Technology major Cisco is working on a plan to establish a manufacturing facility in India and is in talks with the government for the same, a top official of the company has said.
Terming India as one of its “best bases”, Cisco CEO Chuck Robbins said the company is “very actively involved in India across the board” and working on a broader base from digitisation to smart cities in the country.
He was interacting with reporters at the Cisco Live 2016 annual conference here.
On expansion plans in India, Robbins said, “… Prime Minister Narendra Modi is very committed to manufacturing. We worked through a business case and… presented to him that… That was fantastic and we have been moving forward.”
He added that the company is moving forward on various healthcare and security initiatives, with a lot happening on the digital cities front.
Cisco is engaged in over 15 smart cities projects in the country. The company is also working with Andhra Pradesh government for rolling out Bharat Net.
The company views India as one of the best bases and is focusing a lot on education as well, Robbins added.
The country is home to Cisco’s second-largest site, which has about 11,000 employees. It is offering education to 24,000 students spread across 47 schools.
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.
The World Bank Group signed an agreement with the International Solar Alliance (ISA), consisting of 121 countries, led by India. It has committed to provide $1 billion support to Indian solar energy projects.
The World Bank-supported projects include solar rooftop technology, infrastructure for solar parks, bringing innovative solar and hybrid technologies to market and transmission lines for solar-rich states. The cumulative investment in solar would be the World Bank’s largest financing in this sector for any country.
ISA was launched at the UN Climate Change Conference in Paris at end-November last year, by Prime Minister Narendra Modi and French President François Hollande. Through ISA, India aims to collaborate with global agencies and mobilise around $1 trillion of investment in solar energy by 2030.
The agreement was signed for India by Arun Jaitley and Piyush Goyal, the minister of finance and coal, power & renewable energy, respectively, and World Bank Group President Jim Yong Kim.
“India’s plans to virtually triple the share of renewable energy by 2030 will both transform the country’s energy supply and have far-reaching global implications in the fight against climate change,” said Jim Yong Kim. He hopes this agreement would spur a global movement.
The World Bank Group will develop a road map to mobilise financing for development and deployment of affordable solar energy, and work with other multilateral development banks and financial institutions to develop financing instruments in this regard.
The World Bank also signed an agreement to give close to $625 million for the Grid Connected Rooftop Solar Programme under the National Solar Mission. The project will finance the installation of around 400 megawatt of solar photovoltaic power projects. The development of a $200-million shared infrastructure for the Solar Parks Project under a public-private partnership model, is also under preparation, said the Bank.
Execution of works in 20 smart cities will kick-start from June 25 with Prime Minister Narendra Modi launching 14 projects in Pune, while 69 others will commence in other parts of the country entailing a total cost of Rs 1,770 crore.
Marking the first anniversary of the announcement of the government’s flagship programme, Modi will launch the ‘Smart City Mission’ projects from Pune’s 5,000-capacity Shiv Chatrapati Sports Complex.
“Prime Minister Narendra Modi will launch Smart City projects on June 25, 2016, kick-starting execution of Smart City Plans of 20 cities selected in the first round of ‘Smart City Challenge Competition’,” Urban Development Ministry said in a release.
Apart from the Pune’s projects, as many as 69 such works will be launched on the same day in the other ‘smart cities’ entailing a total investment of about Rs 1,770 crore, it added. These projects are related to solid waste management under Swachh Bharat Mission, water supply projects, sewage treatment plants and development of open and green spaces under Atal Mission for Rejuvenation and Urban Transformation (AMRUT).
It would also include housing projects for urban poor under Pradhan Mantri Awas Yojana and area development and technology based pan-city solutions under Smart Cities Mission, the release said. Modi will also inaugurate ‘Make Your City SMART’ contest, aimed at involving citizens in designing smart cities, with a reward ranging from Rs 10,000 to Rs one lakh for winners.
“Suggestions and designs suggested by the citizens will be duly incorporated by respective smart cities,” the release said. The prime minister will also inaugurate ‘Smart Net Portal’ which enables the cities under different urban missions to share ideas and solutions for various issues during the implementation of various missions. On the occasion, all the first batch of 20 smart cities under Smart City Mission will be linked through video-conferencing. These 20 cities have proposed a total investment of Rs 48,000 crore in area development and pan-city solutions.
Some of the projects to be launched include New Delhi Municipal Council area where mini-sewerage treatment plants, 444 smart classrooms, bio-methanation plant, WiFi, smart LED streetlights, city surveillance and command and control centre would be initiated. The function will be attended by Union Minister M Venkaiah Naidu, Maharashtra Governor C Vidyasagara Rao and Chief Minister Devendra Fadnavis, among others. Besides Maharashtra’s Pune, other cities whose projects would be launched include Ahmedabad (Gujarat), Bhubaneswar (Odisha), Jabalpur (Madhya Pradesh), Jaipur (Rajasthan), Kakinada (Andhra Pradesh), Kochi (Kerala) and Belagavi (Karnataka).
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.
In a major incentive, startups can now issue shares to investors at higher than fair value without worrying about tax consequences.
The Central Board of Direct Taxes (CBDT) has notified the much awaited tax exemption on investments above fair market rate for startups.
“The exemption provided to startups from the ‘rigour’ of section 56(2)(viib) of Income Tax Act has been long awaited,” Amit Maheshwari, Partner Ashok Maheshwary and Associates LLP, said.
The effect of the CBDT’s notification is that in case a startup gets investment from resident angel investors, family offices or funds which were not registered as venture capital funds, it will not be taxed even if the investment is made in excess to the fair value.
“It has been a long standing industry demand to abolish this Angel tax,” Maheshwari said.
A startup is a company in which the public are not “substantially interested” and conforms to certain conditions as prescribed by the Department of Industrial Policy and Promotion (DIPP) in February this year.
Under Indian tax law, if an Indian company receives share subscription amount from an Indian resident which exceeds the fair value of shares, then the excess amount is taxed as income of the Indian company, said Rajesh H Gandhi, Partner, Deloitte Haskins and Sells LLP.
“The notification now exempts startups from this rigorous provision. This is a welcome relaxation and would ensure that startups can issue shares to investors at higher than fair value without worrying about any tax consequences,” Gandhi said.
A similar exemption already exists for Venture Capital Funds (VCFs).
Maheshwari said this Angel tax still poses threat to earlier investments which could be perceived as being overvalued in light of the declining valuations globally and in India.
Last week, the DIPP has launched a portal and mobile app through which startups can gather all latest updates on various notifications, circulars issued by various departments and different funding agencies.
In January, Prime Minister Narendra Modi had unveiled a slew of incentives to boost startup businesses, offering them a tax holiday and inspector raj-free regime for three years, capital gains tax exemption and Rs 10,000 crore corpus to fund them.
Switzerland today said it will relax norms for providing information to foreign nations seeking banking details about their citizens on the basis of ‘stolen data’, a move that would benefit India in its fight against the black money menace.
In the case of stolen data, Swiss authorities would extend assistance on tax matters to other countries provided such information was procured through normal administrative assistance channels or from public sources.
The proposal, which has been adopted by the Swiss Federal Council, also comes at a time when India is making efforts to bring back unaccounted money stashed by its citizens overseas. The issue of black money also figured during the discussions between Prime Minister Narendra Modi and Swiss President Johann Schneider-Amman earlier this week.
The Swiss government today said the practices with regard to “stolen data are to be eased”.
“It should become possible to respond to requests if a foreign country obtained the stolen data via normal administrative assistance channels or from public sources,” it said in a release.
However, administrative assistance is still not possible if a country actively acquired the stolen data outside of administrative assistance proceedings.
In this regard, the Federal Council today adopted the dispatch on amending Tax Administrative Assistance Act.
The Bill is expected to be discussed by the Swiss Parliament this year.
Known for its banking secrecy practices, Switzerland has been facing international pressure as countries step up efforts to curb illicit fund flows.
In 2013, the Federal Council had suggested easing administrative assistance practices in the case of stolen data but at that time, the proposal was rejected by majority of the cantons, parties and business associations.
Since then, international practice has established that exceptions to the exchange of information would be tolerated only on a very restricted basis, the release said.
“For instance, the exchange of information could be refused if it is incompatible with public policy, such as in the case of requests motivated by racist, political or religious persecution,” it added.
The Swiss government emphasized it intends to respond to future requests that are based on data obtained by the requesting state from another state through normal administrative assistance channels or from public sources.
“The consultation revealed that the cantons are virtually all rallying behind the proposal, while the numbers of advocates and opponents in the political parties and organisations appear broadly balanced.
“The Federal Council is adhering to the proposal in view of this outcome, as it believes that the proposal is necessary to safeguard Switzerland’s interests,” it noted.
Last month, Switzerland started the process for an ordinance to put in place a mechanism for automatic exchange of tax information.
During Modi’s visit to Switzerland earlier this week, Swiss government assured India of stepped up cooperation with regard to black money issue.
“Combating the menace of black money and tax evasion is also our shared priority. We discussed the need for an early and expeditious exchange of information to bring to justice the tax offenders.
“An early start to negotiations on the Agreement on Automatic Exchange of Information would be important in this respect,” Modi had said at a joint media interaction with Schneider-Amman.
Under the bilateral treaty for administrative assistance and exchange of information with Switzerland, India has sought details about numerous individuals and companies from the Alpine nation as part of its crackdown against those stashing illicit funds there.
Technology major Cisco is working on a plan to establish a manufacturing facility in India and is in talks with the government for the same, a top official of the company has said.
