In Right Direction

Trade bodies and industry players react on the Indian business climate and future prospects...

Laura Prasad

Laura Prasad, Secretary General, Indo-French Chamber of Commerce & Industry (IFCCI)

I feel that things are definitely moving in the right direction, and the fact that more and more French companies are looking at India as a new potential market is a definite sign of it. According to a recent report, the World Bank and IMF project that India will emerge as the fastest growing economy in the next two years and will finally emerge from China’s shadows. The projected growth rate is about 7 per cent. India being Asia’s third largest economy, its growth will only accelerate in coming years as the newly elected government is now taking measures to cut red tape, raise infrastructure investment, deregulate key parts of the economy, and shrink the role of the government. What India needs is to tweak laws and regulations to give Indian as well as foreign - and French - companies more confidence to invest and help the economy expand.

There are currently more than 1,000 French companies in India according to the new report that was recently released by the Embassy of France in India. Many big names have joined hands with the Indian Government to bring the best in technologies to build the Indian infrastructure, especially following the visit of Prime Minister Narendra Modi in France last month. Alstom was recently awarded a contract to supply 20 metros to the Kochi Metro Rail Ltd. Veolia Transport’s joint venture with Reliance – Mumbai Metro One Pvt Ltd (MMOPL) operates the Mumbai Metro. French utility company, Suez Environment is working closely with bodies like Municipal Corporation of Greater Mumbai in the sphere of Water and Waste management. Nuclear power company Areva signed a pre-engineering agreement with stateowned Nuclear Power Corporation of India Ltd (NPCIL) and also an MoU with engineering company Larsen & Toubro for cooperation to maximise localisation for the Jaitapur project. Last but not least, Dassault Aviation will form a JV with an Indian company to jointly manufacture the next batch of Rafale fighter planes with hope to fulfill the ‘Make in India’ dream. And there are many more existing Indo-French collaborations as well as future ones to come.

Yong Chan Kim KotraYong Chan Kim, Director General, KOTRA (Korea Trade-Investment Promotion Agency)

The Indian economy has been suffering from low investment in infrastructure and manufacturing for the last 3-4 years. The current low petroleum prices have given fiscal space to the government to reduce subsidies and invest more in public infrastructure. We are hoping to see the investment cycle reversing this year on back of strong infrastructure growth in Railways, Ports, Renewable Energy, and Urban Mass Transportation. Many Korean companies are looking at India for expanding their manufacturing base. We are keen to participate in the India growth story. If the government follows up on its commitment to improve the “Ease of Doing Business” in India, it can be major factor towards improving bilateral trade and investment. Korean companies are looking for opportunities both in services (EPC contracts) and also supply of construction equipment.

Korean companies are looking to actively participate in the many projects coming up under the smart city programme of the Indian government. Samsung C&T is constructing a high rise tower for the Oberoi group in Worli while HDC is constructing one for RNA developers in Sewri. Hyundai Rotem is supplying coaches and Samsung SDS has been providing its Fare Collection solution to metro projects in Delhi and Hyderabad. Hyundai Heavy Engineering and Liftech are supplying construction equipment like excavators and elevators. Midas IT is a leading supplier of software solutions to structural engineers for large and complex construction projects.

Bernhard Steinruecke IGCCBernhard Steinruecke, Director General, IGCC

The German companies in India hold a positive long term view of the Indian market but they also mention some areas where improvement is needed. Ease of doing business is looked upon as the single biggest hindrance by German companies. At a time when more and more German companies are showing confidence in India’s sustainable economic growth, the Hannover Trade Fair offers an excellent platform to enhance economic relations between the two nations. Around 250 German companies that are already ‘making it in India’ will be present in Hannover. 330 Indian companies will exhibit in 39 decentralized India pavilions. Already more than 1,600 German companies are doing business in India, many of them for decades and as market leaders in their field.

The latest IGCC Annual Business Monitor shows that the 30 largest German companies alone employ about 200,000 people. These companies with an annual turnover of about €16 billion, have invested €2.7 billion in the last 3 years and intend to invest another €1.6 billion in the next 3 years with plans to recruit another 40,000 people. In the last 2 to 3 years, more than 120 factories were opened or significant expansions took place along with formation of more than 100 new companies.

German companies in India are highly profitable. This is proven by the fact that the 13 largest German companies listed at the Indian Stock Exchanges, due to their good profitability in 2014 itself, could on an average double their value and today have a market capital of more than €27 billion.

Sandeep Ahuja RichaSandeep Ahuja, CEO, Richa Realtors

It would be too early to term it as a turnaround, but the economy has surely appreciated from weak to recover level. With the current growth rate between 7 – 8 per cent, the future of Indian economy looks bright. Tax reforms like reducing the corporate tax and implementation of the GST is a very thoughtful move which will help to decrease the fiscal deficit. From the real estate sector perspective, Tax pass through on REITs is an excellent and much required move. We still have to look at the specifics of how capital gains will be rationalised during REIT listing.

The real estate market is gaining the right momentum especially after the cabinet’s nod to the Real Estate (Development and Regulation) Bill, though the bill needs to get the final approval from the parliament, it has set a positive tone.

Sanjeev Ranjan - ICA

Sanjeev Ranjan, Managing Director, International Copper Association (ICA India)

The Modi Government has presented two budgets – One in August 14, an interim one, and another in February 15. Both the budgets have been very directional and helped to draw a blueprint for India’s turnaround where an attempt has been made to come out of the economic morass.

The government is trying hard to sell the various opportunities as they exist in India through its campaign on – Make in India but it will take at least another 6-9 months for us to see the movement happening on the ground. The economic growth not only focuses on generating employment for the youth but provides an opportunity for pushing inclusive growth. Infrastructure can be the medium which helps to address this in a big way.

An open transparent environment has been created both through government policies and by RBI. The Indian economy to a large extent is driven by domestic consumption and we need to keep stoking the fire through government spending followed by easing of interest rates which can be the much needed stimulus for our economy to improve.

Manoj HessManoj Kumar, Managing Director, Hess (India)

“After two years of slowdown, it seems like the market has started to move forward. Whatever be the decisions or the policy changes taken by the government, after the financial yearend it seems that things have started to move and even the banks have also started to support, and for Hess it looks like ‘Manufacturing in India’ is happening. We already started to export the first equipment and now we have started with the second equipment with the 3rd and 4th in the pipeline. So, we could see that whatever we are doing locally in India, price wise it is at least 30 per cent lower than everywhere else. Since the last two years were the years of survival, we could say this is the year for moving. We can see the light far away which is the result from new actions or new directions given by the new government and also the RBI as well. At least we can see some light at the end of the tunnel. I think it’s on the right track and may be by last quarter or the beginning of next year this will be a complete Turnaround for the Indian economy and the construction sector.”

Soji ColumbiaSoji T P, Senior Manager - Marketing, Columbia-Pakona

“Financial year 2013-14 was very bad. It was towards the end of UPA rule in India but when the government changed, the construction segment in India has started to bounce back. So, there is a Turnaround but it is not as per the expectation of the people. All infrastructure companies are in huge debt. Companies are not having money to invest. Their interest patterns are so high and new projects are not allocated at the place where we were expecting. These were the reasons. But for any new government it will take time to implement new policies. Next it will take time for the government to fund all these projects. Companies are already in huge debts and so they won’t be able to invest further at their end. In 2-3 years’ time, we should see a Turnaround. The Land Acquisition Bill will be a major turnaround towards prosperity of our country. By Land Acquisition Bill farmers will be compensated quickly, they will get very good compensation and developers and infra companies will get land for development.”