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BUSINESS AND ECONOMY - February 2017

Feb 2017

Feb 08, 2019

India Up 8 Spots in Global IP Index

India has climbed eight places in the latest annual International Intellectual Property (IP) Index released by the US Chambers of Commerce to reach 36th place out of 50 countries, climbing from 44th rank in the index last year.
For the second year in a row, India's score represents the largest gain of any country measured on the Index, which covers over 90 per cent of global gross domestic product.

RBI Rate Cut

In a major boost to rate sensitive realty and auto sector, the Reserve Bank of India in its bi-monthly monetary policy lowered the repo rate, the rate at which the central bank lends money to commercial banks, by 25 basis point to 6.25 per cent.
The interest rate cut coupled with the budget sops would provide much needed respite to the borrowers irrespective of whether it is a car loan, personal loan or home loan.
In the last one year, home loan interest rates rose by as much as 5-7 per cent as the central bank hiked its repo rates by 50 basis points during the same period.

FPI Norms Relaxed

The Reserve Bank of India has relaxed the provision that barred foreign portfolio investors (FPIs) from having more than 20% exposure of their total corporate bond portfolio towards a single corporate entity.
The relaxation comes nearly 10 months after the cap was first put in place last year wherein it was mandated that FPI investment in a bond issue could not be more than 50% of the issue, while capping single corporate exposure of overseas investors at 20%.
In order to encourage a wider spectrum of investors to access the Indian corporate debt market, it is now proposed to withdraw this provision. A circular to this effect will be issued by mid-February, 2019.
Market participants have welcomed the relaxation and believe that not only FPIs but debt mutual funds would also benefit from the move.

Abolition of Ombudsman for direct, Indirect Taxes

The Union Cabinet has approved the proposal for Abolition of Institution of Income-Tax Ombudsman and Indirect Tax Ombudsman.
The approval comes against the backdrop of people preferring online grievance redressal mechanism.
The approval comes in the wake of alternative complaint redressal mechanisms chosen by public and the institution of Ombudsman could not prove to be more effective than regular existing parallel channels of grievance redressal, both the institutions of Income-Tax Ombudsman as well as Indirect Tax Ombudsman have been abolished.
The institution of Income-Tax Ombudsman was set up in 2003 to deal with grievances of public related to settlement of complaints relating to income tax.

RBI Slaps Fine on SBI

The Reserve Bank of India had slapped Rs. 1 crore penalty on SBI for violating norms. RBI "in exercise of powers conferred under Section 47 A of the Banking Regulation Act, 1949, has levied a penalty of Rs. 1 crore on the bank for not monitoring the end use of funds in respect of one of its borrowers.

Feb 07, 2019

RBI Penalises Three Banks

The Reserve Bank of India imposed separate monetary penalties on UCO Bank, Axis Bank and Syndicate Bank over deficiencies in complying with different regulatory norms.
The RBI imposed a penalty of Rs. 2 crore each on UCO Bank and Axis Bank for non-compliance with its circular on `Collection of Account Payee Cheques - Prohibition on Crediting Proceeds to Third Party Account` and Master Directions on `Frauds - Classification and Reporting by commercial banks and select FIs`.
The RBI imposed a penalty of Rs. 1 crore on the government-owned Syndicate Bank for non-compliance with the directions contained in `Master Circular on Frauds - Classification and Reporting` and `Circular on Risk Management Systems in Banks`.

Dassault Systemes Opens 3D Experience Centre

Dassault Systemes opened its fifth global 3D experience executive centre in Chennai to showcase the real-life examples of digitalisation strategies adopted by firms across industries using 3D technology.
The centre will illustrate the usage of big data and analytics, including digital continuity in a global manufacturing company with advanced engineering capabilities from concept to sales and servicing to understand complexity, save time and reduce errors while making decision.
The centre would present how Dassault Systemes, as a scientific firm, is closing the gap between the virtual and real to harmonise product, nature and life for a sustainable society.

Plan to Continue Coal Exploration

The Cabinet approved the proposal to continue the Exploration of Coal and Lignite Scheme, which took effect in 2017-18 and will now go on till 2019-20, with an expenditure of Rs. 1,875 crore.
The approved scheme is for carrying out 24,41,500 metre of drilling and 3,575 line-km (LKM) of surface geophysical survey for Promotional (Regional) Exploration & detailed drilling in the non-Coal India Limited blocks, in coal and lignite along with coal bed methane and shale gas studies to estimate and prove coal resources during the three year period.
Under the scheme, approximately seven billion tonne of resources will be "established" and 11 billion tonne of resources will be "proved".

Essar Oil UK Acquires BP Assets

Essar Oil UK, part of the Essar Group, has acquired a number of U.K. assets from oil giant BP, as part of efforts to strengthen its distribution and logistics network, even as the company seeks to increase its presence across a number of markets.
The assets include an equity stake in the UKOP north-to-south pipeline — a 200-km-long multi-product pipeline that connects the company's Stanlow refinery to the Kingsbury oil terminal.
It has also acquired an equity stake in the joint venture that runs the terminal as well as a 100% stake in the Northampton fuel storage terminal.
Essar Oil UK, through its two wholly owned subsidiaries, namely Essar Midlands Limited and InfraNorth Limited, will acquire the BP Plc. assets. The UKOP pipeline is BP Plc.'s joint venture with Shell.
With these acquisitions, Essar's total investments in the U.K. now stand at $1 billion since the company bought the Stanlow refinery in 2011.

Unified Regulator for IFSCs

The Cabinet has approved the setting up of a unified authority that would regulate all the financial services in International Financial Services Centres (IFSC), such as the Gujarat International Finance Tec-City (GIFT) in Gandhinagar.
This is to be done through the International Financial Services Centres Authority Bill, 2019.
An IFSC is aimed at encouraging Indian companies that are conducting business in foreign financial centres such as London and Singapore, to bring that business to India by providing them with a global-standard regulatory and business environment.
IFSC would also complement and promote further development of financial markets in India. Currently, the banking, capital markets and insurance sectors in IFSCs are regulated by multiple regulators, i.e. RBI, SEBI and IRDAI.

Indian Exporters Embrace Lab-grown Diamonds

Nearly a year after the US government announced it would no longer discriminate between natural and lab-grown or synthetic diamonds, Indian exporters are taking to manufacturing the stones themselves.
The output of synthetic diamonds, which touched 3,50,000 carats in 2017, is expected to touch 1.5 million carats by 2021, according to officials at the Surat Special Economic Zone. Across Gujarat there are as many as 400-500 diamond exporters who have taken to manufacturing synthetic diamonds.
As of now Gujarat is the largest manufacturer of lab-grown diamonds in the country. However Rajasthan too is catching up.

RBI Unlikely to Transfer Contingency Fund

The Reserve Bank of India (RBI) is unlikely to give in to the government's demand of transferring fund that was set aside for contingency reserves in 2016-17 and 2017-18, according to sources.
A total of Rs. 27,330 crore, Rs. 13,140 crore in FY17 and Rs. 14,190 crore in FY18, was set aside by the RBI for the contingency fund.
As per reports, there was no precedence of such a dividend being paid, that is, from funds that have already been set aside for contingencies.
The government has requested the RBI for providing an interim surplus for the financial year 2018-19 on the analogy of previous financial year and transfer of the amount withheld from the surplus of 2016-17 and 2017-18.

Feb 06, 2019

RBI May Slash Interest Rate

As per reports, the Reserve Bank may cut key lending rate by 0.25 per cent later this week in view of benign inflation.
The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das will start its three-day meet in Mumbai and announce the policy on February 7.
The central bank has maintained status quo on interest rate in its last three bi-monthly monetary polices after hiking the repo rate twice this fiscal by 25 basis points each.

KIA Eyes Big Investment in India

As per reports, Kuwait Investment Authority (KIA), one of the five largest sovereign wealth funds of the world, is keen to triple its investments of $5 billion in India by entering areas such as infrastructure, airports and highways.
The Kuwait government has also proposed to India the possibility of joint investments in third countries, including in the Far East and Eastern Europe, in real estate, housing and free economic zones.
KIA is the world's oldest sovereign wealth fund with assets worth more than $590 billion under management and has invested about $2 billion in India since 2017.

Railways Inks Pact with Magzter

Commuters travelling on trains will now be able to read magazines and newspapers from across the world at a discount on IRCTC's ticket booking website as railways has tied up with Magzter, a leading digital newsstand.
Under the partnership, commuters can get unlimited access to more than 5,000 best-selling magazines and select newspapers on their phones and tablets at an exclusive offer.
IRCTC users will be given exclusive advantage of availing this facility at a heavily discounted price along with customised affordable packages and exclusive seven days free trial package.

Amazon's and Walmart's Plans Ambushed

Amazon.com and Walmart Inc.'s plans to dominate India's online retail landscape have been ambushed by Prime Minister Narendra Modi's political priorities heading into a tightening election.
The vote, which must be held by May, has increased the influence of local retailers that lobbied for growth-crimping curbs on the US giants.
On cue, India rolled out constraints on foreign e-commerce players including Jeff Bezos-led Amazon and Walmart-owned Flipkart, which together control 70 per cent of its online shopping.
The tighter rules, aimed at protecting small traders, may end up benefiting Mukesh Ambani, who is building a home-grown competitor.
The rules now bar Amazon and Flipkart Online Services Pvt. Ltd. from owning inventory, and require them to treat all vendors equally, throttling discounts and exclusives - a huge advantage to homegrown companies including Ambani's new venture.

Government Submits Resolution Plan for IL&FS

The government submitted the debt resolution plan for crisis-hit IL&FS to the NCLAT and also suggested the name of retired Supreme Court judge Justice D. K. Jain to supervise the entire process.
The entire resolution process would be based on the principles enunciated in the Insolvency and Bankruptcy Code.
Under the plan, the government has categorised IL&FS group companies into green, amber and red based on their respective financial positions.

Reid & Taylor Liquidation

The Mumbai bench of the National Company Law Tribunal (NCLT) ordered liquidation of the bankrupt Reid & Taylor following the bidder's failure to meet eligibility criteria.
However, it asked the Resolution Professional (RP) to ensure that the brand is sold as a going concern and protect the interest of the workers.
Reid & Taylor Employees Association has decided to challenge the liquidation order at the appellate tribunal NCLAT.
The move came after the representatives of India Gas failed to satisfy the mandatory net worth of Rs. 50 crore and other bonafides, even though it was ready to make the Rs. 2 crore non-refundable earnest money deposit.

Feb 05, 2019

Swiggy Acquires Kint.io

Online food ordering and delivery app Swiggy announced it has acquired-hired Kint.io, an Artificial Intelligence (AI) start-up that applies deep learning and computer vision for object recognition in video.
Founded in 2014, the Bengaluru-based start-up would assist Swiggy in boosting its computer-vision technology and consumer experience.
The founding members of Kint.io, Pavithra Solai Jawahar and Jagannathan Veeraraghavan, will join the Swiggy team.

April-December Fiscal Deficit

According to data from the Controller General of Accounts (CGA), the fiscal deficit for the period April-December 2018 has touched 112.4% of the budget target of Rs. 6.24 lakh crore for the financial year 2018-19.
The situation, however, is marginally better than last year, where the fiscal deficit at the end of December 2017 was 113.6% of that year's budget estimate.

Anti-dumping Duty on Chinese Products

To protect domestic players from cheap imports, India has imposed anti-dumping duty on as many as 99 Chinese products as on January 28 this year, Parliament was informed.
Chinese products on which the duty was imposed include chemicals and petrochemicals, fibres and yarn, machinery items, pharmaceutical, rubber and steel items.
Countries carry out anti-dumping probe to determine whether their domestic industries have been hurt because of a surge in cheap imports.

Merger of 3 PSU General Insurers

The government expects to complete the merger of three state-owned general insurance companies by 2019-20.
The merger of National Insurance Company, United India Insurance Company and Oriental India Insurance Company was first announced in the Budget 2018-19 and the government intended to complete the process in current fiscal itself.
Initial estimates suggest that the combined entity formed after the merger will be the largest non-life insurance company in India, valued at Rs. 1.2-1.5 lakh crore.

RCom Barred from Selling Any Asset

According to the National Company Law Appellate Tribunal (NCLAT), Reliance Communications (RCom) or any third party cannot sell, transfer or alienate any of its assets (movable and immovable) without the appellate tribunal's or the Supreme Court's permission.
The directive came after RCom moved the NCLAT for withdrawal of its appeal against an NCLT order, directing the firm to pay Rs. 550 crore to Ericsson, to pursue the resolution plan through the National Company Law Tribunal (NCLT) process.

India's Steel Production

India's total steel production increased from 88.98 MT in 2014-15 to 103.13 MT in 2017-18, Minister of State for Steel, Vishnu Deo Sai, informed Lok Sabha.
World Steel Association (worldsteel) in a report in January, said that India has jumped ahead of Japan to become world's second largest steel producing country in the world.
Crude steel production of India in 2018 stood at 106.5 MT, an increase of 4.9 per cent from 101.5 MT in 2017. On the other hand, Japan produced 104.3 MT in 2018, down 0.3 per cent compared to 2017.

Centre May Relax Angel Tax Norms for Start-ups

The government decided to set up a five-member working committee to look into the angel tax issue and come up with guidelines in one week.
It also agreed to implement some key changes requested by start-ups regarding the issue.
The 'angel tax', as it is commonly called, is a tax on the excess capital raised by an unlisted company through the issue of shares over and above the fair market value of those shares.
This excess capital is treated as income and taxed accordingly. This tax most commonly affects start-ups and the angel investors who back them.

Feb 04, 2019

ADB Buys 14% Stake in Microfinance Firm

Asian Development Bank has bought a 14% stake in micro lender Annapurna Finance for Rs.137 crore, reinstating beliefs that the microfinance sector is on course to attract long-term funds from lenders and investors.
ADB's investment in the Bhubaneswar-based Annapurna is an equity expansion, while a few of the existing investors such as Oman India Joint Investment Fund (OIJIF), Oikocredit and Bamboo Finance Partners have raised their holding in the MFI through secondary market deals totalling Rs. 75 crore.
The expansion of equity will help the firm expand its loan portfolio in asset classes such as MSME and affordable housing, beyond its bread and butter microfinance.

Japanese Hybrid Cars to Drive into India in 2021

Suzuki Motor Corp., Toyota Motor Corp. and Honda Motor Co. have started developing strong or full hybrid cars for India and are expected to introduce them by the end of 2021.
The Japanese automakers have been encouraged by the Union government's assurance that it will not differentiate between hybrid and electric vehicles while offering financial incentives to makers of eco-friendly vehicles.
The carmakers are expected to initially offer the hybrid technology in locally produced midsize sedans.
Japanese companies have been mostly focusing on petrol-electric hybrids, despite a rising global trend towards battery-powered electric vehicles.
The companies are now collectively lobbying the Indian government to extend financial incentives offered on electric vehicles to hybrid vehicles as well.
They argue that hybrid vehicles are more fuel-efficient than those that run on petrol and diesel, while emitting substantially less carbon.
As part of its aim to curb rampant pollution in cities, the government plans to promote the local manufacturing of lithium-ion batteries that can be used for both hybrid and electric vehicles.
Toyota and Suzuki, as part of their partnership to develop hybrid vehicles for India, have started developing a common platform, primarily developed by Toyota and code-named GAC.
The platform would be used by both companies to make their respective hybrid vehicles for India and other markets, the people said. Honda has also finally decided on its plan to introduce hybrid vehicles in India and its first full hybrid vehicle would be the next generation City (a midsize sedan).

M&M Signs MoU with Uber for Zero Emission Plan

Mahindra Electric, the country's leading electric vehicle maker, is close to finalising partnerships with multiple city municipal corporations in alliance with Uber, and a pilot project will be announced in February.
Mahindra & Mahindra and Uber had signed a memorandum of understanding (MoU) in 2017 to provide last mile zero emission connectivity in Indian cities.
Mahindra is in talks with the authorities in Delhi, Hyderabad and Bengaluru amongst other cities to supply and operate electric taxis and three wheelers.

Pakistan to Export Donkeys to China

Pakistan, which has the third largest donkey population in the world, will export the animal to China, opening the avenue to earn millions from the trade.
Donkeys are highly prized in China, especially for their hide, which is used to manufacture traditional Chinese medicines.
Gelatin made from donkey skin has been long considered to have medicinal properties in China, traditionally being thought to nourish the blood and enhance the immune system.
Pakistan has the world's third largest population of donkeys with more than 5 million animals, while China stands at number one.
In a bid to boost the country's exports, the live stock department has announced that it will develop donkey farms — the first of its kind in the country.
According to reports, at least two donkey farms are being set up in Dera Ismail Khan and Mansehra with foreign partnership.

Paytm Mall Slashes Cashbacks

Paytm Mall has slashed cashbacks by more than three-fourths across all product categories, including grocery, electronics and fashion, as part of the strategic shift away from a warehouse-based delivery plan, leading to steep sales declines for consumer goods makers using the platform.
Unlike Amazon & Flipkart that sell more mobile phones and electronics, Paytm Mall's focus so far had been grocery and daily-use products.
It had been working closely with large companies such as Hindustan Unilever, Parle, Nestle, ITC, Dabur, Mondelez and Coca-Cola for joint promotions and collaborations for exclusive product launches.
Paytm Mall, which was launched in early 2017, relied on cashbacks to ensure repeat customers, with hyperlocal tie-ups with grocers to step up logistics, and to compete head on with Amazon India and Walmart-backed Flipkart's grocery delivery services.
At its launch, Paytm Mall had said it hoped to earn a gross merchandise value (GMV) of over $3 billion from just the online grocery segment, taking share of grocery to 40%.

US formally Halts Russia Arms Treaty

The US formally gave Russia notice on suspending its participation in the Intermedia-range Nuclear Forces Treaty, saying it will pull out completely if Russia did not become verifiably complaint with the provisions of the pact in the next six months.
Russia has already announced its intention to suspend its participation in the treaty. With the fate of the historic 1987 pact that signalled the end of the Cold War in serious jeopardy, fears have arisen of a renewed armed race that had kept world at the edge of a nuclear exchange for decades.
The US had announced its intentions, after years of trying to bring Russian into compliance. Washington has accused Russia of being in breach of the treaty since at least 2014, for developing and deploying Novators.
As per the treaty signed by Ronald Reagan and Mikhail Gorbachev, US and Russia had committed to stop testing, developing and deploying ground-launched missiles in the 500-5,500 km range.

Banks power cashless campuses

Banks have tied up with educational institutions for debit-cum-NFC cards that function as a regular debit card and can be used for micro-payments.
The cards can serve as identity card (with the student's name, photograph, roll number) or a prepaid/debit card or library membership card (tracking readership, books borrowed) or attendance card (access to gym, classes, labs) or billing card (usage of college facilities such as canteen, bus, shuttle).
DCB Bank, Visa and money management app Slonkit together have issued a multipurpose card as a prepaid card linked to a mobile wallet, which also lets students check their balance, and budget their monthly expenses.
The mobile wallet/app also helps educational institutions to send push notifications to students regarding exam dates, fees, etc.
ICICI Bank first turned its own campus cashless with "Tap-N-Pay" cards, before starting work at Infosys and Indian School of Business.
The semi-closed prepaid card solution works like a unified stored value smart card.
Existing ID or access cards issued to employees, teaching staff or students can be used for cashless transactions.
The card can be instantly loaded by sending an SMS to ICICI Bank or by topping it via UPI.
It reduces transaction time at the counter during lunch hour and coffee breaks. It also provides for seamless settlement between merchants.

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