BQuick On Sept. 15: Top 10 Stories In Under 10 Minutes

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

1. Toyota Halts India Expansion, Blames Tax Regime

Toyota Motor Corp. won’t expand further in India due to the country’s high tax regime, a blow for Prime Minister Narendra Modi, who’s trying to lure global companies to offset the deep economic malaise brought on by the coronavirus pandemic.

• The government keeps taxes on cars and motorbikes so high that companies find it hard to build scale, said Shekar Viswanathan, vice chairman of Toyota’s local unit, Toyota Kirloskar Motor.

• The high levies also put owning a car out of reach of many consumers, meaning factories are idled and jobs aren’t created, he said.

• “The message we are getting, after we have come here and invested money, is that we don’t want you,” Viswanathan said in an interview.

Still, the automaker remains hopeful that the government will support the industry with a viable tax structure.

2. Bill To Ban Cryptocurrency Trading Soon

India plans to introduce a new law banning trade in cryptocurrencies, placing it out of step with other Asian economies which have chosen to regulate the fledgling market.

• The bill is expected to be discussed by the union cabinet before it is sent to parliament, according to people familiar with the development who who asked not to be identified, citing rules on speaking with the media.

• The government will encourage blockchain, the technology underlying cryptocurrencies, but is not keen on cryptocurrency trading, according to two people.

India’s decision will be crucial as more Asian nation countries weigh pros and cons of virtual currencies.

3. Exports Fall, Trade Deficit Widens

India’s trade deficit widened in August as imports continued to pick up while exports dipped.

• The trade deficit stood at $6.77 billion compared to a deficit of $4.83 billion in July 2020, according to data from the Department of Commerce on Sept. 15.

• Exports contracted by 12.66% year-on-year to $22.7 billion in August, compared to a contraction of 10.21% in July.

• Imports contracted by 26.04% to $29.47 billion in August, compared to a contraction of 28.4% last month.

Get a complete picture of the trade data here.

4. LTCG Relief For Startups Mooted

A parliamentary panel has suggested abolishing long-term capital gains tax on investments made in startups to help them raise funds during the pandemic.

• The Parliamentary Standing Committee on Finance, chaired by Bharatiya Janata Party lawmaker Jayant Sinha, suggested LTCG on investments made by angel funds and alternate investment funds into startups—registered by Department for Promotion of Industry and Internal Trade—be exempted for at least two years, according to a report on the Lok Sabha website.

• This would help entrepreneurs raise capital when the Covid-19 pandemic has hampered investment sentiment, it said.

• LTCG earned by foreign investors in private companies attracts a tax of 10%, while domestic investments are taxed at 20% plus surcharge.

The suggestion comes despite reservations flagged by Finance Ministry officials.

5. Nifty Recovers After One-Day Blip; U.S Stocks Rally

Indian equity markets ended higher tracking positive cues from Asia and led by outperformance in banking and pharmaceutical stocks.

• The S&P BSE Sensex ended 0.74% or 287 points higher at 39,044 while the NSE Nifty 50 gained 0.7% or 82 points to end at 11,521.

• Banking stocks, which dragged the indices lower on Monday, outperformed the benchmarks in today's session.

• The midcap index recovered from the day's low to end 1% higher while the smallcap index gained 1.5%.

Follow the day’s trading action here.

The Indian stock market’s extreme reliance on just a single stock almost makes top-heavy U.S. equities look healthy. A 164% surge in Reliance Industries Ltd. -- India’s largest stock by market capitalisation -- accounted for about 43% of the benchmark S&P BSE Sensex Index’s rally since equities bottomed on March 23.

The ballooning weighting of Reliance has also become a problem for the nation’s actively-managed funds.

Technology shares led U.S. equities higher in the wake of this week’s deals activity and data suggesting the global economic recovery is gaining traction.

• The S&P 500 gained for a third day, with the communications, utilities and information technology sectors the biggest gainers.

• Tesla Inc., Apple Inc. and Nvidia Corp. pushed the Nasdaq Composite higher after the index’s worst week since March.

• The dollar weakened for a third day, while crude oil rose.

Get your daily fix of global markets.

6. How To Bridge The GST Deficit

Economist Ajit Ranade cites several reasons for why the Centre should borrow to compensate states for the shortfall in goods and services tax revenue.

• To begin with, that’s the promise the Centre made to states when implementing GST. Also, the Centre has many more fundraising options than states, such as dividends from Reserve Bank of India or borrowing via special bonds or pledging public sector entity shares to raise money.

• If they were to opt for one of the two proposals put forth by the centre, states may end up borrowing at differential rates, based on their individual fiscal situations. Such discrimination was not envisaged in the GST design, Ranade said.

• Time is ripe to reform GST, Ranade argues, to bring it “closer to the original design and objectives”.

Find out what Ranade suggests as a fix to the Centre-states stalemate over revenue shortfall.

7. SpiceJet Says Boeing Max Compensation Offer More Than Recognised

SpiceJet Ltd., one of the world’s biggest customers for Boeing Co.’s now-grounded 737 Max jets, said an interim offer of compensation from the U.S. planemaker is higher than what the Indian budget carrier recognized earlier.

• SpiceJet, India’s second biggest airline, has been using an unusual accounting method to book income on expected compensation from Boeing in the past few quarters.

• SpiceJet, which had 13 Boeing 737 Max jets in its fleet when they were grounded worldwide, has added Rs 860 crore ($117 million) as other income from compensation and related foreign exchange gains in the past five quarters, the company said.

• Based on current advanced discussions and an interim offer from Boeing, “which is higher than the amount recognized by the company,” SpiceJet is confident of collecting that amount, it said in its quarterly earnings statement to stock exchanges.

However, its auditors S.R. Batliboi & Associates, advised caution.

8. Rajnath Singh Says Situation With China Is Serious

India’s defense minister told parliament the current border tensions with neighbour China were serious and the result of Beijing’s violations of boundary agreements.

• Rajnath Singh told lawmakers the situation was tense “both in terms of troops involved and number of friction points” but India wanted to pursue dialog for a peaceful resolution of the conflict that has been simmering since May.

• Both Beijing and New Delhi blame each other for transgressions along their disputed frontier, the 3,488 kilometer (2,167 mile) Line of Actual Control.

• Multiple rounds of high-level military and diplomatic talks have failed to end the long standoff.

More on that and other things on the first day of the monsoon session of the Parliament here.

9. Words Of ‘Supreme’ Importance On Tax Litigation In India

How a decades-old case prompted the Supreme Court to question efficacy of tax litigation in India.

• The 50-page judgment begins with this statement – “Which pocket of the Government should be enriched has taken forty-four (44) years to decide – a classic case of what ought not to be!”

• Justice SK Kaul concludes saying that the case resulted in “the wastage of judicial time.”

• Thereafter, he pens two postscripts to the judgment.

• The postscripts recommend that the government reconsider the way Advance Rulings currently work.

What do the postscripts mean? Are they binding? Read the column by Ajay Rotti to find out.

10. India’s Daily Case Addition, At Over 80,000, Fall To Lowest In A Week

India reported the lowest number of fresh Covid-19 cases in a week, amid concerns that the second-most populous nation may soon be the world's worst-hit.

• The country added 83,809 new infections in 24 hours, taking the total tally above 49 lakh, according to health ministry data.

• This includes more than 38 lakh patients who've recovered and over 80,000 dead.

• Even as deaths due to Covid-19 crossed the 80,000 mark, India’s fatality rate dropped to 1.64%.

• Active cases -- fast approaching 10 lakh -- still accounts for just 20% of the total case load.

Track all developments around the outbreak, here.

Globally, cases topped 2.93 crore while deaths exceeded 9.29 lakh.

• A vaccine may be available for “ordinary Chinese” as soon as November, the state-owned Global Times newspaper said.

• Bill Gates, meanwhile, wondered whether the U.S. Food and Drug Administration can be trusted on a Covid vaccine.

• Thailand will start issuing special visas to foreign tourists starting in October, easing a more than five-month-old ban on visitors.

Follow the global spread of the virus here.