Daily Financial News Analysis – 17th Oct’20

Table of Contents

5G Norms

Latest flashpoint between Jio and Airtel and Vi
Adoption of a homegrown 5G standard
Jio is backing highspeed broadband technology with Indian standards to generate indigenous intellectual property rights (IPR).
Jio has backed the country-specific 5G norm proposed by the Telecom Standards Development Society, India (TSDSI).
Jio: Acceptance of this can lead to the first Indian IPR on the global 5G stage.
Its rivals say that these fall short in terms of interoperability with global standards and thus won’t be commercially viable.
Bharti Airtel and Vodafone Idea have cautioned the government about gaps in the India-centric 5G specifications proposed by TSDSI, saying they don’t mesh with global standards recommended by the 3GPP (the 3rd Generation Partnership Project).
The latter’s standards govern LTE networks operations worldwide and its suggested 5G standard has been backed by the International Telecom Union (ITU).
Telcos in the US, Canada, Australia, Japan, South Korea, Germany, China, Russia and the Middle East among others are rolling out 5G services based on 3GPP’s standard.
TSDSI’s 5G standard, among other things, calls for deployment of 5G services in the 3.4 GHz band and suggests mobile towers be spaced 12 km apart in villages to ensure ubiquitous 5G coverage in rural India.
However, the older carriers have warned that adoption of a purely India-centric 5G radio standard will entail hardware changes in base stations and mobile devices, increasing rollout and phone costs, hurting the business case.
The suppliers want to ensure similar technology standards are adopted across the world to benefit from economies of scale.

Auto Sales

Auto sales are surging, and so is consumption of petrol and diesel.
Indian car and bike makers reported their best monthly sales growth in about two years in eptember, with dealers stocking popular models in anticipation of robust sales through the Navratras and Diwali, in about a month’s time.
Diesel sales rose 8.8% in the first half of October from the year earlier, the first rise in the fuel’s consumption since the pandemic destroyed demand, signalling a strong turnaround on the eve of the festive season.
Sales of petrol, which had recovered to pre-Covid levels last month, grew an annual 1.5% in the first half of October.
Data from the SIAM showed that sales of passenger vehicles, which include sedans, compact cars and SUVs, rose more than a quarter on-year to 272,027.
Car sales, a barometer of consumer confidence, would have been even higher at 31% if despatches by Tata Motors were included. (It reports sales data every quarter.)
Two-wheeler sales rose 12% to 1,849,546 units. Sales of three-wheelers declined 72% to 18,640 units in September.
Thanks to government intervention, auto loan interest rates are below 8%, the lowest in a decade and that should encourage customers to purchase new vehicles.
Commercial vehicle and three-wheeler sales are still in the negative growth zone.
The surge in diesel reflects transport of goods ahead of festive season and a pick-up in industrial activity, oil industry executives said.
Online and offline retailers usually stock up ahead of the festive season, driving up demand for fuel.

GST Compensation Shortfall

Finance minister Nirmala Sitharaman has asked opposition-ruled states to accept the Centre’s offer on bridging the shortfall in the goods and services tax (GST) compensation cess fund since one of their key demands has been met.
This follows the finance ministry announcing Thursday that the government will borrow ₹1.1 lakh crore and loan it to the states.

Country of Origin Details

The government issued notices to Amazon and Flipkart, which have just launched month-long festive season sales, asking them to explain in 15 days why action should not be taken against them for not displaying the country of origin on products they offer.
The Department of Legal Metrology of the consumer affairs department said Flipkart and Amazon haven’t provided the mandatory declaration.
This violates “Section 18 (1) of the Legal Metrology Act 2009 read with and 6(10) of the Legal Metrology (Packaged Commodity) Rules 2011, which is punishable under Section 36 (1) of the Legal Metrology Act, 2009,” it said.
The punishment for the first offence is a fine of up to ₹25,000. For repeated violations, the penalty is ₹50,000 and/or imprisonment.
“Most of the etailers are following this rule. It has come to our notice that products sold on Amazon and Flipkart are not tagged with country of origin,” the notice said.
The notices also contained Uniform Resource Locators (URL) for products listed on the Flipkart and Amazon websites.
The links showed that the mandatory declarations hadn’t been made.
“We are serious about enforcing this rule,” an official said. “Violation will attract strict punishment and penalty.”
The notices to the companies said that the contraventions were punishable under Section 36 (1) of the Legal Metrology Act, 2009.
The government has asked the platforms to provide the names and residential addresses of owners, partners, directors and people responsible for the conduct of business “including the respective police station jurisdiction under which they reside.”
It said a copy of the notice should be issued to all of them.

Collective Global Action Against Covid

Finance minister Nirmala Sitharaman said collective global action was key for an effective response to the pandemic.
World Bank’s 102nd Development Committee Plenary, Sitharaman: As a responsible member of the global fraternity, India is ready to share its experience and play a leading role in the South Asian region as part of its ‘Neighbourhood First’ policy.
The Covid-19 pandemic started before the group’s previous meeting in April and continued to impact both developed and developing countries, the minister said, adding that all the hard-fought gains made in poverty reduction over the years were at great risk of being lost.
Items on the agenda of the plenary included ‘Leaning Forward to Save Lives’ and ‘Scale-up Impact and Get Back on Track,’ the ministry said.
The finance minister welcomed the strong performance of the World Bank during January-March, when the global lender committed to $45 billion in Covid-19 response aid.
She said the government had first announced measures amounting to $23 billion to provide direct cash transfers and food security to the weaker sections.