Sunday, 29 January 2012


Varanasi is situated at the bank of river Ganges, one of the oldest city and is prominent on the tourist map of the world. It is cultural and industrial Centre in U.P. Due to heavy influx of tourist, small industries based on hand skills developed during the course of time. Among others Glass Beads and imitation jewellery made in Varanasi became famous.

The glass beads have a history of around 100 years. Earlier few artisans used to import raw glass and tubes from Firozabad and other places and used to manufacture beads for catering the demand of the tourist visiting Varanasi. With the increased in demand manufacturing activities increased and reached the rural areas of Varanasi. Presently the activities have spread to 40-50 villages in Varanasi and areas around and presently around twenty thousand workers are engaged in these industries. Numbers of micro and artisan based, processing and medium/ small scale unit are working in Varanasi.

Following items manufactured by artisans at Varanasi.

Solid glass beads - these glass beads are largely used in preparation of artistic show pieces and ornaments

Fancy beadsthese are mainly used in India and abroad for embroidery, ornaments and other artistic items.

Hollow beads used for ornaments, wall hanging, curtains and other items.

Glass beads manufactured are generally made by use of colour block glass, glass rod and tubes. The artisan’s units, engaged in production, comprise of hand tools, addas, burner and few other equipments costing 20,000 to 25,000 rupees. The dies which give shape to the beads are generally prepared as per design of the company placing orders for manufacturing of these items. The fuel used is kerosene oil which is generally taken by these artisans from open market. Block glass, rod and glass tubes are main raw material which are purchased form the open market or supplied by the firm placing orders to these artisans, who are the traders and have extended their operation to exports and entered in the field of manufacturing of raw material viz, glass rod, tubes in their own glass factories and have developed arrangements through contractors to ensure distribution of raw material among the artisans and recollections as finial product. 

At present approx. 20,000 artisans are engaged in manufacturing of glass beads and some 35,000 to 45,000 people in other allied activities in Varanasi.  Approximately 8,000 micro units are engaged in production of beads, with 50 small and 6 big units in this area, important among them is M/S Banaras Beads Ltd. The total production volume of the area in terms of rupee is around 105 crores out of which some 70 % is exported to various countries fetching a valuable foreign exchange worth Rs.70 to Rs.72 crores per annum. The perfect and natural mix of urban and rural artisans is the most important factor of this sector. Beside Varanasi Firozabad and Purdilnagar are the other centres where glass bead manufacturing is carried on.

The stress is now for quality up-gradation with improvement in technology, upgraded process and improved raw material. Varanasi is on proposed route of gas pipe line to be laid by ONGC. The availability of gas towards raw material will result in reduction of manufacturing cost.  In spite of threats from china, the industry has witnessed growth rate of 10-12% in the last few years. Large number of artisans and SME has survived in this sector.

S.K. Singh

Udyog Bandhu

Tuesday, 17 January 2012

100% Foreign Direct Investment (FDI) in Single Brand Product Retail Trading

Foreign Direct Investment (FDI) means investment by non-resident entity/person resident outside India in the capital of the Indian company. It is the policy of the Government of India (GOI) to attract and promote productive FDI in activities which significantly contribute to industrialization and socio-economic development. FDI supplements domestic capital and technology.  Presently, 51% FDI was permitted in Single Brand Retail which was opened to Foreign Players almost 6 years ago. GOI has allowed 100% FDI in this segment of retailing paving the way for International Players vide notification dated 10-01-2012. The highlights of the notification of GOI is as under :

(1) Foreign Investment in Single Brand product retail trading is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices.

(2) FDI in Single Brand product retail trading would be subject to the following conditions:
(a) Products to be sold should be of a 'Single Brand' only.
(b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
(c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing.
(d) The foreign investor should be the owner of the brand.
(e) In respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian 'small industries/ village and cottage industries, artisans and craftsmen'. 'Small industries' would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a 'small industry' for this purpose. The compliance of this condition will be ensured through self-certification by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be required to maintain.
(3) Application seeking permission of the Government for FDI in retail trade of 'Single Brand' products would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The application would specifically indicate the product/ product categories which are proposed to be sold under a 'Single Brand'. Any addition to the product/ product categories to be sold under 'Single Brand' would require a fresh approval of the Government.
(4) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the FIPB for Government approval. 

Source : Press Note No.1 (2012 Series) of GoI , Ministry of Commerce & Industry,
Department of Industrial Policy & Promotion, (FC-I Section)

Shailendra Kumar Singh
Udyog Bandhu

Wednesday, 11 January 2012

Government to formulate Public Private Partnership (PPP) Rules 2011

In the year the Department of Economic Affairs (DEA). Ministry of Finance, GoI had issued detailed guidelines for selection of consultants, developers for PPP projects and private Partners for disinvestment, in order to more transparency in the bidding process, these guidelines, in the year 2007 were adopted by GoUP with certain modifications. It was further clarified by DEA that financial support to PPP projects in infrastructure projects shall be granted under Viability Gap Funding (VGF) scheme subject to being in conformity to its guidelines.

Now DEA has issued a PPP (Preparation, Procurement and Management) Draft Rule 2011 for discussions to give more impetus on transparency and conformity defining duties and responsibilities at each stage of implementation of projects. These exhaustive rules on bidding process, monitoring of projects during and after implementation and on audit procedures, are proposed to be applicable on all projects undertaken by Government of India and projects of State Government or of its authorities or Corporations etc barring projects of few Ministries.

 Some of the very important highlights of draft PPP rules are as under :

1.    It involves qualitative and quantitative assessments to ascertain the Value for Money.

2.    The Contracting Authority has been made responsible for ensuring the interests of land owners under the extant of laws.

3.    In very complex PPP projects, a new stage known as Request for Technical Proposal between RFQ and RFP, and Competitive Dialogue system, have been incorporated for assessment technical qualification of developer and to establish project objectives.

4.    A provision of appointment of an Independent Monitor is made to ensure the transparency in bidding process. However, it may not be practically possible as in some states exiting Bid Evaluation and Consultant Evaluation Committee are being headed by fairly senior government officers of the state.

5.    It is proposed that bid security amount shall not be more than one percent of estimated project value.

6.    One applicant can submit only one application either individually or as a member of consortium

7.    Negotiations with the Bidder are strictly prohibited except in case of sole bid to get better terms.

8.    Suitable provision for exit strategy for continued service delivery projects, are required to be made in concession agreement.

9.    A data bank to deal with dissemination of information following in-principle approval, signing of the Concession Agreement, after Financial Close, during Construction and Operations Phase and following Termination of the Concession Agreement shall be created.

10.  An Approach to audit has been formulated and provision of constitution of Contract Management Team (CMT) and Empowered Review Cell (ERC) to deal with the activities related to Post Award Project and Contract Management, has been made with clearly defining their duties.

11.  A code of conduct for officers or employees of Contracting Authority shall be documented and implemented.

It is evident from the above, that implemented of these exhaustive rules would give new dimension to the PPP projects.

Kulbhushan Kapoor
Udyog Bandhu