E-commerce Draft & More…

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India’s e-commerce draft

While yet to come into action, India’s latest ecommerce draft is already making news. With an objective to setting up an industry regulator, by far the most striking provision is a mandate for government access to online site’s source code and algorithm, including for Google. The idea is to thwart monopolies (psst, like Amazon) and give an equal platform to local startups by borrowing from the intellectual capital developed by the bigwigs. While there are no specific mandates with respect to Make In India, the nudge to it is fostered by asking ecommerce companies to detail out imported products with country of origin and value of work done in India.

Like bees to honey: The reason for this recent excitement in the digital space is the same as why India has always been fairly balanced between it’s dependence on exports and domestic consumption. The double edged sword of booming population. Add to the mix world’s cheapest mobile internet data and you get a huge market ready to do your bidding. As projected by IBEF, the Indian e-commerce market will grow by leaps and bounds to reach US $200 Billion, up from a mere $38.5 Billion in 2017. The pandemic has only forced offline shoppers to join the fray.

What’s next on this front? Currently, this policy is still in draft stage. It will be put up on a government website for stakeholder view. Expect a pitched battle there and maybe even some changes and compromises.The policy draft has been in the works for two years, so we can well imagine how much time it will take to get into action, if at all.

$750 World Bank booster shot for Indian MSME sector

The Indian government and World Bank signed a deal for $750 million funding to support the MSME sector in India. MSME sector is the backbone of the economy with a 30% contribution to GDP and 40% to exports. Currently, only 8% MSMEs have access to formal credit channels. The loan is for a 19-year period, with an in-built 5-year grace period.

How will the money be used? Unlike the US where loans were directly disbursed to applicable small businesses at a 1% interest rate, this money will flow to indirect channels. A lot of this money will flow in to banks and NBFCs to give them reassurance in disbursing loans to MSMEs. In this sphere, banks have already sanctioned Rs. 1 Lakh Crore of the Rs. 3 Lakh crore Emergency Credit Line Guarantee scheme promised in the stimulus package. World bank is also helping the government with building a digital platform to aid in better cash flow for the sector.

World bank bill for India so far: Since the lockdown, this is the third tranche that the World Bank has announced for India, totalling $2.75 billion. In April, we received the first billion to support the health sector. In May, another billion was approved to aid in cash transfers and food benefits. If all the approved funds flow smoothly to the intended recipients, it could help reduce the lethality of the economic blow dealt by Covid.

Huawei becoming the face of global data warfare against China

There’s a game of Chinese whispers and dominos going on around Huawei. For years, US has been trying to reduce the grip Huawei has on it’s network and infrastructure. The action heated up in the last few weeks with Donald Trump imposing a ban on Huawei’s access to US made silicon chips. Huawei has been big on 5G infrastructure of which a vital element is the silicon chip from American players like Applied Materials Inc. With this ban, Huawei could have a big part of their 5G jigsaw puzzle missing.

Ripple effects: UK Prime Minister Boris Johnson while giving assurances of not being a “Sinophobe”, also seemingly referred to Huawei as a “hostile state vendor” in the same sentence (yeah, we are also still scratching our heads at that). In the absence of American silicon chips, UK believes the Huawei infrastructure may be a security risk and they could phase it out as soon as end of this year. In their subtlety, the French government has not banned Huawei but has “urged” 5G telecom firms not to use it.

Nationalism taking over technology: Today’s battles are being fought more on optic fibre cable and humanly unreadable reams of data. No wonder our weapons of choice are also changing to recognising global tech giants with the name tag of the country they belong to. Politician endorsements like US secretary of State Mike Pompeo calling Jio a “clean telco” are more of veiled statements reflecting diplomatic ties.

IN SNIPPETS

Food takeaway business is here to stay and grow: As the ambience at home starts to seem most appealing, RedSeer Management Consulting reports that cloud kitchens or takeaway only restaurants could well grow five times in five years from $400 million in 2019 to a $2 billion market in 2024

Indian GDP forecasts keep getting darker: Citigroup Inc reduced the forecast for Indian GDP for FY 21 from -3.5% to -6%, lower than the latest numbers released by IMF.

Fear of an Indo-China war recedes: In a relief to investor fears, yesterday saw the first signs of withdrawal of Chinese troops and temporary structures from the high-tension Galwan Valley.

Warren Buffet breaks his investing fast: Having been out of action since the coronavirus lockdown, Berkshire Hathway finally announced an enterprise deal of almost $10 Billion to the natural gas transmission and storage business of Dominion Energy.

GSK & Sanofi close in on a deal for the holy grail: UK Government is said to be in the final stages of closing a $624 Million deal with Sanofi and GSK for 60 million doses of a possible vaccine which begins human trials in September, behind other front runners like Modena and the Oxford project with Astra Zeneca.

MARKET PULSE

It was a day of global market dominos again. China market was buoyant on the government’s advice to foster a “healthy bull market”. Global markets took the cue to turn green in response. After all it’s like Pied Piper, right? If China led us into this mess, maybe it can lead us out to. Or so, the investors seem to be thinking.

In the Indian markets, the Sensex and Nifty 50 indices saw their biggest gains come from HDFC Bank, Reliance Industries, Tata Consultancy Services and Mahindra & Mahindra.

WILD CARD

No one does quirky like Elon Musk. To show his distaste of short sellers, while crowing about Tesla highest valued auto maker, Musk decided to wave a red satiny flag in their face. Now, on the Tesla website you can find red satin shorts for sale with symbolism galore, for instance “Enjoy exceptional comfort from the closing bell.”

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