CII Mission Manufacturing Jan-Mar 2018

QUARTERLY
Mr Chandrajit Banerjee
Director General, CII
Message from
VOL.2|ISSUE1,JANUARY-MARCH2018
The Union Budget 2018-19 has adopted a
two-pronged approach – to provide a boost
to the economy while taking measures to
enhance welfare expenditure for the poor. A
slew of measures for a more efficient
management of the food economy,
intensifying infrastructure investment,
continuing reforms in the financial sector,
incentives for start-ups and MSMEs,
encouraging Make in India, digitization, and
e-governance initiatives to improve ease of
doing business, among others – are
CII has been advocating on four
broad pillars i.e. building robust
infrastructure, reducing cost of
inputs, workforce development
and promoting innovation and
R&D. In this regard, the Budget’s
proposal for encouraging high-
end technologies is a forward-
looking initiative. The
Government's move to double
the allocation on the Digital
India programme will help
research and skilling in
Robotics, Artificial Intelligence
(AI) and Internet of Things (IoT),
among others.
Supported
by
Inside
01
Special
Feature
New Industrial Policy
Preparing for future
industries
05
03Policy
Focus
11 Budget 2018: Maintaining
manufacturing momentum
Mr Vikram Golcha
Co-Chairman
CII National MSME Council
Dr. Sunil Jha
Associate Professor
Department of Mechanical
Engineering, IIT, Delhi
04Leaders
Speak
18
21
02
CII Mission
Manufacturing
Initiatives 05CII ASCON
SURVEY
08
09
Public Procurement for
Engineering: Preference
to Local Content
CII - DACS: Accelerating
SME Participation in
Defence Manufacturing
15
16
More for MSMEs
Setting it Right: GST
E-way Bill on Roll out
Economic recovery
gathers momentum
in Q3 Fy18
23

NEWSLETTER
designed to strengthen the major growth
drivers and would go a long way towards
facilitating the path of a GDP growth rate of
more than 8%. Many of the measures
announced in this Budget such as market
linkages for the rural economy, incentives for
new jobs, fixed term employment, enhancing
the quality of education, including teachers
training, and addressing healthcare access
are in line with CII recommendations.
To enable India to leapfrog into the digital
age, CII has been advocating on four broad
pillars i.e. building robust infrastructure,
reducing cost of inputs, workforce
development and promoting innovation and
R&D. In this regard, the Budget’s proposal for
encouraging high-end technologies is a
forward-looking initiative. The Government's
move to double the allocation on the Digital
India programme will help research and
skilling in Robotics, Artificial Intelligence (AI)
and Internet of Things (IoT), among others.
The initiatives on National Programme on
Artificial Intelligence to be set up by NITI
Aayog, the 5G test-bed in IIT, Madras and the
mission to encourage Big Data, Cybersecurity
and Robotics announced in the Budget will
help promote Industry 4.0. All these would
lay the foundation for the proliferation of
advanced manufacturing in India while
creating new skills and jobs in the country.
Investment in human capital through
education and skill development is very
important for a sustainable economic
progress and for building a prosperous
future. A new initiative of ‘Revitalizing
Infrastructure and Systems in Education’
(RISE) is anticipated to increase research
investments and infrastructure in higher
education institutions with a significant
outlay of Rs.1,00,000 crores over the next
four years. This is in line with CII’s
recommendation to encourage research in
academia. CII is also happy to note the
launch of the Prime Minister’s Research
Fellowship Scheme to provide fellowships to
1000 engineering students.
The move towards a flexible employment
policy that protects the interests of both the
employer and the employee would go a long
way to boost investment and promote jobs.
A major tax reduction has been announced
for MSMEs by lowering the corporate tax rate
for enterprises with an annual turnover of up
to INR 250 crores to 25%. The lowered rate
would provide more cash to units to grow
faster and create more jobs. The Finance
Minister would have done well to extend the
same concession to corporates of all sizes as
well. One of the key demands of industry has
been lowering the corporate tax rate to 18%
while phasing out exemptions.
Overall, the Budget reflects a pragmatic
approach and displays a vision to drive the
economy back to the path of inclusive
growth.
The current issue of Mission Manufacturing
Quarterly focusses on the key budget
takeaways for manufacturing sector and
pending sectoral agenda.
I sincerely hope that this is of use to you
02
Many of the measures
announced in this Budget
such as market linkages for
the rural economy,
incentives for new jobs, fixed
term employment,
enhancing the quality of
education including teachers
training, and addressing
healthcare access are in line
with CII recommendations

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Message from Executive
Director, Manufacturing & MSME
03
Ratika Jain
Executive Director
Manufacturing & MSME
At the present juncture, there is optimism
about the economy. After a period of brief
decline in growth, India posted GDP growth
of 7.2 per cent in the October-December
(Q3FY18) quarter. A broad-based
improvement across key sectors, especially
in industrial GDP, led by the manufacturing
sector, has supported this rebound.
Exuding confidence in the country’s
economic health, the Government has set a
target of US$ 5 trillion for the economy by
2025. It is envisaged that 20 per cent of this
target, or US$1 trillion, will come from the
manufacturing sector. For the target to be
realized, the Indian manufacturing sector,
which currently stands at approximately US$
350 bn, will have to grow at a sustained rate
of growth of 16 per cent, year on year.
Achieving the targeted rate will require
embarking on a new, steeper gradient for
manufacturing growth.
What will this entail?
The CII Champion Manufacturing Industries
Study 2025 distilled a formula for reaching
this aspirational growth trajectory in the
form of a conducive policy eco-system
(national, state and local), enabled market
access and ensuring robust firm-level
competitiveness. While many of the study’s
policy recommendations, at both the
sectoral and industry levels, have been
accepted and assimilated by the
Government, it is imperative that the thrust
now shift to embracing the shape-shifting
megatrends (globalization, digital
revolution, knowledge economy, climate
change/resource scarcity and responsible
behavior) that are defining the world
we live in.
The effects of disruptive technologies and
the power of the digital economy, which
have already had an impact on some
sectors, are now being felt on others.
Technologies are altering the nature of
demand, causing shifts in business
relationships and impacting profitability
across value chains. Further, it is noteworthy
that in most economies, the evolution from
middle to high-income status involves the
transition from a technology-improving
economy to a technology-generating
economy. India, too, will need to pursue
this path.
Advanced techniques and technologies are
changing the game of manufacturing. Be it
the ubiquitous deployment of sensors,
simulation techniques, intelligent robotics,
augmented and virtual reality, big data
analytics, additive manufacturing/3D printing
or artificial intelligence, the traditional tools
of the manufacturing trade have undergone
a transformation and there is now a new
manufacturing playbook; a new playbook
with many challenges but also many
opportunities.

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04
In CII’s view, India’s mode and model of
adoption of Smart Manufacturing will
ultimately be driven by the resultant benefits
that these technologies enable, as opposed
to the technologies for their own sake. The
positives of transitioning to smart will be
that India will be one step closer to achieving
the US$ 1 trillion target, coupled with a host
of new job opportunities that will unfold, not
only domestically but also globally. Greater
exports, better opportunities to participate in
global value chains, improved sustainability
through harnessing of resource efficiencies,
increased reliability of assets and greater
security are gains that can be expected to
accrue from this transition. At the firm level,
smart manufacturing will enable speed to
market, scale, quality, productivity and mass
customisation. The prime peril of not
pursuing the ‘smart’ journey will be a
potential loss of global market share due to
increased reshoring and competition from
manufacturing powerhouses.
Technology, however, is only one side of the
coin for realising accelerated growth in the
manufacturing sector. The other major game
changer, especially in the Indian context, will
be ensuring connectivity – both physical and
digital - to enhance speed to market. It is,
therefore, with much anticipation, that the
initiatives being undertaken by the
government towards creating a multimodal
logistics network with streamlined and
seamless movement of goods are being
closely watched.
In terms of infrastructure connectivity,
improvement in road and rail connectivity to
ports and efficient implementation of the
initiated and defined industrial zones (SEZs,
NIMZs and industrial parks), smart cities and
industrial corridors projects by greater
alignment across the center, state and local
bodies would assist in integrating,
monitoring and developing a conducive
environment for industrial development.
From CII’s standpoint, the key enablers of
smart manufacturing are digitalized
processes, connected assets and closed-
loop virtual platforms. Therefore, building a
robust and secure digital infrastructure will
be paramount to promoting advanced
practices in manufacturing.
Global standards are also taking center-
stage in this phase of globalization. Today,
more than ever, the world needs global
standards to enable the creation of products
and services that will be implemented and
used by businesses globally. Further, in
addition to attracting and retaining talent the
ability of organizations to assimilate new and
unfamiliar skill sets in order to remain
competitive will become increasingly
imperative. It will become incumbent for
firms to start investing in critical thinking,
problem solving and creativity to leverage
the opportunities that this technological
revolution will enable. Creating an ethos of
lifelong learning has already become the
accepted order of the day.
To support this transition, CII, jointly with the
Department of Heavy Industry, Ministry of
Heavy Industries & Public Enterprises,
Government of India will shortly be
organizing a roundtable to formulate a
national action plan for the Indian version of
Industry 4.0, referred to as Samarth Udyog.
Watch this space

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05
Special Feature
New Industrial Policy
Preparing for future industries
India has made several strides since the last
industrial Policy of 1991. Over the years, the
Indian economy has outperformed other
emerging economies and risen on various
global indices. Today, India is at an inflection
point as it was in 1991. Now it is a resurgent
India aspiring for its rightful place on the
world stage. Several decisive reforms and
initiatives have prepared the ground for a
higher growth trajectory.
Notwithstanding, Indian industry still faces
multiple challenges. There are changes
happening globally across multiple
dimensions. Global mega-trends like
Industry 4.0, changing dynamics of global
value chains, rise of the shared economy and
servicitisation present newer opportunities
and challenges. The boundaries between
manufacturing and services are getting
increasingly blurred requiring recalibration of
the traditional mode of manufacturing-led
development. Long-term enablers that focus
on job creation by harnessing the mega-
trends and business models at the intersection
of services and manufacturing are key to
future development and requires a new
industrial policy to address existing challenges
and prepare Indian industry for the future.
Source: DIPP
Need to address challenges
High Compliance
cost – both time
and resource
Multiple IDs and
siloed systems
to ensure
compliance
Ease of trade
Inadequate
access to capital
High cost of
resources –
land, power etc.
Poor technical
know-how
Inadequate
high-quality,
reliable
industrial
infrastructure
High upfront
construction
cost
Limited ready-
built factories
Rigid labor laws
Insufficient jobs
for 10-12
million
additional
annual
workforce
Limited
preparedness
forautomation
Weak
Commercializati
on of R&D
Silo-ed efforts
of R&D across
public sector
Low spend on
R&D by the
private sector
Preparedness
for next-gen
tech
Lack of robust
standards
ecosystem
Weak role for
Indian SMEs
Quantum
of FDI vs. Quality
Complex
Business
Environment
Low MSME
Productivity
Inadequate
Industrial
Infrastructure
Skill deficit and
challenges forjob
creation
Slow pace of
technology
adoption by
domestic firms
Low share
of Indian
exports in
Global Value
Chain (GVC)

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06
Draft Industrial Policy-
Vision, thrust and aspiration
Six Pillars of the Draft New
Industrial Policy
It is with this backdrop that the draft New
Industrial Policy has been evolved. The New
Industrial Policy has, as its core agenda, the
enterprises of New India. The aspiration is to
create a globally competitive industry which
is equipped with skill, scale and technology.
To achieve this, the draft policy recognizes
the criticality of enhancing the
competitiveness of Indian Industry and is
centred around preparing for future
industries, modernizing existing enterprises
and infrastructure, and strengthening
enablers to equip Indian industry.
Innovation, enhancing ease of doing
business and world class infrastructure are
fundamental to achieve this. The policy has a
strong focus on making doing business
simpler and taking this to the district level.
Promoting India as a hub for emerging
technologies is another underlying objective.
Increased focus on R&D, focus on futuristic
technologies and building an innovation
driven economy will help the country take on
as well as adopt technology disruptions.
The draft policy also focusses towards
greater access to affordable capital,
industrial infrastructure and better skilled
workers and other interventions to enhance
competitiveness.
Make Doing Business Simpler
The draft policy aims to shrink time-to-
market, reduce the cost of compliance for
the industry, aid the domestic manufacturing
and strengthen ease of doing business
measures at the state and local bodies. The
draft proposes interventions to address ease
of doing business across the business life-
cycle through a two-pronged approach: One,
eliminate the onerous and non-essential
regulations that mandate government’s role
in licensing and supervision by introducing
self / 3rd party certification. Second,
wherever possible. The endeavor is to make
the touch points frictionless by deploying
administrative and technological measures.
Strengthen linkages between trade and
manufacturing
Even though India is one of the most open
economies in the world in terms of the
sectors that are open for foreign investors,
our share of global trade in merchandise is
just about 2%. For instance, India’s share in
the global value chain of labour intensive
industries such as branded footwear ranges
between 2 to 3 percent. Strengthening
global linkages not only creates jobs
leveraging the export opportunities within
the global value chain but also helps adopt
global best practices and enhances the
competitiveness of domestic industry.
Provide access to affordable capital,
especially to MSMEs
One of the key reasons for low MSME
productivity is lack of access to affordable
capital. The draft suggests specific
interventions targeted at both reducing the
need for capital and making capital available
and affordable:
Ensure Availability of Affordable High-
Quality Industrial Infrastructure
Quality infrastructure adds to industrial
productivity by reducing the cost of doing
business and compressing the business
lifecycle.
Strengthen Skills for Gainful Employment
of the Emerging Workforce
Enhancing the employability of youth and
existing workers by skilling and re-skilling is
the key to unlock India's demographic
SPECIAL FEATURE - NEW INDUSTRIAL POLICY

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07
dividend. The policy seeks to address this
with emphasis on strengthening skills for
gainful employment of the emerging
workforce which would enable people to
make use of the employment opportunities
created.
Enable Innovation & Technology Adoption
India as a leader in IT services is known
globally for its frugal engineering and vibrant
start-up ecosystem. For India to emerge as
a global leader in emerging technologies
it is important to to provide an enabling
environment for future technologies
potential technologies like - Internet of
Things, precision agriculture, Biotechnology
and bio-pharma, electric mobility, cyber
security, artificial intelligence, clean energy
including energy storage and power
management, additive manufacturing and
water & waste management that could be
applicable across more than one sectors
would be very important. The policy also
emphasis on making the existing systems
that support innovation more effective.
Achieving these two goals will drive India up
the value addition at various stages of a
product life-cycle.
Strategic interventions
4
Promote Affordable
High-Quality Industrial
Infrastructure
3
Strengthen Access
to Affordable
Capital for MSME
2
Strengthen links
between trade &
manufacturing
1
Make doing
business simpler
6
Promote
Next gen-tech
Adoption and
Innovation
5
Enhance Skills for
gainful employment
• Single digital ID for all G2B
services
rd
• Self & 3 party certifications
• Ease of overseas trade
• Performance management
for G2B service delivery
• Strengthen standards
ecosystem
• Map India’s supply chain &
integrate with GVC
• Empower EXIM bank
• Proactive branding of Indian
Products
• Enhancing Quality of FDI
• Affordable land for industry
• Leverage Bill Discounting
platforms for working capital
needs
• Scale up of P2P lending
• Industry Health Clinics for
sick MSMEs
• Promotion of cluster model
of industrial development
• Devolution of management
of industrial estates to SPVs
• Rationalization of cost of
power for industries
• Greater access to Ready
Built Infrastructure
• Skill Census
• Nation-wide
Apprenticeship Program
• Skills for Industry 4.0
• Re-examine existing
categories of
empowerment
• Encourage Next generation
Technologies
• Synchronize nation-wide research
• Increase Pvt. Sector’s role &
effectiveness of Public spend
on R&D
• Researcher Mobility Program
Source DIPP
SPECIAL FEATURE - NEW INDUSTRIAL POLICY

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08
CII Mission
Manufacturing Initiatives
Public Procurement for Engineering:
Preference to Local Content
The Government through Public
Procurement Policy 2017 titled “Government
procurement preference to Make in India
order, 2017” has brought in a “paradigm
shift” in procurement to ensure it is “fair and
transparent” and includes an accountability
process covering the entire value chain. The
policy provides purchase preference to local
suppliers in all procurements undertaken by
Government agencies.
As key features of the Public Procurement
Policy, the locally produced goods will
generally be those deemed to have 50 per
cent local content, or local value addition,
regardless of who owns the businesses.
CII Manufacturing Department along with
DIPP and nodal ministries is working closely
to ensure implementation of the order. CII
along with DHI is working towards facilitating
meetings of sectoral associations,
manufacturers and end users to finalise the
items for Capital Goods sector. Some main
sub-segments include Process Plant
machinery, Electrical Equipment, Machine
Tools, Earthmoving and Construction
equipment, Railway Equipment, Textile
Machinery, etc.
1. Local procurement guidelines should not
restrain the procurement of “best in
class” technologies from the world. As
proposed in the Capital Goods Policy,
procurement must be on “LC1 – Lowest
Life Cycle cost”, to encourage localised
R&D and manufacturing. It is required to
ensure that PSUs procure through Quality
and Cost Based Selection (QCBS) than
through L1 process for adoption of new
Key Suggestions:
technology. Although GFR also mentions
about Life Cycle Cost (LCC) method, but it
needstobeimplementedinletterandspirit.
2. DIPP should conduct monthly
coordination meeting with all such
entities to understand their position in
implementing the order.
3. The order should take cognizance of a
Pre-advisory from CEA, dated May 2016.
By the said document, “Should the
equipment considered for procurement
under local funds is Manufactured locally
and, further, if the Manufacturers
demonstrate capacity to deliver, no
imports shall be contemplated. The
equipment shall be sourced only from
Indian Manufacturers”.
4. The local content of 50% should be
evaluated for every Manufactured
equipment individually. This means that if
the procuring entity is wishing to buy a
composite project solution containing
multiple equipment forming part, the
local content criteria shall be applied for
every individual equipment and not for
the solution.
5. Prevent Imports of used or second-hand
machineries which have low productivity
and high energy consumption and impact
CG production in India as well.
6. Certain clauses about the order,
especially on specification in tenders and
other procurement solicitations, few
restrictive criteria make it difficult for
Indian regular manufactures in
participating in tenders. It is required to
modify the restrictive tender criteria(s), to
be compliant with Clause 10 of the Public
Procurement Order.

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09
CII – DACS: Accelerating SME
Participation in Defence Manufacturing
Defence & Aerospace Consultancy Services
(DACS) is one of the unique offerings of
Confederation of Indian Industry (CII) to map
the competence and capability of the Indian
Industry,enablingthemforgreaterparticipation
in defence manufacturing and subsequently
to be a part of the supply chain.
Since 2015, the Defence Acquisition Council
has accorded “Approval of Necessity” (AON)
for numerous projects under “Make in India”
category. These are now expected to fructify
as contracts for Indian industry, thus
necessitating higher level of production
domestically, also encouraging wider
participation of Indian industry, especially
MSME to enhance the Defence industrial
Base. CII – DACS initiative helps taking this
forward and adds to India’s focus on indigenous
manufacturing in the defence sector.
Creating a vibrant domestic defence
manufacturing sector is vital and has
strategic and economic importance for the
country. However, one of the roadblock to
this aspiration is non-participation of capable
Indian companies in defence production,
which is primarily due to lack of awareness
about the potential opportunities that exists
in defence. Also, the procurement agencies
(MOD, the Services and their lower
formations, Ordnance Factories and DPSUs)
though aware of the capabilities that exist in
the private sector, largely rely on existing
registered suppliers. It is therefore necessary
for capable industries to identify the
opportunities and go through the “vendor
registration” process in good time, before
release of tenders.
With over two decades of expertise in
steering many policy initiatives, business
Why CII-DACS?
forums and training programs in the Defence
& Aerospace sector, CII, through the DACS
initiative endeavors to bridge this
information gap between government and
Industry, between procurement agencies
and capable companies.
This aligns with the on-going policy
transformation under ‘Make in India’
initiatives of the Ministry of Defence to
further encourage indigenous design,
development and manufacturing of
components, parts, minor platforms,
systems, sub-systems in the Defence and
Aerospace sector and facilitate technology
tie-ups, joint ventures and expansion of
defence industrial base in the country.
The defence expert group has mapped
competence and capabilities of over 25
Indian companies, helping them to enter
defence manufacturing and the supply chain
as potential suppliers for defence PSUs and
Ordnance Factories.
Active since mid-2015, CII-DACS envisions to
enlarge the Defence industrial base by
guiding the Indian companies, especially
MSMEs to identify and leverage their existing
as well as latent core competencies to
manufacturing in defence.
With the Ministry of Defence mandating the
Defence Public Sector Undertakings (DPSUs)
and Ordnance Factories to increase their
volume of outsourcing from Indian private
sector up to 20% of their turnover and
expand their vendor base, the arrangement
creates further significant perpetual business
opportunities for the Indian MSMEs in
addition to large companies in the time ahead.
Accelerating SME
participation
CII MISSION MANUFACTURING INITIATIVES

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10
CII MISSION MANUFACTURING INITIATIVES
The new Defence Procurement Procedures
in the DPP 2016 have already set the tone
for a fresh procurement regime by
Capability Assessment
• A thorough mapping of the company'
design, manufacturing, quality
assurance and test facilities
• Preparation of assessment report
Advisory Services
• Identification of opportunities based
on existing / latent capability of the
company
• Advisory for Defence Procurement
Procedures & Policies
• Recommended approach for entering
the aerospace & defence sector
Defence Supply Chain Integration
• Mapping and integration of company
capabilitieswiththedefencesupplychain
encouraging the MSME participation in
manufacturing. However, to build on the
systems and platforms for creating business
opportunities for Indian MSMEs on
sustainable basis, the Indian industry needs
to access the defence manufacturing eco-
system for sourcing all varieties of materials,
parts, components and sub-assemblies. CII-
DACS provides the Indian MSMEs, existing
and the aspirants, a connecting platform to
the defence sector by offering a clear,
objective and even-handed assessment of
their current capabilities, adding further
advisory to access potential opportunities in
the defence sector.
Already contributing significantly to defence
manufacturing with around 10,000 quality
products, it is imperative for MSMEs now to
further strengthen their sectoral foothold
and integrate into the supply chains, both
national and international. CII-DACS adding
new know-how and technical expertise to
the reasonable resource capabilities aims to
further facilitate full exploitation of the
MSMEs in terms of defence manufacturing
by reducing the knowledge gap
CII - DACS offerings

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11
Policy Focus
Budget 2018: Maintaining
Manufacturing Momentum
This year’s budget announcements covering
a spectrum of areas such as rural economy,
infrastructure, digitalization, rural
infrastructure and taxation are cumulatively
supportive in promoting domestic
manufacturing and boosting job creation.
Increased industrial productivity and
employment generation being key focus
areas for the government, the budget
2018-19 brings forth some meaningful
benefits which can translate into growth
of manufacturing. CII believes all these
reforming initiatives will have a positive
impact on the productivity of the
manufacturing sector.
Demand for Indian finished steel products
are likely to get boost after the Government
announced increased spending on
infrastructure in the new budget. India’s
budget allocation for infrastructure spending
will rise to 5.97 trillion rupees from the
current 4.94 trillion rupees. A network of
roads, airports, railways, ports and inland
waterways will be built to better connect the
country, while more than 9.30 million homes
will be built in the next three years. This
would generate demand for steel and
concrete, leading to rise in steel output and
their further penetration in the countryside
areas. Over 3,600 kms of track renewal and
redevelopment of major railway stations
would further lead to increased consumption
of steel and cement.
Boost to demand creation
A healthy financial system with larger
government focus on key sectors like
manufacturing is a fuel for growth of the
economy, resulting in more investments and
boost in overall productivity.
Steel & Cement
Increased investments in railways, roads,
civil aviation, rural infrastructure, irrigation
and housing projects to translate into
higher demand
Engineering & Capital Goods
Thrust on increasing investments in
infrastructure sectors, railways, roads, food
processing, housing, electricity for all, etc
to create demand.
Railway Transportation & Equipment
Rapid electrification of railway network,
redevelopment of major railway stations,
installation of Train Protection Warning
System, special attention to maintenance
oftrackinfrastructure,designing of modern
train-sets with amenities at Integrated
Coach Factory.
ICTE manufacturing
Changes in BCD in line with the Phased
Manufacturing Program (PMP) for Mobile
Phone manufacturing have been
announced. For encouraging higher value
addition in LCD/LED TV sets, BCD on
LCD/LED/OLED panels has been raised.
Automotive
Increase in import duty for auto
components.
At a Glance

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12
POLICY FOCUS
Strengthening domestic
ICTE manufacturing
India’s significance as a destination for
electronics manufacturing is on the rise. The
Government has increased the BCD (basic
customs duty) on several items to encourage
The increased investments in infrastructure
will also create demand in the heavy
engineering and capital goods market with
the thrust on the railways, roads, food
processing, housing, electricity for all, etc.
Optimum electrification of Indian Railways,
intensive electrification of villages under
Deen Dayal Upadhyaya Gram Jyoti Yojana
(DDUGJY) and electricity connections to
Households under Pradhan Mantri Sahaj Bijli
Har Ghar Yojana (Saubhagya) will support
electrical and transmission line and
distribution industry. Food processing
machinery industry is also going to get a
boost with increased outlay in food
processing and setting up of state-of-the-art
testing facilities in theMega Food Parks.
There will be scope for substantial demand
creation for valve manufacturing industry
with the investment plans and progress in
water and waste management.
Increased
Infrastructure
outlay
Roads and highways
network under the
Bharatmala Stage-1
capital expenditure
for the Railways
Building new
houses
Electricity
connections
to households
outlay in food
processing
testing facilities
in Mega Food
Parks
Reduction in customs
duties on inputs and
raw materials
Smart Cities outlay2.04 lakh crores
99 Smart Cities
600
Major railway stations
with wi-fi connectivity
& CCTV
domestic value-added manufacturing. This
will help attract investments and
development of domestic manufacturing
base of components/parts. This becomes
more important considering that electronics
manufacturing at present is largely based
on imported inputs and confined to low
value-addition.
In addition to several key announcements
covering a spectrum of areas like Smart
Cities, redevelopment of major railway
stations with wi-fi connectivity and CCTV
installations, enhanced digital intensity in
education with gradual transition from
‘‘black board’’ to ‘‘digital board’’ will lead to
demand creation of electronic goods in the
country and encourage investments in the
sector. Further, electrification of poor
households under the Saubhagya Yojana and
doubling of farmers’ income is expected to
result in higher disposable income and
standard of living thus creating demand
inter-alia electronic products/appliances in
the country.
Accelerating push for
Automotive
With the rural and agriculture sector push for
increasing income and investment through
greater availability of credit, the
Government’s commitment to double farm
income and maintain minimum support price
at a minimum of 1.5 times the cost of
production and link the farmers to the
INR 5.97 lakh crore 35,000 kms
51 lakh INR 1,48,528 crore
175 lakhs INR 1400 crore
2.5% (from 7.5%)42

NEWSLETTER
POLICY FOCUS
13
electronic market place, the Tractors, 2
wheelers and Utility vehicle segments will
see some positive impact of the budget. CII
believes increased investment in
infrastructure to improve rural connectivity,
The budgetencouragesvalue added manufacturing, especially for largevolume,
high value products like Mobile phones, LCD/LED TV receivers, LED Lighting
products. Changes in BCD in line with the Phased Manufacturing Program (PMP)
for Mobile Phone manufacturing have been announced. For encouraging higher
valueadditioninLCD/LEDTVsets,BCDonLCD/LED/OLEDpanelshasbeenraised.
BCD has also been raised for electronic watches/clocks, movements, Lamps and
lighting products, Toys, video game consoles. The enhanced duty rates will open
investment opportunities for manufacturing input/parts, strengthen domestic
supplychainandcreateemploymentopportunities.
Mr Vinod Sharma
Managing Director,
Deki Electronics Ltd.
For the supplier side, as a positive step
towards the Make in India program and
deepening localization efforts, the budget
has made increase in import duty for auto
components such as engines, engine
components, gearboxes, transmission
shafts, drive axles, brakes, radiators,
silencers, clutches, etc. CKD (Completely
Knocked Down) imports (where engine,
gearbox and transmission does not come in
a pre-assembled condition) of Motor cars,
Motor Vehicles and Motorcycles has
increased, encouraging more local sourcing
of components across vehicle segments.
Enhancing railway capacity and safety has
received a larger focus with a 13% increase
in capital expenditure over last year. Rapid
electrification of railway network to reduce
overall energy consumption and carbon
emissions, major programs for stations
redevelopment, maintenance, safety,
Enhancing Railway Capacity
warning system, maintenance of track
infrastructure, redevelopment of major
railway stations; escalators, CCTVs and Wi-Fi
facilities in all railways stations with more
than 25,000 footfalls, elimination of 4267
unmanned level crossings in the broad-
gauge network over next two years,
designing of modern train-sets with state-
of-the-art amenities and features at
Integrated Coach Factory, Perambur. 12000
rolling stock, 5160 coaches and 700
locomotives for manufacturing at Integral
Coach factory in Perambur, Chennai are
the driving factors for railways capacity
enhancement. CII believes the electrification
and station redevelopment and the focus on
capacity addition poses huge opportunities
for rail manufacturing and allied industry. A
Railway University at Vadodara to train
manpower for high speed rail projects will
further facilitate indigenous technologies
and capabilities.
15%
increase in import duty for select
categories of automotive
components
accelerated execution of road projects will
not only have long term impact on
automotive industry segment but the
Commercial vehicle segment will also get
some substantial push.
15% increase in Completely Knocked
Down imports of Motor Vehicles
Basic customs duty for vehicles
imported in Completely Built
Unit ('CBU')
25%
capital expenditure
for Indian Railways
Railway lines
electrification
Track renewalDouble line tracks
3600 kms18000 km
1.48 lakh crore 4000 km

NEWSLETTER
14
POLICY FOCUS
Thebudgethaslaidoutaroad-mapforIndianRailwaysof
the future. This will give impetus to the ever-rising need
of safe travel and the need to augment capacity to match
increase level of urbanization. Setting up of India's
National Rail and Transport University (NRTU) is also a
welcome step. Online monitoring of key infrastructure
projects continues to ensure timely addition of planned
infrastructureandcapacity.
Mr Tilak Raj Seth
Executive Vice President
Siemens Ltd
Mr Manish Mohnot
MD, Kalpataru Power
Transmission Ltd
The budget has
presented an overall
positive scenario
especially for distribution
companies. Transmission
companies could benefit
due to incremental power
requirement. The
electrification
announcements will result
in a significant uptick in
the number of
electrification and
composite works tenders.
The Smart City mission
and outlay presents huge
opportunity for companies
into construction of Smart
Roads, Solar Rooftops,
Transport Systems etc.
Mr T Kannan
Managing Director
ThiagarajarMillsPvtLtd.
The industry has
welcomed the allocation
of INR7,148 crore for the
Textile Sector,
announced during the
Union Budget 2018. The
major announcement of
reduction in corporate
taxes to 25% for
enterprises having an
annual turnover of up to
INR250 crore will benefit
the Textile Industry. As
most of the Apparel units
are MSMEs in nature, the
reduced corporate tax
would result in INR7,000
crore revenue foregone
by the Government and
will benefit a larger
segment of the industry.
Stepping up larger adoption
of Industry 4.0
To enable India to leapfrog into the digital
age, CII has been advocating on four broad
pillars i.e. building robust Infrastructure,
reducing cost of inputs, workforce
development and promoting innovation and
R&D. The new budget encouraging high-end
technologies is an encouraging and forward-
looking initiative which will help advancing
the country’s digital economy. These
welcome moves will not only facilitate public
and private sector to create the much-
desired technology-driven ecosystem but
will foster local innovation and research to
maximum potentials.
Keeping in view the government’s growth
expectations from the sector and the recent
growth trend in ‘Ease of doing Business’
ranking, the sector will definitely need
further stimulus. The next phase of India’s
manufacturing growth will require
consistency in necessary policy formulation,
some key measures to bring the
unorganized manufacturing sector under the
organized one, to increase in public spending
and capital investment which will help
provide the necessary impetus to the
manufacturing sector. Along with the
financial systems at place, implementation
of positive policies can aid this for India to
climb the list of global economies and
manufacturing destinations

NEWSLETTER
15
More for MSMEs
POLICY FOCUS
MSMEs have worldwide been accepted as
the engine of economic growth and for
promoting equitable development.
Constituting over 90% of total enterprises in
most of the economies MSMEs are credited
with generating the highest rates of
employment growth and account for a major
share of industrial production and exports.
MSMEs in India account for more than 80%
of the total number of industrial enterprises
and produce over 10000 value-added
products.
In this context, various announcements
made by the government recently in terms
of budgetary allocations and appropriate
policies for the MSME sector hits the target.
Many reforms have been initiated to boost
the growth and prosperity in the coming
years. The first big step for MSMEs is
reducing the corporate tax rate to 25% for
the companies with annual turnover up to
Rs 250 crore from Rs 50 crore. This would
leave more investable resources with 99% of
the 7 lakh firms which file tax returns
enabling them to reinvest and expand.
The Government has also changed the
criteria to define micro, small and medium
enterprises (MSMEs) from investment in
“plant and machinery/equipment “to
“annual turnover”. Realizing a long-standing
demand of CII, a micro enterprise, according
to the new definition will be a unit with
annual turnover less than or equal to ₹5
crores, a small enterprise with the annual
turnover more than ₹5 and less than ₹75
crore and medium enterprise with annual
turnover more than ₹75 and less than ₹250
crore. The revised ‘turnover’ norms are
expected to support in bringing scale, skill,
sophistication and speed in the sector. The
classification will also align the enterprises
with the GST regime together with
supporting ease of doing business in the
sector, improving competitiveness and
integration of Indian MSMEs into Global Value
Chain (GVCs).
Since its launch in April 2015, MUDRA Yojana,
a powerful initiative towards financial
inclusion and equitable development has led
to a sanction of ₹4.6 lakh crore of credit to
10.38 lakh beneficiaries. The budget has
taken an appropriate look by further
expanding the reach of MUDRA by allocating
₹3 lakh crores, a nearly 20 per cent rise from
last year’s allocation of ₹2.44 lakh crore.
Introducing Fixed Term Employment in all
sectors will further support the MSMEs to
enhance their human resources and thus the
productivity.
High NPA remains a pressing issue for the
country. The Economic Survey 2017-18,
revealed that the sector-wise NPAs of banks
till March 2017, indicate that MSMEs had
11.8% (Rs 658 billion) share in total NPAs by
PSBs in the priority sector. To solve the issue
government has relaxed the norms for
non-performing asset categorization from
current 90 days to 180 days. In addition to
this government has also proposed to
revamp the system of online sanctioning of
loans to SMEs, including the Online Trade
Receivable Discounting System (TreDs) to be
linked with GSTN, wherein all required
information to be available on the GSTN Portal.
Facilitating ease of doing business will help
Indian MSMEs in taking advantage of the
emerging business opportunities. GoI has
identified 372 basic business reforms which
would be taken up by states in action mode.
By bringing ease of doing business to MSMEs
that run throughout the geographical
expanse of the country, India can notch
much higher ranking in Ease of doing
business rankings, while also increasingly
looking at strategic partnerships of mutual
benefits, innovative capabilities and ability to
speedilyabsorbemergingtechnologiesandskills.

NEWSLETTER
16
Setting it Right: GST
E-way Bill on Roll out
A step forward in improving
India’sglobalrankinginWorld
Bank Logistics Performance
Index and ease of doing
business, the introduction
of E-way bill is going to help
boost tax collections
The GST Council in its meeting in March
2018 has removed several bottlenecks for
successful roll out of E-way bill. The Central
Board of Excise and Customs (CBEC) on
March 07, 2018 released a revised draft
policy on the generation of e-way bills. E-
way bill or electronic way bill is a unique but
critical element of success of GST regime.
The new measures such as matching tax
data and E-way bill are likely to enable the
Government to stop tax leakages and
surpass estimated tax collections. The
impact of Goods and Services Tax on the
economic activity may be reflected in 2018-
19 tax collections. The budget 2018-19
estimates GST collections to be INR 7.44
Lakh Crores.
Unlike in other countries that rely on tax
invoice for movement of goods, the E-way
bill in India is a standardized way bill format
mandated by the Government that is aimed
at checking tax evasion while monitoring the
goodsmovementandimproveGSTcompliance.
Rule 138 of the CGST Rules, 2017 provides
for the E-way bill mechanism and in this
context,itisimportanttonotethat“information
is to be furnished prior to the commencement
of movement of goods” and “is to be issued
whether the movement is in relation to a
supply or for reasons other than supply”.
POLICY FOCUS
Responsibility related improvements provide
much clarification related to goods carried by
public transport, railways, and courier. It also
clearly states the responsibility for
generating E-way bill for the job work related
goods movement. Such specific clarifications
are very helpful for small and mid-sized
businesses and particularly shippers of small
parcels.
Public conveyance has been included as a
mode of transport and the responsibility of
generating E-way bill in case of movement of
goods by public transport would be that of
the consignor or consignee. Railways has
been exempted from generation and
carrying of E-way bill with the condition that
without the production of E-way bill, railways
will not deliver the goods to the recipient.
However, railways is required to carry invoice
or similar documents like delivery challan.

NEWSLETTER
17
POLICY FOCUS
Salient characteristics
1. The purpose of goods transported may
be declared under ten categories, such as
Supply, Export or Import, Job Work, Semi
Knocked Down (SKD) or Completely
Knocked Down (CKD), Recipient not
known, Line Sales, Sales Return,
Exhibition or fairs, for own use and
Others.
2. Though the primary responsibility for
generating E-way bill is with the
consigner, the other two participants in
the transportation chain may also
generate it, if required.
3. The validity of the EWB is calculated
based on the ‘approximate distance’.
For every 100kms, one day is the validity
period for EWB and for part of 100 KM,
one more day to be added. So, for a
distance of 310KMs the validity will be
3+1 days.
4. Consignments less than INR 50,000 value
do not require any E-way bill. Also, Goods
transported from Customs port, airport,
air cargo complex or land customs station
to Inland Container Depot (ICD) or
Container Freight Station (CFS) for
clearance by Customs does not require
E-way bill.
5. Radio frequency identification devices
(RFID) may be mapped with E-way bills to
increase the speed of verification at key
check points. Alternatively, the person
carrying goods may carry a physical copy
of E-way bill number (EBN) and related
documents such as invoice or bill of
supply or delivery challan, etc. for
verification.
6. Four types of E-way bill forms,
registration form and invoice reference
number generation form are provided for
ease of transactions.
7. Complaints may be raised if the goods in
transit are held for verification more than
thirty minutes without proper reason.
The validity of the concerned E-way bill
would be the time for the recipient to
communicate his acceptance or rejection of
the consignment or 72 hours, whichever is
earlier. In case of movement of goods
because job-work, the registered job worker
can also generate E-way bill. Consignor can
also authorize the transporter, courier
agency and e-commerce operator to fill
PART-A of E-way bill on his behalf.
Validity of E-way bill is a critical element of
success. Given the nature of controllable and
uncontrollable factors during the goods
movement,therewasaclearneedforprovision
to extend validity period. This improvement
was hailed by third party logistics providers.
• Movement of goods from the place of
consignor to the place of transporter up
to 50 Km [increased from 10 km] does
not require filling of PART-B of E-way bill.
They must generate PART-A of E-way bill.
Extra validity period has been provided
for Over Dimensional Cargo (ODC).
• If the goods cannot be transported within
the validity period of the E-way bill, the
transporter may extend the validity in
case of transshipment or circumstances
of an exceptional nature. Validity of one
day will expire at midnight of the day,
immediately following the date of
generation of E-way bill.
GST council is set to improve further on few
more areas for enhancing the user experience.
• Provision to upload multiple invoices in a
single day,
• Eliminate the periodical slowdown of the
portal,
• Ensure proper back up during periods of
portal maintenance.
Largely, the industry expects benefits, such
asincreasedtransportspeed,greaterconfidence
in the governance and tax compliance through
the GST and E-way bill combination. As the
data related to consignors, goods, consignees
and tax compliance becomes more reliable
in near future, the introduction of E-way bill
is certainly a step forward in improving India’s
global rankings in world bank Logistics
PerformanceIndexandeaseofdoingbusiness

NEWSLETTER
18
Leaders Speak
1. How are the MSMEs geared up to
adhere to the new manufacturing
possibilities and paradigms?
Industry in India is maturing at a rapid
pace, with many areas of excellence
taking shape. We see great sparks of
innovation and design in new and
upcoming entrepreneurs.
The market of India with all its
challenges and peculiar needs offers
unique opportunities to create unique
products and services. No market offers
such a diverse customer pool of various
economic spectra. The products
developed for the Indian market can
have appeal in global markets especially
in low income countries.
The new manufacturing paradigm as it
takes shape into the future, no longer is
bound by the need for scale.
Possibilities of smart manufacturing
customized, tailor made products in
smaller volumes are growing
exponentially. The availability of
software and hardware is becoming
cheaper and easier. Sophisticated apps,
programs and networks are
progressively going to be available to
small industries to give them new
capabilities.
The challenge for India is to make life
easier for entrepreneurs. The energies
of entrepreneurs should not be wasted
in cumbersome compliance. The
2. What are the challenges for India?
Mr Vikram Golcha
Co-Chairman, CII National
MSME Council
Manufacturing Excellence in India:
Enabling an Effectual Ecosystem
By focusing on manufacturing excellence,
India could aspire for a growth of 8 per cent
and reach $400 billion by 2030. After having
the potentials for technical competence,
manpower, market, complete manufacturing
value chain and government support, what is
the roadmap ahead for achievement? What
are the major underlying issues? Why is it
imperative for industry to incorporate changes?
How will it enable and sustain growth?
Mr Vikram Golcha talks about manufacturing
excellence creating a sustainable and
innovative future for the Indian Industry,
enabling a powerful ecosystem.

NEWSLETTER
19
regulatory system should eliminate
time consuming procedures.
Entrepreneurs’ energies and creativity
should set free to create innovative and
transformative designs and solutions.
As the huge industrial infrastructure of
our competing nations ages,
opportunities arise for us to develop
simple, nimble, flexible and small cost
effective and efficient workspaces. We
need to develop seamless ecosystem
where micro industries feed small, small
feed the medium and medium feed the
large industries. Thus, we can create a
powerful symbiotic ecosystem.
In India we have an amazing pool of
entrepreneurs who have:
• obsessive drive
• capability of surviving in multiple
adversities - multitasking
• good grasp on technologies
• creativity
• ability to be frugal
However, the concern is, while they are
focused and specialized in their arena,
they miss the larger picture. There is a
need to create an ecosystem or
community where they can interact with
and be mentored by people who have
been successful in their fields. There is a
need to expose them to future
scenarios in a rapidly changing world.
3. What are the opportunities available
for creating a powerful and seamless
ecosystem for MSMEs?
4. What are the imperatives to identify
the Indian Industry sectors as
propellers of growth?
Considering the information technology
sector entering a new transformative
age of artificial intelligence and industry
4.0, the industry needs adequate
government attention and fillip through
moderation of certain regulations.
Intelligent self-driving cars,
autonomous machines and robots are
going to create new opportunities for
Indian IT sector. With the sector having
immense opportunity for taking India to
frontiers of the new world order, the
entrepreneurs need to be encouraged
with supportive environment to develop
global solutions.
Likewise, we need to identify many
more such areas where Indian
companies have leadership in global
volumes. There are many small Indian
companies which provide very
specialized and high-tech products to
global markets. They are now supplying
products to many large corporations
that have manufacturing set up in India.
Globally if we take the aerospace
industry as an example, aircraft and
spaceships are made by assembling
specialized components, which are
made by smaller super specialized
industries. Without such specialized
suppliers, large Aerospace companies
would be handicapped.
Manufacturing excellence is often
challenged by certain unhealthy
competition, which at times, compels
the manufacturers to make cheap
products at any cost. This may be
addressed by educating the customer
5. Apart from technical competence, how
can the enterprises take in their stride
all other needs of manufacturing
excellence?
LEADERS SPEAK

NEWSLETTER
20
through independent transparent
agencies on quality parameters that
they should watch for.
What is needed is constant forward and
backward networking with suppliers
and service providers on one hand and
customers on the other. Technical
conferences lead by researchers and
technologists in their respective fields is
essential. While India has greatly moved
forward in this respect, still a lot
remains to be done.
Industry - Academic interaction is
minuscule and investments in R&D still
too low.
There is a need to create industrial
areas with good infrastructure and
competitive energy supply. New
infrastructure may be considered for
generating solar power that can be
shared through grids.
Healthy working conditions are equally
essential for a productive work force.
Industry needs to remain adequately
aware in support of the Industry
Associations who needs to educate and
6. How do you see MSMEs making
attractive investment climate in the
country?
assist industries further in minimizing
pollution and effluents.
Industrial areas and adjoining cities
need to be designed to create more
appealing living spaces. More attention
is required in creating good cultural
spaces as well so that the quality of life
is enriched for all inhabitants.
In the recent budget, corporate tax was
brought down to 25% for MSME. This is
a positive step. This will surely give a
boost to this sector. We will see more
and more unorganized sector joining in
the organized sector.
Looking forward, the government
should provide incentives for higher tax
payments (both income tax and GST).
Attracting skilled man power has also
remained a concern with MSMEs. New
and upcoming skills training schools
need to be engaged with MSMEs. There
is a further need for incentivizing
graduates from technical universities,
ITIs and others who work with MSMEs
7. How conducive is the policy
environment to build on the business
confidence for MSMEs? What more can
be done?
LEADERS SPEAK
th
The 4 edition of the CII Smart Manufacturing Summit
is getting and .BIGGER BETTER
18th September 2018 at Shangri-La Hotel, New Delhi
SAVE THE DATE

NEWSLETTER
21
Where does Indian industry currently stand
in respect to Industry 4.0?
How prepared is Indian industry with
respect to Industry 4.0 transition?
How must India navigate through the
challenges and disruptions to take
advantage from I 4.0?
India must leapfrog with tremendous efforts
to realize benefits of Industry 4.0. In the past
industrial revolutions, India followed
technologies. However, witnessing the
current changes happening in fourth
industrial revolution across the world and
the excellent opportunities lying around for
participation, the time has come, India must
proactively lead the technological trends.
A lot of changes are required at the physical
facility as well as in mindset of Indian
Manufacturing sector, along with adequate
government policy support and financials.
Indian industry, at various levels of adopting
Industry 4.0 is only partially prepared for the
change with only a few being ready for the
revolution. Many don’t even have basic
automation technologies in place. Indian
industry seemingly will take some time to be
able to visualize the immediate benefits of
coming forward and quantifying their RoI.
The transformation is expected in phases
only. There is a need to upgrade the basic
automation infrastructure in the
manufacturing industry to at least a
minimum level, before the next phase of
adoption may happen.
The biggest challenges with Indian industries
are the existing infrastructure. It requires
upgradation and capital investment to
accomplish the same. Moreover, the
technologies need to be developed
indigenously for better affordability and cost.
Skilling of the existing manpower to
understand and use the new and emerging
technologies is must to realize the benefits
of the revolution. For implementable
solutions and in-house development of
technologies, encouragement to start-ups is
vital. Variable customer requirements,
competitiveness in terms of cost and quality,
and better profitability could prove the key
driving force in India for new technology
adoption.
The motivation for change at this time, which
should emanate from inside is driven by
external dynamics. The challenge is to bring
the technology from concepts to the shop
floor and justify the investment as well as
What are the driving forces in India towards
successfully adopting I 4.0?
Dr. Sunil Jha
Associate Professor,
Department of Mechanical
Engineering, IIT, Delhi
Embracing Industry 4.0
LEADERS SPEAK

NEWSLETTER
22
the benefits for the industry, especially
for the Small & Medium enterprises. It is
important for the Indian industry to connect
technology well with their earnings and
that should be the key driving factor for
Industry 4.0.
Government is making efforts to provide a
nurturing environment for manufacturing
start-ups. More technology oriented startups
need to come forward and embrace industry
How can I 4.0 facilitate making the future
Champions of Indian Industry?
4.0. This may realize India’s transformation
journey from an assembly hub to
manufacturing hub. Government is also
making efforts that manufacturing units that
are employment intrinsic, export oriented
and hi-tech manufacturing will have simpler
setup process and easy access to credit
facilities. Government schemes such as
MUDRA, skill development, push for Digital
economy, nationwide road-building program,
improvement in power supply will help
boosting these efforts and in turn, the
manufacturing sector
LEADERS SPEAK
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ASCON QUARTERLY
SURVEY (Q3FY18)
Economic recovery gathers momentum in Q3 FY18;
strong signs of growth visible : ASCON Survey
The ASCON Industry Survey which tracks the growth
of the industrial sector through the responses
collected from sectoral industry associations reveals
improvements in growth trends in terms of production
in October-December FY18 over the corresponding
quarter a year ago. The responses have been
segregated in the four broad categories: (i) ‘Excellent’
(growth in excess of 20%), (ii) ‘High’ (growth in the
range of 10-20%), (iii) ‘Moderate’ (growth in the range
of 0-10%) and (iv) ‘Low’ (growth less than 0%).
Out of the sectoral responses received for 72 sectors,
the Survey analysis reveals that
• the share of sectors registering ‘Excellent’ growth
(>20%) has improved moderately from 18.1 percent
in Q3 FY18 compared to 15.3 percent a year ago
period;
• the share of sectors registering ‘High’ (10-20%)
growth has gone up substantially to 20.8 percent in
Q3FY18 from 9.7 percent in Q3FY17;
• the share of sectors witnessing ‘Moderate’ growth
(0-10%) has come down slightly; and
• there is a significant decline in the share of sectors
witnessing ‘Low’ growth (<0%) at 29.2 percent in
Q3FY18 vs 20.8 in Q3FY17.
On a sequential, quarter-on-quarter basis also, the
Survey results reaffirm our view of improvement in
growth trends in the surveyed quarter. According to
the Survey,
• there has been a substantial improvement in the
share of the sectors reporting ‘Excellent’ growth
and ‘High’ growth which has improved substantially
on Q-on-Q basis;
• sectors witnessing ‘Excellent’ growth have
improved from 4.2 percent in Q2FY18 to 18.1
percent in Q3FY18, whereas sectors witnessing
high growth have improved from 9.3 percent in
Q2FY18 to 20.8 percent in Q3FY18;
• the share of sectors reporting ‘Moderate’ growth
has shown a marginal decline, and
• there has been a significant decline in the share of
sectors witnessing ‘Low’ growth (20.8% in Q3FY18
from 31.9% in Q2FY18).
This further corroborates our perception of
improvements of growth performance on the ground.
15.0 20.0 25.0 30.0 35.0
Low
31.9
29.2
20.8
July-September FY18
October-December FY18
October-December FY17
4.2
15.3
18.1
0.0 5.0 10.0 15.0 20.0
Excellent
26.4
9.7
20.8
High
5.0 10.0 15.0 20.0 25.0 30.0
40.3
45.8
Moderate
25.0 30.0 35.0 40.0 45.0 50.0
37.5
(>20%)
(10%-20%)
(0%-10%)
(<10%)
40.0
55.0
35.0

NEWSLETTER
24
Capacity Utilization Trends
(January-March)
2018
(October-December)
2017
(July-September)
2017
Above 80%65-80%50-65%Below 50%
54.5
27.3 18.2
100.0
18.2 9.1
0.00.0
54.5
27.3
0.0 18.2
54.5
18.2
Above80%50%-65%<50%
65%-80%
According to the Survey,
•
responses indicating sub-50 percent capacity utilization.
• 90 percent of the respondents expect the capacity
utilization to be above 50% in the surveyed quarter as
against the previous quarter.
• Nearly half of the respondents have reported capacity
utilization in the range of 50-65 percent for the surveyed
quarter, the same as the previous quarter;
Going forward, the Survey results point towards further
improvements in capacity utilization in the January-March
quarter.
• 100 percent respondents expect the capacity utilization
to be above 50 percent.
th
• Approx. 3/5 of the respondents have reported capacity
utilization to be in the range of 65-80 percent which
distinctly higher from the around 18 percent responses
recorded in Q3FY18 and
nil in Q2FY18.
• This clearly signals towards the continuation of growth
momentum witnessed in the current quarter to flow in
the next quarter as well.
Feedback points towards a clear decline in the share of
With respect to issues and concerns impacting
growth,
• ‘High Tax Burden’ (50%)
• ‘Cost and Availability of Finance’ (41.7%)
• ‘Transport Infrastructure Bottlenecks’ (41.7%)
• Regulatory Burden (41.7%)
• Margin Pressure due to stiff
competition’ (41.7%)
• ‘Competition from Imports’ (36.4%)
have been reported as the top most issues
facing the industry. However, there has been a
clear decline in the intensity of reporting as
compared to previous quarters.
High Tax Burden
Cost and Availability
of Finance
Transport Infrastructure
Bottlenecks
Regulatory Burden
Competition from Imports
Lack of Export Demand
Lack of Domestic Demand
Margin Pressure due to
stiff competition
Shortage of skilled
labour/Talent
Industrial Relations /
Labour Problems
Shortage of Power
Shortage of Raw Materials
41.7 33.3 25.0
50 16.7 25.0 8.3
41.7
41.7 33.3 16.7 8.3
33.3 25.0
36.4 9.1 45.5 9.1
16.7 50.0 25.0 8.3
16.7 41.7 33.3 8.3
41.7 50.0 8.3
8.3 50.0 33.3 8.3
25.0 50.0 25.0
33.3 41.7 25.0
25.0 66.7 8.3
0% 100%20% 40% 60% 80%
Moderately ImportantMost Important
Less Important Not Important
SURVEY
Capacity Utilization Trends
Issues and Constraints

NEWSLETTER
25
New
Investments
9%
27%
64%
New Orders
9%
9%
82%
Sales
7%7%
7%
79%Stalled
Projects
20%
30%
30%
20%
10%
40%
Import
45%
Exports
9%
46%
expect the
situation to
Improve
Moderately
expect the
situation to
Improve
Moderately
50%
expect the
situation to
Improve
Moderately
expect the
situation to
Improve
Moderately
expect the
situation to
Improve
Moderately
expect the
situation to
Improve
Moderately
Remain
Same
Remain
Same
Remain
Same
Remain
Same
Remain
Same
Remain
Same
to improve
sharply
to improve sharply
DeclineDecline
Decline
Decline
DeclineDecline
Business Outlook for the Next Six Months
SURVEY

The Confederation of Indian Industry (CII) works to create and sustain an environment
conducive to the development of India, partnering industry, Government, and civil
society,through advisoryandconsultativeprocesses.
CII is a non-government, not-for-profit, industry-led and industry-managed
organization, playing a proactive role in India's development process. Founded in 1895,
India's premier business association has over 8,500 members, from the private as well as
public sectors, including SMEs and MNCs, and an indirect membership of over 200,000
enterprisesfromaround 265nationalandregionalsectoralindustrybodies.
CII charts change by working closely with Government on policy issues, interfacing with
thought leaders, and enhancing efficiency, competitiveness and business opportunities
for industry through a range of specialized services and strategic global linkages. It also
providesaplatformforconsensus-building andnetworkingonkeyissues.
Extending its agenda beyond business, CII assists industry to identify and execute
corporate citizenship programmes. Partnerships with civil society organizations carry
forward corporate initiatives for integrated and inclusive development across diverse
domains including affirmative action, healthcare, education, livelihood, diversity
management,skilldevelopment,empowermentofwomen,andwater,tonameafew.
As a developmental institution working towards India’s overall growth with a special
focus on India@75 in 2022, the CII theme for 2017-18, India@75: Inclusive. Ahead.
Responsible emphasizes Industry's role in partnering Government to accelerate India's
growth and development. The focus will be on key enablers such as job creation; skill
development and training; affirmative action; women parity; new models of
development; sustainability; corporate social responsibility, governance and
transparency.
With 67 offices, including 9 Centres of Excellence, in India, and 11 overseas offices in
Australia, Bahrain, China, Egypt, France, Germany, Iran, Singapore, South Africa, UK, and
USA, as well as institutional partnerships with 355 counterpart organizations in 126
countries, CII serves as a reference point for Indian industry and the international
businesscommunity.

CII Mission Manufacturing Jan-Mar 2018

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CII Mission Manufacturing Jan-Mar 2018