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Jaitley says Mastercard, Visa losing out to local players in India

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New Delhi: Finance minister said that Mastercard and Visa were losing market share to domestic payments networks, months after Mastercard complained to the U.S. government that Prime Minister Narendra Modi was using nationalism to promote a local rival.

Finance Minister Arun Jaitley spoke about the surging growth of RuPay and Unified Payment Interface (UPI), which allows swift inter-bank fund transfers, on the second anniversary of Modi`s shock decision to replace high-value bank notes in a bid to flush out untaxed wealth.

Modi has said when Indians use RuPay they were serving the country as its transaction fees stay within India and could help build roads, schools and hospitals, an endorsement that has worried Purchase, New York-based Mastercard, which is the world`s second-largest payments processor.

 

“Today Visa and Mastercard are losing market share in India to indigenously developed payment system of UPI and RUPAY Card, whose share have reached 65 percent of the payments done through debit and credit cards,” Jaitley said in a Facebook post about the various results of the note scrapping exercise, known as demonetisation.
Visa declined to comment. Mastercard did not respond to an email seeking comment.

RuPay process payments between banks and merchants for purchases made with credit or debit cards, while UPI instantly transfers funds between two bank accounts linked to mobile phones.

Jaitley was referring to the volume of transactions, not the value.

Though RuPay, owned by many Indian and foreign banks, accounts for more than half of India`s 1 billion debit and credit cards, industry sources say Visa and Mastercard still process the vast majority of the value of payments transactions in the country. Indian payments transactions were worth $51 billion in August, according to central bank data.

Jaitley said RuPay`s total transactions had leapt to 84.3 billion rupees ($1.16 billion) as of September, from 11 billion rupees before demonetisation. Total transactions done using UPI had jumped to 598 billion rupees ($8.26 billion) from 500 million rupees in October 2016, around the time it was launched.

Reuters reported last week that Mastercard complained to the Office of the United States Trade Representative on June 21 that Modi “associated the use of RuPay cards with nationalism, claiming it serves as `kind of national service`.”

The Mastercard note said that while Modi’s digital payments push was “commendable”, the Indian government had adopted “a series of protectionist measures” to the detriment of global companies.

The story sparked a backlash on social media against Mastercard in India, one of the world`s biggest payments growth markets.

Several people said on Twitter they had asked their banks to replace their Mastercard with RuPay, with some using the hashtag #BoycottMastercard to voice their concerns.

One user posted a picture of a Mastercard cut into pieces, while another named Ramesh uploaded a graphic with a Mastercard logo on a toilet flush. A spokesman for the Delhi arm of Modi`s ruling party, the Bharatiya Janata Party, said he had asked his bank to cancel his Mastercard and switch to RuPay.

Mastercard did not respond to Reuters` emailed request for comment on the social media backlash.

Ashwani Mahajan, who heads an economic group, Swadeshi Jagran Manch, which is linked to the ideological parent of Modi`s party, said that companies such as Mastercard should be “competing with RuPay, not complaining to the U.S. government”.

“They have enjoyed their market share for so long, we have the right to protect and promote our economic interests,” Mahajan told Reuters.


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India to surpass China to become 2nd largest oil demand centre in 2019

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New Delhi: India will surpass China to become the second largest oil demand growth centre globally in 2019 on back of buoyant auto fuel and LPG consumption, research and consultancy group Wood Mackenzie said on Tuesday.

In a report, Wood Mackenzie said India’s oil demand growth recovered strongly in 2018, overcoming the aftermath of the implementation of Goods and Services Tax (GST) and demonetisation, and contributed 14 per cent of the global demand growth or 2,45,000 barrels per day.

“We forecast oil demand to grow at the same level in 2019. This will result in India becoming the second largest demand growth centre globally in 2019, behind the US but ahead of China. Transport fuels – gasoline and diesel – and residential LPG will continue to be the two main drivers of oil demand growth,” it said.

 

According to the US Energy Information Administration (EIA), India is currently ranked behind the United States and China as the world’s third-largest oil consumer. It consumed 206.2 million tonnes (over 4 million bpd) in the 2017-18 fiscal year.

During April-December, consumption of petroleum products has been 157.4 million tonnes, up 2.5 per cent over year-ago period.

Last August, oil cartel OPEC projected India’s oil demand to rise by 5.8 million barrels per day (bpd) by 2040, accounting for about 40 per cent of the overall increase in global demand during the period.

Mackenzie said diesel, the most consumed fuel in the country, is projected to grow by 6.4 per cent or 1,12,000 bpd year-on-year in 2019 compared with 93,000 bpd in 2018.

This was because of “buoyant commercial vehicle sales facilitated by sustained infrastructure growth, and increasing demand from the construction, logistics, e-commerce and consumer goods sectors,” it said.

Also, the push will come from a demand-based approach instead of a tax-based approach in the logistics sector, following the implementation of the GST, which has led to the removal of inter-state taxes. “This is a structural shift, resulting in increased demand for heavy and medium-duty trucks to achieve economies of scale and operational efficiency.”

More importantly, general elections in May will lead to increased travel activity for campaigning and implementation of infrastructure projects, which will bolster demand in the first half of 2019, Mackenzie said.

 

“Key risks ensue as crude price volatility is expected to persist. Historically, short-term gasoline demand has been relatively inelastic to retail prices in developing economies such as India. Even though higher retail prices affect consumer sentiment for new vehicle purchases, we believe this trend will continue with income effects driving the demand, subduing the price effects,” it said.

LPG demand growth will remain robust in 2019 at 5 per cent (40,000 bpd) although it is lower than the 56,000 bpd growth achieved in 2018. “The number of new household LPG customers continued to surge, driven by the Ujjwala scheme to promote clean cooking fuel in rural areas. That said, there is a largely untapped market, as around 50 million households remain deprived of LPG,” it said.

On the use of electric vehicles, it said only 2,60,000 EVs have hit Indian roads, majority being two-wheelers.

“Electric car sales, for instance, declined by 40 per cent to a mere 1,200 units in the financial year 2018 over the financial year 2017, while electric two-wheeler sales rose 138 per cent to 54,800 units during the same period. In contrast, China had a stock of 1.8 million EVs and 258 million e-bikes at the end of 2018,” it said.

This year, it said, will be an important year as the final version of the National Auto Policy and the second phase of the FAME scheme will be released.

“The question is the timing – will it be before or after the elections? Will the Modi government change tack if it is not re-elected? Will this ambiguity continues to deter wider adoption? Automakers seem to have realised that EV adoption is not a question of ‘if’. For instance, Maruti Suzuki, the largest automaker in India, will launch an electric version of one of its best-selling entry-segment cars – the Wagon R – in Q1 2019,” Mackenzie said.

Another key challenge will be stakeholder management and coordination across the different ministries, government bodies and industry participants while the policy is formalised.

Stating that two-wheelers will dominate the electric mobility landscape in the personal transport sector, it said India offers huge potential for automakers as car ownership levels are very low (23 per 1,000 capita).

Rising income levels will increase car ownership and most global automakers are closely watching this lucrative market. At the same time, two-wheelers should not be ignored – with current ownership six times larger than four-wheelers.

“We believe that two-wheelers are the more effective option given their utility in intra-city travel, less need for public charging infrastructure and availability of battery technology. Two-wheelers will eventually leapfrog four-wheelers towards the goal of a greener and sustainable mobility future,” it added.

 

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Sensex snaps 5-day winning streak on weak global cues, profit-booking

Press Trust of India

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Mumbai: The domestic equity market took a breather on Tuesday after a five-day rising spree as investors booked profits in metal, financials and auto counters, amid weak cues from international markets after IMF lowered its global growth projections for 2019 and 2020.

The 30-share BSE Sensex dropped 134.32 points to end at 36,444.64, while the broader NSE Nifty finished 39.10 points lower at 10,922.75.

Participants were seen taking money off the table after the recent rally, even as the wider sentiment remained positive, underpinned by better-than-expected Q3 earnings by several bluechips.

 

The BSE Sensex, after resuming higher at 36,649.92, advanced to 36,650.47 on buying by domestic institutional investors (DIIs) as well as retail participants. However, market quickly slipped into the negative zone as investors chose lock in gains in recent outperformers, dragging down the key benchmark to a low of 36,282.93 before ending at 36,444.64 down 134.32 points, or 0.37 per cent.

The gauge had rallied over 725 points in the previous five sessions. Likewise, the 50-stock NSE barometer Nifty finished 39.10 points, or 0.36 per cent, down at 10,922.75 after hitting the day’s high of 10,949.80 and a low of 10,864.15.

Brokers said investors turned cautious and preferred to log profits in recent gainers, dragging down key indices.

“The market tracked other Asian markets following IMF’s weak forecasts of global growth prospects,” said Paras Bothra, President, Equity Research, Ashika Group.

“While India’s economic forecasts were retained, concerns were raised over the difficulties in containing the fiscal deficit. Continued weakness in the rupee favoured IT and Pharma stocks while majority of other sectors were under pressure,” he added.

The IMF lowered its global growth projections for 2019 and 2020 to 3.5 per cent and 3.6 per cent respectively, citing slowdown in several advanced economies around the world more rapidly than previously anticipated.

Meanwhile, India is projected to grow at 7.5 per cent in 2019 and 7.7 per cent in 2020, an impressive over one percentage point ahead of China’s estimated growth of 6.2 per cent in these two years, the IMF said Monday, attributing the pick up to the lower oil prices and a slower pace of monetary tightening.

The International Monetary Fund in its January World Economy Outlook update on Monday said India would remain the fastest growing major economies of the world.

 

Foreign portfolio investors (FPIs) continued their selling activity on domestic bourses here. They sold shares worth a net Rs 299.79 crore, while domestic institutional investors (DIIs) made purchases to the tune of Rs 520.80 crore on Monday, provisional data showed.

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Gold extends gains on jewellers’ buying

Press Trust of India

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New Delhi: Gold firmed up by Rs 125 to Rs 33,325 per 10 grams on Tuesday, largely on the back of sustained wedding season buying by jewellers even as it weakened to near three-week lows overseas.

Silver, however, turned weak due to reduced offtake by coin makers and consuming industries and lost Rs 250 to Rs 39,850 per kg.

Persistent buying by local jewellers, triggered by the ongoing wedding season, kept gold prices higher, bullion traders said.

 

Globally, gold fell 0.13 per cent to USD 1,278.90 an ounce in New York as a firmer dollar made bullion more expensive for buyers using other currencies. Silver also eased by 0.46 per cent to USD 15.26 an ounce.

In the national capital, gold of 99.9 per cent and 99.5 per cent purity advanced by Rs 125 each to Rs 33,325 and Rs 32,175 per 10 grams, respectively.

The yellow metal had gained Rs 40 on Monday. Sovereign, however, remained unaltered at Rs 25,500 per piece of eight grams on scattered enquiries.

In contrast, silver ready prices dropped by Rs 250 to Rs 39,850 per kg and weekly-based delivery slipped by Rs 264 to Rs 38,876 per kg.

Silver coins, however, were unchanged at Rs 77,000 for buying and Rs 78,000 for selling of 100 pieces.

 

 

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