Economic & Energy : December - 2013

IPDS for Textiles Industry

The Cabinet Committee on Economic Affairs on 30 October 2013 approved the launch of the new Integrated Processing Development Scheme (IPDS) during the 12th five year plan with an investment of 500 crore rupees.

The IPDS was approved for establishment of four to six brown field projects and three to five green field projects that addresses the environmental issues that is faced by the Textile Processing Units.

The projects are eligible under the scheme that cover following things:

• Common Effluent Treatment Plant (CETP)

• Captive power generation on technology preferably renewable/green technology

• Infrastructure such as storm water management, necessary roads and pipelines for water &wastewater

• Facility for testing and R&D centers

The scheme would make possible for the textiles industry to become the globally competitive by using the processing standards and  technology, which are environment friendly and by creating the new processing parks. It will also help in upgradation of the processing clusters/centers in existence, specifically in the areas of the water and waste water management. The scheme will also encourage the research and development work in
the textiles processing sector.

Broadband Subscriber increased to 15.24 Million

As per the latest telecom subscription data released by the Telecom Regulatory Authority of India on 31 July 2013, total Broadband subscriber base in India increased from 15.19 million at the end of June 2013 to 15.24 million at the end of July 2013. This is a monthly growth of 0.33 percent. Yearly growth in broadband subscribers is 3.79 percent during the last one year (July 2012 to July 2013). At present, there are 161 Internet Service Providers (ISPs) which are providing broadband services in the country. Out of these, 121 ISPs (having 98.48 percentmarket share) have provided broadband subscription data for the month of July 2013, for the rest of the ISPs data from previous month has been retained. Top five ISPs in terms of market share (based on subscriber base) are: BSNL (9.97million), Bharti Airtel (1.43 million), MTNL (1.10 million), Hathway(0.37million) and You Broadband (0.32million).

Telecom Subscribers increased to 904.46 Million

Telecom Regulatory Authority of India released the latest telecom subscription data on 31 July 2013. As per this data, the total number of subscribers has increased to 904.46 million with a net addition of 1.37 million subscribers during the month – showing a monthly growth of 0.15 percent. Out of the total subscriber base, 548.85 million are from the urban areas and the remaining 355.60 million are the rural subscribers. The total Teledensity at the end of July 2013was 73.54outofwhich the share of urban subscribers was 60.68 percent and that of rural subscribers was 39.32 percent. Mobile Number Portability (MNP) requests increased from95.59million subscribers at the end of June 2013 to 97.82 million at the end of July 2013. In the month of July 2013 alone, 2.23million requests have been made for MNP. India & Japan Signed MoU to study Mumbai-Ahmedabad Rail Route

India and Japan on 9 October

2013 signed MoU to do a joint feasibility study of High Speed Railway system on the Mumbai- Ahmedabad route. The aim of the Joint study is to prepare a feasibility report of High Speed Railway system on the Mumbai-Ahmedabad route with speed of 300-350kmph. The cost of the study will be shared equally between India and Japan. The study will take 18months to complete. The study will include traffic forecasting, alignment surveys
and undertake comparative Study of High Speed Railway Technology and System. India and Japan also decided to set up A Joint Monitoring Committee which comprises the Ministry of Railways, Planning Commission, the Ministry of Finance and the Ministry of External Affairsfor the Indian side and the MOFA (Ministry of Foreign Affairs), the METI (Ministry of Economy, Trade and Industries), the MLIT (Ministry of Land, Infrastructure, Transport and Tourism), the MOF (Ministry of Finance), EoJ (Embassy of Japan in India) and JICA fromJapan.

Pact for Uttar Pradesh Water Sector Restructuring Project

Government of India on 25 October 2013 signed an agreement with World Bank for credit of 360 million US Dollar for the second phase of Uttar Pradesh Water Sector Restructuring Project. The agreement was signed by Nilaya Mitash, Joint Secretary in the Ministry of Finance, Government of India and Country Director of the World Bank, Onno Ruhl. Similarly the Project Agreement was signed by Deepak Singhal, Principal Secretary, and Department of Irrigation on behalf of the Government of Uttar Pradesh. The objective of the project is to support the State on capacity building of Water Users Association, rehabilitation and modernization of irrigation, development of Basin River planning strategies and flood management systems

The Project’s Development objective is to

• (a) Strengthen the institutional and policy framework for integrated water resources management for the entire State; and

• (b) Increase agricultural productivity and water  productivity by supporting farmers in targeted irrigationareas.

The project has six main components:

1. Strengthening of State Level Water Institutions and Inter Sector Coordination

2. Modernization and Rehabilitation of Irrigation and Drainage Systems

3. Consolidation and Enhancement of Irrigation Institution Reforms

4. Enhancing Agriculture Productivity and On-Farm Water Management

5. Feasibility studies and Preparation Activities for the Next Phase

6. Project Coordination and Monitoring. The closing date for the project is 31 October, 2020.

Cabinet Committee on Economic Affairs Decisions

• CCEA also approved sanction of newprojects for utilizing 717 crore Rupees the balance left in the 12th five year plan allocation, after meeting committed liabilities of the sanctioned 61 parks.

• It also gave its nod for an additional grant of 10 crore Rupees to be given to existing parks for setting up apparel manufacturing units. 50 crore Rupees have been allocated for the purpose.

About Integrated Textiles Parks

• The primary objective of the scheme for Integrated Textile Parks is to provide the industry withworld class infrastructure  facilities for setting up their textile units.

• The product mix in these parks would include apparels and  garments parks, hosiery parks,silk parks, processing parks, technical textiles including medical textiles, carpet parks, power loom parks.

• The Scheme for Integrated Textiles Parks seeks green field investments in textiles sector  on a public private partnership basis with the objective of setting up world class infrastructure for Textiles industry.

The Scheme for Integrated Textile Parks (SITP) was approved in the 10th Five Year Plan (July 2005) to provide the industry with world-class infrastructure facilities for setting up their textile units by merging the erstwhile
Apparel Parks for Exports Scheme (APES) and Textile Centre Infrastructure Development Scheme (TCIDS). The scheme targets industrial clusters or locations with high growth potential, which require strategic interventions by way of providing world-class infrastructure support.

Integrated Textile Parks Scheme in 12th FYP

The Cabinet Committee on Economic Affairs (CCEA) on 3 October 2013 approved continuation of the scheme for Integrated Textile Parks in the 12th five year plan.

Trade Deficit Estimated at 80126.24 Million US Dollars

As per the data released by Ministry of Commerce and Industry, India’s Exports during September, 2013were valued at 27679.33million US dollars (176461.53 crore rupees) which was 11.15 per cent higher in
Dollar terms (29.77 per cent higher in Rupee terms) than the level of 24902.00 million US dollars (135978.63 crore rupees) during September, 2012. Cumulative value of exports for the period April- September 2013 -14 was 152105.40 million US dollars ( 901194.97 crore rupees) as against 144673.91 million US dollars (790838.40 crore rupees) registering a growth of 5.14 per cent in Dollar terms and growth of 13.95 per cent in Rupee terms over the same period last year.

Imports

Imports during September, 2013were valued at 34439.50million US dollars (219559.04 crore rupees) representing a negative growth of 18.10 per cent in Dollar terms and a negative growth of 4.38 per cent in Rupee terms over the level of imports valued at 42051.45millionUS dollars (229624.04 crore rupees) in September 2012. Cumulative value of imports for the period April- September 2013-14 was 232231.64 million US dollars (1365699.30 crore rupees) as against 236493.90million USdollars (1292490.99 crore rupees) registering a negative growth of 1.80 per cent in Dollar terms and growth of 5.66 per cent in Rupee terms over the same period last year.

Crude Oil And Non-Oil Imports

Oil imports during September, 2013were valued at 13196.5million US dollars which was 5.94 per cent lower than oil imports valued at 14029.5 million US dollars in the corresponding period last year. Oil imports during April-September, 2013-14 were valued at 82876.1 million US dollars which was 3.58per cent higher than the oil imports of 80011.6 million US dollars in the corresponding period last year. Non-oil imports during
September, 2013were estimated at 21243.0millionUSdollarswhichwas 24.19 per cent lower than non-oil imports of 28022.0millionUSdollars in September, 2012. Non-oil imports during April-September, 2013-14
were valued at149355.5 million US dollars which was 4.55per cent lower than the level of such imports valued at 156482.3millionUSdollars in April-September 2012-13.

Trade Balance

The trade deficit for April- September, 2013-14 was estimated at 80126.24million US dollars which was lower than the deficit of 91819.99 million US dollars during April-September, 2012-13.

Jet-Etihad deal Approved by SEBI (Securities Exchange Board of India)

Jet-Etihad deal was approved by SEBI (Securities Exchange Board of India) on 1 October 2013. Jet Airways had proposed to sale 24 percent stake to Abu Dhabi-based Etihad. The Jet-Etihad deal was announced in April 2013 and because of objections from regulators the deal was stuck half-way. The proposal will now be considered by the Cabinet Committee on Economic Affairs. The Competition Commission of India (CCI) had also asked for changes in the original deal. The two parties had informed the fair trade regulator about the changes in the deal and approval from the CCI is expected soon. SEBI informed the Finance Ministry about its decision on 25 September 2013.With this deal in place, Jet eventually has a 51 percent stake in the company, Etihad 24 per cent and the public the remaining 25 per cent.

RBI fixed the Reference Rate of Rupee against US Dollar at 61.4050

The Reserve Bank of India on 4 October 2013 fixed the reference rate of rupee against US dollar at 61.4050 and the euro at 83.6790 as against 61.9348 and 84.2360 on 3 October 2013.

 The exchange rates for the pound and yen against the rupee were quoted at 99.2857 a pound and 63.25 per 100 yen, based on reference rates for the dollar and cross-currency quotes at noon. The reference rate is based on the noon rates of select banks and the SDR Rupee rate would be based on this rate.

Bhubaneswar and Imphal airports were Declared as International Airports

The Union Cabinet of India on 30 October 2013 gave its approval for declaring the Bhubaneswar and Imphal airports as international airports to fulfill the long pending demand of people as well as the State Governments of Odisha and Manipur. Declaration of these airports as international airports will offer improved connectivity, wider choice of services at competitive cost to the air travelers resulting in boosting international tourism and economic development of the region and the country.

Bhubaneswar Airport

Biju Patnaik Airport or Bhubaneswar Airport belongs to Airport Authority of India and is suitable for operation of Code ‘D‘ aircraft of type B-767-400. The airport is also equipped with facilities for night operations, runway 14/32 of dimension 2743m X 45m, apron to park six aircrafts and navigational aids. A new domestic terminal building with all modern amenities for handling 400 arriving and 400 departing passengers has been constructed and inaugurated in March 2013. The modification/ renovation of the existing domestic terminal building into international  terminal building with an area of 6264sqm. suitable for handling international operations has been completed. Six check-in-counters, custom counters and immigration counters arebeing provided and the requisite facilities of customs, immigration, health services and animal and plant quarantine at the airport have also completed.

Imphal Airport

Imphal Airport belongs to Airports Authority of India and is suitable for ‘C‘ type (A-320/321) of aircrafts operations in all weather conditions. Major facilities including night operations, runway of dimension 2746m X 45m, Apron to park 3 nos. A-320 and 1 No. ATR-72 at a time, terminal building having an area of 6592 sqm. modified to integrated terminal building, navigational aids, nineteen check-in-counters, custom counters, immigration and sufficient space for health services and animal and plant quarantine are being provided at the airport.

RBI reduced the MSF Rate to 9 Percent

The Reserve Bank of India (RBI) on 7 October 2013 reduced the Marginal Standing Facility (MSF) rate to 9 per cent from 9.5 per cent to improve liquidity in the system. In a release issued from Mumbai the RBI
stated that the decision was taken after a review of evolving liquidity conditions. MSF allows banks to borrow money from RBI at a higher rate when there is a significant liquidity crunch. The RBI further stated that it
conducted open market purchase operations of 9974 crore rupees with the aim of injecting liquidity into the system.

This is the second reduction in the rate since the September 20midquarter monetary policy review, when it was lowered to 9.5 per cent from10.25 per cent.

National Mission on Oilseeds and Oil Palm approved

The Cabinet Committee on Economic Affairs on 3October 2013 approved the implementation of the National Mission on Oilseeds and Oil Palm(NMOOP) during the 12th Plan Period with financial allocation of 3507 crore rupees. This would help in enhancing production of oil seeds by 6.58million tonnes. This would also bring additional area of 1.25 lakh hectares under Oil Palm cultivation with increase in productivity of fresh fruit bunches from 4927 kg/ha to 15000 kg/ha and increase in collection of tree borne oilseeds to 14 lakh tonne. Implementation of the proposed Missionwould enhance production of vegetable oil sources by 2.48 million tonnes from oilseeds (1.70 million tonnes), oil palm(0.60million tonnes) and tree borne oilseeds (0.18 million tonnes) by the end of the 12th Plan Period.

The implementation strategy in the Mission would place emphasis on increasing the Seed Replacement Ratio (SRR) with focus on varietal replacement; increasing irrigation coverage under oilseeds from 26 percent to 38 percent; diversification of area from low yielding cereals crops to oilseeds crops; intercropping of oilseeds and use of fallow land; area expansion under oil palm  and TBOs; increasing availability of quality planting materials of oil palm and TBOs; enhancing procurement of oilseeds and collection and processing of TBOs.

Recommended varieties and proven technologies would be demonstrated in a cluster approach through mini kits and frontline/cluster demonstration. The cluster approach would ensure participation of all categories of farmers, irrespective of the size of their holdings, social status and would demonstrate visible impact of  technologies in enhancing productivity and production. NMOOP is built upon the achievements of the existing
schemes of Integrated Scheme of Oilseeds. Oil Palm and Maize (ISOPOM), Tree Borne Oilseeds Scheme and Oil Palm Area Expansion (OPAE) programme during the 11th Plan period. Implementation of these
schemes have shown increase in production and productivity of oilseeds, area expansion with increased production of FFBs under oil palmand augmented availability of quality planting materials, preprocessing technologies and awareness about TBOs.

MSP of Wheat by 50 Rupees per Quintal

The Cabinet Committee on Economic Affairs (CCEA) on 17 October 2013 enhanced the Minimum Support Price (MSP) of wheat by 50 rupees per quintal to 1400 rupees for the fiscal, starting April 2014. The CCEA accepted the recommendations of Commission for Agricultural Costs and Prices. The MSPof redgramandmustard was also hiked by hundred rupees per quintal each. MSP is the rate at which government buys the grain from farmers. The government took this step to encourage farmers to cover more area under the crop in the ongoing rabi season. The crop’s sowing begins in October and harvesting begins from April onwards. The government procures wheat from farmers during April-June.

IFC Launched 1 Billion Dollar offshore Rupee Bond Programme

International Finance Corporation (IFC), a member of the World Bank Group, on 7 October 2013 launched a 1 billion Dollars offshore bond programme to strengthen India’s capital markets and attract greater foreign investment. Under the programme, IFCwill issue rupee-linked bonds and use the proceeds to finance private sector investment in the country.

This programme will help bring depth and diversity to the offshore rupee market and pave the way for an alternative source of funding for Indian companies. IFC’s offshore bond programme will pave the way for an alternative source of funding for Indian companies.

What are the off shore rupee bonds ?

• These are bonds denominated in rupees but issued in international markets.

• Investor has to convert its currency into rupees before investing.

• The return and final redumption is also in rupees. Why are such off shore bonds are important ?

• They are an important way of internationalising indian currency.

• It will improve acceptance of the Indian currency in setting trade.

• A deep market for local currency will help reduce dollar needs of the economy.

• The diversity fund raising options for Indian borrowers.

About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. Established in 1956, IFC is owned by 184 member countries, a group that collectively determines its policies.

IFC works in more than a 100 developing countries allows companies and financial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. IFC’s vision is that people should have the opportunity to escape poverty and improve their lives.

RBI Allowed Banks to Revise Periodicity of Interest Payments

The Reserve Bank of India on 29 October 2013 allowed the commercial banks to revise the periodicity of interest payments thus enabling savings bank account and term deposit holders to earn interest at shorter intervals.
The Second Quarter Review of Monetary Policy 2013-14 released by the RBI Governor Raghuram Rajan revealed that as all commercial banks are now on core banking platforms, it has been decided to give banks the
option to pay interest on savings deposits and term deposits at intervals shorter than quarterly intervals.

 Presently, banks are required topay interest on savings and term deposits at quarterly or longer intervals. The savings deposit rate for most banks is 4 per cent per annum, while in some cases, it is as high as 7 percent. The interest rate on savings bank accounts is calculated on a daily basis. Term deposit rates are 8-9 per cent for tenures of one year and above. The Reserve Bank of India gave freedom to commercial banks to fix savings
bank deposit rates in 2011. While giving banks this freedom, the RBI kept one condition that a uniform rate will have to be offered on deposits of up to 1 lakh Rupees, on higher amounts banks are allowed to offer differential rates to depositors.

SEBI approved Major Reforms to Attract Overseas Investors

SEBI ushered in major reforms to attract overseas investors. It has announced new Foreign Portfolio Investor regulations for easier registration process and operating framework for investors from abroad.

The new class of investors - FPIs - will encompass all Foreign Institutional Investors, their sub accounts and Qualified Foreign Investors. They will be divided in three categories as per their risk profile.

The Know Your Client - KYC requirements and other registration procedures will be much simpler for FPIs compared to current practices. The SEBI has also decided to grant the ma permanent registration. SEBI
also approved setting up ‘Designated Depository Participants which will register FPIs on behalf of the market regulator subject to compliance with KYC norms.