India's top E-commerce Startups plan to launch a Lobby Group

By Ridhima Malhotra

India’s leading e-commerce companies like Flipkart, Ola, MakeMyTrip and Quikr are coming together to launch an industry body – Indiatech.org. The lobby group is slated to be headed by Sachin Bansal, co-founder of Flipkart. At a time when international companies are successfully tapping into Indian markets, the lobby group seeks to present and advocate for the interests of local ventures.  The formation of the interest group clearly indicates the aggressive stance to fight against ‘deep pocketed’ global competitors for ‘fair market’ in country, reports The Economic Times.

Lobbying is an act of attempting to influence businesses and government leaders to create legislation or conduct an activity that will help a particular organisation. In India, like many countries, lobbying is viewed with skepticism. Though it is rampant, there is presently no law to regulate lobbying in the country. The 2G spectrum scam of 2010, unearthed the need to regulate lobbying and make it more transparent. Despite the ambiguity around lobbying, trade associations such as the FICCI, NASSCOM and CII have been able to carve out good deals for members in the business fraternity. But presently, there is no independent association that solely focuses on home-grown ventures.

The main work of Indiatech will be to push the government to make policies, which would help in the growth of the domestic startups and also boost the local internet business. Different Venture Capitalist and Hedge Fund firms like SoftBank, Tiger Global Management, Steadview Capital, Accel India and Matrix Partners India are invited to join the group. Besides lobbying, the group will also discuss issues related to job creation, skills training and providing resources to boost the internet business.

Data as reported from the Economic Times reveals that if the homegrown e-commerce companies fail, India would lose $10 billion of FDI and over $1 billion of the tax revenue per year. The nation would also lose a chance to create a million job opportunities. Many in the Indian start-up ecosystem feel that a composed gathering like Indiatech.org could be relied upon to provide a platform for the domestic players to voice out their interest. With an eye on domestic markets, it is however left to be seen if Indiatech will succeed in infusing a new sense of proactivity.

India ranked at 40th place out of 137 countries in World Economic Competitiveness

By Shweta Arya

The Global Competitiveness Report (GCR) is a yearly report published by the World Economic Forum. Since 2004, the Global Competitiveness Report ranks countries based on the Global Competitiveness Index, integrating the macroeconomic and the micro/business aspects into a single index.                                                            

For the year 2017, on a list of 137 economies, Switzerland stands at the first place, followed by the US at second and Singapore at third place. India remains the most competitive country in South Asia, appearing at No.40, while neighboring China is ranked at 27th. India's ranking is one lower than last year’s, but the two rankings are not comparable because of a change in the methodology this year.

The report assesses the ability of countries to provide high levels of prosperity to their citizens. This in turn depends on how productively a country uses its available resources. Therefore, the Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity. The yearly meeting brings together some 2,500 top business leaders, international political leaders, economists, and journalists for up to four days to discuss the most pressing issues facing the world.

India's score has improved across most aspects of competitiveness. These include infrastructure (66th rank), higher education and training (75th rank) and technological readiness (107th rank), information and communication technologies also saw a good improvement, reflecting recent beneficial public investments in these areas.

However, as stated by WEF’s Executive Opinion Survey 2017, corruption still remains the most troublesome factor for doing business in India. Access to financing, uneven tax rates, inadequate supply of infrastructure, poor work ethics in national labour force and inadequately educated work force are some other gridlocks affecting the rank. Hence, India needs a greater improvement in the mentioned problematic areas to rise above in the world competitiveness scenario.

Credit Opportunity Funds: a relief for retail investors

By Aarushi Singh

Credit opportunities funds essentially play on the credit ladder and don’t depend on interest rate movements to earn returns, unlike the traditional bond funds. These funds generate returns from interest accrual, mainly investing in higher yielding but lower rated (AA or below) corporate bonds.

There has been growing popularity for these funds as these can help negotiate the uncertainty in interest rates amid talks of a fiscal stimulus which is aimed at reviving growth. This category of fund has given a return of 9.1% over the last one year on the other hand bank fixed deposits have yielded approximately 6% and 6.75%. This differential is attracting investors towards credit opportunity funds and many top performers like Baroda Pioneer, Franklin India Dynamic Accrual Fund and Aditya Birla Bond fund are giving returns of 9.5%-10% over the last one year.

Wealth managers also believe that investors need to be careful while investing in these funds as they are investing in lower –rated paper that carries default risks.

Therefore, with declining rates on small savings and bank fixed deposits, lack of opportunities in company deposits fixed income investors are attracted to this category of funds but they need to be aware about the default risk associated to it.

Japan to fund mass rapid transit systems in Gujarat, Haryana

By Aashi Sehrawat

Funds from a Japanese government loan will soon be utilised for the first time in the $100 billion, Delhi-Mumbai Industrial Corridor (DMIC) project. So far, the mega-project was being developed only with the Indian government’s financial assistance.

The JICA is the Japanese governmental agency in charge of implementation of Japan’s Official Development Assistance (ODA) — with the main objective of ‘promoting economic development and welfare in developing countries. The interest rate of the loan will be kept ‘very low’ (at 0.1%) having a long repayment period (at 40 years, including a 10-year grace period).

The DMIC spans six States (Uttar Pradesh, Delhi National Capital Region, Haryana, Rajasthan, Gujarat and Maharashtra). It uses ‘the 1,500-km-long, high-capacity western Dedicated Railway Freight Corridor (DFC) as the backbone’ and aims to be ‘a global manufacturing and investment destination’.

A soft loan (with concessional conditions) to the tune of $4.5 billion to be extended by the Japan International Cooperation Agency (JICA), will shortly be utilised to develop two Mass Rapid Transit Systems (MRTS) — one each in Gujarat and Haryana — that will be part of the DMIC.

According to JICA, its “ODA to India started in 1958” and so far around “₹2.75 lakh crore in ODA loans have been committed for development across various sectors.” As per JICA, it is “India’s biggest bilateral donor.”

Incidentally, a JICA loan worth ₹88,000 crore, on similar terms , will be used to build the ₹1.08 lakh crore Ahmedabad-Mumbai bullet train project. JICA loans/assistance are being used to facilitate development of Metro rail networks including in Delhi and the Western DFC. The MRTS in Gujarat will be ‘at grade’ (ground level) and link Ahmedabad to the Dholera Special Investment Region (DSIR).

The sources said the Detailed Project Report (DPR) for the MRTS was ready and land was being acquired. The MRTS in Haryana will be an ‘elevated’ one and will connect Gurgaon and Bawal (part of the Manesar-Bawal Investment Region in the DMIC).

The land has been acquired and the DPR has been finalised, officials said, adding that the MRTS has been included in the JICA ‘Rolling Plan’ for the ODA loan. The Department of Economic Affairs will soon ask JICA to work on preparatory surveys for the project, they said. The length of these two MRTS projects will be 85 km each.

Google's Tez App: Fast-tracking Digital India?

By Ridhima Malhotra

Google Tez, a new digital payment app was launched in India this week. Based on Unified Payments Interface (UPI), Google Tez offers a simple and fast way to send and receive payments directly into bank accounts of individuals and merchants.

After demonetisation, a sudden spurt in the growth of digital money transactions was seen, but in recent months, cashless transactions have slowed down. At the launch of the app, Finance Minister Arjun Jaitley however expressed confidence and said that cashless transactions would bounce back, adding that the slump was temporary.

Google's Tez intends to cater to an audience which is looking for easy digital payments solutions. With a user-friendly interface, Google has launched Tez on both Android and IOS platforms. Tez was launched in partnership with four Banks - Axis Bank, HDFC Bank, ICICI Bank and State Bank of India - to facilitate the processing of payments across over 50 Unified Payments Interface (UPI) enabled banks.

So, how exactly is Tez App different from the existing digital payment apps available in the market? The Google Tez is a medium to facilitate bank transactions between the sender and the receiver. One of the interesting new features from the tech giant is the “Cash Mode” where one can pay without sharing bank details or phone number. This is done through technology called audio QR that works like near field communication (NFC) and uses ultrasound waves to connect two phones through microphone and speaker.

With digital transactions facing what seems to be a temporary decline, it remains to be seen if Tez would be able to carve out a niche for itself in the market. 

The Big Merger: Thyssenkrupp AG and Tata Steel Ltd.

By Shweta Arya

Mega mergers aren't very common, but when they happen, the numbers involved are truly massive, as seen from a very recent development in business. 

Leading German Steel maker Thyssenkrupp AG and India's Tata Steel Ltd. signed a memorandum of understanding to form a 50-50 joint venture in a non-cash deal on Wednesday. The newly formed entity will be called — Thyssenkrupp Tata Steel, to be headquartered in Amsterdam region of the Netherlands and will supply premium and differentiated products to customers.

The move to create Europe's second-largest steel company is an effort to affiliate the industry, which has long struggled with excess capacity and competition, particularly from China.

Speculations regarding this proposed merger started one year ago, the company is estimated to have a revenue of about €15 billion (₹1.16 lakh crore) per year, shipments worth 21 million tons a year and, at present, some 48,000 employees. The companies expect to save between €400 million and €600 million (₹40 crore to ₹60 crore) in costs per year by integrating activities including research and development.

The effect of this merger is supposed to help both the companies as the steel assets and identified liabilities will be transferred from their books to the Joint Venture, leading to a leaner balance sheet for both the firms. The combined business profitability will be higher than the Tata Steel Europe's current magnitude.

The critical point arises that up to 2,000 administrative jobs and around 2,000 jobs in production sector will likely be cut, the impact estimated to be shared between both sides. Another major contrast is that Tata Steel is a focused steel company whereas Thyssenkrupp has a more profitable 'capital goods business' it would like to focus on and producing steel is not it's prime initiative. More details are to be concluded in time for a formal signing of the transaction at the beginning of 2018.

The trend of regional consolidation is quite extensive, pointing to other four large combinations in China and ArcelorMittal acquiring ILVA, Italy's largest producer. Hence, how the two firms work to make the European steel business more rewarding and the eventual outcome are the aspects to watch out for in the years ahead.

SBI Life's $1 billion Initial Public Offering

By Shivam Saklani

All of us must have observed the SBI Life Insurance Company Limited’s advertisement, which had been making a prominent appearance in most of the reputed newspapers.

The company, through advertisements was proposing to make an IPO. An IPO or initial public offer, is the first time that the stock of a private company is offered to public.

SBI really came in big, with this IPO prospect and went on to offer 8,82,00,000 shares to general public. SBI Life has fixed a price band of Rs. 685 to Rs. 700 per share for the offer, which is India’s biggest in 7 years. The initial share offer will close on 22^nd September i.e. you still have a couple of days left, in case you are interested. Bids can be made for a minimum of 21 equity shares and minimum of 21 equity shares thereafter. The equity shares are listed on BSE as well as NSE.

SBI Life Insurance is a joint venture between the Bank and BNP Paribas Cardiff, wherein SBI owns 74% of the total capital and BNP Paribas the rest. After this stake sale, SBI’s stake in the arm is proposed to come down to 70.1% while BNP will continue to hold 26%

The stock market was really progressive for IPOs till mid-September, wherein many companies saw their stocks rise, even by a humongous rate of 102% in a very short period. SBI Life had also reported a profit of Rs. 954.65 crore in 2016-17. This made a perfect environment for SBI to launch its IPO.

Even after the entire favorable environment, there was still a speculation in the market, as it is a known fact that IPO can be a risky investment for the individual investor, as it is tough to predict, what the stocks will do on its initial day of trading in the near future because there is often very little to analyze and there is always a sense of uncertainty regarding their future values. This sense of uncertainty also prevailed in stock market as the public offer received bids for 852,81,413 shares against the issue size of 8,82,00,000.

SBI Life has already garnered Rs. 2,226 crore from anchor investors, some of which include Blackrock, Canada Pension fund, Govt of Singapore, HSBC, HDFC MF, ICICI Prudential MF, Kotak MF, Reliance MF etc, from among 69 of the total anchor investors.

With these figures, most brokerage firms believe that the investment is good only if the investor is planning for long term investment. An investor can enter at lower price post listing and can hold the equity for a long period of time for better returns.

Economic Slowdown is Real, not just Technical: SBI Report

By Aarushi Singh

GDP figures of India have experienced a slowdown in recent quarters. This growth slid for the sixth quarter in a row has  hit a three-year low at 5.7 per cent in the June quarter. According to SBI research slowdown is real and not technical and called for more public spending to solve the slide. Research figures depict that this fall in quarter 1 are not short term or transient.

This note has come after a mention of slowdown by BJP president Amit Shah. Reports suggest that the government should consciously expand spending and fiscal deficit, without disturbing the borrowing.

The report also points out the 2008 global credit crisis and admits a forward or upward movement in spending, but was unequivocal in not paying much heed to the rating agencies. But the present economic situation requires a fiscal push without chasing the rating upgrade.

The report also suggested that the government can use a clause in the Fiscal Responsibility and Budget Management Act that provides for a 0.5 per cent slip in fiscal deficit targets. Further talking about the borrowings and government sector investment report warned an urgent check over these factors by moving to short term borrowings.

Tax Deficit & Plans Ahead

By Shivam Saklani

India could be forced to cut spending on major investments such as Railways & Highways due to lower than expected tax collections and sluggish growth, which have impeded the government’s credit.

India is largely a domestic consumption driven economy, which took a massive hit, over past 2 quarters, after the government demonetized high values currencies. A major tax overhaul in the form of roll out of GST also disrupted the consumption cycle as manufacturers went in for massive destocking before new tax rates were enforced.Tax receipts were about 2.8 billion in July, a little over half, of the monthly target, mostly because millions of the firms failed to comply with the new GST Systems. Revenue shortfall, at the end of the fiscal year, could also be at least 800 billion rupees if the current trend continues.

Aiming to boost growth amidst the revenue shortfall, Finance Minister Mr. Arun Jaitely, to everyone’s surprise, increased budgetary allocation for railways by one-fifth to 550 billion rupees, and by 24% for highways’ development. Complicating the finance ministry’s budget arithmetic, the RBI announced last month, that its annual surplus, a dividend transferred by central bank to the government, to be only 4.9 billion dollars, less than half the initial estimate.

The government has now sprung up into action, as the ruling party now gears up for crucial state elections, including that of PM’s home state in a year and general elections in less than 2 years. The government wants to give people a new reason to vote for them. A need is now being felt in the power corridors of the nation, for a push which could bring economy back on the track. Ministries have been told to submit their budget estimates by September 30 and discussions regarding it would be held from October 1.

With the union budget, likely to be presented in the parliament on February 1, The Economists expect another budget with huge allocations for projects in public sector to keep the Capex cycle going. Expecting the economy to return to high growth path, Nifty 50 index opened in the positive and made a new record lifetime high of 10,171 on Monday.

With the plan of bright future ahead, the government hopes to complete a few strategic deals of the government holdings in public sector enterprise by the end of the year, to cope for the tax deficit.

Daily change in fuel prices to continue & Oil Minister bats for Petroleum products to come under GST

By Ridhima Malhotra

In April this year, Petroleum Minister Dharmendra Pradhan's first touted the idea of daily revision of petrol and diesel prices. Many hailed the move and said that it would eliminate steep jumps in rates that consumers witnessed almost every fortnight. But critics have maintained that the government had failed to pass on the benefits of slumping crude oil prices to the end-users. The petrol prices have however been witnessing a steep increase since July, but the government continues to rule out any intervention to regulate prices.

After meeting the heads of state-run firms, Mr. Pradhan told the PTI, "The government has no business to interfere in day-to-day operations of oil companies... government will interfere only to improve operational efficiency of oil companies". The Minister added that it was time for the GST council to deliberate on bringing Petroleum products under the ambit of GST.  It is imperative to note that as of now, petrol and petroleum products, including diesel and natural gas are exempt under the GST. 

Mr Pradhan has gone on to say that the spike is temporary, attributing it to  calamities like Hurricane Harvey and Irma. The long term impact of the daily fuel revision policy on households will only unravel in the months to come. 

Digitization: A major threat for banking sector jobs

By Shweta Arya

Digital transformation has taken control over the world and has given an outright risk to many occupations. One area which has regularly been forced to bear this uncertainty has been the — banking and financial sector.

Advancements in technology have led to greater smartphone usage and an increased use of payment wallets (especially after demonetization), internet banking and the simplicity of the bank being a click away has made technology successfully acceptable to the user.

Major banks are pushing the boundaries of innovation by implementing robotics to centralise operations. Conventional jobs like passbook updating, cash deposit, verification of KYC details, salary uploads are also going digital increasing job layoffs. Insurance underwriters, loan officers and credit analysts have a 98% chance of future automation.  

Vikram Pandit, who ran Citigroup during the financial crisis, endorsed this issue with a disturbing figure citing upto 30 per cent reduction of banking jobs in the next five years.

With the increasing advent of technology, digitization of banking sector is inevitable. It has indeed reduced human errors and also increased convenience. But the fact that cyber threats are on the rise, banks are being cautious and the probability of increasing employment in technology, analytics and cyber security sector would see a rise.

India to finalise first defense purchase from Japan

By Aashi Sehrawat

Japanese Prime Minister, Shinzo Abe, is visiting India nearly two months after operationalisation of the historic Indo-Japan civil nuclear deal, which has added a new dimension to bilateral ties that could scarcely be imagined in the wake of the 2011 Fukushima tragedy.

Japan is now possibly India's closest strategic partner in the world, as both sides converge in their strategic and economic outlook. It will be in the field of defense and nuclear technologies that India and Japan hope to get to the next level. India is likely to finalise  the first defense purchases  from Japan, the US-2 amphibious plane that has been tossed around between the two governments for some years. Some element of "Make in India" may be introduced, but the two sides are looking at a future where joint development will be the key.

Japanese conglomerate Toshiba, which owns US-based Westinghouse, will have a major role when the US nuclear firm supplies technology for the set of six reactors in Andhra Pradesh following its bankruptcy. The finance for the project from the US Exim Bank remains intact and the initiative may kick-start only in 2018.

Countering China, India and Japan are teaming up to roll out big infrastructure and connectivity projects in Asian and African countries. The Asia-Africa growth corridor is slowly getting off the ground, and while it will never be as nimble as the Chinese OBOR, India and Japan are working on a different philosophy, involving more local interests and participation.

With the completion of the civil nuclear deal, India is looking at more collaboration with Japanese nuclear companies. The deal was finally signed between India and Japan in November 2016, and the Japanese parliament cleared it in June 2017.

Is Fiscal Deficit target unattainable for India?

By Aarushi Singh

Many steps were taken by the government to reduce the fiscal deficit and improve the macroeconomic conditions of the country and one of this is the Fiscal Responsibility and Budget Management Act (FRBM), 2003.This act was initiated by the Parliament of India to restore financial discipline, reduce fiscal deficit and the overall management of public funds.

The main purpose was to eliminate revenue deficit of the country and bring the fiscal deficit to a manageable level of 3% of the GDP March 2008.But those targets are yet to be reached.

Although there are lesser problems at the moment but government needs to boost the public investments to revive growth. This revival in public investment is important to cover up for the low private investments. The private sector spirits are on a break and there revival depends upon the government’s actions to revive investments.

It is accepted that the debt to GDP ratio of the Indian Government is high (70%) but it can be brought down by expanding GDP at a fast pace. Therefore the Indian government must indulge in more investments and less debt waivers.

Jobless Nation

By Shivam Saklani

At the launch event of his book, “I do what I do”, former RBI governor, Raghuram Rajan talked about the job deficit which young Indians are facing.

In a country like India, where a million new people enter market, searching for job, every month. Rajan said, “If we don’t provide jobs to these youths, we will have a million frustrated youth which would eventually create a lot of social mischief.

With the rate India’s population is growing, it is sure that India, will be world’s biggest labour force by 2027, if not early. With the scarce job opportunities and the threat of automation looming over, India surely has a herculean task waiting for it in future. Modi’s jobs record is even poorer than that of much maligned Congress. The scale of this failure is enormous, since the brigade of unemployed youth keeps on increasing.

Realizing that the problem is like an iceberg, much bigger than it seems, PM Modi, in his recent cabinet reshuffle replaced skill development minister, Mr. Rajiv Pratap Rudi, with oil minister, Mr. Dharmendra Pradhan. Labour minister Bandaru Dattatreya also got replaced by junior minister, Mr. Santosh Gangwar.

These two ministries are very important in this regard, as even a minute change in any of their policies affect millions of people, but, can only changing the charioteer, fix the already dilapidated chariot?

Mr. Pradhan can’t probably pull a miracle before the next election, but he could start by taking baby steps, but in right direction. He can review and create appropriate skilling programs in the areas where the jobs are, or are likely to be created.

He can also prioritize the inculcation of informal skilling systems which are prevalent from the time immemorial. Mr. Gangwar too has a big task at and. The new Labour code passed by government needs to become a law, and he has to ensure that a conductive environment and adequate opportunities are created in the sector where the skilled labour is being produced. Amidst soaring expectation of people as well as their own cabinet, it would be very interesting to see that if government takes a few more steps in regard especially before elections.

Centre sets up board to recommend on new employments

By Ridhima Malhotra

The NDA government has constituted another team headed by NITI Aayog vice-chairman Rajiv Kumar to prescribe measures to expand employment by promoting labour-intensive exports.

While the Indian workforce has high desires, a larger part of the workers are still employed in low-profitability, low-wage employments in small, micro and own-account enterprises. An urgent and managed development of the sorted out division is basic to address India's joblessness and under-business issue, the NITI Aayog mentioned in an announcement on Wednesday.

Key strategy

An imperative methodology is to empower a move towards more labour-intensive goods and services that are bound for exports. Given the significance of exports in producing jobs, India needs to make a domain in which globally competitive exporters rise and prosper, the Aayog summarized. The committee has been asked to present its report by November 2017.

India's rapidly increasing Income Inequality

By Shweta Arya

Eminent economists Lucas Chancel and Thomas Piketty have claimed that India is now seeing its highest 'income inequality' since 1922 - the year the Income Tax Act was passed.

This report is based on household surveys and tracking national accounts for the time period between 1922 and 2014.

The top 1 percent of the billionaires accounted for 29 percent of the economy's growth, out of which the 0.1 percent of the 1 percent accounted for 12 percent.

The bottom 50 percent, which accounted for 28 percent of economic growth in the 1951-1980 period, now accounts for only 11 percent of growth. The fact that billionaires are now contributing a major chunk of the economy's growth suggests that India is turning towards a 'trickle-down' like growth, that is, if the rich keep progressing, resulting in an overall growth of the economy, the bottom chunk of the population - middle-income earners and low-income earners - will benefit. Trickle-up economics, it's opposite says that the economy is pulled up by first looking after the poorer sections of the economy resulting in an overall growth.

The report suggests that India can promote more inclusive growth, thus suggesting more of a trickle-up like growth. Amartya Sen said, India's fast economic growth had helped in reducing absolute poverty, “but relative inequality has worsened." There is a need for more "more democratic transparency" so that the recorded tax statistics are available to concerned parties.

BSNL partners with Coriant to deploy 5G-based applications and services

By Aashi Sehrawat

State-owned Bharat Sanchar Nigam Limited (BSNL) on Wednesday had an agreement with US-based packet optical and mobile routing solutions provider Coriant to chart the path to 5G and Internet of Things (IoT) in India.

Though, the arrangement between the two companies is, however, on a non-commercial basis at this stage but the US-headquartered Coriant expects to take technology to BSNL subscribers after the 5G rollout commencement.

The Memorandum of Understanding was signed between the companies for laying foundation for innovation in network architectures and services leveraging 5G, IoT, Software Defined Networking/ Network Functions Virtualisation (SDN/NFV), and mobile edge computing technologies.

To this, BSNL CMD, Anupam Shrivastava said, “We continue to focus on bringing our customers across India the latest innovations in communications technologies that enrich their personal and work lives,” and also added “5G represents an enormous leap forward in capacity and throughput speeds, and we are pleased to team with our long-term technology partner Coriant to tap into these capabilities and explore real-world use cases for next-generation services and applications".

Meanwhile, BSNL is also in talks with HP and L&T to procure hardware to make Internet of Things (IoT) operational.

Startups smile as Government gives 80% rebate in Patent Fee

By Aarushi Singh

Under the new definition any entity in India which is recognized as a Startup by the authority under the Startup India initiative will be eligible to access the fast track mechanism for filing patents which will cut down the time to obtain these rights.

The Indian government has tried to liberalize the definition for Startups, so that more of these can take the benefits which include lower fees. This amendment of the patent rules 2003 will be a great encouragement and will be a boost for the economy. The rules for the same were notified on September 2. This amendment is for both domestic as well as foreign entities.

Startups before this amendment were defined as companies which are only five year old along with a maximum turnover of Rs 25 crore per year and those whose main objective was innovation. But after this revised definition for Startups by the Department of Industrial Policy and Promotion (DIPP), there is addition of one more parameter of job opportunities. DIPP will bear the facilitation cost for the startups and provide rebates for filing of applications.

In the fast track route the application fee is ₹ 8,000 for Individuals and Startups against ₹ 60,000 for Companies, and for the procurement of rights and benefits the Startup has to get a Certificate of Recognition from DIPP.

These initiatives by the government will cut time for granting patents to two-and-a-half years from five to seven years and will be further reduced to one-and-a-half years by March 2018.

This liberal definition will make way for Startups to grow in the Indian sub-continent.

Modi calls for BRICS-CRA

By Shivam Saklani

At Xiamen, the port city of China, Prime Minister Narendra Modi, today strongly pitched for early setting up of BRICS-Credit Rating Agency.

Addressing the heads of the world’s top 5 fastest growing economies (B: Brazil, R: Russia, I: India, C: China, S: South Africa), here at Xiamen, PM Modi asserted that a separate rating agency would help the economies of the member countries as well as other developing nations.

The idea initially emerged in 2015 BRICS Summit in Ufa (Russia) and was affirmed by Goa declaration at 8^th BRICS Summit.

The aim behind the idea of having separate credit rating agency is to have a more “balanced view” when ratings are made.

Standard and Poor, Moody’s and Fitch or as they are collectively called “The Big 3” have faced increasing criticism. The BRICS Leaders have claimed that the frequent “down grading” of developing countries are unjust and severe western political interests.

Both Brazil and Russia have recently been “downgraded” by Moody’s. For over a year South Africa is said to be on the verge of a “possible downgrade”. K.V Kamath had also expressed concerns over methodologies of the “Big 3” global agencies saying that these are constraining growth in emerging nations the ratings of multilateral banks like BRICS-New Development Bank are affected due to parent countries’ ranking and ratings, which eventually hampers the liquidity help which NDB provides to parent countries with regard to payment pressures.

The call from India came at a very crucial point, when the nation’s growth rate is 5.7, given that BRICS is home to half the world’s population and accounts for more than a quarter of the world’s economic output and New Development Bank surely has the capacity to establish an influential credit rating institution. It would be very interesting to see, how the BRICS credit rating agency would present itself as a competition before “The Big 3”.

McDonald’s India terminates the franchise agreement for 169 outlets in North and East India

By Himani Gandhi

McDonald’s India has terminated the franchise agreement for 169 fast-food outlets in north and east India run by Connaught Plaza Restaurant Ltd (CPRL) and has said the outlets cannot use its brand for any operations.

CPRL is led by Vikram Bakshi, the estranged partner of the US-based food chain giant.

The decision comes weeks after 43 outlets run by CPRL in the national capital were shut due to non-renewal of eating house licences by local authorities.

The company is currently working on the terms to mitigate the impact of the shutdown on all stakeholders including thousands of employees across 169 restaurants. McDonald’s operations in west and south India have not been affected as the master franchisee rights of the burger chain are owned by a separate company, Westlife Development Ltd, through its unit Hardcastle Restaurants Pvt. Ltd.

The decision could impact about 6,500 direct jobs in India, and lead to the possible closure of McDonald’s restaurants in the northern and eastern regions, at least temporarily. CPRL owned 169 outlets, including 43 in and around Delhi that have already been shut down. 

The battle had not only impacted profitability of CPRL, but also revenue growth, which fell to 6% in 2014-15 from 29% four years earlier. The burger and fries chain said it was compelled to terminate the agreement because “CPRL has materially breached the terms of the respective franchise agreements relating to the affected restaurants, and has failed to remedy the breaches despite being provided with an opportunity to do so in accordance with the agreements”.

Vishal Sikka’s exit again shows India is not a country for outsider CEOs

By Aarushi Singh

In less than a year, two of India’s largest companies have experienced a similar situation and demonstrated that there’s no place for outsider CEOs in Indian companies.

Last October, Tata Sons replaced Cyrus P Mistry as chairman of Tata Sons. His sudden removal, at a board meeting, took most Tata observers by surprise though the disagreements between him and Ratan Tata must have been growing for some time. Though Ratan Tata appointed Mistry as his successor in 2012, but he still wielded a very significant influence over Tata Sons. Reasons behind his removal were restructuring of the management .i.e. bringing new faces at senior levels which led to conflicts, Ratan Tata felt Mistry may not be the best bet for the group in the long-term and that there was hardly any  forward movement under his leadership and last was the difference of opinions with the board and the founders.

And in August, again a similar situation happened in one of India’s best IT company, Infosys i.e. the resignation of Vishal Sikka in response to the continuous allegations he was facing from the last four-five quarters.

One of the main reason behind these allegation was the concern of promoters regarding the deteriorating governance and values of the company, followed by other reasons which include, Sikka's salary: A sharp increase in Sikka's compensation early last year is said to be the biggest flash-point. The company says Sikka's cash compensation had actually gone down and the increase has been primarily in RSUs (restricted stock units) and stock options, which are directly linked to incredibly steep goals.

Second was the Appointment of Punita Sinha, wife of Jayant Sinha who is Minister of State for Finance, was appointed an independent director last year. The appointment raised concerns with founders but the board says she is qualified for the job.

Third, Growth through acquisitions: Sikka has maintained that Indian IT's older businesses of application development & maintenance, infrastructure management and BPO are slowing and the margins are falling .But sources said that some of the founders are not in favour of acquisition-based business model.

And last was the rift between the board and founders over investigations into several decisions made by the company. As Narayana Murthy demanded to make the investigation reports public.

These conflicts between the preceders  and the successors have affected the financial position of the company. Infosys shares touched a three-year low after this step of Sikka which is a severe dent to brand reputation ,client conversation, investor confidence, employee morale and business transformation which will affect the company’s performance in short and long run. But the appointment of Nandan Nilekani as non-executive chairman on Thursday, has been the most dramatic comebacks in recent corporate history, marks the second instance of a retired co-founder being handed the reins to take out the corporation from this unexpected crisis. And the results of Nilekani’s return are evident as Infosys shares have gone up over 2%.

Saga of Infosys: the poster child of the Indian IT industry

By Tabish Salam

On 18 August 2017, Dr. Vishal Sikka resigned as CEO of Infosys citing unrelenting personal attacks on him over the past several quarters. However, he has agreed to take on the executive vice-chairman role till 31 March 2018 to ensure a smooth transition. The board has blamed Narayana Murthy for forcing Dr. Sikka out. 
Vishal Sikka's abrupt exit puts the company in a state of disarray. Allegations and counter-allegations have been flowing thick and fast since Vishal Sikka resigned as managing director and CEO of IT bellwether Infosys. Crises at Infosys opens up the Pandora box which has led head hunters analyse the key takeaways. The Indian system of succession planning within corporates differs largely from their global counterparts, which begin to hunt for a successor quite a few months in advance. Emergency at Infosys clearly shows that no matter how large, most companies fail to plan for leadership vacuum at the top.  

The poster child of the Indian IT industry just cannot seem to stabilise its ship even after a decade of consistently losing market share under different leaders, mostly comprising of its co-founders. In fact, Vishal Sikka was the first non-founder CEO for the company and was the first one successful in bringing stability to the companys market performance vis-a-vis rivals like Tata Consultancy Services since it had begun deteriorating almost a decade ago. 
The founders at Infosys seem to be having a tough time letting go of their control over the company. After Narayana Murthy stepped down as CEO in 2002, three co-founders succeeded him - mostly unsuccessfully in maintaining the company's growth trajectory. Murthy's vocal interference in the company's workings and Nandan Nilekani's return following Sikka's exit points to an utter unwillingness of handing over control to an "outsider". Since Sikka took over as CEO in August 2014, at least 12 senior executives, rank of senior vice president and above, have left the company.

The co-founder of Infosys, Nilekani who also holds the Padma Bhushan award from the government was named Infosys Non-executive Chairman on Aug 24, 2017. In his first message to Infosys shareholders, Nilekani said he will focus on bringing in stability and ensuring there are no discordant voices at the country's second-largest IT firm. 
Nandan Nilekani's comeback definitely works as an advantage for Infosys and without doubt he has played a major role for the company in past, wherein this puts him in the high expectation grid to rescue Infosys for the transformation required. Nilekani was also held in high esteem by Infosys clients and investors. 

The road ahead for Infosys is fraught with challenges as the company works to scale its aspirational goal of becoming a $20 billion firm by March 2021. 

India, Nepal ink 8 pacts; for closer security and top developments

By Aashi Sehrawat

Nepal signed eight pacts with India, including cooperation in countering drug trafficking and gave an assurance that it won’t allow any activity against India. Prime Minister Narendra Modi and his Nepalese counterpart Sher Bahadur Deuba held extensive talks and laid emphasis on closer cooperation between the two countries’ security and defence forces to prevent any misuse of their open border.

The visit assumed significance in the wake of a military stand-off between India and China near the Sikkim border. At the joint press interaction, Deuba said Nepal would "never allow any anti-India activities from its soil". He also hailed Modi's 'Neighbour First' policy and approach on 'Sabka Saath, Sabka Vikas'. Deuba said Nepal will never allow any activity from its territory against India.

Here are the top developments:

1.    Foreign Secretary S Jaishankar said India conveyed to Nepal that the country should forge the “broadest possible consensus” and take every section of the people along in implementing its new Constitution.

2. Vice-President M Venkaiah Naidu laid stress on the need to have enhanced connectivity between India and Nepal, saying it would boost economic growth of the two countries.

3.    Nepal Prime Minister Deuba acknowledged there were “issues” in the implementation of the Constitution but expressed confidence that a Constitution “encompassing” the views of the people from all sections and ethnicities would be a reality.

4.   The two leaders jointly inaugurated the Kataiya-Kusaha and Raxaul-Parwanipur cross border power transmission lines. Foreign secretary S Jaishankar described these projects as game changers. Modi said this would give an additional 100 MW of power to Nepal, apart from the existing 350 MW. The two sides, he added, had also agreed on development of the Ramayana and Buddhist tourism circuits through better connectivity. Modi is also believed to have assured Deuba that work on the hydel power projects promised by India — Arun III, Upper Karnali, and Pancheshwar Multipurpose Project will be accentuated. All these projects have missed several deadlines.

5.   Flood management and irrigation projects were a point of focus in the talks between the two countries. Modi stressed on greater coordination and consultation between the agencies of India and Nepal on flood management and said the two sides must work towards a long term solution, taking into consideration each others interests.

Modi also identified defense and security as an important aspect of bilateral ties. Deuba also agreed to use the housing grant component for the reconstruction of 50,000 houses as a part of the post-earthquake rebuilding effort. It has also agreed to implement the reconstruction pact in education, cultural and health sector following the devastating April 2015 earthquake.