MMR_July_2016_Final

Materials Management Review 3July 2016
From the Desk of The National PresidentFrom the Desk of The National PresidentFrom the Desk of The National PresidentFrom the Desk of The National PresidentFrom the Desk of The National President
Dear Professional Colleagues,
Greetings of the day from your National President !
By the time e-copy or hard copy of this highly valuable professional journal (MMR)
would be available with you, half of the year ‘2016’ would have lapsed. On the other hand, when we look
back, it looks as if the present Team of IIMM took over a few days back at Vadodara NATCOM in November
2015.
Indeed, time is running fast, technology is changing at an unprecedented pace, globally. Major event across
the global such as, Jubilee Year of Mercy, Rome, Italy; The Setouchi Art Festival, Japan; World Design Capital,
Taipei, Taiwan, Olympic Games and Paralympics in Brazil, US President Election this year in November, Brexit -
the recent move of Great Britain’s exit from European Union, Kumbh Mela, Haridwar, India, a few to mention
which are attracting international community’s attention and will impact the global economic scene, during
the year. At IIMM, we as a Team had chosen MISSION-100 for ourselves to accomplish, during our tenure.
However, despite repeated assurances by all Team Members from time to time, for putting in best efforts in
this direction, much does not seem to have been achieved, by now. I, therefore, once again wish to reiterate
my request to all IIMM Members, to support the team in achieving the Mission-100.
Professionals, many a times, I come across to meet such Members, who still express their ignorance about
Mission-100. Hence, here I once again corroborate this mission for the clarity of those to whom it new and to
brush up the memories of those who are already familiar with this. Mission-100 is our plan to get recognition
to our GDMM & PGDMM courses from 100 Industrial Houses for their Materials and SCM employees in their
organizations. In doing so the management will have to announce within the organization some motivational
& financial benefits for their employees for doing the above courses from IIMM. This, while on the one
hand, will inspire their Materials and SCM professionals to our courses, it will, on the other hand, enable our
Course conducting branches to directly get in touch with all these organization’s Materials & SCM Functions,
without spending huge money on advertisements in the newspapers for admission.
Thanks a lot and looking forward to your whole hearted support in our attempt towards accomplishing Mission-
100.
O.P. LONGIA
National President – IIMM
e.mail :omparkash.longia@yahoo.com
Cell No.9878601408

Materials Management Review4 July 2016
From the Desk of Editor-in-ChiefFrom the Desk of Editor-in-ChiefFrom the Desk of Editor-in-ChiefFrom the Desk of Editor-in-ChiefFrom the Desk of Editor-in-Chief
Dear Members,
In India, the Logistics industry is still in its nascent stage with a lot of challenges and
bottlenecks. Over the last few years, there has been an increased emphasis on logistics,as
the sector has seen an inflow of good investments, better regulatory practices, mega
infrastructure projects and several other initiatives like GST, Make in India and Skill Development.
Statistical evidence suggests that Indian logistics sector have grown at a healthy rate of 15% in the last five
years and is expected to grow at a CAGR of 12.17% by 2020 driven by the growth in the manufacturing, retail,
FMCG and E-commerce sectors.
As the economy is growing, logistics sector is also becoming more refined and sophisticated. This is further
supported by the development of E-commerce market. As E-commerce is competing with the Conventional
Markets at the grass root level, the expectations from logistics and supply chains are increasing for being
precise and accurate in their operations with timely delivery and service quality.However, lack of adequate
availability of trained manpower resources and lower adoption of technology in its processes.
Infrastructure is also one of the biggest challenges faced by the Indian logistics sector and has been a major
deterrent to its growth. Infrastructural problems like bad road conditions, poor connectivity, inadequate air
and sea port capacities and lack of alternatives like inland water transport and domestic aviation have been
constant irritants. Due to the infrastructural bottlenecks costs per transaction in Indian logistics sector is very
much high compared to those in the developed markets.
Government of India has allocated greater public budget to boost overall infrastructure spending. An initial
infrastructure investment of Rs. 4100 Billion over the 12th Five Year Plan (FYP) period (2012-2017) is something
that we must appreciate. Building of dedicated rail freight corridors will promote efficient movement of
containerized cargo by rail.
The proposed Goods and Services Tax (GST) regime and e-commerce will change the way, how warehousing,
supply chain management and third party logistics business are seen. Apart from creating a unified market
across India, GST will help make India’s manufacturing competitive by cutting high logistics and warehousing
costs. GST implementation will be a game-changing event for businesses and Indian Economy. Simply halving
the delays due to roadblocks, Toll - Taxes and other stoppages could cut freight times by some 20-30% and
logistics costs by an even higher 30-40%, according to World Bank estimates.
The future of the Industry is very bright and I am sure to achieve exponential growth in the coming years, we
need to focus not only on continued development of infrastructure but also on the capability of the service
providers for adapting themselves and making optimal utilization of technology. With the growing complexity
of supply chains, we need more skilled people to manage them. There is a clear need for both the government
and private players to concentrate on skill development programmes to achieve the targeted GDP Growth.
(M.K. BHARDWAJ)

MATERIALS MANAGEMENT
REVIEW
Volume 12 - Issue 9 (July 2016)
C O N T E N T S
INCHING TOWARDS IMPLEMENTING GST 6
ROLE OF ASIAN DEVELOPMENT BANK IN
CONNECTING SOUTH ASIA TO CENTRAL ASIA 9
CORPORATE CHALLENGE’S - OUTSOURING IN
VALUE CHAIN 10
GDP: AT 7.6%, INDIA’S GROWTH POINTS TO
FASTEST GROWING LARGE ECONOMY 18
CHANGING PERSPECTIVE OF ALL BANKS WHILE
EXTENDING THE CREDIT FACILITIES DUE TO
INCREASE OF NPA ACCOUNTS 19
CAG OF INDIA FORMULATES BIG DATA MANAGEMENT
POLICY TO MEET FUTURE CHALLENGES 21
THE NEXT MANUFACTURING DESTINATION 22
SITUATIONAL LEADERSHIP AND EMPOWERMENT 27
SUPPLY CHAIN MANAGEMENT 30
CUSTOM EXCHANGE RATES 32
WHATS APP - A KEY COMMUNICATION MEDIUM IN
SUPPLY CHAIN & LOGISTICS 33
BUILDING THE CULTURE OF COST CONSCIOUSNESS
IN SMES 34
COMMODITY INDEX 35
GOVERNMENT TO SOON BRING TRANSPARENCY IN
PUBLIC PROCUREMENT OF GREEN PRODUCTS 36
WTO UPDATE : ENHANCING THE PARTICIPATION OF
MSMES IN INTERNATIONAL TRADE 37
INTERNATIONAL NEWS 39
BRANCH NEWS 40
EXECUTIVE HEALTH 57
IIMM BRANCHES 58
PAGE NO.
IIMM is a charter member of
International Federation of
Purchasing & Supply Management
Editor in Chief & Publisher:
Dr. M. K. Bhardwaj
Past President, IIMM &
Former Director Ministry of Defence
Core Committee :
Mr. Ashok Sharma, President 5M India
Mr. V. K. Jain, Former ED, Air India
Mr. Tej K Magazine, Management Advisor
National President :
Mr. O. P. Longia
Editors :
Mr. G.K. Singh (Sr. Vice President)
Prof.(Dr.) A.K.Saihjpal, VP (North)
Mr. Amal Chakraborty, VP (East)
Mr. Malay Chandan Mazumdar,VP (West)
Mr. D. Subramani, VP (South)
Dr. Avinash S. Desai, VP (Central)
Mr. A.K.Mehra, NS&T
Mr. Lalbhai Patel, IPP
Prof.(Dr.) V. K. Gupta - IMT, Ghaziabad
Correspondence :
MATERIALS MANAGEMENT REVIEW
Indian Institute of Materials
Management
4598/12 B, Ist Floor, Ansari Road,
Darya Ganj, New Delhi - 110 002.
Phones : 011-43615373
Fax: 91-11-43575373
E-mail: iimmdelhimmr@gmail.com &
iimm2delhi@gmail.com
Website : iimm.org
Printed at :
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4249/82, 2 Ansari Road, Daryaganj,
New Delhi - 110002
Edited, Printed & Published by :
INDIAN INSTITUTE OF MATERIALS MANAGEMENT
4598/12 B, Ist Floor, Ansari Road, Darya Ganj, New Delhi - 110 002.
Phones : 011-43615373 Fax: 91-11-43575373
E-mail: iimmdelhimmr@gmail.com & iimm2delhi@gmail.com
Website : iimm.org
(Published material has been compiled from several sources, IIMM disowns any responsibility
for the use of any information from the Magazine if published anywhere by anyone.)

T
he Empowered Committee of State Finance
Ministers has released the ‘Model Goods and
Services (GST) Law’ on 14th June 2016. The Model
GST Law is made available on Government of India,
Ministry of Finance website at http://finmin.nic.in/.
The salient features of the draft Model GST Law now
released are as follows:
The Model Law covers the following:
1. Goods and Services Tax Act, 2016
2. Integrated Goods and Services Tax Act, 2016
3. GST Valuation (Determination of the Value of
supply of Goods and Services) Rules, 2016.
The draft Goods and Services Tax Acthas 25
Chapters, 162 Sections and 4 Schedules
The draft Integrated Goods and Services Tax Act
has 11 Chapters and 33 Sections
GST Valuation Rules, 2016 has 8 Rules
The term ‘supply’ is introduced in place of terms
‘clearance of goods’, ‘sale of goods’ and ‘rendering
of services’ being used presently under various
provisions of law.
The term ‘supply’ is defined inclusively to inter alia
include -
All form of Supplies for a consideration.
Specific Supplies without consideration including
supplies between two Units / branches of same
entity having separate GSTIN.
Transactions between principal and agent is deemed
to be supply.
Supply of branded services by aggregator.
There will be three types of taxes. Supply of goods
/ services shall be inter-State if location of supplier
and place of supply are in different States. Otherwise
the supply will be intra-State.
Central GST (CGST) and State GST (SGST) will be
leviable on intra-State supplies at a rate to be
notified and
Integrated GST (IGST) will be leviable on inter-State
supplies at a rate to be notified
Separate Model Acts for the intra-State and inter-
State transactions are provided
INCHING TOWARDS IMPLEMENTING
GST
S.N.PANIGRAHI
snpanigrahi@rediffmail.com
Imports of both goods and services have been
deemed as inter-State supplies leviable to IGST.
Export is zero-rated.
Composition Scheme (rate to be prescribed, but
not less than 1%) available to a registered taxable
person involved in intra-State (not available for
inter-state transactions) supply of goods and
services whose aggregate turnover is less than Rs.
50 lakhs (no credit available and no recovery from
the recipient).
Goods or Services on which GST is payable by the
recipient on Reverse Charge basis shall be notified.
Certain transactions involving both supply of goods
and services such as works contract, restaurant
service, etc. have been deemed as supply of service
under Section 3 read with Schedule II of the Model
Law. Various declared services of the current service
tax law have also been deemed as supply of service.
Transfer of Right to Use Goods has also been
deemed to be a service.
Taxable Person means a person who carries on any
business at any place in India and is registered or
required to be registered and whose aggregate
turnover in a financial year exceeds Rs 10 Lakhs (Rs
5 Lakhs in case of North Eastern States including
Sikkim). Such person is liable to pay tax
However every person crossing the threshold would
be required to obtain registration in each State he
operates.
Threshold limit prescribed of Rs. 9 lakhs and
Rs. 4 lakhs (for North Eastern States and Sikkim)
Central/ State Government may be regarded as a
taxable person in respect of activities engaged as
public authorities except otherwise specified
A person having multiple business verticals in a
State may obtain separate registrations for each
verticals in that State.
Place of registration is the state from where taxable
goods and / or services are supplied by a supplier. .
Persons making inter-State taxable supply
irrespective of threshold; Persons liable to pay GST
under reverse charge; Input Service Distributor;
Aggregator; E-Commerce Operator need to obtain
registration.
Existing taxpayers will be issued Registration
Certificate on a provisional basis valid for 6 months.

The taxable event for levy of Goods and Services
Tax (GST) is ‘supply’.
The liability to pay CGST/SCST on Goods shall arise
at the time of supply of goods
The time of supplyof goods shall be the earliest of
the following dates, namely,-
(a) (i) the date on which the goods are removed by
the supplier for supply to therecipient, in a case
where the goods are required to be removed or
(ii) the date on which the goods are made available
to the recipient, in a case where thegoods are not
required to be removed; or
(b) the date on which the supplier issues the invoice
with respect to the supply; or
(c) the date on which the supplier receives the
payment with respect to the supply; or
(d) the date on which the recipient shows the
receipt of the goods in his books of account.
The provisions relating to time of supply in respect
of services are in line with the Point of Taxation
Rules, 2011 of the service tax law.
The time of supply of services shall be:-
(a) the date of issue of invoice or the date of receipt
of payment, whichever is earlier, if the invoice is
issued within the prescribed period; or
(b) the date of completion of the provision of service
or the date of receipt of payment, whichever is
earlier, if the invoice is not issued within the
prescribed period; or
(c) the date on which the recipient shows the receipt
of services in his books of account, in a case where
the provisions of clause (a) or (b) do not apply.
Since GST frame work will work on the principle of
destination based consumption tax, Place of Supply
is important to determine taxable jurisdiction.
Therefore separate provisions have been made in
sections 5 and 6 of draft IGST Act for determination
of Place of Supply (POS) of goods and services
respectively. The place of supply of goods shall be
the location of the goods at the time at which the
movement of goods terminates for delivery to the
recipient.
Transaction value shall be the basis for the levy of
CGST / SGST and IGST. Certain inclusions and
exclusions while determining the value are provided
in Section 15(2) of Goods and Services Tax Act.
Further draft GST Valuation (Determination of the
Value of supply of Goods and Services) Rules, 2016
is prescribed methods for determination of value
of supply.
Every person making a taxable supply of goods or
services would have to issue tax invoice containing
the prescribed particulars
Adjustment in tax charged in tax invoice can be
made by issuing a credit note containing the
prescribed particulars and within the prescribed
time
Payment towards tax, interest, penalty, fee or any
other amount by a taxable person shall be made by
internet banking or by using credit/debit cards or
National Electronic Fund Transfer (NEFT) or Real
Time Gross Settlement (RTGS) or by any other mode.
The amount shall be credited to the electronic cash
ledger of such person to be maintained in the
manner as may be prescribed
Every taxable person in respect of each registration
shall furnish three returns
furnish details of outward supplies by 10th of the
succeeding month;
furnish details of input supplies by 15th of the
succeeding month;
furnish a return of outward supplies, inward
supplies, input tax credit availed, tax payable and
tax paid by 20th of the succeeding month
No return can be filed unless the tax due as per the
return has been deposited andno return can be filed
unless a valid return for the previous tax period has
been filed.
In addition to the above mentioned periodic
returns, each taxable person shall be required to
file an Annual return as well Returns have also been
prescribed for ISD, Tax Deducted at Source (TDS),
Tax Collected at Source (TCS, applicable for e-
Commerce Operators).
There will be Two Electronic Ledgers&a Registerof
the taxpayer where all transactions of an assessee
shall be recorded and maintained
Electronic Cash Ledger : Amount deposited by the
taxpayer towards payment of tax, interest, penalty,
fee or any other amount by a taxable person shall
be credited to the electronic cash ledger.
Electronic Credit Ledger : Input tax credit as self-
assessed by the taxable person shall be credited to
his electronic credit ledger.
Electronic Tax Liability Register : All the tax liabilities
of the taxable person will be recorded in his
electronic tax liability register.
Rules for utilisation of cash and cross-utilisation of
input taxcredit of IGST, SGST and CGST are provided
in CHAPTER-IX of the GST Act
Amount available in electronic cash ledger can be
utilised for making payment towards tax, interest,
penalty, fees or any other amount payable.
Amount available in electronic credit ledger can
only be used for making payment towards tax. Such
amount cannot be used for making payment of
interest, fee or penalty.
Input Tax Credit (ITC) is available in respect of inputs,
capital goods and input services. There is a negative
list of items on which no ITC is available.

Input Tax Credit (ITC) shall be allowed only in respect
of the inputs attributable to taxable and zero rated
supplies
Input tax credit of CGST shall not be utilised for the
payment of SGST and vice versa
ITC is available only on provisional basis (for 2
months) until the supplier makes the tax payment
and files a valid return. There will be matching of
supplier and receiver data and credit will be
confirmed only after such matching. Where the data
is not matched and where the supplier has not made
the tax payment, the ITC shall be reversed with
interest. Interest is from the date of wrong
availmentor utilization.
Input Service Distributor has been introduced only
for passing on credit of GST onservices. No similar
provision has been introduced for goods
Provisions for Refund of are provided in Section 38
of Goods and Services Tax Act. The claim shall be
made before the expiry of Two Years(not applicable
in case of tax paid under protest) from the relevant
date.
Unutilised credit available on account of exports
(whereby no export duty is payable) can be claimed
as refund.
Special provisions have been introduced in respect
of e-Commerce operators and Aggregators. E-
Commerce Operators are required to collect and
deposit tax at source (TCS) on payments made to
the vendors.
Un-availed Cenvat credit on capital goods, which is
not carried forward in a return, will also be allowed
in certain situations. Credit of eligible duties and
taxes in respect of inputs held in stock will also be
allowed in certain situations.
The Commissioner of CGST/Commissioner of SGST
or any officer authorised by him, by way of a general
or a specific order, may undertake audit of the
business transactions of any taxable person for such
period, at such frequency and in suchmanner as may
be prescribed.
Separate provisions are made for Appeals and
Revisions. Sections 79, 80, 81, 82 and 83 shall be
applicable for appeals under SGST Law. Sections
84 to 93 are common for CGST and SGST law.
Provisions for Advance Ruling are provided in
CHAPTER– XIX
Every taxable person shall be assigned a GST
Compliance Rating Score based on his record of
compliance with the provisions of this Act. The GST
compliance rating score shall be determined on the
basis of parameters to be prescribed in this behalf.
The GST compliance rating score shall be updated
at periodic intervals and intimated to the taxable
person and also placed in the public domain in the
manner prescribed.
Transitional provisions are made to allow amount
of Cenvat credit carried forward in a Return as ITC.
Similar provision has been made for carry forward
of Value Added Tax.
Comments
Broadened Scope of Supply : Section 3 of the Model
GST Act covers the meaning and scope of ‘supply’. The
word supply is defined to include a variety of
transactions. For example “All forms of supply of goods
and/or services such as sale, transfer, barter, exchange,
license, rental, lease or disposal made or agreed to be
made for a consideration by a person in the course or
furtherance of business’ are included as supply. This
implies that stock transfers and supply of goods / services
between two separately registered units / branches of
the same business entity whether in the same State or
not, will be deemed as supply. However, supply of goods
by a registered taxable person to a job-worker in terms
of section 43A shall not be treated as supply of goods.
A person acting as an agent who, for an agreed
commission or brokerage, either supplies or receives any
goods and/or services on behalf of any principal, the
transaction between such principal and agent shall be
deemed to be a supply. This covers scope services of all
types of agents, brokers, commission agents etc.
Stringent Norms for Compliance: Stringent norms are
provided in the act making mandatory obligation to
furnish information return and Disclosure of information
required under section with Penalty for failure to furnish
information return. Matching provisions are made to
tally the supplier and recipient information electronically
to check the correctness. Specific provisions have also
been introduced relating to scrutiny of returns filed and
detect discrepancies. No return can be filed unless the
tax due as per the return has been deposited and no
return can be filed unless a valid return for the previous
tax period has been filed.The law provides for best
judgment assessment in cases where a registered taxable
person fails to furnish the return as well as in cases where
a taxable person fails to obtain registration even though
liable to do so. Model GST Law provides for recovery of
due amount from the taxable person by resorting to
various means including seizure, detention and / or sale
of movable/immovable property of the defaulting
taxpayer
Also provisions are made in the act to putthe burden of
proving claim or claims of non-liable to pay tax or
eligibility for input tax credit shall lie on the person
making such claim.
Onus on the Buyer(recipient): As per provisions of the
draft GST Act, the buyer or goods or service receiver shall
be entitled to take credit of input tax (ITC), as self-
assessed on provisional basis only. Matching provisions
are made to tally the details of inward (recipient) and
outward (supplier) transactions and Input Tax Credit (ITC)
confirmed only after such matchingand tax liableis paid
by the supplier and filed valid returns. That means the
onus is on the buyer to ensure that the seller discharges
his tax liability and files returns with two months period,
otherwise the credit need to be reversed with interest.
Also provisions are made in the act to restrict a taxable
person who has not furnished a valid return under
section 27 of the Act to dis-allow utilizing such credit till
he discharges his self-assessed tax liability.

T
he Asian Development Bank (ADB) is appointed
as transaction advisor to build, own and operate
the planned 1,800 kilometre Turkmenistan-
Afghanistan-Pakistan-India (TAPI) natural gas pipeline.
Under an agreement signed with the state gas firms of
the countries involved in the pipeline, the ADB will advise
on the establishment of the TAPI pipeline company,
undertake technical due diligence, and handle the
bidding and selection of a commercial consortium leader
to build, own and operate the pipeline.
The company will be jointly owned by four state gas
firms: State Concern “Turkmengas” of Turkmenistan,
Afghan Gas Enterprise, Inter State Gas Systems (Private)
Limited of Pakistan, and GAIL (India) Limited. When
selected, the commercial consortium leader will take a
majority stake in the company.
The project, earmarked for completion in 2017 by the
four countries, which will aim to export up to 33 billion
cubic meters of natural gas a year from Turkmenistan,
which has the world’s fourth largest proven reserves, to
Afghanistan, Pakistan, and India over 30 years. It will
allow landlocked Turkmenistan to diversify its gas export
markets to the southeast, provide a vital new fuel source
for developing southern Afghanistan, and help Pakistan
tackle chronic fuel shortages.
In India, it will allow the northern region to access a
steady supply of gas to fuel its economic growth.
The ADB has provided secretariat services for the
ROLE OF ASIAN DEVELOPMENT BANK IN
CONNECTING SOUTH ASIA TO CENTRAL ASIA
PRADEEP KUMAR BARNWAL, OFFICER-MATERIAL,
HALDIA PETROCHEMICALS LTD. pradeepsae2k9@gmail.com
development of the legal and institutional framework
of the TAPI project since 2002, and more than $4 million
in technical assistance. The pipeline was estimated to
cost about $7.6 billion in 2008, but the final amount now
could be substantially different.
The pipeline, that is set to cross over 1,700 km, through
Herat and Balochistan before reaching the Indian Punjab
border, and will draw from the world’s second largest
natural gas field of Galkynysh, comes full of promise. To
begin with, it will reopen a historic route that reconnects
South Asia to Central Asia, in the way it was before the
British Empire sealed it off. It will also bring India and its
neighbours much needed energy at competitive pricing,
and could easily supply a quarter of Pakistan’s gas needs,
about 15 per cent of India’s projected needs, as well as
Afghanistan’s requirements, by the time it is completed
in the 2020s. This is a growing need, and even if India is
able to source energy from other countries like Iran and
further afield, both the proximity and abundance of
Turkmenistan’s reserves, that rank fourth in the world,
will make it an attractive proposition. At a time when
China has already secured nearly half of its energy
requirements from the region, and is working on the
$400 billion Russia-China gas pipeline, India has no time
to lose in securing its interest in Central Asia. Finally, the
TAPI pipeline gives this fractured region a reason to work
on a project together as well, and it is hoped the shared
stakes in TAPI’s success will ensure that India, Pakistan
and Afghanistan find ways of cooperating on other issues
as well.
Simplify Procedures for Returns & Refunds : The
proposed law prescribed electronic entry of details of
each transaction which may add burden on the tax payer
and increases transactional costs. There is annual return
apart from three types of monthly returns and various
other types of returns like TCS, TDS etc with different
due dates prescribed. Since the details are captured
electronically for each transaction, auto summary return
should suffix instead of need to separately filing the
returns. Similarly there is scope for auto return of
refunds.
Passing of GST Bill : Introduction of GST needs
amendment of certain provisions of constitution. The
Lok Sabha had already passed the Constitutional (One
Hundred and TwentySecond) Amendment Bill, 2014 and
is pending for approval by the RajyaSabha because of
opposition mainly by congress party. With the emerging
new equations in the RajyaSabha and many non-
congress state Governments expressing their willingness
to support for passing the GST Bill, the NDA Government
in the centre is enthused to proceed further.
Last year the Government of India had also released four
Reports of the Joint Committee on Business Processes
for GST on Registration, Payment, Returns and Refunds.
Now the draft Model GST Law is released with intention
to make the ground work ready and signalling the trade
& industry to prepare for the new challenges in the face
of proposed GST. This is a definitive move towards
positive outcome.
There is lot of euphoria and expectations that the long
cherished GST be implemented soonest.

A
bstract: Outsourcing is the contracting out of an
internal business process to a third-party
organization. The term “outsourcing” became
popular in the United States near the turn of the 21st
century. Outsourcing sometimes involves transferring
employees and assets from one firm to another, but not
always.[1]
The definition of outsourcing includes both foreign and
domestic contracting, [2]
and sometimes includes
offshoring, which means relocating a business function
to another country.[3]
Financial savings from lower
international labor rates is a big motivation for
outsourcing/offshoring.
The opposite of outsourcing is called insourcing, which
entails bringing processes handled by third-party firms
in-house, and is sometimes accomplished via vertical
integration. However, a business can provide a contract
service to another business without necessarily
insourcing that business process.
Two organizations may enter into a contractual
agreement involving an exchange of services and
payments.
Outsourcing is said to help firms to perform well in their
core competencies and mitigate shortage of skill or
expertise in the areas where they want to outsource.[4]
In the early 21st century, businesses increasingly
outsourced to suppliers outside their own country,
sometimes referred to as offshoring or offshore
outsourcing. Severalrelated terms have emerged to refer
to various aspects of the complex relationship between
economic organizations or networks, such
as nearshoring, crowdsourcing, multisourcing and
strategic outsourcing.
Key Words : ( Outsourcing, Business, Insouring,
Economic, Emerging )
Outsourcing can offer greater budget flexibility and
control. Outsourcing lets organizations pay for only the
services they need, when they need them. It also reduces
the need to hire and train specialized staff, brings in fresh
engineering expertise, and reduces capital and operating
expenses.[8]
One of the biggest changes in the early 21st century came
from the growth of groups of people using online
technologies to use outsourcing as a way to build a
viable service delivery business that can be run from
virtually anywhere in the world. The preferential contract
“CORPORATE CHALLENGE’S – OUTSOURCING IN
VALUE CHAIN.”!
RABI NARAYAN PADHI
Fellow in Research Materials Management
Life Member IIMM VIZAG Br, rabin.padhi@gmail.com
rates that can be obtained by temporarily employing
experts in specific areas to deliver elements of a project
purely online means that there is a growing number of
small businesses that operate entirely online using
offshore contractors to deliver the work before
repackaging it to deliver to the end user.
One common area where this business model thrives is
in providing website creation, analysis and marketing
services. All elements can be done remotely and
delivered digitally, and service providers can leverage the
scale and economy of outsourcing to deliver high-value
services at reduced end-customer prices.
The Benefits of Outsourcing
“Do what you do best and outsource the rest!” – Tom
Peters, Management guru
Outsourcing as an idea is not novice; it has been for over
a thousand years now, the only difference being that it’s
gaining lot more popularity since a decade for whatever
reasons. Outsourcing basically means asking a third-party
vendor to work for you on a contractual basis. Companies
outsource primarily to cut costs. But today, it is not only
about cutting cost but also about reaping the benefits
of strategic outsourcing such as accessing skilled
expertise, reducing overhead, flexible staffing, and
increasing efficiency, reducing turnaround time and
eventually generating more profit.
Like any other business venture proper planning and
research is necessary before choosing an outsourcing
partner whether it is on shore or offshore. But by
outsourcing to a third party, your business can focus on
what it does best and gain a competitive edge in the
marketplace.
Here are the top ten benefits of outsourcing:
1. Get access to skilled expertise : One of the primary
reasons why a business may want to outsource a task is
when it requires skilled expertise. This skill set may not
be a core competency of its business. To allow you to

focus on your core mission in providing a high quality
product and service to your customer what makes sense
is offshoring the task to people can perform it better.
Moreover, as a double whammy, you not only spend less
on employee trainings and save precious man-hours but
cut costs as well.
Outsource to india has dedicated teams to provide wide
range of outsourcing services, which help us offer
specialized business process outsourcing solutions to
clients globally. We leverage on our multi-domain
expertise and skills across variegated industry verticals
and technologies to achieve superior quality and
unmatched proficiency in the outsourced process.
2. Focus on Core Activities : Workload increases with
additional non-core functions and the quality of your
core activities suffers as your business grows.
Outsourcing in such scenario to a third party plays an
important role by allowing your key resources to focus
on primary business tasks.
3. Better Risk Management : Outsourcing will allow you
to share any associated risks with your outsourcing
partners there by reducing your burden. For example -
by outsourcing to a competent outsourcing partner you
reduce the risk involved in having the same task done
in-house by staff that may not be as competent in that
field.
4. Increasing in-House Efficiency : After you allocate
tasks to your outsourcing partner, they share the
workload of your employees. This allows you to develop
your internal task force and use them more efficiently.
5. Run Your Business 24X7 : Offshore outsourcing to a
country like India, which is on a different time zone, gives
you the added advantage of making full use of your 24
hour day. Since your night is their day, your outsourcing
partner can take over and continue your work even after
your employees go home and to bed. They can complete
critical tasks and send it back for your review the next
day. So the benefit of outsourcing here is that you get
more work done in a day, increasing your overall
productivity. A 24X7 customer support is a dream come
true for your customers and this can be fully realized
through offshore outsourcing.
6. Staffing Flexibility : Outsourcing certain independent
tasks, allows your business to maintain a financial
flexibility when there is an uncertainty in demand. You
can scale up or down comfortably. At a much lower cost,
offshore outsourcing provides additional benefit of
running your business in full throttle even during off
season and holiday months.
7. Improve service and delight the customer : Your
outsourcing partner, with their skilled expertise will
produce quality deliverables faster, increasing your turn
around time to the customer. With on-time deliveries
and high-quality services your customers will be
delighted! Outsourcing can help you benefit from
increased customer satisfaction and thus creating a
stream of loyal customers.
8. Cut costs and save BIG! : All the benefits listed above
come with the bonus benefit of lower cost and big
savings! When you outsource services like medical
billing, call center and teleradiology, etc. to a low-cost
country like India or Philippines, you are getting access
to quality services that are offered at a much lower cost
(You can save up to 60% costs)!
Maintaining an infrastructure can be an extra burden
for some businesses, which outsourcing can remove.
Outsourcing your business requirements to a trusted
vendor can help you save on the capital expenditure,
time, and extra efforts of your personnel. Additionally,
you are no longer committed to invest on employee
training, or purchasing expensive software, or investing
in latest technologies. All this add up to higher returns
in the longer run.
9. Give your business a competitive edge : The ultimate
benefit of outsourcing is that it helps your organization
gain a competitive edge in the market. Through strategic
outsourcing to an outsourcing partner, you are not only
providing your customers with best-of breed services,
but increasing your productivity while managing your
in-house resources intelligently. Outsourcing can help
you surpass competitors who have not yet realized the
benefits of outsourcing.
10. See an overall increase in your business :
Outsourcing shows an increase in your productivity,
customer loyalty. level of quality, business value, profits,
and much more.
ADVANTAGES AND DISADVANTAGES OF OUTSOURCING
Outsourcing brings in a lot of flexibility and financial
freedom but it also has its pitfalls. Any company looking
to outsource must keep in mind the pros and cons of
outsourcing before deciding to take the plunge. Take a
look at this list of advantages and disadvantages of
outsourcing.
Advantages of Offshore Outsourcing

· Core activities of the business take center stage.
Outsourcing non-core activities such as
administration and back-office operations helps to
put the focus back on the core functions of the
business, such as sales and marketing.
· One of the biggest advantages of outsourcing to
India (or any other location) is cost savings. The
lower cost of operation and labor makes it attractive
to outsource.
· Outsourcing reduces overhead costs that usually
come with running back-end operations.
· When certain functions of an organization become
operationally uncontrollable, outsourcing helps to
overcome such difficulties.
· A company’s cash-flow can be streamlined.
· By increasing productivity and efficiency, a business
can be more successful and better-prepared for
market challenges.
· Outsourcing frees an organization from investments
in technology, infrastructure and people that make
up the bulk of a back-end process’ capital
expenditure.
· Outsourcing gives businesses flexibility in staffing
and manpower management. Since the service
provider is responsible for managing the workforce,
you save costs and can also pick the best people to
run your core functions.
· Offshore outsourcing gives businesses the ability to
develop new competencies and skill-sets that can
be used as a competitive advantage.
Disadvantages of Offshore Outsourcing
· One of the biggest disadvantages of outsourcing is
the risk of losing sensitive data and the loss of
confidentiality. It is important, therefore, to have
checks in place to avoid data loss.
· Losing management control of business functions
mean that you may no longer be able to control
operations and deliverables of activities that you
outsource.
· Problems with quality can arise if the outsourcing
provider doesn’t have proper processes and/ or is
inexperienced in working in an outsourcing
relationship.
· Since the outsourcing provider may work with other
customers, they might not give 100% time and
attention to a single company. This may result in
delays and inaccuracies in the work output.
· Hidden costs and legal problems may arise if the
outsourcing terms and conditions are not clearly
defined.
· If important functions are being outsourced, an
organization is mightily dependent on the
outsourcing provider. Risks such as bankruptcy and
financial loss cannot be controlled.
· Not understanding the culture of the outsourcing
provider and the location where you outsource to
may lead to poorcommunication and lower
productivity.
· Though outsourcing has its share of advantages and
disadvantages, the many benefits that outsourcing
brings far outweigh its disadvantages.
· Many of the pitfalls of outsourcing can be avoided
by choosing the right company to work with. Before
taking the decision to outsource it is important that
you align the goals of your company and employee
considerations with the objectives of outsourcing.
WHY OUTSOURCE WORK?
Industry trends show that companies that have been
asking the question ‘why outsource’ have become vocal
advocates of the offshore model. Outsourcing work has
come to be a tried-and-tested model and is recognized
as a long term competitive strategy for success. The
question going around now is not ‘why outsource?’ but
‘why not outsource?’
Reasons for Outsourcing : The economist, Adam Smith,
says in his treatise The Wealth of Nations, “If a foreign
country can supply us with a commodity cheaper than
we ourselves can make it, it is better to buy it of them.”
Outsourcing as we know it today is merely a progression
of an idea that has existed since early days of trade.
As companies grow in size and operations, it becomes
increasingly clear that their focus has to be redirected
to their core activities while the non-core functions can
be ‘sent out’ or ‘outsourced’ to vendors specialized in
that particular function.
Why Outsource Work !
Have you found yourself faced with any of the following
doubts in recent times?
Are my resources being utilized effectively?
Are my current resources capable of supporting new
technology?
Is there a quicker, more effective method to handle
processes?

Does my team have the operational expertise to do
the task assigned?
Are we working at optimum costs?
If you are asking yourself the question ‘why should I
outsource’, consider the following top reasons for
outsourcing cited by companies that have successfully
made offshore outsourcing work for them.
Strategic Reasons for Outsourcing
Focus on core functions: Companies that outsource
certain routine functions to offshore experts are capable
of focusing on their core competency. Before outsourcing
caught on in such a big way, healthcare practices had to
deal with functions like transcription, medical
billing and claims processing which consumed a lot of
their time and resources.
However, now by outsourcing these processes to external
locations these practice are able to focus on their primary
concern - ‘patient care’.
Redirect strategic internal resources for core activities:
Outsourcing processes to external third party ensures
that an organization’s internal resources are freed up for
more mission-critical activities.
Accelerate migration to new technology: Migrating to
newer technologies allows companies to make better use
of their investments and enjoy enhanced productivity
and quality. Companies with outsourced IT processes are
better enabled to migrate to new technologies with
minimum downtime and productivity disruption.
Enhance risk management: In any outsourcing model
the offshore partner supplements the operations of the
outsourcing company with redundancies and back-up
mechanisms. In the event of any natural calamities,
accidents, market fluctuations or technical crises the
rigorous disaster recovery mechanisms and detailed back
up plans at the offshore vendor’s end can help
companies to rapidly respond to the situation and get
operations back on track within remarkable turnaround
time.
Lower infrastructure investments: Companies that
decide to outsource find that expensive infrastructure
requirements are cut back drastically as some of the
functions move to external locations. Cutting edge IT
systems, state-of-the-art customer servicecall centers
and technical helpdesks entail heavy investments to
companies. By outsourcing these functions to external
vendors, companies can keep their investments in these
areas very low.
Access to world-class capabilities: Apart from the
financial benefits associated, another reason why
companies outsource work is to have processes delivered
by teams that have operational expertise in the
outsourced process. Outsourcing gives companies access
to world-class capabilities and infrastructure in the
outsourced function.
Tactical Reasons for Outsourcing
Control operating costs: One of the most talked
about advantages of outsourcing to locations like India
is the cheap labor costs in these countries. Processes
outsourced to these locations are done at much cheaper
rates and same quality levels as in the donor location.
This translates into major cost savings for companies.
They also save on operational costs such as payroll,
administrative costs, HR, power, rentals and utilities as
processes move to other locations.
Improve operational performance: Companies
outsource to vendors who have domain expertise in the
outsourced process. Their experience in the field
translates into greater operational efficiencies for the
outsourcing company.
Talent shortages in countries like the U.S. and UK: One
of the key reasons why outsourcing has become a
necessity is the shortage of talent in countries like the
U.S. and UK. As the previous generation of workers
approach retirement, there are precious few newcomers
coming in to fill the skills pipeline. The obvious outcome
of this acute talent shortage is an increased demand for
skills wherever they may be available.
Overcome seasonal workflows: Industries in the U.S.
and UK are subject to seasonal fluctuations in work and
lack of workers during holidays and off-seasons. One of
the advantages of outsourcing such processes to
countries like India and Philippines is that companies can
deal with peak workloads and poor staff strength during
vacations and holidays.
One time applications: Companies often need to build
one time applications. Such ad hoc or one time
applications will require which require high manpower
resources and companies find that they are faced with
the need to ramp up in relatively short time spans.
Outsourcing such needs is the best solution for
companies that want to avoid expensive outlays for the
short term.
Outsource to India is a provider of world-class
outsourced services to a global clientele. Headquartered
in Bangalore, we have multiple delivery centers across
India and offices functioning in the U.S., South East Asia
and South America. We have proven competencies in a
range of services such as Data Entry Services, Engineering
Services, Healthcare Services, Financial Services,
Software Development, Web-analytics Services and
more. Read about the range of services offered by
Outsource to india.
Why Outsourcing is still popular?
Despite outsourcing having come into a lot of
controversies in recent times, industry watchers predict
that outsourcing as a business practice is on a growth
mode. More and more companies are drawing up plans
to outsource work to offshore locations. The trend is
clearly in favor of outsourcing larger volumes of work.
Vendors are moving up the value chain to include in their
service offering a range of additional services that require
greater skills, research support and expertise. As offshore
vendors become more streamlined and improvise on
the offshore outsourcing model, it is not difficult to see
why outsourcing is here to stay.

THE 5WS OF OUTSOURCING
If your organization is new to outsourcing, you might be
confused about why should I outsource, who should I
outsource to, who should outsource, when should I
outsource,what should I outsource and where should I
outsource. Making the right decisions aboutwho to
outsource to, when to outsource, where to
outsource and what to outsource can go a long way in
helping you make the most out of outsourcing. This
article gives you insight on the five Ws of outsourcing,
namely, who should I outsource to?, why should I
outsource?, what should I outsource?, when should I
outsource? and where should I outsource to?
Who Should Outsource?
Today, outsourcing has become the order of the day.
Almost every organization is outsourcing. If you are
unsure about stepping into outsourcing, analyze your
organizations’ needs and find out if your business really
requires outsourcing.
Ask yourself the following questions.
Is my organization finding it difficult to meet customer
needs?
Does my organization want to remain small, but has a
huge market presence?
Does my organization have managers who are not sure
about which product lines make/lose money?
Is my company experiencing constant challenges based
on operational issues?
Does my organization lack the expertise that would
grow my business?
Does my organization have important nonrecurring
project requirements but no resources to handle them?
If you have answered ‘yes’ to more than one question,
then you must venture into outsourcing. Outsourcing
can help you to efficiently deal with the following
challenges. Outsourcing can help you to meet your
customer needs on time, make a huge market presence,
make the right decisions about product lines, overcome
operational challenges, get access to expert services and
benefit from professional resources who can
competently handle your projects.
It does not matter to which industry your organization
belongs to. Outsourcing can bring tremendous benefits
to any type of business, be it B2B, B2C, SMEs, large
diversified companies or small home offices. Make a
decision to outsource today and see a transformation in
your business.
What will I benefit from outsourcing?
Outsourcing can give you access to the several benefits
of outsourcing. The following are a list of some of the
benefits of outsourcing.
Get access to the best & latest in workflow
technology without any capital investment
Benefit from professional and skilled services
Better and cheaper services
Save on time, effort, infrastructure and resources
Large volumes can be completed on time
Increased efficiency and productivity
Reduced capital and labor costs
Faster time to market
Improved processes bring about improved customer
satisfaction
Gain a competitive edge with sophisticated
technology and people
Benefit from operational efficiencies without capital
investment
Benefit from better performance and management
Benefit from process maturity and scalability
Get ahead of the competition with strategic
outsourcing. Outsource to O2I now.
What should I Outsource?
You can outsource almost anything today. You will be
able to easily find an outsourcing provider for any service
that you might want to outsource. The following are a
list of services that can be outsourced to India. India has
a large talent pool of skilled professionals who can
efficiently provide the service that you want to
outsource.
Our key services are:
Call Center Services
Data Entry Services
Software Development
Mortgage Services
Engineering Services
Healthcare Services
Financial Services
Photo Editing Services
Research & Analysis
Creative Services
Outsource your business processes and focus on your
core competencies. Tell us your needs.
When should I Outsource?
The right time to outsource would be when you want
your personnel to concentrate on your core
competencies. While your resources focus more on
business critical functions, other functions which are not
critical can be done by your outsourcing provider. If you
want to get access to expert services, then again it is the
right time to outsource, If you want your services to be
completed on time, in a faster, cheaper and better
manner, then again it is the right time to outsource. If

you do not want to invest in software, technology,
manpower and resources, then you must consider
outsourcing. Finally, if you want your organization to gain
a competitive edge, then you must outsource.
Where should I Outsource?
There are many countries that you can outsource to, but
the best country to outsource to would be India. India is
the world’s outsourcing hub and the most preferred
outsourcing location in the world. India is the most ideal
place to outsource to, because India offers many
advantages. Outsource to India and benefit from cost-
effective services, skilled resources, specialized services
and timely deliveries. Several global organizations have
set up offices in India, totap the benefits that India offers.
Asking yourself the 5Ws of outsourcing can help you
make the right outsourcing decision.
6 OUTSOURCING CHALLENGES FOR 2016
With the economy paragliding in the winds of
uncertainties, challenges are jetted out on all major
industries including the rapidly growing outsourcing
industry. To be geared up for the upcoming challenges
of 2016 is definitely a pressing business need for both
the outsourcers and the service providers. So let’s look
ahead and see what challenges 2016 may dish out to
the outsourcing industry.
1. Outsourcing giants like India and China are struggling
With an overall shaky economy there is dire need to
check and analyze the vendor’s financial health and its
ability to overcome the rough economic patch for a
sustained partnership. Outsourcers should be extremely
cautious and follow due diligence while choosing
vendors, as small vendors may easily close their
businesses if the situation continues to be challenging.
NASSCOM predicts slow growth for India IT-BPO Industry
in FY 2012-2013 with a lesser growth rate of around 14%
with revenues of around US$115 billion in FY 2012-13
compared to revenues of around US$ 101 billion at 15%
growth for FY 2011-12.
2. Changes in outsourcing laws
The economic crisis and local political changes may force
changes to the outsourcing laws in European and Asian
countries. So as outsourcers you need to keep a check
on the same and act accordingly.
3. To outsource or not, in national interest
This leads to another challenge, whether to outsource
or to near-shore. This primarily rests on two factors: one,
to upkeep the national interest and economy by near-
shoring, which also has other cultural and geographic
advantages; and two, to continue outsourcing and
ushering global economic sustenance at cheaper costs
and competitiveness, and at the same time embracing
economic challenges that the Euro zone and the other
Asian economies are facing.
4. Greener partners
Ensuring that your service provider follows green norms
for a greener environment is partly your responsibility;
you can also mandate them to follow environmental
norms to keep your partnership going. One of your
challenges is to make your service provider follow these
norms and become a true global player.
5. Understanding new participating economies
As more and more emerging economies vie for a part of
the outsourcing opportunity, the competition mandates
them to be more lucrative but with hidden challenges.
So exercising extreme care is really important when going
for these new service providers. You have to study their
work culture, living standards, government policies, tax
issues, political stability, work experience, etc., before
signing them in.
As per the global outsourcing report by Mark M and Dr.
Frank, over 30 highly competitive economies will
compete for an outsourcing opportunity in the coming
two years.
6. Partnering with service providers
It is no longer outsourcing and getting relieved of the
task, it’s more about understanding, partnering and
expanding your business in the service provider’s
country. This is extremely lucrative and also challenging,
but it’s a challenge worth taking by partnering with your
offshore service providers, who with their nativity edge
can help you expand.
THE OUTSOURCING HISTORY OF INDIA
The idea of outsourcing is not new. It started way back
in the 1700s when manufacturers started shifting the
manufacture of goods to countries with cheaper labor
during the Industrial Revolution, following the precepts
of Adam Smith in his book ‘The Wealth of Nations’. The
history of outsourcing to India is an interesting story.
Even after over a decade of competitive global
outsourcing, most of it still goes to India. Reaching this
pinnacle in outsourcing has been a long journey. As land,
sea, and later, air routes developed between the 15th

and 21st centuries, more nations started to outsource
trade to other nations, eventually leading to outsourcing
to India and other nations.
Why do companies actually outsource? In earlier times,
cost and headcount reductions were the most common
reasons to outsource. Today, the drivers are often more
strategic, such as how a company can best utilize its own
core competencies. Though the outsourcing of
manufacturing is an old story, outsourcing to services is
a relatively new phenomenon. Services outsourcing to
India started in the 1980s and rapidly accelerated in the
’90s. In today’s world where information technology has
become critical to business, the meaning of outsourcing
has undergone a drastic change over the years.
Companies have started focusing on their core
competencies and outsourcing many non-core functions,
for which they had no competence internally.
Key Factors:
Although the IT industry in India has existed since the
early 1980s, it was the early ’90s which saw the
emergence of outsourcing. First, some global airlines
began outsourcing their back office work to India—and
then IT companies followed. Some of the earliest players
in the Indian outsourcing market were Texas Instruments,
American Express, Swissair, British Airways and GE, who
started captive units in India. Over the years, the industry
has built robust processes to offer world class IT software
and technology-related services.
India offers a unique combination of attributes that have
established it as the preferred destination for IT-BPO.
Advances in technology and communication have
allowed transnational companies to rapidly globalize at
a very low cost. The cost of managing workers in a distant
location had fallen drastically, and the need to outsource
became stronger. Significantly, India also began efforts
to open up its economy to the world. Since the onset of
globalization in the early 1990s, successive governments
have pursued programs of economic reform committed
to liberalization and privatization. The government
started easing restrictions and liberalizing the economy,
which has helped the country see rapid economic
growth.
Developments in telephony, fiber optics and satellite
communications made Internet-based communication
and transfer of data possible, paving the path for
outsourcing to India. The telecom industry in India used
to be a government-controlled monopoly and the market
was small. By 1999, the government introduced policies
which played a key role in reshaping the structure and
size of the telecom Industry, allowing commercial entities
to participate in almost every industry segment. The new
telecom policy brought in further changes with the
introduction of IP telephony and ended the state
monopoly on international calling facilities. The
government’s liberalized investment policies have
resulted in several foreign companies entering Indian
markets, which has been a major contributor to the
growth of the Indian economy.
In addition to the central government’s intervention,
state governments are also competing with each other
to offer more favorable business environments in order
to attract IT/ITES companies to set up development units
in their states. This kind of competition is helping the
industry grow at an astronomical rate.
Indian companies are enhancing their global service
delivery capabilities through a combination of greenfield
initiatives, cross-border mergers and acquisitions,
partnerships and alliances with local players. Global
software giants like Microsoft, Oracle, SAP and many
others have established captive development centers in
India over the years. Indian authorities have made efforts
to further strengthen the information security
environment in the country, and special initiatives have
been taken to enhance the legal framework. Many
companies in India have already aligned their internal
processes and practices to international standards such
as ISO, CMM, Six Sigma, etc. which have helped establish
India as a credible outsourcing destination.
The IT & BPO sector has been a key beneficiary in India’s
growth, with the cost of international connectivity
declining rapidly and quality of service improving
significantly. India’s National Association of Software and
Service Companies (NASSCOM) has played a critical role
in outsourcing by acting as a coordinating body for the
industry. It conducts surveys and conferences which help
in the dissemination of knowledge and research in the
outsourcing industry. As per NASSCOM, “While India’s
low-cost talent pool has helped its businesses grow,
global incumbents have also recognized India’s inherent
advantage and have mastered this capability by off-
shoring more work out of India.” India’s competitive
advantage lies in its ability to provide huge cost savings
and thus enabling productivity gains.
According to NASSCOM, the major reasons behind India’s
success in ITES/ BPO industry are:
Abundant, skilled, English-speaking manpower,
which is being harnessed even by ITES hubs such as
Singapore and Ireland.
High-end telecom facilities and infrastructure which
are on par with global standards.
Better focus on maintaining quality and
performance standards.
Fast turnaround times, and the ability to offer 24x7
services based on the country’s unique geographic
locations that allow for leveraging time zone
differences.
A friendly tax structure, which places the ITES/BPO
industry on par with IT services companies.
Proactive and positive policy environment which
encourages ITES/BPO investments and simplifies
rules and procedures.
India has become the largest player in offshore delivery
with levels of work delivered that are amongst the
highest across several verticals. The supply-side elasticity
of skilled English-speaking manpower across technology
and non-technology spaces is unmatched. The success
of the industry has resulted in Indian companies looking
at acquisition targets worldwide, and the Indian service
provider community is being viewed as a “strategic
business partner” and not just an IT services vendor.

Over the years, BPO has become the second largest
segment in Indian IT/ ITES industry and also the fastest
growing. The scope of process outsourcing has widened
over the past few years to also include KPO (Knowledge
Process Outsourcing) operations. Customer Care is the
largest contributor in the BPO segments. The last few
years have witnessed the industry evolve from executing
projects at the lowest end of the value chain, to one
where Indian players are aggressively bidding for and
winning large-scale turnaround projects. At the same
time, the Small and Medium Providers (SMPs) in this
sector are holding their own during these difficult times.
The SMPs in India are integral to the growth engine of
the industry in particular, and the Indian economy in
general. As per studies by NASSCOM:
The compounded annual growth rate (CAGR) of the
industry has been over 25% in the last five years.
Over these years, four main components have
formed the industry, IT services, BPO, Engineering
Services and Hardware.
Banking and Financial Services, Telecom,
Manufacturing are among the top 4 verticals for
both export and domestic market.
While hardware dominates the domestic market, IT
services tops in the overall industry.
Today, Indian companies offer a wide variety of
outsourced services ranging from medical transcription,
customer care, medical billing services, database
marketing to Web sales/ marketing, accounting, tax
processing, transaction document management,
telesales/ telemarketing, HR hiring and biotech research.
Outsourcing to India has been a satisfactory and
profitable experience for most companies around the
world. Indian outsourcing vendors have continuously
adapted to internal and external challenges and the
credit for this goes to Indian outsourcing companies and
the successive enabling governments. Outsourcing in
India has faced adversities due to the state of the world
economy and the ongoing recession, but it is surely here
to stay.
Outsource to O2I
If you want cost-effective services without compromising
on quality, look no further than Outsource2india. We
have skilled, experienced and well-trained professionals
who will provide you world class services. When you
outsource to O2I, you can be assured of a quick
turnaround time. Outsource you requirements to O2I
and benefit from our expert, efficient and technology-
driven services. Contact us with your outsourcing
requirements.
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3. Davies, Paul. What’s This India Business?:
Offshoring, Outsourcing, and the Global Services
Revolution. London: Nicholas Brealey International,
2004. Print.
4. Overby, S (2007) ABC: An Introduction to
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Discipline Business Trends Quarterly
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7. Holcomb & Hitt, 2007
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Left Created the Outsourcing Crisis - and How We
Can Fix It. New York: Sentinel, 2004. Print 97-118.
11. Hunt, Albert R. “Letter From Washington: As U.S.
rich-poor gap grows, so does public outcry” NY
Times 2/18/2007
12. Condon, Bernard. “Study: Tax code slashes tax for
hugely profitable companies” USA Today 8/16/2012.
13. Forey, Gail, and Jane Lockwood. Globalization,
Communication and the Workplace: Talking across
the World. New York: Continuum, 2011. Electronic
Book #21-26.
14. The Future Of Outsourcing
15. Koulopoulos, Thomas M.: Driving Innovation and
Growth through Outsourcing. Avon, MA: Platinum/
Adams Media, 2006. Print.
16. Lawrence, Robert Z. Single World, Divided Nations:
International Trade and OECD Labor Markets.
Washington, DC: Brookings Institution 1996. Print
#89-102.
17. Parry, G. and Roehrich, J.K. (2009). Strategic
outsourcing of core competencies in the automotive
industry: Threat or opportunity? International
Journal of Automotive Technology and
Management. 9(1): 40-53.
18. Maddock, B. & Warren, C. & Worsley A.
(2005) Survey of canteens and food services in
Victorian schools.
19. Nadeem, S (2009) Macaulay’s (Cyber) Children: The
Cultural Politics of Outsourcing in India. Cultural
Sociology.
20. Alster, N (2005) Customer
Disservice. www.CFO.com.
21. Ribeiro, J (2005) Indian call center workers charged
with Citibank fraud. www.infoworld.com
22. Wadhwa, V (2005) About That Engineering Gap.
www.businessweek.com

I
ndia’s GDP numbers for quarter January-March stood
at 7.9 per cent as against 7.3 per cent in October-
December, thereby making it the fastest growing
economy in the world.
India’s gross domestic product (GDP) grew 7.6 per cent
in 2015-16, powered by a rebound in farm output, and
an improvement in electricity generation and mining
production in the fourth quarter of the fiscal. Economic
growth was estimated at 7.2 per cent in 2014-15.
The growth numbers for the last fiscal, which reinforces
India’s position as the world’s fastest-growing large
economy, came on the back of a strong 7.9 per cent
growth in the last quarter of the fiscal.
The robust headline number, despite faltering private
investment, weak capital goods growth and shrinking
exports, has reinforced expectations that the RBI would
keep its policy rate on hold at its next quarterly review
next Tuesday. The central bank has already cut its policy
repo rate by 150 basis points since January 2015,
reducing it to 6.5 per cent — the lowest level in more
than five years.
The strong 7.9 per cent growth in the fourth quarter
comes at a time when China has reported a 6.7 per cent
in the March quarter — its slowest growth in about seven
years.
According to data released by the Central Statistics Office
(CSO), the farm sector grew by 2.3 per cent from a year
ago compared with a 1.0 per cent contraction in the
December quarter. Mining grew 8.6 per cent in the March
quarter, up from 7.1 per cent in the previous quarter.
Electricity, water and gas production growth surged to
9.3 per cent from 5.6 per cent in the December quarter.
The CSO, in a statement, said that it has revised the GDP
data for the first three quarters released earlier from
7.6 per cent, 7.7 per cent and 7.3 per cent to 7.5 per
cent, 7.6 per cent and 7.2 per cent, respectively.
Also, the growth of in the “agriculture, forestry and
fishing” sector was revised upwards to 1.2 per cent in
2015-16 as against 1.1 per cent in the advance estimates
for the same period. “The upward revision is on account
of the use of third advance estimates of crop production
released by the Ministry of Agriculture,” it said.
The manufacturing sector’s growth was also revised
downward to 9.3 per cent as against the growth rate of
GDP: AT 7.6%, INDIA’S GROWTH POINTS TO
FASTEST GROWING LARGE ECONOMY
ARUN JAITLEY
HON. FINANCE MINISTER OF INDIA
9.5 per cent estimated earlier due to lower print of
industrial output than estimated earlier. “The IIP of
manufacturing registered a growth rate of 2 per cent
during the whole year of 2015-16, as against the growth
rate of 3.9 per cent used for compiling Advance
Estimates. Due to this change, the advance estimate
growth of ‘manufacturing’ sector has been revised
downwards to 9.3 per cent,” it added.
Growth of trade, hotels, transport, communication
services has been revised downward to 9 per cent against
9.5 per cent estimated earlier, while financial, insurance
and real estate sector grew at 10.3 per cent, same as
projected earlier.
Upasna Bhardwaj, Economist, Kotak Mahindra Bank, said
that private consumption has been holding up, mirroring
some of the progress in high frequency data such as auto
sales and the improving prospects of adequate
monsoons.
“Another reason for the pickup in private consumption
could be attributed to the heavy dividend payouts by
corporates rather than increasing investment spending.
Overall, the continued weakness in capital goods
production and lack of capacity addition continues to
remain a drag on growth. Going forward, better
monsoons and seventh pay commission payouts are
likely to remain supportive of consumption. However,
private capex will likely remain the missing link for a few
more quarters with growth continuing to be heavily
reliant on government spending. We, therefore, see a
gradual uptick in growth next year,” she said.
The Economic Survey had projected a wide band of 7-
7.75 per cent growth in 2016-17, boosted by normal
monsoon projection. It had, however, cautioned that
with the global slowdown likely to persist, chances of
India’s growth rate in 2016-17 increasing significantly
beyond 2015-16 levels were not very high.
The RBI, too, in its April monetary policy review, said a
number of factors could impinge upon the growth
outlook for the current fiscal such as slow investment
recovery amid balance sheet adjustments of companies,
weak revival of private investment demand and tepid
external demand.
Source: The Indian Express-1st June 2016

N
ow a day’s all most all the bank has become very
much shaky and scared while accepting any new
proposals from third party those who are not the
existing borrower or already banking with that particular
bank. Banks have enough funds inflow presently in place
with them but reluctant to invest good funds into bad
money unless otherwise is doubly assured with the
minimum risk factor.
Bank is always conservative in nature particularly after
late 90’s wherein they burnt their fingers in many cases
by which its NPA level substantially were very high and
did not examine the credit proposal extensively before
sanctioning the facilities. They were focused mainly on
revenue earnings. At that time the bank’s interest rate
was very high and most of the borrowers unable to
repaid their money on time due to high interest rate. Of
course, the economic meltdown took place at that time
and lots of foreign banking outfit were bankrupt. This
fear factor has induced the entire banking fraternity to
reduce their investment level.However, Indian banks
nicely managed to handle the crisis and did not face any
major issues due to such meltdown. Govt.of India was
greeted by a round of applause for creating such fearless
atmosphere in India.
In my article, I would like to highlight some dimensions
on how to prepare the proposal for those borrowers who
are going to place a loan packageor for availing credit
facilities like project finance/working capital finance/
trade finance/ finance for diversification of their
respective units. These write up/guidelines are both for
new units and existing units.
Not all banks are created same, but many of them focus
on the same areas throughout the loan review process.
You must be clear what documentation, projections and
narratives you’ll need to prepare as well as tips to ensure
you to negotiate the best loan package as available
within the bank.
Five Major Pointsof Loan Applications
The most fundamental characteristics of prospective
lenders will concentrate on the following:
1. Your credit history/past performance
2. Your cash flow history and projections for the
business
3. Your collateral available to secure the loan
4. Your credentials
5. Bank loan documentation that includes business
CHANGING PERSPECTIVE OF ALL BANKS WHILE EXTENDING
THE CREDIT FACILITIES DUE TO INCREASE OF NPA ACCOUNTS
AVIJIT CHAKRABORTY
FINANCIAL EXPERT AND FACILITATORS
avijit_atosh@hotmail.com
and personal financial statements, income tax
returns, a business plan and that essentially sums
up and provides evidence for the first four items
listed
The first three of these criteria are objective data
(although interpretation of the numbers can be
subjective).
The fourth item—your character—allows the lender to
make a more subjective assessment of your businesses.
In assessing whether to finance to consider individual
factors that represent strengths or weaknesses for a
loan.
Loan Documentation : The process of applying for a
loan involves the collection and submission of a large
amount of documentation about your business and
yourself.
The documents required usually depend upon the
purpose of the loan, and whether your business is a
startup or an already-existing company.
Documentation for Startups unit : A bank will typically
request, at a minimum, the following documentation for
a startup business:
a personal financial statement and personal federal
income tax returns from the last one to three years
projected startup cost estimates
projected balance sheets and income statements for
at least two years
projected cash flow statement for at least the first
12 months
evidence of ownership interests in assets, such as
leases and contracts, and collateral
a business plan that includes a narrative explaining
the specific use for the requested funds, how the
money will assist the business and how the
borrowed funds will be repaid (repayment sources
and duration of repayment period), including
identifying any assumptions used in developing your
projected financial
a personal resume, or at least a written explanation
of your relevant past business experience
letters of reference recommending you as a
reputable and reliable business person may also help
your chances for a loan approval
Some lenders will also want you to submit a breakeven

analysis in the form of a financial statement or a graph.
A breakeven analysis shows the point at which the
company’s expenses will match the sales or service
volume. The breakeven point can be expressed in terms
of units sold.
Documentation for Existing Businesses : For an existing
business, you can anticipate a request to produce:
income statements and business balance sheets for
the past three years
projected balance sheets and income statements for
two years
projected cash flow statements for at least the next
12 months
personal and business tax returns for the last three
years
a business plan, depending upon the credit history
of your business and the purpose for the loan, may
be unnecessary, and a brief narrative of your
intentions may suffice
Additional Documentation Requests to Expect :
Depending upon the specific type of loan you are
seeking, you should also address certain issues germane
to that loan type.
For instance, if money is requested for working capital,
your documentation should include:
The amount that will be used for accounts payable,
along with an accounts receivable aging report to
disclose the current amounts overdue 30 to 60 days
or older
The amounts that will be used for inventory and any
increase in the number of days that inventory on
hand will be held
The amount your cash balances will be increased
A contingency amount that is equal to at least 10
percent but preferably 25 percent.
If money is needed for machinery or equipment, include
information that addresses:
whether the assets will be immediately available or
if a delay is anticipated
the price of the assets and how installation will be
performed
whether installation will interfere with current
production and the cost of any interruptions
Documentation for an acquisition/purchasing of land
financing should include the real estate’s cost, location
and size, intended use, and whether any of the land is
for future expansion.
The objective of writing this article is to raise the veil so
to speak about the borrowers for those who are
frantically searching guidelines for preparation of loan
documents. I shall be glad if it helps those who may
gather some idea how to prepare the loan application
from these articles. For more details, please may contact
me on my email.
Indian Institute of Materials Management
MISSION
To promote professional excellence in materials
management towards National Prosperity
through sustainable development.
OBJECTIVE
To secure a wider recognition of and promote
the importance of efficient materials management
in commercial and industrial undertakings.
To safe guard and elevate the professional status
of individuals engaged in materials management
faculty.
To constantly impart advanced professional
knowledge and thus improve the skill of the
person engaged in the materials management
function.
Propagate and promote among the members
strict adherence to IIMM code and ethics.
CODE OF ETHICS
To consider first the total interest of one’s
organisation in all transactions without impairing
the dignity and responsibility of one’s office :
To buy without prejudice, seeking to obtain the
maximum ultimate value for each rupee of
expenditure.
To subscribe and work for honesty and truth in
buying and selling; to denounce all forms and
manifestations of commercial bribery and to
eschew anti-social practices.
To accord a prompt and courteous reception so
far as conditions will permit, to all who call up on
legitimate business mission.
To respect one’s obligations and those of one’s
organisation consistent with good business
practices.

SHASHI KANT SHARMA CHAIRS 1ST BRICS SAIS
LEADERS MEETING
C
AG Institution in India has taken several initiatives
towards use of latest data analytical tools for audit
planning & analysis and is also fine tuning its
methodology for audit of environmental issues for better
impact. This was disclosed by Comptroller and Auditor
General of India Shri Shashi Kant Sharma in Beijing.
He was delivering a key note address at the 1st Meeting
of the Supreme Audit Institutions of BRICS countries in
Beijing. Shri Sharma also shared the contributions made
by the CAG institution of India in enhancing transparency
and accountability in governance and in promoting
economic and social development.
The CAG said that our Governments have taken several
initiatives to address the challenges faced by our
countries and the people by automating service delivery,
choosing partners in development through Public Private
Partnership arrangements, opening up economy for
foreign direct investments and by focusing on sustainable
development.
These government initiatives have brought in new
challenges to the SAI auditors. This has also placed
enhanced Demands for greater objectivity in public
dealings and transparency in governance, he added.
Shri Sharma said that big strides have been made by
Government in automating services rendered by it and
in collecting, compiling and reporting data on its
programme interventions. This has led to a digital data
explosion and opened up an opportunity to the SAIs,
which would be one of the few agencies to have access
to such vast data held by different government agencies.
In the past, SAI auditors were content to analyze the data
maintained by the audit agencies. “Big data” has
provided a window to the SAI auditors to examine the
audited agency data along with related data from other
sources.
The CAG of India disclosed that “Recognizing this trend,
India has formulated a Big Data Management Policy and
is in the process of establishing a Data Analytics Centre.
Our pilot results on using sophisticated data and visual
analytic tools have already produced promising results. I
am convinced that use of improved data analytics will
enable the SAIs to come up with more incisive audit
findings and to assist the Governments in taking
appropriate policy decisions.”
Shri Sharma said that for SAI India, this meeting assumes
greater significance as India has recently assumed
CAG OF INDIA FORMULATES BIG DATA MANAGEMENT
POLICY TO MEET FUTURE CHALLENGES
Chairmanship of the BRICS.
The theme of India’s BRICS Chairmanship is Building
Responsive, Inclusive and Collective Solutions. During
India’s BRICS Chairmanship, India will adopt five-pronged
approach emphasizing on
(i) Institution building to further deepen, sustain
and institutionalize BRICS cooperation;
(ii) Implementation of the decisions from previous
Summits;
(iii) Integrating the existing cooperation
mechanisms;
(iv) Innovation and
(v) Continuity.
Source: PIB
E-tender must from April 1 for Govt
Purchases above Rs 2 lakh
Come April 1, all central ministries and public sector
units will have to float e-tenders for procuring goods and
services exceeding Rs 2 lakh, a move aimed at bringing
transparency in government purchases.
At present, e-procurement is mandatory for purchases of
Rs 5 lakh or more. Government procures goods, services
and work contracts.
In January, the Expenditure Department had decided the
tender value limit of Rs 10 lakh spent in respect of e-
procurement would be brought down to Rs 5 lakh from April
1, 2015 and further down to Rs 2 lakh from April 1, 2016.
As per its instructions it is mandatory for all central
ministries, departments and Central Public Sector
Enterprises, and autonomous/statutory bodies to publish
their tenders on the Central Procurement Portal (CPP) after
a certain threshold limit.
In 2014-15, about 3.81 lakh e-tenders were floated worth
Rs 2.12 lakh crore.
As per the latest data, in 2015-16 so far, 471,826 e-tenders
have been floated entailing an amount about Rs 3.49 lakh
crore.
Bulk of the tenders are floated by Railways followed by
Central Public Works Department (PWD) and defence PSUs.
In the current fiscal so far, 3.56 lakh tenders were floated
for goods, about 93,000 for work contracts and 22,342 for
services.
Source: PTI, 26th
Jan. 2016

I
ndia is on the threshold of major reforms and is poised
to become the third-largest economy of the world by
2030. In the words of our Hon’ble Prime Minister, India
offers the 3 ‘Ds’ for business to thrive— democracy,
demography and demand. Add to that a tech-savvy and
educated population, skilled labour, robust legal and IPR
regime, and a strong commitment to calibrated
liberalization — India is a destination that German
investors cannot overlook. India’s manufacturing sector
has evolved through several phases - from the initial
industrialisation and the license raj to liberalisation and
the current phase of global competitiveness. Today,
Indian manufacturing companies in several sectors are
targeting global markets and are becoming formidable
global competitors. Many are already amongst the most
competitive in their sectors.
Demographics Advantage:
The country is expected to rank amongst the world’s
top three growth economies and amongst the top
three manufacturing destinations by 2020.
Favourable demographic dividends for the next 2-3
decades. Sustained availability of quality workforce.
Strong consumerism in the domestic market.
Strong technical and engineering capabilities backed
by top-notch scientific and technical institutes.
The cost of manpower is relatively low as compared
to other countries.
Infrastructure:
Industrial Parks: Every state in India has developed
industrial parks for setting up of industries.
· National Investment & Manufacturing Zones: NIMZ
is a combination of production units, public utilities,
logistics, residential areas and administrative
services. It would have a processing area, where
manufacturing facilities, along with associated
logistics and other services and required
infrastructure will be located, and a non-processing
area, to include residential, commercial and other
social and institutional infrastructure.
Special Economic Zones: India has also developed
SEZs that are specifically delineated enclaves treated
as foreign territory for the purpose of industrial,
service and trade operations, with relaxation in
customs duties and a more liberal regime in respect
THE NEXT MANUFACTURING DESTINATION
On the threshold of major reforms India is poised to become the third-largest
economy of the world by 2030.
of other levies, foreign investment.
Sector specific clusters: like electronic manufacturing
clusters, mega food parks etc: The government of
India has been promoting the development of sector
specific parks.
Country specific zones: The country also have few
dedicated zones for industrial units from countries
for example Neemrana Japanese Zone etc.
Industrial corridors: The Government of India is
developing the Delhi-Mumbai Industrial Corridor
(DMIC) as a global manufacturing and investment
destination utilizing the 1,483 km-long, high-
capacity western Dedicated Railway Freight Corridor
(DFC) as the backbone. The objective is to increase
the share of manufacturing in the GDP of the
country and to create smart sustainable cities where
manufacturing will be the key economic driver.
Other four corridors: planned include Bengaluru
Mumbai Economic Corridor (BMEC); Amritsar -
Kolkata Industrial Development Corridor (AKIC);
Chennai Bengaluru Industrial Corridor (CBIC), East
Coast Economic Corridor (ECEC) with Chennai Vizag
Industrial Corridor as the first phase of the project
(CVIC).
Incentives offered for manufacturing:
Sector specific initiatives: The government of India
provides sector specific subsidies for promoting
manufacturing for example in order to boost
manufacturing of electronics, the Govt. of India
provides capital subsidy of up to 25% for 10 years.
Area based incentives: Incentives are provided for
units in SEZ/NIMZ as specified in respective acts or
setting up project in special areas like North East
Region, Jammu & Kashmir, and Himachal Pradesh
&Uttarakhand.
Incentives under income tax act:
Investment Allowance: The Government of India in
its Union Budget 2014-15, has provided investment
allowance at the rate of 15 per cent to a
manufacturing company that invests more than US$
4.17 million in any year in new plant and machinery.
Deductions: Several additional deductions are
provided for instance deduction equal to 30% of
additional wages paid to new regular workmen

employed by the assesse over and above 50
workmen.
R&D Incentives: Higher weighted deductions of
200% provided for expenditure related to R&D
subject to fulfilment of conditions.
Export Incentives: Under the foreign trade policy
exports have been provided with several incentives
like duty drawback, duty remission schemes etc.
State Incentives: Apart from above each state in India
offers additional incentives for industrial projects.
Some of the states also have separate policies for
textile sector. Incentives are in areas like rebated
land cost; relaxation in stamp duty exemption on
sale/lease of land; power tariff incentives;
concessional rate of interest on loans; investment
subsidies / tax incentives; backward areas subsidies;
special incentive packages for mega projects.
Recent Initiatives & Budget announcements for
promoting manufacturing:
Ease of Doing Business:
The corporate tax rate for companies registered in
India to go down from 30% to 25% of net profits in
a phased manner over the next four years starting
from FY 16-17.
An expert committee to examine the possibility and
prepare a draft legislation where the need for
multiple prior permission can be replaced by a pre-
existing regulatory mechanism.
Goods and Services Tax proposed to be implemented
from April 01, 2016.
The process of applying for Industrial License (IL) and
Industrial Entrepreneur Memorandum (IEM) has
been made online.
Initial validity period of Industrial License has been
increased to three years from two years, also, two
extensions of two years each in the initial validity of
three years of the Industrial License shall now be
allowed up to seven years. This will give enough time
to licensees to procure land and obtain the
necessary clearances/approvals from authorities.
Operationalizing the e-BIZ portal: Through eBiz
portal, a business user can fill the eForms online/
offline, upload the attachments, make payment
online and submit the forms for processing of the
department.
Labor reforms:
A dedicated ShramSuvidha Portal: The portal would
allot Labour Identification Number (LIN) to nearly 6
lakhs units and allow them to file online compliance
for 16 out of 44 labour laws
An all-new Random Inspection Scheme: Utilizing
technology to eliminate human discretion in
selection of units for Inspection, and uploading of
Inspection Reports within 72 hours of inspection
mandatory
· Universal Account Number: Enables 4.17 crore
employees to have their Provident Fund account
portable, hassle-free and universally accessible
Apprentice ProtsahanYojana: Will support
manufacturing units mainly and other
establishments by reimbursing 50% of the stipend
paid to apprentices during first two years of their
training
Department of Industrial Policy and Promotion has
identified various areas and action points on ease
of doing business index/indicators have been
prepared for assessing the overall business
performance of the country as well as States/Union
Territories.
Government has undertaken a number of steps to
improve Ease of Doing Business in India. A large
number of components of Defence Products’ list
have been excluded from the purview of Industrial
Licencing. The application process for Industrial
Licence and Industrial Entrepreneur’s Memorandum
has been made easy by simplification of form and
making the process online 24X7. The validity period
of the Industrial Licence and security clearance from
Ministry of Home Affairs has been increased. The
process of registration with Employees’ Provident
Fund Organization and Employees’ State Insurance
Corporation has been made on line and real-time.
Process of obtaining environment and forest
clearances has been made online. The Department
of Industrial Policy and Promotion has advised
Ministries and State Governments to simplify and
rationalize the regulatory environment through
business process reengineering and use of
information technology. 14 Government of India
services have been integrated with the online single
window eBiz portal
Skill India: ‘SKILL INDIA’ - a multi-skill development
programme has been initiated with a mission for job
creation and entrepreneurship for all socio-economic
classes. It endeavours to establish an international
equivalent of the Indian framework on skill development,
creating workforce mobility and enhancing youth
employability.
Sector opportunities: India provides great avenues for
investments in various sectors.
Defence: India is expected to spend US$ 40 billion
on defence purchases over the next 4-5 years. The
opening of the strategic defence sector for private
sector participation will help foreign original
equipment manufacturers to enter into strategic
partnerships with Indian companies and leverage
the domestic markets and also aim at global
business.
Automotive: India is expected to become a major
automobile manufacturing hub and the third largest

market for automobiles by 2020, according to a
report published by Deloitte. India is currently the
seventh-largest automobiles producer in the world
with an average annual production of 17.5 million
vehicles, and is on way to become the fourth largest
automotive market by volume, by 2015.
Engineering: The Indian Engineering sector has
witnessed a remarkable growth over the last few
years driven by increased investments in
infrastructure and industrial production. The
engineering sector, being closely associated with the
manufacturing and infrastructure sectors of the
economy, is of strategic importance to India’s
economy. Growth in the sector is driven by various
sub-sectors such as infrastructure, power, steel,
automotives, oil & gas, consumer durables etc.
Textiles: The Indian textiles industry, currently
estimated at around US $108 billion, is expected to
reach US $ 141 billion by 2021. The Indian textile
industry has the potential to grow five-fold over the
next ten years to touch US$ 500 billion mark on the
back of growing demand for polyester fabric,
according to a study by Wazir Advisors and PCI
Xylenes and Polyester. The US$ 500 billion market
figure consists of domestic sales of US$ 315 billion
and exports of US$ 185 billion.
Chemicals: The Indian chemical industry stands as
the third largest producer in Asia and 12th in world,
in terms of volume. This industry could grow at 14
per cent per annum to reach a size of US$ 350 billion
by 2021. India accounts for approximately 7 per cent
of the world production of dyestuff and dye
intermediates and is currently the world’s third
largest consumer of polymers and fourth largest
producer of agrochemicals.
Food Processing: The Indian food industry stood
around (US$ 39.03 billion) in 2013 and is expected
to grow at a rate of 11 per cent to touch (US$ 64.31
billion) by 2018.
Leather: India’s leather industry has witnessed
robust growth, transforming from a mere raw
material supplier to a value-added product exporter.
In fact, today, almost 50 per cent of India’s leather
business comes from international trade.
Pharmaceuticals: The Indian pharmaceutical
industry is estimated to grow at 20 per cent
compound annual growth rate (CAGR) over the next
five years, as per India Ratings, a Fitch Group
company. Indian pharmaceutical manufacturing
facilities registered with US Food and Drug
Administration (FDA) as on March 2014 was the
highest at 523 for any country outside the US. We
expect the domestic pharma market to grow at 10-
12 per cent in FY15 as compared to 9 per cent in
FY14, as per a recent report from Centrum Broking.
The domestic pharma growth rate was 11.9 per cent
in October 2014, highlighted the report.
Electronics: The electronics market is one of the
largest in the world and is anticipated to reach US$
400 billion in 2022 from US$ 69.6 billion in 2012.
The market is projected to grow at a compound
annual growth rate (CAGR) of 24.4 per cent during
2012-2020.
Electronics Systems Design & Manufacturing
Heavy industries
Machineries
Engines
Tools
Steel products
Industrial equipment’s
Electrical and Home Appliances
Builders Hardware
Railway and related products and equipment’s
The Indian electronics system design and
manufacturing (ESDM) industry is at a huge
inflection point. From being predominantly
consumption driven, the Indian ESDM industry has
a major potential to become a design led
manufacturing industry. The industry is one of the
fastest growing sectors in the country. The Indian
ESDM industry was estimated to be $68.31 billion
in 2012. The impressive guidance between 2011 and
2015 for this industry is expected to result in a
Compound Annual Growth Rate (CAGR) of 9.88
percent. The corresponding size of the industry by
2015 is anticipated to be $94.2 billion. Reasons to
Invest
Huge consumption market: The corresponding size
of the industry by 2015 is anticipated to be $94.2
billion. Large demand to be generated due to
government schemes like the National Knowledge
Network (NKN), National Optical Fibre Network
(NOFN), tablets for the Education sector, a
digitisation policy and various other broadband
schemes.
Attractive Incentives: The central and state
government have announced scheme of incentives
for manufacturing of electronics. Incentives include
up to 25% capital subsidy on capital expenditure,
giving land at rebated cost, reimbursement of
central and state duties, income tax exemptions on
setting up in special economic zones, assistance in
skill development etc.
Availability of the infrastructure: The government is
promoting development of electronics
manufacturing clusters throughout the country to
provide world class infrastructure and facilities. The
Government of India has also received the
applications of two consortia (IBM, Jaypee Group,
TowerJazz; ST Microelectronics, HSMC) to establish
2 semiconductor wafer fabrication units in Gujarat

MMR_July_2016_Final

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