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Auction for commercial coal mining to be launched; Supreme Court to hear telecom companies' AGR dues case; SC likely to hear petition against preference to cases filed by influential lawyers and petitioners; India-Pak meet over locust menace; La Liga (Real Madrid vs Valencia)

The traditional India-China playbook has insulated trade and commerce from border differences. But will that change now?

Reports on Wednesday said an immediate impact on trade is unlikely. But there are indications that the rules could tighten on strategic sectors such as 5G — India has allowed Huawei for 5G trials. On social media, #BoycottChina has gained traction, urging users to uninstall China-based apps, including TikTok. But decoupling from China isn’t a matter of clicking a button.

• Trade: According to the General Administration of Customs of China, in the 11 months from January to November in 2019, China’s exports to India amounted to $68 billion, imports from India was $16.32 billion — a trade imbalance of $51.68 billion in China’s favour. According to CARE Ratings, India’s imports from China grew by a compounded aggregate rate of 4.48% between 2016 and 2019; exports to China grew by 23%.
• Mobile market: Chinese companies dominate the Indian smartphone market. According to IDC, Xiaomi had a market share of 31.2% in the first quarter of 2020. In fact, four of the top five smartphone makers were Chinese firms — Vivo (21%), realme (13.1%) and Oppo (10.6%) being the others. These companies have invested heavily in setting up manufacturing bases in India, either directly or through original equipment makers such as Foxconn of Taiwan.
• Investments in startups: Chinese companies write the cheques that fund Indian startups. Tencent, Shunwei Capital, Alibaba, Xiaomi and Fosun Capital are prominent Chinese investors. Indian startups to have received Chinese funding, in order of total funding, are Paytm (Alibaba and Ant Financial are investors), Ola (China-Eurasia Economic Cooperation Fund, Didi Chuxing, Tencent and Sailing Capital), Oyo (Didi, Huazhuhui), Snapdeal (Alibaba, Tybourne Capital) and Swiggy (Hillhouse Capital, Meituan, Tencent), ET Prime reports, citing data from Tacxn. Between 2015 and 2019, Chinese have invested over $5.5 billion in Indian startups, the Indian Express reports, based on data from Venture Intelligence.
• Supply chain: Industrial links to China are deep. According to Dun and Bradstreet, imports from China comprised 68% of India’s bulk drugs and intermediaries; 43.2% of electronics; 27% of garments; and 8.6% of auto ancillaries. There is a bigger dependence on emerging technology such as electric vehicles, where China controls 70% of world’s rare-earth production through investments or ownership of global mines.
• More: China's FDI in India has increased to $2.34 billion, as per official data. Gateway House, a think-tank, says the actual figure could be $6.2 billion, including rerouted investments. Also, Chinese tourists spent nearly $550 million a year in India.

PM Narendra Modi will today kick-off the auction for about 50 coal blocks, which the government claims is the first-ever commercial auction of coal mines, open for domestic as well as global firms under the 100% FDI route. A quick look at the auction:

• The good: This auction, the pricing and the rules are friendlier to the bidder. The floor price has been kept at 4% of revenue and each bid thereafter will be in incremental multiples of 0.5%, till the revenue share touches 10%, after which it will be in multiples of 0.25%. Further, private commercial mining is now allowed — earlier private firms were limited to “captive mining”, i.e. mining coal for end-use at their own facility (say, a power plant). Incentives on early production include a 50% rebate on the revenue share. To prevent under-reporting of revenues by the winning bidder, the price at which coal is mined will be calculated on basis of the National Coal Index (NCI) — and the royalty for the government will be the higher of the actual or the NCI price.
• The bad: India’s past coal auctions haven’t been a hit, though they were open only for PSUs. An auction conducted last year saw bids for merely 6 of the 27 blocks on offer. Though the centre has ended Coal India Limited’s de-facto monopoly, it still accounts for 80% of India’s coal production, of which 80% is sold to power producers. Add to this the drop in demand due to the lockdown, expectations are tempered. Consider this: As against consumption of 40.38 million tonnes (MT) in May last year, this May the power sector bought just 30.15 MT from CIL — a reduction of over 25%. Also, collectively, power plants currently have 50 MT of coal in stock, enough to last 29 days.
• The need: India has the world’s third-largest coal reserves, estimated at 350 billion tonnes, but the production is much lower, at 729.10 MT in FY20. This year, the government has set a target of 1.6 billion tonnes — with 15 of the coal blocks up for grabs having a production potential of 5-10 million tonnes per year. That could fetch the state government anywhere between Rs 5,000-6,000 crore monthly — money that would be welcome in these tough times.

Bayern Munich. The German powerhouse secured a record-extending eighth straight Bundesliga crown (30th title overall and 29th during the Bundesliga era) on Tuesday, with a 1-0 win at Werder Bremen. The victory opened a 10-point gap between Bayern and second-placed Borussia Dortmund who, despite having three games in hand, cannot catch the champions. The Bavarian giants also became the first club in a major European league to win the title after returning to play amid the pandemic.