US warns India of digital tax probe, Tata Tele signs off, Jet gets 4 suitors

The Adani group sought six months more to take over three airports it won in bidding last year; the US moved to investigate India and nine other countries for their digital taxes; Tata Teleservices said it will sell its residual business to pay off loans; and Moody’s cut long-term sovereign rating for India. Here is more on what made news this week.

Business Standard
6th June

  • The US will investigate India and nine other countries for levying a 2 per cent digital tax on technology majors, to determine if it “unfairly targets” American companies like Amazon, Google, and Facebook. India protested the move, arguing that its digital tax measures fell within its sovereign rights and didn't discriminate against US firms.
  • The Adani group has expressed its inability to take over three airports it won in bidding last year, dealing a blow to the government’s privatisation plan. The group has cited uncertainty in the aviation sector due to the coronavirus pandemic for seeking at least six months to take over Lucknow, Mangalore and Ahmedabad airports, Business Standard reported.
  • Four of the 12 expressions of interest (EoIs) submitted for bankrupt Jet Airways in the fourth round have made the cut UK-based Kalrock Capital, Canadian entrepreneur Sivakumar Rasiah, Abu Dhabi-based Imperial Capital Investments, and Alpha Aviation have been shortlisted. A final list of bidders would be issued on June 10.
  • Tata Teleservices, which reported a loss of Rs 13,225 crore for the financial year 2020, will sell its residual business in the current financial year to pay off loans. Tata Sons, the promoter, has promised to provide for any shortfall in liquidity of the company till June next year when the sale is expected to be completed.
  • The Reserve Bank of India told the Supreme Court that waiving off interest on loans would hurt the country’s banks and finances. Banks could forego about Rs 2 trillion in interest income if interests are waived off for the six months duration of the moratorium, the court was told as it heard a petition challenging levy of interest on loans.
  • Moody’s Investors Service cut long-term sovereign rating for India from Baa2 to Baa3--a notch above junk. The global rating agency maintained its negative outlook, citing structural weaknesses, weak policy effectiveness, and slow reforms momentum even before the Covid-19 pandemic.
  • Reliance Infrastructure removed KPMG from the sale mandate of its 51 per cent stake in two electricity distribution companies in Delhi, citing “conflict of interest”. KPMG had to find a buyer for the two firms, but failed to get good offers. KPMG's exit means bidding for BSES Rajdhani and BSES Yamuna has to start afresh.

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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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