“You are listening to the Expresso Business Update. Here is the latest news from the world of Indian and International business brought to you by The Indian Express and The Financial Express.
Let’s begin. The government has no plans to impose any hard set of regulations on Big Tech players like Google, Apple, Amazon and Microsoft. Senior officials told FE that only competition-related issues, whenever they emerge, will be looked at by the government because it does not want to stifle innovation by getting into micro issues like algorithms, which are key to the development of ecosystem by technology players. The government approach would be to look into anti-competitive practices on a case-by-case basis rather than drafting an omnibus legislation aimed at regulation. Last week, representatives of domestic tech startups like Flipkart, Paytm among others had met BJP MP Jayant Sinha and highlighted the anti-competitive practices by the Big Tech firms. According to officials, the key issue highlighted by the domestic players relates to algorithms that they feel are designed in such a way by the Big Tech firms that they do not get a level-playing field.
Moving on. Faced with the task of managing additional spending commitments within a tight fiscal deficit goal, the finance ministry has asked various departments to avoid presenting new schemes that would warrant substantial revenue expenditure in FY23, official sources told FE. The ministry is keen on revenue expenditure compression in FY23, given the strong external headwinds, and wants to generate some savings on this front. This is particularly important at a time when the Center intends to realize its record budgetary capital expenditure target of Rs 7.5 trillion, betting big on its high-multiplier effect to spur growth. The leash on revenue expenditure may lead to the deferment of certain new schemes, including a Rs 16,635-crore program for the textiles sector that has been in the works for some time.
In another development, A new draft Bill on the Development of Enterprise and Services Hub, which will replace the Special Economic Zone Act, proposes a concessional corporate tax rate for units, a revamped indirect tax regime, a dispute settlement mechanism, easier exit and an array of non-fiscal incentives, to draw investors into these customs-bonded zones. It also proposes to allow units in such hubs to sell goods in the domestic tariff area by paying basic customs duty on just inputs, instead of the extant stipulation of having to pay it on the more expensive finished products. However, it’s silent on allowing units to sell in the domestic market by paying a proposed nominal “equalisation levy”. The draft Bill prepared by the commerce ministry proposes to freeze the corporation tax at a concessional rate of 15% for all greenfield and certain brownfield units in such “development hubs” until 2032.
In the corporate world, Infosys, the country’s second-largest IT services provider, missed analysts’ estimates on net profit and margins, but was ahead on the revenue front in the first quarter. The company increased its FY23 revenue guidance to 14-16%, from 13%-15% announced earlier, while retaining the margin guidance at 21-23%. The company’s net profit during the period declined 5.7% to Rs 5,360 crore. Consolidated revenue was up 6.8% on a sequential basis to Rs 34,470 crore. At 20.1%, the company’s operating margin was down 1.4% on a sequential basis. The revenue growth was broad-based across the business verticals, but supply side challenges and higher travel costs hit the margins. The company’s revenues in constant currency terms saw a growth of 5.5% on sequential basis. The IT firm’s total contract value during the quarter stood at $1.7 billion.
Meanwhile, Ashish Chauhan has tendered his resignation as the managing director and chief executive officer of BSE, the country’s oldest bourse. The BSE board is expected to agree to a meeting in this regard shortly. Chauhan’s early departure may spur BSE to expedite the selection of a new chief, applications for which they were invited in March, said sources. Chauhan had joined the BSE as deputy CEO in 2009 and was made MD and CEO for a period of five years from November 2, 2012. His second five-year term as BSE chief was scheduled to end on November 1 this year. An exchange filing by BSE on July 18 said that Chauhan had tendered his resignation. This is a day after the NSE announced his appointment of him as the new MD and CEO.
And lastly, let’s hear what to expect from the stock market today. Domestic stock markets are entering the new trading week on the back of massive gains registered last week when bulls asserted dominance. Bulls have been dictating Dalal Street momentum, propelled by buying from Foreign Institutional Investors (FII) and softening commodity prices. Ahead of Monday’s trade, SGX Nifty was down in the red, suggesting a flat to negative start to the day’s trade on Dalal Street. Global cues were largely weak after Wall Street closed in the red on Friday.
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