INDIA SEES $1 TRILLION DIGITAL ECONOMY BY 2022
The information technology (IT) industry, which is reeling under pressures from key Western markets, will have a formal meeting with the Centre to discuss various problems that have reportedly resulted in job losses across the sector, a senior government official said.
In separate letters to top IT officials, Ministry of Electronics and Information Technology’s additional secretary Ajay Kumar wrote that the government is organising a high-level roundtable with select industry leaders for developing the roadmap towards the Centre’s target of having a $1-trillion digital economy by 2022. The meeting, which is expected to be held on June 16, will be chaired by IT minister Ravi Shankar Prasad.
The government official cited above told The Indian Express that soon after news reports of mass layoffs, the IT ministry began chalking out plans to have regular dialogues to deal with issues concerning the industry. The official also said that apart from the software sector, those from other aspects of digital economy — telecommunications, digital payments, banking, cyber security — have also been invited to the meeting.
In the recent months, the IT industry has faced business uncertainties from various fronts including issues pertaining to H-1B visa in the US, slowdown in key geographies and the growing need for more specialised skills, which reportedly led to a number of mid- and senior-level employees being laid off.
SEBI CONDITIONALLY APPROVES NEW HEAD OF NSE BOURSE
The Securities and Exchange Board of India (SEBI) on Friday approved the appointment of Vikram Limaye, head of infrastructure lender IDFC Ltd, as the next managing director and chief executive of National Stock Exchange (NSE), subject to his resignation from a cricket committee.
The conditional approval from SEBI, announced by the NSE on Friday, comes four months after the country’s largest bourse nominated Limaye for the post, an unusually long time.
Sources familiar with the matter have told Reuters SEBI had been concerned the executive’s time would be split if he were to remain a member of a Supreme Court appointed committee to supervise the country’s cricket body after a 2013 fixing scandal.
“SEBI has approved the appointment of Mr. Vikram Limaye as the MD and CEO of the National Stock Exchange of India Ltd, subject interalia to his being relieved from his BCCI (Board of Control for Cricket in India) assignment,” NSE said in a statement.
No specific date was provided for when Limaye would take over as CEO.
The appointment of Limaye removes one of the key hurdles as NSE pursues a long-awaited initial public offering (IPO) that bankers say could raise as much as $1 billion.
NSE applied for the IPO in December, but SEBI has delayed that approval as well, as it probes the NSE’s disclosure that some brokers may have been given unfair access to its servers.
MARUTI OVERTAKES INFOSYS, ONGC TO BECOME INDIA’S 8TH MOST VALUED FIRM
With a 3 per cent surge in its share prices on Friday, auto major Maruti Suzuki India overtook IT-bellwether Infosys and upstream oil company ONGC to become the eighth most valued firm in India. Over the last three years, the company’s market capitalisation — at Rs 2,25,079 crore — has jumped nearly four times from Rs 57,939 crore at the end of April 2014.
Other major shifts in the market cap sweepstakes over the last three years have been the rise of HDFC Bank, which is now the third largest Indian company after TCS and Reliance Industries and the rise of consumer goods giant Hindustan Unilever from being the 14th largest company to sixth now. Even HDFC Limited and Kotak Mahindra Bank have gained 5 and 7 spots to become fifth and 13th most valued. Maruti Suzuki emerged as the biggest gainer among Sensex companies during this three-year period and has gained 12 positions since October 2014 when it became the 20th company in India to enter the Rs 1 lakh-crore club.
Experts say that this trend is a reflection of the strong consumption story over the last three years and the biggest gainers during this period have been automobile, FMCG and consumer goods companies along with retail lenders. A look at the top 10 companies at BSE by market cap shows that over the last 10 years, four companies have been edged out of the top 10 list — Bharti Airtel, NTPC, Wipro and ICICI Bank. In fact, ONGC which was the second largest by market cap ten years ago, has now slipped to 10th.
In the auto sector, it is not just MSIL that has witnessed a great run. Eicher Motors has grown even faster and from being a Rs 16,700-crore company in April 2014, its market cap hit Rs 80,981 crore on Friday. While Hero Motocorp and Bajaj Auto have grown by 72 and 50 per cent, respectively, auto ancillary majors such as Motherson Sumi and Bosch have witnessed their market capitalisations grow 188 per cent and 120 per cent, respectively. In fact a look at the top 40 firms by market cap shows that one out of five companies in the list is an auto company now.
AIR INDIA TO NOT MAKE ANY FRESH PLANE ORDERS
National carrier Air India on Friday said it will not place any order for new aircraft till there is clarity on its future course, including possible privatisation. The airline, however, said all the existing orders will be respected and new aircraft are being added to the fleet.
“Whatever has been ordered in the past, that is there,” Air India Chairman and Managing Director Ashwani Lohani told reporters in Guwahati, adding that no fresh orders will be placed right now. Ordering of new planes is a long-term process by Air India and it usually takes 6-9 months, he added.
Asked how long the company would go without placing fresh orders, Lohani said: “We do not know. We have to keep on running the airline. There is no decision on that.” He, however, denied reports that some old orders have been cancelled. “No, not right. Whatever the orders, these were ordered before. These will be coming,” Lohani said.
Giving details of Air India’s order list, the CMD said: “We are adding 10 ATRs. We have placed order for 29 Airbus on lease. They have started coming now. But we are also grounding old aircraft. We have lot of old aircraft. So the net addition will be only about 15 Airbus.”
Besides, the airline is procuring wide-bodied Boeing aircraft to its fleet to strengthen the international route. “Also, seven more wide-bodies (Boeing) will be added in next 6-7 months. We are starting lots of international flights,” Lohani said.
The state-owned carrier has a total of 103 planes, of which 42 are wide-bodied Boeing 777s, 747s and 787s, while 61 are narrow-bodied Airbus 319s, 320s and 321s. Its low-cost subsidiary Air India Express has 23 Boeing 737s at present.
Finance Minister Arun Jaitley has proposed privatisation of Air India and the Civil Aviation Ministry is looking at all options to make the airline strong and viable. A Cabinet note in this regard is likely to be prepared shortly, according to Minister of State for Civil Aviation Jayant Sinha. The development came against the backdrop of NITI Aayog submitting its suggestions on the future course for the airline.
Air India has piled up over Rs 50,000 crore of debt, mainly because of high maintenance costs and lease rent. Since the merger of Indian Airlines with itself, Air India has been in the red. However, it posted an operational profit of Rs 105 crore on account of low fuel prices and increased passenger numbers in 2015-16.
INDIA TAKES US TO WTO FOR FAILING TO DROP STEEL DUTIES
India has complained to the World Trade Organization that the United States has failed to drop anti-subsidy duties on certain Indian steel products after losing an earlier ruling, a document published by the WTO said on Friday.
India said the United States had failed to meet an April 2016 deadline to comply with a WTO ruling that faulted it for imposing countervailing duties on hot-rolled carbon steel flat products from India.
The non-compliance complaint, effectively a new trade dispute, could lead to India asking to impose trade sanctions if the United States is found not to have complied.
India brought the original complaint to the WTO in April 2012, after the U.S. Commerce Department set an import duty of nearly 286 percent on a circular welded carbon-quality steel pipe from India to offset government subsidies.
The Commerce Department did this after a petition from Allied Tube and Conduit, JMC Steel Group, Wheatland Tube and United States Steel Corp.
In the extremely complex case, India argued that the price of the steel pipe was set by the market, but the United States said the iron ore used to make it came from a state-run mining firm, NMDC, effectively subsidizing Indian exporters.
India’s complaint alleging U.S. non-compliance listed 14 areas where it said the United States was in breach of the international trade rules.
If the two sides cannot settle the matter within 14 days, India could ask a WTO dispute resolution panel to adjudicate.
INDIA’S PLAN TO DEVELOP KEY IRANIAN PORT FACES US HEADWINDS
Western manufacturers are shying away from supplying equipment for an Iranian port that India is developing for fear the United States may reimpose sanctions on Tehran, Indian officials say, dealing a blow to New Delhi’s strategic ambitions in the region.
Lying on the Gulf of Oman along the approaches to the Straits of Hormuz, the port of Chabahar is central to India’s hopes to crack open a transport corridor to Central Asia and Afghanistan that bypasses arch-rival Pakistan.
India committed $500 million to speed development of the port after sanctions on Iran were lifted following a deal struck between major powers and Tehran to curb its nuclear program in 2015.
But the state-owned Indian firm that is developing Chabahar is yet to award a single tender for supplying equipment such as cranes and forklifts, according to two government sources tracking India’s biggest overseas infrastructure push.
US President Donald Trump denounced the nuclear agreement on the campaign trail, and since taking office in January has accused Iran of being a threat to countries across the Middle East.
Swiss engineering group Liebherr and Finland’s Konecranes and Cargotec have told India Ports Global Pvt Ltd, which is developing the deep water port, they were unable to take part in the bids as their banks were not ready to facilitate transactions involving Iran due to the uncertainty over U.S. policy, the two officials said in separate conversations with Reuters.
These firms dominate the market for customized equipment to develop jetties and container terminals. One official said the first tender was floated in September, but attracted few bidders because of the fear of renewed sanctions. That fear has intensified since January.
“Now the situation is that we are running after suppliers,” one official said, speaking on condition of anonymity because of the sensitivity of matter.
A Konecranes spokeswoman declined to comment beyond confirming the company was not involved in the project.
Cargotec and Liebherr did not respond to requests for comment.
Some tenders have been floated three times since September because they failed to attract bidders. A Chinese firm, ZPMC, has since come forward to supply some equipment, the same Indian official said.
GROWING SUPPLY GLUT THREATENS WORSE TO COME FOR RESTIVE INDIAN FARMERS
Bountiful monsoon rains are unlikely to lift India’s rural economy this year, and may instead compound the woes of millions of debt-ridden farmers who are struggling with low prices amid a glut of produce such as lentils, oilseeds and cereals.
The South Asian nation is still carrying a huge inventory of food grains from last year’s record harvest as exports were hit by an appreciating rupee, falling global prices and restrictions on overseas shipments.
Another bumper harvest could accelerate the price slide and stoke discontent among farmers that has triggered protests in the big agrarian states of Maharashtra and Madhya Pradesh, where police shot dead five protesting farmers this week.
Three years into his term, Prime Minister Narendra Modi remains popular and has no credible challenger. Yet unrest has flared in states ruled by his Bharatiya Janata Party (BJP), catching regional leaders flat-footed and providing a reality check on Modi’s promise to double farmers’ incomes over the next five years.
“The next year will be challenging for the government in ensuring farmers get decent realisation,” said Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities in Mumbai.
Farmers in Madhya Pradesh and Maharashtra are demanding better prices for their produce and billions of dollars in debt relief after the new BJP government in India’s most populous state, Uttar Pradesh, recently announced a $5.6 billion loan write-off for farmers.
Yet experts say such loan waivers amount to quick fixes that cannot compensate for flaws in farm policies, which have encouraged higher production of crops previously in short supply but offered scant protection on prices.
Many farm commodities are trading below support prices set by the government. That is because the government only commits serious sums to buying wheat and rice, but not other crops that enrich the diet of India’s 1.3 billion people.
Prices will fall further unless exports are revived, said Galipelli, adding “production has jumped but local demand hasn’t risen in the same proportion”. Ample world supply is likely to persist, predicts agribusiness giant Cargill Inc.
“There is no export parity right now. Even after the recent correction in oilmeal prices, Indian supplies are expensive,” said B.V. Mehta, executive director of the Solvent Extractors’ Association (SEA), a Mumbai-based trade body.
Indian grains production reached an all-time high of 273.38 million tonnes in the latest crop year, on record output of rice, wheat, oilseeds and pulses. But exports failed to revive, depressing local prices of corn, wheat, soybean and turmeric.
Exports of key farm commodities fell by a quarter in 2015/16 to $16.07 billion due to drought, and failed to revive in 2016/17 despite the recovery in output.–Agencies