How 1996 World Cup is back to haunt foreign portfolio investors

The Budget earlier this year announced a 20% withholding tax on dividends paid to FPIs.

A recent Supreme Court ruling on the 1996 Cricket World Cup could have implications for foreign portfolio investors.

The ruling held that provisions for deducting tax at source will apply even to those covered by tax avoidance treaties. The Budget earlier this year announced a 20 per cent withholding tax on dividends paid to FPIs. Taken together, it may mean FPIs cannot seek treaty protection against the new withholding tax that companies are required to deduct at source, according to experts. The apex court order pertains to when the cricketing bodies of Pakistan, India, and Sri Lanka formed a joint committee to conduct the 1996 Cricket World Cup. The panel had made certain payments overseas as part of the tournament.

“India, Pakistan, and Sri Lanka were selected, on the basis of competitive bids, to have the privilege of jointly hosting the 1996 World Cup. These three host countries were required to pay varying amounts… in connection with conducting the preliminary phases of the tournament and also for promoting the game in their respective countries,” noted the order.

The tax department later said it should have deducted taxes for the same. The final Supreme Court order on the matter came on April 29, where it ruled in favour of the tax authorities while also noting that a Double Taxation Avoidance Agreement (DTAA) cannot shield investors from a withholding tax.

“The obligation to deduct tax at source under Section 194E (of the Income-tax Act) is not affected by the DTAA and in case the exigibility to tax is disputed by the assessee on whose account the deduction is made, the benefit of the DTAA can be pleaded and if the case is made out, the amount in question will always be refunded with interest. But, that by itself, cannot absolve the liability under Section 194E,” it said.

After Infosys, now Wipro hires a Capgemini top executive as CEO & MD

Appoints French IT services firm's COO Thierry Delaporte for its top post.

With Wipro announcing to appoint Thierry Delaporte for its top post, two of the leading Bengaluru-headquartered companies will now have CEOs & MDs who were previously working with French IT services major Capgemini in leadership roles. Salil Parekh, who is presently the CEO & MD at Infosys was a member of the Group Executive Board ay Capgemini looking after the company’s UK, Asia Pacific and financial services business before joining the Bengaluru firm in January 2018.

Wipro on Friday announced that Delaporte who is Capgemini’s chief operating officer and also a member of the group executive board, would join the company as its CEO & MD, effective July 6, 2020. A French national, he would be based out of Paris. Wipro also said that since Neemuchwala would leave the company from June 1, its chairman Rishad Premji would oversee the daily operations of the firm during this interim period.

During his twenty-five year career with Capgemini, Delaporte held several leadership roles including that of chief executive officer of the global financial services strategic business unit, and head of all global service lines. His experience in overseeing Capgemini’s India operations- one of the largest delivery centres of the company- is likely to put him in good stead in managing the operations of Wipro. He has a bachelor’s degree in economy and finance from Sciences Po Paris and a Masters in Law from Sorbonne University.

“I am delighted to welcome Thierry as CEO and Managing Director of the company. Thierry has an exceptional leadership track record, strong international exposure, deep strategic expertise, a unique ability to forge long-standing client relationships, and proven experience of driving transformation and managing technological disruption. We believe that Thierry is the right person to lead Wipro in its next phase of growth,” said Rishad Premji, Chairman at Wipro Ltd. “I want to thank Abid for all that he has done for Wipro and for making this transition as smooth and seamless as possible despite his personal commitments.”

RIL to Hindustan Unilever, stocks that drove Nifty off coronavirus lows

Barring three stocks - Eicher Motors, Shree Cement and Bajaj Finance - all the Nifty components have gained during this two-week period.

The markets have rebounded nearly 15 per cent from their coronavirus lows logged on March 23, when the Nifty had posted its biggest single-day loss to end at a four-year low of 7,610. The index jumped 9 per cent jump on Tuesday to end at 8,792, gain of 1,182 points in two weeks.

Barring three stocks — Eicher Motors, Shree Cement and Bajaj Finance — all the Nifty components have gained during this two-week period. However, the share prices of only 23 Nifty companies have bettered the benchmark.

Further, only eight stocks have accounted for nearly two-thirds of the gains. Among the biggest contributor to the Nifty spurt from the March 23 low is Reliance Industries.

Shares of the Mukesh Ambani-led firm has been the biggest gainer and also the largest contributor to the index gains. It has rallied 36 per cent and have accounted for 21 per cent of the Nifty’s 1,182-point gain.

HDFC Bank, Infosys, and Hindustan Unilever have been the next largest contributors, even though aren’t the biggest gainers. The notable laggards are automobile, NBFC and metal stocks.

Jeff Bezos teams up with Narayana Murthy to enter India's food delivery biz

Amazon's entry in the food delivery business comes at a time when Zomato and Swiggy have started cutting back on discounts.

Amazon is all set to start its food delivery business in India from Bengaluru next month, says a news report in The Economic Times.

The launch of the service, which would be offered as part of either Amazon’s Prime Now or Amazon Fresh platform, could happen as soon as next month. With this, Amazon will take on estabished players such as Zomato and Swiggy.

Executives at two restaurants, who did not want to be named, confirmed that Prione Business Services, a joint venture between Infosys cofounder NR Narayana Murthy’s Catamaran Ventures and Amazon India, has been signing contracts with brands to list on Amazon, offering 10-15% commissions, the report said.

The report points out the e-commerce giant had already started pilot testing its service in select parts of Bengaluru, and by March, it will be rolling out to other parts of the country, says a news report in Dainik Bhaskar

Amazon’s entry into the food delivery market would create new challenges for Prosus Ventures -backed Swiggy, and Zomato, a 10-year-old startup that acquired Uber’s Eats business in India for about $180 million in January.

Amazon's entry in the food delivery business comes at a time when Zomato and Swiggy have started cutting back on discounts.

Last month, Bezos told the audience at an Amazon event in New Delhi that the company plans to invest $1 billion in India.

Infosys fined $800,000 for worker misclassification, tax fraud in US

California initiated legal actions against Infosys after a compliant was filed by whistleblower Jack 'Jay' Palmer, a former Infosys employee.

Market News : Infosys, India's top IT major, has agreed to pay $800,000 to settle allegations of misclassification of foreign workers and tax fraud, officials announced Tuesday.

Infosys will pay California $800,000 (nearly Rs 56 crore) to resolve allegations that between 2006 and 2017, approximately 500 Infosys employees were working in the State on Infosys-sponsored B-1 visas rather than H-1B visas, California Attorney General Xavier Becerra said.

This misclassification resulted in Infosys avoiding California payroll taxes such as the unemployment insurance, disability insurance, and employment training taxes.

H-1B visas also require employers to pay workers at the local prevailing wage, an official statement said.

"Today's settlement shows that attempting to evade California law doesn't pay. Infosys brought in workers on the wrong visas in order to underpay them and avoid paying taxes. With this settlement, California has been made whole," Becca said.

In the settlement, Infosys, however, denied the allegations and asserted of no wrongdoings.

In 2017, Infosys had agreed to pay the State of New York $1 million to settle allegations of submitting wrong documents to federal authorities.

The Californian settlement that was carried out in November was released to the media on Tuesday.

California initiated legal actions against Infosys after a compliant was filed by whistleblower Jack "Jay" Palmer, a former Infosys employee.

Palmer had sued the Indian company in 2017.

Business Standard

India should integrate AI with education to become world leader: Sikka

Last month, at the request of PM Modi, Sikka gave a presentation before the NITI Aayog how to expand the reach of AI to the Indian society in a very big way.

Business Standard : Former Infosys CEO Vishal Sikka, who has announced a new AI startup with $50 million fund, believes India has the potential to become a world leader in artificial intelligence but the key to this is integrating AI into the country's education system in a massive way.

India is at "an inflection point" when it comes to AI or artificial intelligence, Sikka said.

Over the next 20-25 years, AI is going to be "a very, very big disruptor" for the Indian society because what one is seeing now in terms of automation and job losses because of automation is just the beginning, said Sikka, who announced his startup Vianai Systems last week.

"But on the other hand, if we are able to bring AI education, the ability to build AI systems to India at a very large scale, and I'm talking about like billion plus people, then India can really leap frog and become the world's leader in artificial intelligence, in AI skill and AI talent," Sikka told PTI in an exclusive interview.

Doing that requires working on multiple dimensions in parallel, he said.

Last month, at the request of Prime Minister Narendra Modi, Sikka gave a presentation before the NITI Aayog how to expand the reach of AI to the Indian society in a very big way.

Representatives of some 20 Union ministries were present during his presentation on AI and India. This, he said, required creating necessary infrastructure to bring the talent through institutions, schools and educational institutions, the ability to do AI education at a large scale.

According to Sikka, the prime minister said he personally saw whenever classes worked into digital classrooms, he was joking that children would sometimes even forget to eat their lunch because they were so engrossed in learning. "It was very encouraging. But I think a lot of that has to be done," he said and suggested multi-faceted countrywide programme like digital classrooms.

If India does nothing then this great wave of AI is going to have massive disruption over the next 20 years. But on the other hand, if it puts together programmes then this can be a huge advantage for it and "we can be a leader in the world," he said.

Private Banks, Reliance Industries, Infosys take Sensex to new high

The Nifty50, too, breached the 11,700 level for the first time since September 2018 to hit an intra-day high of 11,716.

A sharp rally in three private sector banks – HDFC Bank, ICICI Bank and Axis Bank – that have gained over 10 per cent each from their August 29, 2018 level helped the benchmark index S&P BSE Sensex breeze past the 39,000 mark and hit a new high on Monday. The benchmark index surpassed its previous high of 38,990 recorded on August 29, 2018 in intra-day deals.

The Nifty50, too, breached the 11,700 level for the first time since September 2018 to hit an intra-day high of 11,716.

Besides these three private sector banks, Reliance Industries (RIL), Infosys, Bajaj Auto, Asian Paints, HCL Technologies, Larsen & Toubro (L&T) and State Bank of India (SBI) have gained in the range of 4 to 9 per cent from their August 2018 levels and helped the 30-share index record a new high on Monday.

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“There is more steam left and I feel the S&P BSE Sensex can hit 40,000 levels before the election results are known in May. The optimism stems from the strong foreign flows that we are getting. India now seems to be an attractive investment destination for foreigners amid slowing global growth,” says G Chokkalingam, founder and managing director, Equinomics Research.

Among sectors, most analysts remain bullish on the banking space despite the recent run-up and suggest investors stay put with large private sector banks and good quality public sector plays.

A pick up in industrial activity that will spur corporate loans, aggressive recognition of bad assets and improving recovery that will help boost asset quality, softening credit costs that is likely to propel return ratios and burgeoning share of retail term deposits which is likely to provide long-term stability to the source of funds are the factors working in favour of private sector banks, say analysts at Edelweiss Research. Axis Bank and ICICI Bank are their preferred picks in this segment.

Meanwhile, 17 out of 31 stocks that comprise the S&P BSE Sensex are still trading below their August 29, 2018 levels, shows data. Tata Motors, Tata Motors DVRs, Mahindra & Mahindra and Maruti Suzuki India have lost over 25 per each on the BSE during this period.

Autos, analysts say, are under pressure with respect to their monthly sales numbers. At the same time, the inventory levels are also on the higher side, which they feel, will take some time to get cleared. However, with improving liquidity and decreasing rates, there could be support coming over the next few months.

Infosys to set up three innovation hubs in Australia; to create 1,200 jobs

As part of its localisation initiatives in Australia, Infosys has already recruited 75 graduates from the country.

Country's second largest IT services firm Infosys on Wednesday said it would open three innovation hubs in Australia and create 1,200 jobs by 2020 in the region as the IT firm looks to increase digital offerings for its clients apart from bridging the digital skill gap in the country.

The company also said that it would absorb graduates from the Australian university to fill around 40 per cent of the 1,200 jobs that it will create in the next two years.

"As a key technology partner of Australian business, we are proud to announce our commitment to accelerating digital skills in the region through the creation of 1,200 skilled jobs, the development of our new innovation hubs and our deepening partnerships with academia,” said Pravin Rao, chief operating officer at Infosys.

As part of its localisation initiatives in Australia, Infosys has already recruited 75 graduates from the country out of which, half of the new hires have completed their induction training and are ready to be inducted into strategic client projects.

“The expansion of our Australian team, together with our planned innovation hubs are very important as we help navigate our clients in their digital journey," said Andrew Groth, senior vice president for Australia and New Zealand at Infosys.

In an earlier interview, Infosys CEO Salil Parekh had told Business Standard that the company would set up innovation hubs in Australia. "In Europe and Australia, we are now evaluating fewer cities. In Australia, we're looking at two and will announce one. Within the next six months, we'll start to announce the non-US ones," Parekh had said.

The Bengaluru-headquartered firm is in the process of setting up four innovation hubs in the United States and has announced to hire 10,000 locals in this key client geography. It recently said that the company had already hired 6,200 Americans since May 2017 as part of this initiative.

Infosys, which reports revenues from Australia under 'rest of the world', witnessed 6.8 per cent sequential growth in constant currency terms in its revenues from this geography during the second quarter of ongoing fiscal. Rest of the world contributed 13.2 per cent of company's total revenues, which stood at $2.92 billion in the September quarter of FY19.

Business Standard