📰 Gujjars unhappy over decision for 1% quota
•Gujjars in Rajasthan are unhappy over the Bharatiya Janata Party government’s latest decision to grant them 1% reservation within the 50% ceiling mandated by the Supreme Court and have reiterated their demand for sub-categorisation of the Other Backward Class (OBC) quota for extending the benefit to them.
•The state government decided on Thursday to give 1% reservation to Gujjars and four other nomadic communities, recognising them as a “most backward” category. Parliamentary Affairs Minister Rajendra Rathore said a notification in this regard would be issued soon after getting the Governor's approval.
•At present, the overall reservation in the state stands at 49%. Along with Gujjars, nomadic communities Banjara, Gadia-Lohar, Raika and Gadariya have been included among the OBCs for quota in the government jobs and educational institutions.
•Gujjar leader Kirori Singh Bainsla, who has been spearheading the quota agitation for several years, said on Friday that the decision was not acceptable to the community. “Even the Centre has initiated an exercise to examine sub-categorisation of OBC reservation. What stops the Rajasthan government from doing the same?” he asked.
•The state Assembly had on October 26 passed a Bill creating the “most backward” category within the OBCs for Gujjars and four other nomadic communities and given 5% reservation to them, while increasing the OBC quota from 21% to 26% and taking the overall quota in the state to 54%.
•However, the Rajasthan High Court restrained the state government from implementing the provisions of the Bill on November 9. Later, the Supreme Court restrained the state government from taking any action or decision on the administrative side or in any manner conferring the benefit of reservation, which would have the result of crossing the total reservation beyond 50%.
•The Gujjar Aarakshan Sangharsh Samiti members, who have been interacting with a Cabinet sub-committee tasked with finding a solution to the quota issue, have maintained that making a provision for sub-quota within the OBC quota is the “only solution” available in the matter.
•Gujjars and others were earlier grouped as a special backward class and the state government had tried thrice to grant 5% reservation to them. However, the legislation was struck down every time by the High Court, which ruled that the quota had not only exceeded the 50% limit, but was also not supported by the quantifiable data supporting the claim of Gujjars’ backwardness.
📰 2G case verdict: The brain behind the deadline - ‘It was not Raja’
‘The date was actually the result of an internal discussion in the department to dispose of a limited number of applications in the first phase’
•The Special CBI Court that acquitted former Union Telecom Minister A. Raja has ruled that he was not responsible for either fixing a cut-off date for consideration of applications for Unified Access Services Licences or in altering a press release in a way that favoured two particular companies.
•In his 1,552-page judgment, Special Judge O.P. Saini has absolved Mr. Raja of the charge of conspiracy by rejecting the testimony of senior officers who sought to put the blame on Mr. Raja for introducing September 25, 2007, as the cut-off date for applications and for the deletion of a paragraph from the release that appeared to indicate a change in the spectrum allocation policy.
•Four senior officers deposed in “different and contradictory” tone and also “contrary to the record”, the judge said.
No material on record
•“There is no material on record in the testimony of these four witnesses that the date of 25.09.2007 was arrived at by Sh. A. Raja alone and that too as a result of conspiracy with other accused.”
•It was the prosecution’s case that this cut-off date was suggested by Mr. Raja to accommodate the applications of Swan Telecom and Unitech for grant of UAS licences and allocation of spectrum.
•This date was actually the result of an internal discussion in the department to dispose of a limited number of applications in the first phase, keeping the limited availability of spectrum in mind, the court held.
•On the controversy that Mr. Raja deleted a paragraph in a press release that had been cleared by the Solicitor-General, and this change amounting to a shift in the first-come, first-served policy from consideration on the basis of date of application to date on which payment of entry fee was made, the court backed the defence completely.
•“I do not find any merit in the submission of the prosecution that amendment in the press release led to redefining the concept of first come, first served on the basis of priority from submission of compliance to LOIs (Letters of Intent) against the established practice of priority from the date of receipt of application. The procedure was changed not by the press release, but after discussions in the department,” Mr. Saini said.
•This was as suggested by officers of the Department of Telecommunications, and ultimately conveyed to Prime Minister on December 26, 2007.
PM in the loop
•“It was rightly conveyed to the Hon’ble Prime Minister and the DoT that the policy had the concurrence of learned S-G. Thus, placing of this letter on the record of DoT was an official act and not conspiratorial one,” the judge said.
📰 Missing the pulse: on policies for farmers
Farmers, like investors, need predictability and coherence in government policies
•In what may be the Centre’s first strike in response to therural distress read into the Gujarat Assembly poll outcomes, a 30% customs duty has been slapped on the import of chana dal and masoor dal. The official reasoning is clear. Cheap imports could hit farm incomes especially at a time when domestic production of pulses is at a record high and a bumper rabi crop is expected. With an adequate domestic stockpile of pulses and with international prices remaining low for a prolonged period, the Centre fears that traders may still prefer to import some pulses rather than buy the fresh crop from local farmers at higher prices. There has been a significant upsurge in imports, in the range of 30% to 46%, in four out of the first six months of this financial year. Chana and masoor were the key contributors for India’s pulses imports rising to over $1.6 billion between April and September, compared to $1.2 billion in the same period last year. The value of chana imports in this period rose 373%, while masoor grew 204% year on year. In September, masoor imports shrank 56% in value terms while chana imports grew by a little over 200%. Disaggregated data for the last two months are not available, but overall pulses imports have cooled off since September, with total pulses imports shrinking nearly 30% in October and about 38% last month.
•The recent trend of moderation in imports indicates that the government may have moved too late to curb them, but flawed market timing isn’t the real issue. Reflexively raising or breaking such tariff walls, as the production cycle warrants, doesn’t add up to a serious long-term policy, which should be aimed at boosting farm incomes and ensuring food security. In the case of a key protein source like pulses, import duties may be counterproductive going forward. Just last year, while prices were soaring in the Indian market, Prime Minister Narendra Modi signed a pact to double pulses imports from Mozambique. A bumper crop or two will not diminish the importance of such deals in harder times. India has dal diplomacy interests with more than 40 other countries, for whom the latest move will be of concern, especially since there is already 10% import duty on toor dal and a hefty 50% duty was levied on yellow peas in November. Farmers, like investors, need predictability and coherence in government policies. Just as a duty hike on electronic goods won’t directly prop up local manufacturing or curb their consumption, hiking import duties on one dal or another won’t make farmers better-off — though traders who accumulated cheaper imports will benefit. The government must devise better means to shore up farm incomes without stirring up inflation or upsetting carefully cultivated food security partnerships around the world.
📰 Publish first NRC draft for Assam by December 31: SC
Dismisses Centre’s fears that a volatile situation will arise
•The Supreme Court is standing firm by its order directing the government and the authorities to publish the first draft of National Register of Citizens (NRC) for Assam by December 31, 2017.
•A Bench of Justices Ranjan Gogoi and Rohinton Nariman shot down fears expressed by the Centre that a volatile situation may arise if the draft NRC was published on or before December 31. The first draft is to be published after scrutinising the claims of citizenship of 2.38 crore persons in the northeastern State.
•Attorney-General K.K. Venugopal expressed reservations about publishing the draft NRC when lakhs of claims for citizen registration were still under scrutiny. At a hearing on December 15, the top law officer said there could be a law and order situation in the State.
•But the court dismissed the apprehensions, saying NRC was an ongoing process and the remaining claims, if cleared, could be part of a second NRC draft.
Under scrutiny
•The Supreme Court is hearing a writ petition filed by Assam Public Works (APW) in July 2009 for identification of Bangladeshi foreigners in the State and deletion of their names from the voters’ list.
•The Registrar General of Citizens Registration of India had informed the Supreme Court that 38 lakh people were under scrutiny in the State after their documents appeared doubtful. The parental linkage of another 47 lakh people were in doubt after the authorities matched their family trees. Finally, the cases of 29 lakh married women who had submitted certificates from the gram panchayat secretaries concerned were also under scrutiny.
•The court then ordered authorities to publish the first draft by December 31, after completing the scrutiny of the two crore claims along with that of 38 lakh people whose documents were suspect.
📰 ‘India, China must look beyond bilateral ties’
Scope of boundary talks extended
•China and India must “transcend the bilateral dimension” of their ties for stability in Asia and the world, said National Security Adviser Ajit Doval and China’s State Counsellor Yang Jiechi in their first boundary talks since the Doklam standoff. They discussed enhancing confidence-building measu- res and an “early settlem- ent” of the boundary issue, a statement by the Ministry of External Affairs said.
•The 20th round of Special Representative talks, which officials said were held in New Delhi on Thursday under an extended mandate, referred repeatedly to the consensus reached by Prime Minister Narendra Modi and Chinese President Xi Jinping on the subject of bettering ties.
•“We know that President Xi and (Prime Minister Narendra) Modi met this year in Xiamen and reached an important consensus. So the special representatives meeting [followed] the consensus of the state leaders … so as to achieve win-win cooperation and mutual benefits,” Chinese Foreign Ministry spokesperson Hua Chunying said in Beijing in an interaction on Friday.
•The consensus between the two leaders at Xiamen and on the sidelines of the SCO conference in Astana in June underscored the need to prevent differences from becoming disputes, as well as the need for China and India to maintain an island of stability in an increasingly unpredictable global scenario.
•Separately, a carefully worded MEA statement said that, “The [SRs] underlined the need for the two countries to build on their convergences, while seeking mutually acceptable resolutions of their differences with due respect for each other’s sensitivities, concerns and aspirations,” referring indirectly to tensions over Chinese troops’ transgressions in the Doklam area that led to a 70-day standoff, China’s support to Pakistan on designating JeM chief as a UN terrorist, as well as the Belt and Road Initiative and China Pakistan Economic Corridor, which India has opposed.
•All issues were discussed by the two sides, officials said. The meeting also comes after a quadrilateral meeting of India-US-Japan-Australia, which China had expressed concerns about. Mr. Yang’s visit acquires additional significance as his stature has risen in China’s official hierarchy following the recent 19th Party Congress. Unlike Foreign Minister Wang Yi, who continues his presence in the Central Committee of the CPCMr. Yang has been elevated to the 25-member Politburo.
📰 Affirmative vote: on US' move on Jerusalem
The U.S. must heed the UN resolution and reconsider its Jerusalem move
•The UN General Assembly vote on a resolution calling for the final settlement of Jerusalem through negotiations may have been pitched as a contest between Israel and Palestine; however, it became a referendum on U.S. President Donald Trump’s decision to recognise the city as Israel’s capital. The final outcome should force the U.S. to rethink its move, with 128 of the UNGA’s 193 member-countries voting for the resolution, and only nine against it. Among those voting for the resolution that “deeply regretted” the U.S. decision were its NATO allies, Germany, the U.K. and France, its Asian allies Japan and South Korea; its closest neighbours Canada and Mexico chose merely to abstain. The overwhelming majority ignored Mr. Trump and his UN Ambassador Nikki Haley’s threats that all countries that defied America would be ‘named and shamed’ and face cancellation of U.S. aid. The suggestion was that the U.S. would exact its revenge by refusing to support these countries when they next need it at the UN. Israel showed deep derision for the world body, which Prime Minister Benjamin Netanyahu referred to as a “house of lies”, while his UN envoy called the 128 countries “puppets forced to dance”. Such threats and epithets mark new lows in international diplomacy, and Israel and the U.S. come away looking like churlish bullies for issuing them. With all its weaknesses, the UN is a global collective, and it is imperative to acknowledge its mandate when such a large number of nations speak in one voice. The U.S. only recently asserted its intention to uphold the international rules-based order in its National Security Strategy document. It cannot now just walk away from both UN resolutions and its national commitment to the Israel-Palestine peace process by unilaterally changing its stand on the status of Jerusalem, without being accused of doublespeak.
•By voting for the resolution, India has affirmed its traditional policy in favour of a negotiated settlement for Jerusalem as part of a larger two-state solution for Israel and Palestine. Although Prime Minister Narendra Modi avoided mentioning the contours of the settlement during his visit to Jerusalem in July this year, India’s support to the creation of a Palestinian state according to UN Resolution 181 (1948) was heavily underscored in his statement to the UN in November, just days before Mr. Trump’s decision. There had been some speculation that in the face of the U.S. threats over the resolution, as well as Mr. Netanyahu’s impending visit to India in January, India would dilute its support to those principles in favour of close strategic ties with both nations. In choosing to vote for the resolution at the UNGA, India has shown a clarity of purpose that also aligns with the broad global consensus.
📰 A capital mistake: on UN resolution against US' Jerusalem move
The U.S.’s pressure tactics on the Jerusalem vote marked a new low at the United Nations
•What the world witnessed in the past few days at the United Nations, on a resolution demanding that the U.S. rescind its recognition of Jerusalem as the capital of Israel, was an unprecedented display of the arrogance of power. Never before in the history of the UN has a member state threatened, so publicly and so inelegantly, fellow member states with dire consequences if they did not fall in line with its position as the U.S. did. It should not come as a surprise if in the coming weeks and months the U.S. loses an election to one of the UN organisations, just as Britain lost its bid to a seat on the International Court of Justice, and for the same reason. The member states are not willing to put up any longer with the hubris of the Permanent Five.
A contentious issue
•The Jerusalem issue is easily the most contentious one between the the Palestinians and the Israelis. There are other issues such as borders, sharing of waters, refugees, security, and so on. None of them is amenable to easy answers, but the Jerusalem problem is the most sensitive. Any attempt to unilaterally change its status will kill the peace process.
•U.S. President Donald Trump has obviously given priority to nourishing his core domestic constituency rather than worry about the concerns of his close allies, all of whom voted against the U.S., except Canada — though it did not side with its powerful neighbour and simply abstained.
•The immediate international reaction to Mr. Trump’s decision on Jerusalem was rather muted. Instead of condemning it, most voiced concern at the negative impact it would have on the peace process. Even several Arab countries were not very vocal in their criticism. But soon, the Arab street asserted itself and forced the governments to take a more robust position. Egypt seems to have played a lead role in this. It drafted a resolution which avoided mentioning the U.S. by name; that would have made it difficult for Britain and others to support the draft. After the veto in the Security Council, Egypt and Turkey lost no time in bringing the matter to an emergency session of the General Assembly, where there is no veto.
•In all, 172 member states cast their votes. This means 21 countries did not vote at all. A few of them seem to have lost their right to vote because of arrears in payment of their mandatory dues to the organisation. The resolution passed with 128 votes in favour, a comfortable two-thirds majority. Nine voted against, and 35 abstained. The U.S. threat might have worked both ways.
•It would be interesting to watch how the presidential threat works out in practice in the case of Pakistan which voted against the U.S. Among India’s neighbours, Bhutan abstained. This might be explained either by its desire to demonstrate its independence from India or not to alienate the U.S., or perhaps a combination of the two.
Tilting the vote
•India’s vote in favour of the resolution was in line with its traditional policy. In recent months, there has been a noticeable change in the formulation of Indian statements on the Palestine problem, with the phrase ‘East Jerusalem’ being absent. This had given rise to a doubt about India’s vote in the General Assembly. It is probable that India was in any case going to vote in favour of the Egyptian draft, given its need not to antagonise the entire Muslim world. The American ultimatums might just have tilted the balance. The government, no doubt, analysed the cost-benefit ratio. India’s vote would have disappointed Israel and the U.S. It has excellent relations with Israel, as ought to be. But an objective analysis suggests that it is Israel which needs India more than the other way around. India buys at least a third of Israel’s defence production. India is also very important to Israel for diplomatic and political reasons. Israeli Prime Minister Benjamin Netanyahu will not cancel his forthcoming visit to India.
•As for the U.S., the interest is more mutual. We need American support for a few things such as the sale of their defence platforms and membership of the Nuclear Suppliers Group. The U.S. has a huge interest in India’s markets, especially given the latter’s insatiable desire to acquire, and almost limitless capacity to pay for, expensive military hardware. There is also the China factor. But since Mr. Trump has very recently described India as a leading global power and expressed his readiness to support it in reaching that status, India can perhaps relax. It is fortunate since it is not dependent on American aid, which can be cut off or reduced at will.
•Noteworthy has been the silence of the Muslim community in India, judging from the electronic and English language print media. Jerusalem has always been a ‘red line’ issue for them. The government would be justified in drawing its own conclusions from the relative absence of a Muslim reaction to the U.S. move.
📰 Proud of India, says Palestinian envoy
‘By voting for a negotiated settlement of the issue of Jerusalem, India has conveyed that it stands for peace in West Asia’
•Palestinians are proud of India and India’s support to the cause of peace in West Asia, the Ambassador of Palestine said, hours after India voted in favour of a negotiated solution to the issue of Jerusalem and against U.S. President Donald Trump’s recognition of the holy city as the capital of Israel.
•Ambassador Adnan Abu Alhaija’s comments came even as the government was praised by the Communist Party of India for voting against the U.S. recognition of Jerusalem as the Israeli capital. “We are proud of India and India’s friendship with Palestine. By voting for a negotiated settlement of the issue of Jerusalem, India has conveyed to the world that it stands for peace in West Asia. We wish to thank the Indian government, Indian people and their attitude at the UN which will ensure peace in our region and in the world,” he said.
•However, Israeli Ambassador Daniel Carmon reiterated his country’s claim to Jerusalem in the backdrop of the developments at the United Nations General Assembly. “Jerusalem always was the capital of the Jewish people, is and will continue to be the capital of modern Israel. No vote at the General Assembly can change that,” he said.
•Officials said India’s reaction to Mr. Trump’s statement had indicated that India would vote for the UN resolution. The Hindu had reported that the Arab countries had also reached out to India for its coveted vote. The resolution moved by the Arab countries received 128 votes for and 9 against, with 35 countries abstaining.
•Apart from the diplomatic dialogue, External Affairs Minister Sushma Swaraj discussed the vote at the Consultative Committee on External Affairs on Thursday. “Sushmaji informed that India will vote for the resolution in favour of a negotiated settlement of the Jerusalem issue when D. Raja of CPI raised the issue,” said a source familiar with the meeting.
•“The government has taken the right decision by supporting the resolution at the UN, which reflects India’s traditional policy on Palestine, as it is a highly sensitive issue,” Mr. Raja said.
•Significantly, the government faced criticism from within for the vote, with Rajya Sabha member Swapan Dasgupta coming out against the UN resolution. “India should either have abstained or voted against the UN resolution condemning the shifting of US embassy to Jerusalem. We should stand by Israel, a firm friend,” he said on Twitter.
•The Palestinian Ambassador, however, said the resolution was a clear sign that Israel could not lay any exclusive claim to Jerusalem. “There cannot be any state of Palestine without East Jerusalem as its capital. India has supported the two-state solution traditionally. We believe Jerusalem is the last and most sensitive of the dispute, and that is why we appreciate major countries like India which support a negotiated solution,” he said.
📰 SEBI raids brokers in data leak probe
Regulator examining exchange of price-sensitive company information on WhatsApp group
•The Securities and Exchange Board of India (SEBI) raided 34 locations on Friday, aimed at members of a particular WhatsApp group, as part of a probe into alleged leak of sensitive financial information by analysts and company officials over social media.
Documents seized
•According to a person familiar with the development, almost 100 officers from the investigation, surveillance and enforcement divisions of SEBI along with the local police conducted search and seizure operations at the offices of brokers and investment advisers, primarily in Mumbai and Delhi, seizing documents, computers and even mobile phones as evidence.
•“Two days back, SEBI had got search warrants issued against 34 entities who were part of a WhatsApp group on which price sensitive information was alleged to have been shared,” said the person on the condition of anonymity.
•“Some of the admins of the WhatApp group also came forward and shared the chat records with SEBI that led to today’s action. The group also comprised some officials of a private sector bank and a private insurance entity,” he added.
•It is believed that the raids were against members of a group known as ‘Market Chatters Group,’ however it could not be independently confirmed. An email query to SEBI remained unanswered till the time of going to press.
•Such select sharing of information by companies or even analysts is barred under the current regulatory norms and SEBI can issue show-cause notices to companies and even analysts alleged to be involved in such activities.
•While it is widely known that restricted groups on WhatsApp and Facebook are used to discuss price sensitive information, SEBI’s actions will send strong signals that sharing of such information would attract the ire of the regulator, said Sumit Agrawal, partner, Suvan Law Advisors and a former SEBI law officer.
•“The first-of-this kind step by SEBI will make the regulator realise the kind of conversations that are taking place in the industry as the U.S. SEC also recently did,” he said.
•“SEBI, however, also needs to tread carefully as being a member of a group without any trade or further tipping someone may not be chargeable for insider trading. A quick conclusion of the investigation and clearing the names will avoid troubles of such innocuous members, else these unusual sensational raids will become one more file in the SEBI office,” said Mr. Agrawal.
•At a recent capital market seminar, SEBI Chairman Ajay Tyagi had said that the regulator had received complaints about instances when such information was allegedly shared between individuals in a select group before the same was disclosed to the stock exchanges and that it was “seriously” examining the matter.
•“We are taking that (WhatsApp leaks) very seriously. How come such messages about reputed listed companies are leaked quite close to the financial results is something we are not going to sit quietly on,” Mr. Tyagi had said.
📰 RCEP: India hardens stand ahead of summit with ASEAN
MEA wary of FTAs; cites policy goal to boost manufacturing
•In a sign that India’s Free Trade Agreement (FTA) negotiations could slow further, the Ministry of External Affairs (MEA) has taken a strong stand that the country should restrain itself from concluding any such pact from which it would not gain in the medium term.
•This was evident in Foreign Secretary S. Jaishankar’s comments before the Department Related Parliamentary Standing Committee on Commerce in June. The panel’s report on ‘trade with Association of South East Asian Nations (ASEAN)’ showed that Mr. Jaishankar had “called for observance of due restraint and not conclude trade arrangements which are not to our medium term advantage.”
•According to the panel’s report, the senior official “submitted that a lot of our [India’s free trade] agreements have not served as well as they could have.”
•The report, released on December 18, is significant coming ahead of the ASEAN-India commemorative summit to be held on January 25, where the issue of the long-delayed Regional Comprehensive Economic Partnership (RCEP) will likely take centre stage.
Joint chief guests
•In a first, all 10 heads of ASEAN states led by the grouping’s current chairperson, Singapore Prime Minister Lee Hsien Loong, will attend the ASEAN-India summit and be the joint chief guests at the Republic Day Parade on January 26.
•In an interview during a visit in 2016, Mr. Lee had urged India to take a more “liberal approach” on freeing up trade and promoting regional integration.
•Referring to the RCEP in the standing committee, Mr. Jaishankar had said that “though larger FTAs are important for getting preferential access to the markets, it is important to be cautious about the manner in which such arrangements work out in respect of our imports as well as on our efforts to increase the share of manufacturing sector in our economy.”
•The RCEP is a proposed mega-regional FTA involving the 10 member countries of ASEAN and its six FTA partners including India, China, Japan, South Korea, Australia and New Zealand.
Access for services
•Mr. Jaishankar stressed that India’s external trade arrangements must be supportive of the Make in India initiative. As per the committee’s report, he pointed out that “emphasis in these trade arrangements is mostly on trade in goods and the same enthusiasm is not shared for trade in services. The reluctance in giving market access for trade in services is a big challenge.”
•When contacted, a senior MEA official said, “the thinking is now we do deals only if our interests are taken into account.” The official added that such a strong stand would also be adopted in other negotiations including those on the proposed India-European Union Broad Based Trade and Investment Agreement.
•Commerce ministry sources said while there is immense pressure on India in the RCEP negotiations to commit to opening up (90%) of its traded goods, what is troubling the government is the fact that other RCEP countries have so far been lukewarm to India’s demands for greater market access in services, particularly on easing norms on the movement of professionals and skilled workers across borders for short-term work. India, which is defensive regarding opening up its goods sector, is currently virtually isolated in the RCEP talks, the sources said. The next round of talks is in February in Indonesia. So far, 20 rounds of negotiations have been held, in addition to five ministerial meetings, three inter-session ministerials and one summit level talks between heads of state.
•Significantly, while the India-ASEAN Trade in Goods Agreement was inked and enforced from January 1, 2010, India’s goods trade deficit with ASEAN widened from $4.98 billion in 2010-11 to $14.75 billion in 2015-16, and then narrowed to $9.56 billion in 2016-17.
•The huge goods trade deficit has led to questions on whether the pact is only helping ASEAN nations and not benefiting India.
📰 India’s record share sales bring banks little cheer in fees
While volume of share sales almost $30 bn, arrangers’ fee ratio at four-year low
•Funds raised in India through share sales reached the most in a decade this year thanks to booming stock markets, but the rush to raise capital while investor sentiment remained bullish pushed dealmakers’ fee ratio to multi-year lows.
•India’s main stock indexes surged almost 30% in 2017 as investors bet on economic reform and corporate earnings recovery. That spurred almost $30 billion worth of share sales including a record $11.5 billion in initial public offerings (IPO).
•But for banks which arrange the sales, fees earned as a percentage of funds raised hit the lowest in four years, Thomson Reuters data showed. That made arranging work in Asia’s third-largest economy the worst paid out of 11 Asian markets.
•To be sure, the structure of Indian deal-making means fees are often comparatively small. But this year was particularly low because a high proportion of deals involved state-run firms which typically pay paltry fees.
Competition intensifies
•Competition was also higher with dealmakers such as IDFC Bank Ltd. and IIFL Holdings Ltd. gaining market share, while entrants such as China’s Haitong Securities Co. Ltd. made headway, industry participants said.
•“In a buoyant market there is no cause for anxiety for issuers, so low fees are no surprise. In a weak market, issuers may be willing to pay higher fees but the number of issues are fewer,” said Prithvi Haldea, chairman of data provider Prime Database. “That said, India has been a low-paying market for years and that’s unlikely to change anytime soon,” he said.
Optimistic about 2018
•Bankers are optimistic about 2018’s deal pipeline which they expect to include IPOs, real estate investment trusts and state-backed share sales. But some fear a continued market boom will keep fees low.
•Fees this year averaged 0.8% of deal proceeds, from 1.3% last year, Thomson Reuters data showed. The average was 2% in Hong Kong, 2.6% in Shanghai and Shenzhen and 2.8% in Tokyo. New York averaged 3.2%.
•“While fees in India (usually) are attractive in the Indian context, they are not probably as attractive in an Asian or a global context,” said V. Jayasankar, head of equity capital markets (ECM) at Kotak Mahindra Bank Ltd.’s investment banking arm, which Thomson Reuters data showed arranged the most deals this year by total value.
•Kotak and four other banks split a 0.1% fee for arranging the $1.7 billion IPO of state-run General Insurance Corp. of India, the year’s biggest IPO.
•Six banks arranging a $2.3 billion follow-on share offering by State Bank of India — 2017’s largest ECM deal — received a token fee of ₹1 ($0.016), according to bankers. It is not uncommon for dealmakers to agree to such terms for the opportunity to take part in blockbuster deals. The low fees can be partially attributed to the structure of deal-making in India where, unlike elsewhere, banks do not risk underwriting share sales.
•“We don’t see a material change in the fees paid, and we are at least five to 10 years away from an underwriting fee model,” said Jibi Jacob, head of ECM at Edelweiss Financial Services Ltd., 2017’s sixth-ranked IPO arranger in India this year, Thomson Reuters data showed.
•An increasing number of banks involved in each deal also means fees are being split between more dealmakers, said the ECM head at a multinational bank, who was not authorised to publicly comment on fees and so declined to be identified. There is also a “new cycle of people willing to go down the fee curve,” the banker said.
Larger IPOs ahead
•Looking at 2018, bankers including Citigroup Inc.’s India ECM head Arvind Vashistha said they expected average IPO sizes to be larger, with fundraising picking up in sectors such as infrastructure, real estate, metals and mining.
•“The big risk continues to be that of the global geopolitical environment and of valuations which in some cases have run up significantly. But the fundamental appetite for India paper in 2018 should continue to be very robust,” said Mr. Vashistha at Citi, ranked second among share sale arrangers.
•But low fees mean regardless of higher deal volumes, many banks — especially foreign banks with high cost structures — are not aggressively expanding ECM teams, bankers said.
•“When you have limited resources and deal volumes pick up, I think the only thing we can do is be disciplined about which clients, what transactions, rather than trying to do everything,” said a senior banker at a foreign bank’s India arm.
📰 ‘PCA only to improve banks’ financial health’
Govt. rules out closure of any PSB
•The Reserve Bank of India (RBI) has once again clarified that prompt correction action (PCA) is imposed to encourage banks to improve their financial health.
•The reiteration comes in the wake of rumours on social media that some of the banks that are under PCA could be closed down.
•“The PCA framework is intended to encourage banks to eschew certain riskier activities and focus on conserving capital so that their balance sheets can become stronger,” RBI said. Rajiv Kumar, Secretary, Financial Services, also tweeted that there was no question of closing down any public sector bank and added that the government was strengthening banks by recapitalising them.
📰 HAL gets order for 15 Light Combat Helicopters
This development comes days after the IAF issue the RFP to HAL for manufacturing 83 Tejas Light Combat Aircraft
•Hindustan Aeronautics Limited (HAL) on Friday received a Request for Proposal (RFP) for 15 limited series Light Combat Helicopters (LCH) from the Indian Air Force (IAF) and the Indian Army.
•This development comes days after the IAF issue the RFP to HAL for manufacturing 83 Tejas Light Combat Aircraft (LCA) in Mk-1A configuration.
•LCH is a 5.5 tonne class multirole attack helicopter developed by Hindustan Aeronautics Limited (HAL) and is intended to play a major role in providing close air support to ground forces. It is the only attack helicopter in the world which can operate at heights of 12,000 feet. Presently, four technology demonstrators are under flight testing.
•The limited series production is a precursor for full fledged serial production. Of the 15 helicopters, five are for the Army and 10 for the IAF.
•On August 26 this year then Defence Minister Arun Jaitley launched the production of LCH at Bengaluru and the Initial Operational Configuration (IOC) documents of the basic version were handed over to HAL.
•The IAF has out forward a requirement for 65 LCH and the Army for 114 of these attack helicopters.
