QBiz: Alibaba’s Big India Plans, SEBI May Regulate Money Pooling

Here’s a wrap of the top business stories of the day.

5 min read

The logo of the Securities and Exchange Board of India (SEBI), India’s market regulator, is seen on the facade of its head office building in Mumbai. (Photo: Reuters)

1. How FM Is Attempting to Raise Rural Incomes to Revive Demand and Growth: ET

Officials in the ministry of rural development are a happy lot these days. Finance minister Arun Jaitley agreed to practically every demand they made during Budget discussions.

According to Economic Times, even the Prime Minister sat through some detailed presentations, said a senior ministry official. The result – rural development and agriculture have been the central theme of Jaitley’s Budget for 2016-17.

India, into the 70th year of Independence, still struggles to provide basic necessities to all its citizens. More than 70 percent of its 120 crore population still lives in villages, many of them unconnected by roads, electricity or communications networks.


2. Bankers See Base Rates Falling After Cuts in Small Savings Interest Rate: Livemint

The odds of banks paring base rates in April have increased given that interest rates on government savings schemes have been sharply lowered, according to Livemint.

The government has pared the interest rates on most of its savings schemes, including public provident funds and social schemes such as the Sukanya Samriddhi scheme.

Public Provident Fund rates were cut to 8.1 percent from 8.7 percent and those on one-year time deposit have been reduced drastically to 7.1 percent from 8.4 percent. The interest rate paid by the government on Kisan Vikas Patra (KVP), which matures in 110 months, has been cut to 7.8 percent from 8.7 percent till 31 March.  

Following the cuts, these rates are now comparable with bank deposit rates and in some cases even lower.

3. Alibaba May Set up a Technology Development Centre in India: ET

Chinese e-commerce giant Alibaba Group is reportedly evaluating options to set up a technology development centre in India in yet another global endorsement of the country’s software engineering talent, three people familiar with the development were quoted in an Economic Times report.

The report adds that talks between Alibaba, the government and other likely partners are at a very early stage.

Alibaba is currently evaluating options to tap into India’s software engineering prowess and follow in the footsteps of other multi-billion dollar global technology companies like Apple that have also made moves to leverage Indian technology talent in recent years.


4. Lafarge India Begins Rs 10,000-Cr Sell-Off: BS

Lafarge India begins its sale process this week after receiving approval from the Competition Commission of India, reports Business Standard.

The French cement giant has appointed Arpwood Capital and Citi as investment bankers to sell the entire India operations, which has an annual production capacity of 11 million tonnes (mt).

Bankers will start to reach the potential buyers this week, following which bids are expected to start coming from the next week

The business put on the block has generated wide interest from domestic and foreign entities.

Among these are Piramal Enterprises, JSW Cement and CRH. So are global private equity investors KKR and Blackstone, say investment banking sources. “The deal is estimated to be valued around Rs 10,000 crore,” as per an investment banker.

5. IDBI Bank’s Stake Sale Race Heats Up: Livemint

The International Finance Corp., one of the investors interested in buying a stake in IDBI Bank, has finished inspection of the assets and liabilities of the state-run lender, sources tell Livemint.

The UK’s development finance institution CDC Group Plc and US private equity firm TPG Capital are also in talks with the government to buy a stake, the report adds.

Bloomberg is said to have reported first that TPG Capital is vying for a stake in IDBI Bank last week.

Finance minister Arun Jaitley, in his Budget speech last month, said that the government will consider ceding control of IDBI Bank—slashing its stake to less than 50 percent from 80.2 percent now.

It will be a test case for whether the government, which, according to an estimate by Moody’s, needs to inject Rs.1.45 trillion by March 2019 to recapitalise weak banks, can pursue the politically difficult plan to privatize the state-run lenders.


6. SEBI May Get More Powers to Regulate Money Pooling: Livemint

The Securities and Exchange Board of India or SEBI may get additional powers to regulate money-pooling activities that currently do not come under any other financial sector regulator and those where states have limited powers to act, according to three people quoted in a Livemint report.

The government is in advanced stages of drafting a new legislation to this effect, confirmed the people cited above.

While the ultimate power to control all types of money-pooling activities (except collective investment schemes or CIS) will remain with the central government under the proposed law, SEBI will be given specific powers to regulate those that currently escape the purview of any other financial regulator.

7. RBI Governor Rajan Says Government’s Budget ‘Fiscally Prudent’: ET

Reserve Bank of India Governor Raghuram Rajan has said the government’s 2016-17 Budget had been “fiscally prudent”, and the establishment of a monetary policy committee to set interest rates would help the central bank fight inflation, reports Economic Times.

He build on comments made earlier in the week, when Rajan had said the RBI’s board had praised the Budget unveiled by the government in a meeting with Finance Minister Arun Jaitley.

The recent Central Budget emphasized fiscal prudence and adhered to past commitments, even while allocating resources towards capital spending and focusing on structural reforms, especially in agriculture.
Raghuram Rajan, Governor, Reserve Bank of India

He also reiterated the central bank would not target an exchange rate for the rupee and would only intervene to curb volatility.


8. Cummins to Put Rs 1,000 Crore in India R&D Unit Expansion: ET

Diesel engine maker Cummins plans to invest Rs 1,000 crore in the expansion of its research and development centre in India, touted as the company’s biggest outside of the US, reports Economic Times. The Indiana-based company has 1,500 engineers at its technical centre in Pune, to which it aims to add 500 more over the next year.

Investment in the R&D centre will be completed by the end of 2016. India is among our top five markets and tech capabilities available here will grow significantly once the investment is completed.
Anant Talaulicar, Chairman, Cummins Group India

The technical centre is part of Cummins Technologies India, a wholly-owned subsidiary.

Talaulicar said Cummins has technology for Euro Stage VI diesel and natural gas commercial vehicles and once the Indian government notifies the norms for Bharat Stage VI, the company will step up research and development for localising the solutions for the Indian market.

9. Jewellery Industry Incurs Rs 60K-70K Cr Loss in 18-Day Stir: BS

The 18-day long strike by jewellers, which ended on Saturday night , is estimated to have caused loss of Rs 60,000-70,000 crore to the industry, according to Business Standard.

Meanwhile, a three-member committee has been set up to look into issues of jewellers and it would submit a report to the government within two months. The Gems and Jewellery Export Promotion Council (GJEPC) in a release said that the 18-day stir caused “losses of Rs 60,000-70,000 crore” to the industry.

The decision to call off the strike was taken on Saturday night after the government assured jewellers that there will be no harassment by excise officials and no ‘inspector raj’.
Sreedhar GV, Chairman, Gems and Jewellery Federation

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