Foreign inflow boost for alternative investment funds

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The move by the Reserve Bank of India (RBI) to allow foreign investment into alternative investment funds (AIFs) through the automatic route is likely to boost inflows.

 

In a notification on Thursday, the central bank said those residing outside India (including a registered foreign portfolio investor or a non-resident Indian) might acquire, purchase, hold, sell or transfer units of an AIF. Downstream investment by an AIF shall not be regarded as foreign investment if the sponsor or the manager or the investment manager is ‘owned and controlled’ by Indian.

 

“The notification paves the way for foreign money to come into AIFs without the Foreign Investment Planning Board (FIPB)’s intervention and be treated as domestic capital, subject to conditions. This could lead to a fresh surge of foreign flows in Indian listed and unlisted securities,” said Tejesh Chitlangi, partner, IC Legal.

 

Earlier, every foreign investment proposal in AIFs had to be cleared by FIPB. In some cases, foreign investments would suffer due to the sectoral limits being hit.

 

Importantly, the amendment provides that downstream investments by such investment vehicles, sponsored or managed by Indian-owned and controlled entities, will be treated as domestic investment. With this, investment vehicles so sponsored or managed will be free to invest in all sectors, without any of the sectoral restrictions imposed under the Foreign Direct Investment rules.

Foreign inflow boost for alternative investment funds

 

“Overall, this is an extremely positive development and it is hoped that this is followed with suitable tweaks to the tax laws to address certain vexed issues surrounding these investment vehicles,” added Kalpesh Maroo, partner, BMR and Associates LLP.

 

However, there is one caveat that could be a hindrance. RBI has said this easing of foreign investment won’t be applicable for limited liability partnerships (LLPs), as it would be difficult to determine the Indian sponsors in such structures. And, 60 per cent of the assets in AIFs are sponsored through LLPs.

 

“There is a caveat in the regulations that the Securities and Exchange Board of India (Sebi) is the regulator to determine the sponsor of these investment pooling instruments. We will approach Sebi for checking on the Indian nationality of the sponsors,” said a legal expert, requesting anonymity. Sectoral sources say close to 200 AIFs operate out of India.

 

Source: http://www.business-standard.com/article/markets/foreign-investment-boost-for-alternate-investment-vehicles-115112000837_1.html

India 5th on doing biz in clean energy

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Considering India’s notable policy reforms in the renewable energy sector, Bloomberg New Energy Finance has ranked the country at fifth place on a list of 30 countries on ease of doing business in the renewable energy space. The ranking done by Bloomberg New Energy Finance’s annual Climatescope report indicates that clean energy’s centre of gravity is shifting from developed to developing countries. The report ranked China in the first place, followed by Chile, Brazil, South Africa and India.

The report said: “The new policy ambitions from the (Narendra) Modi government signal clean energy opportunities in the country.” The strongest parameter in favour of India was value chain, while lower-than-expected investment continues to be the weak link.

As solar energy became more cost-competitive in emerging markets in 2014, there would be a surge of investment and capacity-building in the Asian countries, especially China and India, the report noted. Last year, India added 5 gigawatt (Gw) of clean energy generation capacity.

CLEAN BREAK IN RENEWABLE SPACE
  • $343.2 billion Total clean energy investments (2009-14) in China
  • $52.5 billion Total clean energy investments (2009-14) in India
  • 262.5 Gw Installed power capacity
  • 38,360 Mw Total renewable energy capacity
  • 5,009 Mw Renewable capacity added in 2014
  • 14.6% Renewable share in total installed capacity
  • Top Indian states: Tamil Nadu, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan & Gujarat

“Major reforms in India brought by the Modi administration bring hope of quicker deployment for the country’s eager renewable energy developers,” said Climatescope.

Among the states, Tamil Nadu led the pack with the highest wind energy capacity, followed by Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Gujarat.

Madhya Pradesh scored the highest among Indian states on growth rate of clean energy investments. The state’s favourable land policy and easy clearances have resulted in attracting projects. Gujarat, which was once a haven of clean energy investments, slipped from the top slot due to policy uncertainty and litigation over tariff.

Maharashtra’s high feed-in tariff led to a surge in wind capacity.

The report noted: “Maharashtra has done relatively little to encourage private investment in solar; it has held no tenders for power contracts and offers no feed-in tariffs.”

Renewable energy in Rajasthan at 4 Gw represents a high share (32 per cent) of total power capacity of 13 Gw, compared to other states. “The overall renewable energy capacity grew 14 per cent in 2014 in the state, but it has done little policy-wise to encourage solar development through incentives and the state’s distribution utilities are among the financially shakiest in India,” said the report.

At 7.4 Gw, Tamil Nadu has more wind installed than any other state. Since 2012, however, annual new-build rates have fallen and in 2014, only 208 megawatt was commissioned. This is largely due to the poor financial health of state-owned distribution utility companies and occasional payment delays to power project owners.

The Indian government’s goal of providing round-the-clock power to 1.25 billion citizens has triggered huge interest from investors. The report noted that a strong energy minister overseeing coal, power, and new and renewable energy sectors could have a positive influence.

The Modi-led government has revised the targets for renewable energy to 175 Gw by 2022.

Source: http://www.business-standard.com/article/economy-policy/india-5th-on-doing-biz-in-clean-energy-115112300009_1.html

After 50 years of diplomatic ties, India and Singapore to be strategic partners

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After almost five decades of having diplomatic ties, India and Singapore will become strategic partners for the first time on Monday.

The partnership will encompass all aspects of bilateral ties from expansion of defence cooperation, enhancement of trade and investment and strengthening of regional relationship with the Association of Southeast Asian Nations (ASEAN).

The decision to sign the Strategic Partnership Agreement with Singapore was taken in August 2014 based on a ‘5S Plank’. Since then both Prime Minister Narendra Modi and Singapore Prime Minister Lee Hsien Loong have been continuously discussing the contours of such a pact as they planned to take their relationship beyond just business and trade.

“It is crucial to have such a pact with Singapore considering its strategic location. Not only will it enhance India’s ‘Look East’ policy, but it will also give India a greater voice in the ASEAN region at large,” an official told BusinessLine.

This is also done keeping in mind the increasing presence of China in that region and the escalation of dispute in the South China Sea region, the official added.

As a result, Modi’s visit to Singapore assumes importance. The pact will be signed with both leaders having a summit-level dialogue where all issues are expected to be discussed, with a special focus on India’s overall strategy in the Indian Ocean region.

“Singapore is an integral part of our Look East Policy and it was announced from there by our former Prime Minister Narasimha Rao. Singapore remains one of our important defence exporters. Besides, they have been trying to act as a bridge between India and China and all these is linked to the entire Indian Ocean strategy that India is now working on,” highlighted Sanjaya Baru, Director for Geo-economics and Strategy, at the London-based International Institute of Strategic Studies (IISS).

Recently, at a meeting of the Fourth Joint Commission, which was co-chaired by External Affairs Minister Sushma Swaraj and her Singaporean counterpart Vivian Balakrishnan, issues such as maritime cooperation, trade ties and cyber security were discussed. While in Singapore, Modi is also expected to deliver the prestigious ‘Singapore Lecture’ at the Institute of South East Asian Studies.

Singapore has emerged as the second largest source of FDI amounting to $35.9 billion as of June 2015, which is 14 per cent of India’s total FDI inflow. India also has a Comprehensive Economic Cooperation Agreement with Singapore with bilateral trade reaching $17.1 billion in 2014-15.

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/after-50-years-of-diplomatic-ties-india-and-singapore-to-be-strategic-partners/article7906529.ece

Resurgent Rajasthan sees proposals worth Rs 3.3 lakh cr

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The first day of the much-hyped Rajasthan Resurgent Summit concluded with 295 proposals worth Rs 3.3 lakh crore. These proposals, however, were received over the past year and barely left much scope for industry heavyweights and the Union government to announce any new big-ticket projects.

“These proposals are just the tip of the iceberg. A lot of work has to be done,” Chief Minister Vasundhara Raje said in her inaugural speech. “This investment will create 2.5 lakh jobs,” she added.

In the past year, Rajasthan has undertaken a raft of economic and industry reforms to create an investment-friendly image. Her government was left with a huge debt, including Rs 70,000 crore of debt from the power sector, by the previous Congress government.

THE PROPOSALS
• Rs 11,000 cr investments announced by Kumar Mangalam Birla
• Rs 10,000 cr pledged by Gautam Adani
• Rs 6,500 cr worth investments by Anil Ambani
• Rs 10,000 cr worth projects to be undertaken by chemical & fertiliser ministry
• 24 model railway stations to be developed in the state

Lauding Raje’s role, Union Finance Minister Arun Jaitley said, after leading the state in reforms, the chief minister should now lead the state in ease of doing business. The government should provide land for business. “The India of 2015 is not the India of 1971. For that matter, it is also not the India of 1991. The aspirational constituency, which supports growth wants India to reform at a much faster speed,” he said. “Everything should be corruption free. Taxation should be reasonable and the policy should not be so aggressive that it deters investors, ” he added.

Among the investments made public on Thursday, the biggest perhaps came from Kumar Mangalam Birla, chairman of the Aditya Birla Group. Birla promised investment of nearly Rs 11,000 crore, including Rs 7,000 crore for setting up two new cement plants and Rs 3,000 crore for establishing a 500 MW solar power plant in the state. Gautam Adani, head of the Adani Group, also promised to invest an additional sum of Rs 10,000 crore over four years for the expansion of thermal power plants and generation of solar power in the state.

However, then there was a word of caution by Hero Motocorp chairman Pawan Munjal. Though he lauded the government’s role in making the state investor friendly, he requested the chief minister to ensure speedy clearance of projects.

“We need speedy clearances for setting up our industries,” Munjal said, disclosing that his company is setting up a state-of-the-art Research and Development Centre on the outskirts of Jaipur.

Uday Kotak, chief executive officer of Kotak Mahindra Bank, found special mention from Raje for the bank’s financial services. Kotak said his bank’s lending ratio is more than the deposit in the state.

For instance, against a deposit of Rs 100, his bank lends Rs 250. “We plan to double our lending from Rs 5,000 crore to Rs 10,000 crore in the next three years… this will help small, medium-scale industries and farmers in the state,” Kotak said.

From the central government, the biggest announcements came from chemicals and fertiliser minister Ananth Kumar, who promised Rs 10,000-crore of projects. This includes setting up a National Institute of Pharmaceutical Education and Research in Jhalawar district in two years, upgrade of the Central Institute of Plastic Engineering and Technology in Jaipur, and setting up a plastics park and a medical devices park, a first in the country. Railways minister Suresh Prabhu said they were going to set up 24 modern railway stations in the state.

Tourism was another key sector, which received special attention from the Central government, as well as the summit’s international partners including Singapore, Japan, Italy and Australia. Singapore Home Affairs Minister K Shanmugam said Singapore Airlines has decided to operate a direct flight from Singapore. “The airlines knew that it might not be earning profit in one or two years, but it is a long-term partnership,” he said.

Singapore to focus more on economic activities in India: Experts

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“The emphasis would be on working with India in the areas we are good at, including skill development and town planning,” he told PTI in comments on India-Singapore ties ahead of Modi’s visit from November 23.

Singapore will further strengthen its bilateral trade ties with India through the “strategic partnership” the two countries will establish during Prime Minister Narendra Modi’s visit here next week, according to experts.

 

“The strategic partnership means bringing the relationship between the two countries to a higher level. This is likely to be focused on economic activities,” said Gopinath Pillai, Chairman of the Institute of South Asia Studies, a think-tank of the National University of Singapore.

 

“The emphasis would be on working with India in the areas we are good at, including skill development and town planning,” he told PTI in comments on India-Singapore ties ahead of Modi’s visit from November 23.

 

Singapore and India have enjoyed steadfast bilateral relations for the past five decades which were further enhanced under the 2005-Comprehensive Economic Cooperation Agreement (CECA), a free-trade pact promoting economic and trade activities.

 

Singapore is India’s second largest investor, especially in the power and port sectors.

 

CECA is further being reviewed and would encourage more international investments through Singapore into massive developments taking place in India.

The Indian government has this month further liberalised Foreign Direct Investment (FDI) in infrastructure, sending a clear signal of its economic reform programmes, Pillai added.

 

Depending on how the reviewed CECA is positioned, Singapore-based investors remain “gung-ho” on economic prospects in India and will use the treaty to venture into the Indian market, just as Indian companies and businesses are using Singapore as a springboard to spread across Asian markets, including China, he said.

 

The Indian leader’s visit to Singapore is also seen as timely and comes soon after one made by Chinese President Xi Jinping in early November.

 

Singapore, as a signatory to the Trans-Pacific Partnership and as negotiator of the China-led pan-Asian Regional Comprehensive Economic Partnership, can help India expand into Asia, according to Girija Pande, Executive Chairman of Apex Avalon.

 

Pande also pointed out that, Singapore with its links to the Asian supply chain, can also play an important role in ‘Make in India’ initiative, calling on the Indian Prime Minister to push for more commercial engagement with Singapore and the wider ASEAN region.

 

Singapore and India have many collaborative programmes between schools and colleges.

 

“Students from Singapore often visit Indian schools to get better understanding of the Indian communities and study approaches and vice versa,” he said.

 

Source:  http://economictimes.indiatimes.com/articleshow/49857019.cms

Want to partner India in smart cities: Huawei

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Chinese technology major Huawei wants to partner India in helping it build Information and Communications Technology (ICT) infrastructure for the development of smart cities, a senior company executive said at the Huawei Innovation Day Asia, co-hosted with National University of Singapore, here last week.

 

The Centre has already announced the list of 100 cities which it plans to make ‘smart’ by providing efficient physical, social, institutional and economic infrastructure. The government has defined a smart city in the Indian context as a city that provides a decent quality of life to its citizens, a clean and sustainable environment, and supports the application of smart solutions.

 

“We will be able to help India build ICT infrastructure including wireless systems and the computing platforms for the smart cities,” said Joe So, Huawei’s chief technology officer for Industry Solutions at the company’s Shenzhen head office.

 

“We can help build the inter-dependency of the Indian system,” So said, stressing on Huawei’s strength in building ICT infrastructure.

 

Noting the similarities between India and China, especially in view of the huge population in their major cities, So said India’s smart cities should also adopt ICT. So pointed out the use of ICT in Chinese cities has helped reduce crime rates significantly. The Indian smart cities could also use ICT for similar use, said So at the Huawei Innovation Day Asia.

Elaborating, So said India would not be able to have one plan for building 100 smart cities as the country’s major regions are different from one another. Each city must be planned based on its structure and people’s needs such as New Delhi being a government and agencies centre and Mumbai being a commercial hub.

Addressing the Innovation Day Asia, Singapore’s minister for trade and industry S Iswaran said, “The ICT innovation will have a profound impact on the nature of jobs, the viability of business models, and the structure of economies.” Citing the Asian Development Bank’s figures, Iswaran said the continent’s urban population grew by 44 million every year and the Asian nations had to concern themselves with their citizen’s growing expectations for more efficient government services, as well as ensure environmental sustainability.

So said he’ll be highlighting Huawei’s technologies for India, its second largest market outside China, at the Smart-Safe City conference in Bangalore on December 19.

The company also announced its vision for the next generation of the smartphone: The “superphone”, and said it will be developed by 2020.
Source:http://economictimes.indiatimes.com/articleshow/49798484.cms

 

India, Japan sign action plan to double investments in 5-years

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The governments of India and Japan signed an agreement on Thursday for doubling of Japanese investment into Indian firms in the next five years, and  boosting two-way trade. The signatories were Commerce and Industry Minister Nirmala Sitharaman and Japan’s minister for economy, trade and industry, Yoichi Miyazawa.

The plan was categorised into five broad areas: development of selected townships in India, promotion of investment and infrastructure development, further development and cooperation in information technology, enhancing cooperation in strategic sectors and Asia-Pacific economic integration.

Signing of the action plan is seen “as a step further in improving the trade relationship between India and Japan as a follow-up of Prime Minister Narendra Modi’s visit to Japan last year,” stated a release quoting Miyazawa.

According to Sitharaman, the agenda was in line with PM’s Make in India plan that will further investments from Japan into the country’s manufacturing sector.

Last year, the Department of Industrial Policy and Promotion under the ministry of commerce and industry had set up a mechanism to fast-track Japanese investments named ‘Japan Plus.’

During Modi’s visit, Japanese Prime Minister Shinzo Abe had set a target of 3.5 trillion yen ($33.5 billion) of public and private investment and financing from Japan including official development assistance to India to be made over five years. There are already 1,209 Japanese firms operating in India out of which 137 have started their operations after October 2013.

Japan is the fourth largest foreign direct investment (FDI) contributor to India, with major interests in pharmaceuticals, automobiles, and services sectors accounting for 7.46 per cent of total FDI equity inflows into India. During April 2000-November 2014, FDI from Japan into India stood at $17.55 billion.

Under the Tokyo Declaration for Japan-India Special Strategic and Global Partnership, Modi and Abe have set a target of doubling Japanese FDI and the number of Japanese firms in India by 2019.

Source: http://www.business-standard.com/article/economy-policy/india-japan-sign-action-plan-to-double-investments-in-5-years-115043000401_1.html