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

A round-up of top newspaper stories.

#1. Net inflows by foreign funds into India’s debt market hit highest in six years

Foreign portfolio investors have invested a net of Rs 28,216 crore into the domestic debt market so far in 2023, the highest in six years. June saw the highest overseas inflows into debt securities at Rs 10,325 crore, which moderated in July due to increased uncertainty. In August, they have almost doubled compared with July on increased optimism.

Why it’s important: India’s inclusion in international bond indices has likely fed the surge. Muted global economic backdrop has also pushed overseas investors to diversify investments.

#2. State authorities place tax demand worth Rs 30,000 crore from various companies

State tax authorities have sent notices to around 200 companies, including Colgate Palmolive, L’Oreal, Castrol, Saint-Gobain, Whirlpool, Mastek, Domino's Pizza, and McDonald's India, seeking tax under the pre- GST regime. The states have levied value-added tax on the transfer of intellectual property rights, seeking about Rs 30,000 crore in taxes for the period between 2020-11 and 2014-15.

Why it’s important: The affected firms have contested the claims in various courts. The Supreme Court has held that they cannot be taxed on the same item both as goods and services. Expect protracted litigation.

#3. Production-linked incentives scheme for computer hardware sees enthusiastic response

The revised production-linked incentive scheme for IT hardware has received a robust response from as many as 38 companies, including multinationals like HP, Dell, Lenovo, and Foxconn as well as local firm Dixon Technologies. They have proposed incremental investments of over Rs 4,000 crore for additional production worth Rs 3.35 lakh crore in the next six years. The applied amount totals Rs 22,880 crore, much higher than the outlay of Rs 17,000 crore for the scheme.

Why it’s important: Many of the applicants will be impacted the import limitations that come into effect from November. The response is much more than expected and augurs well for local manufacturing.

#4. Automakers in India expect significantly higher sales as the festive season kick off

As the country’s festive season takes off with the 10-day Onam festival in Kerala, hopes are high at the country’s automobile manufacturers. Sales of both passenger vehicles and two-wheelers are expected to be significantly higher this year, industry executives said.

Why it’s important: The renewed optimism in the auto industry is fueled by rising rural sentiment and receding supply chain constraints. A healthy autumn harvest will further bolster demand.

#5. JSW Group may launch electric car with price tag of Rs 15-20 lakh

The promoter entities of JSW Group are in discussions with several Chinese electric car manufacturers to introduce an electric car for the Indian market at Rs 15-20 lakh. The group, led by Sajjan Jindal, is also in talks to buy a sizeable stake in MG Motor India, makers of MG ZS EV that cost around Rs 23.28 lakh, and a small electric car called Comet, priced at Rs 9.98 lakh onwards.

Why it’s important: The sales of electric two-wheelers may have already crossed an inflection point in India. Electric cars may stage a similar rapid growth and companies are readying for the expanded market.

#6. Embraer is talks with Tata, Hindustan Aeronautics to manufacture defense aircraft

Embraer Defense and Security is in discussions with five Indian entities, including Hindustan Aeronautics and Tata group, to manufacture defense transport aircraft in India. The Brazilian company hopes to finalize and announce its partner by the end of this year, a company executive said.

Why it’s important: The Indian government is determined to boost defense manufacturing in the country, which has led to scramble among global players to forge local partnerships.

#7. Trent outpaces DMart to become hottest retail stock on increased valuations

The Tata Group’s fashion retailer Trent has emerged as the hottest retail stock on the stock market, zooming past Avenue Supermarts (DMart), which had a dream run for more than five years since its IPO IPO in March 2017. Trent has narrowed the gap in market capitalization with Avenue Supermarts, but the latter remains ahead in terms of revenues and profits by a big margin.

Why it’s important: DMart’s stock price and valuation have been under pressure in the past one year but Trent has seen increased valuation, which has led to a big market rally.

#8. Cut in cooking gas prices may ease retail inflation by 10-30 basis points

The cut in LPG cylinder prices by Rs 200 is likely to cool the current financial year’s inflation by 10-30 basis points, with a 20-30 basis points decline expected in September alone, economists said. Inflation is likely to fall below 6 percent in September. A basis point is a hundredth of a percentage point.

Why it’s important: Retail inflation needs to ease to fuel demand during the festive season. The lower cooking expenses would be helped further if cereal and vegetable prices decline as well.

#9. India emerges as attractive destination for foreign luxury brands

More than a dozen luxury consumer goods brands are entering India ahead of the festive season, looking to attract consumers in a market riding on the growing affluence of Indians with higher incomes, spurring greater discretionary spending even in small towns. The surge of new and upcoming launches includes Swiss luxury chocolate maker Laderach, French luxury retailer Galeries Lafayette, Spanish luxury fashion house Balenciaga, Swiss luxury watch and jewelry boutique TimeVallee and Dutch haircare salon services brand Keune.

Why it’s important: The trend is driven by increased exposure of Indian consumers to global trends, younger people buying luxury products, and a post-pandemic boom.

#10. India’s success in its moon mission holds management lessons for IIM students

Chandrayaan-3’s historic moon landing on a shoe-string budget of just Rs 615 crore is set to provide plenty of food for thought for budding managers at the Indian Institutes of Management. The mission has much that management students can learn from, which include strategy, collaboration, innovation, cost control and optimization of resources, and how leaders process failure and move on, according to said professors and directors of the IIMs at Ahmedabad, Kozhikode, Sirmaur and Sambalpur.

Why it’s important: India’s Chandrayaan-3 moon mission is a case study in frugal innovation. The success

story is all the more important as it showcases India’s fightback after the failure of the previous mission.