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More layoffs likely as India’s manufacturing sales shrink

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New Delhi, February 27: Despite government’s efforts to attract investment under its Make in India campaign, sales of manufactured goods fell 3.7 per cent during 2015-16 — the first decline in seven years –sparking fears of layoffs and debt default in the months to come.

Spurred by a global slowdown and lack of demand, sales of manufactured goods were falling even before demonetisation, affecting sectors ranging from textiles to leather to steel.

As a result, in the six months to September 2016, engineering major Larsen & Toubro laid off some 14,000 employees. Companies such as Microsoft, IBM and Nokia were also reported to have cut back on their workforce in 2016-albeit on a smaller scale-blaming sluggish demand for downsizing.

In November 2014, just weeks after Prime Minister Narendra Modi launched his Make-in-India campaign, Nokia shut its factory in Chennai, rendering 6,600 full-time workers jobless.

Economists say the government must step in to support the manufacturing sector, which constitutes 15-16 per cent of the gross domestic product (GDP) and supports 12 per cent of the workforce.

Why sales are down? Investment falls, costs and import duties rise, demand contracts

A range of factors including falling investment, increased input costs, and higher import duties have caused demand for manufactured goods to fall, a trend that was visible before demonetisation and has strengthened since.

While the services sector grew by 4.9 per cent in 2015-16, faster than the 3.7 per cent recorded in the previous financial year, manufacturing contracted for the first time in seven years, from a growth rate of 12.9 per cent in 2009-10 to -3.7 per cent in 2015-16, Reserve Bank of India (RBI) data shows.

Small-scale private companies, with yearly annual sales of less than Rs 100 crore, have been more seriously affected as their sales have contracted continuously for the last seven years. Having registered an 8.8 per cent decline in 2009-10, their sales fell by 19.2 per cent year-on-year in 2015-16.

“Our sector is making huge losses as the price of electricity and raw material has gone up,” Shan Ali Syed, owner of a small-scale textile plant in the town of Bhiwandi, 32 km northeast of Mumbai, told IndiaSpend. “Hence, cost of final product also increases, and we are unable to compete with cheaper imported Chinese products.”

“Higher export duty and decline in demand has led to reduction in sales even before demonetisation,” Manoj Kishanchand Ahuja, a Mumbai-based small-scale gold jewellery manufacturer, said. “We were forced to reduce production. So, hiring of workers on contractual basis has also gone down.” He added that most of his business takes place in cash, and post-demonetisation, the situation has worsened.

Investment has fallen because of a decline in demand, leading to lower sales and profits. “New orders recorded a decline sequentially (quarter-on-quarter) as well as on a year-on-year basis and dipped into negative territory,” the RBI said in its latest report.

A cutdown in industrial output for the fourth straight month in December, along with a depressed investment outlook, could lead to more layoffs, industry captains have warned.

On top of that, net loans to the manufacturing sector, which account for 65 per cent of corporate loans, have declined by 77 per cent in the last six years, IndiaSpend reported in January 2017. Large-scale manufacturing units have been the worst hit, recording a fall of 69 per cent.

The fallout: Jobs and companies at risk

If sales do not improve, companies will act to cut costs, manufacturers and traders said.

“The most common way of cutting cost in India is to reduce the workforce,” economist Ila Patnaik, who has served as the principal economic advisor to the government of India, told IndiaSpend. “If the global economy and the domestic market do not improve, we can expect more layoffs in this sector.”

Companies forced to close down due to financial distress will also lay off workers. Closure of 186 industrial units led to net job losses of 12,176 in the manufacturing sector over the last four years, the labour ministry estimated in a December 2015 reply in the Lok Sabha.

Syed blamed the post-demonetisation cash crunch for falling sales as well as a shortage of workers due to mass exodus from cities. “Labourers have to be paid in cash as they don’t have bank accounts. Since we were unable to pay them in cash, the workers have returned to their villages,” he said.

In the first 34 days of demonetisation, micro- and small-scale industries have suffered job losses of 35 per cent and a 50 per cent dip in revenue, an All India Manufacturer’s Organisation study showed as the Indian Express reported on January 7, 2017.

Global upheavals have also caused problems for manufacturers, G.K. Jain, a large-scale manufacturer and exporter of readymade garments, said.

With sluggish growth and high unemployment hitting American and European economies, importers there want to pay lower prices to overseas manufacturers, squeezing exporters’ profit margins, Jain said.

There has been a rise in borrowings by vulnerable companies in the steel sector, the RBI report said. However, steel secretary Aruna Sharma said: “There was heavy investment in public and private steel sector in the past, and the investment takes place in cycles.” She added, “So, once the returns on that investment start coming, there will be big investments again.”

The RBI also noted that Indian manufacturers have collectively run up debt of Rs 6.9 lakh crore. The decline in sales and its impact on profit margins has impacted manufacturing industries’ ability to service their debt. In its study of the financial statements of 1,707 manufacturing companies over the last four years, the RBI revealed that the number of vulnerable companies whose debt-equity ratio is higher than 200 per cent has increased from 215 in 2012-13 to 284 in 2015-16-an increase of 32 per cent. A high debt-equity ratio means a company is aggressively using borrowed money to finance its growth, leading to higher risk for default.

The RBI’s analysis also showed that the debt at risk of default among private manufacturing companies grew nearly four-fold, from Rs 58,800 crore to Rs. 2.1 lakh crore ($32 billion) in the four years to March 2016.

What can be done: Invest in infrastructure, remonetise and increase overall public spending

Economists agree that the government must take steps to undo the damage caused by demonetisation by investing more in infrastructure, remonetising the economy and increasing the allocation for public-spending programmes.

It could take two to three quarters for the effects of the demonetisation-induced short-term shock to wear off and for normalcy to return, Patnaik predicted.

For longer-term support to manufacturing and job creation, new investment and enterprise are a must, economist Ajit Ranade said. “If we need to add two million jobs every month, then we need to create 20,000 to 50,000 new enterprises every month,” he said. “We need a big push in infrastructure.”

By Prathamesh Mulye (Indiaspend.org/IANS)

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Israel PM recreates ‘Oscar’ Moment, poses with Bollywood Celebs

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Mumbai, Jan 19: Recreating the viral ‘Oscar selfie’, which featured several Hollywood stars in one picture, Israeli Prime Minister Benjamin Netanyahu, on Thursday night, posed with Bollywood actors as a sign of the “great friendship” between India and Israel.

Netanyahu was at the ‘Shalom Bollywood’ event in Mumbai, where top stars from the industry were present, including Amitabh Bachchan, Aishwarya Rai, Abhishek Bachchan, and filmmaker Karan Johar.

Israel PM Benjamin Netanyahu met 26/11 survivor Moshe Holtzberg at Nariman House. He also laid wreath at the memorial to 26/11 terror attack victims at Taj Hotel in Mumbai on Thursday morning.

 

Baby Moshe is currently in India, for his first visit back since the 26/11 attacks.

Netanyahu Addressed the India-Israel Business Summit and spoke about how two nations that are as focused on innovation as India and Israel , should come together to “define the future” at the India-Israel Summit he was addressing in Mumbai on Thursday, reports ANI.

Israeli Prime Minister had a packed schedule for the last leg of his India visit. Israel PM met with several Indian CEOs in Mumbai on Thursday morning, where he said that the “future belongs to those who innovate”.

Later in the day he will pay tributes to the 2008 Mumbai terror attack victims. There will be a wreath-laying ceremony at the Taj Mahal Hotel in Mumbai, following which he will visit Nariman House and the Chabad Centre.

Israeli Prime Minister Netanyahu and his wife Sara, reached Mumbai on Wednesday evening as per schedule, after being received by Prime Minister Narendra Modi at Ahmedabad in the morning.

Prime Minister Narendra Modi and his Israeli counterpart Netanyahu along with wife Sara on Wednesday inaugurated ‘iCreate’, an autonomous centre for budding entrepreneurs and start-ups, in Deo Dholera Village, Ahmedabad .

The visit assumes significance given Israel’s reputation as being the global hub for start-ups. The Israeli prime minister also presented Modi a special gift — the Gal-Mobile water desalinisation and purification jeep the two leaders rode at Israel’s Olga beach last year.

The two leaders to a traditional reception at Sabarmati Ashram in Ahmedabad after an 8-km roadshow from the airport. Netanyahu, known as Bibi in Israel, and his wife Sara also tried their hand at the iconic Charkha as Modi looked on.

Israeli Prime Minister Benjamin Netanyahu and wife Sara visited the Taj Mahal on Tuesday afternoon after a brief meeting with Uttar Pradesh Chief Minister Yogi Adityanath. They stayed at the Taj Complex for a few hours, posed for photos and learnt about the 17th century monument.

The Israeli Prime Minister first dropped in at a five-star hotel in Agra from where he directly went to see the Taj. The couple are expected to return to Delhi to take part in the Raisina Dialogue, in which Netanyahu is scheduled to deliver an inaugural speech at 4:30 pm.

Tight security arrangements have been made for the VVIP visit and the Taj, the ivory white marble mausoleum on the south bank of the Yamuna, will be closed for common visitors till the Israeli Prime Minister leaves.

No car or person was allowed to be in a periphery of 500 metres around the Taj since morning.

On Monday, India and Israel signed nine MoUs, including key bilateral agreements in cyber cooperation, film cooperation, science and technology. Speaking on Monday at the joint press conference, featuring the two leaders, Prime Minister Narendra Modi said: “My good friend, Bibi welcome to India, your visit marks a special beginning to our New Year calendar.”

Reciprocating the gesture, Netanyahu called PM Narendra Modi a revolutionary leader and said:” With Modi, I feel like I am in a rock concert. The Israeli premier said the Jews of India never experienced anti-semitism in 2,000 years.

India-Israel MOUs

India and Israel sign MOU on – cooperation in oil and gas sector, a protocol on amendments to air transport agreement, agreement on film co-production, field research in homoeopathic medicine, cooperation in the field of space, letter of intent to invest in India, cooperation in metal battery and cooperation in solar thermal energy.

The Israeli Prime Minister Netanyahu met President Ram Nath Kovind at Rashtrapati Bhavan on Monday Evening around 6 pm.

Updates:

Prime Minister Narendra Modi and his Israeli counterpart Benjamin Netanyahu  holded bilateral talks at Delhi’s Hyderabad House on Monday.

Earlier on Monday, Benjamin Netanyahu has been given a ceremonial reception at the Rashtrapati Bhavan, after which Israel PM and wife Sara Paid tribute to Mahatma Gandhi at Rajghat.

Netanyahu will be accompanied by his wife Sara as they will leave for Agra to see Taj Mahal on Tuesday. On the same day, he will visit Delhi and participate in the Raisina Dialogue, where he is scheduled to deliver an inaugural speech.

Netanyahu will leave for Ahmedabad on the fourth day of his tour and visit the Sabarmati Ashram. The minister will also attend an event at the International Centre for Entrepreneurship and Technology. He will later visit the Centre of Excellence, Vadrad. After which, the minister will leave for Mumbai.

On Thursday, Netanyahu will have a power breakfast with Indian CEOs and attend a business seminar. He will also lay a wreath at Taj Hotel Mumbai and pay a visit to Nariman House – Chabad Centre.

He will also reach out to Bollywood personalities in an exclusive ‘Shalom Bollywood’ event, that aims at exploring business opportunities for Indian filmmakers in Israel.

On Sunday, Prime Minister Narendra Modi set aside protocol to receive his Israeli counterpart Benjamin Netanyahu, who arrived in New Delhi for a historic six-day visit. Modi welcomed Netanyahu with a hug upon his arrival. According to Israeli officials, Netanyahu was pleasantly surprised by Modi welcoming him at the airport. “I very much appreciate the gesture,” Netanyahu was quoted as saying by officials.

A smiling Modi embraced Netanyahu and then shook hands both with him and his wife as they stepped on the red carpet at the airport here.

They both then arrived at Teen Murti Chowk, received by Army Chief General Bipin Rawat and Foreign Secy S Jaishankar on Sunday.

 

Delhi’s Teen Murti Chowk has been renamed Teen Murti Haifa Chowk by PM Modi and his Israeli counterpart Netanyahu. The renaming was done in memory of the supreme sacrifice by Indian soldiers to liberate Haifa in Israel in 1918.

Netanyahu who is accompanied by his wife had a brief conversation with Swaraj after renaming the Teen Murti Haifa Chowk in the capital.

This is the first visit to India by an Israeli Prime Minister since Ariel Sharon came in 2003

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India shouldn’t replicate China’s urbanisation models: NITI Aayog VC

Given India’s diversity, it cannot afford “inequitable and unbalanced urbanisation, said Niti Aayog VC Rajiv Kumar

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Instead of replicating foreign models that may lead to inequitable and unbalanced urbanisation, India needs to create growth hubs across the country, NITI Aayog Vice Chairman Rajiv Kumar said on Thursday.

Given India’s diversity, it cannot afford “inequitable and unbalanced urbanisation”, he said.

“It’s unfortunate that we continuously look for foreign models…

We cannot let India replicate what China has done,” Rajiv Kumar said during the national workshop on “Municipal Finance and Effective & Accelerated Implementation of Smart Cities” here.

He said that development in China had happened only along the coastline whereas other areas had remained backward, forcing millions of people to move inward to their homelands during the Chinese New Year and India cannot have millions of people moving from one part of the nation to the other on festivals like Diwali or Holi.

“To minimise the presence of dualistic structure and to connect villages with all the urban facilities, we need to introduce the concept of ‘rurban’,” he said.

“In order to empower our cities, we need economic-political legitimacy, technologically smart solutions and intellectual legitimacy,” he added.

“Unless we make our cities generators of India, we won’t get intellectual legitimacy.”

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Skilling enterprises, start-up developers key to India’s digital dream: IBM

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With digital transformation comes the daunting task of preparing a workforce for technologies like Big Data, Cloud, Artificial Intelligence (AI) and Internet of Things (IoT) that can address the massive demand coming from governments and businesses in India.

According to a top IBM executive, the time is ripe to start the journey right from schools and universities, leading to up-skilling and re-skilling the enterprise and start-up developers’ community in the country.

Between 2010 and 2030, India’s working population is expected to expand from 750 million to almost one billion.

Image result for artificial intelligence digital transformation ibm

“Without adequate education and training, such population growth poses an increased risk of the emergence of a growing class of under or unemployed. Skill is emerging as the new currency across businesses globally and in India,” Seema Kumar, Country Leader, Developer Ecosystem and Start-ups, IBM India/South Asia, told IANS.

“We believe the industry is no more bifurcated into blue-collar and white-collar jobs. The ‘new collar’ job community is embracing technology rapidly, forging deeper relationships with ecosystem partners and acquiring ‘in-demand’ skill-sets,” Kumar emphasised.

Sensing the urgent need to build a talent pool for the future, IBM recently announced a collaboration with the Telecom Sector Skill Council (TSSC) to spur emerging technology skills in the domestic telecom industry.

The agreement outlines a roadmap to build capabilities in the areas of information and communication technology (ICT) to provide the required and relevant skills for the telecom Industry.

“This collaboration will provide an opportunity to students and young professionals to get skilled in emerging technologies including Big Data, Cloud Computing, IoT and mobile applications that have a huge potential in the telecom sector,” Kumar said.

IBM’s student developers’ programme (career education) that infuses software capabilities that are industry specific and market relevant has helped more than 24,000 students and faculty members develop industry-relevant software capabilities.

Developers are the new marketers and decision-makers across organisations and it has become imperative to make them the centre of the core strategy.

“We also have collaboration with US-based Galvanize and Coursera to offer cognitive and Cloud curriculum to developers to help them equip with new age requirements around data science and Machine Learning (ML), etc,” the IBM executive said.

In 2017, IBM organised “IBM DeveloperConnect Roadshow” in Mumbai, Bengaluru and Hyderabad where it offered day-long workshops that combined technical sessions and hands-on activities, led by technical experts from IBM around data science, ML and Cloud.

“We are going to organise the ‘IBM Code’ day for developers in Bengaluru on February 14 which is another step towards introducing the developer community to IBM technologies,” Kumar told IANS.

IBM also has an online learning platform Cognitiveclass.ai that offers several online courses in the area of data science, AI, big data and Blockchain.

“We also work with external Edtech partners who offer structured courses and curriculum based on these technologies. For instance, Jigsaw Academy is leveraging the IBM Data Science experience platform and CognitiveClass.ai to offer advanced customised learning to students and professionals on data science,” Kumar noted.

Similarly, GlobalKnowledge is a training partner offering detailed courses on Cloud and cognitive development, also enabling professional certifications in these domains.

“Today, we are witnessing start-ups adopting Cloud at a fast pace, looking at creating enterprise class solutions and use best practices at a competitive cost, more agile systems and greater efficiency,” Kumar said.

IBM Cloud Private is an integrated Cloud platform built on a Kubernetes-based container architecture.

It is a pre-packaged offering with enterprise-grade content, bringing Cloud native environment to Private Clouds so that start-ups can maintain control over core data while giving developers the flexibility to easily update and launch new apps in a secure manner.

“We foresee start-ups in the FinTech, e-commerce and HealthTech space leveraging IBM Cloud Private for on-premises software portfolio or easily integrate next-generation data and software optimised for Cloud,” Kumar added.

By : Nishant Arora

(Nishant Arora can be contacted at [email protected])

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