India Among Top 10 FDI Recipients

India was amongst the world’s 10 largest foreign direct investment recipients in 2014, says the United Nations Conference on Trade and Development UNCTAD). Among developing and transitional economies, the country stood forth, behind China and Hong Kong, Singapore and Brazil, an UNCTAD report, released here today states. The World Investment Report 2015 tracks the global FDI flows during the previous year. According to the report, FDI inflows to South Asia rose to $41 billion in 2014, primarily owing to good performance by India. “FDI inflows to the country surged by 22 per cent to about $34 billion. FDI inflows to India are likely to maintain an upward trend in 2015 as economic recovery gains ground”, the report adds. Highlighting the “Make in India” initiative of the government, the report says that FDI inflows into the manufacturing sector is likely to gain strength. The report has picked up automotive industry in India to show how large-scale FDI inflows can reshape the trajectory of industrial progress in low-income countries. “The automotive industry is a key part of the Indian economy and has been identified as one of the key industries in which India has the potential of becoming a world leader. According to data from the Indian government, accumulated FDI inflows to the automotive industry from April 2000 to November 2014 amounted to $11.4 billion. The country accounted for the majority of greenfield investment projects announced by global automakers and first-tier parts suppliers in South Asia during 2013–2014, including 12 projects above $100 million. Inward FDI has led to the emergence of a number of industrial clusters in India, including those in the National Capital Region (Delhi-Gurgaon-Faridabad) in the north, Maharashtra State (Mumbai-NasikAurangabad) in the west, and Tamil Nadu State (Chennai-Bangalore-Hosur) in the south”, it said . Meanwhile, global FDI fell by 16 per cent to $1.23 trillion in 2014. The report says the drop can be explained by the fragility of the global economy, policy uncertainty for investors and elevated geopolitical risks. New investments were also offset by some large divestments. China was the largest recipient of FDI in 2014, followed by Hong Kong (China) and the USA. Developing economies as a group attracted $681 billion worth of FDI and remain the leading region by share of global investment inflows. Among the top 10 FDI recipients in the world, half are developing economies: Brazil, China, Hong Kong (China), India and Singapore. “This is in line with the expansion abroad by multinationals from developing economies which reached its highest level ever, at almost half a trillion dollars”, it said. Looking beyond 2014, the report says that a sustained recovery in global FDI is in sight with global FDI inflows projected to grow by 11 per cent to $1.4 trillion in 2015. The report also foresees further rises to $1.5 trillion in 2016 and to $1.7 trillion in 2017. 

Kickstart Your Dream

Failure fascinates and intrigues me” - Thus begins possibly the most compelling book on entrepreneurship to come out of India. Ronnie Screwvala, the founder of UTV, is, of course, no failure by any standard. A pioneer of several revolutions in the Indian media and entertainment industry — cable television, five-days- a-week soap operas, digital animation, gaming — he has done it all, and set the benchmark for entrepreneurs across industries.And yet, in his story — passionately retold in his autobiography Dream With Your Eyes Open — failure (often, just a setback) makes a constant appearance. The difference, as he says, is your attitude. He starts with the example of the first Bollywood movie he made — Dil Ke Jharoke Main, which nobody will even admit to having watched, he says. But he didn’t stop. Between 2006 and 2012, UTV won 25 national awards with nine films, sweeping the categories for three of those years.But that is not to say that there was no method to his madness. Before the media foray, there was Lazer Brushes, which went on to become the largest manufacturer of toothbrushes in India. Screwvala was at a toothbrush making factory in London, when he spied what appeared to be brand new machines but were actually three-year-old and being readied for sale as scrap. Then in his early 20s, without a rupee to his name and with zero knowledge about the toothbrush industry, he still figured that if he brought those machines to India, he could make them work for 10 or 20 years. Then began the scramble to raise the required funds to import them within 60 days. Armed with a Letter of Intent from a company which was hooked by the promise of advanced technology, and a bank loan, he pulled it off. That gumption plays out over and over again in each of his ventures as he details them, and quite dramatically, betraying his theatre roots, over the book.When he was first building the cable TV empire, he personally went door to door selling the idea of a cable TV connection to people. When the iconic teleserial Shanti was planned, they had to shoot one episode a day to meet the target of airing all five afternoons a week. When he marked a foray into digital animation, he had to train a team of 400 in animation. But he did it, and as we all know, lived to tell the tale. In 2013, Screwvala sold his stake in UTV to Disney for around Rs 900 crore, turning his attention towards rural India.This book talks about what it takes to succeed in a world that is not necessarily flat, and when you aren’t born with the silver spoon. Did luck play a role? He strongly advises you to downplay the idea of luck as a necessary ingredient (The first two times he planned an IPO, the markets crashed), attributing hard work and focus on goals as the real source of success. Entrepreneurs don’t worry about whether or not the world is flat, he says. They are too busy building businesses.But ‘what is most fascinating is the tiny bits of advice he gives for young entrepreneurs, and even other professionals — like not interrupting people mid-sentence, treating your employees as equals, or setting the right tone and culture at the top of the organisation. He gives a peek into the constant networking (He does his deals directly, rarely using investment bankers), talks about relying on instinct (including the times when it backfired) and about exiting businesses (“You can’t time exits”).“It’s all possible,” he says, in conclusion. “Dream your own dream... dream with your eyes open”. (This story was published in BW | Businessworld Issue Dated 13-07-2015)

Wide Angle| Tipping Trade

I never had any doubts over Commerce Minister Nirmala Sitharaman’s claims when she, in a recent interview, broadly hinted that India has already done what needs to be done to comply with WTO’s trade facilitation deal.  But I was a bit worried.  If India’s performance in terms of trade facilitation had improved so much, as a reporter who covers the trade beat, I should have known that.  And if I didn’t, it was a major miss, or negligence of duty.  A week later, I came across an otherwise mundane report of the Comptroller and Auditor General of India, and found it very interesting for the reasons stated above. It proved that the minister was mostly right, and my concerns were mostly genuine.  The CAG report, submitted to the Parliament on 5 May, 2015 had closely looked at the performance of import and export trade facilitation through customs ports during the period 2014-15. Right from the introductory remarks, the report shared my fear, as it quoted World Bank’s “Trading Across Borders” Report for 2015 to indicate that India ranks a distant 126 out of 189 countries in terms of trade facilitation. It also said that the number of documents required to import and export, the time taken and the cost to import and export in India, has more or less remained the same in the past 4 years. The Trade Facilitation Agreement (TFA) of WTO necessitates India making binding commitments on facilitating customs and other border procedures which includes among others, publication and availability of information to members, providing for an Advance ruling mechanism, an appeal and/or review mechanism, regulating the fees and charges other than duties, faster release and clearance of goods, border agency cooperation between the members, minimizing the incidence and complexity of import, export and transit formalities and to decrease and simplify document requirements.  Joe C MathewThe CAG review was meant to straighten out the short comings, as it felt that effective implementation of the TFA provisions and disciplines within an internationally agreed time frame, in spite of the IT initiatives and various facilitation measures introduced by the government, was really challenging. The audit observed that though there was a decrease in the dwell time during the period 2010-11 to 2013-14 for clearance of goods, this could be further improved by implementing the trade facilitation measures initiated by Central Board of Excise and Customs more effectively. According to the report, 70 per cent of the dwell time was attributable to filing of bill of entries and payment process in case of imports and in exports filing of the EGM (Export General Manifest, the document which has to be filed with customs department by shipping liners or air craft liners) constituted 90 per cent of the total time. “These stages caused delay which needed to be addressed to reduce the dwell time and the consequential reduction in transaction cost”, CAG recommended. The audit also found that there were delays and bottlenecks in electronic data interchange projects and revealed that their inter-connectivity is still work in progress.  Now you might want to ask, how come, then, the minister was right?  That is so because; almost every electronic data interchange projects that have been mentioned here are already operational. Further, the new foreign trade policy has simplified the rules and customs procedures to make it user friendly.  For instance, CES, the automated workflow process related to the clearance of import and export consignments that presently handles 98 per cent of India’s international trade, was launched in 1995. ICEGATE, an electronic commerce portal that offers a host of services to trade including electronic filing of the import and export documents and related electronic message between Customs and the trade was implemented in 2002. The Risk Management System (RMS) operational since 2005, provides for the clearance of low risk consignments without assessment or physical checking. Other trade facilitation measures such as SEZonline,  an integrated solution developed for the speedy processing of various transactions that SEZ developers, co-developers, units, EOUs and deemed exporter have with SEZ administration, or  DGFT (EDI) or an interface which allows trade to interact with DGFT in applying for licences, IEC code, status tracking etc are also well in place.   Port Community System (PCS) that integrates the electronic flow of trade related information and functions as the centralised hub for Indian Ports and other stakeholders, Electronic Bank Realisation Certificate (eBRC) launched by DGFT(2012) as an integrated platform for receipt and processing of bank realisation related information and GrapeNet, a web-based electronic software systems that allows shelf  to farm monitoring of quality of grapes exported to the European Union are other examples.  A closer look at the measures that are already implemented would tell us that the minister has tried her best to reduce export hurdles. Compared to that, a larger share of import hurdles remain.  While lack of export facilitation would have affected productivity, tax revenue, growth etc., poor import facilitation affects market access and domestic competition.  For a country with a perennial trade deficit, it would have been natural to discourage imports earlier, but not anymore, especially after the TFA commitments.   As CAG report points out, India is losing Rs 42,000 crore worth of trade every year due to poor facilitation. The government may be able to salvage this in future, though questions will remain on whether it will it have a positive impact on India's trade balance or not.    Meanwhile, don’t miss the commerce minister’s interview in the forthcoming issue of BW Businessworld!

The Monsoon Mania

 “Times of India call ten minutes ago. Before that Cabinet office in Delhi, PM himself wants to know, everyone is most…anxious” This is how British writer Alexander Frater quotes an Indian meteorological department official in his travelogue “Chasing the Monsoon”, as he meets him hours before the advent of monsoon rains in the late 1980s’. Twenty five years after Frater’s book got published; the frenzy and anxiety generated by a potential delay or deficient monsoon in India remains the same. If a failed monsoon could have meant riots and lost elections in the 1980s, it still means crop failures, and possible farmer suicides and electoral debacles.  Over forty per cent of the agricultural area that gets harvested continues to depend on rains, without any irrigation support. This grim fact looms large over all the technological advancements, daily analysis, warnings, contingency announcements and ministerial proclamations that have become an annual drill every May-June period. Last week, Agriculture Minister Radha Mohan Singh informed that the latest monsoon predictions by the meteorological department point to a 12 per cent deficient rainfall during this season. Even before that his ministry put in place a Crisis Management Plan (CMP) for drought 2015. All chief ministers have been asked to expedite preparation of state level ‘Management Plan on Drought’ at the state level. The monsoon situation looks similar to the last year (2014-15), when bad monsoons affected the Kharif crops. Last year’s overall production of food grains also suffered because of unseasonal rains and hailstorm that affected the Rabi crops. As per 3rd Advance Estimates for 2014-15, total food grains production in the country should be 251.12 million tonnes, lower by 13.92 million tonnes as compared to the - monsoon favoured - record food grains production of 265.04 million tonnes in 2013-14. Total production of rice is estimated at 102.54 million tonnes which is lower by 4.11 million tonnes than the last year’s record production of 106.65 million tonnes. Production of wheat estimated at 90.78 million tonnes is lower by 5.07 million tonnes than the record production of 95.85 million tonnes achieved during 2013-14.  Similarly, the total production of coarse cereals is estimated at 40.42 million tonnes, also lower by 2.87 million tonnes than the previous year. As a result of setback in kharif as well as rabi seasons, the production of most of the crops in the country declined during 2014-15, the reason why the government continues to be worried.   While the figures are proof of the genuine political and social concerns over delayed or deficient monsoons, agriculture production statistics also tells us that Indian farmers might be in the process of learning how to minimise its impact on overall agricultural output. That is because, even when compared to a year of record production, 2014-15, which was rain deficient and saw unfriendly unseasonal rain and hail storm, the decline in agricultural production was only 5.3 per cent.   The government preparations did help last year, but there was also an element of luck here. Some of the regions where there was less rain fall were well irrigated areas, thereby minimising the impact.  While there is no doubt about the need to increase the reach of irrigation, public investment in agricultural research, education, extension, soil testing, warehousing and cold-storage etc. also helps minimise adverse impacts.  Let us not forget that the latest National Sample Survey Organisation data indicates that about 59 per cent of farmers do not get much technical assistance and know-how from government-funded farm research institutes or extension services. They rely on progressive farmers, media, and private commercial agents such as dealers of farm inputs like seeds, fertilizers, and pesticides for technical information.  Effective measures to tackle adverse climatic conditions should not be a once-in-a-year exercise. It should be a continuous, round the year exercise. Will the new Kisan TV, along with mobile applications and technology tools help?

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Biocon To Market Insulin Glargine In Mexico

Mexico has approved bio-pharmaceutical major Biocon's insulin Glargine. Mexican health authority COFEPRIS,, through its partner PiSA Farmaceutica (PiSA), approved the insulin, it was announced on Friday (10 April). Mexico has been a very important market for Biocon since 2006, where it has been playing a significant role in enabling access to affordable rh-Insulin. Insulin Glargine will augment the affordable insulins therapy for diabetes management. ‘GALACTUS’ by PiSA is the first Insulin Glargine to be approved in Mexico as per the biocomparable approvals pathway defined in 2012. Biocon is as Asia’s largest insulins producer and has been committed to affordable diabetes management through rh-Insulin (Insugen ®) and Insulin Glargine (Basalog ®) in India and several emerging markets. The company currently has marketing approvals in over 60 countries for rh-Insulin and in over 20 countries for Insulin Glargine. Biocon Chairperson & Managing Director Kiran Mazumdar-Shaw said: “We are committed to make global impact with our affordable insulins therapy. Our Insulin Glargine, will now enable access to a basal insulin which will further expand the diabetes management therapy for patients in Mexico.”  Diabetes is a major health risk in Mexico, over 70 per cent of the Mexican population is overweight thus prone to developing diabetes.  With over 9 million cases of diabetes, it poses a huge disease burden for the government with per capita expenditure on diabetes being as high as $892.5.  Biocon’s presence in Mexico, over the last eight years, has expanded the insulins market substantially by initiating many more patients onto insulin therapy. The increasing affordability of Insulin Glargine will now enable Biocon and PiSA to expand this reach further. The combined market for Insulin Glargine in Mexico is estimated to be in excess of $40 million.