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APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL 18 NO. 39, 22 PAGES, `12 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: 76,499.63 ▲ 169.62 NIFTY: 23,176.05 ▲ 90.10 NIKKEI 225: 38,474.30 ▼ 716.10 HANG SENG: 19,219.78 ▲ 345.64 `/$: 86.65 ▼ 0.07 `/€: 88.89 ▼ 0.63 BRENT: $80.47 ▼ $0.54 GOLD: `77,971* *As on Jan 13 IN THE NEWS Rajeshwar Rao gets monetary policy in RBI portfolio rejig IN A MAJOR reshuffle of portfolios of deputy governors, the Reserve Bank of India on Tuesday allotted the key monetary policy department to deputy governor M Rajeshwar Rao, reports fe Bureau. The rejig follows the exit of deputy governor Michael Patra whose term ends on January 15. Patra was looking after monetary policy along with 7 other departments. Rao has been allocated 11 departments, including risk monitoring, legal, enforcement departments. Deputy governor T Rabi Sankar has been allocated departments of currency management, payment and settlement systems and 11 others. Swaminathan Janakiraman will handle financial stability, supervision, consumer education and protection, and 6 others. Adani bags NHAI TOT assets with `1,692-cr bid ADANI ROAD TRANSPORT has emerged as the highest bidder for the latest set of highway assets of NHAI that has been offered for monetisation through toll operate transfer (TOT) mode, reports Mukesh Jagota. ■ P2 WPI inflation rises to 2.37% in Dec WHOLESALE PRICE INDEX (WPI)-based inflation rose to 2.37% in December from 1.89% in November, thanks to the statistical effect of a low base and rise in inflation rate of manufactured products, official data showed, reports fe Bureau. ■ P11 FE S P E C I A L Why restaurants don’t want Bistro & Snacc NRAI says it amounts to selling of private labelled food by these apps ■ EXPLAINER, P9 FINMIN DRAFTPAPERTO IDENTIFYCASES OFREDUNDANTRULES Regulatory norms under reviewtoeasecompliance RUN-UP TO THE BUDGET UNDER EVALUATION PRIYANSH VERMA & ARUNIMA BHARADWAJ New Delhi, January 14 ■ Govt to undertake review of financial sector regulators RBI, Sebi, Irdai and corporate affairs ministry THE FINANCE MINISTRY is assessingallfinancialregulators in the countryand theirrespective frameworks to evaluate whether over-regulation is stifling economic activity. Accordingtosources,theministryispreparingadraftpaper, which will highlight the regulatoryprovisionsthatshouldbe relaxed in order to support gro- wth and encourage innovation. IntheupcomingBudget,the government may announce its intention to relax regulations, thoughconcretestepswouldbe taken only with the benefit of deductions from the ongoing PRASANTA SAHU New Delhi, January 14 purchasewithout collateral or third-party guarantee,will let pooling of credit risks of the firms. While the guarantee will be limited to `100 crore, the loan amounts could be even higher. The scheme is expected to address the issue of tepid investments by MSMEs in recent years, even as public capex has been robust,and to a certain extent,investments by large corporate groups, too, have picked up. Continued on Page 12 Continued on Page 12 undue regulations, encourage growth, enhance ease of doing business ■ May announce intention to relax regulations in upcoming Budget ■ Industry, economists have been urging Centre to cut compliance burden, ease regulatory oversight CAPITAL BOOST review of regulatory functions and rules,said the sources. Currently, the ministry is evaluating the regulatory frameworkofseveralregulators, including the Reserve Bank of India (RBI), the Securities and Exchange Board of India (Sebi), the Insurance Regulatory and DevelopmentAuthorityofIndia (Irdai),and the ministry of corporate affairs (MCA),theysaid. Continued on Page 12 Larger credit cover for MSMEs likely THE CREDIT GUARANTEE scheme for micro, small and medium enterprises (MSMEs), announced in July last year,will takeformintheupcomingBudget,with a focus on facilitating capitalinvestmentsbythemanufacturing sectorunits. The scheme will be largely modelled on the successful EmergencyCreditLineGuarantee Scheme (ECLGS) for small businesses which was unveiled in2020amidthepandemic,but ■ New scheme to be largely modelled on ECLGS for small businesses unveiled in 2020 To cover larger loans with a guarantee of up to `100 crore ■ will cover larger loans, with a guaranteeofupto`100crore.It will be structured in a way that beneficiary units can use the credit for scaling up, sources ■ MSME credit penetration is just Focus to be on facilitating capital investments by manufacturing sector units ■ 14% in India compared with 50% in US and 37% in China said. The upper threshold for loan eligibilitywould be higher. The scheme, designed to provide guarantee to MSME loans for capital equipment NIKUNJ OHRI New Delhi, January 14 THE CENTRE PLANS toproject highereconomicgrowthforthe next fiscal, two government officials said,adding that fiscal deficit goals are being met and kept.Itislikelytoforecastnominal economic growth of 10.3%-10.5%,accordingtoone of the officials. That’s higher thantheforecastof9.7%forthe currentyearto Marchendgiven by the government’s statistical department this month. The upbeat outlook could help dispel worries about an economic slowdown which have gripped markets since November. The government expectstheworld’sfifth-biggest economy to log its slowest pace of growth in four years for 2024/25. NR Bhanumurthy, director atMadrasSchoolofEconomics, said the nominal GDP estimate for the next fiscal looked realistic, adding that he expects growth to be driven by government capital spending,agriculture and a pick-up in exports. Finance minister Nirmala Sitharaman is expected to cut personal income taxes in her Budget,which is due to be presented on February1,hoping to boost demand among millions ofsalaryearnerswhohavebeen forced to cut discretionary spending due to weak wage growth and high food inflation. ■ Review aims to cut 2025-26 Govtmayset 10.3-10.5% nominalGDP growthtarget Re free fall to hit margins of EVmakers ● Majority of components imported SPEED BREAKER ■ Ashok Leyland, Hyundai Motor India, Kia, Piaggio Vehicles, Hop Electric & Pinnacle Mobility heavily reliant on imports NITIN KUMAR New Delhi, January 14 MAJOR ELECTRIC VEHICLE (EV)makerssuchasTataMotors, Mahindra & Mahindra, Ola Electric, Eicher Motors, TVS MotorCompany,andBajajAuto facemountingmarginpressure with the depreciating rupee inflating theirinput costs. While traditional internal combustion engine (ICE)vehicles have over 90% localisation in component sourcing, EVs remain import-heavy, with the domestic content for some companies, at best, around 50%. In fact, companies like AshokLeyland,HyundaiMotor India,Kia,PiaggioVehicles,Hop Electric,and Pinnacle Mobility Solutionsareevenmorereliant on imports, exposing them to higher currency fluctuations. According to data from the ministry of heavy industries, these firms are yet to achieve the 50% domestic value addition (DVA) certification necessary for being eligible to claim incentives. With the EV industry importing over 70% of its components, rising raw mate- As per data, these firms are yet to achieve 50% domestic value addition necessary to be eligible to claim PLI incentives ■ Rising raw material costs may also drive up prices, say experts ■ ■ Auto parts imports rose by 14% over 2 years to $20.9 bn in FY24 rial costs are likelyto compress margins or drive up prices, experts said. “EVs are significantly more import-dependent than ICE vehicles. Despite the PLI scheme,onlyahandfulofplayers are nearing self-reliance, while most remain reliant on imports,” said Preetesh Singh of Nomura Research Institute. Continued on Page 12 RBI governoropen to let rupee move more freely ANUP ROY January 14 RESERVE BANK OFIndia(RBI) governor Sanjay Malhotra has shown a willingness to allow the rupee to move more freely in tandem with peers in the region while still intervening in the foreign-exchange market to curb excessive moves, according to people familiar with the regulator’s thinking. Malhotra,whotookofficein December, has held multiple meetings with departments at the central bank ahead of his first monetary policy meeting in February, the people said. He’s showed keen interest in theRBI’scurrencyintervention functions and expressed no opposition when his team explained the recent movements in the rupee and the need to allow it to depreciate, the people said. RBI’soverallobjectiveisstill to avoid targeting a specific level for the rupee and to interveneregularlytocurbexcessive MORE FLEXIBILITY ■ Sanjay Malhotra, who took office in Dec, has held multiple meetings at RBI ahead of his first monetary policy meeting in February ■ The new governor may allow a wider gap in the closing level from previous day’s close volatilityandpreventanyspeculative attacks,the people said. The new governor may allow a widergap in the closing level of the currencyfrom the previous day’s close if the situation warrants, the people said,without providing more details. The signals from the new governor suggest a departure from his predecessor, Shaktikanta Das, who kept a tight rein on the currency. Continued on Page 12 ■ RBI's overall objective is still to avoid targeting a specific level for the rupee ■ Under Shaktikanta Das, RBI built up FX reserves of over $700 bn and then used it to defend the currency Rupeeatnew closinglow THE RUPEE FELL to its alltime low on Tuesday due to strongdollarbidsspurredby the maturityof positions in the non-deliverable forwards (NDF) market,while likely RBI intervention helped cap losses, traders told Reuters. ■ PAGE 11 Opening ofWEF meet coincides withTrump’s return toWhite House Davos towelcomeTrumpvirtually MARWA RASHAD London, January 14 DONALDTRUMPWILLattend next week’s World Economic Forum (WEF) meeting in Davos digitally, its organisers said onTuesday,asworld leaderswait to hearmore about the incoming US President’s policies and his pledge to end the war in Ukraine. Trump will return to the WhiteHouseonJanuary20,with hisinaugurationcoincidingwith the start of the 55th annual meetingofpoliticalandbusiness leadersintheSwissresort. Meanwhile,Ukrainian President Volodymyr Zelenskiy will makeaspecialaddressandtake questions,theWEFsaid. Among the other global leaders due to attend the meeting,whichwillinclude60heads of state and government, are ONLINE MODE ■ Donald Trump, who has twice previously attended the meeting in Davos, to join WEF meet ‘digitally’ on Jan 23 European Commission president Ursula von der Leyen and China’svicepremierDingXuexiang, WEF president and CEO BorgeBrendesaidduringapress conference onTuesday. BrendesaidTrump,whohas twice previously attended the meetinginDavos,willjoin“digitally”ontheafternoonofJanu- ■ WEF prez & CEO Borge Brende said there's a lot of interest over Trump admin's policy priorities ■ Ukrainian President Volodymyr Zelenskiy to also make a special address at summit 60 heads of state & govt among attendees, including European Commission chief Ursula von der Leyen and China’s vicepremier Ding Xuexiang ary 23,without giving further details. He said it would be a “very special moment”to learn aboutthepolicyprioritiesofthe Trumpadministration.“Thereis a lot of interest to decipher and tounderstandthepoliciesofthe newadministration,soitwillbe an interestingweek,” he said. Topics on the Davos agenda spanmountingglobalgeopolitical and economic uncertainty, tradetensions,climategoalsand how artificial intelligence can help make lives better. Business leaders have become more optimistic about the economy given Trump's pledges to reduce regulations, potentially cut taxes and ease restrictionsonactivitiesincluding mergers and acquisitions, Rich Lesser,global chairof BCG, told Reuters ahead of the meet. But underlying optimism aboutTrump’spro-growthpolicies is being offset by concerns about tariffs, deportations, a widening budget deficit and US relationswithChina,hesaid. “Thecomplexwebofgeopolitics, the intersection with tariffs,theintersectionwithsupply chains,competitiveness differentiationwillbeamajortheme,” Lesseradded. —REUTERS Lucknow