Major bureaucratic reshuffle likely to happen soon

A major bureaucratic reshuffle is on the cards as several senior officials are set to retire in the next two months and many secretaries, who are holding additional charges, are likely to be relieved of their extra responsibilities. Cabinet Secretary Rajiv Gauba will complete his term on August 21, but it is widely speculated that he may get an extension. Home secretary Ajay Bhalla’s term ends on August 22. Department of Personnel and Training secretary Deepak Khandekar will also retire this month.The office of the Central Vigilance Commissioner has been vacant since June after Sanjay Kothari’s exit. Civil aviation secretary Pradeep Singh Kharola is set to retire on September 15.Higher education secretary Amit Khare, who is also holding additional charge of the information and broadcasting ministry, is due to retire on September 30. The grapevine has it that he may be retained in a significant post.Culture secretary Raghvendra Singh, who’s on a year’s contract after his retirement, will complete this term in September. It will be keenly watched whether he will get another extension because he is steering a key project — the upcoming national museum on the prime ministers of India. Indian Trade Promotion Organisation chairman LC Goyal, who is on an extension, will retire on August 30.Road transport and highways secretary Giridhar Aramane has been holding additional charge of the Department of Promotion of Industry and Internal Trade since April-end after Guruprasad Mahapatra got infected with Covid-19 which ultimately claimed his life. Aramane has also been saddled with the chairmanship of the National Highways Authority of India since last month after Sukhbir Singh Sandhu was appointed as Uttarakhand Chief Secretary.Sports secretary Ravi Mittal is holding additional charge of the skill development ministry. The ministry may get a new person at the helm. Similarly, Anjali Bhawra, secretary, department for empowerment of persons with disability, is holding additional charge of the minority affairs ministry. Drinking water and sanitation department as well as the water resources are under Pankaj Kumar. Most recently, science and technology secretary Ashutosh Sharma was handed over additional charge of the earth sciences ministry following the retirement of Madhavan Nair Rajeev last week.Agriculture secretary Sanjay Agarwal has, in the meanwhile, been given additional charge of the cooperation ministry.Changes at the additional secretary and joint secretary levels are also expected with new batches coming in.

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Where electronics buyers are finding more value

Ahead of the festive season, India’s notoriously value-conscious consumers would now prioritise security and privacy to resolution and memory on their electronic devices like smartphones and laptops. And companies have caught on with this shift in customer behaviour.The steep rise in incidents of cyberattacks, malware and hacking has led to an increase in demand for smartphones and laptops with enhanced inbuilt privacy measures and anti-virus software. Companies are now leveraging the demand by launching more such devices or including these for marketing pushes, industry executives said. “We have launched the Dell EMC PowerProtect DP series integrated appliances and PowerProtect Data Manager Software that help customers in counteracting the effects of cyber threats while safeguarding data across traditional and cloudnative applications,” said Ripu Bajwa, director, Data Protection Solutions, Dell Technologies, India.84962907More than a year since the pandemic struck, cyberattacks have surged manyfold and become more sophisticated, preying on both company and personal data. Retailers like Sangeetha Mobiles have seen an uptick in sales of antivirus software after recent data privacy concerns. “There has been an increase in anti-virus programs since the Pegasus issue with customers opting for the 999 priced software versus 499 taken earlier,” said Chandu Reddy, director of Sangeetha Mobiles.The Pegasus Project revealed that more than 50,000 phone numbers were targeted by a spyware created by NSO Group, an Israeli software company.

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Funds headed to GIFT City ask for GAAR exemption

Mumbai: India’s anti-tax avoidance laws are turning into a concern for foreign funds looking to set up base in Gujarat International Finance Tec or GIFT City, the country’s International Financial Services Centre.The government has announced several tax sops to lure offshore funds to shift their bases from locations such as Singapore and Mauritius to Gandhinagar. But overseas investors are worried that the General Anti-Avoidance Rules (GAAR) provisions can be used by the tax department.According to the tax avoidance laws, tax cannot be the only reason for a fund to move its base from one jurisdiction to another. Lawyers said the prime reason for FPIs to shift base to GIFT City would be tax sops which include exemptions from capital gains tax, STT and stamp duty for their Indian investments.Two leading FPI lobby groups Asia Securities Industry and Financial Markets Association (ASIFMA) and Capital Markets Tax Committee of Asia (CMTC) have written to the IFSC regulator seeking an explicit exemption for funds shifting to GIFT City to be shielded from GAAR.In a joint letter to the IFSC Authority dated July 16, the lobby groups said GAAR provisions “confers wide discretionary powers” to Indian tax authorities and hence “there is an exposure that the GAAR provisions can be invoked against taxpayers who have set up a unit in GIFT IFSC”.“An exposure to applicability of GAAR brings in uncertainty to the eligibility to tax incentives which are provided by the Government to promote GIFT IFSC,” said the letter addressed to IFSC Authority chairman Injeti Srinivas. “To bring certainty on taxability of income of a GIFT IFSC unit, exemption should be granted from applicability of GAAR provisions.”GAAR was introduced in 2017 by the government to curb tax evasion by foreign entities investing in India. Back then, the entities would choose jurisdictions like Mauritius and Singapore to route their India investments. Both the countries enjoyed capital gains tax exemption under the double tax avoidance agreements (DTAA). However, the treaties have been subsequently revised and a large part of tax benefits don’t apply to the countries anymore.“The relocation exercise may be futile if it’s later clouded by tax uncertainties of any kind, particularly GAAR,” said Tejesh Chitlangi, partner, IC Universal Legal.84955998GAAR isn’t the only anti-avoidance law that concerns the global asset management industry. Top economies of the world including India have joined hands under the umbrella of the Organisation for Economic Co-operation and Development (OECD) to arrive at a global tax anti-avoidance law named BEPS.“A fund based in GIFT City will be better protected under GAAR as compared to an offshore fund because there will be no need to consider eligibility under a tax treaty and the Principal Purpose Test under BEPS will not apply,” said Rajesh Gandhi, partner, Deloitte India.GAAR prescribes various tests and thresholds based on which the taxmen assess if a structure was legitimate or created for purposes of tax sops. One of the tests that determine the assessment is commercial substance. If an entity is set up in a jurisdiction say Mauritius, it needs to have an office, permanent staff among others to pass the anti-avoidance test.

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DLF bets big on home projects

DLF is planning to develop 27 million sq ft of residential space in the medium term with a revenue potential of Rs 30,000 crore, on the back of higher demand for houses from corporate executives amid the shift to work from home, said a senior company official.The company sold apartments worth Rs 3,084 crore in 2020-21. These included Rs 1,006 crore from the sale of 36 units at its super luxury ‘The Camellias’ project, where demand was strong despite the lockdown.DLF is looking to generate sales of Rs 4,000 crore in FY22 with Rs 1,000 crore every quarter, Aakash Ohri, senior executive director of DLF Home Developers, told ET.The company will develop 7 million sq ft of residential space in 2021-22, one of the highest in recent times, and then up to 6 million sq ft every year, he said.84957216The major development includes a residential project in Central Delhi in a joint venture with Singapore sovereign fund GIC, independent floors in Gurgaon, some projects in Chennai and Chandigarh and some in the luxury segment in Gurgaon.“While The Camellias will continue to contribute close to 35% of the total sales for the next few quarters, we will hold 80 units and will offer it to top executives of multinational companies under the rental model. Not only have the prices of apartments appreciated, the rental value has also increased and we will sell it later on our own terms,” said Ohri.Each unit, costing between Rs 27 crore and Rs 50 crore, is expected to fetch monthly rental of Rs 7-9 lakh.The Camellias, launched in 2014 at Rs 22,500 per sq ft, is currently selling at Rs 38,500 a sq ft.DLF’s net sales bookings totalled Rs 1,014 crore, a more than six-and-a-half times increase from a year earlier, while sales from new launches were Rs 542 crore. According to a presentation to investors and analysts, DLF had reported consistent double-digit sales of Camellias inventory in the last four quarters with sustained sales momentum despite the pandemic. “The demand for larger homes has led to an increase in sales not only in Gurgaon but our inventories in hills are also getting sold. For the people in Gurgaon, homes in Kasauli have become an extension of their current home,” Ohri said.

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RBI unlikely to tinker with benchmark rates

The Reserve Bank of India is likely to keep benchmark rates unchanged in the bi-monthly monetary policy on Friday amid efforts to regain the country’s growth impetus, shows an ET poll among 21 banks, funds and financial institutions.RBI’s commentary on inflation trajectory would be keenly watched as consumers are feeling the second order impact with manufacturers passing on commodity price increases. It may also clarify on unwinding excess cash from the system, after the US Fed hinted at stopping easy money later this year.Signs of economic recovery are gradually emerging, said Madan Sabnavis, chief economist at CARE Ratings, who expects assessment of inflation and growth to be the “two-point focus” of this policy “rather than tinkering with the rates”. “We need to see if inflation is spooking the central bank, which earlier denounced any major threat of price rise and indicated that this was transient,” he said.The retail inflation as measured by the consumer price index stayed over the RBI's target upper band limit of 6% for the second month in a row. The gauge printed 6.26% in June versus 6.30% in May.“While virus caseload has declined significantly since April, the overall trajectory of economic variables has not changed sufficiently to warrant any material change in the RBI’s policy stance,” said Rahul Bajoria, chief India economist at Barclays.The central bank’s “accommodative” stance should see no change when the Monetary Policy Committee meets to discuss the policy on August 4-6, economists suggested.In its June policy, the RBI lowered India’s GDP forecast for this fiscal year by a percentage point to 9.5%, citing lockdowns during the second wave. The inflation projection was at 5.1% for FY22, well above the ballpark normal target of 4%. The September- and December-quarter consumer inflation forecasts were raised by 20-30 basis points.“We may see some upward revision to inflation forecast as any shock on price rises can upset the central bank's determined focus on growth,” said Rajni Thakur, chief economist at RBL Bank. At the same time, we could expect some extension of measures to arrest rising yields.”The policy repo rate at which banks borrow short term money from the RBI is at 4%. The reverse repo at which lenders park surplus cash with the central bank is at 3.35%.The benchmark bond yield rose to as much as 6.23% on July 23, the highest since March 18, show Bloomberg data compiled by ET Intelligence Group. The bond price, which moves in the opposite direction of yield, has since pared some of its losses after the government’s tax collections showed up.New Delhi’s total tax collection in the April-June quarter jumped about 86% from a year earlier to more than Rs 5.57 lakh crore, diminishing fear of additional fiscal borrowings for a country already bearing a high economic cost of the pandemic.The global crude oil prices soared to nearly $75 per barrel last week fanning fear of imported inflation to India, an anchor for global crude consumptions. “Although the RBI will unlikely rush for unwinding of excess liquidity, it can lay an indicative path for the same,” said Kumaresh Ramakrishnan, chief investment officer-fixed income at DHFL Pramerica MF.India’s banking system has a surplus of Rs 6.11 lakh crore with Mint Road ensuring softer rates. The central bank will purchase government bonds of Rs 1.2 lakh crore under the Government Securities Acquisitions Programme during the JulySeptember quarter.

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