Corporate tax rate cut makes India one of Asia' lowest tax regimes. No GST relief for Auto sector. Nippon Express acquires 22% stake in FSC. ED raises objections against SBI audit of Jet Airways. Facebook suspends “tens of thousands” of apps. Netflix is changing the way Hollywood interacts with talent. Chinese trade negotiators cancel goodwill trip to US farms. President Trump says he wants a “complete deal” with China. Austria expected to veto EU-Mercosur free trade agreement. Millions participate in global protest to demand action against climate crisis.
Moving on to the top Business news of the day:
Table of Contents
ICYMI: In a significant move to bolster the floundering economy, the government yesterday slashed corporate taxes worth INR1.45tr paid by domestic manufacturers. At present, businesses are taxed at 30% but in the new tax regime the rates will be between 15% and 22%. This would make India one of the lowest corporate tax regimes in Asia (the lowest being Hong Kong with its 15%).
The move is expected to boost investments and reignite the economy’s animal spirits. Stock markets gave the move a standing ovation, surging by 5.3%, the highest gain in a decade. However, will this be sufficient to put growth back in the fast lane? Only time will tell.
Nein, Auto: Meanwhile, no relief was announced for the ailing Auto sector at the recent GST Council meet despite numerous demands for a GST rate cut amidst plummeting sales and the worst slowdown the sector has faced in two decades.
Money Matters: Japan’s Nippon Express has acquired a 22% stake in Kishore Biyani’s Future Supply Chain Solutions Ltd (FSC) for INR641cr. FSC will be issuing almost 38L new shares to Nippon at INR664/share and will use the capital raised to fund its growth plans.
Loopholes Galore: The Enforcement Directorate (ED) has raised red flags on the SBI-commissioned audit of Jet Airways books. Its own probe’s findings are reportedly significantly different.
The SBI had commissioned EY last year to perform the audit, which was closed in April, citing the airline’s responses as adequate. The ED, however, argues that there were several loopholes in the audit that was conducted and is now planning to conduct its own investigation into Jet’s books.
Zuckpocalypse: On Friday, Facebook said it had suspended “tens of thousands” of apps for mishandling users’ personal information and other transgressions. Following the Cambridge Analytica scandal, the social media company said it launched an investigation into how third-party apps were interacting with users on its platform.
The scale of the problem is reflected in the numbers. Earlier, Facebook had said 400 apps were suspended. But court filings revealed that as many as 69,000 apps had been suspended. The majority of these were deplatformed because developers didn’t cooperate with Facebook while 10,000 were flagged for exploiting users’ personal data.
Netflix and Shell Out the Money: The emergence of streaming has pushed huge entertainment companies to seek mergers, consolidate verticals, and sell content online directly to consumers for the first time ever. This new business model has up-ended the entertainment industry, and, crucially, is changing the way Hollywood interacts with talent.
The Trip Has Been Cancelled: For the past two days, trade representatives from China and the US have been locking horns over negotiating tables in Washington. Yesterday, they were slated to leave for visits to US farms in Montana and Nebraska as a goodwill gesture (China had asked its companies to refrain from buying American agricultural goods). However, the trips were cancelled in the last minute, crushing hopes of news of a now-very-elusive trade deal.
The Whole Package, Believe Me: Meanwhile, President Trump told reporters that he seeks a “complete deal” with China, not a partial or interim one. Furthermore, he said he doesn’t need it before the Presidential election next November, hinting that trade talks – and, by extension, the trade war – could continue well into 2020.
Austrian Veto: Austrian lawmakers have almost unanimously voted to reject the draft free trade agreement between the European Union and Mercosur (a South American free trade zone). Austria is now obliged to veto the deal at the EU level, which would kill the deal since all 28 member states’ approval is mandatory for Brussels to sign trade agreements.
The EU-Mercosur agreement envisioned the world’s largest free trade area (Mercosur is comprised of Brazil, Argentina, Paraguay and Uruguay). It was the product of almost a decade of negotiations and was announced last June. However, opposition to the deal has slowly risen in recent weeks, especially over Brazil’s perceived indifference to the Amazon fires.
For A Cooler World: On Friday, millions of people around the world, many of them youngsters, held an international climate strike to demand action against the climate crisis. The protests were inspired by teenage activist Greta Thunberg and come ahead of a UN summit on climate action on Monday.
(Don't want to miss out on these End Of Day Wrap Ups? Subscribe Now to our WhatsApp Feed and get the day's Top Business stories straight on your favourite messaging app.)