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QBiz: Govt Mulls 100% FDI in Retail, Paytm Bank Offers 4% Interest

Your roundup of important business stories. 

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1. Modi Govt Mulls Allowing 100% FDI in Retail, With Caveats

To promote its flagship Make In India scheme with job creation at its core, the Narendra Modi government my allow 100% foreign direct investment (FDI) in multi-brand retail — as long as the products are made in India.

A government official familiar with the matter, who spoke on condition of anonymity, said the proposal is being considered. “A final decision on the matter will be taken after wider consultation,” he added.

The policy is unlikely to be termed “FDI in multi-brand retail” as the Bharatiya Janata Party (BJP) is opposed to the idea and had promised in its 2014 election manifesto to not allow this.

(Source: Live Mint)

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2. Hold Back Price Hikes Till GST Rollout: Revenue Secretary Hasmukh Adhia Tells India Inc

The government on Monday asked the industry to hold back price increases till the Goods and Services Tax (GST) is rolled out from July 1, saying such hikes might later lead to inquiry of balance sheet by a specified authority.

Revenue Secretary Hasmukh Adhia said that anti-profiteering provision in GST laws was essential to ensure that the benefits of reduction in tax incidence is passed on to consumers, and the tax department will persuade the big corporates to not engage in profiteering.

“My suggestion to all of them would be for the time being, till GST is rolled out, if they can hold back price increases. Unless it is a serious issue of cost increase, which they cannot absorb immediately. Otherwise hold on for sometime. But still if you have to absorb your cost and you have to do it then it is a matter of inquiry subsequently,” Adhia told television channel CNBC-TV18.

(Source: PTI)

3. Reliance Jio: Airtel, Vodafone, Idea Caused Rs 400-Cr Loss to Govt

Reliance Jio has filed a complaint with the telecom ministry alleging that competitors Bharti Airtel, Vodafone and Idea did not deposit requisite licence fee in March, which led to a potential loss of Rs 400 crore to the government.

The Mukesh Ambani-led firm alleged that the companies, in utter violation of licence rules, ‘unilaterally, wilfully and intentionally’ paid the advance license fee for last quarter’ of 2016-17 on the basis of estimated adjusted gross revenue (AGR). It was alleged that this estimated fee was much lower than “the license stipulation to pay the license fee not less than the fee paid for the third quarter.”

According to the complaint, Airtel paid around Rs 950 crore as the licence fee for January-March 2017. The amount, Jio alleges, was Rs 150 crore less than Rs 1,099.5 crore licence fee paid by Airtel for October-December 2017.

(Source: PTI)

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4. First Contracts Under New Defence Policy Unlikely Before 2019

The ministry of defence has cleared a new policy that looks to boost private participation in the sector but the first contract may not be awarded till 2019.

The Defence Acquisition Policy, which will now go to the Cabinet Committee on Security headed by Prime Minister Narendra Modi, has four strategic segments – single engine fighter aircraft, helicopters, submarines, and armoured fight vehicles/main battle tanks. Each segment will have one strategic partner and one original equipment maker (OEM).

It will take about a year to identify a strategic partner and the government will go for competitive bidding, said Bhaskar Kanungo, senior consultant at the Andhra Pradesh Economic Development Board, who is advising the state on getting defence investments. “An actual contract can be expected in a year and a half from now. So either it will be late 2018 or mid 2019 – that is post the election when the new government takes charge.”

(Source: BloombergQuint)

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5. Goldman Sachs to Invest $1 Billion in India in 3-4 Years

US investment bank Goldman Sachs is looking to invest close to $1 billion in India over the next three to four years through its private equity business, a senior executive at the firm said.

“We think the India opportunity is big and we plan to invest a fair bit of capital. The goal is to invest $200-300 million a year; potentially come close to a billion dollars in the next three to four years,” said Ankur Sahu, co-head of merchant banking division (Asia-Pacific) at Goldman Sachs.

The firm’s primary investment strategy is one known internally as ‘platform builds’, under which it sets up a business from scratch with a professional entrepreneurial team or acquires a large stake in small businesses and brings in a professional team to scale up the business.

(Source: Live Mint)

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6. Government Initiates Debate to Regulate Bitcoin

The Union finance ministry has invited suggestions on whether digital currencies like Bitcoin should be banned or allowed but regulated, and if so, if self-regulation is desirable. It wants feedback by the end of the month.

Earlier, a committee of bureaucrats had been asked to study the issue. In recent times, Bitcoin has been recognised by Japan; it has also been used to ask for ransom money.

Bitcoin start-ups Zebpay, Unocoin, Coinsecure and Searchtrade had in February jointly launched a Digital Asset and Blockchain Foundation of India (Dabfi) as a self-regulatory body. Nishith Desai Associates, a global legal entity, was appointed advisor for developing the regulations.

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7. Paytm Payments Bank Offers 4% Interest

After nearly a year of delay and with a new chief executive officer on board, Paytm’s ‘Payments Bank’ saw the light of day on Monday. It is the third payments bank in the country, after Airtel and India Post.

It offers customers a 4% annual interest rate as well as cash back on deposits. This is the lowest among the three payments banks: Airtel offers about 7.3% interest and India Post about 5.5% annually.

“The first million customers to open accounts and have deposits of Rs 20,000 will get cash back of Rs 250 instantly. Accounts can be opened with a zero balance. All online transactions will be free of charge,” the company said.

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8. RBI Board Members, Rating Agencies To Advise On Resolution Of Large Accounts

The Reserve Bank of India (RBI), on Monday, released broad contours of the framework it intends to follow to resolve large stressed loans on bank books, while saying that details of the plan will be released at a later date.

The outline follows an ordinance passed earlier this month which empowered the regulator to direct banks on the course of action in individual bad loan cases.

Under the new framework, the regulator plans to reconstitute the oversight committee (OC) under the aegis of the Reserve Bank and also enlarge it to include more members. This is being done so that the committee can constitute benches to deal with the large volume of cases referred to it.

The OC was originally created by the Indian Banks’ Association (IBA) to approve restructuring done under the Scheme For Sustainable Structuring of Stressed Assets (S4A).

(Source: BloombrgQuint)

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9. India's Wait for Tesla Cars May Get Longer

Elon Musk, founder of Tesla, on Monday unwittingly agonised many prospective Indian buyers of Model 3 when he indicated his firm may have to put on hold its launch plans in the Indian market due to the absence of an ecosystem for the supply of electric vehicle components.

Responding to a query from Twitter user Avinash Singh on Tesla's Indian plans, Musk indicated that the supply ecosystem is very important for Tesla. "Maybe I'm misinformed, but I was told that 30 percent of parts must be locally sourced and the supply does not yet exist in India to support that," he tweeted.

This contrasts sharply with his statement last month that Tesla is likely to introduce its products in India sometime in the summer of 2017.

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