New Delhi, February 22
The confidence level of corporate India has slipped ahead of the Union Budget due to rising raw material and manpower costs. There is the added threat of food inflation spilling over to the manufacturing sector.

India Inc sees industrial growth slowing down in the next six months, FICCI’s latest Business Confidence Survey (BCS) states. No rollback of the stimulus package and an expectation that Excise rates will not be raised were the key expectations from the Budget.

Companies also said that the Budget must clarify the road map for the introduction of Goods and Services Tax (GST). Benefits to exporters must continue as the global economy is still under pressure.

Additional relief should be provided to individuals and consumers facing the brunt of inflation. They have also sought modulation of the taxation structure on oil products to limit increase in fuel prices.

Other demands include focus on infrastructure development giving adequate emphasis to infrastructure in rural areas. States must be encouraged to remove taxes including octroi on inter-state movement of agricultural products.

FICCI’s latest survey reveals a fall in the overall business confidence index from 76.2 in the previous to 63.8 now. The indices relating to current conditions and expectations in the next six months have also slipped from 75.2 to 63.5 (current conditions index) and 76.6 to 64, (expectations index) respectively.

Input cost inflation is hitting the industry hard. Close to 90 per cent of the firms that participated in FICCI’s BCS point to rising cost of raw materials and industrial inputs as a ‘negative factor’ impeding their business performance.

Ninety three (93) per cent of the surveyed firms expect the build-up in food prices to spill over to manufacturing sector. A fall out of the rising raw material prices and increasing manpower costs is the compression in profit levels.

Nearly 25 per cent of the respondents expects profits to be lower in the next six months.

Companies appear to be struggling to hold the price line . Nearly 53 per cent of the firms say that they would increase selling prices in the next six months. This marks a huge jump from the results of the previous survey, where 26 per cent of the firms had expressed this view.

The survey notes that while current demand situation appears satisfactory, the near-term order book shows signs of some moderation.

It seems that the successive hikes introduced by RBI in the key monetary variables (seven times since March 2010) have started impacting industry’s performance. Nearly 53 per cent of the firms have said that high lending rates by banks impacts operations.

Chandigarh, February 22
Removal of tax anomalies for drug manufacturers located in non-tax exempt states is one of the key demands of the pharmaceutical sector in the region. The industry also wants that intellectual property rights value should be treated as a fixed asset to encourage research and development.

The industry also looks forward to an increase in abatement, hike in excise exemption limit and encouraging public private partnership in research and development. Drug exporters from the region hope that the government extends the sunset clause on the income tax exemption to drug manufacturers.

NR Munjal, president, Indian Drug Manufacturers Association, said that instead of abolishing the exemption on income tax to the pharma- export oriented units (EOUs) from April 1 this year, which would be detrimental to the cause of the pharma exporters, the government can start imposing income tax in a gradual manner.

“Besides, steps should be taken by the government to boost R& D in the drug manufacturing business. Since innovation is the only way forward, the government can encourage this by coming out with a mechanism to create the IPR value and treat it as fixed assets, which will help us get soft loans ,” he added.

Vinod Gupta, president of Association of Pharmaceutical Manufacturers and Entrepreneurs of Haryana, said: “We hope that the abatement is increased from the present 35 .5 per cent to 60 per cent, as taxes, retail and wholesale margin, and the cost of promotion of a drug is nearly 60 per cent of the MRP,” he said.

Jagdeep Singh, president, Punjab Drug Manufacturers Association, said the government must encourage small scale pharma manufacturers.

“Anomalies in tax structure between the manufacturers in tax exempt states and non tax exempt states should be removed. Manufacturers in the excise free zones are misusing the tax holiday, by selling their medicines at higher MRP. Since there is no existing price control mechanism on new brands (except on scheduled drugs which are less than 10 per cent of the total medicines), the result is large scale price increase for profiteering. We hope that the MRP-based Excise regime abolished,” he said.

New Delhi, February 22
The country’s largest car manufacturer Maruti Suzuki India Ltd (MSIL)’s decision to enter the luxury segment with Kizashi is likely to reward the company well, if the early response is any indication.

Known for making small, low-cost, frugal cars that provide customers great value for money, launching Kizashi was a gamble for the Indian arm of Japan’s Suzuki Motor Corp.

Earlier models in the category like the Baleno and the SUV Grand Vitara, which were both initially imported from the parent country did not perform well. However, two weeks after the launch, bookings for Kizashi (which means big), have been good news for the company.

Although Mayank Pareekh, Executive Officer (Marketing and Sales), MSIL was not forthcoming on the number of bookings received for Kizashi, company officials said the bookings had filled the supply schedule till May. Deliveries for Kizashi start next month.

Pareekh said: “Bookings for Kizashi have beaten company expectations.” Another company official said that MSIL had received over 350 bookings for Kizashi. By industry standards, this is a good figure. MSIL could thus go a long way in establishing a name in the big league as a more evolved car manufacturer.

Riding on its success in he small car segment, MSIL has the distinction of being India’s largest car manufacturer and a company that has managed to hold 50 per cent market share despite the advent of just about every global player on Indian soil.

Coming in as a completely built-up unit (CBU), the Kizashi is set to take on established brands such as the Toyota Camry, VW Jetta, Honda Accord and Skoda Laura.

Ludhiana, February 22
Last week’s India, Japan free trade agreement will hit the fortunes of auto parts industry in Ludhiana as the deal lowers tariffs on auto parts. The Rs 1,000-crore industry is finding ways to stay competitive, even as auto parts are set to become cheaper. The industry plans to adopt stricter quality control measures.

Ranjodh Singh, general secretary, Auto Parts Manufacturers Association, said the pact had thrown an open challenge for local manufacturers.

“Quality has to be maintained since imports will now be easily available otherwise it will not be possible for the local producers to sustain in the market,” he added.

Manufacturers may be worried, but vehicle manufacturing companies are happy. Analysts said the move would help car and other vehicle manufacturing companies procure cheaper auto parts imports.

“The government needs to ensure that the inverted duty structure, wherein, raw material comes at a higher price vis-à-vis the finished product, is taken care of. Otherwise, it will erode our competitiveness,” said the marketing head of a local auto parts maker.

Chairman Sonalika Group LD Mittal said the pact will prove beneficial for both countries. “A Japanese company is our partner for providing components. Since now imports will now be cheaper, it will provide competition to local manufacturers. Japanese technology will be coming to India, local manufacturers will benefit as they can use the same technology.”

New Delhi, February 22
One of the most telling images from the frenzied media coverage of India's corruption scandals in recent months was billionaire telecoms tycoon Anil Ambani emerging from the CBI headquarters after questioning.

The reputation of the country's titans of industry has taken a beating over a rash of graft cases, and with it has come the risk of a backlash over their murky links to politicians.

Once seen as invincible, even heroes, big businessmen were lauded for freeing India from the bureaucratic shackles of a planned economy into a globalised world and they were often feted in Bollywood as good guys battling corrupt officials.

That is changing.

“The interrogation of Ambani would never have happened five or 10 years ago," said Siddharth Varadarajan, strategic affairs editor at the Hindu newspaper, who has written on the scandals. "Society at large had grown to admire these people. People are now associating business with corruption as never in the past.”

The scandals, which include the alleged sale of some telecoms licenses for kickbacks, come after two decades of reform that opened up the economy and spawned dramatic corporate growth.

In a country where more than 450 million people live in poverty, around 50 billionaires account for 20 percent of India's GDP and 80 percent of stock market capitalisation, according to a 2009 Asian Development Bank report, which warned that an excessive concentration of power could hinder growth and reforms.

The risks now for companies are greater judicial and media scrutiny and stricter enforcement of regulations: the upside for foreign investors may be greater transparency.

"What industrialist has gone to jail in the last 10 years? Until now the big industrialists, and politicians, the bad ones, could get away with what they wanted," said billionaire Rahul Bajaj, chairman of Bajaj Auto and an Indian lawmaker.

"In terms of corruption ... this will continue for many years but we have reached the bottom of the pit," Bajaj told Reuters. "I am not saying they are saints but willy nilly they are being forced to put their house in order."

Ambani, owner of No. 2 mobile carrier Reliance Communications, denies wrongdoing in the telecoms case.

One of the clearest signals of change came earlier this month when, in an unprecedented statement, the Supreme Court told the Central Bureau of Investigation (CBI): "We have a large number of people who think themselves to be above the law. You must catch all of them. Merely because a person is in the Forbes list of millionaires and billionaires does not matter."

Most companies are not tainted by corruption, and Indian executives have long enjoyed the image of being more innovative than the bureaucrats-cum-businessmen in rival China.

But the recent scandals have exposed the nexus between the corporate world and politics, where it is not uncommon for lawmakers to have their credentials on one side of their cards, and their business details on the flip side.

Other wealthy businessmen are also lawmakers, including liquor and airline baron Vijay Mallya and Naveen Jindal, managing director of Jindal Steel and Power.

Asia's third-largest economy is dominated by billionaire owners with a concentrated wealth akin to that of Russia's oligarchs.

Even the icon of India Inc, Ratan Tata, went to court to stop the release of leaked taped conversations of lobbyist Nira Radia and top industrialists, politicians and journalists, with talk of swinging deals, granting favours and ministers taking bribes. — Reuters

Srinagar, February 22
Reliance Communications today launched its 3G services in Jammu & Kashmir. It is the first private operator to do so in the state. Ataul Haque, J&K Head of Wireless Business of Reliance Communications, said the service would be extended to Gulmarg and Pahalgam.

Other districts including Baramulla and Kupwara in north Kashmir and Anantnag and Pulwama in south Kashmir would also be covered in a phased manner.

“The launching of 3G capabilities in Kashmir is an integral part of our Vision 2015 of creating Wirefree India built upon the affordable 3G for all platform,” Haque added. — TNS

BRIEFLY

IDBI announces monthly plan
Chandigarh: IDBI Mutual Fund on Tuesday announced the launch of IDBI monthly income plan. Syed Sagheer, senior manager- equity, IDBI Asset Management, said that the investment objective of the scheme is to provide regular income along with opportunities for capital appreciation through investments in debt instruments, equity and money market instruments. — TNS

Ind_Swift Lab
Chandigarh: Ind-Swift Laboratories Ltd got the PMDA approval (Pharmaceutical & Medical devices Agency) from Government of Japan for Pioglitazone and Risedronate Sodium to be manufactured at its facilities at Derabassi (Punjab). It is the first Indian company to get Japanese Government approval without any observations. — TNS