Tamal Bandyopadhyay’s HDFC Bank 2.0 book narrates the Puri legacy.

Indian banking industry is not in the pink of health now but that’s largely the story of the government-owned banks. If we look at the private sector, barring a few odd banks which are not the best examples of corporate governance, over the last three decades, the industry has witnessed phenomenal growth with consumerism. The privitisation push in 1991 was a defining moment for the financial sector in India. What we have achieved today would not have been possible without India’s private sector banks like HDFC Bank. It is a child of economic liberalisation.

In the 1990’s, talking about banks as dinosaurs, Bill Gates of Microsoft famously said, “We need banking, but we don’t need banks anymore”. Three decades later, a bank is still relevant and will continue to do so if it’s willing to reinvent itself to be in sync with the changing milieu where it operates – by embracing digitalisation.

From a nimble start-up in 1995 to India’s most valuable banking brand, HDFC Bank has a made  gigantic strides into the world of digital banking under the leadership of Mr Aditya Puri. In a sector marred by controversies, Mr Puri has not just been the longest serving chairman of any bank globally but the face of a world class bank in India. Tamal Bandyopadhyay’s latest book “HDFC Bank 2.0: From Dawn to Digital” narrates this unique story of the  transformation of India’s most valued lender from a life cycle bank to a lifestyle bank. 

For starters, let me remind you that this book is not a sponsored project. It chronicles the HDFC Bank story warts and all. While highlighting the bank’s unique features, Tamal also criticises the unforgivable mistakes done by HDFC Bank during this journey through his unparalleled  writing skills. 

One of the key reasons why Indian banks were largely unaffected  during the Global Financial Crisis of 2009 was the fact that they were truly connected with their roots. During that  period, Mr Puri had guided HDFC Bank to add branches and ATM network in tier three cities and rural areas. The expansion drive created the credit card, auto and home loan boom. The book describes how  a bank reaching out to person for a loan – and not  the other way round - creates a new sense of trust in the aspirational class of India.

The era of Digital Disruption

Mr Puri believes that digitalisation and disruption are intertwined. Whenever there’s change, people tend to panic but if handled correctly, it can open up new beginnings. HDFC Bank saw this transformation ahead of others. During his Silicon Valley trip in 2014, Mr Puri saw how the fintech companies – the new kids on the  tech block – were venturing into fund transfers, mobile banking and shopping. They could build products that could give instant loan with slick user interface on their phones. Home grown fintech innovations like the United Payments Interface (UPI) were set to transform the way we Indians bank.

“Why don’t we disrupt ourselves instead of waiting to be disrupted by fintech companies? Why can’t we give a loan in 10 seconds? Why can’t we invent something to transfer money in just a click? HDFC Bank aspires to become a financial marketplace. It wants to be India’s Alibaba or Netflix when it comes to banking”. - Mr Aditya Puri, Chairman & Managing Director, HDFC Bank.

HDFC Bank first tied up with Chillr, an app which sends money over the phone using a UPI technology. A BharatQR code-based payments service named PayZapp is popular in many stores. The bank has also used AI for many applications like chatbots and social media interactions. Indigenously developed IRA robots have been deployed at several branches to solve customer queries. 

While adopting this technological shift, there were times when the bank failed on the customer front. For instance, the HDFC bank app crash in November 2018 became a hot topic in the media and  the bank was subjected to national outrage and ridicule. The book – “HDFC Bank 2.0: From Dawn to Digital” – clinically  chronicles the journey over the years.

About the book

Tamal Bandyopadhyay’s HDFC Bank 2.0: From Dawn to Digital is published by Jaico Publishing House. The book was launched by Rajnish Kumar, Chairman, State Bank of India at Nehru Centre, Mumbai. Aditya Puri, Managing Director, HDFC Bank Ltd  and many  luminaries in the financial services industry were present there. Tamal Bandyopadhyay is an author, columnist and keen watcher of banking and finance. His Banker’s Trust column, which now appears every Monday in Business Standard, is the most popular column on banking and finance with over half a million followers on the Linkedin platform.

“Tamal combines his financial knowledge, eye for detail, and an excellent storytelling style to create a vivid portrait of India’s most valued bank and its path to future” - Nandan Nilekani, Co-foundar & Chairman, Infosys & founding chairman of UIDAI, has written in his forward to the book.

HDFC Bank 2.0: From Dawn to Digital (ISBN: 978-93-88423-35-9) are now available at Crossword, Amazon, Flipkart and other leading book stores.

YES BANK Datathon unites professionals and academia to co-create next-gen data driven products.

Technology and Banking are no longer poles apart. Over the last few years, innovation in the fintech industry has taken the world by storm, becoming a global phenomena not limited to one region. The Asian fintech space was dominated by innovations from Indian and Chinese firms, especially from the new-age startups. Being a software superpower, Indian startups and MNCs are contributed immensely towards the development of innovative products and models.

This year, we all have witnessed the growth of game-changing technologies like UPI, Blockchain, Artificial Intelligence and Open Banking. Global technology giants like Google, WhatsApp were wooed by the United Payments Interface, making India a top destination of digital payment adoption. Blockchain, which is also the underlying technology for all cryptocurrencies is implemented by banks to secure financial transactions.

Experts who have closely followed these trends believe that the next wave of fintech would be in the field of data science. YES BANK, India’s fourth largest private bank has been at the forefront for adopting next-gen technologies to service its customers better. YES BANK believes that the best of outcomes in the field of technology is received from the engineers and data scientists of tomorrow – the students. The idea generation from aspiring data scientist and its execution under the mentorship of CIOs and CTOs would be key in building scalable models in the data science ecosystem.

Data scientists, engineers, students from Top colleges, all compete at the Datathon.

Datathon, India’s first bank led Datathon collaborated aspiring data scientists and professionals from IT field to augment YES BANK’s 600 TB anonymized and embedded data stack to create new Artificial Intelligence/Machine Learning (AI/ML) prototypes in a period of just 100 days. In its inaugural season, more than 6000 aspiring data scientists/ engineers and developers joined this competitive initiative. The top teams include not only students from top technology institutes like the IITs, BITS, ISI Kolkata and University of Moratuwa, Sri Lanka but also 150 plus professionals from top IT organisations.

Participants at Datathon got an opportunity to access unstructured and anonymised data on Cloudera and AWS dashboards. YES BANK had also onboarded a pool of 20+ data science experts and leaders across industries, to support the data science teams as well as to help the bank identify relevant use cases for product development using Big Data Analytics, AI and ML. After the detailed scrutiny of models, top 15 teams were invited to Bengaluru to present their models in front of esteemed panelists at Datathon Finale.

Data models developed during the Datathon were aimed at addressing the current business and service requirements. For instance, team Django Unchained has created an AI based application for sales representatives of the bank which enables them to measure share of wallet reserved for every retail customer, predict customer attrition and provide customized products to different classes of customer. Team Prayaas, a mix student team from NMIMS Mumbai and ISI Kolkata worked on a proactive model which predicts individual customer deliveries like cards, cheque books, statements by reducing human interference and service requests. Majority of models presented at Yes Datathon pointed towards improving customer satisfaction and reducing overheads; a facet of fintech.

And the winners are...

Oracle, a team of professionals from IBM and two students from IIM Bangalore bagged the top spot of Yes Datathon challenge. Team Oracle presented a ‘master product’ which creates a single 360 degree view of every retail customer. Upon analysis, the model provides customised product and service recommendations for every individual retail customer along with the resolution of pending service requests. Team Data Pros and Data Acers from the University of Moratuwa, Sri Lanka were honoured with runners-up and Best Student Team (position) at Yes Datathon challenge.

YES BANK plans to deploy the selected data models in the real-time banking ecosystem by March 2019. YES BANK believes in the ideology of consistently adopting next-gen technologies to deliver superior products and services. Datathon is also actively partnering with top technology institutes, and has partnered with top IITs and BITS Pilani, and will also host AI/ML challenges and data engineering workshops to deepen practical and technical knowhow of future technology leaders and widen the data science ecosystem. Yes Datathon is a part of a long-term strategy of YES BANK of ‘becoming a technology company in the banking business’.

- Chaitanya Kulkarni.

#DialDforData: YES BANK’s Data Science Initiative Collaborates with 200 Data scientists to create 20+ data models in just 100 days.

Over the years, data has been an analytical tool to record and gather information from our surroundings to optimise our lives. The millennials would recall how we as society shifted from being predominantly ‘analog’ to ‘digital’ in just a few years. Today, thanks to technologies like the cloud and the algorithm-based infrastructure, data evangelists are talking about storing and analysing thousands of terabytes of data within a matter of minutes. This exponential growth of data is referred to as Big Data.

Big Data is our present and our future. In this age of information, data will fundamentally change the way businesses compete and operate. The analysis of this data could help businesses in making key management decisions which drive scalable transformation. Data scientists funnel vital data from terabytes of unstructured information to understand consumer buying patterns, likes and needs, and create scalable models which reduce systemic bottlenecks.

If data is a new oil then analysis is the refinery. The Internet of Things, Machine Learning, Predictive Analytics, Hadoop etc. are leading industrial trends which are shaping the data-driven economy.

Data Analytics: the next frontier.

The impact of data analytics will be beyond one sector, be it manufacturing, healthcare or finance. For instance, data science has today become a vital part of sports management industry. Each and every player of Indian Cricket Team is analysed on his current and past performance to predict behavioural patterns in an effort to rectify human error. BFSI firms are one of early pioneers to adapt data analytics.

With data science and analytics gaining importance across sectors, YES BANK reached out to the global developers, coders and data science community to work on Yes Bank’s data stacks. Datathon, an initiative of YES BANK is India’s first bank-led Datathon with a mantra of decode-derive-develop. Launched in September 2018, Yes Datathon has witnessed participation of over 6000 plus data scientists and engineers both from academia and corporate background. In a competitive selection, top 15 teams qualified for the Datathon Finale will be given 60 days to create working data models/prototypes which will be trained, tested and deployed by the Yes Bank.

The top teams include not only students from top technology institutes like IIT Bombay, IIT Madras, IIT Kharagpur and ISI Kolkata but also 150+ professionals from organizations like IBM, Walmart Labs, Oracle, Amazon Development Centre, TCS, Accenture and Infosys among others, who are taking on the challenge beyond their professional duties. A student team from University of Moratuwa, Sri Lanka presented their model at Yes Datathon finale held in Bengaluru.

Teams participating in Yes Datathon presented innovative models which were previously not thought-off. For instance, Team Data Pirates created an alternative method to credit score customers pooling in LinkedIn and external APIs. Team Greenity has developed an ML algorithm which analyses credit card history transactions to service customer better and predicting new target customers for YES BANK credit card.

Moving from buzz to biz

Artificial Intelligence has moved from buzz to biz. YES BANK has deployed AI based chatbot named Yes Robot to disseminate information about loan offerings to prospective customers. It currently helps users with instant 20+ banking services and 2,000+ banking queries. Next-gen technologies such as artificial intelligence, machine learning, natural language processing and bots enables YES BANK to serve their customers and clients with greater depth, sophistication and efficiency.

Yes Datathon is a part of a long-term strategy of Yes Bank of ‘becoming a technology company in the banking business’. Data scientists and engineers would have an experience of a lifetime handling 600 TB of anonymised data. Datathon provides a rare opportunity to build algorithms and data models on Terabytes of ‘real data’ in a deployment-ready environment. The collaboration between academia and corporate would deepen practical and technical know-how of future technology leaders and widen the data science ecosystem.

- Chaitanya Kulkarni.

Dubai's Relam Investment pumps $250- 300 million in India.

Relam Investment LLC, a new international joint venture formed by UAE-based Vault Investment and Vietnamese MIG Holding officially made entry into Indian markets. The company, headquartered in Dubai is set to focus on investments across multiple sectors including real estate, technology, energy, oil & gas, trading, healthcare, F&B, retail and agriculture. The company looks to invest USD 250-300 million in the Indian market with an initial focus on real estate and technology.

The company announced two new technology-led investment projects. The first would serve the real estate sector through the crowdfunding platform and the second, a trade hub platform, which will move small and medium enterprises into a different paradigm. Relam Investment LLC has allocated an investment portfolio of $50million to fund companies innovating in emerging technology like blockchain, AI, Big Data and another $200 million into the real estate sector, where India stands as one of its main hubs.

Relam Investment LLC also signed a cooperation agreement with RRP S4E Innovation Pvt. Ltd in order to set up renewable energy plants using CIGS, one of the most cutting-edge Nanotechnologies in the renewable domain. The partnership will also lead to setting up of a unique Electro-Optics park, as a part of its programme.

“The partnership between the two companies will bring together proven expertise into multiple sectors, which we aim to replicate in the Indian market. Our strategy is aligned with Dubai’s vision for globalized growth via effective investments. India is a developing region and its ‘Made in India’ project has made the country a global hub for investments. Through Relam Investment LLC, we aim to give a boost to the Indian start-up ecosystem.” - Sultan Ali Rashed Lootah, Chairman & MD, Relam Investment LLC.

Apart from India, Relam Investment LLC will focus its operations in the UAE, Vietnam, GCC countries, United Kingdom, Turkey, South East Asia and Egypt in the initial years, before expanding to other countries and regions around the world.

Source - Press Release.

Walmart - Flipkart deal: India's largest FDI investment

Walmart-Flipkart deal at $20.8 billion is largest FDI investment in India after Essar Oil stake sale to Rosneft - Trafigura at $12.9 billion.

India's leading e-commerce giant has been sold to America's leading e-commerce giant, Walmart. Walmart had been keen to enter India's booming demand-driven market. Some analyst thank the change in government policy. Just a month back, the cabinet approved 100% FDI in Single brand retail. Walmart has been thinking of India as its next market since then. The Walmart - Flipkart deal of $20.8 billion has surprised many including its rival Amazon.

Walmart announced it has signed definitive agreements to become the largest shareholder in Flipkart. The press release says that the investment will help accelerate Flipkart’s customer-focused mission to transform commerce in India through technology and underscores Walmart’s commitment to sustained job creation and investment in India, one of the largest and fastest-growing economies in the world.

Walmart had already entered India's retail market by joining hands with Bharti. They operate 21 cash and carry stores in 9 states of India. The joint company Bharti-Walmart failed to make an impact in the grocery mall business which is ruled by Big Bazaar, D-Mart, Reliance, Tata and the Godrej. Whereas, India's e-commerce market had only three major players namely Amazon, Flipkart, and Snapdeal.

Subject to regulatory approval in India, Walmart will pay approximately $16 billion for an initial stake of approximately 77 percent in Flipkart, formally Flipkart Private Limited. The remainder of the business will be held by some of Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp. While the immediate focus will be on serving customers and growing the business, Walmart supports Flipkart’s ambition to list on financial market's in future. The deal bids a good-bye to Flipkart founder Sachin Bansal.

Founded in 2007, Flipkart has led India’s eCommerce revolution. The company has grown rapidly and earned customer trust, leveraging a powerful technology foundation, including artificial intelligence, and emerging as a leader in electronics, large appliances, mobile and fashion and apparel. In a market where Walmart expects eCommerce to grow at four times the rate of overall retail, and with well-known platforms such as Myntra, Jabong and PhonePe, Flipkart is uniquely positioned to leverage its integrated ecosystem, which is defined by localized service, deep insights into Indian customers and a best-in-class supply chain. Flipkart’s supply chain arm, eKart, serves more than 800 cities, making 500,000 deliveries daily.

In the fiscal year ended March 31, Flipkart recorded GMV of $7.5 billion and net sales of $4.6 billion representing more than 50 percent year-over-year growth in both cases. With the investment, Flipkart will leverage Walmart’s omni-channel retail expertise, grocery and general merchandise supply-chain knowledge and financial strength, while Flipkart’s talent, technology, customer insights and agile and innovative culture will benefit Walmart in India and across the globe.

Walmart’s investment includes $2 billion of new equity funding, which will help Flipkart accelerate growth in the future. The Flipkart investment transforms Walmart’s position in a country with more than 1.3 billion people, strong GDP growth, a growing middle class and significant runway for smartphone, internet and eCommerce penetration. Now, America's rivals will fight in Indian markets, largely benefitting the final consumers and the retailers.

- Chaitanya Kulkarni

Source: Flipkart, Walmart.

India to have 50 crore mobile internet users in 2018

478 million mobile internet users in India by June 2018: IAMAI

Like food, garments, and shelter, the internet connectivity for e-governance and information has been the 21st century’s basic human need. Cut-throat competition between telcos like Jio, Airtel and Idea has benefitted mobile internet penetration at large. Some telcos going ahead announcing that India’s 99% villages will get 4G internet connectivity by Diwali 2018. This isn’t a mere announcement as Open Signal report suggests that India’s mobile internet penetration may be far ahead than the US and developed countries in Europe. Although India ranks amazingly good (much better than its competitors) at last-mile internet connectivity, but we still suffer from low and inconsistent speeds.

The Internet and Mobile Association of India and Kantar-IMRB report points that India may have 478 million mobile internet users by June 2018. According to the report, the number of mobile internet users increased by 17.22% from December 2016 to reach 456 million users by December 2017. Urban India witnessed an estimated 18.64% Y-o-Y rise, while Rural India witnessed an estimated growth of 15.03% during the same period. With 59% penetration, Urban India is expected to show a slowdown, while Rural India with only 18% mobile internet penetration is clearly the next area of growth.

Young students are the most prolific users of most services. Middle-aged and older men show the greater propensity of using social networking and browsing; with old men having lower habits of audio/video streaming. Working women have the highest propensity for social networking and browsing, while non-working women have the highest propensity for text chatting. The report further finds that Mobile Internet is predominantly used by youngsters, with 46% of Urban users and 57% of Rural users being under the age of 25. Urban India has around twice the proportion of users over the age of 45, while the age range of 25 to 44 has almost equal distribution of users in Urban and Rural Areas.

Data is the new oil.

Since the launch of Jio, the affordability aspect of mobile internet services has been benefitting consumers at large. 4G internet can be obtained at just Rs 5 per day if chosen for a three-month plan. Expenditure on Voice has been steadily decreasing from 2013; and with the popularity of VOIP and video chatting, the expenditure on voice services has decreased drastically in recent times. This in turn means that there is a rise in proportion of Data expenditure in comparison to Voice expenditures for most users. In just 5 years from 2013 to 2017, the ratio of Data:Voice went from 45:55 to 84:16.

Telecom companies now not just offer data. They have also ventured into video content, music streaming and online news portals. The latest example of business diversification is JioMusic, which merged into Saavn to create $1 billion dollar entity.

Going forward, NTP 2018 with focus on new technologies like 5G is expected to promote better quality data services at more affordable prices and can be expected to help address the digital divides and promote internet penetration in the rural areas via mobile internet.

– Chaitanya Kulkarni

Source – IAMAI

Expats ❤️ India

Working in India is in demand as expats here earn more than double salary than the global average.

With the world opening up its markets for business, multi-national companies have established their business presence all over the world. Due to regional and religious disturbances, the global economy is going through turbulent times. Countries like India, China and ASEAN economies have cushioned the damages with its high growth markets. In the words of PM Modi, India has 3Ds to offer to the world - Democracy, Demography and demand. India is the youngest democracy in the world. Doing business all over the world is made possible by the personal and professional commitment of expats. Expats, despite being having political and cultural difference make key decision making roles for the organisation. HSBC Expat Survey is an online survey taken in 46 countries with the input from lakhs of expats working globally. The report sheds some unique insight on expats living in India and Indians working abroad.

Key Findings - HSBC Expat Survey

- Singapore is the world's best overall destination for expats.

- New Zealand is the best destination for an experience. 58% of expat respondents felt an improvement in the quality of life.

- The Netherlands is the best destination for family. Expats feel it has one of the best education and healthcare systems.

- Switzerland is the best destination for economics. It is the highest rank country for confidence in the local economy and political stability.

- 41% of expats feel that the move has given them a positive outlook on life.

- 62% of expats own property somewhere in the world, with 9% both at home and abroad.

- USD 99,990 is the average income of an expat.

- 47% of expats retired abroad did so for a better climate and 44% for an appealing lifestyle.

Expats ❤️ India

India draws many expats for work and financial opportunities, but new arrivals often find an improvement in family ties. Family forms an essential part of the Indian culture, thus reflecting in family-friendly labour laws. Pregnant women here enjoy one of the highest paid leaves. India enjoys a higher work-life balance than other European or American countries.

India is always on the move. India has earned its fastest growing economy tag due to consistent large-scale economic reforms. Expats living in India are confident in the local economy. Despite having many regional and national political parties, India enjoys political stability due to its democratic style of functioning.

India has recently taken a giant leap in Ease of Doing Business. More than half of expats living in India feel that it is easy to start and do business in India. Expats in India also enjoy one of the highest salaries in the world. An average expat working in India draws an annual salary of USD 1,76,000.

India has a long way to go. Mumbai, the financial capital of India currently lacks world-class infrastructure. Morning and evening rush hours are deadly with more than 10 deaths in the super jam-packed Suburban railway system. Mumbai is investing heavily in developing metro systems and expressways, but higher domestic demand and limited supply may not be enough. Despite this, real estate prices in Mumbai rival to Manhatten.

Despite being looted and tortured by white skins for several hundred years, Indians strongly believe in Athihi Devo Bhava (Guests are equivalent to God) and Vasudhaiva Kutumbakam (The World is one family). Expats working in India feel that their family life is improved significantly. Expat children easily make good friendship with Indian kids. The role of common language - English also plays a significant role in nurturing cordial relations.

In contrast, the HSBC expat survey reports that Indians working abroad draw lower salary than the global average. Expats working in India's largest city, Mumbai can typically expect to bring home a sizable $217,165 salary whereas Indians expats working abroad draw an average salary of USD 86,000.

- Chaitanya Kulkarni

Plan, Invest and Achieve – a way towards happiness!

I will start with a question. A question which will make you think. A question which is applicable to every person you know, right from the start of one’s career till his or her retirement. WHAT DO YOU REALLY WANT?  Some would want to buy their dream car. Some would dream of living in a sky bungalow. People who have just entered the career cycle may want to invest in an international MBA. Depending upon the age, our goalposts or aspirations may change but goals remain constant.

Life coach experts believe that one should plan strategically and focus on realistic goals. Setting a goal, no matter how simple is always the easy part. Everyone has goals. The real challenge is not determining if you want the result, but if you are willing to accept the sacrifices required to achieve your goals. To achieve life goals, one needs to systemically plan his financial investments. That way, you will always win. With sound financial planning, your short-term goals will be achieved and you will get the motivation to achieve your next goal.

Bajaj Allianz Life Insurance, one of India’s leading private insurer invited us for their #LifeGoals meet. The meet started with a surprise. S.B. Anandan, a Malayalee fellow appeared on stage to explain his failed investment ideas, with the sense of comedy and enthralled the audience. The character was played by none other than Suresh Menon, a legendary comedian and YouTube sensation.

S.B. Anandan, with an advice from family and friends invested in different financial products. But sadly, it never resulted in any worthy savings. In fact, with the wrong financial advice, he lost his money in stock market. Though this was a plot in his stand-up scene, still the story stands true for millions of us. Bank investments these days don’t pay attractive interest which could beat inflation. People who want to achieve more look forward towards equities and mutual funds. Yes, India’s bullish markets have given handsome returns but these returns are based on market research and not mere speculation. People who do not have any financial background may find it difficult to understand and invest. This is where ULIPs work.

ULIPs or Unit Linked Insurance Plan is a long-term investment plan that offers the combined benefit of investment and insurance. These plans invest a portion of your premium in capital markets and allow you to invest in debt, equity or balanced funds depending upon market conditions or your risk appetite. Capital market investments under ULIPs are managed by experts who can mobilise your savings according to the market conditions. By investing in ULIPs, you can stay invested for a longer term, have your life covered and enjoy the benefits of investment made by experts on your behalf. ULIPs bring a modern-day approach towards insurance investing. Now, #InvestBefikar with ULIPs and chase your life goals.

Ideas of today’s aspirational India are far-reaching than a steady job or business. Fitness, solo-travel, road trips, adventure tourism, EDM concerts, technology, start-ups are deep-rooted in our younger minds. Happiness is not something ready-made, it comes with our actions. ULIPs have become a popular choice for investments due to affordability, capital appreciation, flexibility and transparency. ULIPs stand apart from traditional insurance as they act as life maximisers.

Bajaj Allianz Life Insurance is soon going to launch something interesting. Stay tuned on theindiancapitalist.com for more!

- Chaitanya Kulkarni

FDI will bring fierce competition in Indian markets

Photo Courtesy - Deutsche Messe AG/Lars Kaletta

The decision taken by Indian cabinet to bring in 100% FDI in single brand retail will spark fierce competition in FMCG and electronics sector. India’s FDI policy is likely to increase exports in a long-term horizon and bring in high pay jobs in Tier 1 and Tier 2 cities.

The Union Cabinet chaired by PM Modi has given its approval to a number of amendments in the FDI Policy. These are intended to liberalise and simplify the FDI policy so as to provide ease of doing business in the country. In turn, it will lead to larger FDI inflows contributing to the growth of investment, income and employment.

Foreign Direct Investment (FDI) is a major driver of economic growth and a source of non-debt finance for the economic development of the country. The government has put in place an investor-friendly policy on FDI, under which FDI up to 100%, is permitted on the automatic route in most sectors/ activities. In the recent past, the Government has brought FDI policy reforms in a number of sectors viz. Defence, Construction Development, Insurance, Pension, Other Financial Services, Asset Reconstruction Companies, Broadcasting, Civil Aviation, Pharmaceuticals, Trading etc.

Measures undertaken by the Government have resulted in increased FDI inflows into the country. During the year 2014-15, total FDI inflows received were US $ 45.15 billion as against US $ 36.05 billion in 2013-14. During 2015-16, the country received total FDI of US $ 55.46 billion. In the financial year 2016-17, total FDI of US $ 60.08 billion has been received, which is an all-time high.

Keys decisions by Cabinet

• 100% FDI under automatic route for Single Brand Retail Trading
• Foreign firm can invest up to 49% in Air India
• 100% FDI under automatic route in real-estate broking services.
• Amendments in the definition of medical devices.

Hits and misses

FDI in single- brand retail trading has been key issues of Left and opposition parties since 1992. The fear raised by many vouches for an opinion that Indian companies are weak in comparison to MNCs. Well, the reasoning is becoming untrue for few sectors like FMCG. Indian brands like Patanjali, Britannia, Parle, DMart, Big Bazaar and Reliance has a wide-spread brand presence in major Indian cities. International brands which may enter India through FDI namely Walmart, Lotte, Mondelez would find it difficult to enter Indian markets with the bang. They may likely to take a safer M&A route to establish a base in the country.

Electronics is one such segment where Indian companies have failed to grasp consumer attention. Indian manufacturers are finding it almost impossible to counter MNC giants like Apple, LG, Sony and Samsung in high-end products. Chinese companies namely Xiaomi, Oppo, Haier has been a choice recently for Indian middle-class consumers. Apple, Xiaomi etc would open new stores in India. By 2020, Make-In-India electronics products will likely be a global norm. Foxconn, the maker of iPhone has decided to invest in mega-factory in JNPT CEZ, near Navi Mumbai.

Industry rumours suggest that the government of India has tweaked FDI in aviation to welcome investments in debt-ridden Air India. Tata Sons and Singapore Airlines are likely to buy Air India. It is yet unclear whether the national career would retain its name. With Air India acquisitions, Vistara would be India’s largest aviation company.

Fierce competition between ‘Desi vs Videshi’ brands will continue to benefit consumers. Patanjali and Jio have made a significant market share in FDI dominated businesses. Indian brands, over the years, have proved that they are no longer weaker than their international competitor.

- Chaitanya Kulkarni 

Indian electronic manufacturers to get competitive edge from the hike in import duty.

The Government of India’s decision to hike duty on the import of electronic goods would boost #MakeInIndia.

The notification issued by Ministry of Finance announced the raise in custom duties on a host of electronic goods in order to give a push to Make in India initiative. As per the notification, the customs duty on products like Television sets, mobiles, microwaves, refrigerators and many others have been increased.

The customs duty on television set has been increased to 20% from 10%, while the additional duty on assembled LED panels (modules) has also been increased from nil to 7.5%. Similarly, the duty on monitors and projectors has been doubled to 20%, while for the mobile handsets the duty has been raised to 15%. The move has been cherished by electronic manufacturing and Original Equipment Manufacturers (OEMs) who Make in India. This would mean that the electronic product manufactured in India would relatively cost less than its equivalent produced abroad.

Global electronic brands, in a hope to increase revenue, were eyeing India’s booming $100 billion electronics market. The electronics market of India is one of the largest in the world and is anticipated to reach US$ 400 billion in 2022. The market is projected to grow at a compound annual growth rate (CAGR) of 24.4 per cent during 2012-2020. The hike in import duty would encourage global electronics manufacturers to set up plants in India.

#MakeInIndia, for Indians and ship it anywhere in the world – PM Modi

With local sourcing of electronic goods, India could narrow the gap between India’s export and import. As per data published by NITI Aayog, in the period of 2014-15, India imported electronic good worth $36.9 billion while its export was minimal at just $6 billion. In several countries, the contribution of the electronics industry to the GDP is significantly high. For example, the electronic industry contributes 15.5% to GDP in Taiwan, 15.1% in South Korea and 12.7% in China. But in India, this proportion is only 1.7%. As India awakes, the scenario in electronics manufacturing would see a transformational shift.

The notification of increasing import duty gives protection to the brands who manufacture here in India from low-cost OEMs products which are often dumped in price-sensitive Indian market by Chinese brands. With the commitment to Make in India, reputed International electronic brands are keen to set up large Electronic Manufacturing Clusters. iPhone maker Foxconn has agreed to set up a manufacturing plant at India’s largest electronics SEZ at JNPT Coastal Economic Zone near Mumbai.

Local sourcing and manufacturing of electronic products would usher higher profits for MSME as well large-scale manufacturers. The government also expects higher revenues from hiked import duties by the end of the year. Experts who have worked in electronics segment say that hike in import duty would lead to inflationary pricing, however Indian Manufacturers will benefit.

This protectionary measure by the government of India would strengthen Made-In-India brands. The electronics manufacturing industry has a potential to give 10 million jobs per year.

"I would like to congratulate Government on the decision to raise customs duty on some electronic items including television, mobile phone, and water heater. This move will definitely give a boost to Manufacturing in India which will in-turn push Make in India initiative by our Government. It will encourage foreign players to manufacture products in India rather than import them as the prices are expected to go up, especially for televisions. With this move, Indian manufacturers who make products with complete backward integration will benefit immensely. Manufacturers such as Videocon, one of the leading Indian manufacturer with a large workforce will get a boost as they have a very strong manufacturing base in the country. Even smaller manufacturers like Vierra will be benefitted from this step. Overall it is a great step to boost manufacturing in the country and will also lead to job generation. Make in India project by our government is a great project and to make it successful the government has started implementing the right environmental requirement.” said Mr. K.S. Raman, Former President, Consumer Electronics & Appliances Manufacturing Association (CEAMA).

The growing customer base and the increased penetration in the consumer durables segment has provided excellent scope for the growth of the Indian electronics sector. Soon, India will not just be a market for others, but it will reposition itself as the next factory of the world.

- Chaitanya Kulkarni

Give your data the security it deserves

As per Global Information Security Survey 2016-17 by EY, 33% of Indian companies don’t have any Security Operations Center (SOC) as compared to 44% worldwide. Besides, 44% companies in our country don’t have any or minimum vulnerability identification capability.

India is at risk of cybercrimes and data breaches. And increasingly, the situation is getting worse. Recently, the food delivery app, Zomato, was affected by a major data breach incident, which resulted in the information theft of 7.7 million users. Over the past one year, our country has seen many data breach incidents, including Mirai botnet malware, Petya, and the most infamous, ransomware WannaCry.

Undoubtedly, it will be the job of a CISO to place the enterprise-level security agenda on the company’s priority list, communicate its urgency across organizations, drive various remedial programs, and most importantly, ensure the timely deployment of various security measures.

However, when it comes to cyber security, every employee should be responsible. Awareness is the key. Spreading awareness about enterprise-level security in particular and data security in general help dealing with cybercrimes.

Moving a step ahead, some organizations are promoting this issue on a massive level. For example, the latest campaign of Dell EMC on data security, #DataSuraksha. The campaign is getting enthusiastic participation from professionals across sectors and cities, even from Tier-2 and Tier-3 cities. Some good ideas about data security which I found quite insightful include:

• Don't allow your app to access your phone contact book unless it's absolutely necessary.
• Automate end user backups, with multiversioning, whitelisted apps.
• Don’t allow the Internet Server remember passwords
• Use encryption technology and store data at several storage devices.

Going a step further, Dell EMC is also rewarding such great ideas with fascinating goodies. The campaign has already taken social media by storm to fulfill its objective. To know more about the campaign or participate in it, visit Dell EMC India’s Facebook and Twitter.

It’s time for all of us to do our bit and aim for a cyberthreat-free nation. 

Patanjali Ayurved forays into solar power business.

Swadeshi FMCG giant Patanjali has decided to venture into renewables energy space. The company which aims to hit a turnover of more than Rs. 25,000 crores by 2018 have planned to diversify its business into solar power equipment manufacturing.

“Getting into solar is in line with the swadeshi movement. With solar, each household in India can have an uninterrupted power supply, and we are here to make that happen,” Acharya Balkrishna, managing director of Patanjali Ayurved, said in an interview with Mint.

This will be the company’s first exposure to the infrastructure sector and comes after its runaway success in consumer products.

Patanjali Ayurved, which was set up in 2006, has grown at a stunning pace, increasing its revenue more than fivefold to Rs10,561 crore in the year to 31 March from Rs. 2,006 crore in 2014-15; it aims to cross Rs. 20,000-25,000 crore in sales by 31 March 2018. Today, Acharya Balkrishna, the face of Patanjali is a director of 18 companies associated with Patanjali group.

Patanjali’s newest acquisition is Noida-based Advanced Navigation and Solar Technologies Pvt Ltd (ANST). The company pioneers in manufacturing of solar panels, solar sun trackers, solar maritime equipments and rooftop solutions. ANST has a manufacturing unit in the state of Uttar Pradesh with the capacity of 120 megawatts. Patanjali plans to invest around Rs100 crore in solar equipment manufacturing and its factory in Greater Noida is expected to be fully operational within the next couple of months.

Acharya Balkrishna, of Patanjali, revealed that the idea of venturing into solar power business came when we started with our plan to use solar as a source of power at all our factories. That time we understood that most of the solar modules were indirectly imported from China. And there was no quality consistency even in India-made ones”.

With the average efficiency of a solar panel usually at just 16-22%, sub-standard quality will impact generation. The announcement of Patanjali’s acquisition of ANST comes at a time when India plans to auction solar EPC contracts of 17 GigaWatts by March 2018. India has committed to awarding 175 GW of clean energy by 2022, of which 100GW would be solar contracts.

“Solar energy can help us achieve ‘Power To All’. We started with making solar modules for our captive use initially and then decided to utilize existing capacity to manufacture solar modules and sell in the market. This unit is at a nascent stage at this moment,” said Balkrishna.

By March 2019, every household in India is expected to get uninterrupted supply of electricity. With the menace of pollution and arrival of electric cars, Patanjali aims to fill the void of demand and supply. The Ministry of New & Renewable Energy (MNRE) is also planning to issue an expression of interest (EoI) for setting up 20 GW of manufacturing facilities for the renewables sector and is “exploring innovative ways” for the addition of more renewables capacity through floating solar plants, offshore wind farms and hybrid installations. MSME companies get 30% capital subsidy under MNRE rating policy.

- Chaitanya Kulkarni

India’s government bond ratings upgrade is a result of key economic reforms.

Moody's Investors Service has upgraded the Government of India's local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive. Moody’s is amongst the respected sovereign credit rating agency. India’s sovereign credit rating was last upgraded in January 2004 to Baa3 (from Ba1). In sovereign ratings rationale scale, AAA is considered to be highest rating and C is among the lowest. To put it in simpler terms, here’s a comparative lists of rating scale of few economies from high to low : USA - AAA, France – Aa2, China – A1, Malaysia – A3, Thailand – Baa1, India – Baa2, Russia – BA1, Brazil – BA2, Sri Lank – B1, Cambodia – B2, Pakistan – B3, Iraq – Caa1, Ukraine – Caa2, Venezuela – Caa3, Puerto Rico – C. As per popular rating scale opinion, grade of AAA to Baa3 is considered as investment grade, Ba1 to Caa3 as speculative grade and under that would be considered as default.

India’s rating has been upgraded after a period of 13 years. As per press release issued by Moody’s, the decision to upgrade the ratings is underpinned by Moody's expectation that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term. In the meantime, while India's high debt burden remains a constraint on the country's credit profile, Moody's believes that the reforms put in place have reduced the risk of a sharp increase in debt, even in potential downside scenarios.

Moody's has also raised India's long-term foreign-currency bond ceiling to Baa1 from Baa2, and the long-term foreign-currency bank deposit ceiling to Baa2 from Baa3. The short-term foreign-currency bond ceiling remains unchanged at P-2, and the short-term foreign-currency bank deposit ceiling has been raised to P-2 from P-3. The long-term local currency deposit and bond ceilings remain unchanged at A1.

India’s government bonds rating upgrade is a result of key economic reforms taken by PM Modi’s government. After three years of the NDA government, the government is mid-way through the wide of economic and institutional reforms. Moody’s has hailed recent economic reforms as they aim to bring in transparency and improve the business climate. World Bank CEO at a summit in New Delhi rightly said that no other country as the size of India has jumped 30 places in Ease of Doing Business in the economic history of this world. While many important reforms remain at the design phase, Moody's believes that those implemented to date will advance the government's objective of improving the business climate, enhancing productivity, stimulating foreign and domestic investment, and ultimately fostering strong and sustainable growth. The reform program will thus complement the existing shock-absorbance capacity provided by India's strong growth potential and improving global competitiveness.

Political analysts in India are busy taking a dig at PM Modi for a fall in GDP due to GST implementation and demonetisation. Major rating agencies think otherwise and has given a thumbs-up to Modi’s economic policy and decision making as they think a short-term fall in India’s GDP is a result of policy implementation, not policy paralysis. As per Moody’s, key elements of the reform program include the recently-introduced Goods and Services Tax (GST) which will, among other things, promote productivity by removing barriers to interstate trade; improvements to the monetary policy framework; measures to address the overhang of non-performing loans (NPLs) in the banking system; and measures such as demonetization, the Aadhaar system of biometric accounts and targeted delivery of benefits through the Direct Benefit Transfer (DBT) system intended to reduce informality in the economy.

Most of these measures will take time for their impact to be seen on the GDP growth such as the GST and demonetization. As a result of policy implementation, growth has been undermined in near term. Moody's expects real GDP growth to moderate to 6.7% in the fiscal year ending in March 2018. However, as disruption fades, assisted by recent government measures to support SMEs and exporters with GST compliance, real GDP growth will rise to 7.5% in FY2018, with similarly robust levels of growth from FY2019 onward. Longer term, India's growth potential is significantly higher than most other Baa-rated sovereigns. Economists are bullish on India and they expect GDP growth of more than 8% in next few years.

India will spend more than Rs 50 lakh crores on highway developments, ports, metro rail, bullet trains and rural connectivity in five years. India’s debt to GDP ratio stood at 66% but Moody’s has affirmed a stable outlook on India’s spendings. Moody's expects India's debt-to-GDP ratio to rise by about 1 percentage point this fiscal year, to 69%, as nominal GDP growth has slowed following demonetization and the implementation of GST. The debt burden will likely remain broadly stable in the next few years, before falling gradually as nominal GDP growth continues and revenue-broadening and expenditure efficiency-enhancing measures take effect.

Much remains to be done. Challenges with the implementation of the GST, ongoing weakness of private sector investment, slow progress with a resolution of banking sector asset quality issues, and lack of progress with land and labor reforms at the national level highlight still material government effectiveness issues. However, Moody's expects that over time at least some of these issues will be addressed, resulting in a steady further improvement in India's government effectiveness and overall institutional framework.

A rating upgrade for India comes at a time when rating agencies Standard and Poor’s (S&P) and Moody’s have cut China’s sovereign rating. Moody’s cut China’s long-term local and foreign currency issuer ratings to A1 from Aa3 on 24 May on concerns that the country’s financial strength would erode in the coming years. S&P followed by cutting China’s long-term sovereign credit ratings one notch to A+ from AA- on 21 September, holding that its prolonged period of strong credit growth had increased economic and financial risks.

India would need to improve its land and labour reforms significantly to move to next notch. In infrastructure sector alone, companies failed to repay back loans due to stuck land acquisitions. Industries like steel, metal, infra etc are yet to recover from the financial horror of global economic slowdown. Things are improving quickly in India than any other country. This is India’s opportunity to rise back.

- Chaitanya Kulkarni ( TheIndianCapitalist.com, DigiCookies.com, MarineBharat.com )

Source – moodys.com