Foreign direct investment (FDI) in the country increased by 29% for the 15-month period—ended December last year—after the launch of the Make in India initiative, Parliament was informed on Wednesday.
Launched on 25 September 2014, the initiative aims at promoting India as an important investment destination and a global hub for manufacturing, design and innovation.
“FDI inflow has increased 29% during October 2014 to December 2015 (15 months after Make in India was launched) compared to the 15-month period prior to the launch of this initiative,” commerce and industry minister Nirmala Sitharaman said in a written reply to the Rajya Sabha.
In a separate reply, she said during April-January 2016, the government received 424 FDI proposals. Out these, 285 proposals have been disposed of.
In a separate reply about FDI in e-commerce, the minister said foreign investment in business to customer e-commerce activities has been “opened in a calibrated manner” and an entity is permitted to undertake retail trading through e-commerce under certain circumstances.
She said that a manufacturer is permitted to sell its products manufactured in India through e-commerce retail and a single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce.
An Indian manufacturer is also allowed to sell its own single brand products through e-commerce retail. In a separate reply, she said the department of industrial policy and promotion is implementing the eBiz project which is envisaged to work as a single portal for providing all central and state services.
“Twenty central and 30 state government services have already been integrated on the portal,” she said.
Aiming at a massive investment of more than Rs 8 lakh crore over the next five years, Railways has firmed up various models to attract private participation for capacity augmentation of the state-run transporter.
According to Railways estimate, an investment of Rs 8,56,020 crore (approximately $135 billion) over five years will augment infrastructure capacity and modernisation. A participative policy for rail connectivity and capacity augmentation has been in place with five models for building rail connectivity, a senior Railway Ministry official said.
He said Non-Government Railway (NGR), Joint Venture (JV), Build Operate and Transfer (BOT), capacity augmentation with funding provided by customers and capacity augmentation through annuity are five models to attract private investment.
The private companies which have been permitted to build rail connectivity under the participative policy are JSW Jaigarh Port Limited for Jaigarh port rail connectivity, Rewas Port Limited for Rewas port rail connectivity, Balaji Infra Development Private Limited for Lalitpur-Udaipura (electrification) and Dhamra Port Limited for Dhamra port rail connectivity.
Navayuga Engineering Company Limited for Astrangra port rail connectivity, Nargol Rail Link Limited for Nargol port rail connectivity, Simar Port Limited for Chhara port rail connectivity, Hazira Port Infra Limited for Hazira port rail connectivity and Dighi Port Limited for Dighi port rail connectivity are other firms working under Railways' participative policy.
Government has also permitted 100% Foreign Direct Investment (FDI) in construction, operation and maintenance of suburban corridors through public private partnership (PPP) for high speed train projects and dedicated freight lines.
FDI is also allowed in rolling stock including train sets and locomotive/coaches manufacturing and maintenance facilities, railway electrification, signalling system, freight terminal, passenger terminal, infrastructure in industrial park pertaining to Railway line/siding and Mass Rapid Transport System.
Railways have issued sectoral guidelines for Domestic/ Foreign Direct Investment (FDI) in the sector. Besides, public sector undertakings of the Railways and the government have also been permitted to take up rail connectivity projects. Electric and Diesel Locomotive factories at Madhepura and Marhowra entailing FDI have been awarded to Alstom and GE respectively.
Source: DNA India
Dubai-based port operating firm DP World Ltd plans to sell shares through an initial public offering (IPO) and list its new Indian holding company, Hindustan Ports Pvt. Ltd (HPPL).
The development comes after the Union cabinet said it had “no objection” to the proposed change in shareholding in the container terminals run by the Dubai government-owned company in India.
DP World has invested about $1.2 billion and is currently the biggest foreign port operator in India—running six port terminals spread across Mundra, Jawaharlal Nehru Port (two facilities), Cochin, Chennai and Visakhapatnam.
These six terminals have a combined market share of about 30% of the 10.7 million twenty foot equivalent units (TEUs) handled by Indian ports during 2014-15. A TEU is the standard size of a container and a common measure of capacity in the container business.
“When all the six entities, which are currently run by separate special purpose vehicles come under HPPL, it will go for an IPO,” said a Mumbai-based banker briefed on the development. “That’s the plan,” the banker said, without giving a time frame or details of the share sale. The banker also requested anonymity as he is not authorised to speak with the media.
If that happens, DP World would become only the second global port operator to be listed in India, after Gujarat Pipavav Port Ltd (GPPL), the entity that runs the Pipavav port in Gujarat.
GPPL is majority-owned by APM Terminals Management BV—the port operating unit of Danish shipping and oil conglomerate AP Moller-Maersk Group AS.
DP World said it had no comment to offer on the cabinet decision, on the planned restructuring of its Indian assets, or on the share sale.
Through Hindustan Ports, DP World is seeking to restructure its assets in India with the objective of consolidating the ownership of its port infrastructure into a single holding company. The new holding company will take over all liabilities of the existing subsidiaries of DP World in relation to the concession agreements it signed with port authorities for these six terminals.
A concession agreement sets out the terms and conditions of a port contract.
The proposal of DP World, cleared by the Foreign Investment Promotion Board (FIPB) in 2012, is intended to help expand the capital base and enable fresh investments in ports and logistics infrastructure in India.
This will enable efficient access of finance and introduce latest technology in port operations, the government said in a statement after the cabinet meeting. “The government has agreed to the proposal for restructuring by DP World, subject to the condition that the net worth of the holding company HPPL after acquisition of the shares of the project SPVs shall be higher than US $80 million,” it said. “The restructuring of the assets of DP World in India will help in better coordination and control as the port authorities have to deal with a single company registered in India. The approval of the consolidation proposal of DP World will also facilitate promoting foreign direct investment in the country and signal the investor-friendly ambience in the port sector. This may also lead to greater transparency and better compliance to Indian laws and regulations.”
“By setting up a new holding company, DP World is ‘Indianising’ its investments into terminal assets in India that were earlier routed through the tax haven of Mauritius,” said a port industry executive, who too did not want to be named. “In those days, routing investments through Mauritius was fashionable. It is no longer so. Moreover, the strategy adopted by several global firms of routing investments into India through Mauritius has attracted criticism recently.”
DP World will directly route the investments already made into India, rather than through Mauritius, the banker mentioned earlier said, as the Indian government authorities closely monitor routing of foreign direct investment from tax favourable jurisdictions, such as Mauritius.
“All the recent initiatives taken by the Indian government have certainly made the structuring of transactions from tax-favourable jurisdictions more difficult. The investments made through said jurisdiction are facing increasing scrutiny from the exchequer,” said a Mumbai-based executive at one of India’s top law firms, asking not to be named.
Source: Live Mint
India must explore new means of resource mobilization to rev up its public investment in areas such as infrastructure, education and health to sustain its growth momentum, said Asian Development Bank president Takehiko Nakao. Nakao, who was in India to attend the Advancing Asia conference jointly organized by the International Monetary Fund and the finance ministry, said India must make efforts to integrate to the regional value chains in the East Asian economies. Edited excerpts:
How do you think the increasing uncertainty in the global economy will impact India’s growth?
Of course, overall the world economy is slowing down. There is a lot of discussion regarding China slowing down. But it reflects more structural issues like low labour force increase and higher wages. Migration from the rural area to the urban area is now coming to an end. The government is also targeting a new normal, which pays as much attention to environmental and social issues as to growth. It also reflects overcapacity in some areas. China also has room to grow further by focusing more on consumption than investment and on services sector rather than on manufacturing. We are expecting China would not hard land. Commodity exporting countries to China may face some slowdown. But at the same time, because of higher wages in China, some countries like Myanmar, Cambodia, Vietnam, Bangladesh can even take some advantage. Those countries are growing very steadily at 6-7%. India’s economy is not so tightly connected to China. Of course, there is an influence. Indian economy is growing very steadily and we expect more than 7% growth in coming fiscal year. We hope India’s growth will support regional economy and global growth.
So, you expect India’s economic growth to remain robust in the coming years as well?
I really hope so because it is supported by policies. Macro-economic situation has been very stable. There was concern about current account deficit, fiscal deficit and exchange rate depreciation in Indian and other emerging economies after US Fed chairman Ben Bernanke announced tapering of quantitative easing in 2013. But Indian economy has been very stable even after the Fed started increasing interest rates. Growth has been stable, inflation has been managed, foreign exchange reserve is increasing, current account deficit is minimal and fiscal deficit is declining. So, Indian economy is stable. And I think, based on the reform efforts like inviting more foreign direct investment, deregulation and budget proposal for investments in rural and in infrastructure sectors will boost growth.
Do you think India is benefiting because of its rather slow liberalization process of financial and external sectors reforms?
It is better for India to be more open and integrated to the value chains and production networks of the world, especially in East Asia. But it may be true that it (lesser integration of Indian economy with rest of the world) gives India some buffer to global volatility.
What are your views on the new budget presented by finance minister Arun Jaitley?
It is very ambitious and there are very important elements like investments in rural agriculture areas such as irrigation, more investment in infrastructure, more expenditure in health and education and also dispute resolution mechanism for public-private partnerships. Government is also trying to pass the GST (goods and services tax) reform. One thing the Indian government must continue to address in coming years is how to increase capital expenditure from the government. Today, it is 1.6% of GDP and it is very low. Including investments by states and state-owned enterprises, public investment is 5% of GDP. To achieve growth of 8-9% and also to increase expenditure in health and education, which are so important, government must think of how to mobilize more resources. For China, it is more than 10% of GDP. While China may be an exception, public investment at present in India is very small against what it should be.
How do you see Prime Minister Narendra Modi government’s performance after almost two years in office?
Some people say reforms are not implemented as much as expected, but if we look at the track record of the government, macroeconomic stability has been achieved; also there are many reforms, including raising the threshold for foreign direct investment in some areas. Also, there is effort in deregulation of procedure in some areas, doing business index has improved, foreign direct investment is now increasing. So, there are many achievements. Perception about India is now changing. Of course, economic reforms started in the 1990s. So, it’s not only Prime Minister Modi’s achievement. But Prime Minister Modi has provided another impetus to reforms and competitiveness and many other initiatives which we are supporting like Make In India, Clean India, smart cities, solar initiatives. The prime minister has changed the perception of foreign investors and global community about India.
When you visited India in August 2014, Prime Minister Modi told you that ease of doing business would have improved significantly when you visit again within a year’s time. Do you see any perceptible change?
There are things that they can do more, but yes he said that and I came back in February, June last year and now. States can compete to make their investment climate better and if GST can be passed, then it is good to make Indian economy integrated.
In the past, you have said that development finance is a complex business. Do you think the New Development Bank (NDB) and the Asian Infrastructure and Investment Bank (AIIB) have robust mechanisms for this? Has the ADB started coordinating with these institutions?
First of all, I would like to cooperate with these two new multilateral banks. I had good discussion with AIIB’s president Jin Liqun. We have agreed that there are huge needs of financing in Asia and we can cooperate, including through co-financing and also paying attention to international standards for procurement, environmental protection and social impact. India has a strong safeguard process for environmental protection and resettlement. But as far as AIIB is concerned, their idea is to make systems as lean as possible. So, they are not considering having regional missions or local offices. We have around 80 people in our local office in India. I think resident missions are so important to communicate with authorities, finding and implementing projects, including procurement. But because there is a difference of view, I think AIIB and ADB can complement more. We can share the knowledge obtained through our resident missions. We have already started discussion of what project in what country is possible for co-financing projects. Several projects that we have discussed will be in the South Asian countries.
I don’t want to say this because it is not decided, but there can be a possibility.
How effective could the Regional Comprehensive Economic Partnership (RCEP) agreement be towards Asian integration? Do you think it can emerge as an effective counter-balance to the Trans-Pacific Partnership (TPP)?
It doesn’t need to be a counter-balance. We need trade agreements which are effective. TPP and RCEP can both be very effective tools to integrate economies. RCEP is Asean (Association of Southeast Asian Nations) plus six countries, including India. It involves so many important economies in Asia and it is more flexible than TPP in terms of adapting to country’s economic situation. So, we can do TPP and RCEP as well. If both agreements are signed, there are more opening up of sectors, then these two arrangements can merge. But first, they must finalize these discussions and they should be ratified, including by the US Congress.
Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) on Wednesday said it has pledged an investment of US $150 million in the renewable energy sector in India, becoming the latest foreign investor to tap the growing Indian clean energy market.
CDPQ is Canada’s second largest pension fund manager with C$248 billion in net assets and invests globally in major financial markets, private equity, infrastructure and real estate. The fund opened its first office in the country in New Delhi on Wednesday.
The fund said it plans to invest the amount over the next three to four years, targeting hydro, solar, wind and geothermal power assets. It also intends to partner with selective Indian renewable energy companies, CDPQ said in a statement.
Two of Canada’s largest pension funds—CDPQ and the Public Sector Pension Investment Board (PSP Investments)—are looking to invest in the Indian infrastructure sector and have started scouting for assets, Mint reported in October citing people familiar with the discussions.
CPDQ’s entry into India follows that of its larger peer Canada Pension Plan Investment Board (CPPIB), which has already committed substantial funds to the Indian infrastructure sector through an investment of Rs.2,000 crore in Larsen and Toubro Ltd subsidiary L&T IDPL. CPPIB opened its investment office in India in October.
PSP Investments had in November said it would buy a 49% stake in Anil Ambani-led Reliance Infrastructure Ltd’s electricity generation, transmission and distribution business in Mumbai and adjoining areas.
Large global investors, including pension funds, have a large pool of capital and typically look at 14-15% yield opportunity in India. As Indian infrastructure assets start to mature and companies look to divest cash-generating assets, these funds are starting to evaluate possible investments. IDFC Alternatives and I Squared Capital are among the largest investors in renewable energy sector in the country.
Renewable energy in India now has a large enough portfolio of operating assets, which would attract foreign investments, said Manish Agarwal, partner and leader–infrastructure at PwC India. Availability of assets with steady cash flows is now becoming aligned with the return expectations of the investors such as the Canadian pension funds, he said.
India has a target of installing 100 gigawatt (GW) of solar power capacity and 60 GW of wind power capacity by 2022. Welspun Renewables Ltd, SunEdision Inc, NuPower Renewables Pvt. Ltd, Goldman Sachs-backed ReNew Power Ventures Pvt. Ltd, Hero Future Energies, Hindustan Powerprojects Ltd, Morgan Stanley-owned Continuum Wind Energy Ltd, and JP Morgan-backed Leap Green Energy Pvt. Ltd are some of the prominent renewable energy firms in India.
CDPQ said the $150 million investment in renewable energy was a first for the fund in growth markets. “We believe India stands out as an exceptional country to invest in, given the scope and quality of investments opportunities, the potential for strategic partnerships with leading Indian entrepreneurs, and the current government’s intention to pursue essential economic reforms,” said CDPQ chief executive Michael Sabia.
CDPQ on also announced the appointment of Anita Marangoly George as managing director, South Asia effective 1 April. Based in Delhi, George will head CDPQ India, and look for investment opportunities across all asset classes in South Asian markets, the pension fund said in a statement.
Source: Live Mint