Exports to sink ‘the Titanic way’

NEW DELHI, Aug 6 (PTI) — The Delhi Exporters Association (DEA) said today measures announced to spur export were “mere peanuts” and called for further measures, including interest-free pre-shipment and post-shipment export credit.

“There is nothing substantial in the package to spur exports,” DEA president S.P. Agarwal told newspersons here.

“After the dismal export growth during 1997-98 and the 17 per cent negative growth in May this year, we were expecting certain dynamic and practical measures to jack up exports,” he said.

As the exports were sliding alarmingly, the 2 per cent reduction in credit would not improve things and the availability of credit at this juncture had been neglected.

Criticising the decision to give interest on drawbacks extending beyond two months, he said it would hardly benefit exporters as claims worth crores of rupees were still pending.

The DES president said the exports would continue to sink the “Titanic way” in the absence of pragmatic initiatives and the target of 20 per cent export growth this year would remain a “sweet dream”.

The high cost of exports, including 5 per cent service tax on selected items, higher freight charges had placed Indian exporters on an uneven foot vis-a-vis other exporting countries.

The DEA demanded seven days working in all export departments, saying too many holidays were causing delays in clearance of shipments and adding to the cost of exports.

The government had not so far made any conscientious efforts to identify where “the shoe pinched” and demanded that the Prime Minister call a meeting of Chief Ministers and leading exporters associations to ensure speedy export reforms in states.

Agarwal also demanded uniformity in facilities and incentives accorded to exporters without any categorisation
.

RBI to refinance bank lendings
to software firms

New Delhi, Aug 6 (PTI) — The Reserve Bank of India (RBI) will refinance bank lending to software exporters and increase working capital limit for bank lendings.

RBI is working out modalities of refinancing and the interest rate structure in consultation with the Finance Ministry to implement the action plan recommended by the national task force on information technology.

RBI has been asked to keep interest rates for refinancing at sufficiently low levels to enable banks to avail enough funds from the apex bank, sources in Planning Commission told PTI here today adding the announcement is likely on August 14.

The guidelines propose to gradually increase the working capital requirement being provided by banks to software industry from the present Rs 400 crore to Rs 1200 crore.

Working capital requirements of software industry would be decided solely based on turnover, and banks have been asked to extend 25 per cent of the contract value as loan for first six months without collateral security, and based on annual cash flow statement thereafter for the next 12 months.

Banks and financial institutions have been asked to treat information technology as a ‘priority sector’ for the next five years, besides advising them to create specialised I.T. financing cells in major cities.

Banks will be allowed to invest equity in dedicated venture captital funds in the sector as part of 5 per cent incremental deposits currently allowed.

The proposed guidelines also allow banks and financial institutions to set up joint ventures with Indian or foreign companies for setting up at least four different venture capital dedicated funds of not less than Rs 50 crore each to cater the credit requirements of the industry.

Companies with three years of export realisation of $ 25 million would be allowed to shell out 50 per cent of the funds for acquiring software companies abroad.

RBI would set up a mechanism for expeditious processing of applications for FERA approvals beyond this set limit, sources said.

A dispensation shall be given for allowing capitalisation of both goods and services for overseas ventures.

I.T.Exporters are free to spend 5 per cent of their export proceeds abroad for sundry purposes. This would be done as the present limit of 70 per cent of contract amount for expenditure abroad did not give them flexibility. A new list of allowable expenses within the 70 per cent limit was being worked out, sources said.

Call for transparency in functioning of CBEC
Tribune News Service

CHANDIGARH, Aug 6 — The Samadhan scheme is likely to bring down pending litigation substantially, said Mr B.P. Verma, member Budget, Central Board of Excise & Customs, while speaking at a post-budget workshop on central excise & customs organised by the CII here today.

He said it was the industry’s responsibility to pay taxes as the entire tax system depended upon tax compliance. The Finance Act 1998 is expected to boost infrastructure and housing activity, thereby increasing indirect tax collections.

The other officials who participated in the workshop were Mr T.R. Rustagi, Jt Secretary, Tariff Research Unit, CBEC, Mr S.S. Jha, Commissioner-I, Mr I.R. Soni Commissioner-II, Chandigarh and Mr D.S. Sra, Commissioner-Customs, Amritsar.

Earlier Mr Krishan Goyal, Chairman, CII, Indirect Taxation Sub-committee while chairing the session said that the economy was in urgent need of revival and hoped that the bold decisions taken by the Union Finance Minister would help kick-start the economy and restore the growth momentum of 7 per cent achieved during 1994-95 and 1996-97.

Mr R.M. Khanna, former Chairman, CII (Northern Region) called for greater transparency in the CBEC’s functioning and simplification of procedures. He repeated the CII’s suggestion for the abolition of Inspector Raj.

Lure more foreign tourists: Vajpayee

NEW DELHI, Aug 6 (PTI) — Expressing dissatisfaction that a mere 2.3 million foreign tourists visit the country annually, Prime Minister A.B. Vajpayee today asked the Tourism Ministry and all Tourism Ministers “to suggest specific steps” to double this number in the next four years.

“Today we receive 2.3 million foreign tourists a year who contribute about Rs 11,000 crore in foreign exchange making tourism India’s second largest net foreign exchange earner.

“However, this number is very small. Smaller countries, with fewer places to see attract millions of more people”, the Prime Minister rued while inaugurating the state Tourism Ministers Conference here.

As the Prime Minister could not come personally due to last minute pressing engagements, his written speech was read out by Minister of State for Tourism Omak Apang. The inaugural formalities were done by Tourism Minister Madan Lal Khurana.

Signs of revival: Khan

MUMBAI, Aug 6 (PTI) — The domestic industry was already showing signs of a revival despite some sectors faring poorly in the first quarter of this fiscal year, according to NSE chairman S.H. Khan.

“Corporate tax has grown by 60 per cent and excise by 80 per cent over the corresponding period of the previous year, while non-oil imports grew by 22 per cent and the sanctions and disbursements by banks and financial institutions have also been good and I believe the industry is already showing signs of a revival”, he said. Addressing a seminar, organised by the Indo-American Chamber of Commerce here today, he said though some major sectors like automobiles, chemicals and steel were still fighting a downturn, certain segments like consumer durables, synthetic fibre, infotech and financial services have revealed a positive trend.

‘Free’ gifts may not be really free
By Pushpa Girimaji

DON’T look a gift horse in the mouth, it is said. But then, when “free gifts” are handed out to influence consumer choice on almost every product in the market, one has to critically examine not only the practice of giving gifts but also the gifts themselves.

Today, perhaps there is no product that comes without a “free gift”. With a tube of toothpaste comes a toothbrush, with a tin of talcum powder, a toilet soap. With a carton of breakfast cereals, a plastic jar and with a packet of tea, a porcelain tea cup. Over the years, the profile of these free gifts has completely changed.

While earlier, the gifts were small, fairly inexpensive items, these days, the cost of some of the gifts are as much as that of the product itself. Or Almost. You buy a refrigerator and you get a washing machine, absolutely free. You buy a washing machine and you get a microwave oven, at no extra cost. Manufacturers say that free gifts have a tremendous effect on consumer preference and with the market being sluggish and competition fierce, they are forced to cut down on their profit margins to offer free gifts.

But then what is given as free may not really be “free”, as made out to be. The manufacturer may well be recovering either partially or fully, the cost of the gift by jacking up the price of the product prior to the announcement of the gift scheme.

The Monopolies and Restrictive Trade Practices Commission (MRTPC) has in a number of such cases, come to the aid of consumers and passed “cease and desist” orders against such unfair trade practice. The Consumer Protection Act too provides for redress against such unfair trade practice.

But what happens when an expensive “free gift” like a washing machine or a television set turns out to be defective and the manufacturer refuses to give you a replacement? In ordinary circumstances, where you would have paid for the goods, you can seek the help of the consumer court to get a replacement or a full refund, interest on the amount and compensation for the harassment caused. But such redress might not be so easily available in case of free gifts.

The Consumer Protection Act gives the right of redress only to the person who “buys” goods for a “consideration”. A person who uses it with the approval of the buyer is also conferred that right. But complaints against goods or services provided free are outside the purview of the consumer courts.

Of course a consumer can always argue that the “gift” was not really free because it came with the purchase of another product. In other words, the “considertaion” for the so-called free gift was actually the payment for the product that went with it. But one has to wait and see how the consumer courts would react to such an argument.

So that’s all the more reason why you should be a discerning buyer vis-a-vis free gift offers. Here are some tips:

(A) Whenever you are lured by a “free”, think: Are you making your choice purely on the basis of the free gift, without looking at the quality or the price of the product? Would you buy that product if there was no free gift accompanying it? Has the manufacturer increased the price in order to recover the cost of the so-called gift?

(B) If you are buying a product because of an accompanying gift, make enquiries about whether it would be delivered along with the product that you are purchasing and whether you need to spend any money to make it operational.

I say this because recently a consumer complained about how he was lured by an offer of a “free pager” and it was only later that he discovered that he had to pay for activating the pager. “I did not even need a pager in the first place and now I have to incur an additional expenditure for having got it” he complained. There have also been instances of dealers not delivering the free gift even months after the purchase of the product.

(C) If you are going in for one of those “buy a refrigerator, get a washing machine free”, kind of offers, you need to be doubly careful. If you are getting a washing machine “free”, for example, find out the model.

If it is semiautomatic, can you pay a little more and get a fully automatic machine? Is the manufacturer willing to reduce the price of the product if you do not want the free gift? Is the manufacturer giving the same warranty/guarantee on the free product that he would give to a person who paid for it? Be fully informed before you make your choice.

No priority with companies: Hegde

NEW DELHI, Aug 6 (PTI) — Large industrial houses in the country must adopt a clear export strategy with well defined targets for achieving a quantum jump in this sector, Commerce Minister Ramakrishna Hegde said.

Exports will grow only if corporates give a thrust to their efforts in this direction, Hegde told a delegation from the Thapar industrial house here last night.

Despite having a huge production base, a brand image, technological prowess and marketing expertise, these companies are not prioritising exports, he said quoting a study of the top 500 Indian corporates.

The study revealed that the average export intensity was only 8 per cent while small-scale units contributed up to 40 per cent of exports despite limited resources.

The meeting was part of the government’s effort to identify ways to spur export growth and is a sequence to Hegde’s talks with a delegation from Larsen and Toubro yesterday.

Chief of the Thapar group, L.M. Thapar expressed optimism over his group’s export performance and identified agriculture as a major potential in this effort.

Hegde spoke of the government’s intention to set up cold chain networks in major airports of the country. Bangalore would be the second airport to have such a facility in September after Delhi.

Maruti board ‘mum’

NEW DELHI, Aug 6 (PTI) — The Board of Directors of Maruti Udyog Ltd (MUL) held an eight-hour meeting yesterday amid reports of a rising number of contentious issues, including the appointment of the second Managing Director, between Suzuki Motor Corporation (SMC) and the government.

“Board discussions are always confidential. We had a normal discussion and deliberated various issues. We have no comments to make,” Managing Director RSSLN Bhaskarudu said after the meeting.

Asked whether there was any discussion on new appointment at the meeting, Bhaskarudu said: “There are no new appointments.”

Replying to queries on the introduction of the diesel Zen model, Bhaskarudu said: “I am not in a position to give any definite date. Definitely, the car will come.”

At the meeting, the third in the last two months, the government was represented by Bhaskarudu, Director Finance A.R. Halasyam, Joint Managing Director Jagdish Khattar, and Directors Pradip Kumar and A.V. Singh.

SMC was represented by Chairman Y. Saito, J. Sugimori, T. Kobayashi, K. Senga and Dr K. Kumar.

Protest by industry
Tribune News Service

GURGAON, Aug 6 — Industrialists here today staged a protest march against the recent hike in the power tariff and urged the Chief Minister to roll it back.

The industrialists, associated with the Gurgaon Industry Association, the Gurgaon Chamber of Commerce and Industry and the Udyog Vihar Industry Association, alleged that the hike in the power tariff of 51 paise per unit for the industrial consumers made power supply one of the costliest in the northern region.

They submitted a memorandum to Mr Bansi Lal through the Deputy Commissioner, Gurgaon. The GIA said since the industry in Haryana had no home market, products had to be sold in Delhi, Uttar Pradesh, Punjab, Himachal Pradesh and Rajasthan where the electricity rates were much lower.

The GCCI said the government should set up an independent electricity regulatory commission at the earliest to fix power tariff on a rational basis and keep the hike in abeyance till the commission was set up.

Investor signal negative
Tribune News Service

NEW DELHI, Aug 6 — There appears to be increasing negative trend in international investor sentiment towards India, says the Burston-Marstellers Second Quarter 1998 Survey of investor confidence.

A majority of the fund managers with exposure to India who were interviewed felt that the decision to conduct nuclear testing represented an attempt by the government to unify both itself and the country. They, however, considered the government to be weak and divided.

Nine of the 10 fund managers thought that investor sentiment would be, or had already been, damaged by the recent nuke tests.

The economy would suffer as result of retaliatory cuts in investment and World Bank funding. Unfortunately,the Indian government appears more interested in its nuclear policy than its economic policy and sentiment has already been affected, fund managers have pointed out.

All the ten fund managers interviewed conceded that it was prudent for controls to remain on Indian companies borrowing from overseas institutions in the short term.However, internal market reforms were more important than reforms of external trade and finance barriers to trade.

Fund managers were critical of the budget and said that the inward looking budget was a disappointment with reforms in a number of key areas being avoided.

“The market has clearly been impacted by the recent nuclear tests and the disappointing budget.

As a result , India’s safe haven status has taken a big hit.It certainly appears that the protectionist elements of the BJP have come to the fore”, the survey quoted one fund manager as saying.

They identified three key areas of economic reform that were required. These include reduction in levels of government subsidies, a reduction the budget deficit and a fundamental privatisation programme.

The crowding out of private investment by a government which is borrowing the money to pay debt servicing is leading to systematic under-investment.

The survey shows that fund manager sentiment towards emerging markets is weaker than at any time since the South- East crisis in the second half of 1997. Of the 10 fund managers interviewed, six were based in the UK, two in Singapore and two in the USA.

The continuing crisis in South-East Asia was considered to be fuelled by the level of corporate debt within the region.

Coupled with the onset of the deepening recession in Japan and the deteriorating value of the yen, fund managers predicted that the situation for many emerging markets would deteriorate before it improved in the medium term.

On a positive note, the survey noted that India’s “closed economy in general protects it somewhat from external events.

Any drop in exports does not harm the economy as much as in many other export led countries”, the survey notes.

Burston is a global perception management firm focussed on delivering business results to its clients through a full range of consulting and communications disciplines.

In India, Burston - Marsteller has 49:51 per cent equity presence through Burston - Marsteller Roger Pereira Communications Private Limited.

Markfed chief
Tribune News Service

CHANDIGARH, Aug 6 — Akali leader Jagdish Singh Walia took over as Chairman of Markfed here today. Mr Sewa Singh Sekhwan, State Minister, Information and Public Relations Punjab, Amarjit Singh Samra, the outgoing Chairman, Mr Amarjit Singh Gill, Vice-Chairman, Markfed, Directors of Markfed and political leaders were present.

Levy fixed
Tribune News Service

NEW DELHI, Aug 6 — The Union Urban Affairs and Employment Ministry has fixed Rs 1,550 per square metre as the levy on additional floor area ratio. This rate will be charged for additional floor area, including basement.

ICICI Bank
Tribune News Service

NEW DELHI, Aug 6 — The ICICI Banking Corporation Limited is soon going to open branches in Jalandhar and Amritsar to tap the rural and semi-urban market in Punjab. The bank plans to expand its network up to 100 branches by 2000. It already has a significant presence in North India with branches in Ludhiana, Chandigarh, Gurgaon and Noida apart from Delhi, according to the Bank’s Senior Vice President, Mr Suresh Nanda.

Smita Leather
Tribune News Service

CHANDIGARH, Aug 6 — Smita Leather Limited, a garment manufacturing unit, has branched off into the mineral water segment at Baddi in Himachal. The new unit has a capacity of 24,00 bottles a day.

SBI branch
From Our Correspondent

YAMUNANAGAR, Aug 6 — The Yamunanagar branch of the State Bank of India was fully computerised today. The inauguration was done by Mr Bhupinder Singh Jauhar. Mr K.K. Narula, Chief General Manager of the bank, said the bank will shortly computerise its branch at Jagadhri.

CAFE 100
Tribune News Service

CHANDIGARH, Aug 6 — Delhi-based Milkfood CAFE 100 has given its franchisee to Skipper Beverages which opened the unit in multiplex in Sector 34 here yesterday, Mr Ashok Chopra, MD, said.

Microsoft, Global Telecom tie-up

NEW DELHI, Aug 6 (PTI) — Microsoft today entered into a strategic alliance with an Indian Internet service and electronic commerce provider, Global Telecom Services Limited (GTSL). Microsoft will provide GTSL with a core set of technologies and consulting services to deliver Internet-based online services and other broadband multimedia and electronic commerce services.

ICC India

NEW DELHI, Aug 6 (UNI) — Mr Govind Hari Singhania and Mr A.K. Rungta have been elected president and vice president respectively of the ICC India, national chapter of the International Chamber of Commerce, Paris for 1998-99.

Gold weak

NEW DELHI, Aug 6 (PTI) — In an otherwise easy bullion market today, silver coins rose on increased buying by local parties amidst shortage of stocks and closed with gains. Prices of silver and gold remained weak on brisk offerings by stockists against lack of buying support and finished with further losses. The quotations: Silver .999 (ready) 8065 delivery 8120. Coins buyer 10,500 and seller 10,700. Standard gold 4250, ornaments 4100 and sovereign 3475.

Times Demat
Tribune News Service

CHANDIGARH, Aug 6 — Times Bank has become a depository participant with National Securities Limited (NSDL) and has begun all functions necessary to dematerialise, buy, sell and keep records of security holdings. Times Demat focilitates investments in the capital market in “dematerialised” electronic form instead of paper certificates.

Demands
From Our Correspondent

PARWANOO, Aug 6 — The Parwanoo Industries Association in a statement here today said the government while developing new industrial sites must provide adequate land for effluent treatment plants. It asked the government to give priority to the housing sector. Parwanoo and Baddi face an acute housing problem.

Commodities
From Our Correspondent

CHANDIGARH: Wheat 580 to 585, dara 585 to 587, superior 590, maize 425 to 450, surajmukhi 1100 to 1350, sarson 1500 to 1600, taramira 1300 to 1400, rice basmati 2800 to 5000, parmal 850 to 1150, sella 850 to 1100, maida (per bag 90 kgs) 700, suji 710, atta 590, urd (per quintal) 1600 to 1900, urddal 1600 to 1950, moong 2300 to 2650, moongdal 2400 to 2650, moongdhuli 2650 to 2900, masoor 2100 to 2500, masoordal 2100 to 2550, kablichanna 2500 to 2800, kalachanna 1400 to 1700, dalchanna 1450 to 1700, malkamasoor 2300 to 2800, arhar 2800 to 3400.