Year

ReviewIn

Snapshot of the Indian economic,

political and international

developments in the year 2016

India has emerged as the fastest growing major India stood around 4, 76,816 crore in 2016. There was economy in the world as per the Central Statistics a significant increase in the NPAs as compared to last Organisation (CSO) and International Monetary Fund year where it stood around 2, 67,000 crore. (IMF). Post the government’s decision to demonetize Main reasons for increase in NPAs of banks are a major chunk of the currency in circulation, however, sluggishness in the domestic growth during the most international agencies lowered India’s growth recent past, slowdown in recovery in the global forecasts for 2017, with Asian Development Bank economy and continuing uncertainty in the global (ADB) reducing its projection from 7.4 to 7 per cent. markets leading to lower exports of various products. This was due to a slowdown in investments, weaker Power sector contributed 20% to the NPAs, growth in agriculture and a lack of available cash due Infrastructure contributed 17.4% and Steel and to demonetization. Mining together contributed 25% to the NPAs .Delay

in collection of receivables and aggressive lending by Fiscal policy the banks in the past has caused strain on various

Union Budget Highlights: projects in different sectors.Rs 5,500 crore were allocated to Pradhan Mantri Fasal Incentives: Bima Yojna (PMFBY) and an amount Rs 15000 crore

• New manufacturing companies incorporated on has been allocated as interest subvention to reduce or after 1 March, 2016 to be given an option to be the burden of loan on farmers. Funds have also been taxed at 25% + surcharge and cess provided they allocated to boost the rural economy; Pradhan Mantri do not claim profit linked or investment linked Gram Sadak Yojna (PMGSY) was allocated Rs 27,000 deductions and do not avail of investment crore. Fiscal deficit will remain at 3.5% of the GDP in allowance and accelerated depreciation.financial year 2016-17 and Rs 25,000 crore were

injected into the public sector banks which are • Lower the corporate tax rate for the next financial already suffering with huge Non Performing Assets. year for relatively small enterprises i.e.

companies with turnover not exceeding 5 crore Non-Performing Assets for public sector banks in (in the financial year ending March 2015), to 29%

Economic Overview

plus surcharge and cess. unemployment.

• Changes in customs and excise duty rates on The 30-day moving average of rural unemployment certain inputs to reduce costs and improve was 5.77 per cent, 6 basis points lower than the figure competitiveness of domestic industry in sectors on the previous day. In comparison, the 30-day like Information technology hardware, capital moving average of urban unemployment increased goods, defence production, textiles, mineral fuels by 3 basis points to 7.29 per cent during the same & mineral oils, chemicals & petrochemicals, period. As a result of this opposing trend, the urban-paper, paperboard & newsprint, Maintenance rural differential increased by 9 basis points 152 basis repair and overhauling [MRO] of aircrafts and ship points over the previous day.repair.

• Incentives for startups

-Startups to be allowed a 100% deduction of profits for 3 consecutive years out of five, subject to the fulfillment of prescribed conditions

• Tax incentive for employment generation

-Budget has introduced the following amendments/ insertions: 1. Deduction available with respect to employee costs incurred, where total emoluments are less than or equal to Rs 25,000 per month 2. No deduction allowed on government funded

Inflation: Inflation remained at 5.48 % in 2016 and pension accounts 3.Minimum days of

India witnessed an above average monsoon in 2016 employability reduced from 300 days to 240 in

which contributed to the repo rate cut by the RBI. a financial year 4. 30% of all emoluments paid/payable to the employees employed during the year shall be allowed as deduction in the first year of business.

Growth Indicators:

GDP: Indian economy expanded at the rate of 7.9% year on year in first quarter (Jan- March) of 2016. In second quarter of 2016 growth rate went down to 7.1 % year on year because of the slower pace of private consumption. The trajectory of growth went upside again in third quarter of 2016 reaching to 7.3%. Services sector contributed 33% to the GDP in 2016. India’s tax to GDP ratio remained at 16.6% which is well below the emerging market economies and

In August 2016, India adopted an inflation target of OECD average. Personal tax contributed 40% to the

4% for the next five years under the monetary policy Direct tax collections and rest 60% was contributed by

framework. In December 2016, for the first time in corporate income tax in 2016.

150 years, India’s economy surpassed that of United Employment and Unemployment rate: According to Kingdom. It was observed that the rate of inflation CMIE, on 28 December 2016, the 30-day moving was stable during the first quarter around 5. 61%. The average of the all India unemployment rate second quarter and third quarter witnessed inflation decreased by 4 basis points to 6.28 percent, at around 4.8%. However, the fourth quarter compared to the figure on the previous day. The fall in observed a sudden decline in the inflation rate, as low the overall moving average is a result of a fall in rural as 4.3%, due to demonetisation. unemployment, offsetting the r ise urban

• Exports in India averaged 4739.01 USD Million from 1957 until 2016, reaching an all-time high of 30541.44 USD Million in March of 2013 and a record low of 59.01 USD Million in June of 1958.

Reserve Bank of India reduced the Repo Rate from 6.75% to 6.25% during the year, a fair drop compared to last year.

International Trade Foreign direct investments: A UNCTAD report in June

Import trends: 2016, pegged India at rank 10 in global FDI inflows. • Imports to India increased 10.4 percent year-on- The NDA government termed it a “radical

year to $33 billion in November of 2016. liberalisation” of the FDI regime by

• Gold purchases jumped 23.2 percent to $4.4 billion and oil imports increased 5.9 percent to $6.8 billion.

• Considering April to November, imports declined 8.4 percent.

• Imports in India averaged 6916.75 USD Million from 1957 until 2016, reaching an all-time high of 45281.90 USD Million in May of 2011 and a record low of 117.40 USD Million in August of 1958.

Export trends:

• Exports from India went up 2.3 percent year-on-year to $20 billion in November of 2016.

• Considering April to November, exports were up 0.1 percent.

easing norms for a host of important sectors including defence, civil aviation and pharmaceuticals, opening them up for complete foreign ownership. FDI continues to be prohibited in lottery, gambling, atomic energy, real estate investment trusts (ReIT), and railway operations.

Indexes:

Ease of doing business: 2016 witnessed India's improved ranking on Ease of Doing business report. One of the biggest improvement was in ease of ‘access to electricity’, where it moved up 29 spots to 70. A state level analysis of ease of doing business showcased Andhra Pradesh and Telangana to have jointly topped the 2016 all-India State/Union Territory-wise Ease of Doing Business rankings, while last-year's topper Gujarat slipped to the third spot.

Global Competitiveness Index: India’s ranking in the Global Competitiveness Index for 2016-17, also improved 16 places to 39, making it the fastest riser up the ranks among 138 countries surveyed. India’s competitiveness improved across the board, particularly in goods market efficiency (60), business sophistication (35) and innovation (29).

Moody’s credit ratings: Moody’s Investors Service affirmed India’s sovereign rating at ‘Baa3’ with a positive outlook. Even S&P Global Ratings ruled out an upgrade for India over the next two years and also affirmed the stable outlook on the country’s ‘BBB-’ long-term and ‘A-3’ short-term sovereign credit ratings.

Political Overview

ome hangovers from 2016 were more than just The image of electoral invincibility displayed by Prime a surfeit of liquor at numerous New Year’s Eve Minister Narendra Modi and party chief Amit Shah in Sparties. A few “old acquaintances” that refused 2014 took a beating in assembly elections the

to “be forgotten” included the hangover of following year particularly in Bihar. However, they demonetisation as also the battle of the Yadav’s in UP. regained more than a bit of that lustre with the win in Both beginning towards the end of the year, spilled Assam. The main hope of a Congress revival now rests over to the next and are bound to have an impact on on the Punjab Assembly elections early in 2017. The the nation as a whole but specifically in the UP Badal-led SAD-BJP government has been thoroughly Assembly elections due a few weeks into 2017.The discredited by now and Punjab seems ripe for the Congress ended up a big loser, being voted out of picking. So far the Congress is showing no signs of office in two of the four states---Assam and Kerala--- scoring yet another self-goal in Punjab as it did in that witnessed Assembly elections in 2016. While Assam, losing a main chunk of its leadership to the Kerala followed its traditional “revolving door” BJP. It has opted to stick with Captain Amrinder Singh electoral pattern, voting in the Left Front and ejecting who had comprehensively beaten Finance Minister the ruling Congress-led United Democratic Front, Arun Jaitley in Amritsar in the face of the Modi wave Assam provided the true shocker, opting of 2014. The former Patiala Maharajah looks set to overwhelmingly for a BJP government, the first in the put up a good fight in Punjab. However, AAP is waiting history of that state. in the wings as well, having won 4 Lok Sabha seats

Source: News articles

from Punjab in 2014. The anti-establishment vote could well be split.

The Congress had made marginal gains in the Bihar elections in 2015. However, party President Sonia Gandhi and Vice President Rahul Gandhi had played a crucial role in bringing together two warring camps led by Nitish Kumar and Lalu Prasad Yadav thereby ensuring a comprehensive victory for a united opposition front. With the current war going on in the Yadav family-led Samajwadi Party, the Congress could be looking at playing a similar role in the crucial UP elections just a few weeks away.

Highlights at the Centre level

Cabinet Reshuffle: Five ministers resigned and 19 new ministers of state were inducted into Prime Minister Modi’s Council of Ministers on 05 July, taking the total up to 78. Out of the 19 ministers- of which 17 are from the BJP- five belong to the SC community, two are from Scheduled Tribes and two from Other

The ongoing rift in the Samajwadi Yadav Parivar is a Backward Castes. classic example of political family feuds. At one level These caste configurations are critical to the electoral two uncles are engaged in a political battle, one ambitions of the BJP as it readies the party for supported by a nephew and the other by a brother. So assembly elections due over the next year. The Shivpal Singh Yadav booted out of the state reshuffle also saw demotion of four heavy weights - government by his nephew, Chief Minister Akhilesh Smriti Irani, Jayant Sinha, V.K. Singh and Sadanand Yadav, was made state party chief by his brother, Gowda. MoS Prakash Javadekar was promoted to a Mulayam Singh Yadav who also happens to be Cabinet rank, taking charge of Irani’s erstwhile Akhilesh’s father. Another uncle, Ram Gopal Yadav is portfolio of HRD.firmly on Akhilesh’s side and hurling curses at Shivpal

Amit Shah reappointed as BJP President: Amit Shah while making dire statements to the effect that was unanimously re-elected as the BJP President for Mulayam is being led astray by Shivpal and SP general the second consecutive term. His tenure will last secretary Amar Singh. On the penultimate day of the three years. He has been credited with BJP’s victories year, Mulayam moved to expel both his son and his in Maharashtra, J&K, Haryana, Jharkhand and Assam cousin (Ram Gopal) from the party. However, on the previously, even though the party saw massive last day of the year gone by, nearly 200 of the SP’s 224 defeats in Delhi and Bihar in 2016. MLAs turned up at Akhilesh’s Kalidas Marg home in

Lucknow in a show of support. Mulayam, the tired RBI Governor appointment: Urjit Patel was lion in winter managed to attract the rest that is appointed as the new Governor of the Central Bank. around 20-24. Having seen the light Mulayam and his He succeeded Raghuram Rajan. Patel, the 24th RBI brother revoked the expulsion of Akhilesh and Ram Governor, will serve a three-year term with effect Gopal Yadav.from September 4.

Meanwhile in Uttar Pradesh where hours after Highlights at state levelCongress vice-president Rahul Gandhi and chief

Legislative Assembly Elections: Legislative Assembly minister Akhilesh Yadav held a joint news conference elections were held In four states: Assam, Kerala, and a road show in Lucknow, Samajwadi Party (SP) Tamil Nadu and West Bengal in 2016. patriarch Mulayam Singh Yadav announced that he is

against the alliance and won't campaign for it in the Upcoming state elections scheduled in 2017-18 are upcoming assembly polls. The SP founder insisted critical and will decide the fate of Congress in the that his party can contest the elections on its own. country.

Quiteclearly Mulayam Singh Yadav has not been able Karnataka-Tamil Nadu Water Issue: The sharing of to get over his Lohiaite Socialist past whose main waters of the Cauvery river has been one of the major plank was anti-Congressism! reasons for serious conflict between Tamil Nadu and

Karnataka. The Cauvery Water Disputes Tribunal in a North Eastern States: The political situation of North-recent decision decided that the 1892 and 1924 East India plays a very important role in shaping the agreements are still valid; however, it said the latest country's future. India shares its boundaries with 5 order would supersede the agreements of 1892 and countries along the north-east region. With its recent 1924 as far as the Cauvery water system is concerned. win in Assam, the National Democratic Alliance And so, the deadlock continues. moves a step closer to its ambition of a “Congress-

mukt Bharat.” The BJP gives importance to this region Tamil Nadu politics post-Jayalalithaa: Having swept due to its strategic location. However, the BJP has back into power for record second term in a row and displayed an unnecessary degree of impatience in its defeated numerous charges against her that saw a drive to take over the North-Eastern States. At least temporary departure from the Chief Minister’s Chair, one victim of this was the Arunachal Governor, Jyoti Jayalalithaa Jayaram finally lost out to the Grim Prasad Rajkhowa. A former Chief Secretary of Assam, Reaper. Puratchi Thalaivi’s departure will not only he was among the first governors to be appointed by impact the political scenario in Tamil Nadu but will the Modi administration. He also became the first to also impact politics at a national level. be sacked after he exuberantly dismissed the Ottakarathevar Panneerselvam took over as Chief Congress government. There was near repeat Minister and Sasikala Natarajan, Jayalalithaa’s performance in Uttarakhand a few months earlier. longtime aide was appointed the leader of AIADMK.

Both, Sasikala and Panneerselvam will face many state has been in the grip of a protracted, sometimes challenges in the uncertain world of Dravidian violent, dispute, with the powerful Patidar politics. The central leadership of the BJP supposedly community, once at the core of Narendra Modi’s influenced the change of guard in the ADMK with support base.party chief Amit Shah and Central Minister Venkaiah BJP-MGP rift in Goa: BJP ally Maharashtrawadi Naidu working behind the scenes to install Gomantak Party (MGP) demanded that Chief Minister Panneerselvam as the Chief Minister and Sasikala as Laxmikant Parsekar be sacked if BJP wants to continue the Chief of the ADMK. The BJP government at the the ruling alliance. Political wrangling between the Centre needs ADMK support in Parliament for issues MGP and BJP has increased in recent times, especially such as the passage of the crucial GST Bill. Besides the with elections to the 40-member Goa assembly likely BJP is looking for an electoral foothold in Tamil Nadu to be held early next year. In another surprise move to make up for losses it will almost certainly suffer in virtually the entire RSS unit in Goa walked out of the states like Gujarat and UP in 2019. Conspiracy parent body under the leadership of the state unit theories also abound with a respectable retired judge chief, Subhash Velingkar after he was sacked. expressing deep suspicions about the manner of Velingkar has since formed another political entity Jayalalithaa’s death. The return of Sasikala’s and seems intent on fighting assembly elections.numerous relatives, including her husband, to the political centre-stage has added fuel to such theories. Jayalalithaa had banished Sasikala and family in 2011 because they were the fountainhead of corruption in her government. Sasikala returned apologetic swearing to stay away from her relatives and friends collectively called the Munnargudi cartel. All of them are back once again. Income tax raids on the office and home of the TN Chief Secretary, P. Rama Mohana Rao, are being seen as a measure taken by Modi and Shah to keep Sasikala in line (Rao who has since been replaced is said to be close to her).

Najeeb Jung resigns as the LG of Delhi: Delhi lieutenant governor Najeeb Jung resigned on 22 December 2016. His tumultuous tenure was marked by a continuous standoff with the AAP government over jurisdictional issues. Former Union Home Secretary, Anil Baijal has been appointed as his successor. And no one quite knows why Jung resigned.

Kashmir tension: A series of violent protests in the Muslim-majority Kashmir Valley started with the killing of Burhan Wani, a militant commander of the Kashmir-based Hizbul Mujahideen, by Indian security forces on 8 July 2016. After his killing, anti-Indian protests started in all 10 districts of the Kashmir Valley.

Vijay Rupani announced as the new CM of Gujarat: The Bharatiya Janata Party (BJP) announced Vijay Rupani as Gujarat's 16th chief minister to succeed Anandiben Patel and Nitin Patel as the state's deputy chief minister. With Anandiben Patel resigning, Vijay Rupani, who belongs to the Jain community and hails from Rajkot, was considered as the frontrunner. The

adhar Bill: The government passed the bring more products under the mandatory standard Aadhar Bill in Lok Sabha despite protests from regime. One of the prominent highlights of the bill is Athe Opposition parties, who did not want it that it gives the BIS the authority and power to

passed as a ‘money bill’. Money Bills are those that withdraw sub-standard products from the market. contain provisions regarding taxation, borrowing of National Intellectual Property Rights: The Union money by the government and expenditures or Government approved National Intellectual Property contributions to the Consolidated Fund of India. As Rights (IPR) Policy, 2016 to promote a stronger IP per the Constitution, the Rajya Sabha cannot make regime and to encourage innovation, creativity and amendments to a Money Bill once it’s passed by the entrepreneurship in India. The first-of-its-kind policy Lok Sabha. in the country sought to strengthen legislative and Real Estate Bill: The Real Estate (Regulation and legal framework of IPRs, their commercialization and Development) Bill, 2016, became an act earlier this reinforce enforcement and adjudicatory mechanisms year, kick-starting the process of making rules as well for IPR infringements. as putting in place institutional infrastructure to Insolvency and Bankruptcy Code 2016: The Rajya protect the interests of home buyers in India. The Bill Sabha during the Monsoon session passed the largely seeks to promote transparency, accountability Insolvency and Bankruptcy Code 2016, a vital reform and efficiency in the construction and execution of that will make it much easier to do business in India. real estate projects by promoters. The new code will replace existing bankruptcy laws BIS Bill: The Parliament also passed the Bureau of and cover individuals, companies, limited liability Indian Standards (BIS) Bill, replacing the 30- year old partnerships and partnership firms. It will amend laws Bureau of Indian Standards Act, clearing the path to including the Companies Act to become the

Majordevelopments

overarching legislation to deal with corporate Narendra Modi had announced the foundation of the insolvency. It will also help creditors recover loans first 'Indian Institute of Skills' in the country and also faster. launched an array of skill development initiatives for

the country's youth, including Pradhan Mantri Geospatial Information Regulation Bill, 2016: Kaushal Kendras (PMKKs) and Drivers' Training Ministry of Home Affairs earlier this year released the Institutes.draft “The Geospatial Information Regulation Bill,

2016” and sought suggestions from stakeholders. The GST: Goods and Services Tax (GST), the biggest reform bill faced criticism on several aspects including a in India’s indirect tax structure has been in news for proposed jail term of seven years and a fine up to Rs the last decade for numerous reasons. After a stormy 100 crore if anyone wrongly depicts India's map. The progress through the Rajya Sabha, following government agreed to consider the suggestions and opposition by the Congress and a few other parties, review the bill. the bill was passed unanimously by both houses of

Parliament in August. In September, the Constitution Start-up India: Department of Industrial Policy and Amendment Bill for GST was approved by the Promotion launched Start-Up India to give a boost to President following its passage in the Parliament and the start-up ecosystem. Start-up India is a flagship ratification by more than 50 percent of state initiative of the Government of India, intended to legislatures. The government is committed to replace build and nurture innovation and start-ups in the all the indirect taxes levied on goods and services by country that will drive sustainable economic growth the Centre and States and implement GST by and generate large scale employment opportunities. operations in the country.

Stand-up India: The Union Cabinet approved the Demonetisation: On November 8, Prime Minister ‘ S t a n d u p I n d i a S c h e m e ’ t o p r o m o t e Narendra Modi announced the biggest-ever entrepreneurship among members of the SC/ST demonetisation exercise India has ever seen by community as also women. This is among the various abruptly withdrawing Rs 500 and Rs 1,000 notes from financial inclusion and social security schemes public use in a bid to clamp down on black money, introduced by the government. Under the scheme, fake currency, terror funding and corruption. 86 per banks will offer loans in the range of Rs 10 lakhs to Rs 1 cent of India’s currency in value terms was removed crore to Dalits and women. from circulation virtually overnight. The country

G o v e r n m e n t e - m a r k e t p l a c e : B a s e d o n continues to reel in a virtual cashless state nearly two recommendations of Group of Secretaries made to months after the measure was introduced with banks the Prime Minister, a portal called GeM (Government and ATMs struggling to meet the cash demand from e-Marketplace) was conceptualised and launched by common people. The confusion was worse the government's central purchase arm DGS&D to confounded with the government constantly facilitate on line procurement of common use goods changing goalposts both in terms of what could or & services required by various government could not be done and why they were being done in departments/organizations/PSUs to enhance the first place. With black money still emerging in transparency, efficiency and speed in public bundles of new Rs 2,000 notes it is clear that ill-gotten procurement. wealth isn’t going away any time soon although

Finance Minister Arun Jaitley has bravely announced Indian Enterprise Development Service: The Union that black money is now officially dead in India. Cabinet chaired by the Prime Minister gave its

approval to the Cadre review and formation of a new Digital payments: Three committees namely (i) Ratan service in the name of “Indian Enterprise P Watal committee, (ii) committee headed by NITI Development Service (IEDS)” in the Office of Aayog CEO Amitabh Kant and (iii) Committee of Chief Development Commissioner (MSME), Ministry of Ministers have been formed to promote digital Micro, Small and Medium Enterprises. The creation of payments in the country. After demonetisation, the the new cadre and change in structure will strengthen focus is on a cashless economy through digitisation. the organization and also help to achieve the vision of According to some calculations, the digital payments “Start-up India”, “Stand-up India” and “Make in economy could be worth $500 billion by 2020. The India”. aim of the committee is to identify various digital

payment systems appropriate to different sectors of Skill Development Initiatives: Prime Minister

the economy and coordinate efforts to make them NITI Aayog has also announced several awards for accessible and user- friendly. The committee will also people using digital transactions, including a Rs 1 identify and access infrastructural and bottlenecks crore prize and government is planning to support affecting the access and utility of digital payment digital transactions through various taxation options. measures.

REXIT: Brexit is the most divisive political coming to power may be a mixed blessing for India at event that has happened over the last several best. In geostrategic terms he could well be good Byears. On June 23, 2016, Britain held a news for India taking on extremist Wahabi Islam in

referendum to decide whether the UK should leave or tandem with the likes of Russian President Vladimir stay in the European Union (EU). Britons voted to Putin and seeking to curb some of the wilder sallies leave the EU with 52 per cent of the population saying that Pakistan engages in from time to time or even yes. The referendum turnout was 71.8 per cent with moving to try and contain an unbridled China with more than 30 million people voting. Though its partners such as Japanese PM Shinzo Abe. Narendra impact will unfold over a long time, in India this may Modi could fit in well on both fronts. But then lead to considerable uncertainty for businesses; Republican Administrations have tended to be more impact on investment and the movement of appreciative of India than their Democrat professionals from India to Britain; Indian companies’ counterparts. appetite for investing in the U.K., particularly those An example of this is the Indo-US nuclear deal pushed seeking access to the European market etc. among through by the Bush Administration that enabled others. India to at last gain both nuclear legitimacy and a look Donald Trump’s Victory: Brexit is merely one of the in at the High Table of technology. However, being a manifestations of a trend that has been recently set in rank outsider, Trump does not conform to the typical motion. The most recent is the election of Donald free market image of that party. He is likely to push James Trump as the 45th President of the United through protectionist measures both in goods and States of America. Brexit and the US elections clearly services, preventing both cheaper goods and cheaper reflect the pent up frustrations of millions of people in labour from freely entering the US market in a bid to different geographies who have felt left out on the live up to his electoral promises. This could be bad fringes of society and let down by a system that they news for both Indian manufacture and skilled labour. feel is run by self-satisfied “fat cats in an old boys International relations: The year 2016 was marked by network.” Trump is a total novice when it comes to significant departures from post- independence politics, never having won any public office before, foreign policy. The terms of engagement with the leave alone that of POTUS. He tapped into what was Western world, South East Asia and Europe changed quite obviously a well spring of frustration among the markedly. In 2016 Indian international relations had a people that the regular politicians, including his great reach with the visit of Shri Narendra Modi to Democrat rival Hillary Clinton, failed to see. Trump’s Mongolia as the first Prime Minister to do so.

Globaldevelopments

COP 21: India ratified COP 21 (Paris Climate deal) on economies of the world including US, Japan, France, October 2, 2016. The agreement will enter into force Germany, and United Kingdom.one month after 55 countries that account for 55 Major happenings can be seen in diplomacy by Modi percent of global emissions ratify the agreement. has projected ball spheres, especially by instances like Under this agreement unplanned visit to Pakistan on Nawaz Sharif’s Ratifying countries will take steps to limit the global birthday, without following any protocol.temperature to well below 2 degree Celsius above pre Below is a snapshot of the key foreign visits and industrial levels and should make efforts to restrict announcements in terms of international relations in the increase to 1.5 degree Celsius. the year 2016. The year 2016 saw India achieving new heights with the visit of the Prime Minister to all the great

creates a well-defined agri/horticultural processing zone with better support of infrastructure and well-established supply chain

• Aims at providing mechanisms to link agricultural production to the market by bringing farmers, processors and retailers together

• Under Union Budget, USD19.65 million has been allotted for Mega Food Park Scheme

• Final approval has been received for 21 mega food parks, out of which, only 4 food parks are operational Major Policy Initiatives

• As per Union Budget 2016-2017, government The Indian food industry is poised for huge growth, allocated USD89.62 million under National increasing its contribution to world food trade every Mission to food processing sectoryear. In India, the food sector has emerged as a high-

growth and high-profit sector due to its immense Focus on infrastructure: potential for value addition, particularly within the

• The sector has been assigned priority status for food processing industry.

bank credit.The food industry, which is currently valued at US$

• 60 Agri Export Zones (AEZ) have been set up 39.71 billion, is expected to grow at a Compounded

across the country Annual Growth Rate (CAGR) of 11 per cent to US$65.4

• Investment-linked tax incentive of 100 per cent billion by 2018. deduction of capital expenditure for setting up

Engagement of private sector: and operating cold chain facilities (for specified • 100 per cent export-oriented units allowed to sell products), and for setting up and operating

up to 50 per cent of their produce in the domestic warehousing facilities (for storage of agricultural market produce)

• Export earnings exempt from corporate taxes Focus and R&D modernization:

Tax incentives and other sops: • The government launched initiatives such as for the Setting Up/Upgradation of Quality • Services like pre conditioning, ripening, waxing, Control/Food Testing Laboratory, R&D and retail packing, precooling, labeling of fruits and Promotional Activity scheme and the Technology vegetables have been exempted from service tax Upgradation/ Setting Up / Modernization

• Import duty scrapped on capital goods and raw /Expansion of Food Processing Industries Scheme

materials for 100% export-oriented units • In November 2016, Food Safety and Standards

• Full excise duty exemption for goods that are used Authority of India (FSSAI) launched a major

in installation of cold storage facilitiesscheme worth USD 72 million, to address the

Relaxed FDI reforms: urgent needs to upgrade food testing laboratories • 100 per cent FDI permitted under automatic in India

route (except for alcohol, beer, and sectors National Mission on Food Processing:

reserved for small scale industries) • MOFPI launched a new Centrally Sponsored • Repatriation of capital and profits permitted

Scheme (CSS) National Mission on Food • With the recent clearance of Foreign Direct

Processing to promote facilities for post-harvest Investment (FDI) in multi-brand food retail, the

operations, including setting up of food government is looking to double food processing

processing industries in Indialevels to 20 per cent

• In Union Budget 2016-17, government has Mega Food Parks:

announced to spend USD1.1 million in Union • The scheme based on “Cluster” approach, which territories only

Sector Overview: Food processing sector

Sector Overview: Food processing sector

Climate ChangeKey water initiatives India ratifies Paris Agreement: India ratified the Paris Namami Gange: As part of Namami Gange Agreement on Climate Change by depositing the programme, Government of India has set up “Clean instrument of ratification with the United Nations on Ganga Fund” for encouraging contributions towards 2nd October 2016. India was the 62nd country to Ganga Rejuvenation. Ministry of Water Resources, ratify the agreement. The agreement will enter into River Development and Ganga Rejuvenation (MoWR, force one month after 55 countries that account for RD&GR) signed a MoU in Delhi with the Ministry of 55 percent of global emissions ratify the agreement. Agriculture and Farmers Welfare (MoA&FW) for According to the Paris agreement, ratifying countries speedy implementation of Namami Gange are responsible keep global temperature increase programme. Union Minister for Water Resources, River “well below” 2 degrees Celsius and to pursue efforts Development and Ganga Rejuvenation Sushri Uma to limit it to 1.5 degrees Celsius as compared to the Bharti and Union Urban Development Minister Shri M pre-industrial years.Venkaiah Naidu launched Smart Ganga City Scheme in

ten important cities. These cities are – Haridwar, India agrees to amend Montreal Protocol: India and Rishikesh, Mathura-Vrindavan, Varanasi, Kanpur, US agreed to bring an amendment to the Montreal Allahabad, Lucknow, Patna, Sahibgunj and Protocol to phase out the climate-damaging Hydro Barrackpore. fluorocarbons (HFC) used in air-conditioners and

refrigerators by advancing the "freeze year" by two Model Water Bill: The Union Ministry of Water years to 2028 in a meeting at Kigali. The amendment Resources on 16 May 2016 released the Draft will allow the use of ozone-saving Montreal Protocol to National Framework Bill, 2016. The proposed Act phase-out HFCs, a set of 19 gases in Hydro provides an overarching national legal framework fluorocarbons family that are used extensively in air-with principles for protection, reservation, regulation conditioning and refrigerant industry. The amendment and management of water as a vital and stressed to the legally-binding Montreal Protocol will ensure natural resource. that the rich and industrialized countries bring down Highlights of the Draft National Water Framework Bill, their HFC production and consumption by at least 85 2016 are:per cent compared to their annual average values in the • Right to Water for life period 2011-2013.

• Water as a common heritage and resource, held COP 22: Mr. Anil Dave, Minister of Environment Forest in public trust and Climate Change (MoEFCC) attended COP 22 • River rejuvenation meeting at Marrakech and once again clarified the • Sustaining ecosystems dependent on water stand of India on climate change which is common but

• People centre water management differentiated responsibilities.

• Appropriate treatment and use of waste water CPCB reclassified industries: The Union Ministry Of • Water security plansEnvironment and Forests and CPCB released new

Ground water Bill: The Union Ministry of Water categorization of industries according to which Resources has put up a Model Bill for Conservation, industries which pollute the most have been put in the Protection and Regulation of Groundwater. `Red' category while the moderately polluting units are

classified `Orange'. Industries that have a significantly Some of the objectives of the Act that are sought to be low pollution load have been placed in the `Green' achieved include:category while those that operate without causing any • Ensure the realisation of the fundamental right to pollution have been categorized as `White'. The newly life through the provision of water.introduced `White' categories of industries are • Meet food security, livelihoods, basic human exempted from environmental clearance. needs, livestock and aquatic life.Plastic/ PET ban: On the basis of a petition by the Him • Protect ecosystems and their biological diversity.Jagriti Manch, an NGO based in Uttarakhand, the

• Reduce and prevent pollution and degradation of National Green Tribunal (NGT) sought a ban on the

groundwater.use of PET bottles for pharmaceutical products. PET

Key initiatives: Ministry of Environment, Forests and bottles were banned in states like Maharashtra.

However, the Ministry of Health and Family Welfare and earn their livelihood.also tested juices, beverages, alcohol and oil NAPS (National Apprentice Promotion Scheme): packaged in PET bottles. National Apprenticeship Promotion Scheme (NAPS) is a

new scheme of Government of India to promote Key initiatives: Ministry of Health and Family apprenticeship training and increase the engagement Welfare of apprentices from present 2.3 lakh to 50 lakh

Enhanced focus on obesity: The Ministry of Health and cumulatively by 2020. The scheme focuses on sharing

Family Welfare in collaboration with the National of 25% of prescribed stipend subject to a maximum of

Institute of Health and Family Welfare focused on child Rs. 1500/- per month per apprentice to all apprentices

obesity largely. Child and adolescent obesity has risen with the employers. It was notified on August 19, 2016.

rapidly around the world, with few countries taking Government supports Rs. 7500 for a maximum of 500

action against this damaging health issue which affects hours for basic training.

later health, educational attainment and quality of life. Financial and taxation initiatives In May 2016, the 69th World Health Assembly

committed to establishing national strategies to end GST: The re-categorization of aerated drinks under childhood obesity as recommended by the WHO 'demerit' category in the Goods and Services Tax (GST) Commission on Ending Childhood Obesity. October 26 rate slabs, saying at Rs 10 for 200 ml, such drinks are is celebrated across the world as World Obesity Day. neither luxury goods nor do they pose health hazards

has not been welcomed by the beverages industry. The Maharashtra's Minister of Water Resources and GST Council had announced that luxury items like high-Medical Education Girish Mahajan launched an end cars and demerit goods including tobacco, pan awareness campaign against obesity in the state. The masala and aerated drinks, will be taxed at the highest campaign 'Fight Obesity' , which entailed Body Mass rate of 28% and would also attract a cess in a way that Index (BMI) tests for students, teaching and non-the total incidence of tax remains at almost the current teaching staff and patients at Out Patient level.Departments at 16 medical colleges in various

districts of Maharashtra. Demonetisation: Prices of aerated beverages are expected to fall only marginally due to moderation in The initiative had been launched in collaboration with demand as use of cards and cheques would JT Foundation. compensate for some purchases.

FSSAI regulations: caffeine, sugar, additives, Increased tax on aerated beverages in states: MP, restricting sale near schools: The Food Safety and MH and Karnataka: Petrol, diesel, beer, liquor and soft Standards Authority of India (FSSAI) finalized rules for drinks will be costlier in Karnataka, Maharashtra and energy drinks. The FSSAI has decided to set the Madhya Pradesh from April 1, as the state budget for caffeine limit at 320 ppm (parts per million or mg/l). In the coming fiscal (2016-17) seeks to hike various taxes India, caffeine for carbonated beverages was capped on them. The state budgets have increased value at 200 ppm (mg/l) as the safe limit. It was due to CSE's added tax (VAT) to 20 percent from 14.5 percent on effort in 2009, that the caffeine limit was further aerated and carbonated non-alcoholic beverages, scaled down to 145 ppm (mg/l).including soft drinks and soft drinks concentrate.

Modi proposes blending of 2% fruit juice in aerated Sugar tax proposed: Junk food and sugar-sweetened beverages: Prime Minister Narendra Modi, at a start-beverages might soon be taxed higher and subjected up business conference, suggested mixing at least 2 to tougher advertising norms. The government plans per cent fruit juice in aerated drinks to help distressed these measures to control the growing incidence of farmers find a new market for their produce.diabetes in the country.

Key initiatives: Skill Development departmentThe health ministry and the central food safety

Pradhan Mantri Kaushal Vikas Yojana (PMKVY): regulator are working on a proposal to cut

PMKVY is the flagship outcome-based skill training consumption of unhealthy food and beverages,

scheme of MSDE. It is also India’s largest skill mainly among children. The Government insisted on

certification scheme with the objective to enable and food labeling to help consumers make right decisions

mobilize a large number of Indian youth to take up and tax sugary beverages.

outcome-based skill training and become employable

DIPP Note 3 (e commerce guidelines): DIPP issued Consumer Affairs augmented the capacity of the guidelines for foreign investment in e-commerce by National Consumer Helpline and also established way of Press Note 3 of 2016. Apart from prescribing NCH Convergence to enable sharing of consumer certain key definitions, including e-commerce, complaints with e commerce companies. Further, the marketplace based model of e-commerce and department has also inserted provisions to protect e inventory based model of e-commerce, the PN3 lays commerce consumers in draft Consumer Protection down respective caps for FDI as well. According to Bill which, yet to be tabled.PN3, foreign investment is allowed up to 100% under GST (TCS clause): The historic passage of the GST bill the automatic route in the marketplace model in B2B this year was accompanied by the provision of Tax e commerce while no foreign participation is Collection at Source (TCS). This clause mandates e-permitted in the companies working on the inventory commerce marketplaces to deduct a portion of the based model. The rules also prohibit marketplaces tax component and submit it to the government. In from offering discounts and cap total sales originating view of this, the e-tailers will need to adopt a new from a group company or one vendor at 25%. model wherein the state where the package is DIPP Note 5 (FDI in food retail): In a bid to make India delivered gets the respective tax for the sale and not more investor friendly and an attractive FDI from where the order is booked. The TCS would result destination, the government notified changes in the in increased compliance burden on e commerce FDI policy in various sectors including allowing 100% operators and could potentially give rise to cash flow FDI under government approval route for trading, issues for sellers. including through e-commerce, in respect of food Initiatives to provide push start up ecosystem- products manufactured and/or produced in India. NIDHI: The Department of Science and Technology This will benefit farmers, give impetus to the food launched a Rs 100-crore programme National processing industry and also create vast employment Initiative for Developing and Harnessing Innovations opportunities. Presently, the government is (NIDHI) aimed at helping startups across the country reviewing the need to allow non-food items under the in terms of both funding and incubation support. A policy. number of schemes will be taken up under NIDHI, Focus on consumer complaints in e-commerce including NIDHI Prayas, which is focused on sector: In the backdrop of the large volume of addressing the gap between idea and prototype consumer complaints being registered against e funding, NIDHI Seed Support System for funding commerce players, PM Modi directed the Ministry of early-stage startups and NIDHI Centres of Excellence Consumer Affairs to furnish a follow-up action report which will help start-ups go global.on grievance redressal in 10 days. The Department of Committee on e-commerce to suggest ways to

E-commerce

sector

liberalize the sector: A committee under the protectionist policies from the government to favour leadership of Niti Aayog CEO Amitabh Kant was set up the home-grown companies. They believe the this year to review the present policy landscape and presence of foreign competitors with deep pockets submit recommendations to liberalize the sector. The and ability to survive losses is destroying the domestic national think tank held consultations with e market and has urged the government to permit only commerce players, online sellers, etc. to draft a long- foreign investment and not foreign competitors, term plan for the key job-generating sector invoking the model followed by the Chinese addressing issues such as FDI, taxation, marketplace government. curbs and the offline-online conflict. The final report Backlash from various quarters: The e commerce outlining a framework for the sectoral policy was sector encountered backlash from various quarters submitted by Niti Aayog to the PMO in the absence of including offline retailers such as CAIT and RAI who a single nodal ministry looking into e commerce. met key government stakeholders to raise the issue of Task Force on Innovation: Commerce & Industry competition from online players through predatory Ministry set up a Task Force to assess India’s position discounting. Online seller associations such as AIOVA as an innovative country and suggest measures to also pressed for a watchdog for the sector to look into enhance the innovation eco-system in India and violations of the present regulations.improve India’s ranking in the GII. E commerce discussion at WTO: The US urged India Inclusion of internet broadcasting organisations to consider discussing e commerce at the World Trade under the purview of the Copyright Act: DIPP Organization. India has vehemently opposed the released clarification regarding “Inclusion of internet inclusion of new issues such as e commerce in the broadcasting organisations under the purview of multilateral organization unless the existing ones section 31(d) of the Copyright Act, 1957” stating all related to food security and special safeguard broadcasting including internet broadcasting will now mechanism is resolved. Post discussions with the US, be covered under related to section 31 (d). India has begun studying papers submitted to the

WTO on the issue to understand the various views and TRAI Consultation Paper on Spectrum, Roaming and has begun framing its position on issues including e QoS related requirements in Machine-to-Machine commerce, small and medium enterprises, and (M2M) Communications: TRAI released a investment at the World Trade Organisation.“Consultation Paper on Spectrum, Roaming and QoS

related requirements in Machine-to-Machine (M2M) Political and Bureaucratic reshuffle: The year also Communications”. experienced cabinet reshuffle with HRD Minister

Smriti Irani being moved to Textiles Ministry, Prakash Demonetisation giving a fillip to Digital payments: Javadekar getting the HRD ministry portfolio and IT The government’s move to demonetize Rs 500 and Rs Minister Ravi Shankar Prasad gaining additional 1,000 notes eliminated 86% of the currency in charge of Ministry of Law and Justice. circulation, creating a huge cash crunch in the

economy which adversely impacted the online On the bureaucratic front, Hem Pande was appointed retailers who witnessed a 20-40% decline in daily as the Secretary, Department of Consumer Affairs orders as COD came to a halt. However, in the long replacing C Viswanath and Aruna Sundararajan was term the government push towards a cashless appointed as Secretary, MeitY in place of Aruna economy will encourage more online payments and Sharma. Rajeev Kandpal took over as Director (Start-reduce the total share of COD in e-commerce sales ups) at DIPP in place of J Balaji.from the current high of nearly 80% of total State Retail Policies: Given the tremendous growth of transactions. the retail sector and calls for dedicated policies for The government has constituted three committees to retail, the states of Gujarat and Telangana also set out drive the transition to electronic payments and has to formulate retail trade policies for the respective designed mass outreach programmes at the levels of states.gram panchayats, talukas, districts, etc. to ensure Entry Tax: Following the lead of other states, Madhya penetration across strata. Pradesh, Uttarakhand, Uttar Pradesh, Rajasthan and Call for protectionist policies by Flipkart and Ola: Gujarat imposed entry tax on e-commerce goods Indian start-ups Flipkart and Ola have sought shipped to their respective states.

Sector

runs have already been started in western countries. To promote eco-friendly cars in the country, the government made 5 per cent ethanol blending in petrol mandatory, and also enhanced focus on CNG based vehicles, especially for public transport, hybrid vehicles, and electric vehicles.

Safety & Technology: The four-wheeler makers have focused on implementing airbags and ABS as standard safety features in all their basic variants. To take safety features to new heights, global luxury car maker Volvo introduced the new technology - advanced radar safety and pedestrian airbag. Along with this, other safety features like EBD and hill assist Highlights for the automotive sector also were implemented in cars.

The year 2016 has marked a noted growth for the Union Budget 2016-17: Applicability of 1 per cent automotive industry along with some pit falls. The infrastructure cess on small petrol, LPG, CNG cars; industry has overcome many challenges in the form of cess on diesel cars (to a certain capacity); 4 per cent fuel price, diesel cars ban and demonetisation, cess on other higher engine capacity vehicles and alongside the sector also embraced new inventions SUVs to be levied. and implementations.

GST: Below would be the likely Impact of GST on car Below are the major highlights of the year automotive Prices in India: industry.

Small Cars (Sub 4 Meter Segment): No Positive Global brands stepping into Indian Markets: During impact on car prices with 28% GST Cess. Infact, small the 2016 Delhi Auto Expo, many global brands cars would likely be expensive by 1% to 2%. showcased and unveiled their models as a sign that

they are stepping into the Indian market. Likely the Mid Sedan, Mid SUV Range (> 4 Meter, But Engine < demand for premium cars and bikes also emerged in 1.5 Litre): Prices would likely increase by 2% to 3% as is India which fetched the companies to establish a expected that GST + additional luxury cess will make strong foothold for their brands. up for 40% Tax.

Ban on diesel cars over 2000cc: After the Supreme Luxury High End Cars (Engine > 1.5 Litre): Prices Court’s order to ban diesel cars in NCR, the decision would almost be same or may come marginally by 1% sent shock waves among the luxury car-makers who or so and thus would be the only Beneficiary in GST. have variants with high engine capacities. Though the In all, there would not be any benefit post GST - to the ban was initiated in 2015 December, the entire passenger car sector. It was earlier anticipated for premium four-wheeler sector affected until the 20% cess - but with 28% GST on cars - it will likely be decision was revoked in 2016 August. In this eight detrimental for automobile sector - which was months period, the whole industry lost Rs 4,000 crore eagerly waiting for GST and buyers who deferred worth of business. This made luxury car makers to purchase call for 2017. kick-start the production of petrol variants. The NGT

Demonetisation Effecthad imposed a similar ban on diesel vehicles of 2000 cc engine capacity in Kerala in July 2016. Due to sudden demonetisation, many automakers Increased focus on eco-friendly vehicles: noted mixed sales. Demand has been hit, especially in

case of luxury cars. Most firms are expecting to see a Manufacturers ramped up their investments on decline in sales. In two-wheelers, where transactions electric cars and autonomous cars development to a are through cash, sales have taken a massive hit. It will great extent. During Paris motor show, most of the car take a while for demand to improve, say dealers, but makers showcased their concept cars and unveiled the good part is that enquiry levels have not dropped their electric cars too. As the craze built among the and that suggests it is a matter of time, may be three public towards autonomous cars, companies like months, before the industry gets back on track. Volvo and Ford joined hands with taxi giant Uber. Test

Automotive

The National Electric Mobility Mission Plan 2020 Major Policy Initiatives (NEMMP):Auto Policy 2002: • As a result of the government’s agenda of making • Automatic approval for foreign equity investment

the automotive sector as the key driver of the up to 100 percent; no minimum investment Make In India initiative, a scheme for faster criteriaadoption and manufacturing of electric and • Encourage R&D by offering rebates on R&D hybrid vehicles in India, a part of the National expenditure Electric Mobility Mission 2020, has been

NATRiP formulated

• Setting up of R&D centers at a total cost of USD • The objective of this body is to encourage reliable,

388.5 million to enable the industry to be at par affordable and efficient xEVs (hybrid and electric

with the global standards vehicles) that meet consumer performance and

• Nine R&D centers of excellence with focus on low price expectations through government-industry cost manufacturing and product development collaborationsolutions

• Promotion and development of indigenous • The government has extended the timeline of m a n u fa c t u r i n g c a p a b i l i t i e s , re q u i re d

NATRiP from 2014 to 2017 infrastructure, consumer awareness and technology are additional objectives of NEMMP Department of Heavy Industries and Public 2020Enterprises:

• Worked towards reduction of excise duty on small Opportunities cars and increase budgetary allocation for R&D

India is emerging as a fast R&D hub• Weighted increase in R&D expenditure to 200 per

• Strong support from the government; setting up cent to 150 per cent (in-house) and 175 per cent of NATRiP centres from 125 per cent (outsourced)

• Private players, such as Hyundai, Suzuki, GM, Motor Vehicles Act:

keen to set up R&D base in India • The Motor Vehicles (Amendment) Bill, 2016 was

• Strong education base, large skilled English-introduced in Lok Sabha on August 9, 2016

speaking manpower • The Bill seeks to amend the Motor Vehicles Act, • Comparative advantage in terms of cost

1988• Firms both National and Foreign are increasing

• The Act focuses intensely on road safety, and their footprints with over 1,165 R&D centersprovides for standards for motor vehicles, grant of • Indian automobile industries invests USD100 driving licenses, and penalties for violation of billion for R&D sector annuallysafety provisions

Opportunities for creating sizeable market segments Automotive Mission Plan 2016-2026:

through innovations• AMP 2026 targets a fourfold growth in the

• Mahindra and Mahindra target ing on automobiles sector in India which includes the

implementing digital technology in the business manufacturers of automobiles, auto components

• Bajaj Auto, Hero Honda and M&M plan to jointly and tractor industry over the next ten years develop a technology for two-wheelers to run on

FAME: natural gas • Planning to implement Faster Adoption and • Considering the potential of auto market, new

Manufacturing of Electric Hybrid Vehicles till models of hybrid & electric cars launched at Auto 2020 which would cover all vehicle segments; all Expo 2016 forms of hybrid and electric vehicles

• Tata Motors to launch MiniCAT, a car running on Area-based Incentives: compressed air, thereby stepping into the next

era where cars would not require any fossil fuel • Incentives for units in SEZ/NIMZ as specified in and emissions would be almost nilrespective Acts or the setting up of projects in

• Increased investments in technology will give an special areas like the North-east, Jammu & impetus to the automotive exportsKashmir, Himachal Pradesh & Uttarakhand

sustained growth on online pharmacies. E-Pharmacy • Also, with expected regulations in pipeline for • 2016 witnessed a huge increase in the online sale

greater regulation of online pharmacies and of medicines which initiated the debate relating impetus to digital payments, 2017 seems to offer to regulation of online pharmacies in India. greater developments in this segment. • A high-level government committee, constituted

Infrastructure support: by the Drug Consultative Committee under the aegis of health ministry to regulate the sale of • The Indian pharmaceutical industry continues to medicines through online pharmacies, be dominated by generic drugs which focus on recommended the creation of a national portal exporting cheaper generics with very little that will act as a nodal platform for monitoring innovation. sale of drugs via internet. • Although in the short term, this helps us take

• As part of the broad framework, the committee advantage of drug patent expires in developed outlined that "all e-pharmacies that plan to sell, markets, in the medium to long term it creates offer or exhibit for sale medicines over the very little differentiation, thereby exposing us to internet, will need to be registered with Central price competition.Drugs Standard Control Organisation (CDSCO) • The Katoch committee constituted by the under the Drugs and Cosmetics Rules, 1945." Department of Pharmaceuticals to formulate a

• However, this issue led to several conflicts long term policy for reviving the domestic between chemists and online drug sellers, with manufacture of APIs in the country and reducing the chemist lobby group All India Organisation of our dependence on China, had submitted its Chemists and Druggists (AIOCD) approaching 10 report in February 2015. The recommendations high courts over the continued operation of e- of this report were taken into consideration in the pharmacies. Union budget 2016.

• Midst the debate that questioned the legitimacy • One of the committee’s proposals was cluster of online-pharmacies, demonetisation brought a development model for the pharmaceutical great increase in the sales of e-pharmacies in late sector with tax free status to cluster developers 2016. and participants for 15 years. Under this,

Common Effluent Treatment Plants (CETPs) will • With an increased impetus given by the GOI to be established in a PPP model in these clusters or facilitate digital transactions there seems to be a

PharmaceuticalSector

industrial parks. and availability of essential medicines since 1995'. • The Atal Innovation Mission articulated in the

budget 2016 is a welcome step to drive • The study will critically examine the existing pharmaceutical sector towards better R&D focus. alternate methods of ensuring drug affordability

in the country like government procurement and • In light of this, 2017 seems to be a strategic year distribution, the existing insurance support and that may see some substantial impetus on the its impact, etc.growth of Indian pharmaceutical sector in quest

to make it self-reliant. For instance, the Health related regulations (AMR)government of Telangana is setting up a

• In 2016, with recognition of AMR as a global pharmaceutical hub that will incorporate global

threat by United Nations and World Health best practices followed in the entire value-chain.

Organization, the Government of India also Quality standards: recognized AMR as an issue of national

importance. • There were several reports of ‘Made-in-India’ substandard drugs that were detected by • Prime Minister Modi in his Mann ki Baat address regulatory authorities in India, Vietnam and in July 2016 called for the need for increased recently, Mozambique. awareness on AMR.

• In the past decade the regulators from the US, EU • The Ministry of Health & Family Welfare rolled out and WHO have been red-flagging the quality of National Treatment Guidelines for treatment of Indian-made drugs. AMR.

• In late 2016, Aurobindo Pharma, Cadila, Mcleods • India’s idea of putting a red line on antibiotic Pharmaceuticals were among the 39 Indian drug packages to curb their over-the-counter sale companies that have been blacklisted by Vietnam witnessed some immediate success and is now for quality standard violations. being cited as a model that can be used globally to

counter the rising threat of superbugs. • In order to overcome this issue, the Indian policy makers have envisioned certain regulatory steps • Niti Aayog in association with Ministry of Health that will promote safe, effective and quality and Family Welfare introduced Performance on medicines at affordable prices and bring a Health Outcomes’ index in order to nudge States positive change to India's global image as well. towards transformative action in the Health

sector.Pricing issue:• The G-20 health agenda for 2017 has AMR as one

• National Pharmaceutical Pricing Policy has been of the major public health challenges that needs

focusing on regulations such as essential list of to be focused on by G-20 nations, as does the

medicines and capping of drug prices. WHO executive board meeting scheduled in

• There were also speculations that the January.government may cut the NPPAs powers to review

• WHO India is working in tandem with the and fix drug prices. In the month of November,

MOHFW and NCDC to bring out a coherent there were discussion on disbanding the

National Action Plan to combat AMR. National Pharmaceutical Pricing Authority (NPPA)

• Three governance mechanisms have been in its present form and assume the power to set identified to ensure ownership and engagement prices of essential medicines, in order to address of key stakeholders. These were notified on 27 concerns that excessive controls were stifling September 2016innovation and competitiveness of the sector. o Inter-sectoral coordination committee on AMR • Furthermore, the Indian government is expected

– chaired by Health secretary for policy issuesto soon come up with a new pharma policy to o Technical advisory group on AMR – chaired by counter the excessive controls thwarting

DGHS and DG-ICMR/Secretary Health competitiveness and innovation in the sector.Research, for endorsing technical issues• Meanwhile, NPPA will soon embark on a research

o Core working group on AMR – chaired by study on 'Impact analysis of price regulation in Director NCDC for operationalizing action India in the context of affordability, accessibility

against AMR With a boost to Cluster Development Model, 2017 is likely to see development of sustainable and • National Workshop on Development of National environment friendly practices by industries. The Action Plan on AMR was held in December 2016 watchdog role played by CPCB and SPCB in this regard to review and revise the NAP-AMRwill ensure better adherence to regulatory norms.• 2017 seems to be a year that will witness a

renewed government focus on antimicrobial Water related initiatives: resistance. It is expected that AMR, which was • In 2016, the Water Resources Ministry prepared hitherto perceived as an issue pertaining to the draft Water Bill and invited public comments. health, will be addressed as a multi-sectoral issue. It was proposed as a model legislation that can be

adopted by states, since water is in the Environmental Regulations: jurisdiction of the state governments. • The Government has taken a series of steps to

• The Ministry for Water Resources, River address issues related to water pollution, Development and Ganga Rejuvenation also industrial pollution, improper waste disposal etc. placed a draft of the National Groundwater in cities, towns and metropolises.Management Bil l that aims to ensure • CPCB introduced online pollution monitoring groundwater security and proposes a penalty for system to monitor pollution levels in real time and its misuse.also help bring in transparency by making data

• In 2016, significant progress significant progress public on their websites. was made in "Clean Ganga Mission" more • The MOEFCC also released a new categorization famously known as "Namami Gange". The central of industries as red, orange, green and white government ordered shutting down of 150 based on their pollution loads. The developed the industrial units that failed to install adequate criteria of categorization of industrial sectors measures to keep pollution levels in check. based on the Pollution Index which is a function of

the emissions (air pollutants), effluents (water pollutants), hazardous wastes generated and consumption of resources.

• Erstwhile Environment Minister Shri Prakash Javadekar also announced a focus on stricter implementation of regulations and higher penalties for violation of environment norms.

• I n l a t e N o v e m b e r 2 0 1 6 , a r o u n d 8 2 pharmaceutical companies, including 64 from Telangana and 18 from Andhra Pradesh, were served closure orders by the Central Pollution Control Board for not complying with orders to install a continuous online pollution monitoring system.

• Taking the lead in adhering to environmental norms, the government of Telangana identified over 1,500 industries that will be relocated to make the city pollution-free.

• Some of the other major steps taken by the Government in 2016 to control pollution include formulation of environmental regulations, comprehensive amendments to various Waste Management Rules including Municipal Solid Waste, Hazardous Waste, and Bio-medical Waste notified.

ecognizing the importance of Health in the Odisha, Andhra Pradesh in April 2016 as process of economic and social development recommended by the Expert Committee Rand improving the quality of life of the public constituted for the same.

at large, the Government of India under took various b) Adult JE vaccine: Japanese Encephalitis public health initiatives in 2016. Below are some of vaccination was expanded in adult population of the key initiatives taken in this regard. districts with high disease burden of adult JE. The Pradhan Mantri Surakshit Matritva Abhiyan: Mission Indradhanush: Second phase of MI Pradhan Mantri Surakshit Matritva Abhiyan (PMSMA) continued in Jan 2016 in 352 districts. Phase III was is aimed at reducing maternal and infant mortality implemented from April to July in 216 districts of the rates through safe pregnancies and safe deliveries. country. The national programme will provide special free

Pradhan Mantri National Dialysis Programme: antenatal care to about 3 crore pregnant women Under the ‘Pradhan Mantri National Dialysis across the country in order to detect and prevent high Programme’, support is being provided to all States risk pregnancies. for provision of free dialysis services for poor.

MAA-Mother’s Absolute Affection: A nationwide Guidelines for dialysis services in District Hospitals in programme launched in an attempt to bring PPP mode have been shared with States/UTs on 27 undiluted focus on promotion of breastfeeding and April, 2016.provision of counseling services for supporting

I.T. Initiatives: breastfeeding through health systems

a) Swasth Bharat Mobile application: “Swasth Introduction of new vaccinesBharat Mobile Application” to empower the

a) Rota virus vaccine: In order to prevent the citizens to find reliable and relevant health morbidity and mortality in children due to information. The application provides detailed rotavirus, Rotavirus vaccine was introduced in information regarding healthy lifestyle, disease Universal Immunization Programme in a four conditions (A-Z), symptoms, treatment options, states initially i.e. Himachal Pradesh, Haryana, first aid and public health alerts.

HealthSector

b) ANM Online application (ANMOL): ANMOL is a control of cancer, diabetes, cardiovascular tablet-based application that allows ANMs to diseases and stroke (NPCDCS), 356 district NCD enter and updated data for beneficiaries of their cells and 356 district NCD clinics have been jurisdiction. established.

c) E-RaktKosh initiative: This web-based mechanism • 103 cardiac care units, 71 day care centres and interconnects all the Blood Banks of the State into 1871 CHC level NCD clinics have been setup.a single network. • The tertiary care cancer centers (TCCC) scheme,

d) India Fights Dengue: Launched in 2016, this App 20 state cancer institutes (SCI) and 50 TCCCS empowers the community members how to envisagedcontribute towards prevention of Dengue. • So far five (10) TCCC and six (10) SCI have been

e) Kilkari, which means ‘a baby’s gurgle’, delivers supported with financial assistance under the free, weekly, time-appropriate 72 audio scheme.messages about pregnancy, child birth and child • AYUSH facilities and methodologies and yoga care directly to families’ mobile phones from the integrated with NPCDCS services second trimester of pregnancy until the child is

• Scientific study commissioned to document one year old. impact of yoga on diabetes (S-VYASA University

f) Mobile Academy is a free audio training course and HLL).designed to expand and refresh the knowledge base of Accredited Social Health Activists (ASHAs) and improve their communication skills.

g) M-Cessation aims at reaching out to those willing to quit tobacco use and support them towards successful quitting through text messages sent via mobile phones.

h) National Health Portal (NHP) was launched to provide healthcare related information to the citizens of India and to serve as a single point of access for consolidated health information.

i) Online Registration System (ORS): Online Registration System (ORS) is a framework to link various hospitals across the country for Aadhaar based online registration and appointment system, where counter based OPD registration and appointment system through Hospital Management Information System (HMIS) has been digitalized.

j) National e-Health Authority (NeHA) will be an integrated health information system. It will help avoid problems arising out of uncoordinated induction of IT systems in hospitals and public health systems.

Non-Communicable Diseases (NCDs): The programme aims at providing early diagnosis and management of common NCDs, build capacity at various levels of health care facilities for prevention, diagnosis and treatment of common NCDs.

• Under national programme for prevention and

The tourism and hospitality sector’s direct Overview: contribution to GDP, in 2016, is estimated to be USD

The Indian tourism and hospitality industry has 47 billion.

emerged as one of the key drivers of growth among the services sector in India. Tourism is also a potentially large employment generator besides being a significant source of foreign exchange for the country .Tourism in India accounts for 7.3 per cent of the GDP as compared to 2015 when it was 6.3%

The travel and tourism industry contribution on employment was 38,441 thousand which three percent higher than 2015 when it was 37,315

Year 2016 witnessed the first Incredible India Tourism Investment Summit 2016, which was organized

sector Tourism

between September, 21-23, 2016. 86 Memoranda of amenities only, it might be counter-productive for Understanding (MoUs) worth around Rs. 15,000 crore homestays and alternative accommodation, (US$ 2.24 billion) were signed during the summit, for which focus more on experience than amenities.development of tourism and hospitality projects, Development of Tourism circuits: highlighting a surge in public-private partnerships for

• The Ministry of Tourism approved projects worth tourism development. This event was a huge success

Rs. 450 crore (US$ 67.10 million) under the so Union Ministry of Tourism decided to make this an

Swadesh Darshan scheme in 2016, for the annual event.

improvement and creation of tourism According to India Brand Equity Foundation in India, infrastructure in Madhya Pradesh, Uttarakhand, trends of travelers have changed in the last decade. Tamil Nadu, Uttar Pradesh and Sikkim. Travelers are preferring homestay, alternative • The National Mission on Pilgrimage Rejuvenation accommodation and experiential tours over and Spiritual Augmentation Drive aims at traditional tours and hotels. Union Ministry of integrated development of pi lgr image Tourism is actively promoting responsible and destinations to provide complete religious and sustainable tourism under the umbrella theme of spiritual tourism experience. A total of 14 projects ecotourism. have been sanctioned under the PRASAD Scheme

for an amount of Rs.332.82 Crore.Major Policy Initiatives Task force on Adventure Tourism: Guidelines for Approval and Registration of

B&B/Homestays: • The Ministry of Tourism set up a task force on Adventure Tourism in October, 2016 for resolving • The Ministry of Tourism released guidelines for issues related to development and promotion of approval and registration of B&B/ Homestays adventure tourism in the country.establishment in 2016. Till now, every state had

• Various stakeholders including Adventure Tour been coming up with their own set of guidelines Operators, Government Ministries and Central to regulate homestays.Agencies as well as State Governments are • Union Ministry of Tourism is planning to consult members of the task force. states to revise their guidelines to exempt

homestays from service tax or commercial levies HRIDAY action plans: and make their licensing process online, which is • T h e H e r i ta g e C i t y D e v e l o p m e n t a n d expected to encourage people to offer homestays Augmentation Yojana (HRIDAY) action plans for to tourists. eight missions cities including Varanasi, Mathura,

• Uniform guidelines across the states with simple Ajmer, Dwaraka, Badami, Vellankini, Warangal registration procedure will increase the chance of and Amaravati have been approved by HRIDAY homestay owners getting themselves registered National Empowered Committee for a total cost with the government. Online registration process of Rs 431 crore (US$ 64.27 million). and exemption from commercial levies will give a • Government of India has also covered 150 boost to the homestay segment which has countries under e-visa scheme in 2016. This will already picked up in last two-three years in India. make the visa process easier and hassle-free for

Star rating for homestays and B&B units tourists.

• As per Union Budget 2016-2017, government • Ministry of Commerce is developing a database of allocated USD89.62 million under National certified guest house and bed & breakfast units Mission to food processing sectoracross the country and MoC has asked NITI Aayog

to come up with a rating mechanism for Sustainable, Responsible Tourism: homestays and Bed & Breakfast units

• The Ministry of Tourism signed a MoU with • NITI Aayog is in process of formulating the star Ecotourism Society of India (ESOI) to take its

rating mechanism in consultation with states. commitments to Responsible and Sustainable • Star rating mechanism for homestays and bed & tourism to the next level.

breakfast units is also a progressive step but since • According to the MoU, ESOI will work closely with the parameters that are factored in are based on both Central and State Government bodies as well as

relevant institutions and individuals to facilitate and • Implementation of GST and spillover effect of support synergy of policies, initiatives and activities demonetization can impact tourism industry in relating to responsible travel. 2017, services more expensive and free cash

more scarce. Bilateral MoUs for Tourism Cooperation: • 2017 will also be important year for Homestays • Union Cabinet approved an MoU between India

and alternative accommodation in India as most and South Africa aimed at exchanging of the states are either formulating or planning to information and data on tourism and establishing formulate policy on homestaysexchange programs and increasing investments in

• Mandatory registration is one of the important the tourism and hospitality sector. aspects that we should observe keenly because it • The Government of India and the Government of can impact the growth of homestays significantly.the Republic of Maldives signed a MoU for

strengthening cooperation in the field of tourism on 10th April, 2016 during the visit of Hon’ble President of Maldives to India.

• The Government of India and the Government of the State of Qatar signed a MoU for strengthening cooperation in the field of tourism on 5th June, 2016 during the visit of Hon’ble Prime Minister of India to Qatar.

Digital Payments:

• Ministry of Finance and NITI Aayog took various steps to promote digital payments in India throughout the year.

• Ministry of Finance constituted Watal committee to chalk out the path to increase digital payments in India. Watal committee has submitted its report to Ministry of Finance consisting of recommendations to promote digital payments in India.

• Promotion of Digital economy in secure manner is positive development of for online platforms such as Airbnb. In a country like India people are generally concerned about the security issues that come with digital payments, so increase in secure digital payments will boost the confidence of people in platforms which rely on digital payments.

Way forward for the tourism sector:

• The tourism industry is looking forward to the expansion of E-visa scheme development of new tourism circuits in various states across the country under Swadesh Darshan scheme which is expected to double the tourist inflow to India.

• According to a study conducted by SRI international India is projected to be the fastest growing nation in the wellness tourism sector in the next five years, clocking over 20 percent gains annually through 2017.

• The document was prepared in consultation with Overviewall stakeholders including the state governments.

The oil and gas sector is among the six core industries • Uniform guidelines across the states with simple in India and plays a major role in influencing decision

registration procedure will increase the chance of making for all the other important sections of the homestay owners getting themselves registered economy. with the government. Online registration process

Total fuel consumption was growing at a rate of 5-6 and exemption from commercial levies will give a percent in 2016. India is the fourth-largest Liquefied boost to the homestay segment which has Natural Gas (LNG) importer after Japan, South Korea already picked up in last two-three years in India.and China. Currently contribution of natural gas in

Auto Fuels Standardsenergy mix in India is 6% and India is planning to • Ministry of Petroleum & Natural Gas decided that increase the share of gas in energy mix to 15%.

the country will leapfrog directly from BS-IV to BS-Major Policy Initiatives VI fuel standards and BS-VI standards will be

implemented in the country w.e.f 01.04.2020.Pradhan Mantri Ujjwala Yojana (PMUY)

Gas pipeline in eastern India• MoP&G approved Rs. 8000 crore under the • The eastern India gas corridor i.e. Jagdishpur-Pradhan Mantri Ujjwala Yojana (PMUY) for

Haldia pipeline (JHPL) project of 1847 Km is being release of 5 crore deposit free new LPG implemented by GAIL.connections to Women of BPL families over three

• GAIL is implementing the JHPL in a phased years, i.e. Financial year 2016-17, 2017-18 and manner at the total cost of about Rs. 13000 crore. 2018-19. Survey work for the entire project was completed in • As on End of November, 2016 Oil Marketing 2016. GAIL has started work on execution of Companies (OMCs) have released 12288517 new Phase-I LPG connections under Pradhan Mantri Ujjwala

• Government has decided to provide 40% Yojana monetary support of the capital cost to GAIL Hydrocarbon Vision 2030

• CCEA has approved a proposal to grant marketing • In tune with the Government of India’s act east including pricing freedom for the gas produced policy, the Ministry of Petroleum and natural Gas from High Pressure, High Temperature, released a hydrocarbon vision 2030 for the north Deepwater and Ultra Deepwater areas. The east India

Oil and Gas Sector

marketing freedom so granted would be capped Corporation (ONGC) for development.by a ceiling price arrived at on the basis of landed National Mineral Exploration Policyprice of alternative fuels.

• The Union Cabinet approved the National Mineral Refining Capacity and Production Exploration Policy (NMEP), • There has been considerable increase in refining • It is expected to clear the way for auction of 100

capacity in the country over the years. prospective mineral blocks to attract private • During 2016, there was capacity expansion by 15 sector in exploration, besides involving state-run

Million Metric Tonnes Per Annum (MMTPA) with agencies.the commissioning of Paradip Refinery. Hydrocarbon Sector Skill Council (HSSC)

• With this increase, the refining capacity has now • The Hydrocarbon Sector Skill Council (HSSC), was reached at 230.066 MMTPA. Refinery Crude set up by Government of India under its Skill India throughput (Crude Oil Processed) during 2016 initiative.stood around 232.854 MMT. • It plans to train over 1.9 million people in the oil

Emphasis on Bio-fuels and gas sector over the next 10 years, to cater to the rising skill needs of the industry.• The Government, through Oil Marketing

Companies (OMCs) implemented Ethanol Petro-tech 2016Blended Petrol (EBP) Programme under which, • Petro-tech -2016, the 12th International Oil & Gas OMCs were allowed to sell ethanol blended Conference was organized by MoP&G on petrol with percentage of ethanol upto 10%. December 5, 2016

• Further, ethanol produced from other non-food • The three-day mega event saw participation of feed stocks besides molasses, like cellulosic and over 100 eminent speakers and 6,000 delegates lingo-cellulosic materials including petrochemical from 68 countries, including technologists, route, has also been allowed to be procured. scientists, planners and policy-makers,

Startup Fund management experts, entrepreneurs, service-providers and vendors. During the events, 11 • The Oil and Natural Gas Corporation (ONGC) MoUs relating to the sector were signed.launched a start-up fund of Rs 100 crore (US$

14.91 million) on its Diamond Jubilee year to Indian Institute of Petroleum and Energy (IIPE), encourage and promote new ideas related to oil Visakhapattnamand gas sector.

• Indian Institute of Petroleum and Energy (IIPE) Marginal Fields Policy was set up in 2016 with the objective to meet the • The Ministry of Petroleum and Natural Gas quantitative and qualitative gap in the supply of

announced a new 'Marginal Fields Policy', which skilled manpower for the petroleum sector and to was aimed to bring into production 69 marginal promote research activities needed for the oil and gas fields with 89 million tonnes or Rs growth of the sector. 75,000 crore (US$ 11.18 billion) worth of

• The Government of Andhra Pradesh gave land of reserves.

an area measuring about 200 acres of land in • Government offered various incentives to oil and Visakhapatnam District

gas explorers such as exemption from payment of Policy for Discovered Small Fieldsoil cess and customs duty on machinery and • Union Cabinet approved Discovered Small Field equipment.

Policy for monetization of 69 hydrocarbon Hydrocarbon Exploration Licensing Policy

discoveries made by National Oil Companies • Government of India also introduced initiatives ONGC and OIL which could not be monetized for

like the Hydrocarbon Exploration Licensing Policy many years due to various reasons(HELP), Marketing and Pricing freedom for new • 134 e-Bids for the 34 contract areas under the gas production, grant of extension to the Discovered Small Fields (DSF) Bid Round 2016 Production Sharing Contracts and assigning the were received 21st November 2016. 42 Ratna offshore field award to Oil and Natural Gas companies participated in the bid round.

The M-SIPS scheme of the government is likely to be Policy/ Regulatory developments revamped with guidelines to remove loopholes. The

NITI Aayog released a draft paper on “Make-in India measure owes to concerns raised by the Finance

Strategy for Electronic Products” in mid-2016 with Ministry over the lack of clarity in the quantum of

recommendations aimed at creating a globally subsidy outgo. The scheme may also be prioritized on

competitive domestic electronics manufacturing segments of electronics manufacturing which

industry. The paper primarily focused on existing and deserve the subsidy.

proposed policies in favor of import substitution and PMA and Deemed Exports: In a bid to attract more export orientation. However, the policy was junked investment in the ESDM sector, MeitY mooted a later owing to opposition from MeitY and other proposal for amendment of the policy for providing stakeholders. It was replaced by a policy floated later preference to Domestically Manufactured Electronic by NITI Aayog which is more export-oriented and Products (DMEP) on account of difficulties in favors developing coastal economic zones. India’s first qualifying for Preferential Market Access (PMA) CEZs are likely to take concrete shape, with the likely clause of government procurement. This relaxation announcement in the Union Budget for 2017-18 to in the PMA policy proposes to allow those give units in these areas a 10-year holiday from undertaking manufacturing /packaging /marking/ corporation tax.testing etc. for domestic sale or exports of high

The government is formulating a National Policy for technology (in addition to other terms and

Advanced Manufacturing primarily aimed at conditions), it shall be entitled for relaxation in the

increasing the contribution of manufacturing output preference policy by being classified as “Deemed

to 25 per cent of GDP by 2025 from 16 per cent at Domestic Manufacturers”.

present.

Electronics manufacturing sector

A specific notification for inclusion of servers under beef up their individual cyber security frameworks.the portfolio of products notified under PMA is - The RBI has directed banks to improve cyber-expected soon. The proposal has undergone security system to tackle cyber-crime. It has consultation with industry associations. set a deadline of March 31, 2017, for banks to Duty Differential: The scheme saw amendments with put in place a mechanism to report cyber-regard to rationalizing the duty structure to promote attacks.local manufacturing of Customer Premise Equipment - SEBI will enhance its policy framework on cyber (CPE), as announced in the Budget 2016-17. Industry security and plans to appoint a Chief associations such as MAIT, however sought extension Information Technology Security Officer for the of benefits under the scheme to all ITA products same. Sebi would also develop stress testing including desktops, laptops, etc. mechanism to mitigate risk arising out of cyber-The Customs (Import of Goods at Concessional Rate attacksof Duty for Manufacture of Excisable Goods) Rules, - The Centre will set up a cyber-security research 2016 have been introduced with a view to simplify the and development fund of ?1,000 crore to be rules, including allowing duty exemptions to

spent over five years for the power sector. importer/manufacturer based on self-declaration

- The Health ministry will lay down the instead of obtaining permissions from the Central Healthcare Data Privacy and Security Act to Excise authorities.devise a legal framework for protection of

Compulsory Registration Order (CRO): The deadline individual health data

for compliance to CRO for detachable power supplies Cloud Computing: There are no separate policies for servers/storage devices has been extended to Jan governing cloud computing in India. However, 31, 2017 from the earlier Dec 31, 2016. The step has provisions are likely to be brought under the revised IT been undertaken in light of the industry’s appeal for Act which is likely to come out next year.extension due to the large volumes of goods to be

registered. TRAI released a consultation paper on ‘Cloud Computing’ seeking stakeholders’ views on data - MeitY has planned a study to assess the security, service quality and legal and regulatory problem of counterfeit electronic products and framework issues. In response, the industry, however evaluate the impact of CRO. The ministry has unanimously warned against over-regulating the also invited EoI for the same.space. Divergent views emerged over the question of

E-waste: Ministry of Environment, Forest & Climate putting up data centres for hosting cloud-based

Change notified the ‘E-Waste Management Rules, services locally and IT ministry’s plans to rope in

2016’ replacing the 2011 Rules. Apart from an private firms for cloud services due to security

expanded definition of E-waste, the Rules entailed concerns.

provisions for Extended producer responsibility MeitY completed the process of empanelment of (EPR), making producers responsible for e-waste services of 11 Cloud Service Providers (CSPs). It is also collection (30% of the quantity of waste produced).preparing a model framework to enable government

Cyber Security: India’s first platform for homegrown departments to access cloud-based services from the

cyber security companies is likely to come up with the empanelled service providers.

government and industry coming together to prepare The year also saw governments warming up to private a road map for the indigenous industry. This includes partnerships to employ cloud operations. Eg: The creating a special fund for cyber security start-ups and Punjab government inked a MoU with Microsoft; increasing capacity to tackle cyber security issues.universities in Tamil Nadu would be connected

MeitY plans to shortly issue a RFP to set up a National through cloud computing.

Cyber Coordination Centre (NCCC) which will Public procurement: Draft Model RFP 2016 was safeguard India’s cyberspace against potential released by MeitY, to replace the 2015 RFP. threats. It has also approved 26 new posts in CERT-In

and five new state CERTs to strengthen cyber security. The Manual on Policies and Procedures for Procurement for Goods was out for public Ministries and regulators are also drawing up plans to

consultation. assess the innovative nature of Startups and provide certificates to enable them to get recognition from The Manual on Policies and Procedures for DIPP. Procurement of Consultancy and other services was

also out for public consultation. For incubators to get recognition by Government of India a module to recognize incubators has been The Manual on Policies and Procedures for launched. This wi l l a l low them to issue Procurement in e-governance was out for a second recommendation letters to Startups.round of public consultation. In February 2016, The Union Cabinet chaired by the The Assam Government is likely to formulate the state Prime Minister had given its approval for Public Procurement Policy. establishment of the Atal Innovation Mission and

The Haryana Government notified the Guidelines for Self Employment and Talent Utilization (SETU) in Project Execut ion/Publ ic Procurement of NITI Aayog. Establishment of AIM and AIM development works under Swiss Challenge Method. Directorate would result in implementation of The Haryana Government also formulated a public Mission activities in a focused manner. This would be procurement policy for MSMEs. a focal point for innovation and entrepreneurship in

the country. Policy initiatives on Start-ups

NIDHI (National Initiative for Development and The Standup India scheme was launched on 5th April, Harnessing Innovations), an umbrella program is 2016 to facilitate bank loans from Scheduled pioneered by the Department of Science & Commercial Banks (SCBs) between Rs.10 lakh to Rs.1 Technology (DST) has been setup for nurturing ideas Crore to at least one Scheduled Caste (SC) or and innovations (knowledge-based and technology-Scheduled Tribe (ST) and one woman per bank branch driven) into successful startups. for setting up a greenfield enterprise in trading,

services or manufacturing sector. The scheme is DST have also initiated schemes like New Generation expected to benefit at least 2.5 lakh borrowers. Innovation and Entrepreneurship Development

Centre (NewGen IEDC), Grand Challenges and The Finance Act, 2016 Section 80- IAC has provision Competitions for Scouting Innovations (GCC), for Startups (Companies and LLPs) to get income tax Promoting and Acclerating Young and Aspiring exemption for 3 years in a block of 5 years, if they are Innovators and Startups (PRAYAS), Entrepreneur-In-incorporated between 1st April 2016 and 31st March Residence (EIR), Start up NIDHI, Technology Business 2019. To avail these benefits a Startup must get a Incubator (TBI), Seed Support System (SSS), Certificate of Eligibility from the Inter-Ministerial Accelerator, Centers of Excellence (CoE). Board.

Other policy initiatives A panel of facilitators has been constituted for assistance in filing Intellectual Property (IP) MeitY has initiated the process to revise the existing IT applications. DIPP would bear the facilitation cost on Act. It will constitute a committee that would have behalf of Startups and also provide rebate in the representations through industry associations, civil statutory fee for filing application. societies, academia etc. The key issues that shall be

potentially examined by the committee include Cyber The Central Pollution Control Board has exempted security, Cloud computing, new mediums of doing industries in “white” category from all the applicable business (like e-commerce) etc.self-certifications under the 3 environment related

Acts (The water (Prevention & Control of Pollution) MeitY had withdrawn the draft encryption policy Act, 1974; The Water (Prevention & Control of which it had released earlier for comments because Pollution) Cess (Amendment) Act, 2003 and The Air of the widespread criticism on certain sections of the (Prevention & Control of Pollution) Act, 1981) listed in policy, especially in relation to encryption of private the Startup India Action Plan. data of consumers. The draft policy would be

reworked and possibly be released in 2017.List of recognized incubators has been augmented to provide more avenues to Startups to obtain MeitY also formulated the “Draft National Policy on mentoring support. 20 industry bodies and Software Products-2016” which aims to stimulate organisations have been recognized by DIPP who will the emerging software products ecosystem.

BIS has come out with the draft National Standards Other government initiatives for Smart Cities that was put for public comments.

India opened up its supercomputing programme to The benchmarks will be decided after the indicators

the private sector for the first time. have been finalized.

Initiatives to provide push start-up ecosystem. The The Indian Government would soon be framing a

Department of Science and Technology launched a regulatory framework for IoT and policies to promote

Rs 100-crore programme National Initiative for the sector.

Developing and Harnessing Innovations (NIDHI), is Many states laid down their IT policies- aimed at helping startups across the country in terms

of both funding and incubation support.- Telangana state launched its ICT Policy, 2016. Along with the ICT Policy, four allied policy MeitY has started work on the next phase of Digital documents on Rural Tech Centres, Innovation, India plan, called Digital India 2.0, that will seek more Electronics, Gaming & Animation were also participation from the private sector besides released. expanding into areas lacking digital penetration.

- Andhra Pradesh government approved the Ministry of Commerce & Industry Minister has set up policy on IoT with the prime objective of of a “Task Force on Innovation” to assess India’s turning the state into an IoT Hub by 2020 position as an innovative country and suggest

measures to enhance the innovation eco-system.- Haryana government announced its IT and ESDM policy to generate jobs and investment in the sector

- The AP government decided to change its IT and electronics policy after it failed to get the desired response to the existing policy. The new policy is likely to address the gaps in the existing policy.

as Internet of Things (IOT), Artificial intelligence, data International Developmentslocalization, blocking access to online content;

IANA Transitionvarious dimensions of the digital divide.

One of the most significant achievements of this year Other key developments:

was the transition of Stewardship of IANA Functions The Court of Justice of the European Union (CJEU), from U.S. Government to ICANN and the global has issued a landmark ruling against mass Internet Community. ICANN 57, held in Hyderabad in surveillance stating indiscriminate storing of private November was the first multi-stakeholder meeting citizens' communications data is illegal under EU law.post the transition. India has openly supported the

multi-stakeholder model and will work with ICANN to In 2017, the International telecommunication Union develop a structured framework focusing on fostering (ITU) will begin a review of the International the development of the DNS industry in India. Telecommunication Regulations (ITRs) through an

Expert Group on the ITRs (EG-ITR). This review will The framework will concentrate on capacity building begin in 2017 taking into account new trends in for India’s stakeholders, gearing them up for active telecommunications/ICT, emerging issues and participation in ICANN and the multi-stakeholder obstacles that may arise from the implementation of model of Internet governance.the 2012 ITRs and WCIT-12 Resolutions and

The 11th Internet Governance ForumRecommendations.

The 11th Internet Governance Forum was held from US India Cyber Relationship

the 6-9 December, 2016 at Guadalajara, Mexico. The Based on Narendra Modi’s visit to the United States in theme for this year’s event was ‘Enabling Inclusive June 2016, India and United States had formed a and Sustainable Growth’.bilateral relationship recognising the value of

The primary point of discussion this year was related enhancing and further institutionalizing broad-based

to increasing Internet access for connecting the cooperation on cyber issues. A framework was

unconnected. Other important topics included released highlighting the shared principles and

importance of content and IDNs in local language, intended forms of cooperation.

Human Rights, cyber security, new technologies such

SectorIT

Regulatory Developments

Key policy developments

Ministry of Electronics & IT has formulated the “Draft National Policy on Software Products-2016” which aims to stimulate the emerging software products ecosystem.

Beginning December 1, a service tax component of 15% has been added to bills on downloads from foreign websites. The tax component is the result of amendments by the Central Board of Excise and Customs in the 'Place of Provisions of Services Rules' (PPSR) for 'online information and database access or retrieval services'.

DIPP has released clarification regarding “Inclusion of internet broadcasting organisations under the purview of section 31(d) of the Copyright Act, 1957”. The clarification mentions all broadcasting including Internet broadcasting will now be covered under related to section 31 (d).

MEITY has released “Guidelines for Adoption of The Geospatial Information Regulation Bill (2016) was Electronic Payments and Receipts”. The guidelines put up for public discussion and the discourse around aim to harness the potential of electronic cashless the draft had spanned across the wide spectrum of payments platforms for various Payments or Receipts skepticism that such a regulation will stifle handled by Departments / Institutions. ‘innovation’.

Ministry of Commerce & Industry has set up of a “Task The stated objective of the bill was to regulate the Force on Innovation”, which would take forward acquisition, dissemination, publication and innovation in India. The Task Force will assess India’s distribution of geospatial information of India that is position as an innovative country and suggest likely to affect the security, sovereignty and integrity measures to enhance the innovation eco-system in of India and matters connected with these.India and thus improve India’s ranking in the Global Competition Commission of India Innovation Index (GII).

In January 2016, Devender Kumar Sikri, an IAS officer MEITY has started work on the next phase of Digital of 1975 batch was appointed as Chairperson, CCI.India plan, called Digital India 2.0, that will seek more

International Competition Network (ICN) accepted participation from the private sector besides the proposal and decided that CCI would host the expanding into areas lacking digital penetration. 2018 ICN Annual Conference. This will be held at Delhi

Policies on Cyber security in March –April 2018. ICN is an international body MEITY will set up a cyber-security research and comprising 132 members from 120 competition

jurisdictions exclusively devoted to international development fund of ?1,000 crore to be spent over competition enforcement. CCI has also launched the five years for the power sector.‘Community Resource Person’ initiative to promote

Health Ministry planning to create Healthcare Data competition advocacy and disseminate the message

Privacy and Security Act. The law will devise a of Competition – Law, Policy, Culture, Compliance and

comprehensive legal framework for protection of Neutrality - to stakeholders. A Resource Person can

individual health data and its standardization. India’s either be an individual or an NGO who are eligible

first platform for homegrown cyber security according to the prescribed guidelines.

companies is likely to come up with the government Encryption Policy and industry coming together to prepare a road map

for the indigenous industry. This includes creating a MEITY had withdrawn the draft encryption policy special fund for cyber security start-ups and which it had released earlier for comments because increasing capacity to tackle cyber security issues. of the widespread criticism on certain sections of the

policy, especially in relation to encryption of private MeitY plans to shortly issue a RFP to set up a National data of consumers. The draft policy would be Cyber Coordination Centre (NCCC) which will reworked. safeguard India’s cyberspace against potential

threats. It has also approved 26 new posts in CERT-In Developments related to Connectivity and five new state CERTs to strengthen cyber security.

C-DOT plans to provide Wifi Services in railway Ministries and regulators are also drawing up plans to stations as well as 7000 Gram Panchayats. It will be an beef up their individual cyber security frameworks. integrated project where the Gram Panchayats

adjacent to the rural railway stations will be The RBI has directed banks to improve cyber-security collectively provided Wi-Fi services. The Assam system to tackle cyber-crime. It has set a deadline of Government has affirmed providing Digital March 31, 2017, for banks to put in place a Connectivity in every rural household as one of its key mechanism to report cyber-attacks.objectives. It aims to build a Digital Highway that

SEBI will enhance its policy framework on cyber would facilitate the infrastructure required for

security and plans to appoint a Chief Information providing Internet access to all the villages in Assam.

Technology Security Officer for the same. Sebi would The Andhra Pradesh Govt. plans to provide free Wifi also develop stress testing mechanism to mitigate risk services in all colleges and universities within the next arising out of cyber-attacks. month. They have had initial discussions with ISPs

Geospatial Information Regulation Bill discussing the possibility of executing such a move.

MTNL has been establishing Wi-Fi Hotspots in public Ministry of Women and Child Development had areas for digitally connecting the people of Delhi released the “Draft National Policy for Women 2016”. under their ‘My Wifi Service’ initiative. It aims to The policy spoke about forging PPP models that will create more than 200 hotspots in a year and is looking be adopted for building ICT infrastructure, developing to connect additional markets, malls, parks as well as applications and locally relevant content and tourist locations in and around Delhi in the near developing the capacity of teachers required for future. harnessing the full capacity of ICT productive tools.

Government of India has approved the constitution of Other Policy Developments a committee under the Chairmanship of Chief

C-DoT (Centre for Development of Telematics) had Executive Officer, NITI Aayog to examine and suggest successfully built and demonstrated world's first a roadmap for a new industrial policy for North open standards-based M2M communications Eastern and Himalayan States. MEITY has released platform. documents on Digital Locker interoperability for

public consultation. It has invited proposals in thrust Indian language scripts could be allowed for assigning areas with focus on innovation and indigenous internationalized domain names by 2017. C-DAC has technology development & demonstration leading to been given the role to formulate sets of rules for commercialization. Indian Scripts.

BIS has come out with the draft National Standards for Smart Cities. The indicators that have been incorporated aim to assess services and quality of life in the cities.

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