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Expresso Business and Financial News Highlights of the Week for June 22, 2024
Expresso Business and Financial News Highlights of the Week of June 22, 2024 Transcript
Let’s get started – The government is undertaking a revamp of production-linked incentives, easing the norms for release of funds, adding more sectors to the scope of the scheme and extending benefits to MSMEs in many labor-intensive sectors through special exclusions. The restructuring would also include incentives for R&D to create an industrial ecosystem, even if the regime’s total budget is not stretched, official sources said. Although the scheme was launched more than three years ago and covers 14 sectors, only around 5% of the allocated funds have so far been disbursed. According to sources, the government has just started accepting requests for release of incentives on a quarterly basis.
Next – Customers of mid-sized universal banks including RBL Bank, India Post Payments Bank, Punjab & Sind Bank, Bandhan Bank and Central Bank of India have seen higher rates of Unified Payments Interface transaction failures over the past year, according to the National Payments Corporation of India. According to the data, on the sending banks’ side, Baroda UP Gramin Bank had the highest technical default rate of 16% on average between May 2023 and April 2024, followed by RBL Bank, Andhra Pragathi Grameena Bank and IPPB with 5.3%, 4.9% and 4.47%, respectively. On the beneficiary bank side, Baroda UP Gramin Bank once again topped the list with a TD rate of 12%.
Moving forward – Bharti Airtel bought around 1% stake in Indus Towers, acquiring around 26.95 million shares, thereby increasing its stake to 48.95% from the 47.95% it held earlier. The shares were acquired by Bharti when the UK’s Vodafone Plc sold an 18% stake in the tower company for €1.7 billion. The shares were sold for Rs 310-341. Vodafone UK held a 21.5% stake in the tower company and initially planned to sell a 10% stake, but strong investor demand prompted a nearly double the size of the sale, sources said. After the transaction, Vodafone’s stake drops to 3.1%. The company will use most of the proceeds to repay 1.8 billion euros of outstanding bank loans taken out against Vodafone’s assets in India.
In another development – Fitch Ratings has raised India’s GDP growth projection for the current financial year to 7.2% from 7% previously estimated, mainly due to the assumption of recovery in consumer spending. In its June “Global Economic Outlook” report, the global ratings agency stated that investment will continue to increase, but “more slowly” than in the final quarters of FY25, while consumer spending will “recover with elevated consumer confidence consumers.” Fitch’s growth projection is in line with the Reserve Bank of India’s forecast of 7.2% for the current fiscal year and much higher than the International Monetary Fund’s projection of 6.8%. Most economists, however, expect growth to be less than 7% in FY25.
Meanwhile – Fast-moving FMCG companies hope the upcoming Budget will improve the purchasing power of rural consumers as companies envision a faster market recovery. Market researcher NielsenIQ said rural growth outpaced urban growth for the first time in five quarters in the January-March period this year. Companies expect this pace to accelerate with a consumption-friendly budget coupled with a likely good monsoon. CII has proposed initiatives such as industry involvement with the National Rural Livelihood Mission and creation of rural industrial parks to boost development. He suggested that the Center should encourage states to reduce stamp duty on land transfers to 3-5% to reduce the acquisition cost for economic activity.
In other news – Just over a decade ago, Nykaa revolutionized the beauty space, creating a specialized platform in a segment where none existed. But that luster is now fading, with competition increasing rapidly. Reliance Retail’s Tira has increased competitiveness over the past year in India’s $19-20 billion beauty and personal care (BPC) market, as have players like Tata Cliq Palette, Myntra and Shoppers Stop. Bengaluru-based Redseer Strategy Consultants estimates that India’s BPC market will reach $30 billion by 2027, representing about 5% of the global opportunity, as Indian consumers want to look and feel good. as well as organized beauty products, both national and international.
Lastly – As bilateral consultations with the EU earlier this month failed to break the impasse over the extension of safeguard duties on its steel exports, India “reserved the right” to retaliate in equal measure by imposing duties additional payments on imports from the 27-member bloc. . The EU has extended safeguard duties on steel imports, which were expiring this month, for a further two years, until 2026. This is the second extension of the safeguards which take the form of a Tariff Quota and were first imposed in 2018. With In the most recent extension, the safeguard would last for eight years. According to WTO rules, another safeguard measure for these categories of steel products could only be implemented for another eight years.