India’s Department for Promotion of Industry and Internal Trade, DPIIT, has notified the opening up in more sectors for foreign direct investment. These sectors are single-brand retail trading, contract manufacturing and coal mining.
The DPIIT also stated that 26 per cent foreign direct investment will be allowed in digital media. Such investment in print media is already capped at 26 per cent and in TV news at 49 per cent. All these decisions are aimed at increasing economic growth, which has been affected by the COVID-19 pandemic.
Foreign entities can now invest up to 100 per cent in the coal industry for mining and sale of coal under the automatic route. They will also be entitled to carry out processing infrastructure operations such as coal washery, crushing, coal handling, and separation of magnetic and non-magnetic coal.
Full 100 per cent foreign direct investment is henceforth permitted for contract manufacturing, a DPIIT notification said.
Foreign entities intending to engage in single brand retail trading in India may do so through e-commerce prior to opening of their own stores, provided the company opens brick and mortar stores within two years from date of starting such online retail.
Shares of the state-run petroleum major Bharat Petroleum Corp. Ltd. (BPCL) fell nearly five per cent a day after the deadline for submitting bids for the strategic sale of the company ended.
Investor sentiments dampened as major energy giants including Reliance Industries, Saudi Aramco, BP gave the bidding process a miss and did not submit Expressions of Interest for the 52.98 per cent of the stake on sale.
Shares of BPCL on the BSE plunged 4.9 per cent to touch an intra-day low of Rs 392.35 per share.
At 10.54 a.m., it was at Rs 397.70, lower by 3.63 per cent from its previous close.
The government on Monday said that multiple EoIs have been received for divestment of Centre’s stake in the company.
Sources, however, said that several global players did not pitch in for the stake sale. Total and Russia’s Rosneft also did not bid for the stake sale.
The lack of interest among the major players comes on the back of the poor oil demand globally amid the pandemic and low oil prices.
The transaction will now move to the second stage after scrutiny by the transaction adviser, said a tweet from the Twitter handle of the Secretary of the Department of Investment and Public Asset Management (DIPAM).
“For strategic disinvestment of BPCL, multiple expressions of interest have been received by the Transaction Advisor. The Transaction will move to the second stage after scrutiny by TA,” it said.
Finance Minister Nirmala Sitharaman also said that the BPCL disinvestment process is making progress.
“Strategic disinvestment of BPCL progresses: Now moves to the second stage after multiple expressions of interest have been received,” she said in a tweet.
Sources said that 3-4 four bids have come in for the oil giant.
As the deadline for submitting the EoIs for privatisation of BPCL closed on Monday and there has so far been a buzz of mixed interest amongst the bidders.
RIL and Abu Dhabi National Oil Company (ADNOC) were anticipated to submit their bids. While RIL has not put in a bid as per sources, it could not be ascertained whether ADNOC has gone ahead with a bid.
ADNOC already has footprint in India as it is the only overseas company that has crude stored in Indian caverns.
The lack of interest among major players comes on the back of the poor oil demand globally amid the pandemic and low oil prices.
The EoIs came on Monday after four extensions of the deadline for submission of bids.
The Centre has put its entre 52.98 per cent stake in the BPCL on the block.
Civil Aviation Minister Hardeep Singh Puri has exuded confidence that air travel will reach pre-Covid level by the end of current year or early next year.
Addressing the ‘Deccan Dialogue’ organised by Indian School of Business (ISB) in collaboration with the Ministry of External Affairs, he said for the civil aviation sector to reach the pre-Covid level, people required to continue to maintain safety protocol with self-discipline.
“We opened civil aviation on 25th May, a good two months and two days after we had completely locked down, with 30,000 passengers a day. Two or three days ago, just before Diwali, we carried 225,000 people,” he said.
“At a scale at which we are opening up in a calibrated manner, we have already reached 70 per cent capacity and I have asked my colleagues to look at 80 per cent. I am confident that by 31st December or soon thereafter… means a week or two thereafter, we will be back to pre-Covid levels,” he added.
Puri said he was committed to bring aviation GDP back to India. He was confident that the sector would get a boost in the next few years with the country getting 100 new airports and the fleet size reaching up to 2,000 from around 750 now.
“Our fleet size today should be around 750. I know airlines when they come across a pandemic like this, they try to curtail the size of their fleet orders. But, I can say with seven per cent penetration which means out of every 100 Indians, only seven fly and a 17 per cent rate of growth which we experienced pre-Covid at one time. We will move from 750, not to the 1,200 which everybody says, but to 2,000 aircraft. We will do it pretty quickly,” he said.
He said that there is a massive opportunity for investors across the aviation ecosystem including airports, airlines, ground-handling, maintenance, repair and overhaul.
The minister also revealed that Indian carriers get a mere 17 per cent of the value of traffic between India and the US. “The value of traffic between India and the US is roughly 7 billion dollars annually. How much do Indian carriers get out of that traffic, a mere 17 per cent. It is not as if American carriers are getting the remaining 83 per cent. I am not going to say who is getting it. But I see no reason why Indian flagship carrier and private carriers should not be earning more money flying passengers,” he said while terming this as a distorted business model.
Puri, who is also the Minister of State for Commerce and Industry, hoped that the country would be able to reposition itself as an economic player in the global supply chain before long.
He said even during the times of pandemic, global technology majors like Google, Amazon and Mubadala announced $20 billion investment in India.
He also said that the Aatmanirbhar Bharat concept and process would definitely lead to a stronger India post-Covid.
The Chairman and Members of the 15th Finance Commission presented a copy of its report for the period 2021-22 to 2025-26 to Prime Minister Narendra Modi.
The Commission had submitted its report to President Ram Nath Kovind on November 4.
Chairman N.K. Singh along with Members of the Commission, Ajay Narayan Jha, Anoop Singh, Ashok Lahiri and Ramesh Chand along with Secretary to the Commission Arvind Mehta were present at the presentation.
The Commission will present its Report to the Finance Minister Nirmala Sitharaman on Tuesday.
The report will be placed on the table of the Parliament along with ‘Explanatory Memorandum’ by way of ATR as prescribed under the Constitution.
Last year, the Commission had submitted its report consisting of recommendations for 2020-21 fiscal, which was accepted by the Union government and tabled in Parliament on January 30 this year.
As per the terms of reference (ToR), the Commission was mandated to give its recommendations for the five-year period by October 30.
It was asked to give its recommendations on many unique and wide-ranging issues. Apart from the vertical and horizontal tax devolution, local government grants, disaster management grants, the Commission was also asked to examine and recommend performance incentives for states in many areas like power sector, adoption of DBT, solid waste management etc.
The panel was also asked to examine whether a separate mechanism for funding of defence and internal security ought to be set up and, if so, how such a mechanism could be operationalised.
The Commission has sought to address all its ToRs in the latest report, organised in four volumes.
Volume I and II, as in the past, contain the main report and the accompanying annexes. Volume III is devoted to the Union government and examines key departments in greater depth, with the medium-term challenges and the road map ahead. Volume IV is entirely devoted to the states.
The Commission analysed the finances of each state in great depth and came up with state-specific considerations to address the key challenges that individual states faced.
The report entitled ‘Finance Commission in Covid Times’ uses scales on its cover to indicate the balance between the states and the Union.
The Department of Investment and Public Asset Management (DIPAM) on Monday signed an agreement with the World Bank to get advisory services for its asset monetisation plan.
Disinvestment department DIPAM is mandated with facilitating monetisation of non-core assets of government CPSEs under strategic disinvestment or closure and enemy property of value of Rs 100 crore and above.
The World Bank advisory project, approved by the Finance Minister, is aimed at analysing public asset monetisation in India and benchmarking its institutional and business models against international best practices as well as supporting development of operational guidelines and capacity building for their implementation.
It is expected that this project would facilitate and accelerate the non-core asset monetisation process and help unlock the value of these unused/marginally used assets which has the potential to substantially augment financial resources for further investments and growth.
As the deadline for submitting the Expressions of Interest (EoI) for privatisation of BPCL close on Monday there is buzz of mixed interest amongst the bidders.
There is buzz that global majors BP, Total and Saudi Aramco are unlikely to put in a bid while there is talk that ADNOC and Reliance may be interested.
After four extensions, the government is hopeful that strategic sale of BPCL may go through without any further need to postpone the bidding deadlines.
The deadline for submitting the Expressions of Interest (EoI) for 52.98 per cent stake in the BPCL is ending on November 16. Prior to this, the bid start date was September 30, but it got postponed due to bidders’ request in wake of prevailing situation arising out of Covid-19 pandemic.
The Indian government proposes to disinvest its entire shareholding in BPCL comprising 1,14,91,83,592 equity shares held through the Ministry of Petroleum and Natural Gas, which constitutes 52.98 per cent of BPCL’s equity share capital, along with the transfer of management control to the strategic buyer (except BPCL’s equity shareholding of 61.65 per cent in (NRL) and management control thereon).
However, the profit-making oil major has not received interest as anticipated due to low oil prices, coupled with poor demand.
The shareholding of BPCL in NRL will be transferred to a Central Public Sector Enterprise operating in the oil and gas sector under the Ministry and accordingly, is not a part of the proposed transaction.
The government’s stake in BPCL is worth around Rs 47,000 crore at BPCL’s current share price.
According to an earlier research note by Emkay Global, according to DIPAM’s response to PIM queries, interested parties may include global players with limited knowledge on Indian corporate/PSU/accounting /takeover rules as well as parties seeking higher level of clarifications.
“The progress on BPCL’s sale is positive for OMCs in terms of deepening deregulation and profitability outlook. Given the tight fiscal situation, disinvestment would be of utmost importance to the government this year”, the report said.
Industry sources said that Total and Russian giant Rosneft are also not interested to bid in the current subdued market conditions.
The report said RIL can be a serious contender being mostly net debt free now and possibly include BP also as a partner. Other players are Aramco, ADNOC, Rosneft and ExxonMobil, as per the reports. With RIL deal not progressing, Aramco may now look at BPCL aggressively.
Industry sources, however, said that Reliance Industries (RIL) and UAE’s Abu Dhabi National Oil Company (ADNOC) may bid for the state-run oil major.
ADNOC already has footprint in India as it is the only overseas company that has crude stored in Indian caverns.
The process of the BPCL’s strategic sale has been impacted due to the pandemic and the deadline for submission of bids has been postponed four times. The previous deadline was September 30.
The Centre has allowed bidders of privatisation-bound PSU refiner to submit their interest for the company electronically through e-mail to prevent restrictions imposed due to Covid-19 from impacting the sell-off process.
The government is also keen to complete the deal within FY21 as disinvestment proceeds from it would help the government inch closer to this year’s ambitious disinvestment target of Rs 2.1 lakh crore. So far, just over Rs 5,000 crore have been mobilised.
In what may be a big casualty of Covid-19 related market disruptions, India’s Petronet LNG Ltd. may push back its $2.5 billion investment plan in US LNG developer Tellurian’s upcoming Driftwood LNG terminal in Louisiana or shelve the investment plan altogether.
Government sources said that with spot LNG prices now crashing to about $2-3 per million British thermal unit (mmBtu) and gas widely available in the market, it would make little sense to sign an agreement committing to pay on sea price of $3.5 to $4.5 per mmBtu for 40 years for the gas. The delivered price of gas would be even higher
The deal would have to be renegotiated given the current market prices or shelved, sources said.
A PLL official also said that with prices at record low levels and easily available, the company is more concerned about signing LNG supply contracts rather than investing in greenfield project that will meet needs after five to seven years.
In September last year a non-binding memorandum of understanding (MoU) was signed between PLL and Tellurian that gave the Indian entity PLL the option to buy 5 million tonne per annum (mtpa) LNG from Tellurian’s Driftwood project on the banks of the Calcasieu river in Louisiana. In return, Petronet was to spend $2.5 billion for an 18 per cent equity stake in the $28 billion Driftwood LNG terminal.
The term of the MoU was to expire on March 31, 2020, which was extended to May 31 in February. It has now been extended till December end. But with deadline latest extension also nearing, PLL seems in be on no mood to commit investment. The change of government in the US has also made decision to move out from the project easier.
As a test to determine gas prices available on long-term contract basis now, PLL earlier this year invited bids for one million tonne per annum of LNG for 10 years. It asked bidders to quote a price below Japan/Korea Marker (JKM) that takes the price on long term as well as closer to spot prices. Though Tellurian placed its bid for the supply contract, it did not qualify from a list of 13 other suppliers.
The Tellurian deal, if concluded, will be the first long-term LNG deal under the Modi government since 2014. The previous long-term gas supply deals were signed before 2014. The deal for 7.5 mtpa of LNG from Qatar, 1.44 mtpa from Australia, 2.2 mtpa from Russia and 5.8 mtpa from the US were concluded by the previous UPA government.
India’s merchandise exports in October declined by over 5 per cent on a year-on-year basis.
As per the Ministry of Commerce and Industry’s data released on Friday, merchandise worth $24.89 billion were shipped-out during the month under review as against $26.23 billion exported in the same period of the previous year.
In terms of sequential movement, the country’s merchandise exports in September had risen by 5.99 per cent to $27.58 billion from $26.02 billion exported in the same period of the previous year.
Accordingly, major commodities which have recorded negative growth during October 2020 vis-a-vis October 2019 were ‘petroleum products, cashew, gems and jewellery, leather and leather products’ amongst others.
“Non-petroleum and non-gems and jewellery exports in October 2020 were USD 20.31 Billion, as compared to USD 19.07 billion in October 2019, registering a positive growth of 6.51 per cent,” the ministry said.
Similarly, India’s imports declined, it fell by (-) 11.53 per cent to $33.61 billion in October from $37.99 billion reported for the corresponding month of 2019.
In September, imports declined by (-) 19.60 per cent to $30.31 billion from $37.69 billion reported for the corresponding month of 2019.
“Oil imports in October 2020 were USD 5.98 Billion, which was 38.52 per cent lower in Dollar terms, compared to USD 9.73 billion in October 2019,” the statement said.
“Non-oil imports in October 2020 were estimated at USD 27.62 billion which was 2.24 per cent lower in Dollar terms compared to USD 28.26 billion in October 2019.”
“Non-oil and non-gold imports were USD 25.12 billion in October 2020, recording a negative growth of (-) 4.90 per cent, as compared to non-oil and non-gold imports of USD 26.42 billion in October 2019.”
Consequently, India’s trade deficit narrowed to $8.71 billion on a year-on-year basis in October from $11.75 billion reported for the corresponding month of last year.
The trade deficit had narrowed to $2.72 billion in September from $11.67 billion reported for the corresponding month of the previous year.
“The merchandise trade deficit for October 2020 is in line with our estimates, printing at the highest level for this fiscal year,” said ICRA’s Principal Economist Aditi Nayar.
“As the economic recovery strengthens, we expect the current account surplus to decline substantially in Q3 FY2021, from the $20 billion recorded in Q1 FY2021 and the $12-14 billion expected for Q2 FY2021.”
According to EEPC India Chairman Mahesh Desai: “With the second wave of Covid 19 hitting
Europe, and the US reeling under the pandemic, Indian exports face a tough winter of global trade.”
In addition, Suman Chowdhury, Chief Analytical Officer Acuite Ratings & Research said: “The healthy pickup in exports seen in September could not be sustained in October, leading to a YoY drop of 5.1 per cent.”
“The primary factor behind the slip in exports has been the substantial drop in petroleum product shipments on a sequential basis by 54 per cent in October. Excluding POL, exports have seen a marginal YoY growth of 2 per cent given the steady growth in agricultural, minerals and pharmaceutical exports.”
A favourable base effect, along with inventory build-up prior to the festive season, accelerated India’s industrial activity on both sequential as well as on the year-on-year basis in September, official data showed on Thursday.
Accordingly, India’s factory output inched-up by 0.2 per cent on YoY basis. The Index of Industrial Production (IIP) had recorded a de-growth of (-) 4.6 per cent during the corresponding period of last year.
Significantly, this is the first time in the last six months that IIP readings on a YoY basis has shown a growth.
The Ministry of Statistics and Programme Implementation, in the Quick Estimates of IIP document, said the current index readings should not be compared with those of the months preceding the Covid-19 pandemic.
“With the gradual relaxation of restrictions, there has been a relative improvement in the economic activities by varying degrees as well as in data reporting,” the ministry said in the document.
Among major segments, manufacturing production de-grew by (-) 0.6 per cent from (-) 4.3 per cent reported for the corresponding month of last year.
However, electricity generation grew by 4.9 per cent from (-) 2.6 per cent during September 2019.
Similarly, mining output rose by 1.4 per cent on a YoY basis.
Furthermore, the data on a YoY basis showed that manufacturing of primary goods de-grew by (-) 1.5 per cent, capital goods by (-) 3.3 per cent, and intermediate goods (-) 1.4 per cent.
On the other hand, the production of infrastructure or construction goods inched up by 0.7 per cent and consumer durables by 2.8 per cent.
The sub-segment of consumer non-durables showed a growth of 4.1 per cent.
Announcing a fresh round of stimulus package and terming it as ‘Atmanirbhar Bharat 3.0’, Finance Minister Nirmala Sitharaman laid down a total of 12 new measures to support the economy and industry, ranging from employment generation, collateral-free credit for stressed sectors to subsidised fertiliser for farmers.
Sitharaman announced the ‘Atmanirbhar Bharat Rozgar Yojana’ to incentivise creation of new employment opportunities during the Covid-recovery phase.
The employment scheme effective from October 1 will be applicable to eligible new employees joining the EPFO-registered establishments and for those who exited these concerns during the Covid pandemic (March 1-September 30, 2020) and drawing monthly wages of less than Rs 15,000.
Under the scheme, the central government will subsidise the Employees’ Provident Fund (EPF) contributions for two years.
The Centre will provide 12 per cent of the contributions of both employers and the employee for establishments with up to 1,000 employees. In the case of establishments with over 1,000 employees, the Centre will only subsidise 12 per cent of the employees’ EPF contributions.
Also, in order to provide a further boost to rural employment, the government will provide an additional outlay of Rs 10,000 crore for the Pradhan Mantri Garib Kalyan Rozgar Yojana.
The government will provide Rs 65,000 crore to farmers to ensure adequate supply of fertilisers in the upcoming crop season.
In a major decision to support the pandemic-hit industry, the government has also announced an Emergency Credit Line Guarantee Scheme (ECLGS 2.0) for providing much needed relief to stressed sectors by helping entities sustain employment and meet liabilities.
The ECLGS scheme for MSMEs, MUDRA loan borrowers and individuals has been extended till March next year.
In a bid to boost housing sales, Sitharaman announced an increase in the permitted differential between the circle rate and agreement value of housing units to 20 per cent from the current mandated limit of 10 per cent till June 30.
The increase in differential will be applicable in residential units of value up to Rs 2 crore.
Section 43CA of IT Act restricts differential between circle rate and agreement value at 10 per cent. However, prices may actually be lower than that, and the restrictions curbs sale of housing units.
To provide ease of doing business and relief to contractors whose money otherwise remains locked up, performance security on contracts will be reduced to 3 per cent earnest money deposit (EMD) for tenders will be replaced by bid security self-declaration. The relaxation will be available till December 31, 2021.
Work underway on a route of the under-construction Delhi Metro Phase 4 project in East Delhi
Centre will also make an additional outlay of Rs 18,000 crore for Pradhan Mantri Awas Yojana (Urban), which is likely to help ground 12 lakh houses and complete 18 lakh houses, as per the Finance Minister.
In another boost for infrastructure development, the government will invest Rs 6,000 crore in the NIIF (National Infrastructure Investment Fund) debt platform, which will provide infrastructure project financing of Rs 1,10,000 crore.
Sitharaman said that the total value of the government’s stimulus support so far is about Rs 30 lakh crore, post the three rounds of ‘Atmanirbhat Bharat’ economic measure and the measures by the Reserve Bank of India amid the pandemic. Total stimulus accounts for 15 per cent of the GDP, with the Central government’s component being 9 per cent and the rest of the RBI.
