India, France push blue economy & investment partnership

Source: Economic Times, 21 December 2021

François Delattre, Secretary-General, Ministry for Europe and Foreign Affairs of France, is on an official visit to India from December 20-22. The visit comes on the heels of the Annual Defence Dialogue held on December 17 in New Delhi between Rajnath Singh, Defence Minister and Florence Parly, French Minister for Armed Forces.

Foreign Secretary, Harsh Vardhan Shringla, had bilateral talks with the Secretary-General on December 21. Both sides took stock of the bilateral relationship and discussed the potential for cooperation in sectors such as defence and security, space, cybersecurity and the digital economy, blue economy, education and people-to-people contacts, energy, health and climate change. Ambassadors of India and France joined the talks.

India’s trade with France has witnessed a steady rise in the last decade reaching USD 10.75 billion in 2020. Despite the pandemic, it is estimated that bilateral trade between the two countries in 2021 has reached USD 8.85 billion. To tap the full potential of bilateral trade and economic relations, both sides reiterated their commitment to restarting negotiations on the India-EU Free Trade Agreement.

France has emerged as a major source of FDI for India with more than 1,000 French establishments already present in India. France is the 11th largest foreign investor in India with a cumulative investment of USD 9.86 billion from April 2000 to June 2021 which represents 1.80% of the total FDI inflows into India. Most big French groups have their subsidiaries in India such as BNP Paribas, Capgemini, Airbus, Dassault, Arkema, L’Oréal, Sanofi, Total, etc. There are around 200 subsidiaries of Indian businesses established in France, which employ more than 6,000 people. Among Indian investments in France, majority are in IT services, pharmaceuticals/biotechnologies and hospitality sectors.

Reaffirming their shared commitment to a multipolar world and faith in multilateralism, the Foreign Secretary and the Secretary-General also held discussions on a number of regional and global issues of mutual interest, including cooperation in the European Union in view of the forthcoming French Presidency, Indo-Pacific, UNSC, situation in Afghanistan, among others, according to officials.

Delattre will be visiting Mumbai on December 21-22, where he will meet other Indian officials.

PM Gati Shakti plan, single window clearance to further push FDI inflows in new year

Source: Financial Express, 21 December 2021

A series of steps taken by the government to promote ease of doing business and liberalisation of foreign direct investment norms have helped India receive record FDI inflows so far this year, and implementation of measures like PM Gati Shakti, single window clearance and GIS-mapped land bank are expected to further push investments in 2022.

Notwithstanding the global slowdown and the COVID-19 pandemic, total foreign direct investments into India rose to a record USD 81.72 billion in 2020-21. During April-July this fiscal, FDI (foreign direct investment) into the country increased by 62 per cent to USD 27.37 billion.

“Increasing FDI is a reflection of global trust in India’s growth story. World wants reliable partners. India is providing all those parameters of growth which the investors would like to see before investment.

“Further steps like rolling out of PM Gati Shakti National Master Plan (NMP), single window clearance and GIS (Geographic Information System) mapped land bank would help in attracting further investments,” Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Anurag Jain told PTI.

The government is making all-round efforts to improve ease of doing business, he said, adding that the compliance burden has been reduced in more than 25,000 compliances over the last few years.

“Structural reforms and a series of measures to promote ease of doing business, start up programmes and liberalisation of FDI policy are bringing in transformational changes in the industrial landscape. Efforts of the Centre to support the startup ecosystem has also created a buzz about India in the business and investment sector of the world,” Jain said.

He added that so far 19 central government ministries/departments and 10 states have boarded the national single window system, which has been soft launched as a single point of clearance for investor related issues, as of now.

Similarly, the India Industrial Land Bank is GIS enabled and has mapped over five lakh hectares of land, over 4,500 industrial parks, and shows vacant industrial plots available for investors, he added.

Among several areas, the government has relaxed FDI norms in coal mining, defence production, contract manufacturing, and single-brand retail trading.

Foreign direct investment equity inflows into India have touched USD 548 billion between April 2000 to June 2021, which is further strengthening the country’s credentials as an investment destination. About 28 per cent of the FDI came through the Mauritius route. It was followed by Singapore (22 per cent), the US (8 per cent), the Netherlands, and Japan (each 7 per cent) and the UK (6 per cent). The other big investors have been from Germany, Cyprus, France and Cayman Islands. Since 2015-16, total FDI inflows, which comprise equity inflows, reinvested earnings and other capital, have been recording significant growth. In that fiscal, the country received FDI worth USD 55.55 billion, an increase of 35 per cent over the previous year.

FDI stood at USD 60.22 billion, USD 60.97 billion, USD 62 billion and USD 74.4 billion in 2016-17, 2017-18, 2018-19 and 2019-20, respectively.

The key sectors which attracted the maximum FDI include services segment, computer software and hardware, telecommunications, trading, construction development, automobile, chemicals, and pharmaceuticals.

Although FDI is allowed through the automatic route in most of the sectors, in certain areas such as telecom, media, pharmaceuticals and insurance, government approval is required for foreign investors.

Under this route, a foreign investor has to take prior approval of the respective ministry or department whereas for the automatic route, an overseas investor is only required to inform the Reserve Bank of India (RBI) after an investment is made.

At present, FDI is prohibited in as many as nine sectors. They are lottery business, gambling and betting, chit funds, ‘nidhi’ companies (a type of NBFC), real estate business, and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco.

The government had made prior approval mandatory for foreign investments from countries that share land border with India to curb “opportunistic takeovers” of domestic firms following the COVID-19 pandemic, a move which was aimed at restricting FDI from China.

According to experts, the high growth story of FDI into the country would continue in 2022 as well. S Anjani Kumar, Partner, Deloitte India, said international business leaders remain confident of India’s short- and long-term prospects and are readying plans to make additional and first-time investments in the country.

“FDI is one of the key levers that will help achieve India’s USD 5 trillion GDP goal. While foreign investment inflows into India have been consistently rising over the past five years, to achieve this GDP goal, a more proportionate contribution to gross capital formation (new greenfield assets) and the increase in exports can be achieved through greater FDI in manufacturing,” Kumar said.

According to a Deloitte survey ‘India’s FDI Opportunity’, the country scored highly for its skilled workforce and prospects for economic growth, and it has the strongest positive perception in the US when compared to markets such as China, Brazil, Mexico, and Vietnam.

Nischal Arora, Partner – Regulatory, Nangia Andersen LLP, said, “We expect the FDI to grow at a healthy growth rate of 10-15 per cent on the backdrop of PLI (production linked incentive) schemes being introduced and operationalised during 2021-22 in over 12 manufacturing sectors requiring substantial capital investments which may be funded through, among other source, FDI”.

UAE based retail giant, Lulu Group will invest Rs. 2,000 crore in Gujarat to set up a shopping mall

Source: Economic Times, 11 December 2021

This was announced during a meeting between Bhupendra Patel, Chief Minister of Gujarat and Yusuff Ali MA in Dubai. An MOU in this regard was signed by Rajiv Kumar Gupta, additional chief secretary signed on behalf of Gujarat Government and Yusuff Ali CMD of Lulu Group.

According to the MOU, Lulu will set up a shopping mall between Ahmedabad and Gandhinagar which will create employment to more than 5,000 people. The construction is expected to start by the first quarter of 2022 and be completed in 30 months.

Government of Gujarat will facilitate Lulu Group with all necessary assistance and clearances and also depute a senior IAS official to follow up the procedures.

Apart from this, Lulu Group will also set up food processing and logistics centers in Baroda and Surat for exports.

“The government will make every effort to ensure that land and any other assistance is provided to the group so that they can begin work,” said the Chief Minister.

“Gujarat holds a very special place in my heart, this is where I first learnt the basics of business as my father had family business in Ahmedabad. So I feel very excited to invest in Gujarat and hope we can expand further in this Vibrant state,” said Ali.

The group has also recently opened Lulu Hypermarket in Bangalore, spread across 2 lakh sq ft, while Funtura is set up across 60,000 sq ft – the largest indoor entertainment zone in India.

Lulu currently operates more than 220 hypermarkets and shopping malls in the Middle East, Egypt, Indonesia, Malaysia and India. Globally, Lulu Group employs more than 57, 000 people. Lulu hypermarkets and department stores have a 32 per cent share of the retail market in Gulf Cooperation Council countries.

The group also has invested in India’s retail market with malls in Kerala and Uttar Pradesh. Group’s latest mall is slated to be opened by next week at Kerala’s capital Thiruvananthapuram while Lucknow Lulu Mall is expected to be open for shopping by march 2022.

Karnataka makes strong pitch for more foreign investments in Dubai Expo 2020

Source: Business Standards, 17 October 2021

Highlighting Karnataka’s “dominant position” in the Aerospace and Defence sector, the state government on Sunday made a strong pitch for more foreign investments in these sectors, at the Dubai Expo 2020.

Delivering a keynote address during the session on Opportunities in Aerospace, Defence and Space Sector of Karnataka at Dubai Expo 2020, Large and Medium Industries Minister Murugesh Nirani pointed out that the state has great potential in these sectors, his office said in a statement. Karnataka, apart from being India’s largest Aerospace cluster, is also the 2nd largest producer of Heavy Electrical machinery in India. Bengaluru alone produces around 60 per cent of machine tools in India. Our state is also the 2nd largest chip design hub in the country. We have set up a Center of Excellence in partnership with Dassault Systems to provide industry-ready manpower, he said.

Highlighting the thriving small scale industries many of which are auxiliary to the Aerospace and Defence sector, the minister said the state is providing a support system to push these sectors. Karnataka has a strong base of around 2,000 SMEs that carry out niche sub-contracting work in the Aerospace & Defence sector. Therefore, the well-developed support system for the sector has further facilitated the expansion of this industry while also attracting the global players to set up their base in our state, he added. The Minister, earlier in the day held a series of Business to Government (B2G) meetings with the business delegations of top companies at Karnataka Pavilion in Dubai Expo 2020, the release said. The minister held a Business to Government (B2G) meeting with a delegation from United Parcel Service (UPS), which is one of the world’s largest package delivery companies and a premier provider of global supply chain solutions. He also held talks with Dawood Al Shezawi, President, Annual Investment Meeting (AIM), which is an initiative of the UAE Ministry of Economy. B2G meetings were also held with a delegation of Lulu Group- which responded positively to Nirani’s suggestions to set up Lulu markets across Karnataka, the Export Bahrain delegation, and Taghleef Industries- one of the largest global manufacturers of BoPP films, the release added.

Looking forward to investing ‘even more’ in India: Bain Capital leadership after meeting with Sitharaman

Source: Financial Express, 12 October 2021

Bain Capital Co-Chairman Stephen Pagliuca and Co-Managing Partner John Connaughton met Finance Minister Nirmala Sitharaman here on Monday, with Pagliuca describing the meeting as “fantastic”, during which they talked about the Financial Services District in Gujarat.

American private investment firm Bain Capital, with investments of about USD 5 billion in Indian companies, is looking forward to investing “even more” in the country and the next decade will be very important for both India and the US to work together to build businesses on a global basis, top executives of the company said.

Bain Capital Co-Chairman Stephen Pagliuca and Co-Managing Partner John Connaughton met Finance Minister Nirmala Sitharaman here on Monday, with Pagliuca describing the meeting as “fantastic”, during which they talked about the Financial Services District in Gujarat. Sitharaman arrived in the US on Monday for a week-long trip to attend the annual meet of the World Bank and IMF in Washington as well as G20 Finance Ministers and Central Bank Governors (FMCBG) meeting.

During the official visit to the US, Sitharaman is expected to meet US Treasury Secretary Janet Yellen. Connaughton said that “whenever you see the kinds of reforms that we’re seeing in India, and we’ve been there for almost over a dozen years, it really allows us to accelerate our investment activity, particularly across the broader sectors that we participate in,” such as banking, outsourcing and pharmaceuticals. Connaughton said the ability to reform all those industries that the government is now reforming “allows us to participate in a broader way” and “we’re looking forward to investing even more. We’ve invested USD 5 billion already and we see it accelerating.”

Pagliuca said the markets can be made more business-friendly and “I think that’s happening in India right now. It’ll make it a great attractive climate for foreign direct investment.” Pagliuca added that Bain Capital has invested over USD 5 billion in a dozen companies and “had great success in India. And I think the next decade will be very important for both countries to work together to build businesses on a global basis and really increase the GDP of both countries.” The Finance Ministry in a tweet said that Connaughton appreciated the friendly business atmosphere in India and mentioned that he is upbeat about investment in India. Sitharaman spoke about exploring opportunities in Gift City in Gujarat and other opportunities in infrastructure in India.

FDI in telecom: Would MSMEs benefit from Modi govt’s move to provide relief to telcos?

Source: Financial Express, 07 October 2021

Ease of Doing Business for MSMEs: In order to enhance domestic manufacturing, investments and export in the telecom and networking equipment, the Department of Telecommunications (DoT) in February this year had notified Rs 12,195-crore Production Linked Incentive (PLI) Scheme for five years.

Ease of Doing Business for MSMEs: Weeks after the Union Cabinet allowed 100 per cent foreign direct investment (FDI) in the telecom sector under the automatic route, the Department for Promotion of Industry and Internal Trade (DPIIT) on Wednesday notified the government’s move – part of the relief package announced for the sector. The reforms are intended to address the liquidity needs of telcos along with better competition, employment, and overall growth. Major telecom operators in the country already have micro, small and medium enterprises as one of their key focus areas when looking at channels of growth ahead.

For instance, Airtel had tied up with the government’s MSME promotion body National Small Industries Corporation (NSIC) “to make it easier for millions of small and medium businesses get access to Airtel’s Connectivity, Conferencing, Cloud, Security, and Go-to-Market solutions,” according to a company statement. Likewise, multiple initiatives have been taken by the company to digitise MSMEs. Reliance too had announced plans for SMEs in 2019 to offer cloud connectivity and a suite of enterprise applications at one-tenth of regular prices, in partnership with Microsoft. Vodafone Idea too has a suite of solutions for small businesses across connectivity, security, the internet of things, and more.

So, would 100 per cent FDI in telecom benefit MSMEs given the market for digitisation of such enterprises in jaw-dropping? According to a Cisco and IDC survey titled 2020 Asia Pacific SMB Digital Maturity Study, Indian SMEs are likely to add $158 billion to $216 billion to the country’s gross domestic product (GDP) in four years on the back digitalization of their businesses. Lack of enabling technologies was among three key digital challenges for Indian SMEs apart from the shortage of digital skills and talent and lack of commitment or budget from management.

“If there is more investment, the debt-ridden telcos will be less stressed and will be able to invest more in building and improving infrastructure that can power MSMEs. There might be some new greenfield operators who would be more aggressive like Rakuten in Japan and bring 5G network for instance for SMEs. It will spark a different conversation altogether. On the other hand, there are many software companies building digital solutions like Saankhya Labs making chipsets. Such businesses and others offering cloud solutions might get more investment that will lead to better offerings for SMEs,” Neil Shah, Vice President – Research, Counterpoint Research told Financial Express Online.

Importantly, in order to enhance domestic manufacturing, investments and export in the telecom and networking equipment, the Department of Telecommunications (DoT) in February this year had notified Rs 12,195-crore Production Linked Incentive (PLI) Scheme for five years while operational guidelines were issued in June this year. For the MSME category, the financial allocation was Rs 1,000 crores. The scheme stipulated a minimum investment limit of Rs 10 crores for MSMEs and Rs 100 crores for non-MSME applicants.

“In short to medium term I don’t see it (100 per cent FDI) making much difference though it is a good move and we need more investments. There are two big practical challenges – mobile network coverage and bandwidth or speed. India’s digital story has unfortunately become synonymous with mobiles and dongles at best. For MSMEs, if digital is synonymous with mobile, it can work for them but it has to address the challenge of coverage. None of the networks is nationwide even though they claim. Right now, coverage is bare minimum in India with around 400,000 towers while China is into millions while we have a comparable population. So, you need that kind of blanket coverage before you talk about helping MSMEs,” Shiv Putcha, Founder and Principal Analyst, Mandala Insights told Financial Express Online.

India’s August 2021 mobile download speed stood at 17.96 Mbps with 42 ms latency and was ranked 126th globally. In terms of fixed broadband speed, the rank was 68 with a download speed of 62.45 Mbps and 16 ms latency, according to the internet speed testing tool Speedtest by Ookla.

“Once you put up towers, you need to make sure there is enough speed. Watching videos online is one thing but to do business, you need reliable and stable speed. Sending and receiving payments without much signals won’t help MSMEs. Often it is not easy to get signals in the city. MSMEs are happy to go digital but there is a huge constraint on them being able to complete transactions at the last mile. So digital story needs to be end-to-end and that currently doesn’t exist in India,” added Putcha.

Siemens firming up big India investment plans

Source: Economic Times, 07 October 2021

German conglomerate Siemens AG is finalising its strategic plan for the next five years for India and its investments in the country are likely to be “more ambitious” than before, global chief executive Roland Busch said.

Siemens has invested close to Euro 1 billion in the past five years in India. The investments included its biggest ever acquisition in the country – a Rs 2,100 crore deal for electrical and electronic equipment maker C&S Electric – earlier this year.

Talking to ET, Busch said Siemens India, led by CEO Sunil Mathur, is preparing a detailed strategic plan for the country and will finalise the plans soon. “It will be more ambitious than the one before,” said Busch, who is also its global president.

Siemens has hiked its growth forecast for FY21 ended September to 11-12%, on a sharp recovery after the disruption caused by Covid. It expects growth to be around 5-7% in fiscal 2022.

Siemens reviewed its performance across businesses in different countries in January-February to assess growth rate over next five years. While the US and China seem to lead, India had potential to be a growth driver.

FDI equity inflows up 112% to $20.42 billion in April-July: Govt

Source: Economic Times, 22 September 2021

Foreign direct investments (FDI) into the country more than doubled to $20.42 billion during the April-July period of the current fiscal, the commerce and industry ministry said on Wednesday. This is a whopping 112% increase from $9.61 billion of FDI equity inflows in the same period last year.

Total FDI- that includes equity inflows, reinvested earnings and other capital-rose 62% on-year to $27.37 billion during the first four months of FY22 as against $16.92 billion in the corresponding period a year ago.

“Automobile Industry has emerged as the top sector during the first four months of FY22 with 23% share of the total FDI Equity inflow followed by Computer Software & Hardware (18%) and Services Sector (10%) respectively,” the ministry said in a statement.

Under the sector Automobile Industry, majority of FDI Equity inflow of 87% was reported Karnataka.

“Measures taken by the government on the fronts of FDI policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country,” the ministry said.

Overall, among states, Karnataka was the top recipient of investment from overseas with 45% share of the total FDI equity inflows followed by Maharashtra (23%) and Delhi (12%).

India remains an attractive destination for investments: Deloitte survey

Source: Financial Express, 14 September 2021

India remains an attractive destination for foreign direct investments (FDI) on account of healthy prospects of economic growth and its skilled workforce, according to a survey by Deloitte. A large proportion of international business leaders remain confident in India’s short- and long-term prospects and are readying plans to make additional and first-time investments in the country, it said on Tuesday.

“The survey, which questioned 1,200 business leaders of multinational corporations in the US, UK, Japan and Singapore, found that India remains an attractive destination for investments, scoring highly for its skilled workforce and prospects for economic growth,” the survey – India’s FDI Opportunity – said.

India can target attracting greater FDI into seven capital-intensive sectors – textile and apparel, food processing, electronics, pharmaceuticals, vehicles and parts, chemicals and capital goods – that have contributed USD 181 billion of merchandise exports in 2020-21, it added. These seven sectors have the necessary potential, opportunity, and capability to show quick results and set a global precedent, the report noted.

It also said that more business leaders, especially in Japan, are making investments in India for access to the domestic market rather than using India as a springboard for exports.

“India has the strongest positive perception in the US when compared to markets such as China, Brazil, Mexico, and Vietnam…The US and UK business leaders expressed greater confidence in India’s stability,” it said.

The respondents from Japan and Singapore currently view Vietnam as their preferred investment destination, as per the report. Despite recent reforms to improve the ease of doing business in India, the survey found that awareness among investors remains low. Business leaders in Japan (16 per cent) and Singapore (9 per cent) were least aware of initiatives such as the digitisation of customs clearance and production linked incentives for manufacturers, it said.

“Accordingly, India was perceived as a more challenging environment to do business compared to China and Vietnam,” it said, adding while India is perceived as both politically and economically stable, it scored lower on institutional stability, that is, regulatory clarity and efficient judicial redress and mechanisms.

Inadequate infrastructure was another negative factor cited by existing and potential investors, it said. Deloitte Global CEO Punit Renjen said: “We believe the outlook can only get better because of India’s improving ease of business, which includes fiscal benefits and other reforms. These positive steps further convince me that India is moving towards its ambition of a USD 5 trillion economy”.

N Venkatram, CEO, Deloitte India, said that directing FDI into capital-intensive sectors should be the focus, as it is key to the country’s gross capital formation as well as establishing its position as a global trade partner. “While global organisations look for alternative destinations to manufacture and India is well-positioned to capture a disproportionate share of the shift, the country must continue to enact reforms and initiatives that drive improvement, building confidence in and competitiveness of India’s economy,” he said.

Foreign Direct Investment inflow jumped by 90% in Q1

Source: Hindustantimes, 28 August 2021

Commerce and industry minister Piyush Goyal on Saturday said India has the potential to become the “manufacturing hub” of the world. (PTI PHOTO.)

The surge in FDI is “an endorsement of its status as a preferred investment destination” amongst global investors, an official statement said. FDI inflow in the first quarter of the previous financial year was $11.84 billion.

Commerce and industry minister Piyush Goyal on Saturday said India has the potential to become the “manufacturing hub” of the world as it attracted $22.53 billion foreign direct investment (FDI) in the first three months of the current financial year, a 90% year-on-year jump because of several policy reforms to facilitate trade and investments.

The surge in FDI is “an endorsement of its status as a preferred investment destination” amongst global investors, an official statement said. FDI inflow in the first quarter of the previous financial year was $11.84 billion.

Addressing businessmen at the Jain International Trade Organisation (JITO), Goyal said every growth parameter is showing extremely exciting future. “Whether it is FDI, forex reserves, foodgrain reserves, agriculture production, manufacturing, all sectors are on a growth path. We now need to sprint ahead,” another statement quoting the minister said. JITO is a global organisation of businessmen, industrialists, knowledge workers and professionals.

According to the commerce and industry ministry, FDI equity inflow grew by 168% in April-June 2021 at $17.57 billion compared to $6.56 billion in the same period a year ago. Automobile industry emerged as the top sector during the first three months of FY 22 with 27% share of the total FDI equity inflow, followed by computer software and hardware (17%) and services sector (11%), it said.

In the automobile category, majority of FDI equity inflow (about 88%) was reported in the state of Karnataka, it said. Karnataka is the top FDI recipient in Q1 of 2021-22 with 48% share of the total FDI equity inflows, followed by Maharashtra (23%) and Delhi (11%), it said.

Addressing JITO, Goyal said, “Traders and exporters are the twin pistons powering the economic growth engine” of India. He lauded the role of all wealth creators of the country. “You are the people who help the government take several social welfare initiatives to the poorest of the poor,” the commerce ministry statement said quoting him.

“Through a series of programmes, Prime Minister Narendra Modi has transformed the lives of underprivileged, women and children of this country. The business community has helped realise the PM’s vision,” he said.

Under the decisive leadership of PM Modi, India is transforming in every field. Be it ‘ease of doing business’ or ‘ease of living’. “Today, a robust foundation laid in last seven years, inspires us to dream big and write our own destiny,” he said.

The minister said India is fast progressing on its discussions on free trade agreements (FTAs) with several countries such as UK, UAE and the Gulf Cooperation Council (GCC) countries, Australia and European Union (EU).

He said India and US have agreed to aspire for $500 billion trade in the near future. The world is looking for a trusted partner and that partner is India’s business community, he added.

“It may be noted that recently, India emerged as the world’s second most desirable manufacturing destination overtaking US. This shows the potential & promise of India to become the ‘manufacturing hub’ of the world,” the statement quoting Goyal said.

Along with that, we should also become a “Trading hub”, i.e., the place where the world comes to shop, he added.