India Market Watch: New Startup Policy for IT and Electronics Sector in Gujarat and India 2nd in the Global Retail Development Index

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Gujarat Unveils IT and Electronics Startup Policy

The Gujarat state government has announced an IT and Electronics Startup Policy, which will provide various incentives and subsidies to tech entrepreneurs. This comes in addition to a policy for startups in the manufacturing and services sector that was launched in 2015.

Under the new policy, the state government will develop 50 incubators to mentor and guide 2000 startups in the next five years, and aims to attract an investment of US$ 1.04 billion (Rs 7000 crore). 1 million sq ft of land has already been allotted to develop the incubators. The tech startup policy will also provide incubators with a fund of US$ 7446 (Rs 5 lakh) per year for mentoring assistance and US$ 150,000 (Rs 1 crore) for software procurement. The policy intends to integrate the role of industries and educational institutes that will boost the viability of the state’s tech startup community. Workshops, summits, and conferences have also been planned this year, offering a platform for venture capitalists, incubators, and accelerators from around the country to interact.

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India Second in the Global Retail Development (GRD) Index

India climbed 13 positions from last year to rank second on the Global Retail Development (GRD) Index 2016 put out by A.T. Kearney, which is a London-based business consultancy. The index tracks the top 30 developing countries, according to their ease of doing business. Reasons for the jump were the new and clear foreign direct investment (FDI) regulations and India’s positive GDP growth. In particular, FDI regulations in the single-brand retail segment were pointed as having benefited multinational firms entering the Indian market.

The retail sector in India has expanded at a compound annual growth rate (CAGR) of 8.8 percent between 2013 and 2015, with annual sales crossing the US$ 1 trillion mark. Growth in the e-commerce sector also seems optimistic with increased internet and smartphone penetration. So far the government has been receptive to the regulatory and policy compulsions of the retail sector, thereby continuing to attract foreign investor interest.

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India-U.S. MoU to Boost Renewable Energy Sector

India and the U.S. signed a memorandum of understanding (MoU) on June 2 to enhance their cooperation in energy security, clean energy, and climate change. The partnership opens up new renewable energy initiatives and hopes to attract American and foreign investments worth about US$ 1 billion.

The proposed deal is to be secured through two “innovative investment mechanisms” targeting off-grid solar projects and rural electrification, namely the U.S.-India Clean Energy Finance (ICEF) and the US-India Catalytic Solar Finance Program (ICSFP). During the initial phase, ICEF plans to raise about US$ 20 million from US agencies in partnership with the Indian government. Further, the Overseas Private Investment Corporation (OPIC), the U.S. government’s development finance institution, could enable the funding of India’s solar program by up to US$ 400 million. On the other hand, ICSFP could pump in about US$ 40 million towards the ambitious rooftop solar program under the National Solar Mission.

The alliance between the two countries is meant to be an ongoing engagement in the renewable sector. It will considerably expand India’s financing options and will bring down the cost of solar power. Solar power capacity addition targets have currently been raised five-fold by the government to reach 100,000 MW by 2022. Of this, 60,000 MW will be through grid-connected projects and 40,000 MW through rooftop and off-grid solar projects.

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