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Showing posts with label FDI. Show all posts
Showing posts with label FDI. Show all posts

Monday, 29 August 2016

08:04

IMPACT OF NEW FDI POLICY ON EMPLOYMENT & ECONOMY

IMPACT OF NEW FDI POLICY ON  EMPLOYMENT & ECONOMY
Foreign direct investment is a lead economic component which indicates the investment climate in the economy and helps build investors' confidence domestically and internationally. FDI helps to create technological advancements, increase competitiveness of the industry, enhance capital stock, step up infrastructural base and thus reflects the overall level of prosperity in the economy. Post liberalization of Indian economy since 1991s, India has gone a long way in attracting FDI from different economies of the world across an entire gamut of sectors. With the continuous pace of reforms, FDI up to 100% is allowed under the automatic route in many sectors of the Indian economy.
The objective of inviting large chunks of FDI is to provide better career prospects to our youth, to generate employment opportunities and to give a push to overall economic growth and development. With the advent of continuous pace of reforms in attracting FDI, Indian economy has scripted its presence as one of the fastest growing economies of the world economic system and has emerged as a key destination for attracting FDI in the recent years. Foreign companies invest in India to take advantage of relatively lower wages, availability of large scale skilled, unskilled and semi skilled workforce and special investment privileges such as tax exemptions.
Today, India has been considered as one of the favourite FDI investment destinations across the world. The total annual FDI inflows to India have increased by nine fold over the last fifteen years. FDIs were at USD 6.1 billion in FY2002, which scaled up to USD 55.5 billion in FY2016.
FDI inflows growth remains steady over the past fifteen years with a CAGR of 16%. The FDI growth was at 52.1% in FY2002, which scaled up to a peak level of 155% in FY2007 during the period of five years. Further, FDI inflows growth was at 34% in FY2012 and stands at about 23% in FY2016.
Top ten investing countries in India
Among the top ten investing countries in India, Mauritius is the largest investor with a share of 33% in total FDI equity inflows during April 2000 to March 2016, followed by Singapore with a share if 16%, U.K. at 8%, Japan at 7%, USA and Netherlands at 6% each, Germany and Cyprus at 3% each, France at 2% and UAE at 1%.
Services sector- Prominent sector attracting largest share of FDI inflows
Services sector is holding the largest pie in the total FDI equity inflows at about 18% during the period April 2000 to March’16, followed by construction development sector at about 8%, computer software and hardware contributing share of about 7% in total FDI equity inflows. 

State Wise FDI Equity Inflows
Among the top ten states or UTs attracting FDI equity inflows, Mumbai is attracting the largest share of total FDI equity inflows at 29% during April 2000 to March 2016, followed by New Delhi at 22%, Chennai and Bangalore at 7% each and Ahmedabad at 5%.
Easing FDI norms in India to push job creation and infrastructure development
Over the years, Government of India 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. However, keeping in view our economy’s potential to attract far more foreign investment, Government has recently in June 2016 further liberalized and simplified the FDI regime particularly for food products, defence sector, broadcasting carriage services, pharmaceutical, civil aviation, private security agencies, establishment of branch office, liaison office or project office, animal Husbandry and single brand retailing.
Recent FDI reforms to rationalise and simplify process of foreign investments in India
In order to boost the investment environment and attract large chunks of investments, Government has recently liberalised FDI norms in sectors such as food products manufacturing, defence sector, broadcasting carriage services, pharmaceutical, civil aviation, private security agencies, establishment of branch office, liaison office or project office, animal Husbandry and single brand retail trading which are discussed below.
*Food products manufactured/produced in India- Government has permitted 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India.
*Defence Sector - Present regime permits 49% FDI participation in the equity of a company under automatic route.  Foreign investment beyond 49% has now been permitted through government approval route. FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.
*Broadcasting Carriage Services- Government has allowed 100% FDI under automatic route for Teleports(setting up of up-linking HUBs/Teleports),Direct to Home (DTH),Cable Networks (Multi System operators (MSOs) operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability),Mobile TV, Headend-in-the Sky Broadcasting Service(HITS). Further, 100% FDI is allowed under automatic route in Cable Networks (Other MSOs not undertaking upgradation of networks towards digitalization and addressability and Local Cable Operators (LCOs))
*Pharmaceutical- The extant policy on pharmaceutical sector provides 100% FDI under automatic route in greenfield pharma and 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.
*Civil Aviation Sector- The extant 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. Now, 100% FDI is permitted under automatic route in Brownfield Airport projects. 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.
*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.
*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. 
*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.
*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.
FDI reforms to push employment generation, youth empowerment and a boost to economic growth
With the easing of recent FDI reforms, the process of inviting foreign investments is simplified to save time and energy of the investors. The increase in sectoral caps, bringing more activities under automatic route and easing of conditionalities for foreign investment will make India a more open economy in the world economic system. The FDI policy pronouncements will help in creating additional jobs as well as induce employment and spur up the Make-in-India program with emphasis on driving both foreign and domestic investments.
The domestic investment environment will also be boosted with large scale foreign investments offerings in the promising sectors of the economy. Further, millions of the youth of our country will be benefitted as remunerative employment or entrepreneurial opportunities will be created in the coming times.

Impact of recent FDI reforms on select sectors of the economy

*Food products manufactured or produced in India : To provide impetus to the country’s food processing sector and facilitate in strengthening agri infrastructure.

*Defence Sector : To facilitate investments from several global defence companies for setting up of manufacturing base in India and to promote prestigious Make in India initiative of the Government.

*Broadcasting Carriage Services : To facilitate implementation of speedy process of digitization and promote infrastructure development, better satellite capacity and expected to enhance multi system operators in rural markets.

*Pharmaceutical : FDI up to 74% under automatic route in brownfield pharmaceuticals to boost mergers and acquisitions and private equity investments in the sector.

*Civil Aviation Sector : To encourage modernization of the existing airports to establish a high standard and help ease the pressure on the existing airports.

*Private Security Agencies : To expedite investments in private security sector and enhance skill development of security guards. This will further open up avenues for generating employment opportunities particularly among the young unskilled workforce. 

*Establishment of branch office, liaison office or project office : To promote ease of setting up of branch offices, liaison offices or project offices in cases where the principal business is of Defence, Telecom, Private Security or Information and Broadcasting.

*Animal Husbandry : To promote development of animal husbandry sector, invite several research and development agencies in bringing their new and modern technology to India to improve animal breeds in our country.

*Single Brand Retail Trading : To enhance investments in single brand retail and promote technological development in the sector. Setting up of manufacturing units in India will be promoted and employment opportunities will be generated in the economy.

Conclusions
Foreign Direct Investments plays a crucial role for an accelerated economic growth. In India, post the 1991 economic reforms, the regulatory environment in terms of Foreign Direct Investments has been consistently eased to make it more and more investor-friendly and to supplement domestic capital, technology and skills.
Recent FDI policy pronouncements in various sectors of the economy are expected to attract chunk of investments and create additional jobs as well as induce employment and spur up the Make-in-India program. Increase in sectoral caps, bringing more activities under automatic route and easing of conditionalities for foreign investment will make India a more open economy in the world economic system. FDI reforms were very crucial at this juncture which will lead to further FDI inflows which already increased from around US$36 billion in FY2014 to US$55.5 billion in FY2016 due to recent initiatives of the government. Pro-active reforms oriented decisions taken by the government particularly for easing of FDI rules in various sectors of the economy are going to push employment generation, youth empowerment and a boost overall economic growth in the coming times. To sum up, India has only recently begun to attract global capital and given the size of the economy, and its perceived high growth potential, it will remain an attractive investment destination as long as policy towards investment in general and FDI in particular is seen to be supportive. Hence, the Government must continue the pace of reforms to make India more and more attractive for Make in India.

Courtesy:Mr.Surbhi Sharma.
Source:Employment News

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Wednesday, 25 November 2015

08:16

New Alstom and GE Plants to double IR’s Freight-pulling Power

New Alstom and GE Plants to double IR’s Freight-pulling Power

India’s Rs 8,500-crore railway locomotives market is set for a mega upheaval with the government awarding the contracts for the Madhepura and Marhowra factories to General Electric (GE) and Alstom in a Rs 36,000-crore deal — the country’s first foreign direct investment (FDI) in the rail sector.

Once commissioned over the next two to three years, the two factories to come up in Bihar would supply 200 locomotives of 6,000 horsepower (HP) and 12,000 HP annually to Indian Railways, adding to the existing supply of 650 locos of 4,000-6,000 HP.

“That translates into more than doubling the trailing-load-capacity of freight trains without having to use extra engines per train,” said R Sivadasan, former Railway Board financial commissioner, who had overseen the preliminary discussions on the Bihar projects.

Trailing load refers to the maximum tonnage volume that can be hauled by a freight train and it depends on the propulsion strength of the locomotive being used. Indian Railways’ freight trains currently carry a maximum trailing load of 3,900 tonnes.

“The new 12,000-HP engines will catapult this capacity to an average 10,000 tonnes per train — similar to Chinese railways,” Sivadasan added.

India currently manages to achieve higher trailing loads only by using extra two to three low HP engines per train.

Indian Railways operates 10,500 locomotives to haul both passenger and freight trains at present. The transporter inducted 647 locomotives in its fleet in the last financial year at a cost of Rs 8,465 crore, around a half of its total expenditure of Rs 17,376 crore on rolling stock. This included 397 diesel locos purchased from Diesel Locomotive Works (DLW) at Varanasi and 250 electric engines from Chittranjan Locomotive Works (CLW) in West Bengal.

In 2015-16, railways plans to induct 636 locos (375 diesel and 261 electric). While the expenditure on locos is budgeted to remain flat at around the same level as 2014-15, railways’ total rolling stock expenditure is expected to go up 12 per cent to Rs 19,342 crore, indicating higher budgeted expenditure for acquisition of wagons and coaches.

Experts say with the two new factories at Madhepura and Marhowra in two years, making available additional 200 locomotives and the supply from CLW and DLW getting ramped up to 700 locos, total locomotives supply for Indian Railways would cross 800-900 annually. That, however, does not translate into a surplus scenario.

“There is not likely to be a huge demand-supply mismatch. India is now trying to increase freight loading multifold as economy continues to grow at 7-8 per cent; DFCC (Dedicated Freight Corridor Corporation) corridors will start getting commissioned 2018 onwards and also a lot of old locos will gradually retire,” said Amrit Pandurangi, senior director at Deloitte.

He added the new locomotives would be a game changer with better technology, higher fuel efficiency, and increased haulage power. “In addition, the higher speeds of the new locos will play a critical role as we move towards separation of freight traffic from passenger lines,” said Pandurangi.

Experts point out the expected ramp up in domestic demand might not allow an export scenario to develop. Also, the new locos will be designed for Indian broad gauge that is not used in a majority of other countries, which have already moved on to standard gauge in rail networks.

“There is a possibility of utilizing the Madhepura plant for exports but our primary focus is to meet the obligations of this contract and to meet the expectations of Indian railways in terms of product delivery and quality. Hence we are not envisaging any major exports from this plant at this point of time,” Bharat Salhotra, Managing Director at Alstom Transport which bagged the contract for the Madhepura electric loco factory told Business Standard.

The efficiency gains from new locos would come at a cost that is almost double the price Indian Railways pays for existing DLW and CLW locomotives. According to Salhotra, the price for each locomotive churned out by the Madhepura factory works out to Rs 28.4 crore. “However, there is an expectation of a 3 per cent reduction in the price year-on-year. So, the overall average price works out to Rs 24.88 crore per locomotive,” he said.

This price is in stark contrast to the cost of electric locos delivered by CLW – Rs 13 crore per engine. A former Railway Board Chairman said the doubling of price is justified in view of the double trailing load capacity the new locos will provide.

“Also, it must be remembered that the contract for new locos includes maintenance for the first 500 locos too. That is a major gain for Indian Railways,” he said. GE would supply 1000 diesel locos over ten years at a basic cost of Rs 14,656 crore from Marhowra while Alstom would deliver 800 locos over 11 years at a cost of Rs 21,389 crore from Madhepura.

THE BIG FDI PUSHIndian Railways currently operates 10,500 diesel and electric locomotives

More than 600 locos, purchased from DLW, Varanasi and CLW, West Bengal, are added to this fleet annually

Two new factories being set up by GE and Alstom in Bihar would add another 200 locos to existing supply in a few years

New locos would be of higher strength 6,000-12,000 HP with better fuel efficiency and faster speed but cost almost double at Rs 25 crore per loco against the existing ones

GE’s Rs 14,656-crore contract would supply 1,000 locos over 10 years from Marhowra while Alstom would deliver 800 locos over 11 years from Madhepura, as part of Rs 21,389-crore contract

Indian Railways spends Rs 17,376 crore on rolling stock annually, including Rs 8,465 crore on locos. Expenditure on rolling stock seen jumping 12 per cent to 19,342 crore in FY16 though loco spend to remain flat.
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Friday, 31 July 2015

20:50

Gujarat was at the fifth place in receiving foreign investments.

FDI inflows rose in 2014-15 from 3 countries visited by Modi

inflows from foreign direct investment (FDI) increased in 2014-15 three countries out of four major investing nations visited by Prime Minister Narendra Modi last fiscal with Australia showing a decline, government said on Thursday.

Replying in the Rajya Sabha, external affairs minister Sushma Swaraj said Modi visited 26 countries from June 2014 to July 2015 and all visits had a substantial economic component.

"These efforts have helped in creating a positive image of India and, as a result, FDI equity inflows increased from USD 24.3 billion in financial year 2013-14 to USD 30.9 billion in 2014-15, a growth of 27.3%," she said.

A break-up of FDI inflows from top 10 countries visited by Modi showed increase in eight cases and decline in two others.

Out of this, he visited only four countries during the last fiscal. Among these four nations, FDI inflows increased from Mauritius, Japan and the US.

FDI inflow from Australia declined marginally. Swaraj further said, FDI inflows in the first two months of the current fiscal also increased by 40% to USD 5.3 billion.

The countries visited in April and May included Canada, Germany, France and China. While Delhi NCR was the top FDI destination, Gujarat was at the fifth place in receiving foreign investments.

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Wednesday, 29 July 2015

22:36

Railways minister Suresh Prabhu fast-tracks bullet train plan

Railways minister Suresh Prabhu fast-tracks bullet train plan

Railways minister Suresh Prabhu has initiated moves to set up a High Speed Rail Authority (HSRA) – an apex body to formulate the administrative, institutional and legal mechanism to execute the Mumbai-Ahmedabad and other high speed lines identified under the “Golden Quadrilateral” project.

 “The recently submitted Japan International Cooperation Agency (JICA) report on the proposed Mumbai-Ahmedabad high speed corridor is currently under evaluation. Appropriate action will follow”, Prabhu told HT.

Sources said the railways minister has held detailed discussions on the broad contours of the plan to set up the HSRA at a series of meetings with senior officials in past weeks. “The broad framework including the terms of reference of the proposed body are being discussed in detail”, officials added.

To function as a regulatory and monitoring body for the identified high speed projects, the HSRA will be expected to adjudicate possible disputes between different stake-holders including private players, while setting uniform technical standards for undertaking such projects, officials said.

The NDA government last year opened up to railway sector for 100% foreign direct investment (FDI) for are areas including the development of high speed networks.

The JICA report is also understood to have underscored the need for the Indian Railways to set up an apex body to regulate, monitor and set technical standards for high speed projects in India.

“In coming months or years, it is likely that other state governments will follow the Kerala government’s example, which set up a High Speed Rail Corporation last year. If technical standards are not defined or made uniform at this stage, matters might go haywire. Hence, the need to set up the HSRA”, an official explained.

While entrusting the execution task to the Rail Vikas Nigam Limited (RVNL) and its subsidiary – the High Speed Rail Corporation – the railways minister had sent out letters to the chief ministers of Gujarat and Maharashtra in December last year, seeking cooperation to build the line. The JICA report has estimated a cost of Rs 988,050 million to build the corridor.

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Wednesday, 1 July 2015

07:59

Contracts with foreign firms to have 'national security clause'

Contracts with foreign firms to have 'national security clause'

NEW DELHI: Foreign telcos and defence firms looking to invest in India will have to include a 'national security clause' in their contracts, providing for termination of the venture if they are found indulging in any anti-national activity at the post-investment stage. 

"While doing away with country-specific barriers to investment in furtherance of the government's 'Make in India' thrust, the new security clearance policy proposes post-investment safeguards for FDI coming through the FIPB route in 'sensitive' sectors like defence, telecom and private security firms. The 'national security clause' in the FDI agreement can be invoked at the post-investment stage to serve a termination notice to the investor if an adverse, anti-national activity including money laundering, espionage, terror financing or links with terror outfits or foreign intelligence agencies is noticed," a senior home ministry officer told TOI. 

TOI was the first to report on May 22 on the home ministry's move to have a national security clause built into FDI contracts to be approved by Foreign Investment Promotion Board (FIPB). 

The new guidelines on security clearance for FDI proposals in sensitive sectors will require foreign firms to employ Indians in key technical positions like network operators. This will minimize the risk of embedding of spyware/malware in the network equipment used by such firms. Also, testing of equipment both at the initial and post-investment stage is proposed to rule out any malware or spyware. DoT has indicated that it will have the requisite testing infrastructure in place in a year. 

Importantly, while proposing no country-specific barriers, the policy has listed Pakistan as a "country of concern" from which investment is to be discouraged. Even foreign staffers who have served in Pakistan in the past will need to undergo special security vetting before taking up an assignment in India. 

As part of the new guidelines on security clearances for domestic and FDI proposals, which seek to cut the processing time from the current 3-4 months to 4-6 weeks, the promoter or bidder can make a self-declaration on the criminal cases, if any, against them. While the self-declaration would suffice as regards petty criminal cases, the guidelines require the intelligence agencies to report any adverse inputs on parameters such as money laundering, terror financing, links with terrorist outfits or foreign intelligence agencies, major financial frauds etc.

Source :TOI 
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Tuesday, 26 May 2015

06:05

GST will increase the overall GDP of India

You must have heard a lot about the new tax regime GST i.e. Goods and Services Tax, which is being touted to be one of the biggest taxation reform in India. But what is GST and how is it going to impact you? Let’s demystify this tax and understand it better.

What is the GST?

Goods and Services Tax i.e. GST is a comprehensive tax which will be levied on manufacturing, sale and consumption of goods and services at a national level and is said to be one of the biggest taxation reforms in India. In simple words, it is a tax levied at every stage whenever a consumer buys goods or services. This way of taxation is already in force in 150 countries. It will convert the whole country into a unified market and replace all the indirect taxes currently in place with the one single tax system.

What is the need of introducing GST?

Currently in India, there are various taxes being managed differently by Central and state government like Central excise duty, service tax and customs duties at the Central level and VAT (value-added tax), entertainment tax, luxury tax or lottery taxes at state level. Everything will get replaced by one single point of taxation i.e. GST. 

It would facilitate more seamless movement across the nation and will reduce the overall transactional cost of running the business and thereby also reducing the compliance of following multiple tax rules and obligations. This is highly relevant today, looking at the growth that India's economy can achieve. It may also reduce corruption and bring more efficiency in running businesses.   

Will it help you?

As mentioned above, we have a very complex tax structure system in India which makes it very difficult for any business as they are expected to pay and fulfill a lot of legal obligations. GST will help and simplify the process to a great extent and thereby reduce the overall operating costs, which ultimately will be passed on to the consumers. Since it is also going to increase India’s GDP and income overall, consumers can expect more indirect benefit after its roll out. 

How is it going to help India earn more revenue?

GST will increase the overall GDP (Gross domestic product) of India and will increase its total revenue collections. It will also facilitate more exports and has the potential of boosting employment, apart from inviting more foreign investors. 

What will be the impact of GST on businesses?

Let’s understand this with an example. Say you have a manufacturing unit in Mumbai for producing boxes, for which you have to pay excise duty to the Central Government and also need to file a separate tax return. The moment you supply your product to other retailers, you are liable to pay VAT and file its return. Also, the moment you expand to other markets, say Madhya Pradesh, you will be liable to pay Central Sales Tax because it involves multiple states. 

The entire process involves multiple transactions and compliances, which will be removed, or I would say come down, to a much lower level after the introduction of GST. This will be a big help to all businesses - big or small - in bringing down their compliances.

Let’s hope that this new tax regime will simplify our lives, which is right now surrounded by a complex web of taxes.

 Source:DNA

 Other Related Postings:GST will make India single largest market globally: Railways Minister Suresh Prabhu

Source:DNA
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Sunday, 3 May 2015

19:42

Railways will continue to be owned by government of India -No Privatization

No Privatization of Railways; it will continue to be Owned & Managed by GOI: Suresh Prabhu


New Delhi: Notwithstanding recommendation by government panels, Railways Minister Suresh Prabhu has outrightly ruled out privatisation of the public transporter, saying it was a “bogey” being raised by those who do not want any change or by those who do not understand the importance of change.

He further said the concept of privatisation gives confusing signals and envisages the possibilities of ownership transfer of an enterprise to a different entity or management which was not possible in railways.  “Railways will continue to be owned by government of India, managed by government of India, he said and further added, “we want change not for the change in ownership. We do not want change for somebody to run the precious assets of railways. We want to bring in private capital or technology to improve the functioning of Indian Railways so that railways become more valuable and run into profits,” Prabhu told PTI in an interview. For example, If you wants to buy, revamp or carry out some restoration activity to your dilapidated house which is going to collapse shortly, however you have no money in hand, then what you will do?  You will either resort to borrowing money from some Banks or Financial Institutions and execute the job in time and reconstruct your house, and starts repaying the loan amount through regular EMIs or otherwise. In the same way, the Government of India is considering FDI and PPP models to reconstruct the antiquated and financially bankrupt Indian Railway system. India needs FDI model because we need Technology as well.  The funding organisation cannot bring in technology and the Companies cannot act as Banks. Hence we are keen to FDI / PPP models.  So why someone who doesn’t understand what Government of India is going to do should resort to undue cry,” he asked.  “Why those people have not raised their voices when the previous Governments have sufficiently killed the mighty Indian Railways and drove it to great financial bankruptcy for their political agendas?  he asked.

Prabhu’s remarks come in the backdrop of raging debate on the privatisation of railways with the government-appointed committee headed by economist Bibek Debroy recommending corporatization of the loss-making public transporter and suggesting that the ministry of railways be only responsible for policymaking and private players should be allowed to run passengers and freight operations.

According to the latest CAG report on Railways, the Indian Railways was unable to meet its operational cost of passenger and other coach services and there was a loss of Rs 23,643 crore in the same during 2011-12 and is about to land in huge bankruptcy.

Asked about the reasons for opposing privatisation, he said, “Unfortunately this type of nomenclature is an ideological debate. This is unnecessary and unintended confrontation. What is meant by us is that we want to improve quality of service of railways.”

“So whatever brings better quality of service, better technology, better profitability has to be done with whatever means possible. If we can do it ourselves in-house then we should do it. If we realise that we cannot do it in-house then we must get it outside capital, outside technology and outside agency” but not with the transfer of ownership.

Privatisation, he said, “is a bogey being raised by those who do not want change” even if it is for improving performance and facilities.
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Monday, 9 March 2015

21:24

Government encourages Private/Foreign Direct Investment in Railway Sector: MOSR in Parliament

Govt encourages Private/Foreign Direct Investment in Railway Sector: MOSR in Parliament

New Delhi: The Ministry of Railways has issued Sectoral guidelines for Domestic/Foreign Direct Investment (FDI) in November, 2014. The following areas have been identified for Private/Foreign Direct Investment:

  • Suburban corridors through Public Private Partnership (PPP);
  • High speed train projects;
  • Dedicated freight lines;
  • Rolling stock including trains sets and locomotive/coaches manufacturing and maintenance facilities;
  • Railway electrification;
  • Signaling system;
  • Freight terminals;
  • Passenger terminals;
  • Testing facilities and laboratories;
  • Non- Conventional Sources of Energy;
  • Railway Technical Training Institutes;
  • Concessioning of standalone passenger corridors (branch lines, hill railways etc.);
  • Mechanized Laundry;
  • Rolling stock procurement;
  • Bio-toilets;
  • Technological solutions for manned and unmanned level crossings;
  • Technological solutions to improve Safety and reduce accidents.

Modernisation of existing assets and improvement in passenger amenities is an important and ongoing process on Indian Railways. The areas include track and bridges, mechanized maintenance of track, automatic signalling, higher capacity wagons, electrification, new generation diesel and electric locomotives, green toilets on passenger trains, modernization of stations and terminals, quality of bed linen, provision of 24X7 helpline, ticketing, catering services, entertainment facilities on-board, enhancement of train capacity, Wi-Fi facility at stations etc.

Also a Participative Policy for rail connectivity and capacity augmentation was issued on 10.12.2012 which provides five models for building rail connectivity.

No specific investment proposal has been received since the opening of FDI in Rail Transport. However, approximately ` 10,000 crore private investment have been committed for 19 projects under different participative models.

An Investors Meet was organised on 5th December, 2014 and discussions with potential investors have been held to attract private investments.

This information was given by the Minister of State for Railways Shri Manoj Sinha in written reply to a question in Lok Sabha today.
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Sunday, 8 March 2015

16:06

Railway Minister approves 2 FDI Projects for setting up Diesel & Electric Locomotive Plants in Bihar at Rs.2400 Crore

Railway Minister approves 2 FDI Projects for setting up Diesel & Electric Locomotive Plants in Bihar at Rs.2400 Crore

New Delhi: In line with Prime Minister Narendra Modi’s “Make in India” campaign, Railway Minister Suresh Prabhu has finally given green signal to the two much awaited big-ticket FDI proposals for setting up diesel and electric locomotive plants in Bihar at a cost of Rs 2,400 crore.

Ending the suspense over the fate of Madhepura electric locomotive plant and Marhora diesel locomotive plant, Railways has finalised the financial bidding for the high-value joint venture projects after considerable delays, re-thinking and prolonged due diligence amid repeated revision of bidding documents.

The Request for Proposals (RFP) containing financial bidding documents for both the plants are ready and the shortlisted bidders have been intimated the same, said a senior Railway Ministry official.

While four global firms — Alstom, Siemens, GE and Bombardier — have been shortlisted for the proposed electric locomotive factory at Madhepura, two multinationals — GE and EMD – are vying to bag the diesel locomotive plant at Marhora.

The estimated cost of the factories is about Rs 1,200 crore each. The financial bidding will be opened on August 31 and there will be two pre-bid meetings held in between, the official said.

With the government allowing 100 per cent FDI in the railway sector, setting up of the two locomotive plants in joint venture model is crucial for Railways to give a boost to its infrastructure. The two projects are among top eight infrastructure projects being monitored by the PMO.

The Madhepura plant will manufacture 800 electric locomotives of 12,000 horse power (HP) over 11 years. While five electric locomotives will be imported, 795 will be manufactured at Madhepura, as per the bidding condition.

Marhora plant will produce 4500 HP and 6,000 HP diesel locomotives using state-of-the-art technology.

In the course of about 10 years after commissioning, the proposed Marhora plant is expected to manufacture about 1,000 diesel-electric locomotives, that is 100 locomotives annually.

While 700 diesel locomotives will be equipped with 4,500 horse power (HP), 300 diesel locomotives will be manufactured with 6,000 HP, said the official.

Railways will have 26 per cent equity while the global players will have 74 per cent equity in each of the plants at Madhepura and Marhora.

CNR Corporation and CSR Corporation, both based in China, had submitted qualifying bids through request for quotation (RFQ) for both the factories but were rejected in the qualifying bid in May 2014.

The proposals for the diesel and electric locomotive factory in Bihar were announced in 2008 by the then Railway Minister Lalu Prasad.

Both factories are to be set up in PPP model and there are many changes in the bidding documents over the clauses of transfer of technology and maintenance since the announcement.

“In order to give a boost to the infrastructure sector, setting up of these two factories on PPP mode is crucial for the current economy scenario and the PMO is also monitoring these projects,” the official said.

Bidding documents were earlier discharged on November 2011 and Railways called for fresh proposals for the two factories.

Scope of maintenance work for the proposed factories was revised significantly and amended bid documents were approved by the Cabinet on January 20 last year and subsequently RFQ followed by RFP for both plants were finalised, the official said.
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Sunday, 7 December 2014

06:28

Stakeholders to Work Together to Make Indian Railways Much Better in Next 3 to 4 Years: Suresh Prabhu

Stakeholders to Work Together to Make Indian Railways Much Better in Next 3 to 4 Years: Suresh Prabhu 

‘Investors’ Meet’ Organised to Discuss PPP & FDI Issues 

The Ministry of Railways Shri Suresh Prabhakar Prabhu, today organized an ‘Investors’ Meet’ in Rail Bhawan to discuss various issues pertaining to Private Investment in rail sector especially PPP and FDI issues. ‘Chairman, Railway Board, Shri Arunendra Kumar, Board Financial Commissioner Smt. Rajalakshmi Ravikumar Member Traffic Shri D.P. Pandey Member Electrical and, Member Staff were among those present on the occasion. Advisor (Infrastructure) of Railway Board, Shri Girish Pillai conducted the proceedings of the ‘Investors’ Meet. 

In his address, the Railway Minister said that it is necessary to balance the interest of stake holders including railway employees and railway users, investors and the Government so as to make Indian Railways a vibrant and efficient enterprise. He told that Indian Railways has the obligation to protect its vast fraternity of railway employees and at the same time look after the interests of railway users. He said while the railway will continue to be owned by the Government, the private participation will be welcomed in the infrastructure sector of Railways. He said that the framework needs to be put in place to facilitate sustainable long term investment in rail sector. He called upon all stake holder to work together to make Railways much better than what it is today in coming three to four years period. 

The five following presentations were made at the meeting:- 

Overview of framework for PPP and FDI. 

Overview of framework for BOT/Annuity/EPC. 

Overview of framework for rolling stock Production Units. 

Overview of framework for freight marketing. 

Overview of framework for station development. 

Participants at the ‘Investors Meet’ include representatives from Chambers of Commerce, Railway PSUs, PSUs of Ministry of Heavy Industry, Investment Consultants, Investment Bankers, Infrastructure sector, Construction Sector, Port Sector, Rolling stock manufacturers, Raw material Manufacturers etc. 

On this occasion, the Railway Minister unveiled the booklet on “Overview of the framework for Participative Models and Domestic/Foreign Director Investment” published by PPP Cell of Infrastructure Directorate, Ministry of Railways. This booklet provides an overview of the framework for different Participative Models, projects to be undertaken through EPC and sectoral guidelines for domestic/Foreign Direct Investment. 

In the message given in this overview booklet, the Railway Minister Shri Prabhu stated that - “Indian Railways require huge resources to augment its capacity and for modernization . Initiatives for building rail connectivity to ports and mines have been undertaken successfully by involving customers. A Participative Policy was launched in December 2012 subsequent to approval of Cabinet for undertaking rail connectivity and capacity augmentation projects through five participative models. Financial commitments have already been made for 17 projects under this policy. The recent initiative of Government of India for opening up of Foreign Direct Investment (FDI) in rail sector will also open up large opportunities for investment. The past experience shows that there is need for a transparent, balanced, fair and bankable framework under which customers/investors can make investments in the rail sector. The Ministry of Railways on the basis of Participative Policy of December 2012 has prepared Model Concession Agreements for different participative models. These agreements, prepared by the Committee of Executive Directors at Railway Board in consultation with Legal Consultant and the Ministry of Law, provide a framework for rights and obligations of different parties and risk allocation between them in a fair manner thereby balancing risks and responsibilities. The agreements will be helpful to Government, customers/investors and financial institutions/bankers to give a push to building and strengthening rail infrastructure”. 

In a separate message, in the above mentioned booklet, the Minister of State for Railways Shri Manoj Sinha stated that raising resources through Public Private Partnership for network strengthening and modernization is critical for Indian Railways which has to facilitate the economic growth of the country. Lots of work has been done in last few months in providing a thrust to private investment. Launching of new Model Concession Agreements and sectoral guidelines for Domestic/Foreign Director Investment are appreciable steps towards providing a good framework for attracting private investments. 

AKS/HK/KD/RV 
(Release ID :112755)

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Thursday, 18 September 2014

18:59

FDI & PPP in Railways: Union-Railway Ministry tussle set to intensify

FDI & PPP in Railways: Union-Railway Ministry tussle set to intensify

The next few months are going to be eventful for railways. The govt is determined to bring in greater private participation in this public utility, but two of its biggest unions are opposing the move tooth and nail, embarking on a collision course.

Friday will see the first of the big all-India agitations against introducing foreign direct investment (FDI) and public-private partnership (PPP). The agitation is being spearheaded by the communist-backed All-India Railwaymen’s Federation, an umbrella group of 1.1 million railway employees.

AIRF along with Congress-backed National Federation of Indian Railwaymen (NFIR) are two of the biggest unions in the system, and both have made their intentions clear. They are not going to make it easy for the govt to ‘privatise’ railways.

As reported earlier, NFIR had torn into Modi govt’s policies on railways at a seminar on world transport unions held in Sophia (Bulgaria) in mid-August.

JR Bhosale, national treasurer, AIRF, said “We have had a meeting with Railway Board on Sept 8, and we will be meeting railway minister Sadananda Gowda next week. We believe the introduction of FDI and PPP will make Indian Railways sick. That is because, we believe FDI and PP would do nothing for railways’ core sectors that actually require rejuvenation.”

Union’s point of view: No FDI, plain common sense

According to Bhosale, the problem is that railways has not been getting adequate returns on several projects since 1952. “Look at out track system! Of the 63,000km of tracks, only 16% are saturated. We should be doubling these lines because the amount of time and fuel wasted due to congestion runs into several thousand crore. Instead, what we have been doing is constructing lines in areas, mostly rural, where there is hardly any returns,” said Bhosale.

Picking on the slow pace of electrification, Bhosle said that it was this aspect that should be given priority. “Look at the kind of money we are losing because of the diesel trains we operate. Money should be spend on electrification; tariff for power supply to the railways should be looked into so that we start saving money,” said Bhosale.

Railway ministry’s view: Numbers are all off-track

Railways minister V Sadananda Gowda, in his July 8 railway budget speech, highlighted one of the most depressing assessment of railway accounts in recent times. Railways, Gowda told Parliament, earned Rs 1,39, 558 crore, of which it spent Rs 1,30,321 crore as working expenses in 2013-14 fiscal.

On money required for big-ticket projects, Gowda said some ambitious dreams like the Diamond Quadrilateral Network—to connect metros with high-speed trains—and the 350kmph bullet train between Mumbai and Ahmedabad would require the kind of money railways just cannot imagine. The Quadrilateral network would require Rs 9 lakh crore and the bullet train Rs 60,000 crore at the current estimate. Add to that another Rs 5 lakh crore over the next 10 years to complete the ongoing projects.

The bleeding is compounded by the low fares in place. The loss per km per passenger has increased from 10 paise in 2000-01 to 23 paise in 2012-13.

In a system where safety isn’t anything to write home about, railways will be needing Rs 40,000 crore for track renewals, elimination of unmanned level crossings and building road-overbridges/road-underbridges.

Expert view by S.Ananthanarayanan, former FA&CAO, Indian Railways

I believe FDI or PPP is not required. Shortage of funds is not the limiting factor in capital works. It’s not that railways is short of money. We are unable to spend the total money allotted for various projects because of lack of contractors, equipment, materials, etc. And PPP has hardly been used in the railways and would not be an option for building developmental lines. Private investors will come in only where there is profit. The problem is railways has spread its resources very thin (on a large number of projects, most of which have been delayed). Important safety works have been delayed because of the time taken for getting permission, shortage of essentials like sleepers, materials and agencies that can construct these projects.
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Sunday, 17 August 2014

04:28

NFIR General Secretary oppose FDI, PPP in Railways

NFIR General Secretary oppose FDI, PPP in Railways

The Railways’ grand plans to pump in some much-needed funds into its depleted coffers through Foreign Direct Investment (FDI) and Public-Private Partnership (PPP) have already started facing the heat from unions.

M.Raghavaiah, General Secretary of the Congress-backed National Federation of Indian Railwaymen (NFIR), tore into the railway’s privatization policy in his speech at the 43rd World Congress of International Transport Federation being held at Sophia, Bulgaria. Raghavaiah told the gathering that his conglomeration of railway unions under the NFIR wouldn’t give up till the government rolls back the privatization plan in its entirety.

The NFIR and the Communist-backed All-India Railwaymen’s Fedeeration (AIRF) are the two largest unions in the railways. Both are expected to give the BJP-led government a tough time thanks to their parent parties being its bitter opponents.

“The railway ministry will have its hands full for the next few days trying to convince railwaymen that the FDI and PPP route is the only way out for a system which is spending 94 per cent of its earnings as working expenses and that the world’s fourth largest railways cannot survive by ploughing back just 6 per cent of its earnings,” said a senior railway official.

Railways minister V Sadananda Gowda highlighted a depressing assessment of accounts during his budget speech on July 8. The Railways, Gowda told Parliament, earned Rs 1,39, 558 crore, of which it spent Rs 1,30,321 crore as working expenses in the financial year 2013-14.
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Thursday, 14 August 2014

07:40

Cabinet Committee on Security to take decisions on FDI beyond 49% in sensitive Rail areas

Cabinet Committee on Security to take decisions on FDI beyond 49% in sensitive Rail areas

New Delhi: To deal with all the security related issues in sensitive areas like border and tribal areas, FDI proposals beyond 49% in railways will be cleared by the Cabinet Committee on Security.

The Indian government has imposed certain restrictions on foreign direct investment (FDI) in railways for projects in sensitive areas by stipulating that proposals seeking overseas investments beyond 49% will be cleared by the Cabinet Committee on Security (CCS).

Earlier this month, the Union Cabinet had cleared the long-delayed proposal for relaxing FDI policy in the cash-starved Indian Railways.

According to sources the Home Ministry had raised concerns with regard to rail infrastructure in border areas.

To deal with all the security related issues in “sensitive areas” such as border and tribal areas, FDI proposals beyond 49% will be cleared by the Cabinet Committee on Security (CCS), they said.

In all other areas such as high-speed train systems, suburban corridors and dedicated freight line projects, 100% FDI is permitted through automatic route.

The foreign investment liberalisation in the sector is aimed at helping in modernisation and expansion of the rail projects.

However, FDI will not be allowed in train operations and safety.

According to estimates, the sector is facing a cash crunch of around Rs29,000 crore and allowing of FDI will help mop up resources.

With the FDI nod, the proposed Mumbai-Ahmedabad high speed rail corridor is expected to get a push. The construction of exclusive rail corridor for freight movement is also likely to get a boost.
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Friday, 8 August 2014

07:48

Rupee rises 16 paise against the Dollar in early trade on Approval of FDI in Railways

Rupee rises 16 paise against the Dollar in early trade on Approval of FDI in Railways

Mumbai: The rupee recovered by 16 paise to trade at 61.33 against the dollar in early trade today at the Interbank Foreign Exchange market, tracking positive sentiments after the government approved FDI liberalisation in railway sector. Forex dealers said besides selling of dollars by exporters, strength in other currencies against the American unit overseas also supported the rupee, but a lower opening in the domestic equity market capped the gains.

The Cabinet yesterday cleared the long-delayed proposal for raising FDI limit in defence to 49 per cent and fully opened up the railway infrastructure segment, like high-speed trains, for foreign investment. The rupee had plunged 65 paise in its biggest single-day drop in over six months to end at 61.49 in yesterday’s trade against the greenback, hit by spike in dollar demand and negative cues from local stocks. Meanwhile, the benchmark BSE Sensex fell further by 54.13 points, or 0.21 per cent, to 25,611.14 in early trade today.

Shares of companies whose fortunes are linked to orders from Indian Railways and defence equipment makers are in focus on reports the Cabinet has on Wednesday, 6 August 2014 approved a plan to raise the amount of foreign direct investment allowed in its railway sector. The government has increased the foreign investment limit in the Railway sector to 100% as per the announcement by the Finance Minister Arun Jaitley in the Union Budget 2014-15 on 10 July 2014.

IT stocks may decline after global information technology, consulting, and business process outsourcing services provider Cognizant Technology Solutions Corp. unexpectedly cut its full-year revenue growth forecast to 14% from 16.5%, the slowest pace in its 20-year history, indicating an annual revenue growth of $10.1 billion. The management said that the company was facing client specific challenges.
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