The CII Agenda 2017-18 · PDF fileCII to spearhead the effort of drafting a services policy in line with ... employment in all sectors to allow employment of skilled labour for seasonal

The CII Agenda 2017-18

2© Confederation of Indian Industry

ECONOMYTHRIVING IN BALANCE

© Confederation of Indian Industry 3

Executive Summary

● We expect GDP growth for this year at 7.5-8%.

● Industry is committed to GST and we are ready for it.

● We can create 5 million jobs each year.

● Solution to NPAs can no longer be postponed.

● CII requests for lower interest rate structure.

● Corporate income tax should be brought down to 25%

and later to 18%.


GDP growth needs to be stepped up

Source: MOSPI, CII Estimates

5.5

6.5

7.2

7.9

7.1

8.1

9.1

10.1

0

2

4

6

8

10

12

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

GDP growth

1% additional growth in the next three years will take GDP

growth to 10%


How will 1% Additional Growth each year be achieved?

● One, Goods and Services Tax expected to be unrolled from July 1. This will

add about 1% to GDP growth

● Two, Women Parity can be a huge boost to growth. Increase in Women

participation in the labour force can raise GDP by $700 billion

● Three, with more people moving to cities, urbanization process will create

more economic activities like construction.

● India’s infrastructure mission can add significantly to GDP. Indian Railways,

Sagarmala and Bharat mala projects alone will add Rs 30 Trillion in

investments over the next 5 years

● Five, Other factors, such as Defence spending, Aviation services growing,

consumer demand increasing and investors confidence rising will add to

further growth

CII Film: https://youtu.be/ZNhsK5M5-CQ


Near Term Economic Outlook

What’s working?

• Global investors sentiments positive –India remains Strong FDI destination

• Normal monsoons can propel agriculture sector growth.

• GST implementation will encourage tax compliance and formalization of economy.

• Budget announcements around infra and rural spending expected to create investment demand

• Consumption Demand recovering

What’s not?

• High NPAs and over-leveraged position in some of the sectors may inhibit performance of the overall economy.

• RBI has highlighted upside risks to inflation, implying inclination to hike interest rates

• Predictability and Stability of Policies including taxation

• Rise in global protectionist policies leading to uncertain external trading environment.

Given the growth drivers and risk factors, on the balance, India’s economic outlook remains positive. Proposed reforms by the government is expected to prolong India’s position as the fastest growing major economy of the World. With this background CII expects GDP growth of around 7.5-8.0% in 2017-18


Country Risks

War / Peace and Security Risks

including Border Disputes and

Terrorism

Climate Change, Natural Disasters

Cyber Security Threats

Water Disputes, Water Crisis

Public Health Crisis – NCDs,

Pandemics

Technological Obsolescence


GDP Growth Forecast: 2017-18

Source: MOSPI, CII Estimates

CII Estimate for GDP growth for 2017-18 is 7.5% – 8.0%

5.5

6.5 7

.2 7.9

7.1 7.5 8

.0

1.5

5.6

-0.3

0.8

4.4

3.0

1.5

5.6

-0.3

0.8

4.4 4.0

6.8

4.6 4.7

8.4

10.3

6.77.5

7.0 7.0

8.5 8.8

7.28.2

8.5

-1.0

1.0

3.0

5.0

7.0

9.0

11.0

GDP Growth- Trend and Projection

(% Y-o-Y, 2011-12 prices)

Real GDP Agriculture Industry Services


OpportunitiesAgriculture

Source: IMD and CSO

Agriculture has potential to achieve

significant productivity gains.

Recommendations:

1. States to adopt the Model Act

and notify rules. This will help

deliver higher prices to the

farmers and competitive price to

consumers.

2. Promote crop based clusters and

aggregate farmers into producer

organizations.

3. Adopt Success story of Madhya

Pradesh Model of Agriculture -20

-15

-10

-5

0

5

10

2013-14 2014-15 2015-16 2016-17

Agriculture dependence on

monsoon

Monsoon deviation from normal (%)

Agriculture growth (% yoy)


OpportunitiesIndustry

Source: CII Mission Manufacturing

Aerospace and Defence

Auto and Auto components

Chemicals Engineering

ESDM Pharmaceuticals

Food Processing Textiles

Focus Manufacturing Industries CII identified a few sectors that

have the potential to be number

1 or 2 in the World.

Select Recommendations:

1. Stable, co-ordinated policy

regime transitions with

adequate lead times and

certainty

2. Leveraging government

procurement

3. Harmonize Indian standards

with international standards

4. Incentives to scale-up size of

manufacturing units from

small to large


OpportunitiesServices

• Services sector contributes over 60% of India’s GDP and has considerable

weight in trade, FDI inflows, employment and skilling.

• India is the eighth largest services exporter in the world, as its services

exports grew almost 10-fold in the last 15 years

• India’s share of global exports of commercial services increased to 3.3% in

2015 from 1.2% in 2000

Recommendations:

1. Need for trade facilitation in services to overcome barriers to flow of trade

in services

2. Develop a roadmap for new and emerging services such as railways, sports,

e-commerce, R&D and cyber-security

3. CII to spearhead the effort of drafting a services policy in line with the

manufacturing policy that will facilitate the growth of the sector.


ChallengesReviving Investment

Source: xxx

34.3

33.4

31.2

30.3

29.2

26

27

28

29

30

31

32

33

34

35

2011-12 2012-13 2013-14 2014-15 2015-16

Gross fixed capital formation (% GDP)• Around 30% of the

infrastructure projects are

currently stalled, either for

want of completion, payment

disputes or lack of demand.

• Risk sharing in PPP projects is

heavily biased in the favour of

sovereign.

• Ensure that large projects are

awarded to private sector

after first securing the key

sovereign clearances for PPPs.

• Constitute empowered,

multi-disciplinary

Infrastructure PPP Project

Review Committee (IPRC).


ChallengesNeed for banking reforms

Source: RBI

17.0

14.1 13.9

9.0

10.9

5.1

0

2

4

6

8

10

12

14

16

18

20

11

-12

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

Bank credit (y-o-y growth)

• Resolve the NPA problem by a

combination of measures such

as asset transfer to ARCs, part

conversion of debt to equity

and getting strategic investors

to loss making companies.

• Once free of stressed assets,

banks will be free to increase

their lending.

• A phased dilution of

Government stake in public

sector banks, from 58% to 51%,

can then be implemented


ChallengesEmployment

Source: CII estimates calculated from NSS and Labour bureau surveys

• Need to create more jobs in

industry and services

• Higher growth along with

conducive policies will generate

more employment.

• Labour bureau data suggests

that 3.7 million jobs were

created per annum during

2011-12 to 2015-16.

• This number can be increased

to at least 5 million.

• CII has suggested re-

instatement of fixed term

employment in all sectors to

allow employment of skilled

labour for seasonal work.

56.652.9

47.5 46.3 45.6

18.7

22.724.6

22.7 22.4

24.7 24.328.0

31.0 32.0

0

10

20

30

40

50

602

00

4-0

5

20

09

-10

20

11

-12

20

13

-14

20

15

-16

Sectoral share in employment (% )

Agriculture Industry Services


ChallengesEase of Doing Business

EoDB continues to remain a major issue in India. In the Doing Business report of the

World Bank, India stands at 130th Position out of 190 countries.

CII recommendations include:

1. Moving towards zero physical interface for all clearances / NOCs

2. Ensuring onus of clearances is with the govt.

3. Ensuring a mechanism of deemed approval in case clearances / NOCs are not

granted in stipulated time

4. One joint inspection instead of multiple ones

5. Self – Certification / Third Party Certification

6. Reducing the number of forms required by introducing a Common Application

Form (CAF)

7. Sharing best practices among states

8. Tracking effectiveness & implementation of reforms:

• Conducting ground-level impact assessment of EoDB reforms

• Working with State governments in ensuring effective implementation of

reforms- With special focus on ‘Jumpstart needed’ category states

• Launching of CII EoDB facilitation portal


ChallengesTax compliance

Tax compliance needs to increase.

• Out of 13.94 lakh registered companies in India, only 5.97 lakh filed IT returns

for 2016-17

• Out of 5.6 crore individual enterprises and firms, 1.81 crore filed returns

• Out of 4.2 crore individuals in organized employment, 1.74 crore filed returns

for salary income.

GST to improve tax compliance due to greater formalization of businesses

Recommendations on direct tax that will encourage greater compliance:

• Extend the reduction in corporate tax rates from 30% to 25% for all industries

and not only for MSMEs as is done at present.

• Further reduction in corporate tax to 18% accompanied by effecting a sunset

clause for all incentives. Eventually there could be a removal of all incentives

and concessions.


CII Theme 2017-18

© Confederation of Indian Industry

CII Theme 2017-18

Inclusive India

India Ahead

Responsible India

INDIA TOGETHER

18


CII Theme 2017-18

• Skills Development & Training

• Affirmative Action

• Women Parity

• Jobs Creation

1. India Inclusive

• Improving Competitiveness

• Expanding Global Engagement

• Contributing to Wealth Creation

• Driving Innovation

2. India Ahead

• Sustainability

• Corporate Social Responsibility

• Governance and Transparency

3. Responsible India


Inclusive India


India Inclusive: Gender Parity

CII InitiativesCII Recommendations

● CII IWN Gender Diversity Awards –to recognize and reward gender diversity practices

● Launch Shtri Shakti Abhiyan –harnessing women’s potential through skill development to bolster national economy.

● Capacity building and mentoring through women exemplar programme

● CII will announce a Pledge for Parity to be adopted by CEOs

● CII IWN – ISB orientation programme on board leadership for women leaders.

● Policy framework on flexi-working hours

● Conducive environment for professional development

● Skill development for second career opportunities

● Bringing Parity at work-place


Inclusive India: Skills Development and Training


● Aligning training to National Skill Qualification Framework (NSQF) & encourage Industry to hire certified workforce

● Notification of the Apprentices Act by State Governments

● Sensitization of vocational education through primary school & families

● Faculty Development programmes coupled with regular Industry exposure

● Transnational standards for international mobility of skilled Indian talent

● Setting up of 5 industry led Multi-Skill Training Centres across India -Trainees, Trainers and Assessors

● Opening new Model Career Centres to provide career guidance and employment to youth (3 running successfully in Mumbai, Gurugram and Chennai)

● Working with States Skills Mission


Inclusive India: Primary Education

CII Recommendations

● Define Learning Outcomes for States

● Capacity Building and Professional Development of Teachers

● Pedagogy and Curriculum Reforms to include Soft Skills Development

● Support from SCERTs for design, pedagogy, training the teacher, baseline and end line assessment, joint monitoring.

● Support the States to undertake learning assessments at scale with data analysis and report generation of the same at various levels.

● Promoting Thought Leadership on quality in education, learning outcomes, teacher development, stakeholder engagement, school leadership, state governance and structures.

● Online Portal for Sharing of Best Practices on School Education

● Focussed training programmes for States on Capacity Building for Teachers

● Supporting Atal Tinkering Lab initiative: identify industry partners to offer mentorship and guidance to these schools.

New initiatives of CII


Inclusive India: Healthcare

CII Recommendations

● Articulation of deliverables in PPPmode.

● Enabling environment for Funding,tax incentives etc as applied to aPPP project.

● Enable Utilization of existingGovernment infrastructure in PPPmode

● Develop governance mechanism and template for Concessionaire Agreements/ contracts.

● Develop a roadmap for Ayurvedasector and integrate it to mainstreamhealthcare.

● Promote Indian Healthcareservices globally;

� International Ayurveda Conference 2017

� CII footprint at Arab HealthFeb 2018

● Promote Thought LeadershipPlatforms for;

� Public Health Conference2017

� 14th India Health Summit 2017

New Initiatives



● Buyer Seller meets to link SC-ST entrepreneurs to industry

● Setting up Business Facilitation Centers in partnership with National SC/ST Hub

● Capacity Building and Mentorship of SC-ST entrepreneurs

● Vocational training and placement of SC-ST youth through CII Multi Skill Hubs, Skill Gurukuls and members initiatives

● Sensitization & dissemination of information on Affirmative Action through Webinars & Workshops

● Ease of finance for SC-ST entrepreneurs

● Government of India Guarantee for loans to new SC-ST entrepreneurs

● Waiver of minimum number of years operations for vendor registration as supplier by SC-ST entrepreneurs

● Begin awareness-raising of the benefits of addressing Affirmative Action in the market place, which in turn can increase the number and capacity of consumers from SC/ST’s communities.

India Inclusive : Affirmative Action


India Ahead


India Ahead: Improving Competitiveness

● Infrastructure push – unlock the 30% of infrastructure projects currently

stuck: Implement Dr Kelkar Committee recommendations

● Resolve the NPAs of large projects. Consultative Committee approach with

specific time frame – 6 months

● Creation of a digital infrastructure where comprehensive data on

indebtedness of Corporates is available to Financial Institutions (similar to

CIBIL for personal credit rating).

● Push for structural reforms at States Level on labour, land and Agriculture.

An engagement model similar to GST Council may be considered to build

consensus among States

● The above three will trigger consumption, which will in turn start the virtuous

cycle of growth.


India Ahead: Improving Competitiveness

New initiatives of CIICII Recommendations

● CII-CSIR initiative on PPP R&D inpriority sectors on risk sharingmodel

● Scaling-up CII-GoI JV CompanyGlobal Innovation & TechnologyAlliance (GITA) to attract more R&Dinvestments by industry

● Scaling up CII-GoI PM FellowshipScheme for Doctoral Research toattract more investments byindustry in academic institution

Higher Education, R&D and IPR

● Introduce upfront risk-sharingR&D funding to replace currentTax incentives

● Reallocate Government's R&Dspending to increase highereducation institutions’ share by10 times

● Provide guarantee to financialinstitutions and banks to treatIntellectual Property as amortgageable / collateral security


India Ahead: Innovation and Entrepreneurship

CII initiativesCII Recommendations

● CII-DIPP National Innovation Task Force to improve the innovation ecosystem

● CII-NITI Aayog Initiative “India Innovation Index” to measure and rank States on Innovation ecosystem

● CII-DIPP Initiative on “Start-up –Corporate Business Connect”

● CII’s National Start-up Center at Amaravati, the New Capital of Andhra Pradesh

● Upgrade the parameters of Innovation Ecosystem

● Special incentives / package for MSMEs to be more innovative

● Special incentives / package for start-ups in manufacturing sector


India Ahead: Expanding Global Engagement

New initiatives of CIICII Recommendations

● Need to fast-track the conclusion of EU-India FTA and explore the possibility to expanding exports to North America.

● India’s services exports basket is highly concentrated –develop an alternative non-visa dependent model of services exports

● States needs to play more pro-active role and prepare their own export-strategy

● Prepare a National Standard Strategy in collaboration with Government and Standard Setting bodies

● Prepare Services Exports Strategy focusing on – tourism , medical value tourism and education services.

● Work with states to Formulate their export strategies.


Responsible Industry


Responsible Industry: Sustainability

CII initiatives

● Green affordable housing, schools, villages and railway stations

● Carbon footprint study for states

● Green product certification GreenPro

● Green supply chain

● Water audits for railways stations and buildings

CII Recommendations

● Guidelines on implementation of Waste Management Rules, providing role clarity and correct interpretation of various clauses, need to be designed.

● Government should encourage green buildings, in terms of offering higher FAR (Floor Area Ratio), faster environmental clearance for CII- IGBC (Indian Green Building Council) projects

● Government should encourage greening of industrial process, especially SMEs.


Responsible Industry: Corporate Social Responsibility

CII initiativesCII Recommendations

● Identify pool funded projects

through CII Foundation for scale

and impact

● CII Business Impact Awards to

recognize performance/ impact

achieved by projects supported

through CSR

● To assist and educate MSMEs on

CSR compliance

● No further controls and no more

mandatory conditions to be

included into the Act with respect

to CSR.


Responsible Industry : Corporate Governance


● Continue its focus on promotinghighest standards of corporategovernance practices

● Promote voluntary compliance

Pass the Companies Amendment Bill (2016)

● exemption to private and unlisted closely held private companies from some rigorous provisions of the Act

● Increase the list of activities permissible under CSR

● Removal of requirement of auditor rotation for private companies

● Removal of criminalization of offences.

● Remove contradictions between SEBI’s Corporate Governance Provisions and Companies Act 2013


Responsible Industry : Governance & Transparency

CII Initiatives

● Set up a Centre of Excellence on Governance with members’ support.

● Strengthen international collaboration with Ethisphere, in the area of ethics and compliances.

● Last year, two sectors were studied to bring in Ethics and transparency healthcare and real estate. This year two new sectors will be examined-eg. Education.

● CII Model Code of Conduct increase no. of signatories from the present 400 to at least 1000 in this year.

● Introduce Guidelines on Good Corporate Citizenship amongst members.

● With the help of GE and Indian School of Business, run a week long programme on Compliance Management to help increase number of dedicated Compliance Officers.

● Launch a Forum for Compliance Officers in the Country.


Responsible India: Diversity management, Disaster Management

CII Initiatives

Diversity Management

• Promote, advocate and enable industry to create inclusive workplaces

• Offer a package of services for inclusion of Persons with Disabilities at workplace

Disaster Management

• To promote and strengthen the online platform to enable effective, coordinated and collaborative efforts by industry during disasters.

• Making disaster preparedness and response more robust by developing capacities, SOPs, etc and building a cadre of industry volunteers to drive efforts during disaster .

CII Initiatives


India Together: Inclusive. Ahead. Responsible

New Taskforces that will take CII Agenda forward in a focused manner.

1. Agriculture Income Tax

2. Judicial Reforms

3. Cyber Security

4. Security and Privacy

5. Heal from India

6. Justice for Common Man

7. How to make Tax Compliant

8. Globalisation: Can India Lead?

CII Taskforces

CII Theme 2017-18

India Together: Inclusive. Ahead. Responsible

Documents

The CII Agenda 2017-18 · PDF fileCII to spearhead the effort of drafting a services policy in line with ... employment in all sectors to allow employment of skilled labour for seasonal