India fourth in terms of start-up unicorn numbers

Source: Financial Express, Aug 05, 2020

When it comes to start-up unicorns, India is the fourth biggest behind the US, China and the UK, housing 21 of the global total of 586 in terms of valuation. The combined valuation of these 21 unicorns stand at $73.2 billion. An additional 40 unicorns have been founded by people of Indian origin which are mostly headquartered in Silicon Valley, US, according to the Hurun Global Unicorn Index, 2020. The value of the 40 which have Indian origin founders, but headquartered outside India, stands at $99.6 billion.

The US has 233 unicorns and is closely followed by China with 227 and both of them together account for 79% of the world’s unicorns. UK is third with 24 unicorns.

“The US and China continue to dominate with 80% of the world’s known unicorns, despite representing only 40% of the world’s GDP and a quarter of the world’s population. The rest of the world needs to wake up to providing an ecosystem that allows unicorns to flourish,” Hurun Report India MD and chief researcher Anas Rahman Junaid said.

Start-ups with over $1-billion valuation are called unicorns.

Interestingly, of the 21 Indian unicorns, Chinese investors like Alibaba, Tencent and DST Global have invested in 11 of them. Japanese investor Softbank has investments in 9 of them, while the USA’s Tiger Global has invested in 5.

The number of Indian unicorns is just a tenth of China’s 227, according to the Hurun list. Further, China has only 16 businesses started outside the country by its diaspora as against India’s 40.

A third of the 21 Indian unicorns, which include Paytm, Oyo Rooms, Byju’s, Ola Cabs, etc, are in the e-commerce sector and Bengaluru is the unicorn Capital of India being home to 8 such enterprises, the report said. The youngest Indian unicorn is the 2017-founded Ola Electric, followed by Udaan and Swiggy, it said, adding on average, it takes 7 years for a start-up to achieve unicorn status in India as against 5.5 years in China and 6.5 years in the US.

Valued at $16-billion, Noida-based Paytm is the highest valued unicorn in India, while Robinhood, co-founded by Baiju Bhatt, is the most valuable unicorn which is based outside India. Hangzhou-based Ant Group, spun out of Alibaba in 2014, is the world’s biggest unicorn with a valuation of $150 billion, on the back of its impending IPO in Shanghai and Hong Kong. At the second place is Beijing-based ByteDance, founded by Zhang Yiming in 2012, best known for its news aggregator platform Toutiao and short video platform TikTok. Taxi-hailing app Didi Chuxing, founded in 2012, is the world’s third largest unicorn with a valuation of $55 billion. Last year Didi started expanding outside of China. The Indian Institutes of Technology (IITs) have emerged as the lead source of unicorn founders, with 36 of the founders being from these institutes and IIT-Delhi being the most preferred one. From a gender perspective, the ratio is not favourable, with 104 Indian unicorn founders being male and only five of them being women, the report said.

July exports at nearly last year’s level; economy on path to revival: Goyal

Source: Business Standard, Aug 05, 2020

Showing signs of significant improvement, the country’s exports in July have reached almost the level of the corresponding month last year, Commerce and Industry Minister Piyush Goyal said on Tuesday.

He said several indicators are reflecting that the economic activities are reviving in the country.

“Our exports have almost reached last year’s July level, with nearly 90 per cent of our export of July 2019 having come back. And, in fact if we were to remove the oil related exports, where we are largely a small value adder… we are 95 per cent plus on the revival of our exports,” he said.

The minister added that the country “today is in a mood” to not only bring back economic activity but also become self-reliant, improve the quality and competitive pricing of products.

Officially the export numbers for the month of July would be released by the commerce ministry during mid-August.

India’s exports fell for the fourth straight month in June as shipments of key segments like petroleum and textiles declined but the country’s trade turned surplus for the first time in 18 years as imports dropped by a steeper 47.59 per cent.

Exports in value terms declined by 12.41 per cent to $21.91 billion in June on weak global demand due to Covid-19. After falling for a record 60.28 per cent in April, the rate of contraction of the country’s total merchandise shipments slowed down to 36.7 per cent in May and 12.441 per cent in June.

UPI transactions hit a new high of 149 crore in July with transaction value reaching Rs 2.91 lakh crore

Source: The Economic Times, Aug 03, 2020

New Delhi: The number of payments transacted on Unified Payments Interface (UPI) hit an all-time high of 149 crore (1.49 billion) in July this year, with the value of transactions reaching Rs 2.91 lakh crore, NPCI data showed.

The previous high was 134 crore (1.34 billion) transactions in the preceding month of June, while the value of transactions was Rs 2.61 lakh crore, as per the data from the National Payments Corporation of India (NPCI).

In July 2019, the number of UPI transactions stood at 82.23 crore, with cumulative value of Rs 1.46 lakh crore.

During the April-July period of 2020-21, the cumulative transactions on UPI reached 631 crore. The value transacted stood at Rs 6.31 lakh crore.

In fiscal year 2019-20, the number of UPI transactions was 1,252 crore (12.52 billion), while the value of payments was Rs 21.32 lakh crore.

NPCI was incorporated in 2008 as an umbrella organisation for operating retail payments and settlement systems in India.
It facilitates payments through a bouquet of retail payment products such as RuPay Card, Immediate Payment Service (IMPS), UPI, Bharat Interface for Money (BHIM), BHIM Aadhaar, National Electronic Toll Collection (NETC Fastag) and Bharat BillPay.

India steps on gas as coal use for power generation slows

Source: LiveMint.com, Aug 03, 2020

Indian power plants used the most gas in at least 3-1/2 years in the June quarter, as operators along the west coast snapped up cheap liquefied natural gas (LNG) imports that have become competitive against coal, government data showed.

Power producers say the trend is likely to continue until at least September, and perhaps beyond, providing a bright spot for LNG sellers as demand elsewhere falls due to a global economic slowdown sparked by the coronavirus pandemic.

Gas consumption by power plants rose 11.7% to 104.83 million standard cubic metres per day (mmscmd) in the three months to end-June from the same period last year, data from the Central Electricity Authority (CEA) showed.

Imports accounted for 37.4% of overall gas consumption by power plants, up from 35% a year ago.

Lower spot prices are making natural gas “lucrative” for power plants, according to India’s largest gas importer Petronet LNG Ltd, which recently cancelled a tender to buy long-term LNG.

“I do believe there is some coal switching taking place and imported coal-based power plants may not be competitive vis a vis spot LNG (consuming power plants),” Vivek Mittal, general manager for marketing at Petronet, said on a recent conference call.

India’s imports of spot gas more than doubled in the June quarter from a year ago to the highest in at least 14 quarters, while purchases under long-term contracts slumped by over a third to the lowest in the same period, a Reuters analysis of the available data showed.

Coal sales plunge

The increased use of gas comes as India’s overall electricity demand is expected to fall this year for the first time in decades, with a likely fall in national coal-fired generation.

Sales at state-run Coal India, which sells most of its output to power companies, fell to the lowest level in nearly four years in the second quarter. Weaker sales could continue through end-September due to the annual monsoon, when coal demand and output typically falls and transportation is difficult.

Imports of coal by power plants also fell to the lowest level during the June quarter in at least seven years.

Still, coal remains India’s dominant fuel for power production. More than half of India’s gas-fired plants are also shut because they are not economically viable, which power producers attribute to high taxes and transportation costs.

Gas consumption increased mainly due to higher consumption by companies on India’s west coast, particularly the state of Gujarat, home to some of the country’s biggest LNG import plants.

The state, which is close to producer countries such as Qatar, also has a better gas transportation network, and is relatively far from coal mines, making gas-fired power production relatively cheaper, power producers say.

Gujarat-based private firms such as Torrent Power and utilities run by the state government accounted for nearly all LNG imports by power companies, according to the CEA.

“We expect global LNG prices to be at current levels for the next two years due to low global demand and gas consumption by power plants in Gujarat to increase,” an executive from a large Indian power producer said. “But only plants on the west coast will be able to make use of the price competitiveness with coal.”

July manufacturing PMI falls to 46; overall activity shrinks for 4th month

Source: Business Standard, Aug 04, 2020

New Delhi: India’s manufacturing activity hit a speed bump in July after being on the slow road to improvement in the previous two months as regional lockdowns severely held back demand, leading to contraction in output.

According to the monthly IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) survey released on Monday, manufacturing PMI stood at 46 in July, down from 47.2 in June.

In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction. PMI had fallen to a historic low of 27.4 in April, but had been steadily climbing since.

“The survey results showed a re-acceleration of declines in the key indices of output and new orders, undermining the trend towards stabilisation seen over the past two months,” said Eliot Kerr, economist at IHS Markit.

“Anecdotal evidence indicated that firms were struggling to obtain work, with some of their clients remaining in lockdown, suggesting that we won’t see a pick-up in activity until infection rates are quelled and restrictions can be further removed.”

Kerr warned that any more spikes in cases may bring further lockdowns which would derail a recovery in the sector.

A nationwide lockdown in April, coupled with a crash in export orders, had led to conditions across sectors falling by the biggest margin ever and new businesses collapsing at a record pace. Since then, jobs have been hit the most and employment numbers saw a further slide in July.

The PMI survey showed manufacturers cut jobs yet again in July, while new orders fell for the fourth straight month. Industry bodies said with a dearth of labour and raw material, supply chains could not be established.

Similar to the trend for output, the pace of decline in new orders accelerated from June, but remained slower than at the height of the current crisis. When explaining falling sales, companies often cited prolonged closures at their clients’ businesses, the survey said.

The situation was made worse by plunging demand from international markets, which further deteriorated sales trends. India’s biggest overseas markets for merchandise shipments such as the US, Gulf nations, and the European Union have been hit hard by the ongoing pandemic.

Survey participants said international clients were hesitant to place orders while the duration of the pandemic remained uncertain. That said, the latest reduction in exports was the softest in four months.

The PMI survey, however, showed that manufacturers remained optimistic towards the one-year business outlook, with sentiment strengthening for the second month to a five-month high. As a result of reduced output, firms continued to cut their purchasing activity, with the result extending the current run of contraction to fifth months. The latest decline in input buying was faster than in June, said IHS Markit.

On the cost front, input prices faced by Indian manufacturers continued to fall. However, the rate of decrease moderated from June, but remained far softer than April’s survey record. Panellists said subdued demand for most goods more than offset the inflationary effects of shortages in some raw materials. Experts say the aftershocks of the lockdown continued to weigh on domestic industry, even as an uneven recovery started taking shape.

FDI in commercial mining: Govt nod needed for companies from nations sharing border with India

Source: The Economic Times, Aug 03, 2020

New Delhi: The Centre on Monday clarified that any foreign direct investment (FDI) in commercial coal mining from an entity of a country that shares land border with India will be allowed only after government approval.

“This is with reference to the ongoing auction process of coal mines for commercial coal mining…It is further clarified that any FDI (foreign direct investment) in the commercial coal mining is subject to applicable laws including the Press Note 3 of 2020 issued by the Central Government….,” the coal ministry said in a statement.

According to the Press Note 3 of 2020, ‘an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route’, it added.

Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest only under the government route in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment, the statement said.

A corrigendum to the tender document has also been issued in this regard, it added.

Foreign Direct Investment Policy, 2017 was amended vide the Press Note 4 of 2019, issued by the central government, to permit 100 per cent FDI under automatic route in coal mining activities, including associated processing infrastructure, for sale of coal, subject to the provisions of Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957 and other relevant Acts on the subject.
Accordingly, it was stated in the tender document that “The Press Note 4 of 2019, issued by the Central Government, amended FDI Policy 2017, to permit 100 per cent FDI under automatic route in coal mining activities, including associated processing infrastructure subject to the act and other applicable Laws, for sale of coal.”

It is further clarified that any FDI in the commercial coal mining is subject to applicable laws, including the Press Note 3 of 2020, the statement said.

Prime Minister Narendra Modi launched the auction process of coal blocks for commercial mining in June.

Eye on China, India looks to increase barriers on imports from Asia

Source: The Economic Times, Aug 04, 2020

NEW DELHI: New Delhi is considering measures to prevent trade partners mainly in Southeast Asia from re-routing Chinese goods to India with little added value, two government sources said, amid strained ties with Beijing and a push for self-reliance.

India is planning to raise quality standards of imports, impose quantity restrictions, mandate stringent disclosure norms and initiate more frequent checks at ports of entry for goods coming from many Asian countries, the officials said, declining to be named as they were not authorised to talk to the media.

The moves will mainly target imports of base metals, electronic components for laptops and mobile phones, furniture, leather goods, toys, rubber, textiles, air conditioners and televisions, among other items, the officials said.

Last week, India’s trade ministry issued a notice to restrict inbound shipments of TVs by requiring importers to get a special licence.

The moves are expected to primarily hurt Malaysia, Thailand, Vietnam and Singapore – members of the Association of Southeast Asian Nations (ASEAN) with which India has a free trade agreement (FTA). India is also worried about heavy trade flows from South Korea.

“Raising duties has a limited impact,” said one of the officials. “Now we want to raise quality standards and also make sure that goods in FTA routes have roots in those countries. So customs would be more vigilant than before.”
India’s trade ministry did not immediately reply to an email seeking comment.

The government will also discuss raising the value-addition requirement for products imported from those countries from the current level of 20%-40%, the official said, adding FTAs could be reviewed too.

“A lot of the Asian partners have become a place from where just Chinese goods are routed. We are going product by product to design various kinds of action, most of which will be on non-tariff lines,” the official added.

India has long had an uneasy relationship with China and a Himalayan border dispute escalated into the worst clash in decades in June. India said 20 of its soldiers were killed.

China is also India’s second-biggest trading partner, with trade worth $87 billion in the fiscal year ending March 2019, and a trade deficit of $53.57 billion in China’s favour, the widest India has with any country.

Thai and Malaysian authorities said they had not received any official communication on the issues of raising non-tariff barriers or re-routing of goods.

Thailand’s trade ministry said in a statement to Reuters that the ASEAN treaty should be reviewed to make it more liberal in terms of tariff liberalization and rules of origin and to have simpler customs and verification procedures.

Meanwhile, Indian officials said the government was inclined to only stick to those FTAs that it deems mutually beneficial. India has a trade deficit with most of the countries it has signed FTAs with.

“Very clearly in ASEAN agreements India has got, in many respects, the bad end of the stick, particularly in the field of electronics where we now find a number of products are being routed through the ASEAN economies to India,” said George Paul, CEO of the Manufacturers’ Association for Information Technology.

July sales bring some cheer to automakers

Source: The Hindu Business Line, Aug 02, 2020

New Delhi: After four months of negative sentiments ruling the automobile sector due to Covid-19 disruptions, the July wholesale numbers have given some hopes to manufactures with sales picking up marginally for some players. Enquiries and bookings, too, are up. The upswing is expected to continue throughout the festive season over the next few months.

Whether it is passenger vehicles or the two-wheeler segment, companies have reported either better sales or inched-in nearby, during the month as against the same month last year.

In the passenger vehicle segment, market leader Maruti Suzuki India (MSIL) has reported positive growth (by around 1 per cent) year-on-year (YoY) by dispatching 97,768 units in the domestic market as compared with 96,478 units in July 2019.

However, the country’s second largest passenger car maker Hyundai Motor India (HMIL) reported domestic sales of 38,200 units in July, a decline of two per cent YoY as compared to 39,010 units in corresponding month last year.

But, new entrants like MG Motor and Kia Motorss India continue to sell more vehicles every month.

“With the changing trend of preference for personal mobility, our consistent efforts are towards fulfilling the customer needs and meeting the market demand. With 38,200 units, July ‘20 domestic sales volume is 98 per cent of July ‘19 domestic sales volume,” Tarun Garg, Director (Sales, Marketing and Service), HMIL, said.

Similarly, Veejay Nakra, Chief Executive Officer, Automotive Division, M&M, said there is a growing trend in overall vehicle sales, primarily in rural and semi urban India. In the two-wheeler segment also, the companies have reported higher sales as compared to June. For instance, market leader Hero MotoCorp has reported sales of 5,06,946 units (5,11,374 units). TVS Motor Company reported domestic sales of 1,89,647 units (2,08,489 units).

Exports show signs of improvement, but the labour shortage still an issue: FIEO

Source: The Hindu Business Line, Aug 02, 2020

New Delhi: The country’s merchandise exports will further revive in the coming months as order books are showing signs of improvement, even as the industry is still facing a labour shortage, according to exporters.

Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said there is no problem of orders in the shorter run, but exporters are still not getting long-term orders.

“We are expecting that the situation will improve further as the order book situation is improving. Orders are mainly coming from the US and European countries,” Sahai said.

On labour shortage, he said that factories are still not running at full capacity, but the situation will improve in the next few months.

Council for Leather Exports Chairman P R Aqeel Ahmed said the sector is doing well as “our order books are improving“.

Sharing similar views, Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said there is a positive sentiment for Indian goods, and this is helping in pushing the outbound shipments.

“Orders are coming. This year we are hoping that we will be able to significantly increase our exports. Factories are running at about 60 per cent capacity. By November, we will be able to reach the pre-Covid level,” Sakthivel said.

Ludhiana-based Hand Tools Association President S C Ralhan too said that order books are good with engineering exporters.

“But we are facing problems because of the labour shortage. Still, only 50 per cent of the workers are coming to factories, and due to this, we are not able to ramp up our production,” he said.

Ralhan hoped that after the flood water recedes in states like Bihar, labour movement would start.

Export Promotion Council for Handicrafts (EPCH) Executive Director Rakesh Kumar said that orders are coming, but due to shortage of workers, there is a problem in boosting production.

“Labours are not coming in full shifts,” he said.

Kumar also urged the government to address issues related to merchandise export from India scheme (MEIS) as exporters are not able to fix the prices on their products.

“MEIS helps in increasing price competitiveness of exporters, but due to the uncertainty over the scheme, exporters are in confusion over fixing the price of new orders,” he added.

June data

India’s exports fell for the fourth straight month in June as shipments of key segments like petroleum and textiles declined, but the country’s trade turned surplus for the first time in 18 years as imports dropped by a steeper 47.59 per cent.

Export sectors which recorded negative growth in June include gems and jewellery (-50 per cent), leather (-40.5 per cent), petroleum products (-31.65 per cent), engineering goods (-7.5 per cent), ready-made garments (RMG) of all textiles (-34.84 per cent), and cashew (-27 per cent).

Import segments which recorded negative growth include gold, silver, transport equipment, coal, fertiliser, machinery and machine tools.

However, exports of oilseeds, coffee, rice, tobacco, spices, pharma, and chemicals reported positive growth in June.

Indian Oilseeds and Produce Export Promotion Council (IOPEPC) Chairman Khushwant Jain said that oilseed exports are recording growth on account of sound output and steps taken by the government to promote shipments. During April-June 2020, exports fell by 36.71 per cent to USD 51.32 billion while imports shrank by 52.43 per cent to USD 60.44 billion. The trade deficit stood at USD 9.12 billion during April-June.

AIIB in talks with India for financing of $8-billion health infra scheme

Source: Business Standard, Aug 02, 2020

New Delhi: The Asian Infrastructure Investment Bank (AIIB) is in discussion with the Indian government for financing a $8-billion scheme for improving health infrastructure at the district level to make the country better prepared for the future healthcare challenges.

The Beijing-based multilateral funding agency had earlier approved a financial assistance of $1.2 billion for India to fight the Covid-19 pandemic.

“The Government of India has discussed about its ambitious scheme of strengthening the health infrastructure. It entails building health infrastructure in every district including upgrading of testing facilities with the Indian Council of Medical Research (ICMR),” AIIB Vice President D J Pandian told PTI in an interview.

It is a $8-billion project, he said, adding that the World Bank and Asian Development Bank are also involved in the discussion with the Health Department of the Government of India.

The Finance Ministry is trying to put up a financing plan for this ambitious scheme and the minute details are being worked out, he said.

If things work out, the financing by the AIIB can be cleared this year itself on a fast-track basis, he added.

With regard to Covid-19 assistance, Pandian said the AIIB has approved two loans of $500 million and $750 million, respectively.

The first loan of $500 million sanctioned in May was towards building a resilient health system that can effectively treat Covid-19 patients and prevent its spread, he said

A $750 million loan was approved in June to help the government strengthen its battle against the adverse impact of Covid-19 on poor and vulnerable households.

For AIIB, India is the largest borrower, which accounts for 25 per cent of the total lending by it so far. As of July 16, 2020, AIIB has approved up to $19.6 billion for 87 projects in 24 economies. Since its inception in 2016, AIIB has approved loans to the tune of $4.3 billion across 17 projects in India.

India is a founding member of the multilateral funding agency with the second highest voting share. Currently, India has 7.65 per cent vote share in the AIIB while China holds a whopping 26.63 per cent stake in the organisation that was set up in 2016.