In the current times, the consumers of a variety of items from FMCG to electronics to consumer durable etc are having a hey day with access to these at substantially low price from e-commerce platform. Several products are available at a discount as high as 50% [or even higher] over the maximum retail price [MRP]. Juxtaposed with the fact that the requested item is delivered right at the doorsteps of the consumer makes the buy from the platform all the more attractive. But, there is a darker side to it. A close look at the very dynamics of how such heavy discounts are given would show it up. At the very outset, it is important to understand that MRP is...
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Category: Foreign investment & other inflows
India’s growth story is intact, under Modi
The deceleration in economic growth from an already low of 6.1% during the last quarter of financial year 2016-17 to 5.7% during the first quarter of current year 2017-18 has prompted critics [this time, including Yashwant Sinha, former union finance minister in erstwhile NDA government under Vajpayee] to say Modi’s economic policies are responsible for what they allege ‘as loss of 2% in the GDP [gross domestic product] growth. The growth during January-March 2017 at 6.1% was 1.8% lower than during January-March 2016 at 7.9%. Likewise, the growth during April-June, 2017 at 5.7% was 1.4% lower than during April-June 2016 at 7.1%. Thus, even on quarterly basis, the decline is lower than 2% mentioned by critics. Even so, to formulate...
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FDI in food retail: To draw in investors, do away with restrictions
Every year, farmers are forced to sell their produce, especially perishable items such as fruits and vegetables, at throwaway prices, causing loss of income and even suicides. A major bottleneck that forces them to do so is the lack of infrastructure for handling and storage of these items, which results in the loss of output worth Rs 1 lakh crore annually, a fact that Prime Minister Narendra Modi alluded to while addressing a conclave of young CEOs]. The problem has been festering for decades despite both the Union government and states recognising the dire need for setting up the infrastructure and umpteen committees making recommendations in this regard. Even domestic private companies have hardly taken any initiative despite being allowed...
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FDI in food retail – don’t regulate investors
Every year, farmers are forced to sell their produce especially perishable items viz. fruits and vegetables at throwaway price [quite often even destroy as the realization is not enough to cover even the cost of transporting to the mandi/market]. A major bottleneck is absence of infrastructure for handling and storage which apart from denying farmers their due also causes loss of output worth about Rs 100,000 crores annually. The problem has been festering for generations despite both the union government and states recognizing the dire need for setting up the infrastructure and umpteen committees making recommendations in this regard. Even the domestic private corporate has hardly taken any initiative in this regard. This is despite their being allowed entry in...
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FDI in retail – go for ‘holistic’ reforms
In budget for 2016-17, the finance minister had announced 100% foreign direct investment [FDI] in food retail subject to retailer selling only food procured from farmers in India and processed locally. After wait for more than a year, the government has now approved an application of Amazon.in for 100% FDI in food retail chain – both on-line sales [e-commerce] and offline [brick-and-mortar]. While, this may signal big boost to reform and liberalization in regard to FDI in retail, the cobweb of policy maze seems to be getting murkier. At the outset, a few words on how the policy dispensation has unfolded over the last decade or so. For the purpose of FDI, the government has classified retail in two broad...
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3 years of Modi rule – too early to look for jobs
On completion of three years in office, even as Team Modi gears itself to celebrate with focus on disseminating to public at large its achievements, opposition parties [mainly Congress] have projected a counter narrative purportedly to show it in poor light. Picking on BJP’s promise of creating 10 million jobs every year, they point towards a few hundred thousand jobs generated during the last 3 years to proclaim that the performance of this government is dismal. Coming from a party whose own record on all crucial economic parameters [including jobs] was abysmal, such criticism is laughable. During a decade [2004-2014] of UPA rule led by Congress, employment increased by a meager 15 million which is one-fourth of an increase of...
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Trump’s ‘hire local’ juggernaut – smashes Indian IT
An senior official of the Trump Administration has lambasted three leading Indian IT companies viz. Tata Consultancy Services [TCS], Infosys and Cognizant Technologies for resorting to ‘trickery’ for allegedly grabbing most of H1-B visas issued by the US Citizenship and Immigration Services [USCIS]. HI-B visas are issued to foreigners who have ‘theoretical’ and ‘technical’ expertise in specialized areas to work in local [read American] companies for temporary period. United States issues 85,000 such visas every year — 65,000 hired from abroad and 20,000 from those enrolled in US universities/colleges. Due to the heavy demand, USCIS which runs the program, receives several time more applications than it can grant and uses an electronic lottery to pick the ones that will go...
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FDI in retail – a flawed idea
In the Union Budget for 2016-17, the Finance Minister had announced 100% foreign direct investment (FDI) in retail food. This was subject to the retailer selling only food procured from farmers in India and processed locally. However, guidelines in this regard are yet to be notified. Meanwhile, the Government is reportedly considering a proposal to allow 100% FDI in all goods “manufactured domestically”. The policy will be applicable to both offline (brick-and-mortar retailers) and online (e-commerce companies). The idea is flawed. At the outset, a few words on the existing policy dispensation on the FDI in retail. For this purpose, retail is classified in two broad categories, viz, single-brand retail (SBR) and multi-brand retail (MBR). In the SBR, 100% FDI...
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Tata-DoCoMo deal – RBI must not condone violation
It is not always the case that regulatory authorities and policy makers mess up things affecting ease of doing business and vitiating investment climate. Quite often, it is none other than the businessmen and industrialists themselves who vitiate the environment by exploiting loopholes in the system or blatantly violating the extant laws while taking decisions and conducting business. There could not be a better example than the dispute between Japanese telecom major NTT DoCoMo and Tata Teleservices [TTSL] – a Tata group company which is currently pending adjudication by Delhi High Court [DHC]. Briefly, facts of the case are as under:- In November 2009, NTT-DoCoMo had acquired 26.5% stake in TTSL for about Rs 12,740 crore [at Rs 117 per...
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Sun-set for P-notes, sun-rise for clean money
A major challenge facing Modi – government in its fight against black money is so called ‘rounding tripping’ of Indian black money. The euphemism refers to money that leaves the country, often routed to non-resident Indians [NRIs] and making its way back to India in the form of foreign direct investment [FDI]. Until a few years ago, the extant policy and regulatory environment hugely facilitated ‘rounding tripping’. Thus, there was little regulatory oversight on money leaving and there were tax haven jurisdictions ever ready to attract it. The shell companies [albeit owned by persons to whom the money belonged] set up in those jurisdictions would then, invest in India fully leveraging benevolent tax treaties between India and those countries. Under...
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