HSBC Deutschland

Commercial Banking

Global Liquidity and Cash Management

Sales Meeting Düsseldorf

Presentation by: Thomas Sasse

Attorney | Partner

HSBC Deutschland

Königsallee 21/23, 40212 Düsseldorf

Location: HSBC Deutschland, Düsseldorf

Date: 02.04.2019

Time: 13:30 CET

Page 2 of 22

INVESTING IN INDIA

Aspects to consider:

The routes under which foreign investment can be made is as under:

a. Automatic Route: Foreign Investment is allowed under the automatic route without prior approval of the Government or the Reserve Bank of India, in all activities/ sectors as specified in the Regulation 16 of FEMA 20 (R).

b. Government Route: Foreign investment in activities not covered under the automatic route requires prior approval of the Government

Capital instruments permitted for receiving foreign investment in an Indian company

Equity shares, debentures, preference shares, share warrants, GDRs, ADRs and FCCB issued

by the Indian company.

Foreign Investment vs Foreign Direct Investment vs Foreign Portfolio Investment

Foreign Investment means any investment made by a person resident outside India on a

repatriable basis in capital instruments of an Indian company or to the capital of an LLP.

Foreign Direct Investment (FDI) is the investment through capital instruments by a person

resident outside India (a) in an unlisted Indian company; or (b) in 10 percent or more of the

post issue paid-up equity capital on a fully diluted basis of a listed Indian company.

Foreign Portfolio Investment is any investment made by a person resident outside India in

capital instruments where such investment is (a) less than 10 percent of the post issue paid-

up equity capital on a fully diluted basis of a listed Indian company or (b) less than 10 percent

of the paid-up value of each series of capital instruments of a listed Indian company.

Page 3 of 22

Forms in which business can be conducted by a foreign company in India

Foreign companies can make investments or operate their business in a number of ways as

given below:

o Liaison/Representative Office

o Project Office

o Branch Office

o 100% Wholly-owned Subsidiary

o Joint Venture Company

Foreign Companies in India

Joint Venture

Comnpany

Liaison/ Represen-

tative Office

Project Office

Branch Office

100% Wholly-owned

Subsidiary

Page 4 of 22

How does a foreign company invest in India?

Either through:-

a. Automatic Approval - by the country's Central Bank, the Reserve Bank of India (RBI), Mumbai, or

b. Through the Foreign Investment Promotion Board (FIPB) (i) Subject to sector specific guidelines, automatic approval through RBI is

available for all items/activities except a few. (ii) FIPB approval is required for all other proposals not eligible for Automatic

Approval.

Capital account convertibility allowed in India?

At present, the Indian currency is convertible only on current account, though some capital

account transactions are also permitted.

Automatic Approval

by the Central Bank, i.e.,

the Reserve Bank of India

Foreign Investment Promotion

Board

this appproval is required for all proposals

not eligible for automatic approval

Page 5 of 22

Legal and Regulatory Framework

There are several laws are formulated by the Centre, there are State specific laws and rules

that should be taken note of, and these would vary depending on the State where the investor

commences operations. Accordingly, there are various regulators and authorities that the

investor should engage with in compliance with the applicable laws and regulations. The

investor should ensure that appropriate registrations are obtained and all records are

maintained according to the requirements under applicable Indian laws.

Settlement of disputes in India

India follows the common law and has a single court system to administer both Central and

State laws. The court system is broadly three tiered, comprising the lower District Courts, the

High Courts and the apex court – the Supreme Court of India. Court litigation in India is

generally subject to delays, and owing to a backlog of cases before Indian courts, commercial

disputes are being subject to alternative modes of dispute resolution, such as arbitration.

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1. Which industries in India are particularly subsidized / supported by the

government?

The industries which are particularly subsidized / supported by the Indian Government

are the Food, Fertiliser and Petroleum industry, which constitute 88.3 per cent of the total

budgeted estimates for 2017/18. Of this, food subsidy accounts for the largest chunk of

the total subsidy (53%).

Key strategic industries earmarked for development through targeted policies and

supportive initiatives are: Infrastructure, Renewable Energy, Food Processing,

Telecommunications, Manufacturing including electronic system design, Service

Sector including IT and Leisure & Tourism.

(Source: https://www.standupmitra.in/Home/SubsidySchemesForAll &

https://www.smeventure.com/10-best-government-subsidies-small/)

2. What are India’s economic priorities?

India’s economic priorities are currently:

i. Employment of future workforce: About 10 million working age people every

year join the Indian labour market + the participation rate of women in the

labour force is one of the lowest in the world (about 25%).

ii. Economic inclusion of rural India: Very soon, 40% of Indians will be urban

residents. The Government aims to include rural India in its economic plans

as there is a large economic divide between urban and rural India. The

Government has launched programs such as Digital India, which aims to

include the rural sections of India.

iii. Macroeconomic Stability: a prerequisite to sustainable growth and job

Creation

o Fiscal consolidation to creating space for more investment

o De-risking the external sector

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iv. Sustainability: India has some of the world’s most polluted cities. The reason

being that there is a high-density population along with non-sustainable

environmental policies of companies. The Government aims to address

these problems.

v. Fixing the stressed sectors, namely:

o Agriculture & the rural economy

o Infrastructure

o Power

o Financial Sector

vi. Making growth inclusive and sustainable

o Education

o Dealing with the skills shortage

o Women’s labour force participation

o Healthcare

o Environment

o Social Protection

(Source: https://www.bloombergquint.com/global-economics/an-economic-

strategy-for-india-by-rajan-gopinath-and-others-full-report#gs.2xzx63 )

3. Which regulatory and cultural challenges are the biggest hurdles for a market

entry of a European company?

Regulatory Challenges:

The biggest regulatory challenge in India is its red-tape bureaucracy and non-tariff

barriers to get permits or registrations. Fortunately, this is changing quickly as India has

moved up the Ease-of-Doing-Business Index from #142 in 2014 to #77 in 2018.

Page 8 of 22

Regulatory Challenges in detail:

o Trade Barriers: Any restriction imposed on the free flow of trade is a trade

barrier. Trade barriers are tariff barriers (the levy of ordinary negotiated customs

duties in accordance with Article II of the GATT) and non-tariff barriers.

o A delicate economy and uncertainties around the progress of reforms

o Local Sourcing: Foreign direct investment reforms in many sectors like single

brand retailing; have been relaxed continuously by the Government of India in

past years. Investments under this policy have to comply with 30% local

sourcing norm. This is a welcome move. For European companies this still

remains a challenge with 5- years cap. Most European companies have high

demands on standards when it comes to procuring raw material, setting supply

chain, compliance in manufacturing etc. This with long term perceptive to do

business with India, may make local sourcing possible but in more than 8-10

years.

o Labelling: When it comes to adapting global product label to Indian standards

many European companies find this as a challenge. Most companies can work

systems globally to take care of 6 mandatories on the product label prescribed

in India for packaged commodities. What remains a challenge is Maximum

retail price as mandatory component on each product label. The Indian labelling

component of Maximum Retail Price (MRP) is seen by European companies

especially retailers as a big challenge to operate in the Indian market. This

leads to higher operational costs putting Indian customers at a disadvantage of

a higher price compared to customers in other markets with simpler labelling

rules. Government of India in Dec 2017, came with relaxation for single brand

retailers on declaration of retail trade price. But unfortunately, this relaxation is

only for a year and that too needs to be applied which is again a cumbersome

process.

o Testing Requirements: International standards are not recognized in India

when it comes to product and compliance requirements during imports coming

from Europe. In India there are different departments dealing with certification

of different aspects of the same product, often without alignment or

coordination.

Page 9 of 22

Indian authorities don’t recognize international standards and certification

schemes. Most of the products undergo testing requirements again at customs

in India. Samples are taken at port and sent to test labs. The shipment is held

at port until results are received, disrupting supply chain and adding to long

lead time.

o Service barriers: Services in which there are restrictions include: insurance,

banking, securities, motion pictures, accounting, construction, architecture and

engineering, retailing, legal services, express delivery services and

telecommunication. The Indian government has a strong ownership presence

in major services industries such as banking and insurance. Foreign investment

in businesses in certain major services sectors, including financial services and

retail, is subject to limitations on foreign equity. Foreign participation in

professional services is significantly restricted.

Cultural Challenges:

With regards to cultural challenges, it is important to bear in mind that India is a country

with many facets: India is a multilingual, multi-ethnic and pluralistic society, and vast

cultural differences can be seen between different states of India.

The great Cambridge economist Joan Robinson once observed: “Whatever you can

rightly say about India, the opposite is also true.” Indians place great value on

relationships: it is rewarding to take the time to develop contacts and relationships.

English being one of the official languages is generally the business language in India.

o Business Structure: Indian businesses tend to be quite hierarchical.

Instructions are delegated down the chain of command, with few opportunities

to relay ideas or criticisms up the chain by lower-ranking employees. In Europe

and particularly in start-ups who value creative freedom - it’s much more

common to find a flat company structure.

o Directness: Another difference in the broader culture is that the European

business culture is famous for its direct and blunt communication. They like to

be quite straight-forward in their communication even if it sounds rude. Indians,

on the other hand, prefer long and indirect talks to sound polite and not to

offend.

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o Negotiating: In India it’s a common part of business practice to negotiate deals

at length, haggling down everything from supplies, to partnerships to business

services. But due to the direct and straightforward nature of European business,

haggling can be considered rude and off-putting in these countries. Building

lasting relationships is crucial to starting out in Europe, and increasing the

chances of long-term success. While there is room for negotiation, bargaining

too much can jeopardise these nascent bonds with other businesses. It’s

acceptable to ask for a discount or “best price” but going in too hard won’t make

the best of first impressions.

o Pragmatism: In India, when a business deal has been negotiated, it’s common

to consider and scrutinise it for a long period of time. While Europeans are not

as anxious about these waits as Americans, who like to get to the point very

quickly, delays can still cause consternation. Nobody minds a short delay for

reasons of research and comparison, but holding off unnecessarily can be seen

as a criticism of the business’ trustworthiness. By taking too long and

scrutinising too much, any deals are at risk of being jeopardised.

o Punctuality: The Europeans highly appreciate punctuality and like to adhere

to the strict deadlines. If they are unable to complete the task on the assigned

deadlines, then they are expected to inform beforehand as they do not like

surprises. This is in contrast to India where punctuality is more of a luxury. But

today in the business world “on time” is normal.

(Source: www.eurostartentreprises.com/business-advice/item/113-

7-key-differences-between-european-and-indian-business-

culture#.XJtuoZgzZPY)

4. What special features depending on the region must be considered in India with

regard to different legal frameworks?

Before 1st July 2017, there were different legal frameworks when it came to Indirect Tax.

But after the said date, the Government had passed the Goods and Services Tax (GST)

Law, which created uniformity between all Indian states when it came to tax.

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5. In your opinion, as per the ease of doing business and considering all regulatory

conditions, which region would you recommend for which type of business?

India’s annual ranking of business friendliness of countries has improved in “Ease of

Doing Business” over the last two years. The recommended regions for doing business

as per different sectors are as below:

Region State Industries

North Delhi Food Processing, Construction

North Haryana,

Uttar Pradesh

Automotive, Agro-based industry, IT &

ITeS, Textiles, Oil Refining,

Biotechnology and Petrochemicals,

Pharmaceuticals, Power, Tourism

West Maharashtra,

Gujarat

Finance, Engineering, Auto and auto

Components, Food Processing,

Electronic System Design and

Manufacturing, Pharmaceuticals,

Biotechnology, IT & ITeS, Oil & Gas,

Chemicals, Construction &

Infrastructure, Gems & Jewellery

Central Madhya Pradesh, Chhattisgarh

Agriculture & Forestry, Power, Minerals

East Jharkhand, Odisha,

West Bengal

Mining and Mineral Extraction,

Engineering, Iron and Steel, Chemicals,

Handloom and Cement, IT, Leather,

Textiles, Agriculture/Horticulture, Tea

South Andhra Pradesh,

Karnataka, Telangana,

Tamil Nadu, Kerala

IT and ITeS, Aerospace, Manufacturing,

Automotive Components, Biotechnology

& Pharmaceuticals

(Source: Moneycontrol.com)

Page 12 of 22

6. Where is the demand of the know-how of an international bank particularly strong

and can both sides make effective use for business strategies and development?

According to the Reserve Bank of India, there are 45 foreign banks in the Indian banking

sector, with 286 branches amongst them that are spread across all major metro cities in

the country. International banks are expected to widen their network through institutional

banking. India being one of the fastest growing nations in the world, economic growth and

positive reforms mirror their sentiment of stability and soundness of the central bank

continues to remain attractive to foreign investors.

Historically, India’s qualified workforce supplied services in the outsourcing sector to the

world, as well as know-how. We expect that the mere cost arbitration focus in the

outsourcing business will be replaced by knowledge sharing, and thereby step up on the

value chain ladder.

The demand for NRI or Expatriate, migrant and international student banking as well as

international business banking due to outbound investments by Indians in to foreign

countries is showing a steady positive growth. Foreign banks come forward to provide

assistance by equipping them with the necessary instruments and unique benefits

through their international presence. This is mutually-benefitting for both sides.

7. What aspects would you consider regarding an investment in India in terms of

production, sales and finance?

Production

India is Asia’s third largest economy and India seeks to raise manufacturing from 17% to

25 % of GDP, thereby creating 100 million jobs within a decade. India hopes to become

a global manufacturing hub with the ‘Make in India’ campaign.

India has a massive workforce, an emerging supply base, and access to natural

resources needed in production—notably, iron ore and aluminum for engineered goods,

cotton for textiles, and coal for power generation. The country could become a viable

manufacturing alternative to China in industries ranging from apparel to auto components

and might even dominate some skill-intensive manufacturing sectors.

Page 13 of 22

India’s manufacturers have a great opportunity to emerge from the shadow of the

country’s services sector and seize more of the global market. A McKinsey analysis finds

that rising demand in India, together with the multinationals’ desire to diversify their

production to include low-cost plants in countries other than China, could together help

India’s manufacturing sector to grow six-fold by 2025, to $1 trillion, while creating up to

90 million domestic jobs.

India’s manufacturing sector realized its full potential, it could generate 25 to 30 percent

of GDP by 2025, thus propelling the country into the manufacturing big leagues, along

with China, Germany, Japan, and the United States. Along the way, we estimate that

India could create 60 to 90 million new manufacturing jobs and become an attractive

investment destination for its own entrepreneurs and multinational companies.

Sales

By E-Commerce sales - India stands at 18 Billion USD in 2017, and is expected to grow

to 51.2 Billion USD in 2023.

The reason is the large consumer market potential in India with a rising middle class that

is similar in size like Europe.

Finance

India’s banking and insurance sectors have been experiencing large volumes of growth.

With the rules of foreign investment being relaxed, this has received an affirmative

feedback from the Insurance industry. This is bound to produce a large volume of JV

between various foreign and local insurance companies. Further, India’s mobile wallet

transactions is pegged to touch INR 32 Trillion (492.6 Billion USD) by 2022.

(Source: https://www.mckinsey.com/business-functions/operations/our-

insights/fulfilling-the-promise-of-indias-manufacturing-sector)

8. How did the cash reforms at the end of 2016 affect the economy and the

development of digital payment infrastructure?

Initially, there was a lot of disruption to the economy as the 500 and 1000-rupee notes

were India’s two biggest denominations (accounted for about 86% of India’s cash in

circulation).

Page 14 of 22

Impact of Demonetisation in detail:

Gross Domestic Product (GDP)

As about 78% of all Indian customer transactions are in cash, this led to a shock in the

fiscal system. It is reported that at least 1% was wiped out from the country’s GDP, which

affected about 1.5 Million jobs. The GDP growth rate of 8.01% in 2015-2016 fell to 7.11%

in 2016-2017 after demonetisation. This was largely due to less availability of cash in

cash-intensive industries like manufacturing and construction. It has also adversely

impacted the primary function of banks to issue loans and has put pressure on them as

current account holders demand large sums of cash.

Small Scale Industries

Businesses like the textile industry, salons, restaurants, and seasonal businesses are low

capital enterprises and work on the basis of liquidity preference. Demonetisation gravely

impacted their revenue collection and threatened their existence to an extent.

Development of Digital Infrastructure

Post-demonetisation, the government and the Reserve Bank of India have promoted the

use of digital payments. There are mainly five modes of transactions that are increasingly

being promoted. These are Unified Payment Interface (UPI), Unstructured

Supplementary Service Data (USSD), Aadhaar Enabled Payment System (AEPS),

mobile wallets and debit/credit cards. National Electronic Fund Transfer (NEFT)

transactions had gone up from INR 9.88 Trillion in September 2016 (two months before

demonetization) to INR 141.82 Trillion in September 2017, and to INR 180.15 Trillion in

September 2018. According to Payswiff, a payments transaction platform, there has been

a 440 % in all digital transactions increase since demonetization.

Absence of liquid cash has led to people making transactions using cheques or account

transfers. Consumers have switched to virtual wallets like Paytm which allows electronic

transfer of money. All this will result in a digital economy where transactions are being

recorded and the economy has more white money and this might increase the

government’s tax revenue.

Page 15 of 22

The long-term effects of Demonetization are yet to be ascertained. It is expected that it

can improve the Indian economy in the long run by increasing tax compliance, financial

inclusion, consequently improving the state of the economy. It can boost the GDP by

increasing the availability of funds for lending and also by reducing transaction costs if

the economy moves to digital modes of payments.

(Source: https://www.youthkiawaaz.com/2017/12/impact-of-

demonetisation-on-the-indian-economy/)

9. What is the outlook for the current year in connection with the economic dispute

between the USA and China? Is the country profiting from this?

With the ongoing economic dispute between USA and China, India aims to focus on

boosting its export to USA and other global markets. It is reported that the Indian

Government is focusing on exporting chemicals, electrical/automotive parts, etc. This

trade war presents opportunities for India’s manufacturing sector and is a big boost for

the Make in India program. This is, naturally, bound to benefit India in the short term but

in the medium to long term, a harmonized agenda between India and USA or other target

countries will consolidate any opportunity.

The trade war that U.S. President has started will profoundly reshape the global

economy. The trade war will create new impetus for the EU and Asia to speed up the

opening of their markets to forge closer economic ties. This will lead to even faster growth

than in the last decade in trade between the EU and Asia, accompanied by rising

investment. The network of global supply chains that has revolutionized the nature of

trade and investment since the 1980s will expand and become more productive and more

densely intertwined across Europe and Asia while withering in the U.S.

As the global trade roughly accounts for about 25% of global gross domestic product. In

an era of interconnected markets and global supply chains, the current trade tensions

between the U.S. and China are likely to have significant contagion effects around the

world. This would have an enormous impact not just on US-China bilateral trade but also

on many other countries due to global supply chain linkages.

(Source: https://www.forbes.com/sites/yuwahedrickwong/2018/07/13/how-

the-u-s-china-trade-war-will-transform-the-global-economy/ )

Page 16 of 22

10. How is it that there is a huge difference in salary structures between China and

India? Is China really that much further advanced than India?

Salary levels were determined as a composite of 14 different professions after taking

deductions for taxes and social security into account. China earn an average of about 18

percent of their New York based counterparts, while in India the ratio is just above 8

percent. But it varies from sector to sector.

China’s hourly rates indicate that levels for professionals are about double that of India in

the primary cities. A reason for this is the aging demographics of the Chinese population

compared to India, which is experiencing a population boom and has, as a result, released

a greater number of younger workers into its workforce.

Workforce in India are apparently the hardest working in terms of working hours, likely a

result of weak legislation on working hours. Meanwhile, China is quickly approaching the

levels in the United States (U.S.) due to strictly enforced labor law regulations and the

legal requirement to compensate for overtime work.

The difference in salary structure between China and India, could be explained by the

growth story of China. China has economically grown faster than India for longer periods

of time. This high growth has also resulted in wage increases for employees, which has

thereby resulted in higher costs for manufacturing/service Chinese companies. Thereby,

Firms are now looking elsewhere to produce their products, where the wages are much

less, such as in India. India’s low labour costs, along with its well-equipped work force,

provides high incentivize for foreign investment in the country. This gives India an edge

over China, where the latter’s aging population and shrinking workforce means the wages

will remain higher.

(Source: http://www.asiabriefing.com/news/china-india-wage-comparison/)

Page 17 of 22

11. If a customer is in the consumer/retail market and wants to serve the entire Indian

market, which location is recommended?

Investors should note that there are large differences between the regions that should

be taken into account when designing an entry strategy.

o Northern Region: Key cities and sectors: - Delhi-NCR; The Delhi-Jaipur-Agra -

golden triangle: Commerce and manufacturing hub; - Kanpur: Investment Corridor

for leather and textile machinery.

o Eastern and Central Region: Key cities & sectors: - Kolkata: Heavy engineering

and IT - Jamshedpur: Automotive - Chhattisgarh: Power, steel and iron ore, Low-

cost human resources, Rich natural resources, Comparatively low land price.

o West Region: Key cities and sectors: - Mumbai-Pune corridor and Nasik:

Engineering; - Surat: Textiles and gemstones; - Ahmedabad-Baroda-Ankleshwar:

Refineries, petrochemicals, pharmaceuticals, chemicals and fertilizers. High

Government incentives, Emerging software and other high-tech industries, Mix of

cities with diverse economic and social hierarchies.

Consumer Retail

Commerce and Manufacturing,

Leather & Textile Machinery

Heavy Engineering & IT,

Automotive, Power, Minerals

Automotive, Engineering, IT, Pharmaceuticals,

Petroleum, Chemicals

Engineering, Textiles, Gems,

Refineries, Petrochemicals,

Fertilizers

Page 18 of 22

While Maharashtra with its capital Mumbai is still the biggest economic centre in

India, other states are coming up fast, providing growth potential.

o Southern Region: Key cities and sectors: - Chennai-Sriperumbudur: automotive

and heavy engineering - Coimbatore: engineering and textiles - Salem: steel, food

processing, poultry - Bangalore-Hosur: IT - Hyderabad: Agriculture,

Pharmaceuticals and IT - Vishakhapatnam-Kakinada: petroleum, chemical and

petrochemical, developed IT outsourcing industry.

(Source: KPMG report on Investing in India)

12. “Trapped Cash”: The notion that whoever invests in India does not get anything

back for the time being (+ 5 years), but strategically an investment makes sense

anyway. What do you think about this and what are the 3 biggest Pros and Cons

for and against India?

Trapped cash, unfortunately, is still a bottle-neck in emerging markets. Fortunately, there

are reforms taking place to ease the cross-border flow of funds and assisting companies

to have a strong liquidity in their business environment.

Companies in India are able to lend money to their overseas subsidiaries as long as it

doesn’t exceed 400 % of their net worth.

India provides huge opportunities for German companies. India is one of the biggest

market with a functioning democracy. Most German companies operating in India make

maximum profits than their counterparts in other parts of the world.

The new focus area of Indian Economy provides splendid opportunities:

Make in India: Make in India has come with lots of benefits and advantages or the Indian

Economy. Due to this fact companies from across the globe making a huge investment

in Make in India project, and have thrived successfully, making India a hub for the

manufacturing companies.

Digital India: India comprises of 15 per cent of the world population, and with a growth

rate of 7 to 8 per cent, India can very well become the second largest economy by 2030.

Page 19 of 22

To achieve this, the government considers the digital economy as the primary growth

enabler. The major ICT initiatives of the Government included, inter alia, some major

projects such as railway computerization, land record computerization, which focused

mainly on the development of information systems.

Skilling, Entrepreneurship and Job Creation

Skill India: India aims to have one of the strongest economic growth stories in the 21st

century, it becomes vital to ensure its growing workforce is capable to handle the incoming

disruptions and find suitable jobs. Skill India’ aims at providing skill development to over

400 million youth of India by 2022, covering every Indian village for which various training

programmes and schemes have already been proposed. These skill development

programme opens up avenues by which the youth accepts responsibility and no one

remains idle because an idle youth is a burden to the economy. The economy is

concentrating on job creation and social security schemes. With this new approach

towards skill development, India is definitely moving forward towards its targeted results.

Start Up India: Startup India is a revolutionary scheme that has been started to help the

people who wish to start their own business. These people have ideas and capability, so

the government has given them support to make sure they can implement their ideas and

grow. Success of this scheme will eventually make India, a better economy and a strong

nation. The 19-point Action Plan envisages several incubation centres, easier patent

filing, tax exemptions, ease of setting-up of business. This action plan focuses both on

restricting hindrances and promoting faster growth.

The 3 biggest pros for India are:

o According to Oxford Economics, India will remain the fastest growing major

economy till the next decade (2019-2028).

o By 2026, 64% of Indians are expected to be in the working age group of 15-59

years, which basically computes to being the largest-cum-diverse workforce in the

world.

o The Ease-of-Doing-Business Index in India was up at #77 in 2018 from #142 in

2014.

Page 20 of 22

The 3 biggest cons for India are:

o Red-tape bureaucracy and trade barriers to get permits or registrations.

o Protectionist sentiment by certain industry associations/lobbies.

o Slow, yet sustainable, decision making process by the Government.

(Source: http://www.makeinindia.com/home, https://Startupindia.Gov.In, Pradhan Mantri

Kaushal Vikas Yojana (PMKVY) and http://in.one.un.org/un-priority-areas-in-india/)

13. Are deliveries and logistics across the country now easier? What do you think

about that?

Absolutely. Logistics sector has become much easier, especially after the implementation

of Goods and Services (GST) Tax. This helped in the movement of trucks between inter-

states as check posts were dismantled. Due to GST, there was a 20% reduction in

turnaround time of trucks. Further, the activation of the e-way bill on consignments more

than INR 50,000 in time would free truckers of unnecessary checking by the respective

state government.

Logistics form the backbone of the Indian economy and according to an economic survey

in 2017-18, the Indian Logistics market is pegged to touch around USD 200 Billion by

2020, growing at a compound annual growth rate (CAGR) of almost 10.5%.

Logistics companies are facing an era of unprecedented change as digitisation takes

hold and customer expectations evolve. New technologies are enabling greater efficiency

and more collaborative operating models.

Start-ups drive new business models: New entrants become significant players and take

market share from the incumbents through new business models based on data analytics,

blockchain, or other technologies. One or two become dominant in specific segments.

Last-mile delivery becomes more fragmented, with crowd-delivery solutions gaining

ground. These start-ups collaborate with incumbents and complement their service offers.

Page 21 of 22

Redefining Collaboration: Horizontal collaboration is already happening, especially in

last-mile delivery, but it’s hampered by inconsistencies. Higher levels of efficiency could

be achieved by more consistent standards, defined through the Physical Internet and

increased collaboration, whether in the form of alliances, joint ventures or M&A.

(Source: https://www.pwc.com/gx/en/transportation-logistics/pdf/the-future-of-the-

logistics-industry.pdf )

Page 22 of 22

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