INTERNATIONAL, P8 COMPANIES, P4 BACK PAGE, P22 DECLINING SHAREHOLDER VALUE TARGET SET FOR 2030 IN REMEMBRANCE Nick Read to step down as Vodafone CEO after 4 years Tata Power eyes fivefold hike in green energy capacity Dominique Lapierre, author of 'City of Joy', passes away at 91 NEW DELHI, TUESDAY, DECEMBER 6, 2022 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL XLVIII NO. 238, 32 PAGES, `10.00 (PATNA & RAIPUR `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: 62,834.60 ▼ 33.90 NIFTY: 18,701.05 ▲ 4.95 NIKKEI 225: 27,820.40 ▲ 42.50 HANG SENG: 19,518.29 ▲ 842.94 `/$: 81.80 ▼ 0.48 `/€: 86.36 ▲ 0.75 BRENT: $87.95 ▲ $2.38 GOLD: `53,662 ▲ `215 PAN likely to be key to single-window clearance system BUSINESSES MAY be allowed to log in to the national single window system for obtaining various clearances and approvals from both the central and state government departments by using only the Permanent Account Number (PAN) as a unique identifier, reports Banikinkar Pattanayak in New Delhi. ■ PAGE 3 Air India increases aircraft lease tally by 6 to enhance fleet TATA GROUP-owned Air India on Monday announced the leasing of six Boeing B777-300 ER widebody aircraft to further augment its existing fleet, reports Swaraj Baggonkar in Mumbai. Expected to be inducted in the first half of 2023 on long-haul international routes, this is the second announcement by the former flag carrier this year on aircraft leasing. ■ PAGE 4 EXPLAINER PRICE CAP ON RUSSIAN CRUDE ■ PAGE 22 FE S P E C I A L S Customer 360 is the mantra for growth ‘One-bank, one-RoE’ was the biggest takeaway from the analyst meet ■ INVESTOR, P7 IT’s role to be even greater in the next five years Retaining key tech talent will be crucial in such an environment ■ eFE, P7 3 3 -3 -6 -9 -12 -1.17 0 2018 2019 2020 2021 2022* *Up to Dec 5, 2022; Source: NSDL segment in 2014 prompted the Centre to extend the concessional tax rate thrice in subsequent years flight of foreign money. These were applicable on interest payable till May 31, 2015. Record FPI inflows in the debt segment in 2014 prompted the Centre to extend the concession thrice in subsequent years. “Private equity investors and FPIs are hoping for an extension of the 5% withholding tax rate beyond June 2023. The lower rate has provided a significant boost to offshore lending in g-secs and corporate debt. If the benefit is not extended, the government might want to consider a gradual rate increase to say7.5% to startwith so that the tax burden does not suddenly increase to 20%/40%,” Rajesh Gandhi, partner, Deloitte India,said. Experts believe the lower tax rate is a significant contributor in making India's debt market attractive to overseas investors.The concessional rate has also helped in reducing borrowing costs for the government and firms. Chinese phone makers must have open supply chains: Govt Services PMI touches 3-month high in Nov JATIN GROVER New Delhi, December 5 THE GOVERNMENT HAS asked Chinese handset makers like Oppo, Vivo and Xiaomi, who are under scrutiny for alleged tax evasion, to broad-base their distributor network, which is currently fully owned by their own entities. “The government’s stance is very clear — if they (Chinese handset makers) want to continue in India, they must effectively follow the law of the land and should have open transparent supply chains,” ministerof state (MoS) forelectronics and information technology Rajeev Chandrasekhar told FE. “WerealisedthatsomeoftheChinese brands were using unfair practicestocrowdouttheIndianhandset manufacturers.Theywereusingnontransparent,closesupplychains.They were not paying taxes.I have met all the Chinese companies and told them clearly that if you want to continue in India,you must effectively followthelawoftheland.Youshould haveopentransparentsupplychains, Manglunia,managing directorand head of the investment grade group at JM Financial. FPIs have been net sellers of debt papers worth $1.2 billion in 2022 in addition to the $16.9 billion sold in equities.Last year,they were net buyers in Indian debt to the tune of $3 billion. In the past five years, however, FPIs have cumulatively net sold in excess of $10 billion in debt. The government had introduced these lowertax rates in 2013 after a wobble in the rupee led to a ■ Record FPI inflows into the debt RAJEEV CHANDRASEKHAR, MoS, IT & ELECTRONICS We realised some of the Chinese brands were using unfair practices to crowd out the Indian handset makers... I have met all of them and told them that if you want to continue in India, you must effectively follow the law of the land.. pay taxes and follow the law of the land,” the ministersaid. “We want to be a trusted player in the global value chain for electronics which means we need to be open and transparent in terms of howwe are building the ecosystem. So, for India to be a transparent playerin the electronic globalvalue chain,ourplayers also need to function transparently,”he added. GovernmentsourcessaidtheChi- PMI 60 58 56 54 58.4 Manufacturing Services 50 56.4 55.9 55.7 52 Oct 2021 Nov 2022 Note: Reading below 50 suggests contraction and above it indicates expansion; Source: PMI by S&P Global nesehandsetmanufacturersoperate in India in a mannerwhere theirdistributor network is fully owned by their own entities.The distributors are also shareholders of the handset firms.Asaresult,thesefirmsareable to undercut the Indian manufacturersasdistributorsworkonzeromargins and are able to earn as shareholderswith growing market share. Continued on Page 8 Exit polls: Big BJP win in Gujarat, edge in Himachal THE BJP IS headed for a massive win in Gujarat, where it has been in power for nearly two-and-ahalf decades, and is marginally ahead of the Congress in Himachal Pradesh, according to exit polls broadcast by television networks after the final phase of voting in Gujarat Monday, reports Express News Service. Counting ofvoteswill take place on December8. Barringone,allpollstershavegiventheBJPaslenderedge in Himachal Pradeshwhich has a tradition Continued on Page 13 of voting out the incumbent. Most exit polls, however,predicted that the maximum the BJPcould get inthehillstateis40,justsixseatsmorethanthehalfwaymark of 34 in the 68-member House. Meanwhile, exit polls released ahead of the Municipal Corporation of Delhi election results on Wednesday, projected a clean sweep by the Aam Aadmi Party (AAP), which runs the Delhi government,with the BJP coming in a distant second. ■ Report on Page 22 FE BUREAU New Delhi, December 5 INDIA'S SERVICES SECTOR output growth rose to a three-month high in November as new business inflows rose markedly, lifting optimism to its highest level in eight years, even as there was a substantial increase in input inflation, according to a monthly survey released on Monday. The seasonally adjusted S&P Global IndiaServices PMI rosefrom 55.1 in October to 56.4 in November. Survey participants linked the latest expansion to demand strength,successful marketing and a sustained upturn in sales. The survey results indicate that services—especiallycontact-intensive ones — which were the main driver of GDP growth in Q2FY23 continues to be the strong segment of the economy. Continued on Page 13 Those not meeting export obligations may escape penalties PRASANTA SAHU New Delhi, December 5 TO REGULARISE EXPORT obligation (EO) default cases under the Export Promotion Capital Goods (EPCG) andAdvanceAuthorisation (AA) schemes, the government is examining an amnesty scheme for exporters, under which they may be required to pay applicable customs duty but get some relief on interest and escape penalties fully, sources told FE. The amnesty scheme could benefit about 1,000-odd exporters,while it could also result in the immediate flow of tax revenues to the Centre due to the resolution of the disputes. Though the exact cost of the amnesty scheme for the government or benefits to the exporters could not be ascertained, it could well run into at least a few hundred crores. Tax revenue foregone by the government on EPCG and AA schemes in FY22 was `11,700 crore and `2,862 crore, respectively. Similar revenues SCHEME OF THINGS Tax revenue foregone by the govt on EPCG and AA schemes (` crore) FY21 FY22BE Advanced Authorisation scheme 2,862 5 6 ■ Under Section 194LD of Income Tax Act, also referred to as withholding tax, FPIs have been given the benefit of lower tax rate on rupeedenominated bonds issued by Indian firms and govt securities since 2013 2,322 ($ billion) 11,704 MORGAN STANLEY has upgraded China to ‘overweight’ from ‘equal-weight’, given the relaxation in Covid curbs, property market stabilisation, the regulatory reset wrapping up as well as early signs of the US and China intensifying bilateral communications at both state and business levels, reports Ashley Coutinho in Mumbai. ■ PAGE 9 FOREIGN PORTFOLIO INVESTORS (FPIs), who are enjoying a concessional tax rate of 5% on the interest income of rupeedenominated bonds, could be staring at a higher tax outgo after June 30,2023. Under Section 194LD of the Income Tax Act, also referred to as withholding tax, FPIs have been given this tax benefit on rupeedenominated bonds issued by Indian firms and government securities since 2013. However, there are fears that this may not be extended in the upcoming Budget, according to people in the know. This would mean that the tax to be paid on the interest income would shoot up to 20% or higher, going up to 40% depending on the type of debt and tax treaty available. “There's a fair chance that the government may not extend the concessional rate considering that the inflows in debt have been muted in the past year.But considering that this a pre-election Budget, it may not tinker with the tax rates at this juncture,” said Ajay FPI INVESTMENT IN DEBT 13,613 Morgan Stanley upgrades China to ‘overweight’ ASHLEY COUTINHO Mumbai, December 5 -10.7 THE LENDERS and advisers of Reliance Capital (RCap) are at loggerheads on the actions to be taken to complete the firm’s insolvency process, even as the committee of creditors’ (CoC) is scheduled to meet on Tuesday to iron out their differences, reports Rajesh Kurup in Mumbai. This comes after the former Anil Ambani company’s insolvency process elicited a lukewarm response. ■ PAGE 9 Centre planning Cloud over FPI debt taxation amnesty scheme for exporters 5% CONCESSIONALWITHHOLDING TAX BENEFIT FACES UNCERTAINTY -6.9 IN THE NEWS Insolvency process: RCap lenders, advisers at loggerheads Export Promotion Capital Goods scheme were foregone in the previous years as well. The EPCG and AA schemes facilitate imports of goods for producing quality goods and services and enhancing India’s manufacturing competitiveness. Continued on Page 13 Oyo boss seeks jobs for sacked staff TUSHAR GOENKA Bengaluru, December 5 DAYS AFTER HOSPITALITY and travel tech startup Oyo said it was letting go of about 600 employees, founder and CEO Ritesh Agarwal pitched for the staff impacted by his decision and urged companies to recruit the outgoing workers. “Many talented OYOpreneurs are having to part ways with OYO and we want to ensure they receive as much assistance and support as possible.For companies that are hiring in tech,reach out to us at email@example.com and we will share a directory for rehiring our outgoing colleagues,” Agarwal wrote in a LinkedIn post on Monday. Last week, the IPO-bound startup said it was downsizing the product and engineering teams, corporate headquarters and the OYO vacation homes teams, while it adds people to the partner relationship management and business development teams. Further, even as it plans to fire at least 600 employees, the company said it will conduct fresh hiring of 250 members. It has a workforce of around 3,700 employees. Typically, multinational companies use outplacement agencies to look for other employers who are hiring. The expenses are borne by the company concerned and not the employees. In the latest round of layoffs, several Indian tech companies and startups have started doing the same. Continued on Page 13 RITESH AGARWAL, OYO CEO, IN A LINKEDIN POST Many talented OYOpreneurs are having to part ways with OYO and we want to ensure they receive as much assistance and support as possible. For companies that are hiring in tech, reach out to us at firstname.lastname@example.org... STRICTER GOVT SCRUTINY OF ELECTRIC VEHICLE FIRMS EV startups make auto component makers see red SWARAJ BAGGONKAR Mumbai, December 5 WITHTHE GOVERNMENT'S recent crackdown on electric vehicle (EV) makers over alleged flouting of norms, auto component suppliers have become extremely cautious. Severalestablishedcomponentmakers,who had diversified into the EV segment,are now only keen on placing their bets on legacy players as these have emerged relatively more reliablethan the startups. The EV industry has been under fire since the past many months following the suspension of FAME-2 subsidiesbythegovernmenttomore thanhalfadozencompaniesfordefying the rules on localisation. As a result, several startups have either overshot their new product launch HITTING SPEED BUMPS ■ Govt has suspended FAME-II subsidies to over 6 companies for defying rules on localisation ■ Several startups have either overshot their product launch deadline or have struggled to ramp up production deadline by several months or have struggled to ramp up production. SomeotherslikeSimpleEnergy,Matterand Oben Electric have seen their Some others like Simple Energy, Matter and Oben Electric have seen their debut getting delayed by 10-12 months ■ Parts makers say they are placing their bet on legacy players as they have emerged relatively more reliable debut getting delayed by 10-12 months. A proprietor of a company that makeselectricalandelectroniccom- ponentssaid:“Asacomponentmanufacturer, there are a lot of investments companies like us have to makeforthecustomer.Thesearecus- tomisedproducts.Thesearenotonesize-fits-all products. I have more faith in the legacy players than in startups.Itwillnotbethateasyforus to invest forstartup companies.” As more than half of the EV is made outside of the vehicle maker’s factory,componentmakerscarrythe responsibility of supplying numerouspartsthathelpputtheproducton the production line.The component supplier has to invest in producing products that precisely match the requirements of thevehicle maker. “Wedonotdosalesplanninganymore.Instead,we seek a vendor procurement plan where I ask the vendor how much they can supply. It is verydifficulttogetsupplies.Vendors are asking for 100% advance especiallyincaseofbatteries.Thereareso many small OEMs who have taken New Delhi bookings, promised deliveries and gonecompletelysilent,”aGurugrambasedelectricscootermakersaid. Another EV maker said:“It is gettingverydifficulttosecurethesupply chain.This is leading to delays.Most startupslikeusarenotonlystruggling to be in line with our new product launchpipelinebutareunabletoproduce as per our internal projections also. The stoppage of subsidies is addingtothefinancialpressure.” Though the government has halted subsidies which range from `17,000 to `55,000 per vehicle, some EV makers are dipping into theirownfinancestofundthesubsidies to avoid hurting demand while being hopeful of resumption of the subsidies bythe government soon. Continued on Page 13
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