OPINION, P6 ECONOMY, P2 SANJEEV CHADHA MSP for pulses helped boost production of legumes in India MARKETS, P10 SUNIL JAIN YES BANK PMLA CASE FINANCIAL INCLUSION Voda winning arbitration against the retrospective tax law shows how challenging doing business in India is ED attaches `127-cr London flat of Rana Kapoor SBI's micro markets vertical to enhance cost efficiency: Rajnish Kumar MUMBAI, SATURDAY, SEPTEMBER 26, 2020 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. LX NO. 226, 14 PAGES, `10.00 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: 37,388.66 ▲ 835.06 NIFTY: 11,050.25 ▲ 244.70 NIKKEI 225: 23,204.62 ▲ 116.80 HANG SENG: 23,235.42 ▼ 75.65 `/$: 73.61 ▲ 0.29 `/€: 85.81 ▲ 0.38 BRENT: $41.73 ▼ $0.21 GOLD: `498,76 ▲ `238 IN THE NEWS Forex reserves up by $3.378 bn to record $545 bn INDIA'S FOREIGN EXCHANGE reserves increased by $3.378 billion to touch a lifetime high of $545.038 billion in the week ended September 18, the RBI data showed, reports PTI. The forex kitty rose mainly due to an increase in foreign currency assets, a major component of the overall reserves. In-flight services at 20,000 ft and above, says Jio RELIANCE JIO ON Friday said its customers will be able to access mobile services during international flights after the aircraft reaches a height of 20,000 ft, reports PTI. It has become the first Indian mobile operator to have started in-flight voice calls, SMS and data services. Faceless appeals for direct tax cases launched ON THE LINES of faceless assessment launched by the government over a month ago, the income-tax department on Friday said that its appeals systems would also become anonymous and move to the faceless regime with immediate effect to eliminate physical interface between tax officials and taxpayers, reports fe Bureau in New Delhi. INTERNATIONAL ARBITRATION ● EYE ON YIELDS Vodafone wins `22,000-cr retro tax case against govt Award unanimous with govt-appointed arbitrator also ruling in the company’s favour FE BUREAU New Delhi, September 25 VODAFONE GROUP HASwon a long pending arbitration case againsttheIndiangovernment relating to retrospective taxation under which the income tax department had raised a demand of around `22,000 crore on the British telecom major.RulinginfavourofVodafone Group, the Permanent Court of Arbitration in Hague stated that the Indian tax department’s conduct of imposing a tax liability along with interest and penaltieswas in breach of guarantee of fair and equitable treatment of the THE LONG SAGA JANUARY 2012 SC rules in favour of Vodafone, says no capital gains tax payable on its $11-billion acquisition of Hutch’s stake in Hutchison-Essar in 2007 MARCH Overruling SC verdict, UPAGovt amends Income TaxAct with retrospective effect making offshore deals taxable in India FEBRUARY2016 JANUARY2013 Govt served a tax notice of`14,200 crore on Vodafone after including interest on the principal amount APRIL2014 The tax dept served a demand notice of`22,100 crore, including interest accruing since the date of the original demand Vodafone International Holdings initiates arbitration process under the India-Netherlands tax and investment treaty terms laid out in the bilateral investment treaty between the Netherlands and India. Confirming the ruling in favour of the company, Vodafone Plc in a statement to FE said,“Vodafone confirms that the investment treaty tribunal foundinVodafone’sfavour.This wasaunanimousdecision,includingIndia’sappointedarbitrator Rodrigo Oreamuno.The tribunal held that any attempt by Indiatoenforcethetaxdemand would be a violation of India’s international lawobligations.” Continued on Page 2 Other major retrospective/cross-border tax cases CAIRN ENERGY ITC March 2015: `10,247 crore in capital gains tax (interest and penalties being added) on Scottish firm Cairn Energy; 2006 group reorganisation transactionswere cited; firm sold its India arm to Cairn India toVedanta in 2011.Taxman has attached Cairn’s stake inVedanta and dividends of`1,140 crore; `1,590-crore tax refund is alsowithheld; international arbitration decree expected soon. SC rules in the firm’s favour in a `803-cr excise duty case in 2004; Govt refuses to oblige, issues an ordinance to change law retrospectively; settlement cost the firm `350-crore. Its $981-m takeover of Sesa Goa via arms abroad See Page 2 VEDANTA Will govt now challenge Voda award? It does so in most cases FE BUREAU New Delhi, September 25 WHILE GOVERNMENT OFFICIALS maintain“the Award is understudybyIndian authorities and its legal counsels who would seek suitable legal remedies at appropriate forums”, if the past is anything to go by, the award will be challenged. Just lastweek,the Supreme Court turned down the government’s appeal against an arbitration that VedantaVideocon won — the two were awarded $476 million — way backinJanuary2011!Thegovernment also challenged the award in favour of Reliance Industries in the PannaMukta-Tapti case in 2016. Ditto forthe award,in 2018,in favourofRelianceintheONGC casewhere the latterhad asked for $1.6 billion for the gas that it alleged Reliance had stolen from its field. The $672-million award in favour of Devas — in its damages claim against Isro’sAntrix — has also been challenged. Google’s search engine to face its biggest challenge GOOGLE’S SEARCH ENGINE,oneofthemostprofitable businesses in history, is about to face its biggest challenge as the US government readies an antitrust lawsuit accusing the company of crushing competition to protect and extend its monopoly. After a 14-month investigation,the justice department is homing in on whether Google skews search results to favor its own products and whetheritusesanironfistover access to users to shut out rivals, according to people familiarwith the matter. Google, which controls about 90% of the online search market in the US,has long been a target of rivals that complainit’susedthatpower to snuff out competition across the internet. What started out as a college research project in the late 1990s now generates about $100 billion in highly-profitable revenue each year. Continued on Page 12 QuickPicks CAG: Star-rated appliances worth `2,200 cr sold despite failing tests THE CAG’S latest report said that `2,200 crore worth of air conditioners (ACs) and refrigerators with the government’s ‘star rating’ labels were sold in the market between 2014 and 2018, though these products had failed the check tests for energy efficiency, reports fe Bureau in New Delhi. In a repor, CAG noted that though the Bureau of Energy Efficiency planned to check test 1.72% of approved models and actually tested only 0.16% during FY13-18. PAGE 2 Coffee Day: ‘No negotiation’with TCPL for vending machine biz sale DEBT-RIDDEN COFFEE Day Enterprises on Thursday said it continues to explore and evaluate various opportunities amid reports that it is in talks with Tata group firm TCPL to sell its vending machine business, reports PTI. Coffee Day Enterprises, however, in a regulatory filing said that there is no such negotiation or events taken place with Tata Consumer Products (TCPL) in this regard. PAGE 5 E-grocery GMV estimated to touch over $3 billion in 2020 AS MORE customers signed up for online grocery services amid the pandemic, companies seem to be well on course to log higher sales, reports fe Bureau in New Delhi. Analysts at consulting firm RedSeer estimate the sectoral gross merchandise value (GMV) to touch over $3 billion this year. Although nowhere close to doubling last year’s sales numbers, it nonetheless is considerably higher than $1.9 billion in GMV reported in 2019. PAGE 4 10-year bond yield (%) Intra-day, September 25 6.045 6.030 6.041 5.993 6.015 6.000 5.985 5.970 Previous close 5.994 Open Close SUBHADIP SIRCAR Mumbai, September 25 INDIAN SOVEREIGN BONDS fell as traders awaited the results of a `30,000-crore debt sale. The sentiment was also cautious afterthe Reserve Bank of India (RBI) rejected all bids at Thursday’s open market bond purchase auction. The 10-year yields rose 2bp to 6.01% on Friday. Traders who polled in a Bloomberg survey expect underwriters to rescue the 10-year sale; cutoff expected at 6.03%. On Thursday, the central bank rejected all bids at a keenly watched bond-purchase auction, which is being seen as another sign that authorities want to keep yields in a tight range. Continued on Page 12 Govt plans $4.6 bn in incentives for battery makers Seeks to cut down dependence on oil NEHAARORA & AFTAB AHMED New Delhi, September 25 INDIA PLANS TO offer $4.6 billion in incentives to companies setting up advanced battery manufacturing facilities as it seeks to promote the use of electric vehicles and cut down its dependence on oil, according to a government proposal seen by Reuters. A proposal drafted by Niti Aayog said India could slashits oil import bills by as much as $40 billion by 2030 if electric vehicles were widely adopted. The proposal is likely to be reviewed by Modi’s cabinet in the coming weeks, said a senior government official, who was not authorised to comment on the matter and declined to be identified. Niti Aayog and the Indian government did not respond to requests for comment. The think tank recommended incentives of $4.6 billion by 2030 for companies manufacturing advanced batteries, starting with cash and IT’S A DEAL GREEN AMBITION Niti Aayog said India could slash its oil import bills by $40 bn by 2030 if EVs were widely adopted Draft proposal is likely to be reviewed by Union Cabinet in coming weeks Proposal for cash & infra incentives of `900 crore in FY22, to be ratcheted up annually India plans to retain 5% import tax for certain types of batteries, including those for EVs, until 2022; but will hike it to 15% thereafter to boost local manufacturing infrastructure incentives of `900crore($122million)inthe nextfinancialyearwhichwould then be ratcheted up annually. Continued on Page 2 ● LOCKDOWN UP IN ARMS Members of various farmer organisations protest against the government over the electricity amendment Bill and farm ordinances, near Ambala on Friday HARMEET SODHI ● S&P FY21 FORECAST India’s debt level to exceed 90% of GDP FE BUREAU New Delhi, September 25 GDP (% growth, y-o-y) Debt (% of GDP) S&P STANDARD AND POOR’S (S&P) on Fridayforecast a spike in India’s debt levels to 90.6% of its gross domestic product (GDP) in FY21 from 73.4% a year before, although the global rating agency retained the country’s long-term sovereign rating at the lowest investment grade of ‘BBB-’, Moody's Fitch -9 -11.5 -10.5 90.6 90.1 87.9 with a stable outlook. With this,S&Pjoins its peer Moody’s and some others in predicting a steeper slide in India’s fiscal metrics this year, as the Covid-19 pandemic wreakshavoc.Moody’shasalso forecast that India’s debt-toGDP ratio will worsen to 90.1%inFY21,beforeimproving a tad to 88.5% in FY22. Continued on Page 12 GMR Infra to divest 51% Kakinada SEZ stake to Aurobindo SC reserves order on airfare refund FE BUREAU Mumbai, September 25 Continued on Page 2 US ANTITRUST CASE DAVID MCLAUGHLIN & GERRIT DE VYNCK September 25 Bonds edge lower before $4-bn debt auction EV PUSH THE GOVERNMENTONFriday told the Supreme Court that thebestwaytocompensatethe passengers will be to either to give full refund of air tickets or transferable travel vouchers, but the credit shell facility could not be availed by travel agentswhowouldhavebooked tickets for the passengers during the Covid lockdown. Solicitor General Tushar Mehta,appearingfortheDirectorateGeneralofCivilAviation, toldabenchledbyjusticeAshok Bhushan that the credit shell facility for tickets booked during the lockdown period will onlybeapplicabletopassengers who could not avail flights and that no such credit shell would be given to the travel agents. The bench,afterhearing all the parties,reserved itsverdict on the issue of refunds for air tickets that had to be cancelled due to lockdown. Opposingthesuggestionby the travel agent bodies to process the refunds and vouchers to them if the tickets were booked through then, the SG said that “we cannot regulate them. We don’t have control over them.But a passenger can use the credit shell via agents. Unlessticketisbooked,booking name remains floating”. GMR INFRASTRUCTURE ON Friday announced signing of definitive agreements to sell the 51% stake in Kakinada SEZ (KSEZ) to Aurobindo Realty and Infrastructure (ARIPL) for a total consideration of `2,610 crore. The GMR Group has been divesting assets to pare debt and simplify its group structure. The stake is held by its wholly-ownedsubsidiaryGMR SEZ and Port Holding. Out of thetotalconsideration,`1,600 crore would be received on the closing date and balance `1,010crorewouldbereceived over two or three years, which would be linked to certain agreed milestones. GMR to sell entire stake in Kakinada SEZ (KSEZ) for `2,610 crore ■ `1,600 cr to be received on closing date ■ `1,010 cr over next 2-3 years post completion of milestones Proceeds to be used to reduce debt ■ GMR's consolidated gross debt at `32,100 crore and net debt `26,300 crore Proceeds from the transaction will be used to reduce the company’s debt. Continued on Page 2 Fiscal deficit woes: BPCL sale may be delayed until FY22 INDIA’S EFFORTS TO privatiserefinerBharatPetroleum could spill over into the next fiscal,according to a governmentdocumentandsources, hurting its efforts to rein in a ballooning fiscal deficit, reports Reuters.The privati- sation of key companies, including BPCL, is a key part of government plans to pare the fiscal deficit. Industry sources last year estimated the government’s 53.29% stake in BPCL could fetch $8 billionto $10 billion.Page 4 FE BUREAU New Delhi, September 25 Continued on Page 12 IN FOND MEMORY SP Balasubrahmanyam — matchless musician, a nek insaan SUANSHU KHURANA New Delhi, September 25 SRIPATHI PANDITARADHYULA BALASUBRAHMANYAM, legendary playback singer, composer, actor, producer and the musician whose evocativevoiceandtheearnestness in it could elevate a simple pieceofmusictoabsolutesubliminity,diedonFridayafternoon of a cardio-respiratory arrest at MGM Healthcare in Chennai. Balasubrahmanyam, fondly called SPB and Balu,was admit- ted to the hospital on August 5 after he tested positive for Covid-19.Hewaslatershiftedto the ICU after he developed severe pneumonia due to further complications. He is survived by wife Savithri, son SP CharananddaughterPallavi.He was 74.Outside the hospital an emotional Charan told the reporters,“SPBbelongstoeveryone.Hewill live on in his songs”. The news of the musician’s death sent legions of his fans into mourning. Subrahmanyam, believed to be one of SP BALASUBRAHMANYAM JUNE 1946 - SEPTEMBER 2020 thefinestmaleplaybacksingers witha50-year-longcareer,transcended language barriers by singingin16ofthemincluding Hindi,Telugu,Kannada,Malayalam and Tamil among others. He found success in the Hindi film industry but a lot more in SouthIndianfilmmusic—acult status and genuine affection from people. From MG Ramachandran (MGR), Sivaji Ganesan, Gemini Ganesan to Kamal Hassan, Rajanikanth, Mohan and a slew of actors in the present day, Subrah- manyam’s voice was often the fixture for all of them.That he held the Guinness Book of World Record for singing the highest number of songs ever (40,000songs)wasjustanother featherinhiscap.Inallofthem, that tender, velvety voice triumphantlystoodoutasoneofa kind — one that was unpretentious and yet grand.And that’s where the magic nestled. Here northandsouthandthepolitics oftheirlanguagesdidn’tmatter. Continued on Page 12
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