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RCEP pointless without India, says Thai envoy; negotiations may extend to next year
A Regional Comprehensive Economic Partnership (RCEP) would be pointless without India, said Thailand’s Ambassador to India Chutintorn Gongsakdi. His comments assume significance in the context of the 27th round of negotiations on RCEP in Beijing.

“I don’t want India to feel it is the payoff for everyone, it has to be positive for India as well. If you gain nothing, walk away. When we negotiate FTAs, trade negotiators are taught to think ahead, think of the country’s future and all members of RCEP see India in our future. India is on the rise and it will be the driver of the global economy like China and the US," the envoy told CNBC TV18.

Negotiations on RCEP began in 2012 and some countries like China see India as a roadblock to the conclusion of talks.

A recent article in the South China Morning Post said, “India is widely viewed as the biggest roadblock to concluding RCEP, the first negotiations for which were held in May 2013 in Brunei. Delhi has allegedly opposed opening its domestic markets to tariff-free goods and services, particularly from China, and has also had issues with the rules of origin chapter of RCEP. China is understood to be 'egging on' other members to move forward without India”.

China’s Assistant Commerce Minister has said Beijing would work with all sides to push for completion of negotiations this year.

However, the Thai envoy said that RCEP negotiations would extend to next year.

Gongsakdi said, “What I have heard is that we can announce the conclusion of negotiations on the text of RCEP, and the other half which is the bread and butter, the schedule of commitments or the market access part that can continue next year. If we are able to announce conclusion of the text, that will send out a positive message”.

He also said envoys of Thailand, Indonesia and ASEAN Secretary General recently had a positive meeting with Commerce Minister Piyush Goyal which helped them understand India’s economic predicament. While there was disappointment that Goyal would not be attending the RCEP meeting, there were still more rounds of talks to go, he added.

Indian industry is against concluding the RCEP in its present form as there is a growing worry that it would only lead to more Chinese goods entering the market. At the same time India wants favorable services trade which allows free movement of trained professionals.

The envoy mentioned that other country also had concerns over market access. “One of the things that came up was rules of origin, so even if goods are not coming from China, they could come from China and then be re-exported through other countries as people try to circumvent US restrictions. So we will have to look at rules of origin. India has also raised issues about services and movement of natural persons and how countries use domestic regulations to circumvent market access that they have pledged. These are not just problems for India”, he said.

Gongsakdi said all ASEAN nations were concerned about the US-China trade war, Japan-South Korea tensions and the US sanctions.

“The message coming out of the ASEAN meetings would be that sense should prevail and we should re-invest our time and efforts in the multilateral trading system where everyone is equal under the international trade rules and keep markets open,” he added.

A Regional Comprehensive Economic Partnership (RCEP) would be pointless without India, said Thailand’s Ambassador to India Chutintorn Gongsakdi. His comments assume significance in the context of the 27th round of negotiations on RCEP in Beijing.

“I don’t want India to feel it is the payoff for everyone, it has to be positive for India as well. If you gain nothing, walk away. When we negotiate FTAs, trade negotiators are taught to think ahead, think of the country’s future and all members of RCEP see India in our future. India is on the rise and it will be the driver of the global economy like China and the US," the envoy told CNBC TV18.

Negotiations on RCEP began in 2012 and some countries like China see India as a roadblock to the conclusion of talks.

A recent article in the South China Morning Post said, “India is widely viewed as the biggest roadblock to concluding RCEP, the first negotiations for which were held in May 2013 in Brunei. Delhi has allegedly opposed opening its domestic markets to tariff-free goods and services, particularly from China, and has also had issues with the rules of origin chapter of RCEP. China is understood to be 'egging on' other members to move forward without India”.

China’s Assistant Commerce Minister has said Beijing would work with all sides to push for completion of negotiations this year.

However, the Thai envoy said that RCEP negotiations would extend to next year.

Gongsakdi said, “What I have heard is that we can announce the conclusion of negotiations on the text of RCEP, and the other half which is the bread and butter, the schedule of commitments or the market access part that can continue next year. If we are able to announce conclusion of the text, that will send out a positive message”.

He also said envoys of Thailand, Indonesia and ASEAN Secretary General recently had a positive meeting with Commerce Minister Piyush Goyal which helped them understand India’s economic predicament. While there was disappointment that Goyal would not be attending the RCEP meeting, there were still more rounds of talks to go, he added.

Indian industry is against concluding the RCEP in its present form as there is a growing worry that it would only lead to more Chinese goods entering the market. At the same time India wants favorable services trade which allows free movement of trained professionals.

The envoy mentioned that other country also had concerns over market access. “One of the things that came up was rules of origin, so even if goods are not coming from China, they could come from China and then be re-exported through other countries as people try to circumvent US restrictions. So we will have to look at rules of origin. India has also raised issues about services and movement of natural persons and how countries use domestic regulations to circumvent market access that they have pledged. These are not just problems for India”, he said.

Gongsakdi said all ASEAN nations were concerned about the US-China trade war, Japan-South Korea tensions and the US sanctions.
“The message coming out of the ASEAN meetings would be that sense should prevail and we should re-invest our time and efforts in the multilateral trading system where everyone is equal under the international trade rules and keep markets open,” he added.
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Singapore calls India a stabilizing factor, seeks its inclusion in RCEP
Singapore is supportive of India being part of the Regional Comprehensive Economic Partnership (RCEP) as it views Asia’s third largest economy as a stabilizing factor, K. Shanmugam, Singapore’s minister for law and home affairs, said at an event in New Delhi late on Saturday.

Shanmugam’s comment during a lecture on “Developments with Strategic Implications—Views from Southeast Asia" comes ahead of a key round of talks on the finalization of the mega trade deal this month in Bangkok. The countries working towards finalizing RCEP comprise a quarter of global gross domestic product, 30% of global trade, 26% of foreign direct investment flows, and 45% of the world’s population.

The Bangkok meet this month hopes to narrow differences in the deal that has been in the making since 2012.

India’s commerce minister Piyush Goyal did not attend a ministerial meet in China last month against the backdrop of Indian concerns of cheaper imports from China overwhelming India’s manufacturing sector, if India joins the grouping. India’s trade deficit with China in 2018 was more than $60 billion.

Representatives of iron and steel, dairy, textiles, marine products, electronics, chemicals, pharmaceuticals and plastic industries have been the most vocal against the trade deal.

Shanmugham clarified that some others in the proposed grouping that intends to bring together the 10 Association of Southeast Asian Nations (Asean) and their six free trade agreement (FTA) partners: China, India, Australia, New Zealand, South Korea and Japan do not hold the same view as Singapore. However, with the centre of economic gravity likely to shift to the Asia-Pacific region, India not being part of RCEP could leave the country at a disadvantage, he said.

“I think, so far, the view points across Asean...there are countries that would prefer India to be in and there are countries that would actually prefer India not to be in," Shanmugham said but did not name the countries opposed to India joining the proposed grouping.

“When they don’t want India to be in, that’s (for) a mix of economic and other reasons. We have thought that it’s much better to have everyone in but that is not necessarily because we are hoping to exploit the huge Indian market. We are very small so our ability to exploit these things is not that significant," he said.

“We look at it strategically, at how things can be stabilized and India’s presence is always a stabilizing factor and it is useful to have everyone in and everyone has a stake," he said.

“It is not a universally held view that India has to be brought in," Shanmugham said.

On India’s worries on the trade deficit front if it joins the RCEP, Shanmugam said: “Imagine a situation where this huge market I talked about—Asean at $2.8 trillion dollars growing at about 5%, some are growing even faster, China at $14 trillion growing on at 5-6%, Japan at $ 4 trillion dollars, South Korea—all in a free trade agreement and you are not in it. What do you think your position will be? It’s very stark. Unless you think that in this interconnected world you can do it all by yourself, because then you will be at a disadvantage, when you are dealing with the centre of gravity of the next 50 years. The centre of economic gravity is going to be the Pacific, the west coast of the US, China, Japan, South Korea, Asean."

“India is either part of it or not part of it. To me it looks important that countries are plugged in to the Pacific growth story but India may well have worked it out that if it can’t get the terms it wants, it is better off out or it has other options and India does have other options," the Singapore minister said. There “are strong possibilities for India and Asean to embark on greater cooperation."
Singapore calls India a stabilizing factor, seeks its inclusion in RCEP
 
Fintech deals in Indian startups surpass China despite a lending slowdown
Mumbai: The number of fintech deals in Indian start-ups surpassed those in China for the previous quarter, despite a slowdown in lending in India, according to a report. India saw 23 fintech deals during the second quarter of 2019, compared to 15 investments in China during the same period, according to The Global Fintech report from CB Insights, a global intelligence platform.

However, China had marginally higher investments at $375 million during the period, compared to the $350 million in India. China also saw deals drop to a new 5-quarter low of 15 deals, down 81% from Q2 of 2018.

Some large Indian fintech deals during the period include payments firm RazorPay, which raised $75 million in June led by Sequoia and Ribbit Capital, and digital insurance startup Acko, which raised $65 million from investors such as Flipkart co-founder Binny Bansal, SAIF Partners and others.

During the period, the US saw funding top a new quarterly high of $5.1 billion in Q2 of 2019. However, deals slipped to 143, the lowest point since Q4 of 2016. In Europe, the United Kingdom (UK) continued to lead as the top fintech market in Europe in 2019. Funding set a new quarterly record of $892 million, but deals dropped to 33 from 42 earlier.

The areas that fintech covers globally includes payments, insurance, lending, personal finance, wealth management, and blockchain/ cryptocurrency.

Over the next few quarters, fintech dealmaking is expected to continue at a strong pace in India, with at least 3-4 large deals underway, including at Cred, Lendingkart and Policybazaar.

However, broader deal-making has been relatively flat this year. Mint reported on July 22 that venture capital funding in start-ups globally decreased 2% compared to the previous quarter, with Asia slowing even as the US continues to see large-scale deal-making, according to a report from CB Insights along with consultancy firm PwC.

The slowdown in Asia also seems to be driven by a slowdown in China, where funding has slowed down after a record-breaking decade of funds raised, investments and valuations.

Bloomberg reported on 8 January that Chinese technology start-ups saw the slowest quarter in nearly three years, with 713 VC deals in the three months ended December, down 25% from a year earlier, citing data from market research firm Preqin. The amount invested in the quarter shrank 12% to $18.3 billion.

Further, TechCrunch reported last month that China’s deal-making activity for startups in the six months ended June halved from a year ago, as the amount invested in domestic start-ups during the first half of 2019 plummeted 54% to $23.2 billion.
Fintech deals in Indian startups surpass China despite a lending slowdown
 
Fairfax to invest $5 billion more in India in next 5 years

The Fairfax boss thinks India offers an "unusual opportunity". He has also shrugged off slowdown worries.

By Mohit Bhalla, ET Bureau | Updated: Sep 02, 2019, 09.11 AM IST
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Prem Watsa, Photo courtesy : BCCL

India contributes nearly 3% of the world’s GDP but has only a 1% share of global investment money. If this figure were to just double to 2%, that would mean nearly $3 trillion of investments flowing into India, says Prem Watsa.

NEW DELHI: Billionaire investor Prem Watsa proposes to invest another $5 billion in India in the next five years, doubling what he’s put in thus far, and says the country offers an “unusual opportunity,” while shrugging off slowdown worries.

Hyderabad-born Watsa, often described as Canada’s Warren Buffett, said his company has invested $5 billion in the country in the past five years. He was in India for less than a day to meet Prime Minister Narendra Modi.

“I think this is the number one country in the world,” the chairman of the $70-billion Toronto-headquartered Fairfax Financial Holdings told ET in an interview on Thursday. “India contributes nearly 3% of the world’s GDP but has only a 1% share of global investment money. If this figure were to just double to 2%, that would mean nearly $3 trillion of investments flowing into India.”

Watsa said Fairfax was open to participating in the Indian government’s asset-monetisation and divestment plans. “The government has said they want investment in oil and gas. Canada is a big oil and gas producer,” said the Indian Institute of Technology, Madras, alumnus. “So we will look at all of that. If it’s oil and gas, we need someone who has expertise in Canada to come and be partners with. One of the things we want to do is bring good Canadian and American companies and tell them that this is where you should come.”

Watsa said his company would “check” the government’s disinvestment plan for national carrier Air India though he cautioned that Fairfax did not have expertise in the sector. “We have small interest, not significant. We will check it out. We check everything out,” Watsa told ET.

‘India Offers Unusual Opportunity’

The India-born Canadian billionaire was generous in his praise for PM Modi. “This country is so lucky to have a business-friendly man like Modi who is so focused on what’s good for the country,” Watsa said. “Mr Modi has an outstanding 13-year record in Gujarat and a five-year record as Prime Minister. This exceptional experience is highly unusual for a world leader.”

Downplaying worries about slowing growth, Watsa painted a rosy picture of the future of the country, describing its 1.2 billion population as a source of economic prosperity and progress.

“India offers an unusual opportunity,” Watsa said. “I travel all over the place. You know China and the US have some trade questions. Where do people want to put their money if not India? They want to put money in a large market, democracy, in a place that has rule of law.”

A few minor tweaks in government policy and some measures to open up the economy will bring the global investor community to India’s doorstep, he said “I see economic growth coming back to 10%. I cannot say when, but I see it happening,” he said.

Fairfax employs 350,000 people in its companies in India and has investments in sectors such as travel, transportation, warehousing, banking and financial services.

It owns controlling stakes in Bengaluru International Airport, Thomas Cook India, Catholic Syrian Bank (CSB), Quess Corp, National Collateral Management Services, Saurashtra Freight and Privi Organics. It’s the largest shareholder of Nirmal Jain-promoted India Infoline group (IIFL). Fairfax also owns a 43% stake in the Chennai-based Sanmar Chemicals group and has a stake in vessel operator Seven Islands Shipping.

The company will route its investments in India through Canada-listed Fairfax India Holdings and examine investment opportunities through Thomas Cook India, the travel company it acquired in 2013 and having operations in 29 countries.

Watsa said he was bullish on the lending business, despite liquidity constraints in the nonbanking finance firms sector. “Banking is a good business to be in,” he said. “You have to be careful that you don’t lend without discipline.”

With regard to the holding in CSB, “We have been given 15 years to reduce our stake to 15% (from 51%),” Watsa said. This is the timeline the Reserve Bank of India has given Fairfax to pare its stake in the Kerala-based CSB as per the rules.

Fairfax to invest $5 billion more in India in next 5 years
 
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I see money coming into India left, right and centre: Prem Watsa

The government cannot create jobs, businesses create jobs, says Watsa.

By Mohit Bhalla, ET Bureau | Updated: Sep 02, 2019, 09.02 AM IST
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Canadian billionaire Prem Watsa is bullish on India despite the slowdown. His Fairfax Financial Holdings, which has assets of $70 billion, has already deployed $5 billion in India. Watsa told Mohit Bhalla that he plans to invest another $5 billion in the next five years. Edited excerpts:

What do you make of the slowdown that we are facing in India?

Firstly, this country is very lucky to have a business-friendly man like Mr Modi who is so focused on what’s good for the country. Mr Modi has an outstanding 13-year record in Gujarat and a five-year record as Prime Minister. This exceptional experience is highly unusual for a world leader. For example, when he became chief minister of Gujarat, only 4 per cent of the population had tap water. When he left 13 years later, 96 per cent of the population in cities had tap water and more than 80 per cent in rural areas. He will replicate this across India through the Jal Jeevan Mission in the next five years. I think India offers an unusual opportunity. I travel all over the place. You know China and the US have some trade questions. Where do people want to put their money if not India? They want to put money in a large market, democracy, in a place that has rule of law. So, he (Modi) understands the economy slowing down. He is going to come out with things that work out well over time.

What specifically can the government do to provide an impetus to the economy?

The government cannot create jobs. I’ve seen it in North America. Businesses create jobs. Government can only provide the infrastructure. You know in India historically we had a caste system right. What we never had in India was economic freedom. But now with the startup nation, that’s flying. It doesn’t make a difference what your background is. When you look at the 1.2 billion people in India, that’s where it’s going to come from. I see economic growth coming back to 10 per cent. I cannot say when, but I see it happening.

Are we still attractive in the minds of foreign investors?
I think money is going to come here as it should. India’s contribution to world GDP is about 3 per cent whereas it accounts for only 1 per cent of foreign investment money. If you assume that it goes from 1 per cent to just 2 per cent what’s the impact? It’s 3 trillion dollars. So, that’s the potential. I see money coming into India left, right and centre.

What are Fairfax’s plans for India?

I have benefited from India. I got a phenomenal education here studying at the IIT (Indian Institute of Technology). My focus is on putting everything back into India. We’ve got $5 billion in India. We employ 350,000 people across companies. In the next five years, I am going to put another $5 billion in India. I think it is the number one country in the world. Few changes in economic policy, few business-friendly policies and the world will be at the doorstep of India.

Any particular sectors where you want to deploy the next $5 billion that you plan to invest here?

We don’t look at sectors. We look at good companies with good people running it. Like Bengaluru airport. We reposed our faith in the management of Hari Marar. Similarly, for Thomas Cook, we’ve got Madhavan Menon who heads it. He is honest and hardworking and a person we can trust. Look at how they have grown since we acquired it. They are now (as Thomas Cook India) in 29 countries and five continents. But the excitement is in the potential also for tourists coming into India. The number of inbound tourists to India today is about 10 million. A small island like Majorca gets 28 million! China gets 60 million inbound tourists… The potential given India’s scale and history is enormous.

Since you have invested in airports, are you also considering other opportunities that could arise from the disinvestment projects?

Yes, we will certainly look at that. The government has said they will be looking at divestment. They said they want investment in oil and gas and Canada is a big oil and gas producer. So, we will look at all of that. If it’s oil and gas, we need someone who has expertise in Canada to come and be partners with. One of the things we want to do is bring good Canadian and American companies and tell them that this is where you should come. So, we come in partnership with them or help them get an Indian partner who is above board. At Fairfax, we attract a certain kind of partner. The ones that do not have established businesses or track records or where the promoter wants to exit, do not come to us. The ones that have an established and proven track record, where the promoter wants to stay and build the business, come to us. We are good, long-term partners for these. We stay invested. Look at Thomas Cook. I’ve said it before – we will always control Thomas Cook India.

Thomas Cook has faced some financial troubles globally. How is that affecting the India business because you carry the same brand?

So, the company is financially very strong – no net debt. Thomas Cook in the UK has some financial difficulties. And some investors are rescuing it. There’s a little noise here and there about it. But you look at the balance sheet of Thomas Cook India and you say, my god, this company is so strong! The brand in India needs to change in the next four-five years as per our original agreement when the business was acquired from Thomas Cook UK. The team at Thomas Cook India have a clear road map for this transition starting as early as next year.

What about your holding in Catholic Syrian Bank (renamed CSB)? What is the timeline within which you will need to pare your stake?

We have a roadmap laid out by the Reserve Bank of India. The first step was to take the company public. We have 15 years in which to reduce our stake to 15 per cent (from the existing 51 per cent). CSB is now expanding outside of Kerala. Banking is a good business to be in. You have to be careful that you don’t lend without discipline.

You also have an investment in IIFL. Are they applying for a bank license as well?

Yes we own 35 per cent of IIFL. No, I am not aware of any plan to apply for a bank license there. They are splitting into three businesses. One is wealth management, one is NBFC (non-banking finance company) and then there is an investment business.

What do you make of the liquidity crisis in the NBFC sector right now?

They have made some adjustments. The government will continue to make some adjustments. The biggest liquidity crisis was in 2008, right? Big companies like Merrill Lynch had to be sold. GE at that time couldn’t issue a commercial paper (CP). The government had to come out and guarantee money market instruments. There’s a lot of things that governments can do. And this government, which is business friendly, will do that. They will figure it out. I don’t think it will last for very long. It will pass.

Everybody asks about Warren Buffet’s successor. Who will Prem Watsa’s successor be?

Fairfax is being built for the next 100 years. Long after I am gone, the company will continue and grow. I have to have control. So, I tell my public shareholders that I’m not going to sell. So, you have a major negative there. Someone comes and wants to pay 100 per cent higher price, I’m not going to take it. But we are going to build it (the company). We have a clear plan in place. My company, my board, my family know who is to come in if something happens to me. We like people from the inside. If you get people from the outside, the culture changes just like that. We have to be careful about our culture.

I see money coming into India left, right and centre: Prem Watsa
 
ONGC Videsh, Partners Likely To Sign Deal To Acquire 49% Stake In Russia’s Vankor Oilfields

PTI @PTI_News Bookmark September 01 2019, 9:27 PM
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An oilfield in Russia. (Photographer: Andrey Rudakov/Bloomberg)

A preliminary pact for a consortium of Indian companies led by ONGC Videsh Ltd. for acquiring about 49 percent stake in Russia’s Vankor cluster oilfields may be signed during the India-Russia Summit between Prime Minister Narendra Modi with Russian President Vladimir Putin this week.

Oil Minister Dharmendra Pradhan was in Moscow last week in preparation for the prime minister's visit.

Modi will be the chief guest at this year’s Eastern Economic Forum in Vladivostok between Sept. 4 and 6 and would also meet the Russian President Vladimir Putin.

A host of agreements is expected to be signed during the visit and one of them could be on cooperation in oil and gas, sources with direct knowledge of the matter said.

This cooperation agreement may include Indian state-owned firms picking up 49 percent stake in Vankor cluster oilfields, they said.

Indian firms have been in dialogue with Russia since 2017 for a possible stake in the oilfields that will consolidate their presence in the energy-rich Arctic region.

Midway through the negotiations, Rosneft had offered to club five more fields in the same region to the three that were already on the table, the sources said.

ONGC Videsh Ltd., the overseas arm of state-owned Oil and Natural Gas Corporation Ltd., may hold 26 percent stake in Suzunskoye, Tagulskoye and Lodochnoye fields—collectively known as Vankor cluster, while Indian Oil Corporation Ltd., Oil India Ltd., and Bharat PetroResources Ltd., a unit of Bharat Petroleum Corporation Ltd., would split the rest 23 percent, they said.

Rosneft OAO, Russia’s national oil company that owns the fields, wants to retain a majority stake and is keen to sell only up to 49.9 percent stake.

India is keen on sourcing one million barrels per day of oil and oil-equivalent gas from Russia and had identified Sakhalin-3 in the Far East, Vankor in East Siberia, and Terbs and Titov oilfields in Timan Pechora region as fields for potential collaboration. But for Vankor, it has so far not been successful in its attempts.

ONGC Videsh already has 20 percent stake in Sakhalin-1 oil and gas field in Far East Russia, and in 2009 acquired Imperial Energy, which has fields in Siberia, for $2.1 billion.

Russia is wooing Indian investments in its Far East region ahead of Modi's Vladivostok visit to balance China's expanding presence in the resource-rich region.

OVL's stake in Vankor cluster will be in proportion to 26 percent stake in had bought in the main Vankor oilfield. OIL-IOC-BPRL have 23.9 percent in the main Vankor field. Vankorneft, a subsidiary of Rosneft, is developing the Vankor oil and gas condensate field, situated in the northern part of Eastern Siberia.

In 2013, Vankorneft was chosen as an operator on development of new fields of Vankor cluster—Suzunskoye, Tagulskoye and Lodochnoye fields, located close to the Vankor field. The reserves of Suzunskoye field exceed 56 million tonne of oil and condensate, and 35 billion cubic metres of gas.

In 2016, ONGC Videsh first acquired 15 percent stake in Russia's second-biggest oilfield of Vankor for $1.268 billion and then bought another 11 per cent for $930 million. The 26 per cent stake would give OVL 7.31 million tonne of oil.

The consortium of OIL-IOC-BPRL acquired 23.9 percent stake in the field at a cost of $2.02 billion, giving them 6.56 million tonne of oil.

Rosneft continues to hold the remaining 50.1 percent shares of JSC Vankorneft. The field has recoverable reserves of 2.5 billion barrels.

Besides, the OIL-IOC-BPRL consortium has taken another 29.9 percent stake in a separate Taas-Yuryakh oilfield in East Siberia for $1.12 billion. The investments had taken the total outlay in Russia in that year to $5.46 billion.

These investments will give India 15.18 million tonne of oil equivalent. The investment made compares to $28.48 billion investment by Indian oil and gas companies overseas in the past 50 years, giving it about 10 million tonne of oil equivalent.

While Vankor produces about 442,000 barrels of oil per day (4 percent of Russian crude oil production), Taas currently produces about 21,000 barrels per day of oil.

ONGC Videsh, Partners Likely To Sign Deal To Acquire 49% Stake In Russia’s Vankor Oilfields
 
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