A round-up of the biggest articles from newspapers
Tribunal sets aside co-location ruling against National Stock Exchange
In a relief for the National Stock Exchange, the Securities Appellate Tribunal has slashed a Rs 624.89 crore fine imposed on National Stock Exchange by the Securities and Exchange Board of India while setting aside the regulator’s April 2019 order against the exchange in the co-location scam. The tribunal also overturned SEBI’s orders against NSE’s former top executives, Chitra Ramkrishna and Ravi Narain. The tribunal directed NSE to pay Rs 100 crore instead toward SEBI’s investor protection and education fund for its lapses pertaining to the co-location facility scam where certain brokers received preferential access to its secondary server at the expense of other traders.
Why it’s important: The tribunal has also pulled up the market regulator, saying it should have been more proactive in conducting the investigation.
Banks want immunity for board members on loan grant decisions
India’s banks have asked the government for protection against the arrest of board members for commercial decisions such as the granting of loans. They want similar immunity for executives deputed to boards of borrowing firms. The exemption could be on the lines of that available to the top brass of the National Bank for Financing Infrastructure and Development, they have suggested. The issue was discussed at a meeting last week and a representation was subsequently made to the government.
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Why it’s important: Bankers have been lobbying for changes in the existing provisions, arguing that it will help quicken decision-making and bolster growth and economic development. It is uncertain whether the government will agree.
Government may remove tax credits for charity spending by businesses
The central government is likely to introduce modifications to the GST law through the Finance Bill, 2023, revoking a provision that allowed businesses credit for taxes paid on goods and services procured to meet corporate social responsibility obligations. This implies that GST incurred on goods and services used for CSR cannot be adjusted against the company’s overall GST liability. The plan is to amend sections in the GST Act (16 and 17) dealing with input tax credits.
Why it’s important: Any move to specify that input tax credit will not be available to businesses on corporate social responsibility will affect the large conglomerates that spend heavily on this account. CSR spending has seen a sharp rise in recent years.
Monthly e-way bills surge in December, indicating robust GST collections
Monthly generation of electronic permits required to ship goods within and across states has surged to a record in December, suggesting that GST collection is likely to be robust in January. Monthly e-way bills generated shot up to 84.1 million in December, crossing the 84 million permits raised in September, data available with GSTN showed. October GST revenue collection, which reflects transactions in September, was the second highest at Rs 1.52 lakh crore, which could be surpassed in January.
Why it’s important: E-way bills are a high-frequency indicator of economic activity. If revenue collections remain high in January, it will help the government to contain its fiscal deficit.
Sequoia Capital considers auditing multiple investments in Asia
Sequoia Capital’s regional arm in South and Southeast Asia is considering special audits of several investments in the region after allegations of financial irregularities at firms such as Zilingo and GoMechanic. The venture capital firm will work with EY on some of these audits and will increase budget allocations to help investee companies put governance safety measures in place. Sequoia Capital India will also be more selective taking board seats at companies and might replace junior members from their team on boards with more senior partners.
Why it’s important: Reports of alleged irregularities in start-ups such as GoMechanic, BharatPe and Trell has forced Sequoia to enhance due diligence. Its move could be followed by other large investors as well.
Apple may produce 25 per cent of all iPhones in India, commerce minister says
US tech giant Apple is looking at significantly increasing its manufacturing base in India for iPhones, Commerce minister Piyush Goyal has said, raising it to around 25 per cent from the current 5-7 per cent. Goyal credited the conducive business environment, such as transparent government policies, without any hidden subsidy, for global firms choosing India as their manufacturing base.
Why it’s important: The comments come at a time when Apple’s exports from India hit $1 billion in December and its Chinese suppliers have received initial approvals from the government to set up assembly plants. Apple has been looking to diversify its production capabilities outside China and India appears to be the main gainer.
Government may decriminalize some offences under India’s bankruptcy code
The central government has proposed the decriminalization of several violations under the insolvency and bankruptcy code. The move is in line with the government’s initiative to clean up the statute book to decriminalize minor offences and switch to monetary penalties. A similar process has been carried out in the laws for companies and limited liability partnerships.
Why it’s important: The development would further improve the ease of doing business and speed up resolution of corporate failures. It could be a move in the right direction.
Box-office receipts in India surpass Rs 10,000 crore in 2022
Box-office receipts have crossed Rs 10,000 crore in 2022, the second highest ever as filmgoers flocked back to cinema halls as the Covid pandemic receded. The gross box-office collection of Rs 10,637 crore, according to a GroupM-Ormax Media report, was next only to Rs 10,948 crore in the pre-pandemic 2019, despite fewer than usual big-ticket releases by Bollywood and theatre shutdowns in many parts of the country in January and February last year.
Why it’s important: The stage is set for a record collection in 2023, given that the content pipeline for domestic and Hollywood films has been streamlined after two years of pandemic disruptions.
Government may infuse Rs 5,000 crore in loss-making general insurers
The government may infuse Rs 4,000-5,000 crore in three loss-making general insurers after the budget. The capital provision would be made in this year’s budget for which parliamentary approval is expected to be taken through the last supplementary demand for grants for 2022-23. The government had already enhanced the authorized capital, keeping further fund infusion in mind.
Why it’s important: The government could be preparing the ground for the state-owned general insurers for planned listing and privatization. The capital infusion will help improve the financial health of National Insurance, Oriental Insurance and United India and also help improve their solvency ratio.
Google starts reworking terms of distributing mobile phone apps
After the Supreme Court rejected Google’s appeal for a stay on the huge fine of Rs 1,337.76 crore slapped on the tech giant by the Competition Commission of India, the US company is reworking its terms of the Mobile App Distribution Agreement it has signed with mobile device brands. This will be necessary to incorporate changes in Google’s app policy, as ordered by the antitrust regulator. The apex court has given Google a week to comply with its directions.
Why it’s important: Google will likely seek approval by the Competition Commission for the new license agreement before sending to the mobile device makers. It would mark a tectonic shift in the way the search giant operates in India.