For decades, the Old Monk has remained popular among students, soldiers and many others alike despite changing tastes, imported competitors and market churn with remarkably little advertising.
This week, the famous rum was in the news but people weren’t talking about the alcoholic beverage itself. They were talking about what could legally be called rum.
The Food Safety and Standards Authority of India (FSSAI) questioned how some variants of the iconic brand were manufactured and labelled. Rum wasn’t the only thing in the FSSAI’s crosshairs. The food safety regulator also directed Dabur India to withdraw “100%” claims from several food products, while Maharashtra moved against the use of analogue paneer in hotels and restaurants.
At first glance, these looked like separate regulatory actions. But they may actually be part of the same story.
For years, food regulation has largely entered the public conversation when questions arose about contamination, adulteration or hygiene. This week’s actions suggest regulators are also paying attention to something else: whether the description on the front of a package accurately matches the product inside.
The Old Monk case illustrates that shift. The FSSAI initiated enforcement action against manufacturing units producing several well-known liquor brands after laboratory tests found that certain products used rum or whisky flavours instead of relying on the flavour that naturally develops through fermentation, distillation and maturation.
The regulator was not objecting to flavouring in general. It noted that flavours such as coffee or vanilla are permitted under the regulations. Its objection was much more specific: adding rum flavour to rum or whisky flavour to whisky. According to the FSSAI, doing so misrepresents the nature of the product.
One case involved three Old Monk variants—The Legend, Gold Reserve and XXX Matured Rum. According to the regulator, one inspected product labelled “7 Years Blended” contained less than 5% matured rum spirit, while unmatured neutral spirit formed the main ingredient. Lab findings concluded that artificial flavours masked the product’s natural flavour, making it substandard. The FSSAI said products manufactured in this manner should instead be described as “rum-flavoured spirit” or “flavoured rum” rather than simply rum.
The FSSAI also found manufacturing units producing McDowell’s No.1 Rum, Bagpiper Deluxe Whisky, Old Cask Deluxe XXX Rum, Central Province Whisky, McDowell’s No.1 Celebration Matured XXX Rum, and Antiquity Blue and Royal Challenge whiskies.
Following appeals by two manufacturers, the FSSAI revoked its prohibition orders, allowing existing stock from those manufacturers to remain on sale provided the products clearly disclosed their true nature on the front of the pack. For future production, the regulator directed that identical flavouring should not be used.
Some companies have also challenged the regulator’s interpretation. Diageo India has approached the Bombay High Court over a related FSSAI order, maintaining that its labelling practices comply with the prevailing legal framework and reflect long-standing industry practice.
The same question surfaced in a very different category. The FSSAI directed Dabur to withdraw food products carrying claims such as “100% Pure”, “100% Natural”, “100% Organic”, “100% Purity Guaranteed” and “100% Tender”. According to the regulator, such claims are ambiguous, unverifiable and likely to mislead consumers under the Food Safety and Standards (Advertising & Claims) Regulations. The products identified included honey, apple cider vinegar, virgin coconut oil, sesame oil, cow ghee, coconut water and coconut milk.
Dabur disagreed with the findings. The company said its labels comply with the prevailing legal framework, that it has never made misleading claims and that it had already begun transitioning many labels to remove the “100%” claims.
Maharashtra’s action extended the same debate beyond packaged products.
The state announced a one-year prohibition on the manufacture, distribution, sale and use of analogue paneer in hotels, restaurants, caterers and cloud kitchens after concerns that cheaper vegetable-fat substitutes were being served as traditional paneer without consumers being told.
Analogue paneer is a paneer-like product made by replacing milk fat wholly or partly with vegetable fats or oils, often along with milk solids and other ingredients.
Analogue paneer itself is not prohibited under national food regulations if it is properly labelled. Maharashtra’s action targets its use in commercial food establishments where diners may not know they are being served a substitute rather than milk-based paneer.
That distinction matters because companies spend years building trust in a brand name. Consumers, in turn, often rely on that trust rather than reading every line on a label. Regulators now appear to be asking whether that trust is supported by the way products are described and marketed.
Whether this week’s actions ultimately survive legal scrutiny remains uncertain. Some companies have challenged the regulator’s interpretation, while others have begun changing labels without admitting any wrongdoing.
For consumers, though, the week’s developments carry a simpler reminder. A familiar brand may earn attention. A trusted label may earn confidence. Increasingly, regulators seem determined to ensure that both are earned in exactly the same way: by accurately describing what is inside the package.
Closing Time
Moving on from food and drinks, the stock market appeared to close twice this week. At least, that’s what it looked like.
At 3:15 pm on Monday, the Nifty was up about 0.7%. Twenty minutes later, it closed 1.6% higher. On Tuesday, the reverse happened. The index was down 1.25% at 3:15 pm but ended the day with a smaller loss of 0.64%.
Then came another surprise. For a few minutes, the Nifty and the Sensex appeared to disagree about how the same trading day had ended.
There was no late-breaking economic announcement. No surprise policy decision. The market had simply started using a different way of deciding where the trading day officially ends.
That change took effect on August 3.
For stocks that have futures and options contracts, stock exchanges replaced the old method of calculating closing prices with a new Closing Auction Session (CAS).
Until last week, the official closing price was based on the volume-weighted average price (VWAP) of trades during the final 30 minutes of continuous trading. Now, it is determined through a 20-minute auction held between 3:15 pm and 3:35 pm. Stocks without derivatives continue to use the earlier system.
It sounds like a technical adjustment. In practice, it affects one of the market’s most important numbers.
The official closing price is used to settle futures and options contracts, determine the closing value of benchmark indices, value mutual fund portfolios and mark institutional holdings to market. Changing the way that number is calculated inevitably changes how the market behaves around the close.
According to SEBI, the objective is to improve price discovery, make closing prices more transparent and reduce the scope for influencing prices during the final minutes of continuous trading. Instead of relying on trades spread across the last half hour, buyers and sellers now participate in a dedicated auction before one closing price is determined.
That explains the unusual moves investors witnessed this week.
Unlike normal market hours, orders placed during the auction are collected first and matched later. There is no continuous stream of trades during most of the auction window. From the outside, the market can appear unusually quiet. Behind the scenes, however, buy and sell orders continue to accumulate until they are matched.
When that matching finally happens, the closing price can move much more than investors expected only minutes earlier.
Several market participants said institutional buying during the relatively thin auction window lifted heavyweight stocks on the NSE, pushing up the Nifty’s closing level.
The Sensex did not experience the same degree of movement, partly because trading activity during the closing auction differs between the two exchanges.
Each exchange maintains its own order book during the auction, meaning individual stock prices—and, in turn, the indices themselves—can finish at different levels.
For a brief period, the two benchmarks were no longer reading from the same script. The timing made the swings even more noticeable.
Tuesday was the weekly expiry for Nifty options, when the official closing value determines the settlement of millions of rupees worth of options contracts. Analysts said the sharp moves during the auction window were therefore likely to have produced unexpected gains for some traders and unexpected losses for others.
Does that mean the new mechanism is flawed? Probably not, at least not based on the few trading sessions so far.
Most brokers and analysts have described the early volatility as teething issues rather than evidence that the auction itself is fundamentally broken. The Association of NSE Members of India has said it is discussing feedback with the exchanges and the market regulator, while market participants expect the framework to be refined as experience with the new system grows.
There were already signs of that happening by Wednesday. The gap between the Nifty and the Sensex narrowed as arbitrageurs stepped in to exploit price differences between the two markets, helping improve liquidity during the closing auction. Participation has also been encouraging, with more than 56,000 unique PAN holders placing orders on the first day of implementation.
Markets do not always behave differently because investors suddenly change their minds. Sometimes they behave differently because the rules connecting buyers and sellers change.
That is what this week’s unusual closes illustrated. Investors did not suddenly become more optimistic after 3:15 pm, nor more pessimistic twenty minutes later. The mechanism for discovering the closing price had changed. Whether the framework is refined further or simply becomes routine, one thing is already clear: the closing bell no longer marks the end of price discovery. It now marks the beginning of one final auction before the market decides where the day truly ends.
Rewriting the Rulebook
Apple Inc. doesn’t own the factories that assemble most of its iPhones. That’s hardly unusual. Many of the world’s largest technology companies rely on contract manufacturers rather than operating factories themselves.
What is less obvious is that they often own some of the expensive machinery inside those factories. In India, that created an unexpected tax question.
Could simply owning manufacturing equipment supplied to a contract manufacturer be treated as creating a taxable business presence in the country? For Apple, the answer mattered enough to lobby for a change in India’s tax rules.
This week, the government proposed giving companies a much longer answer.
A draft amendment to the Income Tax Act extends until March 31, 2041 a tax exemption for foreign companies that provide machinery to their contract manufacturers in India.
The proposal also extends tax relief for foreign companies that store components for contract manufacturers in customs-bonded facilities and eases conditions for foreign companies using Indian data centres to serve global clients. The draft legislation will need Parliament’s approval before becoming law.
The immediate context is Apple’s rapid manufacturing expansion in India.
Earlier this year, Reuters reported Apple raised concerns that, unlike in China, India’s tax laws could treat ownership of machinery supplied to its contract manufacturers as creating a “business connection” in the country. If that happened, the company feared profits linked to iPhones made in India could potentially become taxable here.
The government first addressed that concern in February by introducing a temporary exemption valid until 2031. The latest proposal would extend that certainty by another decade, until 2041.
The story, however, is bigger than Apple. It is really about how global manufacturing has changed.
A modern electronics company can design a product in one country, own the machinery used to manufacture it in another, ask a contract manufacturer to assemble it somewhere else, and eventually sell the finished device around the world. The factory operator, the owner of the equipment and the company selling the product are not always the same business. Tax rules, however, were written for a much simpler world.
The latest proposal suggests India is adapting its tax framework to reflect that reality rather than forcing modern supply chains into older legal definitions. The same thinking appears elsewhere in the draft amendments.
The government has proposed extending tax relief until 2041 for foreign companies that store components used to manufacture mobile phones, laptops, tablets, hearing devices and wearable electronics in customs-bonded facilities.
Although these warehouses are physically located in India, they are treated as being outside the country’s border for customs purposes, making them particularly useful for export-oriented manufacturing.
This could help companies position equipment and components closer to factories while reducing tax uncertainty and making supply chains more resilient during periods of disruption.
The proposals also make it easier for foreign companies serving global customers through Indian data centres. Instead of requiring Indian partners to own those facilities, the draft allows them to lease data centres instead. That could reduce upfront capital requirements and make it easier for smaller and mid-sized companies to participate.
None of these changes, on their own, guarantee that companies will manufacture more in India. Investment decisions still depend on infrastructure, skilled labour, logistics, geopolitics and demand. But they do point to something important.
For much of the past decade, India’s manufacturing strategy has focused on attracting investment through incentives, infrastructure and production-linked schemes. The next phase may be quieter. It may involve rewriting rules that were drafted for an earlier era of manufacturing.
Factories are easy to see. Tax certainty is not. Yet for companies planning investments expected to last decades, the second can matter almost as much as the first. Sometimes the most valuable policy change is not a new subsidy, but the removal of an old uncertainty.
The Price of Free
In April 2016, the then-Reserve Bank of India governor Raghuram Rajan launched the Unified Payments Interface. Since then, the UPI has become so effortless that we rarely stop to think about what happens after we tap PAY.
The money moves in seconds. The sender and the receiver get a confirmation. The transaction is complete. It feels free. For consumers, it is. For the digital payments ecosystem, it never really was. This week, the government quietly acknowledged that reality.
A proposed amendment to the Payment and Settlement Systems Act would remove the legal provision that currently prevents banks and payment system providers from charging a Merchant Discount Rate (MDR) on UPI and RuPay debit card payments made to businesses with an annual turnover of more than Rs 50 crore.
If Parliament approves the proposal, it would create the legal space for such charges to be introduced. It does not, by itself, impose an MDR.
That distinction is easy to miss, but it is also the most important part of the story.
The proposal does not mean Amazon, Flipkart or other large merchants will suddenly begin paying a fee on every UPI transaction. It simply removes a legal restriction that has prevented banks and payment providers from charging one.
So why change the law at all? The answer lies in the UPI’s extraordinary success.
When the government removed the MDR on UPI and RuPay debit card transactions in 2020, the objective was straightforward: make digital payments as easy as possible for both consumers and merchants. It worked. In July alone, Indians made more than 2,236 crore UPI transactions worth nearly Rs 29.9 lakh crore.
But success created a new question. Every payment made through UPI still has to be authenticated, routed, processed and settled almost instantly. That requires technology, networks, security systems and constant investment by banks and payment companies. The payment may feel free to the user, but the infrastructure behind it is anything but.
For smaller merchants, the government partly offsets those costs through an incentive scheme covering low-value merchant transactions. Large merchants, however, are outside that programme.
That gap has increasingly drawn policymakers’ attention.
In March, the Standing Committee on Finance described the absence of MDR as making the UPI ecosystem “financially unsustainable”. It noted that government incentives between 2021-22 and 2024-25 covered only around 11% of the digital payments industry’s estimated costs and roughly 14% of the potential MDR that could have been collected. The committee also observed that transactions above Rs 2,000 accounted for about 67% of UPI payments by value, even though the subsidy scheme focuses primarily on smaller transactions.
Seen in that context, this week’s proposal looks less like a sudden policy reversal and more like the next chapter in a debate that has been building for some time.
There is another detail that is easy to overlook. The proposal is narrowly targeted. It applies only to businesses covered under Section 269SU of the Income-tax Act—those with an annual turnover exceeding Rs 50 crore. Smaller merchants would continue under the existing framework.
Whether banks or payment providers eventually introduce the MDR, and at what rate, remains uncertain. Those decisions would depend on the framework that follows if Parliament passes the amendment.
The broader question, however, extends well beyond one fee.
The UPI transformed the way India pays. The next challenge is ensuring the ecosystem that powers those payments remains financially sustainable over the long term.
For the past several years, the priority was adoption. Today, the conversation is shifting towards sustainability. Those are not competing objectives. A payments network handling trillions of rupees every month ultimately needs a funding model that is as durable as the technology itself. That’s a conversation India’s digital payments story was always likely to reach—simply because nothing that operates at this scale is ever truly free.
Market wrap
India’s stock markets started August with a weekly gain, helped by the RBI’s decision to keep rates unchanged and foreign portfolio inflows, but the two benchmarks showed divergence due to the new closing auction mechanism.
The BSE Sensex climbed 0.5% and the Nifty 50 rose 0.8% this week. This comes after the Sensex logged gains of 2.3% and 2.1% in June and July while the Nifty 50 jumped 1.4% and 2.2% in the two months.
The small-caps jumped 2.7% and the mid-caps added 0.9% this week. As many as 12 of the 16 major sectoral indexes logged losses.
Foreign portfolio investors have bought a net $1.3 billion of Indian equities so far in August, after purchasing $2.1 billion last month, according to data from the National Securities Depository Ltd.
Aditya Birla Group company Hindalco was the top Nifty performer this week, surging 8.7% after reporting a 75% jump in first-quarter profit on firm metal prices. At No.2 was another Birla company, Grasim, which rose 7.2%. State Bank of India climbed 6.8% after beating quarterly profit forecasts.
Tech stocks were mostly higher—Infosys, TCS, Wipro and HCL Tech logged gains but Tech Mahindra ended in the red.
Auto companies also revved up, with Mahindra & Mahindra, Eicher, Tata Motors Passenger Vehicles and Bajaj Auto rising this week on robust July sales.
Among heavyweights, Reliance Industries gained over 2% but HDFC Bank fell 2.3%. Shriram Finance, Bharat Electronics, Eternal, InterGlobe Aviation, Larsen & Toubro, and JSW Steel were among the other gainers.
At the other end, Bajaj Finance was the top loser and slipped 5.5%. Power Grid Corp, Max Healthcare, Sun Pharma, HDFC Life, ONGC, SBI Life, Maruti Suzuki and NTPC were among those in the red.
Other Headlines
- Air India names Ethiopian Airlines veteran Tewolde Gebremariam as new CEO
- Manipal Health jumps over 10% on market debut, valuing hospital chain around Rs 85,000 crore
- Supply chain firm LEAP India sets Rs 151-159 price band for Rs 3,000-crore IPO
- Shiprocket cuts IPO size to Rs 1,617 crore from Rs 2,342 crore, sets price band of Rs 92-97 per share
- Milky Mist Dairy cuts IPO size to Rs 1,553 crore from Rs 2,035 crore, sets price band of Rs 133-140
- American buyout firm KKR to buy Swedish firm Medicover’s India hospital business for €1.2 billion
- Reliance Retail’s luxury unit Reliance Brands brings Kim Kardashian’s SKIMS to India
- Jio-BlackRock enters ETF market with Nifty 50 fund
- HSBC India Services Purchasing Managers’ Index falls sharply to 53.3 in July from June’s 57.4
- HSBC India Manufacturing Purchasing Managers’ Index falls to 53.5 in July from 54.2 in June
- SEBI proposes depository receipts against REITs, InvITs units
- ONGC Q1 standalone profit soars to Rs 17,034 crore from Rs 8,024 crore a year earlier
- Bharti Airtel posts 37.3% rise in Q1 profit to Rs 8,167 crore from Rs 5,948 crore a year ago
- Trent Q1 profit rises 22% to Rs 519 crore; revenue climbs 18% to Rs 5,755 crore
- Aurobindo Pharma consolidated net profit jumps 25.2% to Rs 1,033 crore
- Biocon profit jumps more than fourfold to Rs 141 crore
- SBI Funds Management Q1 profit rises 3.7% to Rs 880 crore from Rs 849 crore a year earlier
That’s all for this week. Until next week, happy investing!
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