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It's a two way street: US drug cos should follow Indian norms like we do abroad

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Earlier this year the NPPA (National Pharmaceutical Pricing Authority) capped prices of stents to end exploitative pricing and vulgar profiteering.

Data collected by NPPA  showed that cardiovascular stents were being sold by hospitals at extremely high markups (for example, 436 percent for bare metal stents and 654 percent in the case of drug eluting stents, on average).

It is ironic that whereas on one side the whole world is applauding government’s huge step of price cap towards making essential medical products available across the country at affordable prices, on the other side three US MNCs namely Abbott, Boston and Medtronic are trying to arm-twist the Indian government to reverse its decision on price cap of medical devices in India and creating fault lines between India and US relations.

The first bogey raised by these importer MNCs was their products demanded differential higher pricing when it was being decided that stents are an essential medicine and price capping was inevitable. However, they were unable to demonstrate superiority and clinical benefits to patients between their own brands and other equivalent Indian brands to the NLEM committee appointed by Ministry of Health and Family Welfare.

Post price caps the importers protested against the unreasonably low price caps and claimed that this action would be harmful to patients as this move would deny access to innovative medical devices, hurt manufacturing in India and discourage FDI in medical devices sector.

This was blatant misinformation as NPPA and IMA  had clearly spelled out that differential pricing for a new range of stents could be considered in future subject to claims of superior technology to be backed by clinical data. The bogey went bust when Abbott Vascular, one of the US manufacturers who was asked by USFDA (US Food and Drug Administration), EU Regulators, TGA-Government of Australia and also by Drugs Controller General of India to withdraw their absorb bioabsorbable stent on charges of public safety concerns, since the absorb proved to carry higher side effects for the patients in terms of stent thrombosis globally.

The price cap has resulted in simultaneously boosting domestic medical devices manufacturing, increasing the market size due to higher affordable access.

When they realised India was being firm and relentless it is shocking to see how US MNCs are lobbying with the USTR for using threat of access to the US market by Indian exporters to suspend or withdraw Indian exporters' import duty benefits under generalised system of preference (GSP) to arm twist the Indian government in creating differential pricing for US FDA approved stents. The facts are that it’s the Indian medical device manufacturers who face discrimination in India and in USA. Every country encourages indigenous products as they would contribute to low dependence on the imported products but the Indian stent manufacturers were challenged in our own country. There were many government tenders where the Indian companies couldn’t participate as the same had unfair specifications demanding a USFDA approved product.

The US has TBT — technical barriers to trade —  under USFDA, while these are near non-existent in India for US device companies.

Indian manufacturers are barred from selling to the US government-funded health programmes and defense as India is not listed in their TAA (Trade Agreement Act).

India's medical device manufacturers are also discriminated against as the US has a ‘buy American’ policy. No such government support exists in India for domestic medical device manufacturers.

USFDA has increased registration charges by 33 percent to 126 percent from 2018. This makes it very expensive for Indian manufacturers/exporters to register for USA as applicable fees for 510K registration is USD 10,566 for each product compared to USD 4,690 each in 2017 and premarket approval for high risk device is at USD 310,764,  up from  USD 234,495. So a manufacturer would need to be exporting and selling at least 50 to 100 times that values to justify absorbing such high costs.

The big question is should India bow to such threats to access the US market by group of three US MNC lobbies when the US is itself suffering from the highest healthcare costs in the world.

We call on the government of India to uphold the constitutional obligation on right to health and reject any pressure to review reasonable price controls on medical devices.

We ask that reasonable price controls are urgently expanded to cover 19 additional categories of medical devices classified as drugs.

We request the US government to investigate the unethical trade practices of US medical device companies indulge in India, which gives a bad name to USA. Such misinformation has the potential to harm excellent relationships between world’s largest two democracies.

We request Indian government and CCI to expedite its investigation on reported anti competitive practices in healthcare.

If they have to sell in India they have to respect Indian laws and regulations same as we do when we sell to EU/USA and other countries.

Mahindra, Uber come together for electric vehicles push in India

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 Mahindra & Mahindra (M&M) will team up with Uber to explore deployment of electric vehicles (EVs) on the cab aggregator's platform in several cities across India, the automaker said today.

The company, which has already tied up with Uber's rival Ola to build an electric mass mobility ecosystem in Nagpur, will deploy "hundreds of electric vehicles in Delhi and Hyderabad" under the new partnership.

Mahindra's electric vehicles on the Uber platform will include the e2oPlus hatch and the eVerito sedan.

"Our collaboration with Uber is an important next step to help accelerate the large scale adoption of electric vehicles on shared mobility platforms and meet the nation's vision for EVs," M&M Managing Director Pawan Goenka told reporters here.

As part of this collaboration, both the companies will also explore deployment of Mahindra electric vehicles in other cities.

On the tie-up, Uber Chief Business Officer, India and Emerging Markets, Madhu Kannan said the company aims to build a more sustainable future of mobility, moving more people requiring on-demand services with fewer, fuller, and more efficient vehicle trips.

"We see a key role for high efficiency vehicle technologies and therefore, believe that this collaboration with Mahindra, the pioneers in the electric vehicles space, will be truly beneficial not just for Uber, but for our driver partners, riders and the cities we operate in," he added.

As part of the arrangement, driver partners on the Uber app can avail of a package that will include Mahindra electric vehicles at competitive prices, attractive financing and insurance premiums as well as comprehensive maintenance packages from M&M and its associates.

Furthermore, to make this model durable, M&M and Uber will work closely with public and private players which are in the process of setting up a common use charging ecosystem across multiple locations in the cities.

M&M will also support driver education and training related to various aspects of electric vehicles.

Promoters with NPAs of a year or more barred from bidding in insolvency process

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Promoters of large stressed accounts or bad loans, many of which are being resolved under the Insolvency and Bankruptcy Code (IBC), may no longer be allowed to bid for their own assets.

In a set of amendments listed in a government ordinance to the Insolvency and Bankruptcy Code and cleared by the President of India on Thursday, those companies whose loan accounts have been non-performing for a year or more will not be allowed to participate or bid to buy the assets in the resolution plan. Those who have not have settled overdue amounts on the said accounts will also not be permitted, said a provision within the amendments.

The newly introduced provisions indicate that promoters of companies on at least the first list of 12 large cases already referred to the insolvency courts would not be allowed to bid.

The 12 accounts in the first list include Essar Steel, Bhushan Steel, Bhushan Power and Steel, Monnet Ispat and Energy, Electrosteel Steels, Lanco Infratech, Alok Industries, Amtek Auto, Jyoti Structures, Era Infra Engineering, Jaypee Infratech and ABG Shipyard.

Among these, the promoters of the now most notorious case of Essar Steel — the Ruias — are trying to get back control of their firms by bidding in the sale process under insolvency along with five other bidders.

“The Ordinance aims at putting in place safeguards to prevent unscrupulous, undesirable persons from misusing or vitiating the provisions of the Code. The amendments aim to keep out such persons who have wilfully defaulted, are associated with non-performing assets, or are habitually non-compliant and, therefore, are likely to be a risk to successful resolution of insolvency of a company,” the ordinance statement said.

According to Section 29A, which has been added to the code, the following categories of entities will be disallowed:

# Willful defaulters

# Those who have their accounts classified as non-performing assets for one year or more and are unable to settle their overdue amounts including interest thereon and charges relating to the account before submission of the resolution plan.

# Those who have executed an enforceable guarantee in favour of a creditor, in respect of a corporate debtor undergoing a corporate insolvency resolution process or liquidation process under the Code

# Connected persons to the above, such as those who are promoters or in management of control of the resolution applicant, or will be promoters or in management of control of corporate debtor during the implementation of the resolution plan, the holding company, subsidiary company, associate company or related party of the above referred persons

Kalpesh Mehta, Partner at Deloitte, said, "This was mainly to protect the bankers as borrowers could use this as a tool to push banks to take a haircut and get benefit and buy it back. Basically, the ordinance is not to renegotiate your existing borrowings and only use it (IBC) for the purpose of a genuine revival or resolution for an insolvency process and not for a willful defaulters."

The provisions also explicitly obligate the CoC (committee of creditors) to consider feasibility and viability of the Resolution Plan before giving its approval. Those flouting these amended provisions would be subject to punishment, which is a fine not less than Rs 1 lakh and can extend to Rs 2 crore.

In June, the RBI had identified 12 large accounts, which made up 25 percent of the banking system’s total gross non-performing assets or NPAs (which are at about Rs 8 lakh crore), and asked banks to refer these for resolution under the IBC.

It then came out with a second list with another 30-40 companies. The RBI has given banks until December. to try and come up with a resolution plan, failing which these firms, too, must be taken to bankruptcy court.

ovt to completely switch to electric trains, to phase out diesel engines in 5 years: Piyush Goyal

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In a bid to entirely switch to electric-driven trains, Indian Railways has decided to phase out diesel engines in the next five years. The move comes after two months post run-in with manufacturing giant GE over the making of diesel locomotives.

“We have planned to switch all trains to electric-driven in the next five years,” Railway Minister Piyush Goyal said on Tuesday, adding that the diesel locomotives would be used for backup purposes in the yards.


The move will enable the national transporter to save around Rs 11,500 crore annually, railway minister Piyush Goyal said at a meeting of the executive committee of the industry lobby group Federation of Indian Chambers of Commerce and Industry (FICCI).

The government's decision raises uncertainty about GE’s Marhaura diesel locomotive project in Bihar, where the company is setting up a factory at an estimated cost of Rs 2,052.58 crore.

The project in which the Railways Ministry has limited equity contribution was planned for over a period of 10 years, whereby, GE was to supply 1,000 diesel locomotives of 4,500 and 6,000 horsepower with high-level performance guarantees.

On September 7, Goyal had asked Indian Railways to review the GE project given plans for complete electrification of its network by 2022, following which GE issued a statement saying that scrapping the project would have a “serious impact on job creation and skills development and cause the government to incur substantial costs”.

In October, Goyal affirmed that the GE project was on track and if required, a diesel locomotive manufacturing facility could be upgraded to make electric locomotives, adding that GE will be informed if Indian Railways' requirement change.

Spokespersons for GE did not respond to phone calls and text messages.

On railway safety, Goyal said that the production of German-based Linke-Hofmann-Busch (LHB) coaches with better safety features, which was recommended by a high-level safety review committee in 2012.

“I have asked the rail coach factories to develop the LHB coaches and also double up their production at Rae Bareli coach factory, which currently manufacturers 1,000 coaches annually,” Goyal said.

The Uttar Pradesh government has been approached for the allotment of 200 acres for the Rae Bareli coach factory’s expansion.

Are bank safes....well...safe? Only cutting-edge security systems could save the day

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Are bank lockers safe? It is a difficult question to answer.

Amid the recent bank locker heist at a Bank of Baroda branch in Navi Mumbai, bankers and experts are suggesting upgradation of security and alarm systems, fresh guidelines and safety procedures to battle the new and intelligent techniques of robbers and criminals.

Straight out of a movie, Mumbai witnessed one of its most shocking heists where robbers escaped with valuables and jewellery worth over Rs 1 crore from 30 safety lockers of a Bank of Baroda branch, by digging a 25-feet tunnel from the adjacent shop.

Bank of Baroda CEO and Managing Director PS Jayakumar said, “It does raise questions and issues, not so much about us but the sophistication in which it is taking place. Therefore, we have to rework the kind of mechanics we have, the kind of alarm systems and upgrade all of them. The investigation is on now. But banks are insured when it comes to lockers and it is not a financial loss to the bank.”

This is not the first time that bank lockers have been attacked by digging a tunnel.

In 2014, thieves dug up a 125-foot-long tunnel into a Punjab National Bank branch in Sonepat district in Haryana breaking into 77 lockers decamping with cash, jewellery and other valuables. In June this year, a PNB branch was attacked by burglars who drilled a two-foot hole stealing valuables out of 30 lockers.

A senior State Bank of India official said, “These are unfortunate and isolated cases. Bank safes are usually well secured, have the highest security standards and the walls and even the floorings are RCC (reinforced cement concrete) which are difficult to break in. But ultimately technology is changing and the cutters that these thieves use have also become sharper and quicker to use. Hence, banks must follow utmost security and have the corridor guarded.

AC Mahajan, Chairman, Banking Codes and Standards Board of India (BCSBI) said, "It's a very unfortunate incident that happened. The RBI asks banks to ensure certain security like the walls, security guard, safety locks for the vaults; lockers should be of an approved manufacturer and of a certain quality, etc. Maybe now there need to be new guidelines for stronger and new type of flooring, too.”

Further, he said that banks are not responsible for the things kept inside the lockers. It is mentioned in the contract while assigning a locker. The facility is beyond the financial services that banks offer to customers.

According to him, the relationship between the bank and the customer in case of a locker is akin to that between a lessor (banker) and a lessee (customer) of a house, where the former is not responsible to take care of the things kept inside the house.

An email sent to the Reserve Bank of India (RBI) did not receive any response.

RBI guidelines

In 2007, RBI came out with final guidelines on safe deposit lockers that said that banks are not responsible for the contents of the lockers they rent.

“It is clarified that the relationship between the bank and the locker hirer is in the nature of a 'bailor and bailee' and not 'landlord and tenant' though the bank has no knowledge of the contents of the locker and the bank is required to exercise due care and necessary precaution for the protection of the lockers provided to the customer.”

According to Section 152 of the Indian Contract Act, a bank is not responsible for any loss or damage to the contents of a locker.

Respite for customers

Hence, the recent heist again raises concerns on the safety and trust factors of banks. Most importantly, what reprieve do customers have?

None. Because banks are technically not responsible for your valuables inside the lockers.

Banks are only responsible to meet the security measures and procedures to ensure safety of the lockers from outside.  The valuables inside are also not insured by the bank.

An RTI query by a lawyer earlier has revealed something really shocking for many Indians: Banks will not compensate for loss of your valuables kept in their lockers. That’s because "the relationship banks have with customers with regard to lockers is that of lessee (tenant) and lessor (landlord)". In such a relationship, the lessee is responsible for his or her valuables kept in the locker which is owned by the bank, a Firstpost report said.

Mahajan says, the only respite for customers can be to insure their valuables and register a complaint with the police if valuables are stolen. Only if proven that the locker had those insured valuables, can the customers claim the insurance.

With banks not taking responsibility for any theft of the contents in your bank lockers, apart from insuring the jewellery and other valuables, one can even buy a householder’s policy, in which if you declare the valuable contents of the house; they are insured against any kind of loss or damage like theft, loss, fire, accidental damage and so on.

Cool weather eases pressure on coal stock shortage

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Due to the rising electricity demands and excess rainfall a few months back, the coal sector has been witnessing a supply shortage.

The Ministries of Coal, Power and Railways plan to take this weather to their advantage and increase the coal supply. The time gap will help the sector to be ready for the next high demand season - when the northern region experiences winter in full force.

“This month should give us a buffer to prepare ourselves. The three ministries are in regular discussion to prepare a plan for robust coal supply to power sector when the demand increases from  December onwards," sources told the paper.

The demand for coal increases in winter because of heating requirement and agricultural purposes.

According to the Central Electricity Authority (CEA), coal stock at power units has an average of 6 days stock as on November 9, 2017.

The coal shortage arose in August where India was experiencing heavy rainfall, humidity and warm weather. The demand in August had suddenly increased by 18 percent and gradually declined by 2.9 percent and now is in the process of settling down.

Along with the sector using this period to buffer their stocks, the CEA has also issued guidelines for maintaining the coal stocks, supplying the coal and daily stock reviews. The Deccan Chronicle report says the CEA has set up an inter-ministerial subgroup which will keep a check on the coal supply position every week to ensure there is no shortage of coal in the power plants.

The subgroup is constituted by the infrastructure constraints review committee. The subgroup is led by the Coal Joint Secretary (coal) and consists of power, coal and railways representatives, shipping ministries, CEA, Coal India, Singareni Collieries and NTPC.

The move comes after the power plants have complained of the supply constraint and how the industry was unable to meet the fuel and power demands. Coal, which helps in generating power and fuel, was first the only way to generate electricity.

Out of the total 1, 050 rakes, around 400 goes to the coal sector and the rest is shared among iron ore, cement, among other sectors. The power sector claims to be the victim of the coal crunch, even though the railways claim that they give enough to the power sector.

Govt expects mineral auction worth Rs 50,000 cr in 4 months of this fiscal

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Minerals worth at least Rs 50,000 crore can be auctioned from 13-15 blocks in the remaining four months of the current fiscal with the upcoming proposed amendments in the auctioning rules, a top official of the Ministry of Mines said.

These 13-15 mines could include limestone, iron ore, emerald and molybdenum among others.

"We would like the progress to pick up. We are certainly hoping that we will easily cross the Rs one lakh crore figure for the current year, with new 13-15 blocks expected in the remaining four months of FY18," Union Mines secretary Arun Kumar said here last evening.

He was speaking on the sidelines of the golden jubilee celebration of Hindustan Copper Ltd.

"We have auctioned about Rs 50,000 crore worth of minerals from 12 mines in this financial year so far,” the senior official said.

The government has been able to auction Rs 1.80 lakh crore worth of minerals for 33 mines during the last two years, he said.

The Mines ministry was in the process of bringing some amendments to fuel an interest from private investors in the mining sector, after some concerns were raised.

"The amendments are now with the Ministry of Law for its approval and the notification of the proposed amendments can be expected by this November, " Kumar said.

The proposed amendments will relax the eligibility criteria, norms for states using discretion in bidding process, making end use terms more favourable, adjustment of royalty and fees from the upfront fees paid by the successful bidder and giving timeline to begin operations block winners.

Kumar said, these new provisions are expected to bring the auction process "easier and attractive".

The new rules will mandate a bidder to begin operations within three years and extension of another two years can be allowed during conditions beyond control, he said.

Understand the need of an expert to win in share market

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IRDAI to propose to its Board on Nov 29 guidelines allowing PEs to invest in insurers

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Insurance Regulatory and Development Authority of India (IRDAI) will make a proposal to its Board on November 29 which seeks to allow private equity (PE) firms to promote insurance companies.

“We will be allowing PE founders to be promoters for which we are issuing guidelines and are going to our Board for approval. We never had allowed it in the past,” said a senior IRDAI official.

Sources said that not only will the guidelines have a minimum time limit for  PE firms to stay invested in the insurer, there will also be norms around the commitment of additional capital as and when required. This will be discussed in the IRDAI board meeting on November 29.

In September 2017, IRDAI Chairman TS Vijayan had said that short-term investments including those by PE firms are under discussion and added that the regulator may arrive at a decision in a month or so.

On the one hand while some PE firms have approached IRDAI to promote insurance companies, there is also a proposal for the existing promoter wanting to exit the company and sell the stake to a PE firm.

Traditionally, PE firms have an entry and exit strategy for companies that they invest in. To ensure that the stability of an insurance company is not compromised, the regulator will bring out detailed guidelines giving out circumstances under which a PE can enter or exit an insurer.

“We have proposals, including where the shareholder wants to quit and POE wants to enter and another where PE itself wants to start an insurance. Instead of going case by case, we are going to the Board and issuing guidelines on it,” said an official.

As per current regulatory norms, firms holding 10 percent or more in an insurance company are classified as promoters while those holding less than that are called investors. PE-VC firms, unlike promoters, invest in companies based on business prospects and exit when the returns do not correlate to the investments.

IRDAI follows a principle of issuing exposure drafts for all new regulations. Only after the comments of all the stakeholders are received do they bring out final guidelines.

It is anticipated that the past track records of the PE companies and their investments will also be looked into while assessing the proposals to promote insurance companies.

Life insurers see opportunity in plain vanilla protection plans

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Private life insurance companies are seeing an increased business opportunity in the protection (pure term) space. While savings used to be the dominant growth driver, protection products have also seen an increase in the past few quarters.

Sandeep Batra, Executive Director, ICICI Prudential Life Insurance said that while currently protection constitutes approximately 4.2 percent of their business mix, their protection annualised premium equivalent (APE) grew by 31.6 percent.

Protection constitutes pure vanilla products like pure term. Here, a customer pays a premium every year and if he/she happens to die during the policy term, the sum assured is given to the family as a lump sum death claim amount.

Senior sector officials said that while earlier there was a trend for customers to go for endowment products where the premium amount would be returned with any interest accrued if the policyholder survived the premium payment term, that is slowly changing.

“The customer always wanted to get something back at the end of the tenure which was not possible in a pure term product. However, awareness has gone up to have a higher protection cover and agents have also been forthcoming to sell such products because the regulator has enabled higher commissions for these products,” said the head of products at a mid-size private life insurer

Anilkumar Singh, Chief Actuarial Officer, Aditya Birla Sun Life Insurance said that as on October 2017,  5 percent of the product mix is pure protection solutions, but added that the protection mix has witnessed a growth rate of 127 percent year on year in FY18.

“Our recent study on protection highlighted that people in the country are uncertain about their jobs, child’s education and living a healthy and active life, but have low preparedness in terms of protecting their needs,” said Singh.

However, he said that they are aware and hold intent to opt for protection solutions which poses an immense opportunity for life insurance companies.

Apart from the push by agents, the companies themselves are seeing a business opportunity. “First of all there is enough opportunity in selling plain vanilla protection. As we have been saying most people spend more on their car insurance than on pure life protection products. We always have our ear to the ground to pick up changes in consumer needs. Our strategy for launching new products is based on filling in need gaps in the market,” said Batra.

In endowment products, the pure protection element is lower than the one offered in pure term products. According to an earlier report by global reinsurance major Swiss Re, the mortality protection gap in India was USD 8,555 billion in 2014.

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