On Episode 1012 of The Core Report, financial journalist Govindraj Ethiraj talks to Sachin Sawrikar, Managing Partner at Artha Bharat Investment Managers. We also feature an excerpt from our recent episode of our show How India’s Economy Works hosted by Journalist and Author Puja Mehra and featuring Ajay Srivastava, Founder at the Global Trade Research Initiative (GTRI).

SHOW NOTES

(00:00) Stories of the Day

(00:50) More Oil Flowing From Middle East Than Before War

(02:30) The Perils Of Buying Venezuelan Crude And Rubio’s Diesel Purchase Pitch To India

(04:00) The Rupee Is On Stronger Ground On Fresh Flows Including For Jio IPO

(05:42) Power Shortages Are Leading To Cut Backs In Supplies In Gujarat

(19:25) Why Some Funds Are Moving Out Of GIFT City

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Thursday, the 22nd of October and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital.

Our top stories and themes…

More oil flowing from the Middle East now than before the war.

The perils of buying Venezuelan crude and Marco Rubio's diesel purchase pitch to India.

The rupees on stronger ground on fresh flows, including for Jio's IPO.

Power shortages are leading to cutbacks in supplies in Gujarat.

Why some funds are moving out of gift city?

Markets, Oil, The Rupee and Power Shortages

Persian Gulf oil exports have surpassed pre-war levels as an improvised shipping system under US protection is helping tankers move oil through one of the fiercest waves of attacks in the state of Hormuz, according to the Wall Street Journal.

Middle East oil flows, including shipments through Hormuz and alternative routes through the region, have averaged more than 24 million barrels a day in the week through October 18th, crossing pre-war levels of 23.3 million, according to ship tracking firm Kepler. And preliminary figures show Hormuz oil flows, including offshore transfers in the Gulf of Oman, came to around 14 million barrels a day on average for the same period, or 82% of pre-war levels. Now, traders are still concerned that the improvement in Hormuz might not be sustainable, particularly if fighting breaks out again and thinning global inventories leave little margin for error.

All of these operations cost much more, including the cost of rerouting the product, and finally consumers are picking up the tab. Commodities analysts told the Wall Street Journal that the big picture is that the system for shipping through a dangerous state of Hormuz is now well established and the risk appetite of those involved in exporting oil has risen. So that's the good news.

The not so good news is that prices are still very high, including in the US, which is trying unsuccessfully to dampen prices at the pump, particularly of diesel. On Wednesday, oil prices were up again by $2, after Iran said there was little reason to expect diplomatic progress with the United States. Brent crude futures were up about $2 to $110.85, so almost $111 on Wednesday morning.

So the bottom line is that prices seem to have detached themselves even further from flows, at least for now, and are being driven by risk and risk perception, among other factors. Meanwhile, US Secretary of State Marco Rubio is visiting India and Mumbai and Jamnagar specifically on a three-day visit, with a prime objective seeming to be shoring up diesel supplies ahead of midterm elections in the United States, as well as securing a refining foothold for Venezuelan crude. If all of that sounds a little far-fetched, well, this is what he said when speaking at a press conference on Tuesday.

He underscored Reliance's ability to refine heavy crude and referred to India as a refining superpower when asked about the role India and its companies can play in meeting the world's energy demand. Reliance's Jamnagar refinery has a crude processing capacity of 1.4 million barrels a day and Reliance is the biggest buyer of Venezuelan crude outside of the U.S. As of end September, a CNBC report said. Rubio said that Reliance's extraordinary refining capacity could help India diversify its energy supplies and thus hinting at even greater offtake of Venezuelan crude.

Venezuelan crude and production is largely now under US control. US President Donald Trump has been pushing India to buy more Venezuelan oil to replace Russian oil. And while state-owned oil companies have been making some purchases, Reliance has been the primary buyer, the CNBC report said.

Now, with all of this in the backdrop, the Sensex fell 143 points to 73,709, and the Nifty 50 ended 77 points down to 22,801. The markets could have been weaker given all of this, but the fact that there were flows kept things up. In the broader markets, the Nifty Mid Cap 100 and Small Cap 100 were down 1.6 and 2.4% each.

Jio Platform's roughly $3.2 billion or 30,000 crore plus IPO drew bids for more than double the shares available by early Wednesday afternoon after being fully subscribed in under two hours of public trading. This is Reliance's or Reliance Group's first share sale in more than 20 years. Thanks to which, the rupee also extended its gains to a six-week high bolstered by foreign funding flows into Jio Platforms.

The rupee did better than most Asian peers to go up to Rs 94.48 per dollar on Wednesday, a Reuters report said. The Reuters report also pointed out that the Reserve Bank of India earlier took aggressive measures to curb the rupee's weakness, including opening a special window to directly supply dollars to state oil refiners. Meanwhile, an International Monetary Fund official on Wednesday said that India should allow the dollar-rupee exchange rate to move as the first line of defence amidst the ongoing oil shock.

Reuters quoted Krishna Srinivasan, director of the Asia and Pacific Department at the IMF, saying that their advice to countries is to use the exchange rate as the first line of defence amidst ongoing shocks, and we would advise India to let the exchange rate move. The Reserve Bank of India has intervened heavily to support the rupee via dollar sales from its reserves, and the rupee, which fell to near record lows earlier this month, has bounced back by about 2% following the Reserve Bank's moves. The IMF director said that foreign exchange interventions have not been particularly beneficial beyond the near term due to the oil shock, adding that exchange rates have to be shock absorbers.

India had brought in about $134 billion via a dollar deposit scheme called the FCNR-B deposit scheme, or the foreign currency non-resident aimed at Indian diaspora. Elsewhere, power shortages are continuing as temperatures stay high. Gujarat has asked factories to curb electricity use during evening hours to avoid shortages thanks to rising demand and low coal stocks.

India is also struggling to meet demand during evening hours as it does not have enough batteries to store the power generated during the day. Some half of India's 191 coal-fired power plants are operating with critically low coal inventories, Reuters quoted the Central Electricity Authority, saying. Elsewhere, Adani Green Energy reported a nearly 16% rise in second quarter profit on Wednesday thanks to higher power sales.

Revenue from power supplies jumped about 45% to about 4,000 crores, while energy sales rose 33%. Adani Green said it could exceed its full-year outlook of 10 gigawatt-hours of battery energy storage capacity after it installed about 3 gigawatt-hours of capacity at its site in Kavda in Gujarat during the quarter. Its total operational storage capacity, including at Kavda, is about 6.6 gigawatt-hours, Reuters reported.

The Perils Of Buying Venezuelan Crude

What should one make of the US government's latest moves to make India buy Venezuelan crude and send diesel back after refining it? It's interesting that crude will come all the way from the Americas and diesel or other refined product will go all the way back. A testament obviously to India's refining prowess. But it goes beyond that.

Global Trade Research Initiative founder Ajay Shrivastava has said that India must establish whether Washington's proposal would secure crude delivered to Indian refineries or require Indian to finance the recovery of Venezuelan production. Purchasing available oil and financing an industry's reconstruction carries substantially different costs, risks, and timelines, he points out. He also says that the United States changes its policies quickly.

For example, he says the US sanctioned any country buying oil from Venezuela till a few years ago and India has had a bad experience investing in Venezuela during 2010-20 and thus should be cautious about committing fresh funds. The US sanctions had disrupted ONGC Videsh's investments and forced it to halt operations. As the United States tightened restrictions on Venezuela's state oil company PDVSA culminating in the 2019 oil embargo, Indian refineries also stopped buying Venezuelan crude to avoid secondary US sanctions, he says.

Hundreds of millions of dollars in Indian dividend earnings were stranded in Venezuelan accounts, production from Indian equity investments were effectively frozen, and plans to expand oil field development and secure long-term crude supplies were abandoned. So, says Shrivastava, India must consider whether another shift in US policy could again put its investments and earnings at risk. Of course, all of this is in the interesting context of the United States itself buying Russian diesel while earlier putting pressure on India not to do the same.

Meanwhile, Bloomberg reported that a tanker loaded with Russian diesel will sail for the US on Thursday as Moscow starts to implement a fuel supply deal struck between Vladimir Putin and Donald Trump. Russian officials did not identify the port, the supplier, or the tanker, but said the vessel has a capacity of 40,000 metric tonnes, which is equivalent to about 300,000 barrels. Puja Mehra, who hosts How India's Economy Works on The Core, spoke with Ajay Shrivastava, GTRI founder, and began by asking him what kind of stance should India take in its negotiations with the United States.

INTERVIEW TRANSCRIPT

Ajay Srivastava: Yeah, I agree with both of your points. Relationship is unequal not because US is more powerful, we are less powerful. You know, earlier we used to have a WTO where even island countries, they have got favourable judgement against the US.

But now that mechanism is broken. Even though US is more powerful in trade negotiations, both sides have to act as equals. And the results, put aside, the results should be balanced.

Otherwise, how else the countries are going to justify the trade deal back to their people. So, it has to be equal. But in this case, two, three problems are there.

One is what US wants is not fixed. It's a moving target. For example, US has signed trade agreement with European Union, Japan, South Korea last year.

And even after signing the trade deal where they extracted maximum from these countries in terms of investment commitments, buying of energy, opening of their economy through cut in custom tariffs, US has gone ahead and imposed Section 301 tariffs on all three, European Union, Japan, and Korea. And another investigation under Section 303 on excess capacity, the results are about to come in this month or next month. And I'll not be surprised if these countries are targeted again.

So, there is no certainty if I am doing a trade deal with any country. It's for tariff certainty that you don't impose more tariff, but there is no such certainty with US. That's why anything US offers, I mean, unless you say you provide me certainty from future tariffs, it's not easy.

So, others are suffering. We should not suffer. And second one cardinal rule of trade agreement negotiation is that when your negotiation is on, then you give give and take on the negotiating table.

If you do any give and take outside the table, it's just digested without even acknowledgement. So, what Indian government is doing for the past two years, we have been cutting custom tariffs from Ethernet, from Harley Davidson motorcycles, and so many other items. We cut the import duty on nuclear reactor and its components.

We allowed no income tax on data centres till 2045. Last to last month, we allowed the FDI on e-commerce for exports. This was a long demand, 20 year old demand.

We were not agreeing. We thought our MSMEs will be hurting. And now, post Diwali, we agreed to impose some fee on UPI payments.

All these things were demand of US. I'm not saying right or wrong at this point of time. I say, if you're negotiating a deal with any country, do all this give and take on the table.

If you give, you'll get something. Outside you give, you don't get anything. They will digest and will keep on coming for more.

So, Puja, I agree with both of your observations. One, there is no certainty from the US side. And second, we should not keep on giving things outside the negotiating table.

Puja Mehra: How do you think our negotiators can make the US behave in a more predictable manner?

Ajay Srivastava: We should only take care of ourselves, what we have to do. What the US does is their problem. We see how they talk, how they behave.

It's a changed America. I think it's a declining America. A stronger America was always for free trade, was in good terms with all countries, was supporting WTO trade rules, global value chains, no more.

I think they are declining power and their behaviour is like they are trying to latch up to the power which they are losing gradually. So, we should only worry about ourselves, how we behave. Whatever the US does, we should royally ignore that.

And we should not commit to any agreement which does harm to us. If the US imposes some tariff, it's fine. It will hurt some of our exports.

But in return, we agree to give something that hurts our economy. For example, we agree to buy $500 billion worth of things which most of the things we don't require. Or we agree like we agreed on February 6th, the joint statement.

We agreed that we'll align our economic and security policy with the US. What does that mean? That means if the US says don't buy oil from Russia, we'll not buy oil from Russia.

So, it's not a trade deal. It's trade and security and economic. So many restrictions are there.

We should not agree to these things. But if any balance agreement is possible from both the sides, then we can think about this. Else, it's not the proper time for the agreement.

Puja Mehra: So, you're saying that one, there is no real reason for India to rush into a deal unless we can judge that the agreement being offered is going to provide us with durable benefits and the parameter to be used for judging how good the deal is, not the temporary pain or threat of tariffs that it removes, but the durable benefits that it secures. Point number one. And point number two, you're saying that we have to be sure that whether the commitments we secure from the US in exchange for any concessions that we are being asked to make cannot be easily reversed.

Essentially, that is how we should judge any negotiations or any deal, right?

Ajay Srivastava: Absolutely, yes. I'll just try to elaborate on this point only. So, today, most of our exports are paying MFN tariffs, which are the regular tariffs everybody has to pay, plus 10% tariff US imposed accusing us of using imported post-labour produced goods.

US has imposed not only on us, but 60 other economies, 15 other economies. So, our exports are paying MFN plus 10%. For example, that MFN tariff on shirt is 12%.

So, our shirt going to US is paying 22%. What if we do the trade deal with the US? Will we be allowed to pay less than 22%?

No. The US will ask us to continue paying this 22%, 10 plus 12%, MFN tariff plus post-labour tariff, because it's asking with other trade deal partners also the same thing. In return, today we are paying this 22% tariff.

Post-deal also will continue paying this tariff. Why should we do the deal? Because we have to send so many concessions to them.

So, what is US justification is that this 10% plus 12%, 22% is alright. We'll be paying this only, but we'll not charge the threatened tariff, which otherwise we would have imposed on you for buying Russian oil, always forgetting that China is also a buyer. They dare not talk about imposing tariff on China.

Even now they are buying, so they forget all these things. So, all these things, they don't look very objective. It's like somebody is pushing you to the wall.

Puja Mehra: But, you know, with the coming of President Donald Trump, the world seems to have changed. And many commentators have said that even in a post-Trump world, some of these elements will perhaps survive him. Given this new world that we are living in, where trade policy can be used as an instrument, this geopolitical pressure and tariff concessions can be withdrawn or replaced by new demands.

What is a permanent solution for a country like India? Can we permanently be in the situation where we are negotiating on a day-to-day basis what the tariffs applicable will be, what concessions we'll have or we'll grant? Because it creates a whole lot of uncertainty for our exporters.

Of course, like you said, last year, exporters did fairly well in face of uncertainty and higher tariffs. But is there a way to negotiate this new world that we are in?

Ajay Srivastava: So we have to understand the two, three points here. First, the world has more than 200 functioning countries. How many trade deals under Trump have happened in the past two years?

Less than 20. And if we talk about the biggest economies who did the deal, European Union, Japan, South Korea, UK. Let's talk about these four.

They are the biggest economies, and biggest trading partners of the US apart from China. So in all these countries, US has military, air force, navy bases. They have security, military relationships.

Europe, in many countries, US military, US air force is there, physically protecting them, NATO is there. Japan, more than 50,000 US troops are there. South Korea, about 30,000 troops are there.

UK, similarly, air bases are there. So they have military relationship, and US may extract its found of flesh. Not with Russia or not with China, not with India.

We don't have any such relationship with US. So we have to think in terms of economics only. If it suits us, we'll do it.

We cannot be forced like US has forced European Union or others like this. That's point number one. Point number two, suffering of the exporters.

That's very real because 20% of our exports go there. We have to weigh benefits and losses. Suppose US imposes tariffs on us.

One, it will be very clear to the world. It's buying oil from, it's buying diesel from Russia. It dare not touch China, but it's isolating and imposing tariffs on India.

Why isolating India? There is no reason. It can do it.

So we have to see how much our exports are going to suffer if we don't sign. And if we sign, how much our economy is going to suffer because we cannot buy cheap energy from Russia, because we have to buy $500 billion worth of goods from US in the next five years. What will happen to the rupee by this news alone?

And then US is pressing us to open a lot of agriculture items. Whole list is not out yet. We don't know, but you know their demands.

They want the moon. They want all the industrial goods to be open. We have no problem with most of the industrial goods, but agricultural goods is a problem.

$500 billion is a problem. Security and economic alignment is a problem. So exporters suffering, we should worry about that.

But for that suffering, how much we are willing to sacrifice on other front. A country has to weigh the pain, gains and losses, and they'll take decisions.

Why Some Funds Are Moving Out Of GIFT City

Arthabharat Investment Manager's IFSC, a fund management entity or FME in Gift City in Gujarat, managing about $800 million in assets, is relocating two of its funds to Abu Dhabi global market, citing tax uncertainty and compliance burdens, a Business Standard report said. The FME is relocating the master fund of the 112 million Artha Global Multiplier Fund, which mostly invests in US consumer teams. Master feeder structures are key to hedge fund operations.

A master feeder structure is a setup where multiple feeder funds pool their money into one master fund, and the master fund does all the investing. The second fund to move is the recently launched Arthabharat Absolute Return Fund, an arbitrage fund investing in Indian securities. The Artha Global Multiplier Fund is open only to non-resident Indians.

Sachin Savrikar, the firm's founder and CEO, said that they do not believe that taxation is smooth here, that's in Gift City, and there is a lot of uncertainty, and that their fund management entity was disallowed the tax deduction under Section 80LA, a matter which they are pursuing. According to them, leading fund jurisdictions generally tax at the investor level, whereas in India there are several categories with differentiated taxations. I reached out to Sachin Savrikar, who is in Oman right now, and I began by asking him to walk us through why they were moving some of their funds out of Gift City.

INTERVIEW TRANSCRIPT

Sachin Sawrikar: See, let's clear things. We believe in Gift City and four of our big funds continue to stay in Gift City. Okay, the reason why these funds are moving, they have very specific reasons for that.

First, India doesn't have the system of fund level tax shield. It's not tax neutral at the fund level. So there are certain, I think it's a unique thing to India called category 1, 2, 3, I think they copied from the domestic market.

Category 1, category 2, category 3, and each of these categories have certain tax benefits depending on what category we opt for. So most of our funds are category 3, which means that they are taxed at the fund level, not at the investor level. Because our strategies were such that we were getting benefits at the fund level.

For instance, our biggest fund that we are shifting is our hedge fund. And this hedge fund actually collects money from international investors, non-resident investors, and invests in US markets. It's a long-shot fund.

See, there are two problems with this. First, we have a fund level taxation benefits under section 1040, the old tax regime. So we could invest in US.

Any income from foreign securities is considered to be tax-free. But then we have challenges there. See, for instance, if we keep deposits, if they have some surplus, and we keep say deposits with a gift city branch of a bank, that income will not be taxed.

Govindraj Ethiraj: I see. So it's taxed at what level?

Sachin Sawrikar: At the fund level. And what rate? 42 percent.

Short term is 42 percent. Otherwise, it is the normal rate, but it is always at a very high level. Because once you cross five crores of income, I mean, you are talking about a hundred and ten million dollar fund that is over a thousand crores.

Even a small income would easily exceed five crores. So obviously, we were at the marginal rate of taxation. And that is where our main challenge was.

So, you know, we did not have a perfect shield, right? So in tax, inside the neutrality, as I say, we are not asking for making this a tax haven. What we are saying is, let the investors pay the tax.

Let them not be at the fund level. You have a category two, but that's not something which we can opt for, because it's only for close ended options. So we were struggling as to what to do.

And then once we have this fund, the tax break happens only if all the investors are non-resident. The one I talked to you. But if I mix into that, because the fund was doing well, so we had a lot of demand from Indian investors who want to invest in the hedge fund.

I mean, if you look at today, there's a lot of demand for investors who want to invest. So we have a fund with more than 15 months of track record. It has delivered.

So obviously, investors have the interest in investing in this, but we couldn't take them. Because if we take them, then the entire tax benefit that we had as a specified fund would have lost. So what is the option left to us then?

It's not that in the last 15 months, we have not done anything. And we have sent multiple representations. We have sent white papers trying to tell that this is something which is lacking.

And we have done something which not many fund houses have done. Look at this way. We have international investors.

We are investing in international markets. So it just domiciled in gifts. So that's a stage three of a jurisdiction's growth.

I mean, we have come to that level. So we wanted more people to be here in India. When we started this fund, we had five analysts sitting in Philippines.

We reduced that to three and brought two in India. Today, if you know how many analysts are there who actually look at US stocks, how many fund managers are there who trade in US stocks directly. I mean, we wanted to bring all that expertise here.

But things don't work out the way we planned. So the best option was for us is we waited for a long time. And we said, OK, let's move it to Abu Dhabi Global Market.

So it will meet all our objectives. If the fund has a tax shield there, no taxation in any matter. Investors are taxed in the home country.

We have no withholding tax there. Payment to vendors is also not a challenge. It becomes smoother.

So the existing fund will make it into a feeder fund.

Govindraj Ethiraj: So when you launched the fund, were you aware of this or did you start facing the problem because Indian investors started coming in?

Sachin Sawrikar: We were aware, not that much. We were under the impression that we can have a fund which will have both Indian and overseas investors. Only when the tax work was being done for the PPM, we became aware that this fund is for international investors and not for Indian investors.

We said, OK, still we want to start with, let's see how it works. We want to develop. We like to work with the ecosystem.

We like the regulator there. We felt something we can work with how it works. I mean, that's the only reason why we even launched a gold fund.

Today, nobody has such a fund there.

Govindraj Ethiraj: Right. I'm just saying that logically, and I'll come to the funds which you've not moved. It seems that if I'm an Indian investor and investing outside, my income would be taxed like anyone else or the profits would be taxed at 43 percent or whatever that figure is.

Right. Whether I'm sitting inside GIFT City or outside. Inside GIFT City has no meaning for resident purposes.

Sachin Sawrikar: Exactly. In which case, why was this a problem then? I'll tell you something. See, today, what am I shifting?

I'm shifting the master fund as they call it. So master fund is where the transactions happen. That is, you buy, sell, invest.

Everything happens in the master fund. So today the master fund is in GIPCITY. So whatever taxation level happens is at the transaction level.

Right. So in our case, that was accepted because we are only non-resident investors. But if I bring in resident investors, it will not have that break.

I will have to pay a full tax at 42 percent, which in India, short term capital gains for foreign securities is for two years duration. And it is at marginal rate of tax, which is 42 percent, not 20 percent, because no STT is paid.

Govindraj Ethiraj: Got it. And there are also schemes that you're not moving out. So are they complying or are you not facing the same challenge there?

Sachin Sawrikar: See, two of them are inbound funds. Inbound funds, to a large extent, we don't face much problems. So last year, one of our inbound funds, we had substantial gains and that was under certain sections. And I think we got that through.

Inbound is to a large extent been there in India for a very long time. Whether it's from Mauritius or Singapore or Gift City. So the whole thing is more easily understandable.

But it's these other factors like the outbound master funds and these are the challenges that we face here.

Govindraj Ethiraj: And there are other schemes from other houses which could be facing similar problems?

Sachin Sawrikar: Yes. So, you know, if you look at the funds which are there, I think there are more than 300 AIFs today in Gift City. I would assume almost most of them would be feeder funds.

If you ask me, what is an economic value of feeder fund ads? Nothing. It's a fund which is just a booking place.

But the entire economic activity of that is happening abroad. Either it is Cayman or it is in Mauritius or in Abu Dhabi or Singapore, wherever you want to place your master fund, which is your comfort level. So, you know, even now we just launched our Ardh Bharat multi-asset capital fund.

That's what we have done. So we have put a feeder fund in India and we have put a master fund in Mauritius. So we are doing simultaneously both the things.

Now we are planning to launch a money market fund. We'll put a master fund in Abu Dhabi and a feeder fund in India. We could have easily put the master funds here.

But then these tax challenges are a challenge for us. More than that, it is a certainty, right? What is our fear?

These are all open-ended funds, correct? Today, if suddenly after one year, a tax notice comes to us saying you pay the tax which you have wrongly claimed as deduction or something. Who pays that?

Open-ended fund, investor come, investor goes. How do I track that investor and take the money back from them? To me, that is the biggest fear of keeping a master fund here.

It is certainty. You tell me, okay, today the tax is 15%. I'll charge you 15% irrespective of what happens.

You do this and this is your tax. You give me that certainty.

Govindraj Ethiraj: Got it. So if there has to be a solution to this, where exactly do you feel the tax department should intervene?

Sachin Sawrikar: See, look at other jurisdictions, whether it is Mauritius, Singapore or for that matter, Abu Dhabi, DIFC, whatever you take them, they have one fund type, right? Which is a fund, correct? You set that fund up and you give that fund tax break, okay?

And there is no withholding tax in all these countries. You send the money to the investor and the investor takes care of the tax. So if an investor is coming from UAE, UAE doesn't have a tax, so he doesn't pay any tax anywhere.

If he's coming from US, he pays 35% tax in his home. He pays 35% tax in his home. Singapore, he pays 17%.

But in India, they pay whatever their tax sheet, 30%, 35%, whatever that is. So it's up to the investor in where they are. I don't have to worry about my tax filing.

I don't have to worry about whether the deduction that I have done or the tax filing that I have done, is it correct or not correct? This uncertainty, I don't want. You want me to file a zero tax return.

See, today they said there is no GST, correct? So I know there is no GST. I have to file a nil, but still I have to file every month or a quarter, a nil GST return tax. And I mean, that's a different matter, but we are getting harassed also by GST guys now.

Govindraj Ethiraj: Got it. You said if we are able to move the incidence of tax to source, then we should be fine, right? So that's the primary thing, right?

Sachin Sawrikar: That's the primary. So India, they call it as cat two fund, right? Where the taxation is in the hands of the investors, other than business income or some such thing. Always these words are there.

So what I would like is a simple taxation regime where there is no tax at the fund level, no need to file any tax returns. We just come, do the transactions. That's it.

Indian mutual funds, which are equity funds, have this sort of tax neutrality.

Govindraj Ethiraj: Correct. Right. Sachin, thank you so much for joining me.

Sachin Sawrikar: Thank you so much.

Starlink’s Controlled Disruption in Ukraine

Elon Musk ordered the slowdown of a version of SpaceX's Starlink that Ukraine has relied on its war against Russia, the Wall Street Journal reported in a scoop on Tuesday, citing US officials and others familiar with the matter. This obviously puts India's own discussions with Starlink, which has been trying to barge its way into the Indian market, in fresh perspective. And these arbitrary actions also expose the frailty of having the controls for a satellite link service like Starlink sitting somewhere else, which could allow switching on, off, or adjusting of speeds, as has been alleged in this case.

SpaceX founder and CEO last week allegedly capped the speeds at which Ukrainian hardware could stay connected to the satellite-based network, according to the Wall Street Journal, which left some Ukrainian drones virtually inoperable. Musk and President Donald Trump have recently criticised Ukrainian President Vladimir Zelensky, apparently discussed the move to throttle Starlink soon after the change first became public last week, two people told the Journal. One person who spoke with the Wall Street Journal claimed that Elon Musk had discussed the matter with multiple senior Trump administration officials, including the President, prior to imposing the Starlink speed cap.

Some reports have suggested that the speed caps have been removed, but there is no independent verification.