Modi surprises markets with finance minister move

Nirmala Sitharaman is taking over the Finance Ministry when there is pressure from industry for government stimulus to halt a slowdown in India’s economy. (Reuters)
Updated 31 May 2019

Modi surprises markets with finance minister move

  • Sitharaman, 59, will become the most senior woman minister in Modi’s Cabinet and the second woman to head the finance department after late former prime minister Indira Gandhi
  • The government is already considering rolling out a slew of economic reforms in the first 100 days of Modi’s second term

NEW DELHI: Indian Prime Minister Narendra Modi on Friday surprised markets by naming Nirmala Sitharaman, formerly the country’s defense minister, as the next finance minister at a time when Asia’s third-largest economy is stuttering.
Amit Shah, chief of the Hindu nationalist Bharatiya Janata Party (BJP), was appointed as the minister of home affairs, giving him responsibility for internal security with a control over the federal police.
Regarded as the architect of Modi’s landslide victory in the recently concluded general election, Shah replaces senior BJP leader Rajnath Singh, who will now be defense minister.
Shah had been tipped as a possible candidate for the Finance Ministry in recent days, but the job went to Sitharaman, who has an economics background and was briefly the junior finance minister in Modi’s first term.
Unlike Shah and former Finance Minister Arun Jaitley, who opted out of this government due to ill health, Sitharaman is seen as a political lightweight.

 

Sitharaman, 59, will become the most senior woman minister in Modi’s Cabinet and the second woman to head the finance department after late former prime minister Indira Gandhi.
“It is a big surprise and very unexpected news,” said Yogesh Nagaonkar, founder and chief executive of Rowan Capital Advisers in Mumbai. “The initial expectation of the market from her would be to see how she addresses liquidity concerns. We need to have good liquidity in the market to achieve growth.”
Nagaonkar said the ministry should have gone to Piyush Goyal, a chartered accountant who had stepped into the role twice in the previous government when Jaitley was out sick. Goyal will now be minister of railways and commerce, at a time when trade ties with the US are straining.
Sitharaman will take over the Finance Ministry when there is pressure from industry for the government to provide some stimulus to halt a worrying slowdown in India’s $2.7 trillion economy.
The government is already considering rolling out a slew of “big-bang” economic reforms in the first 100 days of Modi’s second term, with a focus on privatization of state assets and relaxation of labor and land rules for businesses, a top official at the government’s main think tank told Reuters.
Modi also named S. Jaishankar, a former foreign affairs secretary, as India’s new external affairs minister. He will take over from Sushma Swaraj, the ruling party’s veteran leader and the previous most senior woman in the Cabinet. She has also stepped aside due to poor health. This is the first time that a diplomat has been appointed as India’s foreign minister.
“It shows that the prime minister is serious about foreign policy, and secondly, that he is entrusting it in the hands of a professional,” Lalit Mansingh, a former foreign secretary, told Reuters.

FASTFACTS

India’s government is under pressure to provide stimulus to halt a worrying slowdown in its $2.7 trillion economy. The government is already considering rolling out a slew of “big-bang” economic reforms in the first 100 days of Modi’s second term, with a focus on privatization of state assets and relaxation of labor and land rules for businesses.


Huawei in early talks with US firms to license 5G platform: executive

Updated 19 October 2019

Huawei in early talks with US firms to license 5G platform: executive

  • Currently there are no US 5G providers and European rivals Ericsson and Nokia are generally more expensive
  • Huawei has spent billions to develop its 5G technology since 2009

WASHINGTON: Blacklisted Chinese telecoms equipment giant Huawei is in early-stage talks with some US telecoms companies about licensing its 5G network technology to them, a Huawei executive told Reuters on Friday.
Vincent Pang, senior vice president and board director at the company said some firms had expressed interest in both a long-term deal or a one-off transfer, declining to name or quantify the companies.
“There are some companies talking to us, but it would take a long journey to really finalize everything,” Pang explained on a visit to Washington this week. “They have shown interest,” he added, saying conversations are only a couple of weeks old and not at a detailed level yet.
The US government, fearing Huawei equipment could be used to spy on customers, has led a campaign to convince allies to bar it from their 5G networks. Huawei has repeatedly denied the claim.
Currently there are no US 5G providers and European rivals Ericsson and Nokia are generally more expensive.
In May, Huawei, the world’s largest telecoms equipment provider, was placed on a US blacklist over national security concerns, banning it from buying American-made parts without a special license.
Washington also has brought criminal charges against the company, alleging bank fraud, violations of US sanctions against Iran, and theft of trade secrets, which Huawei denies.
Rules that were due out from the Commerce Department earlier this month are expected to effectively ban the company from the US telecoms supply chain.
The idea of a one-off fee in exchange for access to Huawei’s 5G patents, licenses, code and know-how was first floated by CEO and founder Ren Zhengfei in interviews with the New York Times and the Economist last month. But it was not previously clear whether there was any interest from US companies.
In an interview with Reuters last month, a State Department official expressed skepticism of Ren’s offer.
“It’s just not realistic that carriers would take on this equipment and then manage all of the software and hardware themselves,” the person said. “If there are software bugs that are built in to the initial software, there would be no way to necessarily tell that those are there and they could be activated at any point, even if the software code is turned over to the mobile operators,” the official added.
For his part, Pang declined to predict whether any deal might be signed. However, he warned that the research and development investment required by continuously improving the platform after a single-transfer from Huawei would be very costly for the companies.
Huawei has spent billions to develop its 5G technology since 2009.