by Yuko Takeo and Emi NobuhiroAsian trade ministers took another step toward creating what could be the world’s biggest trading bloc on Sunday, expressing hope that a deal could be signed by the end of this year.Ministers from the 16-nation Regional Comprehensive Economic Partnership, which includes China, Japan and India but not the U.S., met in Tokyo on Sunday to try and thrash out remaining differences.“The path toward a year-end agreement is now clearer,” said Hiroshige Seko, Japan’s Trade Minister during the joint-press conference held Sunday. “As protectionism concerns increase globally, it’s important that the Asian region flies the flag of free trade.”If ever fully achieved, the partnership would also include the 10 members of the Association of Southeast Asian Nations as well as South Korea, Australia and New Zealand, and cover one third of the world’s economy and almost half its population.While the pact doesn’t seek to impose higher standards in areas such as labor and environmental protection, like the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership signed earlier this year, consensus continues to prove elusive.Major obstacles include India’s requirement that any agreement to reduce tariffs on goods and services should allow for free movement of people, something India wants for its highly skilled information technology sector.“There are great challenges to the global trading system at this point in time,” said Chan Chun Sing, Singapore’s Trade Minister Sunday. “It serves as added impetus for us to try and achieve a substantive conclusion to the RCEP process.”Any further progress on RCEP could put pressure on the U.S. to consider rejoining the TPP, as the U.S.-China trade war continues. U.S. President Donald Trump’s tariffs on $34 billion of Chinese goods are scheduled to kick in on July 6, a move that China has vowed to retaliate against.

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President Donald Trump has warned that Harley-Davidson is going to take "a big hit" for moving some of its motorcycle production overseas and said the American company made the decision even though he got India to reduce import tariff on the iconic motorcycles. Trump said the Wisconsin-based motorcycle manufacturer risks losing American customers if it shifts production overseas. "I have feeling that maybe Harley, I think they're going to take a big hit. I just think it's a great American product. Our people have more pride then they used to have. I really believe that Harley's going to take a (hit)-- the people that are buying Harley-Davidson, they don't want it built in another country," Trump told Fox News. Harley-Davidson has annouced that it is moving some of its production overseas to avoid tariffs on bikes sold in the European Union. Trump's decision to levy tariffs on steel and aluminum from the European Union and other countries triggered the move. Trump cautioned against Harley-Davidson moving overseas, saying, "I think that Harley is an American bike. It's an American motorcycle and they should build them in this country." He accused the American motorcycle maker of using tariffs as an excuse to produce more bikes overseas. "I think I taught them more about tariffs than I could ever learn. I was saying, let me ask you a question. How much do you pay in India? One hundred per cent. Oh, really? Do you do much business? No. Why? Because the tariff's too high," Trump said. "I'm the one telling them. I said, that's a shame. I got them to reduce the tariffs in India, because I used that as an example. All of the sudden, Harley leaves. Everyone else is coming in," Trump said. Trump has repeatedly raised the issue of high tariffs by India on high-end Harley-Davidson motorcycles, which in part is responsible for the current trade tension between the two countries. In February, Trump had said that the Indian government's decision to reduce the tariff on Harley-Davidson motorbikes from 75 per cent to 50 per cent was not enough and asked that it should be reciprocal, as the US imposes "zero tax" on the import of motorcycles. The president claimed that everybody who ever bought a Harley-Davidson voted for him in the 2016 presidential election. "I devoted a lot of time to Harley-Davidson. I treated them good. I guarantee you, everybody that ever bought a Harley-Davidson voted for Trump. I don't know if you know that. They call them bikers for Trump. There's hundreds," he said. Harley Davidson is the company which is going out of the country, while "everyone else is coming in", he said, warning that the decision of the company would hit it. Harley-Davidson said that shifting targeted production from the US to international facilities could take at least nine to 18 months to be fully completed.

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Jagannadham Thunuguntla, Senior VP and Head of Research, Centrum Broking, discusses Tata Steel, IDBI Bank, ICICI Bank auto stocks with ET Now. Edited excerpts: In the Tata Steel- Thyssenkrupp Group deal, instead of 50-50, Tata Steel’s ownership now will remain at 45%, which means there could be a change for Tata Steel sum of part valuations. How do you think the markets would view this deal? In terms of Tata Steel, ever since the Bhushan Steel deal, there were some hiccups vis-à-vis the balance sheet size and the magnitude of debt. That has created some anxiety. The best part is that Tata Steel has ended up becoming India’s largest steel producer. With this JV, the market will be keen to watch the monetisation, IPO or whatever plan they are formulating in the next two-three years. At some point, Tata Steel has to look at addressing the balance sheet issues because markets’ memories are still fresh when it comes to the Corus deal. That is one of the hiccups. Having said that, with more matured hands like Mr Chandrasekaran at the helm of affairs at the Tata Sons, Tata Steel will eventually make some of these major moves.If any clarity comes in realisation of value, markets will take it positively. In the long term, this deal should be seen as a good move. The only challenge is China and how the global macros play out. Considering it is a metal theme, that standard disclaimer will remain on the metal space any which way.The IDBI Bank-LIC deal is done but from market standpoint, should one now focus not on the compulsions of the deal but on how IDBI Bank has the potential to get rerated?Absolutely. When so much is going on in the PSU banks and the stocks like IDBI Bank were under so much pressure. LIC will be the new owner, albeit by proxy, government will be the owner. We have to see how the new ownership will change. Will there be autonomy and will there be clarity in term of decision making and capital deployment. Keeping all those things into account, it is a still risky a call but can be more of a contrarian bet. But having said that, when there are so many clean plays available in private sector banks or NBFCs or many other segments in the private sector, I am not sure why one will want to be very adventurous. Only time and the coming quarter and maybe upcoming analyst concalls, etc, will give us some insights into how the new owner will be handling IDBI Bank. Even for LIC, it is the first time, they are directly into the banking sector.What do you make of the monthly auto sales numbers so far? Irrespective of the 35% sales that Maruti has managed to clock in the month gone by, it has fallen a wee bit short of expectations that over one lakh units. For M&M, the monthly sales growth has been strong at 26%. Do you think that M&M in the near term may be more driven by July monsoon predications as opposed to what their monthly numbers would be? The auto numbers are quite impressive when markets are looking for some positive macro numbers. The initial auto numbers will be comforting for the overall market.As far as M&M is concerned, it is appearing to be in a sweet spot considering that even Maruti has done phenomenally well. The stock had its own fantastic wealth creation and a fantastic rally. M&M is a more stable play in the last two-three years in terms of stock price performance. M&M may be in a more bright spot at this moment considering Tata Motors is still finding it difficult to make a huge comeback in terms of business.What do you make of the appointment of non-executive chairman at ICICI Bank? Soon a new CEO will come in. Finally, there is a face at the operating level and even at the board level? ICICI Bank has gone through a rollercoaster kind of news flow and faced a lot of hiccups. Finally, if things settles down, probably it is good for investors, it is good for all stakeholders. In that sense probably the bank will remain in focus. But we are in a kind of market where the companies with perceivably high quality companies, are finding people ready to pay for high valuations while companies with a little bit of doubtful credentials, are being ignored, It is difficult to say how the price will play out on let us say ICICI Bank but one can say the repair work is on. Let us hope that even the NPA and asset quality issues will be eventually addressed and if there is a permanent CEO and permanent clarity on management. It will be comforting for the stakeholders and investors. In terms of valuations, it is definitely undervalued than let us say a HDFC Bank but only time can tell whether that will translate into the price or not. It will depend on the management and the new CEO who is going to come. Another interesting name is ICICI Securities after the IPO listing. Because of the group related issues, the stock remained under pressure and the stock may be in focus now considering its reasonably value now at about Rs 11,000 crore market cap for Rs 550 crore PAT is not appearing to be very high valuation for the kind of market leadership it has. I think all the stocks in the group should be kept on radar but we are in the process of repair but not there fully.

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For most salaried individuals, the Employee Provident Fund (EPF) forms the backbone of savings needs. Now the scheme is undergoing sweeping changes. Apart from recent tweaks in rules, new measures proposed could change its very structure. So will the changes enhance the utility of the EPF or leave subscribers handicapped?Curbs on withdrawalIn the absence of a dependable pension offering, the PF serves as a nest egg for private sector employees. However, with many dipping into their PF kitty much before retirement, it often leaves the subscriber without a vital savings pool in their twilight years. A few years ago, the Employees’ Provident Fund Organisation (EPFO) had ruled that partial early withdrawal would only be permitted on occasions like a child’s marriage, higher education and making a downpayment for a house, subject to certain conditions. Members are also allowed to withdraw the entire amount and opt for final settlement if they remain unemployed for more than two months. The EPFO has now changed rules for withdrawal in the event of loss of job. Members will be allowed to withdraw 75% of the accumulated corpus after a month of termination of service. If unemployed for two months, the member will have the option to withdraw the remaining 25% and go for final settlement.Financial planners say restrictions on withdrawals will ensure retirement is not compromised. Yet, a certain degree of flexibility must to be retained to help those in crisis. Rohit Shah, Founder, Getting You Rich, says, “Many salaried individuals face a money squeeze at certain stages in life. The flexibility to withdraw PF money for key events needs to stay.” However, Suresh Sadagopan, Founder, Ladder 7 Financial Services, disagrees. “EPF is meant to be a retirement vehicle. If too much flexibility is given during the accumulation phase, it will be abused. This will hurt the individual’s retirement phase.”Partial withdrawal of corpus is allowed for specific needsFinancial planners say restrictions on withdrawals will ensure retirement is not compromised. 64802079 Hike in equity exposureUntil recently, the EPF generated returns entirely from investments in fixed income instruments like government securities and corporate bonds. Three years ago, the EPF entered the stock market, deploying a nominal 5% of the incremental corpus in equity exchange traded funds (ETF). The equity exposure has since been gradually hiked to 15% of the incremental corpus. In future, the subscribers may be given the option to deploy a higher portion of their EPF contributions into equities. At the same time, risk-averse subscribers may be given the option to reduce their equity contribution.Financial planners say the option to hike equity allocation can help deliver a healthier retirement corpus to subscribers. “Equities tend to yield better returns compared to debt instruments over longer time frames. The hike in equity allocation in EPF will help subscribers fetch a higher return on their corpus,” says Amol Joshi, Founder, PlanRupee Investment Services. It would particularly benefit younger subscribers who have a higher risk appetite owing to the longer time horizon. They can step up their equity exposure from the early years and gain from the power of compounding. “For many individuals who consciously stay away from equities, the EPF may be the only way to participate in this high-growth asset class in a responsible manner,” says Sadagopan. As of May-end, the EPFO has invested nearly Rs 47,500 crore in equities, earning a return of 16.07% on the investment.Another proposal is to widen the scope of ETF investments beyond the frontline indices. However, some experts feel increasing exposure to equities is not a good idea. Pankaaj Maalde, a certified financial planner, says the volatility in equity returns will lead to fluctuations in yearly returns from the EPF. He insists that those seeking higher equity exposure should be given the option to shift to the National Pension System (NPS).Unitisation of PF balanceLast year, the EPFO approved a change in the accounting policy for the portion of EPF invested in equities. The corpus parked in ETF will soon be credited to subscribers’ accounts in the form of units. These units can be redeemed by the subscriber when he or she exits the fund or withdraws the money. Meanwhile, earnings on the debt portion of EPF will continue to be paid as interest. Accordingly, each subscriber will have two account heads under EPF—fixed income and equity. Currently, the return on the equity part is not factored in while calculating the interest declared every year. It also does not reflect in the subscriber’s PF account. Once the unitisation of PF balance is implemented, the value of every subscriber’s equity holdings will be marked to market. Additionally, the subscriber would get the option to defer the withdrawal of the equity investment for up to three years. Some financial planners say unitisation will usher in greater transparency in the valuation of the scheme’s holdings. “Unitisation will take away some of the anomalies in the accounting practices,” says Shah. However, others say this will shift the onus of risk onto subscribers. Says Maalde, “Once the scheme is linked to the market, the EPF will not be in a position to give fixed returns to the subscriber.” Besides, regular visibility of the performance of the equity portion may push subscribers into making hasty decisions.Changes to EPSThe Employee Pension Scheme, which runs parallel to the EPF, is also likely to see some changes. At present, employees earning up to Rs 15,000 a month are eligible for a minimum guaranteed pension of Rs 1,000 per month after retirement. All members become eligible for pension after 10 years of contribution to EPS. While employees contribute 12% of the basic pay to EPF, the employer has to make a matching contribution, divided into two parts: 8.33% of the basic pay is directed towards EPS—subject to a cap of Rs 15,000—and the remaining 3.67% is parked in EPF. The labour ministry may enhance the wage ceiling from Rs 15,000 to Rs 21,000. The retirement body is also considering doubling the minimum monthly pension for EPS subscribers to Rs 2,000.While this will bring more subscribers into the pension net, it is still too meagre an amount. As per the current structure, pension is fixed based on the following formula: Average salary for the last 5 years x number of years completed in service / 70. Since the definition of salary is restricted to Rs 15,000, the maximum contribution works out to Rs 1,250 per month (8.33% of salary). This will climb up marginally to Rs 1,750 if the wage ceiling is enhanced to Rs 21,000. Besides, the final pension is also computed on this wage ceiling, which puts a cap on the pension amount. Assuming an employee has served 35 years, the maximum monthly pension he can get today is Rs 15,000. Currently, there are around 60 lakh pensioners under the EPF-95, of which around 40 lakh are getting less than Rs 1,500 per month as pension.Higher pay, more contributionThe EPF may also be indirectly impacted by possible tweaks in the structuring of employee’s salary. According to reports, the government wants to cap allowances to employees at 50% of the basic pay. This proposal aims to make basic income a major component of the employee’s salary structure. Often, employers keep basic pay very low to ensure that the contribution towards social security schemes is also moderate, cutting down on company’s costs. If basic income is raised, it would result in higher contribution towards EPF, apart from other social security schemes. Both the employer and employee contribute 12% of the basic pay and dearness allowance, if any, towards the EPF. Effectively, the rise in basic income may lead to a lower take-home pay for employees while the PF contributions will see a jump. If implemented, this will enhance retirement savings.Dealing with a revamped EPFThe EPF has seen some procedural tweaks in recent years. The EPFO has tried to simplify the subscriber’s interaction with the retirement body by offering services online. The introduction of the Universal Account Number or UAN is set to reduce complications during withdrawals and linking multiple PF balances. Once you are assigned a UAN, when changing jobs, sharing the UAN with the new employer will enable them to get your entire PF balance transferred to the new account.With its tax benefits, the EPF has an advantage over other savings vehicles. Apart from the income tax deduction allowed on employer’s contribution to the EPF, the interest income is entirely tax free. The interest rate itself continues to be several notches higher than comparable government instruments. At 8.55%, the interest rate for the year 2017-18 is the lowest in five years. Yet, it has remained elevated relative to the cuts witnessed in instruments like the PPF and NSC. “Considering the tax savings, the EPF effectively delivers a pretax return of around 12% for those in the highest tax bracket,” points out Shah.Current EPF rate is lowest in five yearsThe PPF rate has slipped more. 64802080 Subscribers can count on the EPF to offer competitive interest rates in the future. However, the introduction and hike in equity exposure along with the planned unitisation of the equity component pose some risks. Yet, most financial planners insist subscribers should make the most of the instrument and stay the course. Joshi says one should refrain from withdrawing money prematurely and remain put till retirement. However, Maalde suggests shifting from EPF to the NPS. Under the NPS, there is greater choice over allocation of savings unlike the EPF, he argues.How to find your UAN1. Go to the EPFO’s Unified Member Portal for UAN related services.2. Select the ‘Know your UAN status’ option under ‘important links’ section.3. Enter details like member ID or EPF account number, name, date of birth, phone number and email. EPF member ID is printed on your salary slip.4. You will get an authorisation PIN on the registered mobile number.5. After entering the PIN, your UAN will be sent to the registered mobile number and email.

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By Anurag Kotoky and Benjamin KatzAirbus SE will miss its delivery target for Pratt & Whitney-powered A320neo narrow-body jets this year, after problems with the engines caused an almost three-month halt in shipments, people familiar with the matter said.The Toulouse, France-based planemaker expects to deliver 30 to 40 fewer of the aircraft than previously anticipated, according to one of the people, who asked not to be identified discussing a confidential matter. Airbus had planned to hand over about 210 of the Pratt-powered jets -- one of two engine options for the A320neo -- during the rest of this year. It could get closer to that target if Pratt, a unit of United Technologies Corp., can accelerate engine production beyond current levels.The delays on Airbus’s hottest selling model -- a workhorse for airlines worldwide -- threaten to expose the planemaker and Pratt to late penalties from frustrated customers. The tardiness also will pressure Airbus’s effort to ramp up production generally, reducing room for maneuvering in its schedule. The company had planned to use this year to catch up from other delivery delays from 2017, a goal that is now out of reach.IndiGo, India’s biggest airline, is the largest customer for the A320neo model with 430 jets on order. The airline has previously said it has been forced to lease A320ceo planes on short-term lease, adding to costs.Airbus had said in early June that it expected higher costs to manage delivery of scores of aircraft that were parked without engines after the latest issue with a knife-edge seal on the high-tech engine, one of several in a new generation of fuel-saving power plants that have suffered through persistent teething pains.At the time, commercial-aircraft chief Guillaume Faury called the situation “challenging,” but said that “if the engine manufacturers stick to their plans, we will stick to ours or very close.”Airplane DeliveriesAirbus can still reach its overall production target for shipping 800 planes of all its models this year, it said in a statement, declining to comment on specifics of the A320 program. Airbus is due to publish monthly order and delivery totals for June this week.“At the end of the day or year, what matters is achieving the guidance, to have delivered around 800 aircraft and the corresponding, incoming cash linked to those deliveries,” the company said in an email.The company can even meet its target for deliveries of the A320 family of planes, people familiar with the matter said, by picking up the slack with other models, including the A320ceo. That variant is less expensive than the more fuel-efficient neo, which stands for new engine option.The company plans to ship about 210 more A320neo planes with engines made by CFM International, a joint venture of Safran SA and General Electric Co., one of the people said.Pratt didn’t respond to requests for comment.The latest problem in the engine -- a fault in its knife-edge seal that led to in-flight shutdowns -- is just the most recent in a series of afflictions for the turbine. Bloomberg News reported last month that Pratt & Whitney is close to finalizing a redesign of the faulty engine part.The other powerplant choice for the A320neo, CFM’s Leap turbine, has also contributed to the number of aircraft that have been undelivered. As a result, Airbus has been forced to store aircraft in France, China, Germany and the U.S. awaiting engine installation.

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By Anurag Kotoky and Benjamin KatzAirbus SE will miss its delivery target for Pratt & Whitney-powered A320neo narrow-body jets this year, after problems with the engines caused an almost three-month halt in shipments, people familiar with the matter said.The Toulouse, France-based planemaker expects to deliver 30 to 40 fewer of the aircraft than previously anticipated, according to one of the people, who asked not to be identified discussing a confidential matter. Airbus had planned to hand over about 210 of the Pratt-powered jets -- one of two engine options for the A320neo -- during the rest of this year. It could get closer to that target if Pratt, a unit of United Technologies Corp., can accelerate engine production beyond current levels.The delays on Airbus’s hottest selling model -- a workhorse for airlines worldwide -- threaten to expose the planemaker and Pratt to late penalties from frustrated customers. The tardiness also will pressure Airbus’s effort to ramp up production generally, reducing room for maneuvering in its schedule. The company had planned to use this year to catch up from other delivery delays from 2017, a goal that is now out of reach.IndiGo, India’s biggest airline, is the largest customer for the A320neo model with 430 jets on order. The airline has previously said it has been forced to lease A320ceo planes on short-term lease, adding to costs.Airbus had said in early June that it expected higher costs to manage delivery of scores of aircraft that were parked without engines after the latest issue with a knife-edge seal on the high-tech engine, one of several in a new generation of fuel-saving power plants that have suffered through persistent teething pains.At the time, commercial-aircraft chief Guillaume Faury called the situation “challenging,” but said that “if the engine manufacturers stick to their plans, we will stick to ours or very close.”Airplane DeliveriesAirbus can still reach its overall production target for shipping 800 planes of all its models this year, it said in a statement, declining to comment on specifics of the A320 program. Airbus is due to publish monthly order and delivery totals for June this week.“At the end of the day or year, what matters is achieving the guidance, to have delivered around 800 aircraft and the corresponding, incoming cash linked to those deliveries,” the company said in an email.The company can even meet its target for deliveries of the A320 family of planes, people familiar with the matter said, by picking up the slack with other models, including the A320ceo. That variant is less expensive than the more fuel-efficient neo, which stands for new engine option.The company plans to ship about 210 more A320neo planes with engines made by CFM International, a joint venture of Safran SA and General Electric Co., one of the people said.Pratt didn’t respond to requests for comment.The latest problem in the engine -- a fault in its knife-edge seal that led to in-flight shutdowns -- is just the most recent in a series of afflictions for the turbine. Bloomberg News reported last month that Pratt & Whitney is close to finalizing a redesign of the faulty engine part.The other powerplant choice for the A320neo, CFM’s Leap turbine, has also contributed to the number of aircraft that have been undelivered. As a result, Airbus has been forced to store aircraft in France, China, Germany and the U.S. awaiting engine installation.

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Bharti Infratel has received a go ahead from the Competition Commission of India (CCI) for the merger of itself and Indus Towers, the country's largest tower providing company."Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, we are pleased to inform you that approval of Competition Commission of India (CCI) has been received for the proposed merger of Bharti Infratel Limited and Indus Towers Limited," the tower arm of India's largest carrier Bharti Airtel said in a statement to the exchanges on Monday morning. The company's scrip fell 1.2% to Rs 297.80 on the Bombay Stock Exchange in early trade. The Sunil Mittal-driven mobile infrastructure company is merging its operations with Indus Towers that has Vodafone India and Idea Cellular as stakeholders to create a $14.6 billion company which will be one of the largest mobile tower entities worldwide with 1.63 lakh towers. Indus Towers is currently jointly owned by Bharti Infratel (42%), Vodafone (42%), Aditya Birla’s Idea group (11.15%) and Providence (4.85%).Bharti Airtel and Vodafone, according to the companies, will jointly control the combined company, in accordance with the terms of a new shareholders’ agreement.CCI is the first approval among several approvals that are required, including from SEBI, NCLT, DoT (FDI approval), and is expected to close before the end of the financial year ending March 31, 2019.

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Mumbai: Officials at the Insurance Regulatory and Development Authority of India (Irdai) had to burn the midnight oil before they gave their approval to the Life Insurance Corporation of India (LIC) to take a controlling stake in debt-laden IDBI Bank.Discussions to explore whether the deal circumvented any provisions of the Insurance Act and the LIC Act, stretched way past 2 am last Thursday at the Hyderabad headquarters of the regulator.However, the architect of the deal –– MK Jain, the former CEO of IDBI Bank who is now deputy governor at the Reserve Bank of India –– was missing.The discussions finally ended when they found a way in Section 27 of the Insurance Act and Section 6(2)H of the LIC Act which allows LIC “to carry on any other business which may seem to the Corporation to be capable of being conveniently carried on in connection with its business and calculated directly or indirectly to render profitable the business of the Corporation.”It all started on Thursday morning when LIC executives visited the regulator to push their plan to take a majority stake in the state-run bank, although there were restrictions in the insurer taking control of a company.“It is a brainchild of Mr Jain. He floated the idea,” said a source in know of the development. “He wanted LIC to buy stakes in non-core. Two months back, he came up with the proposal and the government wanted to act on it.”Before the proposal of selling the stake to LIC, Jain was looking at a demerger between the corporate and retail arms of the bank. IDBI Capital was working on the proposal in which the government was willing to go down to 26 per cent stake from 81 per cent.However, it was difficult to get investors for the bank.Finally, at 11 am on Friday, the matter was placed before the Irdai board. The proposal to increase the stake was presented by Pravin Kutumbe, member finance, through a board note. Since the officials were working on the issue for over 24-48 hours, the discussions lasted barely 10 minutes.The proposal was cleared on condition that LIC should not step into the promoter’s shoe. Irdai chairman Subhash Chandra Khuntia approved the proposal on the agreement that LIC will have to reduce stake in future to the regulatory requirement of 15 per cent.Debashish Panda, additional secretary, financial services, was also present at the meeting.

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By Jeanette Rodrigues, Bhuma Shrivastava and Ronojoy MazumdarA wave of religious intolerance as India heads toward elections is emerging as a new risk for its biggest companies.Over the past weeks, a telecom giant, the Indian lender led by Asia’s richest banker, and the local rival of Uber Technologies Inc. have been roiled by controversies linked to comments on Facebook and Twitter involving a minority community. All these started as social media posts, then gained a life of their own as people backed or vilified the comments, eventually forcing the companies to react to contain any damage.Tensions on social media are mounting as the world’s largest democracy approaches elections early next year that will pit the Hindu nationalist beliefs of Prime Minister Narendra Modi’s party against the main opposition, which often spotlights secularism and rising religious intolerance. Risk consultancy Kroll Inc. says it’s seeing an “exponential increase” in questions from corporate clients on how to manage the fallout from incidents on social media.“It doesn’t just carry reputational and business risk, it can snowball into business continuity risks that can spread faster than a forest fire,” said Tarun Bhatia, a Mumbai-based managing director at Kroll. “Companies can’t choose their customers or control what they say. So it comes down to how companies manage these incidents, how quickly they react.”Bharti Airtel Ltd., India’s biggest telecommunications provider thanks to its 304 million subscribers, was tested on that recently. This is how it began: Around noon on June 18, Twitter user Pooja Singh complained about an Airtel customer service representative. An Airtel employee replied, promising to get back with more information, and signed off as “Shoaib.”This is a recognizable Muslim name in a country currently riven by passionate teams of social media trolls, akin to the U.S. experience where political discourse often degenerates into hate-filled accusations.64821832 “Dear Shohaib, as you’re a Muslim and I have no faith in your working ethics... requesting you to assign a Hindu representative for my request. Thanks,” Singh responded. Soon after, another Airtel rep named Gaganjot -- a clearly non-Muslim name -- promised to resolve Singh’s concern.On the morning of June 20, Airtel published a statement on twitter refuting accusations that it gave in to Singh’s alleged discriminatory demand, something that had already attracted severe criticism of the carrier and threats to discontinue its services, including from opposition lawmakers. The statement said that both Shoaib and Gaganjot were just following established workflow processes that “got read as ‘bowing down to bigotry.”’“Airtel has been resolute for 23 years” and “our training manuals will never carry instructions to pause and check one’s identity before serving a query,” the statement read. The company didn’t reply to an email from Bloomberg seeking further comment.The reputational risks to companies of an increasingly polarized political and social discourse online are relatively new in India, according to Kroll.Loss of reputation or brand value wasn’t a key concern for Indian corporates surveyed for the Allianz Risk Barometer 2018, even while it was among the top 10 for companies in the rest of Asia-Pacific and in the U.S. Almost a quarter of a company’s value is estimated to lie in its brand, according to the Allianz report.Corporates are starting to take notice. Some of India’s biggest companies are upgrading training manuals across India and customer service teams are proactively flagging such incidents to colleagues who handle media interactions, officials at three companies said, asking not to be identified as the matter is sensitive.Software is being installed to flag posts linked to the brand that contain trigger words and employees are being reminded of policies that urge them to write on social media only what they’d say in public, two of the people said. There are expectations that as the election draws nearer such risks will escalate and employees are on the watch for incendiary messages about religion, ethnicity or gender, one said.“We have published and communicated a comprehensive policy on social media to our employees,” said Makarand Khatavkar, group head for human resources at Kotak Mahindra Bank Ltd. “Any violation of the policy could result in disciplinary action, including termination.”The lender, controlled by billionaire Uday Kotak, in April fired an employee who published a post condoning the rape and murder of an eight-year-old Muslim girl. It was a crime that shocked India, and the involvement of Hindu men linked to Modi’s Bharatiya Janata Party may erode support for the government, both among voters and donors.“These incidents contribute to the weakening of BJP’s hold, because they spur opposition unity and strengthen the opposition,” said Satish Misra, senior fellow at the Observer Research Foundation. “The corporate world would also take these things into consideration. These incidents have forced them to rethink. The majority of funding went to BJP in 2014, now more balanced funding will take place.”‘Believes in Secularity’India’s biggest ride-hailing app Ola, which is backed by Softbank Group Corp., fired a driver who -- on the night of June 17 -- refused to drop a passenger to an area he said was dominated by Muslims. When reached by Bloomberg for comment on June 21, the company re-sent a statement issued June 18 that apologized to the customer and reaffirmed its policy of non-discrimination.“Ola, like India, believes in secularity,” the statement read.

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By Jeanette Rodrigues, Bhuma Shrivastava and Ronojoy MazumdarA wave of religious intolerance as India heads toward elections is emerging as a new risk for its biggest companies.Over the past weeks, a telecom giant, the Indian lender led by Asia’s richest banker, and the local rival of Uber Technologies Inc. have been roiled by controversies linked to comments on Facebook and Twitter involving a minority community. All these started as social media posts, then gained a life of their own as people backed or vilified the comments, eventually forcing the companies to react to contain any damage.Tensions on social media are mounting as the world’s largest democracy approaches elections early next year that will pit the Hindu nationalist beliefs of Prime Minister Narendra Modi’s party against the main opposition, which often spotlights secularism and rising religious intolerance. Risk consultancy Kroll Inc. says it’s seeing an “exponential increase” in questions from corporate clients on how to manage the fallout from incidents on social media.“It doesn’t just carry reputational and business risk, it can snowball into business continuity risks that can spread faster than a forest fire,” said Tarun Bhatia, a Mumbai-based managing director at Kroll. “Companies can’t choose their customers or control what they say. So it comes down to how companies manage these incidents, how quickly they react.”Bharti Airtel Ltd., India’s biggest telecommunications provider thanks to its 304 million subscribers, was tested on that recently. This is how it began: Around noon on June 18, Twitter user Pooja Singh complained about an Airtel customer service representative. An Airtel employee replied, promising to get back with more information, and signed off as “Shoaib.”This is a recognizable Muslim name in a country currently riven by passionate teams of social media trolls, akin to the U.S. experience where political discourse often degenerates into hate-filled accusations.64821832 “Dear Shohaib, as you’re a Muslim and I have no faith in your working ethics... requesting you to assign a Hindu representative for my request. Thanks,” Singh responded. Soon after, another Airtel rep named Gaganjot -- a clearly non-Muslim name -- promised to resolve Singh’s concern.On the morning of June 20, Airtel published a statement on twitter refuting accusations that it gave in to Singh’s alleged discriminatory demand, something that had already attracted severe criticism of the carrier and threats to discontinue its services, including from opposition lawmakers. The statement said that both Shoaib and Gaganjot were just following established workflow processes that “got read as ‘bowing down to bigotry.”’“Airtel has been resolute for 23 years” and “our training manuals will never carry instructions to pause and check one’s identity before serving a query,” the statement read. The company didn’t reply to an email from Bloomberg seeking further comment.The reputational risks to companies of an increasingly polarized political and social discourse online are relatively new in India, according to Kroll.Loss of reputation or brand value wasn’t a key concern for Indian corporates surveyed for the Allianz Risk Barometer 2018, even while it was among the top 10 for companies in the rest of Asia-Pacific and in the U.S. Almost a quarter of a company’s value is estimated to lie in its brand, according to the Allianz report.Corporates are starting to take notice. Some of India’s biggest companies are upgrading training manuals across India and customer service teams are proactively flagging such incidents to colleagues who handle media interactions, officials at three companies said, asking not to be identified as the matter is sensitive.Software is being installed to flag posts linked to the brand that contain trigger words and employees are being reminded of policies that urge them to write on social media only what they’d say in public, two of the people said. There are expectations that as the election draws nearer such risks will escalate and employees are on the watch for incendiary messages about religion, ethnicity or gender, one said.“We have published and communicated a comprehensive policy on social media to our employees,” said Makarand Khatavkar, group head for human resources at Kotak Mahindra Bank Ltd. “Any violation of the policy could result in disciplinary action, including termination.”The lender, controlled by billionaire Uday Kotak, in April fired an employee who published a post condoning the rape and murder of an eight-year-old Muslim girl. It was a crime that shocked India, and the involvement of Hindu men linked to Modi’s Bharatiya Janata Party may erode support for the government, both among voters and donors.“These incidents contribute to the weakening of BJP’s hold, because they spur opposition unity and strengthen the opposition,” said Satish Misra, senior fellow at the Observer Research Foundation. “The corporate world would also take these things into consideration. These incidents have forced them to rethink. The majority of funding went to BJP in 2014, now more balanced funding will take place.”‘Believes in Secularity’India’s biggest ride-hailing app Ola, which is backed by Softbank Group Corp., fired a driver who -- on the night of June 17 -- refused to drop a passenger to an area he said was dominated by Muslims. When reached by Bloomberg for comment on June 21, the company re-sent a statement issued June 18 that apologized to the customer and reaffirmed its policy of non-discrimination.“Ola, like India, believes in secularity,” the statement read.

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This is a rare voice of optimism as the general view is that IT companies will face tremendous disruption and revenue contraction.

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Market returns will be linked more to earnings growth in the coming months as valuations are already above average, DSP BlackRock Investment Managers’ head of equities Vinit Sambre told Anuradha Himatsingka in an interview. Edited excerpts:How is the corporate earnings trajectory likely to shape up over the next nine months of FY19?Over the last two quarters, sectors like automobiles, cement, metals, engineering and consumption have been witnessing a resurgence. Sectors such as pharmaceuticals, telecommunications and software, however, are still showing slow growth trends. Going forward, we expect the growth momentum to sustain, fuelled by increasing rural demand, higher individual income and increased government capex for roads and railways. If India is able to meet the 13-14% corporate growth target, we would be fine for the next nine months. Beyond FY19, we can look at higher growth because by then, the public sector banks will have the potential to add meaningfully to the overall growth numbers.What is your assessment of the current market situation?While on one hand, we saw encouraging demand pickup trends with FMCG companies highlighting improvement in consumer demand, cement stocks reporting betterthan-expected realisation trends and retail private banks seeing strong loan growth, on the other, we have weak macro trends such as rising current account deficit, oil prices, bond yields, inflation and a falling rupee. The market in 2018 so far has been in a seesaw mode. The Sensex hit a peak of around 36,200 in January, dropped 10% over the next two months, rallied 6-7% thereafter, and then corrected again. The small-cap and mid-cap indices are down 15-20% from their peaks, while individual stocks have fallen 30% or more in some cases. In the coming months, market returns are more likely to be linked to earnings growth.The Indian market has yet to reach its peak on parameters like capex cycle, credit growth, corporate earnings and capacity utilisation. What is your take on this?Though the government has implemented GST and increased spends on the core sector of the economy, mainly roads and railways, private sector lacks confidence to begin spends in a big way. Corporates are not sure of the regulations that the government may announce or the impact it would have on the industry. Lack of clarity in the minds of corporates can also be attributed to the changing face of competition. For example, a large share of the retail market today has been taken over by ecommerce. Companies have put their expansion plans on hold as ecommerce players have been gobbling up their market share. Another example is the FMCG segment. Patanjali Ayurved is giving tough competition to MNCs, who have dominated the sector for so many years. All these things create doubts in the mind of entrepreneurs, compelling them to go slow on their capex plans. Corporate confidence will be back when they see more clarity of regulation and sustainability of demand.Do you foresee huge volatility in the market in the near future?Election will create volatility and can have a dampening effect on a short-term basis. Such events tend to create a lot of noise which impacts sentiments but not the fundamentals. But, in the long term, it is the fundamentals which matter. Markets have ended up delivering returns based on corporate earnings growth. So, we should be worried about the long-term macroeconomic picture of our country.Where are you placing your bets?We are bullish on the consumption trend of the economy because of rising aspirations and consumer’s zeal to go for financing to enjoy the luxuries of life. We are also positive on the core sectors — currently driven by government capex and funded by multilateral agencies. The outlook on some of the infra and engineering companies is also positive for the next 4-5 years. We have a fair share of exposure in the banking sector. Private sector banks have been a beneficiary of the PSU banks’ problems and are gaining market share. We are looking at the healthcare category as well. As of now, we are underweight on IT and telecom.

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Bengaluru: BNP Paribas says Indian IT companies seem to be ahead of the curve in building automation technologies, compared to their global peers, and that automation would eventually boost revenues and margins for companies that had invested earlier.The brokerage is a rare voice of optimism as the general view is that IT companies will face tremendous disruption and revenue contraction. "People have underestimated the ability of Indian IT companies to deal with disruption, based on the evidence seen in the past 15-20 years. We think the industry is now in the second phase of efficiency building. The first phase was moving work from onshore to offsite. This second phase will be using automation. The takeaway is that the shift to higher automation across service lines is inevitable,” Abhiram Eleswarapu, Head of India Equity Research at BNP Paribas, told ETin a interview.Elewarapu said revenue productivity trends suggest that Indian players may be ahead of the curve compared to their global peers. The brokerage put out a 48-page note examining the impact of automation on the sector ‘Indian IT services: Welcome to the Machine.’Indian firms have in the last two years brought in automation in maintenance of outsourcing projects, freeing several thousand people to do more value add work. Wipro said it has automated the work done by about 8,000 employees in FY18. In FY17, it had automated the work done by 12,000 employees. Infosys had also said it automated the the work over 10,000 FTEs in FY17. The company did not release a similar figure in FY18. The result has been an improvement in revenue-per-employee. Since FY2008, Indian IT revenue-per-employee has grown to over $52,000 from under $15,000.

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