Positive Growth For Real Estate In Budget 2014

Post Budget 2014 reactions from Anuj Puri, Chairman & Country Head, JLL India

The Union Budget 2014-15 was presented in the parliament under economic circumstances that required tax revenues to keep pace with targets. Considering the state of government finances and the current situation – below-normal monsoons, Middle East tension leading oil price volatility, the weakness of the India rupee etc., there was not much room for populism.

However, considering the high inflation and curtailed savings that they have had to contend with for some years now, taxpayers still expected a fair shake from the new government, such as enhanced deductions, reduction in tax rates, interest subvention on home loans and tax incentives to affordable housing.

The Finance Minister took a cautious, yet courageous path with his budget announcement:

Ø  Housing

In terms of relief to the housing sector, the budget has allocated Rs. 4000 crore for low-cost housing schemes. Apart from this, he has also indicated that there will soon be a relaxation of FDI norms for the affordable housing sector. Though the government has announced such incentives for low-cost housing in the past, the real task lies in the fast execution of the fast execution of these initiatives. It is very positive that the government has taken due note of the demand-supply mismatch in the LIG and EWS housing segments, and it remains to be seen how fast these initiatives hit the ground in real time.

Significantly, the budget has increased the income tax deduction limits under 80C, of which the repayment of principal on housing loans is a component. This limit has been raised from Rs. 1 lakh to Rs. 1.5 lakh. Additionally, the budget has also increased the deduction limit on interest payment for housing loans from Rs. 1.5 lakh to Rs. 2 lakh. These two factors alone will lead to a vastly improved sentiment on the housing markets.

The budget gave further indirect benefits for the residential sector by increasing the individual income tax exemption limit from Rs. 2 lakh to Rs. 2.5 lakh. This will increase disposable income of individuals and would have further implications on their ability to service home loans.

Ø  Construction Sector

Construction costs have been rising at the rate of 17% over the last three to four years, and this budget has not provided enough measures to bring down these costs. Contrary to expectations, material costs involved in real estate construction will remain high over the near-to-medium term, which is bound to put pressure on developers’ margins.  

Ø  Infrastructure

The infrastructure and manufacturing sectors have been given paramount importance in this budget, since these are job creating verticals. Banks will now be encouraged to extend long-term loans for infrastructure projects without any regulatory pre-emptions such as CRR, SLR and priority sector lending norms. This additional enforcement of banks to support the creation of infrastructure will result in faster infrastructure creation and the consequent benefits to the real estate sector.

The budget has allocated a total of Rs. 37880 crore towards the NHAI for the construction of highways, and additional Rs. 3000 crore to boost road connectivity in the North-East regions. For the current year, it has targeted the completion of 8500 kilometres of national highways, which are a known real estate catalyst and will have long-reaching implications on the markets of the cities they connect.

Ahmedabad and Lucknow have been singled out as special beneficiaries of this budget with the allocation of Rs. 100 crore towards the deployment of Metro rail systems in these cities. The increased connectivity will raise the scope of real estate development there and also have an impact of property valuations over the mid to long term 

The development of 16 new ports has been proposed at an outlay of Rs. 11,000 crore. Additionally, an allocation of Rs. 11,600 crore has been made for the development of outer harbour port projects. The combined effect of these provisions will be that there will be an increase in demand for commercial office space from the manufacturing sector in India’s major port cities.

Ø  Smart Cities

As promised in the new government’s manifesto, it has proposed the creation of 100 smart cities across India. The budget has allocated Rs. 7060 crore towards this end, thereby giving a financial sign-off for this concept. This will have very positive implications for real estate across all segments, namely residential commercial, retail and hospitality. Smart cities, by definition, imply considerable demand for technology-enabled services, and this is a big positive for IT/ITeS companies in India. Significantly, as much as one-third of the country’s demand for office space emanates from this sector.

Ø  Retail

The country’s warehousing sector has received a boost with an allocation of Rs. 5000 crores. In this, we see positive implications for the retail real estate sector on account of a strengthened supply chain, which has been a serious requirement of this sector for a very long time. Apart from this, the budget has not provided any further benefits to the retail sector, which is a disappointment.

Ø  Hospitality

The budget also brought cheer to the hospitality sector in two major ways. One, it has stipulated that electronic visa services will be introduced in nine international airports in India over the next six months. This will increase the magnitude of tourist arrivals in the country. Secondly, it has indicated that major provisions will be made for the creation of world-class convention centres to be developed through the PPP model. Once these centres are created, they will bring about an increase in corporate tourism into the country.  Ailing hotel chains are looking at a significant revival in their fortunes, and we expect that the absorption of hotel-related real estate will rise in the bargain.

All In All...

The real estate sector’s expectations have definitely not been met completely in this budget. However, given the economic situation prevailing in the country, this is not really surprising as the government needs to balance myriad issues while addressing growth. We are satisfied at the real estate sector is once again headed in the right direction.

Indian Startups Get Fillip Of Rs 10,000 Crore

Finance Minister Arun Jaitley in his Budget speech announced the setting up of a Rs 10,000 crore fund to boost capital flow to startups and small and medium enterprises (SMEs) in the country.

During his Budget speech in the Parliament, Jaitley acknowledged that funding for such companies is a problem.

Moreover, there will be a framework for bankruptcy, which will be worked out. This will make it easier for start-ups to fold up even if an idea doesn't work out.

Currently, this is a major hassle for upcoming companies. The UPA had also announced a $100 billion fund to boost innovation -- a venture that couldn't take off during its tenure.

Apart from the Rs.10,000 crore fund, he has also allocated Rs.100 crore for a start-up village for village youth. Jaitley has also liberally allocated Rs.500 crore towards setting up a pan India technology mission in the country, which will address the "digital divide" in the country. The mission will enable broadband connectivity to the villages, boost IT enabled services, bring transparency in government operations and work towards increased indigenous production. The National rural Internet Technology Mission will address these issues along with the project e-Kranti, that will help digitise the government. 

  

There are 200 companies which contribute 80% of the industry's revenues, but another 15,000 that account for the rest 20%. A significant portion of the 15,000 are highly entrepreneurial and require the right push to become the enterprises of the future. 

Industry Expects Budget Will Support Growth Of Entrepreneurship & Innovation

On the eve of the forth coming India Budget 2014, Indian Inc across industries have voiced their opinions. Among them include: Natarajan, CEO & MD, Mindtree Limited and Nikhil Pathak, Vice President, Business & Strategy- IT Business India & SAARC, Schneider Electric India Pvt Ltd.

KK Natarajan, CEO & MD, Mindtree Limited says, "We are optimistic that the union budget will make room for changes on the policy level to enable greater participation and contribution from the industry. Making provisions for greater IT adoption in the government, manufacturing and private sector through incentivization, and streamlining the procurement process for technology products and services will be crucial.” 

He gone on to say that changes in income tax laws like discarding MAT on SEZ income, minimizing litigation on export turnover, and addressing royalty implication on software, both retrospective and on services, are also important. We expect that the budget will support the growth of entrepreneurship & innovation amongst Indian technology companies. The government should support the repositioning of India as an Innovation Hub and plan investment in rebranding and repositioning.

“Incentivizing expansion to Tier 2/3 cities, and supporting market development initiatives abroad for Indian technology products & services will help drive opportunities for balanced growth, employment, and improving overall competitiveness,” Natarajan adds.

Nikhil Pathak,  Vice President,  Business & Strategy- IT Business India & SAARC, Schneider Electric India Pvt Ltd says, “The Union Budget is an important indicator of government’s intent to fuel economic growth. We have a robust IT industry which is working on cutting edge technology and contributing significantly to the country’s GDP. The Budget should thus open up more sectors to IT and push aggressively for IT adoption across these industries. FDI opening up in different sectors is already good news and the IT sector needs to significantly leverage this. The Budget will also need to address the Indian infrastructure market that can witness investments primarily fuelled by key IT initiatives that include mobility, cloud and big data. ”

SMAC: New Paradigm For Security Professionals

Data Security Council of India (DSCI) announced that its 6th DSCI Best Practices Meet (BPM) will be held on July 9-10, 2014 at, The Leela Palace, Bangalore. DSCI organizes  the BPM, annually, to bring together senior information security and privacy professionals, business leaders and government officials to deliberate on latest developments, existing and contemporary issues in security and privacy  and emerging cybersecurity trends.  The theme for this year’s meet is ‘SMAC: new paradigm for Security?’

The convergence between Social, Mobile, Analytics, and Cloud or collectively referred to as SMAC are the reason for the new age information explosion. Organizations, both large and SME’s, across sectors such as IT, BFSI, Telecom, Healthcare, e-commerce are investing heavily in these technologies and leveraging the proliferation of the internet by launching new-age enterprise capabilities, for their business growth and to gain competitive advantage. 

Government departments are also increasingly adopting technologies in the SMAC stack for increasing the efficiency of their e-Governance projects and to aid policy and decision making. The growing adoption of these technologies along with the collaborative and cumulative effect of all of these technologies working in unison essentially magnifies the efforts of the organizations that are able to wield them effectively. This evolution is challenging the ability of existing security paradigms and current security capabilities to address business critical risks. 

The data explosion on mobile devices, application on cloud environment, big data and advance analytics and social media are leading to heterogeneous security and privacy concerns for enterprises. Hence, enterprises are scouting for new techniques and demanding high data protection standards, which may help retain their customers’ loyalty and trust.

DSCI, through its various programs, engagements and events, focusses on Public Advocacy, Thought Leadership, Outreach and Awareness, in addition to capacity building. DSCI engages with the government and the industry to help aid policy making, conduct studies and surveys reports, develop frameworks, organize capacity building programs and organise events focussed on specific yet diverse challenges facing the Indian Industry. For this work DSCI engages all stakeholders to interact and deliberate for establishing a strong data protection regime in India.

The previous BPM, held in Chennai, witnessed participation from over 200 senior level professionals from industries including IT-BPM, BFSI, telecom, healthcare  and government entities, along with distinguished speakers in panel discussions. This year, The 6th DSCI Best Practices Meet will focus on the theme “SMAC – new paradigm for security” and create opportunity to interact with the leaders in security and privacy, to understand and learn the contemporary practices which are evolving to address specific challenges and threats. The meet will witness over 300 industry professionals, 40+ speakers, 20+ sessions, multiple parallel track discussions, breakfast meets and multiple keynote addresses. Some of the important topics include SMAC Adoption, Big Data, Internet of Things & Everything, Standards & Frameworks of SMAC, Privacy Social Computing, Mobility, Cloud Forensics, Bitcoins and Virtual Currency and more.

For the first time, the BPM is spread over two days, during which workshops and roundtables around specific themes such as IT Act and Amendments, Data Localization and Advanced Persistent Threats will be held to promote security approaches and solutions. Commenting on the importance of BPM, Dr. Kamlesh Bajaj, CEO, DSCI said “DSCI Best Practices Meet, as an annual event, focuses on the threat landscape, security solutions to counter and mitigate risks that an organization faces. 

This year’s meet will bring the security and privacy approaches and best practices that have not been shared with the industry so far; specifically to meet the challenges that have emerged with the evolution and convergence of social, mobility, analytics and clod computing. It will specifically focus on discussing the implication of SMAC stack adoption on businesses and its security and privacy impediments.” He further added “this year BPM aims at engaging the security community and other stakeholders - user organizations, service providers and policy makers to focus on trends, issues and challenges in order to evolve best practices to deal with the same.”

Geoff Thomas Appointed President Of Polycom APAC

Polycom, Inc. has announced that Geoff Thomas has joined the company as President, Polycom Asia Pacific. In this role, Thomas is responsible for leading the company’s regional sales strategy and execution to drive customer success, brand affinity and profitable growth.

Thomas joins Polycom from Juniper Networks, where he was Vice President Enterprise Sales Asia Pacific. He also has a long career history with Microsoft Corporation, where he served in several leadership roles, which included business development in emerging markets.

“Geoff’s leadership and strong background in sales, emerging markets, and business development will steer Polycom’s business in the right direction in the critical Asia Pacific region,” said Peter Leav, President and Chief Executive Officer, Polycom. “Every market in this region has unique opportunities as more organisations discover the benefits of video, voice and content collaboration. Geoff will place renewed emphasis on strengthening our partnerships and providing our customers with the industry’s best experience.”

A dynamic sales and business leader, Thomas has successfully led large teams spanning several geographies, including Australia, the United States, and Greater China. His expertise lies in strategic partnerships, channels, solutions selling, and go-to-market strategy across multiple business verticals.

“I am delighted to join Polycom and lead the company’s team and growth plans in Asia Pacific,” said Thomas. “Polycom helps businesses of all sizes, in virtually every industry, defy distance and improve productivity through authentic collaboration experiences. I look forward to working closely with our partners and sales team to deliver the industry’s best solutions to our customers and driving their success.”

At Juniper Networks, Geoff led the company’s enterprise business across all markets in Asia Pacific, namely Australia and New Zealand, Greater China, India, South East Asia, Japan, and Korea. This role came with the responsibility of achieving over $300 million revenue, and the successful implementation of the company’s enterprise strategy across all APAC markets. Prior to his role at Juniper Networks, he had a successful 15-year career at Microsoft, where he held several executive leadership positions.

Firstsource Launches First WF Suite For Contact Centres

Firstsource Solutions Limited, a global provider of customised business process management (BPM) services to the banking & financial services, telecom & media and healthcare sectors, today announced the launch of First WF Suite, a service offering designed to improve resource availability & utilisation in the contact centre.

Firstsource has a track record of bringing efficiency to customer service operations, while ensuring customer satisfaction. Driven by these twin objectives, the First WF Suite enables enterprises to set up a Workforce Optimisation practice that effectively utilizes their most crucial resource—people. It aligns with all outsourcing delivery models such as onshore, offshore, work at home and more. The service suite supports optimisation in a multi-channel environment including voice, web, chat, email, back-office and social media.

First WF Suite has been enhanced to encompass Consulting, Managed Services and Capability Development. This end-to-end offering will now drive all workforce optimisation requirements and will deliver savings in the range of 10-15% in operating costs.

“The launch of First WF Suite is an exciting development for Firstsource as it is in line with our productization strategy and is a significant step in simplifying business processes. The accuracy of forecasting, scheduling & real-time analytics in First WF Suite will help service oriented organisations to reduce their operational costs through effective resource utilisation,” said Bhupendra Gupta - SVP, Head of Service Quality, WFM & Process Excellence, Firstsource Solutions.

For a large private sector bank, First WF Suite helped redesign the forecasting process, collected historic volumes and performed a causative study. This deployment helped improve the forecasting accuracy from 66% to 92% and service levels increased from 43% to 85%.

For a leading telecom company, the Consulting Services under First WF Suite, helped reduce the operating cost by $2.1mn.

PayPal to Host Chennai’s First Startup Weekend From July 11-13

PayPal today announced that it will host the upcoming Startup Weekend from July 11 to July 13, 2014, at its Development Center in Chennai. The 54-hour long event is a creativity-fueled workshop that provides a platform for participants to meet like-minded enthusiasts, build their network, get face time with thought leaders and learn new skills. Startup Weekend is a global movement to promote entrepreneurship, which takes place in more than 550 cities.

This is the first time that a Startup Weekend event will be hosted in Chennai, paving the way to building a sustainable startup ecosystem in the city. Ranga Kanapathy, Director & India Head, PayPal Data Technology, and Arun Athiappan, CEO & Founder, Ticketgoose.com, will be among the keynote speakers for the event that is expected to bring together about 100 startup enthusiasts, well-established CEOs, and a network of angel investors.

Anupam Pahuja, General Manager, PayPal Development Centers, India, said, “We are delighted to host Chennai’s first Startup Weekend in line with our broader goal of strengthening the entrepreneurship ecosystem in India. PayPal believes in fostering the entrepreneurial spirit as innovation is the key to a better world.”

“With its origins as a startup, PayPal has grown to become a global leader in the payments industry today, and we are proud to help the new wave of aspiring entrepreneurs take their first steps towards a successful venture,” he said.

Leaders in business and academia will also attend Startup Weekend Chennai to guide the participants with their proposals. The applicants at Startup Weekend Chennai will brainstorm their ideas, form groups based on their interests, meet mentors and discuss varied topics such as code designing as well as market validation before presenting their final plans at the end of the weekend. Each team at Startup Weekend Chennai gets $100 of free AWS Credit, $500 of Google Cloud Platform credits to build mobile and web apps, and a free .co domain.

The Startup Weekend sessions organized in India have so far witnessed the launch of seven startups, including SocialShout, Ridingo and Gaze Metrix, two of which have received angel funding. Interested applicants can register for Startup Weekend Chennai at http://em.explara.com/event/swchennai.

                       

In Chennai, PayPal supports the local entrepreneurship ecosystem through Start Tank that provides early stage startups a world-class incubation space and access to global mentors, angel investors, and venture capitalists. The Start Tank runs globally across PayPal offices in Boston, London, and Chennai. PayPal formally launched its Chennai startup incubator in association with The Indus Entrepreneurs (TiE) Chennai in November 2013 and currently hosts four startups.