Huge scope for industry in Financial Inclusion – Dr C Rangarajan

“There is a dire need for a robust and efficient banking system to efficiently fulfill the needs of all the sections and sectors of the economy to fill the existing gap especially in rural India”, emphasized Dr C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister, Government of India, while addressing the 3rd Finance & Investment Summit organized by Confederation of Indian Industry (CII), here today.

Addressing the ‘myths’ associated with financial inclusion, Dr Rangarajan further highlighted that, with appropriate financial products, innovation, change in mindsets, technology and partnerships, financial inclusion is a viable business model and should not be treated as a CSR obligation. Various new entrants in the financial sector can indeed reap huge profits due to the immense potential, huge demand, rising rural purchasing power and low penetration in the rural areas, with the insurance penetration being as low as 4.4 %. According to a NSS Survey, about 50% of India’s farm households do not have access to any credit services. Hence RBI is encouraging entry of private sector in banking sector and has highly relaxed norms for banks to open branches in Tier 1- Tier 6 cities to push financial inclusion. Banks can now open branches in such centers without RBI’s prior permission and use the huge opportunity available for both private as well as public sector banks. It is however possible, if they more than just provide credit to people, they should also act as advisors.

He also called for better marketing management and effective provision and disbursement of credit to small and marginal farmers and Self Help Groups on behalf of Government instead of subsidies or low cost loans.

“Accelerated growth and development is a pre requisite to financial inclusion. If the economy is not growing at a good growth rate, no rural development schemes can be implemented.  Further, Poverty is directly proportional to financial exclusion. To remove poverty, we need to provide financial services, insurance, pension schemes, credit to the vulnerable lot. In addition to availability of credit and other facilities to farmers, its cost is also a critical factor, and to reduce costs, we need to invest heavily in infrastructure – both physical and social infrastructure”, the Chairman further iterated.

Regarding banking regulations and guidelines, he said that there should be a proper balance struck, too little or too much of stringent regulations will both defeat the purpose.

He also released the CII – Deloitte Theme Paper on Financial Inclusion for Reviving Growth: Success Stories, Challenges & The Road Ahead.

“Financial inclusion is new paradigm of economic growth which plays a major role in driving away the poverty. Without financial inclusion, banks cannot reach the un-banked. Government has also encouraged banks to leverage technology to attain greater reach and penetration while keeping the cost of providing financial services to the minimum.  There is a need for banks to develop new products and design new delivery models that are customized to the unique needs of the financially excluded population, both in the rural and urban areas”, shared Mr Jayant Davar, Chariman, CII NR & Co-Chairman & Managing Director Sandhar Technologies Ltd

Emphasizing the importance of inclusiveness in the growth agenda and the role of financial inclusion, Mr Rajesh Srivastava, Summit Chairman and Chairman & Managing Director, Rabo Equity Advisors Pvt Ltd observed that the financial integration was necessary for sustainable development. The wide gap that exists in the penetration levels of financial services including Insurance and Pension schemes, especially in the rural areas, provides a huge opportunity for financial institutions, added Mr Srivastava.

Delivering the Theme address, Deepak Haria, Partner, Leader of India Financial Services Practice Deloitte Touche Tohmatsu India Pvt. Ltd, said that rural India is growing rapidly and lends itself to developing viable business models. Some of the sectors like telecom & FMCG have tapped the rural markets successfully and the same can be done for the financial services as well. What is required is greater understanding of the needs of the market, innovation, entry of pvt corporates, easy entry & license norms, better infrastructure and a change in mindset and accordingly creating products and services. Deloitte Touche Tohmatsu India Pvt Ltd was also the knowledge partner for the Summit.

The inaugural session was followed by panel discussions on Financial Inclusion for Reviving Growth: Success Stories, Challenges & the Road Ahead, New Private Sector Banks and their Potential Role in Promoting Financial Inclusion, Tapping Rural Market – Role of Insurance & Pension Fund Industry, Financing the Infrastructure Development – Extending Infrastructure to the Last Mile.

The panels were addressed by leading luminaries of the financial sector including Mr R K Dubey, Chairman & Managing Director, Canara Bank, Mr B B Joshi, Executive Director, Bank of Baroda, Ms Padma Iyer Kaul, Executive Director, Pension Fund Regulatory & Development Authority, Mr Raja Gopalakrishnan, Group Managing Director, Asia Pacific, Chief Operating Officer, International, FIS, Mr Serge Devieux, Director- South Asia, International Finance Corporation,Dr N Kamakodi, Managing Director & CEO, City Union Bank Ltd, Mr Joseph Plappallil J., Chairman & Managing Director, Agriculture Insurance Company of India Ltd.

10 New STPIs Soon; First in Punjab: Kapil Sibal

Dramatic and high-impact measures have been initiated, which will lead to a revolution in the next 3-4 years said Mr Kapil Sibal, Minister of Communication and Information Technology, at the session on Sunrise Sectors for Services Exports at the Services Conclave: Promoting Services Exports from India – Challenges, Opportunities and Issues organized by the Ministry of Commerce and Industry, Government of India and the Confederation of Indian Industry in New Delhi.

He spoke of steps taken in two broad areas – infrastructure and human resources – which would have far-reaching consequences. For instance, he said, once the fibre optic network is laid out, dissemination will undergo a dramatic change. Similarly, expanding the curriculum for education and skilling manpower to create a skilled workforce of 500 million by 2022 will boost the services sector, and thereby the Indian economy. He stressed on the need to nurture the Services sector, calling it the backbone of the Indian economy since it accounts for 65% of the country’s GDP.

Industry, academia and Government need to work together to understand the challenges that the sector faces and find solutions. For instance, with low-cost outsourcing moving to countries such as Malaysia, we need to strengthen the domestic market and look at Tier 2 and Tier 3 cities within India. Simultaneously, the focus should also be on creating competitiveness through policy and other measures to strengthen the sector. He spoke of measures such as the STPI scheme, the Software Technology Parks, the first of which will be operational in Punjab very soon, which will give a boost to the sector. He also mentioned that by 2015-2016, India will be manufacturing chips. The focus, he said, should be on innovation and increasing competitiveness to give a boost to the sector and the Indian economy.

Earlier, Dr Anupam Khanna, Chief Economist and Director – General (Policy Outreach), NASSCOM, traced the evolution of the IT and ITeS sector, saying it had grown in revenue terms from USD 100 million in 1992 to about USD 120 billion now and how India has emerged as a preferred destination because of its talent pool and competitiveness. He said there is tremendous potential now, with several companies across the world looking at outsourcing and India must take advantage of the opportunities opening up. To go to the next level the focus should be on improving the business environment, broadening the role of this industry in the economy and society, supporting SMEs and start-ups among other measures.

Mr Ashish Kulkarni, CEO, Reliance Animation India Pvt Ltd, said that in the three stages of work in animation – pre production, production, and post production, typically production has always been outsourced to countries within Asia, such as Hong Kong. While India has great story-telling skills and the basic talent, there is a pressing need for trained/skilled manpower to tell stories in a format and manner that the world consumes. He also urged a relook at various policies to enable mutually beneficial co-production treaties with other countries so that more production work could also come to India.

Mr Nalin Kohli, Chairman – Vision Committee, Electronics and Computer Software Export Promotion Council (ESC) & Chairman and CEO, Araina Enterprises Pvt Ltd, stressed on the need to identify gaps and needs of the global market and skill manpower appropriately to meet those needs. India could become a hub for repair work, and should prepare skilled manpower and a conducive ecosystem by way of customs laws to achieve that position.

Dr Rajat Kathuria, Director and Chief Executive, ICRIER, said that there is a change in mindset and the services sector could drive exports. He said the focus should be on capturing data in order to make informed policy decisions to boost exports, and creating a more nuanced industry policy to give a boost to this sector.

Three new bilateral industrial R&D funding programs with Finland, Spain & UK, launched at Global Innovation & Technology Alliance Platform

The Global Innovation & Technology Alliance Platform” event, organized by the Global Innovation & Technology Alliance (GITA), in collaboration with the Department of Science and Technology(DST), Government of India and the Confederation of Indian Industry (CII) was held on November 12-13, 2013.

GITA is a “not–for–profit” Section–25 Public Private Partnership (PPP) company promoted jointly by the Confederation of Indian Industry (CII) and the Technology Development Board (TDB), Department of Science & Technology (DST), Government of India (GoI).

The objective of the platform is to facilitate technology partnerships betweenIndian industry and its counterparts in other countriesto develop new and affordable products & services in diverse areas.This 2-day event was the largest platform of its kind for forging business alliances in Science, Technology & Innovation (STI) areas between India and other countries. During the 2 day event, over 200 B2B meetings were held between Indian companies and their counterparts.

Global Technology Leaders and Delegations from Canada, Finland, Israel, Japan, Norway, Slovenia, Spain, Sweden, Taiwanandthe United Kingdomparticipated in this platform. Several Government agencies & S&T organizations from participating countries partnered for this event.  Exhibition of innovative technologies from India & across the world was also held concurrently during the platform.

The inaugural session was addressed by senior government officials Dr T Ramasami, Secretary, DST, Mr Harkesh K Mittal, Co–Chairman, GITA and Secretary, Technology Development Board, DST, Dr ArabindaMitra, Adviser & Head, International Cooperation (Bilateral), DST, Government of India.

Dr Ramasami gave an overview of the innovation landscape of the country and commended GITA on its initiative. He mentioned that the Science, Technology & Innovation Policy (STI) 2013 of India is outward-looking and reflects the aspiration to be to globalize in the innovation space. It brings the innovation space to centre-stage through which best global practices could be suitably adapted in the Indian context.

From the Industry, Mr Vikram Kirloskar, Chairman, Global Innovation & Technology Alliance (GITA) Chairman, GITA and Vice Chairman, Toyota Kirloskar Motor Private Limited, MrDeep Kapuria, Chairman Hi-Tech Group of Companies &Member, GITA Board of Directors andDr Devi Prasad Shetty, Founder & Chairman, NarayanaHrudayalaya Institute of Cardiac Sciences.

In his welcome address, Mr Vikram Kirloskar, expressed that in a short span of two years, since its establishment in November 2011, has developed partnerships with S&T organisations in several countries and has emerged as anunique institution for forging frontline global technological alliances for Indian companies with counterparts in other countries.

Dr Devi Prasad Shetty, in his address, mentioned that India has the potential to become the first country to dissociate healthcare from affluence. He mentioned several new initiatives such as hospital protocol digitization, simulation-based training of critical-care nurses and disease management software which could revolutionize the healthcare scenario in India and the world.

Three new bilateral industrial R&D programs were announced with between India on one side and Finland, Spain and the UKrespectively. H E Gustavo de Aristegui,Ambassador of Spain to India, Ms MejcaMerjaHiltunen, Director,Tekes, and Sir Walport, Government Chief Scientific Adviser, The Government Office for Science, UK,also addressed the gathering on the occasion. The partnering agencies in the respective countries for these programmes are International Science & Technology Partnerships, (ISTP), Canada; Tekes, Finland; MATIMOP, Israel; Centre for the Development of Industrial Technology (CDTI), Spain; and Technology Strategy Board, UK. During the announcement, Dr ArabindaMitra mentioned that incorporation of GITA has been a phenomenal journey and reflects the aspirations of the Indian Government and Industry to enhance engagement India’s engagement in the innovation space in a collaborative manner.

On this occasion, Mr H K Mittal released the 3^rdedition of the India Innovates report which captures the spirit of innovativeness in India, encompassing the value-chain of the process of technological change that includes development of new ideas & solutions for existing problems, realizing of new solutions & technological options, and diffusion of new technologies at a broader level. It also highlights the pursuit of enterprises fordisruptive innovations in technological and social spheres which help in inclusive growth. The case studies covered in the volume represent diverse sectors such as information technology enabled services (ITES), financial services, waste management, power distribution, biotechnology, automobiles, clay based products for everyday use and handicrafts.

The session on Disruptive Technologies: Advances that will Transform Life, Business and the Global Economy – Opportunities for Technology Partnerships with India was addressed by Mr Koji Omi, Chairman, STS Forum, Japan; Mr Daniel Johansson, State Secretary, Ministry of Enterprise, Energy and Communications, Sweden; Sir Mark Walport, Government Chief Scientific Adviser, The Government Office forScience, UK, Ms Vera Egreja C Barracho, Network Development Manager, European Business Innovation, Centre Network (EBN)

Mr Koji Omi, highlighted the vast potential between India and Japan in the area of Science, Technology and Innovation(STI), to take the relationship to the next level. He showed keen interest in collaborating with DST and GITA in this endeavour.

On November 12,Parallel Sectoral sessions on Cleantech / Green Manufacturing Technologies, Homeland Security, Pharma /Affordable Healthcare Technologies, Information & Communication Technologies and SmartGrids were organized during the day. Senior officials and business delegates from participating countries made presentations at these sessions and discussed collaboration opportunities in the respective sectors. 

From the Indian side, senior officials from the Department of Science & Technology (DST), Ministry of New and Renewable Energy (MNRE) and Ministry of External Affairs addressed the participants at various sessions. Representatives of state governments and academic/R&D organisations also participated in these sessions.

Electronics Industry Needs a Positive Investment Climate and Tax Regime to boost Manufacturing

Investment and innovation are the two major areas that need serious attention to address the present difficulties confronting the electronics industry in India, said Mr J Satyaranayana, Secretary, Department of Electronics & IT (DeitY) while speaking at CII-ICTE Conference on Developing Demand, Manufacturing Competitiveness & Exports in New Delhi today.

Stressing upon the need for investment, Mr Satyanarayana said the lack of finance was holding up several projects. There is a need to convince banking sector, sensitize the investors abroad and build their confidence in the electronics sector to get investment, he said. At the same time, he emphasized, there was a pressing need for innovations in the sector. He said instead of a large number of items, the industry in India could identify about 10 products and build the ecosystem around them.

Mr Satyanarayana said the government has cleared seven green field projects in different parts of the country for the sector, “but there are gaps that need to be closed in development of manufacturing infrastructure” for the electronics industry.

In his special address, Mr Rajiv Arora, Joint Secretary, Ministry of Commerce and Industry, expressed his Ministry’s concern about India’s growing import bill in electronic items, next only to the oil import bill, to emphasise the need to move from mere assembling to manufacturing. For this, he said, the government was open to addressing the requirements of the industry in terms of tax regime, duties and the protection it required. For this, there is need for constant cross flow of information between the government and the industry, he said.

Earlier, Mr Vinod Sharma, Chairman of CII National Committee on ICTE Manufacturing and Managing Director Deki Electronics Ltd, said in his welcome speech that the conference was intended to look at the key issues facing the industry. He said while the size of the industry globally was immense, India’s share remains small and there was need to address this issue. He said while there has been much talk about the disabling factors that pull us down, there was also need to look at the advantages that we in India have.

Mr Satish K Kaura, Chairman and Managing Director of Samtel Group, speaking of the need for electronic hardware manufacturing, said the industry has not been able to make an impact and huge dependence on imports continues. He said one of the factors that pulled down the industry’s performance was exposing it to free market and free trade which made it vulnerable to much unfair competition and led to huge dumping of goods in India by foreign manufacturers. “We overlooked the fact that if you need to build indigenous industry, you need to support it. That is what all Asian countries have done,” he said.

He said he was happy to hear that the government was now serious about doing something to help the industry. He said the opening of the strategic and defence sector to private industry was a massive opportunity for electronic items, which constitute about 40% by value in the defence items, be it fighter planes or other platforms.

Mr Sunil Vachani, Chairman and Managing Director, Dixon Technologies (India) Pvt Ltd, said the one word that summarised the potential of the electronic industry was “Limitless”. Speaking of the problems posed by taxes and duties to manfacturers in India, Set-top Boxes’ inverted duty structure continues to be a major irritant in encouraging local manufacturing. Speaking of the impact of policy changes on certain demands, he highlighted the case of imposition of duty on baggage imports on LCD/LED TV, which has resulted in increasing the demand and local manufacturing of these products. The manufacturing of these items picked up by 30% despite the poor festive season this year. Talking about the need for quality and best practices, he said the Indian manufacturers need to “benchmark themselves against the best in the world” to compete against them.