Package for software industry
Tribune News Service

NEW DELHI, Aug 7 — The government today announced a banking and foreign exchange package for development of the information technology and software industry and to help strengthen its export potential. Under the package, several changes in the guidelines and procedures relating to provision of bank credit, access to foreign exchange for making certain types of payments and also for equity investments in companies abroad have been announced.

The changes have been made keeping in view the recommendations of the National Task Force for Information Technology and Software Development. Regarding bank credit support, the government said that working capital finance, irrespective of the turnover and business of the borrowers would be provided for the following categories:

• Software services, staffing and programming services,
• Project services, customised software development and systems solution and integration/maintenance software
• Software products and packages and information technology related services.

According to the Finance Ministry, the working capital needs of borrowers would be assessed on the basis of 20 per cent of the projected turnover for those having working capital limits of upto Rs 2 crore. In respect of other borrowers, working capital limits would be decided on the basis of deficits shown in the annual cash budget system. Former category of borrowers has also been allowed to adopt cash budget system, if they so desire.
To facilitate overseas investment, Indian software companies would be granted blanked investment approval upto 50 per cent of their cumulative export/foreign exchange earnings in the preceding three years subject to a maximum of $ 25 million under the Fast Track Route of the RBI. This would provide greater flexibility to Indian software companies in terms of the choice of overseas investments. This ceiling would be inclusive of the $ 15 million under the Export Earned Foreign Currency (EEFC) fast track window and the Fast Track approvals would extend to software companies having cumulative actual export realisation in excess of $ 25 million over the preceding three years. Under the changes, the banks have been advised that equtiy investments in dedicated Venture Capital Funds meant for IT are also eligible for inclusion within the five per cent limit presently prescribed for investments in equity shares including PSU shares, convertible debentures of corporates and in units of Mutual Fund schemes, the corpus of which is not exclusively invested in corporate debt instruments.

Indian software companies have been permitted to offer ADR/GDR linked stock option schemes to their permanent resident/non-resident employees, including Indian and overseas working directors.

The government also announced relaxations in regard to the scheme of overseas investment in joint ventures (jvs) and Wholly Owned Subsidiaries (WOS) abroad under the EEFC Fast Track Window to facilitate investment abroad by Indian corporates:

• Under the existing guidelines before approving the proposal, the authorised dealer has to ensure that the applicant has adequate balance in his EEFC account to fully cover the proposed investment as projected in the project/feasibility reports. Henceforth authorised dealers may approve proposals for overseas investment under the EEFC Fast Track Window even in cases where the balance in the EEFC accounts are not sufficient to fully cover the proposed investment at the time of approval, subject to the condition that future accruals in the EEFC account would be utilised to fund the proposed investments within the projected time frame.
• As per the existing guidelines, overseas JVs and WOS have to satisfy certain conditions for setting up second and subsequent generation companies. Henceforth, Indian promoters can agree to their JVs and WOS to set up second and subsequent generation companies without fulfilling these conditions provided the first generation company was set up under the EEFC Fast Track Route.

Regarding use of international credit cards (ICCs) for import of software and other related items, the government has allowed authorised dealers in foreign exchange to obtain through internet reimbursement upto $ 15,000 against international credit cards used by software developers and exporters for making advance payment of cost of software.

They have also been allowed to avail through internet payment of fees in respect of training etc. of technical and scientific nature.The dealers have also been authorised to make remittances towards registration of internet domain name, hosting charges for websites etc.

Authorised dealers have also been advised they may arrange to issue ICCs for use of software engineers going abroad on software assignments subject to the condition that reimbursement would be provided out of funds held in software engineers’ bank accounts abroad and not from India.

Teeth to VDCs may boomerang, fears NC govt
From M.L. Kak
Tribune News Service

JAMMU, Aug 7 — Senior Army functionaries in Jammu and Kashmir are said to be unhappy with the authorities, including ministers, ruling National Conference legislators and senior bureaucrats over the way they have been allegedly trying to hamper the functioning of village defence committees. Over 400 such committees have been formed to tackle militancy in Doda, Udhampur and Rajouri districts.

According to a highly placed official source, the state government does not realise the importance of these committees (VDCs) in containing the activities of militants. The Army authorities have explained to the ruling National Conference that militancy can be controlled by VDC members better than the troops as the members are local and well-acquainted with the people and the terrain.

During the past six months the VDC members have repulsed at least 25 attacks by militants on different villages in Doda district. Citing a Defence Ministry, survey the source said the situation in the Kashmir valley could register an improvement only after counter-insurgents or renegade militants carried out operations against the secessionists in the valley between 1994 and 1996.

It was the result of the efforts of the renegade militants that the assembly and Lok Sabha elections could be held in Kashmir in 1996.

However, soon after the National Conference assumed power a large number of renegade militants were killed. Others went into hiding and the remaining rejoined the militant groups. If there is an increase in insurgency in the state, it is because the counter-insurgent groups have lost their teeth.

Senior Army functionaries are worried that VDC members may meet the same fate. "If this happens, the situation in the three districts of Jammu will be highly volatile when additional companies of security forces have not yet been deployed," according to another senior government officer.

Ruling National Conference circles argue that renegade militants indulged in extortion and excesses which led to a public outcry against them.

The National Conference has misgivings over the role of the VDC as a majority of the members belong to one community. This imbalance can be corrected. There are many in the state government who fear bigger trouble in case the VDC members are neither kept under check nor made answerable to a particular agency. There have been reports that some VDC members have acted beyond their brief.

Those who fear that the VDCs may ultimately prove a liability for the state, however, argue in support of the members being recruited either in the police or made part of a regular government-funded militia so that each member is answerable to the government and remain a disciplined lot.

The Army authorities envisage an important role for the VDC members and want the state government to give them better weapons and facilities. Instead of forcing the Army to be deployed for internal security, it will be better if the number of VDCs are increased by at least four times.

In Doda district, senior Army officers have watched with interest the ability of the VDC members to scale the hilly belts with greater speed than the soldiers.
The VDC members have one grievance. They say they are not getting the requisite support from the security forces.

Meanwhile, following a step-up in militant activities and escalation in Pakistani shelling on Indian border villages in West Kashmir and Kargil Sectors, at least 5,000 families from Kargil, Gurez, Karnah, Uri and Tangdhar have migrated to safer places.

The migration from several areas in Doda, Udhampur, Poonch and Rajouri districts in the Jammu region has assumed significant dimensions.

As many as 135 Sikh and Hindu families have migrated since last evening from Ghota and Chassana villages situated on the border of Rajouri and Udhampur districts. Reports said it is panic migration after the people witnessed large groups of armed militants, including foreign mercenaries, moving freely in the hilly belt that connects Poonch and Udhampur.

According to these reports, two buses carrying villagers left yesterday. Another group of migrants was on its way to safer areas in Udhampur.

At least 125 Muslim families have fled from Sailan village near Bafliaz in Poonch where 19 Muslims were killed recently. They are camping in Surankot.
Leaders and workers of the BJP staged a demonstration in Kishtwar, demanding that Doda, Udhampur, Rajouri and Poonch districts be handed over to the Army. Raising slogans against Pakistan and the state administration, the BJP activists called for immediate handing over of these four districts to the Army for eliminating militants.