The Rise of Cloud Kitchens & Ghost Restaurants, Trump Says Relations with India Have Never Been Better & Other Top Business News Today

Ravi Shankar Prasad forms committee to suggest reforms for telecom industry. Mutual fund industry faces the repercussions of failing to self-regulate. After a sluggish four weeks, the monsoon slowly picks up. The monsoons and India – a love story as old as time. The rise of cloud kitchens and ghost restaurants. Food delivery and payment apps are launching games to cash in on the cricket fever. Trump and Xi agree to resume trade talks. Possible levers that the US and China could pull to get the best out of a trade deal. Relations with India have never been better, Trump says. Is all this hullabaloo over tariffs a charade?

 

Moving on to the top Business news today: 

 

 RULES & REFORMS 

Ravi Shankar Prasad forms committee to suggest reforms for telecom industry. Mutual fund industry faces the repercussions of failing to self-regulate.


 
SOS: Taking note of the financial stress and debt bogging down telecom operators, Telecom Minister Ravi Shankar Prasad said steps would be taken to ensure “rationalisation of levies ... and ease of doing business”. He added that the issue of spectrum usage charges would be revisited.


 
A committee under the Department of Telecommunications Secretary has been formed to look into possible reforms and it will submit a report on the same in two weeks’ time.


 
Even as data rates in India have plummeted in recent years (to the benefit of consumers), debt and distress have piled upon the telecom industry. Taxes and levies make up about 30% of revenues of telecom operators while outstanding industry debt is over INR1 lakh crore.


 
Paying the Price: The mutual fund industry is reportedly displeased over the recent reforms announced by SEBI.  



Industry insiders are worried, for example, about the new exit load requirement on liquid funds. Investor reaction is yet to be gauged, but it could demotivate short-term investments, they fear.


 
Then there’s the market regulator’s decision to reduce to 20% the investment limit in a single sector and to 10% investment in HFCs. SEBI has also placed constraints on use of structured assets to about 5% of the portfolio and on bond purchases based on equity shares.


 
The industry might be miffed over SEBI’s intervention - it might even find it byzantine and atavistic. But over-regulation is the price one pays for failing to self-regulate. The mutual fund industry is learning that the hard way.

 

 MONSOON 

After a sluggish four weeks, the monsoon slowly picks up. The monsoons and India – a love story as old as time.


 
Rain, Rain, Don’t Go Away: Parched farmlands, frowning farmers, worried policymakers, distressed businessmen, naked skies – this was the scenario across India for most of June. The Southwest Monsoon, the lifeline of millions of families’ livelihoods, was first delayed then scarce.


 
Now, four weeks after the worst monsoon performance since the drought year of 2014, the rains are slowly picking up and the water deficit is climbing down. Rainfall this week is 35% below average, but it’s still better than the 43% deficit last week.


 
Whether crop-planting can reach normal levels or not depends on rainfall distribution in the next two weeks. Let’s hope for a healthy downpour so that those frowns can turn to grins and those brown land patches can turn vivid green!


 
India’s Lifeline: The importance of the Southwest Monsoon cannot be overstated. It is the backbone of our nation’s economy.


 
After it strikes an expectant Kerala in June, it spreads to most of the subcontinent in the coming weeks (well, ideally). The monsoon supplies 75% of India’s rainfall, a number that reflect its indispensability in a country where half of all cropland relies on the rains and half the population is engaged in agriculture.


 
The monsoon’s historic significance is reflected not only in its impact on India’s economy but also in its influence on popular culture, cuisine, religion, and the Indian psyche itself.



But India’s over-reliance on the Southwest Monsoon has a dark side – when the rainfall is feeble or insufficient, lives are lost and tragedy is the norm. Read more about India’s relationship with the monsoon here (paywall).

 

 FOOD TECH 

The rise of cloud kitchens and ghost restaurants. Food delivery and payment apps are launching games to cash in on the cricket fever.


 
Cloud Kitchening: The rise of food delivery apps like Swiggy, Zomato and Uber Eats has hurt restaurant chains. More and more consumers would rather order food online and eat it at the comfort of their own homes rather than confront traffic and travel to a restaurant, wait for the food to be cooked and eat it there.


 
A ripple effect of the growing power of the food delivery industry is the rise of “cloud kitchens” or “ghost restaurants”. These are kitchens without any dine-in facilities. They only exist to cook food that is distributed to consumers (or other restaurants) via delivery agents.


 
It doesn’t take a genius to see how disruptive this industry can be. Cooks, waiters, restaurant owners – many jobs are threatened. Many restaurants already earn 30% of revenue from food deliveries, this is expected to quickly climb to 50-60%. Amazon is investing in cloud kitchen companies and Uber is building its own in Paris.


 
And while the industry currently employs an army of delivery agents, further disruption in the form of delivery drones (also already being tested) would endanger their jobs too.  


 
Hunger Games: To increase time customers spend on their apps, food delivery apps are launching games revolving around the ongoing Cricket World Cup.


 
While Zomato has launched Premier League and Cricket Cup, Swiggy is using Match Day Mania to boost online traction.


 
Payment apps are also trying to cash in on the cricket fever. Paytm’s First Captains and Google Pay’s Tez Shots are examples.

 

 US-China 

Trump and Xi agree to resume trade talks. Possible levers that the US and China could pull to get the best out of a trade deal.
 

Mutual Understanding: The world’s two largest economies have apparently found a way to break an impasse and restart talks.


 
US President Donald Trump and Chinese President Xi Jinping met in Osaka on Saturday and held talks about the ongoing trade war between their countries. The results were substantial – Trump agreed to halt (for now) imposing 25% tariffs on the remaining $325bn worth of Chinese goods and allow sale of US products to Huawei.


 
Trade talks between Washington and Beijing, which had stalled in May, will now resume. A final trade deal, though, is still nowhere in sight.


Pressure Points: Now that trade talks between the US and China will resume, expectations for a trade deal will rise again. But talks have stalled, resumed and broken down many times before. And there are many levers each country can pull to get the most out of the talks and out of a deal.


The US can use Huawei as a bargaining chip – and Trump has publicly indicated before that this could be a course of action for US negotiators. Washington can also threaten to hike tariffs further on the remaining $325bn-worth of Chinese goods, which would mean all Chinese goods would be victims of the trade war, and this would hurt the Chinese economy even further.


On the other side of the table, China could weaponise its monopoly on rare earth metals, which are necessary for everything from mobile phones to nuclear reactors. Beijing could also take the decision to dump US treasuries, taking advantage of the fact that it is the biggest holder of US government debt.


Furthermore, China could devalue its currency to make its exports more competitive and sanction specific American companies and individuals – but this would spook investors and elicit further sanctions from Washington over currency manipulation.

 
Then there are defence levers and military ultimatums. But that would be a last-resort option, only if talks deteriorate to the point of hostility.

 

 US-India 

Relations with India have never been better, Trump says. Is all this hullabaloo over tariffs a charade?

 
India, US Bhai Bhai: PM Modi and President Trump met along the sidelines of the G20 summit and the bonhomie was palpable.

 
Ties between the two countries have never been better, Trump told Modi, and pledged “very big trade deals” in manufacturing and 5G. The two leaders have also directed their officials to engage in talks to break trade tensions.

 
This marks a turnaround from Thursday when Trump had tweeted his displeasure over India’s recent tariffs on 28 American products.


Foreign Secretary Vijay Gokhale told reporters that four issues would be the subject of India-US talks – Iran, 5G, trade and defence.

 
Tariffs & Opportunities: Even as India and US flirt with a trade war, Washington is offering India a slew of investment opportunities.

 
During his recent visit, Secretary of State Mike Pompeo claimed that American investors are eager to push cash in the region. As disagreements with Beijing grow, American businesses are looking at other countries not just to sell their goods and services but also as a manufacturing base. And India with its massive population, favourable demographics and growing economy is an attractive and obvious market.

 
This incongruity begs the question – is all this hullabaloo over tariffs a charade?