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| Sunday, December 10, 2000, Chandigarh, India   
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Punjab mulls
over luxury tax on imported
goods Quality & norms: a double-edged sword Correcting water balance of Khara
Majha Industry needs to
interact with govt |
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IT: boys will be separated from men
Ind Swift in pact with global firms
Hallmarking of gold set to make a
mark
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Punjab mulls
over luxury tax on imported
goods NEW DELHI, Dec 9 — Punjab has taken the lead in building a consensus among States in resisting the dumping of imported goods in India, that threatens to seriously harm the domestic industry, particularly the Small Scale Industry. In what could be a trend setter, the Punjab Government is seriously considering a proposal to impose Luxury Tax on several imported goods sold in the state so as to provide protection for the domestic industry. At a meeting of the empowered committee of eight state finance ministers, which met here to discuss the implementation of a uniform taxation system for the states, the Punjab representative, Capt Kanwaljit Singh suggested that the Committee meet again on December 22 in the capital, where the sole agenda would be to discuss measures to counter the latest threat from abroad. The suggestion was approved unanimously by the other States, which included West Bengal, Orissa, Maharashtra, Gujarat, Madhya Pradesh, Karnataka and Uttar Pradesh. After discussing the issue, the ministers would meet the Finance Minister, Mr Yashwant Sinha and the Minister for Commerce and Industry, Mr Murasoli Maran and convey their apprehensions to them. Elaborating on the proposed Luxury Tax, Capt.Singh said the Constitution enables the States to impose this levy and this would be one way of providing an even playing field for the industries based in the State. The measure, however, would run the risk of the people of Punjab sourcing imported goods from other neighbouring States. To this, the minister said the proposal was under consideration and all this would be taken into account. In any case goods like cycles made in the State would become cheaper than the imported ones. The State Finance Minister pointed out that the free import of goods — he prefers to call it dumping as the manufacturers of these goods enjoy subsidies and various incentives from their Governments — threatens to harm the basic economic structure, particularly that of Punjab. Since cheap imports of agriculture and manufactured goods are being permitted under the Open General Licence (OGL), it was affecting the local industries in Punjab. For instance, Capt Kanwaljit pointed out that Punjab had surplus of paddy and there was a crisis as there were no buyers. Though this has been sorted out temporarily, in the long term it would continue to be a problem. Among several reasons for this problem of plenty of foodgrains, one reason is the free import of agricultural goods. While foodstocks are rotting in Punjab, the country has imported during the last two years foodgrains worth Rs 2700 crore. Apart from importing 30,000 tonnes of rice, another Rs 3000 crore worth of
sugar, mostly from Pakistan, was bought affecting the domestic sugar industry and
the sugarcane growers. Similarly, around Rs 3000 crore worth of vegetables were imported as a result of which the vanaspati industry and oilseed production in Punjab got destabilised. Capt Kanwaljit Singh said several States were facing similar problems and they were of the opinion that something must be done about it seriously. The Punjab Minister said the state does not have an appreciable heavy industry but it had a well developed small scale industry. “They have been hit directly by the imports and are facing elimination”. He said the states should
collectively resist this trend of foreign entrepreneurs dumping their goods in India and capturing the market. Otherwise this would lead to large scale destabilisation of the economy. Capt Singh said it was for the first time that the problem of dumping was being taken up by the States collectively and that too at the national level. It is only now that the implications of the World Trade Organisation treaty has begun affecting the states and earlier nobody was aware of that.
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Quality & norms: a double-edged sword INDIA is a member of WTO and has already eliminated quantitative restrictions (QRs) on half the 1429 covered items on April 1, 2000 and is bound to do the same on the balance by April 1, 2001. The accelerated phase-out schedule with the USA will also apply to other trading partners like Japan and European Union, with whom India has agreed to end quotas by 2003. This has opened flood gates for the import of foreign goods to the detriment of domestic products particularly in the listed category of SSI sector, even threatening their closure due to impending draconian competition from overseas. Some of the countries have started dumping their even substandard goods at cheap rates to satisfy the delirium of Indians always hankering for foreign brands not bothering about their quality and regulations. The import mania-hit domestic industry also needed level playing field. The Directorate General of Foreign Trade has made it mandatory that imported products in 131 categories be brought on the quality of Bureau of Indian Standards (BIS) regulations besides following the norms of having the maximum retail price (MRP) in rupees printed on them. This double edged sword would not only ensure quality standards for imported products but also compliance of all regulations listed out in the Standards of Weights and Measures (Packed Commodity) Order of 1977 right at the customs clearance stage, who would ensure stipulated quality and regulations by evaluating them before clearance. This would necessitate the exporters of products in 131 categories obligatory registration with BIS besides making imperative for all imported goods to carry the name and address of the importer alongwith their date of manufacture, packaging and import to ensure about the expiry period thus making their imports more regulated and difficult. These anti-dumping measures against Chinese toys, electrical appliances, batteries, watches, instant milk food, food preservatives, additives, plastic feeding bottles, medical X-ray equipment, stainless steel sheets, cement, gas cylinders and sports shoes etc. would provide the necessary fire fighting for the domestic industry. Moreover, the importers have usually been resorting to undervaluation to evade customs duties causing a huge loss to government exchequer. The printing of MRP inclusive of all taxes, freight, transport, commission, advertisement, delivery, packaging and forwarding expenses on the imported products makes evading of customs duties more difficult. The customs duties have also been raised to further allay the fears of domestic industry. What remains to be seen is whether the domestic SSI units with their archaic infrastructure, poor quality, inefficient work culture and not taking cost cutting measures are still able to vie or the consumer will have to pay more to keep alive uncompetitive industry in the current QR-free WTO regime.
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Correcting water balance of Khara
Majha THE area located between the Beas and Ravi rivers is known as the Upper Bari Doab tract. It is irrigated through a network of the canals called the Upper Bari Doab Canal (UBDC) System. The headwork of the UBDC System is located at Madhopur and has gained the privilege of receiving enhanced water supplies after building of the 160 m high Thein dam on the Ravi, located about 24 km upstream. It is expected that about 1.5 MAF of water which had escaped from the Madhopur headworks during the rainy season on account there being no storage built on the river, will now be available for use in the command area of the UBDC. The sanctioned “water allowances” in the UBDC command areas are much lower than sanctioned for the canal system feeding the Malwa region. It is an accepted fact that the Malwa region with hardly 32% of the canal irrigated area now receives more than 52% of water available at the “Out-Lets.” This resulted in farmers “pumping” more water from the underground reservoir resulting in severe watertable decline. A large block of land located at the south-west end of the drainage basin of UBDC is underlaid with saline water which is unfit for irrigation. This tract has been known as “Khara Majha”. This tract is also located at the “trails” of the different distributaries and so suffer from chronic shortages. The farmers use underground water after dilution with the canal water received. Special attention needs to be given to this region of the UBDC. At present for ‘correcting salinity affected patches of the Khara Majha’, temporary reclamation shoots were sanctioned which provided water during rainy season when the system carried 25% extra supplies. Unfortunately this privilege would cease in the post-Thein Dam stage, as no extra supplies will be carried by the UBDC System then. This is bound to increase the hardship of the “Khara Majha” area. Remodelling scheme sanctioned Large infrastructure changes, termed “remodelling” of the system are planned. The list of such changes is very long. These changes will result in an increase of discharge in the UBDC Main Line by 500 cusecs, i.e. the capacity of the channel to go up to 9000 cusecs from the present capacity of 8500 cusecs. This increase amounts to hardly 4.65% and would transfer 3.06 MAF of the Ravi water for irrigation of the UBDC tract, instead of 2.53 MAF as being done at present. The increase will amount to an additional supply of 0.53 MAF of water. These measures will enhance water availability to some 12.5 lakh acres of the UBDC tract and convert about 21.5 lakh acres of non-perennial area of the UBDC command into perennially irrigated area. The “intensity of irrigation” would go up to 87% from the present 65%. Will these measures correct the water balance of the UBDC tract? The answer is “NO”, reason being that the “intensity of irrigation considered (87%) while planning the scheme is too low.” Farmers grow two crops in a year which amounts to an irrigation intensity of 200%. Providing that the canal water will help irrigation of 87% land, that too for one crop only, the load on the ground water utilisation remains unaltered as addition of 0.53 MAF waters will fail to make any ‘dent’ in the water-table decline situation. The farmers of the UBDC would like to know that out of 1.5 MAF which will be saved on account of building of the Thein Dam, where the balance about 0.97 MAF will be taken. Out of 6.4 MAF Ravi waters in an average year flow, the UBDC tract has been promised to be supplied 3.06 MAF waters and 3.34 MAF are to be used elsewhere. It is unfair, as about 1.75 lakh acres of area located within the UBDC command area and classified as ‘commandable’ will be without any irrigation. The area so left out forms 13% of the CCA (culturable commanded area) of 5.43 lakh acres. The objective of increased water allowances sanctioned for the UBDC tract which is to supply increased volume of canal water to the extent of 28.6% compared to the previously supplied volume to all command areas, except in the case of the Khara Majha, where the increase would amount to about 57% over the previously sanctioned water, will not be fulfilled. We should not spend all the available resources in increasing the “capacity” of the channel to deliver more water, but to evolve new operational mode to deliver extra water at least to the extent of 1.5 MAF in the UBDC command area.
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Industry needs to
interact with govt REVELATION of lower G.D.P. growth has given a wake-up call to the Prime Minister. He has called another round of meeting with captains of industry. Bureaucracy is being made the scapegoat for the economic mess although reasons tie somewhere else. Incidentally two major economic events have taken place which tried to bring the reality out. It is quite an unfortunate situation that only Centre is concerned with economic slowdown with particular reference to industrial slide-down. In real terms state governments share major responsibility for this debacle. We must be thankful to the World Bank which has taken initiative to sponsor first ever “States Reform Forum”. The second phase of reforms has main focus on states that are the real speed brakers or accelerators (a rarity) for the industry in particular. The states are succumbing to populist politics and their combined fiscal deficit has gone upto 2.3 per cent of G.D.P. against 1 per cent a year earlier. Prime Minister calls
the industry for discussion simply by knowing about falling industrial growth. It is in stark contrast to what is happening in Punjab or may be elsewhere. The industry goes on crying on one issue or the other but nobody in the government has ears to listen. Request for meeting remain unattended. If by some chance meeting is granted the results are of no consequence. The State Advisory Board’s meeting is a rarity whereas it should be a routine. Most of Punjab entrepreneurs’ energy is dissipated in sorting out matters with officials of more than two dozen departments. The industry has to deal intimately with the PSEB whose regulatory regime is becoming heavy on consumers. Cash-strapped board tries all possible means to garner revenue. Lower rung official entrap consumers arbitrarily with no instant grievance redressal mechanism. Many instances exist which show how industry can destabilise. Similarly businessmen have to interact very frequently with the sales tax department. The cash-strapped state government is tightening and widening the regulatory frame work. Goods are delayed, exports suffer and entrepreneurs’ energy is sapped in avoidable trips. The PSIEC which allotted plots to the industry in Focal Point has its own share to disturb the entrepreneur. Even after making plots freehold regulatory string is still in place. This is beyond comprehension. A list of departments interfering in business affairs is long. There is yet an anomalous situation. Top brass of every department is responsive to reason and interaction with them is rare. Cutting edge of all departments is the real cause of trouble for the business community. Long and short of this unfortunate situation is that networking between the government and business community is almost non-existant. Frequent interaction with the government is the only solution to remedy the situation. All departments should have instant grievance redressal mechanism. |
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— From Ashok Kumar in Mumbai IT: boys will be separated from men RECENTLY, I was invited to a seminar where the thrust was on the road ahead for IT companies and dot coms especially in India. My personal take, notwithstanding the obituary columns being written about dot coms, is that, those with a sustainable revenue model would not only survive but thrive too. In the meanwhile let me share the observations I jotted down at the seminar, whilst the other speakers communicated their thoughts. Companies like Infosys and Satyam to name a few are the ones that do the work for the pretty sites/sights you click on and browse. They charge good money for this, they provide the skills and the talent, which translate the idea into reality. Most notably they make profits. Nice big ones with comfortable margins to boot. As the market for dot coms grows, so will their business. They are badly needed. Moreover their own growth, experience and evolution empowers them with skills and innovations which people can only come to them for. Unlike ideas, they can have copyrights on their technologies. More importantly they have a list of customers, they can keep taking on new ones as long as they can service them properly. This also means they grow and expand as more sites are built and changed... rates of growth may waver, but they exist. The prospects of the Indian software industry appear strong with increasing demand for Indian software professionals from Europe and Japan. The USA has, of course, taken a lead with respect to increasingly getting its software work done in India. The software sector will continue to grow on an average of 45-50%. However, companies which have implemented an effective derisking model will be better rewarded compared to those which depend too much on a particular division (say Y2K) or geographical region. Exports are estimated to grow by at least 50 per cent
YOY driven by e-commerce, Euro conversion, ERP, IT enabled services etc. — growth rates which are unlikely to be matched by any other sector of the economy. IT enabled services are expected to be the next major demand drivers in the sector. Nasscom expects the segment to notch up revenues of nearly Rs 810 billion by the year 2008. In the years to come, e-commerce especially business-to-business transactions will grow rapidly — more than doubling each year. Venture capital funding is expected to help the industry move forward in the real sense. Product development no doubt increases R&D and marketing costs but the returns as well as the future growth prospects are immense in this field. There has been a lot of debate on the issue of sustainability of margins. Even though manpower costs are increasing pretty fast, with increasing competition most of the companies are trying to neutralise this by moving up the value chain. Margins are encountering some fall but they are likely to stabilise as the companies improve their offerings in terms of the latest technology areas. Overall thus, there is adequate space for both software services companies as well as dot coms to not only survive but also thrive side by side, but of course, the boys will be separated from the men. In the Indian context it will be the front-runners from the IT segment like Infosys, Wipro, HCL Tech, Mastek and Hughes Software that will continue to rule the roost. |
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Ind Swift in pact with global firms Eight top international pharma companies covering Central Asia, Europe and Latin America will source their requirements of four major products — Clarithromycin, Fexofenadine, Roxithromycin and Candesartan exclusively from Ind Swift Laboratories Limited (ISLL), a pharma company of North India. Mr V.K. Mehta, Joint Managing Director, Ind Swift Labs, said that top officials of these eight global companies have already visited the plant and have shown interest in the product range of Ind Swift Labs and the company is planning to launch 36 new molecules in the next four years. The R&D of the company has 12 products in the pipeline. Ind Swift Labs had entered into sales agreement with pharma companies in 30 countries for supply of its drugs — Clarithromycin and Roxithromycin, once in the drugs go off-patent there. The domestic clientele of its products includes major pharmaceutical companies like Cipla, Cadila, Wockhardt, Sun, Glenmark, Novartis, E.Merck, Lupin etc. Eveready Industries India Limited today announced its decision to sell Glenburg Tea Estate in Darjeeling as a part of its strategy to come out of the tea business completely. The company said it would sell the estate to DLX Limited of Calcutta at a price of Rs 215 lakh. Today’s development comes two days after it announced sale of two other estates in Dooars region of Jalpaiguri district, also to two city-based companies, at a price of Rs 31 crore. The Rs 5170-crore mega Haldia Petrochemicals Limited has created a new
safety record by crossing a million man hours of working ‘without a single lost time injury’. Claiming that the achievement was ‘very creditable’ and significant since the plant had been commissioned only recently, a company release here today said. |
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by Praful R. Desai. Terminus quo Q: Would the ‘terminus quo’ for exemption be the date of granting exemption or the date of completion of the construction? Ans: In M. Sreeamulu v Mrs Tahera Yousuf Kadri [2000(2) RCJ 196], the AP High Court expressed the view thus: It emerges that exemption from the application of the Act to the buildings for a period of 10 years from the date on which their construction was granted on 26.10.83. Thus, implicitly it is discernible that all new buildings are exempted from the operation of the Act, irrespective of the fact that the exemption was granted on 26.10.83. Exemption operates retrospectively and prospectively. Thus, terminus quo for exemption of the buildings from the operation of the Act would not be the date of granting the exemption, but is the date on which their construction is completed. In the considered view of the HC granting of exemption on 26.10.83 from the operation of the Act would mean that all buildings constructed after the enactment of 1960 Act for a period of 10 years would be exempted from the operation of the Act. The answer to the question, whether 10 years period should be calculated with reference to the crucial date 26.10.83 in the language employed from G.O. Ms. No. 636 or from the date of completion of building, in view of the observations made in the earlier part of the judgement, the HC was of the considered view: (i) That exemption from the operation of the Act has been granted to all newly constructed buildings irrespective to the date of construction treating them as a class of new buildings; (ii) The exemption from the operation of the Act would be 10 years. (iii) The exemption would commence from the date of completion of the building. Thus, the HC took the view that the statutory period of exemption from the operation of the Act is 10 years and terminus quo for commencement of the exemption for the new building is 10 years from the date on which the construction was completed. Reference thus was answered by the HC. |
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by Pushpa Girimaji Hallmarking of gold set to make a mark WITH more than 150 jewellers opting for third party certification from the Bureau of Indian standards on the gold jewellery sold by them, hallmarking as a method of authentication of gold quality is all set to make a mark in India. Hallmarking is basically a system of analysing or assaying of precious metals like gold in a laboratory to ascertain its purity or fineness and certifying it. And since the certification is done not by the jeweller selling the jewellery but by an independent agency, it provides a third party guarantee on quality. But more important, unlike certain other methods of checking the caratage, which only gives you the purity on the surface to a depth of 25 microns or so, assaying is a more authentic method of testing the purity of gold. Because here a piece or sample of gold from the jewellery is taken, weighed and refined to its finest purity and then compared with its original weight to determine its fineness. In April this year, BIS introduced hallmarking on a voluntary basis. As per the scheme, a hallmarked or certified jewellery will have to carry five markings: the BIS logo, the fineness number, the mark of the assaying and hallmarking centre, year of marking and the jeweller’s mark. Since these are very minute, a jeweller is supposed to provide a magnifying glass to help the customer
identify them. As purity or fineness is marked in so many parts of gold per 1000 of jewellery, the jewellers are also expected to display a board specifying their equivalent in carats since consumers are more familiar with it. For example, fineness expressed as 958 on the jewellery corresponds to 23 carat, fineness of 916 corresponds to 22 carat, etc. Gold, which is highly ductile, is soft and therefore mixed with small quantities of one or two other metals and hardened to make jewellery. However, this lowers the intrinsic value of gold. Since the purity or fineness of gold is expressed in carats or parts per 24, the quantity of other metals used determines its caratage. A 22-carat gold for example, contains 22 parts of gold and 2 parts of other metal or metals. Or it can also be expressed as 916 parts of gold per 1000 of jewellery, as is done in Hallmarking. Jewellers desirous of hallmarking their gold jewellery will have to first become ‘BIS certified jewellers’. BIS will examine their quality management system before issuing such a certificate. Only such BIS certified jewellers can get their jewellery assayed and hallmarked by any of the BIS recognised assaying and hallmarking centres. BIS gives recongnition to these centres after ensuring that they have adequate testing facilities, trained and competent manpower, and follow international norms for sampling and testing of gold besides a competent and transparent system of documentation. BIS has formulated specific standards for fineness and marking of gold and gold jewellery, besides method for assaying of gold and gold jewellery. Once a jeweller sends a piece of jewellery to an assaying centre, it has to be hallmarked and returned within 48 hours of receiving it. According to the BIS, as on November 15, 149 jewellers had taken the BIS certification and the number was growing everyday. The largest number of licensees are in the Southern part of the country. The response from jewellers in the central and western regions has also been good. BIS officials attribute the relatively small number of licensees in the eastern and the
northern parts largely to the fact that there is no recognised assaying and hallmarking centre in these parts as yet. Of the seven assaying and hallmarking centres recognised by BIS so far, two are in Delhi. There is one each in Mumbai, Hyderabad, Ahmedabad, Cochin and
Coimbatore. |
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Hind Motors Daewoo Elect Shaw Wallace |
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SBI donation Mr Dhumal also launched “SBI Card”, for the first time in Himachal. Mr A.K. Goswami, Chief Secretary, H.P. Government presided over the function.
Santhigiri pharma ICICI Bank WagonR rally SBP loan GS Auto |
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