The Government’s unrealistic policy of barring foreign direct investment in the business-to-consumer segment has pushed e-commerce retailers to camouflage themselves as market places to access funds from abroad The Delhi High Court is hearing a plea filed by the All-India Footwear Manufacturers and Retailers Association, regarding the alleged flouting of foreign direct investment rules by e-commerce companies. In its affidavit to the court, the Department of Industrial Policy and Promotion has argued that its job is to formulate policy — not monitor implementation. The DIPP added that it has already laid down a ‘transparent’ and ‘predictable’ policy which permits 100 per cent FDI in business-to-business transactions in e-commerce, but only prohibits in the business-to-customer segment. Further, it does not recognise...
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Category: Regulatory environment
Free basics – a ploy to dominate web space
A likely recommendation of Telecommunication Regulatory Authority of India [TRAI] rejecting differential pricing for data services and zero rating – a practice where internet service providers [ISPs] do not charge customers on data for select applications that they use [this was implemented by Airtel last year but forced to abandon following public outcry] – or ‘free basics’ another nomenclature for zero rating [started by Facebook about an year ago under its earlier incarnation Internet.org] has caused much consternation amongst telecom service providers [TSPs] and social networking platforms. In what could ruffle many feathers, Facebook chose the medium of a ‘discussion paper’ floated by TRAI inviting comments from public to launch a high voltage publicity campaign in support of its ‘free...
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DEBUNK ‘FAMILY SILVER’ ARGUMENT
In a clear case of judicial overreach, the Supreme Court has stopped the Government from selling its residual shares in Hindustan Zinc Limited even though it had no problems when majority of the shares were sold years ago In recent times, the judiciary has made deep inroads into policy making that lies strictly within the executive domain. The latest manifestation is an order by the Supreme Court to the Government of India, to stop selling the latter’s residual stake in Hindustan Zinc Limited. This order came in response to a public interest litigation filed by the National Confederation of Officers Associations of Central Public Sector Undertakings in 2014, which challenged the proposed sale of the Government’s 29.5 per cent stake...
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PSU divestment – judiciary should keep away
Thanks to a decade of mis-governance and policy inaction under the erstwhile UPA dispensation, the judiciary has made deep inroads in to the executive domain. The most recent manifestation of this interference is the order of the Supreme Court [SC] to the Government of India [GOI] not to sell its residual stake in Hindustan Zinc Limited [HZL]. In 2002, GOI had sold 26% shares in HZL to a Vedanta Group company Sterlite Opportunities & Ventures. In the following year, it parted with another 18.92% under a ‘call option’ available to latter. A further 25.5% was offloaded [but not before a long-drawn arbitration battle between then UPA-regime and Vedanta over legality of ‘call and put’ options] taking total divestment to 70.5%....
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PSUs dividend – an order ingrained in archaic mindset
Faced with a massive shortfall in resource mobilization from disinvestment of shares in central public sector undertakings [PSUs] [Rs 40,000 crores] and proceeds from direct taxes [Rs 50,000 crores], Modi – government has issued a diktat to all PSUs to help it avoid slippage in fiscal deficit target of 3.9% of GDP set in the budget for the current year. It has directed them to give a minimum dividend of 30% of profit after tax [PAT] or 30% of government equity whichever is higher. PSUs having substantial free reserves and capability to make good profits on a sustained basis are required to give special dividend and issue bonus shares. As regards their capital expenditure needs, it goads them to increase...
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FDI in retail – policy muddle confounded
The Delhi High Court (DHC) is hearing the plea of Retailers Association of India [RAI] and All India Footwear Manufacturers & Retailers Association [AIFMRA] regarding alleged violation of rules relating to foreign direct investment [FDI] in multi-brand retail by e-commerce companies. The writ petitions were filed by the two associations in May, 2014 and August, 2014 respectively. In its affidavit submitted to DHC, the department of industrial policy and promotion [DIPP] has argued that its job is to formulate policy and has nothing to do with its implementation. It added that it has already laid down a ‘transparent’ and ‘predictable’ policy which permits 100% FDI in B2B [business-to-business] transactions in e-commerce but prohibits in B2C [business-to-customer]. Furthermore, it does not...
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Have Indian banks plunged in risk zone?
An increasingly stressed financial system continues to haunt Modi – government. The more it endeavours to address the maladies afflicting the scheduled commercial banks [SCBs] [through a host of initiatives such as “Indradhanush” and recapitalization of public sector banks [PSBs]], the more grievous these become. A semi-annual Financial Stability Report [FSR] recently released by RBI governor, Raghram Rajan makes it official. The gross non-performing assets [NPAs] [bad loans which do not yield any return] of all SCBs increased from 4.6% of gross advances as in March, 2015 to 5.1% in September, 2015 and are projected to increase to 5.4% by September, 2016. The restructured standard advances as percentage of gross advances [these are potentially bad loans but salvaged by relaxing...
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Economic policies – NDA versus UPA
Some time back, Arun Shourie a senior minister in the then NDA [National Democratic Alliance] government under Vajpayee [1998-2004] and erstwhile member of BJP observed that the economic policies being followed by Modi – government are just a continuation of UPA [United Progressive Alliance] plus the “cow’ [a euphemistic reference to sacred animal worshiped by majority Hindu community in India]. Shourie’s view is shared by many thinkers. UPA – dispensation II [2009-2014] had pushed the country towards economic paralysis with all key indicators i.e. growth [manufacturing in particular], inflation, fiscal deficit, current account deficit [CAD], foreign exchange reserves and infrastructure etc showing dismal trend. In this backdrop and since, Modi is also following the same policies, they aver that outcomes...
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National Herald saga – How to get 1000,000% return?
With the commencement of the winter session of the Parliament, it appeared that the stage was set for smooth passage of various pending bills including the historic 122nd Constitutional amendment bill on Goods and Services Tax [GST]. The first couple of days even went off smoothly with both houses conducting business. Then, came a decision of Delhi High Court [DHC] rejecting the application of Sonia/Rahul duo [and other leaders of Congress] to quash the summons issued by a lower court in the infamous National Herald [NH] case. DHC concurred with lower court that prima facie there was merit in questioning the top brass of grand old party. The matter is strictly within the domain of the judiciary which acted on...
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US should shed rigid stand
In a just concluded meeting of the Trade Policy Forum, United States Trade Representative (USTR) Mic-hael Froman, emphatically rejected India’s request for signing a Social Security Agreement (SSA), nick named totalisation pact. The US argued that, “India did not meet the legislative requirement of minimum social security net (SSN) for 50 per cent of its population.” When Commerce Minister Nirmala Sitharaman drew his attention to the Atal Pension Yojna, Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana in addition to Employees Provident Fund Organisation, the US official’s reaction was that being “non-mandatory”, those schemes did not qualify for social security. The USTR opined that he is open to discussing new social security schemes that India may...
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