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

Daily round-up of top newspaper stories

Here are all the big stories to get you started:

#1. India’s goods exports decline sharply to three-year low as global demand slows

India’s merchandise exports in April fell the steepest in three years as weakening global demand and softening commodity prices weighed on outbound shipments. Exports declined by nearly 13 percent to $34.66 billion from $39.70 billion a year ago, commerce ministry data showed. The last sharp decline was in May 2020, when goods exports plunged 35.52 percent. Goods imports fell by 14 percent to $49.90 billion from $58.06 billion a year earlier. The trade deficit narrowed to $15.24 billion from $18.36 billion.

Why it’s important: Demand for gems and jewelry and petroleum products has slumped. The demand outlook does not look promising in the key markets of Europe and the US, at least for the next 2-3 months.

#2. Wholesale inflation shrinks for the first time in three years on lower commodity prices

India’s wholesale inflation contracted for the first time in three years in April as global commodity prices softened, easing pressure on raw material costs used by factories. The wholesale price index declined 0.92 percent in April, compared with an expansion of 15.38 percent a year ago and 1.34 percent in March. Factory gate inflation last entered negative territory in July 2020 during the pandemic.

Why it’s important: The decline in wholesale prices indicates a downward trend in consumer inflation. This could in turn could herald a turnaround in the tight monetary policy stance of the Reserve Bank.

#3. Regulator denies probing Adani firms since 2016 in Supreme Court

The market regulator has not investigated Adani group companies since 2016 for suspected misuse of global depository receipts to route black money or any other violation, the Securities and Exchange Board of India has told the Supreme Court. It requested an additional six months to conclude its probe into the Adani-Hindenburg incident to ensure justice.

Why it’s important: The regulator’s denial contradicts a statement made by junior finance minister Pankaj Chaudhary in Parliament in July 2021, when he said Sebi was investigating Adani firms for violating norms.

#4. Government panel to prepare fresh list of state-owned banks for privatization

The government may establish a panel to draw up a new list of public sector banks that can be privatized. In April 2021, the Niti Aayog had recommended the privatization of two state-run banks to the disinvestment department. The Central Bank of India and the Indian Overseas Bank were reportedly shortlisted, but no final decision was taken.

Why it’s important: The central government wants to revisit its bank privatization strategy as some state-run lenders have turned profitable and several rounds of consolidation have reduced their number.

#5. Vedanta-Foxconn semiconductor factor to soon get government approval

The government is set to approve the chip-making plans of a Vedanta-Foxconn joint venture under the $10-billion India semiconductor mission. Vedanta Foxconn Semiconductors Ltd has signed initial pacts with two firms for technology transfer, which include US-headquartered GlobalFoundries and European chipmaker STMicroelectronics. The details have been submitted to the electronics ministry.

Why it’s important: The approval will pave the way for the government’s aim to establish India as a global semiconductor hub. The joint venture plans to invest some Rs 1.54 lakh crore in a plant in Gujarat.

#6. Qualcomm working with manufacturers to substantially reduce 5G smartphone costs

Qualcomm is working with original equipment manufacturers to bring down the price of a 5G smartphone to around Rs 7,000-8,000, with reasonable additional features to attract the volume-driven mass consumer market, according to Rajen Vagadia, president, Qualcomm India. The development comes at a time when sales volumes of smartphones in India has seen a sharp decline of 19 percent in the March quarter.

Why it’s important: Mid- and entry-level phones in India are the main volume drivers in the market. 5G phones below Rs 10,000 could lead to wider adoption of the technology.

#7. Apax Funds to buy $450 million minority stake in travel tech firm IBS Software

Funds advised by Apax Partners have reached an agreement to invest about $450 million to acquire a significant minority stake in IBS Software, a provider of software solutions to the travel and logistics industry, from Blackstone. The transaction is subject to customary closing conditions and is expected to close at the end of the June quarter. The financial details were not disclosed.

Why it’s important: The travel and tourism industry have recovered from the pandemic disruptions and have started investing in upgrading their technology. A niche provider in the space has a lot of potential to grow, sparking investor interest.

#8. Consumer firms to stay the course in their high capital spending plans

Several consumer-facing companies, including Hindustan Unilever, Britannia, Voltas, Havells, and Blue Star are going to continue their high capital expenditure and expansion in 2023-24. Much of the expenditure is earmarked for new factories and capacity expansion at existing facilities. Most companies had expanded their capital expenditure by record numbers after two years of the pandemic.

Why it’s important: Policymakers have been concerned about muted capital expenditure plans by India’s private sector. The pace of capex in consumer firms that are expected to continue at least till April next year will provide some relief.

#9. Gift city regulator may permit unsponsored depository receipts for Indian shares

The International Financial Services Centre Authority, the regulatory body overseeing Gift City’s international financial services center, may permit unsponsored depository receipts for Indian shares. By introducing Indian UDRs, the International Financial Services Centre aims to boost liquidity, attracting foreign funds seeking offshore alternatives to the Mumbai stock markets.

Why it’s important: The move would offer investors an opportunity to invest in Indian stocks and avail of tax benefits. The availability of Indian UDRs, coupled with significant tax benefits, is expected to bolster the attractiveness of the financial center.

#10. Founders of digital lending platform ZestMoney resign, plunging firm into uncertainty

Two months after a deal to be bought by Walmart-owned PhonePe fell through, all three founders of the Bangalore-based digital lending platform ZestMoney have resigned, plunging the eight-year-old company and its 100 employees into uncertainty. Since March, some 130 Zest employees have moved to PhonePe. More are expected to follow suit.

Why it’s important: This could be the beginning of the end for ZestMoney, which operated on the buy now, pay later principle. Its valuation has been declining on concerns over its loan book.