Amazon's India investment, US-China truce, and more

Amazon CEO Jeff Bezos announced his company will invest a fresh $1 billion in India to get small and medium businesses online, making the announcement a week after the country’s antitrust regulator started a formal investigation against foreign-owned internet retailers. The US and China signed the first phase of a trade deal, concluding more than a year of tough negotiations between the two largest economies of the world. Only two companies formally bid for defunct Jet airlines after the Hinduja group pulled out. Here is more on what made news this week.

Business Standard
11th January

  • London-based Hinduja group pulled out of the race for Jet Airways (India) Ltd, leaving only two contenders—South America’s Synergy Group and New Delhi-based Prudent ARC Ltd—in the fray to acquire the airline that shut operations in April last year. With only two companies expressing interest, reviving Jet appears difficult.
  • Amazon.com Inc. CEO Jeff Bezos said his company will invest $1 billion to bring small businesses online in India, reaching out to some of his fiercest critics in a goodwill visit. Amazon will setup digital centres in 100 Indian cities and villages to help businesses get online to sell their goods and will offer support in marketing and logistics.
  • The United States and China announced an initial trade deal that will roll back some tariffs and boost Chinese purchases of US goods and services, defusing an 18-month conflict between the world's two largest economies but leaving a number of sore spots unresolved.
  • India’s market regulator gave companies another two years to separate the positions of chairperson and managing director, handing out a breather to top guns of industry. The Securities and Exchange Board of India extended the deadline after lobbying by companies and industry groups, which said meeting the April-1 deadline would be difficult because of the economic slowdown.
  • Retail inflation surged to an over five-year high in December on the back of rising food prices, increasing the likelihood of an extended pause in the central bank’s rate cutting cycle. Inflation based on the consumer price index (CPI) rose to 7.35 per cent in December, adding to the challenges faced by Prime Minister Narendra Modi, who is trying to revive slowing economic growth.
  • India’s antitrust regulator ordered an investigation of Amazon.com Inc and Walmart’s Flipkart over alleged violations of competition law in the latest setback for US e-commerce giants operating in the country. The Competition Commission of India said it was ordering a wider probe following a review of allegations that Amazon and Flipkart were promoting some “preferred sellers” and in turn hurting business for other, smaller sellers.
  • India’s automobile industry is unable to end a slowdown because of “overregulation”, said Rajiv Bajaj, managing director of Bajaj Auto, adding he didn’t expect the Union Budget to address its woes. Passenger vehicle sales in the country have been on a decline for six quarters, and two-wheeler sales have been skidding for four quarters.
  • Sales of motorcycles and scooters fell 15 per cent in the December quarter.

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A few links for further reading

Hard path to growth

The signals for the economy are not positive: overall demand is yet to pick up; the share of total exports in India’s GDP is declining, and industrial output pattern remains worrying.

Small savings scheme

Investors breathed a sigh of relief when the government announced that interest rates on these instruments would not be revised for the fourth quarter of the calendar year.

Invest and emigrate

The great Indian dream of settling abroad is achievable if one has a few crores to invest. Rich nations offer a variety of investment options in a quid pro quo arrangement: immigrants get a better quality of life and revenue from them helps these countries’ finances. Wealthy Indians, troubled by polluted cities and the red tape holding up entrepreneurship, may want a quick ticket out of the country. Sanjay Kumar Singh lists a range of options: from a Canadian province’s investor programme to America’s US EB-5 plan.

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