Xiaomi, Vivo and Huawei caught in money laundering and duty evasion reveal how China captured India’s smartphone market

After Xiaomi was caught by the Enforcement Directorate in the massive royalty fraud and money laundering case last month Vivo has been booked for duty evasion and illegally sending Rs 62,000 crores ( $7.8 billion ) to China early last week.  The Enforcement Department also claimed that Huawei repatriated over Rs 750 crores ($100 million ) to China illegally last year even though profits fell. The money laundering by Chinese phone companies in name of manufacturing ‘made in India phones’ has been going on for years.However it picked up pace once the Govt of India introduced the production linked incentive PLI  scheme for made in India phones in 2019. The PLI scheme that gave 6% cash back incentive for incremental production above Rs 4000 crore each year was intended to benefit local production but it ensured explosive growth of Chinese phone makers. Domestic players like Lava and Micromax just faded from competition. In just three years time the Chinese captured 75% of India’s  smartphone market before the Govt of India started investigating what was actually happening and how cheating and money laundering was being done by the Chinese phone makers. The Enforcement Department has now conducted raids on all three Chinese phone makers  Xiaomi, Vivo and Huawei and seized assets worth hundreds of million in five states and frozen bank accounts to stop money laundering. 

    

 

The BBK Electronics group of China that owns Vivo, Oppo, Real Me and One Plus brands was the first to pounce on to the opportunity setting up local entrepreneurs in the 5 phone producing states of Karnataka, Tamilnadu, Andhra, Telangana and U.P. to front as Indian manufacturers of Chinese phones in quick time. In the year 2018-19 it had smartphone sales of Rs 38,735 crores as against Rs 43,088 crores of market leader Samsung India. Massive imports from China in CKD form and quick reassembly in these workshops followed by relabelling as ‘Made In India’ ensured 65% growth of smartphone sales to a phenomenal Rs 65,635 crores in the year 2019-2020.  

       

Because these were not made in India phones the volumes could be ramped up so quickly. By contrast  Samsung India which had taken a decade to establish it self as India’s largest smart phone maker grew 21% that year with sales of Rs 52,315 crores. Xiaomi, the market leader today had sales of Rs 38,196 crores then. But it soon entered the relabelling game and as it’s sales soared they started repatriating thousands of crores back to China as royalty though their phones as per contract were supposed to be made in India.  In April the ED which was investigating Xiaomi for several months seized assets worth Rs 5500 crores ( $750 million ) on charges of money laundering and royalty fraud 

 

Apart from allegations of violation of contract procedures in the PMLA scheme the ED has started investigation against one of the directors of Vivo against forging papers of Chinese officials and distributors in the state of Jammu and Kashmir. The companies directors have fled India. Investigations  are also on against other companies of the BBK Electronic group that include phone makers Oppo and Real Me who have been adopting similar methods to ramp up production in India and claim PLI incentives. Both Income Tax and ED are investigating these Chinese phone makers .

 

The Perennial Problem of Call Drops and Dual Sims - Is Digital India Really Cheap?

Hey Telcos, we need phones to talk, not only to download videos. 

Almost everyone in India has two SIM cards. I have been using Airtel and Vodafone networks for more than a decade and still am plagued with poor connectivity like other fellow citizens. Often at peak hours I find congested networks and the standard response from the phone is ‘ Network Is  Busy’.  At that time you cannot phone a person who is not using the phone and is sitting in the same room as you and having the same network. His phone is not busy but the network is. But you can download a video from that same network easily. Also if you try the other SIM card at that time you will find that the other network is working fine and you can talk. 

                       

The Telecom Regulatory Authority of India (TRAI) has released the data for voice calls on its MyCall Dashboard portal .The results go a long way to reveal why most citizens in India use dual sims. Why despite paying twice to stay connected, Indians face some of the highest rates of call drop globally at 17.43% and are dogged by very poor voice quality. From the TRAI data we also learn  that apart from call drops 21.87% of the calls suffer from poor voice quality. Only 60% of the calls that we make are of satisfactory quality as per the TRAI website on 22nd June 2022. 

Strangely, Vodafone Idea with Best Voice Call Quality, Looses Money 

Call quality  for indoor calls received the poorest rating of 3.2 on a score of 5 while feedback from those calling from outdoor was slightly better at 3.4 on a score of 10. Comparison of voice quality across TSP showed VI score 4.0 , RJio scoring 3.2 , Airtel and BSNL getting 2.9 and 2.8 respectively. This development is however not recent. This has been a constant feature in competitive digital India since a decade.  As per the data reported by Financial Express on 6th January 2021 Vodafone Idea offered the best voice quality with very high ratings even during the December 2020 pandemic days.       

  

On a scale of 1 to 5 Idea registered 4.9 in the indoor / outdoor voice call quality with a a satisfactory  rating of 97.59% in terms of call quality experience. Vodafone also had a average voice quality rating of 4.3. and a consumer satisfaction rating of 87.68%. Yet the VodafoneIdea network has been struggling to retain consumers because it is saddled with debt and cannot afford to spend on marketing. Also it often does not enter locations where it does not have adequate infrastructure to provide good quality service. So in those areas it’s service is not great and you have to use the second network. Besides it has certain data speed issues and it looses out in the profitable area of data and video downloads.Having two networks is not an issue though the cost virtually doubles if it really ensures 100% connectivity on a 24x7 basis. But it does not, and friends and associates often complain that your network is always busy unless they have both your numbers and the time and energy to try out both.  We will in the next week find out why this problem is so persistent and what ails the networks and the efforts TRAI has made to improve services that has been resisted by the Telcos  . TRAI orders have been struck down by the Courts when they imposed penalties for call drop in 2017

Ed Tech startups reorganise, as funds dry up, separating the men from the boys

Physicswalla succeeds as Ed Tech Unicorns Struggle Despite Adequate Funding 

India has 14 lakh schools for 32 crore odd student population. Of this 60% students (190 million ) go to Government run schools and 40% students ( 130 million ) go to  private schools.  Schools were closed for 9 months of the year due to  lockdowns and economic uncertainties during the pandemic. This affected the basic economics of the  school infrastructure across the nation both for Government and private run schools as well as colleges. But it also created an opportunity for online education. Not only startups with liberal VC funding but even established universities like MIT and Harvard jumped in to expand online learning courses   But since India’s  aspirational student community was not ready to give up, the demand for online education grew stronger by the day. Two types of ed tech companies entered the fray. Some were those who were bootstrapping and were operating as non profits or low profits and growing organically till they achieved scale. Then there were others like Byju’s  who latched onto opportunities and secured VC funding from multiple global investors at an early stage to enter the lucrative top end of the market. 

Among the Ed tech companies catering to the bottom of the pyramid is Rocket Learning founded by Azeez Gupta that develops the basic foundational concepts for children upto the age of eight in math, science and languages. They currently work in two languages of Hindi and Marathi in four states of Maharashtra, UP, MP and Haryana with 8000 teachers and 100,000 children. Another successful grass root startup is Physicswalla which was founded by Allahabad based Alakh Pandey and Prateek Maheshwar in 2016 initially as a YouTube channel to assist engineering and medical students in the joint entrance exam. In 2020 it launched its app and website and turned profitable by the next two years with 500  teachers educating 6 million students. In 2022 Physicswalla became India’s 101 unicorn raising $100 million in its maiden funding round and becoming the seventh Ed tech unicorn after Byju’s, Unacademy, Eruditus, Vedantu, UpGrad and Lead School. Pandey plans to go vernacular in 9 Indian languages after this round of maiden fund raising. If he succeeds he will redesign the entire Ed Tech industry so heavily focused on English language students at the the top of the pyramid.

                                                        

               

                                                   

The Annual Status Education Report after the 1st wave of the pandemic done in October 2020 by education NGO Pratham revealed that about 43.5% of Government school children had no access to smartphones. While most students received textbooks, only a third of the students received learning materials through WhatsApp, phone calls, videos and online classes. A similar conclusion was reached by the Azim Premji Foundation which undertook a survey for disadvantaged children in five states of the country. Online education which is still in its early days was only helpful for about 30% (100 million) students across the country as per these surveys. 

The funded Ed tech startups targeting these 100 million students at the top of the pyramid are reportedly in trouble with revenues falling short of expectations. In the past five years they have attracted an amazing $4billion of investors money. But their performance has been below par. Even the leader of the pack, the Bengaluru based Byju with a mammoth valuation of $40 billion and an annual paid subscriber base over 5 million students is under pressure. In the year 2021 Byju’s took the acquisition route and bought the coding tutorial services WhiteHat Jr for $300 million to gain traction. Soon after 800 teachers who were working from home resigned  after they were asked to report to office. So the expensive acquisition that was done by Byju’s, actually  lost the  expert pool of coders they had paid for. Thereafter they acquired the JEE tutorial services Aakash  Educational with 200 centres across India and a student base of 250,000 for $950  million, which was another pretty expensive acquisition. It remains to be seen how Byju uses to asset to scale up its online learning platform business.

Lido Learning founded by the former VP of Byju, Sahil Sheth in 2019 and funded by Alibaba,   Ronnie Screwvala of UpGrad  and Vijay Shankar of PayTM sacked 1200 employees in February 2022, whose salaries have still not been paid. In April and May Unacademy and  Vedantu sacked 600 employees each, as both unicorns began restructuring after indifferent results. VC funding of the Ed-tech industry has not yielded the desired results in India. There are reports of poor customer satisfaction and toxic work culture. Now that funding is drying up, many startups will fold up and few    survive and remodel their business. The consolidations and restructuring has already started and will soon separate the men from the boys. 

ED seizes house of ex MD IFFCO in Rs 685 crore money laundering case in ‘Fertiliser Import Scam’

It is the tip of the iceberg in India’s largest Fertiliser Import Scam. 

The Excise Department has attached another house of ex IFFCO MD Udai Shankar Awasthi in the plush South Delhi Hauz Khas Enclave on 3d June. With this the total attached assets seized including Rs 37 crore in the Swiss Bank goes upto Rs 86 crores.  The laundered amount currently under investigation is Rs 685 crores. As per the ED this was the  illegal payment made as commissions by foreign suppliers of fertilisers to the Dubai based sons of US Awasthi during the 2017-2014 period.

           

But this is the tip of the iceberg in India’s largest Fertiliser Import Scam that syphoned out thousands of crores as fertiliser subsidy each year funded by the  Indian taxpayer from 2007 to 2014. The key beneficiaries of the scam were not IFFCO’s MD US Awasthi or Indian Potash Ltd’s MD PS Gehlot, both under detention and being interrogated by the ED. These two 70 plus gentlemen were the key players who conducted the scam. The chief beneficiaries were the political masters during the UPA II  and the bureaucrats who helped IPL import bypassing state run importers MMTC and STC . The key beneficiaries were the then fertiliser minister the late Ram Vilas Paswan, the then secretary Fertiliser, the Finance Minister P.Chidambaram and the top bosses of the UPA . The probe into the scam that has  now began belatedly will hopefully expand its horizon in the coming months to snare the key beneficiaries. 

                                              

                                         

In October 2020, my book The Inside Story of Indian Banking was published by Rupa highlighting India’s biggest fertiliser import scam that lasted for a decade and amounted to anything between Rs 50,000 crore to Rs 100,000 crore. Use the Read Inside facility available in Amazon ( page 26 onwards) to know the full details of the scam and how it made India which was self sufficient in fertilisers in 2002 the world’s biggest importer in 2007. In July 2021 the ED filed cases against Awasthi, Gehlot and several others and investigations began unravelling the first layer of the multilayer scam. Let me assure you - This is just the beginning ……much more is in store that will be bared in the months to come.  Keep watching.

Reduce Regulatory Risk for Indian Business - Lower Import Duties, But Don’t Tax Steel Exports

    Why Restricting Wheat Exports to Curb Inflation is OK , But Taxing Steel Exports is Not 

The three month old Russia Ukraine war and the US sanctions thereafter  has disrupted global supply lines. It has raised the price of crude oil above the $100 per barrel mark since the last week of February 2022 ,  - the first time since 2014. It has also created uncertainty in the financial markets and spiked shipping rates, food and fertiliser  prices and the commodity markets resulting in high inflation and fear psychosis. 

                           

                                                           T.V. Narendran  CEO Tata Steel 

RBI Governor Das had no way to see it coming and take steps to manage inflation, nor can the Union Govt be blamed for opening wheat exports only to clamp down on it the next day. The GOI has however agreed to undertake selective wheat exports on requests from needy nations that may actually help the Government to reduce its procurement at MSP prices for the PDS scheme and manage its fiscal deficit. 

Whereas controlling wheat and sugar exports to curb domestic food inflation was a positive step, the same cannot be said of the 15% export tax levied on steel  to cool domestic prices. T. V. Narendran, chief executive of Tata Steel India's biggest steelmaker said that such decisions could affect the steel making capacity output in India and long term goals of businesses.  Looking at the fact that Tata Steel has global experience and plans  to double its steel making capacity to 40 million tonnes per annum, the Government should not increase the regulatory risk for domestic businesses. They can very well reduce steel prices for the construction sector by permitting selective imports at lower import duties. Already UAE and Singapore is weaning away Indian tech startups who are facing regulatory challenges from GOI. Other nations could very well ask Tata Steels with an immaculate reputation to invest abroad where the tax regime is stable.

                           

India has lost many businesses and tech startups due to its ad hoc taxation policies in the past. The right way of dealing with rising domestic steel prices is to lower import duties of competing products temporarily. When import duties are lowered or raised the regulatory risk is transferred to the foreign manufacturer. Taxing steel exports is counter productive as the risk is borne by the Indian manufacturer. That harms domestic industrial growth and hurts Make in India. The decision needs to be reversed before permanent damage is done to export competitiveness. 

          

Over 2700 foreign companies have closed operations in India since 2014 confirmed Mr Piyush Goyal in the Parliament last November. Businesses need regulatory stability and India has a very poor record due to which Indian businessmen move abroad. The Golden visa scheme of UAE is one such scheme that has been weaning Indian unicorns promising minimum regulatory interference.  “One of the key things Dubai has been successful in doing over the last 12 months is attracting the attention of the tech community from India. We have seen a huge appetite from that community across different stages- from series A, and all the way to a unicorn status. Founders and talent are considering Dubai as a tech hub. Talented people are sensitive and precarious. Keeping them happy is also part of the solution and not only the money”  says UAE Tourism Director Yousuf Lootah to ET  It is high time that India’s bureaucracy and political bosses also try to keep talented people happy and create conditions for long term growth.  

Sinking Rupee and Rising Current Account Deficits from Expendable Imports

Curb non-essential imports to reduce trade deficit and falling forex reserves.

JUNE  2022 UPDATE 

The  Rupee continued its downward trend. The foreign exchange reserves managed to gain some ground but  non-essential imports continued to rise for May the second month of the current financial year. The trade deficit during the first two months of this fiscal year doubled to $44.69 billion as against a moderate  $21.82 billion during the same period a year ago. 

And the culprit was not oil. 

Oil imports rose by just 2% , as volumes slumped with low demand in May, against volatile oil prices. 

It  was non essential imports that spiralled, as the trade deficit rose to $24.29 billion during May  As resident Indians pulled out money from the stock market that kept plunging and from real estate that is already in shambles,  gold was the only safe haven to invest in. Gold imports jumped ten fold to  $6billion as against May last year which was pretty unusual.  The statisticians failed to read and check the trends. The imports of coal, coke and pet – coke briquettes also jumped fourfold ( cheap fossil fuel substitutes) which is ominous for pollution in the coming months. Other non essential imports rose by 40% during the month.  We had seen this trend even in April -Nov 21 trade balance gap shared in graph below.  

Also the ECB debt that accounts for around 37% of the foreign exchange borrowings  have been rising which could also create problems for the Rupee. As per RBI data ECBs approvals had risen to $38.2 billion from $34.8 billion in FY21, so more Rupee shocks could be round the corner. 

PUBLISHED IN MAY 2022 

The Russia Ukraine war that disrupts food and energy supply chains may destroy the fiscal stability of many nations. For the first time in over a year, India’s  foreign exchange reserves fell below $600 billion.  India needs to clamp down on non-essential imports just because it has to buy oil at high prices. And most of the non-essential imports comes from China and Switzerland ( see graph below) . Also it has to repay short term debts of $256 billion maturing in  the next twelve months.  Though the  situation is not grim it needs to be managed astutely especially because the Rupee has been continuously under pressure as the Federal Reserve tightens its monetary policy to control rising domestic inflation. 

In Ten Years Rupee Plunged By 80% 

Let us not try to look at the Rupees woes during the Russia Ukraine conflict of past two months. Instead let us gauge its journey over a decade . The Rupee started sliding soon after Manmohan Singh took office and moved faster south during the UPA II. In 2012 the UPA decided to enter the debt markets instead of opting for fiscal discipline to curb the rising deficit. You could see an oncoming currency crisis in late 2011. At that time you could exchange Rupees 46 for a US Dollar. I wrote a piece for The Economic Times on what could happen ‘ Don’t Push the Rupee to the Bin’ 

But the Manmohan Singh Govt kept the import floodgates open reducing duty on imported olive oil to luxury cars and Chinese power stations starving local equipment suppliers from BHEL to NGEF to Kirloskar.  By the summer of 2013 the Rupee had crashed past the Rs 60 to a Dollar psychological barrier as the current account deficit financed by external debt soared. Easy money had arrived from China pushing the Trade Deficit north every other month. The RBI data from 2004 showed clearly how the forex debt had jumped three fold during the ten year rule of the UPA leading to the spectacular fall of the Rupee by the summer of 2013.

How India Fell Into the Chinese Tech Trap 

But worse was to happen after the Modi Government came to power. The Chinese phone companies and technology companies swamped the Indian market and now have a stranglehold with over 70% market share. They used the Modi Governments interest in making India a manufacturing hub for electronics to swamp the market. They pushed in half a dozen Chinese companies like Xiaomi, Oppo, Vivo, and their contract manufacturers setting up base in Maharashtra, Telangana, Andhra Pradesh, Karnataka, Uttar Pradesh and elsewhere with easy credit to push small Indian brands like Micromax and large imported brands like Nokia and Apple into insignificance.

 Broadly cheap items like chargers, phone covers and small components are manufactured in India while the technology products like PCBs, memory devices, storage units, processors, are imported against easy credit. Private debt to Chinese phone makers ballooned as did imports. Once the hardware was in place they supplied the compatible software  without any issues. Here is a brief video from FBI that highlights China’s plan for dominating the tech world.

Chinese Phones Swamp Indian Market Through Easy Credit

In 2015 Indian smartphones had 20% of the domestic market. By 2021 that had dropped to 1% as the Chinese smartphones usurped the entire market while India’s policy makers looked on without clue. Easy credit free flowing bribes and money laundering pushed them to the top of the Indian market in just 5 years.  Even if GOI did not fall into China’s easy credit trap like Sri Lanka or Pakistan, the private sector phone assemblers did. The Indian market was soon flooded with expensive Chinese smartphones - a nonessential luxury item.  China’s market leader Xiaomi was recently caught in a Rs 5550 crore money laundering and royalty fraud scam that could be the tip of the iceberg. More skeletons could tumble out from Chinese phone makers if the same is investigated thoroughly.  The Chinese are ready to lose some money in operations as long as they can make the Indian market dependent on Chinese technology.  In short India was a perfect case study of China’s Silk Road Digital Policy white paper 2015 that it prepared for technology domination of 65 nations. The Rupee has meanwhile slipped to Rs 79 to a dollar making oil and gas imports more expensive and pushing down our forex reserves significantly. 

Central Bank Returns To Profit After Scare About 600 Branch Closures.

Amidst the bloodshed at Dalal Street of overpriced stocks, the public sector banks are slowly showing green shoots of recovery. The Reserve Bank of India Financial Stability Report released in the month of December 2021 confirmed the popular opinion that merged public sector banks are more riskier   than the un-merged banks. The PSBs may however prove the RBI wrong. They are slowly showing  improved results than last year, despite the long drawn effect of the pandemic. The RBI had reportedly analysed the daily stock returns of 32 bank stocks for each calendar year since 2011 to assess the systemic risk levels in the sector. However when we examine the annual performance of the bank stocks that were merged in April 2020 into five merged entities under lead banks SBI, PNB, BOB, BOI and UBI we find that quite a few of the banks have turned the corner. Other than SBI all other banks had recorded losses in the year 2019-2020 and were placed under the RBI watch list. 

Last month,Union Minister of State for Finance Mr. Pankaj Chaudhury, replying to a question at the Rajya Sabha confirmed that the Bank of Baroda posted a profit of Rs 828.96 crore in FY2020-21 against a loss of Rs 8,339.27 crore in FY2018-19 following the amalgamation of Vijaya Bank and Dena Bank with the lead bank. Similarly Punjab National Bank with whom United Bank of India and OBC has been merged has reported a net profit of Rs 2,021.62 crore in the FY2020-21 from a loss of Rs 8,310.93 crore in FY2019-20.

Even one of the un-merged banks in the PSU stable the Central Bank of India has posted profits  of Rs 310 crore in the last quarter of 2021-2022.  Revenue for the  the year rose to ₹ 25,770.13 crore, from ₹ 25,845.90 crore last year while the Bank posted a small profit of Rs 1045 crore against a loss of Rs 888 crore in 2020-21.  The NPA losses of the bank have been low largely because they have been accounted for the previous period and borrowing has still not picked up in the industry sector currently though the consumer businesses are showing some recovery due to strong  demand.

Last week Central Bank employees got a scare when Reuters quoting regulatory filings stated that the Bank in a drastic step to cut losses  and improve its finances will shut down 600 branches by 2023. This was equal to 13% of the Bank Branches. Earlier it was reported that the Bank is taking up rationalisation of work force followed by the sale of non-core assets such as real estate, by  a government source who did not want to be named. The more than 100-year old lender currently has a network of 4,594 branches and a wide footprint in four states of Central India besides presence in most major cities. The bank however clarified that it has not yet decided which branches it will shut and when it will close them and branch rationalisation and reorganisation exercises were routine.

 For a detailed study of  the public sector bank mergers of April 2020 scan the chapter 11 of my book The Inside Story of Indian Banking. The chapter titled ‘Bank Mergers : Will 2+2 Be 5 or 3’  - the Pages 184 to 197 can be read with the free page reading facility ‘look inside ‘ at Amazon. #Banking #Indian Banking #RBI #BranchClosures #CentralBank #SandipSen #Bank of Baroda #Economy 

Xiaomi Caught in Royalty Fraud and Money Laundering. $725 Million Assets Seized. Stocks Slump

Last Minute Seizure of $725 million at Bank. MD Manu Jain flees, relocates  to Dubai. 

The Enforcement Department ED moved to  seize assets of Rs  $725 million (Rs 5551 crore) of Chinese smartphone maker Xiaomi in India on the evening of Friday 29th April 2022. The ED action was based on information gathered by the IT Dept on massive tax evasion by Chinese phone makers. Just before Christmas last year the Income Tax Department had conducted nation wide searches on Xiaomi, Oppo and  OnePlus offices and its contract manufacturers and dealers that covered 25 cities including Delhi, Mumbai, Chennai, Bengaluru, Kolkata and Guwahati and seized data allegedly corroborating charges of tax evasion and money laundering during the searches.

Following the IT raid the ED had interrogated its Global VP Manu Kumar Jain, till recently the Managing Director of Xiaomi, at its Bengaluru office in April 2022 but had not served out a lookout notice for him as it was in the process of collecting evidence. Manu Kumar Jain an IIT Delhi and IIM Kolkata alumnus has reportedly  moved to Dubai following the IT raid and is no longer available in India. With no successor named as MD Xiaomi India remains headless reportedly to avoid scrutiny.  

The Financial Times reported that the Xiaomi share listed at the Hong Kong Stock Exchange tanked by as much as 6 per cent to HK$11.46 (US$1.46) before recovering. India is the biggest market of Xiaomi outside mainland China where it has sold 8 million handsets during the first four months of 2022 that helped it stay profitable as China sales slumped because Shanghai and many parts of China went under total lockdown. Investors apprehend  that  if  the enquiry drags on for six to eight months as is normally the case for such massive money laundering investigations, the revenues and profits of the company could dry up for the current year.  This because over the last 7 years Xiaomi has grown phenomenally in India with 22% market share outdoing the 30 year old popular market leader Samsung Electronics and is dependent on the Indian market for its healthy bottom line. 

A week after ED’s seizure of its assets in India the Xiaomi share was quoted at HK$11.10 close to its 52 week low of HK$10.64. This despite the fact that it received a stay from a single judge bench of Karnataka HC till further hearing of the ED seizure case on the 12th of May. Other companies dependent on imports from Xiaomi and MI were also affected. Dixon Tech is Xiaomi’s manufacturing partner for LED TVs. It’s share quoted at the BSE tanked by 14% to Rs 3784.75 on Wednesday Intraday trade to close near it’s all time low. Dixon is a company engaged in making several consumer durables, lighting, home appliances, mobile phones, smart TVs  and other electronic items in India and is partly dependent on Xiaomi,  MI,  Goldex (HK) Technology, and Syntech (HK) Technology for its supplies from China. However Dixon has also other supply lines  from South Korea and Taiwan and is expected to recover from the sharp loss.

Xiaomi India which began its India operations in 2014 started remitting large amount of royalties from the year 2015 that were designed to siphon out expenses before taxes though the company did not have any such agreements or have the permission of the Government to remit such royalties. The three companies to which it remitted foreign exchange included one company sub-owned by Xiaomi.  “Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities,” said the ED in a statement. In case Xiaomi is found guilty of violating FEMA’s Section 4, they may be slapped with a penalty that can be at least three times the contravened amount. 

For  more on this story watch this space later this week. 

From Wuhan to Pune - China Hurts, India Heals Story with links from 10 major publications

As the Covid 19 vaccine roll out starts from India, the nation which traditionally vaccinates two third of the global population,  a message goes out loud and clear. If China can hurt the world then India can heal its wounds. The virus from Wuhan that killed more than half a million people worldwide in the year 2020 devastated the global economy with the top ten economies other than China recording negative growth. The vaccine development usually a 5 year process saw an innovative reduction to a year by scientists around the world. Several western nations like  UK, US and Canada started distribution of Corona Virus vaccines last month largely from Pfizer. The Chinese and Russian vaccines still reportedly in stage 3 trials are being given to many Middle East and African nations. With the two vaccines from India now ready for rollout a truly scalable counter offensive has been launched against Coronavirus.

3 Vaccines rolled out, a dozen more in line

At 5.40 AM on the 12th January 2021 the first consignment of Covishield Vaccine was despatched from Serum Institute of India Pune after the world’s largest vaccine maker got approval from the Indian Authorities. Three temperature controlled trucks containing 478 boxes of vaccines each left for Pune Airport, with each box weighing  32 kg, revealed a source involved in the vaccine transport arrangements. 

Despite the Corona virus pandemic and the repeated lockdowns, the disruptions and job losses and and the crisis in every major economy, the world bounced back rolling out at least 3 vaccines that completed stage 3 testing and a dozen more that had completed 2 rounds testing and were conducting the final efficacy tests on their products. The 3 vaccines that received approval from most of the Western economies were from Pfizer, Moderna and AstraZeneca. 

India the largest global producers of vaccine gave approval to two vaccines. The AstraZeneca vaccine  manufactured  at Serum Institutes Pune’s facility under the brand name Covishield  along with the Bharat Biotech producing Covaxin at its Hyderabad plant under licence from ICMR with indigenous technology. Covaxin is under 3rd stage trials the rollout of which is planned by end February after its results are released and approved. India’s vaccine roll out is significant for the poor across the world because the vaccine prices are affordable. 

How China Hurt the world 

That China hurt the world by letting the virus spread and intentionally delayed disclosure to WHO and the international community is fairly established by now. Here is the chronological sequence of events that is now available with documented proof from major global publications.

1st January 2020  : Hunan Seafood Wholesale Market area of Wuhan was sealed due to a mysterious  respiratory disorder An informative National Geography article points the finger of suspicion to the Wuhan wet markets and why they were responsible. 

7th January 2020   :  China identified the virus as a novel Coronavirus. 

11th January 2020  :  The first deaths happened in China 

13th January 2020  :  The virus spreads to Thailand 

15th January 2020 : China imposes travel restrictions from Wuhan to other parts of mainland China but keeps international flights open and the world contracts the Covid 19 virus. Business Insider in another informative  article  explained “Everything to know about the mysterious coronavirus from Wuhan “

The Guardian in another investigative article exposed how China locked down early without informing WHO. The traffic data from Tom Tom Traffic Index explains the way how China locked down internally in the month of January and February but the rest of the world getting delayed information could lock down only in March after the virus had uncontrollably spread. So the death count in China remains lower than 5000 while more than half a million people died worldwide The scientific community of the world and the medical fraternity and the Corona healthcare, sanitation, emergency services and police across the world chipped in to see that the world recovers quickly. The vaccine companies innovated to bring out vaccines in record time. These vaccines will rescue the world from Covid 19 and India leads the healing process producing two thirds of the world vaccines.

China says political motives behind India’s vaccine rollout 

This story was perhaps anticipated by none other than the Global Times the official Chinese mouthpiece. In an editorial by expert  Jiang Chunlai from Jilin University's School of Life Sciences, on 6 January Global Times admitted grudgingly that  “ India's vaccine export plan could be good news for global market despite political, economic motive: experts”

 

Here is what it said 

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 India makes about 60 percent of vaccines globally and many countries are eagerly waiting for it to begin shipping doses, according to the BBC report. 

Experts suggested that India's vaccines are no less competitive than Chinese COVID-19 vaccines in both research and production capacity, considering that India has the world's largest vaccine manufacturer and lower costs in labor and facilities. 

Despite India's reputation for generic drugs, the country is not behind China in vaccine R&D, Jiang Chunlai from Jilin University's School of Life Sciences, who had visited Bharat Biotech, told the Global Times on Wednesday. 

"India has the world's largest vaccine manufacturer Serum Institute of India that has a very mature production and supply capacity, even stronger than some Western countries. Indian vaccine manufacturers also have a much earlier cooperation with global institutes including WHO, GAVI and the Pan American Health Organization in South America (PAHO), and earned their trust decades ago," he said. 

"They take a closer approach to Western standards in vaccine development and regulation that has also helped their exports," Jiang said.

 

 

 

The view became trending globally as China and India are engaged in a bitter border confrontation in high altitude Himalayan region of Ladakh. 

The New York Times in December 2020 had given a detailed report of the India China border brawl at 14000 feet in freezing Himalayan province of Ladakh  The NYT report highlights the border brawl and consequent arms buildup along the 2000 mile border and also the skirmishes China has had with other Asian neighbours like Vietnam, Taiwan and Malaysia and how China has changed after the coming to power of Xi Jinping.

The confrontation with India “fits a broader pattern of Chinese assertiveness,” said Tanvi Madan, director of the India Project at the Brookings Institution in Washington, noting that it was the fourth flare-up since China’s authoritarian leader, Xi Jinping, rose to power at the end of 2012.

So the Global Times report was instantly picked up by several media organisations and put the Chinese leadership on the backfoot. 

https://in.style.yahoo.com/china-grudgingly-concedes-indias-covid-071700199.html

The report whose link has been given above was carried by Yahoo news and reproduced by several other media sites globally. It clearly shows the Chinese media grudgingly acknowledge that India can heal the hurt the Wuhan Virus has brought about.

 

 

 

3 Myths of Indian Farming Dispelled

Myth 1 Small and Marginal Farmer can’t be productive.

 

India has the second-highest  acreage  of arable  agriculture  land next  to the US.  As per 2010-11 census,  India had an average land holding of 1.15 hectares against 0.6 hectares of China. China has two times more farmers than India and three times more marginal farmers and share cropper. Despite this China produces 40% more paddy  and three times more fruit with lower arable land dedicated to these crops. It is not only a manufacturing power but the world’s largest exporter of processed food. India’s two dozen food parks started a decade back but has a capital utilisation of less than 20% with little or no marketing or processing infrastructure. 

 

 

Myth 2 India’s water shortage is due to rapid industrialisation and urbanisation. 

 

Central Water Commission (CWC) report  states that 85.3% of  India’s water  was consumed by the  agriculture  sector  in the  year 2000. Since then no countrywide study has been done on sectoral water consumption but  India became a water deficient country as per the 2010–2011 census, when it’s  per capita availability of water fell to 1,545 cubic metres per person. This disproportionate use of water happens primarily in two states of northern India that has canal infrastructure and cultivate crops that are water intensive.

 

 

Myth 3 : MSP helps small and marginal farmers 

 

Punjab and Haryana account for a third of paddy and wheat procured at MSP by FCI. In the year 2019-2020 this rose by 15% to touch Rs 56000 crores for Punjab and Rs 24000 crore for Haryana. 

The two states have  just 5% of the country’s marginal farmers and 27% of rich farmer’s.  So it is the rich farmer who gets maximum benefit of MSP and not the marginal farmer. Besides  with emphasis on MSP procurement of wheat and rice the farmers have no incentive to diversify into production of pulses,fruits and vegetables which are often insufficient that will be beneficial for even the small

 and marginal farmer. 

For more on the subject read the extract 3 Myths of Indian Farmlands that needs to be dispelled :

Page 135 to 137 Chapter 12 Indian Agriculture at Crossroads 

India Emerging Policy Paralysis to Hyper Economics published by Bloomsbury in April 2019.  

https://www.amazon.in/India-Emerging-Policy-Paralysis-Economics/dp/9387457729/ref=sr_1_1?crid=VRJKNTQTN6ZH&dchild=1&keywords=india+emerging+from+policy+paralysis+to+hyper+economics&qid=1607489300&s=books&sprefix=India+emerging+%3A+from+%2Cstripbooks%2C831&sr=1-1