India, UK to cooperate in infrastructure financing, address tax evasion

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The possibility of their investing, either directly in projects or through the National Investment and Infrastructure Fund (NIIF) that we have created, were both discussed,” he told reporters at the Indian High Commission in London.

Amid fears of the global economy edging close to recession, India and UK have agreed to open up trade and markets to support growth, carry out structural reforms and address issues related to cross-border tax evasion.

After talks between India’s Finance Minister Arun Jaitley and UK Chancellor of the Exchequer George Osborne, the two nation’s agreed to boost economic ties particularly in areas of infrastructure and financial services and renewed pledge for autonomical exchange of tax information from 2017.

“From the Indian point of view, we were extremely interested in having the British investors look at infrastructure investments in India for which various possibilities were discussed,” Jaitley said after the talks.

India, he said, is “extremely keen that large British companies, particularly involved in infrastructure financing, start investing in Indian infrastructure”.

The two nations will work together for developing an India-UK partnership fund under the umbrella of National Investment and Infrastructure Fund (NIIF) recently created in India.

“This fund will seek to increase flows of private sector capital and expertise alongside multilateral support into Indian infrastructure,” a joint statement issued after talks said.

The world’s fifth largest economy will work on development of smart cities in India. New Delhi is also looking at London for issuance of rupee-denominated bonds to get UK investors to fund its infrastructure projects.

“The possibility of their investing, either directly in projects or through the National Investment and Infrastructure Fund (NIIF) that we have created, were both discussed,” Jaitely told reporters at the Indian High Commission here.

With the IMF warning of global economy being close to recession with 3.4 per cent growth this year, the two sides said they “remain concerned that global growth is falling short of expectations and that the risks to the global outlook have increased”.

“In this regard we stand ready to take the necessary steps to open up trade and markets to support growth and jobs, and agree on the importance of structural reforms and pursuing credible fiscal policies,” the joint statement said.
The joint statement talked about advancement of cooperation in a range of sectors including infrastructure financing, addressing issues of cross-border tax evasion/ avoidance besides opening up of the Indian legal sector to foreign lawyers.

“The UK and India share a common commitment to address cross-border tax evasion and avoidance. Both sides have committed to the Common Reporting Standards (CRS) on Automatic Exchange of Tax Information and will begin exchange in 2017,” the statement said.

“We call on other countries to meet the commitments they have made and to implement the new standard on time,” it said.

During the talks, which included senior representatives from Finance Ministries, Central Banks and key regulators of both countries, the two leaders discussed ways to strengthen the Indo-UK existing economic partnership in order to further boost trade and investment, and to build on the success of Prime Minister, Narendra Modi’s recent summit with his British counterpart David Cameron in the UK.

“Given the fact that even in a somewhat difficult global scenario, India is managing a reasonable growth rate, this is one of the better options that investors have and that kind of a sentiment gets really echoed in the meetings with the investors that we had. Of course, the investors are also keenly watching which way our reform process in India goes,” Jaitley said.
The two nations agreed to work together on building commercial and regualtor-to-regulator links that can underpin further fintech growth in both countries.

“The UK and India agreed to renew the existing mandate of the India-UK Financial Partnership, and building on the re-establishment of the CEO Forum,” the statement said, adding that potential areas of interest for the India-UK Financial Partnership could be reinsurance, international use of the rupee, role of financial technology, financial inclusion, investor protection and green finance.

“The global economy is facing serious challenges and therefore the estimates of global growth also have been repeatedly lowered. Compared to how various countries across the world have been doing, India’s growth rate despite these challenges is probably the highest in the world among major economies,” Jaitley said, in reference to his meetings with investors at Goldman Sachs and London Stock Exchange.

As a follow up on Prime Minister Modi’s announcement during his UK visit last November on the listing of Rupee bonds in London, the minister said, “the UK is very keen for these to be listed in London and broadly the economic and financial dialogue was carried further”.

During the dialogue, the two sides recognised that as the leading financial centre in the world and in the view of successful issuance of Masala bonds issued by the International Finance Cooperation last year, London will be an attractive location for issuance of rupee-denominated bonds.

“The bonds, which were first announced during the visit of Prime Minister Modi to the UK in November, illustrate the crucial role that the UK’s capital markets can play in an enhanced economic relations relationship with India, with UK investors providing financing for the transformation of India’s infrastructure and continued rapid economic growth,” the statement said.

India and the UK also agreed that the development of deeper markets in rupee-linked products, and the increasingly sophisticated relationship between the Indian and UK financial sectors, are important underlying factors in fostering an enduring economic and financial partnership.

Both sides agreed to continue working closely on the development of smart cities in India.

“We will continue to build on and further embed the existing Technical Assistance Partnerships that were announced during Prime Minister Modi’s recent visit to the UK, and to continue working together on research collaboration and other measures to support India’s 100 Smart Cities programme,” the statement said.

While noting the strength of the economic outlook for both countries, the two sides expressed concern that global growth is falling short of expectations and that the risks to the global outlook have increased.

“In this regard we stand ready to take the necessary steps to open up trade and markets to support growth and jobs, and agree on the importance of structural reforms and pursuing credible fiscal policies in order to raise living standards,” it said.

India and the UK also agreed to work together with the aim of developing an Indo-UK partnership fund under the umbrella of the NIIF. The fund will seek to increase flows of private sector capital and expertise alongside multilateral support into Indian infrastructure.

The working group to be established will report back within the course of 2016 on a proposed fund strategy and delivery approach, the statement said.

“As part of this, India and the UK also both recognise the importance of identifying the sector or sectors where there is greatest potential for developing sustainable project pipelines, and of developing a supportive institutional environment for investment and delivery,” it said.

Source:http://economictimes.indiatimes.com/articleshow/50650198.cms

 

India, Qatar to boost cooperation in hydrocarbons

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Prime Minister Narendra Modi with Emir of Qatar Sheikh Tamim bin Hamad Al-Thani during the welcome ceremony.

DOHA: With Qatar having the world’s third largest gas reserves and being India’s largest supplier of liquefied natural gas (LNG), both countries are expected to give a fillip to cooperation in the hydrocarbons sector .

Qatar has gas reserves exceeding 900 trillion cubic feet (25 trillion cubic metres) or 14 per cent of global reserves. It is the largest LNG exporter in the world.

The Gulf Cooperation Council member accounted for 65 per cent of India’s total LNG imports last fiscal.

India is also hoping to tap the Gulf nation’s sovereign wealth fund, estimated at $300 billion, for infrastructure projects.

Prime Minister Narendra Modi , who is visiting Doha on the second leg of his five-nation foreign tour, praised the role of the Emir of Qatar in promoting business ties with India.

Modi on Sunday also invited Qatari industry leaders to invest in India.

“India is a land of opportunity. I have come to personally invite you to take advantage of this opportunity,” Modi said, according to a tweet by India’s Ministry of External Affairs (MEA) spokesperson Vikas Swarup.

“Business First. For first engagement of the day, PM attends roundtable meeting with Qatari Business Leaders,” the spokesperson said in another tweet following Modi’s meeting here with business leaders.

“Qatar’s Minister of Trade and Economy welcomes PM Narendra Modi, seeks more intensive eco engagement with India,” it added.

This is the second prime ministerial visit from India to energy-rich Qatar in eight years after Manmohan Singh’s visit in 2008.

“It can also be a large economic partner as it has a large sovereign wealth fund,” Foreign Secretary S. Jaishankar said on Friday in a pre-departure media briefing.

Bilateral trade between India and Qatar stands at $10 billion.

Earlier this year, India re-negotiated favourably its LNG agreement with Qatar to bring down the cost of importing natural gas to less than $5 per unit from $12.

In return for the renegotiation, India’s Petronet LNG has signed an agreement for additional import of one million tonnes of LNG per year from Qatar’s Ras Gas for about 12 years with effect from January 1, this year, at the prevailing market prices.

Ras Gas will also not seek Rs.12,000 crore from Petronet for under-lifting LNG by 38 per cent.

The new contract is effective from January 1, 2016, and ends in 2028.

Modi addressed Indian workers at a medical camp in Doha on Saturday night. There are 6,30,000 Indians living in Qatar comprising the largest expatriate community in that country.

Modi, who arrived here from Afghanistan, will also visit Switzerland, the US and Mexico during his seven-day sojourn.

Source: http://economictimes.indiatimes.com/articleshow/52603895.cms

Make in India: DIPP looks to include micro, small and medium industries in startup definition

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A clear definition is imperative for the government to decide which companies can draw the benefits of any scheme for startups.

The government is considering a proposal to include micro, small and medium enterprises (MSMEs) in its definition of startups to help boost the Make in India campaign. Various government departments have held a series of brainstorming sessions to discuss the definition so that the policy can be formalised. A clear definition is imperative for the government to decide which companies can draw the benefits of any scheme for startups.

The Department of Industrial Policy and Promotion (DIPP) is spearheading the exercise of formulating the startup policy, along with ministries such as finance, skill development and MSME among others. The Start-Up India initiative is scheduled to be announced by Prime Minister Narendra Modi in January 2016 and the policy needs to be finalised by then. Progress on the initiative is being monitored directly by the Prime Minister’s Office. India wants to create an ecosystem that encourages entrepreneurship and is collecting suggestions from the startup community for steps that need to be taken to ensure that the Start-Up India initiative is a success.

Including MSMEs, collectively one of the biggest employers of people in India, is seen as positive for manufacturing and therefore employment generation, key aims of the Make in India programme. Officials are also discussing specific criteria that would make an MSME eligible to be called a startup. This would determine eligibility for incentives such as fewer compliance conditions, cheaper credit and tax benefits.

“Defining (startups) is the most complex issue. It involves technology companies MSMEs and so many other sectors. We should be able to finalise something soon,” a senior government official said.

To qualify as a startup, an entity would also have to meet certain financial standards besides having a level of innovation in its product or service. “It is better to have a broader definition of startups, so MSMEs and tech-based startups can both take advantage. The moment one leaves things for interpretation, corruption will seep in,” said Gaurav Kachru, founder, 5ideas Startup Superfuel. Startups are expected to create 250,000 jobs in India by 2020, up from 80,000 now, according to a Nasscom report. The Start-Up India initiative announced by Modi in his Independence Day speech assumes significance given the thrust by the government toward employment generation.

Economic Times View: Start Up On the Ease of Doing Business Front

A wider definition of startups should broad-base attention across industries. In tandem, we need to boost knowledge-creation, innovation and entrepreneurship to better coagulate resources for startups. Otherwise, we will fail to develop a thriving ecosystem, complete with conducive state policy support. In parallel, we need suitable tax treatment and attendant rules so that startups do not see the need to go abroad to do business here in India. We need ease of doing business with the startup economy in mind

 

Source:http://economictimes.indiatimes.com/articleshow/50179566.cms

 

Japanese PM assures stronger biz ties with India

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Prime Minister Shinzo Abe on Friday urged Indian industry to invest in Japan even as he highlighted Japan’s interest in the development of India’s infrastructure.

“Japan is going to realise a GDP growth of about $100 trillion. So I want you to come and see a rejuvenated Japan. Like PM Modi, I will also tell you, come, invest in Japan,” he said.

Abe was addressing a seminar on India-Japan Innovation jointly organised by Confederation of Indian Industry (CII) and Japan External Trade Organization (JETRO).

“Common to all of PM Modi’s initiatives – Skill India, Digital India, Smart City – is protection of people, taking care of them and in return taking care of your customers. This is the key to growth,” he added.

Bullet train

“If Shinkansen – the bullet train – starts plying in India then the distances between cities will be shorter contributing to growth with pollution-free technology. We have made financing easier for Indian businesses. We have all resources available for them,” Abe said. “India and Japan should cooperate more in innovation,” he added.

Abe, who is a on a three-day visit here, will be holding the Annual Summit meeting with Prime Minister Narendra Modi on Saturday. Prior to that, both leaders will also be meeting business leaders and captains of Indian and Japanese industry.

The Japanese Premier, who last visited India in January 2014, is accompanied by a high-powered delegation consisting of NEC Corporation, Fujifilm, East Japan Railway, Hitachi Ltd. and LIXIL Corporation among others.

Japan and India are expected to sign a $15-billion bullet train project.

This will be set up between Mumbai and Ahmedabad. The announcement will be made by both the leaders on Saturday. Abe will be addressing the business community again on Saturday along with Modi. Later in the day both leaders will hold the Annual Summit meeting before leaving for Varanasi together.

Two-way trade between India and Japan stood at $15.51 billion in 2014-15 from $13.72 billion in 2010-2011 when both sides had signed the Comprehensive Economic Partnership Agreement (CEPA). Even under the CEPA, while imports from Japan to India have risen sharply, exports from India to that country have not witnessed a proportionate rise.

In fact in the last fiscal, exports to Japan from India contracted 21 per cent to $5.38 billion compared to $6.81 billion in 2013-14.

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/japanese-pm-assures-stronger-biz-ties-with-india/article7978059.ece

UAE earmarks key sectors like railways, housing, ports, roads for investments in India

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It is part of the $ 75 bn announced during Prime Minister’s August trip to the Gulf nation that marked a paradigm shift in bilateral strategic and economic partnership.

Oil-rich United Arab Emirates (UAE) has identified key sectors including railways, housing, ports, roads and renewable energy (mainly solar) for investments in India as part of the $75 billion announced during Prime Minister’s August trip to the Gulf nation that marked a paradigm shift in bilateral strategic and economic partnership.

UAE had announced to investment $75 billion for various sectors in India when Narendra Modi made a two-day trip to Abu Dhabi and Dubai last August — first by an Indian PM to the Gulf nation in three decades. Earlier this month, Finance Minister Arun Jaitley was in UAE to discuss this investment proposal among other issues and met senior officials of the Abu Dhabi Investment Authority (ADIA), one of the largest sovereign funds in the Gulf nation, officials from Abu Dhabi said.

ADIA would contribute to the $75-billion fund allotted for investments in India in sectors including railways, roads, housing, ports and renewable energy (solar initiatives) where the Modi government is seeking foreign direct investment to boost economy, officials from the Gulf state indicated. The Indian PM is likely to announce a solar mission at the Paris climate change summit.


However, UAE is pushing to begin the process of investments in near future by various ministries in keeping with Modi’s promise. “India is now a strategic partner for UAE and Abu Dhabi wants to invest in India’s growth and seeking expedition of the process on the ground,” a person familiar with the developments told ET.
With this goal in mind Jaitley met Sheikh Hamdan Bin Rashid Al Makhtoum, Minister of Finance, UAE, to discuss issues of mutual cooperation in the field of economic and trade development during his trip there. His visit follows that of UAE’s Foreign Minister to India within weeks of Modi’s trip to Abu Dhabi and this shows the seriousness of both nations which have now expanded their counter terror cooperation amid growing threat from IS and other terror groups in South Asia. Strengthening counter-terror cooperation also figured during Jaitley’s deliberations with UAE leadership.

The finance minister also invited large participation and investment in recently constituted National Investment and Infrastructure Fund (NIIF) by the Sovereign Wealth Funds and Pensions Funds of the UAE. He said the investment in NIIF will ensure good returns on investment as the government will invest these funds in infrastructure projects.

Source: http://economictimes.indiatimes.com/articleshow/49976782.cms

 

Failure to implement reforms may hamper India investment: Moody’s

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A failure to implement reforms in India could hamper investment amid weak global growth, global ratings agency Moody’s Investors Services cautioned on Wednesday.

It said it was highly unlikely that major reforms would be enacted in the upper house of parliament where the ruling coalition is in a minority. The agency said despite overall supportive domestic conditions for the country’s companies, potential headwinds loom from a loss of reform momentum.

The Modi administration so far this year has been unable to enact legislation on key reforms, including a unified goods and services tax and the Land Acquisition Bill, it said.

The government hopes to get the GST Constitution Amendment bill approved in parliament and is keen to push the legislative business. It has reached out to the opposition parties to forge a consensus and ensure the passage of the crucial GST bill. The Narendra Modi government has identified implementation of GST as a key reform initiative. The government has unveiled a flurry of reforms after the rout in Bihar assembly elections and Modi has promised to accelerate the reforms drive.

Moody’s Investors Service says that most non-financial corporates it rates in India (Baa3 positive) will benefit from strong domestic growth and accommodative monetary policy, although weak global growth and a potential US rate hike will weigh on businesses.

“Healthy 7.5% GDP growth for India for the fiscal year ending March 2017 (FY2017) and a pick-up in manufacturing activity will be broadly supportive of business growth,” says Vikas Halan, a Moody’s Vice President and Senior Credit Officer.

“However, the corporates remain vulnerable to the volatile Indian rupee as against the US dollar and to low commodity prices, which has in turn led to a sharp decline in external trade,” said Halan while releasing the agency’s 2016 outlook presentation for Indian non-financial corporates.

The fall in commodity prices has benefited many Indian corporates given the country’s status as a net important of raw materials and its recent history of high inflation.

The resultant moderating inflation should result in lower borrowing costs for corporates and yields on corporate bonds, said Moody’s.

The ratings agency expects upstream oil and gas companies to benefit from lower fuel subsidy burdens, although low crude and domestic natural gas prices will continue to hurt profitability.

Refining and marketing companies meanwhile should benefit from healthy margins as demand growth outpaces expected capacity additions.

The agency’s negative outlook for the steel industry reflects elevated leverage and an extended period of low prices due to continuing steel imports, while the negative outlook for metals and mining companies reflects bleak global commodity prices.

In the real estate sector the agency expects demand to improve in 2016 on the back of lower interests rates, although approval delays could push back project launches for property developers.

It expects retail auto sales volumes to grow 6% in 2016 on the back of sustained growth in passenger vehicles sales and a recovery in commercial vehicle sales.

The telecom companies that the agency rates in India have reported improving revenue per user (ARPU) and EBITDA margins, however competition remains intense and the regulatory framework continues to evolve.

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