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INDUSTRY NEWS - NATIONAL
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India, US to enhance collaboration in research, skill development
Source: The Economic Times, October 17 2011 http://www.ibef.org/ ISA WINWIRE

New Delhi: In a bid to strengthen and deepen its strategic partnership with the United States, India will set up a "higher education platform" to enhance collaboration in research, skill development and student and faculty exchange. The announcement came as the first ever India-US education summit wrapped up in Washington. Both countries stressed on the need to enhance the scope of collaboration and identify new ways to encourage linkages and exchange programmes. In a joint statement on higher education cooperation US Secretary of State Hillary Clinton and human resources development minister Kapil Sibal agreed to make the higher education dialogue an annual bilateral event to "map out strategies for partnership in the field of education" between the two countries. The dialogue, which would be held alternately in the US and India, should "identify areas for mutually beneficial exchanges and provide a platform for intense and meaningful collaboration among academia, private sector and government on both sides," the joint statement said. India announced its intention to set up an "India-US higher education platform as a means to pursue these goals," with Sibal pointing out that the dialogue process has to be managed "effectively".

Pranab on how global crisis is affecting Indian economy
NDTV Correspondent, October 19 2011 http://profit.ndtv.com/ ISA Winwire

Finance minister Pranab Mukherjee on Wednesday said global crisis is casting a shadow on India's economic growth. Addressing the Economic Editors Conference in New Delhi, Mr Mukherjee said that FY '12 growth is likely to be lower than budget projections. Here is the full text of his speech. Ladies and Gentlemen, I consider it an honour to address this august gathering of Economic Editors from the length and breadth of this country. I am keenly aware of the vast knowledge and experience embedded in the audience and am looking forward to a productive exchange of ideas. 2. Feedback from the ground and from experienced analysts goes a long way in enhancing the efficacy of economic policies. It is important for you to realize that as editors you are not just people who report and comment on economic policy but you also, in an important sense, contribute to the formulation of policy. Through your writings you shape people’s opinion a nd, in a democratic system like ours, the opinion that people hold has a large influence on the policies that get adopted. Hence, you have a large indirect impact on policymaking in India.

ESDM sector asks for rapid implementation of the policy
Source: L Subramani, Deccan Herald, October 19 2011 http://www.deccanherald.com/ ISA Winwire

Electronic System Design and Manufacturing (ESDM) sector has urged the government to rapidly implement the electronic policy and create an ecosystem for growth. Speaking in the session on ESDM at BangaloreIT.biz on Wednesday, industry representatives asked the government to recognise computer hardware as a separate sector from IT and provide investments which would save the revenue drain through imports and loss of competitive advantage. “Electronic consumption in this country is growing about 23 per cent CAGR, while figures for 2012 is slated to be nearly 9.86 billion USD. Out of this we would be spending 4.71 billion dollar for import of components, which is nearly 50 per cent of the consumption,” pointed out Chairman of Indian Semiconductor Association (ISA) Dr Pradip Dutta. Quoting a recent study conducted by ISA, which divides electronic and hardware manufacturing amongst different sectors like telecom, consumer, indu stry automation, automotive, Printed Circuit Boards (PCBs) etc, Dutta said the gulf between domestic consumption and increasing import do not allow the country to enjoy the true benefits of growth.

India to overtake China in 2014: Ernst & Young report
 Source: IBEF, October 25 2011http://www.ibef.org/ ISA Winwire

India will overtake China in 2014, according to a forecast by the Ernst & Young's report on Rapid Growth Markets (RGMs). In 2014, India is expected to grow at 9 per cent while China is expected to grow at 8.6 per cent. India and China would probably be less impacted among the 25 Rapid Growth Markets (RGMs) in case of a deterioration of the Eurozone debt crisis. The overall outlook for India remains positive and economic growth will steadily accelerate during 2012. "India's consumption-led economy continues to make the country a highly attractive investment destination in the short to medium term. Its domestic demand-driven growth model has helped the country weather the volatility in the global markets, providing significant growth opportunities to businesses," according to Farokh Balsara, Partner & India Markets Leader, Ernst & Young India.

Indian manufacturing mega-parks to create 100 million jobs
Source: Sarah Falson, Manufacturers' Monthly, October 26 2011 http://www.manmonthly.com.au/ ISA Winwire

The Indian government has passed a manufacturing policy that it claims will generate 100 million jobs over the next 10 years. The policy, announced by Indian Trade Minister Anand Sharma, will make way for seven new industrial ‘zones’ or mega-manufacturing parks. These parks will reportedly make way for lower taxes and faster permits for manufacturers setting-up there, and will also make it easier for businesses to comply with national labour laws. These zones will measure a minimum 12,355 acres each, with the locations for the zones to be chosen by state governments, who will have shares in the zone alongside private investors. A Bloomberg report says the government has also committed to setting-up a fund to compensate workers if they are made redundant. “The idea is to raise the share of manufacturing to 25 percent by 2022 and create jobs,” Sharma said, according to Bloomberg.

Import Curbs on China likely as deficit grows (Widening Gap raises worries)
ELCINA (ET, Oct 31, 2011

India’s widening trade gap with China has triggered an alarm  in the government, forcing it to brood over a host of measures to restrict imports from the country.

The commerce department has hammered out a “China Strategy” that calls for higher tariffs on most Chinese goods while proposing a complete ban on specific items, like power and telecom equipment.  It also suggests making it mandatory for Chinese firms to enter into joint ventures with Indian Companies before they could import heavy equipment and machinery from the country.

The move comes as India’s trade deficit with China, its biggest trading partner, jumped 160% to $23.9 billion in the five years to 2010-11.  Trade deficit is the gap between what is imported and exported and a rise in spread indicates India’s increasing dependence on China.

“China has already taken over our power sector and ius ruling the low-end market for mobile phone handsets,” a senior official in the commerce department told ET on condition of anonymity.  “If we do not step in now with suitable policy measures, our trade gap with China will rise further.”

While imports of Chinese goods rose to $43.5 billion in 2010-11 from $17.5 billion  in 2006-07, exports lagged far behind, up to just $19.6 billion from $8.3 billion over five years.

Indian officials say China acknowledges that trade imbalance is a problem, but it has done little to address it.  The Commerce Department said Beijing has ignored seven specific request from Delhi to ease imports of Indian goods that could have narrowed the trade gap significantly.  These requests, made by Commerce and Industry Minister Anand Sharma during his Beijing visit last year and reiterated during Chinese Premier Wen Jiabao’s New Delhi visit last December, included import relaxation for Indian pharmaceuticals, agricultural produce, IT products and heavy machinery.

“China promised us almost two years back that it would work towards helping us bridge the trade deficit, but has not yet taken any significant step,’ the official quoted earlier said.

China’s lack of response forced the commerce department to plan measures aimed at restricting imports and boosting exports of value-added products, the official said, adding that the ministries of finance, power, telecom and home would be consulted once the strategy is ready.

There has been rapid rise in import of many electronics goods alone rose year-in-year in 2010-11 is 56.02%. 

“In the G-20 forums, countries are constantly harping on ways to keep market open and such would be frowned upon.”  Besides, experts say such measures could scare off foreign investors from India.  “Restriction on Chinese investments could raise concerns that they could be extended to other countries as well,” a trade analyst said. 

But Indian officials do not agree.  “We are aware of all existing rules and policies and there are ways around everything” the official said.  Reliance Communications, the telecom firm led by Anil Ambani, signed a deal in March to borrow $1.93 billion from China Development Bank.  This included $1.33 billion for refinancing 3G spectrum fee payment and $600 million for equipment import from Chinese vendors.

Rs.3,000-tablet PC " Akash" sparks 500,000-order frenzy
ELCINA (HT, Oct 24, 2011)

A  fortnight after Canadian electronics-maker Datawind unveiled its Ubislate, the world’s cheapest tablet PC priced at Rs.3,000, the company has bagged orders for around 500,000 units from dealers and distributors across the world.
The company, which is manufacturing the device at Hyderabad, is in talks to set up at least two more manufacturing facilities in India to bump up its monthly manufacturing capacity to over a million units.

Ubislate is a 7-inch tablet PC with 256 MB RAM, 2GB flash storage capacity and a 366 MHz processor, running on Android 2.2 operating system.

New Manufacturing Policy approved
ELCINA (ET, Oct 26, 2011)

Changing Industrial Landscape – Policy contribution: boost manufacturing share in GDP to 25% from 16% in 10 yrs.

Proposed excellence zones: 7 investment regions along the DMIC, 5 integrated townships, Fund for patent pool, incentives for green manufacturing.

The Union Cabinet has approved the National Manufacturing Policy that seeks to raise the sector’s contribution to GDP and create 100 million jobs over  a decade.

“The NMP seeks to enhance the share of manufacturing in the GDP to 25% within a decade and create 100 million jobs as part of the inclusive growth agenda of the UPA,” Commerce Minister Anand Sharma said after the cabinet meeting.

At present, manufacturing contributes 15% to 16% to the country’s GDP.  Close to 20 million people are added to the country’s work force every year, for which employment opportunities need to be created.  The prime minister had approved the policy in June by the details took long to settle because of inter-ministerial differences.

The policy envisages large integrated industrial townships, national investment and manufacturing zones (NIMZs) with state-of-the-art infrastructure, lesser regulatory and compliance burden, faster clearances and fiscal incentives.

It is proposed that the zones, developed with private participation, will be positioned as self-governing and autonomous bodies.

Industry welcomed the new policy.  “The policy is one of the most significant developments since the economic reforms of 1991, and is poised to transform the industrial   poised   to transform the industrial landscape in the country,”  ITC chairman YC Deveshwar said, adding, “the move will power a new paradigm of competitive growth in the country”.

FICCI secretary Rajiv Kumar said, “We are very pleased that the manufacturing policy has been passed and hope it will be implemented immediately.  State Governments should take up the opportunity to build NMIZs, which will provide a fillip to manufacturing.”

But, some experts were skeptical.  “As far as land acquisition for NMIZs is concerned, it will not be easy in our country,” Planning Commission member Arun Maira said, adding, “But overall, I don’t expect it to be a repeat of the SEZ episode, we have learnt  from our mistakes there.”

The Cabinet also raised the housing loan ceiling for availing 1% interest subsidy from Rs.10 lakh to Rs.15 lakh.  It also raised the cost of houses covered under the scheme to Rs.25 lakh from Rs.20 lakh.  The decision is likely to benefit borrowers by up to Rs.14,865 every year.

The budget provision of Rs.500 crore has been made for 2011-12 from the implementation of the scheme, which was introduced in 2009.

The government also approved capital infusion of Rs.3,000 crore over two year in state-run National Bank for Agriculture and Rural Development (NABARD) to help it mobilize higher resources from the market.

The move will raise the bank’s paid-up capital to Rs.5,000 crore.  At present, the authorized capital of Nabard is Rs.5,000 crore, of which, the paid up capital is Rs.2,000 crore.

National Manufacturing Policy – need for a cautious approach
Source: Bikky Khosla, SME Times, November 1 2011 http://smetimes.tradeindia.com/ ISA Winwire

The government announced the nation's first-ever manufacturing policy recently -- the news looks good. It is an undeniable fact that the health of the manufacturing sector, which relies largely on government support, is the key to a healthy economy. This sweaty business can propel economic growth and create million of jobs. Seen from this angle, the National Manufacturing Policy, which I think should have come much earlier, is certainly a welcome development. The manufacturing policy, as widely reported in the media, aims at increasing sectoral share of manufacturing in GDP to at least 25 percent, creating 100 million jobs in the next 10 years, cutting industry red tape, incentivizing green technology and infrastructure development, and liberalising labour and environment regulations, among many others. All these goals are desirable but ambitious, and if proper planning and efforts are not put on implementing the policy, the whole pla n may turn futile in the coming years. The biggest challenge, I think, is the implementation of the policy.

Govt to unveil National Telecom Policy in January 2012
Source: moneylife, November 4 2011http://www.moneylife.in/article/govt-to-unveil-national-telecom-policy-in-january-2012/21163.html /

The much-awaited National Telecom Policy-2011 will be unveiled in January next year, reports PTI quoting telecom minister Kapil Sibal. The policy was earlier expected to be unveiled by December this year but delays in receiving recommendations have pushed the date to next year. “The (draft) policy I have already announced as I had committed. Industry wants some more time to respond, we will give them time. All what will happen is finalisation of the policy will happen in January instead of December,” Mr Sibal said here at an event. He added that the Telecom Regulatory Authority of India’s (TRAI) recommendations on the National Telecom Policy have just come in and the Department of Telecom (DoT) is looking into the same. “The TRAI recommendations have just come, we will consider them, call Telecom Commission (meet)... move to Cabinet,” Mr Sibal said.

Falling Rupee worries Government & Industry alike
ELCINA (HT, Nov 23, 2011)

At present, demand for dollar is rising sharply as foreign institutional investors (FIIs) are pulling out of stock markets, taking back their investments in dollars, due to worries on growth and the European situation. Indian oil firms also buy dollars to pay for their crude oil imports.

Foreign exchange dealers expect the rupee to fall further. Prices of manufactured goods and food are expected to rise too. Cars could turn pricier as steel imports turn costly.    

India meets 70% of its crude oil needs through imports. Any slide in the rupee or spike in world crude oil prices send the cost of oil up.

Whatever little benefit could have been got from the softening of International commodity prices, has been wiped out by the rupee.

There are indications of discomfort from officials including RBI highlighting that the rupee depreciation is a new price pressure.

Services account for 55% of GDP
(TOI, Nov 19, 2011)

The finance ministry had earlier issued the concept paper on taxation of service on August 31 which included 27 services which had been kept in the negative list.  The fresh list includes 22 services which are likely to be out service tax.

The services sector account for over 55% of India’s GDP and widening of the net could help garner an extra 20% through the service tax window, officials say.  The government plans to net Rs.82,000 cores from service tax in the 2011-12 financial year.  The negative list will include services like funeral, burial and mortuary agencies, interest paid on deposits by bank, services provided by independent journalists, dividend on investments, and transport of passenger in public transport.  Construction, works contract, renovation or restoration of specified infrastructure for larger public good and residential building comprising a single unit would not be subjected to service tax.

Revised negative list for service tax released
ELCINA (FE, Nov 19, 2011

The government issued a revised list of services that would kept outside taxation, taking out a host of services from the “negative list” released in August.  The services now added to the proposed negative list – comprising items which are not to be taxed – include some services relating to agriculture, horticulture and animal husbandry, services provided by freelance journalists and government news agencies and advertisements in media other than newspapers and TV.

Once the shift from the current practice of taxing services on a selective basis (positive list based) to the negative list is implemented, tax revenue would pick for that very reason by 20%, a senior CBEC official said.  The negative list of taxation is also in conformity with the proposed Goods and Services Tax (GST).

In all, 22 categories of services would be there in the negative list, according to Friday’s discussion paper. The revised negative list has been put up for feedback from various stakeholders which can be sent till December 15.