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Indo-Canadian trade, investment sees dramatic growth: Nadir Patel

By Deepak Arora

NEW DELHI, Sept 23: Paul Saltzman, a two-time Canadian Emmy Award-winning film and television producer-director with more than 300 films, had once said “One of the most important lessons I learned is that the goal in life is to integrate the head and the heart.”

This stands true for Mr Nadir Patel, High Commissioner for Canada to India, who has beautifully integrated his head and the heart with tremendous zeal in the past four years to take ties between the two nations to greater heights.

In his nearly four year's tenure as High Commissioner, there has been dramatic all-round growth in Canadian Indian trade and investment and education and aviation ties.

Giving the figures, High Commissioner Nadir Patel said the trade between the two countries was $ 6.4 billion four years ago and in 2017 it reached $ 8.4 billion. Four years agao, Canadian investment into India was $ 4.5 billion and now it has reached $ 23 billion. Today there are 1,000 Canadian companies doing business in India and the figure was 770 four years ago. Now 400 Canadian firms have a physical presence in India and the number stood 270 four years ago.

While 28,000 Indian students studied in Canada four years, it dramatically rose to 124,000 last year. It is estimated to reach 200,000 this year.

While there were no direct flights between the two countries four years, he said now Air Canada has three non-stop flights to Toronto.

In his key-note address at the Annual General Meeting of the Indo-Canadian Business Chamber (ICBC) here on September 14 last, High Commissioner Nadir Patel said we intend to build on the growth momentum of these matrix.

He said the Government's big focus and efforts is on diversification for Canadian companies in markets around the world. With focus on India, Mr Patel said he intends to pay attention on new sectors such as health care, medical technologies, defence and security technologies, infrastructure and smart cities, Artificial Intelligence (AI), Internet of Things (IOT) and Big Data. However, he added, there would be continued focus on traditional sectors that have been successful.

The High Commissioner said: “Canada is globally recognized for its excellence in urban infrastructure and smart cities which includes high-level project management, specialized technical skills and for developing environmentally friendly technological solutions combined with innovative design."

Mr Nadir Patel said the High Commission also plans to aggressively go for branding, advertising and media and social media relations to reach out to those who do not know Canada.

He said "the Government plans to support Canadian SMEs who are looking for support in India. We intend to create opportunities for them to increase their numbers in India."

The High Commissioner also plans to review and reinvigorate efforts at sub-national level in India to support Indo-Canadian trade and investment. In this direction, the Government has changed seven of the nine executives and there would be new Consul Generals in Mumbai, Bangalore and Chandigarh. This would help us in connecting to the Chief Ministers, State leaders, administration, bureaucracy and agencies to boost Canadian investment in Indian States.

Mr Nadir Patel said that educational ties between the two countries have much improved as there has been dramatic increase in number of students studying in Canada. He said the incidental ripple effect of these students on trade and investment is very significant but it is hard to measure unlike the impact of trade and investment on bilateral ties.

"We want to nurture the student community and also encourage Canadian students to come to India. We shall continue to focus on faculty exchanges and the role of Indian Canadian Alumni network."

While praising the role of ICBC in promoting trade between India and Canada, High Commissioner Nadir Patel expressed happiness over the increase in its membership. He said the big growth in trade and investment and the strong educational relationship has been possible because of ICBC Chief Executive Officer Nadira Shah and her team and each and every company member of ICBC who has been an Ambassador in promoting ties between the two countries.

The High Commissioner said all of these developments set the stage for another dynamic year ahead and he looked forward to working with all of Canada’s friends and partners in India.

This year's AGM adopted the theme of 'Women in Business'. On the backdrop of this theme, ICBC felicitated Ms Munira Nagji from Calgary, Alberta for her commitment and dedicated service to the community through her organization called Acts of Love and also hosted a panel discussion to highlight the opportunities, challenges and possibilities of including more and more women in the economy and in the business.

The key panelists were - Anita M George, Executive Vice-President - Growth Markets, CDPQ Le-Luong, MD, Goals Business Solutions (Nurture Growth); Ms. Kashmira Mewawala, Head - Business Development & Chief Ethics Counselor, Tata Capital; Lindsay Margineau, Senior Trade Commissioner, Canadian High Commission; Sudhir Rao, MD, Bombardier Transportation, Akshay Jaitly, Partner, Trilegal and Ms. Atashi Singhania, Chairperson, YFLO.

RBI closely monitoring financial markets along with Sebi, ready to take action if necessary

MUMBAI, Sept 23: The Reserve Bank Sunday said that it along with Sebi is “closely monitoring” recent developments in financial markets and “ready” to take actions, if necessary, as domestic bourses witnessed sudden mid-session plunge last Friday.

“The Reserve Bank of India and the Securities and Exchange Board of India are closely monitoring recent developments in financial markets and are ready to take appropriate actions, if necessary,” the central bank said in a brief statement.

On Friday the BSE Sensex, which opened on a strong footing, suddenly tanked 1,127.58 points, or 3.03 per cent, to hit a low of 35,993.64 in afternoon trade, before staging an equally sharp recovery within minutes.

It finally closed at 36,841.60, down 279.62 points. It saw an intra-day swing of 1,495.60 points.

The broader NSE Nifty shed 91.25 points to finish at 11,143.10.

The indices closed in the red for the fourth day in a row, during which investors lost a massive Rs 5.6 lakh crore.

Overseas investors have pulled out a massive Rs 15,365 crore ($2.1 billion) from the capital markets so far in September, after putting in funds during the previous two months, on widening current account deficit coupled with global trade tensions.

Foreign portfolio investors (FPIs) remained net sellers and offloaded equities worth Rs 2,184.55 crore while domestic institutional investors (DIIs) made purchases worth a net Rs 1,201.30 crore Wednesday, provisional data showed.

The Indian currency has also witnessed a massive plunge in the recent past due to rising trade and current account deficits in the wake of rising crude oil prices.

However, the rupee was bullish on Friday for the second day, rising 17 paise to end at 72.20 against the US dollar.

Sebi relaxes foreign fund rules for non-residents

NEW DELHI, Sept 21: Markets regulator Sebi on Friday issued revised KYC norms for foreign portfolio investors (FPIs), wherein resident as well as non-resident Indians have been permitted to hold non-controlling stake in such entities.

The Securities and Exchange Board of India (Sebi) said it accepted the recommendations by a panel set up to review the rules for foreign portfolio investments, amid concerns in certain quarters that overseas funds might face difficulties in ensuring compliance.

Two circulars pertaining to KYC (Know Your Client) requirements and eligibility conditions for FPIs have been issued.

NRIs, OCIs (Overseas Citizens of India) and RIs (Resident Indians) have been permitted to hold non-controlling stake in FPIs. There would also be no restriction on them to manage non-investing FPIs Sebi-registered offshore funds as well as registered investment managers, according to the regulator.

These entities would be allowed to be constituents of FPIs subject to certain conditions. If single and aggregate NRI/OCI/RI holding is below 25 per cent and 50 per cent, respectively, of the assets under management in the FPI, then such entities would be permitted to be constituents of the FPI.

According to Sebi, FPIs can be controlled by Investment Managers (IMs) which are controlled and/ or owned by NRI, OCI, or RI. In this regard, the conditions include that the investment manager is appropriately regulated in its home jurisdiction and registers itself with Sebi as non-investing FPI.

Among others, a non-investing FPI can be directly or indirectly owned or controlled by a NRI, OCI or RI.

“The restriction that NRI/ OCI/ RI should not be in control of FPI shall also not apply to FPIs which are ‘offshore funds’ for which no-objection certificate has been provided by the board in terms of mutual fund regulations,” Sebi noted.

Existing FPIs and new applicants would be given two years from the date of the new norms coming into force or date of registration, whichever is later. In case of temporary breach, a time period of 90 days would be given to ensure compliance.

The watchdog said that FPIs under category II and III have to maintain a list of beneficial owners and the same has to be provided to it.

Further, additional KYC documentation requirements for beneficial owners have been done away with for government-related entities that come under Category I FPIs.

Beneficial owners are the natural persons who ultimately own or control an FPI. The FPIs have been categorised into three classes based on their risk profile.

Regarding FPIs from ‘high risk jurisdictions’, the intermediaries may apply lower materiality threshold of 10 per cent for identification of beneficial owners as well as ensure KYC documentation as applicable for category III entities.

There is also a framework for identification of senior managing official of FPIs, beneficial owners of listed entities besides requirements with respect to disclosure of personal information.

According to Sebi, senior managing official would mean “an individual as designated by the FPI who holds a senior management position and makes key decisions relating to the FPI”.

In case of companies or trusts represented by service providers like lawyers or accountants, Sebi said that FPIs should provide information of the real owners of those companies or trusts.

If a beneficial owner exercises controls through means like voting rights, agreements, arrangement among others that should also be specified. However, Sebi said that a beneficial owner should not be a nominee of another person.

The new rules would apply equally to those investors using the Offshore Derivative Instruments, popularly known as P-Notes or Participatory Notes.

With regard to KYC documentation for Category III FPIs, Sebi has prescribed that audited annual financial statement or a net worth certificate from auditor should be obtained.

However, Sebi said that exempted documents should be provided during investigations or an enquiry.

“In respect of exempted documents, FPIs concerned should submit an undertaking to designated depository participants or custodians that upon demand by regulators or law enforcement agencies, the relevant documents would be provided,” the regulator said.

Custodians should maintain KYC records in original for at least five years from the date of cessation of the transactions with the FPI concerned. In case any litigation is pending, these records should be maintained till the completion of the proceedings.

The regulator has given six months to FPIs for compliance to new rules, while the non-compliant investors can be given further 180 days to wind down their existing positions.

“Category II and III FPIs registered prior to this circular (existing FPIs) should provide the list of beneficial owners and applicable KYC documentation within six months,” the Securities and Exchange Board of India (Sebi) said.

According to the regulator, a circular regarding clubbing of investment limits for FPIs would be issued separately.

In April, the regulator proposed new norms on KYC and beneficial owner identification but several FPIs had expressed concerns over the proposed changes in rules.

The final guidelines have been prepared by taking into account recommendations made by the panel, headed by former RBI Deputy Governor H R Khan, and public comments on the draft proposals.

People facing problems due to high fuel prices, says Nitin Gadkari

NEW DELHI, Sept 20: High retail fuel prices are prompting India to seek alternatives to curb crude imports and relieve the pressure on the rupee, according to Road Transport Minister Nitin Gadkari, a key member of Prime Minister Narendra Modi’s government.

Fuel “rates are very high and it is a situation where definitely the people are facing a problem,” Gadkari said at the Bloomberg India Economic Forum on Tuesday. “We are going for bio-fuel, electric vehicles, ethanol, methanol and bio-diesel.”

Rising prices of Brent crude, the benchmark for half the world’s oil, has inflated India’s crude import bill and contributed to the widening in the nation’s current-account deficit, a key vulnerability for the economy and one of the reasons why the rupee has been among the worst-hit in Asia amid an emerging-market rout this year.

Gadkari declined to comment on the government’s plan to provide relief on fuel prices, saying it’s for the finance minister to decide on appropriate steps.

The government has so far resisted the temptation of cutting retail fuel prices by reducing taxes to avoid forgoing revenues. But with general election less than eight months away, the administration risks inviting the ire of the people.

Rising fuel costs may fan consumer prices and probably force the inflation-targeting central bank to add to its two interest-rate increases this year. While gains in consumer prices eased below 4 percent in July, India Ratings and Research Pvt., the local unit of Fitch Ratings Ltd., sees inflation quickening to 4.6 percent in the absence of the government cutting taxes on gasoline and diesel.

“Because of crude, we are facing a problem, dollar-rupee fluctuation is there, our imports are high,” Gadkari said. “We have to control the imports and we have to think about import substitute economy,” he said, suggesting a push to more alternatives in order to reduce reliance on petroleum products.

Over-optimistic bankers, slow decision-making responsible for bad loans: Raghuram Rajan

NEW DELHI, Sept 11: Over-optimistic bankers, slowdown in government decision-making process and moderation in economic growth mainly contributed to the mounting bad loans, said former RBI governor Raghuram Rajan in a note to Parliamentary panel.

In a note to Chairman of Estimates Committee Murli Manohar Joshi, he said: “A variety of governance problems such as the suspect allocation of coal mines coupled with the fear of investigation slowed down government decision making in Delhi, both in the UPA and the subsequent NDA governments.”

Project cost overruns escalated for stalled projects and they became increasingly unable to service debt, he said, adding the continuing travails of the stranded power plants, even though India is short of power, suggests government decision making has not picked up sufficient pace to date.

He further said a larger number of bad loans were originated in the period 2006-2008 when economic growth was strong, and previous infrastructure projects such as power plants had been completed on time and within budget.

“It is at such times that banks make mistakes. They extrapolate past growth and performance to the future. So, they are willing to accept higher leverage in projects, and less promoter equity. Indeed, sometimes banks signed up to lend based on project reports by the promoter’s investment bank, without doing their own due diligence,” he said.

Citing an example, he said “one promoter told me about how he was pursued then by banks waving chequebooks, asking him to name the amount he wanted”.

This is the historic phenomenon of irrational exuberance, common across countries at such a phase in the cycle, he said.

Unfortunately, he said, that growth does not always take place as expected and the years of strong global growth before the global financial crisis were followed by a slowdown, which extended even to India, showing how much more integrated the country had become with the world.

Strong demand projections for various projects were shown to be increasingly unrealistic as domestic demand slowed down, he said.

He also pointed to loss of promoter and banker interest for rise in NPAs.

Over malfeasance and corruption in the NPA problem, he said, “Undoubtedly, there was some, but it is hard to tell banker exuberance, incompetence, and corruption apart”.

“Clearly, bankers were overconfident and probably did too little due diligence for some of these loans. Many did no independent analysis, and placed excessive reliance on SBI Caps and IDBI to do the necessary due diligence. Such outsourcing of analysis is a weakness in the system, and multiplies the possibilities for undue influence,” the note said.

On steps required to prevent recurrence rising non-performing assets (NPAs), Rajan suggested that there is need for improving governance of public sector banks and process of project evaluation and monitoring to lower the risk of project NPAs.

Besides, he also made a case for strengthening the recovery process and distance public sector banks from the government.

The Parliament’s Committee on Estimates had invited Rajan to brief it on the matter after former Chief Economic Advisor (CEA) Arvind Subramanian praised him for identifying the NPA crisis and trying to resolve it.

Rajan, who was RBI governor for three years till September 2016, is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth School of Business.

 

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