India Ranks Among Top Investment Destinations and
benefits of FDI
India has received
total foreign investment of USD 306.88 billion since 2000 and 94% of this
amount has been received during last 9 years. India’s Foreign Direct Investment
policy has been progressively liberalised to make the investment regime more
investor friendly. In a recent review of the policy the government has amended
the sectoral caps and/or entry
routes in some sectors viz. petroleum & natural gas; commodity
exchanges; power exchanges; stock exchanges, depositories and clearing
corporations; asset reconstruction companies; credit information companies; tea
sector including tea plantations; single brand product retail trading; test
marketing; telecom services; courier services and defence. The review of FDI
policy is done with a view to boost investor confidence thereby stimulating FDI
inflows and contributing to accelerated economic growth.
The government
approved liberalisation of FDI
norms in a number of sectors, including 100 percent in telecom and
higher caps in insurance and defence sectors. FDI in multi-brand retail has been allowed up to 51%.
The minimum foreign investment requirement is US$ 100 million, at least 50%
which shall be invested in 'backend infrastructure' within three years of the
induction of FDI. The FDI limit in Single Brand Retail has been enhanced to 100%. It was also decided to allow 49 percent
FDI in single brand retail under the automatic route and beyond through the
Foreign Investment Promotion Board (FIPB) route. While the FDI cap in defence sector remained unchanged
at 26 percent, it was decided that higher limits of foreign investments
in 'state-of-the-art' technology manufacturing would be considered by the
Cabinet Committee on Security.
The result of the
liberal foreign investment policies is that India has been consistently rated
amongst the top three investment destinations globally by all international
bodies including World Bank, UNCTAD. This is also mirrored in the foreign
investment data. Between 1999-
2004, India received US$ 19.52 billion of foreign investment which
increased to US$ 114.55
billion between 2004-09, and increased further to US$ 172.82 billion between 2009-
September 2013.
FDI inflows have a
positive impact by supplementing
domestic capital, technology and skills of existing companies including
in the aviation sector, as well as through establishment of new companies. It
has indirect multiplier effect on other related sectors also, and thereby
stimulates economic growth. FDI inflows also have a positive impact on the current account balance.
When it comes to the
impact of FDI in retail trading towards the consumers, it is beyond doubt that
they have gained a lot from organised retail on multiple counts. Studies in
comparable situations have revealed that lower income consumers saved more. Farmers
too have benefited significantly from the option of direct sales to organised
retailers.
Small manufacturers
will benefit from the safeguard pertaining to a minimum of 30% procurement from Indian small
industries. This would provide the necessary scales for these entities to
expand capacities in manufacturing, thereby creating more employment and also strengthening the manufacturing base
of the country. They will also derive the benefits of technology upgradation, which will provide a
fillip to productivity and local value-addition, thereby raising the
profitability and earnings of the small manufacturer. The sourcing condition
will also enable the small enterprises to get integrated with global retail
chains, thereby enhancing their capacity to export products from India. Small retailers would
continue to be able to source high quality produce, at significantly lower
prices, from wholesale cash and carry points. The young population joining the
workforce will benefit from the creation of employment opportunities, in the
entire range of activities from the backend to the frontend retail business, as
also from the skills imparted to them by the prospective investors.
Price stabilisation and
inflation control could be achieved through direct buying from farmers,
improving supply chain inefficiencies to lower transit losses, improved storage
capabilities to control supply/demand imbalances, better quality and safety
standards through farmer development and increased processing of produce. FDI
in retail may thus be an efficient means of addressing this issue as this would
bring in large investments required for the back end infrastructure & value
chain and requisite technical &management know-how.
Prime Minister Launchs National Waqf Development
Corporation
for the protection
and promotion of the interests of minorities National Waqf Development
Corporation Limited (NAWADCO), a new Central Public Sector Enterprise under
Ministry of Minority Affairs has been established.
establishment of
NAWADCO is first step towards creating Shariah–compliant infrastructure building institution. As in
Islam, giving interest is a sin and a Quranic injunction, Muslims keep
themselves away from normal banking channel. They look forward to the
Government to facilitate establishment of certain Shariah compliant financial
institutions, where the savings
of Muslims can be deposited and used for their educational and economic
development. The NAWADCO may also be an institution which can facilitate
issuing of Shariah–compliant bonds to channelize savings of Muslims for
community welfare.
the Waqf means a dedication by any
person of any movable or immovable property for any purpose recognized by the
Muslim law as pious, religious and charitable. Auqaf is considered as a Trust
Asset and the role of the Trustee is to look after the assets and to ensure its
perpetuity for the beneficiaries. There is a virtual collapse of
institutions of Auqaf in India because of legislative lacuna; administrative
lapses; lack of political Will; indifferent attitude of management of the
Auqaf; and lack of integrity.
This Corporation has
been established with Authorized Share Capital of Rs.500 Crore with a paid up
capital of Rs.100 crore. In this Corporation, the National Minority Development
and Finance Corporation (NMDFC) has 49% shares.
This Corporation
will prove an important institution for the development of Waqf properties for the community
welfare particularly for Muslims in India. The establishment of NAWADCO is a
follow up of Sachchar
Committee recommendation. India has the largest number of Waqf properties in the world. Sachar Committee has estimated that such
properties, if properly developed, with a minimum return of 10%, would be
capable of generating an income of Rs.12000 crore per annum.
NAWADCO will
facilitate and mobilize financial resources for the development of Waqf
properties for community development purposes in a joint venture with the State
/ Union Territory Waqf Boards and the Mutawallis. The Waqf Boards and the
Muthawallis were not having the financial resources to develop the properties
leading to encroachments. The total area under waqf properties all over India
is estimated at about 6 lakh acres, the market value of which is about Rs.1.20
lakh crores. Many of these properties are on prime land and they have the
potential of generating considerable returns, which in turn may be used for
socio-economic development of deprived sections of Muslim community.
Government of India
has recently enacted the Waqf
(Amendment) Act, 2013.This will make administration of waqf properties transparent
and will provide an enabling environment for development and utilization of
waqf lands for welfare of minorities.
NRLM
AND DIGITAL GREEN
A memorandum of
understanding was signed between the National Rural Livelihoods Mission and
Digital Green — a Microsoft Research Project .
Digital Green
aims to exchange
livelihood practices among rural
communities using locally produced videos and mediated dissemination. Its innovative ICT-based approach focusses on
low-cost and effective, peer-to-peer learning processes which seek to empower
poor households for increasing productivity and incomes sustainably. new
direction was being given to the NRLM to include sanitation as part of the
scheme.
CAD COMES DOWN
For the first time
in three years, the current account deficit is expected to fall below the
Reserve Bank of India's (RBI)
comfort zone, as the central bank now predicts the deficit to narrow to 2.5% of
GDP for 2013-14.
The CAD was
record high last fiscal when it touched 4.8%.Current account deficit below 3%
is seen as the comfort zone of RBI.The current account deficit fell to 1.2% in
the second quarter following various import restrictions, particularly on
non-essential items like gold.
Another silver
lining is the significant narrowing of the trade deficit on the back of
resilient export growth. The recent resumption of capital inflows should help
finance the current account deficit comfortably.
National Mission on Libraries
the National Mission on Libraries (NML), an
initiative of the Ministry of Culture to modernise and digitally link public
libraries across the country. Nine important constituents of the NML
include upgradation of infrastructure, digitization and modernisation, census
of libraries and their development as knowledge centres and transformation of
libraries into empowering and inclusive institutions.
NML was set up in pursuance of a report of the
National Knowledge Commission, which recommended a total revamp of the Library
and Information Service sector to serve the changing needs and expectations of
the users and give a fillip to the library movement in the country.
NML also intends to
create a National Virtual Library of India (NVLI) to facilitate a comprehensive
database on digital resources, carry out a census on the resources available in
the libraries and conduct a study on the reading habits in different regions of
the country.
The chief objectives
of NML are to create a world class library system, foster reading habits
facilitate research work and provide information to people in a timely and
convenient manner which is also universal and equitable. Kolkata-based
Raja Rammohun Roy Library Foundation (RRRLF) is the nodal agency for the
implementation of NML, a 10-member body headed by Prof. Deepak Pental, former
Vice Chancellor of Delhi University.
Who will pay for
a skilled workforce?
The National Skill
Development Mission is an ambitious project of skilling 500 million youth and
making them employable by 2022. The recent STAR
scheme launched by the National Skill Development Corporation (NSDC),
under the Union Government has earmarked ₹10,000 as the expected cost of a
single skill intervention. If we juxtapose these facts, India needs to find and
invest ₹5 lakh crore to meet the skill
needs of its economy and fulfil the aspirations of its youth. Where will this
massive investment come from? Who will foot the bill?
if ₹5 lakh
crore must be spent to train 500 million youth, there is no reason why it
should be the burden of the State alone. Smart market segmentation suggests
that job-seekers and academic institutions will readily pay for skill
development that leads to high-end, aspirational jobs, and they should be
actively encouraged to do so.the State must play an active role in creating a
skill-rich ecosystem at the bottom-end of the job spectrum, a space that
neither excites job seekers nor attracts enlightened employers today.
Uniform tax rate
for foreign portfolio investors
In a major
boost for overseas entities, the government has said that foreign portfolio
investors (FPIs) will attract uniform tax rate across categories. FPIs bring
together all the three investment categories — foreign institutional investors
(FIIs), their sub-accounts and qualified foreign investors (QFIs).
Besides, the
tax rate for FPIs would be the same as that extended to FIIs. The new system
would be especially beneficial for QFIs, who were subjected to higher tax rate
earlier.
The Securities
and Exchange Board of India notified the FPI norms on January 7, replacing the
regulations for FIIs.Under the new norms, FPIs have been divided into three
categories as per their risk profile and the KYC (Know Your Client)
requirements, and other registration procedures would be much simpler for FPIs
compared to the current practices.
Category I
FPIs, classified as entities with lowest risk, would include foreign
governments and government related foreign investors.
Category II
would cover appropriately regulated broad based funds, appropriately regulated
entities, broad-based funds whose investment manager is appropriately
regulated, university funds and pension funds, among others. Those who are not
eligible to be in the first and second set of classifications would be
considered under Category III.
UREA PRICING AND FERTILIZER SUBSIDIES
IN INDIA
A Group of Ministers (GoM) was set up last year to
suggest a suitable hike in urea price to neutralise increase in energy cost, so
that subsidy can be reined in. The Government, however, has categorically ruled
out any increase until general elections.
The maximum selling price (or MRP) of urea has been
under control since 1957. Until the late 70s — a period of low inflation and
low feedstock price — the MRP was higher than the cost of production and
distribution. Hence, there was no subsidy.
Since 1977, equation was reversed, with cost
exceeding selling price. The Government had to give subsidy to manufacturers.
From ₹266 crore in 1977-78, subsidy rose
to ₹5,796 crore in 1992-93 and further
to ₹35,398 crore in 2012-13.
Between 1981 and 2012, urea price increased from ₹2,350 to ₹5360
per tonne, or 2.2 times. In contrast, price of gas (main feedstock in urea
production) went up from ₹0.32 per
cubic metre to ₹8.4 per cubic metre, or 26 times.
The price of naphtha went up from around ₹600 per tonne to ₹50,000 per tonne, or 83 times. This led to a ‘widening’ gulf between
cost of production and realisation from sales, and a skyrocketing
subsidy.
CCI
clears three hydel projects
Cabinet Committee on
Investment (CCI) has cleared threehydro power projects, which were stuck due
to environmental bottlenecks.the three hydel projects -- Tawang (800 MW), Tato (700 MW)
and Teesta(520 MW) -- which were
awaiting approvals for a long time have been cleared by CCI.
These projects in Arunachal
Pradesh (Tawang and Tato) and (Teesta) Sikkim were sent to CCI from the power ministry in December,
last year.Teesta Stage-IV Hydroelectric Project, which was awarded to state-run
NHPC in 2009, is a run of the river scheme proposed along river Teesta. Teesta
is likely to supply electricity to Sikkim, West Bengal, Bihar, Odisha and Jharkhand.The Tawang Hydroelectric Project is proposed on Tawangchu
river.
The 700-MW Tato hydro power project in Arunachal Pradesh is
being set up by Tato Hydro Power Private Ltd, a subsidiary of Reliance
Power.
Setting up of Rail Tariff Authority
The Union
Cabinet gave its approval for setting up
of a Rail Tariff Authority, as an advisory body, through a Government
Resolution, pending amendment of the Railway Act, 1989. The setting up of
such an authority will institutionalize a regulatory mechanism at arms length for pricing of passenger and freight services.
The Rail Tariff
Authority shall comprise a Chairperson and four Members at the apex level and
will be vested with the function to develop an integrated, transparent and
dynamic pricing mechanism for the
passenger and freight segments of the Indian Railway's business. It will also advise the Central Government on fixation of tariff,
based on cost of operations and factors impinging it, to help generate
requisite surpluses for healthy growth in the future.
NUHM
The ambitious National
Urban Health Mission (NUHM), aimed at providing adequate and efficient
urban public health delivery system for the urban
poor, was formally launched the nationwide scheme, it would cover 779 urban areas with over
50,000 population by March 2015 across the country. The central government will
share 80 per cent of the cost to implement the programme. Primary Health Centres, sub-centres and
referral units would be strengthened in urban areas and be manned by Auxiliary
Nurse Midwife (ANMs).These centres will be visited by mobile health check-up vans
which will have two doctors, two nurses and a pharmacist.
It is estimated that
the NUHM will cover a population of over 220 million people, of which an
estimated 77.5 million are poor and vulnerable, the minister said. The scheme
also aims at giving more thrust to sanitation, clean drinking water, vector
control and other related issues. the scheme would benefit migrant labourers,
slum-dwellers, rag pickers and other marginalised sections of society.
Inclusion of Jains as a minority community under
Section 2(c) of the National Commission for Minorities (NCM) Act, 1992
The Union
Cabinet gave its approval for inclusion
of Jains as a minority under Section 2 (c ) of the National Commission for
Minorities Act, 1992 and the Attorney General through the Ministry of Law and
Justice has opined that this would be neither be illegal nor unconstitutional.
The Cabinet approved the inclusion of Jains in the list of notified minority
communities under Section 2(c) of the National Commission for Minorities Act,
1992 pending the outcome of court cases in addition to the five communities
already notified as minorities under Section 2(c) of the National Commission
for Minorities Act, 1992.These communities are Muslims, Christians, Buddhists,
Sikhs and Zoroastrians (Parsis).
The
community, which comprises only a fraction of India’s population, now stands at
a par with five other minority communities — Muslims, Sikhs, Christians,
Buddhists and Parsis. It will avail of exclusive schemes run by the ministry of
minority affairs.
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Some of the schemes for minorities
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Handshake with the East
The symbolism of a new age of Indo-Japanese co-operation
is notable. But this was more than just a ceremonial visit. The various
agreements that were signed - eight
in total - and the two prime ministers' joint statement revealed a bilateral relationship
that is inexorably growing stronger.
Japan was at "the heart" of
India's Look East policy,
But it might be equally accurate to say that China lay at the
heart of what was said and unsaid about this meeting. The joint declaration
emphasised security
co-operation for stability in "the region", given
"changes in the strategic environment". the fact that China's rise
forced India and Japan closer, Recent aggressiveness from China on the disputed
border with India and in the disputed sea off its coast will have underlined
the need for a closer partnership. The two prime ministers spoke specifically
about the path-breaking agreement to move towards joint manufacturing of the Utility Seaplane-2 aircraft
- which, while it has peacetime uses, is also capable of military use, which is
a major departure for Japanese trade. Most intriguingly, the new national
security architecture that Mr Abe is putting in place was given
special mention, with the two prime ministers saying that India's national security advisor would
henceforth regularly meet his newly established counterpart in Japan.
And that the two countries'
naval forces will exercise together again next year, this time in the Pacific,
is a clear signal to Beijing, as well. Nuclear co-operation has not gone as far as it should. Both
prime ministers may need to intervene with their bureaucracies to ensure that
the agreement happens.
The second rung of the
Indo-Japanese relationship, after security policy, is infrastructure. Japan has made vast
contributions to India's urban and transport infrastructure, and that appears
set to continue. The
Delhi-Mumbai Industrial Corridor (DMIC) and the Western Dedicated Freight
Corridor are indicatives. The DMIC, if it becomes reality, will be the
first real government-driven urbanisation plan in India's recent history; and
it will only deepen the relationship between India and Japan.
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