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India Offers Concessions on Wine, Automobile Imports to Restart Trade Deal Talks With the EU and Other Top News of the Week

Professor of Financial Economics and Part-time Value Investor, Transfin.
Jan 5, 2020 1:34 PM 7 min read

IRDAI proposes Arogya Sanjeevani Policy offering life-long cover, no exit age. Reliance Industries launches JioMart. India offers concessions on wine and automobile imports to restart trade deal talks with the EU. Donald Trump says "phase one" of US-China trade deal will be signed on 15 January. 2019 was a very good year for stock markets. Oil prices rise after US strike kills senior Iranian military leader Qassem Suleimani. 



Factory activity picks up while business optimism falls.

Mixed Signals: In December, India's factory activity expanded at its fastest pace in seven months, the Nikkei Manufacturing Purchasing Manager's Index showed.


The index rose to 52.7 last month, from November's 51.2. It was the highest reading since May and remained above the 50-mark that separates growth from contraction.


At the same time, though, business optimism about output over the coming 12 months fell to a three-year low. Reuters

Air India, BPCL, ConCor disinvestments "unlikely" to be completed this fiscal.

The Art of Running Backwards: The strategic disinvestments in Air India, BPCL and Container Corporation are "unlikely" to be completed this fiscal, a senior government official has said, as reported by Financial Express. The process is reportedly facing delays due to "surprises" encountered. With the fiscal deficit already reaching 115% with four months to go and most of the government's disinvestment goals for this fiscal yet to be achieved, this does not bode well for fiscal arithmetic.



Government unveils ₹102trn national infrastructure funding plan.

GDP Under Construction: Yesterday, Finance Minister Nirmala Sitharaman launched the National Infrastructure Pipeline (NIP), unveiling projects worth ₹102trn across 23 sectors and 18 states and Union Territories. These will be funded over the next five years by the central and state governments as well as private players.


39% of each project would be implemented by the centre, 39% by the states, and the remaining 22% by the private sector.


The projects identified by the NIP would included brownfield and greenfield undertakings. As per data, 43% (₹42.7trn worth) of projects are under implementation, 19% are under development and 33% are at a conceptualisation stage . BS

IRDAI proposes Arogya Sanjeevani Policy offering life-long cover, no exit age.

An Insurance is Forever: The Insurance and Regulatory Authority of India (IRDAI) has mandated health and general insurance companies to offer a standardised product that will take care of the basic requirements of policyholders.


Dubbed Arogya Sanjeevani Policy, the policy shall offer life-long renewability with no exit age. Currently, insurers offer health insurance up to 75-80 or 90 years in select cases.


IRDAI said general and health insurers should offer this product from April 1, 2020 onwards and don’t need any pre-approvals of the regulator. While IRDAI has fixed the minimum entry age as 18 and maximum as 65 years, the policy has no exit age and has provision for lifelong renewability. Here are 10 things one must know about the standard health insurance policy. 



Reliance Industries launches JioMart.

Setting Up Shop: Reliance Industries, in a bid to take on rivals such as Amazon and Walmart, as well as online grocery-specialists such as BigBasket and Grofers, has rolled out its new ventured called JioMart.


Taglined 'India ki nayi dukaan', JioMart is currently available in Navi Mumbai, Thane and Kalyan. JioMart will be an aggregator where it will partner local grocers and equip them with points of sale (PoS) terminals, low interest working capital, inventory management skills, and GST compliance. ET Retail

Reliance Jio may launch mutual funds, amongst other financial products.

We'll Do it All...: As per sources, Reliance Jio might soon roll out financial products including mutual funds.  


...Everything...: Reliance Jio’s digital payments platform, JioMoney, could be used to sell the mutual funds, which currently allows users to donate, send and receive money, in addition to paying bills and recharging mobile phones and DTH connections. 


...On Our Own: A Reliance Jio official reportedly said that the company has been beta-testing its offering among employees for a few quarters now. Inc42


Setting Up Shop: Reliance Industries, in a bid to take on rivals such as Amazon and Walmart, as well as online grocery-specialists such as BigBasket and Grofers, on January 1st rolled out its new venture called JioMart, marketed as “Desh Ki Nayi Dukaan”


The soft launch this week comes months after Mukesh Ambani said that he wants to service tens of millions of retailers and store owners across the country. If there is anyone in India who is positioned to compete with heavily backed Amazon and Walmart, it’s Ambani. Click here for the full scoop.



India offers concessions on wine and automobile imports to restart trade deal talks with the EU.

Renewed Vigour: To restart formal talks on a free trade deal, India has signalled its willingness to cut tariffs on wines and automobiles from the European Union (EU). But the latter has maintained that for any deal to materialise, concerns on investment protection will have to be addressed.


Background: Talks on the Broad-based Trade and Investment Agreement(BTIA) between the EU and India began way back in 2007. Despite multiple rounds of negotiations, talks hit a wall in 2013 and were stalled indefinitely.


However, in 2019, after New Delhi decided to not join the Regional Comprehensive Economic Partnership (RCEP), India approached the EU again to restart talks on the BTIA.


So, What's the Problem?: Brussels is apprehensive about India's commitment to protect European investors. As per the Indian government's Bilateral Investment Treaty (BIT) framework (issued in 2015), Brussels objects to the clause saying that if an investor-state dispute were to arise, a foreign investor can seek international arbitration only after all domestic legal routes have been exhausted. India contends this clause is needed to reduce chances of hefty fines from international tribunals; the EU fears investors' interests will be hurt by India's legal system, which it reportedly regards as slow and corrupt.

Is the BTIA Dead?: Not quite. Recently, the US imposed high import duties on some European products, including whiskies and wines. These are items that are much sought-after in India's growing middle-class. Ergo, New Delhi's offer of concessions on alcohol. BS

Donald Trump says "phase one" of US-China trade deal will be signed on 15 January. 2019 was a very good year for stock markets.

It's  A New Year, A New Dawn: Donald Trump has tweeted that "phase one" of the long-awaited trade deal between the US and China will be signed in Washington on 15 January. Further talks on phase two will reportedly begin in Beijing, where Trump will be travelling to himself "at a later date".


A phase one deal could contribute greatly in pacifying relations between the world's two largest economies, which have been engaged in a tit-for-tat trade war for the last two years.


The text of the deal has not been shared with the public yet. In recent weeks, both sides have tried to roll back tensions - China had promised to buy more American agricultural products while the US rolled back some tariffs. Trump had earlier expressed interest in signing a wide-ranging comprehensive trade deal with the Middle Kingdom. BBC


The Bulls Have It: One year ago, there were widespread fears that sagging global growth and the US-China trade war would drag markets down. In hindsight, these fears have proved to be wrong as 2019 has been one of the best years over the past decade for stocks. From the US and Brazil to Germany and India, stock markets reached record highs and maintained a bullish run for most of the year. WSJ

Oil prices rise after US strike kills senior Iranian military leader Qassem Suleimani. 

High Alert: Oil rose sharply today on the news that the US had carried out an air strike in Iraq that killed senior Iranian military leader Qassem Suleimani.


Following reports of the strike in the media, Brent crude rallied about 4%, the S&P 500 stock futures fell more than 0.6%, and major stock benchmarks in Asia climbed down. Meanwhile, gold, Bitcoin and the Japanese Yen (which tends to rally when investors are seeking safety) rose. WSJ



Huawei's revenue hits record high of $122bn in 2019 despite US sanctions.

A Fighter: Chinese telecommunications giant Huawei reported a record increase in revenue to $122bn for 2020. It sold 240m handsets this year, up from 206m last year. The news comes despite multiple attempts by the US to curtail its global business on the grounds of threat to national security. 


Hit Refresh: The US added Huawei to the Commerce Department’s trade blacklist this year, and placed new restrictions on its ability to sell to - and maintain commercial relations with - American companies, while urging its allies to not use Huawei products.


However, Huawei cautioned that growth next year could prove more challenging. TechCrunch


Meanwhile...: Union Telecom Minister Ravi Shankar Prasad announced that India will be opening up its 5G spectrum for trials to all telecom equipment manufacturers, including Chinese telecom giant Huawei. Firstpost

Uber and Postmates sue California over gig worker law.

Pushback: Ride-hailing company Uber Technologies and courier services provider Postmates have asked a US court to block a California labour law set to go into effect on Wednesday that could force the companies to treat their drivers as full-time employees, arguing the Bill violates the US Constitution.


The complaint, which includes two gig workers as co-plaintiffs, was filed in US District Court on Monday, two days before Assembly Bill 5 (AB-5) is due to go into effect on January 1st. It asks for a preliminary injunction against AB-5 while the lawsuit is under consideration.


The complaint argues that AB-5 violates several clauses in the US and California Constitutions, including equal protection because of how it classifies gig workers for ride-sharing and on-demand delivery companies compared to the exemptions it grants to workers who do “substantively identical work” in more than twenty other industries. Reuters


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