The IBS Times; 194th issue; October 2016

The IBS times COVER STORY

WELSPUN’S EGYPTIAN PROBLEM

BY SMRITI PATODIA.

MASALA BONDS:THE INDIAN FLAVOUR

BY SRUJANA NAIK

THE (SWIFT) HIEST THAT SHOOK BANGLADESH

BY JEET PC

FinStreet, IBS Hyderabad

ISSUE NO. 194, OCTOBER 2016

What’s Inside

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INTELLIGENCE BEYOND SUCCESS LETTER FROM THE EDITOR

TEAM IBS TIMES ISHAN GUPTA (EDITOR-IN-CHIEF) ROHIT TILLU (MANAGING EDITOR) ABHINAV BANERJEE

ANUPAMA KUMARSWAMI CHESTHA KUMAR EYAMINI N

Dear Readers, Greetings from Team FinStreet.

We wish you a very Happy Diwali. May it bring prosperity and happiness to you and your family. We look forward to continue our work of making available of all the latest happenings round the globe with all your gracious support in the year 2016.

Team FinStreet is proud to present the 194th edition of The IBS Times.

HEMLATA HAJONG JATIN SHARMA PRATEEK PANDEY RANU SARUPRIA SANDHYA ADHAVAN SWARUPA ROY ANTRA BHARATI DEBANJAN PAUL DIXITA REDDY GAGAN KAPOOR JEET PC RADHIKA GUPTA ROHAN BAJAJ SHILPAM DUBEY SHREYA RANI SMRITI PATODIA

Diwali is one of the biggest shopping seasons in the country. To tap into this E-commerce companies undertake specific plans. We look into this aspect in our story E-COMMERCE DIWALI DHAMAKA. The financial industry has seen some disruptions, we look at it in our story THE (SWIFT) HIEST THAT SHOOK BANGLADESH, MASALA BONDS:THE INDIAN FLAVOUR and INDIA TOWARDS BECOMING A CASHLESS ECONOMY. A strong negative impact has been put on the Indian textile industry because of Welspun spat which we cover in our COVERSTORY titled WELSPUN’S EGYPTIAN PROBLEM. For Sector research we‟ve published a report on Indian Textile Industry Do make the most out of it and keep enjoying the experience of The IBS TIMES. Your feedbacks and opinions will help us make it better.

Once again, a very happy and prosperous Diwali to all our readers.

Ishan Gupta Team FinStreet

SNEHA TIBREWAL SRUJANA NAIK UTSAV CHANGOIWALA

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BANGLADESH CENTRAL BANK HEIST THE (SWIFT) HIEST THAT SHOOK BANGLADESH

25th March, 2016 : India vs. Bangladesh, a virtual quarter final, where in the winner advanced to the semi- final, Two needed off one, and suddenly, it was Bangladesh‟s game all the way, the home crowd was so loud, that could break the speed force. Pandya ran in for the final delivery, bowled outside Shuvagata Hom's reach, and MS Dhoni, pulled off an outrageous stunt, ran in 15 yards with one glove and ran out Mustafizur Rahman, who had only just walked into the cauldron. That very day Bangladesh missed out on a golden place in history which the nation would have cherished forever.

4th February, 2016 : On a typical warm Thursday afternoon in Bangladesh, an official at the country‟s central bank entered the server room to check certain details, only to found that the printer was in an abnormal state. The paper tray was empty, instead of having a sheaf of reports confirming payment instructions sent through the SWIFT system, the network that connects 11,000 banks around the world. SWIFT stands for the society

-Jeet PC

Society for Worldwide Interbank Financial Telecommunication and is a consortium that operates a trusted and closed computer network for communication between member banks around the world. The SWIFT messaging network links banks all over the world via what's been thought to be a highly secure means of sending instructions for money transfers. The printer glitch was no accident, but a deliberate strategy deployed by someone to hide a trail of something really big, what could possibly have happened ?

Unknown Cyber-Thieves hacked into the SWIFT system and used the credentials of employees to send more than three dozen fraudulent money transfer requests to the Federal Reserve Bank of New York asking the bank to transfer millions of the Bangladesh Bank‟s funds to bank accounts in the Philippines, Sri Lanka and other parts of Asia.

The Cyber-Thieves manifested the bank‟s system by installing six different types of malware upon which they started probing in the January. Later they did a series of test xxxx 4

runs, were the logged into the bank‟s system several times between January 24th and February 4th. One day they would leave their monitoring software running on the bank‟s SWIFT system while on the other they would just delete files from the database. The remote operation through malware on the bank‟s system did leave rumours of it being an Insider‟s Job, which couldn‟t be proved.

On the doomed day of Thursday, February 4th late in the Evening when most of the staff had gone home, the Cyber-Thieves began sending fraudulent payment orders via SWIFT. The timing of the heist was perfectly matched with the upcoming weekend. The first SWIFT message was received at the New York Fed just after 9:55 AM and it ordered to the transfer $20 million from the central bank of Bangladesh to an account in Sri Lanka. Over the next four hours, 34 more orders were received asking the U.S. central bank to move a total of nearly $1 billion from the account it holds for Bangladesh Bank. In comparison to the great maelstrom of global finance, the sums were rather ordinary, since The New York Fed handles about $800 billion of payments a day. Nevertheless, the Bangladesh orders were odd, surprisingly odd. First, all the 35 messages received lacked the names of “Correspondent Banks” – one of the necessary next step in the payment chain, this fault meant the orders couldn‟t be immediately fulfilled. Second, Most of the payments were made to Individuals and not to Institutions and third, the payments made that day were totally distinct from the usual pattern of orders from Bangladesh Bank.

Though what really raised the alarm at The New York Fed was a word „Jupiter‟. That single word, by a stroke of sheer luck, refrained the bank from paying nearly $1 billio

billion to Cyber-Thieves. Jupiter was also the name of an oil tanker and a shipping company under United States‟ sanctions against Iran.

The sanctions listing triggered concerns at the New York Fed and raised concerns over the fake payments. Although it was a total fluke that the New York Fed did not pay out the $951 million requested by the Cyber-Thieves.

The printer glitch helped Bangladesh Bank discover the heist. The bank‟s SWIFT system was configured to automatically print out a record each time a money transfer request went through. The printer worked 24/7 to automatically print out a record each time a money transfer request went through so that when the official reported early morning, he could check the tray for transfers that got confirmed overnight. That day the tray was empty. The bank workers failed to print the records manually. The software on the terminal that connected to the SWIFT network indicated that a critical system file was missing or had been altered. When the IT Team finally got the software working the next day and were able to restart the printer, dozens of suspicious transactions spit out.

The Fed bank in New York had apparently sent queries to Bangladesh Bank questioning dozens of the transfer orders, but no one in Bangladesh had responded. This is when the real Panic mode began, The workers rushed to check if any of the money transfers had gone through their own records system or nothing had been debited to their account yet and halt any orders that were still pending.

They tried to contact SWIFT and New York Fed, but the Cyber-Thieves has times the heist so well, as it was weekend in New York, no one there responded. It wasn‟t until Monday that bank workers in Bangladesh finally learned that four of the transactions had gone t 5

through amounting to $101 million.

Bangladesh Bank did manage to get Pan Asia Banking to cancel the $20 million that it had already received and reroute that money back to Bangladesh Bank‟s New York Fed account.

But the $81 million that went to Rizal Bank in the Philippines was gone. It had already been credited to multiple accounts reportedly belonging to casinos in the Philippines and all but $68,000 of it was withdrawn on 5th and 9th of February, before further withdrawals were halted. The manager of the Rizal Bank branch has been questioned about why she allowed the money to be withdrawn on the 9th, even after receiving a request that day from Bangladesh Bank to halt the money. The stolen amount could have been much more if not for a typo in one of the money transfer requests that caught the eye of the New York Fed. The Cyber-Thieves apparently had indicated that at least one of the transfers should go to the Shalika Foundation, but they misspelled “foundation” as “fandation”.

Negligence” costed Bangladesh $99 Million ($10 million for World T20 ) and sheer humiliation.

Unlike the New York Fed, the world‟s most influential central bank whose sits atop 508,000 gold bars stored below street level, Bangladesh Bank wasn‟t a large and powerful operating bank with a global footprint.

“Security is just an Illusion”, Edward Snowden rightly said. Bangladesh didn‟t protect its computers with a firewall, and only used second-hand $10 electronic switches to network computers linked to the SWIFT global payment system. The Cyber-Thieves exploited such weaknesses after Bangladesh Bank connected a new electronic payment system, known as real time gross settlement (RTGS). The mystery still remains as to who carried out the heist.

One Lost match, One terrible heist – negletiopsf 6

E-COMMERCE BONANZA E-COMMERCE DIWALI DHAMAKA

Flipkart second Diwali sales next week will to try and keep up the festival season sales momentum build over past few weeks.

The festival season October-November in India starts from Durga puja and includes Karva chauth, Bhai dhuj, and the upcoming festival Diwali. This spread of festival are the upsurge in consumer spending and this is the chance for e-commerce to earn market share.

E-commerce accounts for 1/3rd of the annual sales for which Amazon plans of two or more sales event for upcoming festival month.

Whereas, arch rival Flipkart plans as last 10 days of the month as the Diwali shopping day.

Mega Diwali sales of e-commerce started to gear up every e-commerce site like Flipkart, Amazon, Shopclues, Pepper fry, Snapdeal, Paytm, Alibaba, etc are in the rush to compete to take stake over one another.

Each and every company has their own strategy to play safe. Flipkart has offered a lower price on iphone, smart phones, TV brands and many other high value products as compared to Amazon where as Amazon tried to spread its legs in all directions by providing high value to low value product to attract news users with Amazon. Flipkart after losing battle of sales in July and august is in mood to revenge with good backup plan.

Many companies like Shopclues are quiet players‟ hiding their strategies and expenses incurred in marketing for festival season. Cofounder and chief business officer Radhika Aggarwal states that in a move towards profitability this year, the company has slashed the total marketing spend compared to

-Shreya Rani

to last year. They are more focused on highlighting their “get lot more in lot less” marketing strategy on digital marketing.

Shopclues in an interview with IBT questioned for target sales and revenue this festival and shop clues target 200 % growth from last year. Whereas Flipkart and Amazon are on cutting edge to each other after a bumper success of five days “Big Billion Sales” Flipkart reported a sales of 15.5 million units and a gross sales of approximately Rs 3000 crores. Which brought it a notch ahead than Amazon five days “Great Indian Festival” sales of 15 million units. This was the call of word war as when Flipkart jibe at Amazon stating the numbers didn‟t come by selling membership or small ticket items such as “ hing, churan or besan” to reply Amazon states that this (selling of small ticket items) marks a fundamental shift in the way purchases were happening online.

“We are very excited that customers all across India trust us to buy everything from there spices to home appliances to clothes to upgrading their mobile to jewellery” Amit Aggarwals, Amazon‟s India head.

Where as in this war of units sold Snapdeal with 7

with it‟s unbox Diwali sales sold 11 million units and kept itself aside from this war.

Snapdeal recorded 180 orders per second in its unbox Diwali sales and customers used a lot of additional discounts on citibank cards, 50% discounts on foot wears etc. Tata group‟s e-commerce venture CLiQ has come up with its first festival season offers named as “Festober celebrations”. Witnessing a 3X growth and has earmarked 50% of its marketing budget for this Diwali festival.

This offer will be coordinated with its partners Croma, Westside,etc to provide good deals. In this campaign of Diwali there will be different lucrative offers and deals to woo the customers like cash back, loyalty programs through cluebucks, prime offer that helps to get the goodies to the door step in fastest possible time.

Economist predictions are better for the growth and turnover for the retailers, retail business, and e-commerce as compare to last year. E-commerce firm has encountered four time increase in gross sales around $144 million as compared to last year records.

Many e-commerce titans are trying to put their best foot forward. Alibaba directly comes forward in the field of battle with a 40% stake holding in Paytm and 4 % in Snapdeal . Alibaba being the major player behind Paytm will put forward it‟s giant foothold in the Indian market to begin with.

And even Paytm plans out with an investment of Rs 800-1000 cores in its newly separate ecommerce entity to give cut thought competition to the online retailers and they are planning to come up somewhere near to Diwali festival.

Diwali plans and happiness to be shared is not only limited to the customers because the online market players are trying to make it a happy Diwali for the merchants as well, according shop clues 15-20 % of the total market expense of the Diwali campaign is in allocation towards sellers initiative because they believe that their success lies in the merchants‟ success that‟s why even merchants are in limelight this year. Through the 18 banking partners such as flexiloans, ICICI bank, capital float, Indifitech, SBI etc. Clues network private.ltd and operating head of Shopclues will facilitate its sellers with credit at a minimal rate of 11.4%. As the shopclues has a good merchant base of one lakh which incur around 20-50 lakhs expense per month, adding up to 20,000 new sellers per month.

Caring for it‟s sellers shopclues provides services like adzones business guru, store manager to help sellers advertise their products.

Bottleneck competition between sellers and E-commerce this Diwali: Facing huge competition from e-commerce retailers this Diwali, forced mall owners and local shop keepers to find out different routes to retain their market share. These shop keepers are entering into collaborations with manufactures and outsourcing companies to get good negotiation power and attractive schemes to increase their profitability and capture market share. This will also help them in getting easy finance options to increase their business. Mall owners in major cities have launched different attractive offers and freebies to entice customers in the bid to sway them away from e-commerce discounts and sales.

Investors are eyeing to see the unfolding over these upcoming weeks as the e-commerce has entered the last lap of the festival season.

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NEW FDI INFLOW AVENUE INDIA SINGAPORE DOUBLE TAX TREATY

The Avoidance of Double Taxation Agreement (DTAA) between Singapore and India came into effect in 1994. The provisions of this agreement were modified by a protocol signed on June 29, 2005. Its second protocol was signed on June 24, 2011 coming into force on September 1, 2011.The amendment is being reconsidered again. This agreement eliminates the double taxation of income between Singapore and India and reduces the overall tax burden of the residents of both countries.

Singapore accounted for 16 per cent of India's foreign investments over a 15 year period between 2000 and 2015.These are essentially investments from third countries that get routed from Singapore due to tax benefit.

India's tax treaty with Singapore, like the one between India and Mauritius, provides exemption from tax on capital gains to investors, making routing of investments from there an attractive proposition.

The tax treaty with Singapore, entered into in 2005, linked the capital gains tax exemption to those in India-Mauritius agreement. It had a provision which stated that changes to the treaty with Mauritius would extend to this one as well. Basically, from April 1, 2017 the taxation under the treaty will become source based, which means India gets the right to tax capital gains. It won‟t be residence based, it won‟t be Singapore based and for this there won‟t be need for an amendment.

The Double Taxation Avoidance Agreement (DTAA) between India and Singapore is a tax treaty between two countries to avoid the double

-Dixita Reddy

double taxation of income that may flow between the two countries.

Without the DTAA, such income is liable to be double taxed i.e. two countries levy their own tax on the same income. This double taxation unfairly penalizes income flows between the countries and thereby discourages trade and commerce between the countries.

To address this problem and to reduce the overall burden of a taxpayer, Singapore and India signed the DTAA. Pursuant to the signing of the agreement, any income that is taxable in both the countries will be taxable only in one country according to the terms of the DTAA. Scope Of The Agreement The India-Singapore DTAA is applicable to the residents (legal entities and individuals) of the signing states i.e. India and Singapore.

Note: The agreement is not applicable to shell companies. A shell company is a legal enterprise which falls under the scope of “resident” but has negligible business operations in the state with no continuous business activities. According to the IndiaSingapore DTAA, a resident of either of the countries will be a shell company if the total annual expenditure on its operation: In Singapore, is less than S$200,000, and in India, is less than Rs 50,00,000 in the immediately preceding 24 months from the date when the gains arise to the company.

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Where The Income Is Taxed

The DTAA specifically states where the different types of income of a resident of either Singapore or India will be subject to tax. This is important since the country where the income is taxable will determine the tax rate applicable.

Tax Rates

Benefits (LOB)� clause. Under this clause, a Singapore incorporated company will not be entitled to the exemption from capital gains if the sole purpose of the establishment of the company was to avail this benefit.

Additionally, companies that have negligible business operations in Singapore, with no continuity in business activities will not be entitled to this benefit.

The DTAA states the kinds of income that may arise and the tax rate applicable. For example, in the case of royalty income, the tax rate in the DTAA is 10%. This implies that if a taxpayer resides in Singapore and receives a royalty from India, the tax rate on the income will be 10%. This is important since the rates in the DTAA agreed by the countries and the corresponding prevailing tax rates of the country can differ.

Impact of India-Mauritius tax amendments on India-Singapore tax treaty

Limitation Of Benefits Clause

Keeping in mind the very critical role Singapore is playing in the development of India, the tax treaty should (like the IndiaMauritius pact) have clear grandfathering provisions. This would then be a mirror to the treaty with Mauritius.

In 2005, the India-Singapore DTA was amended. The amendment proves that any capital gains that arise on the sale of property or shares are taxable only in the country where the investor resides. This amendment proves beneficial to Singapore since the country does not levy any tax on capital gains. For instance, if a resident of Singapore sells shares of an Indian company, it will be exempt from capital gains tax both in India and Singapore. This is a very significant taxbenefit of the DTA that is designed to encourage investment in India from Singapore-based businesses and companies.

However, to avoid the misuse of this exemption especially by third country residents who establish holding companies in Singapore to avail the capital gains exemption, the treaty added a “Limitation of brv

As the protocol has been signed for amending India-Mauritius tax treaty, the IndiaSingapore tax treaty is being renegotiated.

This leads to more questions. Will grandfathering provisions be applicable for Singapore-routed investments too? Will the transitionary provisions continue to apply here as well?

Mauritius tax residents can now lend money to Indian residents and be subject to a lower withholding tax rate of 7.5 per cent in India.

The rate applicable to similar debt investments from Singapore is currently 15 per cent. Singapore is a leading financial centre in the world. Therefore a similar withholding tax rate of 7.5 per cent should be negotiated into the treaty. This will encourage the growth of the debt markets. Singapore should also look at its domestic law provisions to ensure that investors are not put to a greater burden than those investing from Mauritius.

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TERROR ACROSS THE BORDER INDIA-PAKISTAN TENSION

Ever since partition, there have been continuous tension in relationship between the two South Asian neighbouring countries, India and Pakistan. Despite several attempts of improving the relationship, with the help of introducing transport between India and Pakistan, and campaigns like “Aman Ki Asha”, we have seen war after war, allegations and counter allegations between the two nations. The two countries have been involved in four major wars, including one undeclared war and many border skirmishes and military stand-offs. The four major wars were: • • • •

1947-48 war 1965 war 1971 war 1999 war also known as the Kargil war

If we look back to the first war which occurred in 1947, it arose over Kashmir, and still now the two nations are fighting over it.

-Debanjan Paul

on the basis that India would be dominated by Hindus and Pakistan by Muslims. However, things took an ugly turn in the process of shifting where many Hindus, Muslims and Sikhs were displaced. Millions were killed as they found themselves on the wrong side and millions were left alone without friends and family. This was the biggest reason behind the Indo-Pak conflict.

The second big reason is the dispute over the province of Jammu and Kashmir where the population is a mix of many ethnicities, like Hindus, Muslims, Ladakhy Buddhists and others. However, the large chunk of the population consists of Muslims. This is the reason Pakistan wanted to absorb the state in their part of the territory during independence, while India got it because it was ruled by a Hindu Maharaja. The conflict of who actually deserves Kashmir has never been settled upon.

Uri Attack:

Major reasons behind the conflict: The first and foremost reason is the partition and division of British India. In the wake of Independence, the two countries were formed on

At a situation where the entire Kashmir valley is under unrest, the 2016 Uri attack further worsened the situation where terrorists killed 18 Indian soldiers in their sleep. This has created a lot of tension between the two nations. The Uri attack gave Prime Minister Narendra Modi‟s government a first major crisis. The public‟s anger had reached to a high level where they wanted immediate action to be taken against Pakistan. This situation helped no one, and although retaliation seemed to be the easy way out, but the cost could be very high. A war between two nuclear nations is always going to provises 11

provide severe outcome.

It’s Aftermath: In the wake of the Uri attack, India cancelled its participation in the 19th SAARC summit to be held in Islamabad, Pakistan. Following India‟s footsteps Afghanistan, Bangladesh, Bhutan and Sri Lanka also withdrew from the summit.

Ever since the Uri attack, India started making threating statements against Pakistan.

India had three main options to avenge the Uri attack: a surgical strike, covert ops, or a diplomatic offense to isolate Pakistan.

After the Mumbai attacks of 2008, it was expected that India could launch a surgical strike on parts of Pakistan against Lashkar-eTaiba and Jamaatud Dawa. However, it never materialized. India has been on the receiving end of a series of militant attacks, the January 2016 attack in Pathankot and July 2015 Gurdaspur attack, for example. So, a surgical attack was highly on the cards.

denying it as it would be difficult for them to explain the situation to the people of Pakistan.

Bilateral Boycott: The effect of the Uri attack was first seen in the Bollywood industry, where Indian Motion Pictures Producers Association decided to ban all Pakistani actors, singers and technicians working in India till the situation gets normal.

Although the Bollywood artists were divided with their opinion towards the ban, it seems that banning them for the time being is the best way forward. Similarly, the Pakistani government also responded to the ban by banning all the Indian television and radio programming in Pakistan.

Following the government‟s diplomatic approach against Pakistan, the BCCI, the national governing body of cricket and Badminton association of India, ruled out the possibility of upcoming series against each other as an act of “solidarity”.

Surgical Strikes: On September 29, 11 days after the Uri attack, Indian army carried out early morning “surgical strikes” on terrorist camps in Pakistani occupied Kashmir. The option of the surgical strike was taken in the wake of increase in infiltration bids. It was a 4 hours long combat where 38 terrorists and two Pakistani soldiers were killed in the surgical strike. There was no casualty in the Indian camp.

Although, Pakistan denied that a cross border strike had taken place, a noted Pakistani political analyst confirmed that India carried out surgical strikes in PoK and Pakistan was deny

Who is at fault?

It is a plain common sense that in any contentious issue between two or more parties, the total blame cannot be laid to the sdj 12

shoulder of any one single party.

The most plausible answer to this question is the situation created by the British. They created this mess in the first place, and the western powers are keeping the hostilities alive between the neighbours for the geopolitical and economic agenda.

to improve their relations, I personally believe that the relationship can be improved only when they realize the necessity of each other.

With the new generation taking over, we can hope for the best.

With the future being in our hands, I can wish good luck to ourselves.

Both the countries are mostly angry at each other and consider themselves a victim, rather than disagree about any territory.

Conclusion: Every common man in India and Pakistan wants peace. However, we donâ€&#x;t always get what we want and this is the case here. India has initiated peace process several times, be it during Vajpayeeâ€&#x;s regime, or recently when Modi-Nawaz held talks. But every single time India tries to improve relationship with Pakistan, something goes wrong.

The culture of both the countries are very different, where Pakistan is a country formed on religious grounds and India believes in its secular roots and since improving relationships is not a one-way process, I think both the countries needs to listen each other and when they will adopt this habit, only then the relations can be made better.

If both the countries are seriously interested to 13

INDUSTRY ANALYSIS TEXTILE INDUSTRY

-Shilpam Dubey

Being one of the oldest industries of India, textile industry is has come a long way from being an inherent part of India‟s culture, rightly representing it so, to now being evolved as an industry with the right blend of tradition, technology and fashion. Textile industry in India is not only one of the largest industry in the country but is also globally ahead in the race in terms of capacity. Some important facts about the Indian textile industry are:

Handloom and handicrafts fall under unorganized sector operated through traditional methods in small scales.

• It contributes approximately 5% to India‟s GDP • It contributes 14% to Index of Industrial Production (IIP),(IIP is an index which indicates growth rates in different sectors of the Indian economy) • It is the one of the largest employers of the country. It employs about 40 million workers directly and 60 million indirectly

The textile industry which consumes cotton contributes 4% to the GDP of India hence growth of cotton based textile industry is very important to the overall growth of the country.

Indian textile industry mainly comprises of cotton, handicrafts, handlooms, jute, silk, wool, technical textiles and fashion. handaddfe

Indian textile industry is uses cotton as its major raw material. India is second largest textile fibre producer in the world and first in global jute production. It contributes 36% to the global cotton produce. It is also the leading cotton producing country in the world after China.

Export Textile industry is one of the largest contributors of export, currently contributing 11% to the total exports. India‟s textile market is accessible to ASEAN, Japan, South Korea, Chile. India has trade negotiations with EU, RCEP countries and Australia.

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• In FY 2015-16 India‟s overall textile export stood at USD 40 billion • In 2016-17, textile export is expected to increase to USD 48.5 billion

Scheme (MEIS) which provides duty reward to eligible textile and apparel sector to the extent of 2-5% of FOB value.

FDI and Make in India Amongst the emerging economies, India has the most liberalized FDI norms in the textile industry with 100% limit under automatic route. In the last five years from April 2000 to March 2016, textile industry has attracted FDI close to USD 1.85 billion. Some of the major developments are:-

Government provides export incentives under Export Promotion Capital Goods Scheme (PCGS), Duty Exemption & Remission Scheme and Merchandise Exports from India s

• Raymond Group has signed a MoU with Maharashtra Government for setting up a textile manufacturing plant of worth Rs 1400 crores.

• Snapdeal and IndiaPost have entered into a partnership to jointly work on giving artisia 15

artisans and weavers of India the platform to sell their products online through their website.

India is an excellent host for FDI in the textile industry because of the presence of all the factors of production. It has no dearth of cheap and skilled manpower, abundance of raw materials like cotton, jute, fibre, silk.

Compared to Vietnam and Bangladesh, India has comparative edge over the entire value chain of the textile production having integrated vertical and horizontal value chain.

Also, India offers better demographic dividend than the other emerging countries with rising income levels and higher disposable incomes.

The Road Ahead..

Having both strong domestic demand and rising exports, Indian textile industry is evidently flourishing. With the shifting trends like increase in demand for branded products, demand for quality products will increase.

Exports will continue to rise and will be mainly comprised of made-ups and apparels.

But, the textile industry still has to fight with the challenges like traditional methods of production and a large chunk of the industry being still unorganized.

Government Policies and Initiatives

Not just government has allowed 100% FDI but has also set targets and launched schemes to promote export, provide financial aid, skills to labour, improve supply chain management etc. Some of them are:• Improving the efficiency of production through schemes like Textile Upgradation Fund Scheme (TUFS).

• Set up an integrated textiles city which would build a brand for global market and would focus primarily on exports.

• Up to 2017, under Integrated Skill Development Scheme government aims to train over 2,675,000 people under sectors like apparel, handicrafts, handlooms, jute and sericulture.

• MoU has been signed by Clothing Manufacturers' Association of India (CMAI) with China Chamber of Commerce for Import and Export of Textiles (CCCT) to find areas of potential and increase exports of apparel from India.

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INDIAN BOND MARKET MASALA BONDS:THE INDIAN FLAVOUR

Have we not borrowed money? Yes we did at some point of time in our life! May be to buy a candy when kid or a mortgage when adult.

Similarly as we need money so do companies and government institutions. And to fulfil the need for money companies issue bonds to the public market.

What is a bond?

A bond is a debt security created for raising the capital. It is like a signed document acknowledging the debt given by the borrower to the lender. Borrower is said to be issuer of bond and lender as the investor.

Whenever a bond is issued it is issued at a face value also called as par value of the bond. The issuer of the bond has to pay the interest amount to the investor. That interest is called coupon. The life of the bond i.e. the date when issuer has to repay the amount borrowed is called maturity.

External Commercial Borrowing (ECB’s)

India has always encouraged inflow of capital for the development of the system. The reason for the Indian government to opt for foreign capital was lack of domestic capital. In simple terms ECB is the money borrowed from foreign sources for financing the Indian commercial activities. It includes Commercial bank loans, Buyer‟s Credit and Suppliers Credit, floating rate notes and fixed rate bonds etc. ECB can act as an additional source of financing for expanding the present capital or for fresh investment activities.

-Srujana Naik

1) Automatic Route 2) Approval route Automatic Route: No approval of Reserve Bank or Government of India is required for borrowing through ECB for investment in infrastructure and industrial sector. The industries which pass all the prescribed norms set by Government can raise money without any approval Approval Route: For certain specified industries like import export the borrowers need to take permission before borrowing through ECB. RBI has set of specific rules that has to be followed before borrowing

Advantages • Large volume of funds can be borrowed trough ECB • The funds are available for relatively long term • Lower Interest rates compared to domestic funds • ECB‟s can be raised by cooperates from international sources like banks, international capital markets, export credit card agencies Disadvantages • Risk of bankruptcy • Risk of having more debt on a company‟s balance sheet • As borrowing cost increases and less capital is available to draw from due to lower credit rating

ECB can be accessed by two methods

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Masala Bonds

Advantages

There is something common in Indian Masala, Chinese Dim Sum and Japanese Samurai other than that they are Asian and that is the three of them are the names of debt instruments that raise finance from global capital market. They are the rupee denominated borrowings by Indian companies in foreign markets. Its maturity period is for three years or five years or seven years.

• Currency Risk, the value of the currency may change at maturity • To diversify the bond portfolio.

• Opportunity to target new investors as this bond is issued in the foreign market • Cut down of cost for Indian companies.

Benefit to Corporate • They are not subjected to foreign exchange risks. It will be completely borne by the investors. Earlier Indian corporate have suffered losses on ECB which are USD dominated Benefit to Investors

Example: IFC issues Masala bond in the foreign market, the price of the bond will be denominated in Indian Rupee and not in the USD, but, at the time of maturity , it will be paid in terms of dollar value.

From the above table we can see that how the bond is issued to a foreign investor, the investor needs to pay in rupee terms i.e.USD 14.5(Rs.1000/Rs70) at the time of purchase and on maturity he receives the returns in dollar terms i.e.

USD 20 (Rs60*USD20=Rs1200) for his investments.

• High return • Investors who are reluctant to venture into unknown markets can easily show interest in masala bonds owing to the credibility of IFC. • The Finance Ministry has cut the withholding tax (a tax deducted at source on residents outside the country) on interest income of such bonds to 5 per cent from 20 per cent, making it attractive for investors Coinciding with Prime Minister Narendra Modi‟s visit to the UK last year, organisations such as HDFC, Yes Bank, and the Railways announced are going to raise funds through this route from the London market. Masala bond will not only add that Midas touch of Indian flavour to the International markets but will also help to uplift the value of Indian Rupee in foreign markets. If Masala bonds take off in a big way it will open up potentially significant new sources of funding over ECB.

18

WELSPUN-TARGET SAGA WELSPUN’S EGYPTIAN PROBLEM

A very well known manufacturer of cotton bed sheets and pillowcases was recently accused of selling falsely labelled Egyptian cotton under the pretext of pure Egyptian cotton to American retailer Target. Egyptian cotton being very highly priced is „long staple‟ or „Extra long staple‟ cotton which indicates high quality, resulting in lighter, finer more durable fabric, long lasting and high end clothing. Target which has been the company‟s customer for over a decade has apparently called off the entire relationship: not just sheets but everything.

The face behind this fiasco is Welspun India Ltd. Welspun which was the largest home textile company in Asia, among the top three textile manufacturer in the world and a leading exporter to the US. It caters to 14 out of 30 global retailers which include big names such as Bed Bath and Beyond Inc., Macy‟s Inc., JC Penny co. Inc., Target and Wal-Mart.

Target was buying Egyptian cotton sheets from Welspun and sold them under field Crest brand. In their recent investigation they found that Welspun was selling fake Egyptian cotton for the production between August 2014 to July 2016, of about 750,000 sheets and pillow cases. To counter the issue Target took dramatic action and terminated all business ties with Welspun while offering a refund to all its customers. This decision of Target, not only took Welspun by surprise but the entire Nation. The issue sets the whole industry in a very bad light.

-Smriti Patodia

Egyptian cotton sheets over concern about the products quality. Though it will not terminate its relationship with Welspun and dig further into the matter.

Since the crisis, Welspuns market share has crashed miserably. It saw a downfall of 30% in its market capitalization. The market share went as low as Rs.56 on last Tuesday. In its previous two trading sessions, the stock was at it 20% lower circuit limit. According to Edelweiss Securities, the withdrawal of Target will lead to a decrease in Welspun‟s earning per share by about 11% and 14% in FY17 and FY18 respectively.

The impact of the scandal is borne not only by the promoters who own 73% shares of the company but also many private and foreign investors. Goldman Sachs owns 1.8% whereas foreign investors have 13.6% share of the company. Their list of investors also include mutual funds who own 2.18% and not to miss the public share of 10.75%.

Wal-Mart which is also one of its customers said that it will no longer sell Welspun‟s sfwewe 19

One major reason of the issue could be The Egyptian Crisis when the army took over in 2013. Amidst all the turmoil taking place in Egypt, sourcing cotton could be a challenge.

India is one of the biggest exporters of textile to US. With this recent exposure there are high chances that other textile companies will go through extreme scrutiny.

Welspun gets 10% of its revenue from Target.

Being 10,000 cr. market capital company, it is one of Asia‟s largest terry towel producer. The company which earlier had a low business risk and high growth rate of 11.85% is now striving to sustain its position in the market.

controversies, it becomes difficult for India to maintain its trust abroad. It‟s time that India should focus not on the quantity but more on quality of their production. For Indian industry to strive and survive it has to adopt global standards. A question that comes up is whether India too desperate to accelerate its growth that which has led to ignorance of the major components supporting the business industry – Ethics.

To look into the matter the company has taken a safe yet wise decision of appointing an external auditor from EY to review it supply chain process. The company did not go about screaming its innocence and denying what happened. This proved that Welspun took effort to look into the cause of the issue while trying to prevent it from continuing.

Welspun acknowledged that there may be possible errors from their end which needed quick attention. The major step in the right direction is their level of transparency which keeps the shareholders faith with the company intact.

The entire issue comes as a threat to the “Make In India” campaign. With leading Indian manufacturers getting involved in such con 20

INDO FRENCH RAFALE DEAL THE RAFALE DEAL

“Set your goals high and don‟t stop till you get there” The Dassault Rafale is a twin engine canard delta wing, multirole fighter aircraft medium Multi-Role Combat Aircraft (MMRCA) designed and manufactured by Dassault Aviation, a French firm. The aircraft is equipped with a wide range of weapons. The Rafale fighter jets are named as „omnirole‟ aircrafts that can perform air supremacy, interdiction, aerial reconnaissance, support, in-depth strike, anti-ship strike and nuclear deterrence. It was a creation of agile multipurpose fighter. It was a part of eight year flight test programmed which first flew in July 1986. In 2001 it was being produced for both French Air force and carrier based operations in French Navy and is being used by many countries like Afghanistan, Libya, Syria, and Iraq.

The Rafale deal was signed between India and France on September 23, 2016. Many international aviation manufactures showed their interest after knowing Indian government plan to give a new structure to Indian air force by introducing MMRCA‟s.

India planned to but these fighter jets a decade ago.

The deal between the two countries was signed for rupees 7.87 Euros. The deal was to buy 36 fighter jets, spares and weapons including the Meteor missile which is considered the most advanced missile in the world. The deal was signed in India and France Defense minister Jean-Yves Le Drian came to India for signing the deal. In January w

-Radhika Gupta

the deal was signed as a general agreement without telling the exact price because India wanted a better price so it went for many negotiations. The agreement between India and France was a 10 per cent cost escalation.

The government believes that it has brought down the price by about 600 million Euros as initial demand price was more. As the initial demand was 126 jets that mean eight squadrons but India could get only 36 jets, the deal is like bitter-sweet for India. These fighter jets will be entering the service in 2019. The initial bidders for this deal were Lockheed Martin‟s F-16s, Boeing‟s F/A-18s, Eurofighter Typhoon, Russia‟s MiG-35, Sweden‟s Saab‟s Gripen and Rafale. The process for buying fighter jets began in the year 2001. The old fighter jets were heavy and light weight so the government decided to bring medium weight fighter jets, but the actual process began in 2007. The Defense Acquisition Council, headed by Defense Minister A.K. Antony, approved the proposal to buy 126 aircrafts in August 2007 and this way the bidding process started. The deal was initially estimated to be of $10.2 billion with the demand of 126 aircrafts, 18 of them were expected to be in fly away condition and rest of them were to be made in India at the Hindustan Aeronautics facility with the difference from its competitors of transfer of technology. When Rafale won the contract, India started negotiations in 2012 and finally a general agreement was signed this year in January.

Rafale is different from what competitors are providing; as it is 100 per cent French it prodw 21

provides Dassault an edge over competitors for technology transfer. If India would have demanded Eurofighter then it would had to deal with four countries (UK, Germany, Italy, Spain) for even a minor issue related to technology transfer and Rafale is cheaper. It is far better than its competitors.

Rafale, a medium multi-role combat aircraft, will definitely be able to fill the gap between India‟s high-end Sukhois and low-end Tejas aircraft and can protect the country‟s borders till the time India‟s fifth-generation fighter, being jointly developed with Russia, becomes a reality. The decision taken by Indian Air Force is a safe bet.

There were many reasons for the delay of the deal as discussion started in 2001 and the deal was finally signed this year. There were many reasons as there were many national elections in this period so one reason were the change in government while many negotiations were under way. Even during the signing of the deal pricing was an issue. Both the parties could not reach a conclusion related to the financial aspect. The deal was equally important to both the parties.

France: Rafale can help Dassault to meet its revenue target as the jets are being mostly used by France and also by Egypt and Qatar.

India is the first country to initiate to buy the Rafale jets. If India inducts than other countries could also buy Rafales.

The reason behind the success of the deal was when On April 9, 2015, an Indian delegation arrived in Paris, ahead of Prime Minister Narendra Modi. Till that time, discussions were still going on for the 126 aircrafts (out of this 108 will be manufactured by Hindustan Aeronautics Limited that is in Bengaluru), but the situation went very critical as Dassault was not ready to take the guarantee for the work done by Hindustan Aeronautics Limited and many uncertainties/complications arrived with the Defense Procurement Procedure to make the deal viable.

The decision taken by Prime Minister Narendra Modi to purchase „off the shelf‟ was a quick and a smart move as it is very beneficial to the country. The government to government deal was confirmed by Narendra Modi during his press conference by France President Hollande. Defense Minister Manohar Parikar said that 'India has finally broken the ice over the deal which has been pending for the last 17 years.'

The deal was a master stroke by Narendra Modi because there were no bribes and no middlemen. This deal has brought a great difference to the country and the rest of the defense deals will be decided on the basis of this deal. Hopes this Rafale deal brings best to the country.

India: The country chose to buy Rafales over its traditional partners Russia‟s MiG and also over U.S. Lochheed, at that time when both the countries were aiming for colder ties. This deal is one of the biggest procurement for India. The Rafale deal lies the future of other defense procurements.

22

THE BCCI MESS BCCI VS LODHA PANEL

“The BCCI expects every association to follow the procedure and contribute to the development of the game. Money should be utilised properly. If they (affiliates) don‟t do that, cricket in India will get into trouble,” says BCCI vice-president G Gangaraju.

Supreme Court asked the Board of Control for Cricket in India to implements the changes into regime, which were recommended by Justice RM Lodha-led committee, within stipulated time frame.

These reforms were made compulsory on the BCCI in a Supreme Court order on July 18 this year. And it proves to be a binding and leaves the cricket board with no choice other than accepting the judgment and implementing the necessary changes, which is bound to deliver a big blow on the world‟s richest cricket board.

As per the Supreme Court‟s order based on Justice Lodha committee‟s reform, the strict directives and norms have been issued regarding the internal audits and administrative affairs for the state units of BCCI. Accountability of state units and audit of their accounts are among the key reforms suggested by the Lodha committee. And asked BCCI to submit the details of the funds allocated to state units in the last five years and to give a proper briefing of cricketing developments taken place by utilising those funds.

Delhi District Cricket Association (DDCA) was instructed to clear their books of accounts. As DDCA hasn‟t submitted its balance sheets to the BCCI for the last three yea

-Antra Bharti

years. Goa unit hasn‟t paid service tax for over five years, which lead to Rs 19 crore in dues. Assam unit failed to submit balance sheets this year and Jammu and Kashmir association is under CBI scrutiny for allegedly embezzling funds of over Rs 100 crore. These state units are involved in complex issues and dealing with courts, thus clearing the books of accounts is proving to be a cumbersome task.

Top Changes recommended by Supreme Court’s Lodha Panel The „one state, one vote‟ was recommended

by Lodha panel – only cricketing bodies which represent a state would have full membership and voting rights in the BCCI. Its implementation would have relevance for states like Maharashtra and Gujarat, which have four and three cricket associations respectively as permanent members, would be left with only one permanent member each in the BCCI and the new permanent members would come from smaller cricket playing states.

The Lodha committee also submitted a report for the legalisation of betting, but it should not be allowed for players, cricket administrators, team and the match officials to indulge in betting. And it should be carried out only through licensed betting houses. Also players and other banned parties are restricted to disclose their assets to the BCCI. Also suggested that the BCCI should come under the RTI act, decision on which will be taken in the parliament.

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It suggested replacing 14 member BCCI‟s highest decision making and working committee with 9 member apex council, which will include different representatives and also one woman member. The five of the nine office bearers, would be designated as BCCI president, vice-president, secretary, joint secretary and treasurer four other „councillors‟ – two (one male, one female) would be nominated by the Players‟ association, one would be elected by full members of BCCI from among themselves and the last one would be nominated by the Comptroller & Auditor General of India..

Also suggested their age limits and eligibility criteria for office bearers. These post holders should not be office bearers, they should not have crossed the age of 70 and should be an Indian and not an insolvent.

The tenure of BCCI president should be restricted to just two years. And each of the office-bearers shall have a three-year term and would be allowed to contest for a maximum three terms. Also, there would be a mandatory cooling off period after each term.

Restricting the office bearers to hold office consecutively in a row.

The Lodha Panel recommended establishing a players‟ association that would allow membership to all the Indian International and the most first class cricketers who had retired not less than five years ago.

The bench also recommended that one person would hold just one post in cricket administration to avoid conflict of interest.

Also, the member of CAG shall be a part of the governing council of BCCI. And BCCI is required to create three new positions mentioned as – an ethics officer, an ombudsman and an electoral officer.

Decisions taken against delay in acceptance of the reforms The Supreme Court declared that none of the state associations of Board of Control for Cricket in India's (BCCI) would receive funds from the apex cricket board till they abide by the orders of R.M Lodha Committee reforms in “letter and spirit”.

A ceiling limit is asked to be fixed by the committee, which would specify the financial limit of contracts the BCCI can enter. If the contract exceeds the limit specified, it would require the panel‟s approval for execution.

Also, it is suggested to appoint an independent auditor to fix the financial limits for the contracts and inspect the BCCI‟s accounts.

Chief Justice Thakur made the court's stand clear by ordering that the BCCI will not disburse Rs 16.73 crore each to 12 State cricket associations. As these associations were yet to get the balance payment of their share from nearly Rs 2,500 crore the, BCCI had received towards compensation on account of termination of Champion League T 20. He also declared that the pending funds as well as the future funds would be allotted only when the state units agree to comply with the reforms suggested.

Why is BCCI refusing to implement the reforms suggested by Lodha Panel?

“SC bench, Lodha Committee have behaved like Queen of Hearts in Alice in Wonderland in the BCCI case: Justice Katju”.

The BCCI has accepted few of the suggestions recommended by Lodha committee but a closer look reveals that they are against each and every amendment that ade 24

would affect the smooth working of the system.

wings of the top officials related to the cricketing board.

One of the major issues could be, the reform would lead to the elimination of politicians and bureaucrats from the BCCI hierarchy that would prove to be a massive blow to the functioning of state units, covered by rules and regulations, which won‟t be easier. As Political connections plays a major role in getting quick sanctions in matters related to cricket. While going to play a T20 against West Indies in the US, Anurag Thakur‟s political connection helped to get the players‟ visa promptly.

Also, the panel recommended the age cap of 70 years, which would lead to the retirement of many top officials if implemented. And hence would lead to loss of major resources.

Some state association officials said that the BCCI is being unfairly targeted when most sports federations are yet to implement this rule. “Forget sports federations, even the government doesn‟t have this rule when it comes to electing a president or Prime Minister. Then why should we be singled out,” said an official on condition of anonymity.

This would act as clean up and after which only former cricketers would be left and would be eligible to run the cricket. The BCCI fears losing good administrators, as there is this belief prevalent in many parts of the country that it‟s not necessary that the player who understands the game well would be efficient enough to manage the administration also.

Hence, the BCCI is skeptical about implementing the changes as every amendment would threaten to prune the fegefs 25

NEW BANKRUPTCY BILL THE BANKRUPTCY CODE OF 2016

What is the bankruptcy?

A legal proceeding involving a person or business that is unable to repay outstanding debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. It starts with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less prevalent . All of the debtor's assets are calculated and assessed, and the assets may be used to repay a portion of outstanding debt.

Bankruptcy laws in India Current legal system does not have jurisdiction for lenders effective and timely recovery or reconstructing of defaulted assets , This strains Indiaâ€&#x;s asset system.The stressed assets of the country increases. India did not have a bankruptcy code but two different insolvency laws set up in British period. The Presidency Towns Insolvency Act, 1909 is applicable in Mumbai, Chennai and Kolkata, while the rest of the country comes under the Provincial Insolvency Act, 1920.A person whose liabilities exceeded his assets, making it impossible for him to pay the debt could file for insolvency. However there was much requirement for a new bill in Order to solve the existing problem.

On May 5th 2015 ,After consultation process and recommendation from joint committee of parliament, both houses have passed the bankruptcy code. Speaking at a tech summit in Bengaluru, PM Modi said that they were working on a new bankruptcy code. He said that a company law tribunal would be set up reg

-Rohan Bajaj

to improve the existing conditions of doing business in India with a transparent and predictable tax regime . They main motive for this bill is to solve the problem of Lengthy litigation process, difficult arbitration procedures and deficient bankruptcy laws which causing hindrance for doing business in India. A recent World Bank report ranked India at 130 out of 189 countries on the ease of doing business, up 12 places from its 142 rank last year. Aiming to modernize the bankruptcy process, the law panel appointed by the government recommended vast changes to bankruptcy laws. Separate insolvency committee for individual ,companies and partnership will be established. They recommended establishing a network of insolvency professionals to lighten the courts workload and tackle delays. Under current rules, even deciding whether to save or liquidate an ailing company could take many years. The proposals would be submitted to the Finance Minister on November 2th .The government published the law panel's proposals to replace the outdated and overburdened bankruptcy process and called for public comment on it.The changes would bring insolvency professionals to run the resolution process.

Creditor committees would be set up to reach a verdict on an ailing company's future in up to 180 days, which could be extended up to 100 more days.

The government's involvement would be removed from it. The panel proposed early identification of financial distress so that steps could be taken to revive the ailing company. It proposed to establish an Insolvency Regulator to exercise re 26

regulatory oversight on insolvency professionals and agencies. It recommended a transition provision during which the Central government will impose all powers of the Regulator until the time the a proper Regulator is recognized.

The report suggested the insolvency resolution plan prepared by the resolution professional has to be approved by a majority of 75% of voting share of the creditors.It also laid down a clear, coherent and speedy process for early identification of financial distress and revival of the companies.It said that the National Company Law Tribunal should be the legal authority over companies.

Joint Committee makes recommendations on bankruptcy code

A Joint Committee in its recommendations on bankruptcy contended that a bankrupt person cannot hold public office or contest elections.

The bankrupt cannot also function as a director of any business. A person would be disqualified from being a trustee or representative of any trust, estate or settlement, when declared bankrupt. The Code will be taken up for passage in the ongoing Parliament session.

Insolvency process To start an insolvency process, the default should be at least INR 100,000-10,000,000 .The Code proposes two independent stages A)Insolvency Resolution Process During this all the assets are assessed to check whether business is viable to run or not. The creditor can initiate this against a debtor at the National Company Law Tribunal (NCLT).The tribunal will then provide Resolution professional who will take over the frgeghrthrh

management of the corporate. They identify the financial creditors and constitutes a creditors committee.

B) Liquidation If the insolvency resolution process fails or financial creditors decide to wind down.

At the time of liquidation, a secured creditor may opt to realise his security and receive proceeds from the sale of the available assets as his first priority. If the secured creditor imposes his claims external liquidation, he must contribute any additional proceeds to the liquidation trust. Further, in case of any deficit in recovery, the secured creditors will help unsecured creditors to the fill of the deficit.

2) For Individuals/Unlimited Partnerships It is applicable is case of Individual/partnership with minimum default of INR 1000. It involves two distinct processes in case of insolvencies: automatic fresh start and insolvency resolution. Under the automatic fresh start process, eligible debtors (basis gross income) can apply to the Debt Recovery Tribunal (DRT) to get relieved from certain debts not exceeding a specified limit, helping them to start from scratch .

The insolvency resolution process lays down the groundwork for repayment plan by the debtor, for backing of creditors. If approved, the DRT passes an order necessary the debtor and creditors to the repayment plan.

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UNIFIED PAYMENT INTERFACE INDIA TOWARDS BECOMING A CASHLESS ECONOMY

Unified Payment Interface (UPI) is a new payment system which was launched by then RBI Governor, Raghuram Rajan on April 11th 2016, in Mumbai. It is an initiative by National Payments Corporation of India (NPCI), which operates the Rupay payments infrastructure like Visa and MasterCard – allowing different banks to interconnect and transfer funds. UPI is also known as the brainchild of the Reserve bank of India (RBI), since it is expected to revolutionize the peer to peer payments in the country. The initiative is also backed by Indian Banks Association (IBA) and is expected to be an advanced version of Immediate Payment Services (IMPS) which involves electronic fund transfer service through mobile phones, ATM, Internet Banking, etc.

-Sneha Tibrewal

standards and the vision of proactively encourage electronic payment systems for ushering in a less-cash society in India.

How to use UPI? • User has to download a UPI app of their bank for google play store and create their personal Virtual Payment Address (VPA).

• The VPA acts as the financial address and users need not remember beneficiary account number or any other details.

• The receiver then requests the payers for the money using their VPA and the payee, just by entering their MPIN could process the transaction.

• The transaction is done without having an exchange of account or personal detail.

Unified Payment Interface in simple words is a cashless payment system that allows transfer of money between any two parties using a smartphone. It's similar to NEFT or RTGS or IMPS but far more well defined and standardized across banks, which means one can initiate a bank account transfer from anywhere with a few clicks, at any point in time. UPI allows paying directly from one bank account to different merchants, both online and offline, without the hassle of typing your card details, IFSC codes or net banking/wallet password.

UPI can be used in day to day activities for transfer of money to friends and relatives without considering that they have an account in different bank. It can also be used in paying utility bills, buying railway and movie tickets, barcode based systems, insurance premium collection, donations, school fees and other over the counter payments such as at retail stores. It would also boost the e-commerce in India since objective of both the organizations would be fulfilled. UPI collaboration with ecommerce websites would decrease the cash on delivery phenomena (one of the major reasons of ecommerce incurring losses) and UPI‟s objective of reducing cash transaction.

The interface is designed with a mission to ensure payment and settlement systems in the country are safe, efficient, interoperable, authorized and compliant with international sta

UPI Application could also be used to check account balances, schedule payments and transfers, receive alerts and pay bills.

Multiple accounts and multiple transactions ca

What is UPI?

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can be handled at a point of time using a single application.

Security in transfer of money has always been a sensitive issue in common people. NCPI has made sure that the data is highly encrypted and two step verification of user makes the money transfer safe. There is also a per transaction limit of one lakh rupees.

Impact on Economy Moving towards a cashless economy will have a great impact on Indian Economy The government schemes will gain more boost since all the transaction fees will directly go to government of India. The Direct Benefit transfer will help government keep a check on the total transaction being done all over the nation and also an easy check on the banks.

According to RBI‟s estimates, the cash floating in the system is about 18% of the country‟s gross domestic product, making India as one of the most printed currencydependent country in the world. Reduction in cash transaction would lead to reduction in the cost of production paper money or currency coins helping the economy.

Since the transaction fee of UPI i.e. fifty paisa per transaction is very less as compared to what currently is paid to international players offering master-card or visa-card. Also the other transaction methods of internet banking and use of automated teller machines cost is significantly high which is to be paid by the end user.

• Considering the low level of literacy in India UPI is designed in a way which is very easy of use. This will increase wefwefs

financial inclusion in not only urban but also the rural sector of India.

• UPI would also serve wider audience through offering a „collect‟ feature, improving the entry barrier for startups and smaller business, allowing even an individual to function as a business, by solving their problem of collecting money for products and services.

• UPI would also boost the smartphone industry in India. India is positioned as the second largest smartphone user base whereas the overall smartphone penetration within the country is less than 30 %. This implies that more than 70 % of the Indian population is yet to be exposed to the benefits that the digital revolution is to bring in.

• It is also expected that UPI i.e. increase in the digital transaction will help in curbing black money.

UPI has edge over NEFT, RTGS and IMPS because NEFT can only be done during bank hours and the process time is about an hour.

Where-as RTGS takes place in real time but has a limit of two lakh and processing time is around thirty minute. IMPS overcomes the drawbacks of the rest two, has a long process to follow before transaction is made. There are a few challenges for RBI and NPCI yet to overcome for UPI, such as low internet penetration, digital illiteracy and fear of cyber threat still persists. But with India‟s population of 65% below 35 years, UPI suits the vibe of young generations. With the applications of 21 banks approved by NCPI, running on google play store, UPI is a great step in right direction and it is set to become an efficient alternative to mobile wallets and make cashless payments faster, easier and smoother for millions of people in India.

29

US PRESEDENTIAL ELECTION ELEPHANT VS. DONKEY – ANIMAL FIGHT INDEED

-Gagan Kapoor

Republican candidate and the Democrats‟ convention which took place in Philadelphia had already given hint that Hillary Clinton will be their candidate.

It is going to be a historic event because:

November 8, 2016 is going to be a historic day for US, once again the presidential elections are going to shake everyone down the line. Since the second and final term of American President Mr. Barack Obama comes to an end next month. In this article, I will like to give you all a short introduction about the American Presidential elections and the two candidates – Hillary Clinton and Donald Trump.

Process of Presidential elections • You are just a citizen; you don‟t know the candidate you are voting for. All you need to vote for is an elector who is going to vote for his desired candidate.

• Out of 538 electors, a candidate needs to earn an absolute majority of at least 270 out of the 538 electoral votes cast nationwide.

• The two major fighting parties are - the Republican Party and the Democratic Party.

It took a while, but now we finally know which two candidates are fighting it out in the race for the prestigious White House.

A very easy prediction was seen getting true when Donald Trump was selected as the republic

1) If Donald Trump is elected as the president then he is going to be called the oldest president in history with the age of 70 years.

And If Hillary is selected, she will be the first women president as well as the second oldest president with the age 69.

“And we used to think Indian politicians are aged.”

2) Surprisingly both of them belong to the same city as well i.e. New York. So this is going to be a time where whoever will win, will also become the first New Yorker in Office in 71 years.

3) We all know Mr Trump is a wealthy man but surprisingly he has spent lesser money on the elections as compared to Hillary Clinton or even any other candidate in the past.

4) It is also funny to know that MR Trump has no experience as a governor or in Congress, and amazingly all he had been dealing best is chain casinos and Hotels and trust me he is really proud of it.

5) There‟s one more thing that is exciting to note and that is Hillary Clinton win will add more significance as till now only two democrats have directly succeeded another Democrat as the US president.

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Above all these facts there‟s something strange that most of us have noticed, this time the elections are a kind of unpopularity contest where both of our candidates are unpopular due to some or the other reason and the one which is less unpopular might win.

On the one side we have Clinton who is considered fake and untrue with her words and have created a negative image after spending so much for the campaigns and on the other side there is Trump, who is just like a trumpet saying whatever he finds offensive for the minorities which might show him a face this November.

favourite for 3 big reasons listed in their order of importance – 1.) The Electoral Map From 1992, in 6 presidential elections the Democratic candidate has won 18 states + DC every time which counts for 242 total electoral votes whereas the Republican nominee has won 13 states in all those elections which counts for just 102 electoral votes. So, if this time Clinton wins the 18 states + DC just like what has happened since 1992 plus she wins Florida counting for 29 electoral votes the election is over. She is president.

Let us look at some of Donald Trump‟s bizarre comments “As everyone knows, but the haters & losers will refuse to acknowledge, I do not wear a wig. My hair may not be perfect but it‟s mine.”

2.) The Demographics

“If Hillary Clinton can't even satisfy her husband, I don‟t know what makes her think she can satisfy America?”

Republicans are having a demographic problem going into this election. They are facing a great demographic nightmare now.

Mitt Romney, in 2012 won 27% of the Hispanic votes and currently Trump is just doing half that well. Given the massive growth in the Hispanic community and the continuous declining percentage of the white vote as a function of the total electorate votes, that‟s a real big problem.

But on the contrary when he speaks about terrorism, antisocial elements and economy he literally nails it.

3.) Donald Trump

“I never fell for scams. I am the only person who immediately walked out of his „Ali G‟ interview.”

If we look at the electoral map, it shows that Mrs Clinton only needs to win two or three of the swing states whereas Mr Trump would have to win seven of these swing states in order to get the required 270 electoral votes needed to win.

As of today, Hillary can be considered the fsaf

Trump will be getting blamed more than he probably should if he‟ll lose on November 8.

Trump hasn‟t helped himself yet with his inflammatory rhetoric and unwillingness to stay on the message of course.

Though the polls suggest that Hillary Clinton is going to win the presidential election, but there are still many who think Donald Trump fse 31

actually has a much better and pronounced chance of winning than most people seem to think.

He might look like a truly terrible president, but no one can deny that he is getting support because he is rightly tapping into fears held by the white middle class which are purely genuine. These fears about income inequality, control of government by elites, good jobs moving to a small number of cities with unaffordable housing, large scale immigration of people from a different culture putting at risk an existing culture that many people value and the fear of US being controlled by a group of people who are dehumanizing them as “bigots”.

information people will have. This has already created a false/negative impression that Hillary Clinton is a dishonest woman and she doesn‟t care about the middle class.

Trump is a true marketer, and is using his marketing skills to market his presidency as he used to market and sell Trump University, Trump Steaks, and Trump Casinos. In all these cases, the actual product was terribly bad for the people who bought it, but Trump very cleverly convinced people that his products would solve all their problems. So as it stays like that, and might stay in people‟s mind for long there is a real chance that he could win - even if his promised solutions are make-believe.

Well, who is true and who is better, one will get to know only once the elections actually take place and their work is seen. It‟s always very early to predict what election results can be. The best part about American presidency has always been that the US Presidents have worked for the country, no matter from which party they belonged, they have always thought for the country and his countrymen which is what the public needs.

To counter those fears, Hillary needs to convince the white middle class that she actually cares about their concerns, but the observations say that her cautious approach to the media is preventing her spreading that message across. Where she is just playing safe, Trump is reaching out to people via creating controversies in media.

Let‟s see who gets the key of White House this November 8 and who is going to deal with Mr Putin, Mr Modi and Xi Jinping and how.

Hillary‟s failure to reach and inform people who she is has allowed Trump to define her by caricature. Simply saying, if you don‟t say something controversial, you aren‟t quoted and that gave Trump give misleading claims made by her opponents which is the only infdg 32

FINANCIAL TRIVIA In 1790, to pay for war debt, the federal government refinanced all federal and state Revolutionary War debt by issuing $80 million in bonds.

These become the first major issues of publicly-traded securities and marked the birth of the U.S. investment markets.

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Reliability and Responsibility for sources of data for the articles vests with the respective authors. Please feel free to drop in your suggestions or any feedback at editor.ibstimes@gmail.com Š IBS Times – FinStreet, The Official Capital Markets Club of IBS Hyderabad.

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