A panel of experts discuss whether the Budget has delivered the goods for Young India and what more the government needs to do hereon.
A panel of experts discuss whether the Budget has delivered the goods for Young India and what more the government needs to do hereon.
CBI today registered two fresh cases in coal blocks allocation scam against two firms in Jharkhand and Chhattisgarh following a direction from the Central Vigilance Commission (CVC).
CBI had earlier decided to close the case against these two companies but on orders from the Supreme Court, the agency had to submit all papers to the CVC which was asked by the apex court to verify the reports and whether a correct decision had been taken.
In these two cases, the CVC gave an oral order reasoning registering a case against the two firms whereas in other 12 cases, the Vigilance Commission had merely asked them to register a case without assigning any reason.
Also read: Power projs worth Rs 36,000 cr stranded on coal shortages
CBI will be informing the Supreme Court tomorrow and seek necessary directions in the matter when the matter comes up for hearing. In today's development, CBI alleged Ranchi-based Domco Private Limited entered into a criminal conspiracy with unnamed entities and submitted false information with dishonest intention to the authorities while applying for a captive coal block and secured allocation of 'Lalgarh (North)' coal block.
"The then Director of the said company allegedly gained pecuniary benefit of Rs seven crores by selling shares of the company on premium after the allocation of the coal block," a CBI spokesperson said in a statement and added searches were being conducted at three places at Ranchi and New Delhi. Attempts to reach the company did not yeild any results as the phone number provided by them was not functioning and emails bounced.
The second case was registered against Chhattisgarh-based company -- Vandana Vidyut Limited -- for alleged misrepresentation of facts. Without taking names, the CBI FIR also said the case also included members of 35th screening Committee which had met on September 13, 2007.
The company was approached for comments and the Private Secretary to the Managing Director of the company had assured that a comment would be issued soon. Repeated attempts, thereafter, failed.
In the Vandana Vidyut case, CBI said a case on charges of criminal conspiracy, cheating and criminal misconduct was regieterd against the company, its then promoter and director; then Members of 35th Screening Committee and others in the allocation of Fatehpur East Coal Block in Chhattisgarh.
The company has misrepresented on the aspect of its net worth to get coal block and the screening committee deliberately did not follow the guidelines and showed undue favour to the company, CBI alleged.
With these two, CBI has now registered 22 FIRs in the coal block allocation scam.
Amid frantic diplomatic efforts to put an end to bloodshed in Gaza, a defiant Israel today pressed on with its relentless bombardment of Hamas- ruled territory as the raging conflict that has killed over 770 Palestinians and 34 Israelis showed no signs of abating.
Israel focused its attacks on southeast of Gaza, with residents fleeing areas which came under heavy bombing. Over 70 people were killed in Gaza today, taking the overall Palestinian toll to over 770 since Israel launched its military offensive to halt rocket fire by Hamas on July 8.
In the latest incident, Israeli tank shells hit a compound housing a UN school in Beit Hanun in northern Gaza Strip, killing at least 15 people and wounding dozens. In another tragic incident, seven Palestinians were killed in a series of Israeli air strikes and tank fire in a flashpoint area near Khan Yunis in southern Gaza.
The latest casualties, included a family of six with two young children. Israeli forces have destroyed at least 475 houses while 2,644 have been partially damaged. Some 46 schools, 56 mosques and seven hospitals had also suffered varying degrees of destruction, Palestinian officials said.
Thirty two Israeli soldiers, two civilians and a Thai worker in Israel have also been killed in the conflict. As the death toll mounted, UN Human Rights Council yesterday ordered a probe into Israel's offensive on Gaza.
India along with Brazil, Russia, China and South Africa voted in favour of the Palestinian-drafted resolution on "Ensuring Respect for international law in the Occupied Palestinian Territories, including East Jerusalem".
Israel's close ally US was the only one of the 47 member states to oppose the probe supported by 29 countries. Describing UNHCR as a "kangaroo court", Israel slammed the move as a "travesty".
"This investigation by a kangaroo court is a foregone conclusion," the Prime Minister's Office said. Taking a dig at the UNHCR decision, Israel's Foreign Minister Avigdor Liberman labeled the UN body as the "council for the rights of terrorists".
Prior to the vote, the UN High Commissioner for Human Rights Navi Pillay warned that Israel could be committing war crimes in Gaza.
Meanwhile, US airlines have lifted a flight ban to Israel. The ban was lifted just hours after US Secretary of State John Kerry wrapped up talks in Jerusalem and Ramallah and returned to Cairo to continue pushing regional efforts for a truce. Kerry also spoke by phone with the foreign ministers of Qatar and Turkey.
Speaking after meeting UN Secretary General Ban Ki-moon , who is also in the region, Kerry said: "We have certainly made some steps forward, but there is still work to be done." UN humanitarian chief Valerie Amos expressed deep concern over the mounting civilian casualties in Gaza, warning that it was "almost impossible" for Palestinians to shelter from Israeli airstrikes.
"The reality in Gaza is, it doesn't matter how hard Israel tries to minimise harm, this is an extremely overcrowded stretch of land," Amos told BBC radio. "Forty-four per cent of that land has been declared a
no-go zone by the Israeli army so there aren't that many places for people to go," she said.
Israeli Prime Minister Benjamin Netanyahu today said he regretted each Palestinian civilian death, but held Hamas responsible for the casualties. He was standing beside UK Foreign Secretary Philip
Hammond, who said the cycle of violence had been triggered by Hamas "firing hundreds of rockets at Israeli towns and cities indiscriminately".
Hammond also emphasised that the UK was "gravely concerned by the ongoing heavy level of civilian casualties." The Israeli leader was deeply critical of a vote by the UN Human Rights Council for an official investigation into alleged war crimes in Gaza, describing the decision as "grotesque" and "a travesty of justice".
Meanwhile, Hamas leader Khaled Meshaal said there could be no ceasefire to ease the conflict in Gaza without an end to Israel's blockade. "We will not accept any initiative that does not lift the blockade on our people and that does not respect their sacrifices," he said.
Israel imposed restrictions on the Gaza Strip in 2006 after Hamas abducted Israeli soldier Gilad Shalit. The measures were tightened by Israel and Egypt in 2007 after Hamas ousted rival Fatah and forcibly took control in Gaza after winning elections the year before.
Hamas and Fatah announced a reconciliation deal in April, but the move was condemned by Israel which regards Hamas as a terrorist group.
Israel's Science Minister Yaakov Peri told Israeli web portal Walla that he did not see a ceasefire in the coming days, as the Israel Defence Forces (IDF) needed more time to dismantle Hamas' underground tunnel network.
While China is relying on increased government stimulus to steer its economy away from reliance on exports and towards consumer spending, Europe has taken the opposite approach, combining fiscal austerity with near-zero interest rates.
The latest HSBC/Markit Flash China Manufacturing Purchasing Managers' Index suggested that government stimulus was working, rising to 52 in July from 50.7 in June, and beating the consensus forecast of 51 in a Reuters poll.
That was the highest reading since January 2013, and well above the 50-point level that separates growth from contraction for the second consecutive month.
A comparable survey of private sector activity in the euro zone also rose more than expected, to 54.0 from 52.8, even without signs of the resurgence in inflation from dangerously low levels that the European Central Bank is trying to engineer.
Taken together with data pointing to a solid expansion for the United States, and with most stock markets rallying or near record highs, the reports suggest the world economy is in a brighter spot.
"The strength of this morning's data from China and the euro zone offers some encouragement that there is some momentum building for the global economy at the start of the third quarter," said Mark Wall, European economist at Deutsche Bank.
"We still don't have second quarter growth numbers for the US or euro zone. And although the Bundesbank said earlier this week that German growth could stagnate in the second quarter, what's at least encouraging from the PMI data is it seems any disappointment yet to be published might well be temporary."
Markit's manufacturing PMI for the United States is due later on Thursday and is also expected to show improving activity, rising to 57.5 from 57.3 last month.
CHINA OUTLOOK STILL SHAKY
The PMI data coincided with the latest Reuters poll on the outlook for Asia, which suggested China will struggle to maintain these rates of growth into next year, partly because of risks a property market downturn might threaten the economy.
Analysts polled by Reuters expect the world's No. 2 economy to expand by 7.4 percent this year, slightly below the last reported rate of 7.5 percent. That would be its weakest growth in nearly a quarter of a century.
Some analysts say that more stimulus may be needed to offset any downdraft from falling property prices and activity. There are also increasing risks in the financial system, such as deteriorating credit quality.
Mainland China stocks jumped after the PMI report while shares in the rest of Asia edged higher. The Australian dollar hit a three-week high on prospects of stronger exports to China.
For the euro zone, where forecasters are even more gloomy about growth prospects, the latest PMI data were a bright spot and triggered a rally in the euro from an eight-month low.
Markit said the data suggest quarterly economic growth of 0.4 percent in the current quarter if a similar pace is maintained over the next two months.
Lagging economies like Spain performed even better, with the largest monthly increase in business activity recorded since August 2007 accompanied by a similar surge in new orders growth.
Separate official data showed Spain's jobless rate tumbled to its lowest in two years, although nearly a quarter of the labour force is still out of work.
And while euro zone services business expanded at its fastest pace since May 2011 - the PMI rose to 54.4 - the index measuring output price changes fell to 48.3, suggesting downward pressure on inflation, despite high raw materials costs.
With inflation stuck at 0.5 percent in June, far into the ECB's "danger zone" below 1 percent, and well short of its 2 percent target, that suggests policymakers still face a tough task to thwart the threat of deflation.
"There's so much spare capacity that deflation remains a bigger risk at the moment," said Chris Williamson, Markit's chief economist. "Companies simply cannot push through cost increases to consumers at this point."
Separate official data showed British retail sales were the strongest in 10 years over the second quarter, even though they stagnated in the latest month.
While the Bank of England and the US Federal Reserve are expected to raise interest rates from record lows in the first half of next year, the latest Reuters poll found that rates are expected to remain steady in most of Asia for the rest of 2014.
New Zealand's central bank lifted its official cash rate by 25 basis points to 3.50 percent as expected on Thursday, but said it would suspended its campaign of rate rises and take time out to measure how they have affected the economy.
Coal and Power Minister Piyush Goyal told parliament the projects, costing more than Rs 200 million (USD 3 million), "could not be started due to constraints of land acquisition and environmental clearance".
Twenty new coal mine projects by state-run Coal India , planned with annual capacity of 52 million tonnes, have been delayed by difficulties acquiring land and environmental clearances, the coal minister said on Thursday, underlining the uphill task he faces in reforming the sector.
The new government of Prime Minister Narendra Modi is hastening environmental clearances - which slowed to a trickle under the previous administration - to help fire up power plants and fulfill Modi's campaign promise to light up every home.
But land acquisition remains a major problem, as it is largely controlled by India's states, many of which are ruled by parties other than Modi's Bharatiya Janata Party.
Coal and Power Minister Piyush Goyal told parliament the projects, costing more than Rs 200 million (USD 3 million), " could not be started due to constraints of land acquisition and environmental clearance ".
This month, a Coal India unit, Mahanadi Coalfields, had to halt operations at three mines in Odisha following protests over company plans to relocate nearby residents to make way for expansion. Politicians often side with displaced people.
Goyal told lawmakers six of the delayed mines, with estimated annual output of 27 million tonnes, could start this fiscal year, which ends on March 31. Most of the rest are likely to commence operation next year.
That should help boost the output of Coal India, which accounts for more than 80 percent of the fuel India digs out. The government has set the firm a target of 507 million tonnes for the current fiscal year, although it has failed to hit its target for years.
Coal India and closest rival Singareni Collieries, which together account for more than 90 percent of India's coal production, plan to produce a total of 561.5 million tonnes this fiscal year.
But demand is expected to rise 6 percent to 787 million tonnes, which will mean shipments by the world's third-largest coal importer could hit 200 million.
Coal India stock price
On July 24, 2014, Coal India closed at Rs 385.05, up Rs 1.00, or 0.26 percent. The 52-week high of the share was Rs 423.50 and the 52-week low was Rs 238.35.
The company's trailing 12-month (TTM) EPS was at Rs 23.76 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 16.21. The latest book value of the company is Rs 56.24 per share. At current value, the price-to-book value of the company is 6.85.
West Madhya Pradesh, parts of Maharashtra, coastal parts of Gujarat and Konkan and Goa received good showers on Wednesday. According to the latest weather update by Skymet Meteorology Division in India, Amravati in Maharashtra topped the list of rainiest cities in India. The rain belt will have a tendency to shift northwards and cover south Rajasthan by tomorrow.
Here's a look at our list of top ten rainiest cities in India on Wednesday:
Cities State Rainfall(in millimeters) Amravati Maharashtra 134 Surat Gujarat 112 Indore Madhya Pradesh 108 Ahmedabad Gujarat 89 Baroda Gujarat 87 Bhopal Madhya Pradesh 73 Bhavnagar Gujarat 73 Amreli Gujarat 72 Kunnur Kerala 69 Kozhikode Kerala 55
By: Skymetweather.com
It's portfolio, excluding Andhra Pradesh and Telangana, registered a 39 per cent year-on-year increase at Rs 2,783 crore in the April-June period, from Rs 2,003 crore last year. Loan disbursements grew by 40 per cent to Rs 1,160 crore in the period from Rs 830 crore.
Microfinance company SKS Microfinance today reported a near flat net profit at Rs 49.3 crore in the April-June quarter over the year-ago period.
The company had reported a net profit of Rs 49.69 crore during the same period last year. Net interest income grew by 41 per cent at Rs 89 crore from Rs 63 crore last year, the company said in a release issued today.
During the period, the company reduced its cost of borrowing by 1 per cent, to 12.6 per cent, from 13.5 per cent in the same period last year.
It's portfolio, excluding Andhra Pradesh and Telangana, registered a 39 per cent year-on-year increase at Rs 2,783 crore in the April-June period, from Rs 2,003 crore last year. Loan disbursements grew by 40 per cent to Rs 1,160 crore in the period from Rs 830 crore.
As of June 30, 2014, SKS Microfinance had a net worth of Rs 891 crore and capital adequacy of 39.6 per cent. Cash and cash equivalents stood at Rs 488 crore.
It said the unavailed deferred tax benefit of Rs 542 crore would be available to offset tax on future taxable income. Given the carried forward tax loss, it did not made any tax provision during first quarter.
The company also announced a one per cent reduction in interest rate it charges from borrowers to 23.55 per cent from 24.55 per cent with effect from October 1.
It also announced addition of S Balachandran to its Board of Directors. He has 35 years of experience in the government and corporate sector, including an overseas assignment. Balachandran has held many key positions in past such as Additional Member (Budget), Ministry of Railways, Managing Director of the Indian Railway Finance Corporation and Joint Director in the office of the Comptroller and Auditor General of India.
Ukrainian Prime Minister Arseniy Yatsenyuk has announced his resignation following turmoil in government.
Ukrainian Prime Minister Arseniy Yatsenyuk has announced his resignation following turmoil in government. Yatsenyuk made the announcement from the dais of the parliament after two parties said they would pull out of the governing coalition. "I am announcing my resignation in
connect with the collapse of the coalition," Yatsenyuk said.
He said the parliament could no longer do its work and pass necessary laws.
The nationalist Svoboda party and the Udar party led by former boxer Vitali Klitschko pulled out of the group of legislators that took over after former President Viktor Yanukovich was ousted by protesters seeking closer ties with the European Union.
"We will do it carefully, we will do it in a measured way. In general, the movement is towards more liberalisation rather than away from liberalisation. But we have to do it our own pace," Rajan said.
India will open up its debt markets to short-term foreign investors in a measured way but wants to first build liquidity through long term foreign investments to withstand potential sharp volatilities, Reserve Bank of India Governor Raghuram Rajan said on Thursday.
"We will do it carefully, we will do it in a measured way. In general, the movement is towards more liberalisation rather than away from liberalisation. But we have to do it our own pace," Rajan said at an event, referring to the opening up Indian debt markets to more short-term foreign investors.
Also read: Corporate debt market: Can it weather storm?
India allowed foreign fund managers to hold more government bonds, but also stipulated that they will not be able to hold debt of less than three years, while keeping its overall debt ceiling for all foreign institutional investors intact.
Shares of Facebook Inc were set to open at a record high on Thursday after a surge in mobile advertising revenue helped the world's No. 1 social network trounce analysts' expectations for quarterly profit and revenue.
The company's shares were set to open around 9 percent higher after touching USD 78.13 in premarket trading.
Up to Wednesday's close, Facebook's stock had more than quadrupled since touching a low of USD 17.55 in September 2012.
At least 18 brokerages raised their price targets on the stock, by as much as USD 15 to a high of USD 100.
At USD 100, Facebook would be valued at more than USD 250 billion.
Facebook reported on Wednesday that its mobile advertising revenue grew 151 percent in the second quarter, accounting for about 62 percent overall ad revenue.
"Facebook has, so far, effectively addressed one of the most significant overhangs from its IPO days - the lack of mobile monetization," RBC Capital Markets analysts said in a note.
Facebook's initial public offering in May 2012 was widely considered to be a flop. The stock, priced at USD 38, fell for months after the debut as investors worried about the company's ability to make money from mobile advertising.
With people increasingly accessing the Internet from smartphones and tablets, companies such as Facebook, Google Inc and Twitter Inc have been looking for ways to generate more revenue from the smaller screens.
"We think 2Q represents further validation that Facebook can continue to drive mobile ad revenue growth through better ad targeting, relevancy and quality, and through continued growth in advertiser demand in its ad auction," JP Morgan analysts wrote in research report.
JP Morgan, which kept its "overweight" rating on the stock, raised its price target to USD 90 from USD 80.
Of the 43 analysts covering the stock, 37 have a "buy" or a higher rating on the stock and six a "hold". There are no "sell" ratings, according to StarMine data.
Facebook's quarterly revenue of USD 2.91 billion beat the average analyst estimate of USD 2.81 billion, according to Thomson Reuters I/B/E/S.
"It was a very impressive quarter on top of what we believe were very high Street expectations," Barclays Equity Research analyst Paul Vogel wrote in a note.
While the average price per ad rose 123 percent year-over-year, total ad impressions fell 25 percent.
"The sharp rise in pricing was the result of an increase in proportion of newsfeed ads, which generally command higher pricing relative to other formats, and the decline in impressions was due to an increase in mobile usage," Macquarie Research analysts wrote.
Facebook, whose newsfeed ads inject paid marketing messages straight into a user's stream of news and content, said it now had 1.32 billion monthly users, of which about 63 percent access the service every day.
Facebook shares hit a record high of USD 72.59 in regular market trading on March 11. The stock closed at USD 71.29 on the Nasdaq on Wednesday.
US stocks edged lower on Thursday in the wake of fresh U.S. and European Union sanctions on Russia, but some stronger-than-expected earnings reports helped keep declines in check.
The U.S. sanctions announced late Wednesday hit some of Russia's biggest firms while the EU sanctions were aimed at Russian companies that help destabilize Ukraine and will block new loans to Russia through two multilateral lenders. The Market Vectors Russia ETF dropped 3.9 percent.
As earnings season continues, Morgan Stanley shares advanced 1.3 percent to $32.91 after the bank's second-quarter earnings more than doubled, beating estimates.
Microsoft shares rose 2.9 percent to $45.34 after the company said it would cut up to 18,000 jobs, or about 14 percent of its workforce, resulting in pre-tax charges of $1.1 billion to $1.6 billion over the next four quarters.
Fellow Dow component UnitedHealth Group gained 2.1 percent to $85.57 after the largest U.S. health insurer reported higher-than-expected revenue and raised its forecast.
"Morgan Stanley was great, UnitedHealthcare great – clearly not everybody is doing great but overall the major companies came in better," said Kate Warne, investment strategist at Edward Jones in St. Louis.
"If there were really just Russian sanctions and nothing was positive, you could easily see stocks down a lot more as people worried about the impact and remembered the rest of the world is still a risky place."
The Dow Jones industrial average fell 11.43 points or 0.07 percent, to 17,126.77, the S&P 500 lost 2.95 points or 0.15 percent, to 1,978.62 and the Nasdaq Composite dropped 9.29 points or 0.21 percent, to 4,416.68.
Housing starts were well short of expectations in June, as groundbreaking declined 9.3 percent to a seasonally adjusted annual 893,000 million unit-pace, the lowest since September. The PHLX housing index lost 0.9 percent.
But initial jobless claims dropped 3,000 to a seasonally-adjusted 302,000 for the week ended July 12 versus expectations of 310,000.
Also on the positive side, factory activity in the U.S. mid-Atlantic region grew at a faster pace than expected in July, climbing to 23.9 from the 17.8 in the prior month and well above the 16 estimate.
S&P 500 companies' profits are expected to grow 4.9 percent in the second quarter, according to Thomson Reuters data, down from the 8.4 percent growth forecast at the start of April. Revenue is seen up 3 percent.
Thomson Reuters data also shows that of the 66 companies in the S&P 500 that have reported earnings through Thursday morning, 68.2 percent have topped Wall Street expectations, roughly in-line with the 67 percent rate for the past four quarters and above the 63 percent rate since 1994.
The Indian aviation sector does not show a rosy picture. That's the word coming in from Civil Aviation Minister Ashok Gajapathi Raju, who believes state taxes for aviation turbine fuel (ATF) are fairly high. Speaking to CNBC-TV18's Shereen Bhan, Raju said states can play an important role in the revival of aviation sector by cutting taxes on ATF. "The feel good factor is missing from pricing strategy of airlines," he said.
On the topic of the ailing government-run carrier, Raju said he wants Air India to survive but not at the cost of taxpayers' money. "The losses and figures of Air India are mind-boggling," he said, but added that the carrier has shown signs of improvement in the last one year. He said there are many ideas floating around on how to deal with Air India.
Below is a verbatim transcript of the exclusive interview on CNBC-TV18
Q: Let me start by asking you about the 100-day agenda that you had promised. 51-days in office almost done, you talked about bringing forward a policy to incentivise players to actually setup airports in smaller cities, in tier-II and tier-III town. You have a very ambitious target of 200 of those airports. Where do things currently stand because we haven't really seen very much move forward?
A: You will develop your plans, your ideas. There is nothing sacrosanct about 100-days.
It is probably a reasonable timeframe to develop an agenda. So, we have developed an agenda and we will be going ahead with it.
Q: But you are sticking with the 200 airport numbers. The feedback from the industry is that it is not really going to be viable where are you going to see traffic, who is going to invest in these airports?
A: 200 airports, how did we arrive at the figure? There are more than 400 airstrips in the country as of now. Most of them are dysfunctional. There are hardly about 120 places where aircrafts can land and say about 65 where flights are going every day. So this is probably the picture that you are in. Now air connectivity is extremely important and air travel is not elitist like it used to be. So that is one thing. Then how do you make these airports functional, useful because air connectivity also contributes to the economy. So we have to look in those angles and work out plans.
Q: So when can we see the policy being announced. Industry is waiting to see what kind of incentives you can offer because even for airports in the major cities in the metros airport developers are struggling to keep up at this point in time. So the question is who is going to invest, is it only going to be Airports Authority of India (AAI), what about the six private airports in smaller cities that the previous government had talked about, where are we going to finally see that process head?
A: We are committed for connectivity. This tier II, tier III areas have to be connected. Particularly areas which do not have other forms of connectivity, like the northeast cities. Certain places the train goes up to a particular level; that is it. They are also part of India and they need connectivity and that connectivity has to be given.
Q: AirAsia has said that they would like to enter the northeast market, they believe that is virgin territory that has been unexplored up until now. Have you had any conversation with AirAsia about them flying to the northeast?
A: They haven't bothered to contact me in that sense but it is still okay, they don't have to contact me at all.
Q: But to make that route more attractive is there going to be something that you would do?
A: What routes they have in mind, they have to presented to the authority and the authority has to decide where and how.
Q: I want to ask you about other policy decisions that are pending at this point in time and of course the big one is the 5/20, whether you are going to relax the 5/20 norm and allow carriers without the 5 year experience to actually fly internationally. This was something that the previous government said that it was almost a done deal, it was waiting to be signed off on. There seems to have been a pullback of some sorts as far as this decision is concerned, is that assumption or is that perception correct? Is there a decision not to go in for that relaxation of the 5/20 rule?
A: Show me another country that has a similar regulation.
Q: So, you are saying you want to do away with it?
A: Any regulation has to have a reasoning. What is the reasoning?
Q: So, you are saying there should be no reason for this rule to exist?
A: There should be a reason for regulation. Show me another country in the world that has a similar regulation.
Q: You are saying that airlines that don't comply with the 5 year and 20 aircraft norm should not be allowed to fly international?
A: You have a regulation called 5/20 fairly popular or being discussed. It has been discussed in a lot of forums, some people want it, some people don't want it.
Q: Do you want it or do you not want it?
A: I want to know why the regulation is there.
Q: So you don't want it that's a roundabout way of saying that you are not in favour of 5/20 rule?
A: Any regulation to my mind has to have reasoning, if you don't have a reasoning what's the need for that regulation.
Q: That is very clearly that you are stating that your government believes that the 5/20 rule ……
A: It is not the government.
Q: You believe.
A: I myself am trying to get a clarity of thought on this and as of now this minute nobody inclusive of you has been able to explain to me as to why that regulation exists.
Q: Not my job to explain anything?
A: I am not asking you for an explanation.
Q: Are you going to take this matter to Cabinet anytime soon?
A: That depends on my thinking and my decision. As of now this minute nobody has been able to explain it to me.
Q: Which pretty much means that you are going to take the matter to cabinet?
A: Whatever I decide, I decide.
Q: You are the nodal minister it is going to be your call which will then be taken up by the Cabinet. But speaking of policy matter I want to also ask you about confusion which has arisen because certain comments that Mr Subramanian Swamy who is the member of the Bharatiya Janta Party now has made with regards to FDI policy. Can you clarify for us if there is any proposal at any point in time or any thinking within the ministry at this point in time to review the FDI policy that currently exists?
A: Right now it is 49 percent. 49 percent exists this is a decision that has been taken. Now we have to decide whether we want to increase it or do not want increase it.
Q: So there is no review of the 49 and there is no review of the fact that the FDI can come into a green field airline which is Mr Swamy's contention that it was supposed to be FDI into an existing carrier and not into a green field airline, your are saying that there is no review of that decision or that policy?
A: As of now there is no review of anything. We are trying to formulate our mind on a lot of things. Those are exercises that are going on.
Q: You are looking for reasoning as far as 5/20 is concerned have you been convinced by anybody that FDI into green field carriers should not be the stated policy of the government?
A: People have ideas; some for, some against. Both those points of view are taken into account and you have to formulate your mind. This is what the exercise is all about.
Q: So what is your decision?
A: My decision, as soon as it is taken, will be made known to people through your media, because the media is very powerful and we need you to reach out to the people. So we will be making use of you.
Q: But at this point in time you do not believe that there is any need for any review of the FDI policy as it currently exists?
A: I will not rule out anything nor will I say that this has to be done.
Q: But investments have already been made into two green field carriers both involving the Tatas. So if there is any review then in that sense it puts into question the investments into those carriers, one is even operational?
A: We are not going into anything. As of now there is a stated policy. This has been about 58 days. This 5/20 has been there, still it is on book today. In India it is still a regulation. So when you come to decision there is a process through which the government decides. We will run the process. There has to be a reasoning behind why we have taken a decision. It cannot just not have any reason and the reason and the decision making process has to be a lot more transparent. So right now a lot of things are in the discussion stage. Now when we want decisions - when things are in the discussion stage it will hardly happen that way.
Q: Do you agree with Subramanian Swamy's contention?
A: I don't agree with him, I don't disagree with him, I am listening to him just as much as I listen to you all of you. I have my right to listen to anybody. So, I exercise that right.
Q: Let me now ask you about the financial audit that is currently underway of the aviation industry. Things are not looking good for this sector and things haven't looked good for this sector for a long time. Domestic carriers are expected to post losses to the tune of about Rs 7800 to over Rs 8400 crore. There is need for huge amount of capex. Have you been able to ascertain just how precariously poised this industry is through the financial audit that's being done by your ministry and by the DGCA?
A: Aviation, Civil Aviation does not project a rosy picture. It is an essential sector as far as infrastructure is concerned. It has an impact on a lot of sectors and the economy. So, it cannot be treated lightly. Now how you will formulate your mind, how you will go about addressing yourself with all these problems that is important.
Q: One of the crucial issues is this business of the ATF pricing and I know that a lot of people have made representations to you saying that the government ought to review the way that ATF is priced and whether you should negotiate on behalf of industry with state governments to try and address this problem and find a solution. Can we expect any relief as far as state levies on ATF are concerned, is this a matter that's been taken up by your government internally and then on is it your responsibility to take it up with state governments?
A: ATF has an impact. It is one of the major cost of any airline. State taxes are fairly high. If state taxes are at reasonable levels it will help the industry. One of the actionable points on the state side is probably getting a reduction in the taxes of ATF. Certain state governments have already made announcements, Goa has made it, now Telangana has made, I thin Andhra Pradesh has made. I think Chhattisgarh has also come down.
There is also another request on the other side. Why doesn't Government of India declare it as a declared good which is a long standing demand but that interferes with the states. Let state governments do it. They also have a role in promoting aviation. It helps the state, it helps the industry of the state, it helps the tourism of the state and connectivity also it helps.
Q: Let competitive federalism decide what the price of ATF and the taxes on ATF will be?
A: That should be the right approach. We should probably at the best say that this is the activity that is there, probably in our potential we can reach this level, so we have a role you have a role. So let us all come forward work together and build India.
Nearly 300 contract workers engaged in a sit-in protest that began on July 7, alleging that Britannia retrenched some contract workers without prior notice and without settling their dues. The number of contract workers protesting, however, has halved to 150 as workers moved on to seek work at other places.
Protests by contract workers at Britannia's plant in Shakurpur in Delhi entered its 11th day today. This labour impasse has brought production to a halt, raising concerns about its impact on the company's financials and compelling the company to seek remedial measures.
The Shakurpur plant is a multi-product, multi-category plant that produces the NurtiChoice range, dairy products and biscuits amongst others.
Nearly 300 contract workers engaged in a sit-in protest that began on July 7, alleging that Britannia retrenched some contract workers without prior notice and without settling their dues. The number of contract workers protesting, however, has halved to 150 as workers moved on to seek work at other places.
In a statement to CNBC-TV18, Britannia has refuted this allegation terming it as "false and baseless" and "aimed at disrupting the company's operations".
Also read: WTO: India unhappy over slow pace on food security issue
The company also maintains that these contract workers were hired purely on a contractual basis and therefore " there is no question of retrenchment." A company spokesperson further stated that the sole responsibility of payment to contract workers rested with the contractors who hired them.
He also added that the company is currently ascertaining the financial impact of this strike but does not believe it to be substantial, as the Shakurpur plant only contributes 4 percent to overall production capacity. The impact, if any, would reflect in the company's Q2 performance, says the spokesperson.
Britannia is also implementing measures to mitigate the situation. The company has shifted part of its production to other locations across India. By next week, it is looking to partially operationalise the Shakurpur factory with the aid of permanent workers. Britannia is also looking to hire more contract workers.
Britannia maintains that it has complied with contract labour laws drafted under the Contract Labour (Regulation & Abolition) Act, 1970. The Labour department is investigating the matter.
Taking forward a proposal made in the Union Budget, market regulator Sebi today came out with draft guidelines for Infrastructure Investment Trusts (InvITs) which will enable creation of a new investment product for arranging long-term financing for infrastructure projects.
These InvITs can be listed on the stock exchanges, will get tax benefits and will invest the funds collected from investors in infrastructure projects, including PPP (Public Private Partnership).
As per the draft regulations, on which Sebi has sought public comments till July 24, the listing shall be mandatory for both publicly offered and privately placed InvITs.
"An InvIT prior to making an offer of units, either through public issue or private placement, may have strategic investors such as banks, international multilateral financial institutions, FPIs including sovereign wealth funds, which together invest not less than 5 per cent of the size of the InvIT or such amount as may be specified by Sebi," the regulator said.
Also read: Sebi bars former Gammon Infra CMD Rajan from equity mkt
"The proposed holding of an InvIT in the underlying assets shall be not less than Rs 500 crore and the offer size of the InvIT shall not be less then Rs 250 crore at the time of initial offer of units. The aggregate consolidated borrowing of the InvIT and the underlying SPVs shall never exceed 49 percent of the value of InvIT assets. However, this may exclude any debt infused by the InvIT in the underlying SPV. "Further, for any borrowing exceeding 25 per cent of the value of InvIT assets, requirement of credit rating and unit holders approval has been made mandatory," Sebi said.
Sebi had come out with a consultation paper onInvITs in December last year, on which comments were sought till January 20, 2014.
Earlier this month, Finance Minister Arun Jaitley announced in his budget speech that "a conducive tax regime for Infrastructure Investment Trusts and Real Estate Investment Trusts (is being provided) to be set up in accordance with regulations of Sebi".
In pursuance to the Budget Announcement, Finance Bill for FY2014-15 has also provided various provisions in the Income Tax Act with respect to InvITs.
Based on the comments received on the consultative paper and the Budget announcement, Sebi has now finalised a separate regulatory framework for introducing InvITs in India.
InvITs would have a similar tax efficient pass through status, for PPP and other infrastructure projects. "These structures would reduce the pressure on the banking system while also making available fresh equity. I am confident these two instruments would attract long term finance from foreign and domestic sources including the NRIs," Jaitley had said.
Market regulator SEBI has come out with draft guidelines for infrastructure investment trusts (InvITs) and that too within a week of their announcement in Arun Jaitley's Union Budget.
Market regulator SEBI has come out with draft guidelines for infrastructure investment trusts (InvITs) and that too within a week of their announcement in Arun Jaitley's Union Budget. As announced by the finance minister, InvITs are being planned along the lines of real estate investment trusts or REITS.
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Microsoft's India-born CEO Satya Nadella today announced axing up to 18,000 jobs over the next year, the biggest round of jobs cuts in its 39-year history, in a "difficult but necessary" move as it integrates recently acquired Nokia business and cuts costs.
The company expects to incur pre-tax charges of up to USD 1.6 billion over the next four quarters, including upto USD 800 million for severance and related benefit costs, and USD 350 million to USD 800 million of asset-related charges. The layoffs, the first since Nadella took over the helms of the company five months ago, however, will have "minimal" impact in India, which is an important geography for the US-based giant.
Of the total 18,000, about 12,500 professional and factory positions will be eliminated through synergies and strategic alignment of the Nokia Devices and Services business acquired by Microsoft this year. The workforce realignment is expected to be substantially complete by end of this year and fully completed by June 2015.
"Making these decisions to change are difficult, but necessary," Nadella said. "Having a clear focus is the start of the journey, not the end. The more difficult steps are creating the organization and culture to bring our ambitions to life. "The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year," Nadella, who took over from Steve Ballmer in February, said in an email to employees. Microsoft is moving to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months.
When asked on the restructuring impact on India, a Microsoft India spokesperson told PTI: "We have about 6,500 employees in India, which also includes employees from Nokia. The impact will be minimal. It will be very very small." As of June 30, 2013, Microsoft had about 99,000 people on a full-time basis, 58,000 in the US and 41,000 worldwide. This, however, does not include the employees moving in post the Nokia-deal. Earlier this year, Microsoft completed the acquisition of Nokia's handset division for which it paid over USD 7.2 billion.
Tamil Nadu, lying on the rain shadow area, generally receives less rain by Southwest Monsoon but somehow it received good showers since the beginning of the Monsoon season. In spite of rain deficit in most parts of the country, the state has received normal rainfall so far.
Neighbouring areas like Rayalaseema, south interior Karnataka and Kerala receive good showers during Monsoon in India but Tamil Nadu hardly receives any rain when compared to these adjoining areas.
The state received surplus rain of about 14% till last week but now the state is warming in absence of any rain since a week now. The cumulative rain percentage has reduced but is still surplus by 9% as the state as a whole has surpassed the normal average rainfall of 77.8 mm. From 1st June to 16th July, Tamil Nadu has received 85 mm of rain.
Temperatures across the state are now rising above the normal average of 35⁰C. On Wednesday, Chennai recorded maximum of 37⁰C, Nellore 38.4⁰C and Madurai 39⁰C.
The capital city Chennai and other major cities mentioned above have been experiencing a dry spell in the last 5 days and no weather activity is likely in the offing, according to the latest weather update by Skymet Meteorology Division in India.
By: Skymetweather.com
Commerce and Industry Minister Nirmala Sitharaman, who will be attending the meeting, would state India's position with regard to implementation of the food security issues and other concerns of the developing nations in the meeting, sources said.
India is expected to raise its concerns over the slow progress on WTO's Bali agreement at the G-20 meeting of trade ministers in Sydney on Saturday. Commerce and Industry Minister Nirmala Sitharaman, who will be attending the meeting, would state India's position with regard to implementation of the food security issues and other concerns of the developing nations in the meeting, sources said.
Disappointed over slow progress in finding a permanent solution to the food security issue, India has made it clear that it would be difficult for the country to agree on trade facilitation pact, mainly promoted by the developed world. Sources said that Sitharaman is also expected to held bilateral meetings with WTO Director General Roberto Azevedo, US Trade Representative Michael Froman and EU Trade Commissioner Karl De Gucht on the sidelines of G-2- meeting.
"The leaders are likely to discuss the WTO issues and progress in the Bali package agreed," the source added. The G20 membership comprises a mix of the world's largest advanced and emerging economies, representing about two-thirds of the world's population, 85 per cent of global gross domestic product and over 75 per cent of global trade.
The members of the G20 are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the UK, the US and the European Union.
The aircraft, which other sources said was a Boeing 777 flying from Amsterdam to Kuala Lumpur, came down near the city of Donetsk, stronghold of pro-Russian rebels, Anton Gerashchenko said, adding that it was hit by a ground-to-air missile.
A Malaysian airliner was shot down over eastern Ukraine by militants on Thursday, killing all 295 people aboard, a Ukrainian interior ministry official was quoted as saying by Interfax-Ukraine news agency.
The aircraft, which other sources said was a Boeing 777 flying from Amsterdam to Kuala Lumpur, came down near the city of Donetsk, stronghold of pro-Russian rebels, Anton Gerashchenko said, adding that it was hit by a ground-to-air missile.
There was no further confirmation of the report, although Ukrainian officials said local residents had found wreckage.
Malaysia Airlines said on its Twitter feed it had lost contact with its flight MH-17 from Amsterdam. "The last known position was over Ukrainian airspace," it said.
Gerashchenko was quoted as saying: "A civilian airliner travelling from Amsterdam to Kuala Lumpur has just been shot down by a Buk anti-aircraft system ... 280 passengers and 15 crew have been killed."
Interfax-Ukraine quoted another Ukrainian official as saying the plane disappeared from radar when it was flying at 10,000 metres (33,000 feet), a typical cruising altitude for airliners.
It came down at Torez, near Shakhtersk, some 40 km (25 miles) from the Russia border. The area has been the scene of fighting between Ukrainian troops and pro-Russian rebels.
Ukraine has accused Russia of taking an active role in the four-month-old conflict in recent days and accused it earlier on Thursday of shooting down a Ukrainian fighter jet - an accusation that Moscow denied.
Adani Mining Pvt Ltd on Thursday said South Korea's POSCO Engineering & Construction Co Ltd will build the rail line for a long-delayed AUD 16.5 billion (USD 15 billion) coal and rail project in Australia.
The cost and other details of the contract to build a 388 kilometre rail line for the Carmichael coal mine in the eastern state of Queensland will be set by the end of 2014 under a binding agreement signed on Thursday, Adani said.
POSCO E&C will help fund the rail line by buying an equity stake, Adani said. That could help Adani raise debt funding from South Korea, essential for a project that analysts have said would be uneconomic at current weak coal prices.
"The binding agreement will enable us to develop a cost efficient rail solution and this relationship gives Adani access to the Korean market, POSCO's expertise and capital," Adani Australia Chief Executive Jeyakumar Janakaraj said in a statement.
Also read: Govt to expedite construction of 3 rail lines to move coal
Adani bought the project in the untapped Galilee Basin in 2010, aiming to start mining in 2014. But, like others in the area, the project has run into delays due to environmental opposition and funding challenges for what would be Australia's biggest coal mine at 60 million tonnes a year.
A condition of the state government's approval for the project was allowing open access to the rail line for other coal producers, including a project planned by compatriot GVK and Hancock Prospecting, controlled by Australia's richest woman, Gina Rinehart.
GVK Hancock, aiming to start production in 2017, is working with Australian rail operator Aurizon Holdings Ltd on an alternative rail plan for its Alpha mine project, but has yet to sign a binding agreement.
"This is the largest EPC (engineering, procurement and construction) project in the region for POSCO E&C, and we will put in our best effort to maximise our engineering, procurement and financing capabilities to successfully complete the construction," POSCO E&C President Tae-Hyun Hwang said in a statement.
Adani and GVK Hancock still need clearance to expand the port of Abbot Point to export their coal. Environmentalists and tourist operators are fighting expansion plans involving dredging 3 million cubic metres of soil and dumping it near the Great Barrier Reef.
(USD 1 = 1.0673 Australian Dollars)
The rupee saw its biggest single-day decline in nearly a month on Thursday as the euphoria over the Budget was washed away by the sharp fall in European shares while key stop-losses were also triggered.
Prime Minister Narendra Modi's new government on Thursday unveiled a maiden Budget that seeks to revive growth and curb borrowing, but left open questions on how it would reduce the fiscal deficit and restore investor confidence.
The partially convertible rupee closed at 60.19/20 per dollar versus its close of 59.75/76 on Wednesday after earlier gaining to a one-week high of 59.57. The 0.8 percent fall in the unit is the biggest single-day fall since June 13.
Also read: Indian rupee falls 9 paise to 59.87/dollar in early trade
For the detailed market report, see:Traders said stop-losses in the pair were also triggered once the unit fell past 60.03 levels.
Europe's debt-sodden periphery was back at the top of the list of financial concerns on Thursday, troubles around Portugal's biggest listed bank pushing shares sharply lower and quelling demand for an issue of bonds by Greece.
GMR Infrastructure has informed that in respect of the QIP, the Management Committee of the Board of Directors of the Company has, at its meeting held on July 10, 2014, approved the issue and allotment of 468,817,097 Equity Shares to eligible qualified institutional buyers at the issue price of Rs. 31.50 per Equity Share.
GMR Infrastructure Ltd has informed BSE that in respect of the QIP, the Management Committee of the Board of Directorsof the Company has, at its meeting held on July 10, 2014, approved the issue and allotment of 468,817,097 Equity Shares to eligible qualified institutional buyers at the issue price of Rs. 31.50 per Equity Share which is at a discount of Rs. 1.64 per Equity Share on the Floor Price of Rs. 33.14 per Equity Share, aggregating to approximately Rs. 1,476.77 crore under the SEBI Regulations and Section 42 of the Companies Act, 2013, other applicable provisions and rules prescribed thereunder.Source : BSE
Read all announcements in GMR Infra
To read the full report click here
The government expects to raise Rs 454.71 billion (USD 7.59 billion) from the telecoms sector in fees, including proceeds from airwave auctions, during the current fiscal year, the government said in its Budget presentation on Thursday.
The previous government had said in its interim Budget in February that it aims to raise Rs 389.54 billion from the sector.
Also Read: Telecom space may report 3-4% QoQ growth, says Religare
Receipts under 'other communication services' mainly relate to onetime spectrum charges levied as per the recommendations of the Telecom Regulatory Authority of India, auction of 1800 MHz and 900 MHz spectrum, and receipts from 800 MHz spectrum, the government said.
The Department of Telecom collects recurring licence fees from various telecom operators licensed by it, apart from onetime entry fees from new operators.
India will have to ensure that the current account deficit is maintained at 2 to 2.5 percent of the gross domestic product in 2014/15, Finance Secretary Arvind Mayaram told reporters on Thursday.
Also read:Modi Budget: Increase in FDI defence to reduce CAD in long run
He was speaking soon after the government unveiled the Budget in parliament.
HCL Technologies board meeting will be held on July 29-31, 2014, to consider the Audited Financial Results of the Company for the year ended June 30, 2014, recommendation of final dividend for the year ended June 30, 2014 and other agenda matters.
HCL Technologies Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 29-31, 2014, to consider the Audited Financial Results of the Company for the year ended June 30, 2014, recommendation of final dividend for the year ended June 30, 2014 and other agenda matters.Further the Company has informed that, the Audited Financial Results of the Company for the year ended June 30, 2014 and the recommendation of final dividend for the said year shall be considered on July 31, 2014. Accordingly, the financial results and recommendation of final dividend (if any) shall be announced on July 31, 2014.Source : BSE
Read all announcements in HCL Tech
FM has also proposed to increase the rate of tax on long term capital gains from 10 percent to 20 percent on transfer of units of debt MF schemes.
The maiden Budget of Finance Minister Arun Jaitley will impact Mutual Funds very badly. In an attempt to remove tax arbitrage between bank deposits and Debt Fund schemes (the capital gains arising on transfer of units of debt schemes held for more than a year is taxed at a concessional rate of 10 percent whereas direct investments in banks and other debt instruments attract a higher rate of tax), the Finance Minister has done the unthinkable for the MF Industry. He has proposed to increase the rate of tax on long term capital gains from 10 percent to 20 percent on transfer of units of debt MF schemes. Not only that, he has increased the period of holding in respect of such units from 12 months to 36 months for this purpose.
The Mutual Fund Industry just a month back celebrated achieving an AUM of Rs 10 lakh crore out of which, over Rs 7 lakh crore accounted for debt schemes. The FMPs or Fixed Maturity Plans i.e. schemes used by corporates to park short term funds and earn more than bank deposits constituted Rs 1.6 lakh crore.
This AUM of Rs 1.6 lack crore is at risk. Corporates are unlikely to renew or re-enter fresh FMPs once these FMPs mature. That would mean over the next 12 months, the Mutual Fund industry will see a redemption of over Rs 1.6 lakh crore.
It's not just the FMPs that will be impacted. The debt funds that constitute nearly Rs 5.4 lakh crore in AUM will see a flight to bank deposits since the bank deposits will have similar tax treatment.
The Finance Minister says that this tax incentive was provided with the intent to get the retail investors to invest in debt schemes. But, today majority of the investors are corporate who park their surplus funds in debt schemes earning returns little above short term bank deposit rates.
Jaitley says this practice was being misused and there was a lot of tax leakage to the tune of Rs 500- 700 crore from this practice. The Finance Minister is not willing to re-consider this proposal and that would mean, the industry will lose anywhere between 20-25 percent of the AUM in the next 6 months. Now that's an AUM they wouldn't want to lose given the industry is struggling build-up equity AUMs.
Reliance Infrastructure board meeting will be held on July 18, 2014, to consider and approve the Unaudited Financial Results of the Company for the first quarter ended June 30, 2014 (Q1). Further, pursuant to the
Reliance Infrastructure Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 18, 2014, inter alia, to consider and approve the Unaudited Financial Results of the Company for the first quarter ended June 30, 2014 (Q1).Further, pursuant to the "Reliance Infrastructure Limited - Code of Conduct for prevention of Insider Trading", the Trading Window for dealing in the securities of the Company shall remain closed for the directors and other employees covered under the Code from the closure of business hours of July 10, 2014 to the closure of business hours of July 19, 2014.Source : BSE
Read all announcements in Reliance Infra
Finance Minister Arun Jaitley presenting his maiden Budget announced reduction of central excise duty on branded petrol from Rs 7.50 per litre to Rs 2.35 a litre.
Price of branded or premium petrol will be cut by over Rs 5 per litre after the government reduced excise duty on the fuel. The government had in 2008 introduced differential duty structure for normal and branded/premium petrol and diesel. Branded petrol attracts a total of Rs 15.50 per litre in excise duty as compared to Rs 9.20 a litre on regular or unbranded fuel.
Similarly, branded diesel attracts Rs 5.75 a litre excise duty as opposed to Rs 3.46 a litre for fuel without a brand name. This had led to sales of branded fuel falling to almost nil. Finance Minister Arun Jaitley presenting his maiden Budget announced reduction of central excise duty on branded petrol from Rs 7.50 per litre to Rs 2.35 a litre. No change in excise duty on branded diesel was made . Ever since their introduction in 2002, sale of premium or branded fuels have dwindled from a peak of 5.9 million kilolitres of diesel and 3.4 million kl of petrol in 2007-08 to a mere 0.45 kl of diesel and 0.09 kl of petrol in 2012-13.
The current excise duty on branded petrol is made up of Rs 7.50 basic excise duty, Rs 6 special additional excise duty and Rs 2 additional excise duty. On regular or unbranded fuel, special additional excise duty and additional excise duty are the same but the basic rate is only Rs 1.20 a litre. Today's reduction will bring down the incidence of excise duty on branded petrol to Rs 10.35 a litre. Branded petrol currently costs Rs 83.08 per litre as compared Rs 73.55 cost of regular fuel.
Premium diesel costs Rs 64.95 per litre while unbranded diesel is priced at Rs 57.84. The Saumitra Chaudhuri Committee on Auto Fuel Vision & Policy 2025 had in a recent report stated that the differential duty rate would not fulfil the narrow revenue objectives as branded fuel sales have fallen sharply. "The 'branded' products are premium automotive fuels that result in improved engine life and better long term mileage and policy should encourage their use, not discourage it," the panel said in its report submitted to the Oil Ministry.
The panel said that the it was argued that a higher priced product - which premium fuels indeed are - should be taxed at a higher rate. "This legitimate concern can be taken care of by imposing a small differential in the excise duty of 50 paise per litre, which will more or less maintain the inter se tax proportionality as between regular and premium automotive fuels, as long as the duty rates remain fixed and do not change to ad valorem," the report said.
The RBI said that shareholding by foreign institutional investors (FIIs) under the portfolio investment scheme in the bank has gone below the prescribed threshold limit stipulated under FDI rules.
The Reserve Bank of India (RBI) allowed overseas investors today, to buy shares of private sector lender Kotak Mahindra Bank .
The RBI said that shareholding by foreign institutional investors (FIIs) under the portfolio investment scheme in the bank has gone below the prescribed threshold limit stipulated under FDI rules.
"Hence, restrictions placed on purchase of shares of Kotak Mahindra Bank are withdrawn with immediate effect," the RBI said in a statement issued here today.
The central bank has also notified that all approvals received against the bank's shares are duly cancelled.
"Equity shares of Kotak Mahindra Bank can now be purchased through primary market and stock exchanges," RBI said.
After foreign shareholding in the bank had hit the trigger limit for FIIs, RBI had last month said any further purchase of equity shares of the bank by them would be allowed only after obtaining its prior approval.
As per the BSE data, FIIs held 35.09 percent in Kotak Bank as of June 2014.
The scrip of the bank closed at Rs 867.15, up 0.43 percent on the BSE, which declined 72 points today.
The European regulator had imposed a collective fine of 427.7 million euros on six global drug makers, including Indian drug firms Unichem Laboratories.
"Unichem will vigourously appeal the European Commission decision to the EU courts and seek to attain the correct result in this matter, a result which is in the best interests of the consumer," Unichem Laboratories said in a filing to the BSE.
The company vehemently denies any wrong doing on the part of either itself or Niche, it added.
"Moreover, Unichem was not involved in the agreement to settle the litigation with Servier back in 2005 as it only took full ownership of Niche late in 2006," Unichem said.
The company cannot in anyway see how it can be held accountable for what was in any event a pre-competitive act on part of its then only part-owned subsidiary Niche, it added.
On Wednesday, the European regulator had imposed a collective fine of 427.7 million euros on six global drug makers including Indian drug firms Unichem Laboratories and
Lupin for striking deals to prevent entry of cheaper version of blood pressure drug Perindopril in the EU.
As per the European Commission Anti-trust ruling, Lupin has been fined 40 million euros (nearly Rs 325 crore), while Unichem Laboratories was fined 13.96 million euros (over Rs 110 crore).
The companies have been pulled up for striking a series of deals with French firm Servier, which used to sell patented perindopril drug, so that cheaper copies of the drug were not launched in the EU.
Besides Servier, the other drug makers on whom the European Commission has imposed fines totaling 427.7 million euros are Matrix (now part of Mylan), Teva and Krka.
Commenting on the ruling, European Commission Vice-President Joaquin Almunia, in charge of competition policy, had said: "Servier had a strategy to systematically buy out any competitive threats to make sure that they stayed out of the market. Such behaviour is clearly anti-competitive and abusive."
Competitors cannot agree to share markets or market rents instead of competing, even when these agreements are in the form of patent settlements, he added.
"Such behaviour violates EU antitrust rules that prohibit the abuse of a dominant market position," Commission had said.
Unichem Labs stock price
On July 07, 2014, Unichem Laboratories closed at Rs 228.55, up Rs 0.50, or 0.22 percent. The 52-week high of the share was Rs 241.45 and the 52-week low was Rs 138.00.
The company's trailing 12-month (TTM) EPS was at Rs 19.52 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 11.71. The latest book value of the company is Rs 99.97 per share. At current value, the price-to-book value of the company is 2.29.
Deeply concerned over slow progress in finding a permanent solution to the food security issue, India in a stern message to WTO members said it would not be possible to agree on trade facilitation pact which is dear to the developed world.
"There is a growing disenchantment, anguish and anger in our domestic constituencies and a sense of deja vu as once again they see the interests of developing countries being subordinated to the might of the developed world," India has said in its statement at a meeting of WTO members in Geneva.
With the developed countries attempting to sideline the Bali package on food security programmes of developing nations and issues of the least developed countries (LDCs), the whole matter may now result in Doha type of stalemate. India has made it clear that it would not agree to the Trade Facilitation Agreement (TFA) unless there is a "tangible and credible evidence of movement" on arriving at a permanent solution on safeguards to run food security programmes of developing nations without attracting any penalty and a package for LDCs.
India has stated that the pace of implementation of the Bali decisions has been heavily skewed in favour of trade facilitation and virtually all other decisions have been relegated to the background. "This is unacceptable".
In the WTO's Ministerial meeting in Bali in December last year, members have agreed to finalise on TFA and find a permanent solution to unhindered implementation of food security scheme so that these programmes do not attract any multilateral scrutiny.
"We are deeply concerned that the (Bali) ministerial decision on public stockholding for food security purposes is getting sidelined," it has said.
A senior official in the Commerce Ministry said: "India will not be able to lend itself to the consensus on TF protocol unless there is a tangible, credible evidence of movement on other parts of the Bali package which includes primarily ours public stock holding and LDC issues".
The TFA, which aims at simplifying customs procedure, increasing transparency and reducing transactions cost, is being pushed by the US and other developed world as they seek to bolster their sagging economies through an unhindered international trade by way of a uniform and easy procedures at customs.
"Till we have an assurance and visible outcomes which convince developing countries that members will engage in negotiations with commitment to finding a permanent solution on public stockholding and other Bali deliverables, especially those for the LDCs, India will find it difficult to join the consensus on the protocol of amendment (for TFA)," India has said in its statement.
Naveen Mathur of Angel Commodities shared his views on how the commodity markets are faring and what kind of movement we are likely to see in that space.
Naveen Mathur of Angel Commodities shared his views on how the commodity markets are faring and what kind of movement we are likely to see in that space.
Private carrier Jet Airways today said it has expanded its codeshare pact with Italian airline Alitalia, which offers passengers of the two carriers enhanced network connectivity across cities of the two countries.
The new code-share flights are on sale from July 1, for travel starting from July 5, Jet Airways said in a release.
Codeshare is a commercial agreement between two or more airlines that share the same flight, with all partners able to sell seats on that flight.
As part of the expanded codeshare agreement, while the Jet Airways passengers will get seamless connectivity to Italy from Mumbai, Delhi, Kochi, Amritsar, Bangalore, Chennai, Kolkata and Udaipur, the Alitalia passenger can fly directly to India from Rome, Venice, Naples, Turin, Florench, Verona and Bologna, the release said.
"Thanks to the expanded codeshare agreement, we are able to offer our guests a wider access, unmatched connectivity and seamless travel to Italy's top destinations. The agreement with Alitalia is a further step in Jet Airways' strategy of growing on the global marketplace," Jet Airways Senior Vice President (Commercial) Gaurang Shetty said in the release.
Alitalia too said that its enhanced codeshare agreement with Jet Airways will certainly strengthen its role in the development of traffic flows between Italy and India.
"We look forward to expanding the codeshare agreement with Jet Airways, which is, for Alitalia, an important partner for reaching India," Alitalia's Business Deputy General Director Giancarlo Schisano said.
Following the partnership, Jet Airways will place its marketing code on the Alitalia operated flights between Abu Dhabi and Rome and beyond to Bologna, Florence, Naples, Turin, Venice and Verona in Italy.
Similarly, Alitalia will place its code on Jet Airways flights operated between Abu Dhabi and Delhi, Mumbai and Kochi. Alitalia will also place its code on Jet Airways' flights beyond Mumbai and Delhi to Amritsar, Bengaluru, Chennai, Kolkata and Udaipur, Jet Airways said.
Jet Airways stock price
On July 03, 2014, Jet Airways closed at Rs 267.85, up Rs 7.10, or 2.72 percent. The 52-week high of the share was Rs 459.70 and the 52-week low was Rs 210.25.
The latest book value of the company is Rs -27.75 per share. At current value, the price-to-book value of the company was -9.65.
Published on Thu, Jul 03,2014 | 20:52, Updated at Thu, Jul 03 at 20:52Source : Moneycontrol.com
By: Abhishek Jain, Tax Partner - EY
Time and again, changes related to cenvat credit have found its place in the budget speech and the amendments introduced in the union budget.
In Budget 2004-05, Credit Rules were introduced as a major step towards integrating the tax on goods and services.
In Budget 2011-12, amendments in the Credit Rules were introduced to make the credit regime restrictive wherein inter alia business related services, services of setting up a building or a civil structure and employee benefit related services were excluded from the ambit of credit. Such changes were proposed to achieve a more realistic balance between input credits and output tax and to harmonise the provisions of the scheme across goods and services.
In Budget 2012-13, the Negative List regime for levy of service tax was introduced and Credit Rules were amended again and the Finance Minister assured that the new approach was not a revenue augmentation measure but intended to make compliance simple and administration of service tax law easier.
As is evident from the various budget speeches and clarifications, the Credit Rules have been amended frequently sometimes with the intention to minimize cascading of taxes, providing an assessee friendly regime and aligning the cenvat credit provisions with the much awaited GST regime whereas on some occasions it has been made restrictive. However, there seems to have been an inadvertent deviation from the intended path and what has erupted is a scenario where the assessee does not know what to claim and the revenue does not know what to disallow.
The shift to Negative List based levy of service tax was inevitable considering that GST is knocking at the door of the Indian economy. The implementation of the concept of Negative List of Services has resulted in most of the activities being covered under the ambit of service tax. However, the restrictions, exceptions and limitations on availability of cenvat credit still continue.
The definition of 'input' and 'input service' as per the current credit regime, places various restrictions on availment of cenvat credit. Some of these input and input services are essential in provision of output services or under taking manufacturing activities and such restriction merely adds to the cost of the service provider or manufacturer.
The existing Credit Rules are extremely complex and the categorization into 'inputs', 'capital goods' and 'input services' have made the Credit Rules more perplex. Further, various provisions regarding reversal of credit and numerous restrictions on availment and utilization have only baffled the tax-payers more.
Such restrictions and limitations have steered a situation which is against the principle of value added taxation and has led to undue litigations and administrative difficulties both for the assessee and the revenue.
In GST legislations across the world, most of the expenses incurred in relation to the business are allowed as credit and can be set off against the output liability with very few inputs considered as ineligible. As a step towards the approaching GST legislation and to align the cenvat credit scheme with the Negative List regime and excise legislations, the definition of input services should be amended to allow input tax credit without any restrictions. Removal of such restrictions would result in a much needed fair and equitable credit legislation.
Further, categorizations like 'input', 'input service' and 'capital goods' have only added to the complexity of the credit legislation and the same may be done away with and all genuine business expenses should be allowed as credit. This will help reduce cascading of taxes as well as be a stepping stone to the assessee friendly GST regime.
What is expected from the new Finance Minister are steps to be taken to ensure uninterrupted and unrestricted credit barring minimum exceptions to match the comprehensive coverage of services under the tax net.
Apart from revamping the basic structure on which credit can be availed, expectations regarding improvement of various other provisions of the Credit Rules continue to surface. One of the areas where change would be welcomed would be the provisions regarding reversal of credit. The existing provisions and formulae are perceived not only to be extremely complex but also to an extent inimical and unfriendly. A simplified and more coherent mechanism for reversal of credit would be appreciated.
The wish list for amendments in the Credit legislation also includes amendment in Rule 7 of the Credit Rules regarding distribution of credit by an ISD. Recent changes have created an ambiguity in the formula for distribution of credit which seems to restrict the total eligible credit being distributed. Clarification or amendment in the same would be an added blessing to the tax-payers.
There are some much needed changes in the credit legislation to match the pace of the changing indirect tax legislation and to project an encouraging augury of the anticipated GST regime. What remains to be seen is to what extent the hardships of the tax-payers are resolved. One can only hope that 'Acche Din' comes soon!
(Nandita Nawalakha, Senior Tax Professional, EY contributed to the article)
(Views expressed are personal)
The RBI said Airtel's board of directors and shareholders have passed resolutions agreeing to increase the limit on the purchase of its equity shares and convertible debentures by FIIs.
Overseas investors can now buy up to 74 percent of Bharti Airtel 's paid up capital, the Reserve Bank of India said. "The RBI has today advised that foreign institutional investors (FIIs)/registered foreign portfolios investors can now invest up to 74 percent of the paid up capital of Bharti Airtel Ltd under the portfolio investment scheme," the central bank said today in a release.
The RBI said Airtel's board of directors and shareholders have passed resolutions agreeing to increase the limit on the purchase of its equity shares and convertible debentures by FIIs. The purchases can be made through the primary market and through the stock exchanges. The government last year allowed up to 100 percent foreign shareholding in the telecom sector, increasing it from a cap of 74 per cent earlier. FIIs held 16.39 percent of Bharti Airtel's shares as of March 31, according to data on the BSE website.
Shares of the telecom major closed at Rs 337.35 on the BSE, down 0.34 percent.
FIIs, non-resident Indians and persons of Indian origin can invest in the primary and secondary capital markets in India through the portfolio investment scheme. The RBI monitors ceilings on FII/NRI/PIO investments in Indian companies on a daily basis.
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Bharti Airtel stock price
On July 03, 2014, Bharti Airtel closed at Rs 337.35, down Rs 1.15, or 0.34 percent. The 52-week high of the share was Rs 373.50 and the 52-week low was Rs 279.25.
The company's trailing 12-month (TTM) EPS was at Rs 16.51 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 20.43. The latest book value of the company is Rs 135.70 per share. At current value, the price-to-book value of the company is 2.49.
The budget should raise basic exemption limit to Rs 3 lakh from Rs 2 lakh and also introduce a special basic exemption for women at Rs 3.25 lakh beyond which they will come into the tax bracket, the consultancy firm said.
Stating that the common man has been impacted badly by high inflation and steady increase in fuel prices, consultancy firm PwC today pitched for a slew of concessions on the income tax front, including relaxation of exemption limit to Rs 3 lakh from the present Rs 2 lakh.
The budget should raise basic exemption limit to Rs 3 lakh from Rs 2 lakh and also introduce a special basic exemption for women at Rs 3.25 lakh beyond which they will come into the tax bracket, the consultancy firm said. Fears of poor monsoon, which may lead to higher inflation and the ongoing tension in Iraq pushing up fuel prices only add to the worries of the common man, it said.
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With the infrastructure sector projected to require investment of over USD 1 trillion in the ongoing 12th Plan, PwC also called for re-introduction of Rs 1 lakh annual
exemption for investments in infra bonds. It also suggested doubling of deduction under Section 80 C to Rs 2 lakh, and an increase in deduction for borrowed capital for self-occupied property to Rs 2.5 lakh from the current Rs 1.5 lakh.
PwC said exemption limits on various allowances and reimbursements, set over a decade ago, also merit an upward revision. It called for upping the medical reimbursements to Rs 50,000 from Rs 15,000 now, conveyance allowance to Rs 2,500 from the present Rs 800 and a five-fold hike in the exemption limit on interest-free/concessional loans to Rs 1 lakh, among other things.
Considering the poor state of finances and the need to control fiscal deficit, PwC said the government can look at introduction of a tax slab for those earning above Rs 50 lakh and recommended a 35 percent tax for such people. It also asked for an increase in the wealth tax to 2 percent for those with wealth of over Rs 10 crore and added that introduction of inheritance tax is also a possibility. Finance Minister Arun Jaitley will present his maiden Budget on July 10 and it is being speculated that he may take some tough, unpopular steps.
US employment growth jumped in June and the unemployment rate declined to near a six-year low of 6.1 percent, effectively dispelling fears about the economy's health and underscoring its momentum heading into the second half of 2014.
Nonfarm payrolls increased by 288,000 jobs, the Labor Department said on Thursday. Data for April and May were revised to show a total of 29,000 more jobs created than previously reported.
Economists polled by Reuters had forecast a gain of 212,000 jobs in June. It was the first time since the technology boom in the late 1990s that employment has grown above a 200,000-jobs pace for five straight months.
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The closely watched employment report added to robust auto sales in June and data showing a steady manufacturing expansion in suggesting a plunge in economic output in the first quarter was a weather-driven anomaly.
Gross domestic product contracted at a 2.9 percent annual rate in the January-March period, causing a sharp downgrading of growth estimates for this year. Growth in the second half of the year is forecast around a 3.5 percent pace.
The sturdy pace of job gains was flagged by reports on Wednesday showing companies hired the most workers in 1-1/2 years in June, with small business hiring increasing for a ninth straight month.
With new applications for jobless aid holding at lower levels and the share of businesses that cannot fill open positions rising, there is little doubt the labor market is tightening.
The 0.2 percentage point drop in the unemployment rate in June to its lowest level since September 2008 came even as the labor force swelled. The unemployment rate has declined from a peak of 10 percent in October 2009, driven by job gains and a shrinking labor force.
The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, was steady at 62.8 percent.
The improving tone of the labor market will be welcomed by the Federal Reserve and could spur debate on the timing of the first interest rate increase by the US central bank.
Fed Chair Janet Yellen has argued that there is still considerable slack in the labor force, citing the low labor force participation, which she says partly reflects the departure of discouraged job seekers who could be enticed back into the workforce if conditions were to tighten
Most economists do not expect the U.S. central bank to raise rates until the middle of next year at the earliest, but with the labor market tightening that could change.
The Fed has kept benchmark overnight lending rates near zero since December 2008.
Job gains in June were across all sectors.
Manufacturing payrolls increased by 16,000, rising for the 11th straight month. Construction jobs advanced for the sixth consecutive month of gains.
Services industries employment jumped by 236,000, the biggest increase since October 2012, while government employment increased 26,000. The length of the workweek was steady at 34.5 hours. Average hourly earnings rose by six cents.
A plan by the Reserve Bank of India (RBI) to swap old gold in its vaults for purer metal abroad that it could pledge or sell would have the added benefits of reducing gold imports and easing pressure on the balance of payments.
The RBI would sell relatively impure gold from its own vaults - some dating back to before independence - and receive the equivalent worth of purer yellow metal delivered to the Bank of England, under a scheme outlined on Wednesday.
The swaps would not involve money changing hands, according to three officials aware of the development.
The RBI has parked gold abroad in the past, once in the throes of the 1991 financial crisis. It did a similar swap in 1998, according to a report at the time, before Russia's default and devaluation caused a meltdown across emerging markets.
Governor Raghuram Rajan had to contend with a balance-of-payments shock when appointed last autumn and has taken several steps to improve the management of India's USD 315 billion of gold and foreign exchange reserves.
The old gold is held in the RBI vault at Nagpur, considered to be the geographical centre of British colonial India - in other words, about as far away as possible from the international financial system.
Holding the gold offshore would make it possible for the RBI, if needed, to raise funds using the metal as collateral, or to sell it to defend the value of the rupee.
Import substitution
The so-called location swaps would also reduce the need for imports in gold-mad India. On average, Indians bought 2.3 tonnes of gold a day - the weight of a small elephant - until about a year ago. Most was hoarded and handed down as heirlooms to hedge against inflation.
"To the extent the banks will get the gold, they will not have to import. So this should take some pressure off gold imports," one of the officials said.
The RBI has approached several state-run, private and foreign banks and agencies to carry out the swap deal, including State Bank of India, Corporation Bank, Bank of Nova Scotia and MMTC, according to industry sources.
"The entire cost will have to be borne by the local bank," said a senior official from one private bank. In a letter, the RBI asks the banks to respond by July 15 but does not specify swap ratios or timing of the deals, the official added.
No official comment was available from the banks. The officials declined to be identified as they were not authorised to talk to the media. The RBI has officially confirmed the proposed gold swap but not elaborated on the reason for it.
The central bank in September announced steps to raise money from overseas investors and has intervened frequently since March to buy dollars, building its reserves to guard against any possible selloff of the rupee.
At the same time, India is seeking to reduce its reliance on gold imports, which have cost the country dearly. India paid $54 billion to import 1,017 tonnes of gold in the year ending March 2013, which helped the current account deficit balloon to a record high of 4.8 percent of gross domestic product.
The current account deficit was a major factor in last year's rupee crisis, in which capital outflows were triggered by a warning that the U.S. Federal Reserve would wind down its monetary stimulus. As a result, the RBI and government took stringent steps to curb gold imports.
After those measures, gold imports slumped to just $5.3 billion in the March quarter, helping to narrow the current account deficit to just 0.2 percent of GDP versus 3.6 percent a year earlier.
But the World Gold Council reckons that 200-250 tonnes of gold have been smuggled into India since the imposition of import controls.
"The moment the supply of gold increases, the supply from smuggling will come down," said Madan Sabnavis, chief economist at CARE Ratings.
The RBI holds 557 tonnes of gold, and according to the World Gold Council it has the 11th-largest gold reserves.
However, the officials said there was no deeper meaning attached to the timing of the gold swap and no connection to Finance Minister Arun Jaitley's maiden budget on July 10. One of the officials called it a "housekeeping" activity.
"There is no monetary angle to this. It is an executive decision. It would be far fetched to connect this operation to the budget," the second official said.
The Modi Budget is here and hopes are running high - will the Budget provide a holistic road map for revival, will the finance minister clear the air on the controversial retrospective tax amendment and end what his government claims is an error of tax terrorism. Will team Modi usher in policy reforms to improve the investments climate to attract new investors?
Retrospective taxation is just one of the issues, believes Annat Jain, Managing Director of Acropolis. "Foreign investors globally are concerned with a series of steps that the government has taken over the last four to five years which has created a trust deficit which just fails to go away," he told CNBC-TV18. Apart from that, he feels there is a need for a strategic withdrawal of the government from the economy.
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Despite the expectations, most experts would agree that Arun Jaitley has very little room to manoeuvre. Mukesh Butani, Chairman of BMR Advisors does not expect the finance minister to make any substantial changes in this year's Budget. He, however, adds that this Budget should not be seen as a one-year document, it should be seen as the government's agenda (framework) from medium to long-term perspective.
Foreign investors at their end will be looking out for certainty and clarity from the government through this Budget, says Butani.
Sumit Majumdar, Ombudsman of the CBEC expects the government to give positive and definitive statements on what is going to happen as far as tax reforms are concerned in this Budget.
Below is the verbatim transcript of Mukesh Butani, Sumit Majumdar, Annat Jain and Abhishek Goenka's interview with CNBC-TV18's Shereen Bhan.
Q: Hopes are running high at this point in time, fiscally he is extremely constrained. If you look at the comments that came in from Arun Jaitley just day before yesterday saying that populism does not win you votes, that prudence must be the prevailing thought and the idea that the government should follow, what should foreign investors expect?
Butani: They should tame their expectations - that is the first thing. You are right, expectations are running high. He has got limited room to manoeuvre besides giving benefit to the common man I don't expect substantial changes in this year's Budget. I don't think we should view this year's Budget as a one year document. What is important is that this Budget is likely or expected to set out an agenda from a medium to long-term perspective, for example what is the timeline for roll out of tax reforms.
Q: So high on intent?
Butani: Well not necessarily high on intent because this is an intent by a new government so it is not that they can make a statement that Goods and Services Tax (GST) roll out will happen for example in 2015 and then not make it happen so it should be high on a framework that he is going to lay down for the Budgets ahead of us.
Q: What is the single-biggest thing to your mind foreign investors are going to be watching out for?
Butani: Certainty and clarity. Those are the only two aspects. If these are the precise issues why we have got labelled as a country, the way we have got labelled in the last few years that there is very limited certainty and stability in our tax policies, which is the only single aspect. They are not looking out for any kind of tax incentives. They are looking out for timelines, for rollout of tax reforms and certainty and stability in the law.
Q: As someone who has worked on previous Budgets let me ask you this, foreign investors are not going to be concerned whether excise duties are cut by two percent or hiked by 2 percent, etc. As Mukesh was pointing out they want statements of intent and follow through action from the government to provide a stable policy environment, a stable policy regime and to end what this government has called tax terrorism. Do you believe that we are likely to see steps towards that? Do you believe especially as far as the controversial retrospective tax amendment is concerned we are going to see clarity from this government?
Majumdar: This government will definitely in this Budget will give a positive and definitive statement on what is going to happen.
As Mukesh has said that clarity and certainty these are the two main things and for that your point about the retrospective amendment, very clearly it has to be spelt out.
Q: What can they spell out? Without saying that we are doing a U-turn, we are amending it, what can they do? Do you expect a clarification coming in?
Majumdar: I expect some clarification coming in.
Q: You don't see them doing a U-turn on it?
Majumdar: Whatever it is, certainty should be there and clear cut statement should come out.
Q: On retrospective tax law, what is your best case and what is your worst case, worst case of course is status quo they say nothing?
Butani: I won't put that as a worst case, the best case is obviously repeal of the retrospective law. The not so good case would be to make the law implementable.
Q: After saying end tax terrorism, retrospective is retrograde we don't believe in retrospective taxes do you really see them going down the implementation route?
Butani: Unlikely, but the government has presently a lot of challenges from a constitutional view point as to how do they repeal a law passed by the Parliament. Though there are many instances where this law has happened, take for instance the fringe benefits tax (FBT) law, it was law that was legislated by the previous government which was taken away.
So, I personally don't see a challenge to repeal a law which has had its effects as we can see it. However, the issue is that retrospectivity of the law is being confused now with a single case that the government has in hand.
Q: Maybe they could say - that is a case, that is now going towards arbitration, we have appointed now an arbitrator and let those proceedings continue and this is what we intend doing as far as the broader law is concerned?
Butani: Exactly, so take a holistic view, don't just look at one case in isolation. Look at several cases that could get impacted as a result of the law and it is not just one part of the law we know which is important, take a case of royalties and fees for technical services. There are many aspects of this retrospective law which go much beyond one single isolated case.
Q: Is this the single biggest thing that foreign investors are going to be watching out for; as you speak to foreign investors who are looking at potentially investing in India - is this their number one concern today?
Jain: It is one of the key concerns, it is not the only one. Foreign investors globally are concerned with a series of steps that the government has taken over the last four to five years which has created a trust deficit which just fails to go away. What the government has done or can do is to essentially declare almost like a declaration of intent as we have just spoken about which conveys a path over the next three to five years which it intends to follow.
Q: So what is the path that you would like this government to follow to allay apprehensions that foreign investors have?
Jain: One is certainty of outcome in terms of tax and other laws that they follow over here. Equally important is a strategic withdrawal of the government from the economy. The government has continued to dominate the economy to a degree that it distorts the entire decision making process of the government and foreign investors are not able to make sense of where the opportunities really arise and how they enter and how they exit, it is all convoluted at this moment.
