Category: Economy

Walmart, the largest shareholder of Indian e-commerce giant Flipkart, is poised to invest approximately $600 million in a new fundraise for the startup, as confirmed by a Flipkart spokesperson on December 21.

Reports suggest that Flipkart is actively engaging in talks to secure a total of $1 billion in fresh funds, with discussions underway for new investors to join the funding round.

According to sources familiar with the matter, the latest funding is anticipated to value Flipkart at a premium of about 5% to 10% compared to its current valuation of $33 billion. However, this falls short of the nearly $38 billion valuation the company attained in 2021.

Walmart, a U.S. retail giant, has been intensifying its presence in the Indian market since acquiring a 77% stake in Flipkart for approximately $16 billion in 2018. Earlier this year, Walmart increased its control over Flipkart by acquiring remaining stakes from hedge fund Tiger Global and venture capital firm Accel for $1.4 billion.

Flipkart, focusing on small towns and cities, has emerged as one of India’s leading online marketplaces, distinguishing itself from urban-centric rival Amazon.

The company adjusted its plans for an initial public offering (IPO) to 2023 and internally raised its IPO valuation target to $60-$70 billion in 2022.

Seoul and Tokyo have taken a major step towards economic reconciliation, holding their first high-level economic talks in eight years on December 21st. The meeting marks a significant breakthrough after relations were strained by historical disputes and trade restrictions.

The talks, dubbed the “Joint Committee on Economic, Trade and Industrial Cooperation,” aim to revitalize economic ties between the two Asian powerhouses. Previously stalled since 2016, the dialogue’s resumption signals a thaw in relations that have witnessed positive momentum this year.

Several factors have contributed to this warming trend. In March, Japan lifted export curbs on high-tech materials to South Korea, and in July, it reinstated the country to its “white list” for fast-track trade. Additionally, South Korea independently offered compensation to victims of Japan’s wartime forced labor, addressing a key source of tension.

While historical issues remain unresolved, both countries seem eager to prioritize shared strategic interests and economic prosperity. The recent talks focused on supply chain cooperation, digital economies, and environmental collaboration. A successful dialogue could open doors for further ventures in areas like infrastructure development and joint technological projects.

However, challenges persist. The unresolved “comfort women” issue, concerning Korean women forced into sexual slavery during World War II, remains a sensitive point. Additionally, South Korea’s ban on seafood from areas affected by the Fukushima nuclear disaster could hinder progress.

Despite these hurdles, the resumption of economic talks sends a positive message. It signifies a willingness to move beyond past grievances and focus on pragmatic cooperation. If sustained, this newfound economic understanding could pave the way for a more stable and prosperous partnership between South Korea and Japan.

In a market twist, limited rice supplies from Vietnam have caused a price spike, sending Vietnamese rates soaring to their highest level since 2008. This unexpected jump has, in turn, fueled demand for the more affordable Indian parboiled rice variety, pushing its prices to their highest in two months.

Vietnamese rice, known for its premium quality, has seen export disruptions due to factors like lower crop yields and stricter quality controls. This sudden supply crunch has created a vacuum that Indian exporters are eager to fill. Indian parboiled rice, while not as high-end as its Vietnamese counterpart, offers a cost-effective alternative for buyers, particularly in Africa and the Middle East.

“The Vietnamese situation has opened up a window of opportunity for Indian exporters,” said a Mumbai-based rice trader. “We are seeing renewed interest from buyers who were previously sourcing from Vietnam, and this is pushing up Indian prices.”

However, analysts caution that the Indian rice rally might be short-lived. While Vietnam’s supply issues are expected to persist in the short term, a larger global rice harvest in 2024 could bring prices back down. Additionally, India’s own rice export restrictions, implemented to manage domestic inflation, could dampen the overall surge.

Despite the uncertainties, the current scenario highlights India’s potential as a reliable and competitive rice exporter. By capitalizing on Vietnam’s temporary hiccup and addressing its own internal hurdles, India could solidify its position as a major player in the global rice market.

India’s western state of Gujarat has secured a major economic boost with investment pacts worth a staggering $18.75 billion signed with various firms across diverse sectors. This surge comes just days before the state’s biennial investment forum, raising hopes for further industrial development.

The deals, inked on December 20th, encompass a wide range of industries, including green energy, manufacturing, infrastructure, and finance. A significant portion, $5.11 billion, will be injected by Welspun Enterprises, partially focused on building green hydrogen and green ammonia facilities, aligning with Gujarat’s environmental ambitions.

Other notable agreements include partnerships with state-backed institutions like Housing and Urban Development Corporation (HUDCO) and National Bank for Agriculture and Rural Development (NABARD). These will provide loan disbursements of 145 billion rupees ($1.74 billion) and 260 billion rupees, respectively, further fueling infrastructural growth and rural development.

Gujarat’s recent investment spree extends beyond this week’s pacts. Last week, steel giant ArcelorMittal Nippon Steel India committed 125 billion rupees to upgrade its existing project in the state, while conglomerate Essar announced a massive 550 billion rupees investment in energy transition, power, and port sectors.

These developments position Gujarat as a prime investment destination, attracting leading firms and contributing to India’s overall economic growth. The state’s investor-friendly policies, robust infrastructure, and skilled workforce are all crucial factors driving this success.

With the upcoming forum expected to attract more industrial giants, Gujarat’s economic engine is set to rev up even further, solidifying its position as a key player in India’s industrial landscape.

After two years of debate, EU finance ministers finally clinched a deal on Wednesday, breathing new life into the bloc’s fiscal rulebook. The reformed regulations, set to take effect in 2025, offer member states more leeway in debt reduction timelines and incentivize investments critical for Europe’s future.

This shift marks a departure from the stricter fiscal straitjacket imposed after the 2008 financial crisis. The pandemic further squeezed economies, pushing debt levels to record highs. Coupled with ongoing geopolitical and economic uncertainties, the need for greater flexibility became undeniable.

Under the new plan, countries will have longer periods to bring down their debt – up to seven years with certain conditions. Additionally, a spending “golden rule” allows for uncapped investments in areas deemed crucial for the EU’s future, such as green energy transition and digitalization. This fosters fiscal responsibility while encouraging investments that drive long-term growth and competitiveness.

While some argue the loosened rules might jeopardize fiscal discipline, proponents contend it strikes a crucial balance. “This agreement recognizes the realities of today’s world,” emphasized Eurogroup President Paschal Donohoe. “It ensures responsible fiscal management while allowing vital investments in our collective future.”

The deal now faces scrutiny from the European Parliament before becoming law. Though minor adjustments are possible, the core elements are unlikely to change. The impact on national budgets will only be felt from 2025 onwards, but the message is clear: the EU is adapting its fiscal framework to face a complex and evolving global landscape.

Razorpay, Cashfree, and Open have received the final approval from the Reserve Bank of India (RBI) to operate as payment aggregators. This comes after Razorpay temporarily halted onboarding new online merchants in December 2022, following an advisory from the RBI.

A spokesperson for Razorpay expressed excitement about the recent authorization, stating, “We are now open to onboard new businesses on our Payment Gateway platform!” The company, having received the final authorization under the Payment Settlements Act, 2007, is eager to resume onboarding new customers and provide industry-first payment solutions. Razorpay takes pride in being among the first payment gateways to receive the final payment aggregator (PA) license from the RBI.

Cashfree Payments, another beneficiary of the RBI’s approval, sees this as a pivotal moment. A spokesperson stated, “Securing the Payment Aggregator (PA) license from the RBI is a pivotal moment for Cashfree Payments, affirming our focus on compliance and highlighting the significance of a well-regulated payments landscape.” The company is now actively onboarding new merchants on its payment gateway, marking the beginning of a new phase focused on exponential growth and retaining market leadership.

The resumption of operations took nearly a year for Razorpay, which had initially received in-principle approval for the PA license in July.

UPI payments giant Google Pay, Mumbai-based expense management platform Enkash, payment gateway company Paymentz and Bengaluru-based neo banking startup Open Financial have also received the regulatory nod.

Kenya and the European Union (EU) are on the verge of solidifying an Economic Partnership Agreement, marking a significant step toward providing Kenya with duty-free status and unhindered access to the EU market. The draft deal, initiated after seven months of negotiations and initially led in June, gained approval from the European Union Council last week.

Rebecca Miano, Kenya’s trade minister, emphasized the transformative impact of the agreement, stating, “Today’s agreement heralds a new dawn where Kenyan goods gain immediate duty- and quota-free access to the European market.” The EU stands as one of Kenya’s largest export destinations, particularly for products such as tea, coffee, flowers, fruits, and vegetables, constituting 21% of the nation’s overall exports.

The deal, which will be presented to the respective parliaments for ratification, holds the promise of reciprocal benefits. While Kenyan goods secure preferential access to the European market, European products will also enjoy similar advantages in Kenya over time.

Bilateral trade between Kenya and the EU reached 3.3 billion euros in 2022, making the EU Kenya’s second-largest trade partner. This agreement follows Kenya’s 2016 initial trade deal with the EU, which involved its partners in the East African Community trade bloc. However, this earlier agreement did not receive widespread adoption within the EAC.

President William Ruto emphasized the inclusivity of the new deal, welcoming all eight member nations of the expanded East African Community to join. EU Commission President Ursula von der Leyen encouraged other Eastern African countries to participate, recognizing the potential for shared economic growth and development.

In a significant move highlighting the ongoing thaw in geopolitical tensions, Abu Dhabi’s state-controlled AD Ports Group is poised to acquire a stake in Turkey’s key port, Izmir, according to confidential sources close to the deal. The investment, estimated at around $500 million, will be facilitated through an entity formed by the Turkey Wealth Fund, which currently owns the strategic Aegean coast port.

While the size of the stake remains undisclosed, the deal underscores the warming relations between the UAE and Turkey. The Izmir port, owned by Turkey’s sovereign wealth fund, is in dire need of fresh investment to enhance its capabilities as an essential gateway.

The potential transaction aligns with Turkey’s push for foreign investment to bolster its recent shift away from unconventional economic policies. The global restructuring of manufacturing strategies, driven by pandemic-related supply chain vulnerabilities and geopolitical tensions, has underscored the critical role of ports in the new landscape.

This move follows a meeting between Turkish President Tayyip Erdogan and UAE President Sheikh Mohamed bin Zayed Al Nahyan at the COP28 U.N. climate summit in Dubai.

The investment by AD Ports Group is in line with broader UAE initiatives to explore economic opportunities in Turkey, including energy and logistics, as both nations work to mend ties and foster greater collaboration. The planned investment also reflects a broader trend of foreign investors cautiously returning to Turkish markets, buoyed by recent economic policy adjustments and attractive opportunities.

Britain is gearing up to wield a new weapon in its climate arsenal: a levy on carbon-intensive imports. Starting in 2027, steel, cement, fertilizers, and more will face a price based on their emissions and the carbon pricing gap between their origin and the UK.

This “carbon border adjustment mechanism” aims to level the playing field for UK producers facing cheap, high-emission competition.

Finance Minister Jeremy Hunt sees the levy as a two-pronged attack: protecting British businesses and pushing global emissions down. He emphasizes that imported goods must “face a comparable carbon price” to incentivize cleaner production across the globe.

This move aligns with the UK’s net-zero goal by 2050 and its existing emissions trading scheme. But it also follows the EU’s similar initiative launched this year, raising concerns about a potential trade war.

Concerns have been raised by industry stakeholders, including Gareth Stace, Director General of UK Steel, who believes the UK scheme’s implementation, one year after the EU’s CBAM, could potentially lead to an influx of high-emission products into the UK. The European Union initiated the first phase of its CO2 emissions tariffs on imported goods, including steel and cement, in September, with full implementation scheduled for 2026.

Indonesia and Japan have successfully concluded negotiations to enhance their bilateral economic agreements, marking a crucial step towards improved trade relations. The announcement was made by Indonesia’s Foreign Minister, Retno Marsudi, on December 16, following discussions between Indonesian President Joko Widodo and Japanese Prime Minister Fumio Kishida.

As part of the agreement, Japan has committed to removing trade barriers, granting greater access for Indonesian products. This includes the elimination of tariffs on processed fishery items, a move that is expected to boost Indonesia’s export of such products. The banking sector is also set to benefit from improved relations between the two nations.

The negotiations aimed at amending the Indonesia-Japan Economic Partnership Agreement (IJEPA), initially signed in 2007, are nearing completion. Both countries are optimistic about implementing the amended agreement by the first quarter of 2024. However, the formal signing and ratification by their respective parliaments, following legal checks, are yet to take place.

During the meeting, President Joko Widodo emphasized the strategic importance of Indonesia and Japan’s collaboration on critical minerals. This collaboration aligns with Indonesia’s ambition to position itself as a key player in the global electric vehicle (EV) battery supply chain. Jakarta had specifically sought the removal of tariffs on its canned tuna exports, further emphasizing the mutual commitment to fostering economic growth and cooperation.

The developments unfold against the backdrop of a Tokyo summit commemorating 50 years of diplomatic ties between Japan and the Association of Southeast Asian Nations (ASEAN).