PM MODI STEERS INDIA'S SEMICON HUB DREAM, LAYS FOUNDATION STONE FOR RS.25 LAKH CR PROJECTS - Business Guardian
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Industry & Regulation

PM MODI STEERS INDIA’S SEMICON HUB DREAM, LAYS FOUNDATION STONE FOR RS.25 LAKH CR PROJECTS

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The facilities are expected to bring tremendous opportunities for Assam and Gujarat as well as help create a strong and significant presence for India in global value chains.

Prime Minister Narendra Modi on Wednesday laid the foundation stone for three semiconductor plants worth over Rs 1.25 lakh crore which will fill the space left by the decades long absence in India of a thriving tech ecosystem that will encourage, skill,
and train young Indians, especially in next-generation chip design, semiconductor research, and manufacturing, among other areas. The proposed investments, which received cabinet approval on 29 February this year, include the Tata-PSMC chip foundry at Rs 91,000 crore, the Tata OSAT facility at Rs 27,000 crore, and the CG Power-Renesas at Rs 7,600 crore.

The semiconductor fabrication facility at the Dholera Special Investment Region (DSIR) will be set up by Tata Electronics Private Limited (TEPL) under the modified scheme for setting up of semiconductor fabs in India with a total investment of over Rs 91,000 crore. The outsourced semiconductor assembly and test (OSAT) facility in Morigaon, Assam will be set up by TEPL under the modified scheme for semiconductor assembly, testing, marking and packaging (ATMP) with a total investment of about Rs 27,000 crore. The OSAT facility in Sanand, will be set up by CG Power and Industrial Solutions under the ATMP, with a total investment of about Rs 7,500 crore.

The facilities are expected to bring tremendous opportunities for Assam and Gujarat as well as help create a strong and significant presence for India in global value chains. “India is set to become a prominent semiconductor manufacturing hub. Chip manufacturing opens the door to limitless possibilities and will take India towards self-reliance, towards modernity,” Modi said, laying the foundation stone during his participation in ‘India’s Techade: Chips for Viksit Bharat’ programme. The Government is also aiming to open up opportunity to India’s capable youth, as Modi pointed out. “A self-confident youth changes the destiny of the nation. India’s rapid progress is driving confidence in our Yuva Shakti,” the Prime Minister emphasised.

Stressing on the need to utilise every second, the Prime Minister presented today’s event as an example of the speed with which the government is working since the announcement of the semiconductor mission two years ago followed by the first MoUs in a few months. Only a handful of nations in the world are manufacturing semiconductors today, underlining the need for a reliable supply chain after the disruptions caused by the coronavirus pandemic. India is keen to play a crucial role in this and in the future plans for commercial production for the semiconductor sector.

The Prime Minister also touched upon India’s growing position in electronics and hardware manufacturing where PLI schemes have been provided for large-scale electronic and IT hardware manufacturing and electronic clusters created, thereby giving a platform for the growth of the electronic ecosystem. He credited the unprecedented incentives and encouragement for India becoming the third largest start-up ecosystem in the world and envisioned the creation of new opportunities for start-ups in the semiconductor space.

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Business News

DPI, bankruptcy law, tax code boost India investment destination: WEF official

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The WEF-Cambridge report shows that fintech firms are positive about their regulatory environment, which supports their operations and growth.

A combination of policy changes such as bankruptcy law and taxation code and the enabling environment created by the digital public infrastructure has made India an attractive investment destination for the financial technology sector, a senior World Economic Forum (WEF) official said.

In a video interview with the media, Matthew Blake, Head of the Centre for Financial and Monetary Systems at the WEF said India has been one of the best performing markets in the world and investors have made money here. Blake also struck a word of caution saying that since markets do not move in a purely linear fashion and were prone to ‘’ups and downs’’, there was a need to educate investors. ‘’So this idea of being an informed investor, a diversified investor, and having access to educational resources to do that is really fundamental artificial intelligence (AI),’’ he said. ‘’I think a combination of different policy choices that have been made make India quite an attractive investment destination. In addition to the digital public infrastructure that creates an enabling environment from a technological standpoint, you also have changes in the bankruptcy law and taxation code adding clarity,’’ he said.

Blake said a survey of fintech CEOs by the WEF and the Cambridge Centre for Alternative Finance had revealed that 70 per cent of the firms considered AI as a major force and could be deployed for personalisation and customisation of products and services. Blake said for sectoral regulators, AI could be helpful in the context of risk management and there was a need for them to adapt to the rapid changes in technology. ‘’The sophistication level of the regulatory authorities will also need to increase commensurate with the business sector and talent. Technology, and technologically savvy talent, will be at a premium. And that’s true in the private sector, and that’s true in the public sector,’’ he said. Blake said in the Asia-Pacific region, the regulatory agencies were generally viewed as being quite skilful. ‘’When you look globally, obviously there are varying levels of sophistication of markets. This brings an opportunity globally to share best practices and competencies,’’ he said.

‘’One of the things that we’re looking at is how do you bring the most sophisticated actors in the financial services space from the private sector together in a knowledge exchange with some of the key supervisory bodies,’’ Blake said. ‘’It is absolutely in the best interests of the business sector that their corresponding regulator understands as closely as they do their activities and the technologies they’re using to conduct those activities. So, it is in the mutual best interest to share that information and to try and level set. That is a rather large challenge, but it’s something that we as a team are looking at currently and trying to devote some time to,’’ Blake said.

The WEF-Cambridge report on ‘The Future of Global Fintech: Towards Resilient and Inclusive Growth’, released in January, found that the majority of financial technology companies hold a positive view of their regulatory environment, with 63 per cent rating it as adequate. Additionally, 38 per cent of surveyed fintechs cited the regulatory environment as a major supporting factor for their operations and growth.

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Industry & Regulation

DGCA grounds Air India with Rs 80 lakh fine over pilot fatigue

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The Directorate General of Civil Aviation (DGCA) has levied a hefty fine of Rs 80 lakh on Air India for breaching regulations concerning flight duty time limitations (FDTL) and fatigue management systems of flight crew members. The decision followed a spot audit conducted by the aviation watchdog in January, during which evidence was gathered and fleet-wise random reports were scrutinized.

According to the DGCA, the audit findings revealed several violations by Air India, including instances where flights were operated with both flight crew members aged above 60 years. This contravenes the regulations outlined in the Civil Aviation Requirements pertaining to FDTL. Additionally, Air India was found to be deficient in providing adequate weekly rest, sufficient rest before and after ultra-long range flights, and adequate rest during layovers for the flight crew.

Furthermore, the audit uncovered instances of exceeding duty periods, inaccurately marked training records, and overlapping duties within the airline’s operations. These findings prompted the DGCA to issue a show cause notice to Air India on March 1, seeking an explanation for the violations identified. Despite Air India submitting a response to the show cause notice, the DGCA deemed it unsatisfactory.

Consequently, the aviation regulator proceeded to impose a substantial fine of Rs 80,00,000 on the airline for its non-compliance with regulatory requirements. The imposition of such a significant penalty underscores the DGCA’s commitment to upholding safety standards and ensuring regulatory compliance within the aviation sector.

Violations related to flight crew fatigue management and duty time limitations pose serious risks to flight safety and passenger well-being, necessitating strict enforcement measures by regulatory authorities. Air India, as a major player in the Indian aviation industry, is expected to adhere to the highest standards of safety and operational integrity. The airline’s failure to comply with regulatory mandates not only reflects poorly on its operational practices but also raises concerns regarding its commitment to ensuring the safety of its passengers and crew members.

In response to the fine imposed by the DGCA, Air India may be required to undertake corrective actions to address the identified deficiencies and prevent recurrence of similar violations in the future. Failure to rectify these issues could result in further penalties or regulatory sanctions against the airline, potentially impacting its operational capabilities and reputation within the industry.

Overall, the DGCA’s enforcement action against Air India underscores the critical importance of regulatory oversight in maintaining the safety and integrity of the aviation sector. It serves as a reminder to all airlines to prioritize compliance with regulatory requirements and uphold the highest standards of safety and operational excellence in their operations.

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Industry & Regulation

Government trims stake in 5 public banks to comply with Sebi rule

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Five public sector lenders, including Bank of Maharashtra, Indian Overseas are gearing up to reduce the government’s stake in them to less than 75 per cent to meet the Securities and Exchange Board of India’s (Sebi) minimum public shareholding (MPS) norms, revealed Financial Services Secretary Vivek Joshi. As of March 31, 2023, only four out of 12 public sector banks (PSBs) were compliant with the MPS norms, Joshi informed PTI in an interaction.

Delhi-based Punjab & Sind Bank holds the highest government stake at 98.25 per cent, followed by Chennai-based Indian Overseas Bank at 96.38 per cent, UCO Bank at 95.39 per cent, Central Bank of India at 93.08 per cent, and Bank of Maharashtra at 86.46 per cent. Sebi mandates all listed companies to maintain an MPS of 25 per cent but has granted state-owned banks a special forbearance until August 2024 to meet this requirement.

Joshi outlined various options available to banks to reduce the government’s stake, including follow-on public offerings or Qualified Institutional Placements, emphasizing that each bank would make decisions based on market conditions and the best interests of shareholders. He indicated ongoing efforts to meet the MPS requirement but refrained from providing a specific timeline.

In a separate directive, the finance ministry has instructed all state-owned banks to review their gold loan portfolio due to instances of non-compliance with regulatory norms. The Department of Financial Services (DFS) has urged banks to address concerns such as disbursement of gold loans without requisite collateral and anomalies in fee collection and repayment. Banks have been advised to conduct a thorough review of their gold loan activities over the past two years to ensure compliance with regulations and internal policies.

The advisory comes amid record-high gold prices, with the price of 10 grams of gold surging from Rs 63,365 to Rs 67,605 in the last month alone. Major lenders like State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda (BOB) have significant exposures to the gold loan segment, highlighting the importance of regulatory compliance in this area.

The move to reduce the government’s stake in public sector lenders is aimed at aligning with Sebi’s regulatory requirements and enhancing transparency and accountability in the banking sector. By increasing the public float, these banks aim to diversify ownership, improve liquidity, and attract more institutional and retail investors, thereby strengthening their market position.

Regarding the review of gold loan portfolios, the directive from the finance ministry underscores the importance of adherence to regulatory norms and internal policies to mitigate risks associated with lending against gold collateral. With gold prices reaching record levels, ensuring proper collateralization and risk management practices becomes imperative for banks to safeguard their loan portfolios and maintain financial stability. As public sector banks embark on initiatives to meet regulatory requirements and enhance risk management practices, these efforts are expected to contribute to the overall resilience and efficiency of India’s banking sector. Strengthening compliance frameworks and promoting transparency will not only bolster investor confidence but also support sustainable growth and development in the financial markets.

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Tech

Big Tech Opposes Digital Competition Law’s Ex-Ante Norms

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Big Tech firms such as Google, Apple, Flipkart, Amazon, and Uber have opposed ex-ante regulation while responding to the suggestions of the expert committee on digital competition law. While Twitter and Paytm are among those in favour, the latter in its stakeholder submission said it was in favour as long as only large digital enterprises with a critical mass were subject to the regulations.

The Ministry of Corporate Affairs had invited public comments on the expert committee report and the draft Bill.

While stressing that ex-ante regulation for the e-commerce sector may be untimely and excessive and may lead to overregulation, Amazon said in its stakeholder submission that it was already heavily regulated by the foreign direct investment policy, which mandates that it can only act as an online marketplace and not as a seller, and that it should provide fair terms to all sellers.

Key criterion Systemically significant digital enterprises would be those with:

  • Turnover in India of not less than Rs 4,000 crore
  • Global turnover of not less than $30 billion
  • Gross merchandise value in India of not less than Rs 16,000 crore
  • Global market capitalisation of not less than $75 billion
  • At least 10 million end users for its core digital service
  • 10,000 business users for its core digital service

 

Apple India, while batting for a light touch regime that promotes innovation, said CCI should also consider opening a regional office in Bengaluru in order to get easy access to the technology ecosystem of the country. Flipkart, on similar lines, has said that the existing ex-post regime in India is well-equipped to effectively regulate digital markets in India. “A one-size fits-all approach similar to the DMA model would be unsuitable for effective regulation of digital markets since it remains untested,” Flipkart’s response to stakeholders comment said. The e-tailer was referring to the European Digital Markets Act.

MakeMyTrip said that it was in favour of ex-ante regulation only to the extent that they were made applicable to select large horizontal platforms that have created economy-wide ecosystems.

The expert committee has recommended that the draft Bill should only regulate enterprises that have a ‘significant presence’ in the provision of a core digital service in India and the ability to influence the Indian digital market. The discussion around the digital competition law comes amid a global scrutiny of Google, Apple, Facebook, Amazon, and others for allegedly abusing their market position using chunks of user data.

Last year, the Competition Commission of India (CCI) slapped Google with penalties of Rs 936.4 crore and Rs 1,337.8 crore in two separate cases.

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Business News

Feb vegetable oil imports down13% to 9.75 lakh tonne: SEA

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According to industry data released on Wednesday by the Solvent Extractors’ Association of India (SEA), India’s vegetable oils imports witnessed a notable decline of 13% year-on-year in February, amounting to nearly 9.75 lakh tonnes. This is compared to 11.14 lakh tonnes imported during the same period last year.

The breakdown of imports reveals that edible oil shipments constituted a major portion, totalling 9.67 lakh tonnes in February, down from 10.98 lakh tonnes in February 2023. Additionally, non-edible oils imports witnessed a significant decrease, falling to 7,000 tonnes from 16,006 tonnes year-on-year.

The data further illustrates a broader trend of declining imports over the period spanning November 2023 to February 2024, with total vegetable oils imports dropping by 21% to 46.47 lakh tonnes from 58.87 lakh tonnes in the corresponding period of the previous oil year.

India’s reliance on imports for meeting its edible oil requirements remains significant, with imports accounting for over 50% of domestic needs. Notably, the country sources palm oil primarily from Indonesia and Malaysia, and soyabean oil from Argentina and Brazil.

SEA attributed the ongoing decline in vegetable oil imports to reduced availability of palm oil for edible oil requirements, as major producers Malaysia and Indonesia prioritize its use for biodiesel production. This shift in allocation may lead to price increases in the coming months, the association warned.

Furthermore, SEA highlighted factors influencing palm oil production in Indonesia and Malaysia, suggesting that output levels in 2024 may either marginally increase or decline due to ageing plantations and limited expansion. Meanwhile, changes in soyabean oil imports were noted, with a notable increase from Argentina and a decline from Brazil, attributed to growing domestic biofuel industry requirements.

The latest data underscores the evolving dynamics in India’s vegetable oils market, influenced by both domestic and global factors, and highlights potential implications for pricing and supply chain management in the coming months.

The decline in vegetable oil imports coincides with global trends and factors influencing production and trade dynamics. The redirection of palm oil for biodiesel production by major producers like Malaysia and Indonesia underscores the shifting priorities in the global vegetable oils market. As India grapples with reduced availability and potential price hikes, stakeholders across the industry are closely monitoring supply chain dynamics and exploring strategies to mitigate risks and ensure market stability.

Looking ahead, uncertainties surrounding palm oil production in key exporting countries and evolving demand patterns for edible oils necessitate proactive measures from policymakers and industry players. India’s reliance on vegetable oil imports underscores the importance of diversifying sourcing strategies and enhancing domestic production capabilities to achieve long-term food security goals.

Moreover, the growth trajectory of India’s biofuel industry and its implications on soyabean oil imports signal evolving dynamics within the vegetable oils market. As India continues to navigate the complexities of global trade and production, fostering resilience and sustainability in the vegetable oils sector remains paramount.

In conclusion, while India’s vegetable oils imports witnessed a decline in February, driven by various global and domestic factors, the industry remains resilient and adaptive. Collaborative efforts among stakeholders, coupled with strategic policy interventions, will be instrumental in navigating challenges and seizing opportunities for growth and stability in the vegetable oils market.

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Industry & Regulation

SC stays hearings before HCs

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Raise retirement age of SC, HC judges: BCI

Th e S up r e m e C o u r t o n Mo n d ay st aye d the further proceedings p e n d i n g b e f o r e t h e High Courts across the c o u n t r y o n p e t i t i o n s challenging the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (IT Rules, 2021) and the Cable TV Networks (Amendment) Rules 2021. A bench of Justices AM Khanwilkar and Abhay S Oka also issued a notice in the transfer petitions filed by the Central government seeking the transfer of the petitions from various High Courts to the apex court. The bench however said that it is not interfering w i t h t h e i n t e r i m orders passed by the High Courts at this juncture and that it is issuing notice on the stay applications. The bench now posted the matters for hearing on May 19. Solicitor General Tushar Mehta appearing for the Centre told the bench that the government has already filed a petition to transfer all such matters to the top court and sought a stay on High Courts proceedings

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