OPINION, P6 MARKETS, P10 INTERNATIONAL, P8 EDITORIAL ECONOMY WATCH ‘MAIL-IN VOTER FRAUD’ NEP a renaissance for schooling, but govt must relook language of instruction, other issues Recovery to come with end of lengthy, complete lockdowns, says Parekh Trump suggests delaying November US presidential election DHANENDRA KUMAR Get rid of regulatory sclerosis afflicting the MSME sector NEW DELHI, FRIDAY, JULY 31, 2020 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLVI NO. 130, 34 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: 37,736.07 ▼ 335.06 NIFTY: 11,102.15 ▼ 100.70 NIKKEI 225: 22,339.23 ▼ 57.88 HANG SENG: 24,710.59 ▼ 172.55 `/$: 74.85 ▼ 0.05 `/€: 87.96 ▼ 0.04 BRENT: $43.18 ▼ $0.57 GOLD: `53,071 ▲ `218 « FE BUREAU Mumbai, July 30 22.2 RELIANCE JIO ON Thursday posted a growth of 8.1% in the net profit at `2,520 crore in the AprilJunequarter,slightlylower than analysts expectations.The company’s revenues during the quarter wereup11.6%at`16,557 crorecomparedtotheprecedingquarterontheback of increasing subscriber additionandfullimpactof tariff hike undertaken in December, 2019. The Ebitda was up 17.4% at `7,281crore,whileEbitda margin came in at 44% improving 220 basis points during the quarter due to operating leverage and cost efficiencies. The company’s Ebitda and revenue were in line with analyst estimates for the quarter. *(attributable to owners of the company Telcos: Performance indicators comparison (Q1FY21) DATA RJio VOICE Airtel Usage/customer (MB) 16,655 12,100 RJio Blended Arpu (`) Airtel Usage/customer (mins) 756 Volume (Millon MB) 140.3 994 Volume (million mins) 8,89,440 1,42,00,000 157 8,20,246 72,39,836 The severe demand destruction impacted our hydrocarbons business but the flexibility in our operations enabled us to operate at near normal levels. — MUKESH AMBANI RELIANCE INDUSTRIES CHAIRMAN sales while high fixed costs eroded segmental profits. Retail revenues declined 17.2% y-o-y but the operating income fell sharply by 47.4% to `1,083 crore as margins collapsed to 3.8% from 6% last year. ● REPORT CARD ● SOLUTION IN SIGHT TACKLING COVID ‘In talks with finmin to Corporate resolve MEIS issue early’ bad debt Continued on Page 2 Continued on Page 2 pushes up LIC’s NPAs Continued on Page 2 Special Feature ‘Travel agents will play a crucial role in these times’ Thomas Cook’s Abraham Alapatt on the company’s focus on domestic travel, the pent-up demand among Indian travellers, and competition from travel aggregators ■ BrandWagon, P9 QuickPicks Centre has no obligation to pay states for GST aid shortfall: AG ATTORNEY GENERAL KK Venugopal has opined that the Centre has no statutory obligation to make up from its coffers any shortfall in GST revenues of states, which may now have to look at market borrowings, reports PTI. The Centre had in March sought views from AG on the legality of market borrowing to make good the shortfall in compensation fund. PAGE 2 Govt considers amnesty for citizens hoarding gold illegally THE FINANCE ministry is considering an amnesty programme for residents with illicit stash of gold, as part of an effort to crack down on tax evasion and cut its dependence on imports, reports Bloomberg. The government plans to ask people with unaccounted holdings of the metal to declare it to tax authorities and pay levies plus penalty, the people said. PAGE 2 GIVEN THE SIZE of India’s population, herd immunity “cannot be a strategic choice or option”, the health ministry said on Thursday as it urged people to follow Covid-appropriate behaviour till a vaccine is developed. At a press briefing, when asked whether India was approaching herd immunity, officer on special duty in the health ministry Rajesh Bhushan said that herd immunityis a kind of indirect protection from an infectious disease like Covid-19. It happens only when a population becomes immune either through vaccination or immunity is developed through a previous infec- Continued on Page 2 150 100 50 AstraZeneca to be exempt from vaccine liability claims in most countries, Page 8 try’s recovery rate of over 64% is the best in the world while the fatality rate is nearly2.2%. He also hailed the scientific communityforfighting alongside the medical community in the battle against thevirus. ■ Page 2 0 Apr-Jun Total 750 300 150 2019 2020 0 Apr-Jun 213.2 63.7 Total* Source: World Gold Council Global demand 600 450 44 ILLUSTRATION: ROHNIT PHORE Facebook has either copied or simply acquired competitors that threatened to compete: MARK ZUCKERBERG conceded that he saw Instagram “both as a competitor and as a complement to our services" Google’s decision to restrict ad buying on YouTube to companies that used its adrouting software: SUNDAR PICHAI said the tactics are common in the industry App Store review guidelines are changed on a whim to benefit the company and shut out smaller developers: TIM COOK said Apple treats all developers the same. But the antitrust committee had evidence refuting Cook’s assertion Amazon used data from sellers on its platform to make copycat products, in apparent violation of the company’s own policies: JEFF BEZOS said he couldn’t guarantee the policy had never been violated tions. They were unfailingly polite, even though lawmakers frequentlycutthemoffbecause of a rigourously enforced fiveminute rule per member. Lawmakers peppered the execu- tiveswith questions about specific examples intended to show the companies have thwarted competitive threats. Continued on Page 2 tion,he said.“In a countrywith the size of the population like India, herd immunity cannot be a strategic choice or option. It can only be an outcome,and that too at averyhigh cost as it means lakhs of people will have to be infected, get hospitalised and manywill die in the process,”Bhushan said. FE BUREAU Investment THE CHIEF EXECUTIVES of four US technology giants endured withering, rapid-fire questioning formore than five hours from lawmakers who accused their companies of using their power to crush rivals and squash competition. Alphabet’s Google, Facebook, Apple and Amazon.com were criticised for the power theywield overdigital markets: Google’s control over internet search and online advertising; Apple’s tight grip over apps; Facebook’sacquisitionofrivals; and Amazon’s leverage over third-partysellers.“These companies as they exist today have monopoly power,” said Representative David Cicilline,who is leadingayearlongHouseinvestigation.“Some need to be brokenup,allneedtobeheavilyregulated,” Cicilline said as he adjourned the hearing after it stretched into the evening. The chief executives of the four companies – Alphabet’s SundarPichai,Facebook’sMark Zuckerberg,Apple’s Tim Cook andAmazon’sJeffBezos–testified before the House antitrust committee from remote loca- DEATHS SO FAR 52,123 NEWCASES INDIA IS CURRENTLY conducting around five lakh Covid-19testseverydayand the plan is to double the number in next one-two months, Union health minister Harsh Vardhan said on Thursday,reports PTI. Vardhan said the coun- Jewellery DAVID MCLAUGHLIN & BEN BRODY Washington, July 30 34,968 Plan to increase tests to 10 lakh per day in 1-2 months, says Harsh Vardhan (in tonne) Google, Facebook, Apple, Amazon were criticised for the power they wield over digital markets TOTAL CASES India's gold demand crashed 70% year-on-year in the June quarter, the worst slide since the March quarter of 2009 and the second-worst on record, due to the Covid-19 lockdown. World Gold Council MD (India) Somasundaram PR told FE that good monsoon and a likely revival in rural economy augur well for gold demand but a surge in prices (above a record `50,000/ten grams) pose a challenge. Indian demand Big Tech CEOs accused of crushing rivals, competition 15,83,792 Gold demand plunges 70% in first quarter 200 ANTITRUST GRILLING COVID-19 UPDATE Lacking lustre 19.7 if “something can be done about it”. GROSS NON-PERFORMING ASSETS (NPAs) for Life Insurance Corporation (LIC), as a share of its debt portfolio, increased to 8.17% for 201920 from 6.15% a year ago.The net NPA ratio was 0.79%, up from 0.27% in March 2019. LIC’s total assets in Marchwere `31.96 lakh crore,onlyslightly higher than the `31.1 lakh crore in FY19. “NPAs are a natural consequence of what is happening in the economy and the rise is largely due to the downgrades and defaults in the corporate sector. The 8.17% number relatestocorporatedebtbutasa share of total assets, the npa would come down to around 1%. We make provisions for everything,” senior LIC officials saidonconditionofanonymity. In absolute terms, NPAs stoodat`36,694.20croreason March 20 against `24,777.22 croreayearago,theofficialssaid. In the last few years,there have been a very large number of downgradesanddefaultsincorporate India, which has impacted the portfolios of insurers and mutual funds. 44.5 —PIYUSH GOYAL COMMERCE MINISTER PRESS TRUST OF INDIA New Delhi, July 30 168.6 "We are in dialogue with the requisite authorities. MEIS is not going anywhere. It's a cash flow issue. We are trying for an early solution which is a win-win for everyone." Herd immunity can't be strategic choice or option in India CHIRAG MADIA Mumbai, July 30 FE BUREAU New Delhi, July 30 COMMERCE AND INDUSTRY minister Piyush Goyal on Thursdaysaidheisintalkswith the finance ministry for an “earlyresolution”oftheissueof a massivecutinbenefitsunder the Merchandise Export From Indiascheme(MEIS)bytherevenue department. Speaking at a CII webinar, Goyal said: “We are in dialogue with the requisite authorities. MEIS is not going anywhere. It is a cash flow issue.We are trying for an earlyresolutionwhich is awinwin for everyone.” He was responding to a request by CII president-designate and Tata Steel chief executiveTVNarendran to see 13,248 10,104 31 11.8 Consolidated figures 8.1 « 38.6 21,585 1,00,929 24,486 6.3 582.9 ■ China is the largest exporter of television sets to India Jio net profit up 8%, Arpu rises to `140 GRM ($)/bbl 251.5 non-essential items from countries like China Net profit* Chg (%) 295 ■ Aims to cut import of RELIANCE INDUSTRIES (RIL) onThursdayreported a 30.6% y-o-y growth in net profit to `13,248 crore in the AprilJune quarter, largely driven by an exceptional gain and a lower tax payout. The bottomline got a boost of `4,966 crorefrom anexceptional profit (net of taxes of `1,508 crore) from the divestment of shares of Reliance BP Mobility Services and a lower tax liability. During the quarter, tax payout was lower by 71% y-o-y at `923 crore and deferred tax gains of `663 crore. The company also saw a 54% y-o-y growth in other income at `4,388 crore. Lockdowns across the world impacted demand acrossitskeybusinessverticals — petrochemicals, refining and retail. Prices of crude oil fell on lower demand impacting refining margins. Lockdowns in India impacted retail Ebitda Q1FY21 529.6 NO ENTRY FE BUREAU Mumbai, July 30 Revenue Q1FY20 « THE GOVERNMENT ON Thursdayimposed restrictions onimportsofcolourtelevision, a move aimed at promoting domestic manufacturing and cut inbound shipments of non-essential items from countries like China. “Import policy of colour television.....is amended from free to restricted,” Directorate General of Foreign Trade (DGFT) said in a notification. Putting an item under a restricted category of imports means the importer of that commodity will have to seek licence from the commerce ministry’s DGFT for imports. China is the largest exporter of TV sets to India. It was followed by countries like Vietnam, Malaysia, Hong Kong, Korea, Indonesia, Thailand and Germany. The company booked a one-time gain of `4,966 crore on BP’s investment (` cr) « PRESS TRUST OF INDIA New Delhi, July 30 BP deal, other income boost RIL net by 31% to `13,248 cr 1,64,495 Govt puts restrictions on import of colour TV EXTRAORDINARY GAIN « ● PROMOTING LOCAL 2019 2020 1,137 1,016 *Also includes demand from technology sector and central bank purchases MISSION TO MARS NASA’s next-generation Mars rover Perseverance lifts off from Florida’s Cape Canaveral on Thursday on a mission to search for traces of potential past life SAFEGUARD DUTY Domestic solar module suppliers more than double market share ANUPAM CHATTERJEE New Delhi, July 30 Rising sun THE SAFEGUARD DUTY on solar imports from China and Malaysia has produced mixed results — on one hand, market share of Indian solar module suppliers (a handful of them to be precise) has more than doubled to 30% in the two years to FY20andontheotherhand,the pace of solar power capacity addition in India has declined. TheUniongovernmenthad imposeda25%safeguardduty inJuly2018fortwoyears(ithas just been extended foranother year to July 2021, at a rate of 15%).The impost has helped a few domestic module manufacturers who have increased their market shares (see chart). However, about 50% the country’s 11 giga-watt (GW) domestic solar-panel capacity and another3 GWof cell-manufacturing facilities still Market share of Indian solar module suppliers (in %) 12 10 9 10 8 6 6 4 4 2 2 2 0 Waaree Adani FY18 Vikram FY20 ■ Safeguard duty on imports was introduced in July 2018 Source: Bridge to India, JMK Research and Analytics remain unutilised. Of course,China continues to be the largest source of solar cells and panels for India,with imports worth $1.3 billion in FY20. The value of such imports from China in FY18 was a massive $3.4 billion. Continued on Page 2 New Delhi Safeguard duty on solar cells for one more year till July 2021 THE GOVERNMENT HAS imposed safeguard dutyon solarcells forone moreyear tillJuly2021toprotectlocal manufacturers and discourage cheap imports from countries like China, reports PTI.The move followed recommendation by the commerce ministry’s investigation arm Directorate General of Trade Remedies (DGTR) for continued imposition of the dutyforone moreyear. After considering the DGTRfindings,therevenue department said in a notificationitisimposing“asafeguard duty”on the product.