New Delhi, June 19
The government today ended a two-month long turf war between insurance regulator IRDA and capital market watchdog SEBI, saying Unit Linked Insurance Products (ULIPs) will be regulated by IRDA.

“Life insurance business shall include any ULIP or any such instruments. This would set at rest all the issues regarding ULIPs between two financial regulators,” the government said in statement after promulgating an Ordinance to make necessary changes in the law.

Besides, the government said a high-level committee chaired by Finance Minister Pranab Mukherjee will sort out all issues of jurisdiction regarding hybrid products.

SEBI in April took the market by surprise when it banned 14 life insurance firms from issuing fresh ULIP schemes.

However, IRDA asked the life insurers to ignore the SEBI order and the matter then went to the Finance Ministry, which advised them to move the court and in the meanwhile had asked them to maintain status quo.

ULIPs account for more than 50 per cent of the life insurance business and the money collected is invested in equities.

The committee on hybrid products will include Finance Secretary, financial services secretary and heads of RBI, Insurance Regulatory and Development Authority (IRDA), Securities and Exchange Board of India (SEBI) and the Pension Fund Regulatory and Development Authority (PFRDA).

The ordinance promulgated by President Pratibha Patil last evening amended the RBI Act, Insurance Act, SEBI Act and Securities Contracts Regulation Act to bring about clarity on regulation of ULIPs.

ULIPs are a hybrid instrument that combines both insurance and investment.

While SEBI saw ULIPs as investment products and hence asserted its right to regulate those products, IRDA treats them as insurance instruments. — PTI

Kolkata, June 19
Toyota's compact car Etios would hit the market early 2011, a senior company official said. "Etios, which is now a concept car, will be marketed from early 2011," Toyota Kirloskar Motors (TKM) deputy managing director Sandeep Singh said.

Launching the concept car in the city today, Singh said this would mark Toyota's entry in the mass segment of the Indian market and be placed in the upper bracket of the segment. The price of the car would be sub-Rs 10 lakh, Singh told reporters.

He said the car has been particularly developed for the Indian market and would be manufactured at its second plant near its existing facility at Bidadi in Bangalore.

The plant has been built at a cost of Rs 3,200 crore and would have a production capacity of 70,000 units per annum.

Commercial production of Etios is expected to start from December 2010, TKM managing director Hiroshi Nakagawa said. Singh said in 2011, the company aims to sell 1.50 lakh units and three lakh units by 2015. — PTI

What is the difference between a government undertaking and a private enterprise? The difference is as steep as between Everest and ground. The government body like National Aviation Company of India Limited (NACIL) loses money in the running of commercial venture, while the private operators make money, although shrewd bosses keep juggling with figures to avoid paying taxes.

Around the time, the terminal-2 at the Indira Gandhi International Airport (IGIA) at Rs 100 crore was raised in 1985, two regulatory outfits namely National Airport Authority (NAA) and International Airports Authority of India (IAAI) had also come about.

Both were functioning superbly with the indigenous resources and manpower when suddenly, at the behest of the politicians, they were unified to rise as the Airports Authority of India (AAI).

The AAI’s plight is the same as that of the NACIL. Both are gasping for oxygen owing to paucity of fresh air.

A very useful and convenient vehicle for politicians, the AAI has lost its ‘favourite’ tag with the powers that-be. All major international airports like Delhi, Mumbai, Bangalore and Hyderabad, for example, have been handed over on platter to the private operators with the AAI playing a role of the second fiddle in the scheme of the vex civil aviation scenario in the country.

The naked truth is that private operators at these four international airports are minting money and living lives of kings. The AAI has to sustain with the revenue generated from the remaining airports and construction/upgradation of airports like Libya, Yemen, Maldives, Algeria, Narau and others abroad. When the AAI has competent and efficient engineers, technicians and others, why should government have deprived it from constructing terminals at country’s busy airports. Imagine, a private enterprise like GM Rao’s DIAL has equity share of 46 per cent, while AAI’s is merely 26 per cent.

This is not all. But the DIAL, governed by commercial instincts, has already been charging an exorbitant fee of Rs 1,300 from international passengers without providing even 10 per cent facilities to them in return. It is learnt that this fee will be increased to Rs 2,500-3,000 around September before the start of the Commonwealth Games in October.

How long will ‘development fee’ continue? Why should it fill the coffers of the private company? If the expenditure has increased, who is to blame? Why should poor passenger community be taxed? This users’ fee will also be counter-productive where dwindling tourism scenario is concerned.

The DIAL officialdom seems to suffer from false notions that the new, impressive and spacious Terminal-3, constructed at a mammoth cost is the ‘be-all-and-end-all’ not realising that runways are the ‘heart and lungs’ of the airport. The runways at IGIA, for example, are in a poor state of condition despite ‘shutting down’ main runway for a considerable period.

Q: A couple of years back I had invested in DSP BR World Gold Fund and Mirae Asset Commodity Stocks Fund. Recently, I sold both these investments. But I find that in the account statement, the Securities Transaction Tax (STT) has not been deducted on the redemption proceeds. I was under the impression that STT @0.25% is mandatorily deductible on equity mutual fund redemptions. Could you throw more light on the exact STT provisions and the reasons why these redemptions are exempt from STT?

— Dr Date

A: The reason for this is that STT is deductible only for sale of equity-oriented mutual funds. Now, though these two funds ultimately invest in equity (gold mining companies and commodity companies respectively), these are not equity-oriented mutual funds as far as the Income Tax Act is concerned. The reason for this is that the definition of equity funds is those that invest at least 65% of the portfolio in domestic equity shares.