Xiaomi's ₹ 5,551 Crore Assets Seized Over Forex Violations: Probe Agency

NEW DELHI, April 30: Central probe agency Enforcement Directorate (ED) today seized over ₹ 5,500 crore from Chinese smartphone giant Xiaomi over violations of the Indian foreign exchange law. The action has been taken against Xiaomi Technology India Private Limited. The company has, however, claimed that all its operations "are firmly compliant" with local laws and regulations.

The company (also called Xiaomi India) is a trader and distributor of mobile phones in the country under the brand name MI.

The ED seized ₹ 5,551.27 crore from the bank accounts of the company under the provisions of the Foreign Exchange Management Act, 1999.

Soon after the news broke, Trinamool MP Mahua Moitra attacked the Centre saying Xiaomi was allowed to donate ₹ 10 crore to the "opaque" PM CARES fund and her party's questions on the same were "stonewalled" in the Parliament.

The central probe agency had initiated an investigation in connection with "illegal remittances" made by the company in February this year.

The company started its operations in India in 2014 and started remitting the money in 2015. It has so far remitted foreign currency equivalent to ₹ 5,551.27 crore to three foreign-based entities, which include one Xiaomi group entity, in the guise of royalty, the probe agency said.

"Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities," the ED said. The amount remitted to the other two US-based unrelated entities was also reportedly for the ultimate benefit of the Xiaomi group entities.

Xiaomi has claimed that all its royalty payments are "legit and truthful".

"We have studied the order from government authorities carefully. We believe our royalty payments and statements to the bank are all legit and truthful. These royalty payments that Xiaomi India made were for the in-licensed technologies and IPs used in our Indian version products," it said in a statement.

Xiaomi India is a trader and distributor of mobile phones in India under the brand name MI. It procures the completely manufactured mobile sets and other products from the manufacturers in India. "It has not availed any service from the three foreign-based entities to whom such amounts have been transferred," the ED said.

Under the cover of various unrelated documentary facades created amongst the group entities, the company remitted this amount in the guise of royalty abroad which constitutes a violation of Section 4 of the FEMA.

The said section of the civil law of FEMA talks about "holding of foreign exchange." The ED also accused the company of providing "misleading information" to the banks while remitting the money abroad.

Reliance Calls Off ₹ 24,700 Crore Retail Deal With Future Group After Secured Creditors Voted Against It

MUMBAI, April 23: Following secured creditors - primarily banks and financial institutions - of several listed entities of Future Group rejection of the sale worth Rs 24,713 crore, the deal cannot be implemented, said Reliance Industries Ltd (RIL) in a regulatory filing on Saturday.

In August 2020, Future Group announced the ₹ 24,713-crore deal to sell 19 companies operating in retail, wholesale, logistics and warehousing segments to Reliance Retail Ventures Ltd (RRVL).

On Saturday, in a filing with stock exchanges, RIL said, the scheme of arrangement for the transfer of retail & wholesale business and the logistics and warehousing business of Future Group to Reliance Retail Ventures Limited (RRVL), a subsidiary of the Company and Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of RRVL, cannot be implemented.

Indeed, Reliance said, further to our intimation to Stock Exchanges dated August 29, 2020 on the subject, we wish to inform you that the Future Group companies comprising Future Retail Limited (FRL) and other listed companies involved in the scheme have intimated the results of the voting on the scheme of arrangement by their shareholders and creditors at their respective meetings.

As per these results, the shareholders and unsecured creditors of FRL have voted in favour of the scheme. But the secured creditors of FRL have voted against the scheme. In view thereof, the subject scheme of arrangement cannot be implemented, added RIL.

IMF says Russia's war in Ukraine will 'severely set back' global economy

LONDON, April 19: The International Monetary Fund has slashed its expectations for global economic growth over the next two years because of Russia's invasion of Ukraine, comparing the ripple effects from the conflict to an "earthquake."

"The economic effects of the war are spreading far and wide," the organization said in its latest outlook, published Tuesday.

The IMF now expects the world economy to expand by 3.6% in both 2022 and 2023, a sharp deceleration from growth of 6.1% in 2021. The new forecasts reflect downgrades of 0.8 and 0.2 percentage points, respectively, from its January forecast.

The World Bank also slashed its global growth forecast this week. It now expects the world economy to expand by 3.2% in 2022.

The IMF outlook assumes that the war remains confined to Ukraine, that further sanctions on Russia don't target its huge energy sector and the effects of the pandemic continue to fade.

Unsurprisingly, the conflict will hit Ukraine and Russia the hardest. The IMF expects Ukraine's economy to shrink 35% this year, while the West's efforts to punish Russia are poised to cause its economy to contract by 8.5%.

But because the war has caused a spike in the price of energy and other commodities, worsening supply chain problems and feeding expectations for more persistent inflation, its effects will be felt almost everywhere.

"The war will severely set back the global recovery, slowing growth and increasing inflation even further," the IMF said, emphasizing that the world economy had not fully recovered from the coronavirus pandemic when Russia invaded Ukraine in late February.

In Europe, which relies heavily on Russia to meet its energy needs, growth is now expected to slow to 2.8% in 2022, a downgrade of 1.1 percentage points versus January.

The United States is comparatively insulated. Yet weakness among its trading partners, as well as the Federal Reserve's plans to quickly pull back pandemic-era support for the economy and raise interest rates, are weighing on the outlook. The IMF projects US growth of 3.7% in 2022 and 2.3% in 2023, down 0.3 percentage points since its last forecast.

Storm clouds are also gathering over China, which the IMF now expects to log growth of 4.4% in 2022, well below Beijing's official target of about 5.5%. The world's second biggest economy is hampered by lockdowns aimed at stopping the spread of Covid-19, fallout from the war in Ukraine and problems in its property sector.

While the report observes that "global economic prospects have worsened significantly" since the start of the year, it does not predict a recession, which the IMF typically calls when growth falls to 2.5% or lower.

But the IMF also notes uncertainty "well beyond the normal range" surrounding its projections because of the unprecedented nature of the shock. And the risks of an even greater slowdown, combined with persistently high inflation, are climbing.

Goldman Sachs this week put the likelihood of a US recession at 15% in the next 12 months and 35% within the next 24 months. Japanese investment bank Nomura said Monday that the chances are rising that China falls into a recession this spring.

Much could depend on Russian President Vladimir Putin's next move. If supplies of Russian natural gas to Germany were suddenly cut off, Europe's biggest economy would lose a shocking $238 billion in economic output over the next two years, the country's top forecasters have said.

Europe could also go further in sanctioning Russian energy. French Finance Minister Bruno Le Maire said Tuesday that an embargo on Russian oil at a European Union level was in the works, adding that France's President Emmanuel Macron wants such a move.

"The reason that we are not there yet isn't because France does not wish it," Le Maire told Europe 1 radio. "It is because there are still certain European partners who are hesitant."

India’s Exports @ $400 billion – the party has just begun

By Bikash Narayan Mishra

NEW DELHI, March 30: India’s merchandise exports have achieved a remarkable landmark by surpassing the $400 Billion marks for the first time in current Financial Year. Indeed, it’s a big milestone. This is significantly higher than the previous high of $330 billion in Financial Year 2019. This does call for celebration and satisfaction.

The continuation of pandemic for nearly two years not only affected our domestic growth but also exports. In the last fiscal our merchandise exports, like our GDP, went down. So, it marks a kind of rebound after a 7 per cent decline.

The growth this year can be attributed to, inter alia, a stellar performance by sectors like engineering goods, electronics, gems & jewelry, chemicals and petroleum products. All these sectors have benefitted from a strong global recovery.

Besides, the export basket was widened to farm produce with India emerging as a major supplier of food or essential agriculture products. Liquidity measures announced by the govt for MSMEs, which contribute for over 40 percent of exports; especiallythe (ECLGS) emergency credit line guarantee schemes came to the rescueof export-oriented units and MSME sector in general in a big way by helping them deal with theirworking capital bottlenecks. Undoubtedly a sustained robust growth in merchandise exports can go a long way to provide the much-needed fillip to the Indian economy.

A boom in exports is undoubtedly a remarkable achievement. Our states have also started playing a more active role on this front in boosting exports. To continue the success story, we need to critically introspect what brought us to this comfort zone and what challenges lie ahead.

Much of the upswing is a consequence of the global economic recovery. Things were indeed looking up and the whole world was looking forward to a long phase of peace and prosperity post pandemic. But that was not to be. The story has become a bit shaky post Ukraine crisis.

Russia’s invasion of Ukraine has changed the geo political environment raising questions over sustainability of such growth. India has benefitted from the rebound in US and EU economies with higher demands for Indian goods. The western market resistance to Chinese goods also helped India.

Even as India will continue to have this advantage of western countries remaining away from Chinese goods the geo political changes have brought some uncertainties.

Apart from this the on-going war has already started its adverse impact on the oil front. This is going to worsen our trade deficit and further widen the current account deficit. The international oil prices are likely to remain elevated. As per latest information made available by govt sources while we are likely to end up with merchandise exports of over $410 billion this fiscal India’s merchandise imports, thanks to increase in oil prices, is likely to be over$600 billion. The Ukraine crises has also affected global supply chain and likely to pose fresh risks to Indian exporters. Shipping costs have gone up across the countries.

We are a huge country; a country of 1.40 billion people; more than the whole of Europe and USA. In fact,if the population of whole of south America is also added we will stand near to the aggregate population of all these three distinct geographical entities.

So, although we should make all efforts to sustain the growth in exports perhaps, we cannotexclusively depend on export led growth. We are not a Hongkong, Taiwan or Singapore where export led growth did happen in the Post World War II period. We are huge country. The principal drivers of growth will continue to be domestic demand and investments; especially govt investment to make the growth more inclusive. It again depends on the ability of the govt to spend on projects with high potential on employment generation.

This automatically will push domestic demands. With removal of the supply bottlenecks, we can be back in the high growth trajectory once again. Exports can play a subsidiary yet very important role. If we are able to maintain the present tempo and consolidate the gains our trade/current account deficits can be put on check. As is well known a current account deficit in international trade has a repercussion on domestic fiscal deficit.

Moreover,while the latest exports numbers are very encouraging this will only raise India’s share in the global merchandise exports from just 1.6 percent in 2020 and 1.7 percent in the pre pandemic year of 2018.Therefore a sustained surge in exports for a few years will be crucial for India to regain its lost glory in global trade. We have a negligible market share by every standard.

With the Chinese goods at a disadvantage in the west we need to increase the competitiveness. We must also seek deeper integration with global value chains. In order to do that we also need to look closely at the import tariff side which of late has seen sustained increase in the recent past.

@ Bikash Narayan Mishra is a post graduate in economics from JNU. He has
worked with Punjab National Bank in different capacities over 36 years. At present, he is senior advisor with the Indian Banks Association.

India's Goods Export Hit $400 Billion For First Time Ever

NEW DELHI, March 23: Hailing India's success in achieving its goods export target of USD 400 billion this fiscal, Prime Minister Narendra Modi asserted today that this is a key milestone in India's 'Aatmanirbhar Bharat' journey.

The highest ever goods export target was achieved nine days ahead of the March 31 deadline.

Exports increased by 37 per cent to USD 400 billion during April-March 22, 2021-22 against USD 292 billion in 2020-21.

For the first time ever, India's merchandise exports have crossed USD 400 billion in a fiscal. In 2018-19, the outbound shipments had touched a record of USD 330.07 billion.

"India set an ambitious target of USD 400 billion of goods exports and achieves this target for the first time ever. I congratulate our farmers, weavers, MSMEs, manufacturers, exporters for this success. This is a key milestone in our Aatmanirbhar Bharat journey. #LocalGoesGlobal," Modi tweeted.

He posted graphics of India achieving the highest-ever exports target nine days ahead of the intended deadline.

According to those graphics, the government approach with closer interaction with states and districts; engagement with exporters and faster resolution of their issues; and actively engaging with different export promotion councils, industry associations and other stakeholders have helped in reaching this milestone.

On average, goods worth about USD 33 billion were shipped every month and about USD one billion every day.

The key export sectors, which contributed to record healthy growth include petroleum products, electronic goods, engineering goods, leather, coffee, plastic, ready-made garments of all textiles, meat and dairy products, marine products and tobacco.

Commenting on the data, Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said crossing USD 400 billion is a remarkable achievement as exporters have added over USD 110 billion in one year to reach here despite huge logistics challenges, including container shortage, skyrocketing freight and liquidity constraints.

"What is more important is to build on it, as we will have benefits of new free trade agreements and the PLI scheme (production linked incentive) backing us," he said.

FIEO Vice-President Khalid Khan termed the achievement as a "landmark" and said that despite the COVID-19 pandemic exports have "done so well".

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