The Sensex Has Rallied over 3,000 Points in 3 Sessions.
Indian markets continued to demonstrate underlying strength which had been missing for some weeks
On Episode 559 of The Core Report, financial journalist Govindraj Ethiraj talks to Ajay Rotti, Founder and CEO of Tax Compaas, Sheetal Sapale, VP Commercial at Pharmarack as well as K Venkatachalam, Chief Advisor at TASMA.
SHOW NOTES
(00:00) Stories of the Day
(01:00) The Sensex has rallied over 3,000 points in 3 sessions
(06:24) Angel tax returns in a new avatar as Income Tax services notices on companies on foreign investments
(16:48) Parents are putting oral rehydrating salt packs in their children’s backpacks and India’s pharma industry is benefiting
(25:24) Why Indian textile manufacturers want cheap imports of viscose staple fibre from China
NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on [email protected].
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Good morning, it's Thursday, the 17th of April and this is Govindraj Ethiraj Headquartered in broadcasting and streaming from a warm Mumbai, India's financial capital.
The top stories and themes for the day,
The Sensex has rallied over 3,000 points in three sessions and where could it go next?
Gold hits another fresh high.
Angel tax returns in a new avatar as income tax serves notices on companies with foreign investments from Singapore.
Parents are putting oral rehydrating salt packs in their children's backpacks and India's pharma industry is benefiting.
Why Indian textile manufacturers want cheap imports of viscose staple fibre from China.
The Markets Are Strong
Indian markets continue to demonstrate underlying strength which has been missing for some weeks, bouncing back despite some selling pressure that came in mid-session on Wednesday. Overall, the main indices rose for the third straight day, thanks mostly to interest in financial shares, including private banks, apart from energy stocks. Tariff flip-flops of course continued with the White House saying China would be hit with a 245% peak duty now, which is effectively a non-figure since it brings trade to a halt.
China has responded by saying now that they would agree to trade talks if they are treated with respect, including reining in disparaging remarks by members of the Trump cabinet, according to a Bloomberg report. Other conditions from China include a more consistent US position and a willingness to address China's concerns around American sanctions and Taiwan, said the Bloomberg report. Some of those flip-flops did affect markets, but broadly, Indian markets were unaffected.
The Sensex closed up 309 points at 77,044. The Sensex has now rallied 3,197 points in the last three trading sessions. And the Nifty closed at 23,433, up 104 points and has now risen about 1,038 points in the last three days.
We did mention that India was relatively unaffected. Asian markets, for example, like Hang Seng and Taiwan, were down 2% each. Kospi and Nikkei were also down 1%.
China's Shanghai Composite Index was a little higher as China reported strong GDP numbers. The broader indices were steady with the BSE mid-cap going up 0.6 and the small-cap index going up 0.9%. Foreign institutional investors snapped a nine-day selling streak on April 15th to buy domestic equities worth just about ₹6,000 crore or about $800 million. Now, this was the third-largest single-day buying this year.
And on the same day, domestic funds, that's April 15th, sold stocks worth about ₹2,000 crore according to National Stock Exchange data quoted by Business Standard. Now, it's a little early to call a trend on FII buying since most of their actions have involved selling in recent weeks, with, of course, some buying as well. Now, on to Wall Street, S&P futures were down on Wednesday as investors looked at a stock warning from NVIDIA that pressured global tech.
Futures tied to S&P 500 and Nasdaq 100 were all down and the Dow Jones Industrial Average was down 31 points according to CNBC. Shares of NVIDIA dropped more than 6% after it said that it will post a $5.5 billion quarterly charge relating to exporting its H20 graphics processing units to China and other nations. The company said in a filing that the U.S. government now required a licence to send chips from the United States to China. Other chipmakers were down too. Big tech stocks like Metaplatforms, Google, Parent, Alphabet, and Tesla were also down. Meanwhile, gold scaled a record peak on Wednesday as a weaker dollar, escalating trade tensions and concerns over global economic growth, continued to push funds into safe haven investment being gold.
As of Wednesday, spot gold was at $3,287 an ounce after hitting an all-time high of $3,294 an ounce earlier in the session.
Earnings Season Continues
Bangalore headquartered IT services major Wipro posted a net profit of Rs 3,570 crore for the fourth quarter of 2024-25, that's up about 26% from a year ago. Profit was up about 6.5% quarter-on-quarter. Revenue was up 1.3% to about Rs 22,500 crore. And sequentially, too, the revenue grew about 0.8%. Bloomberg estimates say that the company's fourth quarter performance missed estimates and revenue was expected at about Rs 22,683 crore, net profit at Rs 3,350 crore. Srini Palia, CEO of Wipro, said that the company closed 2024-25 with two mega deal wins and increase in large deal bookings and growth in their top accounts, according to their account. Client satisfaction scores improved, reflecting strong execution and engagement.
We will, of course, do a deeper dive into IT results and what they're telling us, including in terms of attrition, and that we will do next week.
Moody's Mixed Bag of Warnings
Moody's rating said that India's economy is likely to weather the latest wave of US tariff hikes with only limited fallout, though it expects India's GDP growth to now slow slightly to the range of 5.5% to 6.5% in 2025, down from its earlier estimate of 6.6%. It also warned that broader global trade tensions could weigh on economic growth and credit conditions worldwide. The downgrade is attributed to weaker global demand and declining merchandise exports. India's exports to the United States account for about 6.6% of nominal GDP, placing it amongst economies with a moderate exposure to the United States' protectionist push, the Moody's report said. India's trade surplus with the US jumped about 16% in the last financial year, rising to about $41 billion from about $35 billion in the previous year, according to Commerce Ministry data quoted by Reuters. Moody's said India is relatively better positioned than major Asian manufacturing hubs like China, Taiwan, and South Korea. China's growth, for instance, could slip to 4% or lower.
The agency also added that broader credit environments may turn fragile as higher trade barriers slow global commerce and investment.
Is The Angel Tax Back?
The Income Tax Department has issued show-cost notices under Section 68 of the Income Tax Act to new companies or start-ups over funds routed through Singapore, seeking explanations for investments received over the past five years, according to a report in the Business Standard. The Department is questioning the source identity and creditworthiness of overseas investors in these transactions. In addition, the notices are being served on non-resident Indians holding bank accounts in Singapore.
The Business Standard report quoted a person saying that these are not routine enquiries but formal show-cost notices and companies are being asked to justify the inflow of capital even from past years by furnishing detailed investor documentation. Section 68 of the Income Tax Act 1961 allows the Department to question unexplained credits in taxpayers' books. I reached out to Ajay Roti, founder and CEO of tax advisory firm Tax Compass, and I began by asking him if it was true that such notices were being served and what was the implication of this move or moves.
I also asked him if this was angel tax in a new avatar.
INTERVIEW TRANSCRIPT
Ajay Rotti: It is happening. It is happening. There are notices being issued under, you know, what's called Section 68 and we'll get to what that notice actually means and what Section 68 is.
It is happening. They're asking these questions about different investments, more particularly Singapore that I guess, and this is a more educated guess, because of some exchange of information that could have happened. The Department today has a lot of these exchange of information agreements.
Therefore, even though the Income Tax Department may not have a long list of all people who have invested from Singapore, the Singapore government will be giving a list of all residents in Singapore who have wired money to India, etc. So they may be going with that list, but yes, it is happening.
Govindraj Ethiraj: Section 68 seems to be a fairly broad brush kind of section and it covers money that comes into your account. So walk us through how it's being applied here.
Ajay Rotti: Right. So Section 68 is one of those anti-abuse provisions which really brings to tax something which can't be explained and in particular, unexplained cash credits, which is any amount that you receive, which is accounted for in your books. So when you receive money, you know, it can either be revenue, what's called revenue receipt, which is a taxable receipt, which is income.
And to put it in very layman terms, it's something that goes and sits as income in your profit and loss account. Or it could be a capital receipt, which is really a receipt in a business like you borrow from a bank. You get money, but that's not income.
You take a loan from somebody, that's not income, but you still received money. So that sits in your balance sheet. What 68 does is, if any receipt that you've got, you're not able to explain to the satisfaction of the office, it is deemed to be income.
So you may have borrowed money, but if you can't explain who you borrowed from, what's the bank, the papers, loan agreement and things like that, very technically it can become income. So it is broad brush, like you said, it is any credit that's not explained. Today, the department is using that for share subscription, which is some investor, you say, where did you get this money from?
And the company says, you know, so-and-so invested from Singapore. Therefore that person invested $100,000 and I issued shares and he or she is a shareholder today. Now, if the officer is not satisfied with the credentials of the investors, you're not able to show who the investor is, his or her proof, et cetera, they'll say that, you know, this is unexplained credit, therefore it is your income.
Why does this exist in the system? Because in the past, when you had to bring in money, which is unaccounted, you could just bring it in and say, so-and-so gave it to me and therefore it's not taxable and it's a loan I have received from somebody. The department, you know, in its wisdom thought that there has to be a basis in which if you can't explain a credit, it has to become taxable.
And that's the genesis of this section long back. Today, they are using this for shares issued to foreign investors as well. Isn't this angel tax in another way?
Very interesting question. It is because in a sense, angel tax also sought to do the same thing, which is if there is a price. But the fundamental difference is angel tax hinged on valuation, which is to say, if you issued it of higher than the fair value, then it would become taxable.
Not everything. Here, if you can't explain who the investor is, everything from the first rupee becomes taxable irrespective of what your fair value of the shares is. The challenge that is coming today with some of the people I am handling some of these notices is, you know, these monies could have come in a few years back.
And when somebody invests, you don't ask that person, give me your return of income that you have filed for the last three years, etc. As long as you know the persons and these are famous investors, funds, angels who are known to you, etc. Today, the income tax department is saying you received this money from so and so, please give me his or her three years return of income, bank statement, source of income of that person.
Now, that is not something a company will collect from its investors. So in a lot of the cases, we are actually telling them so and so is the person, this is the permanent account number, this is where he is assessed to tax, you know, why don't you seek information because you will have access to that person's taxable records, etc. In some cases, to be fair, the department has dropped these after they know that it's a genuine investor, you provided some information, etc.
But in some other cases, they are asking for the source of the investment from that investor's bank account and from that investor's return, which is becoming quite onerous.
Govindraj Ethiraj: And that obviously is in Singapore, but effectively, even if the company in India has issued shares, and I'm talking about investment now and not the other categories like loans and so on, even if the company has issued shares, that means, which would reflect in its filings to registrar of companies and so on, the income tax would still say that this credit is something that I'm going to treat as income.
Ajay Rotti: Correct. Yes, they can, because they will then, what they will say is that the investor who's paid this money has not been, you've not established genuinity there, you've not established that this person exists, you've not established what the source of that person's income is. See, this was misused in the past, your own money was sent out, brought in using, you know, companies which didn't exist and things like that.
So there has been some misuse, I wouldn't sort of really blame the income tax department for going hard on this, but somewhere they also need to draw a line to leave out the genuine cases. This is a classic case of throwing the baby with the bathwater.
Govindraj Ethiraj: Right. So why is it Singapore specifically? I mean, obviously, there's some, as you also suggested that there's some exchange of information that's happened at a government to government level.
But if it's happened to Singapore, then I'm guessing it could move to other countries and other investors domiciled elsewhere as well.
Ajay Rotti: It could. Like I said, that's more pattern that I could find or educated guess not really based on any formal information that we have. But once they're asking for this information, then they're asking for all investors.
And I have personally seen orders where 68 cash credit entries have been passed even for resident investors. been able to explain who it is from and, you know, provide the information to the satisfaction of the officer. There is some bit of commonality in the notices concerning Singapore investors, but it is happening across actually.
Govindraj Ethiraj: How do you see this playing going forward Ajay?
Ajay Rotti: So I think, you know, in some cases where the officer is clearly not, he or she is not satisfied with what has been filed, these adjustments are happening and maybe there'll be some relief at the appeal levels. I would think the better way here would be for the CBT to actually come up with some guidelines to say that, you know, what are the basic things that you need to see and accept some of the explanations that is being offered because it is quite difficult for the company to have collected all information about those investors. So if at least a basic due diligence is done, something similar to a KYC is done and that much information is given by the company, then if the department still believes that there's a problem, they can always go after the investor where we have given the details.
That would be a more practical way of handling this than really holding the company which has raised money to be responsible for collecting all information.
Govindraj Ethiraj: Because in Angel Tax, something similar happened because investors, including in India, had to show their source of income and ban details and so on, which effectively an investee company finds it difficult to ask for. And in this case, this is cross-border, as you pointed out. I mean, how do I ask a company or an individual in Singapore that, you know, to spend three or five years on your tax records and so on?
Ajay Rotti: Correct. And I've actually had live cases where the company has put its effort and the investors actually come back to say that this is confidential and rightly so. Why would the investor today open up his or her return of income for a $100,000 or $50,000 that he or she has invested as an angel in the company?
Govindraj Ethiraj: You mentioned that the CBTT could look at some kind of guidelines or some kind of direction or guidance on how to approach these. So that it's... I'm wondering if there's something else, because, you know, at one level, we continue to debate about startups.
And while I'm not saying that all startups are clean, we're seeing examples of, you know, Skaldarjuni in accounts and things like that quite recently. But what is it that we can do at a slightly larger level, you know, or maybe let's say at the point that those investments are being made? So as to ensure that this does not crop up again and again.
Ajay Rotti: So some bit of, you know, a little bit of hygiene at the investing companies which are raising funds is to at least have some basic information of tax registrations, identity documents, etc. of the investors, if they're individuals. And if there are companies, at least some charter, certificate of incorporation, which country they are incorporated, what is there, and things like that.
That's at least the basic stuff that can be given to the department when they're asked. And when this basic threshold is at least met, I think, overall, even at litigation future levels, you have a case to argue. If you don't have anything about the investors, then probably the department can build a better case and does have a case to look at these cases where money is being funnelled in through sources which should not be.
So I think there's a little bit of learning, but there's also some bit of practical approach and some bit of, you know, a more lenient, I wouldn't say lenient, more practical view that the department has to take here as well.
Govindraj Ethiraj: Ajay, thank you so much for joining me.
Ajay Rotti: Thank you, Govind.
India Is Seeing An Increase In Gastrointestinal Conditions
The country is seeing unprecedented and early heat waves. Northern parts of India, for instance, have already been experiencing extreme heat this week as temperatures have crossed 40 degrees Celsius, including in New Delhi. Barmer in Rajasthan has touched 46.4 degrees Celsius, more than six degrees Celsius above the maximum in April or the average maximum in April. Increasingly, parents are placing oral rehydration solution packs in their children's school bags in some places. Oral electrolytes as a category saw a 27% increase attributed to those unusually high temperatures in March across the country, according to a report from pharma industry tracking firm PharmaRack. The Indian Meteorological Bureau said last week that most parts of the country would experience an intense heat wave this summer.
On the other hand, and linked to this, India is seeing a rapid growth in gastrointestinal conditions and sales of medicines for it. Even for example, probiotic microbes saw a 13.5% increase as antibiotic usage also remained high thanks to post-seasonal infections. I reached out to Sheetal Sapale, our regular guest and vice president at PharmaRack, and I asked her to take us through what was happening in the gastrointestinal space and why sales were rising so sharply.
INTERVIEW TRANSCRIPT
Sheetal Sapale: Okay, the gastro segment has been growing quite well for the past few months. And this month especially, the growth for the month of this segment is close to 11%. Among the top categories, the growth is the highest seen over here.
And within the gastro segment, the segment is quite broken down into several sub-segments, which may be antacid products, laxatives, antidiarrheal products, probiotics, and oral rehydration solutions. We are seeing good growth across all the segments. So typically, if you look at the seasonal pattern that we are following, March typically is a season where the onset of summer starts in the majority of the states within the country.
Oral rehydration solutions are the ones which pick up very well. In fact, if you look at the most popular oral rehydration solution, Electral, it has grown by almost 30% in terms of units for the month. And this growth has been consistent as well for the last few months.
Also, if you look at the number of viral infections that have happened within the country, because the climatic conditions are such that morning, evening, there is a wide variation in temperatures. The temperatures are quite extreme across the different states, as a result of which viral infections have picked up. And because of viral infections picking up, there are certain other categories of drugs which also pick up in this period.
Typically, if you take drugs for pain, then antacids also have to be given along with the pain category. Also, anti-diarrhoeal infections have seen a surge of late across many states. And when it comes to anti-diarrhoeal preparations, along with anti-diarrhoeal drugs, probiotics, something which is proactively taken to restore the bacteria in your gut, has also seen an increase.
So net-net, if you look at the seasonal trend or the seasonal diseases which have picked up really well, and probably because of the extreme temperatures, slightly more.
Govindraj Ethiraj: Let me pick on two specific categories. One is oral rehydration solutions, that's ORS. And the second is probiotics.
Now, ORS as a category has existed, but it was usually taken only when people were not well or already down with fever and so on. But now it's also a method to combat the extreme heat. So are manufacturers increasing production and supply?
Because there are quite a few brands, as I can see, in the market. In response to that, is it something that has demand-created supply or is supply-creating demand?
Sheetal Sapale: It's the demand-creating supply. The demand for these products has genuinely increased. In fact, some months ago, when we had done studies in certain states, we have seen that in certain states where the education levels are also higher, parents usually pack an ORS tetra pack in their children's sky.
So it's a proactive measure of taking care of dehydration, which may occur due to extreme heat. Now, if it happens in certain schools as a proactive approach, then naturally the consumption is going to increase. That's the reason why the extreme heat has made people a little more proactive.
People know that. And there are certain states where temperatures even cross 40 degrees, wherein it's better to be safe than sorry.
Govindraj Ethiraj: Right. So you're saying awareness amongst parents could be driving it and children are potentially the larger consumers of this. So let me pick up another segment, probiotics.
Again, something that was not really on the top of agenda when it came to buying, let's say, either treatment, preventive or curative. So how is this category caught on so much?
Sheetal Sapale: Probiotics first is even the marketing done by the companies having probiotics has improved significantly and for good, because earlier when it used to come to antidiarrheals, it was just, you know, having little curds or something along with your antidiarrheal preparations. Well, now these probiotics, which are relatively having a higher percentage of the gut bacteria, they help in the recovery faster. In today's scenario, wherein office goers really don't have that much time to, you know, recover.
This is a faster and easier solution. Plus, you see a good amount of intake by this type of preparation, even by a lot of health conscious people.
Govindraj Ethiraj: Right. So if you were to now combine these two or three sub growth areas, the overall GI segment growing, does that reflect people becoming more aware of, let's say, stomach conditions or gastrointestinal conditions? Or is it that the illnesses are increasing and quite dramatically, if so?
Sheetal Sapale: Yeah, the illnesses are increasing because I wouldn't call it more of awareness, but then it is the extreme conditions which are leading to people to take treatment. Unlike lifestyle diseases, this is something which is specific. I wouldn't take a probiotic for a lifetime.
I would take a probiotic only when the condition hits me, unlike a cardiac diabetes product, which I need to take for a lifetime. So this is the disease conditions themselves have seen a spot which has led to increase in consumption.
Govindraj Ethiraj: And you talked about seasonality and again, looking at the composite now. So when we say that between March of last year and March of this year, your growth is more than 10%, but last March also was the beginning of summer or an early summer. So how is it that we're seeing so much growth in the same time period?
Sheetal Sapale: See, the growth that even you're seeing over here is a good amount of value growth. Okay. Prices have also increased.
At the same time for the gastro segment, there is a unit growth seen as well. The unit growth may not be 11%. It is quite limited, but then increase in prices have also driven the growth of the segment to a good extent.
In fact, in the majority of the segment, the price growth is to the extent of 5 to 7%. So if I were to look at the price growth for the gastro segment for the month out of that 11% growth that I'm seeing close to 7% or 6.8% comes from the price growth. New product growth is around 2.4% and volumes is around 2.2%. So prices have also driven the growth of the segment to a good extent.
Govindraj Ethiraj: And what are the top brands in this category, Sheetal?
Sheetal Sapale: Top brands, which are really amongst the top 100 brands in the Indian pharma market, we will have brands like Pan, then we have Liu 52, we have Pandi, Electrol, which is one of the biggest brands, Pantop, a very strong brand in this market, Rantac, Ranitidine. So these are some of the strong brands and these are brands which are worth more than 300 crores, 300 to 400 crore brands.
Govindraj Ethiraj: Each. And Pan is all Pantoprazole, right? I mean, they're all the same thing.
Sheetal Sapale: Yeah, and yes. So if you look at Pan, Pandi, Pantop, all are Pantoprazole brands. So basically things in the antacid segment.
Govindraj Ethiraj: And these are essentially for acidity.
Sheetal Sapale: Yeah, they are for acidity. And now acidity also, if you see viral fevers leads to a lot of pain category consumptions. And when you take drugs for pain, you need to take antacids.
Also, there are very common symptoms of GERD, Gastroesophageal reflux, wherein there is a lot of acidity and a lot of chest pain. Over there also, these drugs get consumed to a good extent.
Govindraj Ethiraj: Right. Sheetal, thank you so much for joining me.
Sheetal Sapale: Yeah, thank you so much.
India's Textile Industry Conundrum
With the U.S. markets closing or close to Chinese exports, India's downstream industries are now fearing that they will be forced to fight cheap imports. Several industries have already sounded alarm bells. To give you a context, India recorded a trade deficit of close to $99 billion with China in the last financial year that ended last month, according to trade data, thanks to a big surge in imports of electronic goods and consumer durables.
In March alone, according to a report from Reuters, goods imported from China jumped about 25% to about $9.7 billion, led by electronics, electric batteries, and solar cells. Total imports from China rose to about $113 billion in 12 months through March, according to that report by Reuters. Meanwhile, India's exports fell 14.5% to just $1.5 billion in March, with total exports that year dropping to about $14 billion. So, imports about $113 billion from China and exports from India to China $14 billion. Ajay Srivastava, founder of the Global Trade Initiative, a Delhi-based trade policy think tank and frequent guest on our show, told Reuters that this is a wake-up call for India as the rising imports reflect deeper structural dependencies of the Indian economy. One industry is textiles, which says prices of viscose staple yarn, which are now being quoted, lower than Indian prices.
The other problem is that they would like cheaper viscose staple fibre, which goes into the making of viscose staple yarn, but imports are restricted because of quality control orders and effective non-tariff barriers. And there is only one company that makes viscose staple fibre in India, that's Grasim of the Aditya Birla Group. The roughly 28-year-old Tamil Nadu Spinning Mills Association, or TASMA, which has close to 850 members, has warned about potential mill closures and job losses because of the unfair price structure created by cheaper Chinese viscose staple yarn.
TASMA says China is dumping viscose staple yarn at a price of Rs. 185 per kilo versus the domestic price of Rs. 198 per kilo.
I reached out to K. Venkatachalam, chief advisor of TASMA based in Dindigul in Tamil Nadu, and I began by asking him to provide us a sense of his membership and the kind of companies and the different areas of textile manufacture they were involved in and the challenges they were facing.
INTERVIEW TRANSCRIPT
K Venkatachalam: Mainly around 60% of our members are processing cotton yarn and some 5-10% are processing cotton fabrics also. And another 5-10% are engaged in the processing activities like bleaching, dyeing, textiles, add-ups, everything. So, the balance of around 30%, around 15-20% are in the field of viscose staple fibre and viscose staple yarn.
And a few of them are also engaged in the polyester fibre, polyester yarn also. This is how our distribution of members is seen from the network we have now. The major portion is in cotton and still a major portion, the second major portion is on the viscose processing.
Some of them are also in polyester yarn manufacturing.
Govindraj Ethiraj: So, all the members are essentially using either cotton or viscose staple fibre as an input. They are not either trading in cotton or producing viscose staple fibre themselves.
K Venkatachalam: We are buying cotton, we are buying viscose fibre, we are buying polyester fibre. So, based on the fibres we are making the yarn, we are either finishing it by the yarn itself or some of them are again value-adding to the developed fabrics, wear-dubs, garments, etc. That is the process also going on.
Govindraj Ethiraj: Given the fact that there is a tariff war going on and clearly China may divert or perhaps has already started, Chinese producers have already started diverting more of, in this case, man-made fibres to markets like India. One of the points that you've been making publicly is that they are dumping viscose fibre at a very low price, which is about Rs. 185 per kilogramme.
K Venkatachalam: My concern is not with reference to the dumping of man-made fibre. My concern is with reference to man-made yarn, that is, viscose stapled yarn. It is not viscose stapled fibre.
There is a difference. Fibre is a raw material like cotton. Like cotton yarn, the viscose stapled yarn is the finished product that goes out of a spinning wheel.
So, I am concerned about the yarn that is unscrupulously allowed for imports from China and all being dumped there in India, affecting the entire operations of the Indian spinning wheels, which are already engaged in the manufacture of viscose stapled yarn. So, it is not a question about the fiber they are dumping. In fact, to go a little ahead of it, because of the quality control order imposed by the Ministry of Commerce, coupled with the Ministry of Textiles notification, countries which are capable of producing the viscose stapled fibres are not in a position to supply the fibre to India.
Some quantity restrictions or otherwise quality restrictions are made unnecessarily. So, they are not allowed to get the certification under the QCA, this quality control order. Because of that, we are dependent only on a single homophily viscose fibre manufacturer in India.
And other than the single manufacturers, we are unable to get imported fibre from other available countries like Indonesia, China and all these countries.
Govindraj Ethiraj: So, what you are saying is that you would like cheaper viscose stapled fibre in India, but you are not able to access it because there is a single company in India and because of quality control orders, you are not able to access it.
K Venkatachalam: Yes, it is not an issue at all. But we want to get the QCA, this quality control order imposed on the companies which have the capacity to export their fibre to India should not be restricted.
Govindraj Ethiraj: That is where our main issue is. What's the price difference between or the value addition between stapled fibre and stapled yarn today? It will be close to around some 80-85 rupees.
Your current concern is that China is selling or exporting viscose stapled yarn which many of your members are producing at a much lower price than what is being sold in India.
K Venkatachalam: At present, it is available in the market to the weavers at 185 rupees per kg of yarn. Whereas, our cost of production by using the fibre supplied by the Indian manufacturer comes to close at 198 rupees per kg. Earlier it was there, here and there, but no problem is faced.
Only very recently, in the last week, people have started quoting the prices of 185 rupees per kg for the imported China yarn. So, weavers aren't very much inclined because when they are getting the yarn cheaper, naturally they will be adapting to go for the Chinese yarn only, neglecting the Indian yarn. So, for the last week only this problem has surfaced.
Govindraj Ethiraj: Okay, and if you were to get VSF, that stapled fibre, which is then input for yarn at a lower price than what you are getting today, then would that be fine?
K Venkatachalam: Naturally, because we have a competitive edge in getting fiber at a reduced price. And when we convert the fibre into yarn, naturally we can also match with the Chinese yarn price and we can operate it comfortably.
Govindraj Ethiraj: What is the current India price or Indian market price of VSF and what would be, let's say, the international price right now? There will be a difference of close to some 30 to 40 rupees per kg. And this is right now or has it always been the case?
K Venkatachalam: Always been there, but as long as the Chinese yarn is not interfering with the Indian market, we are also having a comfortable market with the weavers. And because of the imports that are happening from China on the yarn side at a reduced price, we are not able to find a matching price for our yarn made out of the Indian fibre we got from the Indian fibre manufacturer.
Govindraj Ethiraj: Right. So as you look ahead, one is, of course, you're saying that the government should do something to control the dumping of viscose stapled yarn into India. But equally, are you also saying that there could be, let's say, opening up of imports or maybe some easing of these quality control orders for viscose stapled fibre?
K Venkatachalam: So main objective is to see that instead of controlling the yarn, because the world has become a global market, we cannot have any restriction, instead of controlling the imports of cheaper yarn from China or other countries which are able to supply such yarn at the cheaper price, the government of India should not restrict the import of fibre from countries like Indonesia, China and all. If that fibre comes to India in an uncontrolled manner without any quality control order, we ourselves can manage to supply the yarn matched with China's yarn prices. See, the market has a value chain.
We cannot look into the aspect of the spinners alone. When the yarn is available to the viewers at a considerable fair price, then they will be also encouraged to support our cause. So if the import alone is controlled, as far as the yarn is concerned, then their inputs will be a little overloaded by way of an increased yarn price.
So what we finally seek is to remove the quality control order for some time till the market stabilises and let all the Indian spinners of viscose fibre can import viscose fibre from available sources without any quality control restrictions, so that we can match with the prices by which the imported yarn is now attempted to be marketed in India. So that will benefit both the spinners and also the viewers who are dependent on our yarn for making their products to happen in the market and further value addition with regard to Mad Abs Home Textiles and every other value-added process. The ultimate for the consumers also, it will go a little down.
Govindraj Ethiraj: What's the size of the VHF market or the viscose staple fibre market in India in terms of total demand?
K Venkatachalam: It is ever increasing. It is ever increasing. People have now shifted from cotton to man-made fibre, man-made fabrics and all.
So this is a world international trend. So the stake in cotton is slowly, slowly reducing because of the cost involved and all. And the usability, durability and all.
People are shifting from cotton to man-made fibres. Man-made fibre made sort of final products like bed linens, everything. Now they prefer to go with viscose fabrics.
Govindraj Ethiraj: China, I'm assuming, is the major producer of both staple fibre and staple yarn. But are there any other countries? Comparatively with China, Indonesia is lesser.
K Venkatachalam: But Indonesia has got a strong potential in producing both fibre and yarn. Right.
Govindraj Ethiraj: Mr Venkatachalam, thank you so much for joining me.
K Venkatachalam: Thank you, sir.
Delhi Is In The Top 10 Busiest Airports In The World
New Delhi International Airport is now ranked 9 in the top 10 busiest airports in the world. It was 17 or rather ranked 17 15 years ago. So you can see how it's growing.
The Airports Council International or ACI world has said that in 2024, the total global passengers were about nine and a half billion, which was up 9% from 23 and about 4% up from pre-pandemic levels of 2019. So there you are, traffic now clearing pre-pandemic levels. But whether this will continue is, of course, something that we have to see, given all the tariff wars that are going on.
The top 10 busiest airports represent about 9% of global traffic. That's about 855 million passengers, which also grew about 9% from 23. So the biggest airports are this.
Hartsfield Jackson Atlanta International is the number one, followed by Dubai International and Dallas Fort Worth International as number three. The biggest jump in the top 10 was Shanghai Pudong, going from 21st position in 23 to the 10th spot in 24. The ACI world says the jump was fuelled by expanded visa policies, the resumption and expansion of international flights, operational enhancements and the recovery of the Asia Pacific region, particularly China.
