India, UK strike 3.2 bn pound deal on energy, climate change

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The package encompasses 3.2 billion pounds of commercial agreements and initiatives to share technical, scientific, and financial and policy expertise.

Ahead of the Paris climate summit, India and Britain have agreed on a comprehensive package of collaboration on energy and climate change which includes commercial deals worth 3.2 billion pounds.

During Prime Minister Narendra Modi’s ongoing UK visit, the two countries reaffirmed the importance of addressing climate change and promoting secure, affordable and sustainable supplies of energy that will support economic growth, energy security and energy access.

“The UK and India’s partnership on energy is going from strength to strength. We share world-class expertise in research and innovation. The UK’s experience in green finance and technology in particular makes us well-placed to work together to promote secure, affordable and sustainable supplies of energy and address climate change,” said UK energy and climate change secretary Amber Rudd.

“The upcoming talks in Paris will be a crucial moment in the fight against climate change and I am pleased to be able to work closely with India to ensure that the deal we secure helps to keep the below 2 degree limit on global warming within reach,” she added.

The package encompasses 3.2 billion pounds of commercial agreements, joint research programmes and initiatives to share technical, scientific, and financial and policy expertise.

This is aimed at encouraging the research, development and eventual deployment of clean technology, renewables, gas and nuclear.

As part of the package, Britain also announced the UK Climate Investments joint venture with the Green Investment Bank. This will invest up to 200 million pounds in renewable energy and energy efficiency in India and Africa.

The two countries also agreed on the need for an ambitious and comprehensive global agreement to tackle climate change in Paris later this month and that the agreement should signal to investors and innovators the long term commitment of governments to clean and more sustainable economies.

Modi and his UK counterpart David Cameron also welcomed the completion of negotiations for a Nuclear Cooperation Agreement and the signing of a Memorandum of Understanding (MoU) related to closer civil nuclear collaboration between the UK and India.

 

Source: http://economictimes.indiatimes.com/articleshow/49768488.cms

 

PM Narendra Modi world’s 9th most powerful person in Forbes list. Putin on the Top.

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0

Prime Minister Narendra Modi has been ranked as the world’s ninth most powerful person by Forbes magazine in a 2015 list which is topped by Russian President Vladimir Putin.Modi was placed 14th in the 2014 Forbes list of world’s powerful people.

Forbes while releasing the list today at the same time said governing 1.2 billion people in India requires more than “shaking hands” and that Modi must pass his party BJP’s reform agenda and keep “fractious opposition” under control.

German Chancellor Angela Merkel is at the second spot followed by US President Barack Obama (third) and Pope Francis (fourth) and Chinese President Xi Jinping (fifth).

Apart from Modi who is at the ninth position, others in the top ten are Microsoft Founder Bill Gates at the sixth place, US Federal Reserve Chairperson Janet Yellen (7), UK Prime Minister David Cameron (8) and Google’s Larry Page(10)

About Modi, the magazine said that India’s “populist” Prime Minister presided over 7.4 per cent GDP growth in his first year in office, and “raised his profile” as a global leader during official visits with Barack Obama and Xi Jinping.

“A barnstorming tour of Silicon Valley reinforced his nation’s massive importance in tech. But governing 1.2 billion people requires more than shaking hands: Now Modi must pass his party’s reform agenda and keep fractious opposition under control,” it said.

To compile the list of world’s most powerful people, the magazine said it considered hundreds of candidates from various walks of life all around the globe, and measured their power along four dimensions. They are whether the candidate has power over lots of people, financial resources controlled by each person, whether the candidate is powerful in multiple spheres and whether the candidates actively used their power.

The only other Indian in the most powerful people’s list is Reliance Industries Chairman Mukesh Ambani who is ranked at the 36th position.

Among Indian-origin people, steel tycoon Lakshmi Mittal is at the 55th spot while Microsoft CEO Satya Nadella is ranked 61st.

About Putin, the magazine said he “continues to prove he’s one of the few men in the world powerful enough to do what he wants — and get away with it”.

“International sanctions set in place after he seized Crimea and waged war-by-proxy in the Ukraine have kneecapped the Ruble and driven Russia into deepening recession, but haven’t hurt Putin one bit: In June his approval ratings reached an all-time high of 89 per cent,” it noted.

The magazine said that German Chancellor Angela Merkel continues her reign as the most powerful woman on the planet for 10 years running.

About Obama, Forbes said there is no doubt that the US remains the world’s greatest economic, cultural, diplomatic, technological and military power.

“But as Obama enters the final year of his presidency, it’s clear his influence is shrinking, and it’s a bigger struggle than ever to get things done.

“At home, his approval ratings are perpetually stuck under 50 per cent; abroad, he’s outshined by Angela Merkel in Europe, and outmaneuvered by Putin in the Middle East,” it added.

Source: http://economictimes.indiatimes.com/articleshow/49663215.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

RBI allows foreign currency-rupee swap transactions

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RBI said that such swap transactions could be undertaken by the MFI/IFI concerned on a back-to-back basis with an authorised dealers (AD) Category-I bank in India

The Reserve Bank of India (RBI) on Thursday allowed residents having a long-term foreign currency liability to enter into foreign currency-rupee swaps with multilateral or international financial institutions (MFI/IFI) in which the government of India is a shareholding member, subject to certain conditions.

RBI said that such swap transactions could be undertaken by the MFI/IFI concerned on a back-to-back basis with an authorised dealers (AD) Category-I bank in India. The tenure of such swaps should be at least three years, according to a notification issued by the central bank.

In the event of a default by the resident borrower on its swap obligations, the MFI/IFI concerned will have to bring in foreign currency funds to meet its corresponding liabilities to the counter-party AD Cat-I bank in India, the central bank said.

The AD Cat-I bank will have to report the FCY-INR swaps transactions entered into with the MFIs/IFIs on a back-to-back basis to CCIL reporting platform, including the details of the foreign currency borrower. Furthermore, the banks will have to bring the contents of this circular to the notice of their constituents and customers concerned.

Services sector growth hits 8-month high in October

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India’s services sector activity touched an eight-month high in October driven by a significant rise in new business orders even as growth in manufacturing output eased, a Nikkei survey said.

The Nikkei Business Activity index climbed to 53.2 in October, from 51.3 in September, as fresh orders expanded at a solid pace and were most pronounced since February.

“Services companies saw a faster rise in new businesses than their manufacturing counterparts,” said Pollyanna De Lima, economist at Markit, which compiled the survey.

Meanwhile, the seasonally adjusted Nikkei India Composite PMI Output index, which maps manufacturing and services sectors, rose to 52.6 in October from 51.5 in September helped by new businesses.

A reading of 50 divides growth and contraction.

“India’s economic growth shifted into higher gear in October driven by the services sector. Although manufacturing production continued to expand, the growth eased and was sluggish by historical standards,” Lima added.

Lima noted that “the upward trend in private sector output reflected stronger inflows of incoming new works, one that was most marked since March”.

Going forward, services business sentiment regarding the 12-month business outlook remained positive in October.

Notwithstanding the growth in services activity, October data indicated that services sector employment remained unchanged. Around 98 per cent of respondents reported no change in payroll numbers since the preceding month.

“Private sector firms remained wary of costs and payroll numbers, once again, were unchanged,” Lima said.

On the prices front, the Nikkei survey said average input costs rose in both services and manufacturing sectors, albeit at a slower pace.

Reserve Bank Governor Raghuram Rajan on September 29 effected a more-than-expected interest rate cut of half a per cent to spur the economy.

Moreover, RBI has also lowered its economic growth forecast for the current fiscal to 7.4 per cent, from its previous projection of 7.6 per cent.

The April-June quarter GDP slipped to 7 per cent, from 7.5 per cent in the preceding quarter.

Source:http://economictimes.indiatimes.com/articleshow/49654978.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Private equity investors discover gold mine in e-commerce backend

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Private equity investors, who have stayed away from investing in online retail companies, have instead quietly reaped a windfall by backing logistics companies providing back-end support in the e-commerce rush.

In the latest deal, Peepul Capital recorded an over six-fold return on its investment in Ecom Express according to people aware of the transaction. Earlier this year Multiples Alternate Asset Management also made a partial exit from Delhivery, when the company raised fresh capital led by Tiger Global Management.

“These kinds of returns are only possible if there is multiple re-rating of both a company and a sector, which is not very common,” said Prakash Nene, MD at Multiples, who declined to comment on specifics of the deal.

The PE firm made a partial exit after Tiger Global led a round of about Rs 542 crore in the Delhi-based firm in May.

Peepul Capital is estimated to have earned Rs 500 crore on an initial investment of Rs 80 crore in Ecom Express. The firm made an exit when the logistics firm raised fresh capital in a round led by Warburg Pincus according to two people privy to the details.

The returns have been even higher for early seed and angel investors in these two companies, which handle delivery for top online retailers like Flipkart, Amazon and Snapdeal.

According to filings with the ministry of corporate affairs (MCA), seed fund Oliphans Capital bought shares in Ecom Express at around Rs 70 per share in 2013. The fund is estimated to have sold some of these shares to Warburg Pincus during the investment round in June this year. Regulatory filings indicate Warburg — through its unit Eaglebay Investments — paid Rs 2,276 per share of Ecom Express; this would imply that Oliphans netted a return of over 30 times.

“It’s only logical that investment is also about exits,” said Anish Jhaveri, MD at Oliphans, declining to comment on returns made by his firm. “When we invested around $1 million in the company (Ecom Express) there were just four people in front of us who had just quit Blue Dart.”

Ecom Express was founded in 2012 by TA Krishnan, Sanjeev Saxena, K Satyanarayana and Manju Dhawan who had launched the e-tailing business at Blue Dart. The Delhi-based company expects to deliver goods in over 10,000 pin codes covering more than 1,500 towns and cities, across the country in the next few years.

The increasing interest in these companies is driven by the rapid growth in logistic support for online retail. A recent report on the Indian internet sector by brokerage IIFL estimates that the order volume for e-commerce shipments will increase 13x by 2020, with overall volume of e-commerce orders amounting to 2,000 tonnes per day.

Investors are of the view that just as tower companies gained in the telecom boom, the online retail rush will benefit from the back-end support companies.
“There are a lot of enablers which are important from a shadow driving perspective broadly similar to what telecom towers are to telco industry and EPC companies are to infrastructure,” said Sreeni Vudayagiri, investment director at Peepul Capital, a PE firm with $700 million under management which primarily invests in mid-sized consumption and manufacturing businesses.

Source: http://timesofindia.indiatimes.com/tech/tech-news/Private-equity-investors-discover-gold-mine-in-e-commerce-backend/articleshow/49656651.cms

Global re-insurers gearing up to open branch offices in India

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Global reinsurance majors, such as Swiss Re, Munich Re and SCOR, have firmed up plans to apply for a composite licence to carry on reinsurance business through a branch office in India.

Last week, the Insurance Regulatory and Development Authority of India (IRDAI) released final regulations for registration and operation of branch offices by foreign re-insurers.

Currently, all global re-insurers have representative offices in India and operate from overseas while the Indian market has only one domestic re-insurer, General Insurance Corporation (GIC Re).

Kalpana Sampat, Principal Officer and Managing Director of Swiss Re, said the Indian direct insurance market has seen very good growth and the company plans to apply for the licence shortly to operate in a full-fledged manner in the domestic market.

Hitesh Kotak, Chief Representative for India at Munich Re, said the company is in the process of preparing its application for branch office in accordance with the Indian regulator’s requirements.

A representative of SCOR SE said the company intends to apply to the regulator for a composite licence. Ankur Nijhawan, Managing Director of Hannover Re, said his company is currently evaluating the regulations.

In its guidelines aimed at making it attractive for global re-insurers to set up operations in India, IRDAI has put in place a level-playing field for foreign re-insurers, which have a minimum retention of 50 per cent vis-à-vis the domestic re-insurer GIC Re. Minimum retention is the minimum amount of business that will be ceded to the re-insurer on an automatic basis to avoid the expenses associated with small cessions.

Swiss Re’s Sampat said the regulations allow an equal opportunity to the foreign re-insurer with an Indian branch, which in turn will help facilitate setting up a vibrant domestic reinsurance market.

Build local base

Industry experts also said that the presence of foreign re-insurers would help the Indian market developing technical expertise and underwriting skills.

Hitesh Kotak of Munich Re said, “We are keen to work on the best ways to combine Munich Re’s expertise and establish ourselves by closely working with clients and brokers to identify new opportunities.”

“We plan to achieve this through developing a strong local team which is closer to the clients and, at the same time equipped to explore our rich knowledge base and experience,” he added.

http://www.thehindubusinessline.com/money-and-banking/global-reinsurers-gearing-up-to-open-branch-offices-in-india/article7838538.ece?homepage=true

Finance Ministry to ease transfer pricing rules

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The finance ministry is streamlining safe harbour rules and advance agreements, two mechanisms to determine the price of services rendered by a multinational to its subsidiary in India.

Safe harbour rules – directives on margins the tax authorities should accept for the transfer price declared by an assessee – have drawn a tepid response since they were introduced a couple of years ago. There is also a huge backlog in advance pricing agreements (APAs), an ahead-of-time understanding between a taxpayer and the tax authority on an appropriate transfer pricing methodology.

ALIGNING INDIAN TAXATION WITH BEST PRACTICES
Safe harbour rules

  • Government looking at lowering safe harbour margins to make it attractive for companies to opt for it
  • Government to make safe harbour definition unambiguous bringing in more clarity

Advance Pricing Agreement

  • With close to 550 cases pending, government looking at expediting clearances through:
  • Sector-specific approach to cases
  • Increasing manpower and filling up vacancies

The move would simplify the tax regime, reduce litigation and help improve the business environment, a finance ministry official said.

The steps will involve lowering the margins in safe harbour rules and definitions will be reworked to remove ambiguities. India announced the safe harbour rules in 2013, but the high margins of up to 25 per cent on total operational profits have made it unattractive for companies to use them.

“We are addressing issues related to transfer pricing to align it with best practices. We are revising the safe harbour rules that will include revisiting the definition and revising the margins, considered high by companies,” said a tax official.

Information technology (IT) and information technology-enabled services (ITeS) companies with transactions of up to Rs 500 crore have a safe harbour operating margin of 20 per cent and those with transactions above Rs 500 crore have a margin of 22 per cent. Knowledge process outsourcing companies have a safe harbour operating margin of 25 per cent.

Experts argue there is ambiguity in the definition of IT, ITeS and knowledge process outsourcing companies with a lot of overlap. Moreover, the margins decided in tribunals or in advance pricing agreements turn out much lower, ranging between 15 and 18 per cent.

“The definitions under the safe harbour rules are fuzzy and sometimes overlap, creating confusion over what rate should apply and which company will fall under which sector. We are expecting clarity on the definition,” said Rahul Garg, leader, direct tax, PwC.

Manisha Gupta, partner, Deloitte Haskins & Sells, said the safe harbour margins were high. “The government agrees to far lower rates at tribunals and in advance pricing agreements,” she said.

The lowering of safe harbour rates will ease the advance pricing agreement backlog. The government introduced the advance pricing scheme in 2012 and there are over 500 applications pending.

“We are considering sector-wise handling of cases by officers to expedite decisions,” the tax official said. “We have already made a request for an increase in manpower to clear the backlog. We expect a decision soon,” he added.

India has the highest incidence of transfer pricing litigation worldwide. The number of cases scrutinised has quadrupled from 1,061 in 2005-06 to 4,290 in 2014-15.

Among measures recently introduced, the government said an officer would be assigned not more than 50 important and complex transfer pricing cases. Officers typically audit more than 70 cases at a time.

Besides, the tax department has incorporated range and multi-year data in transfer pricing calculations to bring Indian laws in line with international practices. Earlier, single-year data and the arithmetic mean were used to arrive at transfer pricing.

Earlier this year, the finance ministry allowed rollback advance pricing agreements so that multinational companies could settle taxes for previous years as well.

“The burden on tribunals, high courts, Supreme Court and even on the APA team can be substantially reduced if the Indian government revamps the safe harbour rules (that is, devising calibrated and more reasonable margins for the sector consistent with the margins finally arrived at post-tribunal orders/MAP/APA and providing clarifications on what constitutes software development activities, KPO, contract R&D,” said a Deloitte & Taxsutra report on transfer pricing.

Approximately over 40 per cent of APA applications are from the IT/ITeS sector. Up to September 2015, more than 575 APA applications have been filed with the APA authorities. Fourteen of these APAs have been concluded, of which 12 are unilateral and two bilateral (with Japan and the UK).

Source:Business Standard