OPINION, P8 COMPANIES, P6 CLEARING THE AIR EDITORIAL Issuing a directive to RBI on stressed powercos a bad idea SaifAli Khan gets relief on notional rent, but why should tax be paid on an empty house? INTERNATIONAL, P14 FULL OF BEANS Goyal: GE’s diesel locomotives to be used as back-up Schneider-led Nestle seals $7.15-bn deal to market Starbucks coffee NEW DELHI, WEDNESDAY, AUGUST 29, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 154, 22 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 38,896.63 ▲ 202.52 NIFTY: 11,738.50 ▲ 46.55 NIKKEI 225: 22,813.47 ▲ 13.83 HANG SENG: 28,351.62 ▲ 80.35 `/$: 70.11 ▲ 0.05 `/€: 82.01 ▼ 0.51 BRENT: $76.68 ▲ $0.47 GOLD: `30,097.00 ▲ `228.00 E-COMMERCE POLICY ‘No plans to allow FDI in inventory model’ ■ DIPP has received complaints against e-tailers violating FDI rules by offering discounts on products sold on their platforms ■ These complaints have been forwarded to ED; have discussed the issue with finance secretary Since FDI is not effectively allowed in multi-brand retail, we cannot allow it in e-commerce ventures selling goods FE BUREAU New Delhi, August 28 THE GOVERNMENT ISN’T planning to ease rules to allow foreigndirectinvestment(FDI) in business to consumer (B2C) e-commerce players holding the inventoryofvarious goods, even if such products are locally-made, department of industrial policy and promotion (DIPP) secretary Ramesh Abhishek said on Tuesday. Only in the retailing of food items produced in India is FDI allowed up to 100% through government approval, which will continue. This means players like Amazon and Flipkart can’t float the so-called inventory model of e-commerce and continue to run only as online market places.Recently,a task force on e-commerce recommended that up to 49% FDI be allowed in e-tailers, provided they sell only domesticallyproduced items. At present,up to 100% FDI isallowedine-commercemarketplaces via the automatic route but no FDI is allowed in e-tailers holding inventory of goods,exceptinthefoodretail- — RAMESH ABHISHEK DIPP SECRETARY ing. So while Amazon can run its online and offline stores for food retailing, for which it has already got government approval, it can’t hold inventory of other goods. Also, it is mandated to keep its food retailing separate from other ventures. Speaking at a seminar organised by the Swadeshi Jagran Manch, Abhishek said: “Since FDI is not effectively allowed in multi-brand retail, we cannot allow it in e-commerce ventures selling goods (even) produced in India.” On allegations of deep discounts offered bye-commerce players in violation of FDI rules, Abhishek said the matter needs to be investigated. The DIPP has received several such complaints, which have beenforwardedtotheEnforcementDirectorate(ED).Thesecretary said the e-commerce modelshouldbedrivenbyefficiency,and by discounts. The recent draft e-commerce policy, endorsed by the task force under then commerce secretary Rita Teaotia, also suggested a crackdown on deep discounts.A panel of secretaries is now going through the draft e-commerce policy suggested by the task force. Bodies representing brickand-mortar stores and even the Swadeshi Jagran Manch have often complained about “deep discounts” offered by foreign-funded e-commerce companies in violation of FDI rules. ■ CERC told to compute WHILE BANKS HAVE stepped upeffortstofindresolutionsfor stressedpowerassetsunderthe Reserve Bank of India’s (RBI) directive and insolvency proceedings are to start for units with a combined capacityof 32 gigawatts (GW), the Union powerministryhasdirectedthe Central Electricity Regulatory Commission (CERC) to compute the increase in tariffs that additional (post-power purchase agreement) taxes and dutieswould have necessitated within30daysafteragenerator filedthepetitionforsucharevision. Once a generator’s plea is accepted under‘change in law’ condition, other generators with the same demand should also get similar benefits,withoutfilingseparatepetitions,the ministrysaid. Regulatory dues amounting to `18,000 crore are yet to be paid to power companies. The ministry’s directive, if complied with, will help the resolution process and make some stressed units more FULL-SERVICE CARRIER Vistara, a joint venture between SingaporeAirlinesandtheTata Group, is set to fly on international routes from October. Sources told FE that the airline’s international flights will be from NewDelhi to Colombo in Sri Lanka and Phuket, an islandoffThailand’swestcoast. Underthenewpolicy,anairlineneedstohave20aircraftfor domesticoperationstobeeligibletoflyoverseas.Vistara,which began operations in January 2015, got its 20th aircraft in April and now has a 22-aircraft fleet so it can begin services to two overseas destinations. SourcessaidVistarawanted to fly to Dubai but the quota undertheIndia-Dubaibilateral is full. The quota can be hiked under a new policy, but since Indian carriers are negotiating forbetterslots at Dubai airport the entire matter is stuck. Continued on Page 2 rise in tariffs due to additional (post-PPA) taxes and duties in 30 days of petition filed ■ Once a genco’s plea is accepted under 'change in law', other gencos must get similar benefits, without filing own pleas ■ Regulatory receivables at `18,000 cr; ministry's directive in line with recommendation of parliamentary panel attractive to potential buyers. Lanco’s 1,200 MW Anpara plant,which is currentlyonway to the National Company Law Tribunal (NCLT),was expecting accumulatedduesof`800crore to be cleared by the Uttar Pradeshdistributioncompanies Continued on Page 2 As Apple Music starts composing its India song, it is betting big on independent musicians, indie bands to catch the attention of Indian music lovers ■ eFE, P13 QuickPicks Govt to carve out hydrocarbon blocks on its own for OALP-II GIVEN THE tepid response from explorers to the auction of hydrocarbon blocks under the second round of Open Acreage Licensing Policy (OALP), the Directorate General of Hydrocarbon (DGH) has decided to carve out four blocks on its own to be put up for bidding, reports Saurabh Kumar in New Delhi. In the first round of OALP, a critical part of the March 2016-launched Hydrocarbon Exploration Licensing Policy, explorers had shown interest in 55 blocks. However, according to sources, only 12 EoIs have been submitted for the second round, likely to be launched in September, 2018. PAGE 2 ‘Continue antidumping duty on China flat base steel wheels’ THE COMMERCE ministry's investigation arm, DGTR, has recommended continuation of antidumping duty of $613 per tonne on flat base steel wheels imported from China for five more years, reports PTI. The duty is aimed at guarding domestic makers of the product from below-cost imports. In its sunset review investigation on imports of the wheel, the Directorate General of Trade Remedies (DGTR) has concluded that the product is likely to enter the Indian market at dumped prices if the antidumping duties in force cease to operate. PAGE 12 Amazon Pay stake buy values Tapzo at $35-40 million AMAZON PAY, the payments arm ofAmazon India, will acquire Sequoia-backed Tapzo as the ecommerce giant looks to strengthen its play in the country's growing digital payments space, reports PTI. According to sources, the deal values Tapzo at about $35-40 million. When contacted, an Amazon spokesperson did not comment on the deal but said: "Our commitment to the vision of a less-cash India remains the same. Our goal is to make it easier than ever before for customers to make digital payments by improving the customer experience, affordability and daily routines". PAGE 6 FE BUREAU New Delhi, August 28 Google, banks team up for digital loans FE BUREAU Mumbai, August 28 IN WHAT APPEARS to be a symbiotic relationship, Google’s India arm said on Tuesday it was teaming up with HDFC Bank, ICICI Bank, Federal Bank and Kotak Mahindra Bank to offer loans on its app Google Pay. Digital payments experts saidthatwhilethebankswould be able to acquire customers more easily via the Google Pay app,Google in turnwould have access to the credit histories of theseborrowers.Thedatacould then be mined byGoogle forits business,theysaid. “This is a typical land and expand strategy that fintechs follow and that’s what Google isdoing,”VivekBelgavi,partner and head (fintech) at PwC, observed.Fintech,Belgavisaid, was becoming the newdistributionchannelforbanks,allowing them to address new customer segments. While banks will approve the instant, pre-approved loans, the front-end and user ■ Over 55 million people have downloaded Tez since September 2017 ■ On a monthly basis, more than 22 million people and businesses use the app ■ More than 750 million transactions made using Tez so far ■ Language support for Google Pay in eight languages — English, Hindi, Bengali, Gujarati, Kannada, Marathi, Tamil and Telugu experience will be provided by Google Play.The feature,set to be rolled out to eligible users within the next fewweeks,will appear as a notification informing the user he or she has been pre-approved. He or she can then decide the amountandtenureoftheloan. Continued on Page 2 Twice as nice It was twin celebrations for India as Manjit Singh and Jinson Johnson bagged gold and silver, respectively, in men's 800 m final at the Asian Games in Jakarta on Tuesday AP Hung out to dry BLOOMBERG RBI in hands-off mode during sell-off The Reserve Bank of India hardly intervened to support the rupee during the Turkey-driven rout in emerging markets in the week ended August 17, a departure from the central bank’s recent aggressive defence of the currency. 2 RBI’s weekly FX intervention estimate Weekly change in $ billion Cross-currency valuation impact Total change in FX reserves 1 0 -1 -2 -3 4 11 18 25 May 2018 1 8 15 22 June 2018 29 6 13 20 July 2018 27 3 10 17 August 2018 Source: Bloomberg INDEPENDENTPOWER PRODUCERS Association of India (IPPI) is likely to move the Supreme Court onWednesday, challenging the Allahabad High Court’s orderthat denied any immediate relief to power companiesagainsttheReserve Bank of India’s (RBI) February 12 circular on bad loans. Sources told FE that many power companies are also contemplating moving the SC for a stay on the HC order. Some may also move the HC individually for seeking interim relief, as the HC itself granted them liberty to do so. “IPPA or APP (Association of PowerProducers) are at liberty to apply for urgent interim relief if need so arises, placing the requisite factual details on record,” the HC said while refusing interim relief. The central bank had tightened the norms for settling non-performing assets by allowing lenders to initiate insolvency proceedings against defaulters within 180 days for resolving bad loans. The circular had raised chancesofinsolvencyproceeding being invoked against 34 stressed projects byas early as September. Continued on Page 2 LEVY SUGAR FOR 2005-12 Ghost from the past: Govt asks mills to supply 1.7 lakh tonnes or pay up BANIKINKAR PATTANAYAK New Delhi, August 28 BELLAD BAGEWADI, A sugar unit in Karnataka, apparently failed to supply13,440 tonnes ofthesweetenertothegovernment as part of the so-called levy obligation between 2005 and 2009. Around a decade later, the food ministry has nowasked the mill to meet the obligation or pay up. Bellad Bagewadi is among the 267 sugar units belonging to various cooperatives and companies — including Shree Renuka Sugars, Balrampur Chini Mills and Birla Sugars — that have been asked to meet “unfulfilled” obligations during 2005-12, five years after the levy system was scrapped by the government in 2013 to usher in reforms. The food ministry has now estimatedmills’unfulfilledlevy obligation at 1,38,273 tonnes forthe2011-12marketingyear (October-September) and 36,084 tonnes for 2005-10, leavingthembefuddled.Among Bitter levy (Pending obligation, 2011-12) (tonne) 10,478 Shree Renuka Shri Someshwar (Pending obligation, 2005-10) (tonne) 7,924 Birla Sugars 4,602 Balrampur Chini 3,158 Rajshree Sugar 3,472 Total (264 sugar units ) 1,38,273 Note: Levy sytem was scrapped in 2013 Total (five units) Lokmangal 6,343 Indie notes in Apple Music bring Indian fans Continued on Page 2 Gencos to move SC after HC refuses to give relief PAY APP Special Feature (discoms) afterthe state regulatorhadapprovedthetariffpassthroughs due to higher coal costs in August 2017. If that payment was cleared on time, theassetcouldhaveservicedits debtsandsaveitselffromfacing insolvency and bankruptcy proceedings, Ramanuj Kumar, partner,projects finance at law firm Cyril Amarchand Mangaldas noted. The UP discoms approached the electricity appellatetribunal(Aptel)where an orderisyet to be announced. Similarly, CLP’s 1,320 MW Jhajjar plant in Haryana is still awaiting payment clearance from the state discoms even after the CERC’s approval in January 2016. Haryana discoms has also approached the Aptel on the issue after CERC’s order. Also, Tamil Nadu discoms have recently filed a petition in Aptel challenging the passthrough of the `400-pertonne goods and services tax compensation cess (erstwhile clean energy cess) on coal.The cess is 20% of fuel costs. ● RBI CIRCULAR 9,878 TRADERS' BODY CAIT on Tuesday said it has filed a petition in the National Company Law Appellate Tribunal (NCLAT) against the Competition Commission of India's (CCI) decision to approve the Walmart-Flipkart deal, reports PTI. The Confederation ofAll India Traders (CAIT), in its appeal, said the body has prayed for reversing the order of CCI as no opportunity of hearing was given to them. MANISHA SINGHAL Mumbai, August 28 WHAT THE SECY SAYS ANUPAM CHATTERJEE New Delhi, August 28 Karimganj Walmart-Flipkart deal: CAIT plea against CCI nod DIPP secretary says e-tailer discounts need to be probed; efficiency should drive e-commerce, not discounts Power ministry asks CERC to speed up clearing dues 13,440 PETROL PRICES on Tuesday crossed the `78-per-litre mark in Delhi for the first time in more than twoand-a-half-months, while the price of diesel continued to scale new highs, reports PTI. The price of petrol was increased by 14 paise and diesel by 15 paise, according to price notification of stateowned fuel retailers. Vistara to start flights to Phuket, Colombo Bellad Bagewadi IN THE NEWS Petrol crosses `78, diesel rates at new high REGULATORY DELAYS ● SPREADING WINGS 36,084 Source: Department of food these,Shree Renuka Sugars has been asked to supply 10,478 tonnes, Balrampur Chini Mills 3,158 tonnes, Birla Sugars 4,602 tonnes and Rajshree Sugar and Chemicals 3,472 tonnes.Alternatively, all these mills can pay up the difference between the then prevailing market rates of sugar and the levyprices forthoseyears. Industry executives expect thedemandtocostmillsaround `125crorefor“pendingobligations”for2011-12andanother `30-35 crore for earlier years. Never before was demand againstpendinglevyobligation raised after the passage of so manyyears,said shocked mills. Under the erstwhile levy system, mills were mandated tosupplyaportionoftheirproduction (10% in 2013) below cost for the government’s welfare programmes. Non-fulfilment of levy quota used to attract penal measures such as the seizure of an equal quantity of stocks. Continued on Page 2
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