Inter-ministerial body FIPB today cleared six foreign direct investment proposals worth about Rs 180 crore.
The Foreign Investment Promotion Board has cleared six proposals including those of Janalaxami Finance and Turmeric Vision, a Finance Ministry official said.
The panel headed by Economic Affairs Secretary Shaktikanta Das had considered 15 proposals.
The official further said four investments proposals were rejected while decisions on five were deferred for want of more inputs.
India allows FDI in over 90 per cent sectors via automatic route. However, investment proposals in sensitive sectors like telecom and banking go through FIPB.
In last two years, the government has taken a series of reforms measures to liberalise FDI regime. Last month, it announced FDI liberalisation in nine sectors such as civil aviation, retail and private security services. This was the current government’s second round of relaxation in these rules.
During 2015-16, FDI into the country increased by 29 per cent to $40 billion from $30.93 billion in the previous fiscal.
Temasek Holdings, Singapore government’s investment company, will continue to scout for investments across consumption-oriented segments in India this year, even as it’s open to opportunities from other sectors.
In the previous year, the company’s bigger investments were in consumption-oriented segments such as healthcare and pharmaceuticals, financial services (including insurance), technology (e-commerce or payment) and consumer (FMCG companies).
The investments were made across public and private companies.
“That trend is likely to continue, and that’s where we see most of the India story playing out, unless there are certain opportunities that come up from other sectors.
“We are always open to opportunities from other sectors too,” said R Venkatesh, Managing Director, Temasek Holdings Advisors India Pvt Ltd.
For the sector-agnostic investment firm, there is no preferred exit mode, and previously the company has exited through various modes such as strategic stake, secondary sales and IPOs.
On an average, the company has invested more than $1 billion every year in India across sectors such as consumer, financial services, new economy, healthcare and pharmaceuticals.
“We don’t have an industry allocation, a country allocation or any type of deal allocation. It’s entirely based on the deals that make the cart. Our investments are very much bottoms up, and depends on opportunities,” said Promeet Ghosh, also a Managing Director at Temasek Holdings Advisors.
Temasek, which started its Indian operations in 2004, has investments in companies such as Bajaj Corp, Crompton Greaves, Oberoi Realty, GMR Energy, Axis Bank, Glenmark Pharma and Sun Pharma.
India is one of the markets across the world the company is focusing on due to good macros, great demographics and a rising middle-income population, Ghosh added.
Dip in net portfolio value
Last week, Temasek posted a net portfolio value of S$242 billion for year ended March, lower from S$266 billion posted during the previous year.
This was the Singapore investment company’s first portfolio decline since the 2009 global financial crisis.
India’s exposure to that was about 5 per cent, which was a rise from 4 per cent last year.
“This is reflective of a mark-to-market fall in some of our listed portfolio companies across the world. About 60 per cent of our portfolio is listed and about two-thirds of these are exposed to markets in Hong Kong and Singapore stock exchanges, which have fallen between 15-26 per cent,” Venkatesh said.
Seeking to enhance its ties with resource-rich Tanzania, India on Sunday extended its full support to the country to meet its development needs and signed five agreements, including one for providing a Line of Credit of $92 million in the water resources sector.
Describing India as a trusted partner in meeting Tanzania’s development priorities, Mr. Modi said he along with President John Pombe Joseph Magufuli “agreed to deepen overall defence and security partnership, especially in the maritime domain.”
“Our in-depth discussions on regional and global issues reflected our considerable convergence on issues of common interest and concern,” he said at a joint press interaction after his bilateral meeting with President Magufuli.
Twin threats
The two leaders agreed to work closely, bilaterally, regionally and globally to combat the twin threats of terrorism and climate change.
In a joint statement, the two leaders expressed their strong condemnation of terrorism in all its forms and manifestations and stated that there could be no justification for terrorism whatsoever. They expressed satisfaction on the holding of bilateral counter-terrorism consultations in early 2016.
“India’s cooperation with Tanzania will always be as per your needs and priorities,” Mr. Modi said.
The two sides signed an agreement under which India would provide a Line of Credit of $ 92 million for rehabilitation and improvement of Zanzibar’s water supply system.
Other agreements signed included an MoU on water resource management and development, an MoU for establishment of vocational training centre at Zanzibar, an MoU on visa waiver for diplomatic/official passport holders and an agreement between the National Small Industries Corporation of India and the Small Industries Development Organisation, Tanzania.
The Prime Minister said the two countries were also working on a number of other water projects for 17 cities in Tanzania.
E-commerce continues to drive demand for logistics and warehousing space in the country and has attracted a lot of interest from developers and private equity players, property consultant CBRE said.
“With the logistics and industrial segment witnessing significant development, there is a lot of interest from both developers and private equity investment,” CBRE South Asia Managing Director, Advisory and Transaction Services, Ram Chandnani said in a statement.
The government’s investor-friendly investment policies, improving domestic economy and progressive legislative reforms are all steps boosting the sector, he said at a conference here.
“India is yet to achieve its full potential when it comes to the logistics sector, even though the World Bank has ranked India 35th in logistics.
“China is ranked 27th but India is not too far behind,” said M T Murthy, Member (Operations) – India Post, Ministry of Communication and Information.
Stating that lack of adequate infrastructure has slowed down India’s economy in the past, Murthy said the government is committed towards capacity building.
E-commerce is playing a major role in driving up the demand in logistics that witnessed a growth of 57 per cent between 2009 and 2015, the statement said.
“India Post now has 700 e-commerce partners who rely on the government for their service delivery,” Murthy said.
According to CBRE, nearly 2 million sq ft of warehousing space was taken up by e-commerce firms in 2015, which is a significant jump, as the share of the sector rose from a meagre 2 per cent of the total warehousing demand in 2012, to around 22 per cent during 2015.
Peter Chang, Regional Head (South Asia) of ASUS and Country Manager (ASUS India), at the opening ceremony of India’s first exclusive Republic of Gamers (ROG) store in Kolkata, on Friday Ashoke Chakrabarty.
Taiwanese laptop and smartphone-maker Asus is looking to double its market share in mobile phones in India, by 2016. New offerings across various price brackets, along with premiumisation, is likely to give it the much-needed fillip.
Incidentally, India is amongst the top global markets for the smart-phone maker. The company started selling its smart-phones in the country in 2014.
Current strategy
According to Peter Chang, Regional Head (South Asia) and Country Manager (System Business Group), Asus India, the Rs. 10,000-15,000 price bracket will be its sweet spots, while new launches – scheduled August onwards – will also start competing across high-end segments, such as Rs. 20,000 and upwards.
Asus at present sells 2,00,000 smartphones per month, which it intends to double to 4,00,000 a month within December.
Its market share stands at 2.5 per cent; which will be pushed up to 5 per cent during this period. “Focus on the Rs. 10,000-15,000 range will continue and we will ramp up this portfolio. Asus will also compete strongly in the premium-end. This will give us the scope to double both our market share and sales (in India) within this year,” he told BusinessLine .
The products – launched across different price segments – are said to be “new generation devices” (with high-end specifications). At least four new smartphone models are set to be made available soon (as new generation devices).
Mid-range dominates
As per a report from analyst firm CyberMedia Research, 23.6 million smartphones were sold in the first three months (January-March) of this year. Of these, the higher price-band phones ( Rs. 10,000-15,000) were more popular than budget ones. This means most brands are pitching for mid-range phones as the market grows flat.
The average selling price (ASP) was Rs. 12,983 in the quarter, while it stood at Rs. 10,364 in Q1 last year, indicating a year-on-year rise.
“There is a change coming in the Indian market. Over a period of time it will mature with the average selling price going up,” Chang said. Asus’ ASP stands at around Rs. 11,000.
Growth in laptop sales
Interestingly, Asus is also betting on high-end offerings in the laptop PC segment to see through an overall slump in market conditions. The company is betting on high functionality and specification-heavy devices, targeting gamers.
The laptops targeting gamers are priced at a premium (because of their high specs) ranging between Rs. 70,000 and Rs. 200,000.
Asus launched its standalone store targeting gamers (one that focuses on selling these high spec devices) – Republic of Gamers – in Kolkata on Friday. It is looking to add four more stores across the country by the end of this year.
“Now the first device to connect to an Internet is not a laptop; it is a smartphone. So one has to judge the functionality (of a laptop) and how it will target end users. Gaming gives us a good opportunity which we are targeting,” Chang said.
Other competitors have also forayed into the segment where Asus claims to have a 30 per cent market share.
Sources say gaming in India accounts for just 1 per cent of the global market, with 2,000-3,000 such high-end devices being sold every month.
Global networking major Cisco, which has set aside a corpus of $280 million for funding early stage start-ups in India, has invested in Kolkata-based Videonetics Technology Pvt Ltd, a video surveillance firm that designs, develops and provides ultra-modern surveillance products integrated with video analytics software.
While the amount invested remains undisclosed, Cisco typically acquires an 18-20 per cent stake in every start-up that it invests in. In an earlier interaction with BusinessLine, Joydeep Bose, Managing Director of Cisco Investments – Asia Pacific Japan (APJ), had said the company typically makes investments ranging from $800,000 to $15 million in a start-up.
Confirming the investment in Videonetics, Alok Bardiya, Country Head (Investments and M&A), Cisco Systems India , told BusinessLine that a second investment has also been closed in a start-up that works on IoT (Internet of Things) solutions for Smart Cities, an area that Cisco is heavily focused on to grow its India revenues.
Revenue milestone
Last year, the company crossed the $1-billion milestone in India revenue and is aiming to achieve $2 billion by FY 2018.
Without disclosing the name of the start-up, Bardiya said: “There are two more investments in the pipeline that we should close soon.” This takes Cisco’s investments in Indian start-ups to a total of six over the last 18 months, and with two more in the pipeline, it will take the total tally of investments to eight by the end of the year.
The $49-billion networking giant has already invested in four Indian start-ups over the last two years, namely, Covacsis, Mobstac, Ineda and MobiKwik.
The company’s innovation strategy in India revolves around four pillars – Invest; Acquire; Co-create with start-ups; Co-develop with partners.
While Cisco made its first India acquisition of Bengaluru-headquartered IT security firm Pawaa for an undisclosed amount last October, it has invested in a total of 25 Indian start-ups, some of which are registered abroad, over the last 10 years.
The company’s first attempt at co-creating with start-ups took wings on Thursday, with the announcement of Cisco LaunchPad, an accelerator programme to co-innovate with early to growth stage start-ups.
Partnerships have been forged with companies like Tech Mahindra, Saankhya Labs and industry body Nasscom to co-develop solutions for Utilities, Internet users and Farmers.
Asked if Cisco had identified any start-up to acquire after Pawaa, Bardiya said: “We continue to look for start-ups that are building disruptive solutions that align with Cisco’s business interests.”
In what showed a mindset shift among India’s policymakers, the government on Monday opened the floodgates for foreign direct investment (FDI) by easing the terms for nine sectors
In what showed a mindset shift among India’s policymakers, the government on Monday opened the floodgates for foreign direct investment (FDI) by easing the terms for nine sectors. Showing scant signs of legacy inhibitions, it virtually paved the way for even foreign airlines to acquire their Indian counterparts, removed the condition of domestic access to state-of-the-art technology for 100% FDI in the defence sector and put in abeyance the fractious 30% local sourcing norm for FDI in single-brand retail of advanced-technology products.
Despite the local pharma industry’s oft-expressed fear of being swamped by Big Pharma, foreign firms can now take majority (up to 74%) ownership in Indian drugmakers via the automatic route, which could again catalyse big-ticket M&A activity in the sector.
With the relaxations in the aviation sector, even a foreign airline could acquire 100% ownership in an India airline company by working in concert with a related party, according to some analysts. For example, a Qatar Airways could acquire a GoAir by directly picking up a 49% in the Indian firm and lapping up the balance equity through the West Asian nation’s sovereign wealth fund, Qatar Investment Authority.
Analysts, however, said the government seems to have tightened the sourcing rule in single-brand retailing, instead of giving a blanket exemption from such a rule for entities having “cutting-edge” technology, as was the case earlier. For instance, Apple will be exempted from the local sourcing rule for three years and have a relaxed sourcing regime for another five years if it wants to set up its own retail store, as its technology has already been described as “cutting edge” by a government panel. However, the company will still have to start local sourcing from the fourth year itself, thanks to the insistence of the finance ministry, which wanted that the Make in India programme get a boost. Similarly, Chinese company LeEco will be subjected to the same conditions if its claim of having “cutting edge” technology is endorsed by the panel headed by department of industrial policy and promotion secretary Ramesh Abhishek. However, another Chinese smartphone maker, Xiaomi, which recently withdrew its application for such a waiver, will have to comply with the mandatory 30% sourcing rule from the beginning should it wish to set up its own retail store.
Commenting on the new FDI policy for airlines, Amber Dubey, partner and India head of aerospace and defence at KPMG in India, said: “The avoidable controversies on settling ‘ownership and control’ issue is now over. Foreign airlines can now focus on the customers and competition rather than wasting time on legal and regulatory issues.”
“The likely increase in competition will bring down prices and enhance air penetration in India, both international and domestic. Indian carriers can now look for enhanced valuations in case they wish to raise funds or go for partial or complete divestment,” he added.
Calling the new norms a “bit tricky”, Amrit Pandurangi, senior director, Deloitte Touche Tohmatsu India, said, “Foreign airline investment is restricted to 49% and FDI investment in this sector has been opened up to 100%, so if the beyond the portion of the equity is by a related entity, then that needs to be tested.”
Among domestic airlines, the Rahul Bhatia-controlled Interglobe Enterprises holds close to 43% in IndiGo, Ajay Singh has a 60% stake in SpiceJet and Naresh Goyal holds 51% in Jet Airways. While Tata Sons holds 51% in both Vistara Airlines and AirAsia India, GoAir is wholly owned by the Wadia Group.
In defence, the decision to scrap the condition of access to “state-of-the-art technology” for FDI beyond 49% (through government route) will make it easier for foreign investors to invest in India. Already, Russian firm Kalashnikov is reportedly looking for local partners for manufacturing in India. Similarly, Swedish defence major Saab is learnt to be looking at more than 49% FDI in defence in its joint venture with a local partner to make the Gripen aircraft in India.
The government’s move to allow 100% FDI through the automatic route (earlier it was up to just 49%) in the broadcast carriage industry, comprising teleports, cable, direct-to-home (DTH) players, HITS (head-end-in-the sky) and mobile TV operators will provide a breather to the cable industry which has been struggling with the process of digitalisation of cable TV. The government has also allowed 74% FDI (49% under automatic route and through government approval beyond this ceiling) in private security agencies. Earlier, only 49% of FDI through government route was allowed.
Also allowed now is 100% FDI in animal husbandry (including breeding of dogs), pisciculture, aquaculture and apiculture under the automatic route under controlled conditions. It has been decided to do away with this requirement of ‘controlled conditions’ for FDI in these activities.
“For establishment of branch office, liaison office or project office or any other place of business in India if the principal business of the applicant is Defence, Telecom, Private Security or Information and Broadcasting, it has been decided that approval of Reserve Bank of India or separate security clearance would not be required in cases where FIPB approval or license/permission by the concerned Ministry/Regulator has already been granted,” a PMO statement said..
Monday’s is the second largest FDI liberalisation initiative by the Modi government, after the steps taken in November 2015. Prime Minister Narendra Modi tweeted: “In two years, Govt brings major FDI policy reforms in several key sectors… India now the most open economy in the world for FDI; most sectors under automatic approval route.” He added: “Today’s FDI reforms will give a boost to employment, job creation & benefit the economy.”
In what seemed to indicate that the government’s intention was indeed to let foreign airlines acquire Indian firms and thereby augment their capital and fleet strength for the benefit of air travellers, economic affairs secretary Shaktikanta Das said that Monday’s reforms in the sector were a “game changer”.
India’s FDI inflows increased to $55.5 billion in FY16 from $36 billion in FY14. Net FDI inflows stood at $36 billion in FY16 compared with $32.6 billion in FY15.
Commerce and industry minister Nirmala Sitharaman, however, rejected assumptions that the government decided to announce so many FDI policy reforms in one go to divert public attention from RBI governor Raghuram Rajan’s decision to not continue at the central bank after his current tenure ends on September 4. The reforms are a result of months of deliberations among various departments and are not announced in a hurry to divert attention, she affirmed.
Inter-ministerial body FIPB today cleared six foreign direct investment proposals worth about Rs 180 crore.
