CII Mission Manufacturing Oct-Dec 2017

QUARTERLY
Mr Chandrajit Banerjee
Director General, CII
Message from
VOL.1|ISSUE3,OCTOBER-DECEMBER2017
The Make in India (MII) program of the
Government endeavors to increase the share
of manufacturing in GDP to 25% by 2025.
India’s manufacturing sector stands at
around USD 350 billion as of 2016-17.
According to CII estimates, this could
increase to USD 650-750 billion by 2022,
enhancing the share of manufacturing to
22-25% of Gross Value Added (GVA). In the
long term, GVA could rise to USD 1.3-1.4
trillion by 2030, maintaining its share in total
GVA at 25% in the manufacturing sector.
After the overwhelming
response to MII, the
Government is planning to
launch MII 2.0. This will
require developing advance
manufacturing facilities in
the areas of specialty
materials, biologics,
nanotechnology, precision
mechanical devices,
integrated circuits, high-end
general-purpose chips,
embedded systems,
processors, and medical
imaging devices.
Inside
01
Special
Feature
Smart
Manufacturing
04
03Policy
Focus
20 Reviving Manufacturing:
Key Recommendations for
Union Budget 2018-19
Ankit Mehta
Co-Founder & CEO
Ideaforge
04Leaders
Speak
27
02
CII Mission
Manufacturing
Initiatives 05CII ASCON
SURVEY
29 July-September
(Q2) FY18 Survey
13
14
Chemistry Everywhere
12 Capital Goods
Inverterisation
16
18
Railways
15 Mining
Robotics
19 Smart Manufacturing
24 MSME Definition: Revision
to Redefine Entities

NEWSLETTER
To reach this scale of manufacturing output
would require India to develop capabilities
not only in core products but also in high-
tech products and high-tech manufacturing.
Germany, Japan and the US continue to be
the hub of new product development by
meticulously investing in large productive
capabilities or advance manufacturing
techniques.
After the overwhelming response to MII, the
Government is planning to launch MII 2.0.
This will require developing advance
manufacturing facilities in the areas of
specialty materials, biologics,
nanotechnology, precision mechanical
devices, integrated circuits, high-end
general-purpose chips, embedded systems,
processors, and medical imaging devices.
Investing in emerging sectors of the future
such as electric vehicles, unmanned aerial
vehicles, robotics and artificial intelligence
will give us an edge in technology and
innovation.
The time is opportune for the Government to
develop an ecosystem for advance
manufacturing. While MII has laid the
foundation for developing infrastructure,
skills and investments for the manufacturing
sector, the industry looks forward to further
incentivization of Research & Development,
innovation and entrepreneurship in the
upcoming Union Budget.
The current issue of Mission Manufacturing
Quarterly focusses on developing an
enabling ecosystem for smart
manufacturing and CII’s pre-budget
recommendations for the manufacturing
sector.
I sincerely hope that this is of use to you
02
India’s manufacturing sector
stands at around USD 350
billion as of 2016-17.
According to CII estimates, this
could increase to USD 650-750
billion by 2022, enhancing the
share of manufacturing to
22-25% of Gross Value Added
(GVA). In the long term, GVA
could rise to USD 1.3-1.4
trillion by 2030, maintaining its
share in total GVA at 25% in the
manufacturing sector.

NEWSLETTER
Mr Sunil Mathur
Chairman
CII Smart Manufacturing Council
CEO & Managing Director
Siemens India
Global shifts in manufacturing are taking
place on account of higher availability and
use of technology and digitalization.
Various companies across the world are
deploying next generation manufacturing
practices that are further driving increased
competitiveness. Together these shifts are
being heralded as a move towards Industry
4.0 or Smart Manufacturing.
Indian industry needs to respond to this shift.
To remain globally competitive in a
sustainable way Indian industry needs to
ensure that it remains ahead of the curve.
This will require implementing a clear
road-map leveraging India’s competitive
advantage.
Smart manufacturing is a phenomenon that
is here to stay and and will have several
implications for the Indian manufacturing
sector both at the firm and ecosystem level.
For industry at the firm level, this translates
to increased need for global competitiveness,
higher integration with global supply chains,
investments in building advanced
manufacturing capabilities, etc. At the
ecosystem level, there is a need for
strengthening the building blocks that
facilitate this high growth in a sustainable way.
With this background, the CII Smart
Manufacturing Council is working on
focussed initiatives to help Indian industry
leverage smart manufacturing to drive the
desired economic growth.
As we gear up for smart manufacturing we
need to focus on three primary areas. First,
to change mindsets and address the myths
and fears about what smart manufacturing
will bring in, it’s applicability to the SMEs, it’s
impact on jobs, etc. and address these
concerns. Skill development will play a key
role as it will be critical to train new talent but
reskill existing talent in the latest
technologies,
Second, there is a need to drive smart
manufacturing as a movement.
It is time that we take manufacturing from
megacities to tier-2 and tier-3 cities to make
sure that they are equally competitive to join
the growth movement and help achieve the
inclusivity target for the country. Success of
the manufacturing sector will come as more
and more companies join the movement to
get the benefits.
Third, finding the India right model will be
key. As every country has its own
interpretation of Industry 4.0 and smart
manufacturing, hence perspectives of
developed countries may not be applicable
for India. It is thus critical that we find our
own model that is considerate of the industry
and ecosystem that we have here.
Technology collaborations with international
players will play a critical role.
At this juncture, when a New Year is setting in
and the manufacturing sector is being
entrusted as a key growth driver for India’s
GDP in the coming years, imparting adequate
incentives to the country’s smart
manufacturing ecosystem must be
something binding in all the planning. Let’s
aim to be ready for the leap not only to
Industry 4.0 but also to set examples of the
best manufacturing in the country and
continue creating innovative, quality products
and stronger global footprints
Message from Chairman
CII Manufacturing Council
03

NEWSLETTER
Special Feature -
Smart Manufacturing
What are the forces behind
Digital Enterprises?
Is it about few more waves
of technology that fuel
change or is it also about
the fundamentally different
business environment
achievedwiththetechnology?
Again, what are the critical
capabilities required to
thrive and bring in the real
transformation?
Digitalization changes everything. It changes
the way we stay informed, the way we travel,
the way we buy things. We’re living in a world,
which is increasingly impacted by data.
Today, about eight billion devices, from
smartphones to trains to wind turbines, are
already connected to the internet – a number
that will grow to one trillion by 2030
(according to 2008-2014: UN Conference on
Trade and Development: FDI inward flow;
2015: UNCTAD Global Investment Trends
Monitor No.22). It is estimated that in only
three years the volume of globally generated
data will reach 40 zettabytes (Cisco: The
Internet of Everything, 2013), and half of
them will be machine-generated data.
Besides our private lives, digitalization is
also disrupting business. As the world
becomes increasingly connected,
digitalization is becoming the key
differentiator that will enable companies
to remain competitive. It promises optimized
operations at lower costs, improved
flexibility, efficiency and quality, shorter
response time to customer requests and
market demands and also opens up new and
innovative business models. This holds true
for any kind of industry – from train service
to energy providers to finance companies as
well as the manufacturing industries.
Industries rapidly generate massive amounts
of data. But big data have no real value in
themselves, if they are not placed in the right
context. Clearly, smart data are more
important than big data.
But how do we generate smart data and turn
them into real value?
Turning Big data to
Smart data
Digital Enterprises: The Journey that
Transforms Manufacturing
Dr. Jan Mrosik
CEO of Digital Factory Division
Siemens AG
04

NEWSLETTER
SPECIAL FEATURE - SMART MANUFACTURING
When it comes to make the transition
happen, data analytics becomes the key.
Analytics can dig into the huge data volumes
generated by modern technology, find
relevant information, discover patterns or
connect unlinked threads. We can create
value to reduce time-to-market, enhance
efficiency, flexibility and quality and develop
new business models and services.
Industry 4.0 and the Internet of Things (IoT)
are being driven by billions of intelligent
devices to generate value for customers, be
they small or medium enterprises (SMEs) or
global corporations. The “Digital Enterprise”
is no more a vision of the future, but has
become a reality.
With Siemens’ Digital Enterprise Suite, a
comprehensive portfolio of software-based
systems and automation technologies,
companies can seamlessly integrate and
digitalize their entire value chain: from
product design, production planning,
engineering, production execution to services.
The result of this integration and
digitalization is an exact digital copy of the
value chain – the “digital twin”: an intelligent
virtual model that accurately duplicates and
simulates the real-world properties and
performance of physical products,
production lines and processes. Throughout
the product lifecycle, the digital twin enables
tremendous productivity and efficiency
gains, providing companies with the means
to design, simulate, validate, and optimize
products, processes and even entire
factories in the digital world. All generated
data is stored using a common data
backbone which shares this information
among all stakeholders involved.
But digitalization does not stop there.
The generated data from both product and
production can be evaluated while in use.
With MindSphere, Siemens has created a
cloud-based, open IoT operating system to
quickly connect single devices, machines,
whole production facilities and even fleets
of products to the cloud.
Making the Digital
Enterprise a reality
MindSphere immediately begins to analyze
the generated data according to the defined
needs of the user, be it to detect deviations
from the normal temperature levels or
vibrations or analyze deterioration of single
parts. The knowledge created from these
analytics can be fed back into the product
design or production process to drive
improved decision-making and intelligence.
As a result, customers easily meet their high
expectations for safety, reliability and
durability of their assets without jeopardizing
their existing systems. The MindSphere
ecosystem also provides partners with an
opportunity to participate in the digital
transformation of companies regardless of
industry or size.
With the Digital Enterprise Suite, Siemens
integrates Product Lifecycle Management
(PLM), Manufacturing Operations
Management (MOM), Totally Integrated
Automation (TIA) - all based on one data
model, Teamcenter, and connected to
MindSphere. With this portfolio, Siemens
enables customers to reduce time-to-market,
increase flexibility, quality and efficiency.
By connecting the virtual and real production
worlds under one roof, Siemens allows
companies of all sizes to start creating their
digital enterprise today.
Use cases show the benefits of using
integrated digitalization and automation
technologies. With Siemens’ integrated
technologies, German machine builder
Bausch + Ströbel, for example, realized
digitalization and automation across the
entire lifecycle to improve engineering
efficiency by at least 30 percent by 2020.
But Siemens does not only support its
customers on their digital journey, but also
transforms the manufacturing processes at
its own plants. At its plant in Kalwa, India,
Siemens produces low voltage switchgear.
Thanks to digitalization, more than 180
product variants are now produced in 1 line.
There is a nine seconds cycle time in spite of
varied product-mix and 68 quality
parameters are checked in nine seconds.
This underlines the potential which is
unlocked if manufacturing companies
embrace digitalization as an opportunity
05

NEWSLETTER
Technology Trends Driving the
Future of Making Things
The manufacturing industry is undergoing
profound change. As a result of new design
and production technologies, increasing
competition and cost pressures, as well as
the globalization of markets, companies are
increasingly demanding greater flexibility,
faster adjustment and maximum efficiency.
Only those who understand these changes
can secure competitive advantages and
expand the profitability of their company.
Driven by the convergence of multiple trends
in the development of technology, such as
Internet of Things (IoT), Cloud Computing,
Big Data and Automation, a broad range of
advanced manufacturing technologies are
now available to manufacturer to meet these
challenges. The integration of these new
technology and techniques helps to optimize
product design and also the manufacturing
process to create highly differentiated, cost
effective and competitive products. The
results are smarter products, smarter
factories and smarter production processes.
Autodesk works closely with manufacturing
industry leaders to offer smart
manufacturing solutions that help them to
stay competitive. We understand that it is
not anymore about what happens on the
factory floor. It starts with use of digital tools
to design and build more energy-efficient
and productive factories and production
lines. It includes digital tools to design better
and more efficient products and simulate
their performance refining the product
design on screen before using resources to
produce it. It also includes digital fabrication
tools like computer numerical controlled
(CNC) machines and additive manufacturing
(or 3D printing) to make prototypes and
finished products. And it includes digitally
connecting products so they can talk to each
other and perform better when in use.
Let us look at some of these newest trends
in product design and development that is
going to shape the future of manufacturing
industry:
Generative design is a software creates
highly optimized designs that meet
predetermined goals and constraints. Using
shape synthesis algorithms and multi-
physics performance analysis in the cloud,
Generative Design
Mr Pradeep Nair
Managing Director
Autodesk India - SAARC
06

NEWSLETTER
the software generates thousands of design
options from a single idea. A great example
is that of Hack Rod, which blends the custom
culture of hot rodding and the renegade
attitude of the hacker in a whole new
approach to automotive manufacturing.
Begun as a research project to investigate
how new technologies can be applied to
building a performance car, Hackrod has
evolved into the world’s first vehicle chassis
engineered by artificial intelligence. The idea
was simple: wire a car with sensors, put it
through a punishing series of test drives in
California’s Mojave Desert, and use that real-
time data to improve the performance of the
car. Researchers even wired up the driver to
collect data on his brainwaves. The result
was some 20 million data points about the
car’s structure and the forces acting on it,
which were then plugged into Project
Dreamcatcher—a generative design
technology and applied to a 3D model of the
existing chassis. Based on the data retrieved
over repeated test runs and the evaluation of
the software’s design iterations, a new
prototype was developed, so in essence, the
car co-designed itself.
With Additive manufacturing one can create
physical objects by depositing materials in
layers, based on a digital model. This
technology can be used to create everything
from prototypes to production products such
as airplane engine parts, eco-friendly
Additive Manufacturing
buildings, and medical implants. New
materials and integrated additive methods
drive product innovation by making
previously impossible designs possible, and
reduce manufacturing waste.
Autodesk recently teamed up with Airbus
to create the world’s largest 3-D printed
cabin component for passenger aircrafts.
Dubbed the “bionic partition,” the
component was created with custom
algorithms that generated a design that
mimics cellular structure and bone growth,
and then produced using additive
manufacturing techniques. This pioneering
design and manufacturing process renders
the structure stronger and more light-weight
than would be possible using traditional
processes. Designed in a structurally-strong,
but lightweight micro-lattice shape, Airbus’
new bionic partition is 45 per cent (30 kg)
lighter than current designs. When applied to
the entire cabin and to the current backlog of
A320 planes, Airbus estimates that the new
design approach can save up to 465,000
metric tons of C02 emissions per year, the
equivalent of taking about 96,000 passenger
cars off the road for one year.
The new bionic partition uses Scalmalloy®, a
second-generation aluminium-magnesium-
scandium alloy created by APWorks,
an Airbus subsidiary focused on additive
manufacturing and advanced materials.
Scalmalloy® is specifically designed for use in
3D printing and offers outstanding
mechanical properties, meaning that it will
07

NEWSLETTER
stretch more before breaking. This is the first
time it has been used on a large scale inside
an aircraft component.
The Internet of Things refers to the growing
network of physical devices embedded with
electronics, software, and sensors that are
connected to the Internet and to each other.
This connectivity enables communication
between devices. When smart, connected
products are combined with the cloud,
manufacturers can capture, analyze, control,
and manage previously unseen data from
these products while they’re in use. Once
products have the ability to connect,
manufacturers and third parties can deliver
more value to their customers—well beyond
the sale of the product—by providing an
array of solutions and services. IoT is a key
driver of digital transformation in the
manufacturing sector for years to come and
IDC estimates that global spending on
Industrial Internet of Things to reach USD
1.29 trillion by 2020.
For example, take Premier Deicers, a
Wisconsin-based purveyor of aircraft-deicing
equipment. The company’s Guardian Angel
Monitoring System provides remote access
to 29 functions on the deicers, from fluid
pressures to electrical components.
Customers can access live readings of
applicable functions on the deicers from
Internet of Things
anywhere with Internet service. IoT also
makes it possible to increasingly offer
upgrades to products via software. The
quintessential example of the upgrade
model is Tesla. The electric-car company has
been delivering over-the-air updates to its
Model S for years and recently upped the
ante with its Autopilot update. In addition,
manufacturers can also add value to products
by offering services attached to them. These
services take advantage of the immense
cache of data generated by an IoT product.
By constantly watching and analyzing the
data coming from their products,
manufacturer could detect when that part is
about to fail and schedule maintenance to
replace it during planned downtime, which is
much less expensive for the customer. This
fosters the emergence of Product as a
Service (PaaS) model where a customer
doesn’t pay for the product or spare parts,
but rather “subscribes” to the product and
pays a fixed amount on a predetermined
schedule, be that monthly, annually, or
quarterly.
As we can see, digital transformation is at
the core of transformation in manufacturing
sector. Smart manufacturing trends, such as
above are important reference points for
Indian industry to assess how far it is willing
to go to stay ahead of competition and also
be globally relevant
08
Welcome to CII Mission Manufacturing portal!
www.ciimissionmfg.com

NEWSLETTER
Leveraging Industry 4.0 for Digital
Transformation of Value Chain
In an increasingly global and competitive
environment it has become imperative to
transform the way we look at our value chain.
Organizations today are experiencing
fundamental changes that include shifts from:
• Mass Production to Mass Customization
• Make-to-Stock to Make-to-Order
• Simple ‘product delivery’ to ‘personalized
experienceandservices,’wheretheproducts
are often bundled with ‘value-add’ services
and unique experiences.
The competitiveness of companies becomes
dependent on the overall effectiveness of
their value chain. However, there is a pressure
on the value chain to be redesigned and
reengineered, keeping in view the frequent
changes in market and customer demand.
There is also a pressure to make the
factories, business processes and business
models more agile. Many organizations
today have broad geographical spreads, and
are not only multi-site but multi-country and
continent, and often see a high degree of
variation in specific customer requirements
across geographies and regions. All these
aspects have put new demands on the way
value chains are designed and managed.
There is a global movement in accelerating
the manufacturing activities in various parts
of the world and countries have initiated
their drives, be it the ‘Make in India’ initiative,
Industry 4.0 in Germany or the ‘Made in
China by 2025’,
The 4th Industrial Revolution (or Industry
4.0), the term synonymous with smart
manufacturing methods and initiatives is
expected to transform the entire value chain
by leveraging state-of-the-art digital
technologies like Internet of Things (IoT)
and Industrial Internet, robotics, Artificial
Intelligence, machine learning, cognitive
solutions, cloud-based platforms, additive
manufacturing, integration of renewable
energy to the factory, virtual and augmented
reality, cyber security, vertical and horizontal
integration of plant and big data analytics.
The degree of collaboration at enterprise
level will reach new heights through
machine-to-machine, robot-to-robot,
machine-to-human, and overall two-way
communication between the customer
(or end-consumer) and the factory.
Renaissance in
Manufacturing
Dr. Chandan Chowdhury
Associate Dean and Professor
(Operations Management
& Information System), ISB
09

NEWSLETTER
The objective of such a digital transformation
is to make manufacturing and other business
processes and often business models agile
to meet the changing needs of customers
and adapt to their demand for personalized
product and services. Organisations will start
to build real-time digital- or virtual-twins to
experiment and optimise on business
benefits across the value chain. In addition to
optimising the value chain, these real-time
digital twins will also promote sustainable
manufacturing processes including
quantifying a value chain’s carbon footprint
in real-time (right from where input
materials or raw materials are sourced, to
the point where products and services are
delivered), and identifying weak links in the
value-chain.
The government aspires to increase the
manufacturing sector’s contribution from
the current 16% (in 2015-16) to 25% by
2022. A similar plan was drawn in 2011
under the ‘National Manufacturing Policy’ to
increase the manufacturing sector’s
contribution from 15 to 25% by 2022.
The vision of the policy was to create 100
million additional jobs.
In recent years, the country’s ‘Make in India’
initiative has given a new momentum to the
manufacturing sector, both in terms of job
creation and growth in GDP. This will enable
organisations to design and produce world-
class, high-quality ‘zero-defect’,
environmental friendly goods and services at
globally competitive prices.
Indian companies are no longer isolated and
need to take cognizance of the world-wide
wave of the 4th Industrial Revolution and the
benefits of smart technologies.
Industry 4.0 and
Make in India
IDC forecasts that by 2019, 75% of industrial
enterprises worldwide will transform their
value chain through digitally networked
processes and objects. Many plants will
adopt shop floor networking through
sensors, actuators and cyber physical
system, resulting into transparency and
control over their production processes and
optimise business processes by converting
data into insight and improve margin.
Often such new technologies would enable
them to conceive new business models.
The Government of India too is likely to
integrate Industry 4.0 with its new industrial
policies. At a national level deployment of
Industry 4.0 will have dual implications,
(1) quantum increase in productivity and
customer-centricity and (2) new job creation.
India’s 63% population is likely to be in the
working age by 2022 and the rate of new job
creation needs to significantly increase.
Industry 4.0 will facilitate creation of new
roles and demand for new skills. Companies
also must drive new re-skilling initiatives,
and re-deploy manpower in areas where
there are shortages.
In India, the unorganized sector contributes
50% to our GDP and employs 86% of our
workforce. The unorganized sector differs
significantly from the organised sector on
levels of automation and maturity of
business processes. As we move towards
Industry 4.0, we must recognise that our
approach to deploying Industry 4.0 in the
organized and unorganized sectors needs
to be different. For instance, for the
unorganized sector, the focus should be on
increasing productivity through various
intervention strategies and cluster-based
Deployment in organized
and unorganized sectors
10

NEWSLETTER
technology (deployed by the government or
public private participation) enablement
initiatives that will support modern
management practices and increase the
sector’s global competitiveness.
On the other hand, the organised sector
while deploying Industry 4.0 should consider
the following:
1. critically analysing and mapping its
value chain,
2. leveraging digital technologies to
transform business processes and
people to make the organisation more
customer-centric, agile and productive,
3. quantifying business benefits,
4. assessing the need for re-skilling, and
5. estimatinglikelyjoblossesandopportunities
to train employees on new skills.
Conclusions
The 4th industrial revolution has enormous
potential to increase customer centricity,
agility and productivity and India cannot
afford to miss being part of it. At the same
time, we need to understand that
implementing Industry 4.0 is likely to result
in massive job loss and create challenges in
employment creation across many
traditional sectors. But by carefully
identifying new and emerging roles in the
4th industrial revolution era, and re-training
our workforce, we can create new job
opportunities both in India and overseas. The
government should create cluster-based
innovation platforms through a public private
partnership model that can be leveraged by
the unorganized sector to scale up their
operations, adopt modern management
practices, improve design processes,
manufacturing, marketing and branding
11
Price: Rs 849.00 (US $ 75.00)
Number of pages: 73
Publisher: Confederation of Indian Industry (November 2017)
(Special rates and discounts on bulk purchases)
Powerful case studies with distillation of key
components, key learnings & winning formula of a
SmartFactory.
Insights on a company’s journey towards smart
manufacturing,challengesfaced,implicationsfora
firmandthebenefitsthataccrued
Get Your Copy Now!
Formoredetailspleasecontact:
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Email:ravi.bhushan@cii.in
Tel: +911124653219

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CII Mission
Manufacturing Initiatives
The Capital Goods sector with its strong
engagements across sectors, plays a critical
role in creating jobs, boosting exports and
driving growth.
There is a need to accelerate demand,
localize that, attract more talents, increase
technology depth in manufacturing products
and achieve operational excellence to create
Indian Multinationals. To facilitate actions
around such needs and deliberate on the
Indian Capital Goods manufacturers to
effectively tap the global opportunities, CII
organised the second edition of Capital
GoodsSummit-DevelopingIndianMultinationals
by 2025 in association with Department of
Heavy Industries, Government of India.
Capital Goods: Developing
Indian Multinationals by 2025
Key Takeaways
1. Central government plans to spend INR
3,000 crore to implement various
programs under the National Capital
Goods Policy;
2. Government is also coming up with
changes and support measures in key
sectors including Capital Goods to fasten
up employment creation;
3. Need to accelerate demand. Indigenous
investment is equally important
alongside inviting foreign investments to
spearhead rapid industrialization and
creation of Indian Multinationals;
4. Presently Capital Goods are the fourth
largest item (USD 30 billion) in the
import basket. Need to reduce import
dependency by tapping the areas for
domestic production;
5. Focus on increasing technology depth in
manufacturing products and achieve
operational excellence, to make a mark
in creating Indian Multinationals
12
Shri Anant G Geete
Minister for Heavy
Industries & Public
Enterprises
Government of India
Mr Atul Sobti
CMD, Bharat Heavy
Electricals Ltd., (BHEL)
“Industry has to
indigenise the most
upcoming technologies.
Withthecomprehensive
cost competitiveness and
talent availability, the
future definitely belongs
to Manufacturing”
“Capital Goods
Sector will become
the biggest
contributor to the
ambitious 'Make in
India' programme.”

NEWSLETTER
CII MISSION MANUFACTURING INITIATIVES
Currently India is the 6th largest producer of
chemicals in the world by sales value.
The sector covers more than 80,000
commercial products and is the mainstay of
industrial and agricultural development of
the country, providing building blocks for
several downstream industries, such as
textiles, papers, paints, varnishes, soaps,
detergents, pharmaceuticals, etc.
While the Chemical Industry has the
potential to address the growing challenges
about material and energy needs soon, there
is a limited understanding of the criticality of
this Industry. Towards this, Confederation of
Indian Industry (CII) has initiated its signature
‘Chemistry Everywhere’ campaign. The
campaign, in its 4th year organised the
Chemistry Everywhere Conference –
Energizing Make in India through the
Chemical Industry on Tuesday, 28 November
2017 at New Delhi, in partnership with
Department of Chemicals & Petro-Chemicals,
Ministry of Chemicals & Fertilizers.
The platform generated many strategic
deliberations, identified key policy
imperatives to define the role that the
chemical industry so also the government will
play in creating a robust chemical industry.
Chemistry Everywhere: Energizing
Make in India through the Chemical Industry
Dr Raman Ramachandran
Chairman,
CII National Committee
on Chemicals &
Chairman and
Managing Director
BASF India
13
Key Takeaways
1. Develop a national chemicals inventory
with comprehensive database on the
capabilities, properties, classification,
regulatory status and safety aspects of
chemicals produced in India;
2. Create single window mechanism for
Chemicals Industry for dealing with all
Chemical related issues / regulations with
time bound and automated responses;
3. Set up Petrochemical/Chemical Parks in
India; Dedicated state of the art ports for
handling chemicals/building blocks;
4. Introduce Industry specific skills for
chemicals; Compulsory training of safe
handling of chemicals across
unorganized sectors;
5. Clear 3-5-year roadmap for regulatory
regime especially for EHS norms;
6. Create an integrated Petrochemical &
specialty Chemicals Master Plan;
“The chemical sector
although remains
competitive globally,
it is constrained
domestically.
One important action
plan for government
will be to work with
the consumers and
industry and then
develop the products.”
Mr Rajeev Kapoor
Secretary, Department
of Chemicals &
Petrochemicals, Ministry
of Chemicals & Fertilizers
Government of India
“With the mission
mode set forth by
Hon’ Prime
Minister’s Make in
India campaign, the
chemical sector is
truly being geared
for the next phase
of growth, towards
making India
a global
manufacturing hub
for chemicals.

NEWSLETTER CII MISSION MANUFACTURING INITIATIVES
Accelerating urbanisation, increasing per
capita incomes and sustained economic
growth is leading to greater demand for
energy services. Energy efficiency can
provide substantial benefits to different
stakeholders.
India is the world's third largest producer and
fourth largest consumer of electricity. The
residential and commercial sectors account
for about one-third of the total electricity
consumption. Over 60 million home
appliances (like fans, refrigerators,
ICTE: Inverterization for Energy Efficiency:
Technology, Applications and Opportunities
air conditioners, washing machines) are
added annually to the market in the country.
There is potential of huge energy savings in
the country by adoption of Inverterisation in
residential and commercial space.
To deliberate on the various policy
requirements, standards and regulatory
framework that will support energy
efficiency ecosystem, CII organised a National
SeminaronInverterizationforEnergyEfficiency:
Technology, Applications and Opportunities,
on 26th September 2017 in New Delhi.
Mr Frank Grobe
Head of Digitisation
& Systems Industrial
Power Control
Infineon Technologies
Mr Vinod Sharma
Chairman,
on ICTE Manufacturing
& Managing Director
Deki Electronics Ltd
Key Takeaways
1. Opportunity for Design, Development
and Manufacturing of value added,
differentiated energy efficient products;
2. Outlining focused vision for adoption of
energy efficient appliances;
3. Incentivize use of technologies, such as
Inverterization at the Producer side and
usage of Energy Efficient products at
the Consumer side;
4. Incentivize replacement of Non-
inverterized ACs, Refrigerators, Washing
machines, Agricultural pumps, Industrial
freezers, Fans, etc.
5. Encourage manufacturing/ATMP of ICs
(inverter controllers) and other
components in India.
14
“Home appliances
like Air Conditioners
and Refrigerators
will become
inverterized globally
with high growth
rates.”
“The country’s per
capita electronics
consumption is only
60USD which is much
less than the world
average that stands at
300 USD. There is an
ample scope and
possibility to grow on
this, at least five times
in next five years.”
The Illustrative Casebook of big ideas from companies to use
chemicals in a responsible way - for attaining sustainable
development&promotingGreenChemistry
Impactful case studies from Industries leveraging research
& innovation, developing catalysts and delivering quick
chemistrysolutions
Get Your Copy Now!
Price:Rs800.00(US$50) | Numberofpages:73
Publisher:ConfederationofIndianIndustry(November2017)
(Specialratesanddiscountsonbulkpurchases)
Formoredetailspleasecontact:
MrRaviBhushan
Email:ravi.bhushan@cii.in,Tel: +911124653219

NEWSLETTER
India is one of the highest exploration
potential geographies in the world.
Compared to other geological domains the
country had a significantly lower share of
mineral discoveries. India has total land area
3.2875 million sq. km out of which,
Geological Survey of India (GSI) has identified
0.571 million sq. km. as Obvious Geological
Potential (OGP) area for minerals. However,
a major part of this OGP area is yet to be
fully explored. To discuss and deliberate the
ways and means for enhancing mineral
exploration and production and also to
facilitate investment in exploration and
mining in India CII in partnership with World
Mining Congress organized a summit
“Exploring the Un-explored: Powering India’s
Growth through Minerals” on 6th November
2017 at New Delhi.
Mining: Exploring the Un-explored:
Powering India’s Growth through Minerals
Mr Arun Kumar
Secretary
Ministry of Mines
Government of India
Mr Sunil Duggal
Co-Chairman
on Mining and
CEO Hindustan Zinc Ltd
Key Takeaways
1. Intensify exploration by state-run
companies like GSI and MECL;
2. Utilize funds under the National Mineral
Exploration Trust (NMET) for exploration,
especially in the Greenfield areas;
3. Promoting exploration by the junior
mining companies as well as start-ups;
4. Using improved technology for
enhancing the quality of the mining
equipments;
5. Expediting green clearances and other
regulatory approvals; Releasing a
calendar on auctions of various blocks
well in advance to help the companies
plan their bids accordingly;
6. Benchmarking the fiscal regime vis-à-vis
mining in sync with other countries to
make India an attractive investment
destination for exploration and mining;
15
“10% Growth in
Mineral Auctions is
achievable and can
fetch at least INR 1
lakh crore by the end
of the current fiscal
year. Realism is setting
in the industry and the
bids are getting
moderated.”
“With the Government
revisiting the National
Mineral Policy and
promoting off-shore
exploration, India can
look beyond the slow
growth rate in mining
to more empowerment
by 2030”

NEWSLETTER CII MISSION MANUFACTURING INITIATIVES
Systems become ever more sophisticated
and cutting-edge technology becomes key
driver in increasing the attractiveness of rail
travel. The worlds of technology and railway
need to be brought closer together. India
aims to become a high-speed rail
powerhouse, upgrading its system of
conventional trains and the Bullet train
project is the first step towards this ambition.
The Bullet train project is all set to transform
Indian Railways by making an efficient land
transport system, making existing systems
competitive, promoting ‘Make in India’
doctrine, and ushering in economic growth.
To showcase more such revolutions and
cutting-edge technology trends, CII in
association with the Ministry of Railways
organised 12th edition of IREE– International
Railway Equipment Exhibition, Asia’s largest
event for the Rail transport sector on 11th
October 2017 at Pragati Maidan, New Delhi.
Railways: On the Fast Track
with Technology
16
12th International Railway Equipment
Exhibition (IREE)
• Partner Country: Japan
• Participating Countries: The UK, Ukraine,
India, Poland, Austria, Belgium, Russia,
Switzerland, The USA, Sweden, Japan,
Korea, France, Taiwan, China +
• Business Visitors: 14500
• Partner Country visitors: 400+
• Country participation: 20
• Exhibitors: 500
Event Snapshot
Japan- The Country Partner
Japan participated as Partner Country for the
second time and showcased the latest
products and technologies in the largest ever
Japanese display for the Rail Transportation
sector in India. Around 50 companies including
Japan Railways and Japanese Overseas Rolling
Stocks Association (JORSA) participated in the
showcasing in an area of 3000 sq mtrs. Japan
brought around 500 Japanese businessmen
and participants at the Partner Country
Pavilion, supported by the Government of Japan,
who found it very useful in networking with
Indian Railways and the Rail Transportation
Industry in India for future business.
Shri Piyush Goyal
Minister of Railways and Coal
Government of India
H. E. Kenji Hiramatsu
Ambassador of Japan
Mr C P Sharma
Chairman, CII Rail Transportation
and Equipment Division and
Managing Director
Daulat Ram Engineering Pvt Ltd.
“Railways are a significant
contributor to the 'Make in India'
programme. With attention to
Speed, Scale, and Safety, Indian
Railways will be the best
catalyst for growth of the new
India.”
“With the Japanese Prime Minister,
along with Prime Minister of India
laying the foundation stone for the
Ahmedabad-Mumbai High-Speed
Rail Network, known as the bullet
train, the highly safe and efficient
'Shinkansen' bullet-train technology
will cover major Indian cities
and projects”.
“Indian rail industry is
prepared to carry out the
shift from diesel to electric
traction. Support is required
to the Indian MSMEs in this
change-over process.”

NEWSLETTER
Key Takeaways
1. Indian Railways to take a quantum jump
in the production capability and a
complete change over to LHB coaches
from April 2018;
2. Railways to come up with an online
condition monitoring system, to monitor
the rolling stock performance during the
run and go in for a predictive maintenance;
3. Ministry of Railways to make bulk
contracts to save costs and pace up work
through structured processes;
4. Large contracts for electrification are on
the anvil;
5. Expansion of vendor base and
development of new vendors.
17
MAHSR Project - A New Chapter in
Indo-Japanrelations
Industrytohelpcatchingupspeedofchange
Areasforacceleratedaction
Shinkansen, meaning “new trunk lines”, refers to the
high-speed rail network in Japan. Soon, the Shinkansen
System is going to connect the cities of Mumbai in
Maharashtra with Ahmedabad in Gujarat, as the
Mumbai-Ahmedabadhighspeedrail(MAHSR)corridor.
The MAHSR corridor will cover approximately 500 km at an operating speed of 320 km/h. As the
Railway Minister has announced recently, the first-ever bullet train of India will come as a gift to
thenationin2022ontheoccasionofIndia@75(earlierscheduledtobecompletedby2023).
Transfer of Technology (ToT) and Make in India are important pillars of the Indo-Japanese
agreement for the MAHSR. The project is estimated to cost about INR980 billion (US$15 billion)
and is to be financed by a soft loan from Japan. According to the MoU, the Japanese Government
will provide a loan for approximately 81% of the total project cost for 50 years with 15 years
moratoriumat0.1%interestrate.
MAHSR is first of the six corridors envisaged for running of high speed trains under the Diamond
QuadrilateralprojectthatwillconnectthecitiesofChennai,Delhi,Kolkata,andMumbai.
To encourage transfer of technology and Make in India as part of the project, Confederation of
Indian Industry (CII) along with other industry associations is working closely with DIPP, Railway
Board, NHSRC, JETRO and other stakeholders, while exploring opportunities for Indian industry.
CII has done a capability assessment of Indian industry to encourage engagement of Indian
industry with the Japanese counterparts for development and manufacturing of high speed rail
technologies/products in India. A compendium capturing the details of manufacturing
capabilitiesofIndianindustryhasbeenpreparedforimplementinghighspeedtrainprojectinIndia.
A web page has also been created under Trade Tie Up Promotion Program (TTPP) to connect
JapaneseandIndiancompaniestoestablishthestrategicallianceforMAHSR.
1. JVs and equity participation of Indian and Japanese firms manufacturing in India to realise
‘MakeinIndia’andTOT;
2. Identifying milestones along with defined timelines; ascertaining progress level in each
phase;
3. Details of Japanese companies and their requirements along with extensive information on
the types of technology being transferred;
4. Operationalising high-speed training centre for large-scale skill upgradation of Indian
employees;
5. Undertaking an engineering development programme in Indian technical institutes for
developing skilled manpower/Engineers for HSR

NEWSLETTER
Robotics technology is a combination of
machine, tools and computer applications
used for various activities including
designing, manufacturing and other
applications of robots. Since 2010, the
demand for industrial robots has accelerated
considerably due to the ongoing trend
toward automation and the continued
innovative technical improvements in
industrial robots. Sold worldwide in 2016 are
294,000 units, which is expected to reach
521,000 units by 2020. Asian Countries
dominate the share the robots sold with a
share of 65%, followed by Europe at India’s
share is just 1%!
CII, to create an enabling eco-system for
adoption of Robotics in India, organized first
of its exclusive summit on Robotics on
13 November 2017 at New Delhi. The
summit accentuated that India, to become
the manufacturing destination of the world
and thereby realize the aspirations of ‘Make
in India’, needs to embrace digitization to
boost manufacturing.
Robotics: Changing the Paradigm
of Industry 4.0 & MII 2.0
Mr Nishant Arya
Chairman
CII Haryana State
Council and
Executive Director
JBM Group
Dr Rishi Bhatnagar
President
Aeris India
Key Takeaways
1. Increase manufacturing share to 25
percent of GDP will require active
engagements with trends such as high-
quality manufacturing, smart
manufacturing practices and automation;
2. Need to map the complete value chain
intelligently for engaging robots in new
areas of manufacturing;
3. The global cases of adoption clearly
demonstrate that adoption of
automation /robots has brought with
itself new shills and created new jobs.
4. For policy makers, an embrace of
automation could go hand in hand with
measures to support labor deployment.
5. Presently, in India, sectors like
automotive have relatively high adoption
of automation. Other sectors that have a
lot of room for its adoption include F&B,
FMCG, Healthcare;
18
“The evolving Robotics
ecosystem is integral
to all the flagship
government
initiatives, be it Make
in India, Digital India or
Skill India. We need to
relook at how we are
using next generation
technology for
manufacturing and
how it should take care
of Total Cost of
Ownership of it”.
“Robot-led
automation has the
potential to change
today’s workplace as
dramatically as the
machines of the
Industrial Revolution
changed the Factory
Floor”

NEWSLETTER
India is the fastest growing economy in the
world today and is uniquely positioned with a
deeper engagement with the global value
chain to emerge as a leader in adopting
industry 4.0. Cyber-physical systems are
increasingly disrupting the way industry
approaches manufacturing. Intelligent,
connected, digitized solutions are enabling
customer choices to drive shop floor
operations. To win companies will need to
remain on top of emerging trends and build
agile systems that can produce highly
customizable solutions. Firms will
simultaneously need to address the
significant change and talent management
challenges owing to altering of production
systems. Adoption of Smart Manufacturing is
an inevitable necessity for the Indian
economy in realizing its plans of elevating its
manufacturing industry to global levels of
excellence.
To encourage the adoption of Industry 4.0
across the value chain of manufacturing and
sensitize industry on what will be the best
practices of Industry in action for smart
manufacturing, the third edition of
CII – DHI Smart Manufacturing Summit was
organizedon15November2017atNewDelhi.
The deliberations highlighted the need for
adopting smart manufacturing in India and
provided an opportunity to learn about next
generation manufacturing systems, change
management challenges while deploying
smart manufacturing and strategies to
address them.
Smart Manufacturing:
Creating Champions of the New
19
Key Takeaways
1. Digitalisation of manufacturing is key.
Man and machine will have to come
together to create champions of new.
2. Industry 4.0 will bring in new and highly
skilled jobs; Need to start mapping new
skills to match up the requirements
3. India must strive to become the global
supplier of trained workforce to the
world. Leveraging the existing pool of
highly qualified scientists and engineers
who can be trained and upskilled on the
upcoming technologies;
4. Highly competitive MSMEs will form a
central part of the strategy for
dominating global trade; Setting up
standards for inter-operability;
Mr Amitabh Kant
CEO
NITI Aayog
“India should not miss the
opportunity presented by
the fourth industrial
revolution, which will also
create new kinds of highly
paid and skilled jobs.
There is also an urgent
need for more industry-
academia collaboration to
develop requisite skills in
technology”.

NEWSLETTER
Reviving Manufacturing: Key Recommendations
for Union Budget 2018-19
Policy Focus
20
Manufacturing is at the heart of the country’s
economic progress. It provides a significant
multiplier to the economy, in terms of
output, employment and providing an
impetus to services. While the push to Make
in India is a strategic and stimulating step,
certain issues do hold back the growth of the
manufacturing sector. As we are steadily
climbing the ladder of ease of doing
business, a much-needed push to the
manufacturing sector is important to sustain
and promote an all-inclusive growth.
Budget 2018-19 would play a significant role
in this direction helping India achieve its high
growth potential. While the macro-economic
backdrop of the Union Budget 2018-19
continues to be encouraging, manufacturing
sector performance has remained below
expectations. In April-October 2016-17,
industrial output stood at 2.5 percent as
against 5.5 percent same period a year ago.
The inclination of the private sector to make
key investments continues to be below
potential. Ideal capacities and stressed
balance sheets are further deterring new
investment. Hence, we look forward to a tool
box of policies and a focused strategy in the
Budget to bring manufacturing to the
forefront of economic revival which would
ensure the success of the Make in India
campaign.
In 2016-17 budget, our Finance Minister
made an announcement to reduce the
corporate tax rate from 30 per cent to 25 per
cent over the next four years to improve
India's global competitiveness. To balance
the rate reduction, the government has laid
Lower corporate tax burden
down a road map to phase out several tax
exemptions and deductions from April 1,
2017. The government has already reduced
tax rate for SMEs, which covers close to 98
percent of the corporate population. To give
a boost to the Make in India programme and
manufacturing, CII recommends on ensuring
a lower tax burden to all companies by
lowering corporate tax to 18 % and removal
of all tax incentives and exemptions, cesses
and surcharges.
The current DDT rate of 20.36% is much
higher than treaty rate of 5% to 10% in most
Indian treaties. Currently, DDT rollover
benefit is restricted to dividends received
from subsidiary (equity holding >50%). CII
recommends the Government to liberalize
DDT rollover benefit for dividend received
from all companies whether or not
subsidiaries. Government may consider
restoration of classical system of dividend
taxation whereby shareholder pays the tax.
To incentivise manufacturing, the budget
should consider withdrawing MAT in a
calibrated manner and institute a uniform
accounting standard for calculation of
profits. Alternatively, the MAT rate should be
brought down to 10%. Levy of MAT should be
restricted to those incomes that are taxable
under regular provisions. Incomes that are
exempt under normal provisions such as
LTCG on sale of listed equity shares or
incomes that are not taxable such as Capital
Rationalisation of Minimum
Alternate Tax (MAT) and
Dividend Distribution Tax
(DDT)

NEWSLETTER
POLICY FOCUS
21
Receipts, should be kept out of the ambit of
MAT. If this is not possible, then MAT should
be brought down to the level of 7-10%. Just
like domestic dividend, foreign dividend
should also be exempt from MAT.
A thrust to manufacturing would remain
incomplete unless the government speeds
up, on a war footing, the pace of
infrastructure development by augmenting
investment, both public and private, in other
than traditional infrastructure, such as roads
and railways. Critical push is required in
public housing projects in industrial clusters
where new jobs can be created, affordable
housing and agri-infrastructure - irrigation,
cold storage, warehousing, and rural roads.
To put the economy on a growth trajectory, it
is necessary that there is a demand push in
the form of increased infrastructure
spending, which in turn would result in
generation of demand to a great extent.
It is expected that the government will set
out clear implementation guidelines since
big projects need to be reviewed
independently. Owing to several factors both
global and domestic development of new
Special Economic Zones has been sluggish
over the past few years. Reinstating the SEZ
exemption through removal of minimum
alternate tax and dividend distribution tax
will immensely boost both developers and
the units. Further, the SEZ benefits should
not be phased out as it would hamper fresh
investments.
Boost infrastructure
To address the funding issues there is a need
to allocate appropriate share of funds to cities
and strengthen the Municipal bond market
Research is the lifeline of any business
anywhere in the world. R&D expenditure is a
meagre 0.7 per cent of GDP. India competes
with several other countries Turkey,
Thailand, Malaysia, China, Hungary, Poland,
Indonesia, Brazil, Mexico, Russia, Vietnam,
Singapore for investment in these areas.
These countries provide incentives to MNEs
to set-up Global R&D hub in their countries.
To promote R&D and create state of the art
technologies in sectors, such as, defence
manufacturing, medical devices
manufacturing, automobiles, etc it would be
imperative to restore the weighted
deduction by increasing to 200 percent for
all sectors. Presently, the conditions in
CBDT’s Circular 06/2013, listing conditions
for a R&D development center to qualify as a
contract R&D center acts as a barrier to
foreign companies to scale up their Indian
operations. To move the Indian R&D centers
up the value chain there is a need to rework
the terms of Circular 6/ 2013 to encourage
multinationals investing in research in India.
Further zero-rated supply of tax suffered on
capital goods and raw materials be refunded
to boost R&D in the sector.
Promote setting up of
regional R&D centres

NEWSLETTER POLICY FOCUS
2122
Encourage innovation
Facilitate skill development
Similarly, innovation would be a key factor in
transitioning India into a global
manufacturing player. Core research is a
much-neglected sector and this should be
appropriately encouraged and incentivized
so that there are innovations from this
country. CII recommends creation of a
National Innovation Fund to build the
Innovation ecosystem with a sizable corpus
of at least Rs. 10,000 crores to provide seed
funding to industry for Innovation and R&D
projects.
The Budget needs to do more for start-ups,
more in terms of skill development, training
and retraining, and incentivisation for job
creations in organised sector. These are the
key areas which will certainly need prime
attention even as the government expends
more on social spending, such as healthcare
and education. While Skill India is a right step
in this direction, the government may also
encourage private initiatives on skill
development programmes.
On the indirect tax front, while GST has been
introduced industry expects some pruning of
the 28% GST rate list. While most of the
products earlier prescribed under 28%
category have been reclassified into the 18%
category, certain products like cement,
paints, large monitors, white goods, etc. still
remain in the 28% bracket. It is
recommended that the 28% rate list be
further revisited for classifying products
other than demerit goods in the 18%
category. It is recommended to Converge
Goods and Services Tax rates, keeping
demerit goods in the 28 % tax slab. Items of
mass consumption should be taxed in the
range of 12-18 %, while goods used by the
poor should be exempt or taxed at 5 %.
Include sectors currently
excluded from GST
Encouraging digital
payments
Currently, few goods such as Petroleum,
electricity has been kept outside the ambit of
GST which hampers the basic intention of
providing seamless credit chain under GST. It
is also recommended to expand the GST
base and have seamless credit, sectors
currently excluded from GST (e.g.,
petroleum, real estate, electricity and
alcohol) should be included in GST.
To encourage and incentivise digital
transactions, GST incentive by way of
reduced tax be provided to those consumers
in B2C transactions who pay through digital
methods. The move will help increase the
size of the formal digital economy as
consumers will demand digital payments
options from retailers.
Promoting EODB to Promote Make in India -
Another area of pivotal interest to investors
pertains to the ease of doing business. The
government is to be complimented for
improving ground-level implementation and
simplifying procedures. Some of the
recommendations towards simplifying
procedures and ease rules for the business
include
• Automation of Refund process: While the
refund filing application and processing in
some cases has been initiated, it is
recommended that the processing of the
provisional amounts be expedited as well
so as to prevent any unwarranted
working capital related difficulties for our
foreign exchange earners. Also, Facility
for claiming refund in scenarios like
inverted duty structure, excess payment
of tax etc. has not been provided yet. It is
recommended that the facility for filing of

NEWSLETTER
POLICY FOCUS
23
refund claims in other scenarios like
excess tax paid, inverted duty structure,
etc. should as well be released at the
earliest.
• GSTN and Return Filings: Avoiding filing
multiple returns every month. Return
should be filed quarterly but tax may be
paid monthly. Though the cycle for filing
of return is being considered for quarterly
basis for MSME, it is suggested that it
may be made applicable for all registered
assesses, and may consider half yearly
Returns filing for MSME sector.
• Issuance of Form C’s for purchase of
petrol, diesel, etc. concessional duty rate
of 2% be prescribed for inter-state
purchase of GST excluded products
against Form C for businesses other than
those dealing in it.
• Advances: GST should be made leviable
on the issue of invoice as was applicable
under central excise regime
• Setting up a National Advance Ruling
Authority to avoid ambiguities and
confusions which may arise in cases of
differences in opinion between different
state Advance ruling authorities.
• Reverse Charge Mechanism (RCM) may
be removed or be made simple as one
invoice be issued and one tax rate for all
such supplies on monthly basis may be
levied.
• Anti-Profiteering: Clear Guidelines on how
pricing and profits are to be calculated
under the GST regime to track any
unlawful gains and clarity on whether
anti-profiteering provisions would apply at
entity or a product level would be helpful.
• Intermediary Services- GST on
Commission received from Overseas
Principals in Foreign Exchange by
business intermediaries in India is
subjected to GST @18%. Same needs to
be considered as export of service,
therefore should be zero rated.
• Aligning Customs and GST law to avoid
any dual levy: There are various
scenarios on which a dual levy of GST
seems to apply- levy of IGST under the
Customs law as well as the GST law; one
of such examples being, dual levy on
foreign shipping line freight. It is
recommended that the Customs/ GST law
be amended to avoid any dual levy on the
same supply.
Indian manufacturing also needs strong
support from banking sector for financing
growth. Government proposes to issue
recapitalisation bonds of Rs 1.35 lakh crore
which is very welcome. It is recommended to
permit public sector banks to reissue
recapitalisation bonds to institutional and
retail investors to raise funds, this would
allow banks to raise another Rs 1.35 lakh
crore. It is also suggested to lower
government's stakes to 52 %, and then
subsequently to 33 %, to increase efficiency
to strengthen the Indian banking system.
We hope that the budget proposals will
certainly accelerate the growth pedal for the
country’s economy as a whole and in
particular, the manufacturing sector
Strengthening Banking
Sector

NEWSLETTER
The MSME sector has always played a vital
role in the growth of India’s economy. MSMEs
are complementary to large industries and are
responsible for producing a diverse range of
products and services to meet the needs of
not just the local markets but also the
national and international value chains. The
sector contributes 7% to India’s GDP while
accounting for 45% of the total
manufacturing output, 40% of India’s
exports and provides employment to over
117 million people.
It is well recognized that for our MSMEs to
develop a competitive advantage to operate
in the global market, a strong focus on
implementing new-age technology and
technology collaboration with global
partners will play a crucial role. New areas
for technology application, opportunities for
commercialization of R&D and hand-holding
of MSMEs in their R&D intensification are
need of the hour. However, technology needs
capex, and for this there is a need to look at
the limits defining Indian MSMEs for the
purpose of classifying the units.
Presently, under the MSMED Act 2006, within
the manufacturing sector, micro enterprises
are classified as those with investment in
plant and machinery not exceeding Rs.25
lakh, investments for a small enterprise has
been kept in the range between Rs.25 lakh
and Rs.5 crore, and a medium enterprise is
defined as one with investment in the range
between Rs.5 crore and Rs.10 crore.
MSME Definition: Revision to
Redefine Entities
1
“ThenewwaveIndianMSME”,CII-KPMG,April2015
2
“STRATEGIC DEVELOPMENT OF MSMEs: Comparison of Policy Framework and Institutional Support Systems in India and Select
Countries”,Export-ImportBankofIndia,March2012
1
Criteria UK Germany 2
China India
Investment
in Plant &
Machinery
(INR Cr)
Micro
Small
Medium
<17
<80
<345
<15
<78
<332
<41
<41- 412
<0.01(Services)
<0.25(Manufacturing)
0.01-2 (Services)
0.25-5 (Manufacturing
2 – 5 (Services)
5 – 10 (Manufacturing
POLICY FOCUS
It is worth mentioning here that in terms of
Investment in Plants and Machinery, China
investment ceiling for Small industry is <41
crores whereas for Medium industry is
between 41 -412 crores, UK’s ceiling for
Micro, Small and Medium industry is <17
crore, between 80 t0 345 crore and < 345
crore respectively. Germany’s ceiling for
Micro, Small and Medium industry is <15
crore, between 78-332 crore and <332 crore
respectively. However, at the same time in
India MSME classification in terms of
Investment in Plants and Machinery remains
minuscule standing at Micro industry <0.01
crore for services & <2.25 crore for
manufacturing, Small industry between
0.01-2 for services & between 0.25-5 crore
for manufacturing and Medium industry
between 2-5 for services & 5-10crore for
Manufacturing.
This means that most of the leading and
developing economies around the world
have positioned the ceiling on investment for
medium enterprises at much high levels, so
as to encourage technology upgradation,
quality improvement and most critically,
export orientation.
In India, owing to such low level of
investment ceiling, Indian MSMEs are forced
to either expand laterally or to remain
engaged in low-tech/low-value products.
24

NEWSLETTER
POLICY FOCUS
Given that micro, small and medium
enterprises (MSMEs) are at the heart of
India’s economic model, it will be imperative
that a new framework be introduced that
fosters growth, encourages scale and
recognizes success of these enterprises as
opposed to one that fosters fragmentation
and limits aspiration.
Looking at MSME’s from turnover point, the
largest of large enterprises in India has a
turnover of Rs. 340,000 crores whereas an
average Indian MSME does not record even
0.001% of this turnover. With technological
shifts redefining how factors of production
are deployed and facilitating creation of new
and extremely successful business models,
we need to review our approach. Thus, there
is an urgent need to recognize the global
small and medium segment levels and bring
India at par with them. Global collaborations
and trade interactions would be meaningful
and relevant between similar sized
counterparts.
In the backdrop of the changing economic
and industrial scenario, there is a need to
evaluate the relevance of the threshold
limits of defining MSMEs that were set way
back in 2006. In the aftermath of continuous
inflation cycles triggering high costs involved
with plant and machinery procurement, the
investment caps determining enterprises as
Revision of the Definition
Of MSMEs
micro, small and medium, both
manufacturing as well as service industries,
have been deemed as too low. Since
manufacturing operations are generally
capital intensive, investment ceiling for SMEs
should be reviewed periodically. It is
important to review the investment limits
every three to four years, factoring inflation
at the very least.
Various stakeholders also purport the
consideration of additional or alternative
parameters for this definition. Globally,
manufacturing landscape is being
transformed by digital technologies such as
the “internet of things” and robotics
collectively called “Industry 4.0”. Products
and services are being offered in innovative
new platforms that are more efficient and
integrated. This technology enabled
environment is completely disrupting the
traditional arithmetic of the way the factors
of production- land, Labor, capital is
organized. Many manufacturing units are
becoming more asset-light due to the trend
of leaseback on equipment and buildings,
and therefore basing a definition on asset
investment perhaps needs reconsideration.
It is time for India to create a new paradigm
for MSMEs and consider revising the current
definitions in line with those of global
economies. Bringing the definition of MSMEs
in India at par with global counterparts will
boost cross-border collaborations and trade
interactions amongst Indian MSMEs and their
similar sized counterparts globally.
Turnover
(INR Cr)
Micro
<1.7 -165
(SME)
<0.6 <17 <15 NA
<475
(SME) NA
<9
Small <9 <81 <77 <11 – 31 <63
Medium <402 <386 <31 - 310 <156
3
Criteria
4
US Brazil UK Germany 5
China Singapore India Russia
AllvaluesinINRCrconversionasapplicableon1stDec2015(US$1=INR66.5
Source:CountrySpecificMSMEReports,KPMGData&Estimates
Note*:ConversionsfromlocalcurrencyunitstoUS$basedonexchangeratessourcedfromoanda.comon15December2015
3
4
“Small and Medium Sized Enterprises: Overview of Participation in U.S. Exports”, United states International Trade Commission,
January2010
5
“STRATEGIC DEVELOPMENT OF MSMEs: Comparison of Policy Framework and Institutional Support Systems in India and Select
Countries”,Export-ImportBankofIndia,March2012
25

NEWSLETTER POLICY FOCUS
The pertinent suggestion from CII for revision of the definition is that the definition should
be based on Annual Turnover of the enterprise:
Enterprises Annual Turnover (INR)
Micro Enterprises 0-50 crore
Small Enterprises 50-200 crore
Medium Enterprises 200–1000 crore
Enterprises Annual Turnover (INR)
Micro Enterprises 0-50 crore
Small Enterprises 50-200 crore
Medium Enterprises 200–1000 crore
Manufacturing
Services Sector
7
Criteria 8
US Brazil UK Germany 9
China Singapore India Russia
Turnover
(INR Cr)
<1.7-165
(SME)
<0.6 <17 <15 NA
<475
(SME)
NA
<9
<9 <81 <77 <11 – 31 <63
<402 <386 <31 - 310 <156
Varies by
Industry/sector Yes NA No No Yes No NA
Headcount
<500-1500
(SME)
1-19 <10 <10 NA
<200
(SME)
NA
1-15
10-99 <50 <50 <100-600 15-100
50-499 <250 <250 100-3000 101-250
Varies by
Industry/sector No NA No No Yes No NA NA
Investment
in Plant &
Machinery
(INR Cr)
NA NA
<17 <15
NA
<0.01(Services)
<0.25(Manu
facturing)
NA
<80 <78 <41
0.01-2
(Services)
0.25-5 (Manu
facturing
NA
Micro
Small
Medium
Micro
Small
Medium
Micro
Small
Medium <345 <332 <41 – 412
2 – 5
(Services)
5 – 10 (Manu
facturing
NA
Varies by
Industry/sector
NA NA No No Yes No Yes NA
Americas Europe Asia
6
Snapshot of how MSMEs are defined in different geographies of the world :
Benchmarking against the global scenario
AllvaluesinINRCrconversionasapplicableon1stDec2015(US$1=INR66.5
Source:CountrySpecificMSMEReports,KPMGData&Estimates
Note*:ConversionsfromlocalcurrencyunitstoUS$basedonexchangeratessourcedfromoanda.comon15December2015
6
7
8
“SmallandMediumSizedEnterprises:OverviewofParticipationinU.S.Exports”,UnitedstatesInternationalTradeCommission,January2010
9
“STRATEGIC DEVELOPMENT OF MSMEs: Comparison of Policy Framework and Institutional Support Systems in India and Select Countries”, Export-Import
BankofIndia,March2012
26

NEWSLETTER
27
Leaders Speak
1. The Government has initiated bringing
unmanned aerial vehicles(UAVs) under
a legal framework. What is the market
size we are looking at as Government
regulations ease up up?
2. How can the industry make the most of
the emerging opportunity?
Before the release of the draft drone
regulations, the UAV market was largely
dominated by the military/defence
segment, capturing highest revenue
share. Procurement was largely spurred
by issues such as terrorism, border
security, rising defense budget and
indigenous manufacturing campaign for
aircrafts & military equipment. However,
since the release of the draft drone
regulations, the market is poised to see
tremendous jump in the
civilian/commercial segment, with
growth expected to surpass 2000
crores by 2021.
By creating solutions deployable at the
last mile, the true dividend of this
technology can be delivered to our
country and would thereby unlock the
required scale for the industry to
flourish.
3. India is one of the largest importers of
military Unmanned Aerial Vehicles
(UAVs) in the world. How can we move
towards self-sufficiency and how can
SMEs leverage this potential?
4. UAV R&D and manufacturing in India is
still at a nascent stage. How can the
R&D support for the sector be ramped
up?
ideaForge has already demonstrated
that at the small UAVs scale, India is
self-sufficient. At the large UAVs scale,
India is working hard to become self-
reliant through DRDO with projects such
as Rustom and Tapas. But to make the
program quicker, SME's have to be
encouraged to create technology via
competitive channels.
• Rolling out final regulations for the
industry by DGCA, which include
identification of test sites for R&D
• Hardware manufacturing in the
smaller segment of UAVs is not a
challenge in India, but for larger
systems, investment in private
sector should be done by the
Ankit Mehta
Co-Founder & CEO, Idea
Forge Technology Pvt. Ltd.

NEWSLETTER
government for R&D and for
setting up of facilities for
manufacturing, backed by firm
orders.
• Free access to Govt. owned testing
facilities on a first come, first serve
basis, will help boost the R&D in
this space by leaps and bounds.
• Access of large internal data
points/sets on ground to be able to
correlate aerial data with, to enable
next gen analytics using UAV data.
While the ‘Make in India’ initiative is
providing a good push to encourage the
growth of the foreign products being
made-in-India in the UAV segment,
there are several issues that are holding
India back from developing ‘best-in-
class’ indigenous/homegrown drone
5. In your view, what more steps are
required to encourage the growth of
indigenous UAV industry in India?
technology. Few requirements are for
the Government to support:
• Blocking import of systems from
countries suspected of data theft,
such as China.
• Apply the same set of rules for
manufacturing of UAVs, as instilled
for import/trading of UAVs.
Currently, import/trading rules are
simpler, thus doing a disservice to
the manufacturing sector.
It’s a very positive draft, and with a few
tweaks it should encourage the industry
to scale. Issues like unregulated
airspace, micro UAV category, increase
in the weight category for extensive
training requirements to kick in,
consistent regulations with respect to
industrial license holders and traders
are some of the key areas to change
6. What is your view on the recent draft
guidelines issued by the DGCA?
LEADERS SPEAK
28

NEWSLETTER
29
July-September (Q2)
FY18 Survey
The CII ASCON Survey, which tracks the
growth trends of the industrial sector
through the responses collected from
sectoral industry associations, reveals a
slight improvement in growth trends in
terms of production in Q2FY18 over the
corresponding quarter a year ago.
Notwithstanding, deeper analysis suggests
that on an overall basis the economy is on a
modest growth path with sentiments and
prospects more positive than before.
According to the responses received for 82
sectors while the share of sectors registering
‘Excellent’ growth (>20%) has come down
significantly as compared to year ago,
the share of sectors registering ‘High’ (10-
20%) has gone up substantially. At the same
time, the share of sectors witnessing
‘Moderate’ (0-10%) growth has shown
improvement and also the share of sectors
witnessing ‘Low’ growth (<0%) has also
come down substantially as compared to the
corresponding period a year ago. The current
sectoral growth trends reveal that while
most of the sectors still continue to be
concentrated in the ‘Moderate’ and ‘High’
growth categories, the pace of de-growth
has come down. The current trends indicate
towards a firming of recovery in the
economy, albeit, at a modest pace.
Q2 FY18 Witnesses Modest Improvements in
Industry Growth Trends: CII ASCON Survey
Excellent (> 20%)
14.6
4.9
0.0
5.0
10.0
15.0
20.0
July-Sept. FY17
July-Sept. FY18
High (10-20%)
12.2
24.4
5.0
10.0
15.0
20.0
25.0
30.0
July-Sept. FY17
July-Sept. FY18
Moderate (0-10%)
31.7
39.0
25.0
30.0
35.0
40.0
July-Sept. FY17
July-Sept. FY18
Low (<0%)
41.5
31.7
25.0
30.0
35.0
40.0
45.0
July-Sept. FY17
July-Sept. FY18
The CII ASCON Survey results for Q2FY18 reveals modest improvements in the growth trends
Industry Performance Q2 FY18 over Q2 FY17 (in %)
Overall, the results point towards firming of recovery in the economy, albeit, on a slow pace

NEWSLETTER
30
CII ASCON SURVEY
On the capacity utilization front, in line with
the on ground experience, the capacity
utilization trends have continued to remain
weak. According to the Survey, the majority
of respondents (nearly 3/5th) have reported
capacity utilization to be in the range of 50-
75 percent for the surveyed quarter, 1/4th
of the respondents have reported capacity
utilization to be in the range of 75-100
percent whereas 1/6th of respondents
below 50 percent in the surveyed sectors.
Going forward, the Survey results point
towards improvements in capacity utilization
in the October-December quarter.
Nearly 40 percent of the respondents have
reported capacity utilization to be in the
range of 75-100 percent which distinctly
higher from the 25 percent responses
reported for July–September quarter.
With respect to issues and concerns
impacting growth ‘Cost and Availability of
Finance’ (66.7 %), ‘High Tax Burden’ (62.5%),
‘Competition from Imports’ (50.0%), ‘Transport
and Infrastructure bottlenecks’ (50%) and
‘Regulatory Burden’ (50%) have been reported
as the top most issues facing the industry.
On the industry outlook for the next six
months, overall trends point toward
moderate improvement in the business
situation in the next two quarters. 75
percent of respondents expect the overall
business situation to improve moderately in
the next six months. The current
expectations on the investment outlook
point towards an impending recovery in the
investment cycle in the coming quarters.
Overall, going forward the results point
toward improvements in growth trends.
Growth is expected to strengthen in the
coming quarters supported by consumption
both in rural and urban fronts aided by the
7th Pay Commission allowances, rising real
incomes amidst low interest rates post de-
monetization and moderation in inflation.
Further, complete acclimatization to the GST
architecture and continued support from
global growth would also aid growth in the
coming quarters. The current expectations
on the investment outlook for the next two
months also points towards an impending
recovery investment cycle in the coming
quarters.
Capacity Utilization Trends
Below 50% 50-75%
75-100% Above 100%
Below 50% 50-75%
75-100% Above 100%
Below 50% 50-75%
75-100% Above 100%
16.7
58.3
25.0
16.7
58.3
25.0
8.3
50.0
41.7
Actual
(April-June 2017)
Current
(July-September 2017)
Expected
(October-December 2017)
7.1
50.0
35.7
7.1
will improve sharply
will improve moderately
will remain same
will decline moderately
Outlook for next six months
Overall Business Situation

NEWSLETTER
To further push the pace of recovery, the
respondents to the CII ASCON survey have
suggested putting a strong focus on
infrastructure growth. Fast tracking large
projects, elevating public CapEx in highways,
low cost housing, rural and urban
infrastructure power (transmission and
distribution). Along with continuing with the
business environment reforms especially
w.r.t availability of power, logistics costs and
trading and exports, the respondents have
also emphasized on improving the
regulatory and business environment for
SMEs. With respect to GST, while the rates
remain structurally positive on various
sectors, some of the concerns highlighted by
the Industry include subsuming of ‘Alcohol’,
‘Petroleum’ and real estate under GST,
Allowing C-form set off for other goods not
covered under GST etc
will remain same
will decline sharply
60.0
40.0
60.040.0
will remain same
will remain same
Respondents expect either the situation to improve or remain the same
Investment outlook for next six months
New Orders Stalled projectsNew Investments
60.030.0
10.0
CII ASCON SURVEY
31
The Facts
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The Confederation of Indian Industry (CII) works to create and sustain an environment
conducive to the development of India, partnering industry, Government, and civil
society,through advisoryandconsultativeprocesses.
CII is a non-government, not-for-profit, industry-led and industry-managed
organization, playing a proactive role in India's development process. Founded in 1895,
India's premier business association has over 8,500 members, from the private as well as
public sectors, including SMEs and MNCs, and an indirect membership of over 200,000
enterprisesfromaround 250nationalandregionalsectoralindustrybodies.
CII charts change by working closely with Government on policy issues, interfacing with
thought leaders, and enhancing efficiency, competitiveness and business opportunities
for industry through a range of specialized services and strategic global linkages. It also
providesaplatformforconsensus-building andnetworkingonkeyissues.
Extending its agenda beyond business, CII assists industry to identify and execute
corporate citizenship programmes. Partnerships with civil society organizations carry
forward corporate initiatives for integrated and inclusive development across diverse
domains including affirmative action, healthcare, education, livelihood, diversity
management,skilldevelopment,empowermentofwomen,andwater,tonameafew.
As a developmental institution working towards India’s overall growth with a special
focus on India@75 in 2022, the CII theme for 2017-18, India@75: Inclusive. Ahead.
Responsible emphasizes Industry's role in partnering Government to accelerate India's
growth and development. The focus will be on key enablers such as job creation; skill
development and training; affirmative action; women parity; new models of
development; sustainability; corporate social responsibility, governance and
transparency.
With 67 offices, including 9 Centres of Excellence, in India, and 11 overseas offices in
Australia, Bahrain, China, Egypt, France, Germany, Iran, Singapore, South Africa, UK, and
USA, as well as institutional partnerships with 344 counterpart organizations in 129
countries, CII serves as a reference point for Indian industry and the international
businesscommunity.

CII Mission Manufacturing Oct-Dec 2017

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