Jeff's Feed
Apr 4, 2012

Tata’s new guard can break open old markets

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)

By Jeff Glekin

MUMBAI, April 4 (Reuters Breakingviews) – Cyrus Mistry’s
first major appointment at Tata is a young charismatic head of
business development. Madhu Kannan will leave his role as the
Bombay Stock Exchange’s chief executive to join India’s largest
corporate house next month. With the younger pair of Mistry and
Kannan leading the charge, Tata may be one of the few groups
with the political and economic clout needed to breathe life
into India’s retail and financial services markets.

Apr 2, 2012

India can’t afford a foreign investment collapse

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – India is one of the few emerging market economies which runs a trade deficit, equivalent to about 9 percent of GDP. That means it is dependent on foreign capital flows. If the latest tax spat goes beyond sulking and investment actually starts to freeze up, India could face a balance of payments crisis.

The coordinated letter from international trade associations – including America’s Business Roundtable and the Confederation of British Industry – was sparked by New Delhi’s decision to retrospectively change the laws on capital gains tax. It is as much a rallying cry to investors as it is a message to the India government.

Mar 30, 2012

New bank plan risks dilution of emerging influence

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – The BRICS are gaining global influence. But there’s a danger of overstretch. A plan to create an institution with aims similar to the World Bank has some appeal, especially given the need to finance development; the desire to promote trade in their own currencies; and as a political show of strength. But an Emerging World Bank may diffuse the effort, capital, and talent dedicated to global economic development. BRICS may also struggle to secure their rightful influence over the world’s established development bank.

Sure, the BRICS may argue that the World Bank is becoming irrelevant. China and Brazil’s own national development banks already lend more. And in spite of incremental reform, the developed world continues to out-gun the BRICS in terms of senior personnel. So there is a case for going it alone. The policy objectives are compelling. The need to finance huge infrastructure development is particularly acute in India. And the desire to promote more local currency denominated trade plays to China’s ambitions.

Mar 29, 2012

BREAKINGVIEWS: India’s tax grab threat could backfire badly

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – Investors fear that New Delhi will use tax law changes that could trap Vodafone to snare offshore institutions. If that’s not what the government intends, it should say so. If it is, the value of nearly all investment assets is endangered. Capital inflows could slow to a trickle.

Vodafone is the largest foreign direct investor in India. It has invested $26 billion since 2007. But that’s small beer compared to the $200 billion foreign investors hold in India’s equity market, according to data from the Securities and Exchange Board of India. Together, they hold 17 percent of the total.

Mar 29, 2012

India’s tax grab threat could backfire badly

By Jeff Glekin

MUMBAI, March 28 (Reuters Breakingviews) – Investors fear
that New Delhi will use tax law changes that could trap Vodafone
to snare offshore institutions. If that’s not what the
government intends, it should say so. If it is, the value of
nearly all investment assets is endangered. Capital inflows
could slow to a trickle.

Full view will be published shortly.

CONTEXT NEWS

- Foreign brokerages are worried about recent provisions,
designed to tax indirect investments and combat tax evasion in
India. They say the provisions are couched in ambiguous language
and could also be used to target overseas market investors.
That, in turn, could risk a sell-off in markets, Reuters
reported on March 28.

Mar 28, 2012

With TCI’s help, Coal India could top the Sensex

By Jeff Glekin

MUMBAI, March 28 (Reuters Breakingviews) – Chris Hohn’s
investment fund is raising the stakes in its tussle with New
Delhi over the pricing of coal. The challenge is to win the
policy argument as well as the legal one. Since reform could
make Coal India the biggest company quoted in Mumbai, the
outcome could be win-win.

Full view will be published shortly.

CONTEXT NEWS

- The Children’s Investment Fund (TCI) has written to the
Indian ministry of finance giving formal notice that it intends
to launch dispute proceedings over the pricing policies followed
by Coal India. Coal India, which is quoted on the
Bombay Stock Exchange and is included in the Sensex equity index
, is 90 percent controlled by the Indian state. TCI owns
just over 1 percent and is the second largest shareholder.

Mar 27, 2012

Bitterness could twist $211 bln coal saga

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – Simmering worries about India’s cheapo selloff of its coal asset could yet explode. The economic consequences may well be worse than those which followed the telecoms mess up. Consumers eventually benefited from the mobile licences scandal. Coal could prove murkier.

If India had auctioned its coalmines rather allocating them on a first-come first-served basis it may have raised an extra $211 billion, according to a leaked draft report from India’s audit office. Where have all the gains from this bargain-basement sell off ended up?

Mar 27, 2012

Bitterness could twist India’s $211 bln coal saga

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)

By Jeff Glekin

MUMBAI, March 27 (Reuters Breakingviews) – Simmering worries
about India’s cheapo sell-off of its coal asset could yet
explode. The economic consequences may well be worse than those
which followed the telecoms mess up. Consumers eventually
benefited from the mobile licences scandal. Coal could prove
murkier.

Mar 22, 2012

Breakingviews: India’s $211 bln coal saga can’t be brushed away

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – The toothpaste is well and truly out of the tube in India’s coal saga. The authors of a leaked official study into the sale of mines are desperately trying to retract the whopping figure of $211 billion in lost revenue. But there is no way this news will go up in smoke.

Mar 19, 2012

Govt’s retrospective tax change just isn’t cricket

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – An historic hundredth century by heroic cricketer, Sachin Tendulkar, overshadowed the finance minister, Pranab Mukherjee’s, less memorable fifth budget. But buried in the budget’s text was an attempt to reverse the Supreme Court’s judgment in the Vodafone (VOD.L: Quote, Profile, Research) tax case. That just isn’t cricket.

As appeared possible at the time of the Vodafone judgement, there was always a chance there could be a sting in the tail. Vodafone had argued that the government had no jurisdiction over a transaction between two foreign companies occurring on foreign soil. Yet while the legal case was straightforward, there is a strong moral counter-argument. The business that changed hands was entirely based in India.

    • About Jeff

      "Jeff Glekin is the India columnist for Breakingviews. Jeff is a former diplomat. He spent four years in Mumbai as the Deputy Head of Mission and First Secretary Financial and Economic at the British Deputy High Commission. Before joining the diplomatic service he spent four years with HM Treasury in London. He has a BA in Philosophy, Politics and Economics from Mansfield College, Oxford University."
    • Follow Jeff