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Nath moots pentagonal mantra for better Indo-US ties
Indian Finance Minister Palaniappan Chidambaram attends a session at the World Economic Forum in Davos on Saturday. Blaming industrialised nations for global economic imbalances, he sought stepped up investment in developing nations like India to address the burning issues of high interest rates and fuel prices. — AFP
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FM radio stations for Patiala, Shimla
Furnace owners become traders
Indo-Oman fertiliser plant inaugurated
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Usha Martin to set up unit in USA
Aviation Notes
Fate of Sahara schemes unknown after merger
Premium payment in rupees for US citizens acceptable to LIC of India
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Nath moots pentagonal mantra for better Indo-US ties
Davos (Switzerland), January 28 “To sustain the landscape of the future, I would like to suggest five milestones for a broader and deeper bilateral relationship — the nature of engagement, an enabling environment, building stronger physical and virtual networks through bilateral investments, a technology cooperation, integrating markets by stepping up bilateral trade and nurturing shared values,” he said here. Addressing the Indo-US Partnership session, Mr Nath said bilateral ties were on an upswing, with the US accounting for 18 per cent of India’s total exports and emerging as the largest investing country in India in terms of FDI inflows and portfolio investment. “The economic synergies between our two countries are enormous. This is already visible in the sphere of information technology. Nearly half of all Fortune 500 companies today outsource some component of their back office operations from India,” he said. Mr Nath also attended a meeting of the G-6, which was hosted by Mark Vaile, the Trade Minister of Australia. The ministers reviewed the position on Doha round issues ahead of the mini-Ministerial of the World Trade Organisation and decided to intensify the trade talks with a view to adhering to the deadlines agreed to at the Hong Kong Ministerial. Meanwhile, leaders at the World Economic Forum said though the relationship between the United States and India was blossoming, yet the proposed pipeline with Iran, nuclear proliferation and bureaucracy are just a few of the hurdles that could stall its progress, leaders have said at the US trade with India is one-tenth that of China, a point of contention at this year’s annual meeting in Davos, where China has touted its massive market possibilities, and India —which sent pashmina shawls and iPod shuffles to hotel guests at this Ski resort — has been showing off its democracy. Although India’s software exports were almost doubling each year, and outsourcing exports were expected to surpass $22 billion in the fiscal year ending in March, both sides agreed Indian bureaucracy — a holdover of British colonialism — was a hindrance. “We should be seeing numbers that are three or four times larger for the type of trade between our two countries,” said Josette Shiner, US Undersecretary for Economic, Business and Agricultural Affairs, remarking on India’s 6 to 7 per cent growth rate, compared to China’s 9.9 per cent. “ The bureaucratic issues are really central to that.”
— PTI, AP Mittal’s bid to be scrutinised
EU Competition Commissioner Neelie Kroes has said that a hostile bid by Mittal Steel for Arcelor of Luxembourg will be thoroughly studied for a potential dominant market position. “It’s interesting, and it will certainly get a lot of attention” from the competition commission, Kroes told reporters on the sidelines of the World Economic Forum in Davos. Mittal chief executive Lakshmi Mittal said he did not expect the proposed deal to face any regulatory hurdles and that the group would begin talks with European regulators soon. But French Finance Minister Thierry Breton said the government had concerns about the deal, “particularly with regard to the French and European industrial matters at stake”. And a spokesman for automaker Peugeot said that it would follow the bid closely, “in the knowledge that we already have concerns about the state of competition in the steel sector,” since nearly a ton of steel is used to produce a single car.
— AFP
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FM radio stations for Patiala, Shimla
New Delhi, January 28 After the fourth round of bidding, the company has bagged FM radio rights for Ahemdnagar, Jalgaon, Dhule and Jabalpur. With these cities, the company now has a total of 10 cities to place FM radio stations. It has also won licences for Ranchi and Muzaffarpur, besides Punjab, Haryana and Himachal, said Ms Anuradha Prasad, MD, B.A.G. Films here today.
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Furnace owners become traders
Ludhiana, January 28 Reduced demand has also shifted majority manufacturers to trading of iron and steel procured from Orissa. "We are not able to face stiff competition due to increased production costs due to several factors, including high power tariffs and taxes. People are preferring to procure material from Orissa as it is almost Rs 2,000 per tonne cheaper in comparison to available here," said Mr K.K. Garg, president, Induction Furnace Association of North India. He said not only had units in this industry started closing, the ones which were operational were using only 30 per cent of their total capacity. The industry, that has demanded deemed credit on melting scrap generated in the non-excisable industry (households etc), feels threatened from units of neighbouring states entering Punjab markets. "Due to reduced competitiveness, most of us are now trading in iron and steel which is procured from states like Orissa. The billets and ingots one gets from Orissa are much cheaper. But, the trend will leave a negative impact on the industry in this state." The industry has also urged the government to take measures on rebates in sales tax and central excise duty which are available to industry that comes to Punjab from other states. Sceptical about the proposed abolition of octroi which, it feels, would do more harm than good, the industry said any additional levy would have a cascading negative impact.
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Indo-Oman fertiliser plant inaugurated
New Delhi, January 28 India’s Chemicals and Fertiliser Minister Ram Vilas Paswan and Oman’s Minister for National Economy and Supervisor of Ministry of Finance Ahmed Bin Abdul Nabi Macki jointly inaugurated the plant, a ministry press note said. “This joint venture project is symbolic of the historic age old ties between India and Oman and would be of mutual benefit to both countries,” Mr Paswan said. Omifco, a joint venture with an estimated capital cost of $969 million and debt-equity issue of 67:33, has the total annual capacity of 16.52 lakh tonnes of urea and 2.48 lakh tonnes of merchant ammonia, it said. Indian equity contribution in the joint venture is $160 million and the equity distribution of three joint partners are 25 per cent each of Iffco and Kribhco and 50 per cent of Oman Oil Company. The project envisages urea
off take at pre-determined prices for 15 years period by the Indian government and for ammonia by Iffco at fixed prices for 10
years. — PTI
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Usha Martin to set up unit in USA
Kolkata, January 28 Speaking to mediapersons, Usha Martin Chairman B K Jhawar said here today that the capacity of the plant would be around 25,000 million tonnes (MT) in the next three years. In the first phase, this new plant would produce 6,000 MT of steel wire ropes from April 2007, he said. The plant would be operational in October 2006. The company would float a 100 per cent subsidiary in the US to run the US operations. ''Our factory in the US is well-connected with various other cities like California, Los Angeles and has a huge market for the wire rope business,'' Joint Managing Director, Dr Bhattacharya, said. He added that the company had plans to venture into Chinese market within the next one and a half year. He said, “'We have started an in-house feasibility study-cum- analysis to chalk out our investment strategies in that
country.” — UNI
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by K.R. Wadhwaney
Fate of Sahara schemes unknown after merger
The Jet-Sahara deal has come about at the behest of some senior politicians. The calculated motive behind this changeover is to render the favourite Jet to fly past two national carriers, Indian and Air-India, as also help Sahara to breath free with some cash in kitty.
Unlike Subrata Roy, who has put several eggs in multiple baskets, Naresh Goyal’s only trade is civil aviation in which he has sprung from a medium-sized travel agent to airline baron within two decades. Known to be the ‘smartest’ in the trade thus far, analysts believe that this unique kind of merger will cause many insurmountable pockets of trouble. With Sahara’s leased machinery (fleet) and pampered pilots and cabin crew, Jet will now enjoy monopoly in Indian skies, as Indian had for decades before liberalisation in 1992. The trade union problems have surfaced but Mr Goyal is shrewd enough to deal with them since he has been encountering them since the days he was a GSA (general sales agent) of Gulf Airlines. The airline trade has always been tricky. But merger of two top private carriers is even trickier. The adjustment of seniority, salaries and perks to combined cockpit and cabin crews will give more headaches to the Jet baron than he has encountered so far. There are several other pitfalls plaguing the merger. Will Jet honour all promotional schemes floated by Sahara? What about Sahara’s latest Rs 10,000 schemes, valid for one year, on the Delhi-London-Delhi sectors? The financial health of the Jet Airways is not as robust as it appears to be on paper. But Mr Goyal is a shrewd functionary. His planning is akin to a rummy player. In rummy, experts say, the winner is generally the one who knows which hand not to play. The analysts feel that Mr Goyal will emerge out of all these problems since he enjoys political support. Whatever may be the market evaluation Jet is planning to raise $850 million from the international market before 2006 is out. This money will be entirely utilised for buying new aircraft instead of funding the Sahara purchase.
Cyber security
The mind of militants and law-breakers is sharper than the mind of the law-makers. No law is a fool-proof. The advancement in technology has facilitated terrorists in devising new techniques in achieving sinister designs. The misguided youths are now making effective use of cyber space to indulge in unlawful activities, which is called Cyber Terrorism. Cyber security involves protecting information by preventing, detecting and responding to attacks. Law-breakers have become so well versed with the computer and internet working, that they sneak into the system and even alter files and information. Such has become a level of crime that there is no 100 per cent guarantee of providing fool-proof precautions. As cyber crime has been on the increase, the Confederation of Indian Industries (CII) organised a two-day seminar on the complex subject of civil aviation. Many renowned personalities, Indian and foreign, provided crucial dos and dont’s while protecting critical and crucial infrastructure at international and national airports which, because of multiple agencies working from dawn to dusk, are always vulnerable to attacks.
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by A.N. Shanbhag
Premium payment in rupees for US citizens acceptable to LIC of India
Q: I want to buy an insurance policy against the life of my daughter, who is a US citizen and married to a US citizen. She wants to nominate her daughters, who are obviously US citizens. She has written in the form the address of her present home that is in the US and has sent the copy of her driving license that is also of a US state.
i) Can I pay the premium in Indian currency? ii) Can I avail of tax exemption u/s 80C? iii) When the policy matures, will my grand daughter have any difficulty in claiming the money? — Dr Jawahar Luthra A: You can pay the premium in Indian currency. You can avail of the deduction u/s 80C. However, on maturity or termination of the policy, the money will be paid in India in Indian currency only. The maturity value will be paid in US dollars only if the premium is paid in US dollars.
HUF and PPF
Q: I happened to read your January 15 column. In your reply to one Mr Shravan, you wrote that in the AY 2006-07, u/s 80C PPF contribution is permissible by individual and HUF for the usual rebate. However, I was informed by the agent that post office has taken out a circular that the contribution to the PPF account by HUF will not be accepted. I have an HUF account in the State Bank of India and the manager informed me that though they have received no circular but would advise not to make any contribution in this month till they hear something. — Shrikar Sharma A: The RBI Notification GSR291(E) dated May 13, 2005, has discontinued opening of the accounts on behalf of HUF, AOP and BOI with immediate effect. Such accounts opened my mistake after May 13, 2005, shall be treated void ab initio. As and when the error comes to light, the account shall be closed and the amount refunded to the depositor without any interest. The existing accounts can continue up to their maturity without the privilege of post-maturity continuation. Consequently, you can continue to contribute.
Two loans
Q: I am a government employee. I took a loan from bank and purchased a plot in July 2005. Now I took a loan from the bank again and constructed a house on same plot in December 2005. As both loans are in same year, can I get rebate on both loans? — Jaspal Singh A: The deduction u/s 80C and the interest u/s 24 are allowed even on two or more loans provided the basic conditions are satisfied. It is necessary for the assessee to obtain a certificate from the lender that such interest was payable in respect of the amount advanced for acquisition or construction of the house, or as refinance of the principle amount outstanding under an earlier loan taken for such purpose.
MF dividend
Q: If I invest a part of my retirement proceeds in monthly income schemes or plan of mutual funds (MFs) then will the monthly income derived from the MIPs be not taxable as is the case with dividends received from a diversified equity plan? In other words will the monthly income received from a mutual fund under its MIP schemes be treated at par with income received from the monthly payments under the post office five years MIS plan? What will be the position of capital gains on MIP schemes? — M. M. Mukherjee A: Dividends from monthly income schemes or plan from mutual funds is exempt in the hands of the investor. However, there is a dividend distribution tax of 14.025 per cent payable directly by the MF. In other words, though the dividend is exempt in your hands, ipso facto, you will receive 14.025 per cent less than what you could otherwise have received. Therefore, indirectly, it is the investor who pays the tax, though the actual payment is made by the MF. Diversified equity oriented schemes do not suffer this distribution tax, hence the full amount of dividend is received by the shareholder. You mention, “In other words will the monthly income received from a mutual fund under its MIP schemes be treated at par with income received from the monthly payments under the post office five years MIS plan?” I am afraid this is not true. Monthly payment (interest) from PO MIS plan is fully taxable in the hands of the investor. As mentioned earlier, dividend from MIP is not taxable in the hands of the investor per se. It is exempt income. However, before it comes in the hands of the investor, the MF has already paid the distribution tax to the exchequer.
Family pension
Q: My sister-in-law is working and is an assessee. She gets family pension as her husband died. Does she get any exemption from taxation from the income, as the standard deduction is removed from 2006-07? — Nilam A: Yes, standard deduction is deleted but family pension which attracted a deduction similar to standard deduction has not fortunately been touched. Where the spouse of an employee gets a pension after the demise of an employee, Sec. 57(iia) grants deduction of 33.33 per cent with a ceiling of Rs. 15,000.
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Observing that Indo-US ties were on an upswing, Commerce Minister Kamal Nath today mooted five milestones, including technology and trade cooperation for deepening bilateral economic relationship.
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