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British Prime Minister Liz Truss is not new to India-UK ties. Earlier as an International Trade Secretary, and later as a Secretary of State in the Boris Johnson government, she had many virtual interactions with Indian policy-makers. She also visited India a few times in the recent past.

India-UK ties have already been elevated to a ‘comprehensive strategic partnership’, and an ambitious ‘Roadmap 2030’ have been adopted. Fast track negotiations on bilateral Free Trade Agreement (FTA), and the British ‘Indo-Pacific tilt’ have provided new impetus to relations.

As trade minister, Truss saw India as a “big, major opportunity” and “UK and India in a sweet spot of the trade dynamics”. She launched the India-UK Enhanced Trade Partnership (ETP) in early 2021, and believed that “working with India will help enhance the UK’s position as a global hub for digital and services”. While interacting with the Conservative Friends of India during her campaign, Truss asserted that she is “very, very committed to the UK-India relationship”.

As the fourth British Prime Minister in six years, she is taking over at a time when the UK is facing serious economic, political, and foreign policy challenges. The Conservative Party is badly divided. The post-Brexit disruptions are still being felt. The post-pandemic recovery is rocked by the war in Ukraine, higher energy prices, and unprecedented inflation. So, managing different factions within the party, and announcing a new growth and energy strategy will be on top of her agenda.

During the campaign, she asserted that her plan for growth is to “built on Conservative ideas: tax cuts, supply-side reform and deregulation”. Now she wants to “transform Britain into an aspiration nation” with the priorities on economy, energy, and National Health Service (NHS). In the coming days, her government has to roll out specific details of these plans.

Apart from broader convergence of Britain’s post-Brexit ambitions, and India’s economic and strategic priorities, a major deliverable expected is a bilateral FTA. During Johnson’s India visit early this year, a deadline of an agreement by Diwali was fixed.

As 19 out of 26 chapters are already closed, Indian policy-makers are confident that an agreement by the deadline is within reach. Even if we are able to see an agreement by the end of 2022, it will be quite an achievement as negotiations started only in January. An India-UK FTA also has the potential to provide a broader template to India’s other trade negotiations including with the European Union. However, if negotiations are prolonged, it will impact momentum created by the newly-signed FTA’s with Australia and the United Arab Emirates.

Normally, countries sign trade agreements when economic conditions are more favourable. The conditions in the UK are clearly not encouraging when inflation is at a 40-year-high, and the economy is heading towards recession. Although Indian policy-makers are making positive statements, economic difficulties along with change in leadership in the UK may delay the conclusion of negotiations.

Although the UK's Indo-Pacific tilt has been discussed widely, at the moment, London is focused more on war in Ukraine. This is an area where Indian and British perceptions differ. In March when Truss visited India as part of Britain’s ‘wider diplomatic push’ on war in Ukraine, she hoped that Indian views in Russia would change. Her trip to India had also coincided with Russian Foreign Minister Sergei Lavrov’s visit to New Delhi at the same time. On sanctions against Russia, sharp exchanges were witnessed between Truss and Indian Foreign Minister S Jaishankar.

As she is quite hawkish on Russia at the moment, convergence on many foreign policy issues may not happen automatically. This may impact slowly developing India-UK defence and security cooperation.

Domestic economic priorities, and evolving geopolitical developments including the rise of assertive China have helped boost India-UK ties. Many of the new initiatives were facilitated by Johnson’s close bond with Prime Minister Narendra Modi. As Truss has been part of this process, it will be easy for her to continue with the same agenda. At the moment she may be occupied with domestic economic issues, and Russia. But the broad direction of India-UK ties has already been set. This will be further strengthened by the bilateral FTA whenever it is signed.

Gold prices fell on Wednesday in international markets as the US dollar and Treasury yields rose after economic data bolstered expectations the Federal Reserve will continue on an aggressive rate-hike path. Spot gold was down 0.3% at $1,696.30 per ounce as of 0127 GMT.

At 9.41am, gold contracts were trading 0.52 percent lower on the Multi-Commodity Exchange (MCX) at Rs 50,020 per 10 grams and silver shed 0.72 percent at Rs 52,766 a kilogram.

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Trading Strategy

Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart

Better US economic data signals better health of the economy that supports benchmark Treasury yield which ramps up demand for the US Dollar. Precious metals gave away the day's gains as the US dollar index crossed the 110 mark yesterday. On the data front, US Service PMI stood at 56.9 versus 56.7 putting pressure on precious metal prices. Continuing upward move in the dollar, which moves opposite to gold prices, may put selling pressure on precious metals prices. Gold has resistance at Rs 50750 and support at Rs 50000. Silver has support at Rs 52700 and resistance at Rs 54400.

Pritam Patnaik, Head - Commodities, HNI & NRI Acquisitions, Axis Securities

A surging dollar index and bond yields on the back of a greater probability of Fed hiking rates by 75 basis points has seriously dented gold prices. Encouraged by positive data flows emerging from the US economy, the Fed could easily execute its plans to rein in inflation. With the probability of a 75 basis point hike increasing to 72%, it’s not surprising to see the impact on gold.

The Dollar Index jumped 0.4% to 110.25, an over 20-year high, while the 10-year US treasury yields were also trading at their highest level in the last two months. The bullion pack will be under pressure till the Fed event.

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices traded lower on Wednesday with spot gold prices at COMEX trading 0.30% down near $1697 per ounce in the morning trade. Gold prices fell below $1700 per ounce on stronger dollar and better than expected US economic data boosting expectations of aggressive rate hike from Fed. The dollar index surged above the 110 mark lowering demand for safe haven metals.

We expect gold prices to trade sideways to down for the day with COMEX spot gold support at $1676 and resistance at $1720 per ounce. MCX gold October support lies at Rs 49800 and resistance at Rs 50500 per 10 grams.

When food and nutrition are talked of in the same vein in the context of food security, the divergence between the two sometimes gets blurred. Incidentally, the Sustainable Development Goals (SDGs) framework acknowledges food and nutritional security under SDG 2, while health implications under SDG 3. However, it is the nutrition component of food that is inextricably linked to SDG 3, thereby, reinforcing that mere food quantity is not sufficient for food and nutritional security.

This entire contention of causality between SDGs 2 and 3 gets perfectly exemplified in the context of the edible oil value-chain, where used cooking oil (UCO) often emerges as a consumable primarily as a response to the increasing edible oil prices, the price risks emerging from the global markets (due to India’s high import dependency in edible oils), and low-awareness levels across the value chain.

And, indeed, they have adverse health implications. UCO is linked to several chronic ailments, including cancer, heart disease, and organ damage. Due to its adverse health impact, the consumption of UCO in any form is technically prohibited in India. However, as per the estimates of India’s food safety regulator, the Food Safety and Standards Authority of India (FSSAI), almost 60 percent of the UCO generated in India makes its way back into the food chain, through home and commercial re-use.

Incidentally, the situation with the use of UCO is so alarming in terms of its widespread use that even the top-performing state in terms of FSSAI’s State Food Safety Index of 2022, Tamil Nadu, reveals a dismal picture. A recent survey by a consumer rights group across 13 districts in Tamil Nadu laid found that nearly 1 in 10 food vendors reuse edible oils till the last drop, while 1 in 5 mixed fresh oil with used cooking oils (UCO). One can pretty well make out the conditions in lower-ranked states.

A recent study by The Observer Research Foundation and Koan Advisory Group revealed ubiquitous use of UCO in major Indian metros, despite the existence of better consumer awareness. As per their survey of over 500 food business operators in New Delhi, Mumbai, Kolkata, and Chennai, the practice of re-using edible oil till the last drop is all-pervasive, especially amongst small eateries and food vendors.

The study also indicated that regular under-reporting of UCO use by large eateries is indicative of either re-use of toxic cooking oils in food preparation or illegal sales to downstream buyers. The two demand drivers of UCO are prices of edible oils and low-awareness levels of food safety regulations amongst business operators. Much in keeping with FSSAI findings, the study also revealed that lower propensity of Chennai eateries to re-use UCO due to better awareness levels and commercial channels to dispose of UCO. The same does not hold true for New Delhi, Mumbai, and Kolkata, as per the observations of this study.

The Leeway From This Menace

The FSSAI understands this menace. It launched the Repurposed Used Cooking Oil (RUCO) Initiative in June 2018 to combat this menace by shifting UCO away from the food supply chain towards biofuels, soaps, and oleochemical industries. However, in 2022, the FSSAI took a perplexing step back by allowing the practice of topping up UCO with fresh oil to prolong its use on account of a lack of regulatory capacity to enforce rules.

The findings of the ORF-Koan study are, therefore, a clarion call for all stakeholders in the value chain that more needs to be done on the ground to promote GoI and FSSAI’s avowed Eat Right India Movement. We recommend four steps towards this:

1. The state-level food safety authorities that enforce UCO management rules on the ground are often short-staffed, poorly funded, and lack the necessary testing kits and technology to verify food quality on the spot. There is no substitute for beefing up their capacities from the ground up.
2. The ORF-Koan study found that higher levels of awareness reduce the likelihood of both large and small-size eateries reusing cooking oil by 98 percent. It follows from here that the FSSAI needs to engage with food industry associations, consumer groups, industry bodies, public health experts, doctors, and nutritionists. It should co-opt such stakeholders to run awareness campaigns targeted at food operators. Additionally, there is a need for campaigns aimed at consumers to broad base the risks associated with UCO and provide guidance on safe UCO disposal at the household level.
3. The stakeholders in food manufacturing and services industries must play a proactive role to ensure compliance with food safety standards and regulations. This will require a market-based incentive mechanism that has been successful globally to incentivise responsible food manufacturing and service industries to develop partnerships with UCO aggregators and collectors to sell the waste oils to biofuels, soaps, and oleochemical industries. Given the growth of such non-food industries, there is large scope for commercial linkages to divert UCO from the food stream.
4. Finally, compliance with regulation is contingent upon an enabling infrastructure, including serviceability and access to UCO collectors and aggregators. This will require the FSSAI to engage with the private sector and municipal authorities to improve the physical infrastructure for UCO storage, collection, and disposal.

These steps can help combat a silent epidemic and meet India’s goal of safeguarding the health of its citizens and building a safe, healthy, and sustainable food supply ecosystem.

India’s attraction for natural gas is burning bright again. The government reiterated its target of raising natural gas’ share in the energy mix to 15 percent, six years after its initial announcement. Not much has changed on the demand front — gas was 6 percent of the energy mix in 2016, rising to 6.3 percent today, despite an expanding gas grid, and city gas distribution (CGD) network. On the other hand, prices have skyrocketed globally. As such, the push for more gas use does not bode well for the economy.

Low Price Competitiveness

Gas’ poor price competitiveness has led to its static energy mix share.

The gas price surge since October 2021 has worsened the situation. The Japan Korea Marker (JKM), a benchmark for Asian spot liquefied natural gas (LNG) prices, increased by 373 percent from January 2021 to July 2022, while domestic gas prices soared 240 percent for regular fields between April 2021 and 2022.

Ongoing supply shortages will further raise prices. Russian company Gazprom’s recent supply cut ahead of the European winter season led to gas supply rationing for India’s industrial use, and fertiliser sector.

Reliance Industries has acquired a majority stake of 79.4 per cent in US-based SenseHawk Inc through primary infusion and secondary purchase, for $ 32million, the company said in a BSE filing.

California-based SenseHawk, which was founded in 2018, is an early-stage developer of software-based management tools for the solar energy generation industry. SenseHawk helps accelerate solar projects from planning to production by helping companies streamline processes and use automation. It provides a seamless solar digital platform to manage the end-to-end solar asset lifecycle, the BSE filing said.

Chairman and Managing Director of Reliance Industries Mukesh Ambani said, “We welcome SenseHawk and its dynamic team to our family. RIL is committed to revolutionize the Green Energy sector and has a vision to enable 100 GW of solar energy by 2030. In collaboration with SenseHawk, we will drive down costs, enhance productivity and improve on-time performance to deliver the lowest LCoE for solar projects globally and make solar energy the go-to source of power in lockstep with our vision for solar energy. It is a very exciting technology platform and I am confident that, with RIL’s support, SenseHawk will grow multifold.”
Also Read: Reliance aims to double its value in 5 years as it gets future-ready

The turnover of SenseHawk for FY2022, FY2021 and FY2020 was US$ 2,326,369, US$ 1,165,926, and US$ 1,292,063 respectively., according to the filing by Reliance Industries.

Sensehawk, along with the other investments of the Company in New Energy, will be synergistic and create unique solutions with higher value to customers. The objects and effects of the aforesaid acquisition are explained in the media release dated September 5, 2022 already filed by the Company on the subject. The acquisition does not fall within the related party transactions and none of RIL’s promoter/ promoter group/group companies have any interest in the above entities, the release added.

Commenting on the partnership, Swarup Mavanoor, CEO and Co-Founder, SenseHawk, said, “Rahul Sankhe, Karthik Mekala, Saideep Talari, Viral Patel and I collaborated with a vision to impact all of the processes in the solar lifecycle. We are delighted with the confidence that RIL has demonstrated in us with this investment. The SenseHawk team foresees strategic value in working with RIL, as one of the largest global infrastructure corporations, and look forward to this next phase in our growth.”

The transaction is subject to certain regulatory and other customary closing conditions and is expected to complete before end 2022.

Covington & Burling LLP and Khaitan & Co. acted as the legal advisors and Deloitte as the accounting and tax advisor to RIL on this transaction.

In what can be seen as a blow to its ambitions, on August 19 Beijing approved Islamabad’s decision to scrap the China Pakistan Economic Corridor (CPEC) Authority. The $60-billion CPEC is part of China’s ambitious Belt and Road Initiative (BRI) to link the nations around the world through its road, rail and seaways. The CPEC has been marred with problems since its inception in 2013, particularly for India has the network passes through Indian territory occupied by its two neighbours.

Pakistan may have justified the decision to scrap the CPEC on the pretext of fast-tracking several projects, but that doesn’t hide the widening differences between the two all-weather friends over the project’s success. The slow pace of progress in addition to the rising resentment against Chinese projects and men stationed in Pakistan seem to have aided the decision. The scrapping of the CPEC authority can be seen as a reflection of the resentment and tough times ahead for the BRI elsewhere in the world.

When the BRI was launched with great fanfare by Chinese President Xi Jinping after he came to power in 2013, the CPEC was advertised as its flagship project. How come then it is getting embroiled in polemics? For quite some time, there has been vocal opposition to the CPEC-related projects in Balochistan. In particular, the local population is peeved at the hyper-marketed Gwadar Port, the lack of economic growth, and the absence of job opportunities.

Elsewhere too in Pakistan, the CPEC projects are facing tough times. After the Karachi attack on Chinese nationals in May, China is increasingly bitter about the multi-pronged attacks on its projects, and personnel. While Pakistan has deployed more than 15,000 military personnel in protecting the CPEC projects, China is less than confidant about these security assurances. Popular mood in Pakistan is increasingly tilting against the CPEC due to the high cost of loans, and the resultant debt-trap. An Asian Development Bank report in February recommended immediate structural reforms so as to unleash the potential of private sector along the CPEC pathway since the CPEC itself was not a sufficient condition to improve Pakistan’s economy.

Some policy changes on the CPEC, including the authority, were expected with the change of government in April. Apparently, the CPEC Authority was formed in 2019 to expedite different projects under the CPEC. Instead, it has been bogged down in controversies, corruption allegations, and wastage of resources. Within three years, it was perceived as a parallel power centre, challenging the authority of federal ministries.

Pakistan’s new government blamed the CPEC Authority for not bringing any investment during its existence. Many projects have not taken off in last three years, and some were being shelved. It is now debatable if all the projects as envisaged in the CPEC blueprint will take off.

What is true of CPEC in Pakistan, is also true of BRI offshoots elsewhere. For instance, only recently, Nepal decided to handover nearly $2.4 billion-worth of hydropower projects to India that were initially given to China. Some of these projects were part of the BRI.

The fact is that China is now perceived by many of its BRI partner countries as a neo-colonial power. The COVID-19 pandemic, and the ensuing economic slowdown has weakened Beijing’s economic prowess—but more damaging is that it has created a negative sentiments against China and its ways across many nations. China’s grand strategy of using the BRI as a pathway to alternative international economic order is now muted with more and more erstwhile partners walking away.

Problems aside, there are reasons to believe that China would still handhold the CPEC and not let it fail. First, Beijing has already invested a huge amount of money into several projects under the CPEC. A pull-out or even partial withdrawal may sound alarm bells in other BRI projects, and may widen doubts about China’s funding capacities.

Second, China perceives the CPEC essentially in strategic terms since this would allow the shortest land route to West Asia via Gwadar. The economics, at least in this case, gets subsumed under the rubric of larger strategic goals. The likes of Gwadar Port and other important projects under the CPEC may still run through the course. Third, Pakistan has been a close ally of China for decades. If the CPEC is allowed to suffocate, the so-called Sino-Pak axis would emerge as a farcical arrangement. China would surely want Pakistan to remain its brand ambassador to fashion out the BRI landscape in other countries.

Therefore, notwithstanding the manifold problems in the CPEC, China would try to run through all the projects planned out in different phases of the project. Whether that is possible along with vital domestic support in Pakistan, would be known only in due course.

If his exit from Tata Sons was a mystery, Cyrus Mistry’s untimely death in a road accident in Maharashtra on September 4 is a tragedy of unimaginable magnitude. Fifty-four is no age to go in today’s world. While the loss for his family is irredeemable, he was also a rising star snatched away from the firmament of the emerging new India.

The Shapoorji-Pallonjis were no ordinary business family. Apart from being the silent and invisible force behind the House of Tatas, they were a major player in India’s construction sector for decades — cutting across housing, industry, and infrastructure. Barring Larsen & Toubro, following its Indianisation, the Shapoorjis were one of the most trusted names among the domestic private sector construction firms. They were in it for the long haul unlike many short-term wonders who came and disappeared after bleeding banks and creditors dry.

The group had weathered many storms in the economy. It had the resilience and commitment to take the smooth and the rough patches in its stride. This is a sensibility that Cyrus Mistry inherited from the older generations of the Pallonji family, apart from impeccable genteel upbringing, and the best of education. It put him in the league of enlightened business leaders with a global outlook, but strong local moorings — precisely what we need for the next leg of the ‘India Growth Story’.

This is not the time and place to dwell upon the controversy surrounding Mistry’s short stint at Tata Sons. It is best put behind as an internal squabble which will now go to rest with him. But that does not diminish the promise he displayed and attributes he embodied that is so essential for shaping the future of India’s economic climate. This included above all grace, dignity, and integrity of character that are so essential to earn the respect of the global financial and industrial community. Many of these qualities were on frontal display during his tenure in Tatas in the hard calls he was willing to take on many of the group’s investment decisions and collaborations that did not pass the smell test. Some of these reviews may have contributed to his nemesis at Tata Sons. Though affronted he never gave the impression of regretting his position on the matter.

Mistry broke out of the comfort zone of a family-owned business to a professionally managed organisation like the Tatas. It would have also involved a willingness and ability to learn about diverse businesses ranging from aviation and automobiles to telecom and tea. Making the transition must have been daunting. One does not know the circumstances of his selection after mounting a global search. In hindsight, Tata Sons may not have been all that professional after all as evident from the choice of N Chandrasekaran, a confidante of Ratan Tata, as his successor.

Another trait of Mistry that stands out is the premium he placed on merit. This was evident from the talent pool he gathered at Tata Sons with some of the finest minds in different disciplines from around the world. Almost all of these hires were global thought leaders of Indian origin, rather than foreign experts. This was in keeping with the ethos that had been at the core of both the Tatas and Pallonjis of combining the best of all the worlds. However, not everyone is able to strike the right balance.

That does not mean Mistry was the epitome of success. To be fair, he was at best a 'work in progress'. At one level he may remind us of a Shakespearean ‘tragic hero’ though his end came by the sleight of the divine hand rather than his own undoing. Next generation of business family scions should learn from his example to carve their own path for building on the legacy they have inherited, and to create enduring world-class institutions.

India's dominant services industry grew faster than expected in August thanks to a solid expansion in demand and a continued easing in cost pressures, encouraging firms to hire at the quickest pace in more than 14 years, a private survey showed.

Driven by strong growth in services and manufacturing activity, Asia's third-largest economy expanded at its fastest annual pace in a year during the April-to-June quarter.

However, that momentum is unlikely to be sustained over the coming quarters as higher interest rates, elevated price pressures, and growing concerns about a global recession pose significant risks to the economy.

Still, the S&P Global India Services Purchasing Managers' Index rose to 57.2 in August from 55.5 in July, surpassing the 55.0 estimate in a Reuters poll. It remained above the 50-mark separating growth from contraction for a 13th straight month.

"The pick-up in growth stemmed from a rebound in new business gains as firms continued to

benefit from the lifting of COVID-19 restrictions and ongoing marketing efforts," noted Pollyanna De Lima, economics associate director at S&P Global.

"Finance and insurance was the brightest area of the service economy in August, leading with regards to growth of sales and output."

While that encouraged firms to raise headcount at the fastest pace since June 2008, signs of demand remaining resilient boosted business confidence to its highest in over four years.

But overseas orders contracted for a 30th consecutive month on persistent weakness in global demand.

Input prices, albeit elevated, increased at their slowest pace in nearly a year in August. Persistent strength in demand allowed firms to transfer some of their high-cost pressures onto their customers.

Although overall inflation is widely expected to slow over the coming months, it is unlikely to decline to within the Reserve Bank of India's medium-term target range of 2%-6% anytime soon.

That means the RBI, which has already raised its key repo rate by 140 basis points since May, is expected to continue with its rate hikes.

Faster expansion in services activity and strong manufacturing growth boosted the composite index to 58.2 in August from 56.6 in July.