OPINION, P8 COMPANIES, P6 ALL-CASH DEAL Govt must look at NRI bonds to deal with fall in ` value NPPA's price-caps choke off supplies of live-saving drugs for infants and children MEGA MEDIA MERGER Adani to acquire Kattupalli port for `1,950 crore EDITORIAL INTERNATIONAL, P14 Iger-led Disney wins US nod for Fox deal in blow to Comcast MUMBAI, FRIDAY, JUNE 29, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 153, 20 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: 35,037.64 ▼ 179.47 NIFTY: 10,589.10 ▼ 82.30 NIKKEI 225: 22,270.39 ▼ 1.38 HANG SENG: 28,497.32 ▲ 141.06 `/$: 68.79 ▼ 0.16 `/€: 79.68 ▲ 0.05 BRENT: $77.69 ▲ $0.07 GOLD: `30,488.00 ▼ `48.00 Facebook Creative Shop isn’t here to replace agencies Facebook Creative Shop’s Southeast Asia head Rafael Guida, on Facebook as an advertising platform and being a bridge between agencies and clients ■ BrandWagon, P13 Beware of investment tips, trial packs from scamsters Scamsters tap into the greed of clients, whom they have manipulated to become so devoted to their tips that they are ready to part with their money ■ Personal Finance, P13 QuickPicks Indians’ money in Swiss banks rises 50% to over `7,000 crore MONEY PARKED by Indians in Swiss banks rose over 50% to CHF 1.01 billion (`7,000 crore) in 2017, reversing a three-year downward trend amid a clampdown on suspected black money stashed there, reports PTI. In comparison, the total funds held by all foreign clients of Swiss banks rose about 3% to CHF 1.46 trillion (around `100 lakh crore) in 2017, according to the official annual data released on Thursday by the Swiss National Bank (SNB), the nation’s central banking authority. PAGE 2 Govt rethinks decision to split up gas utility GAIL INDIA IS working on plans to enable gas utility GAIL to keep its marketing and pipeline operations separate without breaking up the company, petroleum minister Dharmendra Pradhan said on Thursday, reports Reuters. The government had said in January that it wanted to split the company into two — one for laying pipelines and the other for marketing and petrochemicals — to encourage more transparency between the two operations. PAGE 15 Merger of 3 PSU general insurers: Govt invites bids from consultants BIDS HAVE been invited from consultants to advise on the proposed merger of three public-sector general insurance firms as announced in this year's Budget, reports PTI. There is a proposal by the government to merge three public-sector general insurance companies — National Insurance, Oriental Insurance and United India Insurance. As on March 31, 2017, they together had more than 200 insurance products with a total premium of `41,461 crore and a market share of around 35%. PAGE 11 Indian OMCs, OVL’s Farzad-B to take hit to prepare for a “drastic reduction or zero”imports of Of India's Iranian oil from IF NEW DELHI total crude oil November.Accordstops importing imports of ing to the news oil from Iran in agency, “... US viewof the US sancambassador to the tions reimposed United Nations on the Persian Gulf in FY18 Nikki Haley has country, Indian told Indian Prime oil refiners will Minister Narendra have to find substiModi to lessen tutes for around dependence on 0.5 million barrels from Iran Iranian oil. of Iranian crude Haley, curper day (around 10% of the country’s total oil rently in Delhi, spoke with US imports), a sourcing process secretary of state Mike Pomthat might bring in instability peoearlyonWednesday,before to their business plans. There meeting Modi.” Earlier, the US had toughwill be immediate implicaened its stance, saytions of the US’ ing it expected move for hydro“zero” import of carbon explorerIranian oil from all producer ONGC countries including Videsh, which China and India, might find it diffithe two biggest cult to receive ONGC Videsh importers of oil exploration serto invest from the Islamic vices (drilling,seiscountry. The sancmic surveys, welltesting etc) from for exploration in tionsaretobeoperational in November top-end firms, Iran’s Farzad-B sans any exempwhich are mostly gas field tions. A US official American. was quoted saying While the Indian government’s official “companies” dealing with Iran stance is clearly that the coun- will also face sanctions in the try won’t recognise the unilat- form of curtailed access to US eralUSsanctions(itisboundby financial system or reduced onlytheUNmeasures),Reuters businesswith US allies. reported on Thursday that the oil ministry has asked refiners Continued on Page 2 SAURABH KUMAR New Delhi, June 28 220 mt 23 19.8 19.3 19 2014-15 2015-16 2016-17 2017-18 Data drive FE BUREAU Mobile-on-net netting more users Bundled services and larger 4G networks are pushing consumers increasingly towards data-enabled services. In Q4FY18,3G and 4G data consumption stood at around 99% of total use against 97% a year ago. Telecom operators 2G/3G/4G data usage Jan-Mar 2017 Apr-Jun 2017 TB: Terabyte (1 TB = 1,000 GB) Jul-Sept 2017 2G 3G Oct-Dec 2017 4G (TB) 66,92,145 US’ IRAN SANCTIONS Special Features Continued on Page 2 2018-19, higher than the rise in overall goods exports. He said the weakening of the rupeehelpsexportersthemost in the short term. “Over the medium term,overseas buyers also tend to renegotiate supply contracts, citing the weakening of the rupee,” he said. Nevertheless, the weak rupee will 12,60,787 — and rising crude oil prices could combine to send the rupeeintounchartedterritory, say currency experts. Moreover,capital outflows, especially from the bond markets, have exacerbated the fall —closeto$6billionhasmoved out since early April. Further outflows — possible given how the US is hiking interest rates — would drag down the currency further. While the Reserve Bank of India (RBI) may have been intervening to *Both goods and services 1,12,353 whereas the Brazilian real has yielded 39%,the lira 55% and rouble close to 47%. AsAnanth Narayan,professor, SPJIMR, observed, from a real effective exchange rate perspective,the recent move is a healthy correction, and the rupee is more fairly valued now.However,while the fall in the Indian currency so far has been gradual,a strongerdollar, a sharper depreciation of the yuan — possible given the looming tradewarwith the US (%, in nominal terms) 53,18,122 (inverted scale) 56 60.444 58.46 May 22, 2014 60 68.793 64 68.825 68 Aug 28, 2013 68.565 Nov 23, 2016 72 Aug 1, 2013 Jun 28, 2018 Export share in GDP falling* 10,88,774 Rupee movement 1,08,953 Base value taken as 100 Turkish lira 82.72 43,56,202 Jun 28, 2018 9,50,569 Jan 1, 2018 THE RUPEE’S DROP to a fresh low of 69 against the dollar in intra-day trade on Thursday will provide limited relief to exporters,thankstoafallinthe currenciesofemergingmarket peers,an escalation of a global trade war,the absence of credible domestic reforms to cut huge logistics costs and high import intensity in some key segments like petroleum and gems and jewellery. Exporters from sectors ranging from the labourintensive garments to engineering goods said a sustained depreciation in the rupee couldhelpIndiasustainaneardouble-digit growth in 201819, as in the last fiscal. However,persistentvolatilityin the movement of the domestic currency, unless managed, could make it difficult for exporters while firming up contracts,they felt. Ravi Sehgal, who exports a lot of engineering goods and is also the chairman of the Engineering Export Promotion Council(EEPC),saidtherupee’s slide will help the engineering goods segment — which accounted for a fourth of total merchandiseexportslastfiscal — achieve 13-14% growth in 1,10,430 Indian rupee 92.56 BANIKINKAR PATTANAYAK New Delhi, June 28 33,99,012 Indonesian rupiah 94.17 80 6,90,743 CLIMATE CHANGE could cost India 2.8% of GDP and depress living standards of nearly half its population by 2050, as average annual temperatures are expected to rise by 1-2% over three decades, a World Bank report said on Thursday, reports PTI. Bangladeshi taka 97.6 90 1,00,390 IN THE NEWS Climate change may cost India 2.8% of GDP by ’50 Chinese renminbi 98.24 100 70 98.95 support the currency, the quantumofdollarsellingisnot known. Economists estimate the RBI has sold some $8-10 billion dollars since March. Rather than using up foreign exchange reserves, Bank ofAmerica Merrill Lynch chief economist Indranil Sengupta has suggested India should raise moneyvia NRI bonds like it did in 2013. Sengupta believes a $30-35-billion issuance would change investors’ perception of the Indian currency and steady it; hepointedoutallthethreeNRI issuanceshadstavedoffcontagion. In 2013, India attracted close to $29 billion as FCNR(B) bonds with the RBI offering banksadollarswapfacility.The redemption of the bonds three yearslaterwasbarelyfeltbythe currency markets. Indian companies and banks need to repay around $27 billion of overseas borrowings byMarch,2019.Typically, these borrowings are rolled over though this time round the cost of rolling over will be higher because the benchmark rates such as the US Treasury have risen and spreads have widened. 29,67,319 THE RUPEE FELL through the 69 mark against the dollar on Thursday but recovered by the end of the session to close at 68.79, above its alltime low closing of 68.82 hit inAugust 2013.The fall was in sync with that for a host of emerging market currencies and the Chinese yuan, which now lost 4.6% since March 23 on concerns of a tariff war with the US. While the Indian currency may have hit new lows, the depreciation in 2018 so far is comparablewiththeweakness in peer currencies — against a fall of 7.1% for the rupee, the Turkish lira has lost 17.4% while the Indonesian rupiah has given up 5.8%.Overa fiveyear period, the rupee has remained more or less flat 110 Vietnamese dong 3,82,439 FE BUREAU Mumbai, June 28 CURRENCY COMPARISON 93,103 Avoids all-time low close; big picture, though, shows it has done better than emerging market peers A cheaper currency to offer limited relief to exporters 25.4 Rupee hits record low in trade but recovers a bit TRADING PLACES 2013-14 TRADE JITTERS Jan-Mar 2018 Source: Trai 21.7 mt $4 billion Mumbai plane crash kills 5 Rescuers search through the wreckage of a private charter plane that crashed at a construction site in Mumbai’s Ghatkopar area on Thursday, killing five people. The Aircraft Accident Investigation Bureau is expected to probe the crash. help exporters beat a rise in other costs. Gautam Nair, managing directorof one of the country’s biggest garment exporters, Matrix Clothing, said: “While the depreciation in recent months should help us, it has also made yarn exports from India more lucrative. So we have to buy yarn at a higher price as well. Nevertheless, the depreciation helps unless there is no sharp volatility.” FIEO director general Ajay Sahai said the falling rupee will help exports of services more than those of goods. This is because overall merchandise exports also have an average import intensity of as much as 60%,with limited value addition in many segments. For instance,thegemsandjewellery segment has an import intensity of 95%, while petroleum products and some electronic goods have as high as 80%. DhirenSheth,alargecotton exporter and the president of the Cotton Association of India,said cotton exports may exceed 70 lakh bales in the 2017-18 marketing year through September, against around 60 lakh bales in the previous year, aided partly by the weak rupee. Continued on Page 2 ● INDIA-US MEET India to not retaliate if US gives duty relief FE BUREAU New Delhi, June 28 INDIA IS OPEN to reviewing its retaliatory tariff worth around $235 million against 29 US goods before it takes effect on August 4, subject to an acceptable positive outcome, an official source said on Wednesday. The obvious positive outcome that New Delhi wants is an exemption from theTrump administration’s move to tax steel and aluminium supplies from India. If that happens, which India is hopeful of getting,there is no case for retaliation,said the official. Senior officials of both the countries concluded a threeday meeting here on Wednesdayandagreedtohuddleagain in July in the US to work out a package thatwill containways to bolster bilateral trade in bothshortandlongterms,said the official. Earlier this month, India had notified the World Trade Organisation (WTO) a revised list of 30 US items, including almonds, apples, phosphoric acid and motorcycles with enginecapacitymorethan800 cc (including Harley-Davidson), on which it intended to impose retaliatory tariffs. Continued on Page 2 HANGING UP After seven years,Apple and Samsung end smartphone patent wars NEW YORK TIMES San Francisco, June 28 THE SMARTPHONE PATENT wars are finally over. Apple and Samsung settled a seven-year legal fight on Wednesday, ending the most prominent case in a series of lawsuits over smartphone patents over the last decade. The companies did not disclosethesettlementamount.A jury in May ordered Samsung to pay Apple $539 million for infringing on its patents. ApplefirstsuedSamsungin 2011 forcopying the design of the iPhone,kicking off awinding trail of countersuits, trials andappeals,includingastopat the Supreme Court in 2016. Apple initially sought to block Samsung phones from themarket,butthetechnology at dispute has long been outdated, and the fight has since largely been about money. Apple at one point sought more than $2 billion, while ILLUSTRATION: ROHNIT PHORE Samsung had argued it owed just $28 million. With two of global industry’s biggest players fighting overone of history’s most successful products, the case was one of the most closely watched legal fights in modern business. “And if I had to characterise it, it didn’t really accomplish anything,” said Brian J Love, a Santa Clara Universitylawprofessor who tracked the case. “Close to a decade of litigation, hundreds of millions of dollars spent on lawyers, and at the end of the day, no products went off the market.” Apple won on paper, but it failed in its goal to gain a competitive advantage over Samsung and other phone makers in its series of lawsuits against them, said Love and Michael Carrier,a professor at Rutgers Law School who studies patent law. Continued on Page 2
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