India’s emerging as next chip-making destination: Ashwini Vaishnaw; VCs reach out to CBDT on angel tax

Happy Friday! Union IT minister Ashwini Vaishnaw told ET in an interview that some major players expect India to be the next chip-making destination, globally. This and more in today’s ETtech Morning Dispatch.

Also in this letter:
■ Guardrails from large banks hinder AePS
■ PharmEasy valuation slashed again
■ Ola chief’s foray into AI space

Major players looking at India as next chip-making destination: Ashwini Vaishnaw

India will focus on creating a supportive ecosystem for semiconductor manufacturing in the country, and not only on fabrication units, union technology, railways, and telecom minister Ashwini Vaishnaw told ET in a wide-ranging interview. Here are some key takeaways.

Submission of new applications: We modified the India Semiconductor Mission (ISM) scheme last October. That was based on the experience and the advice of experts who are in the ISM. Almost all of them suggested that 60% of the global semiconductor industry’s demand would be for mature nodes and the rest 40% for advanced nodes.

Apple and Samsung for PLI 2.0: Apple and Samsung are both present in India and expanding. Their focus is now on getting the component ecosystem. As always, every industry starts with assembly activities. Once volume is created, then the component ecosystem starts coming in.

Regulation of AI: The Digital India Bill will also deal with emerging technologies. The entire world is today concerned about how AI will affect societies and economies. Our challenge is to create that balance, where we take the good things out of this new technology and limit the potential harm that it can cause. Now, technology evolves very rapidly. So, like the DPDP bill, instead of keeping it prescriptive, we will state the principles based on which companies can evaluate what to do.

Status of upcoming Data bill: The Digital Personal Data Protection Bill will be introduced in Parliament in the monsoon session. …the draft (of the Digital India bill) is almost ready. We should be able to bring it for consultation within the next few weeks. Consultations on the Telecom Bill are done. We should be able to bring it in the winter or in the Budget session.

Read the exclusive interview here

Angel tax-hit venture funds reach out to CBDT for relief

Driving the news: Investors are planning to seek an expansion of the list of countries from which entities are exempt, or for the government to issue protective measures for money coming in from major investment centres. Sources also told ETtech that affected VC firms are preparing a white paper capturing their concerns that they will send to the government.

Catch up quick: Last Thursday, the CBDT issued a notification saying sovereign wealth funds, pension funds, and SEBI-registered portfolio investors from 21 jurisdictions will be exempted from the provisions of angel tax.

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ET reported last week that investors were irked at the exclusion of investor-friendly jurisdictions from the list of countries exempted from the angel tax.

Tell me more: Several investors have cautioned that the move will further impact funding inflows into Indian startups. “Current funding climate is slow and selective. Regulatory changes at this juncture may add complexities to the compliance and documentation aspects of a funding transaction and may further slow down the process,” an executive at a VC firm told ET.

Tweet of the day

AePS users in a fix as banks set up guardrails to reduce fraud

The government’s last-mile digital payment link, Aadhaar-based transactions, has run into rough weather.

Driving the news: AePS is facing last-mile issues. State Bank of India (SBI) has faced massive fraud attacks last year causing banks to create security guardrails on the payment railroad making it inconvenient for last-mile beneficiaries.

What’s AePS: Aadhaar-Enabled Payment System (AePS), allows bank customers to use biometric-enabled micro ATM terminals to withdraw cash from their bank accounts.

On-ground impact: Transaction decline rates have shot up by at least 15%. Large banks are declining transactions from other banks’ customer service points. SBI has mandated mobile number seeding for any account to use this service. Many below-poverty-line families do not have mobile phones, let alone them being seeded with their accounts. Bottomline transaction failures are preventing them from withdrawing cash.

Solution in sight? The National Payments Corporation of India (NPCI), which runs the AePS network, has a steering committee where the issue was raised by banks and business correspondents. But, nothing much has moved.

While large banks own the customers, new-generation lenders own the cash-out channels leading to the banks paying hefty interchange rates. This is also a friction point. Problems with AePS are not new. Back in 2017, ET had covered such issues between banks. The NPCI had solved the problem and might have to come to the rescue once again.

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Janus Henderson cuts PharmEasy valuation further to $2.7 billion

Siddharth Shah, founder, PharmEasy

Global asset management company Janus Henderson has further marked down the valuation of its stake in Mumbai-based online pharmacy PharmEasy’s parent company API Holdings, filings with the US Securities and Exchange Commission (SEC) on May 30 showed.

Driving the news: As of March 31, 2023, funds managed by Janus Henderson valued their stake in the startup at $2.7 billion – less than half of the $5.6 billion valuation that was ascribed to PharmEasy at the time of its last fundraise in September 2021.

ET had reported last month that the asset manager had valued the epharmacy company at $2.8 billion as of December 31.

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Tell me more: The markdown has come in the backdrop of PharmEasy having breached its loan covenant terms for its high-cost debt from Goldman Sachs, ET reported on Thursday. PharmEasy’s other investor Neuberger Berman also marked the company’s valuation down to $4.4 billion as of February 28.

Markdowns galore: Valuations of companies such as Meesho, Swiggy, Byju’s, Pine Labs, and Ola have recently been slashed by investors such as Invesco, BlackRock, Fidelity, Vanguard, Baron Capital, Neuberger Berman, and Janus Henderson.

Ola chief Bhavish Aggarwal likely to foray into AI space with new firm

Bhavish Aggarwal, founder and chief executive of Ola, is launching a new business that is likely to foray into the artificial intelligence (AI) space, top sources told ET.

Driving the news: According to documents sourced from the Ministry of Corporate Affairs by business-intelligence site Tofler, Aggarwal and his longtime advisor Tenneti Venugopala Krishnamurthy incorporated a new company named Krutrim SI Designs Private Ltd on April 5. Sources told ET that Aggarwal may have received investment commitment for his new AI-based firm from Ola’s existing backers Matrix Partners.

IPO on the anvil: ET reported last month citing sources that Ola Electric is planning to raise between $800 million and $1 billion, or 6,560-8,200 crore, through its initial public offering (IPO) primarily to fund its capital expenditure. The company is looking at a valuation of $10 billion, or 82,000 crore.

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Capillary Technologies raises $45 million: Customer engagement software provider Capillary Technologies has raised $45 million in a mix of equity and debt, as part of a fresh round of funding from a consortium of global investors, amid a funding drought.

Pixxel bags $36 million from Google, others: Bengaluru-based space startup Pixxel said it has raised $36 million in funding led by Google. Other participants included existing investors Radical Ventures, Lightspeed Venture Partners, Blume Ventures, and growX, among others.

Germany’s NexWafe raises Rs 265 crore: Germany-based silicon wafer manufacturer NexWafe GmbH (NexWafe) has raised €30 million (Rs 265 crore) from a consortium of its investors, namely Reliance New Energy Limited, Aramco Ventures, and Athos Venture GmbH.