India newsletter 06. 2013

India Newsletter | 1

INDIA NEWSLETTERPublished by the Embassy of India, Vienna

Year 3 | Issue 30 | June 2013

Featured IndustryavIatIon

2 | India Newsletter

News

QUICK FACTSSnapshot of last month’s Highlights

Over 20 Euro-pean corpora-

tions have set up engineering R&D centres in India in the last year.The State of Andhra Pradesh (AP)

is projected to add more than 4,000 megawatt (MW) in power gen-eration capacity by March 2014.

With a growth rate of 17 per

cent from 2005 to 2012, India’s ex-ports during the period grew faster than the rest of the world, including China.India’s total foodgrain output in the

present crop year is projected to reach 255.36 million tonnes (MT), driven by higher production of rice, oilseeds and wheat.

Exports of agricultural and allied products from India have grown

from US$ 29.8 billion in 2011-12 to US$ 33.54 billion in 2012-13.

Online video consumption

in India has dou-bled to 3.71 billion videos per month over the past two years.

The investment from the Indian mutual fund industry in software

stocks stood at Rs 19,196 crore (US$ 3.49 billion) in March 2013.

The Indian IT infrastructure

market is projected to grow by 9.7 per cent y-o-y to reach US$ 2.1 billion in 2013.The total number of Internet con-

nections in India is expected to touch 380 million by 2017, growing at about 35 per cent annually.

Domestic pharmaceutical sales registered an increase of 9.7 per

cent in April 2013 as compared to the same period last year.

Gold demand in India grew by

27 per cent to 256.5 tonnes in the first quarter of 2013.PC shipments from India grew by

7.5 per cent to 2.71 million units during January-March 2013 as com-pared to the previous quarter.

Mutual funds invested US$

86.14 billion into the Indian debt market in 2012-13, making it their big-gest investment in the last 12 years.

The Indian public sector banks (PSB) are expected to raise Rs

9.60 trillion (US$ 173.18 billion) in

the 10 year period ending March

2021.

Around 33 per cent co-found-

ers of engineer-ing and technology startups in the US since 2006 are In-dians.The market for rice bran oil in In-

dia is expected to grow by 15 per

cent to Rs 4,600 crore (US$ 826.90

million) in 2013.

Laboratory ana-lytical instru-

ments market in India is expected to reach US$ 2.37 bil-lion by 2018.Engineering exports from India

stood at US$ 4.5 billion in April

2013.

Foreign direct in-vestment (FDI)

in India stood at US$ 22.4 billion in 2012-13.


INDIA-FORUMS IN GRAZ AND LINZEvent invitation by the ICS Steiermark and Export Center Oberösterreich

NeTwORKING SeMINAR IN COLLAbORATION wITh ICCPast Events Report

INDIAN CLASSICAL MUSIC eveNING AT The eMbASSyPast Events Report

Articles

As part of the internationalization ini-tiative “go international”, an initiative

of the Federal Ministry of Economy, Fam-

ily and Youth and the Federal Economic

Chamber, the ICS Graz, Export Center

Oberösterreich and the Austrian Trade

Commision in New Delhi invite Austrian

entrepreneurs to the industry forums:

“FMCG, LUxURy, LIFeSTyLe & DeSIGN IN INDIA”

Graz | 18.06.2013 | 09:00 Uhr

IC Steiermark | Körblergasse 117

“GOING TO INDIA AND SOUTh-eAST ASIA”

Linz | 19.06.2013 | 09:00 Uhr

WKO Oberösterreich | Hessenplatz 3

The industry forums shall provide a platform for interested Austrian entre-preneurs to get information about the business potential in the FMCG, Luxury, Lifestyle and Design in India. In addition to the focus on “FMCG, Luxury, Lifestyle and Design”, the event in Linz shall also cater to the “Renewable Energy Indus-try” with current opportunities for the sector not only in India, but also in South-East Asia.

The Austrian delegates in New Delhi and the industry experts shall present eco-nomic market data as well as case studies to help Austrian companies to success-fully position their business in one of the largest markets in the world. Following the event, the atendees are invited for an Indian buffet and a networking opportu-nity to exchange views and for individual consultations with the delegates.

For more information and free reg-

istration, please refer to the web-

sites below:

http://www.ic-steiermark.eu (GRAZ)

and http://www.exportcenter.at/ (LINZ)

The Embassy of India in collaboration with the International Chamber of

Commerce (ICC) organized a Network-ing Event on 15th May 2013 with the aim of bringing together Austrian companies having business interest in India and to

provide them with a platform to share their experiences and/or provide an-swers to their queries.The event took place at the Embassy Business Center (EBC) and counted with the participation of more than 20

companies from different industries. An introductory address for the event was given by Ambassador of India, H.E. Mr. R. Swaminathan, which will was followed by Q&A and discussion session. Some im-pressions of the event:

On May 10th, 2013, the Embassy of India hosted an Indian Classical Mu-

sic Evening by Sitar Maestro Pandit Saty-

endra Sharma Deo for the Indian Com-

munity and Friends of India in Austria. At

its full capacity, the event was very suc-

cessful. Some impressions of the event

follow:


Articles

INDIA LeADS AMONG bRIC NATIONSHSBC Survey

GOvT ReLAxeS NORMS FOR expORT OF IMpORTeD GOODS Foreign Trade

AMAZON CLICKS INTO INDIAN ONLINe MARKeTpLACe e-commerce in India

India expanded at a better rate than the three BRIC peers China, Russia and

Brazil in May 2013, according to a survey by HSBC.

The HSBC composite index for India, which records manufacturing and ser-vices sector, stood at 52 in May 2013, whereas it was 50.9 for China, 51.2 for Brazil and 51 for Russia.

An index measure of above 50 indicates expansion.

“India has been the bright spot among

the largest EM countries, while a combi-nation of external headwinds and domes-tic issues has led to weakening growth in Brazil, China and Russia,” said Mr Andre Loes, Chief Economist for LATAM, HSBC.

The HSBC Emerging Markets Index (EMI), a monthly indicator derived from the PMI surveys, remained unchanged from April 2013 at 51.4 in May 2013.

Growth accelerated in India on the back of a stronger services sector perfor-mance.

Employment grew marginally in May 2013. This was despite goods produc-ers registering a fractional cut in staffing, highlighted HSBC survey.

The HSBC Emerging Markets Future Output Index that tracks firms’ expecta-tions for activity in 12 months time rose for the first time in three months in May. Improved sentiment was driven by the services sector, as manufacturing output expectations were the weakest in five months, according to HSBC.

To encourage shipments, the govern-ment has allowed export of import-

ed goods with 15 percent value addition to countries from where the proceeds are realised in Indian rupee.

The Directorate General of Foreign Trade (DGFT) will notify the names of those countries as to which exports un-der the new dispensation could be made.

“An enabling provision has been made to allow export of goods imported against payment in freely convertible currency where export proceeds will be realized in rupees,” it said.

It said that this dispensation will be appli-cable to such countries as would be noti-fied by DGFT from time to time.

“They also have to achieve 15 percent value addition,” it added.

India’s exports in 2012-13 fiscal fell for the first time in three years reporting a dip of 1.8 percent to USD 300.6 billion in 2012-13, taking the country’s trade deficit to a record high level of USD 191 billion.

Amazon, the world’s largest online re-tail company, has entered the Indian

e-commerce space, promising low price for users and a better platform for sell-ers. India is the tenth market where Ama-zon has launched a country-specific retail Web site.

But unlike Amazon sites in other coun-tries, the Indian venture is limited to third-party sellers. Amazon will not sell its own inventory due to foreign direct investment (FDI) regulations prohibiting foreign retailers from selling their own products online.

To start with, consumers will be able to buy books, movies and TV shows. Ama-zon.in will introduce additional catego-ries including mobile phones and cam-eras in the coming weeks. On Day 1, the book store featured over seven million print books across 200 plus categories while the video store featured a collec-tion of over 12,000 titles in English and Hindi.

While Amazon has not previously had a branded presence in India, in February

2012, it made its foray into the Indian market with the launch of Junglee.com, which connects buyers with online and offline retailers but with no sales trans-actions.

Real challenges

The launch of Amazon.in comes at a time when other e-commerce sites in the country have not been doing well. There are challenges including customer suspicion towards the quality of products sold online and lack of trust in payment mechanism.

Amit Agarwal, Vice-President, Interna-tional Expansion, Amazon.com, told Busi-ness Line that while these challenges are real, other markets have shown similar trends at the nascent stage. “When you make your investment decision with a timeframe of 10 years then these things do not matter,” he said. From the con-sumer point of view, Amazon offers a platform that is aimed at offering a low price on any product by allowing sellers to compete.

For the seller, Amazon is offering unlim-ited shelf space with no listing fees. “From packaging to taxation to delivery logistics we are offering all of it in a simple pack-age to sellers,” said Agarwal.

Pan-INDIA REACH

“Selling on Amazon presents an exciting opportunity as it opens up a new sales channel with pan-India reach at virtually no investment,” said M. S. Jaya Prakash, Proprietor, EducationSupplies. “Prior to this, I did not sell online and was appre-hensive about how to fulfil online orders in a timely manner, handle customer ser-vice and manage returns.”


Articles

MSMe ShARe IN expORTS wAS 43% IN 2011-12Micro, small and medium enterprises in India

INDIA pRObAbLy wORLD’S 3RD LARGeST eCONOMyOECD Report

The share of micro, small and medium enterprises (MSME) in India’s total

exports has been provisionally estimated at 43 per cent in 2011-12, according to the ministry of MSME. Besides, the minis-try estimates total fixed assets of MSMEs in India at Rs 689,000 crore and the num-ber of people employed by the sector at around 80 million.

Minister of State (Independent Charge) for MSMEs K H Muniyappa said in the Ra-jya Sabha recently that “under a revised method of estimation, the share of MSME product exports in total exports of India has been provisionally estimated at 43 per cent in 2011-12”.

According to Directorate General of Commercial Intelligence and Statistics (DGCI&S) data, in the last three years, MSME exports increased by almost 60 per cent - from $82,494 million in 2009-

10 to $131,483 million in 2011-12.

The main markets for the 20 most-exported MSME product groups, which accounted for more than 90 per cent of MSME exports from 2009 to 2012, include the USA, European Union (EU), UAE, Turkey, Singapore, Hong Kong, Israel and Saudi Arabia. (TOP-10 STATES BY MSME FIXED ASSETS)

The product groups include pearls, pre-cious stones and metals; electrical and electronic equipment; textiles, apparel and accessories; pharmaceutical prod-ucts; machinery and mechanical applianc-es; items made of iron or steel; organic chemicals; vehicles other than railways and tramways; plastics, rubber and arti-cles made from them; footwear, leather and leather products; travel goods; tools, implements and cutlery; tanning and dye-ing extracts, tannins, derivatives and pig-

ments; essential oils, perfumes, cosmet-ics and toiletries; stone, plaster, cement, asbestos and mica; carpets and other textile floor coverings; furniture, lighting, signs and prefabricated buildings.

“The MSME sector of India has been re-peatedly mentioned as the growth engine of the Indian economy, but the depth of its achievements is often not fully appre-ciated,” Muniyappa said on another re-cent occasion.

The MSME sector, with 36 million enter-prises having fixed assets of Rs 689,000 crore and 80.5 million employees, con-tributes around nine per cent of India’s GDP and accounts for around 45 per cent of manufacturing output. It has been continuously growing at a rate far above the large sector.

India has probably surpassed Japan to become the world’s third largest econ-omy after the US and China, Paris-based think-tank OECD said today even as it lowered the country’s economic growth projection for 2013 to 5.3 per cent.

“China will likely pass the United States as the world’s largest economy in the next few years and India has probably recently surpassed Japan to be third larg-est,” said the OECD Economic Outlook report.

Until around 2020, China is set to have the highest growth rate among major countries, but could be then surpassed by India, it further said.

OECD also said that by early 2030s, the BRIICS’ (Brazil, Russia, India, Indonesia, China and South Africa) combined GDP should roughly equal that of the OECD (based on current membership), com-pared with just over half that of OECD now.

“Between now and 2060, GDP per capita is seen to increase more than 8-fold in India and 6-fold in Indonesia and China,” it added.

The Organisation for Economic Cooper-

ation and Development (OECD), which in November had projected India to grow at 5.9 per cent in 2013, cautioned that structural bottlenecks in the coun-try could further constrain investment and growth potential.

“GDP growth is projected to rise gradu-ally over the next two years... Significant-ly more growth would be forthcoming if structural bottlenecks were swept away by fundamental structural reforms,” the report said.

Looking ahead, it said India is likely to im-prove growth to 6.7 per cent next year, after having logged a decade’s low of 3.8 per cent in 2012.

OECD said the world real GDP is pro-jected to increase by 3.1 per cent this year and by 4 per cent in 2014. Across OECD countries, GDP is projected to rise by 1.2 per cent this year and to im-prove to 2.3 per cent in 2014. Growth in non-OECD countries will rise by 5.5 per cent this year and 6.2 per cent in 2014.

In the US, activity is projected to rise by 1.9 per cent this year and by a further 2.8 per cent in 2014, OECD said.

GDP in the euro area is expected to de-

cline by 0.6 per cent this year and then rebound by 1.1 per cent in 2014. Japan’s GDP is expected to grow by 1.6 per cent in 2013 and 1.4 per cent in 2014, it added.

Talking about India’s neighbour China, OECD forecast that its economy would grow 7.8 per cent this year, down from a previous estimate of 8.5 per cent.

Referring to India, it also said the fiscal tightening and the new fiscal consolida-tion roadmap are “welcome and should allow monetary policy to be eased fur-ther”.


Articles

eCONOMy TURNING AROUND: GDp GROwTh TO exCeeD 6%Prime Minister’s Statements on India’s Economy

INDIA M&A DeALS ReCORD US$ 1.66 bILLION IN ApRIL 2013Report by Grant Thornton

IN Fy13, NRI DepOSITS CLIMb 19%Non-Resident Indians deposits

Indicating that the worst may be over for India’s economy, Prime Minister

Manmohan Singh said that the economic situation is turning around with inflation coming under control and the gross do-mestic product (GDP) growth likely to exceed 6 per cent in the current fiscal year.

Speaking on the fourth anniversary cel-ebrations of UPA-II government in Delhi, the Prime Minister said 8 per cent growth rate was possible if the Congress-led co-alition is voted to power again next year.

“The economic situation is turning around. Inflation is coming under control. The fiscal deficit is being brought under

control. The current account deficit is high, but we will bring it down gradually... We are confident that growth in 2013-14 will be better than 2012-13 and could exceed 6 per cent,” he said.

Attributing the decline in economic growth--estimated to be 5 per cent in 2012-13-- to global phenomenon, he said the “slowdown is temporary”.

A 6 per cent growth in the current year will set the stage for returning to 8 per cent growth in the current Five Year Plan period ending March 31, 2017.

“This will be difficult, but it is not impos-sible. We have done it before, and if we receive a mandate next year, we will cer-

tainly achieve it again,” he said.

Stating that agricultural growth was criti-cal for rural prosperity, the Prime Min-ister said the government was targeting 4 per cent growth in the sector and is attempting to increase foodgrain produc-tion as well as diversifying agriculture.

“This is the foundation which allows us to introduce Food Security legislation in Parliament,” he said, adding that the gov-ernment had also introduced the Land Acquisition and Rehabilitation Act to replace the old and highly unfair colo-nial legislation. The new Act will be much fairer to those whose land is acquired, Mr Singh said.

The total mergers and acquisitions (M&A) in April 2013 were valued

at US$ 1.66 billion through 39 deals as compared to US$ 1.97 billion by way of 60 transactions during the same period last year, according to the data released by Grant Thornton. There has been a sig-nificant increase in inbound deals and this trend is likely to continue in the coming months.

“Cross border deals and in particular inbound deals are seeing strong resur-gence. Unilever’s investment announce-ment preceded the Diageo transaction, which is now in its final legs. These are two significant transactions,” as per Mr Harish HV, Partner, India Leadership Team at Grant Thornton India LLP.

During April 2013, cross border deals

were valued at US$ 1,121 million, fol-lowed by domestic deals (US$ 488 mil-lion) and mergers and internal restruc-turing at US$ 60 million.

“We expect significant uptick in the in-bound arena. Similarly, we are seeing re-surgence in outbound transactions and expect to see significant uptick in this area from both, IT and manufacturing sectors,” said Mr Harish.

The deal of the month was Etihad Air-ways acquiring 24 per cent of Jet Airways for US$ 379 million.

Other major M&A deals in April 2013 include Bharti Airtel, acquiring 100 per cent stake in Bangladesh’s Warid Telecom, followed by Aditya Birla Nuvo selling its carbon black business to group firm SKI Carbon Black for Rs 1,451 crore (US$

263.70 million) and Qatar-based invest-ment firm Hassad Food buying major-ity stake in basmati rice company Bush Foods for over US$ 100 million.

“We continue to see Indian corporates focused to divest non-core assets to en-hance liquidity such as DLF stake sale in wind power assets for over $ 100 mil-lion,” said Mr Raja Lahiri, Partner, Trans-action Advisory Services at Grant Thorn-ton India LLP.

The foreign direct investment (FDI) reg-ulatory changes in sectors and govern-ment’s push to attract FDI, the Etihad-Jet transaction is good for the aviation sec-tor and we believe that more such in-bound deals are expected to play out in sectors such as aviation, retail and broad-casting, added Mr Lahiri.

Lured by higher returns offered by banks in their homeland, non-resident Indians

(NRIs) placed deposits aggregating $14.18 billion in the FY ended March 2013, an in-crease of 19% over 2011-12.

In the previous year, NRIs parked deposits aggregating $11.92 billion with banks in In-dia. NRIs placed deposits predominantly in non-resident (external) rupee account or NRE account. NRE deposits with the bank-ing system jumped 85 per cent (rising by $15.81 billion in FY13 compared to $8.53

billion in FY12), according to Reserve Bank of India data.

The attractiveness of NRE deposits lies in the fact that banks quote the same inter-est rate on these as on domestic deposits. For example, State Bank of India is quoting 8.75 per cent on NRE deposits of one- to 10-year duration. Also, the principal and in-terest are fully repatriable and the interest earned is exempt from Indian income-tax.

“The rising trend in NRE deposits is an

indication that the NRIs expect the rupee to appreciate down the line. So, the NRIs are not only gaining by way of interest rate but also on account of favourable exchange rate conversion factor,” said a banker. In FY13, the banking system’s NRO (non-resident ordinary deposits) shrunk by $1.8 billion (against an accretion of $4 billion). Since NRO deposits are non-repatriable and require submission of tax-residency certificate and self-declaration, bankers say these deposits have become unattractive.


Articles

INDIA’S eNTRy INTO eUROpe CLUb TO heLp SMeS expAND FOOTpRINTAs reported in the CII newsletter, MSME Business

FOReIGN INveSTORS INCReASe STAKe IN INDIA INCForeign Investment in India

India has become a member of the En-terprise Europe Network (EEN) - the

54th country to do so - in a bid to fa-cilitate the flow of trade, investment and technology between SMEs in India and the European Union (EU), according to a recent issue of the CII newsletter, MSME Business.

The EEN works through local business organisations to help SMEs make the most of the European marketplace. India’s entry into the EEN will give the country’s SMEs access to Europe’s large database of cutting-edge technologies, with com-panies from the 27-member bloc both offering and seeking research and com-mercial applications in 17 sectors, includ-ing agro-food, automotive, transportation

and logistics, biotech and health care.

The EU has been a difficult market for Indian SMEs, given its complexities, strin-gent rules and protectionist tendencies, but India’s membership of the EEN is expected to make a difference. CII, along with the European Business and Technol-ogy Centre (EBTC) and the Federation of Indian Export Organisations are part-ners in this initiative, and contact points for Indian SMEs.

The network serves as a one-stop shop for enterprises looking to go global with their innovative ideas. The EEN can pro-vide insights on sources of venture capi-tal and loans; the best way to sell a busi-ness plan to investors; getting aid from

regional, national or EU authorities; and accessing public funds and grants for re-search and development.

The EEN’s business cooperation data-base of some 23,000 profiles and busi-ness support organisations from 54 countries enables SMEs to utilise it to search for international business part-ners and sourcing new technologies and advisory services on issues such as intel-lectual property, going international, or EU laws and standards. The network en-sures that SMEs looking to expand their business to another country find compe-tent and trustworthy partners, as well as assess how EU laws and regulations affect businesses.

With foreign investors pumping a massive $10 billion in Indian

markets in January-March , the second highest ever in a quarter, FII ownership in top-500 companies has hit an all-time high of 21.2% for the quarter ending March. It climbed 1.28% in the January-March quarter alone and 2.87% in 2012-13 . Along with foreign promoters (7.6%), foreigners are now the most dominant shareholders in India Inc.

FII inflows topped $25.8 billion during the one-year period ending March 2013, the second best ever. Though FII own-ership of India Inc. has hit a peak, their exposure to Indian markets remains well below the highs achieved earlier. The val-ue of FII portfolio stood at $236.2 billion, data compiled by Citi Research and the Centre for Monitoring Indian Economy showed. It hit an all-time high of $276.5 billion at the end of December 2010.

Significantly, foreigners (FIIs and foreign promoters ), with a combined ownership of 28.8% in BSE-500 companies, are now ahead of Indian promoters, who on an average held 27.7% stake in these firms. The churn on the back of Unilever’s ag-gressive open offer to shareholders and promoter stake sales to meet the mini-mum public shareholding norms stipu-lated by market regulator SEBI has led to the decline .

FIIs own a quarter of the largest compa-nies in the country. They own 25.32% in sensex companies compared to the av-erage 23.37% owned by Indian promot-ers in these 30 blue-chip firms. “FII flows would continue as the interest rate cycle has turned favourable,” says Kishor P Os-twal, Managing Director , CNI Research, an equities research provider. “It is largely driven by global liquidity ,” says Vikram Dhawan , Director, Equentis Capital. Since stock valuations in developed mar-kets are ruling higher, money has started to move into emerging markets such as India, he says.

FII ownership in financial services and consumer staples companies remained high. They have also increased their stakes in energy , telecom and healthcare firms. They have also started to reduce their exposure to IT companies. IT is now the biggest underweight for FIIs, data showed.

FII ownership matters a lot for stock price movement . Stock prices of most companies in which FIIs increased their holdings went up in January-March . All the top companies where FIIs cut their exposure during the quarter witnessed a fall in stock prices. Stock prices plunged 12% to 30% in these companies during the period.

The increase in FII stakes has however failed to move the markets. The markets

declined 3% during January-March on the back of heavy selling from domestic insti-tutional investors (DIIs ).

The average stake held by DIIs dropped 0.24% in 2012-13 during which they pulled out about $12.7 billion from the equity markets. “Domestic investors have been facing redemption pressure. But they held rather tenaciously to their ownership levels,” market observers said.


Articles

India outpaced the rest of the world in terms of exports growth in 2005-12,

charting a 17 per cent improvement over the seven-year period. As per the latest World Trade Organisation (WTO) re-port, this was even higher than arch-rival China’s exports growth of 15 per cent between 2005 and 2012.

The exports growth registered by the powerhouses of the Asian economy was significantly higher than the global aver-

age of 8 per cent in the 2005-12 period. But India was able to achieve the distinc-tion despite a 3 per cent decline in ex-ports in 2012, even as China recorded 8 per cent growth for the year. Globally, ex-ports remained at the same level in 2012 as the previous year.

Delving into India’s export performance, it emerges that growth in overseas ship-ments slowed to 13.6 per cent in 2008-09 and then fell to -3.5 per cent in 2009-10.

But in the subsequent two years, exports witnessed high growth due to steps tak-en by the government to boost exports, besides weakening of the Indian rupee. But exports witnessed a declining trend in 2012-13 on account of the worsening euro zone crisis and poor global demand.

As per WTO data, India’s rank as one of the leading exporters of the world im-proved from 31st position in 2000 to 19th position in 2012.

Social networking giant Facebook wants to make India its largest market

in terms of number of users.

With 78 million users, India is now its second largest market after the US. But the fast paced growth of mobile and data services here makes it a huge opportu-nity for the company.

As of March 31, Facebook had 1.11 bil-lion users globally, an increase of 23 per cent compared with a year ago. In India, the social networking company saw a 50 per cent increase in user base during the same one-year period. “India is an excit-ing market for us because we are at the start of the data boom. We have found that the primary reason for Indians to subscribe to data is to get on to Face-book,” Vaughan Smith, Vice-President,

Mobile and Corporate Development, Fa-cebook, told Business Line.

At the centre of India gameplan is the ‘mobile first’ strategy that the company announced globally a year ago. Face-book has 195 million users in the US and Canada combined and to go beyond that mark the company is offering services in regional languages in India.

For instance, it launched a programme called “Facebook for Every Phone” app, which delivers smartphone-like Face-book experience on feature phones in Hindi and other Indian languages includ-ing Gujarati, Tamil, Malayalam, Kannada, Punjabi, Bengali and Marathi.

Facebook is also aggressively looking at operator partnerships to drive up usage.

It had done deals with Airtel, Reliance, Aircel and Idea for allowing their sub-scribers to surf Facebook for free.

The recent partnership with Nokia is another example. Airtel subscribers buy-ing Nokia Asha 501 will get free data ac-cess for all mobile Facebook Web pages. “With free data package, the users get hooked and then they want to use it reg-ularly. This is good for operators too as data usage grows,” said Smith.

But the big challenge for the company would be to grow its revenues from India in line with the user growth. Facebook now gets 30 per cent of its revenues globally from mobile. While India-specific revenue numbers are not available, the focus for now is to capitalise on the 850 million mobile phone users.

India’s information technology industry body Nasscom has created a separate

unit to drive its newfound enthusiasm for software products, and has set a target of increasing by nearly five-fold revenues from products by 2020.

The product council of the National Asso-ciation of Software and Services Companies will be chaired by Ravi Gururaj, a serial en-trepreneur who is the cofounder of a seed-stage angel fund Frictionless Ventures. The formation of a product council is one of the measures proposed by a committee headed by NR Narayana Murthy, the chief mentor of Infosys. The panel was established to bring Nasscom up to date with the current needs of the industry.

In 2012-13, Indian software products

notched up around $2.2 billion (Rs 12,000 crore) in revenue, of which 30% came from the domestic market. The aim is for $10 bil-lion (Rs 55,000 crore) in sales by 2020.

“Product companies and startups are the next growth engines for the industry,” said Krishnakumar Natarajan, Nasscom chair-man and CEO of software firm Mindtree. Nasscom, which represents India’s $108 billion (Rs 5.9 lakh crore) software services sector, has been facing criticism from smaller and newer members for its inability to ad-equately address the aspirations of software product companies. In February, around 30 product companies formed a separate grouping called Indian Software Product Round Table (iSpirt). “We are a think-tank; we frame policies. As a trade body, Nasscom

can lobby with the government to make them happen,” said Sharad Sharma, one of the founder-members of iSpirt, welcoming Nasscom’s move.

A survey of 100 product companies by Nasscom found that 68% felt market access and customer acquisition were key con-cerns. Raising funds and other capital related issues came second, followed by finding the right talent and scaling operations. Gururaj said the Nasscom product council would help in establishing large one, with small and medium businesses adopting locally devel-oped software products.

Areas such as cloud, software as-a-service, big data and analytics, social and mobility are large global opportunities.

INDIA’S expORTS GROwTh OUTpACeD ChINA’S IN 2005-12 peRIOD Foreign Trade

FACebOOK AIMS TO MAKe INDIA ITS LARGeST MARKeTSocial Networking

NASSCOM TARGeTS $10 bILLION FROM SOFTwARe by 2020Information Technology


Articles

Coram International, the Nether-lands-based coordinated design

bathroom company, is set to start opera-tions in India from July this year.

The company, which set up a wholly-owned subsidiary in India in 2012, also has plans to set up a manufacturing facil-ity for its flagship products in India, which is identified as the “sweet spot” for Co-ram. “There is good potential. But we would put up the plant once there is cer-tain scale. India is likely to emerge as the manufacturing base for our operations in Asia over the next few years,” said Niels Pilaar, CEO, Coram International.

Huge population, coupled with affinity towards European designs, are the key reasons why Coram has decided to shift focus to India, said Pilaar. “Europe has be-come saturated and is declining as a mar-ket. Though China has the advantage of

being the world’s largest population, it is not an easy market because of excessive Government interference,” he added.

The company would require about $10 million to set up a manufacturing unit which can be expanded depending on re-quirement. “The investment in India for a possible manufacturing unit is yet to be firmed up. It would depend on the time and scale. However, investments would come from the parent firm,” said the CEO.

India would be the first country outside Europe where Coram is planning to es-tablish a manufacturing facility. At present, it has production units in Holland, Poland, the UK, Germany, France and Italy. It also has an assembly unit in Malaysia. Pilaar said Coram’s India unit could initially tar-get markets like Indonesia and Vietnam.

By July, the company will set up two ex-perience zones, to have direct consumer connect, in Delhi and the National Capi-tal region. Later, it would look at other parts of the country, starting with cities like Ludhiana, targeting bungalows and other residences.

Coram’s Xtreme wellness bathroom set up costs about Rs 15 lakh, while its prod-uct range starts from Rs 2 lakh.

Coram offers the coordinated design bathroom solutions with the possibility of added sustainable Xtreme wellness. Pi-laar said annual sales of more than 5,000 units would make manufacturing viable in India.

At present, Coram gets about 90 per cent of its revenue from European mar-kets.

Networking solutions provider D-Link is planning to set up a testing

lab in India in the second half of this year to ensure better localisation, its chairman A P Chen said.

At present, D-Link has testing labs in Russia, its biggest market until recently, South America, China and Taiwan.

The testing lab will be set up in Goa. Be-sides the lab, D-Link will have its own service centre and support system for repairing in the Goa facility. “We also have plans to serve markets like Sri Lan-ka, Australia and Singapore from the In-

dian testing lab,” Chen added.

The company is also evaluating possibili-ties of establishing a software develop-ment centre in India within a year, said Chen.

However, there is no immediate plan to start manufacturing in India. At present, India accounts for about seven to eight per cent of D-Link’s global revenue and is growing at more than 20 per cent annu-ally. “We may look at setting up a produc-tion unit here in the future if there is a certain scale,” he said.

Chen said the company had witnessed

a decline in sales in the US, Europe and Russia. At present, Europe has emerged as the largest market for D-Link with about 22 per cent of its global revenue.

In India, D-Link is planning to start D-Link Direct Service (DDS) for consumers so that it would pick up faulty products di-rectly from the consumers’ place and in-stantly replace it with a new product.

Meanwhile, D-Link Holding Mauritius, the 100 per cent subsidiary of D-Link Corp, which holds a 60.37 per cent stake in listed D-Link India, is reportedly planning to delist the Indian arm.

Honda Motorcycle and Scooter India (HMSI), India’s second-largest two-

wheeler company, plans to expand its in-stalled annual capacity by 15 per cent to 4.6 million units by March 2014.

The company inaugurated a plant at the industrial area 58 km from Bangalore, its third plant in the country, after those in Manesar in Haryana and Tapukara in Ra-jasthan.The three plants have a combined capacity of four million units a year. The Narasapura plant would initially pro-

duce 1.2 million units a year. By March 2014, additional capacity of 600,000 units would be added, through a third assem-bly line, said Keira Muramatsu, president & chief executive. The Narasapura plant would see a total investment of Rs 1,350 crore, including the funds for expansion.

The company has acquired 23 acres from the Karnataka government for creating additional facilities such as a safety rid-ing track. By the end of this financial year, the plant, spread over 96 acres, would

provide employment to 4,500 people, said Yadvinder Singh Guleria, vice-presi-dent (sales and marketing). The company would produce the Dream Yuga motor-cycle at the plant from June. Two months later, it would start manufacturing Activa scooters on the second assembly line, he added.

Accordingly, the company would reduce the Activa’s waiting period from the cur-rent 15 days.

DUTCh FIRM CORAM TO USe INDIA AS bASeForeign Companies’ Operations in India

D-LINK TO SeT Up TeSTING LAb IN INDIAForeign Companies’ Operations in India

hONDA OpeNS ThIRD 2-wheeLeR pLANT IN INDIAForeign Companies’ Operations in India


Articles

Union Minister of Health & Family Welfare India, ShriGhulamNabi Azad

and Secretary of State for Health, UK, Mr. Jeremy Richard Hunt signed an MOU on cooperation in the field of health sector between the Government of India and the Government of the United Kingdom of Great Britain and Northern Ireland.

Describing the agreement as a historic event and a great milestone, Shri Azad noted with optimism that this agreement is going to usher in a new era of coop-eration in the health sector between the two countries.

Shri Azad stated that the agreement be-tween India and UK will promote wide-ranging cooperation in the health sector between the two countries and spur the exchange of information and expertise for the common good of people.

The areas identified for cooperation in

the MOU include:

• Promoting exchange on healthcare policy in India and the UK;

• Human resources for Health;

• Regulatory issues;

• Health technology development:

• Primary healthcare;

• Strengthening of public infrastruc-ture and capacity;

• Health security, including coopera-tion on infectious diseases, emerging infections and drug resistance.

It is worthwhile to mention that India is a strategic partner to the UK and has been a recipient of UK’s bilateral assis-tance in the form of grants since 1975. The aid agency of the UK is Department for International Development (DFID). The priority for the DFID (UK)- Gov-

ernment of India partnership has been improvement of maternal & child health and reducing the burden of communica-ble diseases.

Shri Azad also noted with satisfaction that Department of Health Research, GOI and National Institute of Clinical Excellence (NICE), UK are in the process of signing an agreement for collaboration in areas relating to medical and health technology assessment.

Recalling the historic relations that the two countries share, Sh Azad noted that the signing of this agreement dem-onstrates the commitment of both the countries to work closely with each other to further cement their strong re-lations.

INDIA AND The UK SIGN MOU ON COOpeRATION IN heALTh SeCTORInternational

High-end and super-expensive Italian shoemakers are looking at India as a

replacement for their production base in Europe, increasingly a high-cost location for them. These brand manufacturers are also scouting for local partners. Some of these are leading brands such as Baldinini, LORIBLU, Giovanni Fabiani, NeroGiardi-ni, Janet & Janet, FABI and Fratesi.

Another attraction is growing demand here for their products, unlike in Europe, though their footwear could cost any-thing between Rs 29,000 to Rs 1 lakh for a pair.

“Italian producers and manufacturers are looking for countries where the la-bour cost is lower, which is why they are looking at India,” Amedeo Scarpa, trade promotion attaché at the Italian embassy, told Business Standard.

He said these brands were exploring markets in the BRICS (Brazil, Russia, In-dia, China and South Africa) countries, where the raw material cost is lower than in Europe. Analysts said China could give competition to India in this respect but India was increasingly having the ad-vantage in terms of cost of labour.

“We are looking at more and more joint ventures and collaborations with Indian

producers because Indian industry gives us the volume that these companies are now looking for,” said Scarpa. Around 40 high-end European leather and footwear brands, including those from Italy, Ger-many, France, the UK, Spain and Austria, are going to showcase their products at the Expo Riva Schuh India, an inter-national shoes and leather accessories show in Pragati Maidan on July 4-6.

“We want to shift from a concept of ‘Made in Italy’ to ‘Made with Italy’ as we go for more and more joint collabora-tions. This will be our way in entering the market,” said Scarpa. Adding, however, that the Indian market had a lot of trade barriers which sometimes affect the ease of doing business here.

“We have to find the part of the global value chain and where there is competi-tiveness. So, the more you lower your barriers, the more attractive investment destination you will be,” he said. Italian companies, said Scarpa, were also eagerly waiting for the India-European Union free trade agreement (FTA), under nego-tiation for a long while, to be signed. It could help them get more access to the Indian market, with the lowering of tariffs.

According to Carla Costa, fair manager

of Riva Del Garda Fierecongressi, the de-mand for shoes of this type which can cost EUR400-2,000 each, was growing in India.

In Europe, the number of buyers are de-clining. Besides shoes, these brands also produce luxury bags, belts and wallets.

“India has a huge population and de-mand for such goods is on a rise here compared to Europe, where buyers are not ready to buy these costly shoes. So, we are now looking to go out of Europe. Prices in Europe are very high. The real demand is here,” adds Costa.

Overall, the Indian footwear market is estimated at about Rs 19,900 crore, with a yearly growth rate of eight to 10 per cent. The market includes casual, formal, semi-formal and sports shoes, along with sandals for men and women.

The men’s segment is 59 per cent of the market. The overall share of organised retail is 20 per cent and is expected to reach 25-30 per cent by 2015.

Of the total market, the super-rich seg-ment might constitute only a small por-tion but Italians believe it would still be higher than demand for their products in Europe, facing low economic growth.

ITALIAN ShOeMAKeRS eye INDIAForeign Companies’ Operations in India


Interview

Shri Kamal Nath, Minister for Urban Development & Parliamentary Affairs,

and Ms Melanie Schultz van Haegen, Min-ister for Infrastructure and Environment, Netherlands signed a Memorandum of Understanding on Technical Cooperation in the field of “Spatial Planning, Water Management , and Mobility Management” on 14th May 2013 at the Hague, Neth-erlands.

At the bilateral meeting, Shri Kamal Nath spoke about the Urbanization challenge being faced by India and the determina-tion of the Government of India to ad-dress it in partnership with the technical and professional experts and business leaders of both countries. Shri Nath re-

iterated that addressing the urbanization challenge provided a huge opportunity for cooperation including in the area of Private Public Partnership.

The Memorandum of Understanding will enable greater cooperation in the areas of - Spatial planning, urban and regional planning and development and architec-ture; Water management in terms of Wa-ter supply and sanitation and governance structures; Transport management and transport systems and infrastructure; En-ergy-efficient and sustainable built forms

Under the MoU, a Joint Working Group would be set up that would prepare an-nual work programmes. It was decided

that the first seminar under the MoU would take place in June 2013 at Rotter-dam to be followed by another seminar in India later in the year.

On 13 May, Shri Kamal Nath, met Ms. Lilianne Ploumen, Minister for Foreign Trade and Development Cooperation, Ministry of Foreign Affairs. While not-ing that the bilateral trade between In-dia and Netherlands has been increasing at a brisk pace, it was agreed that there is a need to expand the trade basket to other important areas such as Urban De-velopment. Minster Ploumen is likely to visit India with a trade delegation later in the year, which would also include repre-sentatives of the urban sector.

India is one of the top tourism destina-tions in Asia, according to findings from

a CNN global travel survey released re-cently. The results also position the coun-try as the region’s fourth fastest growing tourism destination and the third most attractive business for investment oppor-tunities, right after China and Hong Kong.

One-fifth of CNN’s audience of global travelers considering a visit to Asia Pa-cific, would consider visiting India in the 12 months and experts say its celebrated culture could be a prime reason. The destination fended off competition from Japan and Thailand to rank as the no. 1 destination in the region with the second

richest culture and heritage, with only China scoring more in this category.

The study, entitled ‘CNN Consumer Connect - Travel and Tourism 2013’, looks at consumer travel trends, perceptions and behavior, and was hosted on all CNN websites worldwide. It polled more than 3,000 readers based in over 70 countries around the world and included 25 Asia Pacific destinations.

Duncan Morris, vice-president of Re-search at Turner International Asia Pa-cific, said, “These results are great news for India and the Asia Pacific region as a whole. CNN consumers are discerning, affluent global travelers and they clear-

ly indicate a desire to visit this part of the world to enjoy a particular brand of hospitality, food, culture - everything that makes a travel experience distinctive. At a time where money in the household is perceived to be tighter, spending on trav-el is still obviously a priority for many”.

A look at ‘travel perceptions and behav-ioral trends’ reveals that safety and se-curity issues are of greater concern for two-thirds of global respondents when choosing an international travel destina-tion. Asia Pacific-based travelers prior-itize price slightly more than the global average, while reputation is third in their list of considerations.

INDIA AND NeTheRLANDS SIGN MOU ON TeChNICAL COOpeRATION IN URbAN pLANNING AND MANAGeMeNTInternational

INDIA ONe OF The TOp TOURISM DeSTINATIONS IN ASIACNN Global Travel Survey


After the Indian aviation sector under-went liberalisation in late nineties, it

has seen a flurry of private service air-lines entering the industry. The aviation sector in India holds immense potential for growth; more so because it receives great impetus from the booming tourism industry driven by higher disposable in-comes and favourable demographics.

Also, the robust policy regime created by the Indian Government acts as the blood-line of this industry. While the last five years have witnessed significant in-vestments by large and small domestic companies, indigenous aerospace and defence industry has been evolving in a big way.

Recent developments and statistics per-taining to the sector are discussed here-after.

MARKeT SIZe

Total domestic passengers carried by the scheduled domestic airlines in Novem-ber 2012 were 5.02 million (465, 000 higher than those carried in October 2012). The number of passengers carried by domestic airlines was 53.4 million be-tween January-November 2012.

The market share of scheduled domes-tic airlines for the month of November 2012 was: Air India-20.7 per cent, Jet Air-ways-18.3 per cent, JetLite-6.9 per cent, IndiGo-27.3 per cent, Spice Jet- 19.5 per cent and Go Air- 7.4 per cent.

The air transport (including air freight) in India has attracted foreign direct invest-ment (FDI) worth US$ 448.40 million from April 2000 to December 2012, as per the data released by Department of Industrial Policy and Promotion (DIPP).

Key DeveLOpMeNTS AND IN-veSTMeNTS

• Jet Airways has ventured with Cen-trumDirect (one of India’s leading financial services groups), to offer Foreign Exchange Services to guests travelling abroad. The clients, or the guests, can avail this facility online by providing the stipulated details on the airline’s website www.jetairways.com. They will be then contacted by

the authorised representatives from CentrumDirect in order to com-plete transaction.

• CentrumDirect offers 30 leading world currencies, travellers’ cheques and prepaid travel cards across over 40 cities within India.

• Singapore’s Changi Airport and Switzerland’s Zurich International Airport have expressed interest to carry out the operations and main-tenance of the modernised terminal of the Netaji Subhas Chandra Bose International Airport, Kolkata. The Rs 2,300-crore (US$ 423.37 million) new integrated terminal has an an-nual capacity to handle 20 million passengers. It was jointly developed by ITD Cementation India Ltd and its parent company Italian-Thai De-velopment Public Co Ltd, Thailand (ITD).

• Hong Kong-based full service air-line Cathay Pacific has unveiled its plan to add more direct flights from Mumbai to Hong Kong starting April 2013. The airline will also launch its new product line of the premium economy cabin on this route. Ca-thay that has India route among the top 10 revenue earners, along with its sister airline Dragonair, flies 46 weekly flights from six ports in In-dia. It recently added Hyderabad in its network with four weekly flights.

• IBS Software has signed a ‘multimil-lion dollar’ deal with Turkish Airlines for providing software support to its cargo service. The 10-year con-tract will make the airline have ac-cess to IBS’ flagship product for air cargo operations named ‘iCargo’. iCargo supports requirements of airline freight business by providing Web-enabled features that optimise operations, enhance profitability and provide scalability. iCargo will empower Turkish airline’s air cargo movement worldwide and replace the legacy system.

GOveRNMeNT INITIATIveS

The Government strives to streamline various policies to promote greater in-vestment and make the Indian aviation industry an integral part of the global aerospace and defence supply chain. In-dia’s acquisition programme and its offset policy is anticipated to generate invest-ments in excess of US$ 20 billion along with creating massive employment for skilled and professional manpower.

The government is also trying to create policies that will enable creation of micro, small and medium enterprises (MSME) clusters with quality infrastructure and building capabilities. There are around 500 MSMEs across different clusters in the aerospace sector, but the clusters are fragmented and yet to evolve.

Recently, the Foreign Investment Promo-tion Board (FIPB) has cleared Malaysian low-cost carrier (LCC) AirAsia’s pro-posal to form a budget airline in a joint venture (JV) with the Tatas and Telstra Tradeplace at an initial outlay of Rs 80 crore (US$ 14.73 million). The proposal will head to the Directorate General of Civil Aviation (DGCA) for the necessary license after which the JV can commence its operations.

Once approved, AirAsia India will be the first real action after the government in 2012 allowed foreign airlines to invest in their Indian counterparts.

Meanwhile, India and the US will soon sign an information sharing agreement to strengthen aviation security in both the countries. The agreement, that is yet to be approved by the Cabinet, would cover a large spectrum of civil aviation security wherein Transportation Security Authority of the US would be sharing information in areas including individu-als, systems, technology and equipments with India.

Henry Steingass, Regional Director for South and Southeast Asia of US Trade and Development Agency (USTDA), said that the Indian aviation sector continues to hold immense potential for growth. “India is the founding member of Interna-tional Civil Aviation Organisation (ICAO) and like the US, plays a key role in imple-menting important aviation security pro-visions regionally and globally,” he said.

Industry

AvIATION INDUSTRyIndian Industry Sector Close-Up


ROAD AheAD

AK Antony, the Defence Minister, said that the Indian aviation sector is growing at the fastest pace and will evolve into a major hub for aerospace operations and outsourcing in the coming years.

Moreover, the Indian civil aviation sector has continued to witness high passenger growth (domestic traffic compounded annual growth rate [CAGR] is 17 per cent from 2009 to 2011), and if the trend sustains, it could be among the top three aviation markets in the world by 2020, according to ‘Indian Aviation: Spreading its Wings’- a report prepared by PwC with an industry body. The report further states that a strong market growth rate coupled with infrastructure expansion will boost the sector in a big way.

DeLhI AIRpORT: INDIA’S pRIDe

Delhi’s Indira Gandhi International (IGI) airport is the second best in the world in the category of airports handling 25-40 million passengers per annum (MPPA) for their service quality for the year 2012. In

the report from Airports Council Inter-

national (ACI), a global body of airports,

Delhi airport was ranked fourth in the

‘Best Airports by Region’ across all cat-

egories in the Asia Pacific region. In fact,

Delhi Airport is one of the busiest and

amongst the fastest growing airports in

the Asia Pacific region. Terminal III at the

Indira Gandhi Airport, opened in 2010, is

the eighth largest passenger terminal in

the world. Some of the other salient fea-

tures of the Delhi Airport are as follows:

• One of the largest Green Buildings

in the world. ‘LEED India’ Gold Rat-

ing from IGBC in 2011.

• Integrated Terminal T3 with 553,887

sqm area that can handle 34 mppa.

• Eight level Passenger Terminal Build-

ing (PTB) with 2 piers each 1.2 km

long either side.

• Fully operational three runways with

a peak hour handling capacity 75

ATM.

• Delhi Airports operations contrib-uted Rs 294.7 billion to the national GDP & 13.53 per cent to Delhi’s GSDP in 2009-10.

• In-line Baggage Handling System with 10,800 bags/hour handling capacity

• 12 Baggage Reclaim belt and 168 Check-in counters

Industry


Business

SALeS AND pROFeSSIONAL TAxeS by STATeBy Dezan Shira

This article was extracted from Dezan Shira & Associates’s publication entitled “India Briefing”. For further corporate assistance, consider contating Dezan Shira & Associates, a specialist in foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. For further details or to contact the firm, please email Mr. Olaf Griease under [email protected] or visit www.dezshira.com

Companies that sell a product must file annual sales tax or submit their value-

added tax returns. Companies located in

states where professional tax registration

is mandatory must file annual professional

tax returns for each of their employees for

whom they have deducted professional tax.

The tables below give some examples of sales tax and professional tax requirements for a selection of states. Companies in the service industry with more than INR1 mil-lion in service revenue need to pay service tax by the 5th of the following month (6th for online payments). Service tax returns

must be filed every six months, by October

25 and April 25. Entities with sales revenues

over INR10 million or professional fees over

INR2.5 million must undertake a tax audit

and file the resulting tax audit report before

September 30 of the following year.


Interview

Geoff Lewis is executive director, global mar-ket strategist, at JP Morgan Asset Manage-

ment, which manages assets worth $1.5 trillion worldwide. Prior to joining JP Morgan in 1999 as head of investment services, he had stints at Dresdner Kleinwort Benson as Asian regional economist and Smith New Court as head of Asian economics. According to Lewis the Indian economy will rebound in FY14, boosted by lower inflation and interest rate cuts from the Reserve Bank of India. In an exclusive interview to ET , he said that this is the right time to buy India, as markets are currently trading at a 10% discount to five-year average, and valuations are only at 2.7 times of price-to-book. Edited excerpts:

Q: Further rate cuts have been made incum-bent upon moderating inflation by RBI. Giv-en that wholesale prices rose at the slowest pace since 2009, do you think RBI will be more aggressive in cutting rates now?

A: We don’t expect a dramatic reduction in interest rates as we move forward. We have already witnessed a 75 basis point re-duction in interest rates so far this year. We think there could be one or more interest rate cut for the entire year. At this point of time one should not expect more than a 50-basis point rate cut. Some temporary factors like easing commodity prices are helping inflation to decline. We believe the rupee will strengthen over the next three to six months, as people are expecting an im-provement in the current account and trade deficits. We are long on Indian currency on a three-to-six month basis. We are not posi-tive on commodities, as we believe prices will weaken further.

Q: The Sensex currently trades at 15 times its forward earnings, limiting the room for a further rally from current levels, few fund managers believe. What’s your advise to your clients?

A: We think it would be wrong for investors to become bearish on India. We believe the Indian economy is approaching an inflection point, with GDP growth having bottomed out and corporate earnings having stabilised. The market lull, therefore, offers a good en-try point for investors who wish to increase exposure to India. We expect economic momentum and earnings to improve from current levels.

Q: What is your investment philosophy, and which are the sectors you are currently overweight and why?

A: We don’t take a macro approach to the

markets, as we believe in a bottom-up stock-picking approach. There are many attractive companies whose valuations are currently very cheap, including those in the mid-cap space. At the moment, we are slightly over-weight on private sector banks. We don’t like public sector banks, are positive on cement companies, as the demand-supply situation is favourable. We are avoiding defensives and utility companies, as they are expensive. Currently, we are underweight on technol-ogy, though we like some companies in that space. FIIs are buying into India because they think the economy can grow at 6-7% over the medium term.

Q: The 4th quarterly earnings of India Inc so far have been in line with expectations. Are you considering an earnings upgrade?

A: India was the first country in Asia to see earnings downgrades, and may also be amongst the first to witness improvement. Earnings revisions for MSCI India in recent months have been flat for 2013, and mildly positive for 2014. The forecasted growth of EPS is around 15% for both 2013 and 2014, which may be on the higher side. We believe India’s potential to grow is much higher than what it has delivered in the recent past. The cyclical problems do not undermine the long-term investment case for India. The pol-icies are improving, and, unlike China, there is a clear need for more investments. We believe the Asian equity portfolios should be overweight India position. The pace of foreign flows into India has slowed down in the past couple of months. We understand developed markets such as US and Japan are attracting larger share of flows.

Q: Do you think money flows into emerging markets, including India, may see a tempo-rary blip?

A: We don’t think it’s an India-specific prob-lem. If you look at emerging market flows, they were positive in January and February, trailed off in March, and have been negative in the last month and a half. It’s a case of global risk appetite, and not an India prob-lem. There is no money flow into emerging markets as for global investors it’s a risk-off for emerging markets, and risk-on for US S&P 500. In the global equity rally, the sec-tors which have performed well are the de-fensives, and the high dividend-paying stocks. There is lack of enthusiasm among investors for general emerging markets. However, Asia ex-Japan has done well than most of the

emerging markets. We have not seen any big fund outflows from India. Foreign institu-tional investors are It’s not hot money which is coming in, and going out of India, and this is very encouraging.

Q: Many economists believe that the Indian economy has bottomed out, when it comes to macroeconomic indicators. Do you agree that the worst of macro data is behind us?

A: We have witnessed poor macro eco-nomic data, where quarterly GDP numbers were below 5%, and consumer price index (CPI) inflation remained sticky. The combi-nation of sluggish growth and high inflation is not auspicious for equity markets. But, we believe the worst of macro woes are behind us, and most of the negative news is largely discounted. In the absence of new shocks, we believe the general direction of the mar-kets should be upwards.

Q: Have you any seen silver lining in the macroeconomic data in the recent past?

A: Supporting our optimism, the latest high frequency data has been encouraging. Indus-trial production data is improving, with gains in domestic orders and re-stocking. Even the weak GDP numbers last quarter had a silver lining, as the fall in growth was due to a de-cline in government consumption, reflecting greater efforts by the government to trim fiscal deficit. Private consumption and in-vestments are both showing some signs of improvement, investor attention is mostly focused on capital expenditure. Overall, the indicators are showing that the economy is improving.

Q: General elections are less than a year away. How do foreign investors look at In-dian politics?

A: The foreign investors take this view that BJP, when it was in power, was quite busi-nessfriendly, and very reform-oriented, and will be so again. What foreign investors don’t want to see is a hung parliament. When there is no clear ability to form a govern-ment, in which case, presumably Congress will have to take lot of regional parties on board again, in that case it tends not to be very effective government. Most foreign in-vestors don’t invest in India on expectation of what the government or politics can do. They invest because they believe in what the private sector can do. We have to get the elections out of the way, till then the econ-omy may go through a soft patch. looking at India with from a long-term view.

IT wILL be wRONG FOR INveSTORS TO beCOMe beARISh ON INDIAInterview with Geoff Lewis, Executive Director, and Global Market Strategist, at JP Morgan Asset Management


INTeReSTeD IN vISITING A TRADe ShOw IN INDIA?In case your company is interested in visiting a tradeshow/B2B event in India, be it one listed here or

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Tourism

FeSTIvALS AND FAIRSExperience India Series

The Indian calendar is a long proces-sion of festivals; if you can find your-

self in the right place at the right time, it is possible to go through your visit with a festival each day. The harvest festivals of the south, the immersion of Ganesh in Bombay, the car Festival of Puri, snake-boat races in Kerala, Republic Day in Del-hi... every region, every religion has some-thing to celebrate. Below is a selection of the major ones, but there are countless others; enquire at local Government of India Tourist Offices for details.

JANUARy / FebRUARy

Sankranti / pongal: Mainly Tamil Nadu, Andhra Pradesh and Karnataka. 3 days and colourful: Tamil harvest festival.

Republic Day: National: establishment of Republic 1950. 26th January. Grand Military Parade and Procession of danc-ers etc. Delhi.

vasant panchami: National (Mainly in the Eastern region): Hindu – dedicated to Saraswati the beautiful Goddess of Learning. Women wear yellow saris. Floating Festival: Madurai: Birthday of local 17th century ruler; elaborately illu-minated barge carrying decorated tem-ple deities at the Mariamman Teppakulam Pool amids chanting hymns.

FebRUARy / MARCh

Shivaratri: National: Solemn worship of Hindu deity, Lord Shiva. Fasting and chanting. Special celebrations at Chid-ambarum, Kalahasti, Khajuraho, Varanasi and Bombay.

holi: Mainly northern, popularly called the festival of colors. Advent of Spring. Lively and much throwing of coloured water and powders. Public Holiday.

Mardi Gras: Goa: Mainly three days dur-ing lent. Unique celebrations at this car-nival.

Ramnavami: National: Birth of Rama, incarnation of Vishnu. No processions. Plays and folk theaters.

Mahavir Jayanti: National:Jain festival; birth of Mahavira, the 24th and last Tirt-hankara.

easter: Good Friday / Easter Sunday Na-tional.

MARCh / ApRIL

Kumbh Mela: The oldest and most important of the Hindu festivals. It takes place every three years, at one of the four great holy cities; Nasik in Maharash-tra, Ujjain (MP), Prayag (Allahabad) and Hardwar (both in UP). It is attended by millions of pilgrims who take a holy dip in the sacred Ganges River.

ApRIL / MAy

baisakhi: Northern India, West Bengal and Tamil Nadu; Hindu Solar New Year. Bhangra dancing. Women wear yellow saris.

pooram:Trichur: New Moon. Spectactu-lar sight of large number of elephantscar-rying ceremonial umbrellas going round the temple; midnight fireworks display.

Id-Ul-Zuha: (bakrid): Muslim, Nation-al: The most celebrated Islamic festival in India, commemorating the sacrifice of Abraham.

Id-Ul-Fitr(Ramzan Id): Muslim, Na-tional: Celebration to mark the end of the month of Ramadan.

Meenakshi Kalyanam: Madurai. Mar-riage of Meenakshi with Lord Shiva. Col-ourful temple festival. Deities borne by colossal chariot. Ten day festival.

Urs Ajmer Sharif: Ajmer, 6 days. Reli-gious cultural and commercial extrava-ganza dedicated to the Sufi. Music; no procession.

JUNe / JULy

Rath yatra: Mainly Orissa. Greatest temple festival in honour of Lord Jagan-nath (Lord of the Universe). Three colos-sal chariots drawn from Puri temple by thousands of pilgrims. Similar festivals, on a smaller scale, take place at Ramnagar (near Varanasi), Serampore (near Calcut-ta) and Jagannathpur (near Ranchi).

JULy / AUGUST

Teej: Rajasthan- Particularly Jaipur: Pro-cession of the Goddess Parvati to wel-come monsoon; elephants, camels, dancers etc. Women wear green saris. Colourful.

Raksha bandhan: Northern and West-ern India. Legendary reenactment, girls tie rakhis or talismen to men’s wrists. Colourful build up.

Naag panchami: Mainly Jodphur, Ra-

jasthan and Maharashtra. Dedicated to the green thousand-headed mythical serpent called Sesha. The day is also ob-served in many other parts of Western and Eastern India.

Amarnath yatra: Hindu: Lidder Valley, Kashmir at full moon. Pilgrims visit the place where Lord Shiva explained the se-cret of salvation to his consort Parvati.

AUGUST / SepTeMbeR

Independence Day: (15th August). Na-tional: Independence Day. Prime Minister delivers address from Delhi’s Red Fort.

Janmashtami: National, particularly Agra, Bombay and Mathura; Lord Krishna’s birthday.

Onam: Kerala’s Harvest Festival; spec-tacular snake boat races in many parts of Kerala.

Ganesh Chaturthi: Mainly Pune, Orissa, Bombay, Madras, dedicated to elephant-headed God Ganesh. Giant models of the deity processed and immersed in water. Colourful, and a particularly worth visit-ing on the Day of immersion at Bombay.

SEPTEMBER / OCTOBER

Dussehra: National: The most popular festival in the country, celebrated in dif-ferent ways in different parts of the coun-try. In the north and particularly in Delhi (where it is known as Ram Lila), plays and music recall the life of Rama; in Kulu, the festival is also very colourful celebrated. In Bengal and many parts of Eastern In-dia it is known as Durga Puja, and in the South as Navaratri.

Gandhi Jayanti: National: Mahatma Gandhi’s birthday. No processions.

Diwali: National: One of the most lively and colourful festivals in India. In some parts, it marks the start of the Hindu New Year. In Eastern India, the goddess Kali is particularly worshipped; elsewhere, it is Lakshmi, the goddess of prosperity, who is venerated. Everywhere there are mag-nificent illuminations and fireworks.

Gurpurab: Mainly in northern India. An-niversaries of ten gurus, spiritual teachers or preceptors of Sikhism. No procession.


NOveMbeR

Muharram: Muslim. Commemoration of Imam Hussain’s martyrdom. Tiger dancers lead processions of colourful replicas of martyr’s tomb. Colourful, par-ticularly at Lucknow.

bihar: Largest cattle fair in the world; 1 month Sonepur, Patna; on banks of the Ganges.

pushkar Mela: Pushkar, near Ajmer, Ra-jasthan. Important and colourful. Camel and cattle fair, attended by Rajputs from miles around. Camel races and acrobat-ics etc.

DeCeMbeR

Christmas Day: National: Most exu-berantly celebrated in Goa, Bombay and Tamil Nadu.

Note: Besides the above festivals there are hundreds of festivals and fairs which are of regional significance, celebrated with equal pomp and colour. The most authentic of these are the following:

(1) The Temple Festival in South India, a list of which is available at India Tourist Offices,

(2) The many festivals at Ladakh in Kashmir.

(3) The many festivals in Rajasthan at a time when a festival of some kind is not either in Progress or about to take place.

Tourism

FOR MORe INFORMATION ON INDIA TOURISM:

India TourismBaseler Str. 48 60329 Frankfurt

Tel: +49 (69) 242949-0Fax: +49 (69) [email protected]


INDIAN MOvIe eveNING: LAGAAN - es war einmal in IndienFriday, June 28th, 18:00 | Indian Embassy Business Centre (1st Floor, Kärntner Ring 2, 1010 Vienna)

Genre: Drama / Adventure

Directed by: Ashutosh Gowariker

Starring: Aamir Khan, Gracy Singh, Ra-chel Shelley

Released: 2001

Duration: 224 Minutes

Language: Hindi

Subtitles: GeRMAN

Image Quality: Standard

Synopsis: This is the story about the resilience shown by the Indians when they were under the British Rule. They are already taxed to the bone by the British and their cronies, but when Jack Russell announces that he will double the Lagaan (tax) from all villagers, they decide to oppose it. Leading the villagers is a handsome young man named Bhuvan, who challenges them to a game of cricket, a game that is to be played by veteran British cricket players, versus villagers, including Bhuvan himself, who have never played this game before, and do not even know a bat from a piece of wood. As the chal-lenge is accepted, the interest grows and at-tracts Indians from all over the region, as well as the British from all over the country - as every-one gathers to see the ‘fair play’ that the British will display against their counter-parts, who are aided by none other than the sister, Elizabeth, of Captain Rusell.

Due to limited capacity, seats will be given on a first come, first served basis. Therefore, you are highly encouraged to reserve your seats online at www.indi-anembassy.at or via phone at +43 1 505 866633 (Ms. Lily John).

India in Austria

bOLLywOOD MOvIeS IN AUSTRIAAt the UCI KINOWELT Millennium City (Wehlistr. 66,1200 Vienna)

CONFeReNCe yoga in Transforma-tion: historical and Contemporary per-spectives on a Global phenomenon September 19–21, 2013 University of Vienna, Austria

Contact: Alexandra Böckle Department of South Asian, Tibetan and Buddhist Studies [email protected] OR +43-1-4277-43501

The final program and the con-ference website will be available soon.

For more information, showtimes, reservations and tickets:

www.uci-kinowelt.at/Millennium_City

CURReNTLy ShOwING111


exhIbITION: “IM bANN INDIeNS”Starting July 6th, 18:00 | Atelier Bilder, Rahmen, Spiegel (Zimmermanngasse 8, 1090 Wien)

If you are looking for astonishing Indian Art in Austria then come to the inaugural exhibition of the Austrian-Indian Society of Arts and Cultural Exchange on the 6th of July. The Society aims to promote In-dian Art, Culture and Artists in Austria and help to strengthen bonds between the Austrian public and Indian Art and Culture. India has an amazingly rich cul-tural heritage and up to this day creates fine arts based on its amazing diversity of

talents and cultural background.Recently the society has launched their first artist Sisir Datta (a well renowned and awarded Indian artist based in Delhi) and Abhishek Hajela (freelance photog-rapher who recently won Nikon World Photography Award in the Emerging Talent Category). You will see pieces of both artists at the exhibition alongside artworks of the Vienna based artist and designer Sonal Nathwani. Expect an

amazing evening with Indian culture, in-dulge in Indian cuisine delights and listen to amazing classical pieces. A sneak pre-view of some of the masterpieces can be viewed under the society website - www.jpdgallery.com.

They are also constantly looking to get in touch with promising Artists and wel-come collaborations with different Indian associations, individuals and institutions.

India in Austria


India in Austria

OTheR eveNTSMore Information below

More information under

www.schallaburg.at

Documents

India newsletter 06. 2013