India should introduce Repairability Index like France

Repairability index icons

India should introduce Repairability Index like France


This year Indians are going to buy over 760 million mobile handsets. Assuming that the life of a mobile phone is 3 years, I am assuming that mobile phones are being upgraded every year! Imagine what happens to the 700 million handsets bought in 2020. Around 225 million handsets are being replaced in India every year. An industry news carried out states that more than 5 million mobile phones have piled up for repair and servicing in India during the first phase of the lockdown enforced to control the spread of the coronavirus in 2020. This itself shows the gap in the handsets which could be avoided replacement due to the fact some of these handsets cannot be repaired. This is particularly in high end handsets. Look at the opportunity cost of replacement of handsets just because these handsets are not repairable. Moreover, this would be applicable to other consumer electronic products. Consumer electronic products take a serious environmental toll, and one of the best ways to mitigate that is to use them for as long as possible before replacing them. But it’s hard to know how long a new gadget will last if you’re unsure how easy it will be to fix. Consumers need additional information regarding the repairability of the product as an additional information to aid in their purchasing decisions. France was the first country in the world to introduce a Repairability Index on 1 January 2021. It is hoped that the momentum of this law will gain EU-wide recognition and move on to other large, well developed markets like US, Japan and China and maybe India.

Why should India not introduce its own Repairability Index?

What is France’s Repairability Index?

Since January 1st 2021, France is the first country in Europe to have implemented a repairability index on 5 categories of electronic devices. The goal is to inform consumers about the repairability of a product. a grade out of 10 will be added to the labels of washing machines, laptops, smartphones, TVs and lawn mowers. the repairability index that is defined by the French government. According to their ruling, all new smartphone sold in French must display the repairability index in the stores and website. The repairability index has a score from 0 to 10 and is defined by 5 criteria which has equal weight. Each criteria has 20 points and all adds up to 100 points which will be divided into 10 for the final score. The five criteria is

  • Documentation – Available documentation from the manufacturer.
  • Ease of disassembly – The ease of disassembly of the smartphone.
  • Spare parts availability – The availability of spare parts from the manufacturer. How easy to get them.
  • Spare parts price – The relationship between price of most expensive spare part item and price of original product. The bigger the differences, the better the score.
  • Specific Criterion The quality of information given by the manufacturer such as the information of the update, the ability to reset software and free remote assistance.

While France won’t be enforcing use of the index with fines until next year, some companies have already begun releasing scores for their products.

According to experts, the repairability index represents part of France’s effort to combat planned obsolescence, the intentional creation of products with a finite lifespan that need to be replaced frequently, and transition to a more circular economy where waste is minimized. But it also has global implications. Repair advocates say that the index will serve as a litmus test for other nations weighing similar regulations, help consumers make better choices, and hopefully incentivize companies to manufacture more repairable devices. Eventually, France intends to expand the score to other classes of consumer products. By 2024, the repair index will transition to a “durability index” that not only tells customers how repairable a product is but also describes its overall robustness.

According to the experts, The French Repairability Index has its limitations as they were developed through an intensive stakeholder process that involved input from manufacturers as well as consumer advocacy organizations. For instance laptop and smartphone makers can get a “free point” by providing consumers with information about different types of software updates, such as security updates or system upgrades — information that may not have anything to do with how fixable the device is.

The Case for Repairability Index for India

I believe that the case for a Repairability Index for India is an open-shut case. High-end consumer electronics such as Apple iPhones have become more difficult to fix due to a combination of design choices and software locks that often require proprietary tools to get repair from their authorized service centers. These have given discretionary powers to Apple to charge for the repairs or disallow the repairs providing arbitrary reasons, requiring consumers to forcefully replace their older version of devices to newer ones. Moreover, there is no warranty provided for the repairs or replacement of the parts during repairs offered

RIP Apple!

A blog on how this Repairability Index would impact Apple states:

Apple is known for touting its green credentials. They are using renewables for their operations and has been carbon neutral for years and aims to be carbon neutral in its entire supply chain by 2030. It uses less packaging to reduce carbon footprint. It has remove chargers and headphones from their iPhone offering (much to the chargin’ of their competitors) as an environmental initiative. It has so much renewable energy that it contracts out their excess energy as Apple Energy. Apple recourage users to recycle their iPhones and demos their recycling robots. They wanted all their materials in their devices to be from recycle material instead of mined from the earth.

iPhone 12 and iPhone 12 Pro teardown by iFixit 2
iPhone 12 teardown. Apple recently makes it harder to change the camera module not through hardware means, but software.

That being said, Apple green credentials is not without flaws or critics. Its devices has been criticized as hard to repair. Apple is against the right to repair movement under the guise that the devices are more and more complicated. There has been reports that changing the camera modules in the iPhone 12 made the camera inoperable. The cost of repairing item is significantly higher than other manufacturers since you have to register to be a specialist from Apple. Even then, you might not be able to procure the parts necessary for the repair as shown for other Macs. And their iPhones require specialist tools as they use pentalobe screws which is a non-common tool.

This new repairability label will encourage Apple to rethink their position on repairability. Just like how energy efficiency labels encourage manufacturer to make more efficient devices, Apple will be compelled to make easier to repair phones.

Also see my post on Linkedin Rip Bad Apple! | LinkedIn on getting the repairs or replacement of their faulty products which echoes the same issues.  

How can India take the lead here?

India needs to learn from the experience from France’s implementation of the Repairability Index and plug the loopholes in the process of creating its own index. As India embarks on the aggressive Make in India, it would serve well to also introduce the Repairability and Durability Index of the products manufactured in India to ensure that the Made in India products are accepted globally by the consumers and not fall in the trap the image of cheap Chinese manufactured products have attained globally of their poor quality perception.

It’s the right time to think about the Repairability and Durability of Made in India consumer electronics products given the direction EU is moving!

Fake, Fakier and Fakiest – The Fake News Pandemic – The New Normal to Denting Public Reputation?

The Fake, Fakier, and the Fakiest

The Pandemic of Fake News

During the lockdown there has been a marked increase in the incidence of fake news and its viral spread. According to a research falsehood diffused significantly farther, faster, deeper, and more broadly than the truth in all categories of information, and the effects were more pronounced for false political news than for false news about terrorism, natural disasters, science, urban legends, or financial information. False news was more novel than true news, which suggests that people were more likely to share novel information. Whereas false stories inspired fear, disgust, and surprise in replies, true stories inspired anticipation, sadness, joy, and trust. Contrary to conventional wisdom, robots accelerated the spread of true and false news at the same rate, implying that false news spreads more than the truth because humans, not robots, are more likely to spread it.

As case in point, even a celebrity like Amitabh Bachchan was not spared.

AB Fake News

What is Fake News?

Fake or false news can be categorized in following ways:

  • Fake Article. The entire article is written with the intent of spreading false information.
  • Embellished Article. A real article or fact is enhanced and embellished to add fake information to it.
  • Fake Photo/Fake Video. A photo or video is enhanced and modified to add fake information to it.
  • Older Photo/Video or out of context photo/video. An older photo/video or a photo/video that’s from another country or another context is inserted with the intent of spreading false information.

The common intent of fake news can be:

  • Communal, news written with the intention of inciting religious and communal passion
  • Violence, Criminal and sexual.
  • Integrity and Authenticity
  • Questionable Practices and Rituals (Occult, Blackmagic)
  • Bullying and Terrorism
  • Misinformation (bank shutdown, currency devaluation, economy)
  • False Health Advisories, we see an uptick in these during the Covid-19 pandemic
  • Spreading false information about competition
  • Political misinformation
  • Satire
  • Propaganda
  • Personal Defamation

The Human, Economic and Psychological Damage from Fake News

Some estimates put the damage from Fake news in the range of 80 billion annually.

  • Fake News Stock Market damage – Fake news has caused losses of billions of dollars in company stocks. The damage last year alone was $39 billion or .05 percent of the markets value [1]. A letter purportedly sent by Larry Fink, CEO of Blackrock caused investors to panic and dump coal stocks. [2]
  • Health scares – fake news promotes the sale of questionable medical supplies and result in medical scares from visits to ER’s.
  • Destroying government machinery and loss of life – fake news has resulted in loss of confidence in government machinery and in cases of violence that have resulted in rioting and loss of life.
  • Politics – there have been innumerable news articles and posts on how fake news has resulted in election decision making in favor of the less desirable candidate.
  • Loss of sales due to fake propaganda, corporate espionage and loss of trust in brands – Fake news has resulted in loss of sales and goodwill. [3] McDonalds has been targeted by multiple instances of fake news and has lost customers each time. In addition they have had to spend money each time on advertising to promote facts.
  • Personality disorder in humans who read fake news analysis – Companies that manually curate news to figure out real from fake have high attrition. Employees get depressed from the psychological impact of reading fake news day in and day out.

Fake News Pandemic – How do We Tackle it and Mitigate Reputation Risk?

There are various ways social media platforms, law enforcement agencies, Governments, political parties, companies and individuals celebrities combat fake news pandemic. The tools available can be separated into three categories:

  • an increase in the use of human editors by the social media and publishing platforms. Given the volume of information being disseminated, it is practically inhuman to cover all the material being published
  • crowdsourcing initiatives being used by various initiative still not a viable solution of the joint forces to combat the evil forces of fake news; and
  • technological or algorithmic solutions

We would like to discuss on how we use our algos to assist in mitigating the reputation risks for different stakeholders affected by fake news

Common-sense techniques to find instances of fake news

Text Analytics

  • Subject detection, scan the article to figure out the theme and subject.
  • Use of provocative keywords, fake news usually contains provocative keywords.
  • Sense of urgency – Creating a sense of urgency to ask the reader to take action now by clicking on a link.
  • Spelling and grammar mistakes.
  • Creator credibility analysis, is this website credible, is this handle a new handle that hasn’t posted before
  • Links to websites that contain spyware/botware or other paid news
  • How fake news spreads (not spread by influencers, people with large number of followers), spread by accounts that habitually post controversial content. Truth spreads slower typically.
  • Does the social media account come across as a Bot. Bots have typical characteristics such as account age, account photo and posting only articles and forwarded content. Bots spread fake news faster than individuals.

Image Analytics

Fake news shows a tendency to contain graphic images that help drive home the point of the article. The following techniques help in analyzing the image and hence determining if the article is real or fake.

  • Reverse Image search, we search for images using a reverse search. This gives us context on when the image was first posted, what the original image looked like and what were the changes
  • Image authenticity, an image that diverges significantly from the original or shows signs of doctoring is probably a fake. Minor alterations such as brightening and color correction are acceptable changes to the image.
  • Image age, if the image is old then its irrelevant and is used to spread fake news
  • Image geotags, if the geotags on the image differ from the location mentioned in the article then the image is fake and the article is fake.

Video Analytics

Similar to images, articles contain videos that are provocative to drive home the point the article is trying to make. We use the following techniques to analyze videos

  • Video authenticity, a video that diverges significantly from the original or shows signs of doctoring is probably a fake. Minor alterations such as brightening and color correction are acceptable changes to the video. These videos undergo significant modifications in the post production phase.
  • TikTok analysis, TikTok is a growing source of modified videos.
  • Video age, if the video is old then its irrelevant and is used to spread fake news
  • Video geotags, if the geotags on the video differ from the location mentioned in the article then the video is fake and the article is fake

Article Analytics

A wholistic analysis of the article as a whole gives rich insights into the authenticity of the article. Some analysis that we perform here are

  • Author check, fake news generally does not provide the author name or comes from unknown authors that lack credibility.
  • Text to advertising ratio, fake news generally has a higher ratio of advertising or links as compared to text
  • Article layout, a badly laid out article on a website is a good indicator of the presence of fake news

Be Safe! Spread Genuine!


[1] Fake News Creates Real Losses

[2] The Fake Larry Fink Letter That Duped Reporters

[3] French Fry Grease in McDonald’s Coffee

Beyond the Farm Bill – Setting the Agenda for the Next Generation of Food and Agri Reforms in India

Farm Bill


In 1998, when I was part of the Prime Minister Atal Bihari Vajpeyee’s Task Force on Food and Agri Management Policy, we present set of recommendations that would transform the sector and affect the overall food security of India. The 70-page report outlined the issues across the agri value chain. To align the country, we gave the slogan to the Honorable Prime Minister:

“Kisan Ugaye (farmer grows)

Janta Khaye (population feeds)

Aur Desh Aage Badh Jaye” (and the country advances)

The current Farm Bill which is being politically contested is just addressing one part of the overall agri value chain. Back then in 1998, over INR 55,000 crores of agri produce is wasted every year due to inadequate infrastructure to the latest estimate of INR 44,000 crores. This is hardly a dent over the last 22 years in curbing the loss of farm produce. Over the last 70 years of independent India, the so called ‘middlemen’ have not added value nor reduced the farm produce losses. However, this is not the purpose of my blog today. There were several recommendations that were put forth and accepted by the Government in 1998. Unfortunately, the political and administrative will and intent was missing. I would like to recall some of the key recommendations that would need to form part of the Next Generation of Food and Agri Reforms in India.

Setting Agenda for Next Generation of Food and Agri Reforms in India

India’s current agri output is around USD 300 billion and provides food security for one season. There are several items on the agenda to double this output to around USD 500 billion by 2030. These include reducing the number of Ministries and Departments that manage the agri value chain, to setting up the Next Green and White Revolution to increase productivity to global norms, investment in smart infrastructure and digitization of agriculture, funding agriculture, food processing to enable farm to fork, agri labour reforms amongst a few. Let’s discuss the important agenda items one by one.

Super Food and Agri Ministry

In the current Government, there are following Ministries across the food and agri value chain:

  1. Ministry of Chemicals and Fertilizers
  2. Ministry of Consumer Affairs, Food and Public Distribution
  3. Ministry of Agriculture and Farmers Welfare
  4. Ministry of Food Processing Industries
  5. Ministry of Environment, Forest and Climate Change
  6. Ministry of Animal Husbandry, Dairying and Fisheries

This is still a manageable number from over 14 Ministries in 1998. Compare this with a single Ministry of Agriculture, Fisheries and Food (MAFF) in the UK which manages the administration of the entire value chain.

Next Green and White Revolution in India

In 1998, we had outlined several recommendations that would lead to doubling of the agri productivity to reach global norms in various agri produce per hectare. Over the last 20 years there have been several advances in agri and animal husbandry technology which would need to be rolled out at the farm level to increase the produce on reduced land supply for agriculture due to increasing population pressure. These include agri biotech innovations, precision farming, multi-level farming, organic pesticides and fertilizers and so on. The issue of land fragmentation over the last 20 years have become fairly acute and as time elapses, would accentuate further affecting the productivity. Newer technologies and consolidation to intensify agri on limited land due to population pressure is to be developed. Lastly, the issues of climate and environmental change over the 20 years have become very visible and would need technologies and crop rotation to mitigate agri failures due to climate and environmental changes that are occurring rapidly over the last decade. My work with Department of Biotech (DBT) in setting up the Biotech Ignition Grant (BIG) Policy in 2011-12 was muted to enable innovations in agri biotech and start up to obtain grants to commercialize their concepts and innovation in this area.

Investment in Smart Infrastructure and Digitization of Agricultural Value Chain

There are several developments on the information technology front which has yet to be adopted by Indian agriculturalists. Several product innovation start ups are working on solving some of these issues. We would need to accelerate the adoption as well as new innovation in IoT and remote sensing, big data and artificial intelligence, smaller farm implements for mechanizing small farm holdings, robotics, full stack farm 2 fork digital solutions. In 1998, ITC’s eChaupal was drubbed as an innovative path and way forward for Indian agriculture. Times and technology have advanced by leaps and bounds. Indian agriculture must adopt these quickly and aggressively. This also brings another issue of digital education for the farmers and labourers in upskilling them in these new tools and techniques leveraging deep tech in agri.

New Age Food Processing to Enable Farm 2 Fork

In 1998, several recommendations were made to invest into the food processing and logistics to enable quicker movement of fresh produce from the farm 2 fork. A lot has been done in this front. However, the data on infra investments in this space show a skew towards the top-5 states of India. Another area of innovation is adoption of newer and latest food processing technologies with our ‘jugaad’ innovation including the cold chains and refers. The Covid vaccine distribution cold chain which would be an episodic exercise could be turned to alternative use post endemic in the remotest parts of India to create the linkages of cold chain.

Agri Labour Reforms

Several recommendations have been made to consolidate the farms and contract farmers into co-operatives and social enterprises. One of the steps in the right direction would be the Social Stock Exchange where these social agri enterprises can be listed and be professionally managed with transparent governance and funding. The other issue that is reskilling and employment generation for the displaced labour due to implementation of new age deep tech which would replace manual farm labour. We had recommended around 15% of undisguised labour to be migrated out of agriculture to other sectors for employment. During the Covid Crisis, Rural BPOs have grown over 10-fold, its these ideas for alternative employment generation and reskilling that needs to creatively addressed.

Finally, Funding, Funding, Funding

Apart from the Central and State Government budgetary support to the sector for funding and apex financial institution NABARD, in the last 20 years there were a few focused providers of risk capital to this sector which I can count on my finger tips. These included PE/VC offshoots of large corporate houses with interest in food and agri and multinational agri-focussed banks. I believe the ESG Funds, new age VCs and the Social Stock Exchange Regulations will provide newer players to step into this sector. One of the hang over of the last 20 years had been the accumulated gun-powder that needs to be monitised.

Why Food-Health Alchemy is the Need?

As an investor in core healthcare sector, why am I writing this to set up the discussions on food and agri reforms? Our learning from our investments in nutrigenomics venture was that the new age diseases and syndromes emerging in healthcare is the outcome of what we eat. The food and nutrition consumption basket of Indians has dramatically altered over the last 20 years since my Britannia days. The national well being of Indian population depends on the nutritional outputs from the food and agri sector. Therefore I may now like to alter the slogan which we coined in 1998 to

“Kisan Ugaye (farmer grows)

Janta Khaye (population feeds)

Kisan aur Janta Swasth Rahe (farmer and population remains healthy)

Aur Desh Aage Badh Jaye” (and the country advances)

For more recent update on the issue of Farm Bill and Agri and Agritech Reforms listen to QuoteUnQuote with KK – Kapil Khandelwal (KK) and Mark Kahn on The Future of Agriculture: AgriTech and Government Reforms

Our Recommendations on the Working Group Report on Inclusive Regulatory Framework for Social Stock Exchange (SSE) in India

Cover Letter to SEBI Social Stock Exchange Working Group

Shri Ishaat Hussain

Chairman, SEBI Social Stock Exchange Working Group

Plot No. C 4-A , G Block, SEBI Bhavan, Bandra Kurla Complex, Bandra East,

Mumbai – 400051

Dear Sir,

Re: Our Recommendations on the Working Group Report on Social Stock Exchange (SSE)

At the outset we would like to congratulate you and the working group and the SEBI team along with the external agencies that have worked on drafting the regulations for the SSE for the nation. We believe that a SSE would lead to widening the investor base and also bring to fore the impact investments into this country. We had been involved in discussions with SEBI even before the formation of the working group and provided inputs on what should be the nature of the regulations to guide the investments in the healthcare industry in India.

We are India’s first healthcare infrastructure fund under SEBI AIF-II regulations. We propose to list our fund as a Healthcare REIT. We have therefore focused our note on the issues with respect to healthcare only. As healthcare is a social infrastructure, we and our limited partner and investors believe that a regulation from the SSE and its inclusive definition would go a long way in bringing to the fold of the investment ambit healthcare infrastructure which is being operated under trusts and societies. In addition, we believe that the measurement of impact for healthcare is not only primary but also secondary level. As part of our note we have outlined our recommendations which would be inclusive in nature and would appreciate be considered into the working draft recommendations.

Our review and recommendations for the draft regulations are under the following heads:

  1. All encompassing definitions of operators/players in the social sector
  2. Increased definition of scope of impact which are acceptable by ESG and impact investors
  3. Sustainability and limitations of grants and aids for social projects
  4. Wider inclusion of Alternative Investment Funds (AIF) and relaxations of various limitations under SEBI AIF Regulations
  5. GST waivers and set offs for the social sector like healthcare infra
  6. Regulations for social sector ventures for social credit rating
  7. Sale and lease back for infrastructure under the trusts and societies for asset monetization
  8. Listing and trading norms for wider market participation on the SSE including market making
  9. Participation of CSR funds into healthcare infra
  10. Special purpose vehicles (SPVs) listing of healthcare PPPs with community and social impact
  11. Regulations for pivoting from for profit to not for profit and vice versa and exit for failed ventures
  12. Other regulatory issues

Further, this note may not have been possible during the times of Covid, with inputs and efforts put in by our limited partner who are multilateral agencies, impact and ESG funds, sovereign

funds and several family office investors from India and abroad. We would like to also mention the efforts of our legal counsels Khaitan & Co, Mr. Siddharth Shah, Mr. Divaspati Singh and Mr. Anindya Roy who have worked in compiling the recommendations together into this note. Along the way, I had spoken with several institutions and industry bodies, both in impact and healthcare, in the country for their views. I thank them for their candid views and observations in framing the guidance to this note.

Once again, thank you all for your time and contributions to giving this nation a strong and robust social investment regulations, guiding path and the way forward. I would appreciate if we can be given a chance to discuss the various points outlined in our note.

Awaiting your response.

Stay Safe

With Warm Regards,

Kapil Khandelwal

Toro Finserve LLP

Managing Partner


The establishing of the Social Stock Exchange in India (SSE) is a positive step in the creation of a vibrant capital markets for the social sector. The Working Group Report published by SEBI for the public consumption and response has been reviewed by us and we offer our feedback which we have taken from our investors (some of them are impact and global multilateral funding agencies). We would like to offer our recommendations and inputs for consideration.

Healthcare in India with focus on the Charities and Impact Organisations      

India lags behind on several parameters on SGD-3. One of the reasons is the lagging investments in healthcare infrastructure and spending. On the issue of donor led spending, the participation by donors and external agencies in healthcare has increased from 0.01% of GDP in 2009 to 0.03% of GDP in 2016. The overall healthcare investments through PE/VCs in India is around USD 5.3 bn till June 2018 making it the third largest sector after ICT and BFSI sectors.

Of the total hospital beds in India, 40% of the hospital beds in India are provided by Government (and allied organisations), approximately 5% of the beds are charitable and or subsidized in medical colleges teaching hospitals. A large proportion of these charitable beds are in urban areas which are provided by for profit sector in lieu of concessional land. A recent press report stated that in Mumbai around 89% of the charitable beds earmarked for not-for-profit remained unoccupied during Covid-19.

An article publish in VC Circle by Toro Finserve LLP estimated the healthcare spend on the BoP in India which could translate through the social ventures servicing this population is estimated to be around $1 trillion by 2025 across all products and services for healthcare. The expected healthcare investments to be around $275-350 billion in infrastructure gap funding. The addressable social ventures that would qualify to be listed on the SSE would potentially deliver an annual turnover to be around $5 billion on a conservative basis.

The above estimates would remain elusive unless an inclusive regulatory framework is adopted for the social stock exchange in India and is an attractive proposition for our impact and ESG investors from abroad which is attractive for them to participate.

Over and above, the impact to SGDs and incremental social healthcare capacity creation in India, an inclusive regulation will also lead to:

  • Direct and indirect employment in the healthcare and allied infrastructure creation sector
  • Provision of long-term, perpetual capital to the healthcare infrastructure development
  • Economies of scale of many operators platforms to take them to IPOs and provide investor liquidity
  • Increased investment in newer innovation and clinical solutions to provide healthcare cheaper, better and faster
  • Adequate investment in technology to provide digital health and create smart hospitals
  • Reduced costs and improved quality of healthcare delivery to the masses without any burden on the healthcare operators to repay bank and NBFC debts
  • Creating of Healthcare REIT/InvIT as a separate investment asset class for channelising domestic and foreign investment which has been lagging for the last 4 years despite positive policy initiatives

Inclusive Regulatory Framework for Social Stock Exchange

Our review and recommendations for the draft regulations are under the following heads:

  1. All encompassing definitions of operators/players in the social sector
  2. Increased definition of scope of impact which are acceptable by ESG and impact investors
  3. Sustainability and limitations of grants and aids for social projects
  4. Wider inclusion of Alternative Investment Funds (AIF) and relaxations of various limitations under SEBI AIF Regulations
  5. GST waivers and set offs for the social sector like healthcare infra
  6. Regulations for social sector ventures for social credit rating
  7. Sale and lease back for infrastructure under the trusts and societies for asset monetization
  8. Listing and trading norms for wider market participation on the SSE including market making
  9. Participation of CSR funds into healthcare infra
  10. Special purpose vehicles (SPVs) listing of healthcare PPPs with community and social impact
  11. Regulations for pivoting from for profit to not for profit and vice versa and exit for failed ventures
  12. Other regulatory issues

All encompassing definitions of operators/players in the social sector

The current definitions as given in the report delineates between not for profit and for profit. There are no shades of grey (hybrid models of business) in the draft regulations.

We would like to submit that the definition of a social enterprise should ideally, seek to select a class or category of enterprises that are engaging in the business of “creating positive social impact”. It is our belief that the definitions should be all-encompassing requiring all social enterprises, whether they are FPEs or NPOs, to state an intent to create positive social impact, to describe the nature of the impact they wish to create, and to report the impact that they have created; and the differentiation should not be solely on the criteria of muted returns. There can be various hybrid models created by combining characteristics of both an FPE and an NPO. In our view, the current distinction as provided in the report does not afford enough flexibility to encompass all such possible models. The parameters of what constitutes a ‘positive social impact’ should be inclusive in nature and only by taking such a holistic view of the SSE could we hope to address the issue of the funding gap that this mechanism is expected to resolve. Given the ambiguity around the definitions, the SSE regulations must provide standard definitions to determine whether the model will predominantly provide space for non-profits or for-profit organisations or other hybrid structures.

For example, even schedule VII of the Companies Act uses the words “activities which may be included by companies in their Corporate Social Responsibility Policies” to indicate a list of exhaustive items which may be consider within the ambit of CSR activities by companies. In comparison, both the SASIX in South Africa and Singapore’s Impact Investment Exchange – prescribe social impact to be measured by the outcome in the community and not on muted returns.

In our view, the SSE should have a clear definition of what constitutes a ‘social cause’ and a ‘socially responsible’ act. The definition should also be dynamic to accommodate events that may emerge, such as Covid-19, or cyclone, that would require area-specific funds. We would further submit that the SSE should allow the listing of various assets encompassing a wide array of sectors such as healthcare, education, food, healthcare assets, colleges, schools, minimum development goals etc. This would inject a much needed impetus to overall social development by providing additional fund raising options in these sectors. It would also allow existing investors to offload their assets by listing on the SSE and utilise the money for other viable purposes ensuring a wholistic growth in the economy. Therefore, it is our submission that the ambit of social impact should be kept as broad as possible delineating between FPEs and NPOs, in order to truly enable holistic social development.

Increased definition of scope of impact which are acceptable by ESG and impact investors

Investment into healthcare social infrastructure not only creates bed capacity for population health management and impacting SGDs, but creates various axis of social impact for the Indian economy. These include the following when considering the direct and indirect impact of investment in healthcare infrastructure development that have been accepted by many of our ESG and impact investors as benchmarks:

Table deleted from here due to confidentiality reasons

We therefore submit that the scope of primary and secondary impact to the community needs to be defined into the draft report

Sustainability and limitations of grants and aids for social projects

During my work with the health and ICT Ministers’ Panel for Africa, one of the key fundamental drawback felt by the Governments was that 95% of the projects initiated by donors through grants and aid failed to sustain themselves through the self-funding by the communities once the donor’s grants and aids completed their tenure. The issues project completion and impact post grants and continued funding became very critical. Another issue was the measurement of the impact post exit of the donors. Social healthcare infrastructure project need sustainable upfront funding which need to be closed else projects would not complete

Hence, the scope of grants and aids should be tied to the overall project costs and operations till viability is establish. The regulations need to provide tighter norms for projects funded through grants and aid and not be allowed to kick off till funding closure is announced.

Wider inclusion of Alternative Investment Funds (AIF) under SEBI Regulations

The current draft talks about the AIF -1 Social Venture Capital. As India’s first healthcare infrastructure fund, we are registered under AIF- 2 regulations. We propose to exit the investments we make in for profit and not for profit and select hybrid models with impact in hospital infrastructure, we would like to understand the split between and investment criterial for listing of Social Healthcare REITs on SSE and for profit healthcare REITs on the NSE. We have evaluated the Singapore model. It creates flexibility on price discovery and is not so water tight.

It is submitted that even Category II AIFs may invest in social sectors and cause overall social impact and therefore even such AIFs should be allowed to be listed on the SSE. Here it is our submission that the regulators should consider either designing a general framework of pooling for this purpose which will apply across all regulations, whether AIFs (Cat1, 2 or REITs), or in the alternative create a special class of AIFs for social impact. from a regulatory point of view, that a new category of AIF structured similar to a ‘social venture fund’ may be introduced – the criteria for determination of which would correlate with its positive spillover effects on the economy. Such new class of AIFs should have the benefits of pooling coupled with the flexibility of investing in an identified asset and should be free from the limitations of diversification norms otherwise applicable to other AIFs.

AIFs have the potential to become the best source of additional capital to undertake the desired projects in the social sector given the overwhelming need for additional capital in such sectors in India. To reiterate, under the SEBI AIF regulations, Category I and II Alternative Investment Funds are prohibited from investing more than twenty five percent of their investible funds in one Investee Company. Which is restrictive in itself in the context of social upheaval as it does not provide the flexibility to invest more capital in a single project as may be required. We would humbly request for this restriction to be relaxed in case of a Cat I or Cat II AIF which is eligible to be listed on SSE or provide an exemption from the aforementioned 25% limit to the new category of AIFs specifically designed for this purpose.  

GST waivers and set offs for the social healthcare infra

The current draft has discussed on tax holidays and waivers for social ventures and their investors under the Income Tax Act. Social healthcare infrastructure also attracts GST across the value chain which is being incurred by the social healthcare ventures. However there is zero GST on healthcare for the final services being delivered to the community and is currently not offsetable. As a result the entire burden falls on the social healthcare venture operator and its donors if the final services to the community is fully subsidized.

From the social healthcare infra creation, in the current Goods and Services Tax (GST) regime of charging non-offsetable tax on rent from social healthcare operators makes the cost of funding prohibitive and reduces the net fund in hands of hospital operators to create incremental bed capacity by almost 20% in the country. GST on rent is virtually not offsetable because healthcare operators are exempt from charging GST to its patients / customers and that therefore, is a major roadblock for hospital operators to raise long-term affordable finance to create additional bed capacity in the country. Adequate policy measures need to be introduced to streamline the GST regime for financing healthcare infrastructure through sale and lease back transactions in India in line with bank and NBFC debt which do not attract any GST tax on financing healthcare infrastructure.

We submit that GST offset on the healthcare and allied services increases the burden to the operator and donors and needs to be removed as part of the tax recommendations in addition to the direct taxes recommendations provided by the draft regulations.

Regulations for social sector ventures for social credit rating

Banks and NBFCs do not consider the social and community impacts while providing debt finance to social sector healthcare operators. Our Healthcare REIT/InvIT model considers and ensures these impacts while investing into social sector healthcare operators through the sale and lease back modus of financing healthcare infrastructure. A change in the rating methodology for social sector infrastructure like healthcare is required to be considered for social healthcare ventures.

We therefore submit that the draft should recommend setting of separate rating guidelines for social ventures in India by the credit rating agencies for various instruments being used by the social ventures

Sale and lease back for infrastructure under the trusts and societies for asset monetization

As per our industry estimates around INR 75,000 crs of healthcare infrastructure is the dry gun powder that needs upgrade and expansion funding is residing on the trusts and charitable societies in India. These healthcare operators are currently financing their growth by using funds raised via:

  • Loan Against Property (Hospitals) from Banks (cheaper, limited amount, short tenure, not for debt averse operators)
  • Land Acquisition / Development finance from a Financial Investor (expensive and limited)

A new model of financing growth for such operators has opened up since SEBI announced the REIT / InvIT regulations (cheaper, cleaner and control neutral). This enables the hospital operators to monetize its “dead” hospital infrastructure assets and raise perpetual capital to fund its future growth opportunities. This is done via sale-lease back model where the operator sells the hospital infrastructure to a professional property investor while also signing a long-term lease to ensure business continuity. This enables the property investor to earn rental income while it provides the Hospital Operator with perpetual and affordable source of capital and becoming asset-lite – a win-win situation for all parties concerned.

REITs also have certain listing limitations under the current regulatory regime – which should be relaxed in the event they become eligible to be listed on the SSE. The SSE should also enable debt, equity or perpetual debt instruments to be listed through SPV structures.

Listing and trading norms for wider market participation on the SSE including market making

Under the current AIF regime, units of close ended AIFs are allowed to be listed on stock exchanges subject to a minimum tradable lot of one crore rupees. In light of our recommendation for a separate category of AIFs, the listing for such category of AIFs should be allowed with the minimum tradeable lot for such AIFs being made smaller, in region of 10 – 15 lakhs instead of the more cumbersome 1 crore requirement. The AIF may also hold assets directly, i.e. hospital assets through a single AIF and units of such AIF will get listed. It is humbly submitted that an SPV created for such purposes is listed then in additional to equity listing, perpetual bond listing should also be allowed at the SPV level.

Participation of CSR funds into healthcare infra

Please note that the same asset that engages in ‘for profit’ ventures to initiate social impact may also consider raising CSR money at a ‘for profit’ bond / equity interest.  It is submitted that clear guidelines should be introduced on how CSR funds can be deployed via SSE.

Under the current CSR regime (as per the Companies Act) there is no provision for one company’s CSR monies to be combined with and added to monies of other companies CSR, i.e. there is no concept of pooling and/ or co-participation under the current regime. For example, if the resources of various companies could be pooled together in partnership with the government and other creditable NGOs, the impact could be manifold. Where NGOs and corporates can bring in quality, but scaling is possible only with the involvement of the government. This co-participation may be in the form of cash or in the form of valuable knowledge sharing / experience or personnel that one company may benefit from others. Smaller companies may benefit greatly from such overall changes to the regime given the 5 percent limit on overheads stipulated by the government. Smaller CSR spenders can only deploy a limited amount in the form of administration expenses and hence the sample size of projects they can invest in are much lesser in number and quantity. This often leads to sub-optimal allocation of funds, with a disconnect between capital deployment and on-ground realities.

Therefore, while the CSR regime currently encourages collaboration between companies to help avoid duplication of managerial efforts, infrastructure, personnel amongst other factors, it does not explicitly mention / allow ‘pooling of funds’. We humbly submit that a minor modification in the act could address this aspect. We believe that pooling CSR spends of companies can unlock a myriad number of opportunities in addressing India’s most pressing challenges in the social sector.

SPVs listing of healthcare PPPs with community and social impact

As member of the Planning Commissions’s PPP Committee for Healthcare Infra under UPA -1 chaired by Dr. Hamied and Haldea, several recommendations were given to fast track PPP in Healthcare. However, the issue of concessioning and operating costs of providing community healthcare to the masses has been the bone of contention. The recent Orissa PPP bids front ended by IFC has failed to elicit bidders due to the same reasons.

There is an approximately $45 billion of healthcare infra assets which are sitting on the books of Central and State Governments and Private and Social Sectors. Many of these require funding for upgrading and expanding their infra. Various archaic regulations and other operations bottlenecks are preventing investments flows into these existing healthcare infra from Indian and foreign LP investors as the PPP policies have failed to garner interest.

The current National Infrastructure Pipleline published in Dec 2019, shows a committed pipeline of $2.5 billion which is only through Center and State Governments. A gap of 99% of what needs to be invested for India to meet global norms for healthcare infra supply. Unlike roads which is hogging over 80% of NIP’s committed investments, healthcare infra is gestational. Therefore, there is a weak and lagging healthcare infra investment in India leading to demand gaps. Many of our multilateral funding agencies who are also LPs in our fund would like to participate in the social healthcare.

Innovative SPV structures need to be created where the concessions can be funded by the multi lateral agencies and ESGs for the impact to the communities while the Central and State Governments exit their assets to private operators. These SPVs can be listed on the SSE and actively traded or subscribed to by these LPs.

The government should consider creation of such hybrid impact models involving private-sector partnerships to provide critically-needed health infrastructure.  For profit models may be considered even in this sector which is lagging behind for want of funding from interested LPs. The bid evaluation process in PPP / concession agreements may be relooked at in order to require more concrete bids showing higher levels of commitment from lenders and to eliminate bids that are not in line with commercial projections. An alternative may be for governmental bodies to exit foible projects and letting the operator / agencies pool / fund the concessions through SPV structures. Such SPV structures with underlying PPP projects may be listed on the SSE platform for turnaround and subscribed to by willing investors thereby achieving a turnaround of otherwise stagnant developmental projects.

Regulations for pivoting from for profit to not for profit and vice versa and exit for failed ventures

There have been many instances in the past where social healthcare ventures in trusts which could not be sustained by the promoters and settlers of the trust/societies (see case study) to for profit business models due to various business models, strategic and sustainability issues. The current regulations are fairly prohibitive and do not consider pivoting from not for profit to for profit business models as a going concern. The current draft does not consider these scenarios nor make any recommendations on these exits.

We request that the draft regulations look into provisions for pivoting the business models from for profit to not for profit and vice versa and frictionless exit regulations need to be drafted for a going concern scenarios.

We would like to further submit that LPs should be allowed to exit in the event social ventures are not sustainable for their businesses. Otherwise such models become less lucrative and newer LPs may not participate in such models given the inflexibility around it. Therefore, there is a need to provide a flexible mechanism to allow LPs to exit, be it from a ‘non-profit’ to a ‘for profit’ model or vice versa.

Other regulatory issues

Thin capitalization rules

SPVs / acquisition companies are set up in India to raise money (through debt or equity) for the purposes of financing the said acquisition. While restrictions on debt financing of acquisitions still exist, India has seen a steady increase in the use of innovative financial instruments to fund such acquisitions. Thin capitalisation refers to the situation in which a company is financed / leveraged through a relatively high level of debt compared to equity.

Current IT Act provisions restrict the payment of interest by an entity to its ‘Associated Enterprise’ to the extent of 30% of its earnings before interest, taxes, depreciation and amortization (EBITDA) or interest paid or payable to associated enterprise, whichever is less.

In view of the non-deductibility of the interest expense beyond the de minimis threshold as stated above, investors investing through perpetuity debt instruments, do not have access to such an exemption. It is our humble submission that this exemption be allowed for SPVs with a higher debt component, which are eligible to be listed on the SSE satisfying all relevant criteria.

Flexibility in order to get CSR funding

In the event an FPE is converted into a NPO, such organization should be allowed access to CSR funding and this should be expressly mentioned under the SSE regulations.

Relaxation on listing requirements of REITs

We request that the current considerations which are otherwise applicable around listing of REITs be relaxed to an extent in the event of such REIT being eligible to be listed on the SSE. Such considerations include restrictions on minimum subscription amounts (INR 50,000), minimum tradable lots (200), minimum value of such REIT assets (i.e INR 500 cr) etc. The restrictions for example, may disallow listing of REITs focussed on the hospital sector on the SSE in the event such minimum criteria are not met. Relaxation of these norms would allow for a more holistic growth of the sector by allowing much wider participation and garnering more interest from investors. Similar to our recommendation in relation to AIFs, the regulator may also consider carving out a separate type of REIT for this purpose.

Case Studies for Consideration

Deleted from here for confidentiality reasons



Fostering widespread engagement among investors will be vital to raise adequate capital to fund projects in social sectors. Some of the suggested incentives will be important for both market participants willing to invest and social purpose organisations which are willing to get listed. The wide-reaching economic impact of COVID-19 has resulted in a surge of areas where investments can be made. As envisaged, in order for SSE to be a platform to facilitate raising of capital in such sectors for them to recover and turn-around from the crisis, these measures would only assist in driving more engagement from the relevant market players and ensure that the objectives behind formulation of SSE is met. We therefore request your kind consideration around the suggested recommendations outlined in this note.