OPINION, P8 COMPANIES, P6 STEPHEN ROACH Lower US savings, Trump must know, cause trade deficits INTERNATIONAL, P14 EDITORIAL EXTENDING TENURE TRYING TO EASE CONCERNS Harley doesn’t want Trump’s protection as EU tit-for-tat tariffs have made life worse for it ITC seeks shareholders’ nod to reappoint Deveshwar till 2022 Trump’s adviser Navarro talks down trade policy threat MUMBAI, WEDNESDAY, JUNE 27, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 151, 24 PAGES, `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 SENSEX: 35,490.04 ▲ 19.69 NIFTY: 10,769.15 ▲ 6.70 NIKKEI 225: 22,342.00 ▲ 3.85 HANG SENG: 28,881.40 ▼ 79.99 `/$: 68.26 ▼ 0.13 `/€: 79.69 ▼ 0.10 BRENT: $75.13 ▲ $0.40 GOLD: `30,394.00 ▼ `146.00 REPAYING CREDITORS DIALLING IT UP Reliance Jio crosses Mallya seeks to sell $2 bn in assets 200-m-user mark RISHI RANJAN KALA New Delhi, June 26 217 7,73,498 222 200+ 8,18,085 309 15,39,746 VOLUME (million MB) USAGE (MB) 9,700 6,586 6,065 3,689 Jio Source: Trai/industry Idea Vodafone Airtel JIO'S MILESTONES Commercial launch: Sept 2016 Subscribers (in million) Nov 2016 50 Feb 2017 100 est in the industry as Bharti’s usage stood at 6,586 MB per customer. Jio, a subsidiary of the Mukesh Ambani-controlled Reliance Industries (RIL), had reported a subscriber base of 187 million at end March. In otherwords,it had added close to 9-10 million users each in April,May and June. Thismilestoneislikelytobe announced by RIL chairman Ambani at the company’s annual general meeting on July 5. Jio did not respond to an email query on the subject till the time of going to press. Jio, which commenced commercial services in Sep- May 2018 Nov 2017 200 150 tember 2016, added 50 million subscribers in November that year itself. By February 2017 it had notched 100 million users and by November thatyearit had added 150 million subscribers to its network. Thecountry’stotal1.13billion mobile subscriber base is largely shared between four operators — Bharti Airtel, Jio,Idea Cellular and Vodafone India. While the three incumbents have been adding around 1.5-2 million users every month, Jio’s addition has been in the range of 7-8 million. STRESS TEST With most IoT devices using open source technology, inherent software vulnerabilities remain unaddressed and a single vulnerable device can be used as vector of attack ■ eFE, P13 QuickPicks China to cut tariffs on soyabean, other products from India CHINAWILL cut import tariffs on soyabean and some other goods from India and four other Asian nations from July 1, China’s cabinet announced on Tuesday, amid a looming trade war with the US, reports PTI. China will reduce tariffs on soyabean imported from India, South Korea, Bangladesh, Laos, and Sri Lanka from the current 3% to nil, official media said. PAGE 12 You can now withdraw 75% PF after 30 days of job loss EPFO ON Tuesday decided to give its members an option to withdraw 75% of their funds after a month of unemployment and keep their PF account with the body, reports PTI. The members can also withdraw the remaining 25% and go for final settlement after completing two months of unemployment under the new provision in the scheme. PAGE 2 France’s EDF, GE to co-build reactors for Jaitapur N-plant FRENCH UTILITY EDF and GE will jointly build six reactors for the Jaitapur nuclear power plants in Maharashtra, the two firms said on Tuesday, reports PTI. Once fully commissioned, the Jaitapur project will be the largest nuclear power plant in the world, with a cumulative capacity to produce 9,900 megawatts of electricity. PAGE 5 Medium stress Mar 2018 Mar 2019 PSBs Mar 2018 Mar 2019 PVBs FE BUREAU Mumbai, June 26 THE GROSS NON-PERFORMING assets (NPAs) ratio — bad loans as a percentage of total loans — of the Indian banking system could reach 12.2% by March 2019,the Reserve Bank of India (RBI) said in its financial stability report (FSR) on Tuesday.The gross NPAratio of all banks rose from 10.2% in September 2017 to 11.6% in March 2018. The report noted that if the ■ I have become the ‘poster boy’ of bank default and a lightning rod of public anger ■ Have received no response to my letters sent to the Prime Minister and finance minister on April 15, 2016 AGENCIES Mumbai/New Delhi, June 26 BUSINESSMAN VIJAY MALLYA, who is being pursued by Indian authorities over unpaid loans tied to his defunct Kingfisher Airlines, said on Tuesday he was trying to sell assets worth about `13,900 crore ($2.04 billion) to repay creditors. India has asked Britain to extradite Mallya to face trial after the liquor and aviation tycoon fled there in March 2016. The businessman said in a statement he and his UB ■ My conduct does not amount to ‘wilful default’ ■ I am tired of this relentless pursuit of me by the government and its criminal agencies Holdings filed an application on June 22 before a regional high court in India seeking permission to sell the assets that are under judicial supervision. The Enforcement Directorate also filed an application on the same day seeking to declare Mallya a“fugitive economic offender” and sought to confiscate `12,500 crore worth of his assets. Mallya, who denies the charges against him, said any objection by the Enforcement Directorate or Central Bureau of Investigation to his propos- Mar 2018 Mar 2019 FBs Mar 2018 Mar 2019 All SCBs macroeconomic conditions deteriorated, the gross NPA ratio couldworsen.Among the bank groups, the gross NPA ratio for public sector banks (PSBs) may increase from 15.6% in March 2018 to 17.3%byMarch2019inascenario where the stress was severe. For private banks, the ratio could to 5.3%,the central bank observed while for foreign banks’it could increase to 4.8% by March 2019. Continued on Page 2 als to sell assets “will clearly demonstrate that there is an agenda against me beyond recoveryof dues to Public Sector Banks”. “All my efforts are either ignored or misunderstood,” Mallya said in a statement. The Karnataka High Court has yet to give a verdict on Mallya’s request to sell assets. Kingfisher, which stopped flying in October 2012, owed banks about `9,000 crore when Mallya left India more than two years ago. Lawyers for Mallya, who co-owns the Force India Formula One team,have opposed his extradition to India saying the case against him was politically motivated. “I have become the ‘Poster Boy’ of bank default and a lightning rod of public anger,” Mallya said in his statement. Continued on Page 2 ● STERN STUFF FSSAI for life term, `10-lakh fine for food adulteration PRESS TRUST OF INDIA New Delhi, June 26 Trump targets Harley Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag. I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse - be patient! #MAGA ....When I had Harley-Davidson officials over to the White House, I chided them about tariffs in other countries, like India, being too high. Companies are now coming back to America. Harley must know that they won’t be able to sell back into U.S. without paying a big tax! Severe stress 12.2 12.7 13.3 Baseline 11.6 Actual (%) 20 18 16 14 12 10 8 6 4 2 0 3.8 4.3 4.8 Know how IoT may harbour cyber threats Projection of SCBs’ GNPA ratios 3.8 The golden rule is to invest with a time horizon after taking into account the cash flow and liquidity needs along with asset allocation ■ Personal Finance, P13 RBI sees gross NPAs at 12% by March 4.2 4.7 5.3 Start investing early to reap benefits of compounding 4.0 Special Features HIS STORY Continued on Page 2 16.3 16.7 17.3 THE CENTRE has decided to discontinue the overtime allowance given to its employees except operational staff, according to an order issued by the ministry of personnel, reports PTI. The move follows a recommendation of the Seventh Central Pay Commission in this regard. The operational staff are all non-ministerial, nongazetted central government staff directly involved in the office’s smooth operation. DATA (Q4 FY18) 15.6 IN THE NEWS No overtime pay for most govt employees now RELIANCE JIO INFOCOMM has entered a new league, having notched up more than 200 million subscribers at the end of May; the telco hit this milestone in the shortest time ever to the mark — less than 24 months. With this Jio is likely to overtaken Idea Cellular’s 217million userbase andwould be snapping at the heels of Vodafone, which has around 222 million users. Bharti Airtel is the market leader with 309 million wireless users. Jio is, however, the undisputed number one player in the data segment.Competitive data prices — as low as `5 per GB—haveenabledJiotomaintain a lead over its peers; data traffic at 5,060,000 million MB during January-March quarter of FY18 was much higherthanBharti’s1,539,746 million MB. Jio’s data usage per customer at 9,700 MB at the end of March is also the high- Telcos subscriber base (in million) 50,60,000 Fastest by far to reach the mark; also leads in data but is largely a second connection for most Says he has become ‘poster boy’ of non-settlement of loans; denies being a wilful defaulter SYSTEM UNDER STRAIN Stressed public sector banks hint at need for more capital In October, 2017, the government had announced a FE BUREAU New Delhi, June 26 SENIOR EXECUTIVES OF a clutchofstressedpublic-sector banks (PSBs) on Tuesday indicated to a parliamentarypanel they may require more capital than initially estimated. Bad debts of some banks critically high (As of Mar 2018, %) Gross NPAs Net NPAs 27.95 25.28 24.1 16.69 16.49 15.33 IDBI Bank United Bank IOB `2.11-lakh-crore recapitalisation plan of which `1.35 lakh crore was to come in the of recap bonds.Banks were to get the `76,000 crore by raising money from the markets and from budgetary allocations. So far banks, under the prompt corrective action (PCA) scheme have received `52,311 crore via recap bonds while 16.93 Parliament 22.4 has approved bonds worth 11.76 11.95 `80,000 crore. Dena Bank Bank of Maha Continued on Page 2 THOSE ADULTERATING FOOD products could face life imprisonment and penalty of up to `10 lakh as per the amendments proposed by the Food Safety and Standards Authorityof India (FSSAI) in its 2006 food safety and standards law. The FSSAI has recommended stringent punishmenttocurbfoodadulteration following the Supreme Court order. It has issued the draft amendments to the Food Safetyand Standards (FSS)Act, which was passed in 2006 but the regulations were notified only in 2011. The regulatorhas proposed total 100 amendments to the Act and has sought public comments by July 2. Among key amendments, FSSAI has proposed to include a newsection to crack down on food adulteration. “Anyperson...adds an adulterant to food so as to render it injuriousforhumanconsumptionwithaninherentpotential to cause his death oris likelyto cause grievous hurt, irrespective of the fact whether it causes actual injury or not, shall be punishable for a term which shall not be less than 7 years but which may extend to imprisonment forlife and also fine which shall not be less than `10 lakh,”the FSSAI said. Continued on Page 2 ● INTERVIEW: VANAJA SARNA, chairperson, Central Board of Indirect Taxes and Customs ‘With more enforcement, revenues should stay buoyant’ Aftera successful roll-out ofthe goods and services tax (GST), the soft-spoken Vanaja Sarna will hang up herboots laterthis month. The chairperson of the Central Board of IndirectTaxes and Customs (CBIC) says the government is open to a further rationalisation of rates and believes a centralised Authority for Advance Ruling (AAR) would benefit assessees with a presence in multiple states. In an interview with Sumit Jha, the unassuming Sarna said service tax notices issued to banks for free services would not be withdrawn but suggested the cases could be decided by a common adjudicator. Excerpts: CBIC has said no GST would be applicable on free services provided by banks but many of them have been serviced service tax notices… Once a show-cause notice is issued, banks must respond because the matter has now gone to a different forum.The departmentcan,however,help by appointing a common adjudicator to deal with all the notices. Afewrulings bytheAAR have been criticised for lack of legal rigour and revenue bias especially the one that ruled duty-freeshopswouldattract GST. Does the department have a solution? only to the concerned petitioner but a ruling does have persuasive or precedent value and that can make it difficult for another authority to pass a different order.The question is whether there should there be a common authority to take a uniform decision. A unified AAR at the central levelissomethingthatneedsto be looked at but I can’t confirm iftheGSTCouncilwilltakeitup anytime soon.But it is an issue of concern when you have so manyauthorities passing such orders. An AAR ruling applies crore — a year-ending feature — reaching `94,000 crore in April is good progress. With more enforcement — e-way bill, audit, scrutiny of returns and transitional credit verification — and an increasing tax base, revenues should remain buoyant. Is the GST revenue collection trend satisfactory? One can never be satisfied about revenues but Iwould say it’s good as we haven’t had any major pitfalls. In fact, post `88,000-89,000 crore collections in January and February, we are moving forward nicely. Other than the fact that we peaked in March at `1.03 lakh Does the government have a revenue collection target which could trigger further rate rationalisation? Ithinkthereisscopeforthatand thatthegovernmentisthinking on those lines even though we didrationaliseratesforover200 items in Guwahati lastyear. Continued on Page 2
The Financial Express (FE) is a business paper that’s closest to the people who are in the business of business. From business policies to market trends to new developments, The Financial Express comes packed with incisive news on every relevant issue.