industries and infrastructure€¦ · • 70 per cent have come mainly from singapore, mauritius,...

Sloth makes all things difficult, but industry, all things easy.

— Benjamin Franklin

As per the provisional estimates of the Annual National Income 2018-19 released byCentral Statistics Office (CSO), the growth of industry real Gross Value Added (GVA) washigher at 6.9 per cent in 2018-19 as compared to 5.9 per cent in 2017-18.

Index of Industrial Production (IIP)• IIP assigns a weight of 77.63 per cent to manufacturing sector, 14.37 per cent to mining

sector and 7.99 per cent to electricity sector.• Industrial growth rate in terms of IIP was down to 3.4% in 2018-19 from 4.4% in last

year.• For capital goods growth rate was 2.8% => shortfall in investment.• 8 core industries- Coal, Crude Oil, Natural Gas, Petroleum Refinery Products, Fertilizers,

Steel, Cement and Electricity.• They have 40.3 per cent weight in the IIP.• Growth rate for core industries was 4.3%.

Central Public Sector Enterprises(CPSEs)• 339 CPSEs as on 31 March, 2018. 184 CPSEs were profit making, 82 are non-operational

during 2017-18. CPSEs contribution to the total Central Exchequer decreased by 2.98per cent in 2017-18 as against the previous year.

• there is a great scope for improvement for CPSEs in some sectors as the private sectorfirms have performed relatively better than the public sector firms

Corporate sector Performance• Growth of sales (YoY) of over 1700 non-governmental non-financial (NGNF) listed

manufacturing companies was 21.6 per cent in Q1, 19.3 per cent in Q2 and 13.2 percent in Q3 during 2018-19.

• moderation was observed in nominal sales growth of manufacturing companies due tosubdued demand conditions faced by textiles; iron and steel; motor vehicles and othertransport equipments.

• The capacity utilization of India’s manufacturing sector increased to 75.9 per cent in Q3of 2018- 19 which is higher than Q3 of 2017-18 which is higher than that of last year.

Gross Capital Formation in Industrial Sector• the rate of growth of Gross Capital Formation (GCF) in industry has registered a sharp

rise from (-) 0.7 per cent in 2016-17 to 7.6 per cent in 2017-18, showing upwardmomentum of investment in industry.

Credit Flow to the Industrial sector• a sharp decline was noticed in industries like textiles, petroleum, coal

products and nuclear fuel, basic metal & metal products in 2018-19.• Mining and quarrying, food processing, vehicles, vehicle parts and

transport equipment registered lower growth rate• growth in gross bank credit flow to the industrial sector has increased by

6.9 per cent

Foreign Direct Investment (FDI)• total FDI equity inflows decrreased to US$44.36 billion 2018-19 as

compared to US$44.85 billion during 2017-18.• 70 per cent have come mainly from Singapore, Mauritius, Netherlands,

Japan and United Kingdom.

Key Initiatives taken to boost Industrial Sector in India• simplification and rationalization of the existing rules and introduction

of information technology to make governance more efficient andeffective. Therefore India improved 23 rank in ease of doing businessindex to 77th rank in 2018.

• Start-up India• The initiative aims to create an ecosystem that is conducive for

the growth of Start-ups.• exemption from Income tax on investments raised by Start-ups• Self-certification regime for six labour laws and three

environmental laws,• Start-up India Hub as ‘One Stop Shop’ for the start-up ecosystem

in which 2,37,902 users have availed free Start-up India LearningProgram to build business plans,

• Maharashtra, followed by Karnataka and Delhi, are among thetop ten performers in terms of State-wise distribution ofrecognized Start-ups in India

• industry-wise distribution of recognized start-ups, IT Servicesaccounted for around 15 per cent followed by Healthcare andLife Sciences at around 9 % and education at 8 %.

Industries and infrastructure

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GEOGRAPHY WITH SHABBIR

SteelSteel industry directly contributes to about 1.4 to 2 per cent of India’s GDP.it accounts for 7.53 per cent of the Wholesale Price Index (WPI).India is the second largest producer of crude steel with global share of 6 %.During 2018-19, crude steel’s production witnessed growth rate of 3.3 %with utilisation capacity of 77.24 %.India is the third largest consumer of the finished steel after China and USA.year 2018- 19 witnessed weakening of steel market fundamentals due toincrease in trade friction imposition of protectionist measures and excesssteel capacitytrade restrictive measures by USA, European Union and Canada causedIndia’s exports to declined from 9.6mT to 6.3mT.Import increased. India remained net importer of finished steelSome of the key challenges faced by the Indian steel Industry are• capacity expansion as the demand for steel is bound to rise with

economic growth.• High grade and value-added steel are used in power, defence and

automobile which is currently imported.• Difficulties in acquiring mining lease and high dependency on import of

coking coal add to cost of steel production.• High logistics costs also act as a major constraint.

Leather and Footwear

India is the second largest producer of footwear, second largest exporter ofleather garments and fifth largest exporter of leather goods.It highly employment intensive sector.The global demand for footwear is moving towards non leather footwear,while Indian tax policies favour leather footwear productionIndian Footwear and Accessories Development Programme is beingimplemented (2017-20) to address the challenge of higher tariff rate facedby Indian products.

Gems and JewelleryDuring the year 2017-18, the gem and jewellery exports were 13.69 % of totalmerchandise exports in the country.Step taken to strengthen it –• establishment of Special Notified Zone,• setting up of Common Facility Centres for gems and jewellery sector,• creation of separate ITC HS Code for lab grown diamond,• reduction of GST rates for cut and polished diamonds and precious stones,• exempting IGST on import of gold by specified agencies and banks,• exemption from GST on supply of gold by nominated agencies to exporters

and providing financial assistance for participation of international fairs.

MSME

plays a crucial role by providing large employment opportunities, industrialization of rural areas, reducing regional imbalances, etc.Steps taken for improvement –• ‘in-principle approval’ for loans up to `1 crore within 59 minutes through online

portal.• Interest subvention of 2 per cent for all GST registered MSMEs on incremental

credit up to `1 crore. it will be in operation for a period of two year 2018- 20.• Small Industries Development Bank of India acts as the Nodal Agency for

implementation of the Scheme. working capital extended by Scheduled Commercial Banks and RBI Registered Systemically Important NBFCs and RRBS will be covered under the Scheme.

• Prime Minister’s Employment Generation Programme, • Credit Guarantee Trust Fund for Micro and Small Enterprises, • Credit Linked Capital Subsidy Scheme for Technology Up-gradation, • Scheme of Fund for Regeneration of Traditional Industries• Micro and Small Enterprises- Cluster Development Programme for the

establishment of new enterprises and development of existing ones. All Rights Reserved.® Copyrighted Material. Any unauthorised reproduction maybe illegal.


Textiles and Apparels

Indian textile industry, the second largest manufacturer and exporter in the world, contributes 12.65% to manufacturing and 2.3 % to GDP. India has a share of 5% of the global trade in textiles and apparel This sector is the biggest employer after agriculture employing 4.5 crorepeople directly and another 6 crore people in allied sectors.It plays a critical role in improving social dynamics as mostly women are employed in the sector. It is perfectly aligned with Government’s key initiatives viz., Make in India, Skill India, Women Empowerment and Rural Youth Employment.Challenges –• Except for the spinning segment, all other sectors lack scale • marginal technological gap exists in weaving, processing and

embroidery and larger gaps in knitting, technical textile and garmenting segments.

• Indian exports of apparel continue to face higher average tariffs in external markets as compared with competing nations which enjoy duty free access.

Steps –• package offers Rebate of State Levies, • labour law reforms, • additional incentives under Amended Technology Up-gradation Fund• Scheme • relaxation of Section 80JJAA of IT act.• the rates under Merchandise Exports from India Scheme have been

enhanced • Market Access Initiative Scheme• interest equalization rate for pre and post shipment credit for the

textile sector has been increased.

• “Overhead Capital” or “Social Overhead Capital”• According to A.O Hirschman Social Overhead capital is the “basic services without

which primary, secondary and tertiary productive activities cannot function”.• The very success of social and economic transformation of an economy lies in

providing inclusive and sustainable infrastructure amenities to the people and thepace of economic growth depends on how competently and judiciously an economyis able to address its infrastructure bottlenecks.

• SDG goal number 9 aims to “Develop quality, reliable, sustainable and resilientinfrastructure

• The correlation of investments in inland, road, rail and airport infrastructure to GDPare higher than 0.90 indicating that there exists a strong correlation between GDPand investment in infrastructure

• India needs to spend 7-8 per cent of its GDP on infrastructure annually, but it is ableto spend only half of it.

• Steps –• National Investment and Infrastructure Fund has been created• Credit Rating System for infrastructure projects, based on Expected Loss

approach, has also been launched• infrastructure investment trusts and Real Estate Investment Trusts have

been formulated to pool investment in infrastructure.

INFRASTRUCTURE



Road Sectorprovides crucial links to airports, railway stations, ports and other logisticalhubsIt contribute 69 % and 90 % of the country wide freight and passenger trafficrespectively.Ministry of Road Transport and Highways (MORTH) declared 2018-19 as the‘Year of Construction’,Challenges –• availability of funds for financing large projects• long gestation period of road projects ,• lengthy processes in acquisition of land and• payment of compensation to the beneficiaries,• environmental concerns,• time and cost overruns due to delays in project implementation,• procedural delays,• lesser traffic growth than expected• increasing the riskiness of the projects resulting in stalled or languishing

projects• shortfall in funds for maintenance.In India, the investments in roads have been financed from1. budgetary support (48%) 2. internal and extra-budgetary resources(39%) (IEBR)3. private sector investment.(14%)

Central Road Fund (CRF) amended by the Finance Act, 2018, and replaced byCentral Road and Infrastructure Fund (CRIF)Eastern Peripheral Expressway, Delhi-Meerut expressway and Dhola-SadiyaBridge are the major projects completed during 2014-19

Railways

Category of Road Length of Roads (km) % Share

National Highways 1,14,158 1.94

State Highways 1,75,036 2.97

District Roads 5,86,181 9.94

Rural Roads 41,66,916 70.65

The history of rail transport in India dates back to 1832.

Freight and passenger performance: Revenue Earning Freight loading increased in comparision to last year.There is an increase of 2.09 per cent the number of passengers carried by IR during 2017-18 as compared to 2016-17 train collisions has come down to zero in the year 2018-19

IR has initiated a major electrification program for electrifying 100 per cent of its Broad Gauge network. As on 01 April, 2019 51.85 % of total network is electrified which carries 64.50 % of freight and 53.70 per cent of coaching traffic. ‘Swachh Rail, Swachh Bharat’, mission focuses on cleanliness. As per the swacch rail portal, Beas station ranked first in India in the case of cleanliness among ‘A’ category stations and ‘Visakhapatnam’ tops the list among ‘A1’ category stations there is an increasing competition among stations to obtain “Green Rating”.



Civil Aviation• scheduled domestic air transportation for passengers and goods has grown by 14

per cent and 12 per cent respectively in 2018-19• Domestic passenger traffic in revenue passenger kilometre (RPK) recorded the

fastest growth in the world at about 20 per cent for over 50 consecutive months upto December 2018

• passenger demand is higher than the seat supply• To meet the surging demand and providing air connectivity to remote regions, new

Greenfield airports are being rapidly developed.• Government has decided to lease out six brownfield airports of Airports Authority of

India (AAI) in Public-Private Partnership on Operation, Maintenance andDevelopment model (Guwahati, Lucknow, Jaipur, Ahmedabad, Mangalore andThiruvananthapuram)

• Under “Ude Desh ka Aam Naagrik-UDAN”, a total of 719 routes have been awardedin three rounds of bidding for regional connectivity 182 of which are operational

• ensuring balanced regional growth, while making air travel convenient andaffordable

• Once all routes are operationalized, more than 1 crore RCS-UDAN seats will beprovided annually, and 21 States would have more than 3 operational airports each.

• UDAN (International) Scheme has been launched recently, under which GuwahatiAirport will be connected to Bangkok and Dhaka.

• UDAN benefits –• 1 crore RCS-UDAN seats will be provided annually,• 21 States would have more than 3 operational airports each.

• Air cargo growth of 12.1 per cent in 2018-19 air cargo handled reached 3.6 MMT• General cargo tonnage handled increased by over 10 per cent per year in last four

years with courier services increasing by 17 per cent.• National Air Cargo Policy’s outline was released at the Global Aviation Summit in

January 2019 with target of handling 10 million tonnes by 2026-27• High airport tariffs, royalty and other charges, shortages of certain skilled manpower

in civil aviation sector and recourse to overseas suppliers of Maintenance Repair &Overhaul (MRO) facilities have contributed to engendering cut-throat competitionamongst domestic airlines

• Currently annual import of MRO services by airlines in India is about`9,700 . The size of domestic and imported Indian airline MRO is set togrow annually to `21,600 crore in the next five years

• High and unpredictable change in global crude oil prices during 2018-19have been compounded by a high domestic tax regime on aviationturbine fuel. Therefore there is demand to bring Aviation TirbineFuel(ATF) under GST.

Shipping• India had a fleet strength of 1400 vessels with gross registered tonnage

(GRT) of 12.68 million GT• Shipping Corporation of India (SCI) having the largest share of around

30.52 per cent • Ports handle around 90 per cent of EXIM Cargo by volume and 70 per

cent by value. • Sagarmala and project Unnati to meet the ever increasing trade

requirements, • the Port Performance Benchmarking & Performance Index published by

Logistics Data Bank for February, 2019, Gateway Terminals India is in the top performing category and International Container TranshipmentTerminal, Kochi in the low performing category.

• inland waterways is cheap and environment friendly • India’s first inland waterway multimodal terminal (MMT) at Varanasi was

inaugurated • To establish alternative connectivity to the North East through Indo-

Bangladesh Protocol route, dredging works between Ashuganj and Zakiganj and Sirajganj and Daikhawa in Bangladesh through 80:20 sharing have been awarded



Telecom Sector

• Telecommunication has been recognized world-over as a powerful tool ofdevelopment and poverty reduction through empowerment of masses.

• telephone connections in India touched 118.34 crore in 2018-19, registeringa growth of 26.84 per cent with 51.42 crore rural connection.

• The wire-less telephony now constitutes 98.17 per cent of all subscriptions• The private sector dominated overall connections with a share of 88.72 %.• affordable tariffs, wider availability, roll out of Mobile Number Portability

(MNP), expanding 3G and 4G coverage, evolving consumption patterns and aconducive policy and regulatory environment.

• As per a GSMA report, the mobile industry supports about 6.5 % of India’sGDP, it is expected to reach 8.2% by 2020. its contribution in global GDP is4.6%.

• 5G technologies are expected to contribute US$2.2 trillion to the globaleconomy over the next 15 years,

• 5G has been conceived as a foundation for expanding the potential of theNetworked Society

• 5G will enable citizens to reap the benefits of doorstep governance andavailability of services, medical support, benefits transfers, education,entertainment and build a digital payment, knowledge and services economy

• The Government has constituted High Level 5G India 2020 Forum toarticulate the Vision for 5G in India and submitted its report on “Making India5G Ready” in August, 2018

• Internet of Things (IoT) – using 13-digit Machine to Machine (M2M)Numbering Plan for M2M communication.

• During 2018-19 FDI equity inflow touched US$2.67 billion => faith of globalcommunity in Government policy, reforms and measures taken towards easeof doing business, as well as the bright prospects of the telecom sector in thecountry

• Vide Resolution dated 22 October, 2018, the ‘Telecom Commission’ has beenre-designated as the ‘Digital Communications Commission’

Petroleum & Natural Gas

• Natural gas production during 2018-19 was 32.873 BCM which was 0.69 per cent higher in comparison to last year’s.

• Crude oil production during 2018-19 was 34.203MMT which is lower in comparison to last year’s.

• Refinery production (in terms of crude oil processed), during 2018-19 was 257.20 MMT which is higher than last year’s.

• Refinery capacity in India is projected to be ~400 MMTPA by the year 2030.• To promote ease of doing business in petroleum sector –

o Weightage to Minimum Work Programme (MWP) has been enhanced.

o Revenue sharing ceiling at highest revenue point to be set at 50 per cent.

o The timeline for completion of committing Minimum Work Programme reduced.

o No production and revenue sharing, only statutory levies except in case of windfall gain.

o Full marketing and pricing freedom at Arm’s Length basis based on competitive bidding.

o Grant of concessional royalty, if production commences within 4 years / 5 years.

o National Oil Companies (NOCs) have been given freedom to choose field specific implementation model like Technical Services Model, Joint- Venture Model, Farming-out Model, etc., for enhancing production.

o New gas discoveries to get pricing and marketing freedom. o NOCs have also been mandated to bid-out fields with complete

marketing and pricing freedom on revenue sharing model under the supervision of DGH.



Power Sector• India improved its ranking in the Energy Transition Index published by World

Economic Forum (76th position)

• The installed capacity has increased from 3,44,002 MW in 2018 to 3,56,100.19 MW in 2019.

• The Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA) was launched in October, 2017 with the aim of universal household electrification by providing last mile connectivity and electricity connections to all remaining un-electrified households in rural and all poor households in urban areas.

• Fostering Effective Energy Transition, 2019 report of WEF states that “India, Indonesia and Bangladesh have made fast progress towards universal electrification due to strong political commitment”.

Housing

• According to Census 2011, 377.1 million Indians comprising 31.14 per

cent of the country’s population lived in urban areas,

• in India urbanisation has become an important and irreversible process,• India may be said to be in the midst of transition from a predominantly

rural to a quasi-urban society. • Policy initiative –

o The Real Estate (Regulation and Development) Act, 2016 (RERA) o Pradhan Mantri Awas Yojana (Urban): has four components:

1.“In-situ” Slum Redevelopment; 2.Credit Linked Subsidy Scheme; 3. Affordable Housing in Partnership with public or private sector 4. Beneficiary-led individual house construction/ enhancements.

o Smart Cities Mission

o Initiatives under SCM –o ‘Ease of Living’ Index for cities. it will help our Country to

track and achieve SDGs o Municipal Performance Index (MPI), 2019



Infrastructure Financing• As per World Bank, India is ranked second among developing countries both by

the number of PPP Projects as well as the associated investments.• More than a third of the infrastructure investment in India in the past decade has

come from the private sectorPPP models includes –• Management contracts, • Build- Operate-Transfer (BOT) contracts, • Design- Build-Finance-Operate-Transfer contracts, • Rehabilitate - Operate - Transfer, • Hybrid Annuity Model, • Toll-Operate-Transfer model. Public Private Partnerships are quintessential for addressing infrastructure gaps in the country.

Challenges –Lack of comprehensive resolution/ settlement option for projects which are either stuck-up mid-way or wherein the arbitral disputes/ claims have not been settledLack of time-bound resolution of disputes in infrastructure sectors issues of leveraged balance sheets and aggressive bidding making it difficult for them to mobilize resources for completion of projects. Step – Government has adopted the Hybrid Annuity Mode of PPP to encourage private participation in infrastructure projects.



industries and infrastructure€¦ · • 70 per cent have come mainly from singapore, mauritius,...

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