New Delhi, March 7
The government is likely to put an annual turnover or number of employees threshold limit, to provide relief to the small-scale industries under the proposed Fringe Benefit Tax (FBT), in the Finance Bill, 2005.

The government has invited suggestions from industrial chambers and professional bodies to “finetune the measurement criteria for the indirect income benefits provided by the employers to the employees to impose the fringe benefit tax in an equitable manner. These include free travel, entertainment, free club membership, festival gifts, use of health club, sports and other facilities.”

An indication in this regard was given at a post-Budget interaction between officials of the Finance Ministry and the Institute of Chartered Accountants of India (ICAI) held here today. The meeting was attended by, among others, Mr Ved Jain, Chairman, Fiscal Laws Committee, and Mr Arvind Modi, Joint Secretary in the Finance Ministry.

Finance Minister P. Chidambaram has proposed to impose this new tax to bring under the tax net fringe benefits received by the employee from the employer.

The Finance Ministry has agreed to consider the suggestion of the ICAI and the industry that like the Income Tax Act, there should be a threshold limit for the employers as well in the form of annual turnover or number of employees for consideration of the FBT.

The ministry may propose an amendment in the Finance Bill, 2005 in this regard or issue a clarification to its officials at a later stage. The ministry has also agreed to consider an amendment over the proposed cash withdrawal tax.

The ICAI has proposed to come up with a detailed mechanism and methodology to ensure that “the government could collect the revenue without harassment to the people.”

Appreciating the government contention that a large number of employers were offering fringe benefits to attract ‘white-coloured’ employees, Mr Jain said other countries were also taxing these perks. Further the new tax would encourage the companies to pass on benefits in cash in a transparent manner, he observed.

However, he said, “The government should ensure that legitimate business expenses like advertising, sales promotion and conferences are not taxed.”

The industry is up in arms claiming that the Finance Bill has not made a clear distinction between the business activities like advertising, publicity, conferences and indirect benefits to the employees. It has wondered how the tax would be imposed on those MNCs, having headquarters abroad, and providing fringe benefits to the employees employed here and vice versa.

The ICAI has supported the government decision to impose the fringe benefit tax, saying that “no benefits whether in cash or in kind which are in the nature of income to the employee should be left untaxed.” However, it urged that principle of equity should be incorporated in the legislation.

Finance Ministry officials clarified that the FBT will be charged only from assessment year commencing April 1, 2006. They said under Section 115 WC of the Finance Bill, 2005, “the fringe benefits would include contribution to superannuation fund, expenses on scholarship to the children of employees, repair, running and maintenance of motorcars, employee welfare and use of telephone.”

New Delhi, March 7
Value Added Taxation (Vat) — billed as the most radical tax reform initiative ever to be undertaken in independent India — will keep its date of April 1, 2005, the Empowered Committee of State Finance Ministers said today.

“Make no mistake about. Vat will not be deferred, irrespective of whether Uttar Pradesh joins or not,” Chairman of the Empowered Committee and West Bengal Finance Ministers Asim Dasgupta said.

Uttar Pradesh is one state, which has voiced concerns over transiting to the new order. By its very nature, the full benefits of Vat can be reaped only if it was comprehensively implemented across the country.

“We met UP Chief Minister Mulayam Singh Yadav and he had assured us that they would be sending a delegation”, Mr Dasgupta said.

In addition to UP, Jharkhand is another state, where the preparatory groundwork is inadequate, primarily because of “political uncertainties”. Besides, certain other states such as Madhya Pradesh have said that it would move over to the new regime only if all other states would do the same. Rajasthan demanded a clear roadmap for phasing out the Central Sales Tax (CST).

Under the proposed Vat system covering about 550 goods, there would be only two basic Vat rates of 4 per cent and 12.5 per cent, plus a specific category of tax-exempted goods and a special Vat rate of 1 per cent only for gold and silver ornaments. This would do away with the multiplicity of rates in the existing structure.

There would be also a list of 46 commodities under the exempted category comprising natural and unprocessed products in unorganised sector, items, which were legally barred from taxation, and items that had social implications.

However, the proposed system has come across strong opposition, particularly from the trading community. The Confederation of All India Traders (CAIT), which is spearheading the movement against the introduction of a countrywide Vat, pointed out that the goods are not clearly defined in rate schedule. “Thus, thousands of goods will be covered by the residuary clause under the tax slab of 12.5 per cent”, it said.

The traders association also pointed out that the government. has still not come out with list of identified 550 items.

“If revenue will grow, why the government. is unable to provide expected growth of revenue of each state in next 5 years. In fact, even before implementation, demand to compensate loss of revenue is being talked about. Lack of education and corruption will make it difficult to detect correct input credit. In view of input tax credit lot of government revenue will be tied up by way of tax receivable on stocks lying at different stages of supply chain”, CAIT said.

The resultant loss in the revenue to states in moving over to the new regime will be compensated for by the Centre and the package would be hammered out after the conclusion of the Budget session of Parliament.

Ludhiana, March 7
Experts from the Netherlands have observed that the Indian textile industry needs to take full advantage of its expertise and low-cost labour, and at the same time strive for attaining quality that is on a par with international standards to meet global competition effectively.

“Companies here have immense potential but if they are to capture a sizeable market share and compete globally, particularly with China, they need to provide a quality that is international in standard — be it in terms of product or in terms of adhering to contractual agreements like sending supplies in time,” said Mr Louis Goebel, an expert from PUM Netherlands Senior Experts, a Netherlands Government-aided association engaged in providing free consultancy to industry and other organisations.

Talking to The Tribune, Mr Goebel, who is here along with two other PUM experts for executing various projects, emphasised on the need to improve infrastructure as well.

He also stressed on the need for Indian companies to focus on marketing. “Rather than focussing on what their competitor is doing they need to be clear about what the consumer wants. Besides, a greater visibility in international markets is important,” he opined.

Mr Hans Dits, another PUM expert who is engaged in a project at the Post-Harvest Technology Centre, said while technology being adopted here is superior, it is application of knowledge that is the need of the hour. He said Indian companies that availed help from PUM experts were benefiting and had begun implementing their advice.

Mr H. Dijkema, who has taken up a bee-keeping project in Doraha, said bee-keepers needed to change outlook and adopt the latest techniques. “By adopting these techniques, they can increase honey production from the current 10 kg a year from a colony to almost 40-50 kg a year,” he said.

PUM provides expert consultancy of its members, most of who are retired, to industrial units and companies, particularly in developing countries. These experts have so far provided consultancy in India to units in various industries like agro-processing, textiles, metals, chemicals etc and on various issues ranging from utilisation of energy to environment and process improvement. The consultancy is provided free of charges and companies are selected by the Indian team of PUM here.

The target number of projects to be taken up for this year is 120, informed PUM representative in India K.R.Jain.

New Delhi, March 7
After facing repeated adjournments over the Goa and Jharkhand episodes, the UPA government may accept the demand of the Left parties to send the Patent Bill, introduced last week amid chaos, to the Parliamentary Standing Committee for further discussion. The Left parties are demanding a review of the proposed amendments while seeking to send the Bill to the Standing Committee of Parliament for comprehensive discussion.

CPI Leader Gurudas Gupta has warned that the parties will oppose the Patent Bill in the Parliament if it was introduced without modifications. In an article published in the weekly organ of the CPM “People’s Democracy,” the party has declared the third amendment in the Bill is “like hastening the death of a dying patient by withdrawing the life support system.”

Quoting former director of the National Bureau of Plant Genetic Resources (ICAR), K. L. Mehra, the article noted, “A large number of botanists have gathered knowledge from peasants and traditional herbal doctors for free, and that knowledge acquired by generations could not have any Patent rights attached. Making patents out of these knowledge bases is some kind of a theft.” Meanwhile, a section of pharmaceutical companies, agriculturalists and software industry has opposed specific amendments, claiming that the government was not “ taking advantage of the provisions under TRIPS to protect their interests.”

The Left parties have lamented that the Union Government has not taken advantage of Article 27 of the TRIPS agreement to safeguard the interests of the domestic industry and consumers. They pointed out that following the example set by China, the government should make a provision “ if the price of a patented product is not fixed even after the passage of a stipulated time, another producer might be compulsorily given a license.”

Further, the government should follow the example of some countries that have limited royalty at 4 per cent for the Patent holders, they said.

Hyderabad, March 7
Its distinct pro-farmer image notwithstanding, the new Congress government in Andhra Pradesh has unveiled an ambitious IT policy that aims to capture about 30 per cent of the country’s software exports in the next four years.

The five-year policy, adopted by the state government, envisages setting up a massive IT corridor on the city outskirts spread over 20,000 acres to serve as a ‘self-contained IT City’ with state-of-the-art infrastructure facilities.

Similar corridors would be set up at Visakhapatnam and Vijayawada. The new policy offers incentives that include recruitment assistance subsidies to firms willing to set up their units in smaller towns.

The government would provide Rs 50 lakh to five ‘anchor companies’ on first-come-first-served basis if they employ more than 250 candidates in IT and 500 in ITeS (Information Technology Enabled Services). For the companies coming up in smaller towns, a one-time recruitment assistance of Rs 10 lakh to Rs 15 lakh would be given if a minimum of 100 workers are recruited in IT sector and 200 in ITeS field in two years.

In order to promote quality human capital and skill upgradation, the new policy provides for payment of cash incentive for IT Training Institutions at the rate of Rs 2,000 per candidate.

The IT policy aims at increasing the employment level from the present 95,000 IT personnel to about three lakh over next five years. A new scheme called ‘Andhrapreneur’ will be launched to provide incentives for high-end Research and Development. The government has already launched work on the Rs 700-crore AP Broadband project to provide a 10 GB bandwidth connectivity to all districts.

New Delhi, March 7
The government today indicated that it may allow public sector gas major Gail (India) Ltd to set up its proposed 7,900 km national gas grid.

Speaking at a meeting of the Confederation of Indian Industry (CII), Union Petroleum Minister Mani Shankar Aiyar said that Gail being an infrastructure company should be allowed to play its role.

Attended by the representatives from 24 foreign and domestic oil and gas companies, the one-day meet is a part of CII’s efforts to help forge partnerships between companies looking at 20 exploration blocks being offered by India in the fifth round of the National Exploration Licensing Policy (Nelp).

Gail has estimated that laying the 7,900 km national gas grid of high-pressure transmission pipelines in 15 states across the country would cost around Rs 20,000 crore. It has a network of regional pipelines covering 2,799 km.

The state-owned gas company has already taken initiatives to expand its network in Egypt, Myanmar and China.

During the past two years, the company invested Rs 97 crore in Egypt, Rs 20 crore in Myanmar and signed a share subscription agreement with China Gas Holdings Ltd for acquisition of 210 million share, 10 per cent of the existing equity.

Chennai, March 7
Leading international companies are exploring business opportunities in the fast-growing $ 950 million beauty and cosmetics market in India.

These leading companies from Italy, Spain, Austria, Great Britain, Switzerland, France, USA and Israel are participating in a three-day exposition – BeauWell India 2005, which was launched here today.

It is being organised by the Confederation of Indian Industry (CII).

While a majority of the Indian women might be too busy managing their households and even working in the fields, the beauty and cosmetics markets in India is annually growing between 15 per cent 
and 20 per cent.

The colour cosmetics market in India is valued at $ 175 million; skin care is a $ 305 million market; hair colorant $ 66 million; hair care $ 225 million.

The rapid demographic transition, burgeoning demand, rising affluence and more women in the work force are key drivers for rapid growth in the beauty and cosmetics sector. With per capita cosmetics spend of $ 0.68, the Indian market offers a huge opportunity to international beauty cosmetics companies, for whom markets around the world are saturating.

Perfume giant Christion Dior is organising a makeover session for elite ladies here on Wednesday and is also launching its spring and summer collections.

Cosmexport, Italy - The Italian Association of Cosmetics Industries represents Manufacturers & Exporters of Cosmetics Products are looking for potential national level distributors and partners for Italian cosmetics exporters in India.

Energist Limited, UK is a manufacturer of dermatological, skin lightening and skin rejuvenation equipment and systems and Intercosmetica Neufchatel, Switzerland, a manufacturer of cosmetics products and perfumes; sun care, body care, hair care and facial care products are eager to appoint an Indian distributor.

There are others too like Germaine De Capuccini, Spain, Dead Sea Minerals, Israel, both manufacturers and suppliers of Spa & Spa based Products, Spa line products, skin care products who are looking for national level distributors in India.

At least seven leading Italian beauty and cosmetics companies like HSA Hair Styling Applications, Eudermic, Farmaceutici Dott. Ciccarelli, Muster e Dikson, AGGF Cosmetics Group SPA, and Sabel and one Austrian herbal cosmetics manufacturer are participating in the BeauWell 2005.

New Delhi, March. 7
After the Asian countries, it is the turn of Europe to attract Indian tourists and Spain is the first country to come up with promotional incentives looking to increase its incoming traffic from India by about 25 per cent over last year’s figures.

Spain Tourism Board (STB) Director (New Markets) Paloma Notario said according to the number of direct visas issued, about 17,000 Indians visited Spain in 2003, a 100 per cent jump over the previous year. For 2004, the number was estimated at about 25,000.