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This Week in Business News: Jio Begins Charging Customers, Modi Meets Xi, Road to Privatise Bharat Petroleum Cleared

Professor of Financial Economics and Part-time Value Investor, Transfin.
Oct 13, 2019 5:01 AM 6 min read

Narendra Modi and Xi Jinping meet for second informal summit. India's trade deficit with China and RCEP is over $100bn. Govt clears way for privatisation of Bharat Petroleum. Jio to charge customers INR6paisa/min for calls to other telcos. Govt approves amendments to electric vehicle charging infrastructure guidelines. OYO to raise $1.5bn in latest round of funding. All buses in India to be electric in the next two years, says Nitin Gadkari. Boeing vs Airbus is now US vs Europe. Walmart might demerge Flipkart and PhonePe to enter digital payments space. UK economy shrank last month. US imposes sanctions on China’s activities in Xinjiang as relations sour.


Moving on to this week's End of Week Wrap-up:




Govt clears way for privatisation of Bharat Petroleum.

Private Petroleum: In 2016, the government had annulled "187 obsolete and redundant laws lying unnecessarily on the Statue-Book". One of these was the legislation that had nationalised Bharat Petroleum Corp Ltd (BPCL) in 1976, thereby clearing the way for its privatisation. The government is reportedly looking to sell most of its 53.3% state to a strategic partner, a disinvestment that could get it upwards of INR60,000cr and shake up the state-dominated fuel retail sector. Livemint
BPCL – previously Burmah Shell – has a market capitalisation of c. INR 1.07 lakh crore. Possible buyers of a stake in a company that controls 25% of India’s fuel marketing could include Saudi Aramco and Total SA. But the privatisation news was not received happily by markets: BPCL’s shares fell c. 7% intraday today. Moneycontrol

Passenger vehicle sales fell 23.69% last month.

Slowdown for So Long: Data from Society of Indian Automobile Manufacturers (SIAM) showed that passenger vehicle sales fell 23.69% last month, prolonging the slowdown plaguing the automobile industry, now in its longest streak ever. 2,23,317 passenger vehicles were sold in September, the eleventh consecutive month of decline. Demand continues to be weak and job cuts continue to affect the sector. NDTV Profit

Govt forms committee for biggest review of GST since its launch.

Review & Revamp: The government has formed a 12-member committee to conduct the biggest review of GST since its launch to suggest “systemic changes” to prevent misuse, boost overall compliance and augment GST collection and administration.  The committee will be comprised of state and central government officials and the review panel may even suggest that rates be reviewed. ToI



Jio to charge customers INR6paisa/min for calls to other telcos.

Pay Through The Nose: Telecom operator Reliance Jio has said that it will start charging its customers for voice calls made to other networks such as Airtel and Vodafone Idea at INR6paise a minute. 

The development comes as an attempt to recover the interconnect usage charge (IUC) applicable on calls made to other networks, also known as off-net calls. 

Analysts estimate about 15% rise in average revenue per user and a quarterly rise in revenue of c. INR1,800cr for Jio based on the data for the June quarter. India Today

For Some Perspective: Jio paid INR851cr to Airtel, Vodafone Idea and BSNL last quarter as IUC.

OYO to raise $1.5bn in latest round of funding.

Raking Up a Little More: Hospitality firm Oyo Hotels and Homes is set to raise $1.5bn in latest round of funding. ET Rise

As part of the Series F round, Founder and CEO, Ritesh Agarwal will invest $700mn as he looks to buy more shares in the startup. The remaining 800mn will be injected by existing investors SoftBank Group, Lightspeed Venture Partners, Sequoia India, valuing OYO at a whooping $10bn.

The proceeds from the financing round would be used for expansion in the US and strengthen its vacation rentals business in Europe.

Walmart might demerge Flipkart and PhonePe to enter digital payments space.

Two is Better Than One: Walmart is reportedly looking to demerge PhonePe from Flipkart as the US-based retailer looks to expand beyond e-commerce and tap onto India’s booming e-payments market. Flipkart, which Walmart had acquired in 2015, had passed a resolution in March for PhonePe to evolve as an independent entity. The payments app could be valued as much as $20bn according to Morgan Stanley. And as Walmart seeks to directly own PhonePe, the digital payments space in India is all set to become larger and more competitive. Inc42



Govt approves amendments to the electric vehicle charging infrastructure guidelines and specifications.

Go Electric!: In a bid to promote the adoption of electric vehicles (EV) in India, the government today approved amendments to guidelines and specifications for charging infrastructure.

The new guidelines envisage the installation of a robust network of charging infrastructure throughout the country, such that there is at least one charging station available in a grid of 3 km X 3 km in the cities and one charging station at every 25 km on both sides of highways and roads. News18

All buses in India to be electric in the next two years, says Nitin Gadkari.

EV All the Way: Reiterating his push for the adoption of EV in India, Union Minister of Road Transport and Highways Nitin Gadkari Monday said that all buses in the country would be converted into electric within a span of two years.



Modi and Xi hold their second informal summit. Strengthening economic ties and resolving political tensions are top priorities.

Chennai Express: Prime Minister Narendra Modi and President Xi Jinping convened in Mamallapuram, Tamil Nadu for a two-day “informal summit” – the second of its kind after Wuhan. Besides discussions on strategic issues, economic issues were also at the top of the agenda. Amongst these was India’s sky-high trade deficit with China, especially in the goods trade, and ways to increase investments so as to strengthen economic ties between two of Asia’s largest economies. Hindu BusinessLine

India’s trade deficit with RCEP countries is over $100bn.

Trade in India: Take the RCEP. The reason why there is so much pronounced domestic opposition to the deal is that historically when it comes to free trade agreements (FTAs), India tends to be at the receiving end. Post-FTA, imports from partners have surged even as exports faltered. According to NITI Aayog, India’s exports to FTA countries have not outperformed the overall export growth or exports to the rest of the world. India’s trade deficit with ASEAN and five other countries in RCEP, for instance, is over a staggering $100bn. Hindu BusinessLine
Data regarding India’s current trade deficit and historical trends regarding the same can be accessed here.

India rejects e-commerce chapter of proposed RCEP agreement.

It’s Not Yet A Deal: Indian negotiators debating the RCEP deal in Bangkok have rejected the proposed bloc’s e-commerce provisions. Accepting these rules would have meant India would not be able to ask companies to store data locally, despite the fact that data localisation is required as per RBI regulations. Negotiations will now continue with the Intersessional Ministerial Meeting, which Commerce Minister Piyush Goyal will attend.  The Hindu



Boeing vs Airbus is now US vs Europe.

Storm Clouds Over the Atlantic: The US recently said it would impose tariffs on a swathe of European goods – including wine, olive oil, cheese and aircraft. While tensions between Brussels and Washington have become more and more pronounced of late, the $7.5bn tariffs mark the largest-ever authorised relataliation in WTO history. But US vs Europe has its roots in a more private, more brutal, more long-running feud – in Boeing vs Airbus. NYT

UK economy shrank last month.

Oh Brexit: The UK economy shrank in August as Brexit fears mount with the October 31 deadline nearing. While GDP growth increased 0.4% in July, it contracted by 0.1% last month. Although these numbers are bad news, the country is likely to avoid a recession as long as output doesn’t plunge by around 1.5% in September, thereby leading to two consecutive quarters of contraction, a decline last seen in 2012. Bloomberg 

US imposes sanctions on China’s activities in Xinjiang as relations sour.

The Gloves Are Off: On Monday, the US announced sanctions on a group of Chinese companies whose products are being used by the Communist Party to establish a surveillance state in its Western province of Xinjiang, where it has been accused of running concentration camps and engaging in mass human rights violations. Today, Beijing has demanded that these sanctions be lifted and hat Washington not interfere in China’s “internal affairs”. Viewed from a broader perspective, this signifies a further deterioration in relations between the two countries, which does not bode well for ongoing trade talks. AP



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