurai added.

The senior space scientist, who involved in the country’s maiden lunar and Mars missions, addressed delegates and students on ‘Space Science, Technology and Applications’ at the plenary session of the five-day science congress in the campus of the University of Mysore here.

The space agency outsources about 80 percent of its requirements for rockets and satellites to the private industry comprising about 500 small, medium and large units across the country for supplying structures, subsystems, components and parts.

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When global retailers knocked at India’s fashion doors

Dec 30, 2015 0

By Nivedita

NEW DELHI– India’s burgeoning appetite for foreign brands attracted a string of international brands to establish their presence in the country this year. US apparel retailer GAP, Swedish multinational retail-clothing company H&M, British fashion brands TOPSHOP and TOPMAN and more, available at brick-and-mortar stores or online mediums, are already a hit.

H&M, Ambience Mall VK Opening November 7th, 2015

H&M, Ambience Mall VK Opening November 7th, 2015

The summer arrival of GAP, which has made inroads into India through a franchise agreement with textile and retail major Arvind Lifetsyle Brands Limited, was much talked about.

Spread over a 10,000 sq ft south Delhi mall, the first flagship store offers Gap for men and women, GapKids, and babyGap. The plans are big as officials hope to open about 40 stores in the next five years and Arvind Lifetsyle Brands Limited expects Rs. 1,000 crore worth of business opportunity from the venture.

“I think our clothes are perfect for Indian summer. It’s very easy to wear with a whole lot of linen feel to it,” Oliver Kaye, CEO – Gap Business, told IANS.

Arvind Lifestyle Brands Limited also brought American youth brand Aéropostale to India, with a store at a south Delhi mall in November.

Swedish multinational retail clothing company H&M, which is known globally for offering fashion and quality at the best price in a sustainable way, also opened shop in the country, again at a south Delhi mall.

And then, call it the successful feedback of the first store that within a gap of a month, the brand opened its second store – its largest in the country – at another south Delhi shopping destination.

Expansion plans for the brand include another store in capital suburb Gurgaon, to be followed by outlets in Mumbai and tier-II and tier-III cities.

India is one of the most exciting markets in the world right now, with so much potential within retail, said Janne Einola, country manager, H&M Hennes & Mauritz Retail Private Limited.

“The response to H&M has been fabulous! We are happy that the Indian customers are pleased with our business concept of fashion and quality at the best price in a sustainable way.

“We see a great potential for further expansion in India, the number and time frame will be determined by real-estate opportunities and retail market development.

“Our expansion strategy is to always open at the best business location. We have proposed to invest up to euro 100 million ($110 million) in the SBRT (Single Brand Retail Trade) application,” Einola told IANS.

It was not only through offline stores that many international brands made its India entry this year as many of them chose to be part of the Rs.720 crore worth Indian fashion industry through online mediums.

Handbags from French label Anna Luchini are now available in the Indian market via e-commerce platform Fashionara.com, which has also introduced watches for women from another French label, Christian Lacroix.

Jabong, a leading fashion online retailer in India, has clearly established its dominance in bringing well-curated collections of international fashion labels such as Buggati Shoes, Tom Tailor, NEXT, Misguided, TOPSHOP, TOPMAN, et al in its portfolio this year.

Nils Chrestin, Interim CEO at Jabong and Group CFO of Global Fashion Group, feels that many international brands today are seeking an online presence to explore the diverse Indian market.

“In the last two years, Jabong has facilitated a lot of deals and, as a result, has been able to successfully build an International portfolio,” Chrestin told IANS.

Officials of TOPSHOP and TOPMAN had been eyeing India as a feasible market for quite some time before partnering with Jabong. They feel that the country’s market demonstrates great opportunity for fashion brands and the Indian customer is very fashion-savvy.

As of now, they are happy with the response from the customers.

“TOPSHOP and TOPMAN are very new to India and after an impactful launch on Jabong in September earlier this year have continued to experience high levels of traffic as well as meeting sales targets.

“Both brands are growing at a rate of 25 percent month on month and contribute substantially to Jabong’s international business portfolio. There’s a huge appetite for fashion in India which is why so many brands continue to enter the market,” the brands’ spokesperson told IANS.

Also, six leading South Korean cosmetic companies made their debut in India this year with an array of cosmetic and wellness products. The companies signed a joint venture agreement with an Indian firm for marketing their products first and will eventually make them in India under the ‘Make in India’ campaign.

The companies are PLK International, Coson Company Limited, Outin Futures Corporation, BCL Cosmetics Company Limited, Kell Cosmetics Company Limited, and Esthetic House Company.

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Indian Business Brief: Google CEO, Foreign Investments, Intel Bets on Indian Data Center

Dec 28, 2015 0

Google CEO: India Poised To Become Silicon Valley of the East
On his first visit to India after taking over as CEO of Google, Sundar Pichai met with the Indian leadership, including Prime Minister Modi. During his visit, Pichai said that India will be a larger market than the US for Google by 2016 and India is well-positioned to become the Silicon Valley of the East.

On his first visit to India after taking over as CEO of Google, Sundar Pichai met with the Indian PM Modi

On his first visit to India after taking over as CEO of Google, Sundar Pichai met with the Indian PM Modi

Boeing: India Has Strong IPR Laws
India has very strong laws on intellectual property rights (IPR) and Boeing does not see a threat of violation of these rights in the country, the U.S. aviation giant’s India counsel said. “I do not say this because India is the largest market for us outside the U.S. but because India indeed has modern IPR laws and is a signatory to most international treaties related to intellectual property rights,” said Akhil Prasad.

Foreign Investment Up by 13% to $16 Bn in the First Half of FY2016
Foreign direct investment (FDI) in India witnessed an increase of 13 percent and reached $16.6 billion during April-September of 2015 as compared to $14.7 billion in the same period last year. Top foreign investors were Singapore, at $6.7 billion, followed by Mauritius at $3.7 billion.

PwC: India Had $17.5 Billion in Private Equity Investments in 2015
Private equity investments in India hit a record high of $17.5 billion in 2015 across 685 deals, surpassing the previous high of $14.7 billion recorded in 2007, a PwC report says. The surge in PE investments this year was largely owed to the e-commerce sector, which saw deals worth $5.3 billion across 290 deals.

Intel Bets Big on Indian Data Center Business
Chip-maker Intel is betting big on its India data center business fueled by demand from tele-communications companies, e-commerce firms, government and enterprises. The company’s India data center business is set to witness a 50 percent growth in the current fiscal year. Diane M. Bryant, Senior Vice-President, Data Centre Group for Intel Corporation, said: “India as a marketplace is a big growth opportunity for our data centre business.”

Govt. Introduces New Bankruptcy Bill to Ease Doing Business
Seeking to improve the ease of doing business, the Government has introduced a new bankruptcy code that provides for resolution of insolvency in a timely manner. The bill aims at promoting investments, leading to higher economic growth.

Tax Board Takes Steps for Reducing Tax Litigation
The Central Board of Direct Taxes has revised the monetary limits for filing of appeals by the Department with the objective of reducing litigation as a part of its initiatives to reduce grievances of taxpayers. The revised limits have been made applicable retrospectively to pending appeals also.

Expat Employees of Multinationals Working in India Get Tax Break
Payments to expats working in India for local arms of multinational corporations (MNC) by the foreign parent won’t attract service tax,the Authority for Advance Ruling has said.The decision is significant as it brings some relief to MNCs that have been served with notices in similar cases.

Reserve Bank Will Tweak Strategic Debt Restructuring Rules
The Reserve Bank of India (RBI) will tweak the strategic debt restructuring (SDR) rules on the basis on feedback from banks taking into account their experience in dealing with errant borrowers in the past six months, RBI’s Deputy Governor R. Gandhi said. SDR allows banks to convert their loans into equity giving them more control in recovering bad loans by fastening the sale of assets.

Moody’s: New Reserve Bank Rule for Rate Calculation is Positive
The Reserve Bank of India’s new uniform methodology for calculating the base rate on the marginal cost of funds is “credit positive” for Indian banks as it would ease pressure on their balance sheet, Moody’s said.

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2015 in Review: Start-ups, Digital India dominated IT growth

Dec 27, 2015 0

By Fakir Balaji & Sharon Thambala

BENGALURU– Even as disruptive technologies rolled out game-changing products and software majors vied for more outsourcing, the start-up revolution and the government’s Digital India initiative dominated the Indian IT industry landscape in 2015.

The software services and product-driven industry have been on track this year to register again a double digit (12-14 percent) growth in fiscal 2015-16. But the surge in start-ups and the Digital India plan have redefined the rules of the game,” industry body Nasscom president R. Chandrashekhar told IANS here.

Nasscom president R. Chandrashekhar

Nasscom president R. Chandrashekhar

If convergence of information and communication technologies (ICT) spawned new platforms for vendors to offer more products and cloud-based services, techno-geeks and young entrepreneurs joined the party by developing a host of applications (apps) for enterprises and diverse industry verticals.

The National Association of Software Services and Companies (Nasscom) had initiated an ambitious programme in 2013 to incubate about 10,000 domain-specific start-ups across the country by 2020 for rolling out software products, solutions and apps for individual and enterprise users in India and the world over.

With Bengaluru emerging again as the country’s start-up capital, thanks to the ecosystem this tech hub had built over the years, the tech-savvy Karnataka government has declared a start-up policy and set up two warehouses in the city in partnership with Nasscom to promote and incubate hundreds of them.

“If the Digital India initiative takes off, the start-up ecosystem will thrive with over 100,000 new-age firms in the next 10 years, employing 3.5 million people and targeting a value of $500 billion,” former Infosys director and Manipal Global Education Services chairman T.V. Mohandas Pai told IANS.

Though Pai believes that only 10 percent of the start-ups would succeed, indicating a very high failure rate, they will be a major source of job creation, investments and new apps.

“The government has a key role in facilitating growth of start-ups and in making them open, operate and shut down in case of failure, as many of them fail as elsewhere in the world,” Chandrashekhar observed.

According to Nasscom, about 18,000 start-ups, with a combined valuation of $75 billion, employ around 300,000 across the country.

“The ecosystem has the potential to grow by 10-fold in the next 10 years, with the valuation going up to $500 billion,” Pai noted.

“Digital India will not only benefit traditional and established players but also thousands of new-age firms, especially start-ups across the country, as the ambitious programme envisages a whopping Rs.4.5 lakh crore ($68 billion) investments over the next decade,” Chandrashekhar asserted.

As ICT became pervasive, connecting devices and people, industry players have invested substantially during the year on developing new platforms and hiring more techies to serve their clients worldwide and in India.

“We also see a huge potential for our industry from the government’s Make in India programme, as manufacturing of industrial, consumer and electronics goods will require ICT solutions to operate and deliver them,” said Krishna Prasad, an independent software developer for vendors.

On the software services front, IT bellwethers Tata Consultancy Services (TCS), Cognizant, Infosys, Wipro and HCL were able to grow their revenue by 5-10 percent year-on-year despite the global technology spend declining in 2015.

“We expect the industry to add $20 billion in FY 2016 to the overall revenues of $146 billion in FY 2015, as the industry’s performance has been in line with the expectations we had set at our strategic review,” Chandrashekhar said.

According to a Nasscom projection, IT exports will grow 12-14 percent to reach $110-112 billion and the domestic market by 15-17 percent to touch $55-57 billion by March 31, 2016.

Currency volatility, however, impacted the operating margins of exporting firms, including the global software majors.

“The export growth rate continues in double-digits as in 2014, though firms are under pressure to deliver more value in terms of business and transformation,” Chandrashekhar affirmed.

On the outlook for the industry in 2016, the former telecom secretary-turned industry representative said the projection for 2016-17 would be revealed in February and the growth would be on track as in 2015.

Highlights:

* Start-ups and Digital India dominated IT industry landscape

* Software services and exports to post 12-14 percent growth

* Geeks develop new applications for internet users & verticals

* Nasscom to incubate 10,000 starts-ups by 2020

* Karnataka declares start-up policy, sets up two warehouses

* Digital India will trigger start-up boom and create jobs

* Start-ups are risk prone and many are bound to fail

* Digital India to benefit traditional and new-age companies

* IT bellwethers spur export growth despite cuts in tech spend

* Currency volatility impacts operating margins of export firms

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2015 in Review: Year India became fastest growing big economy

Dec 24, 2015 0

By Biswajit Choudhury

NEW DELHI– Notwithstanding a sharp cut in the government’s growth forecast at the fag end, 2015 will go down as the year when India emerged as the fastest-growing large economy, despite setbacks such as 12 months of negative export growth, another bad monsoon and roadblocks to the far-reaching goods and services tax regime.

Indian Finance Minister Arun Jaitley

Indian Finance Minister Arun Jaitley

In addition to growth, the economy also saw some positives. Global crude oil prices fell to the lowest levels in over a decade, checking the balance of payments from going awry, inflation rate remained more-or-less under control, despite spikes in food prices, and economic reforms got a big push, notably in the form of further opening up of a host of industries to foreign equity.

India’s real GDP in the first half of the current fiscal grew at 7.2 percent as per official data, which was slightly lower in comparison to the GDP growth of 7.5 percent in the previous fiscal.

India’s external position improved at the same time. Forex reserves are a little above $350 billion in November 2015 as compared to a little over $270 billion in July 2013. Net foreign direct investment (FDI) inflows have increased to $17 billion in the first half of 2015-16 in comparison to $15.8 in the same period last year. The second quarter’s current account deficit logged at a level of 1.6 percent of GDP.

However, the global slowdown continued to weigh on exports, which have declined for 12 straight months. The government said this was also pulling down growth but felt the situation would improve in the coming months.

On the fall in the value of the Indian rupee, the finance ministry’s mid-term economic review attributed it considerably to the major devaluation of the Chinese yuan.

The changes overall, however, led many global institutions like the World Bank, International Monetary Fund, Asian Development Bank and some UN institutions to upgrade India’s growth forecast to some 7.5-8 percent, calling it the fastest expanding globally, surpassing China.

The year also began with India’s changing the way it calculated its gross domestic product under a new series, though the controversy over the changed methodology employed refuses to die down with economists even terming it obscure.

Changing the base year to 2011-12 from 2004-05 in January, the Central Statistics Office said India’s real GDP, that is adjusted for inflation, grew by seven percent in the first quarter of this fiscal, slower than the 7.5 percent expansion in the quarter before — but much higher than 6.7 percent registered in the first quarter of the last fiscal.

Arun Kumar, till recently a professor at Jawaharlal Nehru University here, told IANS that in view of negligible industrial growth, drought-like conditions in past years and no substantial increase in profits and wages, the new numbers fall flat from the point of credibility.

“Even input costs, that are now low with falling oil prices, were not low in the period 2011-12. Let the statistics office show the growth figures for up to 10 years prior to the base year for us to consider the new series seriously,” Kumar said.

The mid year review released this month lowered the economic growth forecast for the current fiscal to the 7-7.5 percent range, from the previously projected 8.1-8.5 percent, mainly because of lower agricultural output due to deficit rainfall. It also said there may be a need to reconsider next year’s fiscal deficit target of 3.5 percent.

“GDP growth has been powered only by private consumption and public investment is a concern. The proposed wage hike for government workers may impact plan for next fiscal.” The economy continues to send “mixed signals” over growth, while all economic indicators were not yet aligned in pointing to a higher trajectory of growth, it said.

India’s eight core industries, representing major infrastructure sectors, grew at 2.3 percent in the April-September period of the current fiscal, compared to a rate of 5.3 percent in the same period of the previous fiscal — the fall in growth rate caused by lower expansion in electricity, coal and cement sectors and negative growth in steel and natural gas sectors.

Jaitley’s first full union budget also announced an agreement earlier in the year with the Reserve Bank of India (RBI) that it constitute a Monetary Policy Committee to determine by majority vote on the policy rate required to achieve the inflation target.

Meanwhile, RBI Governor Raghuram Rajan cut the interest rate in January for the first time in nearly two years and followed up with two other reductions to bring down the central bank lending rate to 6.75 percent.

Politics intervened during the year to prevent the enactment of India’s most important reform of its indirect tax regime by way of the pan-India Goods and Services Tax (GST) that the government has targeted for implementing from April next year, because the ruling NDA does not have the numbers to pass the constitution amendment bill in the upper house.

Highlights

* Real GDP in first half of fiscal grew at 7.2 percent
* India emerges as fastest-growing large economy
* Forex reserves of over $352 billion as on the first week of December.
* FDI inflows increased to $17 billion in the first half of 2015-16
* Indian basket of crude oils fell below $40 a barrel
* Foreign investment limits raised in defence, real estate and insurance, foreign equity in railways
* Retail and wholesale inflation rates rose in November to 5.41 percent and (-)1.9 percent respectively, largely due to an increase in food prices
* Infrastructure sectors grew at 2.3 percent in the first half of fiscal
* Government lowers GDP growth estimate for fiscal by one percent to 7-7.5 percent

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