Time running out for Amazon India to conform to new FDI norms in ecommerce
Having failed to gather support for a letter lobbying the government to defer the implementation of rules on ecommerce by six months, Amazon India may have to take rapid action to make sure it conforms to them, said people with knowledge of the matter. The government has said that no vendor on a marketplace the business model for ecommerce companies Amazon India, Flipkart and Snapdeal can account for more than a fourth of sales. But Cloudtail, part owned by Amazon and the dominant seller on the site, may exceed that limit, which means the parent will need to ensure this isn’t the case, especially as the new rules took effect on March 29, the day they were issued in a Press Note. Also read: Amazon in lone battle to delay government’s ecommerce norm rollout Amazon didn’t answer specific queries in this regard but reiterated that it is compliant with all the country’s laws. “We have and we will continue to operate within the parameters of the laws and policies of India as we do in each country we operate in,” an Amazon India spokesperson said in an email. “We are very excited with the growth that we are witnessing in India and we are here for the long term.” As ET reported on April 4, Amazon had wanted the Internet and Mobile Association of India (IAMAI) to request the government to allow a six-month delay on the foreign direct investment (FDI) policy on marketplaces. But fellow members and rivals Flipkart and Snapdeal didn’t support the cause, which meant the joint letter never got sent, said two people aware of the development. ET had seen a draft version of the letter. Also see ETRetail slideshow: 17 charts that show just how vast Amazon’s $275 billion business really is “On behalf of the industry, we would like to state that the ecommerce companies already operating under this model would require some time to examine the provisions in greater detail and assess the impact, if any, on their business,” the draft note had read. “This might include making necessary adjustments and changes in existing operational practices to comply in letter and spirit with the conditionalities explicitly detailed in the Press Note.” Couldtail is a joint venture between Amazon Asia and Infosys founder NR Narayana Murthy’s personal investment vehicle Catamaran through holding company Prione Business Services. Amazon India may be running against time to bring its share of sales down to the stipulated threshold in the next three months before the company’s next expected regulatory filing to the US Security and Exchange Commission at the end of June, said one of the persons cited above. In the last one year or so, Amazon has invested around Rs4,800 crore in the flagship Amazon Seller Services as it looks to capitalise on the boom in the country’s ecommerce, which is expected to surge to $60-70 billion by 2019 from about $17 billion in 2014, having missed out on the opportunity in China. In this regard, it should be noted that Chinese ecommerce giant Alibaba plans to enter the Indian market on its own this year, having already invested in Snapdeal and Paytm, a mobile wallet company that also has an ecommerce business. In its email to ET, Amazon said it is “excited” about the success it has had since entering India three years ago with more than 3.5 crore products sold on its platform. “Today, over 80,000 sellers in India are able to offer millions of products across the country through Amazon.in. We are enthused by the opportunity to serve our customer and sellers on amazon. in,” the email said. Last week, India defined the marketplace model. Apart from the 25% ceiling on a single vendor, foreign-funded marketplace operators are also barred from offering any discounts directly themselves and can’t influence prices on their platforms.
New international flights sought from city
Lok Sabha Member from Visakhapatnam Kambhampati Haribabu has written to Union Minister of Civil Aviation Pusapati Ashok Gajapathi Raju seeking new international sectors from Vizag. On a representation received from K.V. Mohan of the Tours and Travels Association of Andhra, the MP sent the proposals for dedicated Air India flight on the Vijayawada-Vizag-Bangkok, Bangkok-Vizag-Vijayawada-Dubai and vice versa daily and on the Colombo-Vizag-Colombo sector thrice a week. The association sought the new flights based on the load factor for the last two years.
Aviation regulator seeks explanation from airlines on high cancellation fees
Taking a serious note of domestic airlines increasing ticket cancellation fees by a significant amount, aviation regulator DGCA has sought an “explanation” from these carriers on the rationale for such a steep hike. Last week, budget carrier IndiGo had done away with the slab system for charging ticket cancellation fee and made it uniform at Rs 2,250. National carrier Air India too had in February effected a massive hike of Rs 500 for cancelling its flight tickets, which now stands at Rs 2,000 per ticket. “The DGCA has written to all the airlines across board, asking them to explain the reason for increasing ticket cancellation fee, which in some cases now is almost equivalent to the airfares charged for a short haul journey,” a source said. The airlines have been given time till Friday to respond, according to the source. Fee for tickets cancelled up to two hours before the scheduled departure of the flight will be Rs 2,250, IndiGo had informed its passengers, saying that the hike was effective from April 1. A passenger will not get any refund for the bookings cancelled 0-2 hours before scheduled departure, it had said. IndiGo had last time revised these charges in February, under which it was charging Rs 1,900 for tickets cancelled more than seven days before scheduled departure and Rs 2,250 for tickets cancelled two hours to seven days before scheduled departure of the flight.
Many parties jealous about Air India’s success: Aviation Secy
Air India’s performance has improved in recent times and “many parties are jealous about its success”, Civil Aviation Secretary R N Choubey today said and asserted that there is no stake sale plan for the carrier. His assertion comes amid reports suggesting that the government might be looking to offload stake in Air India, which is in the red. “There is not any divestment plan for Air India. False rumours are being spread by those who are jealous. Many parties are jealous about Air India’s success,” Choubey said. Speaking at the pre-launch function for Air India’s non-stop Delhi-Vienna flight, Choubey noted that the carrier has improved “its performance in recent times”. The Delhi-Vienna flight launch will be on April 6. It will fly three times a week. Air India is expected to cut its losses by 40 per cent to Rs 3,529.80 crore in the last financial year, which ended on March 31. In 2014-15, the airline had a net loss of Rs 5,859.91 crore.
NOC to hire 50 more gas tankers to boost imports
Nepal Oil Corporation (NOC) has decided to hire another 50 tankers from two Indian companies to transport liquefied petroleum gas (LPG) in a bid to boost imports. Mukunda Ghimire, spokesperson for NOC, said that the board had okayed the temporary measure. He added that two Delhi-based transport companies would be supplying the bullet tankers for this month. NOC has arranged to hire 35 tankers from Ram Batra’s company and 15 from Satish Sharma’s company. Petrol and diesel supplies have improved after the end of the embargo, but cooking gas shortages persist in the market. Ghimire said that NOC moved to hire the extra tankers after its sole supplier Indian Oil Corporation (IOC) agreed to increase LPG supplies to Nepal. NOC had recently requested the Indian government through the Nepal Embassy in New Delhi to increase the monthly consignment of LPG to 40,000 tons from 23,000 tons. “After receiving the Indian government’s assurance, we acted to hire additional bullet tankers,” said Ghimire. According to NOC, 523 bullet tankers belonging to seven Indian shipping companies have been transporting LPG from IOC’s depots in Barauni, Haldia and Mathura to Nepal. Ghimire said that more than 10 percent of these tankers were out of service. It takes around 10 days for a bullet tanker to transport LPG from the depot in India to Nepal. “The length of the route is also one of the factors behind the short supply of LPG in Nepal whenever there is a crisis.” Meanwhile, NOC has also permitted Nepali companies to operate LPG bullet tankers, breaking the monopoly of Indian companies. “However, due to the slow progress of the plan, we have decided to hire Indian companies to supply tankers as a temporary measure,” said Ghimire. Last month, the state-owned oil monopoly had given the go-ahead to Nepali LPG bottlers to acquire 450 bullet tankers. “However, they have been saying that it will take at least eight to nine months to get them,” Ghimire said. There are 55 LPG bottling plants in the country, and there are more than 5 million gas cylinders in circulation.
Oil prices extend losses on looming gasoline glut
Oil prices dropped for a third session in a row on Tuesday, as weakening demand for gasoline and persistent doubts on whether crude producers will be able to reach an agreement to rein in a worldwide supply glut dragged on the market. Growth in gasoline use has been one of the strongest pillars supporting demand across the fuel complex in both North America and Asia and has been largely credited for providing a floor under crude prices that have slumped as much as 70 percent since mid-2014 due surplus supply. The decline on Tuesday follows data showing U.S. gasoline demand during January fell for the first time in 14 months, while overall U.S. oil demand fell 1 percent that month from a year ago. Front month U.S. West Texas Intermediate ( WTI) crude was trading at $35.51 per barrel at 0652 GMT, down 19 cents from their last settlement. International Brent futures were down. “Crude prices and timespreads have weakened in recent days in line with softer fundamentals,” consultancy Energy Aspects said. “Although Q2 is always a slow period for crude demand amidst peak refinery works, it seems like Asia may have somewhat overdone the crude buying and is therefore pausing for breath.” In Asia, traders have stored excess gasoline on tankers as onshore storage facilities in Singapore and Malaysia are filled to the rims.
China firm wins Myanmar approval for $3 bln refinery
Chinese state-controlled commodity trader Guangdong Zhenrong Energy Co has won approval from the Myanmar government to build a long-planned $3 billion refinery in the Southeast Asian nation in partnership with local parties including the energy ministry, company executives said on Tuesday. The project, which also includes an oil terminal, storage and distribution facilities, would be one of the largest foreign investments in decades in Myanmar. Myanmar currently imports most of its fuel. The Myanmar Investment Committee granted the Chinese firm approval to build a 100,000 barrels-per-day (bpd) refinery in the southeast coastal city of Dawei, Li Hui, a vice president of Guangdong Zhenrong and head of the company’s refining business, told Reuters. The Chinese firm will hold 70 percent of the project, and the remaining 30 percent shared by three Myanmar firms – military-linked Myanmar Economic Holdings Limited, Myanmar Petrochemical Corp, an entity affiliated with the country’s energy ministry and Yangon Engineering Group, controlled by privately-run HTOO Group of Companies, Li said. As the approval came before the government led by Aung San Suu Kyi’s National League for Democracy was sworn in, Li said his firm was ready to work with the new Myanmar authorities to ensure the project gets off the ground. “We are confident (about the project) as it has taken into considerations interests from all parties and the refinery will benefit the local people as well as the economic development of the country,” said Li.
RBI exploring modalities of oil payments to Iran: Raghuram Rajan
The Reserve Bank of India is holding discussions with Tehran on modalities of payment of reported dues of $6.5 billion for oil imports, Governor Raghuram Rajan today said. “We are discussing with them (Iran) the way they want to be paid and certainly, we will work with them on when and how we pay them. I don’t think it will happen as a lumpsum. It is going to be staggered,” Rajan said during the customary post-policy call with analysts. He, however, did not disclose the quantum of payments to be made to the Middle East country, which is getting ready for a life post sanctions. Indicating that the commitments will be honoured, Rajan said meeting the payment should not be a concern as the country has over $350 billion in its forex kitty at present. In August 2015, a central government official had said RBI will be assisting Indian refiners to clear over $6.5 billion of past dues they owe to Iran for crude oil purchases.. The central bank, which previously facilitated payment of oil import bill to Iran, had agreed to help in creating the payment channels to clear the past dues. The then finance secretary Rajiv Mehrishi had led a four member delegation to Tehran in July 2015 to discuss modalities of clearing the dues. After the US and western powers in 2011 blocked payment channels in a bid to bring Iran to the negotiating table over its controversial nuclear programme, RBI had facilitated oil payments to Iran via Turkey. Iran and six world powers last year sealed an accord to curb the Islamic Republic’s nuclear programme in return for ending sanctions. The lifting of sanctions is expected to open up banking channels for Tehran. India is keen that repayment of dues since February 2013 should be done in a staggered manner so as to avoid a run on the rupee.