BQuick On Sept. 13: Top 10 Stories In Under 10 Minutes

This is a roundup of the day’s top stories in brief.

1. Imports, Exports Continue To Fall

India’s trade deficit was little changed in August, as a protracted economic slowdown and cheaper oil kept imports in check.

• The gap between exports and imports was at $13.45 billion last month from $13.43 billion in July.
• Imports declined 13.5 percent from a year ago to $39.6 billion, compared with a 10.4 percent fall in July.
• A fall in prices of crude oil in August and a drop in demand for gold helped contain the import bill.
• Exports fell 6.1 percent to $26.1 billion, against a 2.3 percent jump in the previous month.

2. BPCL Stake Sale To Overseas Firm?

India is considering a plan to sell the nation’s second-largest state refiner and fuel retailer to a global oil company as it explores options to give up its controlling stake in Bharat Petroleum Corp., people with knowledge of the matter told Bloomberg News.

• The government is keen to lure multinational companies in the domestic fuel retailing to boost competition and shake up a sector that’s long been dominated by state-run firms, the people said, asking not to be identified as the plan is not public.
• The Business Standard newspaper reported on Sept. 2 government’s plan to sell a majority stake in the company. It holds 53.3 percent in BPCL.
• Prime Minister Narendra Modi’s government has set a record target of raising Rs 1.05 lakh crore ($14.8 billion) in the current fiscal year from sale of state firms.

Here’s how the company’s shares reacted to the news.

3. Nifty’s Late Rally, U.S. Stocks Rise

Indian equity benchmarks resumed gains after a one-day blip led by the rally in the last hour of trade.

• The S&P BSE Sensex ended 0.76 percent or 280 points higher at 37,384.
• The NSE Nifty 50 ended 0.85 percent higher at 11,075.90.
• The broader markets represented by the NSE Nifty 500 Index ended 0.77 percent higher.
• On weekly basis, the 31-share index and the 50-stock gauge ended 1.1 percent higher and 1.2 percent higher respectively.

Follow the day’s trading action here.

U.S. stocks were mostly higher as the rotation from growth to value shares carries on.

• Shares globally are headed for a third weekly gain thanks to easing trade fears and a new round of central bank stimulus.
• Higher-than-forecast U.S. retail sales in August added to the optimism.
• Treasury yields climbed and the dollar slipped.
• West Texas Intermediate crude fell 0.4 percent to $54.87 a barrel, the lowest in more than a week.

Get your daily fix of global markets here.

4. What’s Behind Abbott’s Outperformance

Shares of Abbott India Ltd. surged to a record this year outperforming peers, as its brands increasingly outsold competitors.

• The Indian subsidiary of U.S.-based Abbott Laboratories Inc. has gained nearly 32 percent so far this year.
• By comparison, the benchmark Nifty Pharma Index fell nearly 9 percent and most of the drugmaker’s Indian peers declined.
• The company’s outperformance can be attributed to its brand strength and the complexity involved in making some of its key products, Sapna Jhawar, pharma analyst at IndiaNivesh Securities, told BloombergQuint over the phone.

The company is now getting ready to launch as many as 100 products over the next three-five years.

5. JSW Steel's Plan B

India’s most valuable steel producer is looking outward as the slowest economic expansion in six years cuts demand in the South Asian country and puts pressure on margins.

• JSW Steel Ltd. expects to exceed its export target of 2.2 million to 2.4 million tons for the fiscal year “after having seen the slowdown in the domestic demand,” Joint Managing Director Seshagiri Rao said Thursday in an interview.
• That’s a reversal from April, when the Sajjan Jindal-led mill left its export target unchanged from a year earlier.
• There has been a substantial increase in inventories, indicating falling demand in the last two months, Rao said in Mumbai.
• For the full year, growth will be slower than the earlier estimate of 6.5 percent to 7 percent, he said.

If demand doesn’t recover then steelmakers will have to review their production plans.

6. Can BHIM Aid Small Business Financing?

The Indian government has put its weight behind attempts to improve the flow of credit to small businesses, from a push for MUDRA loans to promoting online approvals via psbloansin59minutes.com.

Could the next stop in this attempt be the BHIM application?

• Launched in December 2016, in the aftermath of demonetisation, BHIM is essentially a money transfer application.
• However, tech advocacy group iSPIRT Foundation, is initiating a pilot project to see whether the application can be used to push financing to small business borrowers.
• According to an internal iSPIRT presentation, existing financing platforms for MSMEs require extensive documentation and physical processes which "add speed bumps to the velocity of lending."
• Using BHIM could help remove some of these speed bumps, the foundation said. BloombergQuint has seen a copy of the presentation.

The pilot project is so far a private experiment and has no government backing.

7. Government Offers Another Lifeline To Air India

The government will guarantee payments on a bond issue by a special purpose vehicle that holds nearly half of Air India Ltd.’s debt, two bankers aware of the development told BloombergQuint.

• Air India Assets Holdings Ltd. will issue a Rs 7,000 crore government-serviced bond on Sept. 16 in tranches, with a base issue of Rs 1,000 crore and a greenshoe option of Rs 6,000 crore, the bankers said on the condition of anonymity as the information is not public yet.
• The bond will have a three-year tenure with annual coupon payments or a bullet repayment, they said.

While the airline expects to post operating profit this year, it doesn’t generate enough cash to service debt.

8. India’s RCEP Red Lines

India is drawing up a list of ‘must haves’ to enable it to forge ahead with a pan-Asian free trade agreement, as pressure mounts on the South Asian nation to conclude discussions to finalise the pact before end of the year, a senior government official told Bloomberg News.

• Trade ministry officials in New Delhi met late into the night on Thursday to discuss India’s demands and the concessions it’s prepared to offer, the official said, asking not not to be identified because they are not authorized to speak to the media.
• India is under increasing pressure to complete negotiations and decide on whether it will be part of what could become the world’s largest trading bloc covering nearly half of the globe’s population.

The issue has taken on new urgency with a weekend meeting in New Delhi involving representatives of RCEP.

9. Tax Department Goes Digital For Assessments

The Income Tax Department will use video-telephony applications like Skype to ensure assessees get personal hearing with authorities for making submissions if their cases come under scrutiny.

• That’s a marked shift from the earlier practice of issuing summons to taxpayers to appear before the authorities.
• It’s also part of the government’s initiative to promote faceless and electronic assessment of tax returns, named E-assessment Scheme 2019, the Income Tax Department said in a circular today.
• The department will establish facilities for video conferencing to ensure the assessee is given a personal hearing once the draft assessment order picked up for scrutiny is modified, according to the scheme.
• Personal hearings through video-telephony, the circular said, would be provided to taxpayers after their cases are picked up for scrutiny, and if the taxman proposes a modification in the assessment order.

This new dispensation could lead to transparency, efficiency and eliminate chances of corruption.

10. Survival Of Fittest In Real Estate

The slowdown in the real estate sector is a “true test to determine survival of the fittest” according to Innovators Façade Systems Ltd.

• If an organisation has a good product and delivers consistent performance, it can generate demand no matter how bad the economy is, Rohit Sharma, the company’s director told BloombergQuint.
• Mumbai-based Innovators Façade Systems makes building facades and counts 14 Indian airports and the Lodha Group among clients.
• There has been a reduction in the number of projects available to companies like his, but Sharma points out that has also improved the quality of projects and benefited businesses like his.

Here’s more from Real Economy Check—a special series on challenges faced by India’s small-and-medium enterprises.