MitKat India Risk Review 2017

India

Risk

Review

2017

Making Business Sense in a Connected World...

The interdependence of geo-politics and business interests creates opportunities and risks for businesses. A wide array of political, socio-economic, s o c i e ta l , l e ga l / re g u l a to r y a n d environmental risks impact businesses. Understanding and mitigating these risk is vital to running a business.

Geopolitical risk assessment allows business owners to track and analyze current global and local events/trends, to comprehend the impact of these as well as the opportunities they present.

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India Risk Review 2017 www.mitkatadvisory.com

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LIKELIHOOD

Geopolitical Risks

Socio-economic Risks

Technology Risks

Economic Risks

Safety Risks

Environmental Risks

Change from 2016 to 2017

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within India, and from one business to the other.

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2

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Air Pollution

Natural Hazards

Bio-diversity LossWaste Disposal

Water Scarcity

Pandemics

Cross-borderTerrorism

Insurgencyin Northeast

Electoral Violence

PublicProtests

Unrest in J & K

Center StateRelations

Islamic StateThreat

InterstateConflict

CommunalConflicts

ReligiousIntolerance

Maoism

Crime

Castebased violence

PoliticalUnrest

WomenSafety

Corruption

Cyber Attacks

Internet of Things

Mega DataBreaches

Cyber Terrorism

DDOS Attacks

Ransomware

Business Process

Compromise

AugmentedReality

Fiscal Deficit

Oil PriceVolatility

Complex Taxation

Energy Security

CurrencyFluctuation

BankFrauds

Workforce Issues

Demonitization

StructuralSafety

Fire & Industrial

Safety

Rail Safety

Road Safety

Pandemics &Diseases

Food & WaterSafety

High Risk Medium Risk Low Risk

India Risk Map 2017: Security & Safety Perspective


Risk Evaluation Factors

§ Extremism § Natural Disasters § Crime § Civil Disturbance § Environment, Health & Diseases § Infrastructure § Emergency Services

High Risk Medium Risk Low Risk

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within India, and from one business to the other.

Chairman's Message

Lt Gen Sudhir Sharma PVSM, AVSM, YSM, VSM (retd), Chairman

The past year has been significant from the geo-strategic as well as business perspective. The unraveling of the SAARC due to Pakistan's continued dalliance with terrorism and the downtrend in Sino-Indian relations due to China's stance on the NSG has changed the power dynamics of South Asia. This trend is likely to continue in 2017; with India taking firmer steps in its look East policy and closer integration with ASEAN and Pacific Rim countries. GST bill and 'Make in India' policies will give an impetus to the economy. With the government keen to make a success of the demonetization experiment, it will make efforts to stimulate growth and further improve the 'ease of doing business' strategy. Many resurgent states will go all out to woo FDI and enable business partnerships, by streamlining and improving policy guidelines. With elections in many states, it will be a defining year of steady growth but a slightly fragile security landscape.



Security needs collaboration at individual, organizational, industrial, national and global levels; networking and knowledge sharing are the key drivers for mitigating challenges in today's complex security environment. ASIS International works on bringing together security professionals to facilitate exchange of ideas and knowledge sharing so that individuals and organizations can manage risks better. Each of our 38,000 worldwide members is responsible for protecting vital assets – people, property, and/or information – in various industries, both public and private. 2016 will go down in the history as the year of unpredictability; be it the Brexit in United Kingdom or change at the helm in the US government or closer to home, the demonetization move. The year also witnessed innovative terrorist attacks in non-traditional geographical areas. 2017 brings with it more uncertainties, with more radical political personalities taking up prominent positions in mainstream politics, the issue of migration dominating politics in Europe and America, and posing a dilemma not just for countries but companies too. Security, in general, and the issue of terrorism will continue to dominate headlines. More than the issue of foreign fighters, the world will battle the issue of homegrown radicalization. Even as the physical threat to organizations remains high, dangers in the cyber realm will add an additional dimension to security concerns in 2017. ASIS-Mumbai Chapter has come together in a unique collaboration with MitKat Advisory Services to provide a comprehensive round up of the various risks that businesses in India face today; in the form of the India Risk Review 2017. We hope that security professionals and organizations benefit from it.

Message from ASIS Mumbai India Chapter #257

India Risk Review 2017 www.mitkatadvisory.com[1]

investment climate. The rise of states as catalyst for growth would be the highlight of the economic landscape of 2017.

With a desire to make the recent re-monetization experiment a success, the government can be expected to take a series of bold steps to stimulate growth and consumer confidence. This could translate into a softer tax regime, besides easier access to capital and hitherto closed markets. The effect of de-globalization, the slowdown in world trade and creeping protectionism, coupled with ultra-nationalism, could affect the outsourcing and IT sector in the medium term. However since exports are not the key driver of the Indian economy, the effects would be limited in scope.

executive summary

Overall Business Climate in India in 2017India has emerged as one of the fastest growing major economies in the world. The country has stepped up its efforts to improve the overall business climate and has kicked off macro reforms in monetary policies and its regulatory structure. The government has also taken steps to improve the ease of doing business. According to the World Bank's annual ease of doing business report published in 2016, India has implemented a set of reforms leading to considerable improvement in the business environment. Looking at key macro indicators of - Getting Electricity, Paying Taxes, Trading Across Borders and Enforcing Contracts - the country has made tangible reforms. India is placed in the top 50 global economies on three of the ten pointers – Getting Credit, Protecting Minority Investors and Getting Electricity. However, due to overlap of jurisdictions, excessive regulations and bureaucratic impediments, India will continue to be a comparatively difficult country for rapid business growth in the foreseeable future. On the plus side, Indian states are on a reform and fast growth trajectory, creating favourable conditions for investments and a benign supportive regulatory framework. In fact some states will show consistent double digit growth, giving an overall impetus to the Indian economy besides creating a healthy and competitive

Top 5 risks for businesses in 2017Public Protests/Social Unrest Due to the diverse demographic landscape, dissent focused around caste and religion and multiple socio-economic differentiators is deeply embedded in Indian society. The Jat agitation in several parts of Haryana in February 2016 resulted in an estimated loss of around Rs 20,000-30,000 crore to the state


executive summary

coffers. Several parts of Karnataka including the state capital Bengaluru witnessed disruptive demonstrations in August-September 2016 due release of water from the Cauvery River to neighbouring Tamil Nadu state. The unrest entailed blockades of key highways and roads, suspension of state railway and Bengaluru metro services and widespread vandalism. Hardline regional groups could potentially trigger unrest, since the resolution to some of these disputes remains largely unresolved. Furthermore the political landscape has become polarized and more strident in the past year. The coming state elections and the opposition of many parties to re-monetization is likely to exacerbate matters, and create fissure in the social polity of the nation, affecting business growth. Economic growth unless linked to job growth is not going to appease the restless youth of the country. Finding productive employment for the millions of young people entering the job market will be one of the greatest challenges of 2017 and beyond

With the emphasis on digital India, e-commerce and mobile payments, especially after demonetization, cyber security has gained further importance. With business operations

Cyber Security

becoming inter-linked through increasing digitization, challenges emanating from cyber security are bound to manifest in the coming years. Cyber security affects all organizations, ranging from start-ups to multinationals. Previously developed nations were the prime targets of cyber attacks. However, the trend has changed, and firms based in India have also been increasingly, targeted and are par with global companies in terms of being impacted by cyber-attacks. In one of the significant attacks in 2016, around 320 thousand debit cards of various Indian banks were compromised.

In light of the recent cyber attacks, the government is in the process of setting up a national cyber security structure which will designate agencies to monitor the threats and strengthen India's cyber ecosystem. However, going forward in 2017, India requires reformed cyber security laws that would make it easy to protect critical infrastructure, and empower agencies to manage incidents effectively. Thus cyber security would need far greater emphasis in 2017 and unless addressed would constitute a business risk.


executive summary

Bribery and Corruption

Natural Disasters

Despite the central government efforts to bring transparency and limit government interference, bribery and corruption continue to pose a serious risk to the business climate. Corruption in India has raised transaction costs, as well as the cost of operations for businesses, mainly in the real estate, defence and infrastructure enterprises. Companies are likely to face red-tape, petty corruption and bribery when dealing with public services. Some of the other sectors, which will remain impacted by corruption, include metal and mining, power and utilities sector. Overall due to expected regulations on reduced usage of cash, there would be a marginal improvement in the overall corruption index.

Major metropolitan cities continue to remain under-prepared to handle severe flooding, resulting from the annual monsoons, which usually run from June-September. Last year, many parts of Mumbai, Delhi and Gurgaon, Hyderabad, and Kolkata were submerged due to waterlogging, resulting in severe disruption to businesses. The city administrations need to reform and modernize their approach towards urban governance. The

usual aspects of water administration, drainage and sewage systems and public transport facilities need serious revamp, especially to qualify for the “Smart Cities' tag. It is therefore imperative for the firms to strengthen their existing business continuity plans to overcome the challenges likely to present themselves during the monsoon season in 2017. Furthermore there would be a need to further strengthen processes related to fire and natural disasters.

Although several successful security operations in 2016 have put the Maoist insurgents in a defensive mode, the Naxals have conducted some counter-offensive attacks targeting security forces as well as civilians. There have been reports of growing Maoist presence in the southern states of Kerala, Karnataka and Tamil Nadu. In a major Maoist-led strike, the insurgents in December torched around 70 heavy vehicles including three construction-related equipments at an iron mine in Surjagad, in Maharashtra's Gadchiroli district. The incident is considered to be one of the significant attacks against a business enterprise in Maoist affected areas.

Maoist/Naxal Insurgency


executive summary

2016 witnessed a decline in Maoist-related violence as compared to the previous year, due to better deployment of security personnel in the affected regions, loss of cadres and leaders; combined with protracted development measures, and empowering of local communities to mitigate the threat of Naxal violence. Nonetheless, it is likely that the Maoist threat will remain as one of the biggest security threat to businesses operating in the affected regions in 2017.

Top 5 enablers for businesses in 2017DemonetizationThe demonetization of high-value Indian currency notes in November 2016 was planned as big ticket reform. The move has brought into the banking system a lot of undisclosed cash. The move has facilitated the increased usage of digital payments and is hoped to reduce the reliance on cash transactions. India plans to use the unique identification system as the backbone of cashless transaction in the future. The move though path breaking, is controversial, having caused a serious dent to the low-income rural and agricultural economy. The jury is still out

on its overall impact but appears to have had a positive impact. Apart from giving a boost to digitization, the move has the potential for greater financial transparency, higher tax collections and consequent lowering of the fiscal deficit.

Goods and Services Tax (GST) is a planned system of indirect taxation aimed at making India one unified common market. Once rolled out, the industry and business in the country will benefit immensely from the progressive taxation regime. The principal benefit to the businesses across the sectors will be uniformity of tax rates and structures across the country, thus increasing and easing the ease of doing of business. The industry in the country is ready to accept the new tax regime, as it will terminate some archaic tax laws; and is considered to be one of the game changers for the Indian economy. GST roll out in 2017 is expected to give up to 1 to 2 % increase in GDP in a few years.

With NPA's of banks being brought under some control, capital availability is likely to be a big catalyst for growth in 2017. Lending to the medium and small scale sector is poised for a

Goods and Services Tax

Easier Availability of Capital


executive summary

huge growth at affordable terms. Easier housing loans would also give a boost to the infrastructure sector. Re-monetization would also make additional capital available for the agricultural and rural sector. With states rolling out the red carpet for investors, capital would be more readily available in 2017, but would be spread out across the industry and not be restricted to few favoured corporate entities as hitherto fore.

Given the current governments desire to generate a level playing field and give impetus to 'Make in India,' a more business friendly compliance and moderate tax regime can be forecast for 2017.India has just signed an avoidance of double taxation protocol with Singapore on similar lines that it had signed with Mauritius. This is a significant step and would pave the way for a just tax regime, triggering genuine investment and tie ups. A simpler and lower corporate tax and capital gains rules would be a big business enabler for 2017.

2016 witnessed a proliferation of the usage of 4G smart phones

More Benign Compliance and Tax Regime

Mobile and Internet Penetration

in India. With tariff rates plummeting steeply, the usage of smartphones with versatile apps will grow exponentially. The enhanced smartphone based connectivity, and data reach will provide for huge opportunity for data stacks to be optimized and connect seamlessly with consumers. Internet penetration and multiple payment gateways would greatly help business to grow and attract consumers.

Huge growth in the middle class numbers would stimulate demand and consumer spending. With rise in incomes consequent to the 7th Pay commission, coupled with government spending on infrastructure and Smart Cities; there would be multiple growth opportunities in the retail and manufacturing sector. Renewable energy, agriculture, rural growth would also create and be a catalyst for demand and business confidence. With numerous airports and additional roads planned for tier two cities, railways and freight corridors coming up, cost-efficient movement of goods would push growth of capital goods besides having a trickledown effect of infrastructure spend.

Growing Middle Class


executive summary

Infrastructure

PowerSector

The Indian government has announced a massive $376.53 billion investment in infrastructure over a period of three years, which entails $120.49 billion for developing 27 industrial clusters and an additional $75.30 billion for road, railway and port connectivity ventures. In 2016, India climbed 19 places in World Bank's Logistics Performance Index (LPI), to an impressive 35th position amongst 160 countries.The government is further planning to enhance regional connectivity by setting up 50 new airports in the next three years; at least 10 would be operational in 2017. There remains a huge gap between potential and current demand in this sector, and the prospects and possibilities of growth of infrastructure market are huge.

Consistent and abundant power is one of the most critical components for decisive economic growth. India's power sector is believed to one of the most diversified one - sources vary from coal, natural gas, oil, nuclear power to non-conventional sources such as wind, solar, agricultural and domestic waste. The sector is witnessing a transformation and has redefined the

industry outlook. From the investment scenario, the industry has attracted $10.48 billion in Foreign Direct Investment (FDI) from 2000-2016. Furthermore, the government has identified power sector as a medium to promote sustained industrial growth. This sector is poised for further growth in 2017, as it carries the potential to attract over $220 billion in next 4-5years.

The Indian defence sector is likely to carry forward the growth momentum in 2017, that it witnessed in the previous years. India in 2016 became the fourth largest spender in defense. The government's special drive to defense manufacturing, in sync with the 'Make in India' campaign, has attracted the attention of major global defence firms. The government has liberalized up the sector by increasing the FDI cap in defence to 49%. The defence market is estimated to become $620 billion by 2022. Furthermore, around $130 billion worth of contracts are projected to be awarded locally. Major industrial organizations such as the Tatas, the Mahindras, the Hero group, Anil Ambani's ADAG, Mukesh Ambani's Reliance Industries, Bharat Forge and the Hinduja group have already invested capital in this sector.

Defense Sector

Sectors with potential for growth


executive summary

Geopolitical

Risk

Socio-economic

Risk

Technology

Risk

Economic

Risk

Safety

Risk

Environmental

Risk

Cross-border Terrorism

Insurgency in Northeast

Unrest in J&K

Interstate Conflicts

Islamic State Threat

Electoral Violence

Center State Relations

Public Protests

Women Safety

Communal Conflicts

Crime

Religious Intolerance

Corruption

Maoism

Caste based Violence

Internet of Things

Ransomware

Cyber Attacks

DDOS Attacks

Cyber Terrorism

Mega Data Breaches

Fiscal Deficit

Demonitization

Oil Price Volatility

Workforce Issues

Energy Security

Complex Taxation

Bank Frauds

Currency Fluctuation

Structural Safety

Fire & Industrial Safety

Food & Water Safety

Rail Safety

Road Safety

Natural Hazards

Air Pollution

Waste Disposal

Bio-diversity Loss

Water Scarcity

Business Process Compromise

Augmented Reality

Pandemics

GEOPOLITICAL

RISK

IMP

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LIKELIHOOD

1

2

3

4

5

1 2 3 4 5

Islamic StateThreat

InterstateConflict

Cross-borderTerrorism

Insurgencyin Northeast

Electoral Violence

PublicProtests

Unrest in J & K

Center StateRelations

India will remain at risk from state sponsored cross-border terrorism; this

would, for the most part, be confined to the state of J&K. In West Bengal and in

some states of Northeast India, growing radicalisation will be a cause of concern. Left Wing Extremism will see a further

decline across all affected states.

- Maj Gen Dhruv C Katoch, SM, VSMEditor: SALUTE Magazine

Former Director, CLAWS


Geopolitical Risks

0 2 4 6 8 10

Cross-border Terrorism

Insurgency in North East

Inter-state Conflict

Public Protests

Islamic State Threat

Center State Relations

Electoral Violence

Unrest in J&K

2017 2016


Cross-border Terrorism For half a decade now, the northern state of Jammu and Kashmir has been witnessing the most number of cross border terrorist strikes while being marred with the highest number of casualties. In 2016, the worst attack took place at Uri (Baramulla), where four heavily armed terrorists attacked an army camp that resulted in the death of seventeen Indian Army personnel.

Pakistani forces have consistently sheltered militant groups and the current hostility between the two countries is likely to provoke a rise in insurgency across the Line of Control (LoC). The Minister of State of Home Affairs confirmed the claim that an estimated two hundred active terrorists groups operate in Jammu and Kashmir, with 105 of them having infiltrated in 2016 alone. Between January and November 2016, Indian security forces have killed 148 terrorists, the most since 2010. However, 74 security personnel too have lost their lives, the highest such fatalities in a single year since 2009.

Cross border terrorism is on the rise, especially post April–May since the melting of snow at the mountain passes makes it easier for militants to cross over. The unrest in Jammu and Kashmir

seen earlier this year may incite anti-nationalism amongst a section of the local population, which can increase the likelihood of infiltration incidents. On the Punjab and Rajasthan front, the vast border region makes monitoring these swaths of land challenging. Moreover terrorist outfits have used the relatively porous borders with Bangladesh and Nepal to enter the country.

Geopolitical Risks

140

120

100

80

60

40

20

0

2013 2014 2015 2016

LOC IB Total

250

200

150

100

50

0

Ceasefire agreement violations 2013-2016

Source: SATP


including the National Human Rights Commission. An all-party meet chaired by the Union Home Ministry and the Prime Minister failed to come to a consensus regarding the removal of the Armed Forces (Special Powers) Acts (AFSPA) in J&K. While the curfew was lifted in most regions by early October, several incidents of unrest marred the following months.

Geopolitical Risks

Unrest in Jammu & Kashmir2016 saw a record growth in homegrown militancy and radicalization of the Kashmiri population. The coalition of the Peoples Democratic Party (PDP) and Bharatiya Janata Party (BJP) in Kashmir and Jammu regions respectively was viewed in a negative light by many Kashmiris. This has led to a growing influence of the Hizbul Mujahideen amongst the Muslim youth. The death of Burhan Wani, commander of Hizbul Mujahideen, during a planned security forces operation in July triggered a large-scale mobilization of Kashmiri youth against the government machinery. Protests erupted in various parts of Kashmir, prompting an additional deployment of security personnel. There was a complete breakdown in law and order, especially on the day of Wani's funeral, where over 200,000 people attended his last rites.An unprecedented curfew of 53 days was observed in ten districts of the Valley.

An estimated 85 civilians were killed and many more left injured in clashes with security personnel. Around 1,274 CRPF personnel and 2,747 police personnel were injured in the clashes. Over 32 installations were set ablaze by protestors. The use of shotguns ('pellet' guns) by CRPF and State Police resulted in increased eye injuries and was condemned by various organizations,

300

250

200

150

100

50

02013 2014 2015 2016

20

61

100

163

113110

181

260

174

193

3220

13

5141

84

Civilian Fatalities Security Forces FatalitiesTerrorist Fatalities Total Fatalities

Source: SATP

Fatalities in terrorist related violence within Jammu & Kashmir


In July 2016, over 20 individuals were reported missing from Palakkad in Kerela. A Daesh operative, Subahani Haja Moideen, confirmed the presence of a Maharashtra based couple in Iraq. Syrian Arab Army sources have confirmed a surge in the number of Indian fighters, who have lost their lives in Palmyra, Syria. Individuals pledging allegiance to Daesh have been arrested in Hyderabad, Hoogly and Kannur, where further investigations revealed that concrete plans and logistics were in place to carry out attacks and assassinations.

Daesh has also gained a strategic foothold due to allegiance of groups such as the Indian Mujahideen (IM) and Ansar-ut Tawhid fi Bilad al-Hind, having similar Salafist ideology. The Kashmir issue has invited the ire of Daesh, as through its online magazine, Dabiq, it has called for Kashmir to be included in the Caliphate. Army officials have warned of its increasing influencing on the Kashmiri youth after Daesh black flags were displayed in Srinagar.

Geopolitical Risks

Islamic State Threat in IndiaThe increasing number of attacks attributed to the Islamic State in neighboring Pakistan, Afghanistan and Bangladesh has established the fact that the Caliphate is focused on spreading its physical presence in South Asia. India has by and large been free of IS attacks, however recent developments within India and abroad have increased the IS ('Daesh') threat in India.

The southern parts of the country are more vulnerable to Daesh ideology, since a large portion of its migrant population works in West Asian countries. In 2016 the National Intelligence Agency referred to a total of 50 individuals as Daesh sympathizers and supporters. Out of which, 11 were from Maharashtra, 11 from Telangana, 7 from Karnataka, 4 from Uttarakhand, 6 from Kerela, 2 from West Bengal, 2 from Uttar Pradesh, 2 from Bihar, 2 from Tamil Nadu and 1 each from Rajasthan, Delhi, Jammu and Kashmir, Bihar and Madhya Pradesh. There has been confirmation of Indian citizens travelling to Syria and Iraq to join the Islamic State, emphasizing on its increasing influence in India.


Geopolitical Risks

Key Islamic State arrests in India

AndhraPradesh

ArunachalPradesh

Assam

Bihar

Chhattisgarh

Goa

Gujarat

Haryana

Himachal Pradesh

Jammu & Kashmir

Jharkhand

Karnataka

Kerala

Madhya Pradesh

Maharashtra

ManipurMeghalaya

Mizoram

Nagaland

Orissa

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

Uttar Pradesh

Uttarakhand

WestBengal

Delhi

Telangana

February 6th – Two alleged IS operatives arrested in Delhi and Silchar

November 17th – Alleged IS operative arrested in Sikar. A Kashmir link connected to the Hyderabad module was uncovered

§May 23rd – Two Kalyan youths who were promoted to head IS operations in India were arrested in Thane.§July 12th – A Parbhani based IS module

was intercepted after an arrest by an IS recruit in Parbhani.§July 23rd – A suspected IS recruit was

arrested in Kalyan on charges of carrying out attacks. Another individual with links to Islamic Research Foundation and IS was arrested in Navi Mumbai

February 4th – Indian Mujahideen connection in IS Recruitment within Bhatkal

§July 8th – 20 people reported missing from Palakkad and are believed to have joint IS in Syria.§October 2nd – Six individuals were arrested

on charges of terrorism with links to IS in Kannur

February 5th – Key arrest of an IS instigator in Hardoi

§1st June- An engineering student was arrested in Hoogly with links to IS and for plotting to assassinate an MLA§July 5th- Suspected terrorist with links to IS

and Bangladeshi terror group JMB arrested at Bardhaman. Another IS operative was arrested at Labhpur

February 1st 2016 - IS sympathizer arrested in Bhopal

June 29th – 11 suspected individuals with links to IS detained by NIA. Explosives and ammunitions were also recovered

§October 6th – Key arrest of an IS fighter who fought in Iraq and Syria arrested in Tirunelvel§October 12th – Three suspected IS

sympathizers arrested in Coimbatore

Source: MitKat Advisory Services

The trans-border linkages that these insurgent groups have, and strategic alliances among them, have acted as force multipliers and have made the conflict dynamics all the more intricate. With demands of these insurgent groups ranging from secession to autonomy and the right to self-determination; and a plethora of ethnic groups clamoring for special rights and the protection of their distinct identity, the region is bound to remain turbulent.


Geopolitical Risks

Insurgency in the North-East StatesNortheast region of India continues to witness insurgent activities, with Assam, Manipur and Meghalaya recording the highest number of casualties. Reportedly, in 2016 alone there have been 153 fatalities of which 13 were security personnel. Adding to this, the demonetization drive by the central government has left several groups in the region with no legitimate currency to fund their operations. Resultantly, militant groups are compensating by aiding drug smugglers from across the border and indulging in extortion activities.

There is a growing concern regarding the infiltration of Islamic militants into Assam and Meghalaya from Bangladesh, posing as refugees and illegal immigrants. June 2016, the National Register of Citizens (NRC) investigation uncovered over 27,000 illegal immigrants in Dhubri, Assam, alone. The Assam government has been working on a program called “Detect-Delete-Deport”. This move has however hurt the sentiments of several Muslims, including religious heads. This sentiment could be an ideal breeding ground for recruiting Muslims into extremist organizations such as the JMB and HUJI-B.

Arunachal Pradesh

Assam

Nagaland

Manipur

MizoramTripura

Meghalaya

84

3331

6

9

Source: SATP

Number of Fatalities in India’s Northeast - 2016


Maharashtra, the Maratha community had taken out large scale silent protests to advocate an increase in reservation for the community in educational institutes and government jobs. Members of the Christian community also carried out silent protests in Delhi, West Bengal and Odisha to protest persecution by various fundamentalist groups.

Protests over Natural Resources: The southern state of Karnataka and its capital Bengaluru witnessed one of the most disruptive civilian protests of 2016. Violent demonstrations during August-September, 2016, were over a Supreme Court verdict directing Karnataka state to release water from the Cauvery River to the neighboring state of Tamil Nadu. There was severe disruption to businesses, mainly in Bengaluru, as well as blockade of key highways and roadways.

Public protests often arise out of genuine grievances, but get hijacked by local politics and vested interest groups. It is likely that protests over some or all of these issues could recur in 2017, as some of these disputes largely remain unresolved.

Geopolitical Risks

Public ProtestsPolitical parties and their affiliate groups along with student unions have also contributed significantly to the protests in 2016. These protests are significant in terms of their number of participants, as well as their impact.

Student Protests: The arrest of Kanhaiya Kumar, Student Union leader of Jawaharlal Nehru University (JNU), and the subsequent linking of these protests to the ABVP (student wing of the BJP) had prompted protests by students across major universities. JNU was once again rocked by protests following the case of a missing student, Najeeb Ahmed. Caste disputes within universities have also sparked protests, as seen in the death of a post-doctoral Dalit student in the University of Hyderabad.

Religious & Caste based Protests: The Gau Rakshak (cow protection) campaign has advocated the beef ban, persecuted scores of Muslims and Dalits, especially in Gujarat and Haryana, and led to protests across the country as well as at the national capital, New Delhi. The Jat agitation in Haryana (demanding reservation in government jobs) resulted in open fire on protestors by the police forces, killing one individual. In


This is linked to another sensitive issue in Punjab, that is the alleged seizure of farmlands for building the SYL canal. Interstate conflicts are exacerbated by identity politics along the lines of differences in culture, language and political interests. Adaptation of businesses in various regions demands the understanding of these inherent divisions amongst states.

Geopolitical Risks

Interstate Conflicts2016 saw extreme tensions between neighboring states with political parties capitalizing on the discord. Land related disputed have occurred on a frequent basis in the North-Eastern States, especially across the border of Assam and Nagaland.

The Cauvery River water dispute following the verdict of the Supreme Court in August–September, 2016, triggered massive disruptive demonstrations in Karnataka and resulted in large-scale disruption to business and daily life. The protests in Karnataka were so severely violent that curfew had to be imposed in Bengaluru that continued for a number of days.

Water again became the point of contention between Chhattisgarh and Odisha. The alleged misdistribution of the Mahanadi waters by Chhattisgarh, led to political unrest on both the sides. BJD party workers staged “Save Mahanadi” protests in western Odisha and disrupted rail traffic. Another such conflict involving the states of Punjab, Rajasthan and Haryana threatens to escalate to a flashpoint due to the water sharing directives over Sutlej River and the stalled construction of the Sutlej – Yamuna Link (SYL) canal. Punjab unilaterally cancelled a decade-old water-sharing pact with Haryana and Rajasthan, forcing the Supreme Court to impose a stay order.

Major Inter-State River Disputes

IndusIndus

Jhelum chenab

Ravi

BeasSatluj

Luni

Saraswati Chambal

Yamuna

Ganga

GhagharaKosi

Ganga

Brahmaputra

Narmada

Tapi

Godavari

BhimaKrishna Krishna

KaveriPayaswani

Mahanadi

Ravi & Beas

State concernedPunjab, Haryana, Rajasthan

Narmada

State concernedMp, Gujarat, Maharashtra, Rajasthan

Madel/Mandovi/

Mahadayi

State concernedGoa, Karnataka, Maharashtra

Krishna

State concernedMaharashtra, Andhra Pradesh (AP), Karnataka

Periyar

State concernedTN, Kerala

Godavari

(Babhali Barrage)

State concernedMaharashtra, AP

Vamasadhara

State concernedAP, Odisha

Godavari

State concernedMaharashtra, AP,

Karnataka, Odisha, Madhya

Pradesh (MP)



project in Andhra Pradesh and Mahanadi water dispute with Chhattisgarh. In response, the Central Government has downplayed these requests often siding with the Andhra Pradesh and Chhattisgarh governments. Similar tensions are brewing between the Telangana State Government and the Centre regarding a decrease in power distribution between Telangana and Andhra Pradesh.

Another important dispute between the central government and state governments is the implementation of the GST Bill. Already nine discussions have been carried out by the Finance Ministry and the Sates. The States' primary demand is to seek powers that control and administer levies. Another dispute is the corpus to be created for compensating states for loss of revenue from the GST rollout. This is an important issue as several non-BJP states have claimed that the NDA led centre has not treated this issue fairly. Several protests led by states such as West Bengal, Uttar Pradesh, Kerela and Telangana have occurred over the last 6 months. Protests from several officers of the Commercial Taxes department from all states was also witnessed in Delhi. The ramifications of the GST dispute will depend on the negotiation by the GST council and the States

Geopolitical Risks

Centre–State RelationsThe ongoing dispute between the Aam Admi Party (AAP) that governs National Capital Region, Delhi, and the Centre has been in the spotlight throughout 2016. The key concern revolves around the appointment of 21 AAP MLA's to the post of Parliamentary Secretaries. The Central government objects to this, demanding disqualification of the posts on the ground of 'office of profit'. In June 2016, the President withheld ascent to a Bill passed by the Delhi Government. The Bill proposed to exempt the post of Parliamentary Secretary from the purview of an 'office of profit', with retrospective effect.

The Demonetization Bill has further created discord between the Centre and non-NDA/non-BJP state governments, spearheaded by the West Bengal Chief Minister Mamata Banerjee (Trinamool Congress), Delhi government (AAP) and Uttar Pradesh Government (Samajwadi Party SP). Large-scale protests have been conducted within these states, with opposition parties attempting to mount pressure on the centre. The Central Government has been accused of neglecting certain infrastructure concerns of states, leading to a breakdown in Centre-State relations. The Government of Odisha has repeatedly asked the Centre to intervene in the Polavaram dam


Geopolitical Risks

Indo – Nepal RelationsThe promulgation of the Constitution of Nepal in 2015, the subsequent protests, and border blockade in 2015 have been a major setback in Indo-Nepal relationship.

The Madhesi and Tharu minority agitation in Nepal has been of concern due to the close ties these communities share with India. A key grievance is that the constitution restricts the representation of the Madhesi and Tharu percentage elected by proportional representation to 45 per cent. This has led to large-scale violent protests by the Madhesi and Tharu communities. A change in leadership of the Nepal government in August 2016 brought the former Maoist rebel leader Pushpa Kamal Dahal (also known as Prachanda) to the post of the Prime Minister. This government forms a coalition government between the Maoists and the Nepali Congress. Prachanda has taken steps to ensure that the Constitutional Amendment includes the redrawing of provinces taking into consideration the demands from the Madhesis, Tharus and Janajatis.

2017 will see five states going into assembly elections namely, Uttar Pradesh, Punjab, Goa, Uttarakhand and Manipur. The recent political unrest, especially in Punjab and Uttar Pradesh, has high potential for civil unrest and poll–related violence. Insurgency in Manipur could also disrupt peaceful polls. The United National Liberation Front of Western South East Asia (UNLFW) can capitalize on these crucial days to hit strategic security posts, since a large number of security personnel will be deployed at polling stations.

The states of Gujarat and Himachal Pradesh will witness state assembly elections during November and December of 2017. There is probability of electoral violence due to clashes between rival political parties, especially in Gujarat. There is also a risk of isolated incidents of unrest, following the announcement of election results.

Electoral Violence


Geopolitical Risks

Indo – Bangladesh RelationsIndia has lately shared close ties with Bangladesh and 2016 saw cordial relations between the two nations. Talks have resulted in India being allowed to use the seaports of Chittagong and Mongla, which can greatly benefit Indian trade in the Far East. Both the countries have recently signed MoU's in transport, energy, trade, finance and security.

Despite official support to Indian policies by the Bangladeshi Government, there is an increasing and worrying trend of radicalism in Bangladesh. Individuals belonging to religious minorities, including Hindus and Christians, have been persecuted in large numbers. Beginning with the destruction of 10 Hindu temples and several homes in the Brahmanbaria district (October, 2016), the violence progressed to sustained attacks on the indigenous Santals in Gaibandha district (November, 2016), subjecting minorities to communal violence. A second wave of attacks in Brahmanbaria spawned sectarian violence against Hindus in Sirajganj and Jhalakathi districts. Moreover, the propagation of radical Islamic content on social media instigating educated Bangladeshi youths in support of terror outfits like Jamaat-ul-Mujahideen and the Islamic State, is a rising security concern for India.

After Prachanda's visit to India in September 2016, ties have significantly improved and both nations have signed bilateral agreements on infrastructure in the Tarai region and post-earthquake rehabilitation. The decisive factor in determining India – Nepal ties in 2017 will be Prachanda's ability to pacify the opposition parties as well as the Madhesi groups, in drafting a suitable Constitutional amendment bill.

Another important aspect influencing India-Nepal relations is the veering of Nepal towards China. In 2016, Nepal and China has signed 10 MoUs, including Nepal's first ever transit and transportation treaty. This treaty decreases Nepal's dependency on Indian sea–port for third-country trade links. Nepal and China have further signed agreements for construction of a regional airport in Nepal and free trade agreements to boost Nepal-China trade. Increase in Nepal's bilateral relationships with China poses as a security concern for India.


Geopolitical Risks

India–Pakistan relations have been strained historically; 2016 saw a further breakdown in diplomatic relations due to the Pakistan sponsored terror strikes at Uri, Pathankot and Nagrota. Cross border firings have also seen a significant rise since June, 2016, with over 300 ceasefire agreement violations targeting Army and BSF posts at the International Border and Line of Control. The most serious violation took place on the 1st of November, when 8 civilians, including two children and four women, were killed and 22 others were injured in five sectors of Jammu and Kashmir.

The September 18th Uri attacks led to a hostile build-up in diplomatic ties, starting with the cancellation of the 19th SAARC summit that was to be held in November at Islamabad. Bangladesh, Afghanistan and Bhutan followed suit in support of India's stand and its unwillingness to participate. Furthermore, both states have halted diplomatic relations after deporting of officials of High Commissions in Islamabad and New Delhi.

Indo – Pakistan RelationsMuch of the escalation in tensions can be attributed to the Pakistani Army led by General Raheel Sharif. Thus the appointment of General Bajwa by Prime Minister Nawaz Sharif as the new Army Chief, could be a positive step in restoring ties. It can create space for the political leadership to resume talks with India and draft a fresh ceasefire agreement.

As far as Kashmir is concerned, there is not likely to be any radical change in the policy of the Pakistani Army under General Bajwa. Pakistan has pressed for a United Nations resolution over the Kashmir issue and has openly stated that it would continue to fuel the Kashmir agitation, unless the resolution is passed. The terrorist attacks and cross border violations, which have targeted several civilian areas have ensured that diplomatic relations remain strained, and may deteriorate further in 2017.


Geopolitical Risks

India Conflict Map

Andhra Pradesh

Arunachal Pradesh

Assam

Bihar

ChhattisgarhGujarat

Haryana

Himachal Pradesh

Jammu & Kashmir

Jharkhand

Karnataka

Kerala

Madhya Pradesh

Maharashtra

Manipur

Meghalaya

Mizoram

Nagaland

Orissa

Punjab

Rajasthan

Sikkim

Tamil Nadu

Tripura

Uttar Pradesh

Uttarakhand

West Bengal

Delhi

Telangana

Jammu & Kashmir

LeT, JeM, HuM, HM, UJC, JuM

Madhya Pradesh

CPI (Maoists)

Chhattisgarh

CPI (Maoists)

Maharashtra

CPI (Maoists)

Karnataka

CPI (Maoists)

Kerala

CPI (Maoists)

Tamil Nadu

CPI (Maoists)

Telangana

CPI (Maoists)

Andhra Pradesh

CPI (Maoists) Odisha

CPI (Maoists)

West Bengal

CPI (Maoists) JMB

Jharkhand

CPI (Maoists), TPC, PLFI, JMB

Tripura

ATTF, NLFT

Uttar Pradesh

CPI (Maoists)

Bihar

CPI (Maoists)

Meghalaya

ANLA, ASAK, ANLCA, ATF, ANUF, HNLC,

LAEF, GNLA

Uttarakhand

CPI (Maoists)

Assam

ULFA(I), JMB, NDFB-(S),CPI (Maoists), MULTA,

KPLT, PDCK

Arunachal Pradesh

NSCN(IM), NSCN(K),NLCT, TLNLT

Nagaland

FGN-NA, FGN-A, NSCN(K), NSCN(R),

NNC-NA, NNC-Accordist

Manipur

CorCom, MNRF, NSCN-IM, NSCN-K, PULF, ZUF, PLA, MNPF, KCP, KCP-PM, KCP-

MJC, KCP-Tamganbaon, KCP-MC, KCP-Poirei Lup, KCP-Poirei Meitei, KCP-Mangal,

KCP-N, KCP-Nandu, PLA, PREPAK, PREPAK-Pro, KYKL, UNLF

Mizoram

HPC(D)


SOCIO-ECONOMICS

RISK


Socio-Economic RisksIM

PA

CT

LIKELIHOOD

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5

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CommunalConflicts

ReligiousIntolerance

Maoism

Crime

Castebased violence

PoliticalUnrest

WomenSafety

Corruption

Social risks are ever-present, and have become a prominent area of concern in

India. These risks also negatively impact businesses, making them susceptible to

social and political challenges and furthermore, unsustainable in the long

run. It is imperative for private sector leaders and civil society organizations to

become key collaborators in bringing about innovation for developing new

solutions.

- Oxfam

0 5 10 15 20 25

Maoism

Crime

Women Safety

Communal Conflicts

Religious Intolerance

Corruption

Caste based Violence

2017 2016


The Maoist movement, primarily spearheaded by the CPI (Maoist), has managed to remain strong enough to challenge the security forces. The year 2016 witnessed a decline in Maoist-related violence as compared to the previous year. This decline can be attributed to several reasons such as greater deployment of security personnel in the affected regions, loss of cadres and leaders, desertions and surrender, and fatigue among the Maoists. Maoists are currently believed to be operating in around 118 districts in 17 States of India. Out of these states, Jharkhand, Chhattisgarh, Bihar, and Orissa are the worst affected states.

Demonetization has created a major setback in the activities of Maoists, as it has affected their tactical capabilities to procure firearms, ammunition, essential commodities and wages. There was an increase in extortion activities, harassing of locals and using them as proxies to appropriate cash.

On December, 2016 Maoist torched 69 trucks and three JCBs at Surjagad Lloyd Metal's iron mine in Maharashtra's Gadchiroli district. This is the biggest arson attack in Maoist insurgency-

Operations by security forces along the Odisha – Andhra hit

areas.

Pradesh border in late October, in which 24 Maoists were killed, showed signs that the Maoists were looking to consolidate lost ground in these regions.

Sustained operations by the security forces, coupled with government policies, has meant that states like West Bengal, Maharashtra, Odisha, Andhra Pradesh, Telangana and Bihar have seen a significant reduction in the Maoists' activities. However, the movement remains active in parts of Jharkhand and Chhattisgarh, and post October 2016 there was an increase in activities.

Maoists have shown growing presence in the tri-junction area of Kerala, Karnataka and Tamil Nadu in South India; an area where security forces have, in recent years, seen a growing footprint of Maoists. It is likely that the Maoist threat will remain as one of the biggest internal security threat to the country in the coming year as well. As the security forces intensify operations in the Maoist affected areas, it is unlikely that the insurgents will enhance their operational capability outside their stronghold areas. However, there is a low but credible probability of one-off attacks in some small urban centres of the affected states.

Maoism

Socio-Economic Risks



Crime Against WomenOver the past few years, incidents of crime against women have been on the rise in India. Cities such as Delhi, Gurgaon, Mumbai, Pune, Bengaluru, Hyderabad, Chennai and Pune have witnessed an increase in the number of cases of harassment and molestation. The year 2016 witnessed higher rate of crime against women, but it could also be that more women are

2013 2014 2015 20160

50

100

150

200

250

300

350

400

450

500

159

111

151

421

128

8799

314

93

55

101

257

120

66

244

430

Civilian Fatalities Security Forces Casualities

Maoist Casualties Total

Fatalities due to Left Wing Violence

Source: SATP

confident enough to report crimes against them. Exposure to media over the last decade has also led to better reporting of crimes.

However, conviction rates are poor because of the poor judicial system, faulty methods of collecting forensic evidences, lack of fast-track courts and speedy trials and limited use of modern technology. This is due to the stigma attached to the victim rather than the perpetrator of the crime, who often gets away.Absence of fast-track courts and speedy trials are among the major challenges in dealing with rape cases. The quality of governance in states is key to understanding the huge variation in incidence of serious crimes against women.

The government has issued a regulation requiring all mobile phones sold in the country from 2017 to include a panic button and Government of India has also launched mobile applications with ”SOS” buttons. From 2018, phones are set to include in-built GPS navigation systems. However, technology can at best be a facilitator; and not a replacement for better social awareness, and robust government machinery.



AndhraPradesh

ArunachalPradesh

Assam

Bihar

Chhattisgarh

Goa

Gujarat

Haryana

Himachal Pradesh

Jammu & Kashmir

Jharkhand

Karnataka

Kerala

Madhya Pradesh

Maharashtra

ManipurMeghalaya

Mizoram

Nagaland

Orissa

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

Uttar Pradesh

Uttarakhand

WestBengal

Delhi

Telangana

3363

1289

5291

944617104

35527

Chandigarh5291

28165

7762

31126

365

365

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24135

1453

13891

6518

5720

15135

15931

17144

33218

53

23258334

384

90

266

1581267

5847

Dadra & Nagar Haveli

25

Daman & Diu28


Given India's multi-ethnic composition where communities of various religions and castes live together, the country's history is no stranger to communal conflicts. Communal tension often prevails between the Hindu and Muslim communities, and are generally sparked-off due to some local issue which then takes on a communal colour. Groups with political affiliations often stoke tensions and incite rioters, to further their own agenda.

India's demographic diversity and tensions between various communities are conducive to communal violence at short notice. Such violence can take place around sensitive dates or events, as well as in known conflict-prone areas. Several incidents of communal violence have been reported in 2016. However there has been a distinct trend in these instances.

Political and caste based instances of communal clashes have been reported in West Bengal, Uttar Pradesh, Bihar, Gujarat and Madhya Pradesh at regular intervals. Rajasthan, Gujarat, Uttar Pradesh, Maharashtra have seen “agrarian riots” and the National Crime Records Bureau (NCRB) has projected an increase in this categorization of communal tensions in 2017. This encompasses communal tensions within the agrarian

Communal ConflictsCrime against women across India


section of Indian society and includes discontent over land acquisition; caste based rioting as well as demands for reservation and discontent among economic policies.Uttar Pradesh, Karnataka and Maharashtra reported the most number of instances; but West Bengal and Assam also remain communally sensitive. In October 2016, in West Bengal, several areas such as Hazinagar in North 24 Paraganas, Chanchal in Malda, Chandannagar in Hooghly and Kharagpur city in Paschim Medinipur, reported communal violence during the festival season of Durga Puja and Muharram. In Punjab, various developments show significant signs of growing communal tensions in the state. Several rallies were organised to protest against the desecration of the holy book of Sikhs by miscreants across the state. The latest tensions in the Northeast state of Manipur and Nagaland is centred around the division of districts and land disputes which has led to mass violence, protests and destruction of government property. The current political environment will continue to prevail in upcoming years and so there remains a high risk of communal violence in future throughout the country.


AndhraPradesh

ArunachalPradesh

Assam

Bihar

Chhattisgarh

Goa

Gujarat

Haryana

Himachal Pradesh

Jammu & Kashmir

Jharkhand

Karnataka

Kerala

Madhya Pradesh

Maharashtra

ManipurMeghalaya

Mizoram

Nagaland

Orissa

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

Uttar Pradesh

Uttarakhand

WestBengal

Delhi

Telangana


Incidents of communal conflicts 2016


2016 saw an unprecedented rise in caste politics and identity politics, across the country. Upset by the high level of reservations (in the form of affirmative action) in government jobs for various disadvantaged groups, the 'higher' castes of Kapu, Jats and Marathas undertook agitations over reservations. The year started with violent protests by the Kapu community of Andhra Pradesh in East Godavari district.

This was followed by the Jat community in Haryana in February, which nearly shutdown the state for several days, and led to the death of around 30 people and injuries to hundreds. During the violent protests, mobs set fire to vehicles, buses and commercial centres, and blocked the railway tracks near Rohtak, Haryana. The likelihood of further protests and action has increased markedly following the success of the Jats as this can now be seen as a viable way of attaining reservation status.

Another notable incident of reservation-based agitations occurred last year in Gujarat, where the Patidar community organised various demonstrations in order to gain reservation status in the OBC category. The Patidar agitation was inspired by the Jat agitation in Haryana; if successful it will inspire similar

Caste-based Violence


agitations in future. The continued lack of inclusion in the reservation system may prompt renewed protests in 2017.

Later in the year, the state of Maharashtra, saw unprecedented (but non-violent) protests by the state's dominant community, Marathas, who comprise about 32% of the state's population. The Maratha agitation gave rise to similar agitations by the Dalit, OBC and Muslim communities in the state. All these communities held protests across the state, highlighting the deep caste divides that exist in one the largest states in the country.

Maharashtra's other backward classes (OBC) and Dalits are rallying behind the Bharatiya Janata Party (BJP)-led administrations-both in the state and the centre, hoping that they will turn down two of the Maratha demands: amendments to the SC/ST Prevention of Atrocities Act and reservation for Marathas. OBC organizations have started organizing silent marches. In November, 2016 members belonging to Dalit, Adivasi and other communities held a Mahasangram Rally at Ramlila Maidan in New Delhi, to demand self-equality and rights in accordance with the constitution. Haryana holds the



dubious reputation of being the state with the highest number of Dalit killings over the past decade.In most of the cases, groups with political affiliations have previously stoked tensions and incited rioters to further their own agenda. Such mass movements also indicate the disillusionment among dominant farming communities in some of India's richest states.

Gau Rakshak related incidents 2015Gau Rakshak Related Incidents 2016

Delhi

00 22 1111 11

Haryana

11 00

Rajasthan

22 00

Gujarat

11 22

Uttar Pradesh

55 00

Madhya Pradesh

11 11

Karnataka

00 11

HimachalPradesh

00 11

Jammuand Kashmir

11 00

Jharkhand

Incidents of religious intolerance - 2016


Incidents of crime in India show a general uptrend, with the rate of crime per unit population also showing a rising trend. However, this is more likely an indication of better reportage than an actual increase in the number of crimes. Media activism and social media are also contributors to public awareness and a higher propensity to report crime.Uttar Pradesh, Haryana, Bihar and Maharashtra reported high incidences of violent crimes, although when considering the rate of violent crime per unit population, Delhi, Assam, Arunachal Pradesh, Sikkim, Haryana and Bihar show the highest number.

Incidents of petty crime in public places (like picking of pockets and theft of valuables) have decreased. On the other hand, ATM robberies and cash-van attacks have been more frequent. However, due to better CCTV's and crowd-sourced investigations, recoveries have also been higher.

To overcome enhanced security measures, more and more criminals are resorting to collusion with insiders. Criminals are more likely to use technology intensive tools rather than old and rudimentary means, in order to escape strict policing and CCTV surveillance in public places.

Crime

TECHNOLOGY

RISK


Technology Risks

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Cyber Attacks

Internet of Things

Mega DataBreaches

Cyber Terrorism

DDOS Attacks

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IMP

AC

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LIKELIHOOD

The potential of emerging technologies to disrupt the standard business models

in India is huge. While many of these disruptions will benefit governance,

business and improve the quality of life for the common man; on the other hand they may adversely affect financial and knowledge-based industry, when in the

wrong hands.

- Dr Prem ChandEx-CIO, Tech Mahindra

Business ProcessCompromiseAugmented

Reality

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Cyber crime/attacks

Cyber terrorism

Mega Data Breaches

Ransomware

Business Process Compromise

DDOS attacks

IoT

2017 2016

Augmented Reality


Technology Risks

Cyber Crime / AttacksAn increasing amount of business value and personal information worldwide are rapidly migrating into digital form, on open and globally interconnected technology platforms. As that happens, the risks from cyberattacks become increasingly daunting. It is now 20 times more likely to have money stolen online by a criminal overseas than by a pickpocket or mugger in the street. With increasing internet penetration, cybercrimes have also increased in the last few years. Between 2011 and 2015, the number of cybercrimes registered in the country has increased 5 times. Maharashtra & Uttar Pradesh alone accounted for a third of these crimes.

Statistics indicate that 60% of small enterprises go out of business within 6 months of a cyber-attack. As per the report by Symantec and the National Cyber Security Alliance, most SMEs have no security policy, only 50% have basic cyber-security, 40% don't back up off site, and only 25% get a third party to test them. Most business owners have simply ignored the challenge of cyber-security thinking, somehow it was simply going to go away. Because of this, these businesses have constantly been targeted.

Cybercrime is big business. Over the last few years, cyber criminals have been re-investing much of the ill-gotten gains into developing more sophisticated capabilities, using more advanced technologies.

Despite ongoing innovation in the cyber security industry, much of the effort remains reactive. Cyber security needs to become more proactive, rather than reactive.

2011 2012 2013 2014 2015 2016

Cases Registered Persons Arrested

Source: NCRB

Cyber crime in India


Technology Risks

Augmented RealityPokémon Go turned into a worldwide phenomenon and brought to light the new threats of Augmented Reality (AR) games. The physical issues included cases of people who were hurt, mugged or even killed themselves, just because they were too caught up in the augmented reality and weren't paying attention to the real world. There were the cyber security and privacy issues born from the melding with the real world: the images and audio registered by our smartphone, location tracking, and all the rest of the information that we willingly give away about ourselves.

Cyber security company RiskIQ discovered 215 rogue versions of Pokémon Go that downloaded malware and ransomware on the Google Play app store.

However, experts have opposing notions of what AR is going to be. With the advent of Google Glass, Microsoft HoloLens and the world's favorite Snapchat, AR is here to stay since simplicity rather than ambition, is where it has proved itself.

Cyber Terrorism“Cyber terrorism” is a contested term that can erroneously include acts of “hacktivism” and internet vandalism which do not directly threaten the lives and livelihoods of their victims. Cyber terrorism threatens us the most at the vulnerable points where our physical and virtual worlds converge. In Iran, the Stuxnet virus proved to the world that malware infections can disrupt the operations at their nuclear facilities. In Ukraine, cyber-attacks on their energy provider resulted in deliberate blackouts. In the United States, Cesar Cerrudo, a security researcher, was able to take control and manipulate traffic systems by exploiting vulnerabilities in the traffic control devices.

India lacks the required techno-legal framework, which can help in fighting against cybercrimes and sophisticated national and international cyber-attacks. During the India – UK Tech Summit, British Prime Minister Theresa May and Prime Minister Narendra Modi decided to strengthen the relationship between the two countries by negotiating a cyber framework to counter cyber terrorism. An MoU was also signed between India and United Arab Emirates (UAE) on Technical Cooperation in Cyber Space and Combating Cyber-Crime.

80

Anthem

25

Office ofPersonnel

Management (US)

500

Yahoo

Bangladesh Bank

81

#No. of Million Records Stolen

Ashley Madison

37

PanamaPapers

15

Experian Plc


Technology Risks

Hackers used malware that they injected into Hitachi Payment Services' systems to steal 3.2 million debit cards' details in India. The Yahoo! breach of 2016, exposed 500 million Yahoo! accounts. The data breaches during the US Presidential elections highlighted the possibilities of state-sponsored cyber-attacks.

The latest Verizon Data Breach Industry Report stated that: 93% of the attacks cyber criminals take minutes or even less to compromise systems; 4 out of 5 victims don't realize they were attacked for weeks or longer; 7% of the cases, the breach goes undetected for more than a year; 63% of the data breaches were caused by a weak, default or stolen password.

The top data breach trends anticipated in 2017 by Experian, a Global Information Services company are:

Aftershocks of cyber-breachesNation – State cyber-attacksHealthcare sectors as the new targetsPayment based attacksInternational data breaches

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Mega Data Breaches

RansomwareIn 2017, ransomware will become an increasingly commonplace component of data breaches. Cybercriminals start with stealing confidential data to sell in underground markets, further installing ransomware to hold data servers hostage, and double their profit. Mobile ransomware will likely follow the same trajectory as desktop ransomware given how the mobile user


Major global security breaches


Technology Risks

According to Business Insider, there will be more than 24 billion IoT devices on Earth by 2020. That's approximately four devices for every person on the planet. And as we approach that point, $6 billion will flow into IoT solutions, including application development, device hardware, system integration, data storage, security, and connectivity. But that will be money well spent, as those investments will generate $13 trillion by 2025. Businesses will be the top adopter of IoT solutions because they will use IoT to:

Lower operating costsIncrease productivityExpand to new markets or develop new product offerings.

Governments will be the second-largest adopters, while consumers will be the group least transformed by the IoT. The Department of Electronics and Information Technology (DeitY) has drafted India's first ''Internet of Things Policy. This policy has been developed with an aim to make the IoT industry in India to reach the mark of USD 15 billion by 2020 by increasing the number of connected devices in India from the current 200 million to 2.7 billion by 2020. Two major efforts taken by the Government of India which will lead to a rapid growth of IoT

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Internet of Thingsbase is now a viable, untapped target. Non - desktop computing terminals like point-of-sale (PoS) systems or ATMs may also suffer extortion-type attacks. It is now clear to enterprises that suffering a ransomware attack has become a realistic possibility and an expensive business disruption. While there is no silver bullet that can protect potential targets from ransomware attacks 100% of the time, it is best to block the threat at its source, via Web or email gateway solutions.

Infected web page

Malware

Ransomware

Malware that encrypts data on the PC, blocks user out and asks for a ransom to provide the

decryption key

Infected linkrecieved in email

OU

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*

Internet Explore

Firefox

Chrome

Flash

Adobe Reader

>

>

>

>

>

Ransomware



Technology Risks

industry are Smart Cities project and Digital India Program.

With IoT penetrating various sectors, there are several emerging trends that are slated to be on a rise:

Be it cloud – analytics applications, supply chain, smart energy & water management implementation, connected vehicle, beacon based application, emerging low power wireless technologies and manufacturing & logistics, the future of IoT is inordinate.As IoT introduces efficiencies into industrial environments like manufacturing and energy generation, threat actors will build on the effectiveness of the BlackEnergy attacks to further their own ends. Together with the significant increase in the number of supervisory control and data acquisition (SCADA) system vulnerabilities, the migration to IIoT will introduce unprecedented dangers and risks to organizations and affected consumers in 2017.These dangers can be proactively addressed by vendors who sell smart devices and equipment by implementing security-focused development cycles. Barring that, IoT and IIoT users must simulate these attack

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scenarios to determine and protect points of failure. An industrial plant's network defense technology must, for instance, detect and drop malicious network packets via network intrusion prevention systems (IPSs).

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The Internet of Things ecosystem



Technology Risks

DDOS attacksIn 2017, we can expect to see DDoS attacks grow, fueling the need for solutions tailored to protect against and mitigate these attacks.

Threat predictions for 2017 include:Terabit-scale attacks to become the new norm, impacting ISPs and the Internet backbone itselfNovel zero-day reflection and amplification attacks will appear with more frequency, enabling more sophisticated and targeted attacksDDoS attacks will become a top security priority, with increased disruption to businesses and government due to rising threat levels

While much of the focus in the wake of recent IoT-related DDoS attacks was put on encouraging manufacturers to install proper security controls on Internet-connected devices before they are issued, ISPs also have an important role to play in reducing the number of future DDoS attacks.

Further, best practices exist and can be leveraged to utilize ingress filtering to remove the problem of spoofed IP addresses that are widely used in reflection DDoS attacks.

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The Bangladesh Bank heist caused losses of up to US$81 million. Unlike Business Email Compromise, which relies on erroneous human behavior, the heist stemmed from a much deeper understanding of how major institutions processed financial transactions. BPC will go beyond the finance department, although fund transfers will remain its most typical endgame.

Possible scenarios include hacking into a purchase order system so cybercriminals can receive payment intended for actual vendors. Hacking into a payment delivery system can likewise lead to unauthorized fund transfers. Cybercriminals can hack into a delivery center and reroute valuable goods to a different address.

Cybercriminals staging BPC attacks will still solely go after money instead of political motives or intelligence gathering, but the methods and strategies used in these and targeted attacks will be similar. Security technologies like application control can lock down access to mission-critical terminals while endpoint protection must be able to detect malicious lateral movement. Strong policies and practices regarding social engineering must be part of an organization's culture as well.

Business Process Compromise (BPC)

ECONOMIC

RISK


Economic RisksIM

PA

CT

LIKELIHOOD

Downside risks to the Indian economy in 2017 include slower than expected

normalization from the demonetization process in Q1 2017, as well as potential

delays to the GST implementation process. Another risk is that of rising inflation due to higher raw materials

prices, particularly for oil and gas, which could force the RBI to start tightening monetary policy and dampening the

pace of economic growth.

- Rajiv BiswasAsia-Pacific Chief Economist, IHS Markit

1

2

3

4

5

1 2 3 4 5

Fiscal Deficit

Oil PriceVolatility

Complex Taxation

Energy Security

Currency Fluctuation

BankFrauds

Workforce IssuesDemonitization

0 2 4 6 8 10 12 14 16 18

Demonetization

Complex Taxation

Currency fluctuation

Fiscal Deficit

Energy Security

Oil Price volatility

Bank Frauds

Work force Issues

2017 2016


Economic Risks

DemonetisationOn 8th November 2016, India witnessed demonetization of high-value Indian currency notes. Seen as a shock-therapy move, the primary aim is to tackle black money, counterfeit currency and the shadow economy. The demonetization move neatly ties up all the initiatives of the Modi government; starting with the launch of Pradhan Mantri Jan Dhan Yojana, Aadhar and RuPay Cards, followed by Insurance and Pension schemes linked to accounts to bring financial inclusion. Economists are divided over the usefulness of the exercise and the impact it will have on the economy, whereas critics have argued that it carries little economic validation and is politically motivated.

Demonetization is the process of devaluing currency. In a surprise move by the government, the old 500 and 1000 rupee notes ceased to be legal tender. The denominations comprised of 86% of the currency in circulation.Indian economy is currently the 7th largest global market and heavily reliant on cash based transactions, 95% of the transactions by volume are in cash. The base of the economy, formed by the unbanked and informal sector, is most severely impacted. The cash crunch has resulted in loss of income and welfare for daily wage earners and small businesses in the informal sector.

India's GDP will be impacted in 2017, as the move has triggered a short-term slowdown in consumption. RBI estimated growth for the current fiscal is 7.1%, while IMF predicts 6.6%. However, even then the country is expected to outpace most other major global economies. Only 6% of the black money, held in cash, can be targeted through demonetization. The immediate impact has been and will remain for the larger part of 2017, cash liquidity and hassles for tax-paying individuals.

The move can be a leap towards inhibiting future financial wrongdoings, if the tax returns of those who make large deposits compared to their declared income is checked out meticulously.

The united Opposition is mounting pressure on the government via rallies and protests, opposing demonetization by calling it an anti-people drive. It has had a negative impact on certain sectors – small and medium enterprises, retail, automobile, real estate, transport and logistics, agriculture, and hospitality; facing a short-term slowdown as most demand is serviced through cash.


Demonetization has provided momentum to the Jan-Dhan bank accounts, with approximately $3 billion increase in deposits, boosting financial inclusion. The digitization of economy, which could have previously taken around 8-10 years, may now be achieved at a quicker rate due to demonetization. E-Commerce and the IT sector are set to experience an overall boost with an attempt to digitize services. Construction activities have decreased mainly due to cash shortage to support daily wage earners. Impact is also felt in the cement and steel industry. With nearly five states planned to hold assembly polls in 2017, the demonetization drive has forced the political parties to re-strategize their political campaigns.

With this move, the government has demonstrated its intention to execute bold decisions, as well as pave way for a shift from pre-modern to modern economy. It may lead to an increase in tax collection and the lowering of fiscal deficit in medium to long term, while the current downturn in economic activity due to reduced cash levels are likely to be limited for the first four to eight months of the year. The policy aims for long¬–term c h a n g e s ; h o w e v e r t h e i m p a c t d u e t o m i s m a n a g e d implementation is being felt in the short term.

Economic Risks

0

1

2

3

4

5

6

7

8

9

Q1 (2016) Q2 (2016) Q3 (2016) Q4 (2016) Q1 (2017) Q2 (2017)

Actual Forecast

India GDP annual growh rate and forecast

Source: MOSPI

Investment Demand

Private Consumption

Services

Industry

Agriculture

GVA at basic price

-2 0 2 4 6 8 10

GDP estimates

2016-2017 2015-2016 Source: CSO


Transparency International ranks India 76 out of 168 countries, with a score of 38, on the latest Corruption Perception Index. While India saw an improvement in its rank from previous years, its overall score remains unchanged as bribery and corruption continue to pose serious risk. Companies in India are likely to face red tape, petty corruption and bribery when dealing with public services. The World Bank Ease of Doing Business Report put 29 days as the number of days it takes to start a business, however, pointing out that India fares poorly when it comes to enforcing contracts and passing regulations. Some of the major sectors which are affected by corruption include: infrastructure and real estate; metal and mining; power and utilities sector and defence.

The Right to Information Act, 2005, aims to make the government working transparent. E-auctions of spectrum bands and coalmines have decreased scams in the mining and telecommunications sector. The Enforcement Directorate has launched an 'enquiry of records' operation at over 50 bank branches in major cities across the country to detect money laundering and hawala dealing instances through these channels.

Corruption

Economic Risks

New age crime dominates economic crime in the near future, particularly cybercrime. National Crime Records Bureau reported a 19 times increase in cybercrimes in India over the last 10 years. With India moving towards a cashless economy, the threat of cyber crimes and fraud is increasing. Regulatory changes with the introduction of Black Money (Undisclosed Foreign Income and Assets) Imposition of Tax Act, 2015, Benami Transaction (Prohibition) Amendment Bill, 2015, and Companies (Amendment) Act, 2015, measures are in place for the penalisation of prohibited and unethical business activities. With a spike in cybercrime, cyber readiness is emerging as a key concern for businesses. According to Price Waterhouse Coopers report, 56% of Indian respondents have perceived an increase in cybercrime and only 45% of organizations have trained manpower to handle cybercrime.

Concerned over the rise in complaints about unauthorized electronic transactions, the Reserve Bank of India has introduced a policy of 'zero liability' for customers in third-party frauds if they are reported within three days. S t e p p i n g u p action to check financial crimes post demonetisation, the Enforcement Directorate (ED) launched an 'enquiry of records'

Financial Crimes


operation with over 50 bank branches under the scanner to money laundering and hawala dealings. Post demonetization, bank robberies have increased in Kashmir and troubled states of India. Espionage, procurement fraud, accounting fraud, and asset misappropriations are in-organization crimes that have increased financial damage for organizations.

Top reasons contributing to fraud include diminishing ethical values, lack of control systems, bribery and corruption, technological advancements and limited employee education of fraud, amongst others. Loss recovery in cases of fraud is poor as laws governing fraud are not effective. Government efforts towards stronger enforcement and corporate role towards incorporating ethical standards is key to decrease the likelihood of fraud.

Economic Risks

In 2017, oil prices will continue to remain uncertain and volatile. World oil demand is projected to grow by 1.5 million barrel per day and hence prices are likely to stay above $50. India depends on imports to meet 80% of its oil needs, and an increase in oil prices is highly likely to effect inflation and current account deficit.

An increase in crude oil prices will result in increase in petrol and diesel prices in India, directly impacting businesses and individuals. India's oil demand is projected to increase from 4.33 million barrel per day in 2016 to 4.49 million barrel per day, straining the government's coffers. OPEC countries and Russia's plan to cut down supply in the first half of 2017 can put inflationary pressure on oil prices. Policy interventions by the Government seek to boost domestic oil and gas production.

The Hydrocarbon Exploration and Licensing Policy, 2016, offers advantages ranging from single license for exploration and production to revenue sharing model. The government is offering 46 contract areas under the Discovered Small Field Policy. New initiatives aim to deliver results in 2017, and decrease the pressure of increasing global oil prices.

Oil Price Volatility


Fiscal DeficitThe Fiscal Deficit, the gap between the expenditure and revenue for the entire fiscal year, is pegged at 3.5% (Rs.5.33 lakh crore) of the GDP for 2016-17. Fiscal deficit is projected to come down for 2017 with an increase in taxation after demonetization, however a decrease in growth rate can negate any positives. As per data released by the Controller General of Accounts, tax revenue came in at Rs.6.21 lakh crore, accounting to 59% of the budget estimate. Revenue deficit, till November 2016 stood at 98.4% of the budget estimate referring to the shortfall in total government revenue realisation from the targeted figure. The surge of liquidity in banks, increased liquidity in government's treasury and raids at black money hoarders is expected to increase revenue for the government, hinting at a possible decline in the deficit. The dip in economic activity due to the demonetization will affect the GDP and the overall earnings in the economy.

Economic Risks

Complex TaxationIndia's current tax system is complex and multi-layered. Cross-border compliance, compounding of taxes on domestically produced goods and services, in addition to several central and state taxes, exacerbate the complexity of the system.

Indirect taxes in India have driven businesses to restructure and model their supply chains and systems owing to multiplicity of taxes and costs involved.

India is planning to implement a dual Goods and Services Tax (GST) system. India stands to gain $15 billion a year by implementing GST as it would boost exports, raise employment and promote overall economic growth by widening the tax base. While the overall tax rate is expected to fall, the broadening of the tax base and greater compliance could boost tax collections. GST will be supply-chain neutral and will obviate the need for bundling or unbundling of goods and services for taxation purposes.

Small businesses and start-ups are likely to benefit from an eased tax structure. GST will protect businesses from the cascading effect of the country's complex regulatory structure and multiple local taxes. Overhauling the existing tax structure of a country is a challenging task and needs continuous monitoring at every step. Moreover, to roll out GST effectively, India will need to build a robust nationwide IT network and infrastructure.


Economic Risks

Currency FluctuationCurrency fluctuation now appears to be the new normal globally. Indian foreign exchange reserves hit a historic high in September 2016 but dropped soon after, due to foreign currency non-resident deposit redemption, flight of capital due to US Federal Reserve hiking interest rates, and demonetisation. The rate of fluctuation in the Indian currency has been far lower compared to other currencies, and the rupee ended in 2016 at 67.93 against the US dollar.

The biggest influencer on the INR exchange rate recently has been crude oil costs, which have risen lately after OPEC members agreed on cutting oil production to boost the price. At the moment, the government is not considering any intervention to stabilise the rupee. Given global uncertainties, it is tough to predict where it will head in coming months.

The Rupee is still projected as a resilient currency, given improved policy and macro economic fundamentals; nonetheless sluggish industrial production and the central bank's decision in respect to lending rates may have an unfavourable effect.

In 2016, strikes, closures and unrest were ranked as one of the major risk affecting the Indian economy. There is a giant underbelly of disparity and discontent that exists, and its sudden eruption can affect India's attempts at gaining investor confidence and ease of doing business. The unpredictability of unrests in this day and age pose a greater risk.

The outburst in Bangalore by garment factory workers in response to Provident Fund reforms, left labour union leaders, police and employers flabbergasted. Riding on rumours and misleading press coverage, the protest started at one garment factory and spread to major industrial clusters in the city in a matter of hours. There was no leader or negotiator. Protests by union-less labour cannot be correctly predicted, and can become a serious concern for Corporate India.

In addition to the heightened social unrest in 2016, labour unrest, strikes and demonstrations protesting reforms; land acquisition and industrial projects continue to shape business perception. On September 2, 2016, ten central trade unions called for a nationwide strike against anti-labour policies affecting bank operations, public transport and telecom

Workforce Unrest


services, public sector undertakings and businesses. Andhra Pradesh-based international paper maker, AAPM, was forced to shut down its operations after a strike called by staff unions took an ugly turn at its plant in Rajahmundry. The cotton textile and yarn maker GTN Textiles in May 2016, declared a lock out at its Kerala plants due to labour strike. Attempts made to negotiate with the unions, with intervention from officials of the Labour Department, did not make any progress.

Inadequate InfrastructureIndia's 2016-17 Union Budget provided for significant outlay for infrastructure expenditure. Infrastructure is a key driver for the Indian economy and expenditure in this sector has a multiplier effect.

The infrastructure deficit is costing up to 5 per cent of the GDP.The value of roads and bridges infrastructure in India is projected to grow at a Compound Annual Growth Rate (CAGR)

Economic Risks

of 17.4 per cent over FY 12–17. Transparency and corruption need to be positively addressed to help facilitate the development of better infrastructure in India.Infrastructure sector could benefit from a stable regulatory environment with an independent regulator, appropriate dispute- resolution mechanisms and supportive, and comprehensive policies. In case of the power sector, better regulation has helped in a turnaround and the country is expected to have a power surplus in 2016-17. The IMF points out a need to increase electricity generation and increased infrastructure investment to retain a steady growth rate. India is developing power grids and transmission lines with neighbouring countries like Nepal and Bangladesh.

One of the key reasons why infrastructure development in the country has failed to take off in a big way is due to the dismal performance of the Public Private Partnerships; which at one point of time were considered to be a panacea for all infrastructure challenges facing the country.


Economic Risks

Goverment's 8-point strategy to move up in World Bank Doing Business Index ranking

The eBiz portal will be mandated for starting a business.The number of procedures for starting a business and the number of days to start a business will both be cut to four.The Shram Suvidha Portal will be the only portal for filing tax returns, challan and making online payments for EPFO and ESIC.The department of revenue and the ministry of shipping will work towards increasing the number of direct-delivery consignments to 40%.Provisions under the Insolvency and Bankruptcy Code will be implemented through the National Company Law Tribunal.The Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI) database will be integrated with the Registrar of Companies to create a single registry of assets.E-courts will be expedited for the electronic filing of complaints, summons and payments.On the 'construction permit' indicator, the number of permits required will be brought down to eight.

§

§

§

§

§

§

§

§ Innovation

Institutions

Infrastructure

Macroeconomic Environment

Health and Primary Education

Higher Education and Training

Goods Market Efficiency

Labour Market Efficiency

Financial Market Development

Technological Readiness

Market Size

Business Sophistication

India Emerging and Developing Asia Developed Asia

0 1 2 3 4 5 6 7

3.73.3

5

43.9

5.2

3.93.7

6.2

4.54.9

4.8

5.55.6

6.6

44

5.8

4.24.3

5.5

3.94.3

5

4.23.9

4.9

2.83.4

5.9

6.54.5

5.4

4.23.9

5.2

India’s performance on the 12 factors of competitiveness

Source: World Economic Forum

sAFETY

RISK


Safety RisksIM

PA

CT

LIKELIHOOD

Mainstream industrial India needs to improve its safety awareness and

conduct, to actually reduce occupational Safety and Health Risks to As Low as

Reasonably Practicable. Commitment of managements, use of proper equipment

and a proactive mindset is necessary if India is to mature as a country with a

strong industrial Workplace, Safety and Health culture.

- Capt Ashwin KhandkeExecutive Director,

NUSTAR QHSE CONSULTING PTE. LTD

1

2

3

4

5

1 2 3 4 5

StructuralSafety

Fire & Industrial

Safety

Rail Safety

Road Safety

Pandemics &Diseases

Food & WaterSafety

0 2 4 6 8 10 12

Road Safety

Rail Safety


Structural Safety

Food & water safety

2017 2016


Indian Railways, one of the largest rail networks in the world, operates more than two thousand trains daily. The year 2016 witnessed several train accidents, the Patna-Indore Express derailment that happened on 20th November was the most catastrophic. Derailments are major causes of rail accidents.50 percent of train accidents in the last three years have been due to derailments, of which 29 percent were caused by track defects.

Accidents due to derailment have been up by 67 percent this fiscal year. Of late, the Indian Railways have incorporated the Track Monitoring System, software meant to store information regarding temperature and track-maintenance activity across the railways.

If India aims to maintain the pace of economic development, it has to be backed by a robust rail network of passenger as well as freight. The biggest risk facing railways is mitigating accident risks, ensuring safety of female passengers, and functioning on a tight budget.

Rail Safety

Safety Risks

0

50

100

150

200

250

Total Accidents Derailments Mishaps at LCs Other Causes

2006-07 2014-15 2015-16 2016-17

LC: Level Crossing; Other causes include collision, fire etc

Road Safety World Health Organisation (WHO) statistics indicate that one road-related accident death takes place every four minutes in India. Thirteen states, including Tamil Nadu, Maharashtra, Madhya Pradesh, Karnataka, Kerala, and Uttar Pradesh, account for more than 80% of all road accidents and fatalities.Most of the road accidents can be attributed to lack of driving knowledge, non-adherence to traffic rules, drunken driving, inadequate road infrastructure, and unsatisfactory weather conditions.

Rail accidents in India

Source: Indian Railways


In an effort to bring down the incidences of drink driving on Highways, the Supreme Court in December 2016 directed a ban on the sale of liquor on all State Highways, adding that all licenses of liquor shops in the vicinity of the National Highways would be closed. On a broader perspective, both the central and state governments have to set adequate road safety targets as well as formulate national road safety plans.

Safety Risks

590

450270

240

380

Nh45 Chennai-Theni

Nh4

Thane-Chennai

Nh2Delhi-Kolkata

Nh8 Delhi-Mumbai

Nh44 Nongstoin-Sabroom


Highways having the highest number of accidents -2016

Despite a plethora of regulations and laws for fire and industrial safety; the implementation of the basic and necessary rules remains a grey area. In January 2016, a firecracker-manufacturing unit in Maradu in Kochi caught fire. In February 2016, during the 'Make in India' cultural extravaganza in Mumbai, huge flames erupted from under the stage, setting it on fire. The fire was attributed to storage of inflammable material below the stage in direct contravention to regulations. In April, Puttingal temple at Paravur in Kollam district of Kerala, witnessed one of the worst fire tragedies of India, where more than 100 people died due to a fireworks-related incident.

In the same month, Delhi's National Museum of Natural History was destroyed in another massive fire. With increasing migration and burdened metropolises, the need for structural guidelines in case of fatalities is higher.

The pace of construction of high-rises in urban areas is fast, there is a need to ensure that these new buildings comply with safety norms.



Safety Risks

In 2016, several building accidents took place, some caused by natural disasters while others were the result of poor construction. When Cyclone Vardah struck in Chennai, December 2016, its impact on buildings and other structures was massive, resulting in severe damage. Earlier in the year, in January, when an earthquake measuring 6.7 magnitudes hit Manipur & neighboring states of Myanmar, Bangladesh several buildings collapsed and many others suffered structural damage. In Kolkata, an under-construction flyover collapsed due to fault construction design and poor quality of material; more than 20 people died in the incident.

There are several buildings in India, which are beyond their shelf life and are still inhabited. There is an urgent need to retrofit these buildings. Building construction works carried out by the Public Works Departments, other government construction departments, local bodies or private construction agencies needs to adhere to National Building Code of India (NBC). The NBC mainly contains administrative regulations, general building requirements; fire safety requirements; stipulations regarding materials, structural design, and construction and plumbing services.

Building Structural SafetyIndia lacks a comprehensive food regulatory system, thus the safety of food and water becomes a key concern. The challenges range from supply of food to such a wide geographic spread, coupled with issues of adulteration, counterfeiting and spurious products that are detrimental to public health.

Food scams have plagued India. For instance, several reputed food brands operating in India are prohibited in Western countries. Recently in December 2016, a court in Haridwar fined a leading Ayurveda FMCG firm for misbranding as well as misleading advertisements of their products. Around 67 variants of the pesticides which are banned or restricted in many international markets, are used in India. This not only affects the ground water, but the contaminants find their way into agricultural produce too.

India has one of the highest numbers of populace in the world without access to safe water. One of the key reasons is attributed to the poor management of water resources that becomes a challenge in providing safe water to the entire population. The health burden of poor water quality is enormous, especially in rural areas of India. It is estimated that waterborne diseases affect around 37.7 million Indians annually. About 140,000

Food & Water Safety


children die from diarrheal diseases due to the usage of dirty water. Around 73 million working days are lost annually due to waterborne disease. The government should allocate resources to regulatory units more effectively, strengthen institutions and capacity building, and effective coordination among agencies.

Safety Risks

The travel risk environment in India varies considerably across the country. Potential targets include public transport, religious sites, busy and unsecured areas, government, and military buildings. There is risk to personal security in the state of J& K due to the threat of terrorist activity, and ongoing political violence. The recent violent movement led by Naxalities is mainly concentrated in the rural areas of central and eastern India, where local business personnel remain at risk to kidnap-for-ransom, while conducting overland journeys .

Travel to the North-Eastern region requires logistical as well as security support, due to the risks posed by banditry, insurgency, and tribal separatist activity. Travel restrictions could be imposed in these areas at short notice, and permission is required from the authorities to travel to certain 'inner-line' areas. Petty crime such as picking of pockets and bag/chain-snatching is common in crowded areas such as markets, airports and on buses, metros and trains (including overnight and long-distance trains), as well as tourist places. Women travelers should take particular care, even when travelling in a group and avoid travelling alone on public transportation, especially at night.

Travel Safety

Drinking water quality

Source: World Resources Institute

No Breaches

1 Breach

2 Breach

3+ Breach

No Data

Groundwater Quality (Number of BIS-standard breaches)

More than

People Live in Areas of Poor Water Quality

100MILLION

ENVIRONMENTAL

RISK


Environmental RisksIM

PA

CT

LIKELIHOOD

While countries are in the process of making their National Action Plans, it is

critical that environmental policymakers in developing countries are actively involved in this exercise, along with

policymakers from the agriculture and health sectors.”

- Sunita NarainCentre for Science and Environment

1

2

3

4

5

Natural Hazards

Air Pollution

Bio-diversity LossWaste Disposal

Water Scarcity

Pandemics


India, on account of its geographical position, climate and geological setting, is the worst affected theatre of natural hazards in the South-Asian region. Approximately 85 percent of India is vulnerable to some natural hazard- from earthquake to cyclones, tsunamis, floods, heat and cold waves, drought and landslides. Of India's 29 states, 22 fall in the category of disaster-prone. Almost 58.6 percent of the country's landmass is prone to earthquakes of moderate to high intensity. Some of Indian cities such as Srinagar, New Delhi, Patna, Lukhnow, Itanagar, Shillong, Kohima, Guwahati, Imphal fall in seismic zones 4 or 5.

Over 40 million hectares (12 per cent of land) are prone to floods and river erosion; of the 7,516 km long coastline, close to 5,700 km is prone to cyclones and tsunamis; 68 per cent of the cultivable area is vulnerable to drought and hilly areas are at risk from landslides and avalanches. India is situated in a unique geographical setting, making 'Natural Hazard' a major operational risk for companies. Moreover, the impact of many of these natural disasters becomes severe due to poor disaster preparedness and lack of early warning systems.

Natural Hazards EarthquakeThe edge of the Indian tectonic plate runs through Pakistan, North India, Nepal and the north-eastern parts of India. Seismologists consider India's mountainous Northeast region as the sixth major earthquake-prone belt in the world. Around 30 medium-to-low intensity earthquakes were reported in the Northeast region of India in 2016. Most of these earthquakes occurred in the Tuensang, Phek, districts of Nagaland and a few more on Wangling, Manipur. In addition, Assam and Arunachal have also witnessed earthquakes in Lakhipur, Haliakandhi and Tezu areas.

In the first week of 2017, Tripura witnessed a moderate intensity earthquake measuring 5.7 on the Richter scale, triggering landslides in the hill state and jolting the country's northeast.

In 2016, earthquakes were also reported in Haryana and Delhi (August), West Bengal and Bihar (August), and Maharashtra (November). New Delhi and some part of National Capital Region (NCR) felt tremors of 4.4 magnitude. Maharashtra observed a medium intensity earthquake measuring 3.5 on Richter scale in May, 2016.

Environmental Risks


Floods and DroughtsEvery year, India receives rainfall from the southwest and northeast monsoons, which leads to heavy rainfall in several parts of India. As much as a good monsoon is required for India's agricultural and water needs, the monsoon season also brings with it massive flooding problems, not just along the regions which lie along the rivers in India but also in India's urban areas. This has been a trend year-on-year in India.

.The unprecedented and unchecked population growth along the riverbanks has been one of the major factors causing heavy damage to life and property due to flooding. Another major factor for the flooding is increased incidents of landslides in the Himalayan region, which have resulted in increased silt deposition in the river's beds. In 2016, many parts of Mumbai, Delhi and Gurgaon, Hyderabad, and Kolkata were submerged due to water-logging resulting in severe disruption of daily life in these cities. Severe flooding affected parts of Uttarakhand, the north-eastern states of Assam and Arunachal Pradesh, Uttar Pradesh, Bihar, West Bengal, Telangana, and Maharashtra. More than 300 people died and millions had to be evacuated as a result of the monsoon rains. In Bihar, around 150 lost their lives and nearly half a million people were displaced. The western

Environmental Risks


LandslidesIn India, scores of people die every year from flooding and landslides during the monsoon season. In addition to the loss of life and property, landslides also result in critical road infrastructure being blocked, thereby disrupting daily life along with business continuity. The areas typically affected by landslides include the north-eastern states, Himachal Pradesh, Jammu and Kashmir, Uttarakhand and the Western Ghats and Konkan hills. Landslides have also disrupted daily lives and crop fields in different parts of Arunachal Pradesh, Assam, Meghalaya, and Nagaland.

Heavy rainfall-induced landslides led to a number of deaths in Uttarakhand and buried villages under sludge in June 2016. The recurring landslides also blocked National Highways leading to the Badrinath and Kedarnath shrines. At least 16 people died in landslide in Phamla village in Tawang district of Arunachal Pradesh in April 2016. Sections of the arterial NH-8 in Tripura remained non-operational for at least two months this year due to the damages caused to the road by the heavy rain, leading to a shortage of essential commodities. The heavy monsoons continue to greatly hamper the lives of the people, especially in landslide affected hilly regions.

Environmental Risks

Floods 2016 - the damage

Affected States

14

Affected Districts

112

Cropped areas lost

hectare5.97 lakh

Deaths850

People1.24cr

Cattle lost18,575

part of the country, including Rajasthan, Gujarat and some parts of Maharashtra (especially the Marathwada region) are arid, and as a result are hit frequently by droughts. In the last few years, drought-like situations have triggered many farmer suicides. Overall, rainfall patterns have become more irregular over the last decade. Extreme rainfall events in central India, the core of the monsoon system, are increasing and moderate rainfall is decreasing; as a part of complex changes in local and world weather

Source: MHA


quality, 5 cities (Dehradun, Agra, Alwar, Delhi and Rourkela) showed very poor air quality and 2 cities (Lucknow and Delhi) indicate severe air quality.

According to a World Bank report, Delhi topped the list of 381 most polluted urban settlements, from developing countries worldwide. Delhi recorded almost three times higher air pollution than Beijing and had 15 times greater concentration of fine particulate matter in its air than the WHO guidelines. Patna, Gwalior, Raipur, Ahemdabad, Lucknow, Kanpur and Amritsar are among other Indian cities also in the list. The major contributors for air pollution in India include: Coal-powered thermal power plants which emit SO2 and No2

Growing number of cars in Indian cities; low standards for vehicle exhaust emissions, rural households using kerosene as a primary source of energy contribute pollutants to the air. Households depend on biomass for cooking; burning of biomass is a leading cause of indoor air pollution. In the wake of the unprecedented smog levels and highly dangerous levels of air pollution in 2016, Delhi administration had launched several initiatives to combat the pollution. In addition, the National

In recent years, air pollution has acquired critical dimensions and the air quality in most Indian cities fails to meet World Health Organization (WHO) guidelines for safe levels. In November 2016, Delhi (National Capital Region) and parts of North and East India recorded unprecedented levels of air pollution, hovering around the 'severe' category consistently over a period of several days. In early November, Delhi faced the worst smog in 17 years, with visibility as low as 300-400 meters. In addition, Patna and Kolkata also recorded alarming levels of air pollution, surpassing even the level of pollution in Delhi on certain days in November end.

The levels of air-borne particles smaller than 2.5 micrometres in diameter and 10 micrometres in diameter; as well as concentration of dangerous carcinogenic substances such as Sulphur Dioxide (SO2) and Nitrogen Dioxide (NO2) have reached alarming proportions in most Indian cities, putting people at additional risk of respiratory diseases and other health problems. Of the total 56 cities covered for calculation of Air Quality Index (AQI) during March 2016, 22 cities revealed good air quality, 38 cities revealed satisfactory air quality, 37 cities revealed moderate air quality, 14 cities indicate poor air

Air Pollution

Environmental Risks


Due to industrialization and inequality in health status between and within the states, India faces a “triple burden of diseases” - communicable diseases, emerging non-communicable diseases (lifestyle related), and emerging infectious diseases. Diseases like malaria, tuberculosis, dengue and other vector born disease continue to be a major problem in India. India's public health care system is not yet capable of handling hazards of pandemic proportions, except in the developed urban centres.

Experts estimate that India loses 6 per cent of its annual GDP to preventable illness and premature deaths. India has only 0.7 beds per 1000 persons, while WHO recommends 3.5 hospital beds and would need 340,000 more doctors by 2020.

India has a shortage of medical staff, inadequate facilities, untrained paramedics and midwives, unaccredited labs and high cost of advanced diagnostics. Many of government schemes do not reach backward and rural areas and marginalized communities.

Pandemics/Diseases

Environmental Risks

20

40

60

80

100

120

140

160

180

200

Gwalior,MP

Allahabad,UP

Patna,Bihar

Raipur, Chhattisgarh

Delhi Ludhiana,Punjab

Kanpur,UP

Khanna,Punjab

Firozabad,UP

Lucknow,UP

176170

149 144

122 122115 114 113 113

Most Polluted Indian Cities in 2016

Source: WHO

Green Tribunal (NGT) had banned all construction activities for a week in the entire Delhi-NCR region due to rising pollution.

However, such ad-hoc measures need to be replaced with more holistic and future goal-oriented measures in order to control the virtually unchecked rise of pollution levels. In 2016, India has ratified the Paris Agreement, under which countries agreed to take steps to limit the rise of the earth's temperature to under two degrees Celsius by the year 2100.


remains the country with the highest number of people still using this practice, an estimated 597 million (2014 estimate), roughly half of India's population. The initiative named Swachh Swasth Sarvatra will focus on two main objectives. First, the government will facilitate the construction of infrastructure and facilities such as public toilets, and second, will aim to change behavioral factors through educational means.

In 2016, large parts of India suffered from a variety of vector-borne diseases. Malaria, Dengue, and Japanese Encephalitis were responsible for over 650 deaths in the country in 2016. Meanwhile, Delhi and other parts of north India and Karnataka were among the worst affected by Chikungunya – with close to 50,000 cases being reported across the country in 2016.

A Japanese encephalitis (JE) outbreak in Odisha's tribal-dominated Malkangiri district claimed about 100 lives. Even though JE traditionally attacks children, in recent years there have been several cases of adults dying to this viral brain infection. Cardiovascular diseases were the leading cause of death in both genders in India, with the next biggest cause of deaths being chronic respiratory diseases. The other leading causes of deaths in both genders were ischemic stroke, hemorrhagic stroke, tuberculosis, lower respiratory infections, and diarrhea.

In December 2016, the Ministry of Health and Family Welfare in collaboration with the Ministry of Drinking Water and Sanitation and Human Resource Development have launched a new initiative aimed at reducing open defecation in India. India

Environmental Risks

Malaria, Dengue, Japanese Encephalitis (JE) - cases and deaths recorded in India (2012 - 2016) Cases Deaths

Malaria

Dengue

Japanese Encephalitis

1067824

2012

519

2013

881730

440 562

2014

1102205

2015

1169261

384

2016

849610

205

50222

2012

242

2013

75808

193 137

2014

40571

2015

99913

220

2016

97313

197

745

2012

140

2013

1086

202 293

2014

1661

2015

1730

291

2016

1474

256

Source: WHO


Environmental Risks

Water scarcity in India

Source: World Resources Institute

Water ScarcityThe country's water resources are a combination of groundwater and surface water resources. The total available

3water in India is 4000 billion m per annum. Out of this, a third of the water is lost due to evaporation, transpiration and runoff, reducing the available water to two thirds and the usable water to one third. As a majority of the rivers in the country are not perennial, except the glacial rivers in North and East India, groundwater sustains much of the population during lean months.

Presently, despite good rainfall distribution, the country is unable to make good use of rainwater, because of lack of awareness and poor infrastructure for storage in form of dams and reservoirs. It is pertinent to note that only 18 per cent of the rainwater is used effectively. 54 per cent of India's ground water wells are depleting and this number will increase in future. Water scarcity in India is expected to worsen as the overall population is expected to increase to 1.6 billion by year 2050.


Waste DisposalWaste disposal is the bane of most cities, especially in bustling metros such as Chennai, Delhi, Mumbai, and Bengaluru. Urban areas in India generate more than 1,00,000 metric tons of waste every day.

Indian municipalities are responsible for solid waste management (SWM). However, most of them are currently unable to fulfill their duty to ensure environmentally sound and sustainable ways of dealing with waste generation, collection, transport, treatment and disposal.

The failure of municipal solid waste management has resulted in serious health problems and environmental degradation in the country. A major fire broke out at the dumping ground in January, 2016 in Mumbai, which lasted for an entire week when parts of eastern Mumbai were covered in smoke.

The 'Swachh Bharat Abhiyan', or 'Clean India Mission' by 2019, has come as a major step in the right direction; but unless it backs the intent with technology infusion and financial outlay it is unlikely to achieve realistic goals.

Environmental Risks

Biological diversity deals with the degree of nature's variety in the biosphere. India's considerable bio-diversity under threat and losses which can be attributed to the resource demands of rapidly growing human population.

Bio-diversity in India has also been facing threats from various sources of pollution; the major ones being improper disposal of municipal solid waste, inadequate sewerage, excessive use of chemical pesticides and continuous use of hazardous chemicals even where non-hazardous alternatives are available.

Degradation of forests results from illicit felling, excess removal of forest products, fodder, fuel wood, forest floor litter, overgrazing and forest fires.

New industrial processes are generating a variety of toxic wastes, which cannot be dealt with by currently available technology in the country.

As a result, many keystone and endemic forest species are now left with eroding populations that need to be urgently conserved in order to eliminate further loss in coming years.

Bio-diversity Loss

SM Kumar

Pawan Desai

Sushil Pradhan

Pallavi Ade

MalcolmCooper

Pankajam Devanandan

Arpita

SukanyaKanawade

Soheb Khan

Uday Deshwal

Akul Arora

Ankit Jadhav

Amika Bawa

Anchal Agarwal

Kinnari Mohite


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