New Delhi : Despite exports and imports growing at the same rate of 9 per cent, India’s trade deficit reached a record high of $176 billion in 2018-19.
According to data released by the commerce and industry ministry , exports stood at $32.55 billion in March, taking the total tally in 2018-19 to $331 billion. While it is the first time that outbound trade has remained above $300 billion for two consecutive years, exports couldn’t cross the government’s internal target of $350 billion. In the 2017-18 financial year, exports stood at $303.52 billion.
On the other hand, a continuous shoot up in imports, which grew at double digit levels for 6 of the last 12 months, took cumulative imports to a soaring high of $507.44 billion. This was nearly $42 billion more than India’s total bill in the preceding year.
New orders in key foreign exchange earning sectors such as gems and jewellery, engineering goods, and petrochemicals, meant export growth reached double-digit figures for the first time since October. March’s 11 per cent follows four straight months of low growth with export receipts rising by just 2.44 per cent in February.
Of the 30 major product groups, 20 recorded a growth in March, up from 18 in February. Among the growth pullers, engineering goods rose by 16.2 per cent, after remaining sluggish after the marginal rise of 1.7 per cent in February.
“The prospects look very challenging going forward, as cautioned by the IMF, the RBI and other agencies,” Engineering Export Promotion Council India Chairman Ravi Sehgal warned.
The sector accounts for nearly one-fourth of the total foreign exchange earned through exports, and EEPC has suggested a strategic shift in export of particular products to improve growth.
Readymade garments, the sector in which India’s export competitiveness has steadily fallen over the past financial year, showed signs of steady recovery with $1.71 billion worth of merchandise exported in March. Growth was up by more than 15 per cent in March after the 7.1 per cent growth in the previous month.
However, drugs and pharmaceuticals exports went down in March with 13.59 per cent growth, down from the 16.11 per cent growth in February.
However, gems and jewellery also continued to contract. Periodically falling into the negative zone in November, the $3.42 billion worth of exports in the sector contracted by 0.37 per cent in March.
However, the pace of contraction has reduced steadily with contraction registering at 2.1 per cent in February. The pace of exports has been hit in the sector, as fund availability dried up in the aftermath of the fraud reported by Punjab National Bank by diamond merchant Nirav Modi.
Receipts from the volatile processed petroleum exports rose by 6.55 per cent in March, up from the 7.7 per cent decline in February. While declining oil prices have marred the chances of earning the same dollars through exports in recent months, it has helped India save foreign exchange through a slowdown in imports.
The largest component of the import bill — crude oil — saw the cost of inbound shipments rise by 5.5 per cent, following the 8 per cent decline in February. While global crude prices had started reducing from early November and a supply glut was expected to remain till the middle of the year, prices have started rising again.
Gold, the second-largest component of the import bill, saw a sharp rise of 31.2 per cent to $3.27 billion. Imports of the metal had fallen by 10.81 per cent in February after a 38 per cent growth in January. The industry continues to see volatility as imports had risen in July after remaining in negative territory for six months.
However, total import growth stood at a mild 1.44 per cent. The country had seen a 5.4 per cent decline in imports in the previous month of February. As a result, the monthly trade deficit came in at $10.89 billion in March, higher than $9.59 billion in February.
Non-oil, non-gold imports, a sign of domestic industrial demand, remain depressed in March, contracting by 2.67 per cent. It had contracted by 3.72 per cent in February.
Sebi reduces minimum subscription requirement for REITs, InvITs
New Delhi: Markets regulator Sebi has reduced the minimum subscription requirement as well as defined trading lots for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
REITs have to offer their units in lots worth at least Rs 50,000 in initial and follow on public offers.
The minimum value of a single lot should be Rs 1 lakh in the case of InvITs.
Markets regulator Sebi on Tuesday came out with guidelines for determination of allotment and trading lot size for REITs and InvITs.
Sebi norms pertaining to REITs and InvITs were amended on April 22.
“The said amendments have, inter-alia, for publicly offered InvITs and REITs, reduced the minimum subscription requirement and has defined the trading lot in terms of number of units.
“Further, limits for aggregate consolidated borrowings and deferred payments, net of cash and cash equivalents, have been increased to seventy percent of the value of the InvIT assets,” the regulator said in a circular.
The amendments are aimed at providing flexibility to the issuers in terms of fundraising and increasing the access of these investment vehicles to investors.
Moreover, the trading lot has been defined in terms of number of units.
Further, leverage limit for InvITs has been increased to 70 percent from current 49 percent.
Such InvITs which are increasing their leverage beyond 49 percent will have to make additional financial disclosures along with specific details of available asset cover, debt-equity ratio, debt service coverage ratios, interest service coverage ratios and net worth.
While making an initial public offer and follow-on offer, the minimum subscription shall not be less than Rs 1 lakh for InvITs and Rs 50,000 for REITs. Allotment to any investor shall be made in the multiples of a lot.
For initial listing, a trading lot should be of 100 units and during follow-on offer each lot shall consist of such number of units in its trading lot as it had at the time of initial offer.
Currently, in the case of an REIT issue, the minimum subscription from any investor in an initial offer and follow-on public offer is not less than Rs 2 lakh, while the same is Rs 10 lakh in case of InvIT.
The exchanges shall in consultation with the publicly offered InvITs/REITs need to determine the number of units in the trading lot for such REITs/InvITs, within a period of 6 months from date of the circular, Sebi said.
SoftBank eyes $2-3 billion investment in Ambani’s Reliance Jio
Mumbai : Japan’s SoftBank is looking at buying a $2-3 billion stake in Reliance Jio, Reliance Industries’ telecom subsidiary and the country’s fastest-growing telco.
“For the past two years, our conversations with investors have highlighted the expectations of SoftBank investing in Jio and hence the news flow is not surprising,” wrote Pinakin Parekh, analyst, JP Morgan, in a report to investors.
Mukesh Ambani-led Reliance Industries Ltd (RIL) is interested in deleveraging its balance sheet, and reports of SoftBank’s Jio investment follow last week’s news that Saudi Aramco is in talks with RIL to pick up to 25 per cent in the latter’s refining and petchem business for $10-15 billion.
According to reports, SoftBank is conducting due diligence for its investment through SoftBank Vision Fund.
Spokespersons of both Reliance Jio and SoftBank declined to comment on the matter.
“What would be important from a stock price perspective is how much SoftBank puts in, what is the implied equity valuation of Jio, and whether the e-commerce venture is included in the Jio entity,” said Parekh.
The retail and telecom arms together contributed around 25 per cent of RIL’s 2018-19 revenue.
SoftBank has a mobile telecom business in Japan and also owns Sprint in the US. It also has a 30 per cent stake in Chinese e-commerce giant Alibaba.
Jio had a debt of Rs 76,212 crore at the end of the March 2019 quarter, and RIL may want to reduce that. It had begun the exercise by transferring its tower and fibre assets to two infrastructure investment trusts, which resulted in a reduction in liability of Rs 1.07 trillion, and issuing preference shares of Rs 78,100 crore to RIL (through the revaluation of fibre assets), according to analysts.
Jio invested Rs 21,500 crore as capital expenditure in the March 2019 quarter, and the cumulative investment so far has been around Rs 2.9 trillion.
“With most of tower and fibre (except last-mile) capex being done by InvITs, we think Jio’s capex should decline in FY20,” noted Anil Sharma, analyst, Nomura.
An analyst who did not want to be named said, “RIL may be looking at an equity investor in Jio to continue investments as it continues to keep offering services at low tariffs.”
RIL Chairman Mukesh Ambani last year announced a plan to integrate the telecom and retail entities through a consumer platform called New Commerce. However, despite analyst speculation that it would be launched this year, the management has not indicated any timeline for the rollout.
RIL has, however, continued to add a number of ancillary tech platforms like Haptik, EasyGov, Saavn and Reverie over the year to create platforms similar to Baidu or Alibaba, which offers e-commerce, entertainment, finance and many other facilities to consumers.
India TikTok ban causing $500,000 daily loss, risks jobs: China’s Bytedance
New Delhi : India’s ban on popular Chinese video app TikTok is resulting in “financial losses” of up to $500,000 a day for its developer, Beijing Bytedance Technology Co, and has put more than 250 jobs at risk, the company said in a court filing seen by Reuters.
TikTok allows users to create and share short videos with special effects and is one of the world’s most popular apps. It has been downloaded by nearly 300 million users so far in India, out of more than 1 billion downloads globally, according to analytics firm Sensor Tower.
Earlier this month, an Indian state court ordered the federal government to prohibit its downloads, saying the app was encouraging pornography. Acting upon instructions from the federal IT ministry, Apple Inc and Alphabet Inc’s Google last week removed TikTok from their India app stores.
The developments have dealt a blow to the India growth plans of Bytedance, which is backed by Japan’s SoftBank Group Corp and by private equity. Bytedance, one of the world’s most valuable startups potentially worth around $75 billion, was considering a public listing in Hong Kong this year, sources told Reuters in August.
The ban has also worried the social media industry in India as it sees legal worries mounting if courts increasingly regulate content on their platforms.
In the filing made to India’s Supreme Court on Saturday, Bytedance urged the court to quash the ban and direct the federal IT ministry to tell companies such as Google and Apple to make the app available again on their platforms.
The court filing is not publicly available and its contents have not been previously reported.
Bytedance pegged financial losses at $500,000 each day, which it said includes destruction in the value of its investments and loss of commercial revenue. It added the ban would result in its reputation and goodwill taking a hit with both advertisers and investors.
“Banning has had adverse impact on the user base of this app, losing close to 1 million new users per day … It is estimated that approximately six million requests for downloads could not be effected since the ban came into effect,” the company said in the filing.
A spokesman for TikTok and the federal IT ministry did not respond to requests for comment.
The Supreme Court has so far not provided any interim relief on repeated pleas by Bytedance and referred the case back to the court in southern Tamil Nadu state, where the case will next be heard on Wednesday.
Memes and music videos thrive on TikTok, although some clips show youngsters, some scantily clad, lip-syncing and dancing to popular tunes.
Its growing popularity has drawn criticism from some Indian politicians and parents who say its content is inappropriate.
The Tamil Nadu court, which ruled against TikTok after an individual filed a public interest litigation, has said the app could also expose children to sexual predators.
The Supreme Court filing included a table in which Bytedance compared TikTok to Facebook, Instagram and Twitter by listing 13 of its implemented safety features, including parental controls.
A “very minuscule” proportion of TikTok’s videos were considered inappropriate or obscene, the company has said.
“The constitutionally guaranteed fundamental rights of free speech and expression … of numerous Indian citizens have been severely impacted,” the company said in its latest filing.
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