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QBiz: India Notifies FDI Policy Change; Facebook-Jio Partnership 

Your daily lowdown of all the top business news for the day.

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1. India Notifies FDI Policy Change Mandating Prior Nod for Border-Sharing Nations

The government on Wednesday notified changes to the foreign direct investment (FDI) policy and put into effect the requirement of prior clearance for investments from countries with which India shares its land border.

The Department of Economic Affairs notified the new norms under the Foreign Exchange Management Act (FEMA), days after the Department for Promotion of Industry and Internal Trade (DPIIT) issued Press Note 3 detailing the changed rules.

The move, aimed to curb opportunistic takeover due to the COVID-19 pandemic, especially from China, now puts all investments from India’s neighbors under the approval route.

(Source: The Economic Times)

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2. DA Hike Implementation for 1.13 Crore Govt Employees, Pensioners May Be Postponed

With tax revenues down to a trickle because of lockdown, the Centre seems to have decided to delay the implementation of its recent decision of raising dearness allowance (DA) for 1.13 crore government employees and pensioners.

On March 13, the Cabinet had given its approval to increase the DA by 4% to 21%, which would have cost the exchequer an additional Rs 14,510 crore in FY21.

Changes in DA are to come into effect retrospectively from January 1, 2020. The April salary, which is due to be paid in a week’s time, was supposed to be based on revised DA, along with arrears for three months (January-March).

However, the finance ministry is yet to notify the changes in DA announced on March 13. In normal circumstances, it would have been notified by now, an official said.

(Source: Financial Express)

3. Reliance Jio Connects With Facebook for $5.7-Billion Equity Deal

Facebook and Reliance Jio hit the headlines early Wednesday morning, in a break from the daily lockdown news. Mark Zuckerberg announced in a Facebook post that the technology giant had acquired a 9.99 percent stake in Jio Platforms Ltd (JPL) through a fresh issue of shares worth Rs 43,574 crore. The deal values JPL—the holding company of Reliance Jio — at an enterprise value Rs 4.62 trillion.

JPL’s equity value works out to Rs 4.36 trillion after Facebook’s investment, making it the fifth most valuable company in the country, behind its parent Reliance Industries (RIL), Tata Consultancy Services, Hindustan Unilever, and HDFC Bank.

Considering the market value of RIL and JPL, the Street is valuing RIL’s remaining but core businesses of refining and petrochemicals and others such as retail at a lesser number of Rs 4.28 trillion. This makes JPL more valuable than the rest of RIL. (Source: The Business Standard)

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4. Congress Calls for Suggestions to Firm up Stance on Economy

A consultative committee of the Congress headed by former prime minister Manmohan Singh is focusing on the three key areas of migrant labourers, micro, small and medium enterprises (MSMEs), and food security, ahead of announcing the party’s stand on economic issues that need attention with the COVID-19 pandemic roiling the country.

The move comes amid growing demand for a stimulus package that would ease the hardships being suffered by the poor who have been hit the hardest by the coronavirus-induced lockdown.

The 11 members of the committee formed by Congress president Sonia Gandhi on Saturday have held two rounds of meetings and are now reaching out to trade bodies, representatives from MSMEs, and sector experts among others. The panel has informally tasked groups of two to three leaders to focus on individual sectors such as farmers, migrants, and MSMEs.

(Source: Livemint)

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5. States Move to Assist Stranded Migrant Workers Amid Livelihood Threat

State governments are considering various options to help migrant labourers earn their livelihood, in the wake of the government partially lifting the lockdown to kickstart stalled economic activity, especially in rural areas.

States aim to increase the number of jobs under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), especially for those who have returned to their villages after losing their jobs, even as cash is being directly transferred to the migrants to help them fulfill their immediate needs.

Labourers who were stranded at their accommodations within workplaces are also returning to work in increasing numbers since Monday following the relaxation of curbs.

(Source: Livemint)

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6. Taking Stock: Investor Wealth Jumps by Over Rs 2 Lakh Cr; 10 Takeaways From Market Action

The Indian market got off to a strong start on April 22 despite muted global cues after the social media giant Facebook announced that it had picked a 9.9 percent stake in Reliance Jio, for $ 5.7 billion (Rs 43,574 crore).

The sharp rally seen in RIL not just triggered a positive sentiment on D-Street but also helped the market recoup losses. The bulls took control and pushed the Sensex back above 31,000 and Nifty above 9,100.

The sharp rally helped both the Sensex, and the Nifty50 recoup almost 70 percent of loses seen in the previous session.

The final tally on D-Street: the S&P BSE Sensex rose 742 points to 31,379 while the Nifty50 closed 205 points higher at 9,187.

(Source: Moneycontrol)

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7. Three Private Banks Pare Stake in Yes Bank Within 14 Days of Investing

After mounting an effort to rescue Yes Bank last month, three private-sector lenders have already sold part of their stakes between 17 March and 31 March, showed shareholding data from BSE.

The highest number of shares were sold by Federal Bank at 5.86 crores, followed by Kotak Mahindra Bank at 4.72 crores and IDFC First Bank at 4.02 crore shares. While Federal Bank’s stake in Yes Bank declined 47 basis points (bps) to 1.92% as on 31 March, Kotak Mahindra Bank’s stake fell 37 bps to 3.61% and IDFC First Bank’s stake declined 32 bps to 1.67% between 17-31 March, the data showed.

Other lenders like State Bank of India (SBI), Axis Bank, Bandhan Bank, and Housing Development Finance Corp. (HDFC) have not sold any shares and therefore did not see any change in their stake. However, ICICI Bank has purchased 78,300 more shares after 17 March, although its stake has remained unchanged at 7.97%.

(Source: Livemint)

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8. Gold Prices Gain as Investors Rush to Safety

Gold edged higher on Wednesday as fast-rising coronavirus cases in India despite strict lockdown measures increased worries of the investors, leading to a rush to safe-haven assets.

Investors are keenly watching the situation as select businesses have started working from this week. A glitch-free resumption can lift investor sentiments. The number of reported COVID-19 cases were at 19,984, as per the government data.

Gold futures were up 0.97 percent or Rs 438 to Rs 45,763 per 10 grams. Silver futures slipped 0.31 percent or Rs 128 to Rs 41,620 per kg.

Globally, gold prices held steady on Wednesday as fragile equities, hammered by falling crude prices, offset a stronger U.S. dollar.

(Source: The Economic Times)

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9. Vodafone Pays India Unit $200 Million to Comply With Obligations

UK-based Vodafone Group said it has accelerated payment of $200 million to Indian telco Vodafone Idea, which was due in September 2020 under the terms of the contingent liability mechanism (CLM) with Vodafone Idea.

Vodafone Idea manages around 300 million-odd customers and almost 14,000 employees.

Following the decision by India’s Supreme Court on the definition of Adjusted Gross Revenue (AGR) in October 2019, India’s telecoms operators became liable for licence fees, penalties, and interest dating back over 14 years. Vodafone Idea made payments to the Government of India in relation to its AGR liabilities.

Under the terms of the contingent liability mechanism (CLM), Vodafone Group is obliged to make payments to Vodafone Idea where amounts paid pursuant to the contingent liabilities of Vodafone India exceed those of Idea Cellular. The CLM took effect at completion of the merger of Vodafone India and Idea Cellular in August 2018.

(Source: Livemint)

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