India's "Make in India" Initiative
By Mr. Arun Sahu, Acting High Commissioner of India to Canada
Make in India, a major national initiative rolled out by Prime Minister Narendra Modi in September 2014, was designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build best-in-class manufacturing infrastructure.
The Government of India has identified five industrial corridor projects across India with strategic focus on inclusive development to provide an impetus to industrialization and planned urbanization. In each of these corridors, manufacturing will be a key economic driver and these projects are seen as critical in raising the share of manufacturing in India's GDP from the current levels of 15% to 25% by 2025.
Smart Industrial Cities are also being developed along the five corridors. These cities are to integrate the new workforce that will power manufacturing and will lead to planned urbanization. With a population of 1.31 billion out of which 767 million falls in the 15-64 age group, India is set to become the youngest country with an average age of 29 years by 2025 and second largest in Internet usage with 462 million users. 150 million more are likely to be added to the middle class by 2025, which will create a consumer market base of US$ 3.6 trillion by 2020 (BCG Report).
India is already the third largest economy in the world at US$ 8.6 trillion by PPP and is expected to rise to US$ 20 trillion in size by 2025. India has an immediate investment opportunity of $1 trillion and it enjoys stable/positive ratings from major credit rating agencies around the globe, which opens huge opportunities for Canadian investors. I hope, like many others, that Canadian investors also seize these opportunities. We, in the High Commission, remain open to working with our Canadian friends.
Specific queries could be directed to:
Invest India, The Ashok, Third Floor, 50B, Diplomatic Enclave, Chanakyapuri, New Delhi 110 021, India,
Telephone No: +91-11-2419 0300 E-mail:firstname.lastname@example.org
The Canada-India Centre for Excellence (CICE) at Carleton University is pleased to publish the November 2016 edition of the Canada-India Innovation Connections. The aim of this quarterly publication is to provide in-depth insights into the most relevant national, bilateral, and multilateral initiatives in the areas of science, technology, innovation, and trade that impact Canada and India.
This edition focuses on renewable energy, GST, Global Innovation Index, and India's digital transformation. If you have any questions or would like to write an op-ed, please contact us at email@example.com.
For a full repository of national and bilateral policies, agreements, and data, or to network with domain experts, please visit the Canada-India knowledge hub at www.knowledgehub.ca.
Quarterly updates on science, technology, trade and policy
On August 17, 2016, India’s government passed the Goods and Services Tax (GST) Constitutional Amendment Bill after it was debated in parliament for almost a decade. The GST will be the biggest reform in India’s indirect tax structure since the economy began liberalizing approximately 25 years ago. The model put forth is similar in nature to Canada’s GST infrastructure, which was studied when designing the Indian tax system. In early September, the central government sent the Bill to the President for his assent, after 16 of 29 Indian states had ratified the legislation. Under the previous system, goods were being taxed at different levels as they moved across state borders. This implied multiple duties and taxes being added under sometimes incompatible systems, and goods were often re-taxed multiple times as they moved around the country and up the value chain. Individual state taxes distort supply chains and add costs as well as complexity to trade in India. The GST will combine the current complex system of indirect central and state taxes into one unified, coherent national tax system. Once implemented, the GST is expected to be an important support for the government’s Make in India initiative as well as the country's overall economic reform agenda. It will also be crucial to demonstrate the BJPs ability to create consensus on important legislation. While global economic growth continues to be weak, this structural change will paint India as a strong, promising economy.
The government has planned for an implementation completion date of April 2017 for rolling out the new indirect tax regime; however, most expect that the full process, including the legislation processing the establishment of the legal framework, as well as the IT infrastructure, will take approximately one year. The overall benefits are increased efficiency and ease of doing business through compliance simplicity in the system, and also the enhanced competitiveness of Indian domestic markets and accessibility to international markets. The benefits can be further categorized by the three parties involved: businesses, central and state governments, and consumers.
GST In India
Many goods will likely be at a lesser cost: For manufactured goods, the current tax regime means consumers pay 25-26% more than the cost of production due to excise duties. With a suggested GST rate of between 18-22%, basic goods are likely to become marginally cheaper.
The GST will act as a transparent tax that is more reflective of the value of the goods and services: The costs of most goods and services are laden with hidden taxes. The planned a GST would enhance transparency of taxes paid in that there would only be one tax applied from the manufacturer to the final consumer.
India's biggest tax reform in 25 years
What does it mean for:
Simple and easy to administer: Using a structured and robust IT system, the GST will be much easier to manage and administer than all other indirect taxes at the central and state levels.
Higher revenue: The implementation of GST will decrease the cost of the collection of Governmental tax revenues and will therefore lead to higher overall revenue efficiency.
Easy compliance: Once a robust and comprehensive IT system is in place, all tax payers will be able to access services on-line (including registrations, returns, payments) which will facilitate a higher degree of compliance and transparency.
Uniformity: The GST will ensure that tax rates and structures will be consistent across the country, thus naturally increasing certainty and ease of doing business in the country.
Benefit to manufacturers and exporters: The phasing out of central sales tax will reduce the cost of locally manufactured goods and services, increase the competitiveness of these local goods and services in the international market and give a boost to Indian exports.
During the week of September 9, 2016, Canada’s Minister of Natural Resources, the Honorable James Carr, led the Government’s first official visit and trade mission to India. The purpose of this visit was to build upon the bilateral energy dialogue established in 2013, and discuss areas to advance engagement.
The accompanying delegation for the trade mission consisted of 20 Canadian experts and academics in oil and gas, renewable energy and electricity. The delegation met with Minister Carr’s counterparts including Atomic Energy Minister of State Jitendra Singh, Power, Renewables, Coal, and Mines Minister Piyush Goyal, and Oil and Gas Minister Dharmendra Pradhan.
Together, they successfully created new partnerships and applications for renewable energy and clean technology. Both countries recognize the growing complementarity in their national and international energy agendas, particularly in oil and gas. They also vowed to continue their efforts towards developing an action plan and critical path for the implementation of specific cooperative energy projects that will bring about measurable benefits for both nations.
Projections for 2020
An increase from 350 million users in 2016, to 730 million users in 2020
75 percent of this growth in Internet usage will come from rural areas and by 2020, Internet is expected to penetrate deeper sections of the country, creating more opportunity for marginalized populations
70 percent of e-commerce transactions will be done via mobile phones. By 2020, India will have an estimated 702 million smart phones in use and mobile phones will emerge as the preferred device for shopping.
Liberal government’s first official visit to India
The Future of Internet in India
The "Jio" factor
India’s largest private sector company, Reliance Industries, launched Jio 4G with over 80% coverage across the country. It is reported to be the lowest priced mobile data network in the world. Data and usage plans will be offered at US$2 a month with no charges for voice calls, or SMS.
The National Association of Software and Services Companies (NASSCOM) along with Akamai Technologies Inc. released a report on the progression of internet usage and technology in India. The report aimed at describing the impact the internet has on Indian society by analyzing current tendencies and forecasting the changes in the landscape by 2020. Internet usage in the country has had massive implications across all sectors, changing the way people interact socially, consume and produce, the way we work, and live day-to-day life. To date, the internet base in the country stands at approximately 350 million users. The internet has especially penetrated in the business and government models, including expansion of e-commerce practice, travel and hospitality, public sector operations, media and economic infrastructure.
Internet consumption in India has already exceeded the USA to become No. 2 globally, making India’s internet user base the second largest after China.
will remain the fastest growing market. However to keep pace with this continual rapid growth, India will need to improve efforts in resolving its massive deficit of high speed Internet. India is currently the world’s largest slow Internet nation. Additionally, as growth continues, there will be stronger need to produce higher, more advanced levels of cybersecurity in upcoming years.
Government of India
Make in India is a national initiative designed to: facilitate investment; foster innovation; enhance skill development; protect intellectual property; and build best-in-class manufacturing infrastructure. www.makeinindia.com
In August 2016, India crossed the 6,000 MW mark in nuclear energy with the synchronization of Unit II of the Kudankulam power plant in Tamil Nadu. According to the Nuclear Power Corporation of India Limited (NPCIL), once the output of Unit II is scaled up to a full 1,000MW in two months, combining all 22 of India’s nuclear power reactors, 6,780 MW of power will be generated.
India is planning to build on its current nuclear objectives with Russia. Indian Prime Minister Narendra Modi said, “In the years ahead we are determined to pursue an ambitious agenda of nuclear power generation. At Kudankulam alone, five more reactors of 1,000 (megawatts) each are planned. In terms of our cooperation with Russia, we plan to build a series of bigger nuclear power plants.”
PM Modi’s nuclear energy goals are not limited to its current partnership with Russia, but rather include building new partnerships and agreements. In June, India and the United States showed an interest in negotiating a deal to finalize the establishment of six new reactors. Additionally, China has expressed strong interest in taking part in the atomic power projects in India in the near future.
Nuclear transformation for poverty reduction
Nuclear power is more than just an alternative electricity source in low and middle-income countries. In India, it has been a critical component of poverty alleviation strategies and outcome. Nuclear energy will not only feed the country’s growing energy demand, but will also give access to safe, affordable, reliable energy to many impoverished cities and villages across the country. Developing nuclear energy sources is the main method of strengthening overall energy security. Being the fourth largest source of electricity generation (next to coal powered, gas and hydroelectric energy) it is likely to become the preferred energy source in coming decades.
India’s Progress in Nuclear Power Generation
Canada continues to be a leading performer on the Innovation Index. In 2016, it inched up one spot from 16th to 15th. However, while India has been improving in the rankings in the past several years, Canada’s ranking on the index has declined, even shifting from the top 10 globally. While Canada is, nonetheless, still higher ranked in innovation compared to India when evaluating the GII as a whole, the countries have a similar ranking on the innovation efficiency ratio with Canada ranking 57 and India 63. This means that the amount of innovation output received for its inputs are similarly low for both countries.
Canada has been consistently strong, achieving top scores in its regulatory environment, financial market sophistication and venture capital and on-line creativity. Canada also has one of the most conducive business and investment climates. Similar to India, Canada also ranks high in universities, with a world-class university network and top quality scientific publications.
Canada’s decline in ratings can be primarily attributed to weak performance in its R&D expenditures, information communication technology (ICT) services and energy efficiency. Canada’s competitiveness is also lagging behind due to a lack of investments from Canadian business in areas that support and enhance long-term competition.
The Trudeau government has acknowledged the need to reform policy that favours innovation and investment, and has made growth driven by innovation a key priority for his government. This means restructuring key areas of the economy including the financial sector, and putting heavier investment in human capital and R&D, two key driving forces of job and wealth creation in most economies. The federal government also plans to increase investment for renewable energy platforms, investment in infrastructure, and to extend its research capacity to create a more stimulating environment for entrepreneurs.
Areas of strength, and necessary improvement
In the past year, India jumped 15 places on the Global Innovation Index, from 81st to the 66th position globally. This database represents 92.8 of the world’s population and 97.9 of global GDP. After 5 years of continuous drop in the ranking, India’s position this year demonstrates significant improvement. Although still relatively low from a total of 100 rankings, the jump is an indicator of the rapid changes taking place within India's economy.
India has shown considerable strength in tertiary education, R&D and in the overall measure of human capital, which saw a rise of 40 spots in the rankings. This reflects the quality of its universities, research outputs, and scientific publications. India ranks 2nd among all middle- income countries in university rankings in terms of excellence in overall educational opportunity. Additionally, graduates in sciences and engineering ranked 8th this year, a value that was missing in 2015, which notably impacted the overall upturn. India has also done very well in building and expanding R&D intensive firms and producing research outputs, ranking third in all middle-income countries in patent families. On the commercial front, India has seen significant growth and expansion in the startup ecosystem, readily available venture capital, and supportive government policies for start-ups.
India ranks among the top 50 economies overall in two pillars: Market Sophistication (33rd) and Knowledge and Technology Output (43rd). India’s ranking in business sophistication (up 59 spots) was mainly impacted by a substantial improvement in knowledge workers and knowledge absorption. Thirdly, India over-performs in innovation relative to its GDP, ranking second on innovation quality amongst middle-income economies. India is still sluggish, however, in comparison to other economies in terms of overall ICT penetration, e-participation, ICT use and e-governance services. Relative weaknesses still exist in the indicators for business environment, education expenditures, new business creations and creative goods and services production. In summary, India has exhibited strong performance in innovation and is a prime example of how policy is improving the overall scope and environment of innovation. This shift marks India as an innovation overachiever, outranking all other South Asian countries.
2016 Global Innovation Index
The Canada-India Innovation Conference was hosted by the Canada-India Centre for Excellence (CICE) in partnership with the High Commission of India on Sept. 23, 2016.
The conference was attended by over 125 policy makers, government officials, academics, and business executives and featured addresses by the Honourable Navdeep Bains, Minister of Innovation, Science, and Economic Development, His Excellency Mr. Vishnu Prakash, High Commissioner of India to Canada, Mr. David Lametti, Parliamentary Secretary to Minister of International Trade, and Dr. Roseann O'Reilly Runte, President and Vice-Chancellor of Carleton University.
In his remarks, Minister Bains highlighted that "Canada and India have much to offer each other by collaborating in the fields of clean technology, cybersecurity and digital infrastructure."
Both Countries Benefit from Canada-India Partnerships
Referring to his recent announcement to build Canada as a global centre of innovation through the federal government’s Innovation Agenda, Minister Bains told conference participants: “I want India to benefit as well. Our countries can stand closely together as innovation nations." According to Bains, India could be Canada’s greatest partner. “The country is poised to become the world’s third largest economy and it’s a nation of young people. Half its citizens are under 25. And its booming middle class is a key driver.”
Panellist Julie Sunday, a Director General at Natural Resources Canada, suggested that international collaboration is key to developing cleaner technologies, and Canadian and Indian businesses can benefit from investing and collaborating in clean energy research and development.
“We are pursuing conversations with India right now to advance some initiatives,” said Sunday, referring to the Canada-India Energy Dialogue, established in 2013 to promote collaboration. She also noted Natural Resources Minister James Carr’s recent visit to India to “broaden our energy dialogue” with government officials in that country.
Canada Has an Important Role to Play
Carleton’s then-Vice-President (Research and International), Dr. Nimal Rajapakse, highlighted that Canada has an important role to play in contributing technologies to India’s smart city vision and already works with up-and-coming companies in India. Powertech Labs, a leading alternative fuels testing and research facility near Vancouver, could potentially work in India in the natural gas sector, for example, and share other resource technologies that are unique to Canada.
Another sector that can benefit from a Canadian-India link is the defence sector, according to Angsuman Rudra, chief executive officer of D-TA Systems, a homegrown defence electronics company in Ottawa. He said several years of incubation were required to make inroads into the Indian market, but large companies in India are beginning to take D-TA Systems products and add their own labour.
To ensure that there is an established platform for such conversations, India's Deputy High Commissioner to Canada, Mr. Arun Sahu, said that "we need to work together to take advantage of the potential of the human mind over geographical boundaries. And this conference is a good beginning".
Harry Sharma, CICE's Manager, said that "we believe that this annual event is a credible platform to help shape the Canada-India innovation agenda. Participation from all relevant stakeholders is a testament to the level of interest that exists. Moving forward, our goal will be to further enrich the conversation by presenting more data, evidence and analysis to help shape innovation and trade policies that are evidence-based.”
platform for policy conversation
Canada-India Innovation Conference 2016
Canada-India center for Excellence
Study of India's Smart City initiative
Wastewater technologies for India
Visit us at Carleton.ca/India
Canada and "Make in India"
Investment Program for Canadian investors looking to invest in India
Innovation Connections: Quarterly publication for updates on innovation related policies, initiatives and projects
KnowledgeHub.ca: an online portal for Canada-India related information, data, and connections
Study of India's carbon emissions
1125 Colonel By Drive
Ottawa, ON K1S 5B6
Acceleration Program to train Canadian companies to enter India
Evidence-based Policy Making in India - A guide to India's policy development
Located in the heart of Canada’s capital, the Canada-India Centre for Excellence (CICE) is a research and training centre committed strengthening ties between Canada and India
The centre works closely with governments, businesses, and academic experts to undertake projects for: