BackBrexit shock, India’s FDI push and textile sops
Britain's vote on EU exit triggers meltdown; India relaxes foreign investment norms; and textile sector gets big incentives
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1. NDA government overhauls FDI norms
The NDA government on Monday eased the rules to foreign direct investment (FDI) in seven sectors ranging from civil aviation and defence to food products and pharma in a bid to attract more money to create jobs and boost economic growth. The government raised foreign investment caps in some sectors, brought more investments under the automatic route that will not entail prior approval and relaxed some conditions governing FDI to improve the ease of doing business. This is the second major overhaul of FDI rules in seven months. In November, the government eased norms in 15 sectors. The announcement was made on a day when the equity and currency markets battled investor concerns over Reserve Bank of India (RBI) governor Raghuram Rajan’s announcement on Saturday that he will not seek an extension of his tenure.
2. Rajan says no to new term as RBI governor
RBI governor Rajan will return to academia after his term ends in September. In a message to RBI staff, put out on the central bank’s website on Saturday, Rajan said that he is proud of what has been accomplished over the past three years at the RBI and recognizes that some of what has been initiated remains work in progress. Rajan took over as the governor in September 2013 when the economy was facing high inflation, battling a high current account deficit and the currency had plummeted to record lows. This combination had put India in the infamous “fragile five" grouping of vulnerable economies.
3. Textile sector gets Rs6,000 crore package
The cabinet on Wednesday cleared a Rs6,000 crore package for the textile sector, aimed at generating 10 million jobs over the next three years and improving the sector’s global competitiveness. The sops, which include incentives related to tax, production and labour to garment makers, are meant to help India overtake Bangladesh and Vietnam in apparel exports. The government thinks it is the right time to push local manufacturing as China, the largest garment exporter, is ceding ground to other countries on account of an increase in wages and a shift to high-tech industries. Under the package, the government will bear the entire burden of workers’ contribution to the Employees’ Provident Fund scheme for new employees of the industry earning less than Rs15,000 a month for the first three years.
4. Modi leads international Yoga Day celebrations
Prime Minister Narendra Modi on Tuesday joined more than 30,000 people in Chandigarh for the second International Yoga Day celebrations as he pitched for treating diseases like diabetes through the ancient spiritual discipline. People from all ages, 10,000 each from Chandigarh, Punjab and Haryana, performed asanas during the event. Separately, about 10,000 people also performed yoga at over 100 other locations in Chandigarh. Expressing concern over the rising number of patients suffering from diabetes, Modi asked yoga trainers to help in controlling the disease.
5. Britain voted to quit the European Union
Global markets buckled as Britain voted to leave the European Union on Friday. The results drove the pound to the lowest level in more than 30 years and European banks to their steepest losses on record. The pound slid by the most on record and European stocks headed for the biggest drop since 2008. The yen strengthened past 100 per dollar for the first time since 2013, gold rose the most in more than seven years and the benchmark Treasury yields had their biggest drop since 2009. The Indian rupee closed at 67.97 a dollar, down 1.06%, its steepest fall since 24 August 2015. The Sensex closed at 26,397.71, down 2.24%, or 604.51 points.
6. IISc among top 30 Asian universities
Indian Institute of Science (IISc) Bangalore found a place in the top 30 Asian universities—the best yet for an Indian institution—in the Asian University Ranking 2016 by the UK’s Times Higher Education. According to the rankings published on Monday, IISc jumped 10 places to be ranked 27th among the top 200 universities in the continent. Overall, 16 universities from India found a place in the top 200 list and eight of the top 10 Indian universities improved their rankings. National University of Singapore was ranked the best, followed by Nanyang Technological University (also from Singapore) and Peking University in China. Universities from 22 countries participated in the ranking, which counts parameters such as learning environment, research, research citations, international outlook and industry income.
7. India ranked among worst in tackling malnutrition
India ranks 114th out of 132 countries in stunting among children aged less than five years. Anaemia among women is another major concern as India ranks 170th among 185 countries, shows the Global Nutrition Report, prepared by an independent expert group, released on Tuesday. The report analysed the situation in countries against targets set last year at the World Health Assembly held in Geneva in May 2015. India is off the track on all targets related to malnutrition, except overweight among under-5 children. Overweight and obesity among adults has been increasing and is a matter of grave concern. Twenty-two per cent of adults are either overweight or obese and 9.5% suffer from diabetes in India. Nearly 48% of women in India are anaemic, which is better than only two other countries in Asia.
8. Deveshwar to be ITC’s non-executive chairman
ITC Ltd, India’s largest cigarette maker, on Tuesday said that Y.C. Deveshwar will step down as its executive chairman at the end of his term in February 2017, but will continue to helm the company as non-executive chairman for at least three more years. At the company’s annual meeting to be held on 22 July, a resolution is to be moved seeking shareholders’ approval for his appointment as non-executive chairman, ITC said in a regulatory filing on Tuesday. At the time of Deveshwar’s reappointment as chairman in 2012, the company had said he might serve part of the five-year term as non-executive chairman. Through two decades of his leadership, ITC’s revenue has grown 10-fold, while shareholder returns grew at a compound annual growth rate of 23.3%, the company claimed in its statement to shareholders.
9. Nikesh Arora resigns from SoftBank
Nikesh Arora, heir apparent to the CEO’s role at SoftBank Group, is leaving the Japanese company after chairman and CEO Masayoshi Son, who had been expected to step down after turning 60 next year, said he will remain at the helm. Arora, who joined SoftBank in September 2014 with an annual salary of $135 million, and Son announced the departure a day after a panel comprising independent members of the company’s board cleared the former of conflict-of-interest charges. Arora will step down as representative director, president and chief operating officer of SoftBank and will assume an advisory role effective 1 July. He will also step down from the chairmanship at Yahoo Japan, in which SoftBank has a 36.4% stake, as well as director of Sprint, the ill-fated acquisition Son made in 2013.
10. Lightning strikes kill dozens in Bihar
As monsoon advances across India, at least 57 people have died due to lightning strikes in Bihar, while 22 others were injured, said an official of the State Disaster Management Authority on Wednesday. Media reports said that more than 40 lightning-related deaths have taken place in Jharkhand, Uttar Pradesh and Madhya Pradesh. When it comes to death due to natural causes, lightning has been the No. 1 reason in India over the past few years. States such as Odisha have demanded that lightning be included in the list of natural calamities. As per recommendations of the 14th Finance Commission, the State Disaster Relief Fund should only be used for victims of cyclone, drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche, cloud burst, pest attack and cold wave.
Graphics by Ajay Negi/Mint.
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