Thursday, May 18, 2017

GST in India: For Better or Worse?

Apple has started manufacturing iPhones in India. According to a WSJ report, the the iPhone SE series is being produced by Wistron, near Bangalore. Since the locally manufactured or assembled products will not attract import duties, it seems the prices are going to about USD 100 lower than imported phones.

Import duties and taxes make a big difference to a companys' fortunes. India's tax system is often cited as one of the top reasons why global manufacturers prefer to stay away from India. For instance, JCCII, a body representing Japanese corporate's, puts out every year "Suggestions to the Government of India". These suggestion have remained more or less unchanged for many years, and it is always complaints about the tax system that tops the lists.

In the latest 2016 list too, JCCII's tax-related suggestions include -
  • Removal of Permanent Establishment (PE) taxation
  • Easing of Transfer Pricing assessments by classifying Japanese Trading Companies (Sogo Sosha), not as traders but as Service Providers
  • Exemption from Minimum Alternate Tax (MAT) in the SEZs
  • Exemption from Dividend Distribution Tax (DDT) paid to foreign shareholders
  • Exemption of Service Tax on exports from India
In other words, the Japanese companies are saying, "If you don't let us take our profits home, we will not be able to invest more in India". In the official cover note JCCII also says, "While we await...the all-important GST bill, our concerns on the Tax system...remain."

So is the GST going to really improve our tax system and east of doing business? Much of what I have read so far has been gung-ho about GST, and about how it is going bind the whole country into one large happy market for goods and services.

An interesting contrarian view is held by Aravind Datar, who is quite convinced that GST, in its present form, is only going to worsen the ease-of-doing-business scenario in India. Here is the video -

The critical points are -

* More Laws, More Confusion: As of today, 29 states in India have their own VAT / Sales Tax laws, and separate laws for Service Tax and Excise Duty (total 32 laws). When GST is adopted by all the states we will have 29 StateGSTs (SGSTs), one Central Service Tax (CST) and one Inter-State GST (IGST). In all, 31 laws instead of 32.

* Lack of Checks and Balances: The GST Council can make only recommendations, which cannot be enforced. The state governments are free to make GST laws as they please (as per the 101 Amendment, Article 246A, and the Supreme Court judgement of 11 Dec., 2016)

* Cumbersome Reporting Requirements: Service providers currently file their returns twice a year. Now they will have to file 49 returns every year! (3 returns per month online - 10, 15, 30th + 12 TDS returns + 1 annual returns = 49)

* Discouraging Economies of Scale: Any company earning more than INR 2 million will have to file returns. So this will only encourage those who want to stay below that threshold, as in the old "License Permit Raj" days.

* Enormous potential for tax evasion, and tax-related harassment: Unlike other countries which have one single GST rate (eg. Singapore - 7%), we are going to have slabs - 0%, 5%, 10%, 28%. This encourages ambiguity, and the discretionary powers of tax officers.

* More Ambiguity, Not Less: Lack of clarity on General Anti Avoidance Rules (GAAR) and Place of Effective Management (POEM) is sure to discourage manufacturers and FDI investors.

Datar is a great communicator and his speeches, articles and arguments are quite convincing. Is there anybody in the establishment who has come up with a point-wise rebuttal of the concerns raised by him?


* (2017) WSJ -

* JCCII's Suggestions to GoI (2016) -

* Aravind Datar on GST -

* (2015) Aravind Datar, IE - GST's Seven Deadly Defects -

Sunday, May 14, 2017

To OBOR or not to OBOR

A grand summit is now on in China. Around 65 countries are participating in the One Belt One Road (ORBOR) meeting which envisages construction of international trunk passageways and an infrastructure network connecting all sub-regions in Asia, and between Asia, Europe and Africa.

There is big money promised for these projects - China has committed a total of about $100 billion to three new infrastructure funds: a $ 40 billion fund to the Central Asia-focused Silk Road Fund, a $ 50 billion fund to a new Asian Infrastructure Investment Bank (AIIB) and a $ 10 billion fund to the BRICS-led New Development Bank.

India, however, has opted out. It is anything but enthusiastic about the CPEC, a highway that cuts through territory that has been illegally occupied by Pakistan.

What does this mean to countries that are enthusiastically participating in OBOR? Perhaps they expect a windfall by way of investments and market access. Or perhaps they will take a closer look at countries that have already borrowed tons of money from China, and ten contemplate - like Sri Lanka - whether they did the right thing.

Sri Lanka is currently in $58.3 billion debt to foreign financiers, and 95.4% of all government revenue is currently going towards paying back its loans. Of this, about $8 billion is owed to China alone, of which $1.4 billion was borrowed by the Sri Lankan government for constructing the Hambantota port.

Since these investments are not bringing in revenue as projected during the - rather hasty and secretive - planning & approval, the state is handing over its assets to Chinese companies on long-term lease:
  • 80% of its Hambantota port has been handed over for 99 years, to China Merchants Holdings.
  • Colombo’s South Container Terminal is a 35-year Build-Operate-Transfer (BOT) arrangement with the same company
  • IZP, a Chinese informational technology company, has been put forward as a potential purchaser of Mattala International Airport.

So is there a pattern here? Borrow on easy terms, belatedly discover that the revenue model was flawed, and grudgingly hand over your land and assets to the foreign lender?


* (2017) ET -

* (2017) IE -

* (2017) IE - Belt Road Initiative -

* (2017) FT - One belt, one road and many questions --

* (2017) - Bloomberg -

* (2017) Wanda Bullish on India -

* (2017) Express edit -

* (2017) The Guardian -

* (2017) Dawn, Pakistan - CEPC for Pakistan - A Colonial Enterprise?  -

* (2016) Wire --

Hanbantotta - China's own port in Sri Lanka

* (2017) Forbes - India Tells Sri Lanka: You Can Take Your Port And Shove It -

* (2016) Forbes --

Thursday, May 11, 2017

Solar: Upstream and Downstream

Amazing things are happening in India's renewable energy market - especially solar power.

Yesterday , it was reported that at an auction of a 250 MW capacity plant at Bhadla (Rajasthan), South Africa’s Phelan Energy Group and Avaada Power bid INR 2.62 (USD 0.04) per kilowatt-hour (kWh) to win contracts to build capacities of 50MW and 100MW, respectively, at Adani Renewable Energy Park Rajasthan Ltd. This is a new record low. The bidding wars seem to have now reached a point where experts are wondering if it is commercially viable to produce produce power at these rates.

If the unit price is surprising, so is the sheer scale of the new 'solar farms' that are coming up. The current world record the world's largest solar project in a single location is now held by Adani's 648-megawatt Kamuthi plant (near Marurai, Tamil Nadu), which went online in September, 2016. The second largest solar plant, the Topaz Solar Farm in California, has a capacity of 550 megawatts.

For a country that located in the tropics, India has a huge potential for switching over to solar energy. Consider these facts -

  • The solar  radiation incident over India is equal to 4–7 kWh per square meter per day with an annual radiation ranging from 1200–2300 kWh per square meter. 
  • It has an average of 250–300 clear sunny days and  2300–3200 hours  of sun shine per  year. 
  • India's electricity needs can be met on a total land area of 3000 km2  which  is  equal  to  0.1%  of  total  land  in  the country 
  • Currently  India is  generating  4.59%  of solar energy  of  total  produced  renewable  energy  installed capacity in India

Over the past few years, thanks to a concerted push by the government, India has quadrupled its solar-generation capacity from 2,650 MW on 26 May 2014 to 12,289 MW in 10 March 2017.  Yet, behind all these impressive numbers, fact remains that present and future growth is completely hinged on the import of equipment from China. In 2015-16, the value of imported solar cells and modules tripled to $2.34 billion, with China accounting for 83 per cent ( $1.9 billion).

Despite having a dedicated Ministry for New and Renewable Energy (MNRE) for the past 15 years, why is it that India has not been able to it own supply chains? Why is it that Indian manufacturers have no access to domestic upstream raw material supplies of poly-silicon and wafers?

According to a KPMG report (2015), India has not been able to create economies of scale in solar manufacturing, mainly due to insufficient government support - loans, tax holidays, subsidized utility services, easy access to land and technology support.

Is that a rather simplistic view?


* (2017) Wire - Why Increasing India’s Solar Energy Capacity Won’t Work --

* (2017) Mint -

* (2017) - Solar panel imports - -- HSCode - 39209919

* (2017) -

* (2016-Dec) --

* (2016) - BL - Import of solar panels triples in 2015-16 -

* (2016) - Adani's Kamuthi Solar Power Project -

* (2016) - India's solar energy push to generate 1 mn green jobs --
- Report by Natural Resources Defense Council (NRDC) and the Council on Energy, Environment and Water (CEEW) -- ‘Filling the skill gap in India’s clean energy market: Solar energy focus’
- The country will need new skilled workforce & training to achieve its ambitious national target to add 100 gigawatts (GW) of installed solar energy by 2022
- one million new engineers, technicians, solar installers, maintenance workers and performance data monitors
- International Solar Alliance (ISA) -  alliance of more than 120 solar-rich countries aims to facilitate widespread deployment of solar power and supporting knowledge exchange on manufacturing and skills.

* (2015) - DTE - WTO rules against India in Domestic Contents Reqirements for the Solar Industry --
- Indian manufacturing capacity of solar cells and modules is limited to 1,386 MW and 2,756 MW respectively. The Mission's target at the time of the complaint stood at 10,000 MW to be achieved in the period from 2013 to 2017.
- Since the solar target has been revised to 100,000 MW or 100 GW by the Modi government, the target now stands at 29,000 MW.

* (2015) - Research Paper - Potential of Solar Energy in India -
-  The solar  radiation incident over India is equal to 4–7 kWh per square meter per day with an annual radiation ranging from 1200–2300 kWh per square meter.
- It has an average of 250–300 clear sunny days and  2300–3200 hours  of sun shine per  year.
- India's electricity needs can be met on a total land area of 3000 km2  which  is  equal  to  0.1%  of  total  land  in  the country

Potential of Solar Energy in India
- Currently  India is  generating  4.59%  of solar energy  of  total  produced  renewable  energy  installed capacity in India

* India Solar Resource Maps -
* NREL - National Renewable Energy Lab -

* International Solar Alliance (ISA) -

* (2016) Yes Bank - Compendium of Global Success Stories in Solar -

* (2015) - KPMG Solar Manufacturing Report -

* Wiki - List of solar manufacturing companies -

Sunday, April 30, 2017

Water Diviners

“There is water here,” the old man from Kasaragod said simply, after reading the landscape and its botany, and placing his hands on the earth.

I was struck by this line from recent article by Lalitha Sridhar in the Hindu. She was describing C. Kunjambu Attan, a highly regarded 76-year-old water diviner from Kerala and his visit to Bidar, a drought-prone city in Karnataka, India.

It is not uncommon in India to come across stories of great mystics who had special powers to commune with nature. The book, "Autobiography of a Yogi" contains numerous instances of sages who developed a capacity to communicate their thoughts to their people sitting thousands of kilometers away, and of yogis who could "create" fruits out of thin air. In a more recent book, "Apprenticed to a Himalayan Master", tells the story of a Muslim boy who was impelled to find his life's calling a Nath-panthi yogi.

A water diviner may not be categorized as a Yogi, but unlike the seekers of the ultimate spiritual Truth, they seem to be putting their talents to good use -  not in some distant afterlife but in the immediate here and now. What could be more useful that helping thirsty people in parched lands quench their thirst?

This also makes me wonder if there are mystics and diviners who try to prevent the colossal wastage of water we see all around us -- especially in urban areas.Take Noida for instance. Potable drinking water for the city is sourced from the distant Ganga river (80%), and from groundwater aquifers (20%).

Despite the huge expense involved in transporting, cleaning and distributing water to the cities, the UP Jal Nigam seems to care little about wastage. Users are charged a paltry one-time annual fee that creates no incentives to prevent overflowing water from literally going down the drains.

Are there any Kunjambu Attan's who can help prevent the mindless wastage of water in our cities -- especially in the scorching summer season?


* Sridhar, Lalitha - How Bidar Beat Back the Heat --

Kashmir: Any Lessons from Shin Bet?

An article by Virendra Kapoor in the Sunday Guardian presents a contrarian view to the prevelant doom-and-gloom scenario painted by the usual op-ed writers in the English press. He essentially points out that the "Kashmir Problem" is centered on just five of the 22 districts in the state, covering 15% of J&K's land area and less than half of the state's population of 12.5 million.

One of the tweets that came in response, suggested a documentary for essential viewing: "The Gatekeepers", based on an interview of all the surviving chiefs of Israel's secret service, Shin Bet.

Directed by Dror Moreh, this ~90-minute video contains many elements you would expect -- grainy clips from drones following vehicles used by Hamas operatives, dramatic recreations of some famous "targeted assasinations", especially that of Yahya Ayyash, and of interrogation techniques used by Shin Bet.

What is, however, completely unexpected is that clarity of understanding amongst all the spook-chiefs' that a solution to the Palestenian Problem cannot emerge out the ongoing cycle of violence and revenge. They are all for talks with anybody who is willing to negotiate a settlement. As one of the them puts it memorably. "We need to talk to each leads us to understand each other better...he may realise that I do not eat glass, I may find that he does not drink petrol."

It may not be entirely fair to equate Palestine with the Kashmir valley, but some elements are indeed common: The sense of being dis-empowered and alienated; of being under an army occupation; of midnight raids and the disappearance of young men, and stonepelters .  However, unlike Palestine, separatists in the valley are driven by an ideology inspired by radical Islam. This has resulted in an ethnic cleansing of Hindu Kashmiri's who continue to live in refugee camps elsewhere, and now the perpetrators of violence claim to be victims themselves who say, "Victory is to see you suffer!"

According to Clautzwitz, "Victory is simply the creation of a better political reality". While the Modi government finds news ways of overcoming the cycle of violence, it may be worthwhile to keep in mind Prof. Y. Leibowitz's prediction for Israel, one year after the Six Day War, in 1968:
 "A state ruling over a hostile population of one million foreigners, will necessarily become a Shin Bet state with all that this implies for education, freedom of speech, thought and democracy. The corruption found in every colonial regime, will affix itself to the State of Israel. The administration will have to suppress an Arab uprising on one hand, and acquire Quislings, or Arab traitors on the other.."


* Kapoor, Virendra (2017) - Rest Assured, Kashmir is not lost for India -
* Documentary - "The Gatekeepers" on Wiki -

Monday, April 24, 2017

The Not-so-Holy Buffalo

The lunatic fringe in India now has a new avatar - "Gau Rakshaks" - the self-appointed cow-protectors who patrol our roads and highways like the thugee of yore, seeking out the weak and the meek to bully, intimidate, and kill.

Yesterday night they set upon a Gujjar family in Jammu, pulled down a police picket in which they had taken shelter and beat them up for plying their trade. Last week another mob attacked a truck suspected of transporting cows to slaughterhouses, and after beating up the driver, found out that their cargo was not cows but buffaloes.  A clear case of mistaken identity but how does one explain that to a mob targeting muslims?

What explains this sudden touchiness for the well being of cows? In the North Indian Gangetic belt, life has evolved around a pastoral economy. Wealth was measured by the number of cows you owned; Gods were created from iconic cowherds and much loved stories woven around their adventures with the "Gopikas" on the banks of the Yamuna; communities and intra-caste divisions were based on "Gotras"...and yet, even when the cows were pivotal to life in ancient India, our scriptures (eg. Taitriya Brahmana) say that beef was a special treat reserved for honored guests.

The problem with inconvenient truth's is that they lack the emotional appeal, and the political power that can be squeezed out of it. Consider this screenshot of recent tweet. Cows qualify as "harmless, giving animals", but, not other farm animals!

The mobs - and their puppeteers - choose to ignore the face that times have changed. Cows are being rapidly replaced by buffaloes on Indian farms. Compared to cows, buffaloes are a lot more valuable now the north Indian farmer for the simple reason that they provide a higher RoI. The water buffaloes do not carry the cultural baggage of "holiness" associated with cows in North India. So they are treated like the usual farm animals - valuable when they are lactating or pulling carts but easily sold off to the nearest abattoir the moment they cease to be useful on the farm.

So it comes as no surprise that buffaloes provide more than 55 per cent of the milk that Indians consume. They are also the backbone of India's thriving meat export industry. One single company - The Allana Group, processes no less than 7000 buffaloes a day. Last year, we exported about 1.2 million tons of "carabeef" worth INR 23,646 Cr (USD 3.6 billion)!

Despite being one of the original homes of the water buffalo, why is it that in India this animal considered less holy, less worthy of any of the sentiments associated with the cow?

Mythology provides some pointers and clues.  One of the many villains in Indian mythology is "Mahisasura", that unseemly combination of a demon and a water-buffalo who is ultimately slain by Durga, the celebrated Mother Goddess. In many temples there is nothing irregular about offering animal sacrifice, and the buffalo tops the list of blood offerings. At the famous Kalibari temple in Kolkata I remember being taken aback by the sudden sight of severed buffalo heads in the sanctum. Ditto for temples in the Kathmandu valley and the Kamakshi temple at near Gauhati, Assam.

Perhaps the only place where I have seen buffaloes raised to an iconic status is at the Achaleshwar Mahadev Temple in Mount Abu, Rajasthan.

On the banks of the temple pond, stand three stately buffaloes, overlooking a herd of their real-life brethren cooling off in the muddy waters. As with most historical places in India, there are no plaques telling you who took the trouble of putting up the statues, and for what reason. The tourist-guides, will, as usual, tell you some cock-and-bull story that fits the contemporary bias against buffaloes.

It is a sad sign of out times that political revival of the 'Hindu Identity' is being built on regressive, shallow symbolism.

If the celebrated Polish artist, Pawel Kuczynski,  turned his attention to contemporary India, he might have replaced the cat in this painting with a cow, and added a few people (bearded, skull-capped) into the barn! :/


* ENS (2017): Where Indian Meat Exports Go --

* Damodaran, Harish (2012): Cow Belt or Buffalo Nation?
More than 55 per cent of the milk that Indians consume now flows from the udders of buffaloes, which are neither born holy nor have holiness thrust upon them.buffaloes constituted 34.6 per cent of the country's total bovine animal population (male plus female) as per the latest 2007 Livestock CensusAn average Murrah buffalo produces 2,000-odd litres over a 300-day lactation period, which is more or less what comparable elite indigenous cattle breeds such as Sahiwal yield. But buffalo milk also fetches higher price, as it contains 7-7.5 per cent fat – almost twice that from cows.In 2010-11, 7.1 lakh tonnes of buffalo meat, worth Rs. 8,413 crore, was officially shipped out from India.
* Bovidae Family -
* Devdatt Pattnak: In Defense of the Buffalo -

* Allana Group -
57% of total buffalo population of the world, India is considered as the home track of some of the finest breeds of buffaloes

Wednesday, April 19, 2017

Zero Energy Building

A rather unusual looking building came up in South Delhi a couple of years ago. Amidst other, conventional government buildings in the Jor Bagh area, "Paryavaran Bhavan", the new office of the Ministry of Environment and Forests (MoEF), looks as though its wearing a graduation cap.

A  closer look reveals that the cap is actually an elongated, cantilevered roof which holds a vast array of solar panels. This seven-storied tower covering 32,000 sq.m, and accommodating over 600 government officials is India's first "Net Zero Energy" building. The solar panels generate 930 KWp of power, which is more than enough to meet its annual energy requirements of 1.4 million Units at 9KWh. The building actually generates a surplus of about 70,000 KWh which diverted back into the grid.

According to MoEF, this "Multi-storied Building with 100% Onsite Power Generation", is the first of its kind in India. Apart from those solar panels on the roof, it uses a Chilled Beam System of air conditioning which saves more than 50% in energy consumption. The building incorporates a Geothermal Heat Exchange System as well as seven "Machine Room Gearless Lifts (OTIS) that converts braking energy into electrical energy (regenerative brakes, as in automobiles). The building also has its own plants for water and sewage treatment -- in other words, it neither takes any energy from outside, neither does it dump its waste into the city's drains.

Who were the people behind such a pioneering effort? How did the usually hidebound CPWD, with its record of making dreadful looking public buildings actually undertake this leap of faith and technical flourish?

Unfortunately, there seems to be nothing in the 'public domain' that either chronicles, or celebrates this achievement. The CPWD website (accessed 19 April 2017), does have a  button titled "Click Here for Old PPTs", and this does lead to a list of projects that includes this building. None of the URLs work.

Dig a little deeper at other websites (ICFILD, CSE) and you would find that CPWD did indeed lack in-house expertise for such a project. So the government did the the next best thing - it employed competent consulting agencies for each of the specialized aspects of this project. CPWD then brought in its formidable project management skills and completed this building in just two years' time (Jan. 2011-Oct 2013). Among them was Deependra Prashad's DPAP -  the architecture firm that designed this building.

Is this new approach going to be the new norm in public works? Have we finally graduated to better designed public buildings?


- MOEF Pamphlet - "A New Benchmark in Sustainable Built Habitat"
- CPWD - PPT - Technical Presentation -
- Case Study (2014) -
- Ramachandran, Smriti Kak (2012) - A Green Revolution in Letter and Spirit -


Capacity of power generation: 930 KWp
Annual energy requirement and generation: 14 Lakh Units 9KWh
Total area covered by solar panels: 4600 sqm
Building plinth area: 32,000 sqm
Structure: G + 7 floors + 3 basements
Solar Panels: Covering 4600 sqm, monocrystalline with 20% efficiency
Amenities: 440 TR HVAC Air Conditioning; Lifts, Fire Alarm System; DG Sets, UPS, IBMS and CCTV Systems; Fully automatic robotic car parking for 330 cars
Architecture, Planning and Execution: Central Public Works Department (CPWD)
Cost: INR 209 Cr. (USD 32.4 million)

Tuesday, March 28, 2017

Climbing Mt. Fuji

Every now and then nostalgia bumps into wobbly memory cells, leaving you a bit tongue-tied. This happened to me last week when a friend, an ultra-marathoner,  suddenly asked me -  "I want to climb Mt. Fuji - do you know anybody who can arrange it in the off-season this year?"

While trying hard to remember details of my trip in 2009, I just said, "It all depends on when you are planning to climb..."

For a moment, I could not recall the dates when I climbed that iconic mountain. Nor could I remember the route I took, or the total expense for that trip. Instead, the memories that floated up immediately were -  the taste of the most delicious hot curry rice I'd ever had, at a quaint wooden inn high above the clouds; of the long lines of climbers trudging uphill in pitch darkness at 3:00AM; the cold wind and rains, and of a spectacular sunrise we saw, perched precariously on steep, dark slopes dotted with large chunks of pale, white ice.

Memories of the trek had receded to the bye lanes of my mind. It did pop up occasionally whenever I came across a painting, a photograph, or even an emoji that featured Mt. Fuji. A fleeting thought would then cross my mind - "I have actually been to the top of that mountain!"  A sense of awe and wonder that was, perhaps, bigger than the actual experience.

I had to go back to the notes written six years ago, to be reminded that I owed the trip to a gentleman named Sakata Yoshinori, and to an organisation named JISEDAI. In July 2009, I had responded to a notice that came up at Tsukuba University. I was the only one who registered, so  Sakata-san had traveled all the way from Tokyo, just to brief a single guy.

When we met at the Tsukuba TX station, he was standing next to the ticket counter, soaked in sweat. At a Starbucks table nearby, he had carefully handed me his visiting card, and then spread out his laptop, plugged in a thumb-drive, to explain how I should prepare for the trek.

"It would be a nine-member team this year", he had said "All the others were university students from Tokyo". He explained the itinerary, detailed the expenses (~JPY 20,000 which included bus-rides, boarding, meals), and pointed out the precautions to be taken and then offered to help me find the right equipment for the trip. I definitely needed a 35L backpack, a pair of waterproof trousers and, if possible, ankle-length hiking shoes.

Mr. Sakata even insisted to helping me get the right equipment and took me to a few shops at Tsukuba Centre. Apart from being amazed at his helpfulness, I remember thinking that his well-meaning advise bordered on being fussy and over-cautious. Having done some trekking in the Western Himalaya's, climbing a gentle-looking 3776m peak did not seem like a big deal. And then there was the cost of buying all the new gear...It is only later that I realized that Mt. Fuji was different, and that each item was necessary.

Eight of the nine-member team turned up. We all met outside the Shinjiku station and discovered that an interesting mix of people -- Yeo, a dude from Singapore; Melissa, a budding dentist from Indonesia, along with her two batchmates Pat and Thuy; A South American named German (pronounced Herman), and two other experienced Japanese trekkers - Chiaki and Hiroki.

We all took a bus from Tokyo to the Gotenba (2 hours), and then a local bus to a large facility called Fujinosato, an 'education facility' right next to the JSDF Takigahara camp. It was a sprawling campus with scores of tatami-matted dormitories, forest trails, an archery complex, camping sitesi in the woods, and even a spacious Onsen (hot-spring bath). School children, baseball teams, and various other groups in assorted uniforms milled about the place, waiting for their turn to climb uphill.

Our turn was early next day morning. After breakfast we walked to the base of the 7.8 km Subashiri Trail, downed a few cups of green-tea, and started trekking on  pathway that cuth through the thick forests.

At this point the ground was gently undulating - pathways that cut through the deep, dark volcanic soil and lush vegetation. As we climbed to 6th Station (2400m), and the 7th Station (3000m), forests gave way to sparse scrub vegetation dotting the slopes, and then none at all beyond the Old 7th Station (3200m). We rested for a while at this point at the Miharashikan Hut.  By this time it was cold and windy outside, and, at a time like this, what could be more welcome than a plate of hot curry rice? :)

Shadow of Mt. Fuji on the Clouds (Old 7th Station)

Early next morning, we padded ourselves with warm clothing, fitted head-lamps and walked out into the pitch darkness, to join a steady stream of climbers going uphill. It was between the 8.5th Station - 3450m (Goraikokan Hut), and 9th Station that we noticed that we were far above the clouds. This was also the meeting point of the Yoshida Trail (Yamanishi Prefecture) and, suddenly, it felt like we were all commuters at the Shinjiku Station!

Torches and lights were switched off as everybody settled down on the steep slopes, sitting down wherever they could find some space. As the clouds gradually gathered light, we all seemed to be sitting in a massive amphitheater, waiting for the drama of the rising sun to unfold...and what a sight it was!

Within seconds of the sunrise, a blanket of clouds rolled out reducing visibility to a few meters, and drenching us all in icy rain. We continued moving up at a snail's pace now, a part of a long line of colorful raincoats slowly bobbing to the summit. The last few hundred meters were rather steep and the ropes helped. Finally, when we reached the top, got past the crowds and eateries and looked down the caldera, it seemed so... ordinary.

After offering prayers are the Kusushi Shrine we started our descent. It was a lot faster than I expected because we were just wading down ash-laden slopes. Often our legs would just dig in, right up to our knees with each step.
Wading down the ash-slopes
This is where you realise that Mt. Fuji was quite different from other non-volcanic mountains. The weather was fickle, and the terrain even more so. Each and every item listed by Sakata-san turned out to be essential - the layered clothing, raincoats, and ankle-length boots. Our friend from Singapore made the mistake of coming in shorts and sneakers, and paid the price for it. He had been shivering from the 7th Station, and now, with the ash filling up his sneakers, he was feeling quite miserable all the way down.

In a couple of hours we were down at the Subashiri base station, and then on to the comforts of Fujinosato. After a soak in the steaming Onsen, a hot meal and a nap in the bus back to Tokyo, none of us doubted that Mt. Fuji looked a lot prettier from a distance!

For friends who are trying to climb Mt. Fuji during the off season, my suggestion is simple -- please don't. During the off season, all huts, toilets and first aid stations are closed and most of signs on the trails are removed. Unless, of course, you are part of JSDF, a scientific team or a team with special permission, your are quite unlikely to get beyond the 5th Station.

The climb is not difficult, but given the way the weather changes suddenly, the chances of getting lost in the forests, rain or in the cloud-covered slopes, is quite high, unless, of course, you are travelling with experienced climbers, and following a long line of colorful raincoats all the way to the top!


Official Website for Mt. Fuji Climbers -
  • Climbing season: Early July to Mid-September
Subashiri Trail -

For info on other trails -

Tuesday, March 07, 2017

Kalavati and Kankali

If there was a book that brings ancient India back to life, this must be it.

Kshemendra's Sanskrit classic, "Samaya Matrika" (The Courtesan's Keeper), presents the life and times of a Kashmiri hooker, more than a thousand years ago. For anybody who looks at the mess in Kashmir today this book is revelation of alternative realities that existed long before Islamic invaders, their pillaging and forced conversions transformed the valley into a completely different animal.

Written sometime between 990 - 1070 AD, the book begins - "In Kashmir, there was a famous town called Pravarapura (today's Srinagar). Its name is a byword for worldly pleasures."

The protagonist, Kalavati, is no ordinary hooker. She is a courtesan, a professional well versed in the arts, one who clearly understands the limitations set by an ageing body. When business takes a downturn she decides to seeks help from a friend who introduces her to an old, experienced lady who becomes her adviser, consultant and mentor.

The book brings to life a time when religion was a garment that was worn lightly. You could joke about Gods and their fallibility. It weaves humor and irreverence with homilies that would do AIB proud. Here are a few samples -

"One's youth must be devoted to a special, artful trade -- that of relieving the unintelligent of their money in various ways..."
 "One who has money is honored by everyone...And  the unlucky one who does not earn money, is always a malefic planet: the heartless Rahu, the slow-moving Shani and the crooked Mangala."
"Do not forget that youth, the friend of lovers, is ever passing. It disappears like the pretty spring creepers and the sun's warmth on the lotus pond; like the autumn a simpleton's money"
Along with tricks of the trade, the narrative carries you through cities and towns that existed long ago, and gives you a glimpse into the lives of traders who crisscrossed various kingdoms with ease. A saffron trader brings his son along and the youngster cannot resist the temptation of making a show of his father's wealth. Scenes that have not doubt, been repeating every year for the past 1000 years!

Many of the places mentioned in the book still exist but with truncated names. Pratapapura is now Tapar, Vijayeshvara is now Vijabror and Parihasapura is the Paraspor of today.

The book also opens up a world of possibilities in Sanskrit literature which, for some odd reason, is now co-branded and fettered with religious texts.

It also makes you look at today's Kashmiri's in a completely new light, for it is difficult to imagine that the ancestors of burkha-clad women, the stone-pelting students and gun-totting jihadi's of Kashmir once lived in an altogether different world!


Amazon -

Search Kashmir in Bits and Pieces -

Thursday, March 02, 2017

Spring Flushing Puzzle

Winter is giving way to Spring in Delhi.

Days are getting hotter, and longer; Sparrows are getting noisier as they compete for mates and nesting sites, and the lapwings have started doing aerobatics to keep stray dogs off their nesting grounds...and some trees are busy shedding leaves.

"Fall" is a season commonly associated with Autumn (Sep-Nov). It is easy to understand the logic behind trees shedding their leaves to prepare for a few months of cold winter. There is a need to conserve energy, to minimize exposure to the elements, especially when energy from sunlight is hard to come by.

Why then do so many trees retain their leaves right through winter, only to shed them in spring, just when the days are getting brighter?

In NCR Delhi, many avenues are littlered with yellow leaves time of the year. Neem (Azadirachta indica), Kadamba (Neolamarckia cadamba), and even the Rangoon Creeper (Quisqualis indica / "Madhmalti") go almost completely barren even while they are putting out fresh shoots and leaves. Why is this so?

Turns out that botanists and ecologists are still grappling with this puzzle. They call this phenomenon "characteristic and counterintuitive ‘spring-flushing’ of monsoon forest trees". Latest available research covering Costa Rica, India and Thailand seems to suggest that the trees do this because "it optimizes use of large subsoil water reserves for photosynthetic activity during seasonal drought and thus extends the relatively short, wet growing season."

This does not make sense. Neem trees thrive in dry, drought prone areas and it seems unlikely that Rangoon Creepers are capable of sending their roots deep down to the 'large subsoil water reserves'.

So this makes 'spring flushing' yet another of nature's puzzles, and the answers continue to be in the realm of speculation.


*(2006):  Leaf flushing during the dry season: the paradox of Asian monsoon, Global Ecology and Biogeography -

* Spring Flushing -
- Establishment of new foliage shortly before the wet growing season is likely to optimize photosynthetic gain in tropical forests with a relatively short growing season.

- Deciduous -

Indian Infra: Untold Stories, Lost Lessons

I always do a double-take whenever I spot an article or new item on the Delhi-Mumbai Dedicated Freight Corridor (DFC).  Call it nostalgia, or just plain curiosity that comes from close association a few years ago.

I was working with JICA in the 2000s when this project was conceived, and when the proposal passed through the labyrinth of North Block before being taken up by the Japanese government. As a part of the numerous surveys and site visits that resulted in the master-plan, I worked with various consultants and traveled extensively - especially in Maharashtra and Gujarat.

One thing that had always puzzled me was the insistence from Indian Railways that the dedicated freight line be "double stack" and "electrical traction". This meant that the engineers and planners had to work on Star Trek mode - to 'go where no man had gone before'. Such a combination had never been implemented successfully anywhere. Getting the electrified pantographs over and above the height of double-stacked containers, and then to get these trains to run reasonably fast across the baked scrublands of Rajasthan, seemed particularly difficult.

Another clear challenge was to get the freight lines through the super densely populated areas of Mumbai, to the JNPT Port.

After 2009, I had lost touch with this project since not much was coming into the public domain by way of news. I did read that the Japanese had - very strategically - limited their ODA involvement to the Western Corridor, and that too from Rewari to Vadodara, instead of going all the way till Mumbai. The Eastern Corridor was subsequently taken up by the World Bank.

Cut to 27 Feb., 2017, to a symposium organised the Centre for Policy Research (CPR) and the Embassy of Japan on "Quality Infrastructure: Japanese Investment in India". At this event, I was quite surprised to hear Mr. Amitabh Kant (now CEO, NITI Aayog) say that five new cities would be commissioned by 2018, along the DFC.

Was this my own Rip Van Winkle moment? What had I missed? Was the Industrial Corridor coming up faster than the freight corridor that supported it? How was this great development being ignored by our hyperactive media?

A subsequent presentation confirmed a long-held opinion that the focus of the Indian media remains firmly on negative reporting. Good news is no news.

Mr. Anil Kumar Dutta (MD, DFC 2014-15) spoke of the close coordination with state government that had resulted in smooth transfer of land to DFC. He talked of 'bombshells' that had been defused during his tenure. One had come from the environment ministry (MoEF) demanding that the route alignment be shifted 140km to save the Balaram Ambaji Wildlife Sanctuary on the Gujarat-Rajasthan border. Another one from the Archaeological Survey of India (ASI) that had objected to the use of a piece of land in the Rewari for the main rail-yard because it had traces of a Harappan settlement dating back to 3000+ years.

Contrary to popular notions about both MoEF and ASI, Mr. Dutta declared that they were "most cooperative...all you must do is to listen - and take action - on their concerns!"

In the case of the suspected Harappan settlement, the discussions had yielded a time-bound, pragmatic solution. DFC hired the services of IIT Kanpur and had the whole rail-yard zone scanned with special ground penetrating radars. A small portion was found to contain ancient remains and  ASI had agreed to go as deep as required to extract all the material it needed. Once this was done, all the clearances were promptly given.

This symposium had quite a number of takeaways. Clearly, we seem to be hiring the right people for the right jobs and they seem to be doing great work, far away from the glare of the Indian media.

Unfortunately, it is also clear that we continue to be pathetic when it comes to documenting lessons learnt from mega projects like the Dedicated Freight Corridor. Great lessons learnt by JICA, DFC and DFCCIL remain locked in project reports, and in the minds of the pragmatic people who cut the proverbial Gordian knot, and then moved on nonchalantly to the next task at hand, or just faded into retirement.

If the lessons we learn are not shared in the public domain, the task of pioneers in other sectors are bound to become so much more difficult.


* Axis Capital PPT (Jan., 2016) -
* Balaram Ambaji Wildlife Sanctuary -
* (2012) -
* (2013) - DFCCIL PPT by R.K. Gupta --
* Nippon Koei India -

Sunday, February 19, 2017

DHL Express - Amazingly Slow

What is it that makes leading global logistics companies nervous about handling food consignments to Japan?

Over the past few weeks, I have been witness to an uncharacteristic display of tardiness from one of the big boys in logistics - DHL Express. Until now, my experience with this German company had been pretty good. Even though they charged a premium they have been able to deliver documents from Japan to India in three days' time. Food samples, however, seems to be an altogether different ball game.

Japan is one of the leading food importers in the world.  The country's total food self-sufficiency ratio based on calorie supply was just 39% in 2015. Based on production value, it was just 66%. So the country relies almost entirely on imports, not only for staples like wheat, barley, corn, and soy, but also a wide range of raw materials for its food processing industry.

Half of the meat products consumed in Japan is imported. According to a survey by the Japan Frozen Food Association of 31 member companies, 200,634 tons out of 315,436 tons of precooked frozen imported food in 2006 came from China. Farm ministry data show that of the roughly 778,000 tons of frozen vegetables imported that year, about 326,000 tons came from China and 285,000 tons from the U.S.

Despite these high volumes import regulations are strictly enforced. The key organisations involved are -

  • Ministry of Health, Labor an Welfare (MHLW) -- sets standards for chemicals in food -- monitors compliance
  • Ministry of Agriculture, Forestry, Fisheries (MAFF) -- Registers agricultural chemicals -- Approves and controls Veterinary drugs and their uses -- Set standards for feed. The key department here is the Dept of Food Safety under the Pharma and Food Safety Bureau of MAFF.
  • Food Safety Commission
  • Consumer Affairs Agency

Fronting all these ministries and agencies is the Japan Customs Office which keeps close watch on all the international airports and ports. Even before a food consignment is loaded on a ship or aircraft, a 24-hour advance notice is to be send to the customs office. This rule, referred to as the Japan Advance Filing Requirements (AFR/JP24) has been enforced since March 10, 2014. Under this, a 10-point checklist is to be submitted along with the Bill of Lading.

All these rules and regulations have been around for over three years. Despite this, what explains the repeated delays by DHL, in dispatching a consignment of food-samples to Japan?

Consider the case of a 5kg packet sent on 7 Feb., 2017, by an exporter of Moringa plant products (dried leaf, powder and seed oil) to Yokohama, Japan. The DHL office at Theni (TN) accepted the packet after confirming that all the necessary paperwork was in place. This included a signed declaration by the exporter, a Sanitary & Phytosanitary Certificate (SPS) from the authorized government agency at Tuticorin, and a Material Safety Data Sheet (MSDS).

The packet (waybill no. 7840177741) then moved to Bangalore, and stayed put for the the next three days. When asked the reason for the delay, DHL stated that it needed each page of the declaration to be signed by the exporter. Yet this requirement was not informed while the packet was being accepted, nor did DHL bother to inform the exporter from its Bangalore office. It was only when the customer contacted DHL that the response came up - "Oh, yes, by the way, we need some more paperwork!".

After a weeks' delay, a fresh Shipment Waybill (No. 7840177262) was raised with the signatures on all the pages. Then again the packet got stuck at the DHL warehouse in Bangalore. This time they came up with yet another requirement -- over and above the "non-hazardous" certificate given by the Indian government agency, DHL needed another self-declaration from the exporter stating that the seed-oil was non hazardous in transit the flight to Japan.

Today, nearly two weeks after the packet was handed over to DHL Express, the packet has finally reached Yokohama.

So the question that begs an answer is: Is it Japan's Customs Office that is making shipments from India difficult, or is it the DHL office in India simply incompetent when it comes to handling consignments to Japan?


FAO requirements of Phytosanitary Certifications -

(2008) - The Tokyo Foundation -- the Perilous decline of Japan's agriculture --

Food Exports from India to Japan - Phytosanitary Requirements --

Japan's Import dependency -

Japan Customs website -

Procedures for Private Import Cargo -


How does one view a South Indian monarch who stood up to the British? Is he really worthy of all the negative press he has been getting from the newly empowered echo-boxes of the right wing, especially over Twitter and Facebook? These are some the questions that crossed my mind while picking up Kate Brittlebank's book, "Tiger - The Life of Tipu Sultan".

As a Keralan, I have always had a dim view of this father-son duo who invaded Malabar and Kochi, and along the way, slaughtered, enslaved or forcibly converted the locals, apart from the legacy of one of the most odd place-names in the region - Sultan Bathery (Sultan's Battery). It also brought back memories of an odd sight I had seen in the dense forests of Talavadi, in the Western Ghats. A long line of huge Banyan trees marked the remnants of a highway built across the mountains, by Mysorean army to reach the port cities of Kerala. 

The book is a quick, easy read. Right at the outset, it sets the tone to readers' expectations by stating clearly that the focus is on the Tipu the person - a son, a father and a leader - rather than weighty matters related to state policy, military strategy and ethics. 

This works pretty well. For one thing, it confirms that Tipu Sultan's identity as a Muslim was hardly an issue within his own kingdom of Mysore. He lavished funds and patronage to the shrines of all religions - Hindu, Muslim and Jain - located in his territories. His own palace in Srirangapattana stood next to a Vishnu temple dedicated to Sri Ranganatha, and he referred to the head of the monastery at Sringeri Math as "Jagatguru".

Outside his realm, he played the usual policy of Divide and Rule. He allied with the Marathas of Pune and the Nizam of Hyderabad whenever it was convenient. At other times, he actively encouraged infighting within their territories. Tipu instructed his agents in Pune to trigger fights between Hindus and Muslims, to weaken the Marathas - "Let the fire of discord, therefore, be kindled amongst them, to the end that they may, in this manner, waste each other".

There is good reason for his enemies to hate him -- especially after what he did to the Nairs of Malabar, the Coorgis of Kodagu, and the Christians of Konkan. Yet, as the author notes, "Warfare at this time was brutal, and the punishment for those who resisted often cruel. It was common practice to set examples to forestall further opposition". It is certainly not different from military intimidation described today as "shock and awe".

In the end, Tipu does manage to come through as a fairly good ruler, until he put all his eggs in the French basket, and then, ran out of luck. 

Tuesday, January 31, 2017

An Appetite for Steel

Recent newspaper headlines proclaimed that India is now poised to overtake Japan as the “second largest producer of steel in the world”. This sounds quite impressive - until you see the numbers in perspective. The largest producer of steel in the world - China - produces over 800 million metric tonnes (mmt) while India’s 'record production' was less the 90 mmt in 2015.

The current situation is like that of a huge kitchen that needs to keep itself busy. Excess production capacity is now at odds with low appetite. Over the past 40 years there has been a massive increase in global steel production - especially in China. A country that produced just 37 million metric tonnes (mmt) in 1980 produced more than 21 times that amount - 803 mmt in 2015!

Similarly, on a much more modest scale, India which had been producing 9.5 mmt in 1980 , increased its production to about 90 mmt in 2015.

China’s domestic appetite has been a bit satiated now, so now we are seeing a sharp increase in its steel exports. As with numerous other Chinese products its prices are super competitive, and this is triggering “anti-dumping” measures from other countries, including India. About two years ago, India’s DGFT set a Minimum Import Price (MIP) for 66 types of iron and steel products, while at the same time, imposed duties up to 20% on a number of steel products.

The main countries affected by these measures were China, South Korea and Japan, which accounted for 63.6% of total imported steel volume, and 54.6% in terms of value. As expected, Chinese imports are the largest at over 37%.

Yet, strangely, it is not China or South Korea, but Japan that is at the forefront of the campaign against the restrictions imposed by India. It has threatened to take India to WTO over the import restrictions, and various interpretations of the provisions of GATT 1994 and the Agreement on Safeguards.

What explains this unusual stance?

Some commentators claim that for Japan, India is  just the proxy country used to fight a larger war against MIPs and other border taxes. According to others, this is just a reflection of political clout wielded by steel exporters in Japan. Either way, one thing is clear - higher steel prices is not good news for downstream industries, or for the consumers who end up paying more for cars and cooking utensils.

Lobbies like the Indian Steel Association (ISA) and their counterparts in Japan will always try their best to influence governments for their own benefit. Ultimately, it is for the government to strike a balance between the long term costs and benefits of bowing to the pressure of industry lobbies. And that, unfortunately, is linked to election funding...

LINKS & REFERENCES,-but-it%E2%80%99s-really-a-proxy-200173645

(26Jan17-BL) -

(25Jan17, BT - India to be global no.2 steel producer by 2020) -

Reuters (23Jan17) -

Forbes (23Jan17) -

(22Jan17 - Taiwan) --


DGFT Notification on MIP (4Aug16) -

(4Dec16, IE) - Indian Steel Association (ISA) for extension of MIP for 6 months -

(30Mar16 - VCCircle - Timeline on MIPs) -


- Japanese steelmakers (Nippon, Sumitomo) use better technology to lower costs. They process cheaper, low grade coke to better quality before replacing 50% of high-grade imported coke...this keeps their steel competitive in the world markets.

(2Dec2016) -
> India imported ~ 3 million tonnes of metallurgical coke in 2015-16 --- of which 2 million was from Chine alone!...Metallurgical coke, a key raw material for the steel sector, is used for smelting iron ore in the blast furnace. Around 0.7 tonne of coke is required to produce 1 tonne of steel and it constitutes 40-50% of the total cost of crude steel.
The government on 25 November imposed anti-dumping duty in the range of $16.29-$25.2 per tonne on imports of low ash metallurgical coke from countries such as China and Australia for a period of five years.

Thursday, January 12, 2017

Open Sesame

In an interview reported earlier this week, India's Minister for Commerce and Industry, Ms. Nirmala Sitharaman, requested Japan to take steps to increase Indian exports to Japan of sesame seeds, Surimi fish and generic drugs.

This was quite puzzling. Why were two specific items - "sesame seeds" and "Surimi fish" - mentioned in the same breath as Generic Drugs, which is a whole category in itself?

Perhaps it had something to do with the commercial value of the items being imported by Japan...

Sure enough, it turns out that Japan is one of the world’s largest importers of sesame seeds. It is mainly sourced from African countries. Nigeria is, by far, the biggest source, accounting for 28% all sesame seed imports valued at about JPY 11.4 billion (USD 96 million or INR 656 Crores in 2014). This means that Japan imports seeds worth about USD 343 million annually!

In recent years, India too has seen a sharp rise in sesame seed production. In 2014-15, over 0.43 million tonnes was produced, mainly in Gujarat and Uttar Pradesh. However India has not had much success in exporting the seeds to Japan. This is apparently because of high pesticide residue levels.

In other words, it is India that needs to take adequate steps to ensure that the sesame seeds it produces, is not only cost competitive, but also meets phytosanitary standards in the export markets.

The second item - Surimi fish - . I had heard of "Surmai" (Indo-Pacific Mackarel) but not this one.

It turns out that Surimi not a type of fish but something that Japan exports to other countries - especially USA. It is the term used for  "minced fish paste, made from a cheap fish in abundant supply, usually Alaskan pollock, frequently mixed with sugar and sorbitol, a sweetener. The paste is combined with other varieties of fish and fish flavorings, preservatives such as sodium tripolyphosphate and binders such as wheat flour or egg white, and then restructured and colored to look like higher- priced crab, scallops, shrimp or lobster." 

So, is this a case of a minister who was not properly briefed, or was it the IANS/Business Standard reporter who misquoted what has actually transpired?

Either way this is a fine example of the cross-talk, and communication gaps, not only within India, but also between the two countries.


* BS (2017) -

* Surimi exports from Japan to USA -
* (BS, 2014) - Sesame production in India -

* BS (2016) -

* CEPA - RIS Report 2016

* Mint (2014) -

-  About Sesame seeds -

* IARI - All India Network Project on Pesticide Residues -

Tuesday, January 10, 2017

MPesa India: Wrong Time, Wrong Place?

According to a recent article, there are 271 different mobile money services offered in 93 countries worldwide. Among these, the most successful one is Kenya's M-Pesa.

Launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania, M-Pesa has spread quickly, and by 2010 had become the most successful mobile-phone-based financial service in the developing world. By 2012, it had about 17 million M-Pesa accounts registered in Kenya alone.

M-Pesa's key advantage is that it does not need a 'smartphone'. Apart from being relatively expensive, smartphone tend to be battery guzzlers which need to be charged frequently, quite unlike the older mobiles which are cheap and far more durable.

In India, 61% of Indians own a basic mobile phone while only 17% of own a smartphone. Why, then, has M-Pesa not caught on in India?

Perhaps the answer to this question lies in a closer look at the Kenyan mPesa model.

The idea behind M-Pesa has its origins in 2002 when researchers found that the Kenyans had been using talk-time on pre-paid mobiles to make small payments across the country. People were purchasing everyday necessities - provisions and services - and paying for it by adding talk-time to the service provider's mobile phone. Thanks to code written by a student, this was expanded into a payment-transfer service.

Vodafone was the first to spot a big opportunity here and purchased the code. It then improved upon the model and created a wide network of agents across Kenya, selling this as a service. Within 10 years, M-Pesa transactions have grown so fast that they account for 20% of Kenya's gross domestic product.

Yet, when Vodafone tried to replicate the same M-Pesa model in neighboring Tanzania, it bombed. What was so different between Kenya and Tanzania?  An IFC report suggests the following reasons:

  • Demand - urban migrants sending money back to family is not as prevalent in Tanzania and since there is less crime and insecurity in Tanzania
  • Access to Financial Services - Only 9% of the population has access to formal financial services and 54% don’t use any form of financial services. When compared to Kenya, we see that 19% of the population there has access to formal financial services and only 38% don’t have access to any form of financial service
  • Strength of Economy and Banking System - Kenya also has a stronger economy, a higher GDP (USD 890 per capita in Kenya versus USD 520 in Tanzania). 1.38 bank branches per 100,000 inhabitants in Kenya versus 0.57 in Tanzania
  • Geography and distances - Tanzania is a large country with a dispersed population so quickly reaching dealers in rural areas was difficult
  • Competition - Tanzania as Zantel’s competing service - ZPesa -- Tanzania also faces competition from informal money transfer channels such as the use of airtime as a currency
  • Business Model -  Vodafone decided that the service would be offered to local subsidiaries on a license fee model instead of the shared revenue model that was agreed with Safaricom in Kenya. 
  • Population and Customer Base - Tanzania has a population of 40 million - dispersed across Vodacom’s market share in Tanzania (41%) is significantly less than Safaricom’s in Kenya (79%) which translates into a base of 13 million customers for Safaricom as opposed to only 5.9 million for Vodacom
  • Technology - M-Pesa is delivered in Tanzania using USSD which does not require any application to be stored on the SIM card. The user dials a short number to receive a set of menu options.
  • Laws & Regulations - no national id in Tanzania -- cumbersome Anti-Money Laundering procedures -- 
  • Lack of preparation - no market survey -- pilot test only covered one aspect: The main focus of the pilot was to test the USSD gateway since the USSD channel was not used in the Kenyan implementation. 

So the key factors that prevented this useful technology from crossing borders were - population dispersion, crime rates, financial literacy and mobile penetration.

In 2013, mPesa was launched by Vodafone India, in collaboration with ICICI Bank. From the look of it, this seems to be based on the menu-driven USSD model that was used in Tanzania, and not the faster, more efficient SIM-based model that was a huge success in Kenya. Over and above the challenges faced by Vodafone in Tanzania, the Indian market was already groaning under severe competition by the time Vodafone stepped in.

Perhaps the biggest advantage it still retains is the fact that unlike other leading e-wallet services like PayTM and Oxigen, M-Pesa users do not need to have a smartphone or 3G/4G internet connectivity, to use the service.

Howver, this advantage has also been diluted with the launch of the national Universal Payment Interface (UPI now renamed  BHIM). ICICI Bank too is offering this as a service independent of Vodafone.

So, is it just a matter of time before M-Pesa turns belly-up in India?


* mPesa India FAQs -
* Smartphone penetration in India (2014-2019) -
* mPesa launch in India - 2013 -
* IFC Case Study mPESA in Tanzania -
* Padmanabhan, Vishnu (2016) -