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Automation Technologies 5/2015

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Automation Technologies 5/2015

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NEWS AND MARKETS next page sector is set to increase from $ 41 billion in 2014 to more than $ 94 billion in 2019. These, and many more factors show us the direction in which India is headed. To drive and sustain this economic growth, India will require vastly superior manufacturing capabilities. India’s manufact uring sector needs a massive transformation with automation clearly at the spearhead. Along with transformation, what India needs is a clear long term vision with actors that are proactive rather than reactive to leverage this economic upturn. Strategic aims of the Govt: Make in India: The Modi government has taken several initiatives to make India an attractive investment destination. The one-year-old ‘Make in India’ initiative, is Prime Minister’s vision that aims to turn the country into a global manufacturing hub. Currently India’s manufacturing sector accounts to 15 % of the country’s GDP. Prime minister wants to increase the share of manufacturing from 15 % to 25 % of GDP. Since the launch of this initiative, PM Modi and his band of top ministers has traveled to several countries laying out a red carpet for foreign investors and large corporations to set up shop or increase operations in India. Since the launch of this campaign, India is tracking well ahead of where it was at this time last year. It has more than doubled its investment levels, attracting $ 30 billion by the end of June 2015 compared with $ 12 billion in the first half of last year. In a year when many major FDI destinations posted declines, India experienced one of 2014‘s best FDI growth rates, increasing by 47 %. The largest splash in regards to investment flowing into India came around when Prime Minister Modi visited the U.A.E and Japan. The rulers of U.A.E pledged to invest a whooping $ 75 billion and the Japanese govt. set up a $ 35 billion fund to be invested in India’s various infrastructure projects in the next 5 years. Ease of doing business: The government aims to be among the top 30 countries on the ‘ease of doing business’ index. There are a lot of steps taken by the govt. to improve the environment to carry out international trade with and in India. For example, n The regulatory environment has been improved by delicensing, deregulating and simplifying the procedures. n The environmental clearance application procedure has been made online, further reducing the project delays. n The finance infrastructure has been continously improving and significant changes are being made to further facilitate trade and businesses. n A single-step incorporation of companies and integration of 14 government services on an online single-window portal n The national govt. has come out with its own ‘ease of doing business’ rankings for the federal states in August. It will assess states on seven parameters, including setting up of a business, allotment of land and obtaining construction permit, complying with labour regulations and environment procedures and obtaining infrastructure-related utilities. This will help create a healthy competition within the states to attract more and more investment. When Merkel met Modi In October 2015, Chancellor Merkel, accompanied by a large delegation of ministers and senior officials, arrived in New Delhi. Her talks with Mr. Modi centered around ways to deepen bilateral engagement in sectors like defense, security, education and renewable energy. India and Germany have signed a deal to fast-track approvals to make it easier for German firms to operate in India. The fast-track approvals process will cut bureaucratic hurdles to ensure ease of business for German firms. The two leaders also discussed the stalled free trade agreement negotiations between India and the European Union which, if implemented, will further boost bilateral commerce. Germany also agreed to provide more than $ 2.25 billion to India to develop a clean energy corridor and solar projects. AUTOMATION TECHNOLOGIES 5/2015

NEWS AND MARKETS previous page Some notable investments in India in the last 12 months GST (Goods and Services Tax): Currently, decisions regarding inventory and distribution of industrial goods are based on Central Sales Tax (CST) and an inter-state Value Added Tax (VAT). From a macroeconomic level, GST will prove to be a game changer. This uniform tax regime will make transaction cost of doing business more competitive and will make pricing of products and services, supply chain more efficient. Implementation of GST, will give freedom to decision makers of the companies to make decision based on operational and logistical efficiency. Unlike today, where the tax considerations are prioritized above the operational logic. “Implementing the GST will transform India by eliminating the inefficient taxation regime and go a long way in boosting the manufacturing sector. The impact of this reform, particularly if enhanced by systematic dismantling of inter-state check posts, can dramatically boost competitiveness. According to some govt. estimates, simply halving the delays due to road blocks, tolls and other stoppages could cut freight times by 20-30 % and logistics costs by 30-40 %. This alone can go a long way in boosting the competitiveness of India‘s key manufacturing sectors by 3 to 4 % of net sales, thereby helping India return to a high growth path and enabling large-scale job creation” said, the World Bank in its latest India Development Update. n Foxconn, Taiwan based electronics manufacturer : $ 5 billion n Posco, South Korean steel giant : $ 3 billion n General Motors: $ 1 billion n Linde group from Germany : $ 200 million n GSK, pharmaceutical manufacturer : $ 150 million n Honda, Japenese car giant : $ 250 million n Mercedes Benz and Diamler setting up new manufacturing plants to double their production capacities respectively n ZF, auto components manufacturer setting up new plant in complement with its clientele in India Conclusion In April, during Modi’s visit to Germany, there was a sense of optimism and change of perception about India as an investment destination. The international business community and Germany in particular were quite impressed with Modi’s vision and his ambitions about India. But nobody, maybe not even Modi himself had anticipated that the flood gates would open so much and so fast. Well, attracting investment is just the first step, there is whole lot to do but it’s a good start and definitely in the right direction. Programs such as ‘Make in India’, ‘Digital India’, ‘Skill India’ and tax reforms, land acquisition reforms and over all improvement in the ‘ease of doing business’ have to be kept going and even expanded to achieve the actual and consistent growth that Modi envisions. Photographs: Teaser + ornament Fotolia, Bundesregierung/ Kugler z AUTOMATION TECHNOLOGIES 5/2015

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