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TOP 10 BUSINESS/INDUSTRY NEWS
- RBI to merge 3 categories of NBFCs to create a new category
The Reserve Bank of India (RBI) will merge three categories of Non-Banking Financial Companies (NBFCs) into a new one to create a new category called NBFC-ICC. The three categories being- Asset Finance Companies (AFC), Loan Companies (LCs) and Investment Companies (ICs) into a new category called NBFC – Investment and Credit Company (NBFC-ICC). The RBI released a notification on 22.02.2019 saying that this step has been decided provide the NBFCs with greater operational flexibility.The principle of regulation will be followed instead of the principle of entity for the harmonization of different categories of NBFCs into fewer ones. Further, a deposit-taking NBFC-ICC shall invest in unquoted shares of another company which is not a subsidiary company or a company in the same group of the NBFC, an amount not exceeding 20% of its owned fund, the central bank said.
· India’s Q3 GDP grows at 6.6% vs.7.1% in Q2
India’s gross domestic product (GDP) for the third quarter of FY19 grew at 6.6% compared to 7.1% in the previous quarter, the government data showed on 28.02.2019.The government has revised Q1 GDP to 8% from 8.2% earlier and Q2 has been revised to 7% from 7.1% earlier. Meanwhile, the growth of eight core sectors slowed down to 1.8% in January on lower production of crude oil, refinery products, and electricity, official data showed. Infrastructure sectors such as coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity — had expanded by 6.2% in January 2018.Production of crude oil, refinery products and electricity contracted by 4.3%, 2.6%, and 0.4%, respectively, in January.
· Nikkei India Manufacturing PMI rises to 14-month high in February
At 54.3 in February, up from 53.9 in January, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) reached a 14-month high. The latest figure was consistent with a robust improvement in business conditions that was stronger than seen on average over the 14-year survey history.
The health of the Indian manufacturing sector strengthened further in February, with a sharp and accelerated increase in sales boosting the growth of output and employment. There was a solid rise in input buying and a modest accumulation in preproduction inventories, but stocks of finished goods decreased as firms utilized them to fulfill orders. Rates of both input cost and output charge inflation remained subdued by historical standards, despite picking up from January.
Amid reports of successful advertising efforts, supportive government policies and strengthening demand conditions, inflows of new work at Indian goods producers continued to expand during February. The increase was the sixteenth in as many months and the most pronounced since October 2016.
Manufacturing output rose at the quickest rate since December 2017, boosted by strong inflows of new business, technological progress, beneficial public policies, and positive market conditions.
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- Eight Core Industries at 1.8% in January
The combined Index of Eight Core Industries stood at 134.8 in January, 2019, which was 1.8% higher as compared to the index of January, 2018. It’s cumulative growth during April to January, 2018-19 was 4.5%, as per government data.The Eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
Coal production increased by 1.7% in January, 2019 over January, 2018. Its cumulative index increased by 7.1% during April to January, 2018-19 over corresponding period of the previous year.
Crude Oil production declined by 4.3% in January, 2019 over January, 2018. Its cumulative index declined by 3.8% during April to January, 2018-19 over the corresponding period of previous year.
The Natural Gas production increased by 6.2% in January, 2019 over January, 2018. Its cumulative index increased by 0.5% during April to January, 2018-19 over the corresponding period of previous year.
Petroleum Refinery production declined by 2.6% in January, 2019 over January, 2018. Its cumulative index increased by 3.4% during April to January, 2018-19 over the corresponding period of previous year.
- High value cars, jewelry to become cheaper as TCS to be excluded in computing GST
In a relief to buyers of high value cars and jewelry, the CBIC (Central Board of Indirect taxes and custom) has said that the TCS (tax collected at source) amount would be excluded from the value of goods for computing GST liability.
Under the Income Tax Act, tax collection at source (TCS) is levied at 1 per cent on purchase of motor vehicles above Rs 10 lakh, jewelry exceeding Rs 5 lakh and bullion over Rs 2 lakh. TCS is also levied on other purchases at different rates. The CBIC in a circular said that the TCS amount would be excluded from the value of goods while computing the Goods and Services Tax (GST) liability.
Earlier in December, the CBIC had said that the TCS amount would also be included while ascertaining the GST liability on goods on which TCS is applicable under the I-T Act. In view of the representations received from various stakeholders and after consultation with the Central Board of Direct Taxes (CBDT), the CBIC has decided to exclude the TCS amount paid while valuing the goods for the purpose to levy GST. The CBDT has clarified that TCS is not a tax on goods but an interim levy on the possible “income” arising from the sale of goods by the buyer and to be adjusted against the final income-tax liability.
- Data usage in India to grow at 73% CAGR by 2022: Study
India’s data consumption is expected to grow at a compounded annual growth rate (CAGR) of about 72.6 per cent to 10,96,58,793 million MB by 2022, according to a study. This growth can be attributed to lower than ever data tariff and increasing number of smartphone penetration in the country, which is around 40 per cent as of 2017.Data consumption in India will grow from the level of 71,67,103 million MB in 2017 to 10,96,58,793 million MB (megabytes) in 2022, growing at a compound annual growth rate (CAGR) of about 72.6 per cent, PWC reported. While the average Indian used to spend more on voice services than on mobile data services until 2013, the majority of an average mobile bill is now spent on data. The average monthly spend on voice services in 2013 was Rs 214 compared to o Rs 173 spent on data. In 2016, the spend on voice fell to Rs 124, while data spend rose to Rs 225, according to the report. Video streaming constitutes roughly 65-75 per cent of the traffic, as per the Nokia Mobile Broadband Index 2018. While internet penetration is increasing in India, with mobile internet penetration set to reach 56.7 per cent in 2022 from a mere 30.2 per cent in 2017, connectivity and consistency in speed issues need to be addressed, said the study titled ‘Video on Demand: Entertainment reimagined’. It further said that in a country where approximately 65-70 per cent of the population resides in rural areas, no service meant for the masses can afford to ignore this market. Internet connectivity and speed issues are significant in rural areas as against urban areas. It is important for OTT (over-the-top) players to cater to the rural market if they wish to stay relevant. Thus, apps like YouTube, which support low Internet connectivity, will be able to penetrate faster into rural areas, according to the study. The report also noted that there has been a value shift to platforms. “Social media and technology platforms, instead of content creators and packagers, have emerged as the primary beneficiaries of the increase in user time and spending,” it added. Another major aspect in the journey of OTT players will be the ability to personalize experiences. Emerging technologies would help companies create unique experiences that add value to the services provided to users.
- Government cancels sixth, seventh rounds of coal mines auction
The Centre has cancelled the sixth and seventh rounds of coal mines auction under which it was planning to put on sale 19 blocks. The coal ministry in a notice to the bidders said that “the 6th Tranche and 7th Tranche of auction stands cancelled.” However, the government did not specify the reasons for the cancellation. “Accordingly, the tender process of the coal mines standscancelled,” the ministry said.Under the sixth round, the government had earlier announced the auction of 13 blocks for the regulated sectors, including iron and steel, cement and aluminium. The mines were Brahampuri, Bundu, Gondkari, Gondulpara, Jaganathpur – A, Jaganathpur-B, Khappa and Extn, Bhaskarpara, Marki Mangli – IV, Sondiha, Chitarpur, Jamkhani and Gare Palma IV/1.
A source had earlier said the successful allotters of the 19 coal blocks will be allowed to sell up to 25 per cent of the actual production in open market at prices fixed by state-owned Coal IndiaNSE 3.62 %. The government had last month allowed sale of 25 per cent of coal production from captive mines in the open market, a move aimed at increasing competitiveness and making future auction of blocks attractive.The decision was taken during a meeting of the Cabinet Committee on Economic Affairs under the chairmanship of Prime Minister Narendra Modi, an official release had said. The allotter of a coal mine for specified end use or own consumption was not permitted to sell coal in open market earlier.
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- Trade deal with China only if it is good for US: Donald Trump
Amidst reports of negotiations for a deal with china hitting a bump, President Donald Trump has said that he will enter into a trade deal with Beijing only if he is confident that it is good for the US. But he also told reporters at the White House on Friday that he is confident of entering into a trade deal with China. The world’s two largest economies are locked in a trade war since Trump imposed heavy tariffs on imported steel and aluminium items from China in March last year, a move that sparked fears of a global trade war. Trump imposed tariff hikes of up to 25 per cent on USD 250 billion of Chinese goods. In response, China, the world’s second largest economy after the US, imposed tit-for-tat tariffs on USD 110 billion of American goods. Top trade officials from America and China are holding talks to negotiate a comprehensive trade deal. “I am confident. But if we don’t make a very good deal for our country, I wouldn’t make a deal,” Trump told reporters. “If this isn’t a great deal, I won’t make a deal.” In the absence of a trade deal, Trump has threatened to impose additional tariffs on import of Chinese products into the US.
Last month the US President had said that he and his Chinese counterpart Xi Jinping are planning to meet at his Florida resort in Mar-a-Lago to give a final shape to the trade deal, which is being negotiated between the two countries for past several months now. However, after the collapse of the North Korea summit in Vietnam where Trump walked out of his meeting with Chairman Kim Jong-Un, the US president has not spoken about it. Taken aback by Trump’s decision to walk away from the summit with North Korean in Hanoi, China now wants the summit as a mere signature ceremony and finalize everything before that. According to The Wall Street Journal report on Friday, a US-China trade accord is facing a new roadblock, as Chinese officials balk at committing to a presidential summit until the two countries have a firm deal in hand.
- IHCL announces partnership with global car rental company Sixt
Indian Hotels Company (IHCL) announced its partnership with global car rental company Sixt at the International Tourism Exchange (ITB) in Berlin. IHCL said the first step in this global collaboration will bring benefits to the members of IHCL’s loyalty programme, Taj InnerCircle. Over hundred years old, Sixt, is a global car rental company with an international network of more than 2,200 stations and is present in over 110 countries globally. The new cooperation between the two companies will give Taj InnerCircle members immediate access to Sixt’s services and fleet. In addition, they receive 100 Taj InnerCircle points for each rental with Sixt and 50 points for using the exclusive Sixt Limousine Service. The points collected can be redeemed for a variety of rewards and Sixt vouchers that are valid for Sixt services in countries such as Germany, Switzerland, Austria, Great Britain, France, Italy, Spain, the US and the Benelux countries. For IHCL and Sixt, this is the first phase of the association. An expansion of the partnership is planned for the near future, IHCL said.
- Banks ask NareshGoyal, Etihad to contribute to Jet Airways bailout
The consortium of lenders in Jet Airways has made it clear to the promoter and chairman of the cash-strapped airline, NareshGoyal, and partner Etihad Airways that there cannot be only a bank-driven bailout of the Indian carrier and the two will have to play an equal role in getting it out of financial woes.Also, Goyal, according to banking sources, is open to the suggestion of him stepping down from Jet Airways’ board and having no role in managing the airline. He, according to the sources, has also agreed to reduce his equity stake from 51 per cent to around 22 per cent and pledge his shares in Jet Privilege Pvt Ltd (JPPL) as securities.These developments took place during an urgent meeting on Wednesday to find a solution to the gridlock over the resolution plan after Etihad put in various conditions before it accepted the plan.Bankers say they have stressed that the cash needed to run the airline, so that it could bridge its interim cash flow mismatch, needs to come not only from banks but also from the promoters and Etihad.The sources said the resolution plan could finally be approved of only in April as several clearances, including those from the civil aviation ministry and oversight panel for vetting resolution proposals, would be needed, besides endorsement of the final proposal from the boards of the banks.
Though Goyal appeared to make some compromises, the sources noted that talks between the Jet lenders and Etihad were still taking on various issues. For instance, Etihad is not willing to pledge its shares in either Jet Airways, in which it has a 24 per cent stake, or in JPPL, where it is a joint venture partner. The Abu Dhabi-based airline has also said that it was not in favour of providing a bridge funding of Rs 750 crore against the proposed rights issue, which it has pegged to Rs 5,000 crore — higher than the resolution plan that had envisaged a rights issue of Rs 4,000 crore. On the other hand, the lenders are not willing to give in to its demand for the right to the first refusal.
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