Morning Scan: All the big stories to get you started for the day

A round-up of top newspaper stories.

1. Tax investigation on insurance premium irregularities widens to private banks

The income tax department has sent notices to two large private banks in its probe into alleged malpractices involving commission payments by insurance companies. The names of the two banks were not immediately known. Initially, the income tax department was probing more than 20 insurance firms and about 500 entities linked to their sales agents. But the line of investigation has now shifted to the banks after the probe revealed voluminous transactions demanding further explanation.

Why it’s important: It is worrying that the investigation of insurance firms over suspected malpractices and tax evasion is uncovering the involvement of banks as well. This could open a can of worms.

2. India’s start-up valuations plummet as investors become cautious about further funding

Start-up valuations in the private market in the country are beginning to show cracks as investors start deploying cash selectively, according to investors and investment bankers. Offers are being increasingly made at valuations sharply lower than previous rounds, and all of them do not conclude successfully.

Why it’s important: The era of easy money for start-ups has come to an end as a funding winter deepens. Lower valuations will force new enterprises to lower cash burns that might impact business expansion.

3. Apple supplier Foxconn likely to expand Chennai iPhone factory

Apple's iPhone manufacturer Foxconn may expand its manufacturing facility in India by adding two additional buildings at its site near Chennai. It is also looking to establish a research and development center in Bengaluru’s Whitefield, a strong indication of the rapid capacity expansion in India by the contract manufacturer.

Why it’s important: The development comes at a time when Apple is looking at increasing its engagement in India to reduce dependence on Chinese supply chains.

4. Sale of fridges and ACs soar as summer temperatures rise across India

Demand for air conditioners and refrigerators has picked up over the past week amid rising mercury across India after a lull because unseasonal rains caused temperatures to dip. The Consumer Electronics and Appliances Manufacturers Association expects the industry to see an increase of 15-20 percent this summer in refrigerator and air conditioner sales. Cold drink makers also expect strong summer demand.

Why it’s important: As summer temperatures soar, orders for compressor-driven products would naturally rise, especially in northern India. Companies in the space will welcome the rising trend.

5. Angel investments in local start-ups with excessive premiums under tax scanner

Domestic start-ups that raised capital from local investors at a high premium between assessment years 2018-19 and 2020-21 have come under the scanner of the income tax department. Tax authorities have asked a large number of start-ups, including those in financial technology and education, to justify their shares issued at a premium to domestic investors under angel tax provisions in a recent communique.

Why it’s important: If taxmen see excess premium received on share sale by an Indian unlisted company to foreign or domestic investors as income from other sources, it could become liable for angel tax.

6. Semiconductor fab of Vedanta-Foxconn in India to generate sales by 2027

Vedanta-Foxconn Semiconductors, a joint venture between the Vedanta group and contract manufacturer Foxconn, wants to start generating revenue from its semiconductor fabrication unit in India from 2027, said new CEO David Reed and Akarsh Hebbar, managing director of Vedanta’s semiconductor and global display business. Construction of the plant is slated to begin by the end of the current fiscal year.

Why it’s important: The Indian government is providing massive incentives to companies manufacturing semiconductor chips in hopes that India will become a global hub. The Vedanta-Foxconn venture is taking advantage of that.

7. New mandate for certification grips finance professionals in exam fever

Several private equity and hedge fund managers are experiencing exam jitters following a proposal that mandates finance professionals to validate their skills by clearing a certification examination from the National Institute of Securities Market. The Securities and Exchange Board of India approved the proposal mandating certification for alternative investment funds in March.

Why it’s important: Financial sector professionals are worried about the reputational risks as failure to clear the exam could put them in an awkward position within their networks.

8. El Nino could hit wind power generation in the country by lowering output

The El Nino weather phenomenon, linked to droughts and lower monsoon rainfall in the subcontinent, could affect wind power generation as well. During El Nino, trade winds weaken or even reverse, and wind speed generally slows down. This could lower wind power output amid soaring summer temperatures, driving up electricity demand. Wind power constitutes 10.2 percent of India’s installed capacity of 42.6 GW.

Why it’s important: Wind power generation in India typically peaks between June and September. If the output is impacted during this period, energy costs could rise, hurting the economy.

9. State Bank board approves raising $2 billion by issuing overseas bonds in 2023-24

The board of the State Bank of India has approved raising funds of up to $2 billion (Rs 16,000 crore) in 2023-24 through bonds. India’s largest lender will raise the money through foreign currency bonds in single or multiple tranches, it said in a stock exchange filing.

Why it’s important: The proceeds from the sale will be used to boost the overall capital base of the bank and also strengthen capital adequacy in line with Reserve Bank guidelines.

10. Apple fans cheer as American tech giant opens first store in Mumbai

Serpentine queues, loud music, trademark claps, and CEO Tim Cook opening the door marked the launch of Apple’s first store in India. Cook is expected to meet Prime Minister Narendra Modi on Wednesday. He will also open the company’s second store in the national capital.

Why it’s important: Apple is showering attention on India to grab more market share in the country. It has also been ramping up local production in a pivot away from China.