Commerce Ministry not accepting MEIS applications from exporters

NEW DELHI, July 28: The commerce ministry has blocked the online system for exporters to apply for availing tax incentives under the MEIS scheme from July 23 as the department of revenue (DoR) decided to limit the benefits under the scheme at Rs 9,000 crore for April-December 2020.

According to an office memorandum of the Directorate General of Foreign Trade (DGFT), the Department of Revenue in May had conveyed that it may not be feasible to exceed MEIS (merchandise export from India scheme) allocation beyond Rs 9,000 crore for 2020-21 (up to December 2020).

It has also been suggested to review MEIS and coverage so that the benefit outgo remains within the allocation of Rs 9,000 crore in this period.

The commerce department has requested its revenue counterpart to reconsider its decision, and a communication has also been sent by Commerce and Industry Minister Piyush Goyal to Finance Minister Nirmala Sitharaman on July 21.

In the meanwhile, according to the office memorandum, the database for MEIS scrip issuance has been checked and it has been found that as on July 20, the scrips of value Rs 422.4 crore have already been issued to exporters for shipping bills with Let Export Order (LEO) since April 1 onwards.

'Since allocated funds at this stage for MEIS for 202-21 stand at Rs 9,000 crore and any additional allocation has not been conveyed by the department of revenue, the online MEIS module has been blocked on July 23 from accepting new application for shipping bills with LEO date April 1 onwards to limit the issuance of any more scrips,' the memorandum dated July 27 said.

'DoR/CBIC (Central Board of Indirect Taxes and Customs) may take steps in such a situation and ask customs ports/field formations to stop registration of MEIS scrips with shipping bills with LEO date of April 1 and beyond,' a deputy DGFT said in the memorandum.

Commenting on the development, Federation of Indian Export Organisations (FIEO) President S K Saraf said the government's intervention has been sought to resolve the issue as MEIS benefits are already factored by exporters in the prices and help in easing the liquidity of exporters which is severely impacted due to the COVID-19 pandemic.

Under the MEIS, the government provides duty benefits depending on product and country.

Rewards under the scheme are payable as percentage of realised free-on-board value and MEIS duty credit scrip can be transferred or used for payment of a number of duties including the basic customs duty.

The government has already announced a scheme for Remission of Duties or Taxes on Export Product (RoDTEP) to replace MEIS.

Aditya Puri sells 7.42 million shares worth Rs 842.9 crore in HDFC Bank

NEW DELHI, July 26: HDFC Bank chief executive and managing director Aditya Puri has sold more than 7.4 million shares of the private lender to raise Rs 842.87 crore, according to regulatory filings.

The share sale, which was executed between July 21 and 23, brought down Puri's holding in the most valued Indian lender to just 0.01 per cent from the earlier 0.14 per cent.

The sale comes months ahead of Puri's retirement from the bank, which he led to become the largest by assets among private lenders and the second-largest overall over 25 years.

He sold 7.42 million of the 7.79 million shares in the bank and Puri's remaining holding of the bank shares is now 376,000 shares valued at over Rs 42 crore as of the last close.

A bank spokesperson explained that the shares were allotted to Puri over a period of time at different price points and stressed that they were not given at par with the face value of the share.

“The net value realized by Puri is not as stated. The acquisition cost of shares and the tax payable on the transaction has to be accounted for as well,” he added.

Puri had emerged as the highest-paid Indian banker in FY2019-20 with a 20 per cent growth in gross earnings at Rs 18.92 crore. He had also earned an additional Rs 161.56 crore in FY2019-20 and Rs 42.20 crore in FY2019 by exercising his stock options, as per the bank's earlier disclosures.

HDFC Bank shares have gained 46 per cent since touching its 2020 low of Rs 765 apiece on March 24, amid a massive sell-off in equities due to fears over the Covid-19 pandemic. The scrip closed at 1,118.80 on the BSE on Friday.

Puri was reportedly granted 682,000 shares under the Employee Stock Ownership Plan (ESOPs) in FY2020 and had also sold shares worth Rs 200 crore in the bank's subsidiary HDB Financial Services in FY2020.

His term is set to end in October when he attains the age of 70 and he will be second chief executive after Indusind Bank's Romesh Sobti to retire this year.

Speaking at a bank annual general meeting earlier this month, Puri had said his preferred successor has been with the bank for over 25 years and it is up to the Reserve Bank now to confirm the name.

After undertaking a search for his successor, which included appointing an external headhunter, HDFC Bank board had earlier this year decided on the possible successors and submitted their names to RBI in preference of their choice.

According to reports, bank's change agent Sashidhar Jagdishan and head of wholesale banking Kaizad Bharucha are among the chosen internal candidates, while Sunil Garg of Citibank is among the three external candidates selected by the board.

Reliance Industries market valuation crosses Rs 14-lakh cr mark

NEW DELHI, July 24: Reliance Industries’ market valuation crossed the Rs 14-lakh crore mark on Friday as its stock rallied over 4 per cent to scale its fresh peak.

The company’s partly paid-up shares, listed separately, have a market capitalisation of Rs 54,262.45 crore. The combined market capitalisation (m-cap) of Reliance Industries now stands at Rs 14,14,825.44 crore.

The stock of the country’s most-valued firm jumped 4.15 per cent to close at Rs 2,146.20 on the BSE. During the day, it gained 4.95 per cent to a record high of Rs 2,162.80.

This took its market valuation to Rs 13,60,562.99 crore at the close of trade on the BSE.

On the National Stock Exchange (NSE), shares of the oil-to-telecom conglomerate rose 4.40 per cent to close at Rs 2,148.40.

Shares of Reliance Industries had on Thursday also jumped nearly 3 per cent amid reports that Amazon was eyeing a stake in the conglomerate’s retail arm.

The company’s partly paid-up shares zoomed 8.77 per cent to close at Rs 1,284.50 on the BSE.

ReliancePP, the partly paid-up shares issued in the recently concluded rights issue, had listed on the stock exchanges on June 15 this year.

While RIL is the country’s most-valuable listed company, the second-placed TCS has a market capitalisation of Rs 8,09,408.14 crore, followed by HDFC Bank at the third place with an m-cap of Rs 6,14,252.37 crore.

Since last Thursday, RIL’s shares have jumped 16.44 per cent.

So far this year, RIL shares have gained 41.74 per cent.

Mukesh Ambani now world's fifth richest as RIL shares soar to new highs

NEW DELHI, July 22: Chairman of oil-to-telecom conglomerate Reliance Industries Mukesh Ambani is now the world's fifth richest person, according to the Real-Time Billionaires List by Forbes magazine.

With an estimated wealth at $75 billion (₹5.61 lakh crore at $1 = ₹74.76) after 4.49% increase from earlier, the Indian billionaire is now just below Facebook's Mark Zuckerberg, whose net worth is at $89 billion.

On Wednesday, Reliance Industries shares hit a new high of ₹2,010. Year to date, RIL shares are up about 35%, taking its market capitalisation to ₹12.70 lakh crore.

According to the Forbes list, Amazon founder and CEO Jeff Bezos is at the top position in the list, with a net worth of $185.8 billion.

The company on 15 July held its all-important Annual General Meeting (AGM) where Mukesh Ambani spoke about Jio's deal with Google to develop-android based operating system, the AR-enabled Jio Glass and also the Jio TV+ among others.

Just days ago, India's wealth tycoon eclipsed the fortune of Berkshire Hathaway's Warren Buffett.

While Ambani’s wealth has jumped -- he became the only Asian tycoon in the exclusive club of the world’s top 10 richest people last month -- Buffett’s fortune dropped this week after he gave away $2.9 billion to charity.

In the last few months, Reliance sold nearly 33% stake in Jio Platforms to several investors including tech giants Facebook, Google, Qualcomm Ventures etc.

On 22 April, social media giant Facebook on Wednesday announced investment of ₹43,574 crore into Jio Platforms, the investment will translate into a 9.99 per cent equity stake in Jio Platforms, the largest FDI in the Indian tech sector.

IFFCO reports record profit of Rs 1,005 cr for FY 2019-20; turnover up 6%

NEW DELHI, July 16: Fertiliser cooperative IFFCO’s net profit rose 20 per cent to an all-time high of Rs 1,005 crore during the last fiscal year on record sales of soil nutrients.

Its profit stood at Rs 841.58 crore during the 2018-19 financial year.

IFFCO’s turnover increased to Rs 29,412 crore in the 2019-20 fiscal, from Rs 27,851.74 crore in the previous year.

The group turnover of IFFCO, including its joint ventures, subsidiaries and associate companies, rose to Rs 57,778 crore last fiscal, from Rs 50,908 crore in the 2018-19 fiscal.

“I am glad that IFFCO could achieve outstanding overall performance for the FY 19-20, which is indeed incredible to accomplish in a year severely affected by global and economic challenges,” IFFCO Managing Director U S Awasthi said.

IFFCO has achieved highest ever production, sales, profit and despatches of fertilisers for the financial year 2019-20, the company said.

Apart from core fertiliser business, IFFCO has diversified into general insurance, rural retail, farm forestry, rural telecom, agrochemicals, rural finance, logistics, SEZ. It has forayed into food processing, organic food and nutrients for urban gardening.

The cooperative achieved the highest ever sales of fertilisers at 133 lakh tonnes last fiscal despite difficult market and weather conditions.

On operational front, IFFCO’s total production of fertilisers increased to 91.42 lakh tonnes last fiscal year, from 81.49 lakh tonnes in the previous year.

Urea output increased to 48.75 lakh tonnes from 45.62 lakh tonnes last year, while the production of di-ammonium phosphate/nitrogen phosphorus potassium/water soluble fertilisers (DAP/NPK/WSF) rose to 42.87 lakh tonnes from 35.87 lakh tonnes.

IFFCO sold record 133.31 lakh tonnes of fertilisers in the last fiscal year, as against 115.56 lakh tonnes in 2018-19.

Out of total sales, urea stood at 86.31 lakh tonnes and DAP/NPK at 47 lakh tonnes in 2019-20.

IFFCO, the worlds largest fertiliser cooperative, has five plants at Kalol, Kandla, Phulpur, Aonla and Paradeep in India and two overseas.

‘Country-driven’ approach must to limit Corona virus damage to food security

By Deepak Arora

ROME, July 14: A ‘business as usual' approach is no longer an option, the head of the UN agriculture agency said on Tuesday, launching a new plan to move past the coronavirus pandemic.

"We must work very hard to limit COVID-19's damaging effects on food security and nutrition”, QU Dongyu, Director-General of the Food and Agriculture Agency (FAO) said in his opening remarks launching the new strategy: “We need to be more country-driven, innovative and work closely hand in hand”.

FAO’s comprehensive COVID-19 Response and Recovery Programme aims to avert a global food emergency during and after the pandemic while simultaneously working on medium to long-term development responses for food security and nutrition.

To provide a coordinate response that ensures access to nutritious food globally, resources and partnerships must be mobilize at country, regional and global level, requiring a $1.2 initial investment.

The new programme aims to mitigate the immediate impacts of the pandemic while strengthening the longer-term resilience of food systems and livelihoods.

“This is how FAO has built its COVID-19 comprehensive response and recovery programme, and today we are asking you to join us", said the FAO chief.

In addition to being a major public concern, the pandemic also imperils global food security.

According to World Bank's estimates, the economic impact of the crisis could push some 49 million more people into extreme poverty.

Furthermore, soaring unemployment rates, income losses and rising food costs not only jeopardize food access in both developed and developing countries but also have long-term effects on food security.

And as COVID-19 plunges national economies into recession, with more to come, countries must urgently act to mitigate the longer-term impacts on food systems and food security.

Meanwhile existing crises – such as conflict, natural disasters, climate change and plagues – that are already stressing food systems and triggering food insecurity around the globe, are compounding a precarious situation.

FAO is asking governments to better understand emerging trends, pinpoint any lapses and provide technical advice and capacity development across a wide range of disciplines. In addition, it is offering more investment support.

“The Food Coalition is an exemplary approach to leveraging high-level capital and political will to avoid an escalation of the pandemic from a health crisis to a food crisis", FAO Deputy Director-General Beth Bechdol told the meeting, amidst a warning that "immense” efforts will be needed ahead.

Key response areas

The report lays out seven priorities to enhance food system and minimize COVID-19 effects on food security.

• Reinforce a global humanitarian response plan for COVID-19.

• Improve data for decision-making,

• Ensure economic inclusion and social protection to reduce poverty.

• Bolster trade and food safety standards.

• Boost smallholders’ ability to recover.

• Strengthen a “One Health” approach to prevent the next zoonotic pandemic

• Transform how food systems work

COVID-19 Triggered Economic Distress Sees Sharp Spike In Smuggling Of Goods: FICCI CASCADE

By Deepak Arora

NEW DELHI, July 15: FICCI’s Committee Against Smuggling and Counterfeiting Activities Destroying the Economy, (CASCADE) has appealed to the policy makers that illicit trade should be treated as a national threat. Illicit trade has emerged as one of the most formidable challenges before our nation, especially during the current pandemic which has led to an economic distress. This comes in the wake of several cases of smuggling of goods such as gold, cigarettes, liquor, which have been reported amid the COVID-19 pandemic.

Anil Rajput, Chairman, FICCI CASCADE while congratulating the officers of the enforcement agencies for successful seizures, said, “The perpetrators of illicit trade are always looking at innovative ways to deceive the system to carry out their activities. This deeply harms the economic interests of the nation and the society ends up paying a huge cost. While the recent efforts of enforcement officers are laudable, we cannot afford to let the guard go down. At a time when the country is already dealing with the coronavirus triggered financial stress, it is even more important that the government maintains a strict vigil to ensure that these offenders are kept at bay.”

In less than a week, the customs officials had two major seizures of smuggled cigarettes at the New Delhi Railway station where the smugglers were using COVID-19 special trains for ferrying these products. These seizures come on the back of two other major busts of foreign cigarette smuggling rackets, first in Mumbai and second one in Hyderabad. The combined value of the seizures is over Rs 15 crore.

Earlier this month, large seizure of smuggled gold worth Rs 1.5 crore and 15 crore was also made by the Kerala Airport Authority and customs at Thiruvananthapuram Airport respectively.

Not only does smuggling dent the government exchequer, by creating opportunities from tax arbitrage, but also threatens local industries on which livelihoods of many depend.

In a recent study by FICCI CASCADE, it was estimated that due to smuggling over 16 lakh jobs were lost in India in 5 industry sectors alone in 2017-18. Besides unemployment and massive financial losses, it also creates large scale destabilization by fomenting crime and funding insurgency and terrorism.

In order to create large-scale awareness of this menace, FICCI CASCADE has been conducting several interactions with government and enforcement agencies across several states in India on the ways and means to mitigate this challenge.

Qualcomm picks 0.15% stake in Mukesh Ambani’s Jio Platforms for Rs 730 cr

NEW DELHI, July 12: Qualcomm Ventures has picked up 0.15 per cent stake in Jio Platforms for Rs 730 crore, Reliance Industries said on Sunday.

Qualcomm is the 12th investor in Jio Platforms in as many weeks.

“Qualcomm Ventures, the investment arm of Qualcomm Incorporated, an industry leader in wireless technologies, has committed to invest up to Rs 730 crore in Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore.

“Qualcomm Ventures’ investment will translate into 0.15 per cent equity stake in Jio Platforms on a fully diluted basis,” the company said in a statement.

Current crisis worst of century: RBI

MUMBAI, July 11: Reserve Bank of India (RBI) governor Shaktikanta Das asked banks and finance companies on Saturday to conduct so-called stress tests even as he emphasised that the central bank’s primary focus will be on reviving growth and ensuring the stability of the financial system.

The economic fallout of the coronavirus disease pandemic may lead to higher non-performing assets, or bad loans, and capital erosion at Indian banks, he warned, terming the Covid-19 outbreak the worst economic and health crisis in a century.

A recapitalisation plan for public sector banks and private banks has become necessary because of the compression in economic growth during and after the Covid-19 lockdown, Das said at the seventh banking and economics conclave organised by the State Bank of India (SBI), stressing the need for banks to raise capital and build cash buffers to ensure credit flow and resilience of the financial system, and to be prepared for more frequent and bigger risk events.

“While the NBFC [non-banking financial company] sector as a whole may still look resilient, the redemption pressure on NBFCs and mutual funds needs close monitoring,” Das said at the digital conference, referring to the emerging stress points in the financial system.

“Mutual funds have emerged as major investors in market instruments issued by NBFCs, which is why the development of an adverse feedback loop and the associated systemic risk warrants timely and targeted policy interventions.”

“Increasing share of bank lending to NBFCs and the continuing crunch in market-based financing faced by the NBFCs and Housing Finance Companies (HFCs) also need to be watched carefully,” the RBI governor cautioned.

The RBI governor ended his speech on a cautiously optimistic note, saying the financial system was functioning well and the economy had started showing signs of getting back to normalcy after the easing of lockdown restrictions. “It is, however, still uncertain when supply chains will be restored fully; how long will it take for demand conditions to normalise; and what kind of durable effects the pandemic will leave behind on our potential growth.”

The need of the hour is to restore confidence, preserve financial stability, revive growth and recover stronger, he added.

Das said: “While the multipronged approach adopted by the Reserve Bank has provided a cushion from the immediate impact of the pandemic on banks, the medium-term outlook is uncertain and depends on the Covid-19 curve. Policy action for the medium-term would require a careful assessment of how the crisis unfolds. Building buffers and raising capital will be crucial not only to ensure credit flow but also to build resilience in the financial system.”

India’s economy, which was already in the grip of a slowdown when the outbreak began at the end of last year in the central Chinese city of Wuhan and spread rapidly around the world, grew 3.1% in the quarter ended March from a year ago and 4.2% in the full fiscal year.

India’s economy will likely shrink 5% in the year through next March, Goldman Sachs said in a report in the last week of May. The International Monetary Fund has slashed its 2020-21 growth projection for India to 1.9% from 5.8% estimated in January.

“We have recently [19th June and 1st July, 2020] advised all banks, non-deposit taking NBFCs [with an asset size of ₹5,000 crore] and all deposit-taking NBFCs to assess the impact of COVID-19 on their balance sheet, asset quality, liquidity, profitability and capital adequacy for the financial year 2020-21. Based on the outcome of such stress testing, banks and non-banking financial companies have been advised to work out possible mitigating measures including capital planning, capital raising, and contingency liquidity planning, among others. The idea is to ensure continued credit supply to different sectors of the economy and maintain financial stability,” Das said in his speech, a transcript of which was posted on the RBI website.

The growth woes began much before Covid-19 struck. In September 2018, Infrastructure Leasing and Financial Services Ltd, a major lender to all kinds of businesses, defaulted on its debt obligations, triggering a rippling liquidity crisis in the financial services market. Borrowing costs rose sharply. Private demand began collapsing too.

“The outbreak of Covid-19 pandemic is unambiguously the worst health and economic crisis in the last 100 years during peace time with unprecedented negative consequences for output, jobs and well-being. It has dented the existing world order, global value chains, labour and capital movements across globe and needless to say, the socio-economic conditions of a large section of world population,” Das said.

RBI has cut its key interest rate by 115 basis points (BPs) since the coronavirus crisis began, having pared it by 135 BPs between February 2019 and the onset of the pandemic. One basis point is one-hundredth of a percentage point.

The liquidity measures announced by RBI since February 2020, after the onset of Covid-19, aggregate to about ₹9.57 lakh crore, equivalent to about 4.7% of the 2019-20 nominal gross domestic product, according to Das, a former civil servant in the central government who was appointed the RBI governor in December 2018 to replace Urjit Patel, who resigned over differences with the government.

“Consistent with this [accommodative] policy stance, liquidity conditions were also kept in ample surplus all through since June 2019. The lagged impact of these measures was about to propel a cyclical turnaround in economic activity when Covid-19 brought with it calamitous misery, endangering both life and livelihood of people,” Das said.

Heading into the pandemic, the financial system was in a much improved position, owing mainly to various regulatory and supervisory initiatives of the Reserve Bank, he said.

“We had put in place a framework for resolution of stressed assets in addition to implementing multiple measures to strengthen credit discipline and to reduce credit concentration. For the five years between 2015-16 and 2019-20, the government had infused a total of ₹3.08 lakh crore in public sector banks. As a result of the efforts by both the Reserve Bank and the government, the overhang of stressed assets in the banking system had declined and capital position had improved,” he said.

The overall capital adequacy ratio — an indicator of financial strength expressed as a ratio of capital to risk-weighted assets — of commercial banks was 14.8% in March 2020, compared to 14.3% in March 2019. The ratio of public sector banks had improved from 12.2% in March 2019 to 13% March 2020. The gross non-performing asset ratio and net non-performing ratio of commercial banks was 8.3% and 2.9% March 2020, compared to 9.1% and 3.7% a year ago.

Das said the Reserve Bank would reinforce its focus on developing financial institutions’ ability to identify, measure, and mitigate risks. “The new supervisory approach will be two-pronged — first, strengthening the internal defences of the supervised entities; and second, greater focus on identifying the early warning signals and initiate corrective action.”

Mukesh Ambani now richer than Warren Buffett as RIL shares break records

NEW DELHI, July 10: Mukesh Ambani has had a rollercoaster 2020, cutting a string of deals for his digital business, undergoing wild swings in his wealth and having his brother’s finances laid bare for the world to see.

Now he can add another chapter -- eclipsing the fortune of Warren Buffett.

The chairman of Reliance Industries Ltd. is now worth $68.3 billion, surpassing Buffett’s $67.9 billion as of Thursday, according to the Bloomberg Billionaires Index.

Shares of Ambani’s Indian conglomerate have more than doubled since a low in March as its digital unit got more than $15 billion in investments from companies including Facebook Inc. and Silver Lake. This week BP Plc paid $1 billion for a stake in Reliance’s fuel-retail business.

While Ambani’s wealth has jumped -- he became the only Asian tycoon in the exclusive club of the world’s top 10 richest people last month -- Buffett’s fortune dropped this week after he gave away $2.9 billion to charity.

The 89-year-old, known as the Oracle of Omaha, has slipped down the rankings after donating more than $37 billion of Berkshire Hathaway Inc. stock since 2006. Berkshire Hathaway’s stock performance has also underwhelmed recently.

Ambani, 63, is now the eighth richest person on the planet, and Buffett is ninth, according to the index, which started in 2012.

Thanks to Ambani’s deals, India has emerged as a hot-spot for M&A this year, accounting for more than 12% of those announced in Asia Pacific -- the highest ratio since at least 1998.

Mukesh Ambani’s RIL first domestic firm to cross Rs 11.5 lakh cr m-cap mark

NEW DELHI,July 6: Reliance Industries Limited on Monday added another feather to its cap as its market valuation crossed Rs 11.5 lakh crore mark, the first by any domestic company.

The market heavyweight stock jumped 3.57 per cent to close at Rs 1,851.40 on the BSE. During the day, it rose by 3.94 per cent to a record high of Rs 1,858.

On the NSE, it gained 3.75 per cent to settle at Rs 1,855.

The company’s market valuation rose by Rs 40,508.8 crore to Rs 11,73,677.35 crore at close of trade on the BSE.

In terms of volume, 9.49 lakh shares of the company were traded on the BSE and over 2 crore on the NSE.

Gains in Reliance Industries’ shares were also instrumental in taking the BSE 30-share index higher by 465.86 points, or 1.29 per cent, to close at 36,487.28.

Reliance Industries, the country’s most valued firm, last month became the first Indian company to cross the Rs 11 lakh crore market valuation mark.

Shares of Reliance Industries on Friday rose by nearly 2 per cent after announcement that Intel Capital will buy 0.39 per cent stake in Jio Platforms. The stock has gained over 22 per cent this year so far.

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