Impact Assessment of Union Budget 2015-16 on Indian Power Sector

Power

§ 5 UMPPs

Will add 20 GW of more efficient power plants, will improve the power availability situation of the nation. The background work done for the earlier attempted UMPP bids will speed up the process.

But the concern is the availability of such huge quantum of finance, going by the unfavourable time for the banks and other financing agencies.

§ Plug & Play model for quick clearances

Quick clearances, definitely a positive move, to avoid time over run of projects.

§ Additional depreciation @ 20% is allowed on new plant and machinery installed by a manufacturing unit or a unit engaged in generation and distribution of power .

It would be having a positive impact on the sector, although the quantum of benefit would be moderate.  

RE

§INR75 crore for electric cars production under Faster Adoption and manufacturing of Electric Vehicle (FAME) policy.

The impact would be positive, but low as it would only be benefiting a small portion of everyday transport, usually helpful for small distance commute.

§ Target 2022: 100 GW in solar; 60 GW in wind; 10 GW in biomass and 5 GW in small hydro.

The goal seems unrealistic. But if could be achieved the carbon footprint of an equivalent of 85 GW of coal based thermal power generation can be offset. Power availability of the nation would see a growth. 

But then, is there enough power evacuation infra available to address this huge quantum of capacity installation?

§ Reduction in Basic Customs Duty to reduce the cost of raw materials- Active Energy Controller (AEC) for use in the manufacture of Renewable Power System (RPS) Inverters to 5%, subject to certification by MNRE.

The impact of this cost reduction would be positive on the sector, but the impact would be low. As this component forms a very minute part of the project cost.

And again the implementation of the same is subjected to the approval of MNRE.

Rural Electrification

Electrification, by 2020, of the remaining 20,000 villages in the country, including by off-grid solar power generation.

Will be positive for the sector. But the goal seems to be difficult. Even if the numbers of electrified villages reach the set mark of 20,000, the impact would not be that significant if they happen to provide electricity connections to just 10% of the total household of those respective villages as has been defined by Rural Electrification Policy. 

The War of Drones, A New Delivery Mode in E-commerce

Drone Delivery System, the much hyped Amazon's dream of 2013 has now been shattered with Alibaba, the Chinese giant finally testing the service while Amazon is still looking for test in US.

So how this drones are going to affect the e-commerce market dynamics? Let's have the SWOT

STRENGTHS

• Faster Delivery
• Larger Volume of delivery with lots numbers of drones
• Reduced Delivery Cost 

WEAKNESS

• Technology

OPPORTUNITIES

• Huge market  for local by delivery option 

THREATS

• Regulations
  

So the market dynamics will see a paradigm shift once the regulations are set up, and civil drone operations are allowed on large scale, till then finger crossed. 

Digital Sales Presence, is it the end of Brick & Mortar Retailers

The heavy discounts on online retail has once made the multi-nation giants to literally ban warranty  or after sales services to check the fall in price of these commodities, they even went ahead to issue consumer advisory mails to refrain them from purchasing online. But the tide is with on-line marketing, the recent trends of exclusive e-commerce launch is the exact opposite in the nature of what these giants had done earlier. They now have come to the terms that rather then ignoring India's potential as an e-commerce market, their benefit lies in adopting the change. And there comes "Digital Sales Presence"

So what is the "Digital Sales Presence"? The digital sales presence is the expansion of sales network of these giants over the digital space, ie- online. Amongst the market place and inventory led model, India fits best for the first one, and these adopting players are now consciously tying up their retailers with the e-commerce players, as for instance Sony has tied up with Snapdeal, and more such development will happen in the near future. This new strategy will enable the stakeholders to have larger, untapped consumer base, but at the cost of marginal decrease in profit per unit. 

But what about the Brick & Mortar retailers, is this just the beginning of their downfall. Because obviously they would find themselves at constrained margin levels or even that quantum may further decrease. So what should be their answer to this?  

INDIAN POST Going on-line, Impact On The Indian E-commerce Market

The Indian E-commerce segment is growing like anything, and it will continue to be the same, but the growth has been confined to major cities or as of now you can count Tier- II & III cities, but what about the rural consumers. 

China, the arch rival of India is now focusing on this untapped potential consumer base their.

And as per the recent news Indian Post, is in the pilot phase of going on-line which definitely would have the edge over others through its robust deliver y network. 

Hence its time for the major players to get alarmed and formulate new strategy.

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