Ravinder Pal Singh an award winning technologist, rescue pilot, angel investor all rolled into one
Ravinder Pal Singh shies away from attention, despite the fact that he’s one of the world’s most sought out experts in the field of Artificial Intelligence, Innovation and Robotics. Ravinder Pal Singh (Ravi), is an award winning Technologist, Rescue Pilot and Angel Investor with several patents. As an inventor, engineer, investor, highly sought global speaker and storyteller, his body of work focuses on making a difference within acute constraints of culture and cash, mostly via commodity technology. Ravi’s latest invention is arguably the world’s most affordable ventilator and what has fuelled him, in his own words, is – “Fear of human contact is not sustainable for civilization. Everyone has to contribute to overcome this fatigue and fatality of fear”.
His latest visionary creation is a blueprint to help humanity in the fight for survival against one of the most challenging health crises in the recent past. The impact of COVID-19 has prompted a reluctant but much needed change. According to Ravi, the cost of life should not come at the price of lifestyle. Intent for compassion has to translate into actual actions by everyone and every-where and every day. Disparity and im-balance take resources away from most people to live a basic life, so a minority can afford an expensive (lavish) lifestyle, and this is no longer sustainable. Secondly, the world, till now, has been driven by collaboration of conflict (potential of war) and/or economics (fiscal prudence), which should be changed towards collaboration to survive, keeping health as a priority. Healthcare infrastructures across countries needs to be revisited and global uniformity has to be established. Thirdly, how we design our lives places where we live, places where we work, places where we interact - should all change. The glorification of creating mega cities is no longer sustainable. In fact, the history of the demise of past civilizations has a commonality of 4 factors: A combination of an epidemic plus population movements plus the pressure urbanization put on rural lifestyles as well as climate change. There is still merit in non-political Gandhian theories based on De-centralization and Micro Markets, Rural development (ideal cluster of villages), Self-sufficiency while living harmoniously with nature and a greater equity or “distributive justice via creating institutions than solely profit driven businesses.
The inspiration for Ravi’s latest invention came from his own experience at the frontlines. The world faces a severe and acute public health emergency due to the ongoing COVID-19 global pandemic. It is a stark truth that COVID-19 can require patients to be on ventilators for significant periods of time and that hospitals can only accommodate a finite number of patients at once. Ventilator shortages are an unfortunate reality as the COVID-19 outbreak continues to worsen globally. Ventilators are expensive pieces of machinery to maintain, store and operate. They also require ongoing monitoring by health-care professionals. To solve the above situation, Ravi has invented and prototyped an affordable ventilator for all, using a minimalistic design which can be easily operated by anyone. The key design element is the ability to build it quickly for mass production so governments around the world can encourage existing industrial setups and start-ups to manufacture them locally to help save lives.
Ravi was baffled with the thought of why one would require an engineering degree to design, produce and manufacture a ventilator. He has built two different working prototypes on common platform design. The first version is the simplest and is an extremely portable ventilator, one which is intuitive, can be used by anyone and fundamentally takes air from the atmosphere, extracts oxygen, controls pressure and pushes the output to the lungs. The second one is an advanced version of this particular ventilator. It is on a similar design plat-form which converges artificial intelligence with electrical, mechanical, electronics and instrumentation, with the capability to supply pure oxygen. It has self calibration capabilities, a machine learning algorithm to adjust the air flow according to the needs and the resistive nature of the lungs of any patient. Both of them are based on common platform design thinking and that’s the real beauty of his patented design and platform thinking. The reason to work and produce outcomes has become purified through the stark reality of death. Driving Ravi’s imagination and the core to all of his inventions is the burning desire to create a meaningful body of work through compassion oriented design and architectural forms.
Ravinder Pal Singh (Ravi) is a Harvard Alumni and Award Winning Engineer with over several hundred Global Recognitions and Patents. His body of work, mostly 1st in the world, is making a difference within acute constraints of culture and cash via commodity technology. He has been acknowledged as one of the world’s top 10 Robotics Designers, #1 Artificial Intelligence Leaders in Asia and featured as one of the world’s top 25 CIOs. Ravi is the advisor to a board of nine enterprises where incubation and differentiation is a core necessity and challenge. He sits on the advisory council of three global research firms where he contributes in predicting practical future automation use cases and respective technologies.
Established in 2016, Annie Koshy Media Consultant has developed a reputation for expertise in Media Relations, PR and Promotion of those in the arts, media and entertainment industries, as well as in Marketing and Community Outreach. The multi-award winning media brand, has a vast network, both within the South Asian as well as the mainstream communities and has the leverage to develop meaningful associations amongst individuals, businesses and within the media fraternity. (www.anniejkoshy.com | www.findyourselfseries.com)
How world turned blind eye to Chinese excess
It is argued that the Chinese economic juggernaut, was already on a roll before China’s membership of the W.T.O. It’s GDP, trade gaps and foreign investment numbers right from the mid-seventies till the end of the last century, amply demonstrates this truism. The bilateral trade deficit of the U.S. with China had already exceeded that with Japan. Mr. Clinton and his Western allies cannot therefore be faulted for thinking that the way to close or narrow the ever-increasing trade gaps was to bring China into the fold, enabling freer access to its large domestic market. Indeed, the protocol commitments which China made were far more stringent than ever before, especially after the Uruguay round of talks, which went beyond trade to include agriculture and intellectual property.
It was believed that China agreed to the protocol commitments only be-cause of the imperative of transitioning to a market economy, so as to increase the living standards of its people. China convinced global leaders that this was the case, and the world turned a blind eye to the excesses of a one-party regime, in the hope that a market economy, would inevitably foster democratic values. What was not apparent, nor deliberated, is the reason why this transition would assuredly take place. As it turns out, China today is neither a market economy nor anywhere near a democracy.
While Indian planners discounted the possibility of harnessing water resources as a source for electricity, owing to the social upheaval which would arise from diverting rivers and submerging large tracts of land, China built a dam visible from space. China’s heavy-handed approach to what the communist party believed to be in its national interest was winked at and even justified as the reason for its rapid development. Astonishing double standards for countries which otherwise were keen on exporting democratic values.
Even now, while calling out its ‘wolf warrior’ diplomacy, there are still many in the West who would love to wish away the fact that it has created a new evil empire, far worse than the Soviet Union could ever be. The world is ready to overlook its misplaced belief that free trade would inevitably result in a market economy, which would in turn foster a democracy. There is no explanation for how this transition was hoped to be achieved and if there is one, it is at best fallacious, at worst delusionary.
The view that free trade would somehow persuade China to adopt a more open form of Government failed to recognise that totalitarian communist regimes march to the beat of a different drummer. The ideals and interests of such a regime are very different from that of the West. Moreover, trading or doing business, is not the same thing as being a market economy. State-owned enterprises, or States themselves, do both. A State controlled economy differs from a market economy not in the identity of its constituents, but rather the extent of influence and control exercised by the State. Why does it take a pandemic of dubious origin and an increasingly aggressive foreign policy to realise that Chinese companies are owned and controlled by senior functionaries of the communist party? Or that the People’s Liberation Army owes allegiance to the party and not the country.
In over two decades and some, what started as a labour arbitrage for easy to manufacture components, has culminated into an estimated 30% of the world’s supply chain being dependent on China’s manufacturing sector and the trade deficit of the U.S., as well as the rest of the world, has burgeoned into unmanageable proportions. A large part of this may be attributed to China’s clever tightrope walk of the W.T.O.’s flawed enforcement mechanism, allowing foreign investment in industries on the condition of transfer of technology and building in subsidies to local units. Although, direct subsidies such as tax exemptions have been documented, there are other covert, incentive based methods, such as affording exporters preferential or cheaper access to land or finance. Another commonplace strategy is “dumping”, where quite simply Chinese exports flood the markets with far cheaper products, ruining local manufacturers. This is apredatory practise, which comes with a cost which is then recouped in higher prices.
While these practices which are quite visible, were tolerated due to an inherent vested interest of the Western economies, what many missed is the one singular flaw in the W.T.O. mechanism, which is that there is nothing to prevent currency manipulation. There can be no free trade leave alone a free market, in that case. The problem here was also that many who cried foul did not fully understand the mechanics of foreign exchange markets and how a country manipulates the value of its currency to keep it artificially low relative to the dollar.
The impact of currency manipulation can best be explained by an illustration. Suppose the intrinsic value of 1 kg of wheat equals that of 1 kg of ginseng. One could either barter the goods with the U.S. shipping the wheat to China and taking ginseng in exchange, or else payment would be made, exchanging (say) $1 for Y1. If this was the only trade between the countries, there would be exchange rate parity.
However, if the U.S. consumed more ginseng than China consumed wheat, the increased demand for Yuan (to import the Ginseng) would make it dearer, resulting in the price of Ginseng to also rise. This would continue until the increased price results in the demand for Ginseng to fall, consequently lowering the trade gap in the hypothetical case. This is the reason why no trade gap can increase steadily – trade equilibrium would result, unless of course, either the price of the goods is cheaper (because of hidden subsidies) or the value of the currency falls (because of currency manipulation). China has cleverly used a combination of both. Frequent market interventions and flooding the currency markets and the U.S. reserves with yuan by buying up U.S. bonds, leads to a relatively lower currency value. The inevitable result is a vicious cycle where Americans invest in China, and purchase their goods, while China buys US debt and property.
Whether the American multinationals were complicit in the creation of this monster or not, there has been a collective failure to recognise that this situation is unsustainable. Now that the chickens have come home to roost, one may well ask – what lies ahead?
THE NEW BANKING IS MORE DEADLY THAN COVID 19: More Bank financial frauds, Money laundering, Regime Change, Riots, Racial Trade Wars.
Year 2020 has been a life changing year in more ways than one for all people and this planet. The happier joys of life and family have been chocked by the many dangerously dumb western politicians and their man-made “Pandemic” virus fear fuelled by their lying medical monsters and their government funded mainstream media news. The brainwashed public carry on believing the lies and following the stupid new laws thus destroying their next generation. The 2021 western banking virus is more deadly and must be stopped from infecting the Eastern World. As there is little trade export and sales many western banks/financial institutes and companies are brazenly breaking international laws. Many of them are using Indian people, banks and companies to assist them in money laundering, financial accounting frauds. The British bank HSBC has a history of this and still continues to break many laws in Hong Kong and across the World.
The British Bank HSBC’s shares fell to their lowest level in 25 years as the bank faced allegations of money laundering and concerns about its ability to expand in Asia amid the fallout from the Covid-19 pandemic. The London-based bank’s Hong Kong shares slid 5.33 per cent to 29.30 Hong Kong dollars at market close on Monday and plunged 6.23 per cent in London to £285.05 at 11.22am UK time. The stock has nearly halved since the start of the year. The British bank is among five global financial institutions named in a report by the International Consortium of Investigative Journalists that defied money laundering crackdowns by moving “staggering sums of illicit cash” in transactions that were flagged as suspicious.
This happened even after US authorities fined the institution for “earlier failures to stem flows of dirty money”, the ICIJ report said. The leaked documents, which are known as the FinCen Files, include more than 2,100 suspicious activity reports filed by banks and other financial firms with the US Department of Treasury’s Financial Crimes Enforcement Network. The documents identified more than $2 trillion (Dh7.34tn) in transactions between 1999 and 2017 that were flagged by financial institutions’ internal compliance officers as possible money laundering or other criminal activity, the report said. The top two banks are Deutsche Bank, which disclosed $1.3tn of suspicious money in the files, and JPMorgan, which disclosed $514 billion, the analysis found. Other lenders include Standard Chartered and Bank of New York Mellon, the report found, with HSBC disclosing $4.48bn in transactions.
The ICIJ report is another blow for HSBC, which is also a possible candidate for China’s “unreliable entity list” that looks to penalise firms, organisations or individuals that damage national security, according to the Communist Party’s Global Times newspaper. Last month, HSBC reported a 65 per cent drop in pre-tax profits to $4.3bn for the first half of the year, a much steeper fall than analysts expected with the bank's chief executive blaming a series of triggers. While HSBC is based in London, more than half of its profits come from Hong Kong. Europe's biggest bank also set aside between $8bn to $13bn this year for bad loans as it expects more people and businesses to default on repayments amid the fallout from the Covid-19 outbreak.
HSBC Bank 2018 tax fraud probe in India
The HSBC had acknowledged the fact that the regulatory and law enforcement agencies of various countries contacted the bank for information on persons and entities named in the leaked 'Panama Papers' which included hundreds of Indians who had indulged in alleged tax violations through offshore tax havens with the help of Panamanian law firm Mossack Fonseca. HSBC had set aside over Rs 5,000 crore ($773 million) as a provision for various tax and money laundering-related matters.
Here are all the key points that were related to the Indian investigation against HSBC:
- The Indian tax authority-initiated prosecution against HSBC Swiss Private Bank and an HSBC company in Dubai for allegedly abetting tax evasion of four Indian families.
- According to the report, the Indian tax authority had claimed they had sufficient evidence to initiate probe.
- The HSBC annual report said Indian tax authorities in February 2015 had issued summons and request for information to an HSBC company in India.
- Also, two offices of the Indian tax authority sent notices to HSBC companies in August 2015 and November 2015 on the matter.
HSBC's disclosure on the Indian tax authority's investigation came after the then Finance Minister Arun Jaitley informed the Parliament earlier that month that the Government detected over Rs 16,200 crore in black money after investigations on global leaks about Indians stashing funds abroad. In the written reply to the Rajya Sabha, Jaitley had also said about Rs 8,200 crore (including protective assessment of income of Rs 1,497 crore) of undisclosed income was brought to tax in the last two years on account of deposits made in unreported offshore accounts in HSBC Bank but this is not just limited to India. Various tax administrations, regulatory and law enforcement authorities around the world, including in the US, France, Belgium, Argentina, are conducting investigations and reviews of HSBC Swiss Private Bank and other HSBC companies in connection with allegations of tax evasion or tax fraud, money laundering and unlawful cross border banking solicitation. Some Indian banks/financial institutes are being assisted by NRIs/PIOs and the Indian overseas branches who have closer relations with the many corrupt western banks/financial institutes. Nirav Modi (PNB Scam), Vijay Mallaya (Kingfisher Airlines), Rana Kapoor (Yes Bank and DHFL Scam) would NEVER have had the opportunity to commit the financial crimes against Indian government if the western banks/financial institutes had not completed the wire transfers and formation of offshore companies.
Instrumental in many business and banking trades from India to the UK/Europe and offshore locations is The Hinduja Group of companies in the UK. In 2000 Corruption charges were filed in Delhi, India against the three brothers in connection with one of India’s biggest and longest running arms sales scandals, the 1986 Bofars affair. A $1.4 bn Indian government (Congress Party) contract to purchase artillery guns from the Swedish manufacturer Bofors. The Indian investigators based the charges on bank documents that a Swiss court released to India between February 1997 and December 2000. The Hindujas failed in an appeal to the Swiss courts to have the release of the documents blocked. The Hinduja brothers were acquitted of all charges in the Bofors affair in May 2005. Delhi’s High Court threw out all charges against Srichand, Gopichand and Prakash Hinduja due to a lack of evidence. It is very interesting that Indian government failed to appeal against the high court judgement in the supreme court despite clear evidence due to the lack of Global expertise and offshore banking structures knowledge. One key point being that Hinduja Bank Ltd was founded as a finance company in 1978 and became a Swiss regulated bank in 1994. The Hinduja Bank has its headquarters in Geneva and has a developed network in Switzerland including offices in Zurich, Lugano, St Margrethen, and Basel. Hinduja family have the backing of the IndusInd Bank which in May 2020 is planning to raise over $500 million to shore up its balance sheet as it grapples with bad loans. The bank registered a 16% year-on-year drop in net profit at INR30.1bn ($401m), which lead to a 56% rise in bad loan provisions to INR244bn ($3.24bn). Its stock prices also plunged to more than 70% since the beginning of 2020.
The bank, which is backed by Hinduja Group, is in talks with three strategic investors, including Japan’s Nippon Life for the fundraising. According to sources, Nippon Life needs a bancassurance partner to boost its distribution network of insurance products in India. It also intends to bag huge corporate treasury cash for its asset management business in the country. However, the preliminary talks with Nippon may or may not result in a successful transaction. The other potential strategic investors include Canada Pension Plan Investment Board (CPPIB), and Singapore’s GIC. All the investors were warned in advance about the shady past of the Hinduja Group.
There is much more to this which will be re-investigated in the coming months as well as many new investigations and tracking of Indian banks/financial institutions and NRI/PIO companies who are on the scanner of The WHS Group’s “INDIA FIT” (Financial Intelligence Troops) legal case databases. In 2021 “INDIA FIT” is the new healthy cure and right medicine shots that bring back more business trade sales confidence and FDIs into good clean healthy Indian companies that we verify/certify a good clean bill of health to so that scams/frauds are eliminated and no international laws get broken.
What are FinCEN files?
FinCEN is the US Financial Crimes Enforcement Network at the US Treasury who combat financial crime. They look into grievances and concerns about transactions made in US dollars need to be sent to FinCEN, even if they took place outside the US. The FinCEN files comprise 2,657 documents, including 2,121 suspicious activity reports, most of which were files that banks sent to the US authorities between 2000 and 2017. They raise concerns about what their clients might be doing. These documents, known as Suspicious Activity Reports or SARs, are some of the international banking system's most closely guarded secrets. They reflect views by watchdogs within banks, known as compliance officers, reporting past transactions that bore hallmarks of financial crime, or that involved clients with high-risk profiles or past run-ins with the law. A bank must fill in one of these reports if it is worried one of its clients might be up to no good. The report is sent to the authorities.
India, IPL links
Indian entities figuring in these documents include “a jailed art and antique smuggler; a global diamond firm owned by Indian-born citizens named in several offshore leaks; a premier healthcare and hospitality group; a bankrupt steel firm; a luxury car dealer who allegedly duped several high net worth individuals; a multinational Indian conglomerate; a sponsor of the Indian Premier League (IPL) team; an alleged hawala dealer”. A key finding is that in many cases, the very fact that individuals and companies are being probed by Indian agencies is part of the SAR flagged to FinCEN.
In a majority of cases, domestic branches of Indian banks have been utilised to receive or remit the funds; in some cases, bank accounts with foreign branches of Indian banks, too, have been used to carry out these transactions. As many as 44 Indian banks figure in the FinCEN Files primarily because they are “correspondent banks” to the foreign banks which have filed these SARs. Key in this list are Punjab National Bank, Kotak Mahindra, HDFC Bank, Canara Bank, IndusInd Bank and Bank of Baroda, among others.
There are a total of 3,201 transactions which have been listed as "suspicious" in nature and these add to $1.53 billion—but this is only those where complete Indian addresses linked to different entities (senders, banks, beneficiaries) are available. These are attached as spreadsheets in each SAR. Over and above, are thousands of other transactions, also linked to Indian entities where senders or beneficiaries have addresses in foreign jurisdictions, the report added. What was more revealing is that the Indian Premier League (IPL) has also landed on the US financial regulator’s radar in a network of transactions involving a leading US bank, a little-known UK company, a Kolkata-based sponsor of an IPL team, and allegations of fraud and forgery.
In 2013, KPH Dream Cricket, which runs Kings XI Punjab, went to court against team sponsor NVD Solar International Ltd for “cheating and duping” them of $3 million in sponsorship fee. The SAR, filed by , reportedly offers a clue to what went wrong. In 2013, San Francisco-based Wells Fargo Bank had received “a $2,975,460 SBLC (Standby Letter of Credit) from Deutsche Bank AG in London” with KPH Dream Cricket as the beneficiary. The SBLC for nearly $3 million was sought by Aerocom UK Ltd, an air tubes manufacturer, with no apparent links to the team or the sponsor. The SBLC said that “in case of failure of the obligator, NVD Solar International Ltd of Dhaka, Bangladesh, was to pay the amount due as per the terms of the contract”.
However, according to the SAR filed by Wells Fargo, the SBLC turned out to be “fraudulent” and was “declined”. Wells Fargo’s SBLC unit found that none of the companies named in the request—applicant Aerocom UK, beneficiary KPH Dream Cricket, warrantor NVD Solar — were on the bank’s customer rolls. It concluded that the “SBLC is believed to be bogus, as a search of Wells Fargo electronic messaging system does not show receipt of this transaction”, according to the SAR. An investigation by Wells Fargo’s Trade Finance Investigations unit also found out that the transaction also involved a forged signature. The IPL case is just one among the many transactions with India connections that were red-flagged in a SAR.
According to the leaks, Indian banks received $482,181,226 from outside the country and transferred from India $406,278,962. These transactions were red flagged to the US authorities. So far, the Indian banks named by ICJI for dubious transactions include State Bank of India, Punjab National Bank, Union Bank of India, HDFC Bank, Indusind Bank, Axis Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, Indian Overseas Bank, Canara Bank, Bank of Maharashtra, Karur Vysya Bank, Tamilnad Mercantile Bank, Standard Chartered Bank (India operations), Bank of Baroda, Bank of India, Allahabad Bank, Indian Overseas Bank, Indian Bank, Deutsche Bank (India operations), UCO Bank, Karnataka Bank, RBS, Andhra Bank, and Vijaya Bank.
The present Indian government and people of India have been robbed by many of their own Indian people who were assisted by many on the Little British Island BK (Broken Kingdom) and their offshore bank locations. The World Homeland Security (WHS) Group of companies has undertaken financial investigations of misconduct, bribery and corruption, as well as assessments of financial transactions, accounting irregularities, and regulatory and compliance issues on behalf of publicly and closely held companies, private equity firms, government agencies, municipalities, NGOs and high net worth individuals. India and China must avoid conflict, making peace is the best path forward. Western warmongers need another war so that they can “Divide and Rule” while stealing more Eastern Countries resources, create regime change riots and shatter the Eastern Countries societies with terrorism/false flag attacks. India and China Govts must amicably make land border decisions with lawful agreements while increasing more peaceful trade business ties so that it prospers people from both countries.
Why India’s financial system is vulnerable to hacks?
India's financial systems are extremely vulnerable, because they still rely on international banking networks like Swift to make transactions. International gateways are open vectors of attack for India. Last year hackers were able to siphon off 900m rupees ($12m; £9.7m) from Cosmos bank in the western city of Pune through a malware attack on one of its data suppliers. India is among the top three countries in the world for phishing and malware attacks. Although this comes down to the sheer size of India's digital population, the population of France is added every month to the country's internet: it is a big concern because many first-time internet users are being pushed to use digital payments.
In November 2016, for instance, when the government suddenly removed 80% of the country's cash from the economy by saying that 1,000 and 500 rupee notes would no longer be valid, Prime Minister Narendra Modi heavily promoted digital payments as an alternative. Mobile payment platforms both (Paytm) and (GooglePay) have since become a massive industry in India. A report by Credit-Suisse estimated that mobile payments in India would become a $1tn market by 2023. Credit and debit card payments are also popular, with an estimated 900m card operational in India today. Many of the newest entrants to India's internet more than half the 600 million-odd total users are from the middle or bottom of the pyramid. This means that very often, their digital literacy is low, or they are migrant labourers working in states where they are not familiar with the language hence, they are very vulnerable to fraud. And secondly, there is inadequate reporting of fraud by banks, which means sometimes consumers are not even aware of what has happened.
What kind of fraud is happening?
Financial fraud in India takes many different forms. Some involve hackers fixing skimmers and keyboard cameras to ATMs, which duplicate the card details of unsuspecting users. Others involve calling people up and tricking them into handing over information. The problem is that in a digital transaction lines are blurred and confusing. In the real world there is a clear distinction between giving and receiving. But on a mobile payment platform, this is not always clear. For instance, someone trying to sell a table online might be called by someone posing as a prospective buyer, offering to make an online payment. If that person says that he or she has made a payment and tells you that you will get a code via text message to confirm the transaction, many users would think nothing of it, even if they are asked to tell that person the code. The next thing they know is that the money has been deducted from their account.
What improvements can be made?
One problem is that the systems themselves are not secure or transparent enough. In the Cosmos fraud for instance, the software was not able to throw up red flags when so many transactions were compromised. And by the time the fraud was discovered, a huge sum of money had been lost. Furthermore, a lack of standardisation also makes transactions confusing, especially for first-time users. ATMs for instance, come in many different forms and each payment app in the country has a different interface. In India, due to the lack of computer software education and correct security procedures there is a human problem. People lack even basic awareness of the dangers, leaving both themselves and sometimes entire systems at risk.
What is the government's role?
Given the rate of India's internet growth, it is not possible to rely on just education alone. It's not possible for everyone to keep up with the sophisticated methods of hackers, especially when they are constantly changing tactics and methods. So, the onus has to be on regulators and payment firms to protect users. The other problem is that communication between the various cyber-security organisations is just not fast enough. The Computer Emergency Response Team (Cert), are sometimes too slow to respond to reported threats. But India is already aware of this. The country is formulating a national cyber-security policy for 2020 -2021 and officials have identified six critical areas where policy needs to be where special attention is needed. Finance security is one of these areas. It is only then that India will be able to effectively respond to the risks that come with moving to a largely cashless economy.
Even before the pandemic: the western economies and majority of people were already crumbling into deeper debts, bankruptcies, lost jobs/homes and slow trade. The present British regime is breaking international laws on the withdrawal agreement which was written agreed and signed by Clown UK PM BoJo as their Brexit virus finally gets cured. Stop your investments, banking and credit loans to UK/British companies as you will suffer bigger losses in 2021 and beyond as their Brexit cure fails to work as do their public fail to work (No new Jobs) because they were stupid enough to vote and elect their clown prince BoJo and his highly useless mindless ministers who enjoy breaking laws even when the little Island is in lockdown mode.
Many western politicians, companies, Banks/financial institutes in the West will increase more bank financial frauds, money laundering, regime change, Riots, Western False Flag terrorism acts in the East, More Plandemic Virus BS lies and more Racial Trade Wars. More peace can prevail if good people irrespective of one’s country, culture or religious beliefs learn to respect more real truths without being swayed and misled into more darkness which will dim and destroy your children’s future peaceful happy lives on this Earth if you do not peacefully unite now. It is not hard to make a decision when you know what your “True” Values are.
Writer is the Global Chairman Group President of The World Homeland Security/Smartechno Group of Companies. www.worldhomelandsecurity.one
As pointed out by the nation’s top auditor, there are irregularities galore in the management of the various cesses as they have been appropriated to manage deficits
Reining in the fiscal deficit has always been a challenge for the Centre especially after the enactment of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, which requires it to maintain the shortfall within a specified threshold. At the same time, there are certain thrust areas, such as education, roads and other infrastructure, telecommunication networks in rural areas, exploration of oil, gas and so on, which the Government feels won’t get the desired funds in the normal course of budgeting. This led to successive dispensations to think of a special tax or cess — a form of tax charged/levied over and above the base tax liability of a taxpayer. These include USO (Universal Service Obligation) levy imposed on telecom service providers, cess on Crude Petroleum Oil (CPO), Road and Infrastructure Cess (RaIC), Primary Education cess (PEC), Secondary and Higher Education cess (SHEC), Education cess on Imported Goods (ECIG), R&D cess and so on. The proceeds from these taxes are credited to the Consolidated Fund of India (CFI) and subsequently transferred to a non-lapsable fund, for instance, the USO Fund (USOF) — based on the appropriation approved by the Parliament — created in the public account for utilising exclusively for the purposes for which it is collected. The financing of the specified activity thus gets shielded from the vulnerabilities associated with the normal budgeting exercise.
Prima facie, the idea sounds appealing. But the big question is if this is working. Are funds being utilised for the declared purpose? Are the outcomes commensurate with the intent? To answer these questions, let us look at the reports of the Comptroller and Auditor-General of India (CAG) brought out from time to time. The Centre charges licence fee at eight per cent of the adjusted gross revenue (AGR) of telecom service providers. This includes five per cent as appropriation for crediting to USOF (set up in 2002) while the balance three per cent is retained with the general exchequer. For 2018-19, the CAG has noted that out of a total collection of about Rs 6,900 crore as USO levy, only Rs 4,800 crore was transferred to the USOF, implying a shortfall of Rs 2,100 crore. Against a collection of Rs 1,10,000 crore since 2002, the amount disbursed till date is only Rs 54,500 crore. The balance Rs 55,500 crore remains with the CFI. Coming to the SHEC, the Government started collecting this levy from 2006-07 and until January 2019, could harness about Rs 94,000 crore. The entire amount has been retained in the CFI. In this case, even the public account christened as Madhyamik and Uchchtar Shiksha Kosh (MUSK) was created only in August 2017 (more than a decade after the collection started) and has not been operationalised so far.
The R&D Cess Act, 1986, provides for levy and collection of cess on all payments made for the import of technology. The proceeds of this were to be disbursed as grants-in-aid to the Technology Development Board (TDB) set up in 1996. During 1996-97 to 2017-18, a total of about Rs 8,000 crore was collected. Of this, a mere Rs 800 crore was transferred to the TDB. Furthermore, though the cess was abolished from April 2017, it continued to be collected during the following two years, viz. 2017-18 and 2018-19. In case of Clean Energy Cess (levied on coal supplies) since 2010-11, the amount denied to the designated fund, viz. National Clean Energy Fund (NCEF), was about Rs 44,500 crore. Likewise, in the case of the RaIC, (earlier nomenclature Road Cess), there was a “short transfer” of about Rs 72,000 crore in the amount collected since 1998-99 till March 31, 2018 to the Central Road Fund (CRF), the public account.
Unlike other taxes, which are part of the “divisible pool” to be shared with the States as per the recommendations of the Finance Commission, the Centre gets to retain all of the cess (which goes to the CFI and is available for general use). Because its finances have come under serious stress during the current pandemic year, its reliance on RaIC has increased by leaps and bounds. It raised central excise duty (CED) on petrol and diesel twice this year in March and May, mostly through hike in the cess. At present, out of CED on petrol of Rs 33 per litre, Rs 18 per litre or 54.5 per cent comes from the cess. For diesel, out of Rs 32 per litre CED, RaIC is Rs 12 per litre or 37.5 per cent. The Government also levies the Oil Industry Development (OID) cess currently at 20 per cent ad-valorem on the price that domestic producers of crude, namely the Oil and Natural Gas Corporation (ONGC) and the Oil India Limited (OIL), get on their supplies from nominated blocks and pre-NELP (new exploration licensing policy) exploratory blocks. Collected under the Oil Industries (Development) Act of 1974, though the cess proceeds are intended to fund research, exploration and development work, yet the money remains with the CFI.
As pointed out by the top auditor, there are irregularities galore in the management of the cesses. These include short or “nil” transfer of cess proceeds from the CFI to the dedicated non-lapsable fund in the public account set up for the specified purpose. In certain cases, the public accounts were not even created long after the Government started collecting the tax. In others, it continued to collect even after the same was abolished. The Government has, in fact, used them primarily for increasing its “general revenue” and meeting the fiscal deficit target. If an overwhelming share of proceeds (or even the whole of it) from the cess remain with the CFI, what else one should conclude? Or the dedicated public account where the money has to go (for use in the intended purpose) is not even created, what else can one infer?
Meanwhile, these cesses continue to inflict damage on the stakeholders who bear their brunt. Look at the impact of the five per cent USO levy on telecom service providers. In an intensely competitive environment, wherein they are compelled to keep the tariff low (this is also in sync with the dire need to make these affordable to consumers, with a majority of them having a low income), such levy has the effect of raising the cost of services and making them unviable. In fact, there is a strong case for scrapping this tariff.
This was recognised by none other than the Union Telecom Minister, Ravi Shankar Prasad, when he wrote to the Finance Ministry: “Given that rural tele-density has significantly increased since the time the fund was set up, it is proposed that the USO levy may be reduced from five per cent to three per cent. The two per cent USO levy reduction may be made available to the telecom service providers provided that this amount is utilised by them for carrying out research and development for development and deployment of indigenous technologies in the country.” Yet the Government continues with status quo, the sole reason being easy availability of funds (from USO levy) which can be used for plugging its general deficit. Look at the RaIC, which accounts for a major slice of the CED on petrol and diesel and together with the cascading effect of Value Added Tax (VAT) leads to a bizarre situation whereby taxes alone account for about two-third of their prices at the pump. The high fuel price contributes to high inflation and higher cost of fertilisers and food. Since the Government controls their prices at a low level to make them affordable, much of the extra revenue is given back as higher subsidy.
To that extent, the revenue gain from the cess (besides other taxes) is imaginary. Likewise, 20 per cent OID cess on domestic supplies of crude (besides the 20 per cent royalty ONGC/OIL need to pay to State Governments in respect of onshore supplies and 10-12.5 per cent royalty to the Centre on offshore supplies) impacts the viability of producers at a time when their realisation from sale has plummeted (courtesy, the steep decline in the international price of crude).
Despite the cesses not serving the intended purpose and their negative consequences, the mandarins in the Finance Ministry appear to be in no mood to say goodbye to them. Amid the current crisis created by the pandemic, when the tax collections have been severely impacted and expenditure commitments have ballooned, they may not even entertain any discussion on this. Nonetheless, there is dire need to put abolition of these cesses on the high table as these are not only counter-productive but also make our policy planners and administrators complacent with regard to sustainable ways of balancing the budget. Will the Government go on a course correction? One can only wait and watch.
(The writer is a New Delhi-based policy analyst)
There should be a certainty about tax liability but retrospective changes in tax laws are undesirable. They negate the basis of key investment decisions
Death and taxes are certain but when, how or why can be most uncertain. Experts find ways and means — sometimes genuine and sometimes sham — of minimising tax liability. This is to contextualise an arbitral panel under the Permanent Court of Arbitration rejecting India’s income tax claim of about Rs 22,100 crore from Vodafone.
The tax dispute goes back to 2007 when Vodafone International Holdings, a company registered in the Netherlands, acquired CGP Investments Limited, a company registered in Cayman Islands. Normally, acquisition of one foreign company by another foreign company should have nothing to do with Indian law and taxmen. A company’s shares are supposed to be situated in the country where it is registered. Legally, only Cayman Islands’ Government had the right to tax the capital gain made by the shareowner as the share sale took place there. However, Cayman Islands does not impose income tax or capital gains tax (and that is why so many companies are registered there.)
Through other offshore entities, the Cayman Island company controlled CK Hutchison Holdings Ltd’s 67 per cent stake in the Indian company, Hutchison Essar Ltd (HEL). So the end result of this share sale was that the ultimate “owner” of the Indian company got changed from the Hong Kong-based Hutchison to the UK-based Vodafone, both controlling the Indian company indirectly through a chain of intermediate companies. Since the share sale in Cayman Islands did not entail any income tax, it was a “tax-efficient” arrangement.
HEL was a joint venture company formed by the Hong Kong-based Hutchison and Essar Group. HEL held a telecom licence. The share sale transaction in Cayman Islands meant that the Hong Kong company Hutchison ceded control of HEL to British company Vodafone to the extent of 67 per cent of HEL shareholding. Had the shares of the Indian company been sold directly, Indian income tax would have been unquestionably payable on capital gains. But Vodafone indirectly acquired 67 per cent control in HEL from Hutchinson in a $11.2b deal.
Indian taxmen did not like what they saw as a tax-dodging arrangement. They argued that the Cayman Islands’ share sale was actually an indirect sale of shares of the Indian company. They raised a demand (2009) of $2.2 billion as capital gains tax. With interest and penalty, the total tax demand rose to Rs 22,100 crore. Vodafone contended that it was not liable to pay tax because the transaction did not involve transfer of any capital asset situated in India.
On January 20, 2012, the Supreme Court ruled that the Government had no jurisdiction to levy tax on overseas transactions between two foreign companies. A sale transaction between two foreigners was beyond Indian tax jurisdiction even if the subject matter of sale was controlling interest in an Indian company having valuable assets. No Indian company had directly sold anything.
The Government requested the Supreme Court to lift the corporate veil to see the true substance of the transaction, the true end-beneficiaries of the transaction and not go by mere form, or the corporate boundaries of shell companies through which ultimate owners operate. These arguments were not accepted. The top court said that the law as it then stood did not allow lifting the corporate veil based on such interpretations. Instead of “look through,” the court adopted a “look at” approach.
Unwilling to give up the tax claim, the Government amended the tax law retrospectively with effect from June 1, 1976, giving itself the power to re-open past mergers and acquisitions if the underlying asset was in India. Vodafone then contested the claim under the Bilateral Investment Treaties (BITs) between India and the Netherlands and between India and UK.
A PCA arbitral tribunal recently adjudicated the investment treaty arbitration dispute and rejected the Indian tax demand. The retrospective change in income tax Law in 2012 was held to vitiate the guarantee of Fair and Equitable Treatment (FET) given to Dutch/British investors under the BITs.
The Government can now appeal against the order in the High Court of Singapore. If not, it has to spend about Rs 85 crore (Rs 40 crore to PCA as 60 per cent of litigation cost and Rs 45 crore refund to Vodafone).
Another similar arbitration involving UK’s Cairn Energy Plc is expected to be concluded soon, where $1 billion of Cairn Energy’s shares have been confiscated.
India and similarly placed financial resource-starved countries face this dilemma. We want to welcome foreign capital to bring financial resources and technology to expand the earning capacity of the Indian economy, create jobs and raise income levels. The investors have a legitimate expectation of a fair and equitable non-discriminatory taxation and regulatory regime, ease of doing business but the Government also has a legitimate interest in collecting taxes. Last year, we reduced corporation tax for new manufacturing companies to a record low of 15 per cent.
There should certainly be a certainty about tax liability but retrospective changes in tax laws are undesirable. They change assessment of future profits and may negate the very basis of important investment decisions.
Discerning eyes can see that the primary driver of the Cayman Islands sale was acquiring controlling interest in the Indian telecom company and the deal was structured to make it an offshore transaction beyond the reach of Indian taxmen, an innovative tax avoidance measure. The world’s rich shift their incomes and wealth from their high-tax home countries to these “tax haven” countries like Cayman Islands having almost no income tax. How can “tax haven” countries defend giving shelter to people running away from their taxing home jurisdictions is a big international debate. It is an ideological battle between tax-free Governments of these countries and remaining “tax-and-spend” Governments who want to impose their ideology on nations following “minimalist Government” ideology.
One country’s “black money” (tax-evaded income) is a source of survival for another. That is how “tax havens” flourish. One would wish greater international cooperation in enforcement and “tax-and-share” being put in place but the interminable debate on limits of taxation, sovereignty and protection to criminals, acceptability of national laws on crime and taxation by outsiders, unfair/unjust/excessive taxation and fair end-use of tax proceeds block any such agreements from fructifying.
Taxation of foreigners and foreign companies presents special challenges. There is a clash between two principles. One is the US system based on “situs” of the assessee’s nationality and the other is the Organisation for Economic Cooperation and Development (OECD) system based on “source” of the assessee’s income.
The tax liability attaches to assessees based on their nationality. A Government may tax its citizens and the companies registered under its national laws. The 2012 Supreme Court judgment was based on the law then in force which limited extra-territorial application of tax laws.
The “situs” of the taxed entity is now pitted against the “source” of the entity’s income. The OECD project on Base Erosion and Profit Shifting (BEPS) is gaining traction.
More and more Governments are now coming to clash with the classical worldview on foreign taxation and asserting that a Government’s jurisdiction extends to foreigners and foreign companies who may be present on their soil or drawing sustenance from it. Big MNCs like Google, Apple, Facebook, Amazon and Netflix are inviting global attention for earning from different countries without contributing enough to the local public exchequer.
There is a global consensus regarding the need for a comprehensive mechanism to tax cross-border transactions in the digital economy. OECD, UN and EU are working on a resolution. We amended the Income Tax Act in 2018 to bring the concept of ‘Significant Economic Presence’ from April 1, 2019, and introduced equalisation levy (Google tax) in an attempt to tax incomes being collected by foreigners from Indian consumers. In an imbalanced world, the terms of trade and investments are not always favourable to emerging economies. They also don’t have the freedom to print money and spend. Balance has to be struck between fair taxation and honest tax compliance in form and substance.
(The author is an IAAS officer, superannuated as Special Secretary, Ministry of Commerce and Industry.)
The human rights watchdog may have looked at India through a Western prism but can we dispute its findings on Delhi riots?
The trouble with human rights watchdogs is that they have, by virtue of countering the establishment narrative, assigned themselves a certain kind of legitimacy and credibility without realising that some of their own investigations are compromised by subjective assessment rather than objective investigation. This has also been a problem with Amnesty International, which has many times been accused of looking at India through a Western prism. But as a robust democracy, we have it within ourselves to accept vilification and acknowledge cogent counterpoints. We shouldn’t need lobbyists to get the other side of the story; our media should be free to do that. Besides, by and large, the organisation has an international acceptability even if we take some of its reports with a pinch of salt. But by targetting Amnesty, which says it is now forced to shut shop in India because the Government has completely frozen its bank accounts here, we appear to be in the bracket of oppressor and authoritative regimes like China. And considering its activists have been particularly penalised for tracking dissent pan-India over the last two years, it gives them a moral upper hand and claim a witch-hunt. The reasons that the organisation lists behind the Government crackdown on it are the same as those cited by tormented civil society activists — namely “unequivocal calls for transparency in the Government, more recently for accountability of the Delhi police and the Government of India regarding the grave human rights violations in Delhi riots and Jammu & Kashmir.” Frankly, even without the Amnesty’s reports, there is far too much on-ground evidence of the charges it has made. And the way the disclosure statements and names in the chargesheet of the Delhi Police on the city riots have been circled out, targetting the liberal intelligentsia, protesters and activists while leaving out the inflammatory fringe Rightists, there is a move to freeze the right of democratic dissent. So the timing of its India exit suits Amnesty more than us at this point of time.
It would have made more sense had the Government zeroed in on Amnesty in 2016, when it was booked in a sedition case for allowing “anti-India” slogans on Kashmir at an event in Bengaluru. But to pursue it for violating foreign funding rules in 2019 obviously raises questions on intent. Amnesty though claims that its India operations have been funded domestically. The immediate context seems to be the report it released last month on the complicity of Delhi police in the riots. Yes we must defend our pluralism and challenge the official narrative. But by hounding out Amnesty, we have a public relations battle ahead. Nothing will happen to it. Nothing would have if it had been allowed to continue.
The benefits of filing taxes are many apart from the fact that we should be responsible citizens of the country
Given the havoc that the Coronavirus pandemic has played on the economy of the country and personal incomes of people, the Government has extended the Income Tax Return (ITR) filing deadline for the financial year (FY) 2019-20 to November 30. However, not many people are aware that they may be liable to file their ITR this time around even if their income was below the taxable limit in FY 2019-20. Though this may make people question the intention of the Government in the face of the hardships being faced by them due to salary cuts and lay-offs, but this has been done in a bid to catch tax evaders. In a bind because of the crumbling global and Indian economy even before the outbreak proved to be the last straw that broke the camel’s back, the Government last year introduced certain criteria from FY20 that make individuals liable to file ITR. The whole idea behind enhancing the return filing criteria is to catch unscrupulous taxpayers where there is a mismatch between the declared income and the expenses incurred by the assessee.
Even though most people tend to believe that filing an ITR is relevant for assessees with income above the tax slab, it has multi-layered importance, irrespective of whether the income is above or below the taxable limit or whether there’s a tax liability or not. Significantly, if the income is below the taxable limit or is “zero” the return is called “nil” return. But it acts as proof of funds accumulated in bank accounts or investments because, even if a person is earning an income below the taxable limit, over the years they create a corpus. In case there is any scrutiny after a few years, it becomes a tiring and lengthy process to prove the source of earnings, without an ITR, which is a legally-accepted proof of income.
Plus, under the seventh proviso to Section 139(1) of the Income-tax Act, 1961, even if the income is below the exempted limit, an assessee will have to file an ITR if they paid an electricity bill of Rs 1 lakh or above during the year; deposited Rs 1 crore or more in one or more current accounts and incurred an expenditure of Rs 2 lakh or more for travel to a foreign country. An individual travelling or planning to travel abroad requires a legal proof of earning. For salaried people, the employer certificate serves as proof. However, for individuals who are self-employed, the ITR can serve the purpose.
In cases where the assessee incurs capital losses during the financial year, the Income Tax Act allows him/her to carry it forward for eight consecutive years to set it off against any future gains. However, to keep track of the losses, it is mandatory to file the return before the due date even if the ITR is a loss return. Without this the losses of the year cannot be carried forward. So, even if there is no income to show, the Income-Tax Department lays it down that you declare the capital losses in your return before the due date.
In case a person has paid taxes over and above what stands payable, considering all the deductions and exemptions allowed, the assessee becomes entitled to a refund from the I-T Department. However, to get this refund, filing an ITR is mandatory. Salaried people usually believe that filing ITR isn’t required because the tax on their income has already been deducted. However, it is possible that the tax deducted and deposited as per Form 16 may be in excess of what should be cut. The employer might not have taken into consideration the actual tax-saving investments, insurances or actual house rent. In that case, filing the ITR helps to claim a refund.
Although, the Motor Vehicles Act does not make it compulsory to give the ITR while arriving at a compensation in case of disability or accidental death, the ITR is needed in case of self-employed people to establish the income of the person and arrive at the compensation amount.
Also, when a person is applying for loans, be it for a house, car or a personal loan, one of the mandatory documents required to be submitted to the loaning entity include the ITR for the last two-three years as proof of income. This is because ITR helps the lender determine the person’s income, payment obligations and loan repayment capacity. Plus when an individual intends to buy a high life cover, it is common for the insurance company to ask for proof of income. This is primarily done to assess the value of the cover amount that can be allowed to the person. The proof of income could be the salary slip, bank statement or the ITR of the past three-consecutive assessment years. So, for cases where the person doesn’t receive a salary slip or has monthly income disbursed from different groups, ITR serves as the only solid proof of income.
Then there are people who have very small incomes from sources like dividends, bank interest, family pension or tax-free earnings like agricultural income or interest on tax-free bonds. For these people, even though the proceeds are below the taxable limit, filing an ITR serves as proof of income that can be of multi-dimensional use subsequently. The benefits of filing taxes are many apart from the fact that we should be responsible citizens of the country.
(The writer is CEO, IndiaFilings)
The Government should accept the arbitration verdict and draw a line under the Vodafone issue
Pranab Mukherjee was a consummate politician and when the man, who was India’s 13th President, passed away recently, he was fondly remembered by all across the political spectrum. Yet, one of Mukherjee’s legacies as Finance Minister was the unfortunate retrospective tax legislation that he included in one of the Finance Bills he presented. This singular piece of legislation, for which the entire Cabinet of the time, including Dr Manmohan Singh, must share responsibility, ruined India’s reputation as an investment destination. It was in May 2012 that the Parliament passed the Finance Act under which various provisions of the Income Tax Act, 1961, were amended with retrospective effect to tax any gain on transfer of shares in a non-Indian company which derived substantial value from underlying Indian assets. And the exemplar of this legislation was the case the Government fought against British telecom giant Vodafone. Despite losing the case in the Supreme Court, tax authorities and the Government doubled down and the case went to arbitration in London, where even the member appointed by the Indian Government was found in Vodafone’s favour. The international arbitration tribunal ruled that India’s demand in past taxes was in fact a breach of fair treatment under the bilateral investment protection pact. Vodafone India was later on merged with Aditya Birla Group’s telecom company Idea.
Mukherjee had logic on his side when he wanted to tax deals where entities operating in the Indian market were bought and sold, even if they were not “based” in India. However, to make any act of legislation retrospective is not only unfair, it is also a confidence buster for investors, the thinking being that if it can be done once, it can be done again. When Narendra Modi said that he wanted to make doing business easier in India, he should have started by withdrawing the case against Vodafone and some other companies like Cairn. Maybe it wasn’t done lest he be accused of being friendly to industrialists or the tax authorities thought that they had a good case (as they always think) but now that the arbitration case has been lost, it is time to end this once and for all. This was a clear instance of tax terrorism and India’s reputation suffered as a result. At a time we need to roll out the red carpet for all investors, that is the least that can be done right now.
In these exceptional global conditions, coopetition — cooperation between competitors — will be vital as survival takes prominence over rivalry
The contagion has changed how business is conducted the world over. Firms which are unable to adapt are perishing as remote- working has become a norm. The post-pandemic world could throw up a lot of challenges and businesses need to revise their strategies in numerous ways to acclimatise themselves to the disruptions. An open organisational culture towards innovation, structured horizon planning and most importantly exceptional value proposition for customers and stakeholders will help businesses survive in these difficult times. Flexibility has also become crucial during these testing times. For example, a number of companies like Ford, Coca-Cola, 3M, Honeywell have augmented their traditional business models and their usual products to produce PPE (personal protective equipment) to fight the outbreak. In these exceptional global conditions, coopetition — cooperation between competitors — will be vital in times to come as survival takes prominence over rivalry. According to Bengttson and Kock, coopetition can be defined as a complex association between two business players, irrespective of their involvement, be it horizontal or vertical. A horizontal relationship would mean being business competitors or complementers in the same sector, producing similar products, whereas vertical business involves suppliers and customers. Research in this domain is unravelling tremendous benefits for competitors, who are forging mutually beneficial collaborations that are based on coopetition strategies where companies share resources such as equipment, funds and capabilities, like technical know-how, expertise and experience. These initiatives ensure mutually-beneficial outcomes by pursuing goals collaboratively that otherwise would be difficult to chase, which in turn improves their financial performance.
However, there is a catch here. Coopetition is not as easy as it seems, as rivals cannot suddenly collaborate, as this has to happen at all levels, top, middle and bottom. According to researchers, the degree of collaboration is inversely proportionate to the magnitude of rivalry or competition. In fact, it is a delicate balance between collaboration and rivalry. If businesses that complement each other work together, there is a potential for huge benefits. But if rivalry or competition is high, it could lead to adverse performance outcomes.
Several rival companies have taken advantage of collaboration and there are several motives to take this strategic route. First and foremost, the main motive is to effectively utilise scarce resources. Coopetition can effectively utilise scarce resources by integrating them to efficient production with lower risks. For example, in the electronics industry, Samsung Electronics and Sony worked together to develop the flat screen LED televisions by sharing R&D costs. This strategy is also used to increase the current market size or create a new market by introducing new products or services. Costs and risks are shared and companies can dominate their competitors. In the automobile industry, rivals Ford and Toyota teamed up to develop Atlas Ford F-150 hybrid pick-up truck, which went on to become the best-selling hybrid in this segment. The third motive is to augment the competitive position by increasing the market share. Protecting the current market share and increasing the same is one of the important strategies of firms. Giants like Google and Mozilla are working together with Google supporting and funding Firefox, Mozilla’s web browser, to beat the web browsers of its rivals Apple and Microsoft.
There are several other examples to show how companies benefit through coopetition. EDX is a non-profit organisation, which was founded by rivals Harvard University and MIT to provide free online education worldwide. Similar coopetition can also be seen between Amazon (Kindle) and Apple (iPad). They entered into an agreement in 2007 to deliver Amazon e-books through an iPad Kindle App which enabled Amazon to access a wider market and made iPad a complete content provider. This type of cooperation is also seen in the airline industry where competitor airlines use each other’s networks and ground staff for efficient services. One example is the Star Alliance network of competing airlines Thai Airways, Singapore Airlines, Lufthansa, Air India and many more. Its aim was to provide a seamless experience to travellers and also save on logistics, marketing and other costs. Fierce competitors in the beverage industry, Coca-Cola and Pepsi, along with Red Bull and Unilever have come together to set up a non-profit organisation to develop sustainable supply chain technologies, particularly in refrigeration, to fight global warming and ozone depletion. The phenomenon of coopetition gained popularity as a counter-intuitive strategy for a networked economy, leading to mutual benefits for both firms, like increasing their knowledge and expertise, sharing costs of new developments and R&D, improving market share and expanding into new markets. With the advent of technology, it is now easier for firms to reach out to competitors and other stakeholders. This strategy of cooperation among competitors and suppliers will be all the more useful in these exceptional times.
(The writer is Associate Professor, Amity University, Noida)
The technology major is like a media company and should be subjected to similar laws
Facebook should be answerable to Governments as the technology giant can fundamentally alter the course of public discourse not just through its own network but through other assets like messaging application WhatsApp and photo-sharing application Instagram. These are all powerful tools to build organisation and opposition but can also be used to silence dissent or manufacture violence. The safe harbour provisions under which such technology companies have escaped sanction for many years cannot be allowed to continue unchallenged. The likes of Facebook and Google are not just technology companies, they are media companies, too, and should be subjected to similar laws. Technologies like deepfake videos, where even a few photographs can be used to manufacture a video showing a personality spouting opinions far from his/her real stand, can potentially alter the course of a democracy. Think of this as the new terrorist attack before an election. By the time any rectification takes place, often due to delays, the damage has been done.
We agree that it is impossible to keep a check on every single user at every single point of time. However, it is also true that technologies are being developed to be able to quickly find potential hateful content. That said, it is important to haul these companies under the Central Government and on that front, Facebook India does have a point in refusing to appear before the Delhi Government’s Peace and Harmony Committee. The company is currently being hauled over the coals in a parliamentary committee, not just in India but in several countries across the world as Governments realise that its power needs to be kept in check for the growth of democracy. This includes the United Kingdom and the United States. Indeed, we wish the parliamentary committee hearings in India were streamed live for the public to observe and decide for themselves. Tech majors can do more themselves. For example, they should work a lot closer with traditional media companies as well as develop technologies that can easily detect videos that promote hate as well as those where users threaten self-harm. Facebook should not be allowed to escape with impunity but making it answerable to multiple agencies will serve little purpose either. Indeed that could actually delay meaningful reform.
(Courtesy: The Pioneer)
India’s rising COVID-19 numbers and a second wave in the West mean that economic revival is a long way off
China has enjoyed showing its thumb to the world and in a brazen display of insensitivity, it recently allowed a mass beach party to take place in the city of Wuhan, the epicentre of the contagion that is ravaging the lungs of people across the world as well as the global economy. Stock markets worldwide are in a tumble once again as renewed curbs across Europe, following a resurgence of the pandemic, cast a shadow on economic activity that was picking up pace. The cascading impact hit D Street, too, as foreign portfolio investors and domestic institutions dumped shares, plunging graphs southwards. And although our market has recovered by about 50 per cent from the lows of March, it is still patchy and any decelerator sends it crashing too. Large countries like the UK as well as several cities and states across the US are being forced into another round of lockdown to prevent a devastating “second wave,” which means shuttering businesses that had opened. In India, while numbers have stabilised, albeit with lower testing numbers as well as evidence that district and city level officials are restricting testing deliberately, the pandemic appears to have become a fact of life with most cities whirring back. In Kerala, the State Government is allowing asymptomatic workers to return to their jobs in a secluded work zone. Yet, full steam ahead is quite a way off. While the impending festive season and the action in the Indian Premier League (IPL) will bring a spending boost, the levels will be nowhere close to those of past years. The problem is while businesses aren’t completely dysfunctional, allowed as they are to operate freely in non-restricted areas, they are inter-connected to supply and distribution chains across States. Stalling of operations in one hub in a badly-hit State is bound to affect others as the cascading effect slows down the sector a particular business is into, and thereby grunts the overall economy. With attendance and production capacity affected by restrictions, some sectors cannot even take off optimally. Bengaluru is a prime example. With most IT workers having left the city through a series of lockdowns, they returned in waves, thereby, slowing down the desired momentum for recovery. All such micro-blocks are threatening to disrupt the little gains made in reviving the economy. A slew of economic relief measures, too, has failed to inspire confidence among businesses as corporate finances remain squeezed, sales have not regained momentum and demand remains low. Even the amount allocated for bailing out MSMEs remains largely undistributed.
As some have described it, 2020 is a lost year, a year spent bleeding and that can only stop next year. Anyway the process of full recovery will not start before 2022. That said, others are still quite hopeful of a rebound economy and while expecting numbers to be lower than before, they feel they would be fairly decent. Many of these people are seen in the stock exchanges betting big. The rise in the price of many major stocks despite the lost first and insipid second quarters of the year was a sign that some would hold out long-term. As long as COVID-19 is around, there will be a continuing drop in demand and supply chain inconsistencies. Besides, there are sectoral spurts while the economy as a whole needs to stabilise. Given the Government’s long-range structural reforms, stimulus and relief by RBI, many investors are still using the volatility to their advantage by focussing on long-term prospects and asset allocation and choosing to build a solid portfolio. While many Indians do not have a choice but to live with the virus, some nations might prioritise differently. That said, it appears that the virus will keep on coming back. If we are to learn anything from the 1919-1920 Spanish flu epidemic, it is that it just took time to eliminate it. Vaccines did not exist then. But a price of asking for time will be that the economic bleeding might last longer and many worry that a body without any blood is not worth saving. So, will 2021 also be frightening year? It is a question worth asking now. Global ratings agency Fitch has already estimated that the Indian economy is expected to contract by 10.5 per cent in 2020-21. And while industry federations are hopeful that growth can be expedited through continued government support and hand-holding of businesses during this crisis, they are still cautiously optimistic about full capacity utilisation. This is going to be a long road to recovery.
(Courtesy: The Pioneer)
FREE Download
OPINION EXPRESS MAGAZINE
Offer of the Month