India’s Rooftops to Boost Solar Power

India increased its rooftop solar power capacity in 2017 by more than the previous four years combined, adding 715 megawatts in rooftop photo-voltaic power and recording a compound annual growth rate of 117% since 2013. That makes solar the fastest-growing area of the country’s clean energy market, and solar rooftop panels are the fastest growing sub-sector of the renewables market in India.

The major boost can be attributed to the lowering cost of rooftop solar units in India, which has dropped by 50 percent in the last five years, making it cheaper than commercial and industrial power in the country. Now, setting up a rooftop solar system is cheaper in India than the global average by 39 to 50 percent.

Solar Panels

Solar Panels

Rural electrification is a key part of the Indian government’s plan to boost the economy, and Prime Minister Narendra Modi has promised to meet electrification goals by installing record amounts of renewable energy.

January 8, 2018   No Comments

Ten Most Significant Changes in India in the Last Decade

Forbes documents the top ten most significant changes that India has witnessed from 2010 to 2017. Read a lightly edited summary of these below:

1) Emerging as one of the largest economies

The recent economic expansion noted in India has brought a record number of people out of poverty. A growing middle class fuels its impressive consumer growth. Today, India is the world’s third largest market for smart phones and the sixth largest for cars; its software industry employs more than four million people directly and more than ten million indirectly.

With almost fifty percent of India’s population under the age of twenty-six, the country faces the challenge of finding jobs for one million citizens who enter the employment market every month.

2) Gaining diplomatic clout

With economic prosperity, India gained strategic importance. India’s Civil Nuclear Treaty with the U.S. in 2008 ushered India into the global nuclear elite. For the last three years, India has given more aid than it has received, with neighbors Bhutan, Afghanistan and Nepal topping the list of recipients. All of this has added up to give India much more power in diplomatic negotiations.

The current Indian government is the first one to consistently conduct diplomacy in the language of international business. Prime Minister Narendra Modi has undertaken more than 70 foreign trips since taking office in May 2014. Given his focus on trade and investment, Modi is widely promoting the fact that India jumped 30 places on the World Bank’s Ease of Doing Business list for 2018 to the 100th place.

3) Evolving federalism

Cooperative federalism of India’s 29 states has now morphed into a competitive federalism in which states – many with the populations of large countries – vie with each other for investment. Foreign investors need to assess the political and regulatory scenarios at both the federal and state levels and pay attention to the state-wise ease of doing business rankings that are published every year.

In the middle of 2017, India replaced dozens of state and federal taxes with a national one, called the Goods and Services Tax or GST. The federal government created a more unified national market which is expected to lead to greater efficiencies and a more attractive business environment.

4) Fighting corruption and “black” money

Prime Minister Modi’s government was elected on an anti-corruption manifesto, and in November 2016, Modi announced the immediate withdrawal of two high-value currency notes. In one stunning move, 86% of the currency was sucked out of circulation, to be gradually replaced by new bills. The declared aim of the move was to fight black money and counterfeiting.

The Prevention of Money Laundering Act, has recently been bolstered by an expanded Enforcement Directorate, the federal agency tasked with fighting money laundering. Between April and August of 2017, the Enforcement Directorate and the Securities and Exchange Board of India, the stock market regulator, acted against at least 331 fake companies and 100 brokerages charged with facilitating money laundering. This government has implemented Aadhaar, the world’s largest biometric identification system, to root out duplication of identities and safeguard welfare plans from corruption-related leakages. Aadhaar was conceived during the previous government of Dr. Manmohan Singh but Modi’s team has fully embraced its power.

5) Forging a stricter compliance regime

The Reserve Bank of India, the country’s central bank, has been given more power in 2017 to act against loan defaulter. The Companies Act of 2013, despite many problems, also brought clearer accountability to corporate anti-corruption and anti-fraud measures.

6) Emergence of the modern Indian  and Indian led multinational

Indian business groups began to extend their international footprint in this decade – India’s Tata Group bought Britain’s Corus Steel for $13 billion in January 2007. The next month, the Aditya Birla Group, announced the acquisition of Canada’s Novelis for $6 billion. The year after that, Tata Motors bought the Jaguar Land Rover car businesses from Ford Motor for $2.3 billion. These acquisitions have helped change the culture of corporate India, embedding international best practices in some of India’s top companies. During the same period, executives of Indian origin were appointed to lead Pepsico, Google. Adobe, Microsoft, Deutsche Bank and Reckitt Benckiser.

7) Tilting to the political right

India’s growing right-wing nationalism concerns business leaders who feel that a sense of nationalism is in the way of business decisions and policies. As the most populous democracy in the world heads towards another national election in the first half of 2019, this position is unlikely to soften anytime soon (“according to Forbes”)

8) Growing wealth of “godmen”

The fastest growing consumer company in the country today is Patanjali, which was founded just a decade ago by Baba Ramdev, a yoga evangelist whose religious sermons on his own television channel are watched by tens of millions every day. His diet-biscuit-to-dish-washer company is now a $1.6 billion behemoth whose success has forced several multinational giants to rethink their market strategies.

9) Changing security challenges

In  the November 2008 terrorist attacks, when Pakistani terrorists attacked four locations across Mumbai, India resolved to fight terrorism in a more coordinated way.

10) Leaping into a digital future

The Modi government has launched Digital India, a campaign to improve the country’s digital infrastructure and offer more government services online. Many Indian companies are leveraging artificial intelligence, data analytics and machine learning to disrupt their markets and deliver a competitive edge.

Indian flag

December 5, 2017   No Comments

Barack Obama Revisits India

Former president Barack Obama completed a three nation tour to China, India and France recently. In his first visit to India after leaving office, Obama met with Prime Minister Narendra Modi in New Delhi, addressed a Leadership Summit sponsored by the Hindustan Times newspaper, and held a town hall meeting with young leaders where he discussed what it means to be an active citizen and make an impact — and how the Obama Foundation can support emerging leaders in this effort. He also met with Tibetan spiritual leader Dalai Lama.

Some key points Obama made in India reported by Financial Express:

“The world’s oldest democracy and world’s largest democracy should be a defining partnership of 21st century.”

“If India and the United States work together, there is no problem that we can’t solve.”

“We can’t unwind globalization, we can’t make sure that AI doesn’t exist, but we can invest in people.”

“Youth is India’s biggest power.”

“PM Modi and I met because if India plays a larger role not only in Asia but on the world stage, it will be good for everybody. ”

Obama and Modi

“For a country like India where there is a Muslim population that is successful, integrated and considers itself as Indian — which is not the case in some other countries — this should be nourished and cultivated.”

Obama followed in the footsteps of Bill Clinton and George Bush who also visited India after leaving office.  In our view the President Obama’s visit was not particularly significant and none of his points or speeches displayed his past dexterity in understanding India or offered any new insights. Perhaps he accomplished more in his private meetings.

 

 

December 2, 2017   No Comments

India Improves Investor Appeal

You may want to take a fresh look at business opportunities and investments in India, if a new World Bank report is to be believed.

In November 2001, Goldman Sachs published a landmark paper where they identified India, along with Brazil, China, and Russia as the four “BRIC” economies that the world needed to watch. Many companies and investors began investing in these countries.

In 2002, the World Bank launched a project to rank the Ease of Doing Business in countries across the world. For well over a decade, more than 135 countries ranked better than the world’s largest democracy — India continued to be stymied by red tape, limited infrastructure and an army of bureaucrats who seemed to revel in creating complex, conflicting, and even arbitrary rules. India ranked worst among the BRICs and many companies mitigated their enthusiasm for India as a result. Persistent players such as Abbott, Accenture, Boeing, Coca Cola, Cummins, Deloitte, Exxon Mobil, GE, Hewlett Packard, Mylan, Oracle, PepsiCo, Vodafone and Western Union thrived despite some setbacks.

In our consulting, we always advised clients to look at specific Indian states, rather than the entire subcontinent when locating sales offices, subsidiaries, or manufacturing plants; some states welcomed businesses while others did not care. For the first time in India’s 67-year-old democracy, the leader (Chief Minister) of a state was elected as Prime Minister in 2014. One of Prime Minister Narendra Modi’s first goals was to improve India’s business environment.

The latest report from the World Bank, “Doing Business 2018“, published this week, shows that India made important reforms in six of the eight areas that the Bank measures for its report. Small economies can pass reforms relatively easily and it is important to note that Nigeria and India are the only large economies to make significant improvements as shown in this table:

Table

To global companies and investors, it is even more important to note that India jumped by 30 ranks overall to go from 130 to 100 and leapfrogged over Brazil, which is stagnant at 125. Such an improvement in just three years since the new government took over is quite remarkable. The juggernaut of the BRIC countries is China and it is currently ranked at 78. If Modi’s government can keep up the momentum, it is not inconceivable that India might vault ahead of its autocratic neighbor in three to five years.

We often help clients to start a new company or office in India and that process has improved considerably. Getting credit and obtaining construction permits for a business has also become easier according to the World Bank’s research. Minority foreign investors in India felt vulnerable in the past but new procedures protect them a bit better while enforcing contracts might also become easier once the new National Judicial Data Grid starts paying results. Paying taxes electronically is becoming the norm and import of goods is being streamlined with more and more online functions for customs clearance.

Does this mean that India is an easy place to do business now? Not at all. The World Bank only measures a few criteria. Foreign companies have many challenges in India: the weather, the pollution, the current government’s tendency to place non- tariff barriers, even occasional price controls, and most importantly the illusion that they can readily understand India, just because they can understand their Indian-American physician.

Skeptics may ask, will progress continue? What if Modi’s party loses the next general election, scheduled in 2019? One major initiative that cannot be rolled back is that the states of India were encouraged to compete with each other for foreign and domestic investment. State leaders in Andhra Pradesh, Telangana, Maharashtra and at least seven other provinces and territories have led the charge in improving their own attractiveness. This genie cannot be put back in the bottle and we anticipate that up to 20 of India’s 29 states will join the race shortly.

If you have questions about how your company can do better in India or if you want to take a fresh look, Contact Us or drop me a note here on Linked In.

November 2, 2017   No Comments

India and USA Are Natural Allies says Tillerson

U.S. Secretary of State Rex Tillerson arrived in India as part of a multi-stop tour across the Middle East and South Asia. He had discussions with Prime Minister Narendra Modi, and  India’s minister for Foreign Affairs Ms. Sushma Swaraj. Tillerson and Swaraj stressed the close relationship and shared values between the two countries and pledged to work closely on matters of security, and also to enhance defense and economic cooperation.

The US Secretary of State, Mr. Rex Tillerson calls on the Prime Minister, Shri Narendra Modi, in New Delhi on October 25, 2017.

The US Secretary of State, Rex Tillerson calls on Prime Minister Narendra Modi, in New Delhi on October 25, 2017

Tillerson mooted a larger role for India in stabilizing the economy of Afghanistan, and pledged American support to fight terrorists. “In the fight against terrorism, the United States will continue to stand shoulder to shoulder with India. Terrorist safe havens will not be tolerated,” he said.

Tillerson expressed concern that extremist groups could threaten the security of Pakistan. “We also are concerned about the stability and security of Pakistan’s government, as well as that these terrorist organizations have enlarged their numbers, enlarged their strength and their capability,” he told reporters.

While recognizing India as a key partner in the face of what he considers as China‘s negative influence in Asia, Tillerson reiterated that India could play a wider role in the region, reports Voice of America.

“The United States supports India’s emergence as a leading power and will continue to contribute to Indian capabilities to provide security throughout the region.” He said Washington was willing to provide New Delhi with advanced technologies for its military modernization.

“We also look forward to further cooperation in the broader Indo-Pacific region as we both promote a rules-based approach to commerce, and a transparent and sustainable approach to economic development,” he said.

October 27, 2017   No Comments