Curbs on companies from countries illegally holding Indian land

Source: The Economic Times, Jul 02, 2020

New Delhi: As tensions run high along the border with China, the government is examining a proposal to impose trade and procurement curbs on companies from countries ‘illegally occupying Indian territory’, specifically those active in territories such as Pakistan-Occupied Kashmir (PoK).

ET has gathered that while a final call is yet to be taken, high-level discussions are underway to scrutinise the proposal threadbare, and discuss its implementation and business implications.

Any decision would directly impact Chinese firms as the northern neighbour ‘illegally occupies’ 38,000 sq km of Indian territory in Ladakh. Also, Pakistan, which has occupied a part of Kashmir, has ceded over 5,000 sq km in the Shaksgam Valley to China.

If the proposal is accepted, the curbs are likely to be brought in through changes in the Public Procurement (Preference to ‘Make in India’) Order of 2017, sources said. Some changes may also have to be made in the General Financial Rules. Officials confirmed that the proposal is being looked at carefully, given its ‘high sensitivity’ and possible ramifications on diplomatic ties with China.

In April, without naming China, the government had removed FDI coming in from that country from the automatic route, fearing hostile takeovers. “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,” the notification said.

Big Investments by Chinese Companies
However, the FDI bar preceded the ongoing standoff on the Line of Actual Control (LAC) in eastern Ladakh. The proposal to restrict companies has picked up pace because of the rising tensions between India and China. On Monday, India banned 59 Chinese apps by invoking the national security clause in the IT Act. There are several Chinese companies in India with huge investments in infrastructure projects and telecom equipment.

The discussions are being held amid a growing chorus to keep China’s Huawei out of India’s planned 5G trials.

Issued in June 2017, the Public Procurement (Preference to ‘Make in India’) Order of 2017 could be key to more such moves. The order is central to the initiative to ensure preference in government procurements for local suppliers, and calls for a minimum local content of 50%.

THE PROVISION
The only provision that deals with foreign governments in the 2017 order is Clause 10(d). This clause says that if a nodal ministry is satisfied that Indian suppliers of an item are not allowed to participate/compete in procurements by a foreign government, it may restrict or exclude bidders from that country from eligibility for procurement of that item and/or other items.

New Delhi has in the past urged other nations to not invest in Indian territories illegally occupied by neighbours. In September 2019, ET had reported that defence minister Rajnath Singh had urged South Korea to block investments in infrastructure and other projects in PoK.

Korea had assured India that it would not grant any governmental benefits, such as subsidies and tax breaks, to its companies setting up shop in the disputed region.

Ministry launches online portal for MSME registration

Source: The Hindu Business Line, Jun 30, 2020

The Ministry of Micro, Small and Medium Enterprises (MSMEs) on Tuesday launched a new portal for MSME registration. The new process of classification and registration of enterprises starts on July 1.

“The MSME registration process is fully online, paperless and based on self-declaration. No documents or proof are required to be uploaded for registering an MSME,” said an official release.

The portal guides entrepreneurs step by step as to what they should know and what they should do.

After completion of the registration process, an ‘Udyam Registration’ Certificate will be issued. This certificate will have a dynamic QR Code from which the webpage on the portal and details about the enterprise can be accessed, the release added.

The Ministry also clarified that except this portal (www.udyamregistration.gov.in) and the government’s Single Window Facilitation System, no other private online or offline system, service, agency or person is authorised or entitled to do MSME registration or undertake any activity related to the process.

“No enterprise is supposed to file for more than one Udyam Registration. However, any number of activities including manufacturing or service or both may be specified or added in one registration,” the official release added. The registration process is free.

Digital strike: India bans 59 Chinese mobile apps on security threat

Source: Business Standard, Jun 30, 2020

Mumbai: India has banned 59 Chinese mobile apps, including the popular SHAREit, TikTok, UC Browser, and SHEIN, citing them to be a security threat. The government invoked its powers under Section 69A of the Information Technology Act and relevant provisions under IT Rules 2009 to block these apps, the Ministry of Electronics and Information Technology (MeitY) said on Monday.

The move did not come as a surprise as it comes in the backdrop of stand-off along the Line of Actual control in Ladakh with Chinese troops. Other popular apps on the ban list include Club Factory, Helo, and CamScanner. The ministry said it had received complaints about the misuse of some mobile apps available on the Android and iOS platforms “for stealing and surreptitiously transmitting user data” in an unauthorised manner to servers located outside India. The Indian Cyber Crime Coordination Centre and the Home Ministry, who had had earlier sent an exhaustive recommendation on the apps to be blocked, were consulted on this issue, the MeitY statement said.

“The government believes these are data-mining apps that compromise the user’s data and national security,” said Salman Waris, managing partner at New Delhi-based specialist technology law firm TechLegis Advocates & Solicitors. “The next move could be the Department of Telecom asking internet service providers to block IP addresses and access to these apps.”

Waris said the sentiment could hamper the flow of Chinese capital into Indian start-ups. The government had in April amended the foreign direct investment (FDI) policy, saying that an entity of a country, which shared a land border with India, can only invest through the government route.

Blaise Fernandes, director, Gateway House, said there were essentially four types of Chinese apps in India — economic, service oriented, vanity, and strategic. “The Digital India story is globally tracked. Baidu, Alibaba, and Tencent are part of the digital ‘Silk Route’ of China.

The ban of the 59 Chinese apps in India will negatively impact the valuations of these apps and their respective promoters,” Fernandes said. The official referred to the upcoming IPO of TikTok and said: “Almost 30 per cent of its user base comes from India. This (ban) will impact TikTok’s valuations negatively.”

However, most home-grown start-ups and Confederation of All India Traders welcomed the move. The CAIT said it was a “big support” to its “Boycott Chinese Goods” campaign. Berges Malu, director (public policy) at ShareChat, a social media start-up, said: “This is a welcome move against platforms that have had serious privacy, cyber-security and national security risks.”

Oracle sets up second cloud region in India to take on Amazon, Microsoft

Source: Business Standard, Jun 29, 2020

Bengaluru: Oracle, one of the world’s biggest technology companies, is increasing its investments in India, which is becoming its major battleground to take on rivals Amazon, Microsoft and Google and dominate cloud computing services. The Redwood City-, California-based firm has announced its second Cloud region in India in Hyderabad. The firm is betting big to sell its cloud technology to Indian businesses, the government and start-ups to unlock innovation and drive business growth.

“India is one of the few countries in the world that has got two (such) cloud regions. That’s a big thing and the reflection of Oracle’s commitment to India and the fact that there is a growing cloud business for us here,” said Sriram Rajan, vice president – Cloud (India) at Oracle. “India is going to be a very important market for Oracle globally. Our customers are running in thousands and we have doubled our customer base over the last four year.”

The opening of the new facility follows the launch of its Mumbai Cloud region in 2019. Oracle said the new region makes India the company’s latest country with multiple cloud regions available and capability to effectively meet the increasing demand for secure and stable enterprise cloud services. Oracle said it will provide enterprise customers in India better performance, pricing, and security based on its second-generation cloud. With this launch, India joins the US, Canada, Japan, Australia, South Korea, and the European Union in having multiple Oracle Cloud regions that facilitate enterprise-class disaster recovery strategies.

“With Oracle opening dual cloud regions in Australia, Japan, Korea and now India, we are further renewing our commitment to support growth in the new decade,” said Garrett Ilg, executive vice president, Japan and Asia Pacific, Oracle.

Oracle said its unique dual region strategy enables customers to deploy resilient applications in multiple independent cloud regions for disaster recovery – without having sensitive data leave the country. The firm said it is thereby complying with regulatory requirements around data sovereignty as well as operational issues associated with operating in multiple countries.

“A large number of Indian organizations are looking to change growth orbits with a greater focus on cloud-led innovation,” said Shailender Kumar, regional managing director, Oracle India. “With two Oracle Cloud regions live in India, we’re fully geared to support our 15000 plus customers in their innovation journey, with adequate support by nearly 1000 specialized Oracle partners.”

Oracle competes with global rivals, such as Amazon Web Services, Microsoft, and Google, to dominate cloud computing services.

In India, Oracle provides its technology to customers including Indian Farmers Fertiliser Cooperative Limited, Manappuram Finance and Indian Oil Corporation Limited. It also counts Birla Institute of Technology and Science (BITS) Pilani, HDFC Bank and government’s policy think tank Niti Aayog among its customers.

“Oracle continues powering a large number of our citizen-centric services,” said Jayesh Ranjan, principal secretary, industries & commerce (I&C) and information technology (IT), Government of Telangana. “This (new cloud region) will surely help both public and private enterprises in our state to take advantage of Oracle cloud services.”

According to a report by technology research firm Canalys, cloud infrastructure services spending worldwide hit yet another record at $31.0 billion in the first quarter of 2020, growing at 34 per cent year-on-year. It said growth was driven by organisations around the world moving to remote working owing to the pandemic. As a result, enterprises sought rapid access to compute resources in the face of lockdowns and disruption. A surge in demand for online collaboration tools, e-commerce, and consumer cloud services drove sharp increases in cloud infrastructure consumption, benefiting all major cloud providers, the report added.

Rishu Sharma, principal analyst, cloud and artificial Intelligence at research firm IDC India said now as Indian enterprises start their journey towards getting back onto the growth track, they will look first for locally-based cloud infrastructure and services providers. The providers would be chosen based on the ability to provide low latency, in-country services to access data and its data management and analysis, bullet-proof security and interoperable cloud environments.

“A provider that can fulfil these demands and complies with the data sovereignty laws of the country will be viewed as a partner of choice,” said Sharma. “By the addition of this second cloud region, Oracle has enhanced its position in the Indian market with increased capacity to meet customer demands for cloud services that deliver resilient digital infrastructure.”

MSMEs may need massive restructuring post moratorium, says industry

Source: Business Standard, Jun 26, 2020

Kolkata: Micro, small, and medium enterprises (MSMEs) might need large-scale restructuring in August once the moratorium on loan repayment is lifted, people in the industry have said.

Most small businesses have started opening up with Unlock 1.0 but they continue to remain under stress due to lack of demand.

In March, the Reserve Bank of India (RBI) had launched three-month moratorium on loans, which was extended by another three months. Customers can now avail of moratorium till August, albeit at a higher cost on account of accrued interests.

“About 40-50 per cent of borrowers are availing of the moratorium and the stress is likely to continue. Across the banking sector, small businesses have been seriously impacted and banks might have to make high provisions for them if restructuring is not done. This will seriously impact balance sheets of all banks,” said Samit Ghosh, founder of Ujjivan Financial Services, adding that MSMEs might need further restructuring after the moratorium period is over.

S Harisankar, managing director and chief executive officer of Punjab & Sind Bank, said they were adopting a wait and watch approach. “If cash flow improves, MSMEs will be self-sustainable. If it doesn’t, we will have to be open for further restructuring and forbearance,” he said.

Small industries have proposed to extend the moratorium till March 31, 2021. “For most MSMEs, the supply chain is largely disrupted, there is an acute labour shortage, and the export market is very weak. Most importantly, there is not much demand in the market,” said Chandrakant Salunkhe, founder and president of SME Chamber of India and SME Importers Association of India.

According to estimates by Small Industries Development Bank of India (Sidbi), recoveries have been around 40-65 per cent in June for most non-banking financial companies, including microfinance operators.


Microfinance lenders that lend to small businesses have been witnessing better recoveries as their lending has been mostly concentrated in rural areas. Most of the loans sanctioned by Sidbi have been for emergency purposes, such as paying staff salaries, according to sources. Sidbi had received Rs 15,000 crore from the RBI to provide financial help to MSMEs.

“Although 75 per cent of our customers are in rural areas, if we look at pure urban customers, we find small businesses have been very badly affected. It is quite possible that they might need some restructuring once the moratorium is lifted,” said H P Singh, chairman and managing director, Satin Creditcare Network.

In rural areas, income from harvesting season, along with the essential nature of rural occupations, helped rural borrowers to be more resilient to the economic slowdown due to Covid. Recently, Finance Minister Nirmala Sitharaman had said that banks had sanctioned working capital loans of Rs 75,426 crore under the Rs 3-trillion Emergency Credit Line Guarantee Scheme for MSMEs. Of the sanctioned amount, Rs 32,895 crore has been disbursed. Under the scheme, the government offers full guarantee on up to 20 per cent additional and collateral-free working capital loans.

Google India launches new features for small enterprises to go digital

Source: Business Standard, Jun 25, 2020

Google India on Thursday announced a slew of new products and initiatives for small enterprises to help them to recover and rebuild their business amid the Covid-19 pandemic by going digital.

It has launched ‘Grow with Google Small Business hub’ in India that will serve as a single destination for all small businesses to get access to all the products and tools they need to go digital, maintain business continuity and get access to helpful resources like quick help videos and support pages to learn digital skills, a statement said.

This will soon be made available in Hindi as well, it added.

To help these businesses start using digital payments, Google has also introduced new features on Google My Business app and Google Pay for Business. These features will help small businesses to be discovered by customers across Google search and maps and start accepting digital payments, it said.

“We have consistently invested in programmes and solutions to remove the barriers that come in the way of small and medium businesses benefiting from digital. And every month we drive over 150 million direct connections between these businesses and customers including calls, online reservations and direction requests,” Google Director India Customer Solutions Shalini Girish said.

However, the ongoing Covid-19 pandemic and the ensuing lockdowns have accelerated the need for many more businesses, especially small businesses to adopt technology and get online to minimise the disruption and recover, Girish added. “We recognise that recovery will come in different stages for different businesses and navigating the digital world can be a daunting experience for many. Under our Digital Unlocked programme, we are proud to have supported over 1 million businesses and individuals to gain from our digital skilling programme in India,” she said adding that the company will double down on this effort.

Gadkari launches credit guarantee scheme worth Rs 20,000 cr for MSMEs

Source: Business Standard, Jun 24, 2020

New Delhi: Union Minister Nitin Gadkari on Wednesday launched the Credit Guarantee Scheme for Sub-ordinate Debt to provide Rs 20,000 crore of guarantee cover to 200,000 micro, small and medium enterprises.

The funding scheme to help the distressed MSME sector entails a sub-debt facility to the promoters of those operational MSMEs that are distressed or non-performing assets (NPAs). It is also called the ‘Distressed Assets Fund Sub-ordinate Debt for MSMEs’.

According to the scheme, the guarantee cover worth Rs 20,000 crore will be provided to the promoters who can take debt from the banks to further invest in their stressed MSME units as equity.

“It was being felt that the biggest challenge for stressed MSMEs was in getting capital either in the form of debt or equity. Therefore, as part of Atmanirbhar Bharat package, on May 13, 2020, Finance Minister (Nirmala Sitharaman) had announced this scheme of sub-ordinate debt to the promoters of operational but stressed MSMEs,” an official statement said.

After completion of the necessary formalities including approval of the Cabinet Committee on Economic Affairs and consultation with the finance ministry, SIDBI and the Reserve Bank of India (RBI), the scheme was formally launched by Gadkari in Nagpur.

The scheme seeks to extend support to the promoters of the operational MSMEs that are stressed and have become NPAs as on April 30, 2020.

Promoters of the MSMEs will be given credit equal to 15 per cent of their stake (equity plus debt) or Rs 75 lakh, whichever is lower.

The promoters will in turn infuse this amount into the MSME unit as equity and thereby enhance the liquidity and maintain debt-equity ratio.

Ninety per cent guarantee coverage for this sub-debt will be given under the scheme, whereas the remaining 10 per cent would come from the promoters concerned. There will be a moratorium of seven years on payment of principal amount, whereas maximum tenor for repayment will be 10 years.

“It is expected that this scheme would provide much-required support to around 200,000 MSMEs and will help in reviving the economic activity in and through this sector. It will also help in protecting the livelihoods and jobs of millions of people who depend on them,” the statement said. Promoters of MSMEs meeting the eligibility criteria may approach any scheduled commercial banks to avail benefit under the scheme. The scheme will be operationalised through Credit Guarantee Fund Trust for MSEs (CGTMSE).

Cabinet approves participation of private sector in space activities

Source: Business Standard, Jun 24, 2020

The Cabinet on Wednesday approved participation of the private sector in the entire range of space activities, including planetary exploration missions, Union minister Jitendra Singh said.

The newly-created Indian National Space Promotion and Authorisation Centre (IN-SPACe) will provide a level playing field for private companies to use Indian space infrastructure, Singh, who is the Minister of State in the Prime Minister’s Office, said.

The Department of Space comes under the PMO.

This centre will also hand-hold, promote and guide the private industries in space activities through encouraging policies and a friendly regulatory environment, Singh added.

The ‘New Space India Limited (NSIL), a PSU under the Department of Space, will endeavour to re-orient space activities from a ‘supply driven’ model to a ‘demand driven’ model, thereby ensuring optimum utilisation of our space assets, the minister said.

The Cabinet decisions come weeks after Finance Minister Nirmala Sitharaman announced opening up of the space sector for private entities.

Some of the planetary exploration missions will also be opened up to private sector through an ‘announcement of opportunity’ mechanism, a government statement said.

“This will not only result in an accelerated growth of this sector but will enable Indian Industry to be an important player in global space economy. With this, there is an opportunity for large-scale employment in the technology sector and India becoming a global technology powerhouse,” it said.

The proposed reforms will enhance the socio-economic use of space assets and activities, including through improved access to space assets, data and facilities. These reforms will allow ISRO to focus more on research and development activities, new technologies, exploration missions and human spaceflight programme, Singh said.

Government approves Rs 15,000 crore Animal Husbandry Infra Development Fund

Source: The Economic Times, Jun 25, 2020

NEW DELHI: The government on Wednesday announced a Rs 15,000 crore infrastructure development fund with an interest subsidy scheme to promote investment by private players and MSMEs in dairy, meat processing and animal feed plants, a move which is expected to create 35 lakh jobs.

The fund is part of the Rs 20 lakh crore stimulus package announced in May to help people affected by the lockdown to prevent the spread of COVID-19.

An interest subvention of 3-4 per cent will be provided to farmer producer organisations, MSMEs and private players for setting up of dairy, meat processing and animal feed plants, an official release said.

The Animal Husbandry Infrastructure Development Fund (AHIDF) was approved in the Cabinet meeting, chaired by Prime Minister Narendra Modi.

Briefing about the Cabinet decisions, Information and Broadcasting Minister Prakash Javadekar said: “A Rs 15,000 crore fund has been approved by the Cabinet that will be open to all and will help in increasing milk production, boost exports and create 35 lakh jobs in the country.”

Animal Husbandry Minister Giriraj Singh said the government had earlier approved the Dairy Infrastructure Development Fund (DIDF) worth Rs 10,000 crore for incentivizing investment by the cooperative sector for development of dairy infrastructure.

“However, the MSMEs and private companies also need to be promoted and incentivized for their participation in processing and value addition infrastructure in the animal husbandry sector,” he said.

The AHIDF would promote infrastructure investments in dairy, meat processing and animal feed plants. Farmer producer organizations (FPOs), MSMEs, Section 8 companies, private companies and individual entrepreneurs would be eligible to benefit from the fund, he added.

The minister said the beneficiaries will have to contribute 10 per cent margin towards the proposed infra project and the rest 90 per cent would be a loan component to be made available to them by scheduled banks.

“For the first time, we will give interest subvention up to 3 per cent to private players for setting up of processing infrastructure for dairy, poultry and meat,” he added.

In an official statement, the government said that 3 per cent interest subvention will be given to eligible beneficiaries from non-aspirational districts. About 4 per cent interest subvention would be given to beneficiaries from aspirational districts.

Aspirational districts are those that are affected by poor socio-economic indicators. There are about 115 such districts in the country.

The government said that there will be a two-year moratorium period for repayment of loans with six years repayment period thereafter.

Besides, the Centre would also set up a Credit Guarantee Fund of Rs 750 crore to be managed by National Bank for Agriculture and Rural Development (NABARD) which would provide credit guarantee to the projects which are covered under the MSME defined ceilings. The guarantee coverage would be upto 25 per cent of the credit facility of the borrower, it added.

Highlighting the benefits of the new infra fund, the government said there is huge potential waiting to be unlocked through private sector investment in the animal husbandry sector.

“The AHIDF with the interest subvention scheme for private investors will ensure availability of capital to meet upfront investment required for these projects and also help enhance overall returns/ pay back for investors,” it said.

Such investments in processing and value addition infrastructure by eligible beneficiaries would also promote exports. Since almost 50-60 per cent of the final value of dairy output in India flows back to farmers, the growth in this sector can have a significant direct impact on farmer’s income, it said.

Size of the dairy market and farmers’ realization from milk sales is closely linked with development of organized off-take by cooperative and private dairies.

Thus, investment of Rs 15,000 crore through AHIDF would not only leverage several times more private investment but would also motivate farmers to invest more on inputs thereby driving higher productivity leading to increase in farmers income, it added.

Indian fashion industry on the verge of collapse

Source: ETRetail.com, Jun 24, 2020

New Delhi: New Delhi: The Indian fashion industry is on the verge of collapsing amid supply orders drying up from retailers that are already reeling under mountains of unsold inventories.

Garment manufacturers said they received virtually no order from domestic fashion retailers in May and June, generally a busy time for businesses for the fall season, and that they don’t expect any significant improvement in July either.

On Tuesday, several Twitter users shared a video showing a protest by hundreds of workers outside a Bengaluru factory that produced goods for retailers including H&M. “H&M cancelled orders and refused to pay for (the) work done,” a tweet said.

An H&M spokesperson, in response to the tweet, said, “The drop in customer demand due to Covid-19 will inevitably impact suppliers. However, we are placing orders with this supplier and we fully stand by our responsible purchasing practices. We are in dialogue with the supplier and the trade unions to resolve the conflict peacefully.”

With most fashion brands looking to run their unsold spring-summer collections until October without placing fresh orders, garment manufacturers say many factories will be closed and hundreds of thousands will lose their jobs.

“Retailers will be liquidating inventory for the next two months and they will only start placing orders when the cash cycle starts to improve,” said Kulin Lalbhai, executive director at Arvind Ltd that supplies apparel products to both domestic and international clients. “It will mean a couple of months of very low orders… People (retailers) would be cutting down their overall autumn-winter orders by more than 50%.”

Most garment shops opened earlier this month after more than two months of anti-coronavirus lockdown, but sales have remained tepid.

Sales of goods in malls are paltry at around 25% of pre-Covid levels, retailers said.

“Footfalls have been below expectations in malls as well as in high streets, specifically in the metro cities,” said Rakesh Biyani, managing director of Future Group that sells fashion brands such as FBB, Lee Cooper, Converse and Clarks.

He said retailers were expecting around 50% of mall traffic to be back, but currently footfalls in malls are hovering around only 25% of pre-Covid period.

“The situation of the retail industry is very bad,” Biyani said. “You need 60-70% sales just to make ends meet. That is why the domestic retail industry is not placing any orders.”

On Wednesday, a group of retailers are scheduled to have a videoconference meeting with finance ministry officials. They would ask for financial stimulus for the beleaguered industry, industry insiders said.

Fashion retailers were ready with their spring-summer collections in early March but many could not even launch them as most states ordered closure of shopping malls to curb the spread of the Covid-19 by then and then in late March the nationwide lockdown started. Hence, the move to run the unsold inventory until October when the winter season begins.

“The intention is to continue with the existing collection till the end of this year,” said Sundeep Chugh, CEO of Benetton India. “This may lead to an overall drop of orders by around 40% as compared to last year.”

Siddharath Bindra, MD of Biba, said the ethnic brand is reducing its orders for the August to December season by 40%. “We are also moving some of existing inventory into the next season,” he said.

A top executive of another ethnic brand said his firm has curtailed its orders this year by 50% as its sales are hovering around 35% of the pre-Covid levels.

Retailers Association of India (RAI), which represents thousands of modern outlets, said the fashion apparel business declined by 70% year on year during June 1-15.

“Customers are still wary of getting into retail stores and we are only doing about 30% of business compared to last year,” said Kumar Rajagopalan, chief executive of RAI. “With that kind of sales we have enough stocks for the next four months. So manufacturers are not getting the orders.”

Manufacturers confirmed that they have hardly received any fresh order for retailers.

“Even the orders for winterwear this year is going to be limited because of the cash crunch the retailers are facing,” said Rahul Mehta, chief mentor of Clothing Manufacturers Association of India (CMAI).

So, the only ground for hope for garment manufacturers is the exports market. Mehta said export orders have started to pick up in places like Tiruppur, the garment hub in Tamil Nadu.

Lalbhai of Arvind said, “Exports are seeing a stronger recovery. Both Europe and the US are opening up. We believe exports will start moving towards 60-70% of the original mark possibly by the end of second quarter.”