Thursday, June 5, 2014

Improved Business Environment in India is Expected to Benefit P2 Solar Inc. (PTOS)

P2 Solar, a developer of solar photovoltaic (PV) and hydro power projects, has a focus on developing a number of mini-hydro and solar power projects in India. On May 1, 2014, an Implementation Agreement, giving full government approval of the mini-hydro Rajgarh project, was signed with the Punjab Energy Development Agency (PEDA), Punjab State’s governing authority on all renewable projects. The Rajgarh project is to be located on the Sidhwan irrigation canal near the city of Ludhiana in Punjab, India.

The May 16 election of Narendra Modi to Prime Minister of India, together with the BJP party gaining a majority in parliament, is expected to result in a significant improvement in India’s business environment. On the day of the election, India’s Bombay Stock Exchange Index broke new highs, surpassing the 25,000 mark to close up 6% from the day before. American Depositary Receipts (ADRs) of India’s largest bank, ICICI Bank Ltd. (IBN), jumped up from a share price of $46 to $52 on the NYSE in a single day, as the business community anticipates an administration that promises to cut down on government corruption and bureaucracy, to more rapidly approve projects related to foreign direct investment. A common complaint in India is that, if you have a business idea, it takes endless approvals from at least ten different departments. If an application spends just two weeks at each department desk, one is guaranteed a minimum of a six month wait just to get a basic approval. Prime Minister Modi’s initial task will be focusing on slashing these barriers to entry.

With talks of hundreds of new roads and trains, massive infrastructure projects are being planned. The Modi government will also be keen to relax foreign investment laws, to automatically allow foreign firms’ ownership stakes of at least 49 percent in Indian firms without requiring time-consuming government approval. This is part of Modi’s plan to double the country’s growth rate, contain inflation, and ensure the creation of jobs for the 10 million new job entrants that flow into India’s job market every year. A broad based consumption tax is planned to enhance revenue for infrastructure projects.

The bulk of India’s inflation is due to artificially high food prices. It is believed over 40% of India’s food is rotted and lost in storage and transport. The Modi administration plans to restructure the government owned Food Corporation of India to tackle these issues.

The improvement in India’s business environment will be a boost to P2 Solar’s projects in India. The company has two mini-hydro projects in Punjab, India, with plans to boost electrical power output with solar photovoltaic cells along the sides of the canals. Another 35 Megawatts in power projects for India can be obtained by the company within three to six months.

For more information, visit www.p2solar.com

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