Indian Business News (1 Oct 2014 to 11 Oct 2014)

Editor's Notes

1. Business Today 11 Oct It is a crying shame that India has some of the largest deposits of coal in the world—close to 300 billion tonnes—and is also one of the largest importers of coal. Last month, when the Supreme Court cancelled 218 coal fields allocated since 1993, the supply situation got aggravated further. Power producers, steel companies, fertilizer manufacturers and cement plants will have to face the brunt of dented supplies and higher prices in the short-run. In the next six to 12 months, such companies are likely to be affected badly. Of these, it is the power sector where maximum trouble can be expected. The lower supply of coal coupled with higher prices due to imports or delayed availability from other sources will translate into higher power prices. The entire coal sector is now beset with policy uncertainty due to the court’s judgment. But this is also an opportunity to clean up the coal sector. In fact, if the government is able to implement a model solution for coal—clear laws with clear lines of authority for permissions, etc.,—then the model can be extended to other mineral resources that have been gripped by allocation controversies. In creating a new framework one assumption is necessary to start with. The government-owned Coal India Ltd, one of India’s largest companies by market capitalization, is simply unable to supply the stuff demanded. In 2013-14, India produced 570 million tonnes of coal while the demand in recent years has hovered around 700 million tonnes per annum. This is a serious shortfall that cannot be addressed overnight except by imports. If shortages are not to turn into bottlenecks in the years ahead, India needs to reinvent the legal and operational framework for coal mining. That process cannot be delayed. One way to get around the problem is to issue an ordinance undoing the apex court’s judgment. While there will be no legal infirmity in issuing a properly considered and drafted ordinance, a better and lasting option be to introduce amending Bills in Parliament. Amending the relevant sections of the Mines and Minerals (Development and Regulation) Act, 1957 and the Coal Mines Nationalization Act, 1973 can obviate the adverse effects of the Supreme Court’s judgment. As compared with an ordinance, amendments carry greater legitimacy. In any case the court has granted a relief period of six months for 42 of the coal blocks the government wanted to save from cancellation. If the Bills are passed in the next session of Parliament, status quo can be restored and damage can be averted. To operationalize the renovated legal framework, the government needs to take further steps. One, allocation priorities must be decided by end users and not what the government thinks based on some plan. Two, attention must be devoted to price discovery mechanism. While it is easy to say that auctions are the best route, what is needed is careful auction design, keeping in mind the peculiar conditions and factors of the coal mining sector. Economists with practical experience in the mining sector and regulatory experience in other countries (because India has no such experience worth its name) should be roped in for this important task. Three, India’s coal sector is in needs to be modernized. Since independence, investment in mining technologies has been woefully inadequate. The result is that Coal India cannot explore and extract the mineral from complex geological formations. This burden of this investment should not fall on the government. Independent mining companies should be allowed participate in auctions for coal fields. India should not shy away from seeking help in modernizing its coal sector. The idea that foreign investors and experts are devils should be discarded. Where expertise is not available, it has to be imported. It is much better then importing coal.Read more at: http://www.livemint.com/Opinion/hnoEwEsBT4sNnDM0rNIFfJ/Cleaning-the-mess-in-the-coal-sector.html?utm_source=copy
2. NDTV News 9 Oct Flipkart's massive discount sale last week is reportedly being scrutinised by the Enforcement Directorate following complaints from traders against the online retail giant. Sources said the agency is "discreetly inquiring into" whether the company has flouted any retail rules during the single-day sale held on October 6."There is no proof of anything wrong yet, we are investigating complaints," an official said.In a statement, Flipkart said, "We are in complete compliance with the laws of the land and will cooperate with authorities when required."Earlier this week, traders' bodies had asked the government to take steps to monitor and regulate online businesses, alleging unfair competition and lack of a level-playing field.Flipkart's "Big Billion Day" sale offered steep discounts on various products, raising concerns among traders that such campaigns would badly affect players in the traditional retail market.The portal said 1.5 million people shopped at its portal and products worth over Rs. 600 crore were sold in just 10 hours. 
3. Economic Times 11 Oct Indian Oil Corporation will invest USD 4 billion in the British Columbia province, Canada, to source liquefied natural gas from the region.Premier of British Columbia, Canada Christy Clark said: "Indian Oil is poised to make its biggest investment in Canada to secure natural gas for India from BC."She said the state-run firm will invest USD 4 billion for securing LNG supplies from the Canadian province. IOCBSE -3.06 %, in May, signed a deal to buy 10 per cent stake in shal .. Read more at:http://economictimes.indiatimes.com/articleshow/44812472.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
4. Economic Times 10 Oct  Mukesh Ambani will invest Rs 20,000 crore inMadhya Pradesh, while brother Anil pledged to take his investments there to Rs 60,000 crore, they said at the state's global investor's summit at Indore on Thursday. Anil Ambani's group said it was the largest investor in the state, with Rs 30,000 crore in coal, power, cement and telecom while employing 25,000 people. It plans plans to double the investment by 2020, the company said in a statement after the investor summit. "Taking an inspiration from our Prime Minister's call of Make in India mission, we are not only going to Make in India but Make in Madhya Pradesh. We are committing ourselves to double our investment in the state from current Rs 30,000 crore toRs 60,000 crore by 2020 in our four key growth areas—coal, power, cement and telecom," the company said. Reliance Industries chairman Mukesh Ambani said his group was in the midst of a Rs 20,000 crore investment over the next 18 months, according to a PTI report. "Our major investment is in coal bed methane which is bringing in energy with technology. We are also investing in the retail business," he said.
5. Business Today 1 Oct Prime Minister Narendra Modi on Thursday launched his flagship 'Make in India' campaign to put the country prominently on the global manufacturing map and, in turn, facilitate the inflow of new technology and capital, while creating millions of jobs. The ambitious scheme, that also puts in place the logistics and systems to address, in a timely manner, queries of potential investors, was unveiled along with a logo, a portal and brochures on 25 identified growth sectors before bigshots from the corporate world from India and abroad at the Vigyan Bhavan conference complex in the national capital. The event was watched live in several cities in the country and overseas via video conferencing. Laying out the red carpet before investors, the prime minister said, "After what we have done and what I hear from you, I don't think I need to assure you any further on 'Make in India'." He hoped that industry across the globe would take his invite seriously. He said he was saddened in the past to see scores of citizens leaving the country to seek opportunities elsewhere. People have lost faith in domestic manufacturing and themselves. "We do not want any industrialist being forced to leave India," he said. "A trust was broken - that when a policy will be changed, when will the CBI (Central Bureau of Investigation) come. This is what I heard from all you. The biggest issue is trust. Why don't we trust each other? I want to change that." The prime minister said for him the term FDI for the domestic industry did not expand to "foreign direct investment" but "first develop India". "We have to create opportunities of employment. If the poor get jobs the purchasing power of families will increase." Pointing to campaign logo, he said, "This is the step of a Lion... Make in India." Ahead of the launch of the campaign, Commerce Minister Nirmala Sitharaman said a number of steps had already been taken by the Modi-led government to make it easier to do business in the country along with the removal or relaxation of foreign equity caps in several areas. "The processes of applying for licences has been made online, it is 24/7. The validity of such licences has also been extended to three years," Sitharaman said, adding several norms and procedures have also being changed to make it easier to do business in the country. "Make in India is not a slogan but a mission to be accomplished with a single-minded commitment." At the event some top industrialists and executives, among the 500 who had gathered in the Vigyan Bhavan conference complex, were also invited to make short speeches. "This programme offers a unique and timely opportunity to make India truly global," Tata Sons Chairman Cyrus Mistry said, adding, countries attain high standards with a vibrant industrial economy and the biggest challenge is to create jobs for millions of youth. Kenichi Ayukawa, managing director of Maruti Suzuki India (MSI), said his Japanese group was among the first to invest in the domestic market and remains committed to the country. He said he was sure the country will eventually become one of the most competitive economies. "Today we commit ourselves to the 'Make in India' movement that was given to us by our beloved prime minister," Reliance Industries chairman Mukesh Ambani said. He said the main task before the industry in India was to achieve global competitiveness. The other speakers included Wipro's Azim Premji, Aditya Birla Group's Kumar Mangalam Birla, ICICI Bank's Chanda Kochhar, Lockheed Martin's Phil Shaw, and ITC's YC Deveshwar.
6. Economic Times 11 Oct NEW DELHI: CBI has started a probe into alleged undervaluation of penalty to the tune of nearly Rs 17,500 crore on Reliance General Insurance Company Limited by the officials of Insurance Regulatory and Development Authority(IRDA) in 2009. The agency has named Reliance General Insurance Company in its inquiry and "unknown officials" of the Authority, CBI sources here said today. "CBI has registered a preliminary enquiry against unknown officials of Insurance Regulatory and Development Authority and a private company on allegations that a penalty of Rs 20 lakh (approximately) was imposed on the said company instead of Rs 17,500 crore for 3.5 lakh instances of violations of IRDAguidelines," CBI spokesperson Kanchan Prasad said. According to IRDA penalty order in 2009, the company had sold 3.5 lakh policies and each policy constituted a violation thereby making company liable for a penalty of Rs 17,500 crore. But only Rs 20 lakh of penalty was actually levied, it said. The then Chairman J Hari Narayan who signed the order has already been quizzed, CBI sources said, adding that they are trying to understand if there was a mala fide or a quid pro quo in the order. The allegations relate to Reliance Health Care policy which was sent to IRDA in 2005 for necessary clearances which was cleared in 2006. A Reliance General Insurance spokesperson said the allegation that penalties of Rs 17,500 crore could have been imposed in this matter is baseless, unfounded and devoid of any legal foundation. The total premium collected under the policies issued more than five years back was Rs 80 crore, against which claims of Rs 140 crore were paid, resulting in huge losses to RGCIL, the spokesperson said. The penalty of Rs 20 lakh imposed was itself thus highly excessive and unwarranted, and the allegation that this represented a 'favour' to RGCIL is far-fetched and imaginary. "We welcome any enquiry into the exercise of discretion by IRDA in this matter, which is identical to penalties imposed on all leading insurers in the country," the spokesperson said. Narayan is reported having said that the insinuation that he had favoured RGICL was unfounded. In 2006, IRDA revised guidelines or 'File and Use' specifying various other procedural and other requirements to be followed by the insurers. "These revised guidelines required the prior approval in case change in the name or any of the terms and conditions or an increase in the price of the product," the IRDA order had said.
7. Hindustan Times 8 Oct Social networking sites are slowly emerging as  mini-banks for users! Advertisement While private sector lender Kotak Mahindra Bank (KMB) has launched a Facebook-based instant fund transfer service in India, French banking major Groupe BPCE is teaming up with Twitter to allow its customers to transfer money via tweets. KMB’s service will enable users to send money to friends on the social media network real-time, absolutely free!. “This is a bank agnostic product, the sender and the receiver may not be our account holders. We have used the IMPS (immediate payment service) platform on the National Payments Corporation of India (NPCI) network to make this possible,” said Deepak Sharma, executive vice-president and head of digital initiatives, Kotak Mahindra Bank. The IMPS platform has 28 banks under its fold and account holders of any of these lenders can use the newly-launched service, Sharma said. The sender will have to register on a dedicated website for the initiative called “KayPay”, wherein he will have to give bank account details and the bank’s MMID (mobile money identification number), apart from personal credentials, Sharma said.Once registered, the sender can initiate transactions. He claimed it is fully secure, even in the event of the Facebook account getting compromised as it uses two-factor authentication to complete a transaction. Additionally, there is also an expiry time for a transaction. At present, some lenders such as ICICI Bank allow fund transfers for their own account holders using Facebook.
8. Business Today 11 Oct Prime Minister Narendra Modi on Friday discussed the use ofsocial media in checking terror activities and a host of other issues with social networking firm Facebook 's CEO Mark Zuckerberg. The issues discussed included 'Swachh Bharat' Mission with the Facebook co-founder. Zuckerberg, who called on the Prime Minister, expressed his interest in working with the government in the areas of healthcare and education. The Prime Minister pointed out that lots of terrorist elements are using social media platforms to recruit members, according to an official statement. "This is unfortunate and we need to think of the role the social media can play to stop terror," Modi said. Facebook will extend help in developing the Clean India Mobile App that would be launched soon. "This would give a strong impetus to the Swachh Bharat Mission," the statement said. They discussed a wide range of issues revolving around the innovative use of Facebook as a platform to engage with a large audience in the service of humanity, the statement said. They also talked about the Digital India initiative and the Prime Minister asked Zuckerberg to identify some domains of Digital India where Facebook can get involved and help. Facebook chief said that he is extremely excited about the Digital India initiative of the Government of India. Modi recalled how he used social media during campaigns such as tracking the missing children, during his tenure as Chief Minister of Gujarat and how it gave wonderful results. The Prime Minister appealed to Zuckerberg to promote India's rich tourism potential through Facebook. He asked Facebook to look at how to enhance Internet literacy along with Internet connectivity. Earlier in the day, the Facebook CEO met Telecom and IT Minister Ravi Shankar Prasad. Zuckerberg is the third high-profile CEO of a US-based firm, after Amazon's Jeff Bezos and Microsoft's Satya Nadella, to visit India in last few days.
9. Business Today 7 Oct The government said on Monday it could consider imposing "some kind of safeguard duties' on Chinese imports to bridge the huge trade gap as it cannot be sustained in the long run. "This trade deficit (between India and China) is not sustainable in the long run and therefore it is very important to understand for Chinese companies that in the coming years, India will have to put some kind of safeguards whether it is in terms of standards... India will do this because (India) can not sustain this (trade deficit) for over a long period," said Department of Industrial Policy and Promotion (DIPP) Secretary Amitabh Kant. India's trade deficit with China stands at about $36 billion with exports totalling only $15 billion against $51 billion imports. Speaking at the function of industry body PHDCCI Kant said that it was time that Chinese companies should invest more in India and set up manufacturing bases. "Chinese companies should actually manufacture the same goods (which they export to India) in India. We welcome Chinese companies. You please invest and manufacture in India. We will welcome telecom equipment, power equipment but kindly manufacture in India. Our government wants Chinese companies to make in India and use India as an export base for other places," he added. The Secretary said that China is facing problems in export solar equipment to the US as America has imposed anti-dumping duty. "...please use India as a base for exports...you will face anti-dumping duty on every good in future so the only solution for Chinese companies is to produce in India and export to America," Kant said. He asked Chinese companies to find domestic partners and export to regions such as Africa and Latin America. "India is a very attractive FDI destination," he said, adding: "we expect that this year, we will get about $50 billion FDI". He said although China is setting up two industrial parks - Maharashtra and Gujarat - but there is a need to increase investment. "Between April 2000 and July 2014, China have invested only $411 million. This is only 0.18 per cent of India's total FDI which it has received so far. The Chinese figure is very low. Lower than Botswana and Rwanda. FDI from China in India is insignificant and extremely poor. This is shocking," he added. Assuring full support and hand holding to Chinese companies, the secretary said the Chinese companies should look at sectors such as automobile, power, telecom, infrastructure and development of smart cities and industrial corridors".
10. Business Today 11 Oct Fallen trees, tin roofs littered on roads, telephone and electric poles knocked down, shattered window panes and with power supply disrupted, industry in the port city of Vizag is trying to come to terms with the aftermath of the cyclone Hudhud that wrecked the city on Sunday. With  strong gales accompanied by heavy rainfall expected, most took precautionary steps to protect human life. But factories and buildings in the region bore the brunt. "We took some precautionary measures and shut our units [for bulk drugs and formulations] in the region and so no human life was impacted," says Saumen Chakraborty, President and Chief Financial Officer and the global head of IT and Business Process Excellence at Dr Reddy's Laboratories. "However, we are now trying to assess the damage at the units which also have had no power supply." K.V. Vishnu Raju, Chairman, Anjani Group, which has a food processing unit spread over seven acres and employs close to 200 people 30 km north of Vizag, says there has been no power supply since Sunday morning 2 am with telephone lines also down now. He says the group's flagship bakery unit in the city located at the Siripuram junction, about 10 km from the eye of the storm, and with light roof structures, as is the case with most retail units, is expected to have suffered severe damage. "Since early evacuation measures were taken there is no damage to human life but it will take a few days before we can think of resuming operations," he says. "Most importantly, we may not be able to get the manpower as people have to first deal with problem faced by water entering their homes." Even bank branches in the region have been hit. Take Andhra Bank for instance. "We have about 100 branches in the Vizag and Srikakulam area. However, we are not able to operate 56 of these branches as there is no connectivity to our server and also there is no power supply," says C.V.R. Rajendran, Chairman and Managing Director of Andhra Bank. "We are working with local authorities to try and restore the services today." Meanwhile,  industry in Telangana is facing another concern. "A bigger damage is being done in Telangana with two days a week official power cut announcement by the government. This came into effect from the 8th of this month. This may probably be a bigger damage that the impact the units faced due to the cyclone in Vizag," says Devendra Surana, former president of the Federation of Andhra Pradesh Chambers of Commerce and Industry and Managing Director of Bhagyanagar India, a Rs 250 crore company that makes telephone cables and copper products.