RBI extends card tokenization deadline to June 30
The Reserve Bank of India has extended the deadline for wiping off card data on merchant sites and applying tokenization by another six months as merchants and payments companies expressed their inability to meet the December 31 deadline.
Why it’s important: The RBI in September had prohibited merchants from storing customer card details on their servers with effect from January 01 and mandated the adoption of tokenization as an alternative to card storage. Industry bodies had said that if implemented in the present state of readiness, the new mandate could cause major disruptions and loss of revenue, especially for merchants.
Vedanta to invest $ 15 billion in fab plants
Billionaire Anil Agarwal’s Vedanta group will invest $ 15 billion in the next 5-10 years to make displays and semiconductor chips in India. The investment will be made through group company Avanstrate, a Tokyo-based maker of the special glass used in LCD panels.
Why it’s important: The government on 16 December unveiled a $ 10 billion incentive scheme to encourage companies to build semiconductor and display factories. It plans to provide financial support of up to 50% of the project cost to eligible companies. This is likely to see a boom in India’s semiconductor industry.
Ratan Tata’s Electra EV aims double turnover every year
Electra EV, the Ratan Tata-founded firm that offers EV powertrain solutions to Tata Motors and other automakers, aims to double its turnover every financial year on the back of strong order books. The company has seen a 10-fold jump in demand. Until August, it was making 100-150 EV kits a month, which had to be ramped up to 1,000 units subsequently. Electra clocked a revenue of Rs 115 crore in the financial year ended March 2020.
Why it’s important: As India plans aggressive moves to hasten energy transition that will reduce emissions of greenhouse gases to tackle climate change, there is tremendous interest in making electric cars in the country.
Ola’s dream of world’s biggest e-scooter factory hits hurdle
The Bengaluru-based unicorn, which has delayed initial deliveries to mid-December from October, is pledging to fulfill rest of the orders by February. Ola is struggling to iron out manufacturing wrinkles and can make only 150 units a day, a slow pace if it plans to deliver the 90,000 orders it has received on time.
Why it’s important: Hobbled by a global shortage of chips, and what analysts call an overreliance on imported components, Ola Electric’s woes are a microcosm of the challenges that India’s automobile industry will have to navigate as it pivots toward electric vehicles. They also underscore the hurdles India, the world’s third-biggest emitter, may face as it attempts to become net carbon zero by 2070, as promised by Prime Minister Narendra Modi at the UN climate summit in Glasgow in November.
Edtech unicorns take acquisition path for growth
India’s new-age edtech companies, which grew rapidly in 2020 during the first wave of the Covid-19 pandemic, are continuing to grow inorganically this year by quickly acquiring companies. Five edtech unicorns together acquired 21 firms in 2021, spending a total of about $ 3 billion.
Why it’s important: India’s edtech sector has been growing rapidly since the pandemic hit, spurred by a rise in remote learning and online education due to school closures and lockdowns. The edtech market in the country is expected to be worth $ 3.5 billion by the end of 2022.
SK Finance raises Rs 4 billion from IIFL Wealth and others
SK Finance Ltd, the Jaipur-based used vehicle and small business financier, has raised Rs 4 billion in a funding round led by IIFL Wealth Management Ltd and other new investors. It has so far raised about Rs 14 billion from six investors.
Why it’s important: Financing small businesses is emerging as a significant growth area for many firms. Many medium and small enterprises find raising funds from commercial banks difficult, enabling others to step in to fill the void.
HSBC Acquires L&T mutual fund business for $ 425 million
L&T Housing Finance announced selling L&T Investment Management, the investment manager of the mutual fund business of L&T, to HSBC Asset Management (India) at $ 425 million. At a conversion rate of Rs 75 to one US dollar, the deal will be worth approximately Rs 32 billion.
Why it’s important: This will be a third merger and acquisition in the Indian asset management space in 2021. India’s mutual fund industry has grown rapidly in the past few years, from Rs 16.50 trillion on November 30, 2016, to Rs 37.34 trillion as November 30, 2021, more than double in five years.
Indian Oil to invest Rs 90 billion for new crude oil pipeline from Mundra
Indian Oil Corp will invest Rs 90 billion in laying a new crude oil pipeline from Mundra in Gujarat to Panipat in Haryana. The pipeline, which will have a capacity of carrying 17.5 million tons a year, will transport imported crude oil from the Gujarat coast to the firm’s refinery in Haryana.
Why it’s important: Indian Oil operates a network of more than 15,000 km of pipelines and added 337 km of additional pipeline length in 2020-21.
Indian Oil, Adani Total top bidders for city gas licenses
State-owned Indian Oil, and a joint venture of Gautam Adani’s gas arm and Total of France, Adani Total Gas Ltd, have bid for the maximum number of licenses to retail CNG to automobiles and piped cooking gas to households in the latest city gas bidding round. Indian Oil bid for 53 out of 61 geographical areas in the city gas licensing round that closed on December 15. Adani Total bid for 52.
Why it’s important: CNG has emerged as an important auto and cooking fuel in India and is set to expand rapidly due to its lower prices. There would be investments of as much as Rs 800 billion in the next few years to set up city gas infrastructure in the 61 geographical areas, spread over 215 districts in 19 states and one Union territory.
Indian equities at greater risk from US Fed’s rate moves
The decision by the US Federal Reserve to raise interest rates may have an impact on Indian equity markets. The equity assets under management of the US funds in India rose by 47 percent on an annual basis to Rs 18.5 trillion at the end of November, while the total equity portfolio of the foreign portfolio investors increased by 37 percent to Rs 48 trillion.
Why it’s important: Historically, interest rates in the US have a negative correlation with the equity performance of emerging markets like India. The risk of the redemption in emerging markets amplified after the US Fed began doubling the rate of tapering or reducing the monthly purchases of government securities due to surging inflation in that country.
