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Tuesday,
February 18, 2003, Chandigarh, India  
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Experts
differ on Kelkar report Cabinet to
take up SEZ Bill soon Haryana to
promote food processing TRAI to
examine Reliance’s reply |
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Apollo
plan to acquire Modi Rubber put off Markfed
signs MoU with Inhambane Reduce
transaction cost of industry Gold
plunges by Rs 125
Kinley
meets EU norms: Coca-Cola
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Experts differ on Kelkar report
New Delhi, February 17 The differences came to the fore, particularly between eminent tax expert Subhash Lakhotia and economist Surjit S. Bhalla at an Assocham-organised seminar on the Budget. While Mr Lakhotia said people should be encouraged to save more, Mr Bhalla pointed out that it was mainly corporates which were investing in the schemes under tax rebates and not pumping money in the productive assets as rates of borrowing were still quite substantial. Mr Bhalla contested the popular notion that small savers contribute major chunk of the saving schemes, saying the bulk of Rs 1,00,000 crore mopped up through them come from the corporate sector. ''Since the corporate sector gets the juicy government secured returns, they are not investing in the productive assets,'' he added. With real interest rates of borrowing still standing at 9 per cent and more, corporates are not inclined to invest in the productive assets. ''It is mainly rates for government borrowing that have come down and those for corporate borrowing, in fact, rose by 500 basis points during the last decade,'' he said. The economist said instead corporates should ask for the lowering of interest rates on borrowing. However, Mr Lakhotia expressed disagreement with Mr Bhalla's views, saying corporates in fact did not have money to pool their resources in government-secured schemes. Many businessmen had left their construction plans mid-way since the Kelkar Committee had recommended doing away with tax rebates on the housing schemes. ''They have adopted a wait and watch policy till the Budget is presented,'' he said. The committee's recommendation of doing away with income tax relief to the exporting sector would also have a dampening effect on the sector, which still lagged way behind the target of cornering 1 per cent of the total global trade. Mr Bhalla's suggestion for the soft rate regime would further make the lives of the vulnerable section, particularly senior citizens, more miserable. Their income had gone down by 40 per cent during the last three years by the continuous decline in the interest rates, he pointed out. Business journalist T.C.A. Srinivasa Raghvan expressed concern over the uncertain business outlook and suggested that Finance Minister Jaswant Singh would have to create an environment conducive for the industry to borrow. He sought to explode the myth that the reduction in the corporate tax rate from 36.75 per cent to 30 per cent as recommended by the Kelkar Committee would be a bonanza for the industry. ''On the contrary, the decline in depreciation claims from 25 per cent to 15 per cent will actually increase the tax incidence to 40 per cent and up to 65 per cent in some cases,'' he said.
UNI
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Cabinet to take up SEZ Bill soon
New Delhi, February 17 Official sources said here that a Cabinet note on the Special Economic Zones Bill, 2003 had been prepared and circulated to the ministries. The issue was expected to come up for consideration of the Cabinet soon. While the Government has already in-principle approved the setting up of 17 SEZs in the country, the law will seek to lay down rules on all matters related to these zones, sources said adding that the law was expected to be taken up during the current Budget session of Parliament and be effected by May this year. The draft law, provides for the establishment of an SEZ authority and seeks to exempt these zones from central legislations namely - the Indian Stamp Act, 1899, the Insurance Act, 1938, the Banking Regulation Act, 1949 and the Sick Industries Act, 1985. The law also envisages granting these zones, deemed to be foreign territory for the purpose of trade operations, exemptions from customs and excise duty as also income tax exmptions for a block of 10 years in the first 15 years of operation. As per the draft Bill, these zones would be exempted from 100 per cent income tax for five years in a block of 10 years of operations and 50 per cent of the peak rate of income tax thereafter. As per the draft law, sale from Domestic Tariff Area (DTA) to SEZ units and between SEZ units shall be treated as exports under the Income Tax Act. The act also provides for the setting up of an SEZ authority to be located at each of these zones including Kandla, Santa Cruz, Chennai, Noida, Falta, Cochin and Visakhapatnam. "The authority shall furnish to the Central Government at such time and in such form and manner as may be prescribed or as the Central Government may direct such returns and statements and such particulars in regard to the development, operation and maintenance of SEZs and units in SEZs as the government may from time to time require," the drafts states. The draft law also provides for constitution of designated special courts or nomination of a single agency by the Government to investigate and take action in respect of prescribed economic offences committed in SEZs.
PTI
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Haryana to promote food processing Chandigarh, February 17 The government will make efforts to attract foreign capital investment in the food processing by providing required infrastructure. A team headed by the state Chief Secretary will soon study the policies of the neighbouring state before finalising the policy in the Budget. These views were expressed by Mr Sampat Singh, Finance Minister, Haryana, participating at a meeting organised by the PHDCCI here today. The meeting was organised as part of the pre-Budget discussions with the state Finance Minister. He said, ‘‘since there is a scope in the food and fruit processing sector, the state government will promote this sector by taking required steps. Units will be provided all required infrastructure and other incentives.’’ Referring to the demand of rice millers to abolish a 2 per cent market fee and a 2 per cent rural development fund cess, he said the committee would look into the matter and a decision in this regard would be soon taken. He also assured the industry that the state government was committed to introduce VAT from April 1 but it would depend on the fact whether the Central Government would be able to pass an Act in this regard before March 31. Earlier, Mr Sunil Sabarwal, Co-Chairman, Haryana State Committee, PHDCCI, urged the Finance Minister to introduce pro-industrial policies in the budget, apart from taking steps to check the increasing fiscal deficit. He claimed that the state government could swap high interest loans with the lower interest loans from the market. Mr C.B. Goyal, President, Panchkula Chamber of Commerce and Industry, urged him to review the professional tax imposed on industrial units in the Panchkula and abolish the fire tax. Appreciating the state government for slashing the local area development tax, Mr Sabarwal said, ‘‘the state government should also cut down stamp duty on residential and non-residential properties from 15.5 per cent to 5-7 per cent.’’ Mr Sampat Singh assured the chamber that all of their suggestions would taken into consideration while finalising the Budget, likely to be presented by mid March.
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TRAI to examine Reliance’s reply
New Delhi, February 17 “We have received reply from Reliance Infocomm about their roaming facility on WLL phones and we are examining it,” TRAI Counsel Meet Malhotra told TDSAT. Meanwhile, TDSAT refused to give an intermin order and adjourned the hearing for February 24. Meanwhile the 7-member group constituted by Communication and IT Minister Arun Shourie, comprising members from Basic, Cellular and PSUs are slated to meet late today to deliberate on various issues concerning WLL and cellular services in the country. Cellular Operators Association of India (COAI) had last week approached TDSAT alleging basic telecom operators like Tata Teleservices and Reliance Infocomm were flouting the license conditions with regard to WLL based limited mobile services like roaming facility by Reliance Infocomm. While the allegation against Tata Teleservices that they were offering WLL services beyond their licensed area, the company had assured the TDSAT that “their services would be strictly limited to local call area known as Short Distance Charging Area (SDCA).”
PTI
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Airtel offers free incoming calls
Chandigarh, February 17 The facility would be available in its post-paid and pre-paid plans without any additional charge. The calls from landline phones, including BSNL and other private operators, WLL phones, including of Reliance Infocomm and Connect would be free, said Mr Vinod Sawny, CEO, Airtel Northern Region here today. Mr Sawny also announced a new plan, “Dream 3333” under which with one time rental of Rs 3,333 for five months, a subscriber would get 333 minutes of outgoing calls free besides the free SMS, CLI and rental-free National and Regional roaming.
TNS
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Apollo plan to acquire Modi Rubber put off
New Delhi, February 17 The takeover was understood to have been delayed due to differences among the two brothers — B.K. Modi and V.K. Modi, sources close to the developments told PTI. Apollo Tyres Vice President Sunam Sarkar said, “talks are on between the parties but we have not fixed any definite time table”. Despite repeated attempts, B.K. Modi could not be contacted for his comments. Apollo has already completed a due-diligence of Modi Rubber’s tyre assets through consulting firm, Enam Consultants. As per available data, the FIs hold the majority 49 per cent stake in Modi Rubber while the promoters have nearly 23 per cent shareholding. Apollo CMD Onkar Singh Kanwar had recently said the acquisition of Modi Rubber was significant for his company as it was likely to increase its turnover by about Rs 1,000 crore to Rs 3,000 crore in the next fiscal (2003-04). The acquisition was likely to be funded from the firms cash reserve which stand at over Rs 370 crore.
PTI
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Markfed signs MoU with Inhambane Chandigarh, February 17 A team of delegates from Inhambane had visited India and has shown keen business interest to explore new venues for joint cooperation on food processing, small scale industries, agricultural production, irrigation and manpower training. The possibilities for the supply of agro-processing products to Inhambane and export to South African and US markets through the Indian market were also considered. The delegates are planning to visit various agro based and other industries with an aim to set up a joint venture company in Inhambane as well as India. Mr Channy said that the experts and scientists of Punjab, especially in the field of agriculture could visit Mozambique to see for themselves the problems being faced in the development of these sectors. Also, the experts of these sectors in Mozambique could visit Punjab.
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Reduce transaction cost of industry Incentives for the industry in Himachal Pradesh & Uttaranchal have caused a lot of stirring in official and unofficial circles of Punjab. J&K already enjoys good package. The Chief Minister of Punjab has written to the Centre against this package, as it will destabilise Punjab’s industrial infrastructure. Punjab’s infrastructure is so strong that no industry up to medium scale can shift as a rule. Strong incentives in these hilly areas had been in place earlier also. Despite that the sickness is widespread. If we closely analyse the industrial scenario in Punjab the emerging picture is different. It is the push of the Punjab Government rather than the pull of incentives which gives signals of shift. The government has ushered in a rigorous regulatory regime, which has vitiated the working environs of the industry. Punjab’s industrial economy is dominated by the small-scale sector. Banks are charging much higher rate of interest. With free market economy model in vogue the industry here is suffering from the ever increasing freight component. Principle of freight equalisation has to be put in place to give much relief to Punjab. Earlier this was available on iron and steel produced and was withdrawn in 1992. Apart from these crucial factors the government is making the working of the industry difficult through it’s regulatory regime. This is particularly so in the Sales Tax Department and in the field of power. For six months, businessmen had to struggle against the draconian Exim Form. The most unfortunate part is that the senior persons in the government have stated that it is a part of VAT. These is absolutely no ling whatsoever between the two and an attempt to put off the matter has given a wrong signal. There are enough rules and procedures, which can check sales tax evasions provided there is a will. Every new incumbent heading the Sales Tax Department imposes his own will while continuing with the old procedures simultaneously. The burden of this over regulatory regime is unbearable. Moreover, there is no stability of policy. Evasions can be checked through better management techniques. To counter the effect of incentives in the neighboring states steps are needed which can reduce the transaction cost of the industry. The small and medium sectors face a lot of problems from excise & customs departments. The Punjab Government should constitute of coordinating committee of senior officers to take up these matters with the Centre on behalf of the industry.
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Gold plunges by Rs 125
New Delhi, February 17 This had been the third major set-back in the yellow metal prices since last week, dwindling to touch over the six weeks level from where it started an upsurge to touch record high levels. The precious metal had suffered two major losses last week of Rs 100 and Rs 140 on Thursday and Friday. Rising to a record high of Rs 6,010 per 10 gram recently along with a
similar trend in international markets at $ 387 an ounce attracted selling by stockists.
PTI
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Recovery agents Divi’s Lab BoB MF Union Bank Essar Projects |
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