On September 4, 2016, the 11th G-20 Summit was held at Hangzhou, China. CII has been engaged through B-20 to submit private sector‘s inputs into the G-20 process. Source <> http://blog.bizbilla.com/smes-msmes/user/show/7400/cii-recommendations-for-g-20-summit-china

1. CII Recommendations for G Twenty
Summit China
On September 4, 2016, the 11th G-20
Summit was held at Hangzhou, China. CII
has been engaged through B-20 to submit
private sector‘s inputs into the G-20
process. After considering the success of
the pervious B-20 Task Forces, liaising
with G-20 members and affiliated business
representatives and reviewing the
statistics of three rounds of questionnaire

2. surveys, the B-20 China has established
five Task Forces, one each on Financing
Growth, Trade and Investment,
Infrastructure, SME Development and
Employment. The Task Forces, comprising
senior Industry members, actively
participate and share recommendations
highlighting the Indian perspective on
issues in order to boost exports and overall
economic activity.
Some of the issues and key CII
recommendations pertaining to each of the
areas are given below:
I. Financing Growth
Finance is vital to global economic growth
and employment, both of which are G-20
priorities. For the international business
community, the focus is on how to best

3. utilize finance to stimulate economic
growth. The Financing Growth Task Force
proposed to focus on policy
recommendations to G-20 on five key
issues.
The issues highlighted by B-20 China are
as follows:
- Improve global financial regulations by
optimizing the domestic regulatory
framework and enhancing international
cooperation and coordination.
- Promote the diversification of
international settlement currencies to
facilitate global and regional trade and
capital flows.
- Explore the mean s to enhance
international taxation cooperation and
coordination so that taxation collection

4. can be more transparent and double
taxation can be avoided.
- Encourage green finance to pursue
economic growth combined with
significant improvement in environmental
quality and sustainable resource use.
- Improve financial infrastructure to
facilitate diversification, fairness and
competition.
CII Recommendations
- There is a need to mobilise low cost debt.
This could be done through multilateral
funding. Funds that are part of the climate
change negotiations (costs of mitigation
which the developed countries need to pay
to the developing countries) could be
deployed to lower the debt cost.

5. - Need to follow target based approach to
channel finance streams. Disparate finance
streams could be channelled in a more
targeted way. Stakeholders were of the
view that currently local funding agencies
are providing debt at high interest rates.
- A long term tenor (the duration of
lending) is required for infrastructure
projects. Spreading the loan over a 20-
year period will lead to improved cash
flows. The tenor currently tends to be
insufficient in India, typically up to 8 years.
This mismatch means there is a shortage of
appropriate debt as investors seek out
alternative assets that fit better with their
investment horizons.

6. II. Infrastructure
Infrastructure is one of the important
subjects of deliberations at the G-20. This
issue is of primary concern to the
international business community. The
global economy is undergoing significant
adjustment and countries need to join
forces to nurture new growth points and
competitive advantages. Conventional
wisdom is that promoting the development
of infrastructure not only helps identify
new growth points but also lays the
foundation for deep, enduring economic
development in each country. The
recommendations by the Task Force are
based on the principles of selecting high
impact, G-20 consistent and
ready-for-solution areas.

7. The issues are as follows:
- Infrastructure investment policy
environment.
- Innovation in infrastructure financing
(especially PPP).
- Effectiveness of multilateral development
banks and institutions.
CII Recommendations
- Strengthening Project Preparation:
Successful PPP projects require risks to be
accurately estimated, appropriately
provisioned in the contract and
proactively managed during execution by
the respective parties. The success or
failure of the project is very often
determined by the way the contracts have

8. been structured by the parties. The
importance of clearly laying out the
objective and fair set of conditions
precedent, penalty, compensation and
incentive structure, performance norms etc.
cannot be under estimated. Going forward,
it is extremely important to create a robust
project pipeline which also needs to be
transparent and should be determined
through a comprehensive assessment of
needs. It must be derived from the
integrated infrastructure country plan
addressing socio-economic objectives. The
focus should be on projects which are
financially viable and have sustainable
social and economic benefits.
- Evolve long-term alternate Funding
Mechanism: There is an urgent need to
develop alternate funding mechanisms for
financing long-term infrastructure needs

9. given the increased exposure and rising
NPAs in banks’ balance sheets. While
Infrastructure Investment Trusts are the
need of the hour, it is important to modify
it to be successful in the current context.
- Long-Term Infrastructure Fund: It is
imperative to develop a dedicated
institutional funding arrangement for
meeting long-term Infrastructure needs.
This fund can be an innovative means for
financing growth and ensure market
penetration. Further, it will enable greater
ability to access funds in the international
market and will also create in-built
flexibility to revise financing norms
depending on the situation in the industry.

10. III. Trade and Investment
Trade and Investment which are
intimately linked to the creation of
business value and innovation are
important sources of economic growth and
job creation. They have always been
central to both B-20 and G-20 meetings
over the years. Building on the success of
previous B-20s, B-20 China focuses on
global investment and trade governance
system, and implementation of the Trade
Facilitation Agreement (TFA), among other
matters of concern to the business
community. The Trade and Investment
Task Force proposes to focus policy
recommendations on three issues based on
the principle of selecting high impact, G-20
consistent and ready for solution areas.

11. The issues are as follows:
- Improve trade co-operation mechanisms
and standstill/roll-back protectionism.
- Ratify Trade Facilitation Agreement (TFA)
and take implementation to the next level.
- Build a global investment governance
system to promote favourable foreign
direct investment environments and
improve the safety and fairness of global
investments.
CII Recommendations
- Specific protectionism in the Services
sector should be discussed and deliberated
upon at the G-20. Many developing
countries are building their economies on
the Services sectors and exports of
different services are critical for the

12. growth of their economies. In the global
services trade, the movement of natural
persons or mode IV of services is becoming
very restrictive. As a result, the services
exporters are finding difficulties in
exporting their services.
- As of now, multinational enterprises are
using Global Value Chains (GVC) and are
getting benefits of distributed production
processes. Such benefits should reach the
small and medium sized enterprises (SMEs)
also. Within the existing structure of trade,
they are mostly left out and they are losing
trade competitiveness.
- A large number of countries, mainly
developing and least developed countries,
are not participating in any of the existing
negotiations of megaFTAs. There is a high

13. chance of trade diversion from
non-partner countries to partner countries.
G-20 should focus on more inclusive global
trade.
- Many developing and least developed
countries are losing their exports because
of the changing international Standards
environment. There should be a
mechanism to transfer knowledge and
expertise to help these countries in
reforming their individual domestic
Standards eco-system.
SME Development
SMEs are important contributors to
economic growth, taxation revenue,
employment and streamlining of industry
structures. With global economic recovery
progressing slowly, SMEs and especially

14. MSMEs, SMEs are confronted with even
more challenges. For this reason,
promoting SME development has become
an important objective for both G-20
leaders and business representatives. B-20
China continues to focus on the priorities
identified by the previous B-20 Task Forces:
SME financing, access to GVCs, improving
the regulatory environment for SMEs and
SME innovation. However, inadequate
access to finance, access to GVCs and the
regulatory environment are major
challenges for SMEs, especially in terms of
scaling up their business. B-20
recommendations address the three
critical challenges:
- Access to Finance
- Access to Global Value Chains Powered
by Innovation

15. - Improving the Regulatory Environment
CII Recommendations
In spite of the cognizance in all quarters of
the importance and contributions of this
sector, MSMEs in India, like many of their
global counterparts, continue to be
enervated by a host of challenges
diminishing their growth potential. Lack of
access to key resources like infrastructure,
finance, etc., complex business
environment, poor technological access,
lack of adequate market linkages, lack of a
comprehensive regulatory framework, etc.
are some of the regular issues faced by the
Indian MSMEs.
The key factors to which this can be
attributed include lack of a formal legal

16. structure of most enterprises in this
category, high risk perception of these
enterprises, unreliable financial evaluation
data and the wide geographical expanse of
these enterprises. There is absence of a
suitable ecosystem for process facilitation
between banks and MSMEs. Further, delay
and other issues related to credit delivery
to MSMEs are primarily due to a lack of
understanding of various schemes offered
by the banks and financial institutions as
well as the procedures and documentation
required for accessing credit from these
institutions.
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