Engineering exports set to cross $70 b this fiscal

New Delhi: Engineering exports are set to cross $70 billion in the current fiscal, growing by 15 per cent over the previous year, as demand in key markets such as the US and the UAE is on a rise.
“The flow of orders from the US and the UAE has increased substantially in the recent months. We are hopeful that this would continue the rest of the year,” Engineering Export Promotion Council (EEPC) Chairman Anupam Shah told Business Line.
Engineering exports, which account for a fifth of the country’s total exports, had taken a big hit in 2012-13 with shipments dropping 3 per cent to $57 billion as demand in the recession-hit Western countries dried up.
With the global situation improving, exports picked up in 2013-14 and increased 9 per cent to $62 billion.
Apart from traditional markets in the US and the EU, markets in Eastern and Central European countries such as Poland also hold huge promise.
“The non-EU countries in Europe are virgin markets that we have successfully started tapping,” Shah said.
On the prospects for the on-going fiscal, Shah said that things looked bright if the export growth of 24 per cent in the April-May 2014 period was anything to go by. “We will go by a conservative growth target of 15 per cent, while we certainly hope we will have higher growth,” he said.
While export sops given by the Government helps exporters to stay competitive in the foreign market, what is also required is more clarity in existing policy so that exporters spend less time in handling litigation.
“For instance, while we have been told that there is no need to pay TDS (tax deducted at source) on foreign commission, there is no formal notification which leads to trouble,” Shah pointed out.
Engineering exporters also want States to speed up VAT refunds as payments are pending in some cases for as long as three-four years.

India proposes to set up pharma, info-tech industrial parks in China

Gandhinagar: India has proposed to set up industrial parks in China, mainly in pharmaceutical and information technology (IT) sectors.
The Union Government, which gave an in-principle approval to the signing of an MoU at its meeting in New Delhi on Wednesday, with regard to the setting up of Chinese industrial parks in India, has made this proposal to Beijing, Jagat Shah, Interim Secretary-General, China India Trade and Investment Centre (CITIC), told BusinessLine here on Thursday.
Earlier, the two sides had identified five States where Chinese industrial parks would be set up in India: Uttar Pradesh, Andhra Pradesh, Gujarat, Maharashtra and Karnataka.
Earlier this month, a 20-member Chinese business-cum-investor delegation had shortlisted three locations near Sanand in Ahmedabad district to set up their units in an industrial park with an initial investment of $1 billion. Shah said Wei Wei, China’s Ambassador to India, who arrived here on Thursday, is set to meet Gujarat Chief Minister Anandiben Patel later in the day.
China is interested in investing in India especially in automotive, electronics, agro-processing, tourism and manufacturing and will participate in the setting up of the industrial parks in the country. It has emerged as India’s biggest trading partner in the current fiscal, replacing the UAE. Sino India trade has touched $49.5 billion with 8.7 per cent share in India’s total trade between September 2013 and May 2014.
The NDA Government believes the move will help address India’s widening trade deficit with China, which has led to the government pushing China to source more products from here, Shah said.
“This was a long pending demand to strengthen India-China trade and investment ties which has now been fulfilled by the new government. In return, the Chinese Government may agree to allow India to set up industrial parks there in China.”

Crompton Greaves combo bags Netherlands wind project

Mumbai: Avantha Group Company CG (Crompton Greaves), along with the other consortium partners Fabricom and Iemants, has been selected by Van Oord, for the offshore wind project `Gemini' in the Netherlands.
As part of the scope, CG would design, deliver and install two high voltage (HV) offshore substations and 1 HV onshore substation. The volume of the order for the consortium is in excess of €150 million. CG’s scope covers around 30 per cent of the overall contract. The project is expected to start in the second quarter of 2014, and to be completed in 2016.
The Gemini project consists of two offshore wind farms i.e. Buitengaats (300 MW) and Zee Energie (300 MW) and is located 85 kms north of the island of Schiermonnikoog in the Dutch North Sea. The total 600 MW of installed capacity would produce electricity for over 785,000 households which equal a reduction in emissions of 1,250,000 tonnes of carbon dioxide.
CG would design and engineer the overall electrical HV system, manufacture and supply all key equipment and connect the onshore substation to the 400 kv tennet high voltage grid.

Telenor selects TCS for fixed-line upgrade in Norway

New Delhi: Norwegian telecom giant Telenor has selected Tata Consultancy Services Ltd to modernise its fixed-line network operations. The infrastructure services contract, which was signed on 24 June, is for four years.
"This is one of the largest change programmes in recent history for Telenor Norway. Our aim is to provide customers with better experiences, with improved quality and faster deliveries, while reducing costs," Berit Svendsen, chief executive of Telenor Norway said.
Telenor invests more than 4 billion Norwegian krones in infrastructure and services in Norway.
"As much as India emerges as a promising mass market opportunity for the Telenor Group, it is our endeavour to ensure that our international markets also open up for our Indian business partners. Our partnership with India should bring affordable services to subscribers in the country, global opportunities with us to Indian businesses and the benefits of the top-class competence and capabilities of these partners to the Telenor Group," said Sigve Brekke, Head of Telenor Asia operations.

NFSM General Council approves Rs 2,100 crore for the scheme in 2014-15

New Delhi: The General Council of the National Food Security Mission (NFSM), which met here today under the Chairmanship of Agriculture Minister, Shri Radha Mohan Singh, approved action plans of different States for Rs. 2100 crore for 2014-15.
The Council also approved taking up pulses under NFSM programme in Himachal Pradesh, Jammu & Kashmir and Uttarakhand. The Council also approved taking up demonstrations of inter-cropping of food grains with oilseeds which was not part of the Mission activities till now. This has been done to put focus on increasing production of oilseeds.
The General Council reviewed the performance of NFSM in 2013-14. Four States i.e. Maharashtra, UP, Bihar and Tamil Nadu made presentation on their performance in NFSM.
Director CRRI made a presentation on the prospects of cultivation of hybrid rice in India and its role in increasing rice production. The Agriculture Minister directed that the feasibility of taking up production of seeds of hybrid varieties in different rice growing States may be explored. The Minister also emphasized upon taking up more demonstrations of improved technologies in pulses production in rainfed areas in different parts of the country.
The Minister stressed upon the need to take up soil testing and providing soil health cards to individual farmers, especially small and marginal farmers. This will help farmers in making informed decisions on inputs to be applied, resulting in better productivity and cost effectiveness.

India is 15th in world in premium volume

Mumbai: Global re-insurer Swiss Re’s sigma study on world insurance in 2013 said India stood at 15th position in the world in terms of premium volume. In 2012, it was at 14th position. The study showed insurance penetration in India fell to 3.9 per cent in 2013 compared to four per cent in 2012.
India’s life insurance penetration was 3.1 per cent, while in non-life insurance it was 0.8 per cent. Insurance density stood at $52 (about Rs 3,120) compared to $53 (about Rs 3,180) in 2012. In the world average too, both insurance penetration and density saw a fall.
Globally, premiums written in the global insurance industry grew by 1.4 per cent in real terms to $4,641 billion in 2013 after a 2.5 per cent increase in 2012, said its latest sigma study.
Insurance penetration refers to premiums as a percentage of GDP, whereas insurance density (measured in $) refers to per capita premium or premium per person.
The slowdown was primarily due to weakness in the life sector in advanced markets. Global life premiums were up only 0.7 per cent in 2013, with weak sales in North America and the advanced Asian markets offsetting a strong performance in Western Europe, Oceania and most emerging markets. Non-life premiums grew by 2.3 per cent, also less than the previous year, as growth slowed in the advanced and emerging markets.
Overall profitability in the life and non-life sectors improved, despite the impact of still low interest rates on investment returns.
India saw a 0.5 per cent growth in life premiums for the period, whereas non-life premiums saw a 4.1 per cent growth. Total premiums for India stood at $66 billion (Rs 3.9 lakh crore approximately), up by 1.2 per cent. World premiums were up by 1.4 per cent at $4641 billion (Rs 278.46 trillion approximately).
Premium growth in the advanced Asian markets was flat relative to the previous year, further offsetting the sector's strong performance in other regions.
At global level, life premiums grew by just 0.7 per cent in 2013 to $2,608 billion -- down from 2.3 per cent growth in 2012. Premiums in the US contracted sharply by 7.7 per cent due to the non-recurrence of large corporate deals which had boosted group annuity business in 2012.
The study said life premium growth was expected to resume in the advanced and improve in the emerging markets. The firming economy and labour markets in the advanced markets will support the life and non-life sector, and growth in the emerging markets should hold up also. “In the life sector, China and India in particular should see a return to higher growth rates,” said the Swiss re sigma study.
Overall profitability has improved in the life and non-life sectors. However, the study said investment returns, an important component of insurers' earnings, remain low given the very low level of interest rates since the 2008 financial crisis.

IT hardware market will touch $17-b mark this fiscal: MAIT

New Delhi: The growth in information technology hardware market is expected to dip this year owing to flat PC sales. The growth is expected to be around 30 per cent this fiscal year compared with 37 per cent last year.
Overall sales are projected to touch $17 billion against $12.43 billion, the Manufacturers’ Association of Information Technology (MAIT) said on Wednesday.
Desktop & laptop
In the desktop PC and laptop segment, MAIT expects a flattish growth of around 3 per cent. It expects the PC market to sell around 12.21 million units in 2014-15 compared with 11.85 million units last year. “Last year was not great for the market because of lot of challenges such as foreign exchange fluctuations. A quick change in exchange rates matters a lot for the industry. But, having said that, we are optimistic about next two years in the hope of better economy with the new Government,” Amar Babu, President, MAIT, told reporters here.
According to its latest study done along with IMRB International, while most of the products are expected to be in positive numbers, the desktop sales are expected to decline by 16 per cent because of the low demand from consumers.
MAIT expects the desktop PC sales to come down to 4.21 million units against 5.01 million units in 2013-14. The most positive outlook is for smartphones, which is expected to grow by 91 per cent this year to 100 million units compared with 52.43 million units last year. On the printers’ side, MAIT expects the overall sales to grow by 22 per cent to 3.47 million units in the current year compared with 3.10 million units last year.
Tablet sales
Similarly, tablet computers are expected to grow at 4.26 million units, up 27 per cent from 3.35 million units in 2013-14, and laptops by 17 per cent to eight million units from 6.84 million units last year.
However, tablet sales growth was comparatively low as against previous year (424 per cent up) due to low base and also because of the norms set by the Government with Bureau of Indian Standards’ safety and quality tags on such products.
“Lot of low-cost tablet makers could not release their products in the market due to new norms, which affected the sales,” Babu said. As per the new norms (Compulsory Registration Order, 2012), set by the Government, there is a mandatory testing and labelling from BIS for 15 electronic products, including video games, laptops, dot matrix printers and microwave ovens to ensure safety standards.
Budget expectations
On the expectations from the Union Budget, Babu said that as per their demand earlier, the Government should address issues such as inverted duty structure on IT hardware, concession rate of duty for personal computers and tablets, dual taxation on sale of packaged or canned software and early implementation of goods and service tax.

Oil India, Gazprom signs MoU for co-operation in exploration and production

New Delhi: Oil India Limited announced on Thursday that the company has signed a Memorandum of Understanding with Russia’s Gazprom International for evaluating and pursuing exploration and production opportunities across the world.
The MoU also provides an option to the companies for technological association and any area or project of common interest would also be covered. The MoU was signed in Moscow by Oil India’s Chairman and Managing Director S K Srivastava and Valery Goulev, Managing Director of Gazprom International.
Gazprom is one of the largest oil and gas companies in the world and the largest producer of natural gas with the largest natural gas reserves in the world. It is also the only producer and exporter of natural gas in Russia.
“This is a very strong association and we should take advantage of leveraging each other’s strengths,” said Srivastava of Oil India in a statement. “Our countries have a history of close co-operation and very good relations and I sincerely hope that our partnership will grow from strength to strength and yield results in the shortest time possible.”

Domestic air traffic rises 5.3% in May

Mumbai: Budget carrier IndiGo retained its leadership position in domestic skies with a 31.7 per cent market share in May. However, its loads have been showing a declining trend in the first five months of the year, compared to the same period last year. In comparison, Air India is showing an uptick in its occupancy on a year-on-year basis.
Domestic air traffic was up 5.3 per cent in May, compared to the same month in 2013 with airlines carrying about six million passengers, up from 5.7 million passengers in May 2013. Domestic airline capacity was up 7.5 per cent on a year-on-year basis and demand showed growth.
May is the peak season for travel as it coincides with school and college holidays.
IndiGo retained the No 1 spot among domestic airlines followed by Jet Airways-Jet Konnect, which secured a 21 per cent share and Air India, 18.6 per cent. Data from the Directorate-General of Civil Aviation shows only IndiGo and GoAir have added market share since January at the expense of others. IndiGo's share increased 27.7 per cent in January to 31.7 per cent in May and GoAir’s share rose from 8.4 per cent to 9.8 per cent in the same period. The market share of all other airlines declined.
However, in terms of loads, Air India put up a good show. The government carrier's load factor increased from 74.2 per cent in May 2013 to 79.5 per cent last month. IndiGo had the highest load factors among all airlines (82 per cent) last month. However, IndiGo's load factor fell from 89 per cent in May 2013 to 82 per cent last month. In fact, IndiGo’s loads in January-May 2014 have been lower than in the first five months of 2013. Over the same period, Air India's loads have shown a growth on a year-on-year basis. An industry source said one of the reasons for the fall in IndiGo’s load factors is the expansion in capacity and the airline added nine planes last year. “One reason why we see Air India's loads better than IndiGo in certain months is because Air India flies planes with fewer seats. All of IndiGo's planes have 180 seats and SpiceJet Boeing 737s have 189 seats and both airlines carry more passengers per flight. Air India's planes have a business class seating and thus have fewer seats,” said the source.
IndiGo did not respond to an email query on topic.
“Drop in share is due to modest reduction in capacity vis-a-vis market capacity. SpiceJet load factors have shot up since earlier this year since we introduced the new network on March 30 and is now amongst the top,” said a SpiceJet spokesperson.
“In April and May, traffic has risen five per cent, which is an encouraging trend. This could be an early sign of a revival in demand catalysed by flash sales and promotions,” said Sharat Dhall, president, Yatra.com.
Airline executives, however, remain cautious. “Unless we see some serious cost correction, there will be no revival. Capacity continues to grow at eight-to-nine per cent and demand is growing at four to five per cent. The first half of June has been good for airlines, but once schools and colleges re-open, the occupancy will tank,” said the senior executive with a private airline.
GO INDIGO
31.7% Market share of Indigo in May. This was followed by Jet Airways-Jet Konnect with 21% and Air India with 18.6%
6 mn Number of passengers who travelled via air in May as against 5.7 mn in May 2013
7.5% Increase in domestic airline capacity on year-on-year basis
79.5% Air India's load factor in May this year as against 74.2% in the same period last year
82% Load factor of IndiGo, highest among all airlines, but 7% decline from May 2013

SEBI unveils measures to revitalise primary market

New Delhi: In an effort to improve retail participation and boost the primary market, the Securities and Exchange Board of India announced a slew of measures on Thursday. They include reservation and discounts for retail investors under the offer for sale (OFS) mechanism and a hike in the minimum shareholding for public sector undertakings (PSUs).
“We have broadened the scope of OFS, which though well accepted by the market, has been criticised for no retail participation,” SEBI Chairman UK Sinha told reporters after a three-hour-long meeting of the SEBI board.
It was decided that there would be minimum 10 per cent reservation for retail investors in this mechanism. They could also be given a discount.
Introduced in 2011-12, the OFS or auction method is used to sell shares through stock exchanges and is used mainly for the Government’s divestment programme.
Wider scope
“We have also extended the scope of companies (that can use the OFS mechanism) to the top 200 companies from 100 earlier. We have also provided that not only the promoters group but also any entity owning 10 per cent or more can participate in an OFS through stock exchanges,” Sinha said.
He added that 10 per cent dilution in one go through the bourses would not be disruptive.
According to Prime Database, an independent primary market monitoring firm, a total of Rs. 13,518 crore was mobilised through the OFS route in 2011-12, Rs. 28,024 crore in 2012-13, and Rs. 6,859 crore in 2013-14.
Public holding in PSUs
The regulator has also decided to bring the minimum public shareholding in PSUs at par with private sector companies. This means all listed PSUs will have to maintain a 25 per cent minimum public shareholding as against 10 per cent currently. Sinha said that 36 (out of 50) listed PSUs would have to comply with the norms within three years.
SEBI has also decided to remove the anomaly regarding issue size of an initial public offering (IPO). Now, the minimum dilution to the public in an IPO will be 25 per cent or Rs. 400 crore, whichever is lower, for companies with post-market capitalisation (number of shares offered multiplied by issue price).
With this, Sinha said the existing anomaly would be corrected. At present, if the post-issue capitalisation was more than Rs. 4,000 crore, the issuer was supposed to issue only 10 per cent or Rs. 400 crore worth of shares. Whereas, if capitalisation is even a rupee less than Rs. 4,000 crore, the promoters were required to issue 25 per cent shares, or close to Rs. 1,000 crore.
Greater participation
Prithvi Haldea, Chairman of Prime Data Base, said that with the removal of this anomaly, companies with strong fundamentals or those expecting better valuation in the future would come into the market.
As a part of primary market reforms, the regulator also decided to increase the anchor investor’s bucket to 60 per cent from the current requirement of 30 per cent of the institutional bucket. It also permitted bonus shares issued a year prior to filing of the draft document for a public issue to be offered for sale. SEBI expects these measures to breathe new life into the primary market.