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Less Means Too Much: the Sustainability Paradox and India’s Eco Hotel Sector

Less Means Too Much: the Sustainability Paradox and India’s Eco Hotel Sector

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Neil Armstrong will be remembered for his small step, Theresa May for her Brexit stumbles and Boris Johnson for his …well, we’ll have to wait and see about that. But we already know how William Stanley Jevons will be remembered, because we can see the impact of the Jevons Paradox every day, in almost everything we do. With its roots in careful observations drawn from early nineteenth century coal markets (bear with me, I’m not making this up), Jevons discovered that the truism that as technologies become more efficient, they will inevitably consume more resources. So, efficient steam engines will not reduce the demand for coal, they will more and more coal up…and that’s the Jevons Paradox.

So what’s all this got to do with Eco Hotels in India? Well, let’s fast forward from the age of steam, leave ringworm epidemics behind and look more closely at our contemporary climate change policies.

With the exception of the current occupant of 1600 Pennsylvania Avenue and a motley collection of loose jawed climate change deniers, we are all concerned about reducing global carbon emissions and improving energy consumption, and at least superficially one way to do this to make our energy production technologies more efficient. Switching to wind powered technologies rather than burning coal is surely a step in the right direction. Unlike coal, the wind is free at the point of delivery: coal on the other hand has to be dug out of the ground, shipped from there to here and expensively burned up before it can belch carbon deposits into the atmosphere.

But in fact the reverse is the case: by switching to more wind powered technology we are more likely in the long term to increase global energy consumption and diminish sustainability levels.

That’s because the Jevons Paradox tells us that the more wind powered energy we produce (that is, more cheaper energy), the more we will inevitably increase global energy demands. Simply making the output cheaper than conventional production methods means more and more energy outputs will be required in the long term. We cannot hope to promote sustainability simply by focusing on output costs and operational efficiencies.

All of which brings us (at last you might think) to Eco Tourism in India, where consumer demand levels are running at an all time high and business and recreational travellers alike rating environmental sustainability at the top of their criteria for choosing a hotel.

That’s why the Hilton Hotel Group has announced a sustainability vision for 2030 based on locally sourcing less energy hungry products and services, such as soap and laundry supplies. The rationale for the new policy is that cheaper soap, towels and bedding will lead inevitably to more efficient operations and better environmental ratings. But just think about that for a moment: think about it in particular from the perspective of your average cost conscious hotel manager in Mumbai (which means pretty much all of them). Suppose he (or she) has been used to spending Rs 5000 a day on soap for their guests, shipped in by Unilever; but now, under the new Hilton policy, they will spend only Rs 1000 a day buying their soap locally. Ask yourself, under the new regime, are they likely to care more or less about how much soap their guests use? Will she (or he) worry as much about the number of towels being sent to the laundry if the laundry bill is now a quarter of what it used to be.

Exactly. That’s the Jevons Paradox: the very act intended to make operations more efficient has caused the hotel to become more energy hungry and less sustainable.

But there’s a positive flip side. Take a look now at the much more successful Eco Hotel brands on the subcontinent, brands such as Lemon Tree Hotels and Eco Hotels which are responding to the same burgeoning consumer demand by doing more than just toy with their supply costs, soap and towels. Unlike the Hilton’s model, these groups have had “green credentials” built into their corporate DNA from the very beginning of the construction process. Water saving devices are added at the outset to inhibit excess usage (not just make water cheaper to supply); solar devices are installed that will reflect light across the entire hotel environment irrespective of an individual guest’s decision to turn the lights off when they go out; and communal kitchens are built to make shared usage an inescapable fact of occupancy rather than just a lifestyle choice. These are precisely the kind of structural, systemic changes that are likely to entrench environmental efficiencies into India’s hospitality sector and we are seeing the change happen first, in the mid range eco market. Where Lemon Tree and Eco Hotels lead, others are likely to follow.

Eco Hotels, the world’s first carbon neutral hotel brand of its kind offers green hospitality as an essential component of its progressive roll out across India, designed specifically to take advantage of current market opportunities on the subcontinent. The brand meets all key sustainability criteria without compromising on quality or standards and is designed to cater for commercial and recreational travellers alike.

Executive Overview

India’s boom in tourism levels is playing a significant part in driving the subcontinent’s hotel and hospitality sector to unprecedented levels of growth and, as the article says eco credentials are playing a bigger and bigger part in determining where this tide of travellers are deciding to stay. Key surveys have confirm that so called “green credentials” are high up on the scale of priorities they will take into consideration when making their choice.

And as the article also says, tinkering with purely superficial aspects of eco compliance, counting the soap and laundering hotel bedding more cheaply, not only does little to meet these exacting consumer demands, but actually makes it more likely that the business itself will be less sustainable in the future. That’s why at Red Ribbon, when we founded the Eco Hotel project, it was important to us to build sustainability into the initial construction process and to hard wire it into the operation of our hotels.

I’m proud that Eco Hotels has done just that and proud too of the part Red Ribbon has played in developing the brand and its ambitions in the years since, spearheading an innovate and environmentally friendly response to India’ resurgent tourism demands.

India’s appetite for alternative, eco-friendly tourism provides strong economic support

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India’s growing middle classes are emerging as a group of alternative, eco-conscious consumers who are as active in the country’s travel and tourism industry as overseas visitors. With the industry as strong as ever in India, the growth of eco-friendly accommodation and tourism services is already underway.

India’s growing middle classes and their disposable income is something that is increasingly written about, reported on and discussed. One reason it’s such a popular topic is that the sheer scale of the country’s population means that when they mobilise as consumers, it has an impact way beyond most other countries.

One way in which India’s population has begun to use its consumer power is through holidays and vacations. The latest report from the India Brand Equity Foundation, or IBEF, shows that the travel and tourism industry in India is expected to more than double from $234 billion in 2017 to $492 billion in 2018.

In addition to that, the April IBEF report also highlighted that based on travel and tourism foreign exchange contributions to GDP, India ranked 7th out of 184 countries. Indeed, travel and tourism is the third largest foreign exchange earner across the sub-continent.

However, it’s not just overseas visitors that are fuelling the growth of travel and tourism across India. Demand from staycationers and a desire for alternative and eco-friendly accommodation, is also proving an important driver.

An appetite for the alternative

According to the senior vice-president and head of accommodation at Booking.com, India is among the online holiday portal’s top 20 fastest growing markets for alternative accommodation. That excludes traditional hotels and resorts and includes home stays, cabins and treehouses. Figures from its database shows that around 15% of the around 880,000 Indian accommodations listed on the website, are classed as alternative.

But that’s not all. Booking.com’s senior VP Pepijn Rivjers also recently told Indian journalists that while some 33% of global travellers prefer to stay in eco-friendly accommodation, that rate surges to 75% when it comes to Indian travellers’ bookings. That’s the same for vacationers from India who choose to travel overseas, or visit a different region in their home country.

With alternative accommodation bookings accounting for 20% of the company’s total revenues in 2018, Rivjers considers India as one of its most important markets, right now.

Government supports eco-friendly hotel industry

While its clear that India’s population has a keen interest in supporting and preserving their country, it’s becoming abundantly clear that the Government shares a similar mindset. Its support of businesses, start-ups and ensuring the supply of affordable and modern housing is adequate for the population, perfectly underscores such an attitude.

However, a continued desire to promote and encourage eco-friendly activities is also akin to the population’s appetite for sustainable holiday accommodations. In the latest fight against plastic pollution and in response to a rise of single-use plastic food containers in some regions, action is being taken.

Recent meetings between the Kerala City Corporation, the Kerala Hotel and Restaurant Association (KHRA) and the city’s food aggregators have focussed on the growth in single use plastics refuse in the city. The local Government is keen to ensure its a shared responsibility among everyone involved, to consider more eco-friendly packaging options for their food sales and deliveries.

One suggestion from the local government is to encourage restaurants and food delivery firms to charge their customers a little more, to support their use of typically more expensive eco-friendly food containers.

KHRA commented in a report that some restaurants have chosen to improve their food packaging with no straws available in some and only paper straws on offer in others.

“Such interventions are happening and it is a welcome move. But unless we get suitable eco-friendly alternatives, we can’t implement it. If such alternatives are made available at nominal rates in the market, then we can implement it across all the hotels,” said B Vijayakumar, secretary of the district chapter and one of the secretaries of the state chapter of KHRA.

However, while India’s demand for eco-friendly travel and tourism service and accommodation offerings is seen as a boost and a bit of a surprise to some, it’s an attitude that Red Ribbon understands and shares in. That’s why we created Eco hotels, the world’s first mid-range eco-friendly, carbon neutral brand of hotels and alternative holiday accommodation.

Sustainability is an essential part of India’s economic future and the Eco Hotels brand will help support that, today and for years to come.

 

 

Red Ribbon CEO, Suchit Punnose said:

Sustainability, climate change and carbon neutrality are important topics and while they’re gaining traction on a global scale, it’s something that we at Red Ribbon have been investing in for some years.

Eco Hotels delivers on everything that India needs for a sustainable and economically healthy future. But, more than that, it also reflects the broad view of a population that is proud of the country they live in and want to ensure the beauty and opportunities they’re now enjoying, will be available to future generations, both from within India and overseas.

That’s why we’re confident the Eco Hotels brand can deliver as an investment from a financial perspective and a sustainability one, too.

 

Climate Change recognition and energy inefficiencies

Climate Change recognition and energy inefficiencies

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Climate change and carbon emissions feature in most of India’s political party’s manifestos, as the electorate votes to decide on the Government for the next 5 years. However, tackling climate change and reversing the recent growth in India’s CO2 emissions will take more than lip service from politicians hoping to win votes. We discuss the importance of following through on eco-friendly and carbon neutral plans.

Changing weather patterns and health problems related to air quality, are just two of the many issues affecting India – and other countries – today. Taking steps to improve the environment aren’t always easy and nor do they always garner the required support, at least in the first instance.

However, some four years after signing the Paris Agreement, many of India’s political parties, including the BJP and INC, have included plans to tackle Climate Change in their political manifestos. This is a major development from the 2014 elections and shows that the topics of air pollution, water scarcity and carbon emissions, are clearly becoming more important.

For the BJP, air pollution is treated as a priority. It states it would introduce a clean air programme across 102 cities, with a target of reducing pollution by 35% over the next five years. For INC, air pollution was also considered important enough to discuss, as it said it would be named as a national public health emergency. However, no specific targets were outlined.

They are not alone in detailing plans to reduce air pollution, with other parties also promising investment in reducing air pollution and using cleaner, renewable energy.

Indeed, the use of renewable energy in technological advancements that support India’s economic growth forecasts, would most certainly have an impact in a relatively short timeframe, due to the sheer size of the country and its population.

Of course, just how far any policies relating to reversing climate change and helping to improve the health of India’s many inhabitants will actually be further developed and implemented, remains to be seen.

India’s CO2 emissions rise

Shortly before India’s political manifestos were released and the electorate embarked on a series of votes that will select the next Government, the latest Global energy and CO2 Status report from the International Energy Agency was published. It showed that India’s carbon emissions rose by 4.8% in 2018 from 2017.

That increase in emissions was higher than both the US and China, which are the world’s two largest carbon emitters. The rise in India’s carbon emissions, meanwhile, was attributed to increased consumption of coal.

To put the near 5% increase in CO2 emissions into context, the global average CO2 rise in 2018 was calculated at 1.7%, less than half the increase across India. India is currently the fourth largest emitter of CO2 and its increased use of coal in 2018, was part of a wider trend in which coal accounted for 30% of all global emissions last year.

Of course, India isn’t the only country where emissions rose. However, its notable that India’s use of coal grew by more than any other country. In fact, the report shows coal use fell in the US, Europe and Japan. It’s also interesting that the IEA did point out that despite the huge increase in CO2 emissions, per capita emissions in India are below the global average.

That suggests the country is moving in the right direction and with some further improvements, including even less reliance on coal for energy, the country can help to make a real difference to lowering global CO2 emissions.

Carbon neutrality

Together, these two important developments highlight the growing importance of tackling Climate Change and creating, then effectively promoting, the use of sustainable, low carbon emitting energy projects, businesses and general practices.

At Red Ribbon we’re already doing our part to promote cleaner air and sustainable energy solutions. But our ambitions don’t stop there. We’re also interested in supporting India’s economy and creating eco-friendly, sustainable investment options for those interested in securing their share of returns from the still strong growth across India’s various industries.

Eco Hotels is one such investment opportunity that we’re proud to be part of. The first of its kind, this carbon-neutral hotel brand has sustainability and emissions-controlled planning at its core.

Not only does it provide domestic and international travellers the opportunity to visit parts of India in a cost-effective way, the brand has also been designed to ensure it gives back to more than just India’s financial economy.

Sustainability is increasingly important to India’s future, as it is across the globe. Eco Hotels gives investors the chance to truly diversify their portfolio, while being part of an expanding eco conscious that tomorrow’s business leaders will support and develop even further.

 

 

Red Ribbon CEO, Suchit Punnose said:

There are an increasing number of developments pointing to the importance of tackling climate change and lowering CO2 emissions. These details have always been important to us at Red Ribbon and are more than a consideration when we create new businesses and investment opportunities.

Eco Hotels is just one way that we continue to support and promote sustainable living and investing across India and we know it will be among those businesses that stand the test of time in India. Not just as a brand, or even as an example of sustainability for the economy and for investors, but also as a way of creating new businesses, by always keeping the future of the land it’s built on in mind.

 

India's eco-friendly stance on plastic pollution reduction

India’s eco-friendly position on plastic pollution reduction

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Action against pollution is growing and India is emerging as a country willing to take a tough stance on the . It’s previous announcement on eliminating single use plastics in the country by 2022 has won praise from the UN and now, it has amended a rule to end the importation of plastic waste into the country. This week we highlight India’s eco credentials and why it’s the perfect country for the eco hospitality industry.

India’s promotes eco-friendly policy through plastic pollution reduction

India’s commitment to reducing plastic pollution was further highlighted last week, by high praise from the UN Environment acting Executive Director and a new directive from the Election Commission, for political parties to avoid the use of single-use plastics during campaigning.

Both these developments follow the country’s plan to ban single-use plastics in the country by 2022 and also, a March amendment to its Hazardous and Other Wastes (Management & Transboundary Movement) Rules, which bans the import of waste plastics across the entire country.

While India isn’t alone in its commitment to limit the level of plastic waste around the world, due to the sheer size of its population, the success of such plans would prove a huge boon for the broader eco-friendly cause.

Praise for India’s tough stance on single use plastics

The UN Environment acting Executive Director Joyce Msuya, told independent India newswire, IANS, that the countries plan to eliminate single use plastics in less than five years was “a tremendous move by the Government”.

That announcement was made by the Indian government in August 2018 and has been followed up more recently, with an amendment to an existing rule regarding the importation of plastic waste.

Previously, India had banned such activity, with the exception of certain zones around the country. A number of companies worked to evade the ban by operating in those zones. That led to a notable increase in the amount of plastic waste that was imported into a country that already creates some 9 million tonnes of its own plastic waste, each year.

From August 31st 2019, that activity will cease and India can turn to finding suitable ways to recycle more of its own waste, than the less than 50% it currently manages. Once the importation of 48,000 tonnes per year of plastic waste stops, India can then begin working on sustainable solutions to manage its own single-use problem.

However, while ending the importation of plastic waste is good for the local environment, its less beneficial on an economic front. It’s possible

An eco-conscious country

As this recent eco-friendly and anti-plastic pollution action highlights, India is not among those countries who doesn’t believe the science behind the pollution headlines. Indeed, it’s a country that is taking more steps than many others to put sustainability and an eco-conscience at the heart of its future growth.

That’s an attitude and outlook that we at Red Ribbon identify with. Yes, we work hard at uncovering investment opportunities that produce the right level of returns. But also, we only consider the creation and support of sustainable businesses and projects. Ideas that will help support the global environment and reduce the amount of energy and natural resource hungry developments, that remain popular among other investment plans.

Eco-hospitality is an industry that is growing in size and popularity, two important details supportive of a healthy return on investment.

The creation of the economical and ecological, carbon neutral Eco Hotel, is something that attracts many visitors. Not only from the millions of people from within India who enjoy travelling around the country, while exerting their eco-conscience at the same time. But also, holiday-makers around the world who want to enjoy India’s scenery and culture without impacting on it, in any way.

This latest raft of news highlights that India is the perfect location for the Eco Hotel brand to begin its journey. We know it will help support the country’s economy for many years to come, just as the country and government has supported the development of a carbon neutral, sustainable, eco hospitality industry.

 

Red Ribbon CEO, Suchit Punnose says:

As an entrepreneur and business man, I’ve always understood India’s desire and ability to become a country that will support the right business ideas that can, not only have lasting and positive impact on a national scale, but on a global one too

That’s why Red Ribbon has been there every step of the way as Eco Hotels was developed and has become a popular destination for holidaymakers of every type, including those with a keenly developed eco-conscience.

Eco Hotels’ carbon neutral design is something that can work across different countries, continents and landscapes and now is the right time to support and invest in sustainable, eco-hospitality.

Indian Rupee

Broad-based planning supportive of India’s economic ambition

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It may be a New Year, but in many countries, old worries remain. Take the UK, for example. Brexit is as uncertain as ever and that’s unlikely to change any time soon. Not only have forecasts for economic growth in the country been tempered by the lack of a clear path for Brexit, the latest survey data from IHS Markit have served to underscore the worry felt by consumers and businesses, with the country’s dominant services sector close to stagnation during December.

However, the UK isn’t the only country experiencing uncertainty as to how 2019 will unfold.

India has an interesting 12 months ahead as incumbent Prime Minister Narendra Modi must work hard to maintain his position, after recent state election results make the likelihood of a new leader a real possibility. However, Modi has begun 2019 with ideas and a plan to show his support of the large farming industry, which is unhappy with the lack of fiscal support from the Government.

Speaking at the India Science Congress this week, the India PM urged scientists to find low-cost solutions for ‘social good’, including the creation of more affordable and balanced agriculture industry and using big data analytics to improve crop yields for farmers with smaller holdings. Introducing this element to the PM’s broader outlook for India’s economic development may always have been the plan.

Although, there will likely be many who will say its merely a move to encourage more votes in an election year. Regardless of the truth, this latest step is a further sign that Modi’s economic ambitions for the country remain front-and-centre.

Economic outlook

Even before this latest speech, the outlook for growth in the country was upbeat, particularly when compared with global competitors. Despite some GDP forecast downgrades from the likes of Fitch Ratings and the OECD – to a still healthy 7.2% and 7.3% respectively – India is assessed to have outpaced China during 2018 and to do so again in 2019. India’s finance ministry, meanwhile, forecasts economic expansion of 7.8% during 2019, which would likely be similar to the average pace of growth across 2018, despite the slowdown to 7.1% in the third quarter.

Indeed, it appears that the third quarter GDP number is partly behind most of the forecast reductions, although other details also weigh.

They include:

  • Generally weaker global GDP outlook.
  • Global trade worries.
  • Liquidity squeeze.

Modi and his Government, however, are upbeat and standing firm on their positive outlook. Many would say, with good reason.

Despite the difficult global scenario, some developments have been in India’s favour. The high price of crude oil has receded, despite the sanctions against Iran. Meanwhile, the country has moved up the World Bank’s ‘ease of doing business’ rankings. And while there has been some disagreement over the Government’s demands for the Reserve Bank of India to relax some restrictions on weaker banks, inflation has remained under control.

The decision to remain firm on many fiscal elements of governance while creating a more supportive backdrop for businesses and consumers, has been a core driver of the strong level of economic expansion across India. It appears that focus on moving forward with policies designed to encourage start-ups and innovation is very much still in place.

Modi told delegates at the Science Congress that following on from its success of improving its ‘ease of doing business’ score, it must now work to improve the ‘ease of living’ in India. That requires a broad-based plan; working to support businesses across every industry, supporting innovation and new ideas, job creation across every industry and providing a stronger and more reliable infrastructure for consumers.

At Red Ribbon we understand the importance of introducing innovative developments into an existing industry, which is why we believe the Eco Hotel industry is one that can help ensure India’s economic growth ambitions will succeed and even exceed expectations.

Red Ribbon CEO, Suchit Punnose said:

An economy the size of India’s will only flourish if a broad-based outlook is in place that also supports innovation and allows every industry to move in an agile fashion, particularly when it becomes clear that a new approach is required. India’s leisure and tourism industry is a case in point. It draws tourists from within and without the country to its variety of regions and attractions. Introducing a new type of accommodation, such as Eco Hotels, will work to add yet another string to India’s bow as the destination of choice for an even broader range of holiday-makers and business travellers, while supporting jobs growth and industry innovation at the same time. As long as business start-ups and industry innovations are supported and encouraged, they will only have a positive impact on India’s economy, the standard of living and the global environment.

Eco Hospitality benefits India economy - Red Ribbon Asset Management Plc

How Eco Hospitality provides a double benefit for India’s economy

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How Eco Hospitality provides a double benefit for India’s economy

The World Bank’s January 2019 Global Prospects Report shows that the United Nations institution continues to expect economic growth across India to expand in 2019 and beyond. The group’s estimate for full-year GDP growth in 2018 is for 7.3%. Meanwhile, the World Bank is also anticipating that level to rise to full-year GDP growth of 7.5% in 2019, 2020 and 2021.

There are many details that go into a forecast like this, which means it is an absolutely achievable and likely outcome. However, if some of the assumptions made in those forecasts don’t proceed as expected. Or, something completely unexpected occurs, then India’s economy could either exceed or fail to achieve that forecast rate of growth.

Another interesting figure that has recently been published about India’s economy, comes from the Indian Government’s Ministry of Statistics. According to its 2018 Environmental statistics, the natural capital in 11 of India’s states has declined. Natural Capital “refers to all types of environmental assets existing in the environment” according to the report.

Once again, a lot of work and details go into creating these data and stats to produce reliable and correct information.
The figures in that painstakingly generated report suggest that, at least in some parts of India, pure economic growth is being achieved at the expense of the country’s natural capital, or native environment. And that’s not something that can be allowed to continue unchecked. At least not if the economy is to remain on a long-term and sustainable, positive economic growth path.

 

Sustainable, eco-industry

With that in mind, we now turn to a specific part of India’s growing economy, the Eco, or green sector. While much thought is being put into how to ensure residential building and consumer habits are increasingly sustainable and Eco-friendly, another key area in which India is already developing an Eco-footprint in, is hospitality.

For a country that welcomed over 10 million overseas tourists during 2017 – an increase of 14% in number and 15.4% in income generation – it’s a sizable industry. In GDP terms, the total contribution from travel and tourism across India made up 9.4% of India’s GDP in 2017, likely rising to around 17% in 2018, according to the World Travel and Tourism Council.

If, however, efforts into supporting and growing the eco-hospitality sector of the travel and tourism industry continue, or even gain pace, not only will green hotels, eco holiday destinations and sustainable tourist hot spots generate welcome income for the economy, it will also help improve and even expand the country’s natural capital. That’s something that’s a double boon for the sub-continent that consistently strives to develop, advance and improve.

Eco Hotels is among the green businesses that are investing in India’s economy, in a sustainable way. The world’s first carbon neutral, mid-market hotel brand has been operating since 2012 and is a popular option, for businesses, investors and also among those travellers who include Eco credentials in their search for holiday accommodation.

Growing India’s eco-hospitality sector is something that is will undoubtedly help ensure the country’s travel and tourism industry will contribute to both the financial GDP figures and its nature capital. But, even better, positive eco changes in one country actually contribute to green credentials and work towards stopping climate change on a global basis too.

With so many benefits to be gained from Eco hospitality, there’s little doubt as to just how valuable it is to India’s economic, business and green ambitions.

Red Ribbon is the founder of Eco Hotels, the world’s first carbon neutral hotel brand which offers “green hospitality” as part of a progressive roll out across India designed to take advantage of current market opportunities on the subcontinent. The brand meets all key sustainability criteria without compromising on either quality or standards of hospitality and is designed to cater for commercial and recreational travellers alike.

Red Ribbon CEO, Suchit Punnose said:

Understanding the full implications of the way in which a country achieves economic expansion is an essential part of working towards maximising that country’s growth potential, while also making sure all the ingredients required to continue growing and innovating remain available. While the 11 states experiencing a decline in their nature capital account for fewer than half of India’s regions, its not something that should be ignored.

With Eco Hotels, Red Ribbon is putting both India’s economy and nature capital at the heart of its investment strategy. Combatting climate change, promoting sustainable industry and creating profitable carbon neutral businesses, is the right way to create an investment that will remain popular and relevant for years to come.

India Economic Evolution - Republic Day - Red Ribbon Asset Management Plc

India’s economic fortunes in the 70 years since gaining independence

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India’s economic fortunes in the 70 years since gaining independence

This year’s Republic Day in India marks the 70th anniversary since it truly became an independent country, with its first elected President after the withdrawal of British rule in 1947. Since then, every year on January 26th, the nation celebrates its hard-won achievement.

India’s first elected President was Dr. Rajendra Prasad, who took his oath at the Durbar Hall in Government House. Since that time, India has proudly voted for its own President during elections and celebrates that independence with joy and jubilation.

Of course, the year is now 2019 and many things have changed since 1950. Ram Nath Kovind is the country’s 14th President, with Narendra Modi serving as Prime Minister. The economic landscape is very different from 70 years ago and it continues to transform further as a combination of financial, digital and ecological developments demand.

Economic output

It’s never easy to gain a true comparison of economic performance between years gone by and any given year in today’s era. However, the available data does give an idea of the make up of economic growth and also the rate at which a country expands – or contracts.

Given India’s size, population, agricultural performance and the more recent growth of eCommerce and finance, you likely won’t be surprised to find that the current pace of GDP growth is superior compared to the rates of growth achieved in 1950.

Data from India’s Central Statistics Office shows that GDP growth in the 1951-52 financial year was 2.3%, with the main contributor to that growth, being the agricultural sector.

Until recently, academics have placed India’s average rate of GDP growth at somewhere between the 3.5% to 4.5% level. But that average is well below the 7.5% rate of GDP growth anticipated for 2018 and also that masks many peaks and changes in the country’s fortunes and chosen paths.

The official data show that after some notable peaks and troughs, GDP has been broadly positive and even prosperous since the 1980s. India’s economic landscape, however, has shown a consistent picture of agriculture losing its place as the major part of the economy, being replaced by the services sector.

Where agriculture made up over half of activity and profits in the 1950s, it now accounts for around 18% of GDP growth, despite employing close to 50% of its population. The services sector, meanwhile, has doubled from a proportion of around 30% of GDP in the 1950’s to the 60% mark, today.

This switch between the dominance of two key industries across India highlights the way technology and digitisation have evolved and been embraced across the country and indeed, the world. While some pain has been felt along the way during that transformation, it also shows that even though it is a huge country with an impressive population, it is able to recognise when change is required and crucially, to implement that change.

Modern economic drivers

Republic Day is a wonderful to day to remember that after 20 years of struggling to gain independence, it was finally achieved. It is also a day to reflect on how, as an independent country, India has chosen to adapt to and even welcome wide-reaching changes, today.

Technology and digitization is something that has affected every industry and by embracing that, the future for India’s economy has become brighter.

Manufacturing has changed thanks to the way technology has enhanced its capabilities and made it a safer environment for its workers. Meanwhile, tourism and eco-hospitality are also examples of where the abilities of technology, combined with the wants of a modern society, can be incorporated to produce something that not only services the needs of consumers, but also the needs of the environment in the name of sustainability.

Red Ribbon CEO, Suchit Punnose said:

Republic Day is a special day, not only because of the celebrations that mark its passing, but also because it underscores that as a country, India is always moving forward, developing and achieving thanks to its own population and ability to embrace change.

Red Ribbon embodies that sentiment and our investment in industries such as modular construction, through Modulex and the eco-hospitality sector, with Eco-Hotels, show that we’re always looking towards supporting a prosperous future for India’s economy and vast population.

We look forward to continuing to play our part in India’s future, participating to the utmost in the opportunities the subcontinent’s explosive growth has to offer and at the same time providing above market rate returns from our investors in what I am convinced will continue to be one of the world’s most exciting markets for many years to come.

India Economic Ambition Planning - Red Ribbon Asset Management Plc

Broad-based planning supportive of India’s economic ambition

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Broad-based planning supportive of India’s economic ambition

It may be a New Year, but in many countries, old worries remain.

Take the UK, for example. Brexit is as uncertain as ever and that’s unlikely to change any time soon. Not only have forecasts for economic growth in the country been tempered by the lack of a clear path for Brexit, the latest survey data from IHS Markit have served to underscore the worry felt by consumers and businesses, with the country’s dominant services sector close to stagnation during December

However, the UK isn’t the only country experiencing uncertainty as to how 2019 will unfold.

India has an interesting 12 months ahead as incumbent Prime Minister Narendra Modi must work hard to maintain his position, after recent state election results make the likelihood of a new leader a real possibility. However, Modi has begun 2019 with ideas and a plan to show his support of the large farming industry, which is unhappy with the lack of fiscal support from the Government.

Speaking at the India Science Congress this week, the India PM urged scientists to find low-cost solutions for ‘social good’, including the creation of a more affordable and balanced agriculture industry and using big data analytics to improve crop yields for farmers with smaller holdings.

Introducing this element to the PM’s broader outlook for India’s economic development may always have been the plan. Although, there will likely be many who will say its merely a move to encourage more votes in an election year.

Regardless of the truth, this latest step is a further sign that Modi’s economic ambitions for the country remain front-and-centre.

Economic outlook

Even before this latest speech, the outlook for growth in the country was upbeat, particularly when compared with global competitors.

Despite some GDP forecast downgrades from the likes of Fitch Ratings and the OECD – to a still healthy 7.2% and 7.3% respectively – India is assessed to have outpaced China during 2018 and to do so again in 2019. India’s finance ministry, meanwhile, forecasts economic expansion of 7.8% during 2019, which would likely be similar to the average pace of growth across 2018, despite the slowdown to 7.1% in the third quarter.

Indeed, it appears that the third quarter GDP number is partly behind most of the forecast reductions, although other details also weigh. They include:

  • Generally weaker global GDP outlook.
  • Global trade worries.
  • Liquidity squeeze.

Modi and his Government, however, are upbeat and standing firm on their positive outlook. Many would say, with good reason.

Despite the difficult global scenario, some developments have been in India’s favour. The high price of crude oil has receded, despite the sanctions against Iran. Meanwhile, the country has moved up the World Bank’s ‘ease of doing business’ rankings. And while there has been some disagreement over the Government’s demands for the Reserve Bank of India to relax some restrictions on weaker banks, inflation has remained under control.

The decision to remain firm on many fiscal elements of governance while creating a more supportive backdrop for businesses and consumers, has been a core driver of the strong level of economic expansion across India. It appears that focus on moving forward with policies designed to encourage start-ups and innovation is very much still in place.

Modi told delegates at the Science Congress that following on from its success of improving its ‘ease of doing business’ score, it must now work to improve the ‘ease of living’ in India. That requires a broad-based plan; working to support businesses across every industry, supporting innovation and new ideas, job creation across every industry and providing a stronger and more reliable infrastructure for consumers.

At Red Ribbon we understand the importance of introducing innovative developments into an existing industry, which is why we believe the Eco Hotel industry is one that can help ensure India’s economic growth ambitions will succeed and even exceed expectations.

Red Ribbon CEO, Suchit Punnose said:

An economy the size of India’s will only flourish if a broad-based outlook is in place that also supports innovation and allows every industry to move in an agile fashion, particularly when it becomes clear that a new approach is required.

India’s leisure and tourism industry is a case in point. It draws tourists from within and without the country to its variety of regions and attractions. Introducing a new type of accommodation, such as Eco Hotels, will work to add yet another string to India’s bow as the destination of choice for an even broader range of holiday-makers and business travellers, while supporting jobs growth and industry innovation at the same time.

As long as business start-ups and industry innovations are supported and encouraged, they will only have a positive impact on India’s economy, the standard of living and the global environment.

Eco Tourism Odisha - Red Ribbon Asset Management Plc

How Eco-Tourism is generating economic boost for India

By | India, News | One Comment

How Eco-Tourism is generating economic boost for India’s Odisha state

Eco-tourism is becoming an increasingly important part of India’s economic growth. Just take a look at the state of Odisha. Located on the on the Eastern coast of India, on the Bay of Bengal, Odisha’s investment into eco-tourism is beginning to pay off, as it’s expected to generate some Rs6 Crore (£ 700,000) in revenue by the end of the 2018-19 financial year and providing a boost to local Government coffers.

As the popularity of the sector continues to grow, so too will the India Government’s return on its investment.

Of course, this economic benefit hasn’t happened overnight. However, nor has it taken as long as one might anticipate. The Odisha State Government has invested some Rs34 crore (£ 4 million) during the 2016-17 to 2018-19 financial years, into 37 separate eco-tourism locations across the state.

The eco-tourism offerings, created and managed by Odisha’s Forest and Environment Department are expected to reach Rs 10 crore (£ 1 Million) in the 2019-20 financial year, according to the department’s chief conservator of Forests and wildlife.

As you can see, even though the end of the current fiscal period has not yet arrived, the region is already seeing notable revenue generation form its investments, with further growth anticipated. That highlights the popularity of eco-tourism and hospitality as a something that’s more than a passing trend.

For the Indian sub-continent, which is awash with natural beauty and a growing desire to enhance that, with green, eco-friendly and carbon neutral hotels and other hospitality sector developments, now is the perfect time to support that ambition. Not only does it give tourists – from both India and the rest of the world – the opportunity to retain their eco-consciousness even when they travel far afield. But it also provides an option for investors to make socially responsible and sustainable financial decisions, too.

That’s essentially why opting for sustainable and eco-friendly investments is a good decision right now; they provide an option for travellers, countries and investors, who hold to environmental ideals that are now possible.

But Odisha isn’t the only region in India to pursue eco-friendly tourism. There are a growing number of mid-market eco-hotels that are continuing to expand across India. We’ve previously highlighted how Lemon Tree hotels is already proving a success in terms of cost controls and room occupancy rates.

Our own carbon neutral hotel group Eco Hotels, meanwhile, builds on everything we’ve mentioned here – and more. Demand for hotels across India is strong and rising, boosted in part, by the increasing middle-classes of the region.

Creating an eco-friendly hotel chain fulfills all the needs that we have identified:

  • The growing number of hotels across the subcontinent.
  • Creating sustainable, carbon neutral tourism options.
  • Giving investors peace of mind that their decision to support Eco Hotels, is a socially and environmentally responsible one, as well as a sound financial one.

Red Ribbon is the founder of Eco Hotels, the world’s first carbon neutral hotel brand which offers “green hospitality” as part of a progressive roll out across India designed to take advantage of current market opportunities on the subcontinent. The brand meets all key sustainability criteria without compromising on either quality or standards of hospitality and is designed to cater for commercial and recreational travellers alike.

Red Ribbon CEO, Suchit Punnose said:

The quick and impressive revenue generation from the commitment of an entire Indian state to eco-friendly tourism, only works to highlight our belief that socially and environmentally responsible developments and investment decisions, are the right path for, not only Red Ribbon, but the broader investment community.

Eco hotels, that are created to provide business and leisure travellers with the accommodation they desire, in the location of their choice, is just one way we are supporting this view. With demand for such options growing both domestically and internationally, the Eco Hotels brand is proud to be built with carbon neutrality and green credentials as part of its fundamental core.

I’m proud that Eco Hotels have done just that from the very beginning of the project, and proud too of the part Red Ribbon has played in developing the brand and its ambitions in the succeeding years, spearheading an environmentally friendly response to India’ resurgent tourism demands.

10 Reasons to Invest in India by Red Ribbon Asset Management Plc

The place to be: 10 reasons to invest in India

By | Archive, India, News | No Comments

India’s economy and business landscape are changing, ushering in a period of growth, prosperity and investment opportunities. All the ingredients are in place for India to become a world leader investment destination.

Let’s look a little more closely at just a few of the more compelling reasons why investing in India is an opportunity you can’t afford to miss:

1. The Perfect Demographic For Growth: India is the fastest growing large economy on the planet. Its rapidly increasing population is predicted to overtake China by 2022, and become the largest in the world.

2. Exceptional Consumer Led Demand: A large part of the 1.34 billion people are increasingly sophisticated, technologically literate and wealthy.

3. Supportive Fiscal Regime: The government has been making radical changes to create a more business friendly environment. There is now a uniform tax regime (GST) across all 29 states of India, and introducing an affordable housing programme with additional tax breaks.

4. Dynamic Real Estate Market: India is experiencing an unprecedented demand for both domestic housing and commercial property. Real Estate investment in India’s six major cities doubled in the first half of 2017.

5. Vibrant Private Equity Sector: 2017 was the busiest year for more than a decade for private equity deals in India, with total investments of £16.84 billion.

6. Unprecedented Infrastructure Spending: There is a public infrastructure programme of moving scale. This includes 83,677 km of new road being built over the next 5 years (The UK’s motorway network is a little over 3,000 km).

7. Regulatory Certainty: The government has been decisive. Demonetisation has removed much of the ‘black economy’ and over 6,000 companies suspected of improper activities have been closed. Arbitration and court procedures have been overhauled and sped up.

8. Global Trading Hub: Major international companies, such as Virgin and Amazon are now moving to India to invest in and participate in the expansion.

9. World Leading Computer Technology: India is now recognised globally as a technology powerhouse, with an increasingly IT literate population.

10. Stable Federal Structure: India’s federal structure offers highly effective risk management, that helps protect the economy from any unpredictable events. Which means that investors are more than ever protected against localised market risk.

For these reasons and more, India is now one of the most exciting places to invest. At Red Ribbon, we use our expertise and resources to identify the investment opportunities that have the potential of delivering superior returns to our investors.

Nobody understands that potential for growth better than Red Ribbon Asset Management, which has placed India at the very heart of its investment strategies since the company was founded more than a decade ago. With an unrivalled knowledge of market conditions on the subcontinent, Red Ribbon offers a unique opportunity to share in that vast potential. India is more than just an exciting investment opportunity, it’s also a driver to global economic growth and that’s why Red Ribbon has long held the view that no investment portfolio can be considered properly balanced unless at least 10% of its holdings are deployed in Growth Markets and, of course, for us that has always meant India in particular.

 

At Red Ribbon we are very proud to have been playing our own part in India’s economic resurgence over the last decade, investing in just the kind of projects that are at the heart of the interlocking triangle of growth mentioned in the article: everything from the modular construction technologies now being developed by Modulex so as to deliver affordable housing at the pace demanded by the subcontinent’s urban expansion, through to innovative sustainable energy infrastructure investment. And to see India now firmly established at its place on the economic top table, uniquely well placed to move further forward still is, of course, a particular source of pride for us.

 

 

 

 

 

We look forward to continuing to play our part in India’s future, participating to the utmost in the opportunities the subcontinent’s explosive growth has to offer and at the same time providing above market rate returns from our investors in what I am convinced will continue to be one of the world’s most exciting markets for many years to come.

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Red Ribbon

At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.

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