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Gates opened fully for FDI in construction
Dividend distribution tax may be cut
NTPC sanctions 2000 MW project to dubious Russian firm
Cognizant plans Rs 130-crore facility
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Big jump in number of flights to France
Videocon unveils new range
Special TV programmes on Budget
Approval of 32 non-serious units cancelled
Bajaj Allianz plan for working women
Woes of HP industries
Food plaza opened at Howrah station
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Gates opened fully for FDI in construction
New Delhi, February 24 Union Minister of Commerce and Industry Kamal Nath said the government has decided to allow FDI up to 100 per cent under the automatic route in townships, housing, built-up infrastructure and construction-development projects, “in order to catalyse investment in a vital infrastructure sector of the economy”. The construction development projects would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, he said. It is expected that allowing investment on the automatic route in the construction and development sector would have a multiplier effect on the economy by boosting construction activities of all types, the minister said. “This would mean that being an employment-intensive sector, it would create employment not only for skilled and unskilled labourers, technicians and artisans but also for engineers, architects and designers”, he said. Besides, it would lead to spin-off benefits to the manufacturing sector, particularly construction material industries like cement, steel and brick making. Moreover, “it would ensure rapid increase in built-up infrastructure as well as improving the infrastructure”. To avoid speculation in real estate by foreign investors, the sale of undeveloped land has been prohibited. Minimum area to be developed under each project would be: (i) In case of development of serviced housing plots, a minimum land area of 10 hectares (ii) In case of construction-development projects, a minimum built-up area of 50,000 sq. mts; and (iii) in case of a combination project, any one of the above two conditions would suffice The investment would further be subject to the following conditions: (i) Minimum capitalisation of $10 million for wholly-owned subsidiaries and $ 5 million for joint ventures with Indian partners. The funds would have to be brought in within six months of commencement of business of the company. (ii) Original investment cannot be repatriated before a period of three years from completion of minimum capitalisation. However, the investor may be permitted to exit earlier with prior approval of the government through the Foreign Investment Promotion Board (FIPB). The investor would not be permitted to sell undeveloped plots. “Undeveloped plots” will mean where roads, water supply, street lighting, drainage, sewerage, and other conveniences, have not been made available. It will be necessary that the investor provides this infrastructure and obtains the completion certificate from the local body/service agency concerned before he would be allowed to dispose of the plots. In addition, the project shall conform to the norms and standards, including land use requirements and provision of community amenities and common facilities, as laid down in the applicable building control regulations, byelaws, rules, and other regulations of the state government/ municipal/local body concerned. “This essentially means that now it is state governments and municipal bodies which would be approving such projects, not the Central Government. It also means that in terms of treatment, FDI projects would be accorded national treatment on a par with local developers”, an official statement said. “FDI in this sector will, therefore, not displace or replace the local industry but rather help it to grow at a rapid pace and generate greater economic activity”, Mr Nath said. FDI up to 100 per cent, but with prior government approval already exists for development of integrated townships, including housing, commercial premises, hotels, resorts etc with a minimum area criterion of 100 acres and 2000 dwelling units. Now, the norms have been modified to allow FDI under the automatic route. Further, the requirement of minimum 100 acres and 2000 dwelling units is being changed to minimum 10 hectares (25 acres) for serviced housing plots or minimum built-up area of 50,000 sq. mt. for the construction of development projects, the statement said.
Industry happy
The domestic industry welcomed the decision, saying that it would create employment opportunities for both skilled and unskilled labours. “Civil engineers, architects and designers will be among the professionals that will gain a great deal by throwing open construction sector for foreign direct investors”, president of Assocham M. K. Sanghi said.
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Dividend distribution tax may be cut
New Delhi, February 24 Under the existing rules of dividend distribution tax, which was reintroduced in 2003, a company or mutual fund declaring dividend has to pay tax at 12.5 per cent on the profit distributed to the shareholder as per Section 115 (O)/115® Sub-Section (1). However, the government is now learnt to be veering to the view that taxation of dividend amounts to double taxation whether in the hands of the recipient or as a tax on companies that are distributing profits as dividends. Consequently, a strong argument is now gaining ground that this tax should be reduced, if not completely withdrawn (as demanded by the domestic industry). Sources said the government is also considering to relax the existing conditions where dividend distribution tax is imposed only on the holding company and not for “group companies”. That apart, Section 115-O of the Income Tax Act, 1961 levies distribution tax on dividend distributed by Indian companies at the rate of 12.5 per cent (plus surcharge) whereby the subsidiaries of US multinational corporations that declare tax in India also have to pay this distribution tax. However, the existing double taxation avoidance agreement with the USA specifying the coverage of taxes, does not take into account the distribution tax. Moreover, the government is also taking a “hard look” at the existing minimum alternate tax (MAT). Under the existing norms, MAT is payable at 7.5 per cent on book profits and is also applied on infrastructure companies, which are otherwise exempt from payment of tax for a period of 10 years. The provisions of MAT were earlier withdrawn and were reintroduced in Finance Act 2001. Experts were of the opinion that the imposition of MAT has affected the investment plans of companies due to reduction in the availability of resources, due to pay of MAT. MAT has been a topic of intense discussion amongst corporate taxpayers as well as tax authorities. Experts pointed out that a key logic behind introduction of MAT was that hugely profitable companies paying substantial dividends must also contribute something by way
of taxes. However, this logic may not necessarily hold true in many cases as many medium-sized companies do not pay dividend instead, retain the earnings in the
company for re-investment.
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NTPC sanctions 2000 MW project to dubious
New Delhi, February 24 After the controversy of the National Hydropower Corporation (NHPC) granting a plant and machinery contract to a French company worth over Rs 1600 crore, another order by the National Thermal Power Corporation (NTPC) is likely to embarrass the government. The NTPC has reportedly granted a project for plant and machinery for 2000 MW plant (660MW X 3) to a “dubious” Russian Company-Technopromexport, which had failed to meet pre-qualification criteria. The project is estimated to cost Rs 8693 crore. Prime Minister Manmohan Singh has reportedly asked Power Secretary R V Shahi and NHPC Chairman Yogendra Prasad to enquire into the NHPC order to the M/s Alstom of France on the basis of the report published in The Tribune. The order was given despite objections by a Union Cabinet Minister and adverse remarks by the Solicitor-General of India. According to information available, the NTPC Board yesterday cleared the project to Technopromexport for the Steam Generator (Boiler) for the power plant to be set up in Barh, the constituency of JD (U) leader Nitish Kumar in Bihar. Public sector major BHEL and M/s Doosan of Korea were the other two bidders for supplying the plant machinery. However, the project was granted to the “dubious” Russian company, despite the fact that its bid was rejected outright last year due to “ outdated and inefficient” technology and the project was sanctioned to M/s Doosan, Korea. Interestingly, the Russian firm was the lowest bidder in that project as well. Earlier, Union Heavy Industries Minister Santosh Mohan Dev, who has been pushing the bid of BHEL in the power project, had written a letter regarding NHPC case to Union Power Minister P M Sayeed “not to proceed ahead in the matter (award of contract) till Ministry of Power was satisfied on the various concerns expressed by the bidders regarding the evaluation.” Both issues are likely to be raised in Parliament next week. It is learnt that Left Parties and the Opposition have asked Power Minister P. M Syeed and Prime Minister Manmohan Singh to ensure transparency in granting orders for power projects worth thousands of crores. The sources alleged that the NTPC and NHPC, which are the star public sector power companies are granting orders to the private players due to “underhand dealings.” BHEL, engineering giant in public sector has been ignored, said trade union leaders, “ as it could not pay money to the officials.” “NTPC is likely to suffer financial losses worth crores, as the selected bidder may not be able to supply machinery and the project may be delayed. Technopromptexport-Russia has not received any contract during the past three years anywhere in the world and have no project management capabilities of handling super critical technology of 2000 MW,” said an official. The sources alleged that NTPC Chairman C.P. Jain has been pressurised by vested interests to select Russian firm based on distorted facts including inflated inefficient criteria, which can be achieved. They claimed that attempts are being made to release the contract and advance payment hurriedly to avoid any opposition. The BHEL and M/s Doosan have reportedly urged the NTPC management and Power Ministry to disqualify the Russian firm, but they have not received any response so far.
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Cognizant plans Rs 130-crore facility
Bangalore, February
24 CTS President and CEO Lakshmi Narayanan said here today that the company has also acquired 10 acres in Electronic City near here, to meet further expansion needs. The company employs about 1,000 people in Bangalore, and this figure is set to go up by another 1,000 before the year-end, CTS head of Bangalore operations Kalyan Mohan stated.
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Big jump in number of flights to France
New Delhi, February 24 After virtually opening up the skies with the UK and the USA, India has now substantially raised the number of flights to France from 14 to 35 each week. The two governments signed an agreement to this effect yesterday. A high-level delegation from the Ministry of Civil Aviation led by Civil Aviation Secretary Ajai Prasad was in Paris for the purpose. The new agreement also provides for multiple designations of airlines, thus paving the way for Indian private carriers to fly to destinations in France. A Press note issued by the Civil Aviation Ministry here said the French Government had also allowed the ‘Fifth Freedom’ traffic rights to Indian carriers, allowing them to operate to places beyond France. This would now enable Indian carriers to operate to New York and four more points in the USA as also to Toronto and Montreal in Canada after a stopover in France. India, on its part, designated Bangalore and Hyderabad as additional points of call for French airlines, besides Delhi, Kolkata, Mumbai and Chennai. The French Government also agreed to assist Air-India to get additional landing slots and terminals at Charles de Gaulle airport in Paris. As a result of the signing of the new bilateral with France, the ministry here is expected to allot new routes to private airlines and also raise the number of flights for the public sector international airlines. The Indian side besides Mr Prasad, comprised of Director-General Civil Aviation Satinder Singh, Joint Secretary Raghu Menon and Air-India CMD V. Thulasidas. In the past few months, the government has signed agreements with the USA, virtually opening up the skies and with the UK by more than doubling the number of flights between them.
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Videocon unveils new range
Chandigarh, February 24 With a turnover of Rs 4,500 crore of which 70 per cent comes from consumer goods, Mr Mehta said the company was looking at a growth of 60 per cent in its market share and an increase of 40 per cent in its turnover in the fiscal year of 2005-06. He said Plasma TV of 42” was priced at Rs 1.5 lakh and the company was offering various schemes as an introductory offer. Speaking about the expansion plans, Mr Mehta added that they had acquired a picture tube plan in Italy. “We have opened a plant in Uttaranchal for airconditioners in collaboration with Toshiba. Also, we have set aside Rs 150 crore for promotional campaigns, of which 5 per cent would go to the cricket publicity series,” he said.
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Special TV programmes on Budget
New Delhi, February 24 Doordarshan will telecast live special programmes on the Economic Survey, Rail Budget and Union Budget on DD News Channel. On February 25, programmes relating to the Economic Survey will be telecast from 1 pm to 2pm, 8pm to 8.30 pm and 10 pm to 10.30 pm. The programmes on the Rail Budget on February 26 will be telecast from 11 am to 2 pm, 5.30 pm to 6.30pm, 8 pm to 8.30pm, and 10 pm to 10.30 pm. The telecasts on February 28 relating to the Union Budget will be from 9.30 am to 2 pm, 3.10 pm to8 pm, and 9 pm to11 pm. Noted Economists like Saumitra Chaudhary and Paranjoy Guha Thakurtha will be the expert anchors. Experts from business and industry would discuss and assess various proposals of the Union Budget and political views of different parties.
— UNI
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Approval of 32 non-serious units cancelled
Solan, February 24 The step was taken when 56 industrial units failed to initiate production, even after a lapse of more than a year, were served notices to explain their position. Highly placed officials in the Industries Department said while 25 industrial units responded to the notices and promised to take the required effective steps, the remaining 32 showed no seriousness. The approvals of these non-serious entrepreneurs were then cancelled. The presence of such entrepreneurs had become a cause of concern for the Power Department also as they had unduly blocked power in
various industrial areas of the state. Even as the government claims to have attracted investment to the tune of Rs 8,689 crore in the state after the announcement of Central industrial package, only 1,538 units had initiated commercial production till now. This included 33 medium and large-scale units and 1,505 small scale units. As many as 4,578 industrial units had sought the approval from the government, but investment to the tune of Rs 205 crore only had been made against the projected investment of Rs 8,689 crore in the first two years of the
incentive period. Not only this, employment was generated for a mere 10,458 persons till now against the projected employment generation of 1,56,760. The officials of the Industries Department, however, were optimistic of the figures going high as they claimed that more than 75 per
cent industries had taken the effective steps to start production.
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Bajaj Allianz plan for working women Chandigarh, February 24 With most of the new general insurers following the strategy of market penetration by accepting the co-insurance share in the case of corporate accounts, Mr Ghosh said the company would like to lead the insurers by issuing policies in the shortest possible time with minimum formalities. On the future plans, Mr Ghosh said they would soon launch a special insurance product for the working women. Another product in the pipeline is in the health sector, which will be different from mediclaim and will cover critical illness, hospital plan etc. The Zonal Manager, Mr M. S. Sidhu, said of the total business, Rs 90 crore had come from the northern region and they would strive to take it to Rs 150 crore by the end of this fiscal. He said that they planned to further strengthen their presence in Punjab and Haryana and would double the number of centres from 60 to 120. Meanwhile, the company is the only private general insurer to have tied up with bancassurance partners to sell their insurance products.
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Woes of HP industries
Kumarhatti, February 24 The fee structure of the PCB was very high, especially for small-scale units which do not have polluting process. The small, medium and large sector, which were entirely non-polluting and were not listed in the delegation list, have to obtain consent from Shimla office instead from the field level. A classification list approved by the Ministry of Environment already exists under which various kinds of industrial activities have been classified as red, orange, and green based on the level of pollution rendered by the units. The industrialists plead that the PCB should adopt the same list and accordingly appropriate delegation of powers should be approved. According to industrialists, the units falling under green category should be given consent at the local level and the units falling under the orange category should be cleared at the XEN level. They alleged that the stamp duty charges in the state were one of the highest in the country. They urged that the peak load restriction should be withdrawn as this would not only act as an incentive to the investors, but it would also reduce air pollution in the state. They alleged that under the norms of the HPSEB and PCB, the effluent treatment plants must run even during peak load hours, but due to peak load restrictions imposed by the HPSEB, the usage of electricity during evening peak load hours attract huge penalties, including disconnection of power connection for continued violation. In either case, it was the industry which was caught between the two departments without any fault of theirs, they opined.
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Food plaza opened at Howrah station
Kolkata, February 24 Inaugurating the plaza, Eastern Railway General Manager Shyam Kumar hoped the food plaza would fulfil the needs of the train passengers. This was the first time that such luxurious plaza was opened in the Eastern Railway jurisdiction. The total number of the Railways’ commercial food plazas in the country has gone up to 30 since the novel method was introduced about three years back.
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