B U S I N E S S

US tapering won’t have any big impact on India: FM
New Delhi, December 19
As the US Federal Reserve finally began the process of pruning its monetary stimulus, the Indian markets reacted by falling 150 points while the government assured investors that the country was better prepared to deal with its impact.

Cabinet okays higher gas price for RIL if it provides bank guarantee
New Delhi, December 19
The Cabinet today decided to allow Reliance Industries (RIL) to almost double the price of natural gas from April on the condition that the company gave a bank guarantee to cover its liability if gas hoarding charges are proved.

Gold import bill drops by Rs 29,900 cr in Nov
New Delhi, December 19
The value of India's gold imports in November fell by over Rs 29,900 crore, or 84%, from the level in January after steps taken by the government to curb inward shipments of the metal.

US tapering won’t have any big impact on India: FM
Sanjeev Sharma
Tribune News Service

New Delhi, December 19
As the US Federal Reserve finally began the process of pruning its monetary stimulus, the Indian markets reacted by falling 150 points while the government assured investors that the country was better prepared to deal with its impact.

Late last night, the US central bank announced that it would cut monthly bond purchases by $10 billion in January due to the improved economic outlook in the US. The world markets reacted much more calmly compared to the tizzy in the equity and currency markets in May this year when the Fed had frist indicated that it would begin the process of tapering. The rupee along with other emerging market currencies had weakened suddenly following the announcement. This has also finally put an end to the speculation surrounding the timing of tapering.

Finance Minister P Chidambaram said India is better prepared to deal with the impact of US stimulus withdrawal and said its consequences will not be large and more steps will be taken, if needed.

"We are better prepared than in May 2013 to deal with consequence, if any, of the US Fed Reserve's decisions. I think the consequences should not be large. Even if there are some consequences then I think we are better prepared," he said.

Chidambaram said the government is of the view that markets have already factored in the US Federal Reserve's decisions and "therefore is not likely to be surprised by these moderate changes".

The stock and currency markets reacted negatively to the US Fed's announcement, with the BSE Sensex falling by about 151 points and the rupee slipping to 62.25 a dollar intra-day, down by 16 paisa from its previous close.

Industry said India is better prepared to deal with the impact of the tapering. “India is now definitely in a better position to manage its balance of payments as the government and RBI has taken effective steps to build up forex reserves and render stability to the foreign exchange market”, said Naina Lal Kidwai, president, Ficci. However, she cautioned that India cannot disregard the possibility of turbulence in the FIIs market as seen earlier this year.

The positive side of the story is that with the US economy improving it will boost exports as seen in the sharp uptick in the IT stocks today. Industry body Assocham said the positive side to the tapering phenomenon is that the US economy is improving which will improve potential for exports to the American markets. It would give a fillip to the export sector which in turn would mean further improvement in current account deficit.

Analysts said the rupee may not weaken as much as it did in the summer. Anindya Banerjee, currency analyst, Kotak Securities, said the Indian rupee weakened towards 62.48 on spot on the back of broad-based weakness among the Asian and emerging market currencies against the US dollar. However, a year end coupled with improved current account outlook and active intervention from the central bank means that rupee might not weaken the way it did in summer, he said.

Cabinet okays higher gas price for RIL if it provides bank guarantee
Tribune News Service

New Delhi, December 19
The Cabinet today decided to allow Reliance Industries (RIL) to almost double the price of natural gas from April on the condition that the company gave a bank guarantee to cover its liability if gas hoarding charges are proved.

The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1&D3) fields in the eastern offshore KG-D6 block since 2010-11.

The issue had held up notification of the new gas pricing formula that will be applicable to all producers — public and private from next year. The Cabinet had approved the gas price hike in June which had been criticised by CPI MP Gurudas Dasgupta who had been alleging that the government is favouring RIL.

The rate in April 2014, when the new pricing is to be implemented, will be about $ 8.4 per million British thermal units as against the current $4.2.

Natural gas prices to double in April

The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1&D3) fields in the eastern offshore KG-D6 block since 2010-11

Gold import bill drops by Rs 29,900 cr in Nov

New Delhi, December 19
The value of India's gold imports in November fell by over Rs 29,900 crore, or 84%, from the level in January after steps taken by the government to curb inward shipments of the metal.

About 21,281 kg of gold valued at Rs 5,619.66 crore was brought into the country last month, according to data provided by the Finance Ministry in response to a query filed under the Right to Information.

In January, India had imported 1.2 lakh kg of gold worth Rs 35,528.24 crore. It stood at Rs 23,688 crore in January 2012.

Monthly gold imports have fluctuated since the start of this year.

Gold imports stood at about Rs 26,930 crore in February, Rs 12,741 crore in March, Rs 36,223 crore during April, Rs 40,867 in May and Rs 8,543 in June.

The value of inward shipments of gold was Rs 13,225 crore in July, Rs 2,899 crore in August, Rs 3,149 crore in September and Rs 6,433 crore in October, according to the data.

The ministry said the data was based on information received through the electronic data interchange only and excludes "manual data."

RTI activist Subhash Chandra Agrawal had sought information on whether gold imports had declined after customs duty on the metal was increased.

The government raised customs duty on gold to 10% in August from 2% in January 2012, besides imposing other curbs on imports of the metal. — PTI

Assocham for uniform spectrum usage charge
Tribune News Service

New Delhi, December 19
Industry body Assocham has urged the government to implement uniform spectrum usage charge (SUC) before the forthcoming auctions in the interest of all stakeholders, including consumers, economy, government and the industry.

"We support the TRAI's recommendations and urge the government to announce the implementation of uniform SUC before the forthcoming auctions," Assocham’s National Telecom Council chairman TV Ramachandran said.

“None of the spectrum reforms being introduced by the government such as spectrum sharing, spectrum trading, revised mergers and acquisitions (M&A) guidelines will take off until there is a uniform SUC regime as the operators will be discouraged to purchase spectrum if the SUC continues at the current escalated regime,” said Ramachandran.

“The concerns of the telecom department that uniform charges may cause a loss of Rs 2,500 crore to the government exchequer over a period of 10 years, i.e. Rs 250 crore per year are incorrect and would actually lead to serious disadvantages to the nation, including huge financial losses,” he said.

The SUC, which is levied annually by government as percentage of revenue earned by telecom companies, varies between 3 to 8% in case of mobile operators. TRAI had suggested that the annual SUC be set at a flat 3% of companies' revenue.