Ahead of Pompeo’s visit to India, the Commerce Minister has sounded a warning bell to the ecommerce players. According to a report in The Hindu, Commerce Minister Piyush Goyal, has dissuaded ecommerce giants like Flipkart and Amazon from offering steep discounts. He also asked them to ensure early compliance with the new foreign investment rules. Ironically, the US Secretary of State, Mike Pompeo, will be visiting India this week to discuss precisely on this issue. The US has been unhappy with the new ecommerce policy, which was designed to protect the interests of the small traders.
The central bank may be looking at a quantum push for SMEs. In fact, the RBI panel has voted for an Rs.5000 crore fund for small enterprises. The UK Sinha Committee has suggested a distressed fund for small enterprises worth Rs.5000 crore which will help provide a line of support for small business that are in trouble. The committee also suggested a government sponsored Fund of Funds (FOF) to support VC/PE funds looking to invest in SMEs. The fund is likely to be in the model of the Textile Upgradation scheme and will be reviewed along with way based on the performance.
India is charting out big plans for its renewable energy thrust with a commitment to add 500 GW of renewable energy capacity by year 2030. India already has a plan to touch 175 GW of renewable energy capacity by 2022 and plans to triple it in the next 8 years after that. India is a signatory to the Paris accord which requires all nations to adhere to a time table to shift to green energy sources. The rapid expansion is likely to throw open a huge opportunity for power companies and for power equipment companies in India. Of course, India will still rely on equipment from China for the purpose.
There is some good news on the monsoon front coming from the IMD. According to the Med Department, monsoons have covered most of Cane, Cotton and Soybean fields of India in June. Till date, the monsoons have already covered most parts of cane, cotton and soybean fields in Western India and some rice growing areas of central and Northern India. The overall monsoon shortfall for the first half of June has narrowed to just 37%. This news released by IMD could be critical as these crops have their cropping season around October and sowing happens in June, failing which the output gets impacted.
Globally, it appears to be a toss-up between Brent and Gold. While the geopolitical tensions continued in the Middle East, the price of Brent Crude fell below the $65/bbl mark on Tuesday as concerns over global growth came back. Trump and Xi are scheduled to meet during the G-20 Summit in Osaka over the week end but markets are not too positive of any favourable outcome considering the intransigence shown by both sides. Meanwhile, investors rushed to safe havens like gold in the midst of rising geopolitical tensions in the Middle East. Spot gold rallied to $1435/oz, the highest level in the last 6 years as a mix of dovish central policy and the war-like situation in the Middle East led to a huge risk off shift. Apart from investors, even central banks like the PBOC and the SNB are shifting to gold.
Global markets weak on Tuesday as US bond yields again drops below 2%. With geopolitical tension simmering in the Middle East, the bond yields in the US again fell below the psychological 2% mark. The markets were factoring in lower growth in global GDP and also central bank dovishness across the major central banks like the Fed, ECB, BOJ and the Bank of England. US yield curve seems to having a repeated problem of inverting, which is normally interpreted as a signal of an impending recession. In fact, that has been the case in most of the cases in the past and that is not great news for global markets.
