08 Dec, 2016
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December 06 – 07, 2016
ND has initiated a new section of daily news, where our news desk compiles the latest news on the Indian economy, to keep our readers abreast and updated on daily economic state of affairs.
The economy news compilations bring business news reports that are relevant today and tomorrow, based on the new pattern of current affairs, and for English awareness. This gives vital inputs on the various sectors of the Indian Industry and trade.
Double-digit ad growth seen for India in 2017
Business Standard: December 07, 2016
Despite a cutback in ad spends by most advertisers in December quarter, media agencies GroupM and Zenith say India will continue to be among the world’s fastest-growing ad markets in 2017. The forecast comes as both agencies see cash crisis triggered by demonetisation as temporary.
GroupM, media arm of WPP, said India was a key market with ad growth in 2017 pegged at 12.5 per cent, led by low interest rates, sustained urban demand, and impact of key reforms such as goods and services tax.
Zenith, part of Publicis Groupe, said India’s ad growth in 2017 would be 11.2 per cent.
In 2017, categories that would lead ad growth in India would be mobile wallets, telecom 4G, banking, financial services and insurance, mobile handsets, fast-moving consumer goods and consumer durables, said Zenith. “In November, the central government introduced demonetisation, which has led to some contraction in ad spends. We expect demand for goods and services to pick up and this shortfall to be temporary,” Tanmay Mohanty, group chief executive officer (CEO), Zenith India, said.
Ironically, the rise of mobile wallets comes at a time when categories such as e-commerce, a key driver of ad growth in India over the past three years, are slowing down. The trend, explains Ashish Bhasin, chairman and CEO, South Asia, Dentsu Aegis Network, has been going on for a while now as consolidation and emphasis on profit grows among e-commerce firms.
Paytm, Mobikwik, and Freecharge have given full-page ads in newspapers over the last one month. Mobile wallets are marking their presence felt aggressively on TV and digital.
RBI eases two-factor authentication for online card transactions up to Rs. 2,000
Livemint: December 07, 2016
Mumbai: The Reserve Bank of India (RBI) has removed the so-called two-factor authentication for online card transactions involving sums up to Rs2,000, in a move aimed at simplifying and encouraging electronic payments.
The move will likely help cab aggregators, online movie ticket sellers and even e-commerce marketplaces.
Currently, any online transaction involving a card requires users to first enter card details on the merchant’s payment gateway, wait for a one-time password (OTP) to be sent to their mobile phone, and then use this number to complete the purchase.
To be sure, discarding two-factor authentication for purchases up to Rs2,000 is an opt-in service, which means that customers will have to specifically opt for it.
RBI said that card network providers and banks will have to inform customers about the availability of such services and take their consent.
Customers opting for this facility will go through a one-time registration process requiring entry of card details and additional factor authentication by the issuing bank, RBI’s notification said.
“We would have to wait and see how the registration process will come up, but it should be largely online,” said Sangram Singh, head of card and payments business, Axis Bank.
Banks and card networks will be free to allow their customers set lower transaction limits, RBI said. They will also have to indicate the maximum liability on the customer (if any) at the time of registration and educate customers that it’s their responsibility to report any frauds while transacting, the regulator added.
Vijay Jasuja, chief executive officer, SBI Cards Pvt. Ltd, says that the central bank’s intent is to provide a level playing field to everyone in the payments ecosystem.
“As of now, customers can make payments using mobile wallets without a two-factor authentication. If you provide a facility to one company then it must be provided to everyone,” Jasuja said.
App-based payments service providers say the move will boost digital transactions. “We welcome the timely move. This will definitely encourage more users to switch to debit and credit cards for online payments,” said a spokesperson for cab-hailing service Ola.
Experts say that customers are likely to welcome the move as well. “Service providers will have to be careful in ensuring that security in these services is maintained. Multiple fraudulent small value transactions can add up to a large amount, if card details are compromised,” said Bhavik Hathi, managing director, Alvarez & Marsal India, a consultancy.
However, there seems to be confusion over what exactly these new guidelines imply.
“The guidelines aren’t saying that AFA (additional factor authentication) will be removed fully. It seems to suggest that certain payments solutions providers such as Visa and MasterCard will be able to take charge of the second factor authentication from banks. This would hasten the process and there would be better execution of payments. However, we would have to wait and hear from the regulator about some clarity,” said the chief executive of a large digital payments company, speaking on condition of anonymity.
In 2014, US-based cab services provider Uber Inc. was pulled up by RBI for providing payments without a two-factor authentication process. RBI had then said all transactions, including electronic ones, involving credit cards issued in India for goods or services in the country must have an additional authentication system at each point of sale.
In May 2015, RBI said that two-factor authentication was not necessary for transactions up to Rs2,000 through contactless cards. However, such cards constitute a minuscule proportion of all debit cards issued in India.
In order to facilitate the move towards cashless transactions, the Government has directed the banks to install an additional one million new PoS terminals by 31st March 2017
Press Information Bureau: December 07, 2016
New Delhi: As part of the plan to expand the digital payments eco-system and facilitate the move towards cashless transactions, the Government has decided that an additional one million new PoS terminals should be installed by 31st March 2017. Towards this end, banks have already placed orders for 6 lakh PoS machines and another 4 lakh PoS machines are likely to be ordered in the next few days. The country today has about 15 lakh PoS terminals across different merchants to facilitate card based payments.
A special drive has also been undertaken jointly with Ministry of Labour & Employment and States’ Administration to open banks accounts for unorganized labour by holding camps at various locations. A total of 2,73,919 camps have been organized so far in which 24.54 lakh accounts have been opened.
In the light of the Government’s decision to demonetize Specified Bank Notes w.e.f. the midnight of 8th November 2016, banks are making all out efforts to facilitate genuine transactions. Appropriate action is being taken against individuals involved in irregular and unauthorized activities. Since 3rd December 2016, action against 7 officials of Public Sector Banks (PSBs) have been taken.
In addition, audit has been taken-up in few branches of Public Sector Banks (PSBs). The Concurrent Audit is also being initiated as per the requirement and under the extant guidelines of RBI.
Panasonic steps up India focus
Business Standard: December 07, 2016
Mumbai: Japanese major Panasonic is upping its investment in India despite challenges the consumer electronics and durables market is facing in the wake of demonetisation.
In a conversation with Business Standard, Tetsuro Homma, senior managing director, Panasonic Corporation, said the pain triggered by demonetisation was short-term and would not last more than a couple of quarters.
“We remain committed to the Indian market despite the disruption triggered by demonetisation. From long-term point of view, India still remains an attractive bet for us,” said Homma, who is also worldwide president of Panasonic’s appliance company, responsible for a $25 billion (or Rs 1.7 lakh crore) business.
The maker of the Viera brand of televisions and Econavi range of air conditioners will set up a new manufacturing facility for refrigerators in Jhajjar, Haryana, at an investment of Rs 115 crore. The plant will be operational by November 2017, with annual production capacity of 0.5 million units, Homma said.
This investment figure along with previous amounts will take Panasonic’s total investment into India in the last few years to over Rs 300 crore, company executives said. “While local manufacturing of most of our products including televisions, air conditioners, washing machines and mobile phones had begun in India, refrigerators was a gap that needed to be filled,’says Manish Sharma, president and CEO, Panasonic India & South Asia. “That process has been set into motion now,” Sharma said.
The move to manufacture and assemble Panasonic products in India also comes at a time when the Japanese major is looking to shift its manufacturing and research and development (R&D) base here from China. This comes as China loses its advantage as a cost-effective base, market sources said, compelling consumer electronic majors to look at alternatives such as India.
Homma says that India will act as a regional hub not only for the south and west Asian markets, but also for Africa. The firm will also set up its first offshore advanced R&D unit in Bengaluru next year as it looks to widen its footprint in the country, he added. The advanced R&D unit will begin with 60 people, which is expected to be ramped up quickly over time. Exports from India into South & West Asia and Africa are also expected to increase over time, Homma added.
Raymond partners with Khadi and Village Industries Commission to launch new clothing line
Economic Times: December 07, 2016
Mumbai: Fabric and apparel major Raymond has partnered Khadi and Village Industries Commission (KVIC) to introduce a new line of clothing under the brand Khadi by Raymond, which will directly compete with Fabindia.
KVIC will certify Raymond to use Khadi mark to sell ready-made garments and fabric which will be available at KVIC and Raymond outlets across the country.
“Khadi is looking for an economic revolution and Raymond has technical expertise as well as significant global presence. This is a perfect match”, said Sanjay Behl, CEO Raymond. “Our idea was really to own the complete value chain by getting directly into the source of Khadi in India and the most widest and proficient in Khadi is KVIC,” he added.
The initiative is taken under the KVIC Act that permits it to promote the sale and marketing of Khadi or products of village industries or handicrafts and forge links with established marketing agencies.
As per the signed MOU, Raymond has agreed for a guaranteed initial procurement of a substantial amount of Khadi fabrics from the 2300 clusters under KVIC in the initial year.
Apart from retailing the brand, Raymond will provide technical and design expertise to Khadi manufacturing clusters for crafting readymade garments for its apparel brands.
“This is historic for us because a typical government organisation is joining hands with a private company like Raymond. Despite having the best products in the world, we could not take Khadi to the globe because of very limited resources. But this partnership will allow us to do that,” said VK Saxena, KVIC chairman.
According to KVIC this joint venture is also a step towards making a radical shift in people’s perception of Khadi from a fabric that stands for nationalism to a fabric that stands for fashion.
The association will add an incremental employment of 2.1 lakh man hours for spinners and weavers.
In the past, Raymond has had similar associations with the handloom sector which included hand-crafted khadi products as well but have never branded and marketed them on a scale this big.
Raymond has a near 60 percent market share in the Rs. 18,000-crore suitings segment.
Raymond plans to invest about Rs 500 crore to open 400-500 new stores across all its portfolios in the next 5 years. The company is also investing the same amount in setting up a new plant in Ethiopia to cater to its global markets like Europe and US.
The company, currently manufacture textiles from three manufacturing unit; Chhindwara in Central India, Vapi in Gujarat, near Mumbai and Jalgaon in Maharashtra is also ramping up its production capacity.
In Feb, this year Raymond invested Rs 450 crore in a new textile unit at Nandgaon Peth in Amravati district in Vidarbha which will have an annual capacity of 20 million metres of cotton fabric.
Any Payment above Rs.5,000 to Suppliers, contractors, grantee/loanee institutions etc by Government Departments to be now made through e-Payment
Press Information Bureau: December 06, 2016
New Delhi: In order to attain the goal of complete digitization of Government payments, the Ministry of Finance, Government of India has again reviewed the existing limit of Rs. 10,000/-(Rs. Ten Thousand only) prescribed regarding e-payment to Suppliers etc. It has now been decided to lower this threshold limit from Rs. 10,000 to Rs. 5,000 (Rupees Five Thousand only).The last review in this regard was made only in August, 2016.
Accordingly, all the Ministries/Departments of the Government of India have been now directed by the Ministry of Finance to ensure with immediate effect that all payments above Rs. 5000/- (Rupees Five Thousand only) to suppliers, contractors, grantee/loanee institutions etc. are made by issue of payment advises only.
The Swedish newspaper was recently asked it to delete the reference made by President Pranab Mukherjee to the Bofors scam in an interview to it, as a claim protested by the Indian Government on 27 May 2015. India has expressed disappointment over the disrespect shown to the President, the newspaper has defended its right to publish what was said during the interview.
Know, who is Vijay Kelkar and what is PPP !
Vijay Kelkar is a renowned economist and a former Finance Secretary. He was appointed head of newly constituted committee to give recommendations to recast the model of Public-Private-Partnership (PPP) model in India. India is one of the largest PPP market with over 900 projects. The Kelkar committee will review the PPP policy, suggest a better risk-sharing mechanism between private developers and the government after analysing such projects.
Know, who is Yaduveer Krishnadatta Chamaraja Wadiyar !
Yaduveer Krishnadatta Chamaraja Wadiyar was crowned as the new Maharaja of of Mysuru (Mysore) royal family. He is the 23-year old grandson of Princess Gayathri Devi, who was the eldest daughter of the last Maharaja of Mysore, Sri Jayachamarajendra Wadiyar. The coronation was held at Mysuru’s famous Amba Vilas Palace, which was decked up for the occasion.
Know about Sepp Blatter!
Swpp Blatter, was re-elected as FIFA president for a fifth term at the 65th Annual Congress of FIFA held at Zurich for four year term.
Prince Ali bin al-Hussein of Jordan stood against Blatter in this election. It is worth mentioning that FIFA is going through a major controversy regarding corruption in the organisation with two FIFA vice presidents and a recently elected FIFA executive committee member still in custody.