Major impetus to job creation and infrastructure: Radical changes in FDI policy regime; Most sectors on automatic route for FDI

Major impetus to job creation and infrastructure: Radical changes in FDI policy regime; Most sectors on automatic route for FDI

The Union Government has radically liberalized the FDI regime today, with the objective of providing major impetus to employment and job creation in India. The decision was taken at a high-level meeting chaired by Prime Minister Narendra Modi today. This is the second major reform after the last radical changes announced in November 2015.  Now most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI.

            In last two years, Government has brought major FDI policy reforms in a number of sectors viz. Defence, Construction Development, Insurance, Pension Sector, Broadcasting Sector, Tea, Coffee, Rubber, Cardamom, Palm Oil Tree and Olive Oil Tree Plantations, Single Brand Retail Trading, Manufacturing Sector, Limited Liability Partnerships, Civil Aviation, Credit Information Companies, Satellites- establishment/operation and Asset Reconstruction Companies. Measures undertaken by the Government have resulted in increased FDI inflows at US$ 55.46 billion in financial year 2015-16, as against US$ 36.04 billion during the financial year 2013-14. This is the highest ever FDI inflow for a particular financial year. However, it is felt that the country has potential to attract far more foreign investment which can be achieved by further liberalizing and simplifying the FDI regime.  India today has been rated as Number 1 FDI Investment Destination by several International Agencies.

Accordingly the Government has decided to introduce a number of amendments in the FDI Policy. Changes introduced in the policy include increase in sectoral caps, bringing more activities under automatic route and easing of conditionalities for foreign investment. These amendments seek to further simplify the regulations governing FDI in the country and make India an attractive destination for foreign investors.  Details of these changes are given in the following paragraphs:

1.         Radical Changes for promoting Food Products manufactured/produced in India

It has now been decided to permit 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India.

2.         Foreign Investment in Defence Sector up to 100%

Present FDI regime permits 49% FDI participation in the equity of a company under automatic route.  FDI above 49% is permitted through Government approval on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country. In this regard, the following changes have inter-alia been brought in the FDI policy on this sector:

i.        Foreign investment beyond 49% has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded.  The condition of access to ‘state-of-art’ technology in the country has been done away with.

ii.      FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.

3. Review of Entry Routes in Broadcasting Carriage Services

FDI policy on Broadcasting carriage services has also been amended. New sectoral caps and entry routes are as under:

Sector/Activity	New Cap and Route
5.2.7.1.1 (1)Teleports(setting up of up-linking HUBs/Teleports); (2)Direct to Home (DTH); (3)Cable Networks (Multi System operators (MSOs) operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability); (4)Mobile TV; (5)Headend-in-the Sky Broadcasting Service(HITS)	100% Automatic
5.2.7.1.2 Cable Networks (Other MSOs not undertaking upgradation of networks towards digitalization and addressability and Local Cable Operators (LCOs))
Infusion of fresh foreign investment, beyond 49% in a company not seeking license/permission from sectoral Ministry, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require FIPB approval

4.     Pharmaceutical

The extant FDI policy on pharmaceutical sector provides for 100% FDI under automatic route in greenfield pharma and FDI up to 100% under government approval in brownfield pharma. With the objective of promoting the development of this sector, it has been decided to permit up to 74% FDI under automatic route in brownfield pharmaceuticals and government approval route beyond 74% will continue.

5.     Civil Aviation Sector

(i)  The extant FDI policy on Airports permits 100% FDI under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route. FDI beyond 74% for Brownfield Projects is under government route.

(ii)   With a view to aid in modernization of the existing airports to establish a high standard and help ease the pressure on the existing airports, it has been decided to permit 100% FDI under automatic route in Brownfield Airport projects.

(iii) As per the present FDI policy, foreign investment up to 49% is allowed under automatic route in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service. It has now been decided to raise this limit to 100%, with FDI up to 49% permitted under automatic route and FDI beyond 49% through Government approval. For NRIs, 100% FDI will continue to be allowed under automatic route. However, foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and  non-scheduled air-transport services up to the limit of 49% of their paid up capital and subject to the laid down conditions in the existing policy.

6.     Private Security Agencies

The extant policy permits 49% FDI under government approval route in Private Security Agencies. FDI up to 49% is now permitted under automatic route in this sector and FDI beyond 49% and up to 74% would be permitted with government approval route.

7.     Establishment of branch office, liaison office or project office

For establishment of branch office, liaison office or project office or any other place of business in India if the principal business of the applicant is Defence, Telecom, Private Security or Information and Broadcasting, it has been decided that approval of Reserve Bank of India or separate security clearance would not be required in cases where FIPB approval or license/permission by the concerned Ministry/Regulator has already been granted. 

8.     Animal Husbandry

As per FDI Policy 2016, FDI in Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture is allowed 100% under Automatic Route under controlled conditions. It has been decided to do away with this requirement of ‘controlled conditions’ for FDI in these activities.

9. Single Brand Retail Trading

It has now been decided to relax local sourcing norms up to three years and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having ‘state-of-art’ and ‘cutting edge’ technology.

Today’s amendments to the FDI Policy are meant to liberalise and simplify the FDI policy so as to provide ease of doing business in the country leading to larger FDI inflows contributing to growth of investment, incomes and employment.

What sets India apart in global power market India is the only major country that is expected to see a significant rise in conventional capacity additions

What sets India apart in global power market

India is the only major country that is expected to see a significant rise in conventional capacity additions 

Two new reports that forecast trends on the global electricity sector expect India to stand apart on three different counts.
First is solar and wind power costs. The International Renewable Energy Agency (IRENA) forecasts that technology, competition, improvements in supply chains, economies of scale and right policies will reduce the cost of electricity from solar and wind power by at least 26% and perhaps as much as 59% between 2015 and 2025.

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But some countries are expected to see lower cost reductions. Among them is India. Cost reductions are expected to be driven by a fall in balance of system (BoS) costs (BoS involves system design, finance costs, installation, grid connection, etc). But if one looks at BoS costs of various countries, India is already in the “low cost” basket, providing limited scope for cost reductions, especially when one compares to major countries like the US, Australia and Japan.
The story is similar in the wind sector, where installed costs are already low in India, partly due to usage of relatively smaller and cheaper turbines. “The total installed cost reduction potential remains significant for many markets, although markets with very competitive cost structures, such as China and India, or restrictive policies, will experience lower than average cost reductions,” IRENA said in its report.
The second is conventional energy capacity additions. Bloomberg New Energy Finance forecasts zero-emission energy sources to make up 60% of global installed power capacity by 2040. In the process, conventional energy sources like coal and gas are expected to take a back seat. A combination of pollution regulations, carbon prices and lack of electricity demand growth are expected to lead to the closure of 286 gigawatts (GW) of coal capacity in OECD (Organisation for Economic Co-operation and Development) economies by 2040. China too is dealing with air pollution and has imposed a moratorium on new coal-fired power post 2020.
In this backdrop, India is the only major country that is expected to see a significant rise in conventional capacity additions, primarily due to steady rise in electricity demand, development of domestic mines and easy access to global coal resources. “Low coal prices also mean more new coal capacity in countries such as India. It will see 258 GW of new capacity and trebling of coal consumption by 2040,” Bloomberg New Energy Finance said in its New Energy Outlook 2016 report. And further, “India once again is the major economy to buck the trend, becoming Asia’s largest gas power market by 2040, with 79 GW of cumulative capacity,” it added.
Third, despite the massive investments in clean energy, world power sector emissions are estimated to rise by 2040, mostly due to the rise in emissions in India and South-East Asia. “Despite $9.2 trillion of new clean energy investment worldwide, equating to $370 billion per year, power sector emissions will still be 5% higher in 2040, as progress in the EU, the US and China is offset by steep emissions growth in India and SE Asia,” Bloomberg New Energy Finance said. Power sector emissions in China are likely to fall by 5% in 2015-40, while they are estimated to treble in India.
Overall, India is likely to travel on a different path in global energy trends. It would be interesting to see how industry participants align to this reality.

10 recommendations of Subramanian Committee on new education policy

Here are top 10 recommendations of the Subramanian Committee suggesting measures that the govt must take to improve the education sector that caters to over 300 million students in the country 

The T.S.R. Subramanian committee, entrusted with preparing a new education policy for India submitted the report to the government in May suggesting measures that the country must take to improve the sector that caters to over 300 million students in the country.

The report, a copy of which has been reviewed by Mint, finds glaring holes in the existing system from primary to tertiary level. Here are top 10 recommendations of the report:
1) An Indian Education Service (IES) should be established as an all India service with officers being on permanent settlement to the state governments but with the cadre controlling authority vesting with the Human Resource Development (HRD) ministry.
2) The outlay on education should be raised to at least 6% of GDP without further loss of time.
3) There should be minimum eligibility condition with 50% marks at graduate level for entry to existing B.Ed courses. Teacher Entrance Tests (TET) should be made compulsory for recruitment of all teachers. The Centre and states should jointly lay down norms and standards for TET.
4) Compulsory licensing or certification for teachers in government and private schools should be made mandatory, with provision for renewal every 10 years based on independent external testing.
5) Pre-school education for children in the age group of 4 to 5 years should be declared as a right and a programme for it implemented immediately.
6) The no detention policy must be continued for young children until completion of class V when the child will be 11 years old. At the upper primary stage, the system of detention shall be restored subject to the provision of remedial coaching and at least two extra chances being offered to prove his capability to move to a higher class
7) On-demand board exams should be introduced to offer flexibility and reduce year end stress of students and parents. A National Level Test open to every student who has completed class XII from any School Board should be designed.
8) The mid-day meal (MDM) program should now be extended to cover students of secondary schools. This is necessary as levels of malnutrition and anaemia continue to be high among adolescents.
9) UGC Act must be allowed to lapse once a separate law is created for the management of higher education. The University Grants Commission (UGC) needs to be made leaner and thinner and given the role of disbursal of scholarships and fellowships.
10) Top 200 foreign universities should be allowed to open campuses in India and give the same degree which is acceptable in the home country of the said university.

Heartfelt congratulations to ABHINAV Bhatt for qualifying Rajasthan PCS mains exam in his first attempt.

Heartfelt congratulations to ABHINAV Bhatt for qualifying Rajasthan PCS mains exam in his first attempt.
A very simple,nice and polite guy who always think about study nothing else.His hard work and in depth study has started to produce result. we wish him best of luck for interview.
‪#‎RASMAINS‬ ‪#‎RPSC‬ ‪#‎ABHINAV‬ ‪#‎PCS‬ ‪#‎UPSC‬ ‪#‎UKPSC‬

A greater focus on farmer welfare There is an emphasis on increasing farm productivity, but this might not always align with greater profitability

A greater focus on farmer welfare

There is an emphasis on increasing farm productivity, but this might not always align with greater profitability 

While inaugurating the Krishi Mela at the Indian Agricultural Research Institute in March, Prime Minister Narendra Modi appealed for a “three-pillared” approach to farming, which included crop farming, agro forestry—that is, planting timber trees along farm peripheries—and animal husbandry.
This is an important enunciation of how Indian agriculture works as an integrated system in which growing crops and rearing livestock coexist.
While over 57% of India’s population depends on agriculture for livelihood, close to 80% of India’s milk, for example, comes from such integrated, “mixed” farming systems. Most farmers in India diversify into different subsectors in an attempt to boost their incomes, and often to mitigate risk.
Indian agriculture has come a long way, with the country among the world’s top seven food exporters today. However, this positive headline obscures continuing challenges with farm productivity and incomes, particularly for small and marginal farmers. While agriculture has progressed significantly, most Indian farmers have not, a key issue being the lack of profitability in farming.
Farmers’ aim is to generate income and make profits to meet living expenses, cover social welfare needs and build assets for their families. Hence, for a farmer, what is significant is not just increased production but rather how much of the production translates into tangible profit.
Most agencies working for farmers focus on increasing farm productivity, but their efforts might not always be aligned with converting increased yield into greater profitability. This fundamental divergence in practical priorities needs to be plugged in order to bridge the gap between what research is keen to deliver and what the farmers are likely to adopt.
The recent rechristening of the ministry of agriculture as the ministry of agriculture and farmers welfare can be realized when there is greater rigour and focus on farmer welfare by optimizing and helping farmers realize the true value of what they produce. The three-pillars message needs better adoption by public sector research, extension and development agencies—which often work in mutually exclusive silos of crops and livestock and typically reach out to farmers through independent, often uncoordinated channels.
This type of compartmentalization can probably end if agricultural universities also adopt a “farming systems” lens that is more aligned with the reality of farming households. The collective impact of India’s large-scale public sector infrastructure in agriculture is reflected in significant improvements in crop and livestock productivity, which is necessary but not sufficient to address the challenges faced by smallholder farmers. What is further required of such platforms and missions is a greater emphasis on an integrated approach and a sustained focus on market development.
The elements that can significantly enable agricultural development are technologies (including appropriate innovations in market systems); extension and dissemination of technologies to farmers; and access to financial services such as loans, savings, remittance and insurance—for achieving higher agricultural productivity, livelihood diversification and improved food security.
Successful implementation of the three-pillared approach will require integration at all levels. We need to balance the existing farming portfolio by increasing emphasis on priority commodities such as livestock and locally relevant legumes and vegetables, while simultaneously exploring the impact potential of new commodities like potatoes. Goods and services reach farmers through both public and private channels. We should leverage the strengths of both sectors—involving the existing community, government and for-profit companies—and streamline the delivery process.
From a financing systems perspective, the newly licensed payments banks can be used to test various digital services such as insurance, direct benefit transfer and savings for smallholders. Measures can include providing funding for proof-of-concept, for-profit goods and services and supporting digitization of financial transactions for key institutions to reduce transaction costs and systems’ leakage.
Providing this initiative with the needed visibility will require a coalition of champions to voice key issues. This can be done by convening a policy advisory group and by partnering with domestic institutions to study the impact of poor land titling and tenancy laws and its impact on smallholders and landless farmers, particularly women.
Our approach must take into account the importance of policy in driving change. For effective policy, we must gather data and analyse evidence on the impact of existing policies, and accordingly modify or revise policies to address constraints.
The latest Union budget offers hope for all three pillars referenced by the prime minister—the total outlay of Rs.35,958 crore is being distributed across important parameters including irrigation, seeds, crop production and livestock. Combined with robust reforms in market development, this could very well transform the lot of Indian farmers by making farming a viable source of livelihood. The ambitious plan of doubling farmers’ incomes in the next five years is not impossible, but will become a reality only when a thrust to markets and farmer incomes will be added to the focus on production. A key task will be to have public sector institutions deliver a “package” of services to farmers, not just for better agricultural output, but for the overall economic well-being of the farming community.

How Indian universities perform compared with Asian peers

Here are six charts to understand the QS Asian University Rankings and how Indian institutions have performed on different parameters 

India has 17 institutions among the top 200 universities in Asia, led by the Indian Institute of Science or IISc in Bangalore (33rd rank), followed by IIT Bombay (35), IIT Delhi (36), IIT Madras (43), IIT Kanpur (48) and IIT Kharagpur (51), according to the QS Asian University Rankings. The rankings are limited in their impact and cannot be compared with the world university rankings, but they do give an indication of the competitiveness of these institutions in the region. Though IISc and IITs lead the pack of India in the Asian rankings published earlier this week by British ranking agency QS, they still lag behind their Singapore and Chinese counterparts.

However, there are several parameters within the rankings on which the Indian institutions have done exceedingly well, better than several top institutions in Asia. These parameters include the qualification of teachers and papers published per teacher. There are also parameters where the top performers of India like the IITs have fallen short not just before their Asian peers but also in front of less reputed private universities in India.
Here are six charts that go beyond the overall ranking to understand the QS Asian University Rankings and how Indian institutions have performed on different parameters.
1) Academic reputation
Though IISc is the best Indian institution as per the Asia rankings by QS, when it comes to academic reputation, IIT Bombay and IIT Delhi have done better than IISc. Jawaharlal Nehru University in Delhi otherwise placed much lower in the overall rankings has done better than many, including the IITs.

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2) Employer reputation
IISc Bangalore may be the table-topper in India in overall rankings, but there are several others, including the less reputed Mumbai University or even less talked about Anna University in Tamil Nadu, which have done much better. Employer reputation findings of the QS Asian Rankings, in a way, point to the poor industry collaborations and placement of their graduates.

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3) Faculty-student ratio
The faculty-student ratio in Indian universities is often less talked about, but it forms a key parameter for international rankings. While the teaching community talks about the work load, the ratio at times is neglected. This segment of the rankings points to the huge shortage of faculty and vacant posts in Indian institutions in the range of 15-40%. In the faculty-student rankings, three out of the top five institutions are privately-run, pointing to the problem in our top government institutions.

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4) Faculty staff with PhDs
This is the sweet spot for Indian universities. Indian professors are considered well-educated and reputed world over, and it reflects in the qualification of the teaching staff parameter considered for preparing the overall rankings. In the top 10 Asian universities in the ‘Faculty staff with PhDs’ parameter, seven are Indian institutions, of which five are jointly in the third position. In the top 30, there are 12 Indian institutions.

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5) Citation per faculty
Research quality of an institution and its faculty is established on the basis of the citations or the number of times others refer to it. This reinforces the importance and quality of research and its relevance in the global marketplace. Citation is one area that Indian teachers need to look at and it depends on the kind of journal a paper is being published in, quality of work, word of mouth publicity and the network of a professor or researcher.

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6) In-bound exchange
Indian universities traditionally lag behind on internationalization parameters. International faculty, international students and exchange programmes have been poor. While traditional government institutions are yet to better the situation despite a clear demand from experts and industries, some of the private universities have started doing it. For example, Amrita University in Kerala promoted by spiritual guru Mata Amritanandamayi has done exceedingly well in all aspects of internationalization, much better than the elite IITs. Inbound exchange is the flow of foreign students to an institution for short durations of study, research or related academic activities.

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On the highway to a better trade regime

Along with GST, India needs infrastructure for easy movement of goods 

The opening of the Suez Canal in 1869 helped India participate in an expanding world economy. An industrial boom followed, albeit under conditions of unequal colonial trade. The broader lesson is clear. Interlinked trade routes—be it the Suez Canal or the Silk Route—have always been essential to the spread of economic prosperity.

The creation of a seamless internal market that promotes economic growth is an unfinished job in India. One part of the task is removing barriers to interstate trade through the goods and services tax (GST). The other task is to provide physical infrastructure that will allow goods to move across the country comfortably.

The Indian government plans to build a network of 27 road corridors that will bring various parts of the country together. The blueprint for the grid is reportedly ready. Such a proposal needs to be welcomed. It may seem ambitious to some, but it is useful to remember that the Golden Quadrilateral and the North-South corridor projects were met with a lot of scepticism when they were first announced by then prime minister Atal Bihari Vajpayee at the turn of the century.

The proposed national highway grid will connect 12 major ports and cities with populations of more than 45 million and 26 state capitals, and ensure that highways are linked every 250km, conforming to the ambitions of Bharatmala—the government’s flagship project to “connect India like never before”.

Roads form vital links between markets that are not connected. They link producers to distant markets, promote economic specialization, provide linkages to other parts of the economy and generate positive externalities. But the greatest benefit of the proposed national highway grid would be for interstate trade. Interstate trade for India is less than 15% of gross domestic product, whereas the corresponding figures for the US and China are 40% and 35%, respectively. High transaction costs, which include physical and legal infrastructure problems, are among the primary reasons for the low level of such trade in the country.

In India and elsewhere, travel—both passenger and freight—involves costs in terms of money and time. The reduction of these costs requires the expansion of roadways as well as the simultaneous deployment of resources on alternative means of transport such as rails, inland waterways and air.

Though India has the second largest road transport network in the world, the growth rate of road development is slow compared to the growth of road freight and vehicle volume. The disproportionate burden of freight on roads does not help either. The current road to rail ratio of 70:30 is inadequate and inefficient for economic as well as environmental reasons.

If roadways form the physical foundation for uniting India’s markets into an integrated whole, reducing transaction costs and facilitating interstate trade, GST—now with the backing of most states—will form the legal and fiscal foundation. It will address the cascading effect of the present tax regime, broaden the tax base, increase compliance and reduce inter-state variations in taxes. The current tax regime also imposes significant time costs on interstate road freight via interstate checkpoints, and that translates to lower freight volumes moved.

India has one of the lowest average speeds for trucks and about 60% of their time is taken up at these checkpoints and tollgates. A joint study report by Transport Corporation of India and Indian Institute of Management Calcutta released last week estimates that India incurs costs of $14.7 billion and $6.6 billion annually due to additional fuel consumption costs and transportation delays, respectively. This makes producers less competitive despite having competitive input prices. According to a McKinsey estimate, around 13% of GDP is compromised by these logistical lacunae in India compared to 7-8% in developed economies.

Freight transport depends on the volume of goods produced, location of suppliers and consumers and efficient use of resources. But in India, infrastructure problems and red tape have compromised the manner in which these factors are balanced—and consequently, the demand-supply equation. The highway grid will not set it right by itself. But it could be a good start.

In what other ways can India resolve its logistics issues?