SOCH Synopsis of Current Headlines

06th March 2024

Synopsis of Current Headlines

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06th March 2024

Bloomberg to Include India's FAR Bonds in

EM Local Currency Government Indices
- Bloomberg has announced the inclusion of India's Fully Accessible Route (FAR)
bonds in the Bloomberg Emerging Market (EM) Local Currency Government Index
and related indices.

- These bonds will be gradually phased in over a ten-month period, starting from
January 31, 2025.

- Initially, Indian FAR bonds will have an initial weight of 10% of their full market
value in the Bloomberg EM Local Currency Government indices. This weight will
increase by 10% increments every month until October 2025.

- The indices where these bonds could be included are the Bloomberg EM Local
Currency Government Index, the Bloomberg EM Local Currency Government Index
10% Country Capped Index, and all related sub-indices.

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- India is expected to join China and South Korea as markets reaching the 10% cap
once fully included in the Bloomberg EM 10% Country Capped Index. In the market
cap weighted version, India is anticipated to be the third-largest, following China
and South Korea.

- According to data as of January 31, 2024, the index would include 34 Indian
securities, representing 7.26% of a $6.18 trillion index on a market value weighted
basis.

- This inclusion is expected to bring in significant flows into DBS Bank and Kotak
Mahindra Mutual Funds. DBS Bank anticipates a flow of $3-4 billion, while Kotak
Mahindra Mutual Funds expects $2.5-3 billion.

- Ashhish Vaidya, Managing Director and Head of Treasury and Markets at DBS Bank
India, highlighted that while the inclusion is in the EM index and not the BBG global
bond index, it still represents a substantial inflow.

- Lakshmi Iyer from Kotak Mahindra AMC emphasized the positive impact of this
inclusion on bond yields, particularly in the context of India's stable currency
performance in the last 18 months.

Electric Two-Wheeler
Sales Fall Short of
Targets Amid
Industry Challenges
Overview of FY24 Sales Performance

Electric two-wheeler (E2W) sales in the

financial year 2023-24 (FY24) are
expected to miss the NITI Aayog target
of 2.3 million units by a significant
margin, with the industry achieving
only around 800,000 units so far.

Factors Contributing to Slower Growth

Industry insiders cite various reasons

for this slower growth, including

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challenges faced by smaller startups in establishing their presence and major

players struggling with FAME subsidy funds and heavy discounts.

Year-on-Year Growth and Missed Targets

Despite a year-on-year growth of 26%, the E2W industry is projected to fall short of
both the NITI Aayog FY24 target and the FY23 target of 1 million units. Sohinder Gill,
CEO of Hero Electric, highlights the significant deviation from ambitious forecasts.

Market Dynamics and Emerging Competitors

Emergence of formidable competitors like Ola, Ather, TVS, and Bajaj has reshaped
the market landscape, impacting pioneering brands like Hero Electric and Okinawa.
Ola has notably gained significant market share, while Hero Electric's share has
eroded.

Impact of Heavy Discounting

Larger players have resorted to heavy discounting to fill the gap left by pioneers,
but this strategy may ultimately erode the value of products and brands in
customers' minds. Gill compares heavy discounting to a persistent winter sale
during summer.

Government Subsidy Reduction and Market Response

Reduction of FAME subsidy by the government has affected the market dynamics,
leading to price shocks and fluctuations in penetration rates. Manish Raj Singhania,
president of the Federation of Automobile Dealers Associations, highlights the
market's response to subsidy changes.

Conclusion

The challenges faced by the E2W industry underscore the need for comprehensive
strategies to address market dynamics and regulatory changes. With missed targets
and evolving competition, industry stakeholders must navigate these challenges to
drive sustainable growth in the electric two-wheeler market.

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DoT's Sanchar
Sathi Portal
Discontinues
2,500 Fraudulent
Connections
Daily
Overview

The Department of
Telecommunications (DoT)
reports that its Sanchar Sathi
portal is actively discontinuing
over 2,500 fraudulent
connections on a daily basis,
serving as the government's
primary tool to safeguard
mobile phone users from scams.

Functionality

Sanchar Sathi detects fraudulent

connections and initiates re-
verification processes. Failure to
undergo re-verification leads to
disconnection of the number,
preventing potential fraud.

Process and Oversight

While questions have been raised about the government's procedures, the DoT
assures that the established process includes built-in checks and balances, resulting
in zero complaints or grievances against the portal to date.

Upcoming Initiatives

The portal is set to launch an app version soon, aiming to enhance accessibility.
Additionally, a grievance redressal portal is in development to address any
connections mistakenly disconnected via Sanchar Sathi.

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Collaborative Efforts

The DoT is collaborating with the Reserve Bank of India and the Department of
Financial Services to reimburse citizens affected by fraudulent accounts, amounting
to approximately ~1,008 crore.

Key Figures

- 71,000 Point-of-sale accounts blocklisted

- 150,000 Total handsets blocked for involvement in cybercrimes
- 300,000 WhatsApp accounts disengaged
- 1 million Bank and payments wallet accounts frozen
- ~1,000 crore Total money of citizens saved
- 700,000 Stolen phones traced
- 365+ FIRs registered
- 5.9 million Fraudulent connections disconnected
- 2.3 million Connections disconnected based on user feedback
- 10 million+ Disconnections (total)

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Government Eases
FDI Norms in Space
Sector
On Tuesday, the government
announced amended foreign direct
investment (FDI) norms in the space
sector, permitting 100 per cent
overseas investment in satellite
components, 74 per cent in satellite
manufacturing and operations, and 49
per cent in launch vehicles, subject to
government approval for investments
exceeding these limits.

Background and Rationale

This move follows a period of subdued foreign investment in the country's space
sector, attributed partly to global economic challenges such as inflation and
recessionary trends. Experts view this policy change as a crucial step towards
unlocking the potential of India's space economy, projected to reach $44 billion by
2033, up from $8.4 billion currently.

Projected Investments

The sector is anticipated to attract around $20 billion in investments over the
coming years, spanning areas like launch vehicles, satellite manufacturing, earth
observation, communication, and in-orbit economy.

Previous Policy and Current Changes

Previously, foreign investment was limited to 100 per cent in satellite establishment
and operations, but only through the government route. With the relaxation of
these norms, the government aims to attract overseas players and private
companies to the segment.

FDI Limits and Approval Process

Under the new guidelines, up to 74 per cent FDI is permitted under the automatic

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route for various segments including satellite manufacturing and operation,

satellite data products, and ground and user segments. Government approval will
be necessary for investments exceeding this limit. Similarly, up to 49 per cent FDI is
allowed through the automatic route for launch vehicles and associated systems or
subsystems, with government approval required beyond this threshold.

Industry Response and Potential Collaborations

Experts highlight the advantages of collaborating with Indian innovators and

startups to leverage technology and innovation. Several global space companies,
including SpaceX, Virgin Galactic, and Airbus Defence and Space, express interest in
tapping into the cost-effective Indian market.

This policy overhaul is expected to stimulate production scale and market growth in
the Indian space sector, paving the way for a new era of collaboration and
innovation.

Enhanced Infrastructure Fuels Surge in

Enforcement Directorate Activity
A fortified building in plush Lutyens Delhi now houses the Enforcement Directorate
(ED), equipped with stringent security measures and advanced facilities, marking a
stark departure from its previous modest quarters. The upgraded infrastructure
may have contributed to a notable spike in ED's activity over recent years, as
indicated by statistics under the Prevention of Money Laundering Act (PMLA) from
April 2014 to January 2024.

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Rise in Enforcement Activities

During this period, the ED witnessed a significant increase in enforcement case

information reports, arrests, provisional attachment orders, and convictions
compared to previous years. The heightened activity underscores the agency's
intensified efforts in combating financial crimes.

Impact of Infrastructure Upgrade

Former ED chief Karnal Singh emphasized the significance of infrastructure in

facilitating effective investigations and storage of sensitive information. The
transition to a state-of-the-art office space between April 2021 and January 2022
has evidently enhanced the agency's operational capabilities.

Manpower Strengthening

Efforts to augment manpower capabilities have yielded positive results, with over
70 per cent of sanctioned posts now filled, compared to a mere fourth previously.
This specialized workforce is crucial in tackling complex financial crimes and new-
age challenges like cryptocurrency-related offenses.

Focus on Technological Advancements

In response to evolving crime trends, particularly in the digital realm, the ED is

prioritizing technological advancements. Collaborations with institutions like the
National Forensic Sciences University (NFSU) facilitate cyber forensic investigations,
equipped with state-of-the-art software and hardware.

Key Statistics under PMLA

Key statistics under the PMLA from July 1, 2005, to January 31, 2024, illustrate the
agency's increased efficiency in terms of cases recorded, provisional attachment
orders issued, arrests made, searches conducted, and assets seized.

- Cases recorded:
- July 1, 2005 to March 31, 2014: 1,797
- April 1, 2014 to January 31, 2024: 4,911

- Provisional attachment orders issued:

- July 1, 2005 to March 31, 2014: 311
- April 1, 2014 to January 31, 2024: 1,871
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- Value of assets under attachment (~ cr):

- July 1, 2005 to March 31, 2014: 5,086.43
- April 1, 2014 to January 31, 2024: 1,19,555.54

- People arrested:
- July 1, 2005 to March 31, 2014: 2
- April 1, 2014 to January 31, 2024: 31

- Searches conducted:
- July 1, 2005 to March 31, 2014: 84
- April 1, 2014 to January 31, 2024: 6,727

- Indian currency seized (~ cr):

- July 1, 2005 to March 31, 2014: 0.32
- April 1, 2014 to January 31, 2024: 2,241.62

- Foreign currency seized (~ cr):

- July 1, 2005 to March 31, 2014: 0.11
- April 1, 2014 to January 31, 2024: 10.41

- Moveable assets seized (~ cr):

- July 1, 2005 to March 31, 2014: NIL
- April 1, 2014 to January 31, 2024: 2293.45

- Prosecution complaints filed:

- July 1, 2005 to March 31, 2014: 102
- April 1, 2014 to January 31, 2024: 1217

- Prosecution complaints disposed:

- July 1, 2005 to March 31, 2014: 0
- April 1, 2014 to January 31, 2024: 69

- Convictions:
- July 1, 2005 to March 31, 2014: NIL
- April 1, 2014 to January 31, 2024: 32

- Amount confiscated under PMLA (~ cr):

- July 1, 2005 to March 31, 2014: NIL
- April 1, 2014 to January 31, 2024: 15,637

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- Red-corner notices published:

- July 1, 2005 to March 31, 2014: NIL
- April 1, 2014 to January 31, 2024: 24

- Extradition requests sent:

- July 1, 2005 to March 31, 2014: NIL
- April 1, 2014 to January 31, 2024: 42

Future Directions

The investigative agency's strategic focus on modernizing infrastructure,

strengthening manpower, and embracing technological innovations underscores its
commitment to combating financial crimes effectively in an increasingly globalized
and technologically advanced landscape.

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Surge in Liquidity in Banking System Amidst

Government Spending
After nearly three months, liquidity in the banking system has moved into surplus
territory, driven primarily by increased government expenditure. The Reserve Bank
of India (RBI) absorbed over ~40,000 crore from the market on Monday, marking a
significant shift. However, treasury executives caution that this surplus may be
short-lived, given the anticipated rise in demand for funds due to tax payments and
year-end targets.

Weak Response to Variable Reverse Repo Rate (VRRR) Auctions

Two VRRR auctions held on Tuesday received tepid responses, reflecting market
participants' cautious stance. Despite the RBI's offer to absorb ~1 trillion, the
morning auction saw offers amounting to only ~72,840 crore. The afternoon
auction fared even worse, with offers totaling just ~11,185 crore against a notified
amount of ~75,000 crore.

Market Volatility and Caution

Market volatility is expected to persist this month, driven by year-end financial

activities. Treasury experts advise maintaining liquidity rather than engaging in
investments during this period. The RBI is scheduled to conduct another VRRR
auction for ~1 trillion on Wednesday.

Shift in Liquidity Dynamics

The surplus liquidity comes after a period of high liquidity deficit, which
occasionally surpassed ~2 trillion. Increased credit growth and subdued
government spending until December 2023 contributed to tight liquidity conditions.
However, substantial government spending and the cessation of central
government borrowing have reversed this trend, injecting liquidity into the system.

Expectations and Concerns

While surplus conditions prevail for now, concerns loom over upcoming corporate
tax payments and GST dues, which could absorb liquidity. India Ratings anticipates
tight liquidity in March 2024, exacerbated by quarterly advance tax payments,
monthly GST settlements, and year-end financial activities.

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State Government Securities Auction

Ten state governments and one Union Territory raised ~27,981 crore through the
auction of state government securities (SGS) on March 5. This amount was 27 per
cent lower than the indicated figure for the week in the Q4FY24 auction calendar.
Despite lower issuance, the spread between the 10-year SGS and the government's
10-year bond yield narrowed to 35 basis points on Tuesday, indicating increased
demand for SGS.

Ayush Ministry and ICMR Collaborate on

Efficacy Study
Introduction:
The Ministry of Ayurveda, Yoga and Naturopathy, Unani, Siddha, and Homeopathy
(Ayush) has joined hands with the Indian Council of Medical Research (ICMR) to
conduct a placebo-controlled, double-blind trial to assess the efficacy of Ayush
drugs in treating anaemia among non-pregnant women.

Study Details:
The research aims to evaluate Ayush drugs like Punarnavadi Mandura and
Drakshavaleha in comparison to iron folic acid for treating moderate iron deficiency
anaemia. The trial will employ a placebo-controlled, double-blind methodology to
ensure unbiased assessment of treatment effectiveness.

Government Initiatives:

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Recognizing the rising demand for Ayush treatments, the government is working
towards mainstreaming Ayush practices. The Insurance Regulatory and
Development Authority of India (Irdai) has instructed general insurers to
collaborate with Ayush experts to expand coverage and ensure compliance.

Approval and Implementation:

The two-year study, conducted by the Central Council of Research in Ayurvedic
Sciences (CCRAS) and ICMR, has received ethical and drug standardization
approvals. It will involve 3,192 participants across eight sites, including prestigious
medical institutions.

Ayush Industry Growth:

The Ayush manufacturing sector has witnessed substantial growth, reaching $18.1
billion in 2020. With ongoing research and development initiatives, the industry is
projected to reach a value of $50 billion.

Public Health Standards and Initiatives:

Union Health and Family Welfare Minister Mansukh Mandaviya has introduced
Indian Public Health Standards for Ayush healthcare facilities, aiming to establish
uniform quality standards and infrastructure. This marks a significant milestone in
providing comprehensive and quality Ayush healthcare services to the population.

Conclusion:
The collaboration between Ayush Ministry and ICMR underscores the government's
commitment to integrating traditional healthcare practices with modern scientific
research. Through rigorous studies and standardization efforts, Ayush treatments
aim to offer effective solutions for various health conditions, contributing to
improved patient outcomes and healthcare accessibility.

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After a brief pause, Google has reinstated Indian apps on its Play Store following
their removal last week. This action reportedly required government intervention,
prompting Google to relist all the Indian apps. The core of the dispute revolves
around compliance with Google's Play Store policies, particularly regarding
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payment and the distribution of apps from sources outside Google Play. This issue is
not limited to Google alone but also affects Apple's App Store, prompting high-
profile legal battles in the US and investigations by the European Union into the
policies of these tech giants. Together, Google and Apple control nearly 99% of the
mobile ecosystem, with Google servicing Android and Apple serving iOS.

Both companies charge service fees and take a percentage of payments for paid
apps listed in their respective stores. They have also attempted to impose
restrictive terms of service, making it difficult for app developers, including large
companies, to distribute apps through sideloading. This behavior has been
scrutinized by regulatory bodies such as the Supreme Court in India and the
European Commission. In 2023, the National Company Law Appellate Tribunal
(NCLAT) upheld a penalty of ~1,337 crore imposed by the Competition Commission
of India (CCI) on Google for anti-competitive practices, although it set aside some
non-monetary penalties.

While Google and Apple justify their fees as necessary for ensuring app quality and
security, developers argue that the fees are excessively high (around 30%) and the
policies restrictive. They also contend that developers should have more flexibility
in distributing their apps through alternative channels. Additionally, Android
manufacturers have expressed concerns about Google's insistence on featuring
Google Play prominently on device screens, as they offer their own app stores.

This recent incident involved Google removing numerous apps, including those
from startups, for non-compliance with its terms of service. While commission rates
are typically subject to commercial negotiation, the dominance of digital giants like
Google and Apple may limit developers' bargaining power without judicial
intervention. The government's intervention is a positive step, but long-term
solutions will require clear legal rulings that define acceptable practices. The
overarching issue here is the market power of large players in the digital ecosystem,
which can stifle competition and limit choices for users. Regulatory intervention is
necessary to ensure fair competition and benefit both Indian app developers and
mobile users. India must develop policies that promote free competition in this
critical ecosystem.

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As International Women’s Day 2024 approaches, with its theme "Invest in Women,
Accelerate Progress," it serves as a poignant reminder of the ongoing need for
global change to achieve gender equality. The timing coincides with numerous
elections around the world, providing an opportunity to assess the position of
women in politics and the centrality of gender-related issues in electoral discourse.

In Bangladesh, despite Sheikh Hasina's long tenure as Prime Minister, women

remain underrepresented in parliamentary seats, highlighting a stark gender divide.
However, recent elections in Pakistan witnessed a surge in female participation,
with more women contesting seats in the National Assembly and provincial
assemblies, reflecting a growing political engagement among women.

Mexico stands on the brink of potentially electing its first woman president, yet the
country grapples with deep-seated challenges such as escalating femicides, raising
questions about the impact of female leadership on addressing gender-based

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violence. Similarly, Taiwan recently saw the election of its second female vice
president, highlighting progress in women's political representation, albeit against
persistent gender disparities.

In the UK, women voters are poised to play a crucial role in shaping the outcome of
upcoming elections, particularly amid concerns about household finances and
public services like the National Health Service (NHS). Meanwhile, in the US, surveys
suggest that gender discrimination, lack of support from party leaders, and family
responsibilities are significant barriers preventing women from attaining high
political offices.

Closer to home, as India gears up for both Women’s Day and the upcoming Lok
Sabha elections, political parties vie for women's support by announcing initiatives
aimed at benefiting women. The ruling Bharatiya Janata Party (BJP) highlights
flagship schemes such as the Jal Jeevan Mission, Swachh Bharat Mission, and
Pradhan Mantri Ujjwala Yojana (PMUY) as transformative for women's
empowerment. These schemes promise to improve access to clean water,
sanitation facilities, and clean cooking fuel, with a focus on rural women.

While these initiatives have made strides in improving women's lives, challenges
persist, and the voices of women remain crucial in shaping policies and priorities. As
India witnesses a rise in female voters, surpassing their male counterparts, it
underscores the importance of addressing women's concerns and aspirations in
electoral agendas. Beyond the numbers and government schemes, this is an
opportunity for women to assert their demands and advocate for meaningful
change.

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