Month: January 2021

Nine of 10 most valued firms take over Rs 3.96 lakh crore hit in market-cap

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The combined market valuation of nine of the top 10 valued domestic companies eroded by a whopping Rs 3,96,629.40 crore last week in tandem with a weak broader market, where Reliance Industries Limited took the biggest hit.

In the last week, the 30-share BSE benchmark tumbled 2,592.77 points or 5.30 per cent due to profit-booking ahead of the Union Budget.

Only ICICI Bank managed to witness addition in its market valuation the holiday-truncated last week. Its valuation rose by Rs 2,397.43 crore to Rs 3,70,773.35 crore.

Reliance Industries accounted for the lion’s share of the total loss. Its valuation tumbled Rs 1,30,909.45 crore to reach Rs 11,68,454.02 crore.

The market capitalisation of Tata Consultancy Services tanked Rs 71,482.92 crore to Rs 11,68,079.84 crore and that of Infosys plunged Rs 42,936.43 crore to Rs 5,28,040.02 crore.

TCS had on Monday surpassed RIL to become the country’s most valued firm by market capitalisation. But on Friday Reliance Industries Limited (RIL) once again went past Tata Consultancy Services (TCS) to take the coveted title.

HDFC’s valuation declined Rs 38,083.07 crore to Rs 4,28,040.72 crore and that of Hindustan Unilever Limited dived Rs 34,150.8 crore to Rs 5,31,798.56 crore.

The market capitalisation of HDFC Bank eroded by Rs 28,894.3 crore to Rs 7,66,218.59 crore and of Kotak Mahindra Bank dipped by Rs 23,320.13 crore to Rs 3,39,345.13 crore.

The valuation of Bajaj Finance declined by Rs 13,949.9 crore to Rs 2,85,382.35 crore and that of Bharti Airtel by Rs 12,902.4 crore to Rs 3,01,801.43 crore.

In the ranking of top-10 companies, Reliance Industries was leading the chart followed by TCS, HDFC Bank, Hindustan Unilever Limited, Infosys, HDFC, ICICI Bank, Kotak Mahindra Bank, Bharti Airtel and Bajaj Finance.

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd., the parent company of CNBCTV18.com

Click here to Catch all the action and updates in our Budget 2021 Live blog.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

FPIs net buyers at Rs 14,649 crore in January

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Foreign portfolio investors (FPI) have remained net buyers to the tune of Rs 14,649 crore in Indian markets in January, amid availability of global liquidity and emerging markets being a preferred destination for foreign funds.

According to FPI statistics available with depositories, overseas investors pumped in a net of Rs 19,473 crore into equities but pulled out Rs 4,824 crore from the debt segment between January 1 and January 29.

The total net investment in January stood at Rs 14,649 crore.

Morningstar India Associate Director (Manager Research) Himanshu Srivastava said, “Excess liquidity in the global financial markets with central banks and governments worldwide announcing stimulus measures to support their dwindling economies, made its way into the emerging markets with India too benefitting from this trend.”

Geojit Financial Services Chief Investment Strategist V K Vijayakumar said that due to uncertainty regarding the budget proposals, FPIs have been a bit apprehensive about the direction of the market going ahead and, therefore, they have seen selling in the past few days.

He further noted that India has been one of the highest recipients of FPI funds among emerging markets in November and December which played a significant role in pushing the Sensex to record 50,000 levels.

“Given the uncertainty surrounding the Budget, FPIs would have preferred to book some profit at these levels,” Srivastava said.

Giving an overview of emerging markets, Kotak Securities Executive Vice-President and Head (Fundamental Research) Rusmik Oza said that except for India and few more countries, most emerging markets are witnessing FPI selling in a big way.

“Countries like South Korea and Taiwan have seen month-to-date FPI outflows of $ 5.3 billion and $ 3.4 billion, respectively,” Oza said.

Countries like India and some of the oil-producing nations can still expect positive FPI flows in the medium term, he further added.

On current selling by FPIs, Groww co-founder and Chief Operating Officer Harsh Jain said said “such movements happen from time to time”.

He added that in the longer term, India continues to remain an attractive destination for investment among the emerging market. It has been validated by the FPI inflows into the country in 2020, a year when nearly all other emerging markets saw only outflows, Jain said.

On the domestic front, the focus is on the Union Budget and the measures that the government announces to accelerate the economic growth in the country, Srivastava said.

Click here to Catch all the action and updates in our Budget 2021 Live blog.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Will honour PM’s dignity, but also protect farmers’ self-respect: Naresh Tikait

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Farmer leader Naresh Tikait Sunday said that protesting farmers will honour the dignity of the prime minister, but are also committed to protecting their self-respect, a day after Narendra Modi said his government was just a “phone call away” for talks with them.

Tikait said the government should “release our men and prepare an environment conducive for talks”.

“A respectful solution should be reached. We will never agree to anything under pressure,” he told PTI.

Prime Minister Narendra Modi had Saturday said his government’s offer on Agri laws made to protesting farmers “still stands” and the Centre was a just a “phone call away” for talks, days after violence broke out in parts of the national capital on Republic Day.

“We will honour and respect the dignity of the prime minister. Farmers don’t want that the government or Parliament bows down to them,” Tikait said.

“We will also ensure that the self-respect of farmers is protected. A middle way should be found. Talks should be held,” he added.

During their January 26 parade, many of the protesters, driving tractors, had stormed the Red Fort, with some of them hoisting religious flags on its domes and on the flagstaff at the ramparts.

Tikait said, “The violence on January 26 was part of a conspiracy. The Tricolor is over and above everything. We will never let anyone disrespect it. It will not be tolerated.”

The Delhi Police has registered nearly 40 cases and made over 80 arrests in connection with the violence and vandalism.

“The government should release our men and prepare an environment conducive for talks. A respectful solution should be reached. We will never agree to anything under pressure,” Tikait asserted.

In his monthly Mann Ki Baat radio broadcast Sunday, Prime Minister Modi also referred to the Red Fort incident, saying the country was much pained at seeing the dishonour to the Tricolour on Republic Day.

Meanwhile, more tents came up at the UP gate protest site on Sunday as farmers kept pouring in from neighbouring regions.

Many waited for hours to talk to Tikait or to click a selfie with him.

The farmer leader remained busy meeting his supporters and talking to the media, halting only when his voice broke.

A Bharatiya Kisan Union member said Tikait has not been able to sleep for more than three hours a day for the past three days.

“In between, he complained of blood pressure issues, but is doing fine now,” the BKU member said.

At the protest site, small groups of farmers took out marches, carrying the Tricolour and shouting slogans.

Farmers deeply hurt by BJP’s moves to defame them: Akhilesh Yadav

Samajwadi Party chief Akhilesh Yadav on Sunday said the farmers were deeply hurt by the moves made by the BJP to defame them. He also alleged that the BJP has tortured common people. “The farmers are feeling deeply hurt because of the moves made by the BJP to defame them. The BJP has enacted demonetisation, GST, labour laws and farm laws to give benefits only to the billionaires. The BJP has tortured the common people,” the Samajwadi Party chief said in a tweet in Hindi.

New Agri laws will undercut MSP procurement, Mandi system: Sharad Pawar

 NCP president Sharad Pawar on Saturday said the new agriculture laws of the Union government will adversely impact the Minimum Support Price (MSP) procurement and weaken the `Mandi’ system.

-with inputs from other agency copies

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Heart and Art: The two worlds of Chetna Singh

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Meet Dr Chetna Singh, emergency care physician at Ocean Medical Center in New Jersey. For the last year, she has grappled with the unending coronavirus pandemic, working the frontline in the emergency room.  Right from the first beginnings through the first wave to the second wave life has been lived out with the sombre reality of packed hospitals, with patients on ventilators and near death, fighting against a relentless virus.

For Chetna, whose husband Arun is also an ER physician, work means long 12-hour days, including a 50-minute commute each way.  She’s been doing this work for 18 years but COVID-19 has changed everything: “This is just something totally different, we’ve never encountered anything like this, and its life-changing for us,” she says.

“When the pandemic first started, everybody was scared. We were scared too, just going in and putting our lives at risk every single day. Over time you get over the fear and you do the best you can to protect yourself and protect others, and you just have to take the proper precautions. We’ve got three children so we try to be protective of both the home and the hospital.”

The Singhs have seen the toughest part of the pandemic with the country in the throes of Covid-19 with escalating cases, inadequate supplies and overrun hospitals. The worst she says was “just seeing people struggling to breathe and sometimes you’re at a loss, even with all the support you have, you cannot help them to survive. The worst is probably just seeing them die alone. There have been days where I have had to call multiple families on one day and tell them that we can’t do anything anymore.”

Sometimes she finds herself in the position of calling families to tell them their loved one needs to be put on a ventilator and knowing that the patient will be alone, scared and with no family member to hold on to.  It has been heart-wrenching but, there seems to be a light at the end of the tunnel, with the vaccinations finally being administered, first to the healthcare workers and the elderly.

Having her spouse in the same field has been a great support. As she says, “It’s an absolute blessing because we can talk to each other about it, and that, I think, really does help to de-stress.”

What really helps Chetna to build resilience and face the tough times is the other world she inhabits – the world of an artist. Growing up in Patna, the daughter of two professors, she was always encouraged to paint and found inspiration in the colours, the beauty and the cultural mix that is India. Over the years even as she attended medical school in Patna and later became a medical professional, she turned to art to relax and create.

While she’s always worked on canvas, she was intrigued by the thought of wearable art and launched a very popular line of art scarves in 2013 with her artwork digitally printed on luxurious scarves of silk, cotton, cashmere and chiffon. Over the years, Chetna Singh scarves are almost like art stories, reflections of her travel to India, Mexico, Paris, Venice and Istanbul with renderings of Buddhas, butterflies, horses and florals.   She says, “Art is more beautiful when it is shared and even more beautiful when it is worn.” Chetna has shown her work in Fashion Week in NYC and her line is carried by boutiques and online.

Sometimes, her two worlds intersect. As a child she had often played at being doctor, injecting her family with pretend vaccines with talcum powder and knitting needles. Now that she is a real doctor, she is often inspired to paint canvases of ER physicians. As she wrote on Facebook recently after a rough day in the hospital: “The last few days have been stressful to say the least. On my day off from the ER I painted this today. For all my frontliners – physicians, nurses, mid-levels, techs, medics, EMTs and all other staff – this one is for you.”

Prints of this powerful portrait were sold to support those who have been affected financially by the pandemic. This portrait of an ER physician kneeling down in exhaustion, yet still not giving up and continuing to fight is right from the heart. She says, “That’s the way I felt – it’s like we are all burnt out, totally exhausted but we continue to fight every day.”

Art is certainly her creative outlet and respite from the pressure cooker of the ER. What does she suggest for others who are facing the stress of the pandemic? “You have to find something that makes you happy, find joy in something that you do, whether it is talking to a friend on the phone or sharing a glass of wine on Zoom,” she says. “It’s whatever makes you happy because  the world as we know it has changed and it’s going to be some time before it goes back to where it was.”

Indeed, the past was always about an adventurous journey to many parts of the world as Chetna translated those scenes into impressions on silk and cashmere scarves. Travel will not be on the agenda for a long time and she now relies on memories of the past to paint the magic of a lost world.

Recently as health professionals, the Singhs got their second dose of the Pfizer vaccine and she encourages everyone to get their vaccinations as they become available.  She says 15- 20% of people may have side-effects similar to the flu, usually 12 hours after vaccination. “In our case, I was the one with fever, chills and body aches for 24 hours and milder symptoms after, but this was completely resolved by 48 hours. I would absolutely do it again as it means that it gives me protection against Covid.”

(Lavina Melwani is a New York-based journalist who blogs at Lassi with Lavina. Read her columns here.)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2021: Expectations of the travel and tourism industry

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The travel and tourism industry was amongst the first-hit due to the COVID-19 pandemic and will probably be amongst the last to realise full recovery. UNTWO’s report estimated a loss of $1.1 trillion to the international tourism industry in the calendar year 2020. The sector’s losses in India can be estimated to Rs 125 lakh crores, as per CARE Ratings. As a sector whose contribution is projected to hit 9.9% of the country’s GDP before the end of this decade, a concrete roadmap is required to revive the beleaguered industry and help it emerge stronger in the post COVID world.

With the advent of the holiday season in December 2020, leisure travel had gradually started gaining momentum in India. The announcement of the new COVID guidelines coming into effect from February 1, 2021 will introduce big changes which are further expected to bolster tourism. With relaxations in religious, cultural and social gatherings, exhibition halls and permissions to operate swimming pools in hotels; we already foresee a strong recovery in religious, business as well as leisure travel segments in the upcoming months. The pent-up demand growth and the declining number of COVID cases combined with the government’s impetus to the industry in the Union Budget 2021 will ascertain an exponential recovery in the near future.

The revival of domestic tourism

Although the vaccine administration has begun across India, it is unlikely to reach the larger population before mid-2021. Moreover, the international travel picture still remains vague with the speculations of mandatory vaccine certificate requirements to obtain visas to some countries, particularly the US and EU nations which have been severely hit by the second wave of coronavirus with high case count. Consequently, international leisure travel is expected to remain largely inaccessible in 2021 much like the last year. However, due to the pent-up travel desire, people are now inclined towards leisure travel, with more and more international travellers now turning towards domestic travel for their long-pending retreats and ‘revenge travel’ plans. The timing is just about right for the domestic travel boom that the country has been waiting for!

With safety still taking the front seat, the domestic travel pattern is currently determined by the distance of the destination from home as well as the various safety offerings during commute and stay. Which is why nearby, offbeat destinations that are accessible by short road trips are taking precedence over popular tourist destinations.

Evidently, a similar pattern is being witnessed in the $50 billion Indian wedding industry. With a majority of the weddings scheduled last year stalled to 2021, the affluent couples are looking forward to lavish yet compact weddings to be organised at the nearby ‘unconventional’ destinations as safety still remains the foremost deciding factor.

The advantages of these offbeat destinations are two-fold. Firstly, a boost to the local economy including more sales/businesses in hotels, tourist attractions, restaurants, local art, handicrafts and more which would act as accelerators to help realize the government’s Atma Nirbhar Bharat and Make in India initiatives. Secondly, ensuring the reduced risk of infection as these destinations are lesser-known and hence, less crowded.

Expectation:

As per CARE ratings, India stood 10th worldwide in terms of its annual spend on travel and tourism in the year 2019. The Tourism Ministry’s budgets have, in fact, previously been slashed over the last few budgets to a meagre 1500 crore. In order to spur domestic tourism and make India a world-class tourist destination, we expect that the budgetary allocation is at least increased by 50% to 2250 crore in this budget.

Allocation of funds for road infrastructure

Due to the shift in travel preferences of people post COVID, 2021 is dubbed as the year marking the return of the classic road trips. The onus to make it a success is on the country’s road infrastructure that facilitates full scale and last-mile connectivity. Moreover, if an economy aims at promoting domestic travel, its road connectivity plays a pivotal role.

Investments in the road infrastructure, especially for the remote towns and villages would be a prudent choice to promote local tourism while simultaneously ensuring risk-free travel. This would align well with the government’s vision to build a self-sustained economy creating jobs in smaller towns thereby supporting the local travel and hospitality sector.

Expectation:

The total expenditure on the Ministry of Road Transport and Highways for 2019-20 was around Rs 90,000 crore, growing at a healthy trend over the last 5 years. We would anticipate this to continue and hope that the allocation hit the Rs. 100,000 crore mark in the upcoming budget.

Extend support to the nascent EV industry

Over the last couple of years, the government has been promoting the electric vehicles industry in keeping with the growing consciousness towards environment and energy conservation. Having witnessed a steep decline in pollution levels during the lockdown phase, the vision has not seemed more plausible until now. 2021 seems like an opportune time for the government to focus on achieving a clean, green and sustainable future for the country.

Expectation:

To encourage green commuting, the government needs to focus on the manufacture, infrastructure as well as adoption of electric vehicles in India. Addressing the major challenge faced by the electric vehicle manufacturers could be the solution – reconsidering the 18% GST input on components/raw materials and providing attractive subsidies.

Another bottleneck corresponding to the EV adoption is the lack of associated infrastructure such as charging and battery swapping stations. With Tesla entering the Indian market, it is expected that the upcoming budget will allocate funds for setting up EV infrastructure which will increase its adoption and penetration PAN India.

Focus on religious tourism

In India, pilgrimages and holy sites rank significantly high among the preferred tourist destinations of people, including the lower classes. Religious tourism was severely hit as the prominent religious attractions such as Vaishno Devi, Golden Temple, Tirupati, Shirdi and Siddhivinayak temples remained largely shut during most of the previous year.

Expectation:

As religious travel is expected to soar in 2021, the government should allocate a large pool of funds for the up-gradation of on-premise infrastructure like ticket collection centres, ATMs, cloakrooms, lodging and toilets in these establishments of worship.

In conclusion

The travel and hospitality industry is one of the largest revenue and employment generators in the country. The industry seeks to support and simultaneously holds faith in the government to help the industry emerge from the disruptions caused by COVID-19 and return to normalcy soon.

It will be safe to say that if the budget addresses the subjects of domestic travel, road infrastructure, electric vehicles and religious travel by allocating necessary resources and funds in the upcoming budget, the contribution of travel and tourism industry towards India’s GDP can increase from 6.8% to 10% in the FY 2021.

-by Gaurav Aggarwal, Founder & CEO, Savaari Car Rentals.

Click here to Catch all the action and updates in our Budget 2021 Live blog.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Country saddened by insult to Tricolour on Republic Day: PM Modi

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Prime Minister Narendra Modi said on Sunday that the country was saddened by the “insult” to the Tricolour on Republic Day, referring to the religious flag incident at Red Fort during the farmers’ tractor parade.

In his monthly ‘Mann ki Baat’ broadcast, Modi maintained that his government is committed to “modernising” farming and has been taking many steps.

“The efforts of the government will also continue in future,” he said, amid intense protests by a section of farmers from states like Punjab, Haryana and UP near the Delhi border against three farm reform legislations enacted by his government. Farmer unions have demanded that these laws by repealed.

While recounting a number of developments in January this year, including India’s remarkable come-from-behind series win over Australia in the recent Test series, Modi made a brief reference to the farmers’ tractor rally on Republic Day which witnessed incidents of violence.

“Amidst all this, the country was saddened by the insult to the Tricolour on January 26 in Delhi. We have to infuse times to come with new hope and novelty. Last year, we displayed exemplary patience and courage. This year too, we have to work hard to attain our resolves. We have to take our country forward at a faster pace,” he said.

Referring to India’s corona vaccination exercise underway, the prime minister said the country has not only rolled out the world’s largest vaccination drive but is also vaccinating its citizens at the fastest rate.

The country has vaccinated over 30 lakh corona warriors in 15 days, he said, adding the US and the UK took 18 and 36 days to reach this figure.

“Just as India’s fight against Corona became an example, our vaccination programme too is turning out to be exemplary to the world,” he said.

Noting India’s decision to send vaccines to several countries and the praise it has received from their governments and citizens, he said during the moment of crisis India is able to serve the world since it is capable and self-reliant in the field of medicines and vaccines.

“The same thought underpins the Atmanirbhar Bharat Campaign. The more India is capable, the more will it serve humanity; and the world will benefit more,” Modi said.

Speaking of the recent announcement of Padma award winners, he said the tradition of conferring the honour on unsung heroes that was started a few years ago has been maintained this time too.

“I urge all of you to know more about these people and their contribution,” he said..

Noting that the country is approaching its 75th year of Independence, Modi urged people, especially youngsters, to write about freedom fighters and incidents associated with their struggle.

The freedom struggle was fought with full might in every part, every city, every town and village of India, he said, and highlighted the comments of a resident from Munger in Bihar about the ‘Tarapur Martyr Day’.

On February 15, 1932, Britishers had mercilessly killed several of a group of brave young patriots, and the incident has not received as much publicity as it should have, he said.

“Write books about the saga of valour during the period of freedom struggle in your area. Now, as India will celebrate 75 years of her freedom, your writings will be the best tribute to those heroes of our freedom. An initiative has been taken for young writers for the purpose of India Seventy-Five. This will encourage young writers of all states and of all languages,” Modi said.

With the country observing Road Safety month between January 18 and February 17, the prime minister said road accidents are a matter of concern not just in our country but also the world over.

Modi often highlights the presence of different aspects of Indian tradition and culture in different parts of the world during his monthly radio address and this time spoke of yoga’s popularity in the South African country of Chile.

You will be pleased to know that there are more than 30 yoga schools in Santiago, the capital of Chile, he said, and noted that the name of the Vice President of the Chilean Senate is Rabindranath Quinteros, inspired by India’s nobel laureate poet-philosopher Rabindranath Tagore.

The prime minister also highlighted remarkable efforts of individuals and groups of people in different parts of the country in various fields.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2021: Here are the key expectations of India’s retail sector

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Retail Sector has provided recommendations to the Government, ahead of the upcoming Budget 2021. Retail sector’s wish list includes a reduction in customs duties on certain products such as furniture, toys, etc., enhancing the existing local testing facilities for quality testing of import of certain items, amendment of law under GST to permit cross-state returns, and reviewing Customs Act to control imports under free trade agreements.

Given that year 2020 has witnessed a lot of uncertainties and challenges for all nations across the globe including India and economic activities were severely affected for few months as India imposed several lockdowns to deal with the outburst of the pandemic, government could also consider rationalisation of the licencing process for new entrants and expansion in retail business by complete digitisation whereby significant time can be reduced to obtain licenses for new entrants in the retail sector.

The government could consider re-visiting the hike in customs duties on certain products which act as trade barriers and are against ideas of a global economy and ease of doing business and will lead to higher costs in India for consumers while balancing the need to push Make in India initiative.

Similarly, to ease the burden of double taxation on retail companies where IGST on ocean freight is taxed twice, Government could consider exempting ocean freight from levy of GST as a supply of service when the same is in relation to transportation of imported goods. Other reforms which Government could consider to reduce the overall cost burden could be to allow an input tax credit for retail sector companies who regularly keep adding new stores by closing some of the existing stores and renovate existing stores intended to be used for the furtherance of business or commerce and clarifying allowance of the input tax credit on business promotion expenses in light of recent Advance Ruling which has denied input tax credit on such expenses on the ground that there is no output GST paid on those products.

In order to promote vision of One Country, One Tax, One Market approach and in light of the fact that retail sector is batting for an amendment of law under GST to permit cross-state returns for the retailer.

Also setting up of a national bench of Advance Rulings could help bring certainty in the GST era as divergent rulings by AARs leave the industry flummoxed about the tax implication of a business decision.

Furthermore, due to the ongoing pandemic, companies are also struggling on manpower as well as facing financial hardship and therefore government may consider e-invoicing system to be deferred say till April 01, 2021.

On the Income-tax front, Government could also consider providing incentives such as accelerated depreciation/additional depreciation for boosting retail infrastructure especially in Tier II and Tier III cities of India. To provide relief for various expenditures which a company could have incurred as a fixed cost during the pandemic situation, Government could consider in providing additional tax deductions to companies for overheads like store outlet costs, employee salaries, rent, electricity expenses, etc. during pandemic wedged period.

Reducing tax rates, aligning income tax slabs, increasing basic exemption limits for income tax, increase overall budgetary spending, etc. could help to boost the purchasing power in the hands of the consumer.

To boost new India investments, liberalizing multi-brand Foreign Direct Investment [FDI] norms around less sensitive and high employment generating sectors like electronics, consumer durables, etc would provide more access to capital and expertise to Indian entrepreneurs and start-ups.

So, all eyes now on whether and how the Finance Minister through Budget 2021 addresses the expectations and challenges faced by the Indian Retail Sector. Timely and appropriate support from Government could help Retail sector, which is India’s one of the largest employment generating sector, in improving employment situation especially amongst the needy and relatively less educated class and also accelerate the capital and income flow to the real productive economy like manufacturing, etc.

–Utkarsh Mehta, Manager, EY co-authored the article.
–Paresh Parekh is Partner & National Tax Leader, Retail Sector, EY.

(Views are personal)

Click here to Catch all the action and updates in our Budget 2021 Live blog.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Transfer pricing challenges due to COVID-19: A taxpayer’s wishlist for Budget 2021!

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The COVID-19 pandemic has posed significant challenges to the taxpayer from a transfer pricing perspective. Resolving these challenges may require intervention from the Government. Will Budget 2021 bring some relief to tax payers? This article seeks to highlight some of these and explore possible solutions.

Comparable analysis – Challenges posed by multi-year comparison

The most commonly used benchmarking methods under the transfer pricing law such as transactional net margin method or cost-plus method requires benchmarking of the tax payer’s income or arm’s length price (“ALP”) with that of comparable companies by using multi-year data. For instance, while benchmarking income or ALP of the financial year (“FY”) 2020-21, point data of the taxpayer for FY 2020-21 will be compared with that of the 3-year weighted average of comparable companies.

Because of the COVID-19 pandemic, companies have witnessed significant hit to their businesses in FY 2020-21. Comparing point data with average data of three years will result in skewed outcome from this exercise because 2/3^rd of the comparable company’s benchmark will be weighted by prices or profitability of normal years.

To factor in this effect, one would have to make comparability adjustments, which more often than not have resulted in long drawn litigations.

What can be done to address this challenge?

One solution would be to permit taxpayers to opt-out of performing benchmarking exercise by using multi-year data set. For illustration, the taxpayer can be permitted to benchmark using single year data of comparable companies for the FY 2020-21.

An alternative solution would be to permit benchmarking by comparison of 3-year data of the tax payer’s income or ALP with the 3-year data of the comparable businesses.

Because comparable businesses would be more or less equally affected by the COVID-19 pandemic, this would ensure a like to like comparison. This would deliver a more consistent outcome and avoid the need to make comparability adjustments.

The fundamental assumption behind advance pricing arrangements tested

Advance pricing agreement or APA as is more popularly known as a mechanism to minimise disputes between the taxpayer and the tax department. APAs seek to minimise disputes by getting the taxpayer and the tax department to agree in advance on the assumptions relating to the methodology used in computing income or ALP for future years. The fundamental principle underlying the APA mechanism is that the business environment does not change drastically within the block of years covered by the APA.

COVID-19 pandemic has unsettled this fundamental assumption behind APAs as it has severely and adversely affected several businesses. The assumptions agreed upon in the APA may, therefore, not be achievable or relevant for the current year. Recognising such a situation, tax authorities in countries such as the US and New Zealand have provided relaxations to address this issue. These jurisdictions have either provided for renegotiation of APAs or for exceptions to APAs to handle the breach of APAs for COVID affected years.

The Government could consider bringing in similar relaxations in the upcoming Budget to address this anomaly caused by the COVID-19 pandemic.

Need to be liberal with leverage in pandemic times

Thin capitalisation rules seek to prevent multi-national enterprises from shifting profits out of India by adopting thin capital structure for their group entities in India. In a thinly capitalised structure, the group entities in India would adopt higher leverage and make payments to parent entities in the form of interest.

In pandemic times, multi-national enterprises would be compelled to support their group entities in India as the parent entities would have much stronger balance sheets and credit ratings. Supporting through debt is one of the quickest and relatively simpler route. In some instances, the ceilings stipulated by thin capitalisation rules could be breached leading to disallowances for the Indian group entities.

Given the extraordinary circumstance, this calls for providing some relief to taxpayers from thin capitalisation rules. Jurisdictions such as Australia have adopted mechanisms to provide relief to taxpayers in such circumstances.

One-time guidance to address peculiarities arising from the pandemic

The Central Board of Direct Taxes (“CBDT”) could also consider issuing guidelines to deal with peculiarities arising from this pandemic. Such guidance could cover aspects such as manner of making adjustments to factor the effect of the pandemic on ALP, documentation to be maintained to substantiate these adjustments, identification of appropriate comparables, treatment of cost distortions caused due to the pandemic and its effect on business, treatment of intra-group loans, etc.

In such an extraordinary year, any relief would be a welcome relief.

-by Vasudevan, Executive Partner, Sriram Vijayaraghavan, Principal Associate & Harshit Khurana, Senior Associate, Lakshmikumaran & Sridharan Attorneys

(The views expressed by authors are strictly personal)

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No question of closing the door on talks with government: Samyukta Kisan Morcha

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Samyukta Kisan Morcha spearheading the agitation against the Centre’s three agri laws said on Saturday that there was no question of closing the door on talks with the government.

The farmer union’s statement came after PM Narendra Modi told an all-party meeting earlier in the day that his government’s offer on agri laws made to the protesting farmers “still stands” and it was a “phone call away” for talks.

The protesting farmer leaders observed ‘Sadbhavana Diwas’ on Mahatma Gandhi’s death anniversary and held a day-long fast at various protest sites on Delhi borders.

According to a release issued by Morcha leader Darshan Pal, “Farmers have come all the way to the doorsteps of Delhi to converse with their elected government and therefore, there is no question of the farmer organisations closing the door on talks with the government.”

The last meeting between representatives of protesting farmers and the Centre was held on January 22.

The unions continue to seek repeal of the three farm laws and a legal guarantee of minimum support price (MSP) for crops, the Morcha statement said.

Prime Minister Modi told the all-party meeting that his government’s offer on agri laws made to protesting farmers “still stands” and it was a “phone call away” for talks, days after the violence during farmers’ tractor rally in the national capital on Republic Day.

The Morcha also “condemned” alleged attempts of police to “weaken and destroy” the farmer’s movement.

“It is clear that the police is encouraging various attacks on peaceful protesters. The continuous violence by police and BJP goons clearly shows the palpable fear within the government,” Pal claimed in the statement.

The one-day fast was observed at all borders of Delhi and all over India. The farmers took a pledge to continue their movement peacefully, the statement said.

Reports of farmers observing farmers in various parts of Maharashtra, Tamil Nadu, Karnataka, Gujarat and other states were received, it said.

In Bihar, Sadbhavana Diwas was marked with long human chains in different districts of the state including Muzaffarpur and Nalanda, it added.

Thousands of farmers have been protesting at Delhi’s borders with Haryana and Uttar Pradesh demanding the rollback of the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 and the Essential Commodities (Amendment) Act, 2020. The protest took a violent turn during the farmers’ tractor rally on January 26.

Enacted in September 2020, the central government has presented these laws as major farm reforms aimed at increasing farmers’ income, but the protesting farmers have raised concerns that these legislations would weaken the minimum support price (MSP) and “mandi” (wholesale market) systems and leave them at the mercy of big corporations.

The government has maintained that these apprehensions are misplaced and ruled out a repeal of the laws.

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