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The insurance regulator is keen that Life Insurance Corporation of India (LIC) pare down its stake in other companies to 15 percent or below. But this reduction has to be gradual, Insurance Regulatory and Development Authority of India (IRDAI) Chairman Subhash Chandra Khuntia said.

"We would like LIC to bring down their stake in firms to below 15 percent. But this cannot happen before the (proposed) IPO. The reduction cannot be instant because it will lead to disruption and prices may get impacted. We will be fixing a timeline," he said on the sidelines of a National Insurance Academy event.

Finance Minister Nirmala Sitharaman announced on February 1 in her Budget 2020 speech that the government will divest its stake in LIC through an IPO. It is likely that LIC will be listed on the stock exchanges in the second half of FY21.

LIC holds more than 15 percent stake in entities like IDBI Bank, ITC and UTI. As per insurance rules, an insurance company cannot hold more than 15 percent stake in any company. However, LIC has been given special exemption for investing in IDBI Bank.

Once the Parliament gives nod for an IPO, the stake sale by the government will be undertaken. It is likely that the government could sell 10 percent stake in LIC, an insurer whose valuation could be as high as Rs 10 lakh crore.

New tax slabs

Khuntia also spoke about the Budget 2020 proposal on the new optional tax slabs that offer lower tax rates but without any tax exemptions or deductions.

"Even if there is a new tax regime I am sure people understand the need for protection. Those who need it will opt for insurance products. But it is a fact that people don't just buy insurance for tax exemption. There is a still an option," added Khuntia.

Capital infusion in PSU insurers

When it comes to the public sector general insurance companies, Budget 2020 has provided for additional capital of Rs 6,950 crore for Oriental Insurance, United India Insurance and National Insurance.

The budget documents showed that the provision was for the higher requirement of maintaining the requisite minimum solvency ratio by each of the three public sector general insurance companies.

"A total of about Rs 9,500 crore has been provided. This year (FY20) there was a provision of Rs 2,500 crore capital. The same for FY21 will be Rs 6,950 crore," Khuntia added.

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The zero customs duty on open-cells for LCD/LED panels used for televisions may get a temporary extension. The government is studying a proposal to extend the nil duty by another six months. Currently, this is valid till September 30.

Imposition of customs duty would lead to an immediate hike in prices of televisions. This is because open cell is what makes the LED/LED screen of a television function effectively. The entire open-cell component is imported from South-East Asian markets.

LED TVs comprise one of the largest segments under the entire domain of Appliance and Consumer Electronics, accounting to a volume of almost 15 million with an estimated sale value of almost Rs. 40,000 crore.

"While the emphasis is on Make in India, the government is cognisant of the fact that key components for products like televisions do not have local manufacturing capacity," said an official.

In September 2019, the Ministry of Finance had said the open-cells for LCD/LED panels will not attract any customs duty. The ministry had said that it will be valid till September 30, 2020 post which local manufacturing of open cell could be incentivised.

In her Budget speech, Finance Minister Nirmala Sitharaman said that it has been observed that imports under Free Trade Agreements

(FTAs) are on the rise.

"Undue claims of FTA benefits have posed threat to domestic industry. Such imports require stringent checks. In this context, suitable provisions are being incorporated in the Customs Act. In the coming months we shall review Rules of Origin requirements, particularly for certain sensitive items, so as ensure that FTAs are aligned to the conscious direction of our policy," she had said.

It is to be noted that televisions are also a category where FTAs are being used in a small way to source products/parts from outside. This will also be under review.

She also said that the custom duty exemptions shall be comprehensively reviewed by September, 2020 for taking a view on their relevance.

Currently, the zero customs duty is applicable for open-cell (15.6 inches and above) used in the manufacture of Liquid Crystal Display (LCD) and Light Emitting Diode (LED) TV panels. Further, components like the chip on film, printed circuit board assembly and cell used in LCD/LED TV panels will also be exempt from customs duty.

Open-cell is a critical component used in manufacturing television sets. At present, there is no local manufacturing of open cell in India so a higher customs duty meant that TV prices stayed high.

The LED TV industry is also one of the biggest employers with estimated employment of 50,000 people directly and many more indirectly through the ancillary units.

The industry has sought a policy to enable phased manufacturing of TVs and end-to-end manufacturing of televisions in the country.

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The proposed levy of 1 per cent TDS on e-commerce transactions announced in the recent Budget may seem like a harmless 'papercut' but could impact working capital of small businesses, Amit Agarwal, country head of Amazon India and Chairman of industry body IAMAI said on Wednesday.

Agarwal said the focus for India should be on "removing friction and bottlenecks" and added that the target of USD 1 trillion digital economy is not far fetched for a country that is seen as a digital powerhouse.

"Just look at the most recent Budget. There is an introduction of tax collection at source. These seem like harmless papercuts but really impact the working capital of small businesses," Agarwal said.

A lot can be achieved by focusing on removing friction, he said expressing hope that there will be more attention in enabling this space for successful entrepreneurs.

Agarwal was speaking at 14th India Digital Summit organised by Internet and Mobile Association of India (IAMAI).

Agarwal further advocated a razor sharp focus on skilling, grassroot entrepreneurship, driving equal opportunity through greater women's participation as well as Artificial Intelligence backed solutions, and said a multi pronged approach can enable India to meet its target of USD 5 trillion economy.

He exuded confidence that bold reforms of last few years and India's rising tech clout globally backed by success of Aadhaar, UPI and other initiatives will help the country scale new highs.

The Union Budget announced on February 1 has proposed a new levy of 1 per cent TDS (tax deducted at source) on e-commerce transactions, a move that could increase burden on sellers on such platforms.

"In order to widen and deepen the tax net by bringing participants of e-commerce (sellers) within tax net, it is proposed to insert a new section 194-O in the Act so as to provide for a new levy of TDS at the rate of one per cent," according to Budget 2020-21 documents.

The amendments will take effect from April 1, 2020. The documents said the e-commerce operator -- an entity owning, operating or managing the digital platform -- will have to deduct 1 per cent TDS on the gross amount of sales or service or both.

This provision will not apply in cases where the seller's gross amount of sales during the previous year through e-commerce operator is less than Rs 5 lakh and the seller has furnished his PAN or Aadhaar number.

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The Chinese yuan benefited from the stronger tone in the country’s equity markets Tuesday, although concerns about the widening coronavirus outbreak have kept the gains capped.

At 03:05 ET (0805 GMT), USD/CNY traded at 6.9935, down 0.4%, pushing back below the 7.0 level after breaking through that barrier Monday for the first time this year.

The country's central bank has tried to mitigate the economic damage caused by the coronavirus by trimming interest rates and injecting 1.2 trillion yuan of liquidity into the markets.

Most expect more measures ahead.

"Chinese authorities have been providing a lot of support for the financial markets. There's a level of assurance that the rout would not be allowed to go on much further than necessary," said Christy Tan, head of markets strategy for Asia at National Australia Bank in Singapore.

Still, the number of coronavirus deaths in China continued to climb, reaching 425 as of the end of Monday, from over 20,000 cases, a mortality rate of barely 2%.

Elsewhere, the US Dollar Index Futures, which tracks the greenback against a basket of other currencies, pushed up 0.2% to 97.767, helped by stronger than expected manufacturing sentiment data late Monday and weakness in sterling.

“The ISM manufacturing index has surged back into positive growth territory. The Phase One trade deal between the US and China has lifted much of the gloom hanging over the sector with businesses responding positively,” said ING, in a research note.

Sterling was weak Tuesday as Prime Minister Boris Johnson and Chief EU Negotiator Michel Barnier laid out opposing visions for the relationship between the two groups post-Brexit.

Fears still exist that the U.K. could end the transition period at the end of this year without a trade deal.

At 03:05 ET (0805 GMT), GBP/USD traded at 1.2957, down 0.3%, near a seven-week low.

Overnight, the Australian dollar rose after the Reserve Bank of Australia decided to hold the official cash rate steady at 0.75%. The decision was largely in line with expectation, but analysts do look for another rate cut in the near future.

At 03:05 ET (0805 GMT), the AUD/USD pair traded 0.4% higher to 0.6717.

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The dollar held firm on Tuesday after a key U.S. manufacturing survey showed a surprise recovery, while concerns about a widening coronavirus outbreak in China kept the yuan and the Australian dollar subdued.

The dollar index (=USD) rose 0.44% on Monday, the biggest gain so far this year, and last stood at 97.802. It was boosted by a report from the Institute for Supply Management (ISM) reported that U.S. factory activity unexpectedly rebounded in January after contracting for five straight months amid a surge in new orders.

Against the yen, the dollar traded at 108.62 yen , after a gain of 0.3% on Monday, the biggest gain in a downtrend that started in mid-January.

The euro stood at $1.1062 (EUR=), having slipped 0.3% on Monday.

In Asia, coronavirus remained in focus as the number of cases and deaths showed little sign of slowdown.

"The question is how long it will take to contain the epidemic. While some people are selling risk assets, there are also lots of people who are looking for a chance for bargain-hunting," said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.

"If we start to see a decline in the number of new cases, then we could see an end. But at the moment, it is hard to say when that will happen."

The offshore yuan traded at 7.0127 yuan per dollar , holding slightly above its one-month low of 7.0230 per dollar hit in European trade on Monday.

The Australian dollar fetched $0.6690 , within sight of its 10 1/2-year low of $0.6670 touched last October, ahead of an interest rate decision Reserve Bank of Australia (RBA) due later in the day.

Although most investors expect the RBA to keep rates on hold at this month's meeting, a cut has not been completely ruled out, with markets pricing in a 100% chance of such a move by May.

Elsewhere, sterling fetched $1.2999 , having lost 1.54% on Monday on renewed worries about Britain's relations with the European Union. Prime Minister Boris Johnson set out tough terms for Brexit talks with the European Union, rekindling fears Britain would reach the end of an 11-month transition period without agreeing a trade deal.

Traders are also casting an eye on the U.S. state of Iowa, where Democrats are kicking off a process to choose a challenger to President Donald Trump.

Market players say a victory by a progressive candidate such Senator Bernie Sanders and Elizabeth Warren could hurt shares and lift safe-haven currencies as some of their policies are thought to be not in best interests of Wall Street.

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Removal of tax exemptions under Section 80C in the new tax regime could be dampener for life insurance products as well as equity-linked savings schemes (ELSS) of mutual funds.

In her Budget speech on February 1, Finance Minister Nirmala Sitharaman said a salaried professional opting for a lower tax rate under the new regime will not be eligible for deductions, including insurance premium paid and ELSS investments.

“The removal of 80C benefit may pose a risk to new business volumes of life insurance companies,” said Kotak Institutional Equities in a report.

Life insurance

Tax exemptions are an important incentive for purchase of life insurance. To be eligible for exemption under Section 80C, the sum assured has to be 10 times the annual premium. This is part of the Rs 1.5 lakh limit under this section.

But now, those who opt for the new tax regime will not be eligible to claim any deduction under Section 80C.

It is likely that those earning annual income between Rs 5 lakh to 7.5 lakh could switch to the new regime and hence will not have any incentive to buy an insurance product.

Though tax saving is not the only objective to buy life insurance, it is one of the motivators. Life insurers are hopeful that fewer people opt for the new regime.

Kamlesh Rao, CEO Aditya Birla Sun Life Insurance, said the insurance industry will be watchful of the implication of direct tax changes in the new tax regime.

As soon as the new regime was announced on February 1, life insurers' stocks were hit. Currently, HDFC Life Insurance, ICICI Prudential Life Insurance and SBI Life are listed on the stock market.

Shares of Max Financial, which holds Max Life, gained 8.65 percent intraday today (against a 12.8 percent fall on Budget day), ICICI Prudential rose 1.69 percent (against a correction of 10.93 percent), HDFC Life gained 1.80 percent (against a fall of 6 percent) and SBI Life was up 3.12 percent (against a decline of 10 percent).

The high reliance on the fourth quarter for premium collection by life insurers has however come down. Since Q4 is when individuals buy life insurance to claim deductions, a major portion of the new premiums would come in the January to March period.

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The Economic Survey 2020 stated that India had been the dominant economic power for over three-fourths of known economic history. Such economic strength is created "by design" rather than by chance, the report said.

The survey also drew the connection between the invisible hand of the market, the hand of the trust and how it can contribute to India's target of becoming a $5-trillion economy.

"In a market economy too, there is need for state to ensure a moral hand to support the invisible hand," the survey emphasised.

The survey traced the country's history, right from the ancient texts such as Arthashastra and Thirukural to contemporary times and the problem of bad loans.

Pro-business practices can help promote the invisible hand of the market, the report added.

The survey introduced the concept of “trust as a public good that gets enhanced with greater use”.

The Survey suggests that policies must empower transparency and effective enforcement using data and technology to enhance this public good.

The global financial crisis in 2009 and its consequences created a trust deficit in the economy. Economics literature after the financial crisis has emphasised the need to rebuild the trust in the economy.

"Following the Global Financial Crisis, an emerging branch of the economics literature now recognises the need for the hand of trust to complement the invisible hand," the report said.

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The U.S. dollar inched up on Thursday in Asia after the Federal Reserve said it will hold its benchmark rates steady as expected.

The U.S. dollar index inched up 0.1% to 97.875 by 1:20 AM ET (05:20 GMT).

The central bank’s Federal Open Market Committee said it will hold the rates between 1.5% and 1.75%. It was the second straight meeting the Fed made no changes to rates following three rate cuts in 2019.

During his post-meeting news conference, Fed Chair Jerome Powell said the Fed“wanted to underscore our commitment to 2% not being a ceiling, to inflation running symmetrically around 2% and we’re not satisfied with inflation running below 2%.”

"We expect (reserves to reach an ample level) during the second quarter and our plan, as we do that, is as those purchases get to that level we believe we can gradually reduce them and we believe we can also gradually reduce repo as we reach an ample level," he added.

The decision came just hours after data showed weaker-than-expected housing activity.

The National Association of Realtors' measure of pending home sales unexpectedly fell 4.9% to 103.2 in December. That was the biggest decline since May 2010.

The GBP/USD pair was little changed at 1.3013. The Bank of England is expected to hold rates unchanged later in the day.

The AUD/USD pair fell 0.2% to 0.6739, while the NZD/USD pair was also down 0.2% to 0.6509.

The safe-haven yen traded slightly higher against the U.S. dollar as Asian stocks fell amid coronavirus concerns.

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Cargo traffic at India's non-major ports jumped 4.8 per cent in April-December period of the current fiscal to 447.21 million tonnes (MT), a Shipping Ministry report has said. These non-major ports had recorded a cargo traffic of 426.53 MT in the April-December period of 2018-19.

During the April-December 2019-20, Directorate of Ports at Odisha recorded highest growth in traffic at 64.2 per cent followed by Ports of Tamil Nadu Maritime Board (34.1 per cent), Directorate of Ports, Puducherry, 27.7 per cent) and Ports Management Board, Andaman & Nicobar Islands (25.4 per cent) against the corresponding period of the previous fiscal, as per the report.

Directorate of Ports, Karnataka, recorded a growth of 25 per cent while Gujarat Maritime Board recorded a growth of 4.1 per cent.

Negative growth was seen at Goa, Kerala Maritime Board, Maharashtra Maritime Board and Directorate of Ports, Andhra Pradesh (2.1 per cent).

Cargo traffic at India's non-major ports jumped 4.8 per cent in April-December period of the current fiscal to 447.21 million tonnes (MT), a Shipping Ministry report has said. These non-major ports had recorded a cargo traffic of 426.53 MT in the April-December period of 2018-19.

During the April-December 2019-20, Directorate of Ports at Odisha recorded highest growth in traffic at 64.2 per cent followed by Ports of Tamil Nadu Maritime Board (34.1 per cent), Directorate of Ports, Puducherry, 27.7 per cent) and Ports Management Board, Andaman & Nicobar Islands (25.4 per cent) against the corresponding period of the previous fiscal, as per the report.

Directorate of Ports, Karnataka, recorded a growth of 25 per cent while Gujarat Maritime Board recorded a growth of 4.1 per cent.

Negative growth was seen at Goa, Kerala Maritime Board, Maharashtra Maritime Board and Directorate of Ports, Andhra Pradesh (2.1 per cent).