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 SEBI Levels Playing Field for FVCIs with New Governance Norms

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The Securities and Exchange Board of India (SEBI) has issued new norms that bring foreign venture capital investors (FVCIs) under the same regulatory framework as foreign portfolio investors (FPIs). This move marks a significant overhaul of the registration and governance framework for FVCIs, aiming to establish greater parity between the two investor categories. Under the updated norms, effective from January 1, 2025, FVCIs will be required to delegate their registration and governance processes to designated depository participants (DDPs), aligning with the current requirements for FPIs. The amendments also mandate FVCIs to disclose details of beneficial ownership under the Prevention of Money Laundering Act, enhancing transparency and compliance. Key changes include revisions to registration and eligibility criteria, application requirements, the rationalization of registration costs, and the introduction of a renewal fee. Previously, SEBI managed the registration and due diligence processes directly, but these responsibilities will now be handed over to DDPs. This change reflects SEBI’s broader strategy to reduce its direct involvement in the day-to-day operations of intermediaries, allowing the regulator to concentrate more on policy-making and regulatory oversight. Gazal Rawal, Partner at Cyril Amarchand Mangaldas, noted that while the changes may increase compliance burdens for DDPs amid ongoing regulatory adjustments, they will ultimately enhance governance and transparency. She added that the application process for FVCIs is expected to be streamlined in the future, similar to FPIs, with registration, PAN allotment, and KYC for bank and dematerialized accounts to be managed through a common form. Legal experts see these reforms as an effort to replicate SEBI’s success in delegating responsibilities to DDPs for FPIs. “New concepts like notifying the DDP of material changes, renewal of registration, and the imposition of late fees for renewal have been introduced for FVCIs. This move aligns SEBI’s approach to reduce its direct operational involvement with intermediaries,” said Ritul Sarraf of Nishith Desai Associates. Interestingly, restrictions under Press Note 3 on foreign direct investment from land-bordering countries and additional disclosure requirements for FPIs do not appear to apply to FVCIs, signaling nuanced regulatory considerations. The updated norms come after a year-long consultative process, providing stakeholders ample time to adapt. In 2023-24, 28 new FVCIs were registered, bringing the total to 279 as of March 2024, with investments increasing by 12% year-on-year to Rs 53,922 crore, predominantly in the information technology sector. SEBI’s revamped framework is expected to streamline processes, enhance transparency, and bring FVCIs and FPIs onto an equal regulatory footing, reinforcing India’s commitment to a robust and transparent investment ecosystem. Source: Business Standard  

MCA Notifies ₹2,000 Crore Deal Value Threshold for Mergers and Acquisitions

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The Union Ministry of Corporate Affairs (MCA) has introduced a significant update to India’s merger and acquisition regulations by notifying the deal value threshold (DVT) provision under the Competition (Amendment) Act, 2023. Effective from September 10, this new rule mandates that all mergers or acquisitions with a deal value exceeding ₹2,000 crore must undergo review by the Competition Commission of India (CCI) if the target company has substantial business operations in India. This move aims to address potential gaps left by traditional asset or turnover-based thresholds, especially in the context of high-value transactions within digital markets. By incorporating the DVT, the MCA intends to provide additional scrutiny to ensure that large digital deals do not escape regulatory oversight merely because they do not meet conventional financial criteria. Alongside the DVT provision, new rules under the Competition (Minimum Value of Assets or Turnover) Rules have been introduced, offering a safe harbour for certain combinations. Transactions involving enterprises with assets below ₹450 crore and turnover less than ₹1,250 crore are exempt from CCI approval, thereby easing regulatory burdens on smaller deals unlikely to pose anti-competitive risks. The CCI has also updated its regulations under the Competition Commission of India (Combinations) Regulations, 2024, detailing how deal value is to be calculated. All forms of valuable consideration—whether direct, indirect, immediate, deferred, or non-cash—are included. This encompasses payments related to covenants, technology assistance, intellectual property rights, branding, and other inter-connected transactions within two years of the deal. The updated regulations also specify filing fees for different types of combinations: ₹30 lakh for Form I filings and ₹90 lakh for Form II filings. If a combination’s market share exceeds specified thresholds, a more detailed review (Form II) is mandated to assess its impact on competition. The newly notified regulations will have an overriding effect on all other regulations under the Competition Act related to mergers and combinations, reinforcing the importance of these updates. The amendments, passed by the Lok Sabha in 2023, are intended to modernize India’s merger control regime by introducing a more comprehensive assessment criterion focused on deal value, particularly relevant to rapidly evolving digital and tech markets. This regulatory overhaul marks a critical step in aligning India’s competition framework with global standards, ensuring fair competition and protecting the interests of consumers in an increasingly digital economy. Source: Times of India

Assam’s ‘Shiksha Setu Axom’ App Wins Gold for Excellence in e-Governance

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The Assam government’s ‘Shiksha Setu Axom’ mobile application has been awarded the prestigious gold category award for excellence in e-governance by the Centre’s Department of Administrative Reforms and Public Grievances. The award was received by Assam Samagra Siksha Mission Director Om Prakash and Executive Director Sanjoy Dutta at the National Conference on e-Governance 2024, held in Mumbai on Tuesday. The conference was organized by the Department of Administrative Reforms and Public Grievance, as stated in an official release on Wednesday. The ‘Shiksha Setu Axom’ app was recognized for its innovative use of technology to enhance real-time monitoring and attendance management, setting new benchmarks in educational governance. With a user base of 4.9 million, the app captures real-time, geo-fenced attendance of teachers, students, and non-teaching staff. Its AI-based system eliminates proxy attendance and ghost students, ensures timely teacher attendance, monitors prolonged student absence, predicts potential dropouts, and helps re-engage students. The department presented a total of nine gold, six silver, and one jury awards in the e-governance sector. By integrating AI-based solutions, the app provides an efficient and transparent platform that addresses critical issues like absenteeism, dropout rates, and the challenge of maintaining accurate attendance records. Its geo-fencing capabilities ensure that attendance data is captured only when users are physically present within designated school premises, thereby maintaining the integrity of the system. This forward-thinking approach not only supports the state’s mission to enhance educational governance but also serves as a model for other states looking to implement digital reforms in the education sector. Source: Times of India

Himachal Pradesh Government Rationalises Subsidies for Financial Prudence

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The Himachal Pradesh government, led by Chief Minister Sukhvinder Singh Sukhu, is taking steps to rationalise subsidies and freebies to address the State’s financial challenges. With the total debt soaring from ₹47,906 crore in 2018 to ₹76,651 crore in 2023, Sukhu has criticized the previous BJP regime for its wasteful expenditures and financial mismanagement. Sukhu’s government aims to improve revenue by curbing subsidies given to affluent sections of society. “We are working towards fiscal prudence, and rationalising various subsidies is one among them,” said the Chief Minister. Subsidy cuts include stopping the electricity subsidy for hotels and large commercial establishments, and imposing charges for water on rural households earning above ₹50,000 annually, while weaker sections continue to receive it for free. The government has also introduced water cess on power projects, though its implementation faces legal hurdles. Other austerity measures include deferring the salaries of top government officials for two months to symbolize the State’s commitment to financial discipline. The opposition BJP has targeted the Congress government, blaming it for the rising debt, now approaching ₹90,000 crore. Sukhu argues that his government inherited this financial burden and is taking steps to correct it, such as adopting an open tender policy for auctioning retail liquor vends, generating significant revenue compared to the previous government’s approach. Sukhu also criticized the BJP for not adequately presenting the State’s case before the 15th Finance Commission, resulting in a reduction of the revenue deficit grant and restrictions on borrowing for external projects. Sukhu’s government continues to push for reforms to stabilize the State’s finances and curb further debt accumulation. Source: The Hindu  

Unified Pension Scheme (UPS) to Provide Assured Pension, But Adds Financial Strain on Exchequer

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The newly approved Unified Pension Scheme (UPS), set to be implemented from April 1, 2025, promises to provide an assured pension to 23 lakh eligible central government employees, adding an annual financial burden of Rs 6,250 crore on the exchequer. Under this scheme, the government’s contribution will rise from the current 14% to 18.5%, while employees’ contributions will remain unchanged at 10% of their basic salary. The UPS aims to address long-standing demands of government employees by offering a guaranteed minimum pension of Rs 10,000 per month for those with at least 10 years of service. Additionally, it ensures an assured family pension in case of a pensioner’s demise, with dearness relief linked to the All India Consumer Price Index for Industrial Workers (AICPI-IW). For employees retiring before March 31, 2025, under the National Pension System (NPS), a total arrear of Rs 800 crore will be provided if they choose to switch to the UPS. The scheme, recently approved by the Union Cabinet, is seen as a move ahead of upcoming assembly elections in states like Haryana and Jammu and Kashmir. The UPS allows employees under NPS to opt in, but once chosen, there is no option to revert. The pension payout will be linked to the corpus accumulated, unlike the NPS, which is solely contributory. Employees with a service length of 25 years will receive a pension amounting to 50% of their average basic pay over the last 12 months before retirement. For those with service periods between 10 to 25 years, the pension will be proportionate. This move comes amid demands from several states to revert to the Old Pension Scheme (OPS), which was linked to dearness allowance, in contrast to the NPS. Despite the shift to NPS since January 1, 2004, some states have been pushing for a rollback to OPS. Information and Broadcasting Minister Ashwini Vaishnaw highlighted that the UPS ensures dignity and financial security for government employees, aligning with the government’s commitment to their well-being and a secure future. The scheme represents a significant transformation of NPS, integrating features like dearness relief and fixed pension amounts. The approval of UPS follows a review by a committee set up by the finance ministry last year, tasked with recommending improvements to the NPS while balancing fiscal implications. The UPS is expected to reshape the pension landscape for central government employees, offering enhanced benefits while managing long-term fiscal sustainability. Source: Economics Times

Maharashtra Becomes First State to Implement Unified Pension Scheme for Employees

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In a significant move ahead of upcoming elections, Maharashtra has become the first state to introduce the Unified Pension Scheme (UPS) for its employees, following demands from central government employee organizations for state governments to adopt the scheme. The decision came just 24 hours after the Union Cabinet approved the UPS, which offers 50% of an employee’s average salary from the last 12 months as pension, with inflation adjustments and additional benefits. The scheme is designed to address the demands of government employees who joined service in 2004 or later, offering a viable alternative to the Old Pension Scheme (OPS). While 23 lakh central government employees are set to benefit from the UPS, the number could rise to 90 lakh if all states implement the scheme. Top representatives of central government employees have urged states to adopt the UPS and avoid politicizing the issue. Although they consider OPS the best option since it did not require employee contributions, they expressed satisfaction with the new UPS, noting that it incorporates 90% of the OPS features. Shiv Gopal Mishra, of the All India Railwaymen’s Federation, emphasized the practicality of the UPS given the current economic scenario. The panel reviewing the National Pension System (NPS), led by Cabinet Secretary-designate T V Somanathan, highlighted that the UPS template can be replicated by states and would benefit over 99% of employees currently covered under NPS. JCM chief M Raghavaiah called for more states to implement the UPS and urged the government to reduce the service requirement for guaranteed pensions from 25 years to 20 years. He also suggested that the lump sum payment at retirement should be based on one-fourth of an employee’s monthly pay over the last six months. The scheme is expected to particularly benefit over eight lakh railway employees who have joined service in the past 20 years. Addressing concerns about political implications, a senior representative emphasized that the welfare of government employees should not be a partisan issue. Source: Al Jazeera

Protests Erupt Across Indonesia as Parliament Delays Election Law Changes

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Mass protests have swept across Indonesia after the parliament postponed ratifying controversial changes to the country’s election law. The proposed revisions have sparked outrage, with many accusing the government of trying to consolidate political power for outgoing President Joko Widodo (Jokowi). The parliamentary session to pass the amendments was delayed on Thursday due to insufficient attendance, leading to a standoff outside the legislature in Jakarta, where protesters attempted to breach the gates. Demonstrations also took place in multiple cities across Java, with some turning violent as authorities responded with tear gas. The proposed changes would overturn a recent constitutional court ruling that blocked a vocal government critic from running for the Jakarta governor position. Additionally, the revisions could allow Jokowi’s youngest son to participate in upcoming elections in Java this November, raising concerns about political dynasties. President Widodo has downplayed the unrest, framing the situation as a normal part of Indonesia’s democratic system and checks and balances. However, legal experts have warned that the dispute between the judiciary and parliament could lead to a constitutional crisis. Analyst Titi Anggraini described the situation as “constitutional insubordination.” In Jakarta and other cities, demonstrators carried signs and banners criticizing Jokowi, accusing him of undermining democracy. Many protesters, including members of the Ummat Party, expressed concerns that the government’s actions represent a move towards authoritarianism. The situation remains tense, with parliament yet to decide whether it will reconvene before the regional election registration opens next week. Protesters have vowed to continue their demonstrations until their concerns are addressed.

DNPA Urges Government to Exempt GST on E-Papers and Digital News Subscriptions

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The Digital News Publishers Association (DNPA) has called on the Indian government to exempt Goods and Services Tax (GST) on e-papers and digital news subscriptions. The DNPA highlighted that while printed newspapers are exempt from GST, digital news subscriptions are currently taxed at 18% under the Integrated Goods and Services Tax (IGST) Act. They argue that news content, whether delivered via print or digital platforms, should be made accessible at affordable rates. The Information & Broadcasting (I&B) Ministry recently requested the Ministry of Finance to reconsider the GST rate for digital news subscriptions. In its appeal, the DNPA pointed out a previous instance where the GST Council reduced the tax on e-books from 18% to 5% in 2018, after recognizing the disparity between printed books (exempt from GST) and their electronic versions. The DNPA believes a similar approach should be applied to e-papers, advocating for either a significant reduction in GST or complete exemption. In a letter dated July 22, I&B Secretary Sanjay Jaju requested Revenue Secretary Sanjay Malhotra to either remove the GST on digital news subscriptions entirely or reduce it from 18% to 5%. Jaju’s letter noted that the higher GST rate could stifle the growth of the online news sector by pushing it towards an ad-based revenue model, which could compromise content quality and credibility through practices like clickbait and sensationalism. The letter emphasized that with the increasing internet penetration in India and the relatively nascent stage of the digital news industry, it is crucial to treat online news subscriptions similarly to printed newspapers and e-books for GST purposes. Jaju also noted that the revenue impact of reducing the GST rate on the Rs. 120 crore digital news subscription industry would be minimal, with an estimated revenue loss of around Rs. 21.6 crore. The DNPA’s appeal underlines the need for policy adjustments to support the growth of digital news and ensure that credible information remains accessible to the public as the media landscape continues to evolve. Source: Story board  

Centre Approves 25% Increase in Security at Central Government Hospitals Amid Nationwide Protests

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In response to widespread protests by doctors demanding better protection following the tragic rape and murder of a trainee doctor at Kolkata’s RG Kar Medical College, the central government has approved a 25% increase in security at all central government hospitals. The decision, announced by the health ministry, comes amid calls for a special law to combat violence against healthcare personnel. The enhanced security will include the deployment of marshals, which can be requested by hospitals based on individual security assessments. Officials noted that while the protests highlight safety concerns, enacting a central law solely based on the RG Kar incident might not be the solution, as the case did not involve patient-doctor violence. Currently, 26 states and Union territories, including West Bengal, Delhi, Maharashtra, Karnataka, and Kerala, have laws that protect healthcare workers from violence, making such offenses cognizable and non-bailable. Officials emphasized that these existing laws already cover key aspects of protection for healthcare personnel. To address additional concerns, the government plans to form a committee headed by the Directorate General of Health Services (DGHS) to review hospital security, working conditions for resident doctors, and related facilities such as duty rooms and canteens. Public hospitals, as government facilities, cannot be turned into heavily guarded zones, officials stated while urging doctors to end their strike, which has severely impacted patient care. The Indian Medical Association (IMA) has also reached out to Prime Minister Narendra Modi, seeking intervention to address their demands, which include the enactment of a central law against violence in hospitals and the designation of hospitals as safe zones with mandatory security measures. Source: Hindustan Times

Chhattisgarh Cabinet Approves Formation of ‘Good Governance and Convergence Dept’

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The Chhattisgarh government has announced the creation of a new “Good Governance and Convergence Department” to enhance the effective implementation of state welfare policies and ensure better governance. The decision was made during a cabinet meeting chaired by Chief Minister Vishnu Deo Sai on Tuesday. This newly formed department will integrate key initiatives such as e-Review, e-Public Service Guarantee, and the Digital Secretariat, which were previously managed by the General Administration department. The cabinet has also amended the “Chhattisgarh Government Work (Allocation) Rules” to facilitate this change. In addition, the cabinet approved the implementation of the National Education Policy (NEP) 2020 in the state. As part of this policy, education up to the 5th standard will be provided in local languages or dialects, and the current 10+2 academic structure will transition to the 5+3+3+4 format, focusing on equitable and inclusive education from pre-primary to the 12th grade. The cabinet also decided to extend the registration deadline for providing housing to economically weaker and lower-class families in Naya Raipur under the Mukhyamantri Aawas Yojana. The new deadline has been pushed from March 31, 2024, to March 31, 2027, allowing more time for eligible families to benefit from affordable housing schemes being developed in the area. Source: Hindustan Times