Industrial, warehousing leasing up 7pc in Jan-June across 5 cities: Report

Source: Financial Express, 18 July 2022

Leasing of industrial and warehousing spaces across five cities rose 7 per cent to 10.8 million square feet in January-June period on better demand, according to Colliers India.

The gross leasing or absorption stood at 10.1 million square feet in the first six months last year in five major cities namely Delhi-NCR, Mumbai, Chennai, Bengaluru and Pune.

Leasing increased in Mumbai and Pune but fell in Bengaluru and Chennai. Absorption of industrial and warehousing space remained flat at 3 million square feet in Delhi-NCR. The gross absorption refers to the actual leasing and does not include renewals.

“About 55 per cent of the gross absorption was led by third-party logistics players, followed by the engineering and automobile sectors with a share of 12 per cent each,” Colliers India said in a statement.

As per the data, Bengaluru saw 29 per cent decline in leasing activities to 1.4 million square feet during January-June 2022 from 2 million square feet in the corresponding period of the previous year.

Leasing in Chennai fell 16 per cent to 1.7 million square feet from 2 million square feet.

However, Mumbai saw three-fold jump in leasing to 2.1 million square feet from 0.7 million square feet.

Absorption of spaces in Pune grew 7 per cent to 2.6 million square feet in January-June 2022 from 2.4 million square feet in the year-ago period.

Out of the total leasing in the first half of this year, Delhi-NCR accounted for maximum 28 per cent share, followed by Pune with 24 per cent share in demand.

“Third-Party Logistics players continue to dominate demand in the first half of this year and the trend is expected to continue in the next few quarters as well,” said Shyam Arumugam, Managing Director, Industrial and Logistics Services, Colliers India.

He said enquiries for warehousing spaces have increased in Tier II cities as key players are strengthening their last-mile delivery supply chain to be proximate to customers.

On supply, Colliers India said that it fell 24 per cent to 11.8 million square feet in January-June 2022 from 15.6 million square feet in the year-ago period.

In Bengaluru, supply rose by 73 per cent to 1.2 million square feet from 0.7 million square feet.

Chennai saw 11 per cent rise in supply to 2.2 million square feet from 2 million square feet.

Supply in Pune went up 42 per cent to 1.5 million square feet from 1.1 million square feet. However, supply in Delhi-NCR declined 47 per cent to 5.1 million square feet from 9.5 million square feet.

Mumbai witnessed 21 per cent fall in supply to 1.8 million square feet in January-June 2022 from 2.3 million square feet in the year-ago period.

Colliers India mentioned that the industrial & warehousing hubs are typically located outside the city limits. However, these are considered as a part of the defined major cities for analysis.

The key hubs are Hoskote and Bommasandra in Bengaluru; Thamaraipakkam, Kotarabakkam, Polivakkam in Chennai; Tauru Road, Pataudi Road, Greater Noida in Delhi-NCR; Bhiwandi in Mumbai; and Chakan, Talegaon and Ranjangaon in Pune.

First prototype train of Mumbai Metro 3 trial run to begin soon; Racks dispatched from Alstom plant at Sri City

Source: Financial Express, 18 July 2022

The much-awaited trial run of the underground Metro 3 (Colaba-Bandra-SEEPZ) is going to start soon. The first two cars of a prototype train are to be dispatched from the Alstom trains fabricating plant situated in Sri City, Andhra Pradesh. The new Maharashtra government has taken the decision to relocate the Metro 3 car shed from Aarey Colony to Kanjurmarg overturning the previous Uddhav Thackeray-led MVA regime’s decision. The Urban Development department has initiated proceedings to remove the stay on construction of Metro-3 car shed in Aarey, as per sources.

The cars of the Metro prototype trains, which were prepared for almost a year, were not brought to the city because of the inaccessibility to the Metro car shed. It is now set to reach Mumbai within the next 8-12 days.

As per MMRCL Official, the Mumbai Metro Line-3 project, the two cars that are part of a prototype Metro train, have a total of 8 metro cars, were loaded in the trailers on Sunday from Alstom’s manufacturing facility. It will be dispatched to Mumbai at any moment.

The process will take around 8 to 12 days for the trailers to reach Mumbai then they will be assembled at the temporary facility centre (temporary Metro car shed) at Aarey. Then, the trial run can begin among Marol and Maroshi as expected. He further added that all parts of the prototype trains are likely to reach Mumbai around August 15 after which the testing of the Metro can be started. The train will be tested on various parameters including speed, emergency break, oscillation, distance during 10,000km test runs etc. The trial could go on for over three-six months, he added.

Due to the delays in the project, the Mumbai Metro Rail Corporation Ltd (MMRCL) is now planning to complete the first phase by January 2024 and the second in one-and-a-half years provided the issue surrounding the construction of the Metro car shed is now resolved. The second phase of the project from Colaba to BKC is expected to be completed by mid-2025.

CBIC clarifies ambiguity on GST on pre-packaged items, new rates from Monday

Source: Economic Times, 17 July 2022

The Central Board of Indirect Taxes and Customs (CBIC) on Sunday clarified that all pre-packaged items containing a quantity up to 25 Kg, will attract a GST of 5%.

The CBIC said that the items, which are pre-packaged in above 25 Kg, in a single packet will be exempt from GST.

Also the clarification said that if several packages intended for retail sale to the ultimate consumer, say 10 packages of 10 Kg each, are sold in a larger pack, then GST would apply to such supply. Such a package may be sold by a manufacturer through a distributor.

For instance a package of rice containing 50 Kg would not be considered a pre-packaged and labelled commodity for the purposes of GST levy, even if rule 24 of Legal Metrology (Packaged Commodities) Rules, 2011, mandates certain declarations to be made on such wholesale items.

The CBIC also clarified that packaged commodities supplied for consumption by industrial consumers or institutional consumers are excluded from the purview of the Legal Metrology Act. Therefore no GST will be attracted to this.

In case a manufacturer is supplying to distributor, to dealer and to retailer then GST will be applicable to it but the manufacturer/wholesaler/retailer would be entitled to input tax credit on GST charged by his supplier in accordance with the Input Tax Credit provisions in GST.

The clarification came after many businesses said that the notification issued by the CBIC has left much ambiguity and may be subject to multiple interpretations.

The Finance Ministry has notified GST rates for various goods sold as pre-packaged and pre-labelled beside others, which was decided by the 47th GST council meeting held in Chandigarh.

The notification, said that “expression ‘pre-packaged and labelled’ means a ‘pre-packaged commodity’ as defined in clause (l) of section 2 of the Legal Metrology Act, 2009.

Under the Legal Metrology Act “pre-packaged commodity” means a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre-determined quantity.

Experts said that the notification mentioned about retail sales only, so, the issue is will declaration on packages of above 25 kgs also required and they sought clarification from the government.

Saurabh Agarwal, Tax Partner, EY India, said, “The specified pre-packaged and labelled commodities (without registered brand name) such as wheat, rice, maize, makhana, specified flours, etc would be liable to 5% GST from 18 July 2022 increasing the cost for the customer”.

He added that it is important for industry to examine whether the specified pre-packaged commodities are required to have a declaration on it under the Legal Metrology Act, 2009 as the levy of GST on such products have been linked to the declarations under the said Act.

Small Traders Protests
Trade bodies from across the country have been writing to the finance minister to withdraw the five percent GST imposed on unbranded pre-packaged food items.

Sanjay Chhabria, Director Nexdigm, adds,” This move is likely to have adverse implications on the small traders and retailers who hitherto were outside the GST net and had neither obtained any GST registration nor undertaken any compliances”.

He added that with such pre-packaged and pre-labelled food items getting costlier for the end consumers, the levy could lure them to more established brands, or prefer items which are loosely sold given that they continue to be exempt from GST.

In conversation with Abhijit Roy, MD & CEO of Berger Paints: Understanding the market and delivering quality products

Source: Economic Times, 15 July 2022

With a versatile product portfolio, a long list of happy clientele, and an impressive growth trajectory, Berger Paints has been thriving in the Indian market for almost a century now. From its humble beginnings back in the 1920s to being India’s 2nd largest paint company – the journey has been full of ups and downs. In the last 25 years, under the leadership of Abhijit Roy, Berger Paints has had an astounding growth rate of 2,500x in market capitalization and an impressive growth in EBIDTA. Roy, the Managing Director & Chief Executive Officer of Berger Paints for the past decade, believes that Berger Paints has the right temperament to outperform its peers. In an exclusive interview with ET Spotlight, Abhijit Roy talked about the future of Berger Paints, key growth drivers, pillars that have fueled this growth, some successful innovations and a lot more. Excerpts below:

Q. Berger Paints has seen great success under your leadership in the last decade. What are the three key pillars that have fueled this growth?
Abhijit Roy: I would say that the fuel for Berger’s growth has been self-belief, passion and innovation. As an organization, we had the conviction that we were meant to achieve great things. Q. Berger Paints has seen great success under your leadership in the last decade. What are the three key pillars that have fueled this growth?
Abhijit Roy: I would say that the fuel for Berger’s growth has been self-belief, passion and innovation. As an organization, we had the conviction that we were meant to achieve great things. We constantly prioritized people, nurtured their talent, identified people with the drive to excel and channelled their passion. As a result, we were successful in creating a great workplace where a team of passionate people, who were not afraid to experiment, came together to realize that vision.

Q. How does it feel to steer one of India’s leading consumer goods companies? What have been the growth drivers?
Abhijit Roy: It has been a singular privilege for me to work with an organization such as Berger Paints and to lead a team of such dedicated and passionate individuals. Our journey together has led the company to such heights which has made it more fulfilling. Our greatest focus during this time has been on listening to our customers and driving meaningful innovation that adds value to their lives. Creating profitable and sustainable growth for the company has been our objective. To that end, we have invested in building people, research, manufacturing, distribution, and marketing capabilities. All of these coming together in a vibrantly growing economy has catapulted our growth.

On completing 25 years with Berger Paints India, Abhijit Roy – MD & CEO, talked about the inspirational success story:

Q. Seeing how the brand has successfully navigated the highs and lows, what can we expect from Berger Paints in the next decade?
Abhijit Roy: Berger Paints has its eyes set firmly on becoming one of the world’s top-10 paints and coatings companies in the coming decade and within the top 5 in decorative coatings. We are in the midst of a process that will see us becoming more technology-led and data-driven. These changes have already unlocked a lot of efficiencies and the task is ongoing. You will see us keeping the customer at the center of a relentless drive towards achieving this growth objective.

Q. With 2500X growth in Market cap and 14% CAGR, what would you define as the key factors driving this growth?
Abhijit Roy: We would attribute this to a sustained and laser focus on creating a well-managed and financially disciplined organization built for rapid and repeated market-friendly innovation. Our best work coincided with a very conducive Indian economy that provided the ideal ramp for acceleration in the last decade.

Q. In your 25 years at Berger Paints, there have been many innovations. Could you elaborate on the success of one of them that is the closest to you?
Abhijit Roy: Strictly speaking, it is tough to choose between the many successful innovations that we as a team managed to bring to fruition. However, Color Bank, the tinting machine system, which was my first assignment for Berger and for which I was the product manager, would probably be the closest to me because of the magnitude of the task given the prevalent condition of the industry. The innovative tinting machine, which is now a ubiquitous feature of all paint shops, transformed Berger into a key player in the high-value and profitable emulsions segment. The success of Color Bank was sweeter because, as a new-to-market innovation, it had many naysayers, including the then industry leaders, who followed in our footsteps.

Q. With an upward trend of start-ups entering every sector, how does Berger Paints aim to stay young?
Abhijit Roy: As an organization, Berger Paints is nearly 100 years old in India, but in spirit, we are quite contemporary. We have many employees who have been with the company for decades; on the other hand, our annual intake of young talent is also quite high. We have a healthy contribution from business lines that are digital-first in nature and driven by young team members who could walk into any of the storied startups that adorn the Indian market. Berger is also continuously looking for and evaluating new economic opportunities synergistic with our core business.

Q. What is your mantra for keeping yourself focused on the goal?
Abhijit Roy: Keep things simple. Plan well. Trust your team. Execute better.

Having a wide range of products catering to various clients, Berger Paints has got what it takes to thrive in this competitive market. Click here to know more about Berger Paints and if you wish to be updated on all their latest happenings, do follow them on social media here: Facebook , Twitter , Instagram and LinkedIn .

Govt amends SEZ norms to help companies opt for flexible work options

Source: Economic Times, 18 July 2022

The government has amended the Special Economic Zones (SEZ) Rules, 2006 to accommodate the work-from-home model of employment, a move expected to change the demand for leasing of space at information technology parks.

This is also expected to help companies attract and retain talent with flexible work-from-home and hybrid work options.

As per the notification issued by the commerce and industry ministry, a unit operating in the SEZ may permit its employees, including contractual staff, to work from home or from any place outside the SEZ.

This proposal for working from home will cover a maximum of 50% of the total employees, including contractual employees, of the unit. The development commissioner may approve a higher number of employees to work from home for any bona fide reason to be recorded in writing.

“The guidelines are welcome as there were different rules issued by each development commissioner. However, in the new world of hybrid working, it remains to be seen whether the 50% threshold will be achievable,” said Abhishek Goenka, partner of consultancy firm Aeka Advisors India. “Further, clarity is needed on the manner in which the 50% test is to be applied, i.e., on the stated capacity of the SEZ unit or the total strength of the company.”

Employees who are covered under this notification include employees of the IT and IT-enabled services SEZ units, employees that are temporarily incapacitated, employees who are travelling; and employees who are working offsite.

“It will allow companies to onboard new talent in the office environment while extending the work-from-home policy for existing talent. This is a welcome move for corporations as we are in the midst of a gradual phase of return to work, especially in the IT and ITeS sector,” said Karan Singh Sodi, regional managing director, JLL India. “The last two years have seen pressure on their attrition rates as well as growth in the business, thereby creating new jobs in the IT and ITeS sector.”

The units established in SEZ are granted certain incentives, including tax benefits for goods and services exported by them, but with stringent controls in place. These conditions include specific permission to move assets outside the SEZ premises and allowing employees to work from home.

While various SEZs had allowed suo-moto permission for work from home in the backdrop of the Covid-19 pandemic, in March, however, they asked most of them to resume work from the office.

The insertion of Rule 43A in the SEZ Rules provides companies the flexibility to allow a maximum of 50% of their employees to work from home, along with prior permission to temporarily remove goods such as laptops, computers, electronic equipment, etc., from the SEZ unit to a domestic tariff area without payment of duty or integrated goods and services tax (IGST).

As per the new provisions, a company’s unit operating in the SEZ is expected to ensure export revenue of the resultant products or services are accounted for by the unit to which the employee is tagged.

The unit whose employees are working from home or from any place outside the SEZ on the date of commencement of the SEZ (third amendment) Rules, 2022, is expected to submit its proposal for permission within 90 days from the date of such commencement.

The guidelines state that the work to be performed by the employees permitted to work from home under this rule will be as for the services approved for the unit, and the work is related to a project of the unit.

The unit operating in the SEZ is expected to submit its proposal for work from home for its employees to the development commissioner through email or physical application. This application needs to contain the terms and conditions of working from home, including the date from which the permission for the same will be utilised and details of the employees to be covered by such permission.

The development commissioner, on receipt of such a proposal with compliance, can grant permission to the proposal of the unit, which will be valid for a period of one year from the date of the permission. The authority can grant an extension for this permission, not exceeding one year at a time.

The application for the extension needs to be submitted at least 15 days in advance to the development commissioner, except in the case of employees who are temporarily incapacitated or traveling.

Q1 GDP growth seen at 14-15% on services’ revival

Source: Economic Times, 18 July 2022

The Indian economy likely grew at 14-15% in the first quarter of the current fiscal year, riding a recovery in contact-intensive sectors even as the rest of the economy held firm despite multiple headwinds, a poll of economists indicated. While uncertainty still looms, economists say the worst may be over.

GDP data for the first quarter will be announced on August 31.

The median estimate in the poll of 10 economists was 14.43%. It pegged FY23 growth at 7.2-7.6%. The Reserve Bank of India (RBI) has forecast 16.2% GDP growth for the first quarter and 7.2% for the fiscal year.

High-frequency indicators released during the first quarter show that there is a pick-up in economic activity despite global headwinds, said Abheek Barua, chief economist, HDFC Bank.

The recovery in contact-intensive sectors such as travel, cinemas and dining among others as the pandemic abated, supported the economy even as high inflation took a toll on some consumer sectors.

The recovery in contact-intensive sectors such as travel, cinemas and dining among others as the pandemic abated, supported the economy even as high inflation took a toll on some consumer sectors.

Nomura said improvement in high-frequency data has been broad-based across consumption, investment, industry and the external sector, although exports have started to struggle.

“Overall, we expect sequential momentum to remain strong in Q1 FY23,” said Aurodeep Nandi, India economist and vice president at Nomura.

High commodity prices, steep inflation and rising interest rates have dented sentiment, but the impact in the June quarter has been limited.

Luxury vehicle sales may breach 2018 peak of 40,000 units next year: Audi

Source: Economic Times, 14 July 2022

Sales of luxury vehicles in India should breach the 2018 peak of around 40,000 units next year, on back of strong consumer demand after the pandemic, said a top executive at German luxury-car company Audi.

The automaker is optimistic of growth prospects given the demand momentum it has witnessed in the Indian market in the first half of the year.

Industry estimates that around 17,000 luxury vehicles were sold in the country during January-June this year, which is an increase of 55% over the 11,000 units sold in the year-earlier period. Upwardly mobile consumers continue to purchase top-end vehicles, despite inflationary pressures and long waiting periods.

The luxury vehicle industry is poised to make the leap into the next stage of expansion over the next few years, Audi India head Balbir Singh Dhillon told ET. “In the luxury vehicle segment, we expect the momentum to continue in the second half of the year. Sales have not only been good, (but) there are also decent customer orders. Pent-up demand, as well as new product launches have helped shore up volumes. There is a lot of positivity in the market.”

While globally there are several major challenges, the Indian economy seems resilient, Dhillon said. “Even as FPIs (foreign portfolio investors) are moving out, Indian investors are investing in the market. We feel India will grow and grow strongly. This year, we (luxury vehicle makers) should be coming very close to the previous peak and thereafter take a leap and get a little larger share of the overall passenger vehicle market,” he said.

Luxury vehicles now account for just a 1.0-1.5% share in India’s total car sales, which is among the lowest in the world.

Dhillon was speaking on the sidelines of the launch of the new A8 L on Tuesday. The car is priced at Rs 1.29 crore for the celebration edition and Rs 1.57 crore for the technology edition. This is the second launch for the company this year, after the Q7 SUV.

Dhillon said supply challenges were expected to continue for some more time. “While we definitely expect to grow in strong double-digits in the second half, it is difficult to predict numbers in the current environment given supply constraints,” he said.

Audi’s India sales grew 49% to 1,765 units in the first six months of 2022.

The company has plans to launch a few more models this year to maintain the growth momentum. Dhillon declined to share the number or the specifics of the remaining products scheduled for launch.

Necessary info on QR code compulsory on packaging of electronic goods

Source: Economic Times, 15 July 2022

New Delhi: The Ministry of Consumer Affairs, Food and Public Distribution on Thursday issued new rules for packaging of electronic goods making the QR code compulsory on the packaging with relevant information for products manufactured on or July 15 onwards, i.e. Friday.

If not mentioned as QR code, the information should be part of the packaging, said the rules called the Legal Metrology (Packaged Commodities) (Second Amendment) Rules, 2022, notified by the ministry. These shall come into force right away.

Citing relevant clauses and sections, the ministry said,
“Provided that in the case of an electronic product which is manufactured or packed or imported after July 15, the package of such product shall, for a period of one year from such date, declare the name of the manufacturer or packer or importer, as the case may be, on the package itself and such declaration shall also inform the consumers to scan the QR code for the address and other related information.”

In case such information is declared through the QR Code and not declared on the package itself, the package of such product shall, for a period of one year from such date, inform the consumers to scan the QR code for the common or generic name of the commodity and where such package contains more than one product, then for the name and number or quantity of each product.

Similar provisions have been mentioned for size and dimension of the commodity, and for declaring the telephone number and e-mail address on the package itself.

PM Modi to attend I2U2 virtual summit

Source: Economic Times, 14 July 2022

Prime Minister Narendra Modi will join US President Joe Biden, Israeli PM Yair Lapid and UAE President Mohammed bin Zayed Al Nahyan at the first virtual summit of the four-nation grouping ‘I2U2’ on Thursday. The leaders are expected to discuss joint economic projects to bolster economic cooperation under the framework of the coalition.

The grouping is known as ‘I2U2’ with “I” standing for India and Israel and “U” for the US and the UAE.

The global food and energy crisis arising out of the Ukraine conflict is likely to figure prominently in the talks.

The virtual summit is likely to begin around 4 pm.

“The leaders will discuss the possible joint projects within the framework of ‘I2U2’ as well as the other common areas of mutual interest to strengthen the economic partnership in trade and investment in our respective regions and beyond,” the Ministry of External Affairs (MEA) said on Tuesday.

The I2U2 grouping was conceptualised during the meeting of the foreign ministers of the four countries held on October 18 last year.

India’s bilateral strategic ties with each of the three countries are on an upswing in the last few years.

Indian economy to grow 7.1-7.6% in current fiscal: Report

Source: Economic Times, 13 July 2022

Indian economy is projected to grow 7.1-7.6 per cent in the current financial year despite shifting geopolitical realities across the world, a report said on Wednesday. In its India’s economic outlook – July 2022 report, leading consultancy Deloitte India said that as 2021 was coming to a close, there was optimism in the air but the optimism received a jolt early this year as a wave of Omicron infections swept through the country and Russia’s invasion of Ukraine happened in February.

“These events aggravated the pre-existing challenges such as surging inflation, supply shortages, and shifting geopolitical realities across the world with no definite end in sight.

“And the subsequent confluence of headwinds such as surging commodity prices and disruption in trade and financial transactions quickly deteriorated economic fundamentals that were trending up a few months back,” the report said.

Rising commodity prices, surging inflation, supply shortages, and shifting geopolitical realities across the world weigh on the growth outlook. Still, India will likely reign as the world’s fastest-growing economy, it noted.

“India is expected to grow by 7.1-7.6 per cent in 2022-23 and 6-6.7 per cent in 2023-24. This will ensure that India reigns as the world’s fastest-growing economy over the next few years, driving world growth,” the report said.

Reserve Bank of India (RBI) has projected a GDP growth of 7.2 per cent for the current fiscal ending March 2023.

Deloitte India said that it expects inflation and supply chain disruptions to remain entrenched for some time.

The domestic currency will likely recover some lost ground against the US dollar, but not before early next year. India’s relatively strong recovery and the global slowdown will improve INR’s strength, it added.

The rupee depreciated by 3 paise to close at a record low of 79.62 (provisional) against the US currency on Wednesday.

“The desire of global businesses to look for more resilient and cost-effective investment and export destinations during difficult times, among other factors, could work in India’s favour,” Rumki Majumdar, Economist at Deloitte India, said.

The report also said that uncertainties in the global business ecosystem will pose significant risks.