Government’s new stimulus package unlikely to upset fiscal math

Mumbai: North Block’s Diwali bonanza to add momentum to an economy rebounding from the strictest lockdown on the planet appears to have convinced even the biggest D-Street sceptics that New Delhi wouldn’t spend way more than it earns, comforting both the bond market and confirming for the broader audience the likelihood of a V-shaped economic recovery.The Dhanteras announcements might have some fiscal implications of course, but those are well within the limits budgeted by investors that rightfully anticipated higher federal expenditure in a crisis.“Adding the recently announced and perhaps some more fiscal stimuli, we may still be around 8% of GDP ultimately in the fiscal gap,” said Suyash Choudhary, head — fixed income, IDFC Mutual Fund. “This may not require any further enhancements to the borrowing programme. Compared with our expectations earlier in the year, the pace of government spending has been more controlled and the draw down on tax receipts may turn out to be less dire.”Consequently, IDFC MF estimated the central government’s deficit moving down to around 7 per cent of the GDP for FY21.Finance minister Nirmala Sitharaman announced an economic relief package of about Rs 1.2 lakh crore on Thursday in addition to the Rs 1.45-lakh crore boost unveiled a day earlier. This included a farmers’ subsidy of Rs 65,000 crore.The benchmark bond yield was little changed at 5.90 per cent Thursday.“The announcements today are significant reforms but unlikely to upset the fiscal math in any meaningful manner,” said Mahendra Jajoo, CIO of fixed income at Mirea Asset Investment Managers. “There are no major incremental concerns of overshooting the government’s borrowing target or fiscal deficits for now.”While production-linked incentives should lift tax collections, a one-off cash outgo may result in higher sovereign borrowing from the market.The central government is estimated to borrow a net of about Rs 11 lakh crore, including dated government securities and treasury bills. Although the farmers’ subsidy may trigger a sudden one-time expenditure, it could be well covered within the enhanced borrowing limits, dealers said.Depending on how much money is spent this year, the fiscal deficit can widen by up to 0.5 per cent of the GDP, assuming nothing else changes in terms of expenditures in the budget and the stimulus, according to Care Ratings. This is also based on the rating company’s estimate of real GDP falling by 8.2 per cent this year.“The allocation of subsidy on fertilisers would not be incurred this year,” it said in a note.

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HDFC Bank red-flagged as foreign holding nears max limit

Mumbai: HDFC Bank, India’s largest lender by market value, is back in the caution list of depositories for foreign investment – the first time in over a year. On November 9, the National Securities Depository (NSDL) put HDFC Bank stock on the so-called Red-Flag list after the total foreign holding in the lender crossed 71%. The maximum permissible foreign holding in the bank is 74% according to the Reserve Bank of India (RBI) rules. According to November 11 data, foreign portfolio investors’ holding in HDFC Bank was 71.16%. Overseas investors still have headroom to buy up to 15 crore shares of the bank.Red-flag in terms of foreign investment limit serves as a word of caution to the foreign investors making fresh purchases in the stock about the risks involved in such a purchase. If any such purchase is made beyond the permissible limit, which is 74% in the case of HDFC Bank, FPIs will be liable to sell the excess shares to domestic investors. For now, FPIs will still be able to buy fresh shares of HDFC Bank.If the limit crosses 74%, HDFC Bank will be put under the Breach List, where no new FPI purchases will be allowed. But FPIs would be allowed to buy shares of the bank from other FPIs.HDFC Bank shares have rallied over 28% since September 24. Market participants say HDFC Bank shares benefit both from active and passive dollar flows. Foreign portfolio investors have net purchased shares worth roughly Rs 1,28,000 crore since May.

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Nifty m-cap tops Rs 100 lakh cr as stocks hit record

Mumbai: The market value of all Nifty companies topped Rs 100 lakh crore for the first time on Wednesday as stocks closed at an all-time high. Foreign investors bought shares worth Rs 6,027 crore, the highest single-day purchase in nearly three months. The Nifty is already the fourth most expensive global index on a trailing 12-month basis after Germany, US and France.Strong foreign fund buying amid hopes of a quicker recovery from the economic crisis caused by the pandemic have driven stocks to all-time highs in recent days. The Nifty rose 0.93% to 12,749 on Wednesday while the Sensex jumped 0.73% to 43,593. The 50-share index has climbed 67% since the lows of March when its value was Rs 58.91 lakh crore but its closing market cap on a dollar basis of $1.33 trillion is still lower than its peers in East Asian countries — South Korea’s Kospi is valued at $1.46 trillion while Taiwan’s TSEC is worth $1.38 trillion.Nifty’s market cap is 60% of all listed companies which together are valued at Rs 167 lakh crore.The Nifty’s journey to Rs 100 lakh crore since March has been led by heavyweights like Reliance Industries — which added Rs 8 lakh crore — as well as TCS, HDFC Bank and Infosys, which together contributed nearly Rs 9.8 lakh crore. HDFC Bank on Wednesday became a $100 billion market cap company after an 11-month gap. It became the third Indian firm to achieve this milestone after Reliance and Tata Consultancy Services.Raamdeo Agrawal, chairman, Motilal Oswal Financial Services, said more companies from IT, pharma and private sector banks could join the billion-dollar club in the coming years.“In the midst of several challenges, I still think that the outlook for markets is pretty positive," said Pankaj Murarka, CIO, Renaissance Investment Managers.

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Diwali blitz: Car companies ramp up production to match steps with retail sales

Mumbai: Automakers have stepped up production, as dealerships are running low on stock ahead of Diwali after they retailed more cars and SUVs in October than what the manufacturers supplied.The passenger vehicle segment is upbeat about demand this month as well, but not so confident about the market beyond the festivals as uncertainty due to the pandemic continues to shroud the economy. In the two-wheeler segment, which was the first in the automotive sector to bounce back from the Covid-induced slump, retail sales last month have at best been flat as pent-up demand started to taper off, and industry insiders warned that this could happen to the passenger vehicle segment as well after the festive season.Industry estimates put retail sales of passenger vehicles in October at 365,000-370,000 units, the third highest on record for a month and about 40,000 more than the 330,000 units dispatched by automakers last month.79031899Wholesale, Retail Numbers UpBoth wholesale and retail numbers have grown in double digits from a year earlier.That has left inventories at dealers enough to meet just 20 days of sales at the beginning of November, ahead of the peak sales season around the Diwali and Dhanteras festivals, industry executives said. A month prior, they had 45 days of inventory.Industry executives and experts said many people who had delayed the decision on purchasing a vehicle during the early days of the pandemic are returning to the market as the festive season is on and worries over job loss have eased. There is also continuing demand for personal mobility in the time of social distancing. Still, the October performance has surprised many in the industry.“Everyone was expecting a good October, but not a lot of people expected it to be this good,” said Shashank Srivastava, industry leader Maruti Suzuki’s executive director for sales and marketing. “It is a great confidence booster for the network that stock is low and bookings and deliveries are keeping pace.”Festive PeriodThe 45-day festive period in India is divided into three blocks — the first nine days of Navratri constitutes 30-35% of the total sales for the auto industry, followed by the period between Navratri and Diwali that accounts for 25-30% and 6-8 days around Diwali when 35-45% of the total festive sales happen.In October this year, Navratri and Dussehra saw retail sales of around 200,000 units, according to industry estimates. Last year, the festivities of Navratri, Dussehra and Diwali-Dhanteras were all in October. This year, Diwali is in November and automakers expect the momentum to continue into this month as well.With a large chunk of buying to happen during Diwali and Dhanteras, Maruti Suzuki has revised its production schedule by 7,000-8,000 units more in November. This will, however, be calibrated in December, said people in the know.Maruti Suzuki’s management in a post-earnings call said the company was operating at almost peak capacity. The company believes visibility of demand is quite strong till December 2020, but it doesn’t have much clarity beyond that as of now.Demand may Taper OffSrivastava of Maruti Suzuki said there was no metric to prove how long the pent-up demand would last. “The sustained bookings and deliveries and resultant lower stock indicate that there should not be a problem till December. But what happens post December, no one can predict,” he added.The strong performance in passenger vehicle sales has come at a time when the two-wheeler market has started seeing pent-up demand tapering off. According to several people in the know, two-wheeler retails in October were 1.8 million units. There is a big concern of piled up inventory as well, even as manufacturers hope Diwali and Dhanteras deliveries might be higher.While the segment’s lacklustre Navratri-Dussehra retail performance surprised many, an industry executive said passenger vehicle makers too could soon face this “air pocket”.

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Tata-Mistry feud: Costs involved are high

On September 22, after nearly four years of all-out acrimony, an opportunity to cease hostilities presented itself to Tata Sons and Shapoorji Pallonji (SP) Group. During court proceedings to prevent the SP Group from pledging or selling Tata Sons shares, the latter offered to buy out the former’s equity holding. By late evening, SP Group put out a statement, saying a separation of the long-standing relationship was perhaps in the best interest of everyone, including “livelihoods and the economy”. This opened up a path to end the bloodletting, although it is as yet unclear if the two sides can find common ground on the valuation of the shares in question. There is a gap of about one lakh crore rupees between what the two sides think the holding is worth. At Bombay House, the headquarters of Tata Sons, strategies are being drawn up to find the money to fund the buyback. 78849765Options, restructuring plans and routes to raise funds are all being weighed. A reconciliation is not on the cards. But as the pressure valve of the conflict has been released, and the two sides are now focused on settling the matter (although the Tatas have said no formal communication in this regard has been received from the Mistrys), a reckoning with the real cost of the dispute has begun on both sides. The fight dragged hard-earned reputations through the mud, mired top executives in legal proceedings and sucked precious time and management bandwidth at a time when both groups — one far larger in comparison and therefore more vulnerable, while the other finds itself in a tight corner — needed every available ounce of these. While the tangible costs are considerable, there’s a dawning realisation that the true toll this episode has taken on businesses, morale and people is staggering. ET Magazine spoke to a range of key figures — stakeholders from constituencies such as current and former employees, directors, top executives, independent observers, members of the Parsi community and others — and a few themes emerge clearly. First, the conflict has set the companies involved back by several years and growth has become a casualty, even as rival conglomerates have made strides in this time. Second, now that a window has opened, the two sides should find a way to end the dispute quickly, without permitting further damage. Third, the Tatas need to work on an ownership and governance structure that insulates its businesses from such shocks in the future. Lastly, urgent work needs to go into repairing diminished morale, formation of silos, an environment of uncertainty and second-guessing the changing power dynamics within Tata companies. 78849769Due to the sensitive nature of the subject, most people spoke under the condition of anonymity. Tata Sons, SP Group and Ratan Tata did not respond to requests for comment. Shifting Sands of Power “It’ll be a pyrrhic victory,” says a top director at a Tata group company, discussing the legal battle, which is set to wind its way into the final stages in the Supreme Court next month. “The only winners will be the battery of lawyers hired from both sides,” says another group director. For the Tatas, the challenge is that growth is muted across the group, except at Tata Consultancy Services and Titan. It’s now pursuing a strategy to catch up with competitors and become a digital one-stop shop for all consumer needs through one platform or app, tying in a range of disparate group businesses. But if that requires collaboration across companies and reporting lines, what the boardroom battle has left behind won’t be conducive. Insiders say the battle has caused a lot of distraction in group companies, as their own boards, managements and performance have also been dragged into it, becoming subjects of public accusations and courtroom arguments. Public scrutiny of past decisions, investments and performance, often stripped of the context in which those decisions were taken, brought undue pressure to bear on executives. All of this also meant employees prophesying change in organisation charts and power dynamics. “There is a sense of disorientation among a set of managers today who have had to see the bloodbath since 2016. In a divorce, the collateral damage is always on the children… Here is an institution where the greatest asset was always the employees. The group had people power. The current cadre of managers have been hurt by the ensuing confusion and lack of communication” says an insider.The peak of this phenomenon was in December 2019, when the National Company Law Appellate Tribunal (NCLAT) reversed Cyrus Mistry’s 2016 ouster as Tata Sons chairman, effectively reinstating him to his former role. “It was as if Bombay House was on oxygen support,” sums up a legal official who witnessed the ensuing pandemonium at the time. It shook the top echelons of the group for several days until Tata Sons secured a stay order from the Supreme Court. “The distraction from that episode hasn’t worn off yet,” says another insider. The appointment of N Chandrasekaran as chairman in January 2017 was meant to bring stability and end the confusion. But he has himself had to function under the shadow of the legal battle and the enhanced scrutiny of his decisions. “Today, the situation can be compared to a Ferrari forced to be driven on a crowded Mumbai road with several traffic junctions. So either the driver steps off to clear the traffic and move ahead or gets stuck helplessly,” says a group watcher. Mistry’s allegations of pervasive mismanagement and poor decision-making meant that Tatas had to marshal evidence and data to defend themselves in court and in the public eye. This exercise meant that decisions involving executives, who were no longer around to defend themselves, were also called into question — by a former chairman, no less. The quarrel might have been between Tata shareholders, but the damage has sustained far beyond those rarefied quarters. It has also landed the group in a quandary — even if it now wants to correct past decisions, having defended them in court affidavits, it’s hard to carry out changes as it will seem like vindicating Mistry’s arguments. “We have to understand that this not just another corporation. It is the Tata group, globally renowned for its integrity, values and legacy. This has been painful on many fronts. The legal dispute has dragged on for so many years that it has hurt group focus and commitment. Many tough decisions that should have been taken have not been as these have been justified in the court petitions,” says a former director at a group company. 78849780 78849785Structural Changes Even in closure, the onus of having to find the funds to buy out the Mistry family is falling on the Tatas. “It is the responsibility of Tata Sons to evaluate options either internally through TCS by dilution of stake or by finding external investors who will buy SP’s stake. That is a clear distraction that does not add value in any way towards business growth,” says a financial expert in Tata group. Mukund Rajan, former member, Group Executive Council, Tata Sons, and author of The Brand Custodian : My Years With the Tatas, says the need of the hour is to resolve the dispute.“The battle between the two most significant shareholders in Tata Sons, the apex investment holding company of the Tata group, has generated intense stakeholder scrutiny of governance within the group and eroded the morale within its employee base, with profound, long-term implications for the Tata brand. The shareholder dispute needs to be urgently resolved, and the roles the Tata Trusts and Tata Sons envisage for themselves as owners and managers need to be clarified,” he says. “One possible way out may ultimately be to publicly list Tata Sons, allowing its ownership to devolve on the Indian public markets and the people of India. In a way, this will honour JRD Tata’s famous articulation of the trusteeship concept at Tatas,” says Rajan. Consequent to such a change, Tata Sons would be under constant public scrutiny and be required to have a very distinctive board of directors, he says. “The publicly elected board would be tasked with streamlining the conglomerate’s unwieldy portfolio — few Tata companies currently are genuine market leaders and even fewer brands have made an international impact. The board would also have to make bold bets on transformational innovations and ideas that can capture the imagination of stakeholders, in areas such as electric vehicles and artificial intelligence,” says Rajan. Lost Decade Between 2000 and 2010, the Tatas spread their wings globally, acquiring such behemoths as steelmaker Corus and iconic carmaker Jaguar Landrover. Another top director of a group company likens some of the problems that followed in the subsequent decade, to indigestion. “It was like having a huge full meal in that period. And the years from 2012 to 2020 were about digesting the meal. The heavy eating led to some indigestion. But now the group’s focus should be on having a healthy diet and fitness.” A former Tata Sons director terms the last 10 years as the lost decade for Tata group. The group commenced the search for Ratan Tata’s successor in 2011, as he prepared to exit. Mistry was appointed chairman in 2012, and was ousted in 2016. Chandrasekaran, his successor, has held office under the shadow of the legal battle as well as constraints on decision-making stemming from the narrative upheld by the group. “Cyrus Mistry identified hot spots that led to his ouster, whether right or wrong. The current Tata Sons management has had to deal with the same issues such as telecom, Tata Steel Europe, Tata Motors, airlines, etc. There is always the shadow of the past looming over decision-making since Ratan Tata stepped down in 2011,” says the CEO of a Tata group company. A former group company CEO says while Mistry identified issues, he could not do much about it whether it was Tata Steel, Docomo or Tata Motors. “It was like giving expert medical comment about a patient on the operating table but not doing anything to cure.” However, a former director of Tata Sons says it is not fair to attribute current strategy delays to distractions. “When Ratan Tata had taken charge of the Tata group, he had his own share of distractions around old satraps. He handled those issues, while parallelly charting the group’s growth path,” he says. Although management decisions reflect in company performances with a lag, Tata group’s combined market capitalisation grew 88% to Rs 8.54 lakh crore while Mistry was at the helm. Sales of all the listed companies grew by 35%, profits grew 15% and debt grew by 42%. During Chandrasekaran’s time, market cap grew by 64%, sales grew 15%, profits declined by 17% and debt grew by 31%. “It’s difficult to say if the boardroom battle with Mistry has affected the Tata group companies or not, as some of the companies like TCS, Titan and Tata Consumer have done extremely well in the last two-three years, whereas companies like Tata Steel, Tata Motors, Tata Chemicals and Tata Power have grossly underperformed,” says Sunil Singhania, founder, Abakkus Asset Manager LLP. Raghu Viswanath, chairman of business consulting firm Vertebrand, says he doesn’t foresee any lasting impact of the battle on the Tata brand, although doubts have been created in people’s minds and “some may be here to stay”. “Even misperceptions regarding corporate governance or individual leaders, if any, will hardly make a dent on the overall image of the Tata brand,” he says. As for SP Group, issues that it started facing in the aftermath of the collapse of IL&FS, as funds and institutional investors started pulling out of real estate and construction, have been exacerbated by the Covid-19 crisis. The group is in urgent need of funds and attempts to raise promoter funds to the tune of Rs 11,000 crore have not been met with success. The company has applied for a one-time restructuring of its debt and has therefore chosen to not pay maturing debt. The default on loans by the SP Group attracted some negative publicity, but company officials say it is a temporary cash flow issue and not a balance sheet crisis. Way Forward “I see zero hope for a reconciliation between the two unless a very strong intermediary gets them to sit across a table for the larger good. Keeping in mind the larger focus of the Tata group as an institution and its legacy should be the best reason to resolve the issue,” says Nawshir Mirza, a former Tata Power director. 78849798 78849803Well-wishers feel there is an urgent need for an interlocutor to get the warring sides to the table and thrash out some solution and end the legal fight. Officials close to the Tata group say the fight would never have reached this point if Pallonji Mistry, Cyrus’ father, was playing an active role. “The presence of Kokilaben ended the spat between the Ambani brothers years back. Someone of that kind of stature — Pallonji or Keshub Mahindra, or Vijay Kelkar — could have played peacemaker. Maybe even Nusli Wadia had things been different. That is not happening today,” says a top director in a Tata group company. R Gopalakrishnan, a former Tata Sons director, says, “From the broader stakeholder perspective, both parties might consider editing their self-narratives in the search for a nonscalding solution. That process requires that organisational dreams for the future must exceed individual memories of the past.”

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Pandora’s box opens for companies as taxmen begin data crunching

Mumbai: The data analytics tax demands are here — indirect tax authorities have issued notices to companies and individuals based on data collected from income tax filings.The Central Board of Direct Taxes (CBDT), the authority for direct taxes, and the Central Board of Indirect Taxes and Customs (CBIC), the authority for indirect taxes, had agreed to renew the data-sharing pact, first signed in 2015, this July.Tax notices have been issued to several companies after correlating income and service tax data. Essentially, if data from 2014-15 onward showed a company or an individual employed by a company paid substantial income tax but no service tax, authorities have raised questions on how a business earning large incomes escaped the service tax net.Tax notices were issued by indirect tax authorities and companies were asked to cough up 15% service tax on earned amounts. According to a notice reviewed by ET, taxmen have questioned how a company paid lakhs in income tax, but zero in service tax for 2014-15.The focus of the tax department currently seems to be on the informal sector, and in some cases notices have even been issued to astrologers, said people in the know. Data analytics were used to find individuals who claimed to have earned money from companies or by providing services — that data was checked against service tax records.Tax experts say that more collaboration between various government departments is only going to increase. “It is clear that going ahead the tax department will depend more on data analytics between different departments to look at patterns and raise tax demands,” said Abhishek A Rastogi, partner, Khaitan & Co. Industry trackers say that similar notices can also come based on goods and services tax (GST) data.78740190‘Move could Face Litigation’“Greater interaction between authorities is likely to be more now as there is a lot of data analytics happening at various government agencies. With goods and services tax (GST) coming in, data available with the indirect tax department is enormous and the direct tax department too can use that to zero in on those escaping taxes,” said Pratik Jain, partner and leader, indirect tax, PwC India.In July, CBDT also signed a memorandum of understanding (MoU) with the market regulator Securities and Exchange Board of India (Sebi) to share data.Till a few years ago different government authorities would not even talk to each other, let alone share data, said a senior tax official. And many individuals would deliberately submit different numbers and even prepared separate balance sheets for different government departments, he said.Some legal experts say that tax notices issued by the indirect tax department may face litigation on technical grounds. “Period of limitation is prescribed in tax regulations and any extension beyond the prescribed period will be subject to judicial review,” said Rastogi.

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IT stocks are ‘buy on dips’. Here's why

Traders took profits off the table in technology shares last week after a strong run over the last few months but the recent underperformance might be a blip. Technical analysts are advising clients to buy the top four technology stocks — TCS, Infosys, Wipro and HCL Tech — on dips. The BSE IT index has gained 99.6% from its March low while the Sensex has gained over 55% from its March lows. Analysts feel the Nifty index is likely to find strong support at 11,400-11,600. ET spoke to four analysts on the road ahead.GAUTAM SHAHFOUNDER, GOLDILOCKS PREMIUM RESEARCHWill the IT sector continue its recent underperformance? The uptrend in the IT sector is a structural change with fundamental positives and excellent chart set-ups. 22,500 on the NSE IT index was a major resistance from where a correction has been seen. It got a bit overbought and became a crowded trade that triggered the pullback last week. This is a buying opportunity for a move back to 22,500-22,700 and higher. Investors who got in at lower levels should simply stay put. All the top four names have positive set-ups and could be bought into. Where is the Nifty headed? Every dip in the last three months has been bought into. The market is going through a “V” shaped recovery that is unlikely to end till the Nifty moves into the 12,100-12,250 area. We see a strong base in the 11,600-11,700 area that is unlikely to be breached. Breadth indicators suggest that the market is far away from being euphoric and is also light on leverage. We stay positive for the near term. The sectoral themes to look forward to are IT, pharma, cement and chemicals while metals could be the dark horse.SHRIKANT CHOUHANEXECUTIVE VP-EQUITY TECHNICAL RESEARCH, KOTAK SECURITIESWill the IT sector continue its recent underperformance? For Nifty IT, the view is still strong. The results season is almost over for large-cap IT companies and so we are seeing profit taking. I am not expecting Nifty IT to fall below 20,000. The support is at 19,500- 20,000; and on the higher side we can again see the level of 24,000. The IT index will see a sideways consolidation for the next few weeks in the range of 20,000 to 22,500, and after this consolidation we can expect a rally till 24,000. All the stocks are trading at the highest point of the current rally, but with a view of next 3-6 months, we are bullish on Infosys along with Tech Mahindra and L&T Tech. Where is the Nifty headed? We were expecting some correction after the index hit a psychological level of 12,000. Some more correction is not ruled out. Probability of the index hitting 11,400-11,500 is very high but after that we expect the index to move towards 12,300-12,400. The strategy should be to buy on dips. We need to focus again on financials along with FMCG stocks.ABHILASH PAGARIASENIOR MANAGER, EDELWEISS ALTERNATIVE RESEARCHWill the IT sector continue its recent underperformance? Indian IT index has gained around 92% from its March lows and has even outperformed the US Tech Index – Nasdaq — by around 23%. After strong quarterly results by key companies, the index is witnessing profit taking at multiyear high levels. In the near term we may see some bout of correction led by profit taking as various quantitative Indicators are in overbought territory; while our longer-term view remains bullish. For the medium-term, one can look to accumulate Tech Mahindra and HCL Tech on dips. Where is the Nifty headed? October has always been a strong month and the Nifty has gained 5% so far, the upward momentum remains intact until we close below the key support levels of 11,440. In this expiry we might consolidate at these levels as sustaining above 12,000 can be difficult.ASHISH CHATURMOHTAVICE-PRESIDENT, SANCTUM WEALTH MANAGEMENTWill the IT sector continue its recent underperformance? The IT sector is in a long-term uptrend and one can buy on dips as new deal wins, execution and margin stability will keep the momentum going. Infosys, TCS, Info Edge, CoForge can be looked at. Where is the Nifty headed? After an 11% upmove, profit booking was expected. Now 11,600 is the immediate support, holding above which expect 12,000 to be crossed and head towards 12,250 and then possibly to all-time high of 12,428.

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Tax relief for pvt co staff too for LTA spends

NEW DELHI: Private sector employees who opt to spend their leave travel allowance on the purchase of consumer goods, along the lines of the latest scheme unveiled for central government employees, will be eligible for tax exemption.“Tax benefit would be available… Mechanism is being examined and a clarification would be issued shortly,” a government official told ET.The government is keen to ensure that private sector employees are also nudged to take advantage of the scheme that seeks to prop up consumer demand. The government expects this incentive to the private sector will generate additional consumer demand of Rs 28,000 crore.Finance minister Nirmala Sitharaman had on Monday announced measures to boost consumption demand and capital expenditure.One of the measures gave central government employees an option to avail of their Leave Travel Concession (LTC) if they spend three times the entitlement on goods or services attracting a GST rate of 12% or more by March 31, 2021.In the private sector, the income tax benefit is available twice in a block of four years if an employee can furnish proof of travel. Without proof, the employee gets the amount after tax is deducted.78672053Tax Experts DividedIndustry said there is a need for clarity on how private sector employees can avail of this without any change in the income tax provisions or a clear directive.Tax experts are divided over whether the government can extend the benefit by issuing a circular.“Central Board of Direct Taxes may issue a circular notifying an amendment to the Section 10(5) of the Income Tax Act, 1961, and Rule 2B, income tax rule, 1962, providing that the private sector employees can claim tax exemption for the Leave Travel Assistance (LTA) if the said amount is spent for certain specified purposes,” said Neha Malhotra, director, Nangia Andersen LLP. The circular can be later included in the next Finance Bill, she said.Ved Jain, former president of the Institute of Chartered Accountants, said the government will have to amend Section 10(5) of the Income Tax Act as this section has a proviso restricting the exemption.It can’t exceed the amount of expenses actually incurred on such travel. Jain also said the government may include this amendment in the next budget.There is no clarity on whether private sector employees will also need to spend three times their LTA to avail of the benefit and whether those that had opted for the new exemption-free income tax regime will also be eligible for it. “Issue is being examined and will be clarified soon,” the official said.

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July is the New January for companies looking to return to the office

By Gillian Friedman and Kellen BrowningWhen the coronavirus pandemic shuttered offices around the United States in March, many companies told their employees that it would be only a short hiatus away from headquarters.Workers, they said, would be back in their cubicles within a matter of weeks. Weeks turned into September. Then September turned into January. And now, with the virus still surging in some parts of the country, a growing number of employers are delaying return-to-office dates once again, to the summer of 2021 at the earliest.Google was one of the first to announce that July 2021 was its return-to-office date. Uber, Slack and Airbnb soon jumped on the bandwagon. In the past week, Microsoft, Target, Ford Motor Co. and The New York Times said they, too, had postponed the return of in-person work to next summer and acknowledged the inevitable: The pandemic isn’t going away anytime soon.“Let’s just bite the bullet,” said Joan Burke, the chief people officer of DocuSign in San Francisco. In August, her company, which manages electronic document signatures, decided it would allow its 5,200 employees to work from home until June 2021.“We’re still in a place where this is evolving,” she said. “None of us have all the answers.”Many more companies are expected to delay their return-to-office dates to keep workers safe. And workers said they were in no rush to go back, with 73 per cent of U.S. employees fearing that being in their workplace could pose a risk to their personal health and safety, according to a study by Wakefield Research commissioned by Envoy, a workplace technology company.More companies are also saying that they will institute permanent work-from-home policies so employees do not ever have to come into the office again.In May, Facebook was one of the first to announce that it would allow many employees to work remotely even after the pandemic. Twitter, Coinbase and Shopify have also said they would do so. On Friday, Microsoft announced it would also be part of that shift.The elongating timelines and changing policies add up to a continued balancing act for companies as the coronavirus shatters work norms and upends assumptions about where workers need to be to achieve maximum productivity. Employers are also under pressure to be as open as possible about their intentions so that workers can plan ahead with their lives.The postponement of return dates is a “psychological blow for those who expected this to be a transition phase,” said Tsedal Neeley, a Harvard Business School professor who studies remote work. “The reality is hitting that, ‘There won’t be a vaccine as I expected very quickly. This is going to be my life, and I’d better learn how to do this.’”Neeley likened the situation to waiting at an airport terminal for a flight that is continually delayed. With the new dates announced, she said, people can finally start adjusting from a temporary “grinning and bear it” approach to a permanent shift.Successful companies “have begun to think about long-term strategy rather than ‘Let’s just survive our crisis,’” she said.Much of corporate America is now following the lead of Silicon Valley tech companies like Google and Facebook. They were among those that allowed employees to work from home even before the pandemic hit in full force in March. Since then, Facebook has set the tone in planning for permanent remote work, while Google established the July 2021 target date for returning to the office.“I hope this will offer the flexibility you need to balance work with taking care of yourselves and your loved ones over the next 12 months,” Google’s chief executive, Sundar Pichai, wrote in an email to employees about the July 2021 date.Other employers soon emulated the tech giants, also citing worker flexibility as a key factor in pushing their return-to-office dates to next summer.Burke, the DocuSign executive, said announcing the June 2021 return date to employees prompted a “collective sigh of relief inside the company” because it put an end to the incremental postponements and uncertainty of when they would be expected to return.Remote work has been productive, she said, and people like not having to commute. But a mix of in-person and remote is probably the most popular option for employees when life returns to normal, she said, because they also miss the social interaction of an office space.Zoom “is not the same thing, and it’s exhausting,” Burke said. “By 7 o’clock last night, I was Zoomed out.”Other companies that have delayed their returns to the office until next summer often face a more complicated decision because their workforces are not just made up of white-collar engineers, unlike those of internet companies.Ford said last week that its decision to hold off on back in-person office work through June 2021 would apply to its roughly 32,000 employees in North America who are already working remotely. The company, which has about 188,000 employees, said the policy does not apply to factory staff.When Target announced its decision to let some employees continue to work at home through June 2021 in a letter to staff last week, it said it would apply just to employees at its headquarters in Minneapolis. The company said a small number of employees who rely on the headquarters facilities would continue to work on-site. In-store employees will work in retail stores as usual.Some companies that have already tried bringing employees back to the office have grappled with safety concerns. Last month, Goldman Sachs and JPMorgan Chase sent some workers back home after employees who had returned to the office tested positive for the virus.Tech companies have also been at the forefront of permanent work-from-home policies because digital work is often simpler for people to conduct via laptops and teleconferences than by being on site.Slack told employees — many of them engineers — in early August that its offices would remain closed until June 2021 and that it was considering permanent work-from-home, a decision partly driven by how productive its employees have been remotely, said Robby Kwok, the chief of staff to Slack’s chief executive.“I do think this flexibility that employers are giving to employees about not needing to come into the office five days a week is going to be extremely beneficial for productivity, for engagement,” Kwok said.Even when the pandemic subsides, 72 per cent of Slack employees surveyed said, they preferred that the company allow a mix of at-home and office work. Slack operates a messaging platform used by many businesses.Still, some tech companies have reservations about embracing permanent remote work and what might be lost in the process. Rapid7, a cybersecurity company in Boston, has told its more than 1,600 employees that they would continue to work from home through the beginning of 2021. But the company said it does its best work through in-person collaboration, and the pandemic has not changed that.“We know we are not meant to be 100 per cent remote,” said Christina Luconi, the company’s chief people officer. “We will all go back to the office” when it is safe to do so, she said.A push to all-company remote work can be particularly difficult for companies with predominantly young workforces, said Andy Eichfeld, the chief human resources and administrative officer at the credit card company Discover, which told employees on Sept. 29 that they would not need to return to the office before June 2021.“A younger person needs apprenticeship in the first 10 or 15 years of their career,” Eichfeld said. “And we know how to deliver that in person. I’m not sure apprenticeship happens remotely.”For some workers, the return date of next summer and the idea of permanent work from home is a mixed blessing.When Colin Fahrion, a digital communications specialist for the University of California, San Francisco, found out in June that he would not need to return to the office until at least July 2021, he moved 15 miles farther away from San Francisco, from Richmond to Vallejo, about 30 miles outside the city, and bought a house.Fahrion, 47, now has a dedicated office space and a backyard where his dog can play, and he has talked to his supervisor about working remotely on a permanent basis. Still, he finds Zoom meetings to be devoid of collaborative energy.“I miss my co-workers,” he said.

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CCI may ping Google for information on its 7.73% stake in Jio Platforms

Mumbai | New Delhi: The Competition Commission of India (CCI) is set to ask Google whether the US Internet giant’s purchase of a 7.73% stake in Jio Platforms would entail any sharing of data in a way that could stymie competition, especially in the handset industry, said people familiar with the matter, including lawyers and government officials. “The CCI is likely to ask Google to explain details of data sharing with Jio. In many countries, the regulatory bodies are doing these cross checks when a big player strikes a deal, which will be happening in this case as well,” said a person aware of the development. The competition watchdog had sought similar information from Facebook as well before giving its clearance recently to the social media company’s investment in Jio Platforms, the Reliance Industries unit that holds mobile services operator Reliance Jio and other digital businesses of the Indian group.Google moved the commission in September seeking approval for its Rs 33,737 crore investment in Jio Platforms and a commercial pact to jointly develop entry-level Android smartphones. 78611383The application is currently under review. Google, Jio and CCI didn’t respond until press time Sunday to ET’s emails seeking comment. Among the things being studied by the CCI are how much of Google’s investment in Jio Platforms would go into handset development and manufacturing, said a second person. Another person said the CCI had already reached out to various stakeholders, including device makers, to understand the market and the possible implications the deal could have on the rest of the handset industry. “Since most handset makers use Android as a platform, the CCI is trying to understand if any arrangements between Jio and Google could be exclusive, thus what it means in terms of access to Google's software for other device makers, especially at a time when the government is trying to make India a smartphone manufacturing hub and has come out with an incentive scheme. Does this (deal) mean other handset makers could suffer because of an arrangement between the two,” this person said. The CCI seeks clarifications from companies during the assessment process, a government official said. Apart from pre-filing consultations, the applicants require to provide substantial information on the deals, he added.

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Bharti Airtel seeks more clarity on AGR payments from here on

NEW DELHI: A top Bharti Airtel executive said the adjusted gross revenue (AGR) issue was more or less behind it, but the telecom operator still needed some clarity from the government over what was the actual amount to be paid from here on, given the Rs 18,000 crore it had already paid upfront.The telco has yet to make a decision on filing a curative petition seeking a correction in the computation of its AGR-based dues, said the executive, who spoke to ET on the condition of anonymity.“I think the AGR was a big overhang but now that it is behind us … we have 10 years to pay and we have already paid a substantial part of that prior to the judgement … we are now awaiting clarity on what is the actual amount to be paid from here on … that is the confusion now,” he said.ET had reported in its September 2 edition that both Airtel and Vodafone Idea were considering filing curative petitions in the Supreme Court. On September 1, the Supreme Court had given telcos 10 years to pay their balance dues. In Airtel’s case, the remaining amount is close to Rs26,000 crore, of the total nearly Rs44,000 crore. Airtel is clear that it needs to start paying its instalments from fiscal 2021-22, though the telecom department says telcos must pay 10% of the balance by March 2021.The executive said despite Reliance Jio’s entry, Airtel was enjoying its highest revenue market share in its history, and added that with relative clarity over the AGR issue, the prospects looked good with the potential for a further increase in the average revenue per user, with expected tariff hikes.Airtel’s prices are currently at a premium to rivals Reliance Jio and Vodafone Idea, and if any of those two raise rates, the company too would do so the next day, he said.A “meaningful” contribution from its digital services businesses like entertainment, including music, in the next four to six quarters through a subscription and advertising model will further help revenue, he said.Airtel declined to officially comment on these issues.HIGHEST MARKET SHARE“Airtel with close to 34% revenue market share, is enjoying its highest ever market share,” the executive said.He added that the telco was in a “comfortable financial position” with a strong balance sheet, having raised $8 billion in the last year or so, and would raise more funds if and when it needed to. He was reacting to a reference to Jio Platforms that houses Reliance Industries’ digital businesses raising more than Rs1.52 lakh crore from major investors including Google and Facebook.However, the company is “looking at building a digital services platform to draw meaningful revenue from a combination of our own products, partnerships and through commerce”, he said, adding that Airtel was not “bothered about noise” in the marketplace.He rejected fears of a tariff war in the critical post-paid segment, saying that Jio’s latest plans for the higher revenue generating segment weren’t really cheap and it would find it difficult to churn away the Sunil Mittal-led carrier’s stickier users. The segment forms some 5% of Airtel’s user base but around 15-18% of its revenue.“This (post-paid) is a very sticky business, to win in this space you need DNA in the mindset of the company to play on this. It isn’t so price sensitive, not as though some deal seekers in that segment of customers are hunting for a deal,” the executive said.He claimed that Jio’s latest post-paid plans which start at Rs399 required a customer to pay double the price to get some content. “Earlier, if you see, Jio’s plan was Rs199, so at Rs399 you get some content. It is not a price drop actually.”2G AND 5GReacting to Jio’s call to rid the country of 2G technology, the Airtel executive said even though 2G was still relevant, especially for the significantly large migrant population, Airtel was increasingly reducing spectrum allocation to the legacy technology and was devoting it for 4G technology.“However, you can’t just switch off 2G overnight; it would lead to almost 50% users just in UP and Bihar completely becoming unconnected, as 2G or just voice services are still crucial for a lot of migrant labourers who just need some form of connectivity,” he said.He said India could wait until 2022 for 5G since the ecosystem, including handsets and India-specific use cases, were still to be developed.“Even globally the devices and the ecosystem are yet to develop and mature. The real challenge in deploying 5G comes because it requires large quantities of spectrum and handsets still cost more than $700,” he said. Citing 5G deployment reports from the US, the executive said even in the US so far, 5G experience was at best as good as 4G.

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Life insurance companies' new business premiums hint at industry’s revival

MUMBAI: Life insurers saw new business premiums (NBP) climb more than a fourth in September, pointing to a quick revival in an industry that’s crucial for helping finance long-gestation and capital-intensive assets.In September, NBP of life insurers saw a robust 26.5% increase at Rs 25,366.32 crore against the same period last year, led by strong performance from LIC and select private insurers such as SBI Life, HDFC Life, Bajaj Allianz Life and Max Life, latest data released by the Life Insurance Council showed.LIC’s NBP rose 30% to Rs 16,602.84 crore and private insurers – 23 in total – saw their NBP rise 20% to Rs 8,763.48 crore. Among private players, SBI Life exhibited the highest monthly growth among listed insurers in terms of individual and total annual premium equivalent (APE).“September witnessed strong growth for private life insurers (+13% YoY and 28% MoM in terms of total APE) with powerful performance by HDFC Life, Max Life, Tata AIA and Bajaj Life, in that order,” ICICI Securities said in a note. “SBI Life exhibited highest month-on-month growth amongst large insurers in terms of individual as well as total APE,” it said.Insurance penetration remains low in India, where weighted average capital costs for companies remain high compared with their peers in the West. Life insurance premiums, which ensure steady cash inflows for insurers, often find their way into the financing of capital-intensive assets that need long-term and milestone-linked financing. For the second quarter between July and September, NBP for insurers rose 16% largely on the back of demand for single premium-based protection products whereas the demand for investment-led ULIP products continued to be low. For the first quarter of FY21, the slump in NBP was of the tune of nearly 18%, the data showed.

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Volume, pricing trends hint at improving demand for cement

Mumbai: Cement volumes could climb sequentially by about a third in the three months to September in India, indicating revival of demand in the world’s second-biggest building materials industry that should also benefit from lower input and logistics expenses.Prices moderated in the second quarter, traditionally soft because of the monsoon rains across India, but volume growth points to potential margin expansion in the second half (H2) of the fiscal year that coincides with the post-harvest dry season. Traditionally, prices are the highest in the busy season that begins with the retreat of the annual monsoon rains.“After witnessing a challenging demand scenario but healthy pricing trend during April-September, we believe the industry is poised for a recovery during second half of FY21, led by government’s strong push on reviving the economy and increased traction in metro and tier-I cities,” said Ravi Sodah, analyst, Elara Securities. “Further, improvement in utilisation is likely to support prices and operating leverage amid rising fuel prices.”Operating cost for the industry is likely to be lower due to the lag impact of benign fuel prices. The brokers’ survey with dealers has indicated 7 per cent year-on-year growth in volume offtake in the month of September, leading to total sales volume of 72 million tonnes (MT) for the September quarter — down 7 per cent on-year but up 36 per cent sequentially.The volume recovery seen in May and June, driven by strong demand from the rural and semi-urban areas, has largely sustained in the September quarter. While volumes have recovered well in East, North and Central region, they remain weak in South and Maharashtra, showed channel checks by various brokerages.

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ICMR, Biological E develop purified antisera

MUMBAI: India’s top health research body Indian Council of Medical Research (ICMR) and Hyderabad-based Biological E have developed purified antisera, raised in animals, as a prophylaxis and treatment for Covid-19.Antiserum is blood-based serum containing antibodies against viruses.The therapy works like plasma therapy. However, the blood plasma is obtained from animals — from horses, in this case — that have recovered from a viral infection and found to have antibodies against the virus in their system. Antibodies from horses, known as equine antisera, are quite common.“Equine sera-based treatment modality thus stands out as yet another remarkable public health initiative supported by ICMR in the time of Covid-19,” the research body tweeted.Antibodies from animals have been used to control many viral and bacterial infections such as rabies, Hepatitis B, vaccine virus, tetanus, botulism and diphtheria.In June, the ICMR had invited drugmakers to produce equine antiserum against Covid-19. The equine antiserum was isolated by the ICMR-led National Institute of Virology, Pune.The plasma recovered from patients experiencing Covid-19 could serve a similar purpose, the ICMR said in a series of tweets, adding that the “profile of antibodies, their efficacy and concentration keep varying from one patient to another and therefore make it an unreliable clinical tool for patient management”.

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Govt open to launching Indian app store

New Delhi: The central government will consider requests from technology entrepreneurs to launch an Indian digital application store, two senior officials told ET, responding to the growing outcry against the dominance of US technology giants Google and Apple in the country’s digital services market.India already has an app store for governance-centric apps, which can be scaled up to begin with, said one of the officials cited above. In addition, there is a need to also introduce policies requiring handset manufacturers to preload alternative app stores alongside popular offerings like Google Play, the sources said. Weighing in on the issue, union minister for electronics and IT Ravi Shankar Prasad said in a post on Twitter that he is happy to receive suggestions from Indian app developers on how to encourage the ecosystem. “Encouraging Indian app developers is vital to create an #AatmanirbharBharat app ecosystem,” he tweeted on Thursday. The Indian government “is not averse to the idea” of launching its own app store, officials said. The existing digital store for government apps, developed by the Centre for Development of Advanced Computing (CDAC), hosts a slew of applications such as e-governance app Umang, health app Aarogya Setu and storage app DigiLocker.Won’t be Easy, say ExpertsPayment app Paytm is among the few private sector apps to feature on the store. 78439498“Building an app store is like building a shopping mall and the government can very well facilitate it,” one of the officials said while acknowledging that for an indigenous app store to successfully take on Google and Apple’s dominance, it has to be “as good” and “robust”.Global experts are of the view that India is well placed to break the dominance of global technology giants in its digital app ecosystem. “The (digital) industry doesn’t need the government’s help in this, they (developers and entrepreneurs) can just crowdsource it and keep a minimal charge of 2% to run the platform. Nobody will then need to pay 30% to Apple and Google,” said Vivek Wadhwa, an American technology entrepreneur and academic.Government officials said the issue (of overseas tech giants dominating India’s digital app sector) emerges from the fact that Google’s Android operating system has a “98% market share” in the smartphone segment in India whereas it’s much lower in other countries including the US. “The problem of monopoly is very acute,” said the person.

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As India slowly opens up, tourists begin to check in

New Delhi: Leisure bookings and travel to popular holiday destinations went up significantly in September over August despite the surge in Covid-19 cases, pointing to green shoots of recovery in the tourism sector that has been crippled by the protracted lockdown. Nishant Pitti, co-founder of EaseMyTrip, said average daily tickets sold in September for airports in Goa, Udaipur, Bagdogra, Port Blair and Cochin, went up on his platform to 571, 126, 651, 67, and 575 respectively, registering a growth of around 340%, 147%, 80%, 219%, and 144% over August.Travellers are mostly opting for homestays, villas and more personalised modes of accommodation. Aditya Agarwal, head of corporate strategy at Cleartrip, said the portal has seen a pickup in September coinciding with easing of travel and quarantine restrictions. “This suggests that pent-up demand for leisure travel is now starting to get converted into bookings,” Agarwal said. “In September, booking volumes to Kochi are around 25% of previous year volumes, while Udaipur and Jaipur are around 24% and 30%, respectively, of previous year volumes.Goa is slightly lower at around 18% of last year's volumes.” Hoteliers said bookings for accommodation in Uttarakhand and Himachal Pradesh have also been going up as the two states eased travel restrictions for outsiders. In a whitepaper released on October 1 titled ‘Domestic leisure demand picks up in India’, Vidhi Godiawala, business development manager for central and South Asia at hotel industry tracker STR, said that Rajasthan, Karnataka and Punjab were the first to attract domestic leisure guests. Goa, where occupancy was in a state of limbo and in single digits until August, has seen considerable upward movement with weekend leisure demand growing ‘robustly.’ Kochi, a market that initially saw high occupancy rates during the lockdown mainly on account of the GCC quarantine business, has also begun to see an uptick in weekend hotel demand. As per STR, hotels in these destinations have also started getting the weddings business, aiding their recovery. According to a survey done by ixigo with over 5,000 users in September, 21% of the respondents said that they were travelling for a workation.

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Transfer pricing disputes may return to haunt MNCs soon

Mumbai: Companies may face transfer pricing disputes due to data unavailability used as inputs in computing tax liabilities on intra-group transactions as the protracted lockdown, enforced to prevent the spread of the virus, has shifted the reporting calendar for several companies. Transfer pricing is a tax levied on Indian subsidiaries and captives of multinationals for cross-border transactions within the group. Most companies arrive at an amount of tax they are required to pay to the Indian revenue department based on certain computations and assumptions. This year, the calculations on arms-length basis transactions and comparables have become tough due to unavailability of the data, say tax experts. These computations are mainly based on two factors. First, how many overseas transactions were recorded between the Indian arm, its parent or any other foreign company or arms length. Second, whether the amount paid or received by the Indian arm is on a par with industry standards – or comparable.Both these assumptions are based on numbers available in the company’s audited results and audited results of other companies in the sector or competitors. “As the deadline for AGMs and consequently the filing of audited results has been postponed due to the COVID pandemic, sufficient comparable data would not be available on a timely basis in the public domain for this year. Taxpayers would surely face problems in obtaining comparable data and hence the benchmarking exercise would be difficult to conduct. It would be better if the government provides relaxation in the transfer pricing filing deadline for this year,” said Amit Maheshwari, Partner, AKM Global. Indian entities of many multinationals receive a fixed margin or a mark-up from their parents and a tax is paid on these transactions in India. Transfer pricing is essentially the price paid by the parent company or its foreign arm to a local subsidiary for transactions among them. In most cases, the local entity charges a mark-up at arm’s length, or at a price as per industry average. Tax experts say that the calculation cannot be based on last year’s data too as most multinationals have seen huge value erosion due to Covid. “There are several problems this time around availability of required data for the purposes of testing companies’ international transactions for arm’s length standard. First, the audited internal company data which forms the basis for implementing transfer pricing method (in computing margins) may not be available due to extension of the timeline, and second, there is limited industry data to form basis to account for potential adjustment warranted for the impact of pandemic during the last quarter, i.e., January to March 2020, for benchmarking purposes,” said Kunj Vaidya, a CA specialising in transfer pricing.78439338

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HMD ships over 56m syringes to Covax facility

NEW DELHI: Hindustan Syringes and Medical Devices (HMD), one of the largest suppliers of syringes, has sent its first shipment of 56 million pieces of auto disable syringes to Covax facility as the race for safe and effective vaccine continues.The Covax facility, which seeks to pool in resources to accelerate the development of the promising vaccine candidates for Covid-19 that will be made accessible to all the participating countries, has ordered 140 million pieces to be supplied between August and December.“We have shipped out more than 56 million pieces of 5 ml auto disabled (AD) syringes for intra muscular syringes,” said Rajiv Nath, managing director of Hindustan Syringes and Medical Devices, while the company awaits the Indian government’s advisory on the procurement of syringes for vaccination.In the last few days demand has come forward from other countries like Japan and US for disposable syringes and Indonesia for auto disposable syringes as the countries start to stockpile. The company has even scaled up its production capacity to one billion from 700 syringes a year.However, Indian government is yet to make a move. “We plan to allocate 50% of the total for the government of India and 50% for export as we have got a global responsibility. But there is no clarity so far from the government as yet,” added Nath.

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New supply chains central to free, open Indo-Pacific

New Delhi: Prime Minister Narendra Modi and newly elected Japanese Prime Minister Yoshihide Suga agreed at their first official conversation that the “economic architecture of a free, open and inclusive Indo-Pacific region must be premised on resilient supply chains”. In this context, both leaders welcomed cooperation between India, Japan and other like-minded countries on developing alternate supply chains to China.Signalling momentum in Special Strategic & Global Partnership in the post Abe period Suga and Modi held a summit over telephone little over a week after the election of new Japanese PM. The two PMs emphasised that the economic architecture of a free, open and inclusive Indo-Pacific region must be premised on resilient supply chains, and in this context, welcomed cooperation between India, Japan and other like-minded countries, according to a MEA statement.Coinciding with the Modi-Suga phone call, the senior officials of India-USA-Australia-Japan or Quad held a virtual meet and underscored the importance of enhancing the resilience of supply chains. The officials reaffirmed their commitment towards a free, open, prosperous and inclusive Indo-Pacific region based on shared values and principles and respect for international law, according to a MEA statement. The four discussed measures to promote peace, security, stability and prosperity in the Indo-Pacific region.India, Japan and Australia have stated that the initiative to build resilient supply chains in the Indo-Pacific region could be launched later this year as they seek to reduce dependence on China following its hostile political and military conduct. The trio aims to create a free and transparent trade & investment environment. According to the readout issued by the Japanese side, Suga expressed his intention to promote bilateral cooperation in the fields of security, economy and economic cooperation, and to work with India towards achieving a “Free and Open Indo-Pacific.” Suga also stated that he would like to promote cooperation in such multilateral mechanism as Japan-Australia-India-U.S. meetings, according to the Japanese statement clearly spelling out the like-minded partners.Suga-Modi phone call happened close on the heels on the Japanese PM’s conversation with his counterpart from Australia earlier this week. This phone call raised concern in Beijing about Tokyo and Canberra forming an “iron triangle with Washington” in the Indo-Pacific. Tokyo and Canberra are working on a plan for Morrison to become the first leader to meet Suga in November. Modi and Suga appreciated the progress made in the economic partnership between the two countries, and in this context, welcomed the finalization of the text of the agreement pertaining to specialized skilled workers. Suga will visit India for the annual bilateral summit after improvement of the situation caused by the global COVID-19 pandemic.

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Xi the architect of border row: Report

Washington: Describing Xi Jinping as the "architect" of the PLA's recent aggressive moves against India, a leading US magazine has reported that the Chinese President has risked his future with the high-profile incursions into Indian territory that "unexpectedly flopped" in the face of ferocious fightback by the Indian Army. Xi, 67, already roiling the Communist Party with a "rectification" campaign and mass persecution of foes, will launch "another brutal purge" following the Chinese army's failures on the Indian border, the Newsweek said in an opinion piece. "Unfortunately for Xi, he is the "architect" of these aggressive moves into India and his People's Liberation Army (PLA) has unexpectedly flopped. The Chinese army's failures on the Indian border will have consequences," it said, adding that the recent developments give Xi an excuse to pick up the pace of replacing adversaries in the armed forces with loyal elements. "More important, the failures motivate China's aggressive ruler- who as chairman of the Party's Central Military Commission, is the leader of the People's Liberation Army (PLA) and the ruling Communist Party of China - to launch another offensive against Indian positions," the magazine warned. Tensions escalated manifold along the LAC in eastern Ladakh after the Galwan Valley clashes on June 15 in which 20 Indian Army personnel were killed. The Chinese side also suffered casualties but it is yet to give out the details. "China is thought to have suffered at least 43 deaths in the Galwan clash," the magazine said. Citing Cleo Paskal of the Foundation for Defense of Democracies, it said the number of Chinese killed could exceed 60. "Indian troops fought back ferociously. Beijing won't admit the extent of the debacle," it said. It said that late last month, for the first time in a half-century, India carried out an offensive against China, taking back high ground the Chinese recently grabbed. "China's forces were surprised when Indian troops mounted their attempt to retake strategic high points. Stunned Chinese soldiers retreated," it said. "China's subsequent efforts to counter the Indian moves proved ineffective. At least for the moment, India's troops, in the southernmost of the three areas of conflict, are in control of territory once in Chinese hands," it added. It said the PLA Ground Force can move against undefended targets. However, it is not clear how effective it is in battle. "The Ground Force does not have a track record of success in contested situations. Its last major engagement was in 1979 when, in the effort to 'teach Vietnam a lesson,' the Chinese troops were repelled and humiliated by their much smaller neighbour," the magazine noted. "India is not giving the invaders the opportunity to improve," it said, adding that India's troops are displaying "newfound boldness". "The game has changed," Paskal said. "You can say the Indians are more aggressive or more aggressively defensive, but they are in fact bolder and better." "The setback in the Himalayas poses problems for Xi, which means it poses a problem for everyone else," it added. It said that in China's highly politicised system, the setbacks in Ladakh cannot be perceived as Xi's fault, so he will almost surely purge elements of the military. "PLA leaders begin to see little choice but to undertake offensive military actions to avoid becoming a victim of Xi's internal terror," said Richard Fisher of the Virginia-based International Assessment and Strategy Center. The Indian Army and the PLA have been locked in a tense standoff in multiple areas along the LAC in eastern Ladakh since early May. Following fresh confrontation around the southern bank of the Pangong lake, India further bolstered its military presence in the region by sending additional troops, battle tanks and other weaponry. Amidst the very tense situation in eastern Ladakh, India and China reached an agreement to resolve their border row at a meeting between External Affairs Minister S Jaishankar and his Chinese counterpart Wang Yi in Moscow on September 10 on the sidelines of a Shanghai Cooperation Organisation (SCO) meet. The agreement included measures like quick disengagement of troops, avoiding action that could escalate tensions, adherence to all agreements and protocols on border management and steps to restore peace along the LAC. It also mentioned that the two sides should expedite work to conclude "new confidence building measures" to enhance peace and tranquillity in the border areas. However, the agreement has not mentioned any timeline for disengagement of troops.

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