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

A round-up of the biggest articles from newspapers

January 28, 2022 / 08:07 AM IST

Air India returns to Tata Group after nearly seven decades

The Tata Group has regained ownership of Air India, 69 years after the airline was nationalized. The conglomerate has promised to turn the lossmaking carrier into a world-class airline.

Why it’s important: The sale of Air India to the Tata Group comes after years of struggle by the government to divest the struggling airline that became a burden on taxpayers. Its fortunes might change under its new owners. The acquisition will give the Tata group access to 4,400 domestic and 1,800 international airport slots at Indian airports and 900 slots at foreign airports.

US Fed signal worries investors, stock markets on slippery slope

Global investors continued to sell risky assets in emerging markets after the US Federal Reserve said it will raise interest rates in March and stop bond purchases. The Sensex slipped 581.21 points, or 1 percent, to 57,276.94, and the Nifty shed 167.80 points, or 0.97 percent, to 17,110.15.

Why it’s important: The US central bank reduced borrowing costs to near-zero in 2020 to tackle the economic disruption due to the Covid-19 pandemic. The change in its stance could prompt other central banks to raise rates and crimp liquidity. This could lead to capital outflows from emerging markets such as India. Expect more market volatility in the near future.

Reserve Bank may increase reverse repo rate in February

There might be a rise in the reverse repo rate early next month after overnight call rates exceeded returns the central bank gives lenders to park excess funds. A rise in the repo rate, at which the Reserve Bank of India lends to banks, is a possibility if the budget deficit exceeds 6.5 percent of GDP. The monetary policy committee is expected to give its suggestions on key rates on February 9, less than two weeks after the US Federal Reserve indicated it would hike benchmark rates.

Why it’s important: The anticipated rise in benchmark rates will squeeze easy liquidity. The rate tightening is almost certain as retail inflation continues to be beyond the Reserve Bank’s comfort range, despite concerns over the economic impacts of the Omicron wave.

Indian firms hold back $3 billion overseas bond offers

Domestic companies have halted plans to issue global bonds worth about $3 billion. Vedanta Resources, Jindal Steel and Power, Mumbai International Airport Limited, and Sukhbir Agro Energy are among the companies that had planned dollar bonds issues and had already appointed arrangers and started legal background work.

Why it’s important: there is increased volatility in the markets as the US Federal Reserve has indicated it will raise interest rates. This could impact investor appetite for bonds in the short-term.

Government may tweak duties on electronics, cellphone parts

The central government is likely to lower customs duties on components and parts of consumer electronics and mobile phones in the upcoming budget. It might reduce import duties on components of audio devices and wearables such as smartwatches and smart bands. It might also simplify customs procedures.

Why it’s important: The lowering of custom levies is expected to encourage domestic manufacturing and increase local sourcing of components. Simplified procedures will also lower the compliance burden.

India Inc to normalize pay hikes to pre-Covid levels

Indian companies are likely to normalize salary increments to pre-Covid levels, with average increments projected at 9. 4 percent for 2022 against an actual average raise of 8. 4 percent in 2021, according to Korn Ferry India’s annual rewards survey.

Why it’s important: Companies are increasingly upbeat about the economy and consumer confidence as the impact of Covid-19 on the business cycle reduces. The pay hikes will also be aimed at reducing attrition. Many companies may offer customized career trajectories for key talent, fast-track growth, greater flexibility, and hefty retention bonuses.

IT sector concerned over waivers in proposed data protection law

The IT will petition the government over concerns that the broad exemptions sought in the proposed data protection bill over access to personal data will adversely impact India’s $190 billion IT-business process management industry in the European Union.

Why it’s important: The proposed exemptions, which could dilute a comprehensive data privacy regime, could make it difficult to get the nod of the European Union for an adequacy status. India presently does not have the adequacy status with the European Union, which boosts prospects of Indian firms in getting business from organizations and governments in the region.

Telecom department drops plan on India-specific 5G standards

The Department of Telecommunications will. Not continue with its contentious plan to push for an India-specific standard for 5G, also known as 5Gi. The Telecom Standards Development Society of India informed the Telecom Engineering Centre not to proceed with the process of adopting 5Gi as a national standard. It also informed the International Telecommunications Union that it will follow the global 5G standards.

Why it’s important: The move is a major relief for telecom operators, who have been protesting that a separate 5G standard in India will raise network costs as well as prices of mobile devices because specific chipsets will have to be made for India.

India may not crack down on edtech companies

The federal government may not opt for any immediate regulation of the ed-tech sector. It will wait and watch to see if self-regulation can uphold the standards set by the India Ed-tech Consortium and address grievances faced by students.

Why it’s important: The government had earlier warned ed-tech portals against making undue and unrealistic claims on the services on offer, and against predatory marketing practices, based on complaints that students are being exploited. The online education sector has grown rapidly in the Covid-19 era on school closures.

TVS Motors acquires majority stake in largest Swiss e-bike maker

TVS Motor, the flagship of the $8.5 billion TVS Group, has bought a 75 percent stake in Swiss e-Mobility Group for $100 million (about Rs 7.52 billion). It is the firm’s second acquisition in Switzerland in the e-mobility space in the current financial year, after it bought 80 percent stake in EGO Movement for $17.9 million in September 2021. The company wants to launch SEMG brands in India by the end of 2022.

Why it’s important: India’s automakers are placing strong bets on the growth of electric mobility in the country on the back of several government incentives. The e-mobility sector is expected to register exponential growth in the next few years.

Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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first published: Jan 28, 2022 08:07 am