OPINION, P6 COMPANIES, P5 ASHOK GULATI Sans reforms, India will remain a cut-rate market STAKE SALE FIGHT ON FINANCIAL RISKS Agri-growth under Modi quite poor, doubling farm income a distant dream EDITORIAL INTERNATIONAL, P4 Government mulls absorbing Air India employees in PSUs Xi-led China to step up oversight in banking sector NEW DELHI, MONDAY, JANUARY 15, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XLIII NO. 272, 16 PAGES, `5.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E Capital spending outlay may be raised 10% to `3.5 lakh crore HIGHER ALLOCATION BANIKINKAR PATTANAYAK New Delhi, January 14 Outlay for key export schemes may jump Continued on Page 2 Continued on Page 2 Road ministry seeks Skill development for `75,000 cr, textiles 30%, against could see a with `64,900 cr 3-fold hike `8,000 cr (BE) for to about extra funds FY18 `600 cr to around `23.5 lakh crore in 2018-19, compared with almost `21.5 lakh crore (BE) for this fiscal,said the sources. Based on discussions with the finance ministry, a senior official expected the fund allocation to promote exports through two key schemes — the Merchandise Export from India Scheme (MEIS) and Services Exports From India — could see around a 30% jump, or an additional `8,000 crore, for 2018-19 from a year earlier. The MEIS is the most important export promotion scheme under which the government provides exporters duty credit scrip at 2%, 3% or 5% of their export turnover, FE BUREAU New Delhi, January 14 depending upon products and shipment destinations. However, the commerce department’s long-pending demand to scrap minimum alternate tax on special economic zones units is unlikelyto be endorsed bythe revenue departmentyet again,said one of the officials. The ministry of road transport and highways is learnt to have sought around `75,000 crore of budgetary support for the next fiscal,against `64,900 crore budgeted for2017-18. Given the government’s focus on infrastructure, the ministryexpectsitsdemandto be met. ` WITH GREATER EMPHASISon job creation through infrastructure building, the Modi government’s last full-year Budgetbeforethe2019general electioncouldofferapackageof incentives for rural,infrastructure and labour-intensive sectors,whileretainingitsfocuson productive capital spending. Sectors like textiles and garments, agriculture, transport, housing and skill development willgetahigherallocationinthe Budget for 2018-19,and funds to promote exports will be enhanced, official sources told FE.Thanks to still-elusive private investments, the government will continue to pump in funds to prop up the economy. So allocation for capital spending could be raised around 10% to `3.4-3.5 lakh croreforthenextfiscal,against the 2017-18 Budget estimate (BE) of `3.1 lakh crore. Total expenditure is expected to rise FM launches agri options platform IN A FIRST for the country, finance minister Arun Jaitley on Sunday launched options trading in a farm commodity on National Commodity & DerivativesExchange(NCDEX) and affirmed the move will enable farmers to hedge their price risks better. NCDEX has introduced options in guar seed,one of its most important products in the futures segment. It is the second exchange to launch options trading after MCX but the first one to introduce an agri options product. Stressing that options trading is one of the tools to ensure farmersgetremunerativeprice for their produce, Jaitley said: “We see in some places the problem of falling prices because of higher production. Farmers are not getting the right price for their produce. Many steps have been taken in the last fewyears to take farmers out of this situation.There has been some positive impact,”he said. The finance minister said agriculture is the top priority forthegovernment,becausean overwhelming portion of our population is dependent on it. Total A 10% rise expenditure in farm research seen at outlay `23.5 from lakh cr, `6,800 against crore this fiscal `21.5 lakh cr for FY18 OVERSEAS BOND MARKET Over $6 bn of foreign currency bank bonds maturing in 2018 Likely to be refinanced through fresh issuances Coupon (%) Issuer ICICI Bank/Dubai Original Amount maturity issued ($ m) 4.7 Indian Overseas Bank/HK 5.5 yrs 4.625 5.5 yrs 500 5.0 yr 500 HDFC Bank/Bahrain 3 1,000 BHAVIK NAIR Mumbai, January 14 IDBI Bank/DIFC Dubai 4.375 5.5 yrs 500 Syndicate Bank/London 4.125 5.5 yrs 500 THE OVERSEAS BOND marketmightseeseveralissuances from Indian banks in 2018, as more than $6 billion of foreign currency bank bonds come up for maturity during the year, and these will likely be refinanced through fresh issuances,say bankers. Bloomberg data shows that of the total bonds coming up for redemption in the year, those worth about $5.35 billion are all large size issues by banks. Of these, bonds issued byICICI Bank,Indian Overseas Bank, HDFC Bank and IDBI Bank worth $2.5 billion will mature in the first quarter of the calendar. Aninterestingpointtonote here is the movement in the costoffinancingfromthetime when many of these bonds were issued.Forexample,State Bank of India’s London branch priced a five-year dollar bond inApril2013ataspreadof255 basis points over the five-year US Treasury yield. At that point, the yield was close to 3.25 5.0 ys Bank of India/London 3.625 5.5 yrs Canara Bank/London 5.25 5.0 yr 500 Union Bank of India/ Hong Kong 3.625 5.5 yrs 350 SBI/London 1,000 500 Source: Bloomberg BOND 0.7%,resulting in a coupon of 3.25%.In January2017,when SBI’s London branch issued a similar tenor dollar bond, the five-yearUSTreasuryyieldhad risen to 1.8%. However, the spread had compressed to 145 basis points, resulting in a similar coupon. What this implies is that while the treasury yields have trended up, the spreads BOND have tightened. A similar trend has been seen in the case of private sector bank issuances, with the spread on ICICI Bank’s dollar bonds narrowing by over 200 basispointsbetween2012and 2017, despite the treasury yield rising by just 130 basis points. Continued on Page 2 FARM PRODUCTS Special Feature Mandi prices of most crops rule below MSPs Microsoft Cloud expands its footprint in India Much of Microsoft’s growth in India lately has come from its cloud business, as Indian start-ups, SMEs & govern-ment bodies leverage the Microsoft cloud to build new digital capabilities Farmers don't really get MSP at major trading hubs 1,550 1,490 ■ EFE, P8 Paddy QuickPicks Finmin plans to simplify GST profiteering complaint form Wheat Tur (Arhar) (common) Source: e-NAM & Agmarknet THE FINANCE ministry is planning to simplify the form which consumers are required to fill to submit their complaints against businesses that are indulging in profiteering post-GST, reports PTI. It wants to make the form more consumer-friendly and simpler. As many as 170 complaints have been filed by consumers against businesses for not passing on benefits. PAGE 2 Tata Motors’ Jaguar Land Rover plans new R&D hub in Ireland THE TATA Motors-owned Jaguar Land Rover (JLR) is mulling a new software hub at Shannon in Ireland as part of its wider plans to invest in electric and driver-less technology, reports PTI. According to 'The Sunday Times', JLR plans to create 150 jobs at the site, where it will research new technologies related to battery-powered cars and automated driving. MSP+ bonus Gram PRABHUDATTA MISRA New Delhi, January 14 MARKETRATES OFmostfarm commodities in the major trading hubs (mandis) are ruling below minimum support prices set bythe government,a reasonwhythe rural distress is persistingdespitethepastcouple of years’bumper crops and reasonable hike in MSPs. According to data furnished byAgmarknet and e-NAM portal,farmersaregettingtheMSPs or higher prices only for two crops — soyabean and cotton — out of 15 major cereals, pulses and oilseeds (see table).A posi- JOINT VENTURE OF DRDO, INDIA & NPOM, RUSSIA Latest mandi price 4,320 5,325 5,450 4,143 (`/quintal) 4,000 3,675 THE GOVERNMENT WILL soon invite fresh applications for the post of RBI deputy governor, a position that fell vacant after SS Mundra retired on completion of his three-year term on July 31, 2017, reports PTI. Although interviews were conducted on July 29 last year, the government has decided to start the process all over again, sources said without giving reasons. Advertisements seeking application from eligible bankers would be issued soon, they added. Jobs, infra and rural sectors to get a leg-up 4,450 3,750 Fresh applications soon for RBI deputy guv post ● NCDEX TRADING 4,400 3,871 THE COMMERCE MINISTRY is working on new schemes for the next foreign trade policy (FTP), to be released in 2019-20, with a view to boost exports, a senior government official said, reports PTI. The ministry has asked all the commodity boards and the concerned ministries to identify those “support” structures, which are compliant to global trade rules. "These support measures could be some schemes or some incentives or it could be infrastructure related," the official said. BUDGET 2018-19 1,735 1,725 IN THE NEWS Govt working on new schemes for next FTP Groundnut Mustard Cotton (long staple) tive impact of the lower crop prices is that the NDA government has managed to more or lesscontainthefoodpriceinflation(thoughthesehaverecently risen partlydue to seasonal factors and unfavourable base), unlikeintheUPAregime,which sawinflation skyrocketing. The retail food inflation was 4.96% in December 2017 against 4.35% in November. Farmers may not be getting prices as remunerative as their expectations,butinmanyplaces the rates are not bad either,said a government official. BRAHMOS Salutes the Heroes of Indian Army on the th 70 Army Day BRAHMOS SUPERSONIC CRUISE MISSILE World Leader in Cruise Missile Family Continued on Page 2 SMALLER IS BEAUTIFUL OTT players rush to build content ANUSHREE BHATTACHARYYA New Delhi, January 14 IN DECEMBER, AMAZON PrimeVideo showcased a multilingual medical thriller Breathe its second Indian original series.Meanwhile,Hotstar made sure viewers could watch series from the stable of Awesomeness. Withvideostreamingaudiences tipped to double every year, albeit off a small base, OTT (over the top) players are making sure they have a wide variety of content and don’t run out of it. While they’re acquiring some amount of library content—typicallyfilms—they’re increasinglyfocussedoncreating shows. ALT Balaji for instance, recently released its first Tamil show Maya Thirrai with 16 episodes. Films and OTT platforms Baahubali 2 (Hindi) 511 Judwaa 2 Box office collection, ` cr 139 Raees OTT platform 137 Sample of 27 films No. of Subscription subscribers (m) cost ($) Hotstar Voot Amazon Prime Video Sony Liv Netflix Tubelight 75 22 11 5 5 3.00 Free 1-1.5 0.80 8-12.5 Amazon Prime Video: 14 Hotstar: 6 Netflix: 7 Available on: OTT platform 119 Jolly LLB 2 117 Footfall of top 50 films in 2016: 27.9 crore Footfall of top 50 films in 2017: 26.5 crore Average ticket price weekdays : `110 - `120 Average ticket price weekend : `180 – `200 Source: ICICI Securities, Couterpoint Research, industry source BRAHMOS AEROSPACE “Youngsters are already moving away from television to video streaming,” says Jehil Thakkar, partner, Deloitte. Thakkaradds onlineviewing is fast transitioning to becoming an alternative to television. Market research firm Counterpoint expects the video OTT market, currently valued at $280 million with nearly100millionsubscribers, to grow at 35% year-on-year. Continued on Page 2 16, Cariappa Marg, Kirby Place, Delhi Cantt., New Delhi-110010, www.brahmos.com MULTIPLE PLATFORMS MULTIPLE MISSIONS MULTIPLE TARGETS
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