Business Today 1-Jul-2018

WAREHOUSES lack the sex appeal of the slick, consumer-facing showrooms, though, they are probably as important, if not even more, for any consumer products company that wants to win in the marketplace. Strategically placed warehouses allow the company to deliver the product quickly and service the customer better. They are the not-so-visible parts of a company’s supply chain, but they form the crucial link between the factory and the customer. There is a veritable revolution taking place in Indian warehouses now for multiple reasons. First, GST has completely changed the rules of the game for all companies when it comes to choosing the spots where they will set up their warehouses. Earlier, different taxes in different states played a huge role in deciding the placement of warehouses. Today, after GST…

THE PERIOD OF FALLING interest rates that almost started with swearing-in of the NDA government four years ago seems to be coming to an end. During this period, the repo rate, at which banks borrow from the Reserve Bank of India, or RBI, fell from around 8 per cent to 6 per cent. Now, with the RBI raising the rate by 25 basis points, there is a view that India is entering another rate increase cycle. But is it so? There are enough reasons to believe that this is indeed the case. The RBI has projected consumer price index inflation of 4.85-4.9 per cent in the first half and 4.7 per cent in the second half of 2018/19. This is above the RBI’s target of 4 per cent (+ -…

THE GOVERNMENT has given its nod to a new category of vehicles called quadricycles that will finally see homegrown auto major Bajaj Auto’s Qute hit the road in India. At close to three years, the wait for Qute has been quite long and frustrating. Largely considered to be an upgrade from the three-wheelers (India is the largest market for three-wheelers with more than 6,00,000 unit sales in FY2017/18 and Bajaj leading the market), quadricycles faced stiff opposition from carmakers who saw them as competition. With stringent safety and emission norms coming into force for cars – sure to hike the price – many feared that the new category (with its greatly relaxed regulations) could be a threat to the entry-level segment. The Qute and other vehicles of its ilk are…

INDIAN PHARMA is on edge with an expected pharma pricing overhaul, but nothing is known yet on the shape of things to come. Industry sources say pharma manufacturers are already battling single-digit growth rate in India and price erosion in the American market. Post GST, the sector even witnessed negative growth for a month or so. While annual growth stood at 12-15 per cent just three years ago, it is now less than 8 per cent. Understandably worried, industry sources contend that the government’s impending amendments to Drug Price Control Order will prove to be a major setback. In fact, the Secretary-General of the Indian Pharmaceutical Alliance has recently pointed out that over the past five years, the industry’s annual price increase has been between 1 per cent and 5…

AFTER THE EARLY hiccups cups in implementing the Goods and Services Tax (GST), the new indirect tax regime has graduated to new levels of complexi ties – interpretation of the law. Several recent pronouncements by the Authority for Advance Rulings (AAR) in different states have left both taxpayers and expert advisers in a state of confusion. In some cases, rulings have contradicted the circulars issued earlier by the Central Board of Indirect Taxes and Customs; elsewhere, entirely contradictory rulings have emerged from AARs of separate states. The AARs were set up to provide taxpayers clarity on their future tax liabilities to minimise future litigation, but this would be a distant dream given the way some of the rulings have been issued. Meanwhile, the government is reportedly considering setting up a…

FACING HEAT for its failure to cope with increasing crude oil prices, the government finally has some respite in the form of its GST collections for April. The GST collection in the first month of the current financial year at ₹94,000 crore is a healthy jump from the average monthly collection of ₹89,000 crore in the previous fiscal. A windfall collection from GST in the coming months – especially if it can touch the ₹1 lakh crore mark – will give the government some leeway to play around with populist measures like reducing excise duties. Experts suggest that collections could be more consistent now that the government has introduced a slew of anti-evasion measures such as the e-way billing system. On the flip side, collections from GST are still far…