What’s India’s strategy to beat Brexit? Here’s a sneak peak

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India is considering recalibrating its strategy, including renegotiating its tariff offers, for the proposed free trade agreement (FTA) with the EU following Brexit, with demands from key sectors for a separate trade pact with the UK gathering pace, sources said. But with both the EU and the UK busy grappling with Brexit, serious trade negotiations are unlikely to start anytime soon.

Textiles secretary Rashmi Verma told FE: “Britain continues to be an important market for us, as it makes up for around 23% of the EU demand for Indian textiles and garments. We have requested the commerce ministry to look into the possibility of a bilateral preferential trade agreement (PTA) with the UK.”

The UK accounts for over a half of India’s software services exports to the EU, 23% of key engineering and electrical goods exports and 16% of jewellery, precious metal and stones exports. So, senior industry executives from these sectors endorse an FTA or PTA with the UK. Britain alone accounted for 3.4% of India’s goods exports in 2015-16, while the EU – including the UK – made up for 17%.

Nasscom president R Chandrashekhar said once the current storm settles down, the UK will also be looking to compensate itself for no longer being part of the EU trade bloc.

“At that time, a special trade arrangement or relation with India will become crucial to them. And for India, it will perhaps be a tad easier to negotiate with one nation instead of the entire EU,” he said. He, however, added that much will depend on the exact terms and conditions of Britain’s exit from the EU.

Meanwhile, sources said the government is open to a trade pact with the UK, but India also remains committed to taking the proposed EU FTA talks to its logical end. “The EU isn’t ignorable just because Britain has decided to be out of the bloc,” said one of the sources.

However, the Brexit has added to the workload of Indian negotiators as they have to deal with the UK separately now. As such, the FTA with the EU is still a work in progress, so there is a scope for renegotiation of offers in view of the Brexit reality, said the source. The government is closely monitoring the situation and a final call will be taken at an appropriate time, the source added.

With the depreciation of the pound, euro and Chinese yuan following the Brexit referendum, India’s export competitiveness to these regions has come under strain. If the situation persists, a trade pact with the UK or the EU will come handy, as fears of China pegging its currency to its advantage loom, said analysts. The pound, euro and the Chinese yuan have depreciated almost 12%, 2.3% and 1%, respectively, against the dollar while the rupee has appreciated 0.1% between the closing of June 23 and July 1.

But a foreign diplomat posted in New Delhi said: ”Their (the EU’s) job is already cut out. They have to first finalise the terms of the British exit, which is a mammoth and complex task. Both the parties have to recalibrate their strategy even at the WTO. In such a situation, starting another front of negotiations (with India) could take some time,” he said.

As such, differences already persist on the broad contours of the proposed FTA, including on EU’s insistence that India cut import duties on auto parts and wine and strengthen intellectual property rights regime and Indian demand for greater liberalisation in services.

Anwarul Hoda, a former deputy director general at the WTO and current chair professor for trade policy at Icrier, said the Brexit holds some potentially good news for India, apart from the obvious shocks. “The UK is more liberal than the rest of the EU. So, it could still be easier for India to clinch an FTEU-FTAA with the UK than with the EU.”

There is a fair amount of chance that an FTA with the UK, if talks are initiated simultaneously, will be sealed before such a deal with the EU, he said. In fact, Britain doesn’t have the same baggage as the EU. For instance, the UK may not stubbornly insist on the removal of tariff barriers in automobiles as the EU, as the former isn’t a major auto player.

The EU hasn’t yet given the dates for a resumption of the FTA talks, said the source mentioned earlier. Recently, commerce minister Nirmala Sitharaman had written to her EU counterpart, asking for dates to resume the negotiations.

Source: http://www.financialexpress.com/article/economy/after-brexit-vote-india-to-tweak-eu-fta-strategy/309181/

PE exits set to see new record through IPOs this year

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With RBL Bank and Aster DM Healthcare planning to raise Rs 1,500 crore and Rs 1,600 crore, respectively, through initial public offerings (IPOs) this year, private equity investors are set to make a record exit using the primary market route.

According to Prime Database, a Delhi-based financial services firm providing research on IPOs, the first six months of the year saw PE investors exit stakes worth Rs 2,993 crore across six IPOs. These include small finance bank Equitas raising Rs 2,176 crore through IPO in April. Twelve PE investors including International Finance Corporation and Sequoia Capital sold stake worth Rs 1,454 crore in the issue, making part or full exit.

The first six months of the year has already seen more PE exits through IPOs than the annual record of Rs 2,346 crore across 12 IPOs in 2015.

“The value of exits is related to the size of the company looking to list and in recent times, we have seen larger companies coming to the market,” said Subhrajit Roy, executive director and head (equity capital markets origination) at Kotak Investment Banking. “Investors are increasingly focusing on post-listing liquidity, which is enhanced by a higher free float. The average deal size has been increasing to adhere to this requirement,” said Roy.

While Ratnakar Bank’s IPO will see PE funds Gaja Capital and Capvent India making part exits, that of DM Healthcare will see India Value Fund and Olympus Capital paring their stake. Another PE-backed company, Varun Beverages, has also planned to raise Rs 1,000 crore through an IPO this year by providing liquidity platform for its PE investors AION Global and Standard Chartered Private Equity. “The PE activity over the past few months was characterised by an increase in buy-outs, the restart of investments in infrastructure projects especially roads, PE-backed IPOs and continued robustness in fund raisinPE exits set to see new record through IPOs this yearg,” said Mayank Rastogi, partner and leader for PE at consulting firm EY.

“Owing to the strong listing performance of PE-invested firms in the past 12 months, a long list of IPOs is being lined up amongst PE-invested companies,” said Rastogi.

PE exits set to see new record through IPOs this year. Increasing PE exits through IPOs is also credited to the performance of secondary markets. Sensex, the benchmark index of the BSE, has risen four per cent to 27,167 this year. Also the average price-to-earnings ratio for 30 Sensex companies is 20.13 now, against five-year average of 17.93. This has given PE-backed companies an opportunity to provide their investors’ exit through the IPO route.

“As the broad secondary markets remain buoyant, we will see more and more PE-backed IPOs where the investor would make only partial exits,” says Pranav Haldea, managing director at Prime Database Group. “PEs want to keep their skin in the game as they expect secondary markets to do better from hereon.”

Source: http://www.business-standard.com/article/specials/pe-exits-set-to-see-new-record-through-ipos-this-year-116070600752_1.html

Paperless I-T assessment: CBDT plans to take project to more taxpayers

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After successfully completing over 1,000 scrutiny I-T assessments under a maiden taxpayer-friendly paperless inquiry system, CBDT is set to extend the initiative as it is mulling seeking taxpayers’ consent to opt for the scheme at ITR filing stage itself.

Central Board of Direct Taxes (CBDT), the policy-making body of the Income Tax department, had launched a pilot project last year to reduce taxpayers’ visit to the tax office and their interface with the taxman.

Under the project, the first set of e-communications were decided to be mailed to the assessees in DELHI, Mumbai, Bengaluru, Ahmedabad and Chennai region.

As per official data accessed by PTI, the department in these five cities has completed scrutiny assessments in 1,001 cases till now, after a total of 6,481 assesses were contacted of which 1,812 responded positively.

A senior official said the biggest “challenge” in achieving better success in this new project was obtaining the consent of the taxpayers.

The Assessing Officers (AOs) found that while in some cases the taxpayer could not be reached as their personal email ids were with their CAs or authorised representatives, in a few other cases the assessee withdrew his consent to join the scheme, the official said.

“It is now being mulled if the I-T department can print a footnote on the Income Tax Return (ITR) or on the scrutiny notice itself that the taxpayer is invited to participate in the exercise over email in a paperless manner.

“The results are encouraging and the CBDT wants to make this an institutional system for scrutiny assessments henceforth,” the official said, adding the scheme is expected to be widened and rolled out with new features within this financial year.
The success of the project, initiated last year, is evident from the fact that CBDT recently added two more cities (Hyderabad and Kolkata), to the existing five metros, under the paperless assessment system exercise.

With this project, CBDT aims to end corruption and bring hassle-free experience for the taxpayers who undergo a time-consuming scrutiny assessment procedure which entails production of a number of documents and financial statements.

The department, however, says it brings only about 1 per cent of cases under the said procedure.

An official notification had been issued earlier which spells out the procedure, formats and standards for ensuring “secured transmission” of emails between the AO and the assessee stating all communication between the two sides will be done in PDF file format and over bonafide email ids.

This followed an amendment in the I-T Act in December last year, which allowed emails to become the new mode of interaction between the AO and the tax-paying individual.

Under the new procedure, the taxman will send emails, for issuing notices and summons, through the government registered ‘@incometax.gov.in’ email domain and the attached PDF document will have his or her designation and signature.

In response to such I-T notice, taxpayers will have to submit the details called for, in a Portable Document Format (PDF) through their email id registered with the department.

The notification states, “Any email, in response to the notice issued by the AO, received from the primary email address of the assessee, shall be considered as a valid response to the notice.”

In the same notification, CBDT had also mandated that the taxman will maintain an audit trail of all e-communication with a taxpayer in the IT department’s central database for future reference and as record management of the entire transaction.

The new directives also allow a taxpayer to physically submit a reply to such e-notices in case of a technical problem in their email. “This shall be treated as adequate compliance,” it had said.

The project was launched after CBDT had asked the I-T department to “initiate the concept of using emails for corresponding with taxpayers and sending through emails the questionnaire, notice etc at the time of scrutiny proceedings and getting responses from them”.

“This would eliminate the necessity of visiting the Income Tax offices by the taxpayers, particularly in smaller cases, involving limited issues and where taxpayer is able to provide details required by the AO without necessitating his physical presence,” the order had said.

Source : http://economictimes.indiatimes.com/articleshow/53061801.cms

 

Tamil Nadu to get 4th major port

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The Cabinet on Tuesday approved the setting up of a major port at Enayam near Colachel in Tamil Nadu. This would be the country’s 13th major port.

Colachel is about 50 km north-west of Kanyakumari.

India has 12 major ports — Kandla, Mumbai, JNPT, Marmugao, New Mangalore, Cochin, Chennai, Ennore, V O Chidambaranar, Visakhapatnam, Paradip and Kolkata (including Haldia). These handle approximately 61 per cent of the country’s cargo.

A special purpose vehicle (SPV) would be formed for the development of Colachel port, with an initial equity investment from the three existing major ports in Tamil Nadu — V O Chidambaranar Port Trust, Chennai Port Trust, and Kamarajar Port. The SPV would develop the port infrastructure, including dredging and reclamation, construction of breakwater and ensuring connectivity links, a statement said.

Fishermen in the coastal villages of Tamil Nadu have been opposing construction of this port, fearing sea erosion and loss of livelihood.

India has few ports with sufficient draft to match global cargo handling efficiencies. All of India’s trans-shipment (transfer of shipment from one carrier to another during transit) traffic is handled in Colombo, Singapore and other international ports. Indian port industry loses up to Rs 1,500 crore of revenues each year, the official statement said.

This major port at Enayam will act as a major gateway container port for Indian cargo now trans-shipped outside the country. It would also reduce the logistics cost for exporters and importers in south India, who depend on trans-shipment in Colombo or other ports, incurring additional port handling charges.

Minister of Shipping Nitin Gadkari had in April said the government had plans to add eight major ports in the country — including at Wadhawan in Maharashtra, Sagar in West Bengal and Colachel in Tamil Nadu.

 

Source: http://www.business-standard.com/article/economy-policy/tamil-nadu-to-get-4th-major-port-116070501191_1.html

JPMorgan Chase & Co gets RBI approval to open 3 new branches

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JPMorgan Chase & Co today said it has received Reserve Bank’s approval to open three more branches in the country.

The bank will open new branches at New Delhi, Devanahalli (near Bengaluru) and Paranur (near Chennai) in the next few months, it said in a statement.

“We are seeing an increasing level of cross-location and cross-border activity among our clients as they capture business opportunities driven by the country’s economic growth.

These branches will further enhance our capability to better serve our clients in India and overseas,” JPMorgan Chase Bank India MD and CEO Madhav Kalyan said.

JPMorgan will provide all existing products and services through these new branches, including cash management, trade finance and foreign-currency payments.

At present, the bank serves its clients from Mumbai branch.

“Our strategy is to follow our clients’ priorities. The expansion endorses our long-term commitment to India, a key market for JPMorgan, as well as for many of our clients,” JPMorgan South & South East Asia CEO Kalpana Morparia said.

Source: http://economictimes.indiatimes.com/articleshow/53008936.cms

ASUS betting big on India market

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Peter Chang, Regional Head (South Asia) of ASUS and Country Manager (ASUS India), at the opening ceremony of India’s first exclusive Republic of Gamers (ROG) store in Kolkata, on Friday Ashoke Chakrabarty

Peter Chang, Regional Head (South Asia) of ASUS and Country Manager (ASUS India), at the opening ceremony of India’s first exclusive Republic of Gamers (ROG) store in Kolkata, on Friday Ashoke Chakrabarty.

Taiwanese laptop and smartphone-maker Asus is looking to double its market share in mobile phones in India, by 2016. New offerings across various price brackets, along with premiumisation, is likely to give it the much-needed fillip.

Incidentally, India is amongst the top global markets for the smart-phone maker. The company started selling its smart-phones in the country in 2014.

Current strategy

According to Peter Chang, Regional Head (South Asia) and Country Manager (System Business Group), Asus India, the Rs. 10,000-15,000 price bracket will be its sweet spots, while new launches – scheduled August onwards – will also start competing across high-end segments, such as Rs. 20,000 and upwards.

Asus at present sells 2,00,000 smartphones per month, which it intends to double to 4,00,000 a month within December.

Its market share stands at 2.5 per cent; which will be pushed up to 5 per cent during this period. “Focus on the Rs. 10,000-15,000 range will continue and we will ramp up this portfolio. Asus will also compete strongly in the premium-end. This will give us the scope to double both our market share and sales (in India) within this year,” he told BusinessLine .

The products – launched across different price segments – are said to be “new generation devices” (with high-end specifications). At least four new smartphone models are set to be made available soon (as new generation devices).

Mid-range dominates

As per a report from analyst firm CyberMedia Research, 23.6 million smartphones were sold in the first three months (January-March) of this year. Of these, the higher price-band phones ( Rs. 10,000-15,000) were more popular than budget ones. This means most brands are pitching for mid-range phones as the market grows flat.

The average selling price (ASP) was Rs. 12,983 in the quarter, while it stood at Rs. 10,364 in Q1 last year, indicating a year-on-year rise.

“There is a change coming in the Indian market. Over a period of time it will mature with the average selling price going up,” Chang said. Asus’ ASP stands at around Rs. 11,000.

Growth in laptop sales

Interestingly, Asus is also betting on high-end offerings in the laptop PC segment to see through an overall slump in market conditions. The company is betting on high functionality and specification-heavy devices, targeting gamers.

The laptops targeting gamers are priced at a premium (because of their high specs) ranging between Rs. 70,000 and Rs. 200,000.

Asus launched its standalone store targeting gamers (one that focuses on selling these high spec devices) – Republic of Gamers – in Kolkata on Friday. It is looking to add four more stores across the country by the end of this year.

“Now the first device to connect to an Internet is not a laptop; it is a smartphone. So one has to judge the functionality (of a laptop) and how it will target end users. Gaming gives us a good opportunity which we are targeting,” Chang said.

Other competitors have also forayed into the segment where Asus claims to have a 30 per cent market share.

Sources say gaming in India accounts for just 1 per cent of the global market, with 2,000-3,000 such high-end devices being sold every month.

Source: http://www.thehindubusinessline.com/todays-paper/tp-info-tech/asus-betting-big-on-india-market/article8798772.ece