India's Small-Cap Stocks Set to Beat Larger Peers on Improved Earnings
Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. Another volatile day awaits Indian stocks, with Israel-Iran tensions showing no signs of a let up. Nothing suggests either a breakdown or a breakout with the main gauges in a tighter coil than the broader market. The spotlight will be on BSE's shares after the exchange switched its derivatives expiry to Thursdays, which could impact its newfound heft in the futures and options market.
BSE bulls on the backfoot as expiry day battle ends
The short-lived expiry-day war between India's main bourses may be over, but not in BSE's favor. NSE has chosen Tuesdays for the expiry of its derivative contracts, prompting the BSE to reschedule its settlement day to Thursdays. This means BSE's expiry day will now follow that of NSE, reversing its previous lead. Goldman Sachs on Monday warned that BSE may face a 3 percentage point loss of market share and an 8% cut in EPS estimate if the bourse chooses Thursday to settle its contracts.
Mutual funds emerge as eager buyers in large deals
Local mutual funds are increasingly active participants in block trades of key consumer stocks, underscoring growing optimism about a revival in consumer sentiment in the coming months. SBI Mutual Fund, ICICI Prudential Fund, and HDFC Mutual Fund were among the biggest buyers in a $900 million block trade in Asian Paints and a $1.15 billion deal in Vishal Mega Mart. With the block deal market expected to heat up further, cash-flush mutual funds are set to absorb the increased supply with ease.
Profit margin recovery may sustain in June quarter
Corporate profit margins are expected to remain stable in the 18.2%-18.5% band during the June quarter, thanks to robust demand and easing input costs, including crude oil, coal, and steel, according to ratings firm ICRA. Declining interest rates may provide an additional boost to businesses. It expects some sectors such as electronics, semi-conductors, and niche segments within the automotive space, particularly electric vehicles, to witness an increase in investments.
Three great reads from Bloomberg today:
India's small-sized stocks are on track to beat their larger peers for a second straight month, with improved earnings prospects pointing to more gains this year. The NSE Nifty Smallcap 250 Index has advanced about 2% so far in June, outpacing a 0.4% gain in the benchmark Nifty 50 index. A 100-basis-point cut in borrowing costs this year, along with the RBI's cash-boosting measures, is fueling optimism that companies catering to domestic demand will benefit more as the economy grows.
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--With assistance from Kartik Goyal.
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Business Standard
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Barometers end with moderates cuts; Nifty settles below 25,500
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News18
4 minutes ago
- News18
The High Cost Of 10-Minute Convenience: How E-Commerce Is Squeezing India's Small Entrepreneurs
Both new and old players are flouting the laws, and despite policymakers being aware of these illegal activities, they have been slow to act and level the playing field. Across India's cities and towns, e-commerce and 'quick commerce' platforms are revolutionising traditional retail, threatening the livelihoods of millions of small shopkeepers, entrepreneurs, street vendors, and local manufacturers. The unfortunate aspect is that both new and old players are achieving this by flouting the laws, and despite policymakers being aware of these illegal activities, they have been slow to act and level the playing field. Over the past decade, giants like Amazon and Walmart-owned Flipkart have reshaped Indian retail through immense scale, aggressive discounting, and complex seller networks. Consumers have benefited from low prices and a vast selection online, but local producers and shopkeepers have suffered. Walmart, notorious for its impact on the US economy by driving down prices and destroying both manufacturing and small businesses, found a way into Indian retail through e-commerce after its initial entry was blocked. The current homelessness and opioid crisis in the US can be traced back to job losses or jobless growth. Similar destruction of small businesses and entrepreneurship is unfolding rapidly in India, creating the same conditions. Industry estimates suggest that up to 70 per cent of the items sold on Amazon and Flipkart are of Chinese origin, indicating that India's e-commerce boom has favored cheap imports over domestic manufacturing. These imports are routed through companies owned and operated by e-commerce giants in countries like Singapore to exploit FTA and tax rules. Despite the Indian government being aware, there is no action to prevent this, including enforcing rules for disclosing the origin of products on their websites. From toys to electronics, the influx of low-cost Chinese goods has made it tough for Indian MSMEs (micro, small, and medium enterprises) to compete, even in categories where local industry once thrived. A detailed 2024 study by the Global Trade Research Initiative found that Chinese imports have captured over 52% of India's toy market (despite high import tariffs) and majority shares in products like umbrellas, leather goods, and glassware, displacing many local producers. Domestic manufacturers are not benefiting from the e-commerce surge, as consumers often prefer the cheaper, mass-produced imports available online. This challenge is compounded by the way major e-commerce marketplaces operate through 'preferred sellers" and exclusive partnerships, creating roadblocks for smaller sellers. Investigations by India's antitrust regulators have shown that Amazon and Flipkart favor a small group of large sellers on their platforms, granting them better search placement, lower fees, and other advantages. Just 35 sellers out of Amazon India's 400,000+ sellers account for two-thirds of all sales, with Amazon's joint-venture sellers (Cloudtail and Appario) making up 35 per cent of sales alone. Ordinary merchants are 'mere database entries," as described by Competition Commission of India (CCI) investigators. This preferential treatment enables predatory pricing strategies – popular products are sold at or below cost by the favored sellers, supported by the deep pockets of the platforms. An antitrust report in 2024 found that Amazon and Flipkart had indeed violated competition laws by using preferential listings and selling goods below cost (especially mobile phones) to capture market share, which had a 'catastrophic impact on the existing competition in the market." These tactics were noted across many product lines, drawing shoppers away from small shops to online platforms, where independent sellers couldn't match the prices. The 'Amazon effect" – as fearful shopkeepers call it – means local electronics or book stores watch customers browse, then order the same items online at heavy markdowns that small retailers can't afford to offer. A typical Indian kirana (neighbourhood grocery) store offers a wide variety of goods. These family-run shops – numbering in the millions – are the backbone of India's retail economy. They now struggle to compete with the deep discounts and home-delivery convenience offered by e-commerce giants. India has failed to implement its FDI (foreign direct investment) rules, which aim to prevent foreign e-commerce firms from stocking inventory or controlling prices directly. As a result, these platforms use the 'marketplace" model to circumvent the rules. By 2020, the Commerce Ministry was alarmed that Chinese goods dominated online sales and that platforms might be circumventing rules through preferred seller arrangements. 'We have received suggestions… our priority is to cut unnecessary imports and boost local manufacturing," an official said as the government mandated country-of-origin labels on e-commerce products in 2020. The intention was to inform consumers that their online bargains were often imports, encouraging them to consider Indian-made alternatives. However, this has not been enforced, and platforms have avoided compliance, with no action taken by the Consumer Protection Authority. Commerce and Trade Minister Piyush Goyal has publicly criticised the e-commerce giants, noting that the 'massive growth of e-commerce is not a matter of pride but a matter of concern." He highlighted the imbalance where traditional small traders, a pillar of India's economy and the BJP's political base, are struggling against Walmart and Amazon-funded giants. Goyal called out e-commerce platforms' strategy of using large investments to finance sustained losses to wipe out competition. Now, quick commerce players are doing the same, affecting street vendors who supply vegetables and small household items. Flouting Rules, Violating Safety And Quality Norms Crucially, the 'dark store" model of quick commerce, enabling 10-minute delivery, is breaking all the rules. These small warehouses, located in residential neighborhoods to be closer to customers, violate zoning laws for warehouses and commercial establishments. They establish themselves as shops but operate as warehouses, creating traffic problems with swarms of delivery bikes in narrow lanes. Residents in some cities have protested the noise, traffic, and safety hazards from these 24/7 mini-warehouses. Despite this blatant flouting of zoning laws, state governments' urban affairs ministries have not taken any action. While the police and municipal corporations are active in evicting street vendors, they have done nothing against quick commerce entities destroying other entrepreneurs. Regulators have found safety and quality violations behind the scenes. In recent months, Maharashtra's Food and Drug Administration (FDA) conducted surprise inspections of quick-commerce storage facilities and found disturbing lapses. Blinkit's dark store in Pune's Balewadi had its food business license suspended after officials found food safety violations, including expired products and hygiene issues. In Mumbai's Dharavi area, a Zepto dark store had its license suspended due to expired goods, fungal growth on food items, and unsanitary storage conditions. (The license was later reinstated after Zepto claimed to fix the issues.) However, the FSSAI, the national regulatory body for food and licensing, has never questioned how fresh food is being stored and distributed from warehouses masquerading as shops, or how these entities openly flout the laws for shops and warehouses. The Bureau of Indian Standards (BIS) raided Amazon warehouses in March this year and seized hundreds of products (toys, appliances, cables) lacking the required ISI safety certification. Despite finding non-certified products, no action has been taken against the organisation, with the onus conveniently passed on to the vendors by the platforms. There are institutional gaps and complicity that need to be investigated suo motu. Regulatory scrutiny must focus on the larger problem: some of the cost-cutting and hyper-growth tactics by online platforms may bypass quality and safety norms that brick-and-mortar businesses must follow. After five years, and with billions of dollars in trade already done, the Competition Commission of India released its investigation report in September 2024, explicitly stating that by giving preferential treatment and discounts to select sellers, Amazon and Flipkart harmed countless small retailers. It likened their deep discounting to an unfair trade practice foreclosing competition. The report found all allegations of anti-competitive conduct to be true. However, since that report, no action has been taken as all petitions and cases have been transferred to the Karnataka High Court. Now, the platform and regulators play a cat-and-mouse game in court, with the legal fraternity showing little concern for the economy, entrepreneurship, or jobs. How can the playing field be leveled? Policymakers need to recognise the limitations of current laws and act collectively. Raids and investigations might appease the media but do not change the behaviour of these platforms on the ground. It's surprising that a system designed to prevent such issues is being exploited by smart lawyers and public affairs professionals on these platforms to undermine the Indian economy. There is no innovation in these digital shops; delivering something in 10 minutes is convenient but lacks innovation. Significant capital is being invested in solving a problem that isn't worth solving. Burning capital is not innovation; it's the destruction of capital and economic ecosystems, leading to joblessness. Hence, these entities should not be viewed as technology companies or innovators, even by the courts. There is no balance to be achieved in protecting them; instead, there is job destruction. Policymakers and courts should ensure a level playing field for the smallest entrepreneurs. The first step in avoiding further capital dumping is to enforce existing laws, ensuring compliance with foreign investment rules (preventing platforms from secretly controlling inventory via proxies) and consumer protection rules (mandating origin labeling and product safety certification online). Secondly, policymakers should stop delaying the Digital Competition Act (or 'Digital India Act") to address anti-competitive conduct by Big Tech and online marketplaces. Lobbying has delayed this bill for over five years, and it is urgent that it be passed immediately. Thirdly, several government ministries, including Commerce and Consumer Affairs, have formed a panel (as of August 2024) to assess the impact of rapid delivery services on small shopkeepers. The outcomes and proposed actions of this panel must be shared with the public. If the panel has not proposed anything, it should be dismantled. Fourthly, the government must revive and clean up the board and management structure of the Open Network for Digital Commerce (ONDC). Envisioned to bring millions of kirana stores and small sellers online on a neutral platform, breaking global platforms' dominance, ONDC aims to integrate 30 million sellers and 10 million small merchants. In practical terms, the platform has gaps, especially in attracting buyers. Policy makers have also shied away from using policy to make ONDC attractive to consumers. The failure of ONDC is real and present, and action is needed to prevent its complete shutdown. Fifth, India's policymakers must finalize the long-pending National E-commerce Policy, addressing grey areas like flash sales, data use, seller parity, and more. This policy should explicitly protect domestic manufacturers and traders by mandating transparency in search algorithms and strengthening local sourcing norms. Sixth, state and city administrations must regulate the physical footprint of quick commerce. Requiring dark stores to obtain commercial licenses, adhere to zoning laws, and comply with all safety and food standards, with stringent penalties for violators, is crucial. Quick-commerce players should not externalize the costs of their speed race into residential neighborhoods, creating traffic snarls or compromising safety. City councils and resident welfare associations should engage in dialogues with these companies to designate suitable locations for fulfillment centers and establish guidelines, such as limiting late-night operations in residential areas. Seventh, industry self-regulation and consumer awareness are essential. Companies like Amazon, Flipkart, Blinkit, and Zepto must realize that long-term prosperity comes from coexisting with the ecosystem, not cannibalizing it. Responsible business practices are crucial. A 'winner takes all' and 'kill all the competition' approach will not ensure long-term survival in India, as consumers will eventually reject them. top videos View all Eighth, consumers wield power here. Shoppers should understand the diversity of marketplaces and choose to support local businesses. It might be worth walking to the kirana instead of ordering bread online, or buying Diwali gifts from a local artisan, despite the inconvenience compared to one-click purchases. Each such choice sends a signal. Public opinion can push platforms to change – for example, after outcry over working conditions and reckless delivery promises, some quick-commerce firms dropped the '10-minute" claim to reduce pressure on workers. A similar push could discourage predatory pricing if consumers make it clear they care about the origin of products and who benefits. K Yatish Rajawat is a public policy researcher and works at the Gurugram-based think tank Centre for Innovation in Public Policy (CIPP). Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18's views. tags : e-commerce Location : New Delhi, India, India First Published: July 02, 2025, 16:37 IST News opinion Opinion | The High Cost Of 10-Minute Convenience: How E-Commerce Is Squeezing India's Small Entrepreneurs
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Business Standard
5 minutes ago
- Business Standard
RDI scheme a major boost for R&D and deep-tech in India: Industry
The approval of the Research, Development and Innovation (RDI) scheme by the Union Cabinet on Tuesday, with a corpus of Rs 1 trillion, is being seen as a major boost to research and development and deep-tech investment in India. Industry players and associations welcomed the announcement as a step in the right direction. India's R&D investment has long been a concern, with the country allocating only about 0.64 per cent of its GDP—significantly lower than the 2–5 per cent invested by countries such as the US, Japan and China. Many hope India will also attempt what China did in 2008 under its 'Thousand Talent Plan' to attract talent back to the country. The programme aimed to bring researchers and entrepreneurs home to contribute to the scientific and technological journey. 'The wish from industry is for the Fund to provide grants for research and fund the commercialisation of innovation. A scheme to attract global Indian talent and allow them to set up labs in India will be a critical factor for success. This will allow equity capital to follow and fuel the commercialisation of Indian innovation,' said Siddarth Pai, founding partner, 3One4 Capital. He added that India's innate talent requires infrastructure and policy support to thrive and move up the value chain. 'A single-window clearance for labs and import of equipment will be crucial to create this ecosystem,' he said. The scheme, announced in the July 2024 Budget, has excited the industry because of the two-tiered financing structure it proposes. Funds will flow through a 50-year, interest-free loan to the Anusandhan National Research Foundation (ANRF), chaired by the Prime Minister. The ANRF will then offer long-term concessional loans to second-level fund managers such as alternative investment funds, development finance institutions and non-banking financial companies. These, in turn, will finance individual projects. Anjali Bansal, founding partner of Avaana Capital, said this was a much-awaited move: 'Deep-tech ventures have longer gestation periods, complex technical risks, and often don't align with traditional venture capital timelines. India needs a broader spectrum of financing instruments—early catalytic capital, innovation-linked debt, and blended finance models that allow commercial investors to participate as the companies scale. The challenge lies in balancing long-term investments in deep tech with short-term economic gains. Patient capital, combined with strong technical and business teams focused on fundamental unit economics, can build a scaled business and deliver outsized returns over time.' Pai said a significant aspect of the special-purpose fund was that it enables the government to deploy capital through special purpose vehicles, AIFs and other instruments in collaboration with the private sector. 'This marks a strategic shift, recognising that industry has a better grasp of emerging technology needs,' he said. He added that the fund-of-funds model has worked well in developing the startup ecosystem in India. 'The same model lends itself to fuelling innovation with the government as a partner.' While the scheme's structure has been announced, the industry is now awaiting finer details—including the criteria for fund allocation and the timeline for disbursement. Ajai Chowdhry, founder of HCL and chairman of the EPIC Foundation, said the fund would also enable translational research by the private sector. 'Typically, under the ANRF, technical and research institutions will take innovation up to TRL-4 (technology readiness level). The private sector—both corporates and startups—can then take it to TRL-9 for India and the world,' he said. Industry players also raised concerns over the composition of the ANRF's governing board. Several told Business Standard that a board comprising only bureaucrats could derail the initiative. 'Ideally, people with global experience or those currently building products or services should be part of the board. This will be key. A board made up only of academics or bureaucrats will not help,' said a senior executive at a venture capital firm. According to the details released on Tuesday, the ANRF's governing board will provide overall strategic direction to the RDI scheme, while its executive council will recommend guidelines for the scheme and second-level fund managers, as well as define the scope and types of projects in sunrise sectors. Changes to the scheme, sectors or project types—as well as changes to second-level fund managers—will be approved by an empowered group of secretaries led by the Cabinet Secretary, the statement said.
