National News

FREE TRADE

Indo-Swiss FTA by Year End

The Free Trade Agreement (FTA) between India and Switzerland is expected to be signed by year end, consul general of Switzerland Rolf Frei has informed. “We hope that the negotiations on the FTA will end by this year. Being an open economy, our country will be aiming for the most liberal market access both ways in trading of goods and services. Currently, the bilateral trade between Switzerland and India stands at US$ 3.5 billion.” Switzerland’s exports to India include machine tools, pharmaceuticals, chemicals and precision instruments, while India exports textile, garments, agri products and IT services.

On the double taxation treaty between the two countries, Frei adds, “The first chamber of Parliament in Government of Switzerland has already passed it, and now the treaty is before the second chamber. We hope that it will be passed in the winter session in October.” According to him, once the double taxation treaty becomes operational, it would help the Indian government seek details of secret Swiss bank accounts of its citizens in cases of suspected tax evasion or fraud. However, the disclosures would be in accordance with due procedures, especially the widely referenced guidelines of the Organisation for Economic Cooperation & Development (OECD).

The consul general has invited the trade and investor community of the country to explore the European markets via Switzerland. “The Swiss advantage lies in being a strategic location in the neighbourhood of three of the big four EU markets - Germany, France and Italy - which make the country a logistical hub that allows 90% of EU markets to be reached in a single day, along with the highly skilled and internationally oriented labour force, and a stable political system.”

Large Number of FTAs Will Hamper Manufacturing

Expressing concern over a large number of Free Trade Agreements (FTAs) being signed by India, industry body FICCI has said that it would make India’s manufacturing sector uncompetitive. The secretary general of FICCI, Rajiv Kumar, has stated, “Since we have inked FTAs with ASEAN and Sri Lanka, people will import duty free goods from these countries that will make our manufacturing sector uncompetitive.” Under an FTA, two sides heavily reduce or eliminate duties on maximum number of goods traded between them.

He opined that instead of signing FTAs, the government should try to make similar arrangements within the country. “We need to sign one FTA with ourselves, because each state is a different country in some terms. If we market amongst ourselves, that would mean that onions from Nashik will move to Delhi much faster rather than rotting there. Apples of Himachal Pradesh will not just be controlled by five traders in Azadpur Mandi in Delhi, but can be moved all over the country.”

Kumar added that the manufacturing sector contributes only 16% to the country’s GDP, which is very low. “People will focus more on imported goods manufactured in China like Kanjivaram sarees rather than producing them in the country.” According to Kumar, the country’s economy could touch over US$ 3.5-trillion if the shares of manufacturing and agriculture sectors are increased from 16% and 14%, respectively. “Issues like land acquisition, labour and policy reforms must also be addressed immediately to boost the manufacturing sector. If these issues are not resolved in time, the entrepreneurs will shift to those sectors where no land is required or into the services sector.”

REAL ESTATE

New Acquisition Law Makes Real Estate Sector Apprehensive

The Union Cabinet has cleared a new land acquisition law, arguing that it will bridge the gaps in the existing legislation. However, the real estate industry is less enthusiastic about the new law. Commenting on the issue, the national president of the Confederation of Real Estate Developers’ Associations of India (CREDAI) says, “It is an absolutely mindless idea to bring private land acquisition under this act. There are too many points of conflict, which will only put hurdles in developing huge areas of land.”

According to some legal experts this bill seeks to replace colonial era legislation, and hopes to draw a line under a hugely sensitive issue. Further, it offers generous compensation to land owners in the form of subsistence allowances, annuity payments, employment, and a share in any future appreciation of the land. This will have to be paid irrespective of whether the land is acquired by the government or industry.

Under the new bill, the state will be able to invoke the provisions of eminent domain and public service under very limited circumstances. The ability to invoke urgency clauses has been limited to instances related to national security and natural calamities. The definition of livelihood losers under the draft bill has now been changed to mean people who have been employed in the land being acquired for three years or more. This means that squatters on public land, for instance, will not be able to seek immunity under this provision, but farm wage workers will. Also, the new law says 80% of the people affected by an upcoming project must agree to the acquisition, unless it is being done in public interest.

PAINT

Paint Industry to Touch Rs 1 Lakh Cr by 2020

The Indian Paint Association (IPA), the apex body of the country’s paint industry, has projected that the `24,000-crore Indian paint sector is likely to grow to `1,00,000 crore by 2020. “Buoyed by the vibrant domestic demand, the industry has registered a double digit growth. Different market statistics indicate that the industry, which is currently estimated at `24,000 crore, has the potential to grow to `one lakh crore by 2020,” says D P Basu, president of IPA.

IPA suggests that there is need to improve the ratio of decorative to industrial paints in value terms to match international standards. “The current ratio in India is 67:33, while the international ratio is 50:50. The burgeoning automotive industry and real estate sector are also likely to contribute largely towards the growth of the paint industry.” Basu points out that the country loses over `2,00,000 crore annually due to the menace of corrosion. “Therefore, there is a need for effective practices to control and prevent erosion, which offers a big opportunity to the paint industry to concentrate on anti-corrosive paints.”

Basu observes that in spite of opportunities and growth, the industry has been adversely affected by inflation, weak global capital markets, and higher cost of capital. He adds that paints, being categorised as hazardous, have constantly been under environmental scrutiny but hopes that the issue would be solved quickly. “The issue of lead content in paints and its ill effects on the environment has always been on our mind. The big players in the industry have already done away with lead, and by the end of this year, the whole industry would be manufacturing lead-free paints. We hope that the implementation of the goods and services tax (GST) would also benefit the industry.”

GREEN BUILDING

Green Buildings to Tackle Environmental Challenges

With the involvement of more decision-makers, construction of several new buildings, more certified professionals and new members joining the Indian Green Building Council (IGBC), the green building concept has made significantstrides in the country. But, this is only a beginning, and much more has to be done to develop new products, systems and methods in order to transcend India into a world leader in green buildings. This consensus was reached at the green building conference which was jointly organised by the Confederationof Indian Industry (CII) and IGBC inNew Delhi.

Elaborating the significance of green buildings, Dr K Karthikeyan, joint chief environmental engineer, Tamil Nadu Pollution Control Board, said, “The answer to many of the major environmental challenges like waste management, reduced use of water and energy can be found in the green building concept. Path-breaking research, development and innovation, and out-of-the box thinking is necessary to take forward the green building movement. We need to create new products using the existing materials differently, and evolve new systems.”

Delving upon the subject of products and use, C N Raghavendran, chairman, CII-IGBC Chennai chapter and partner in C R Narayana Rao & Architects, said, “Research should be undertaken on better application of rapidly reusable materials like bamboo in the construction industry. For instance, research on how to use it differently, like laminated bamboo, will lead to the development of sustainable products from renewable and home-grown materials.”

BRICKS

Automation, Innovation Buzz Words for Brick Industry

Prompted by the entry of international technology providers and producers in the country’s brick sphere, Indian brick makers, a majority of whom are SMEs, are undergoing a complete makeover through the adoption of mechanisation and innovation. There are about 35 plants across India, including semi-automatic and fully-automatic ones that are already operational. Many other modern plants are under construction. Analysts believe that increased difficulties in handling labour, maintaining quality and meeting the increased demand for better quality bricks have forced brick kiln entrepreneurs to rethink their production processes and also led to product innovation. As a result, many entrepreneurs are diversifying into resource efficient bricks (REBs) by importing machinery.

Buoyed by the experience of the early starters, more entrepreneurs are importing state-of-the-art fully automatic machinery from China and Germany for making both REBs and conventional bricks. As for deployment of machinery and REB manufacturing, lots of entrepreneurs are joining the bandwagon. Already there are 12 plants in the southern region, eight in the north, four in the west, and two in the eastern region.
Pritpal Singh, senior engineer, Punjab State Council for Science & Technology, says, “Foreseeing the potential in the Indian construction sector, major European machinery manufacturers have tied up with Indian machinery manufacturers and started operations in India. The entry of multinational brick producers like Wienerberger in Bangalore has motivated brick entrepreneurs to adoptmechanisation and production of REBs, besides setting up new units and expanding capacity.”

India produces about 140 billion bricks annually, mainly through traditional production processes. The industry consumes about 24 million tonnes of coal annually, a huge quantity of biomass fuels, and up to 350 million tonnes of top soil is used every year for clay-based brick production. The industry’s CO2 emissions are estimated to be 42 million tonnes a year. Courtesy: Business Standard