New Delhi, September 21
With a view to prevent special economic zones (SEZs) from becoming a mere real estate opportunity, the Centre today finalised detailed guidelines for developing social infrastructure such as schools, houses and hospitals in SEZs, besides setting a criteria for developers.

The Board of Approvals for SEZs, which today gave final approval to 14 more proposals taking the total number of zones approved so far to 164, has also made it mandatory for the SEZ developers to invest a specific amount or have a stipulated net worth to be eligible for setting up sector-specific and multi-product zones.

"The BoA has broadly decided the procedure to be adopted while approving infrastructure in non-processing area of SEZs. The Central Government will shortly notify the list of activities that will qualify for tax exemptions," Mr G.K. Pillai, Special Secretary in the Commerce Ministry, told reporters.

The activities include building of basic infrastructure, water and sewage treatment plants, office space, shopping areas, schools, houses, hospitals, recreational and sports facilities, restaurants, power and gas connections.

In addition, multi-product zones that are spread over a minimum area of 1,000 hectares would also be allowed to build ports, airports, banks, rail heads and golf courses.

However, developers need to have a net worth of at least Rs 250 crore and invest a minimum of Rs 1,000 crore for a multi-product SEZ. For sector-specific zones, the BoA fixed the minimum investment at Rs 250 crore or a net worth of Rs 50 crore, Mr Pillai said. — PTI

New Delhi, September 21
Joining the ongoing tussle between the Finance and Commerce Ministries over SEZs, the RBI today ruled out concessional finance to developers and units in these zones.

Amid the government’s announcement to issue new guidelines shortly for these mega projects, the RBI has directed banks to treat loans to SEZs on a par with lending to the real estate sector, a development that could prove to be a dampener in India Inc’s rush to set up SEZs.

Talking to reporters here today RBI Governor Y.V. Reddy said: “Like any other land, SEZ is a real estate.” He claimed inflation was likely to remain in the range of 5 to 5.5 per cent in the medium term while projecting the GDP growth rate between 7.5 and 8 per cent during the current fiscal.

The Central Bank had in its annual report last month also raised concern over the SEZ scheme, saying that it could result in uneven economic development in the country.

After the RBI notification, banks would have to make provisions as also assign appropriate risk weights for such exposures as per the existing guidelines.

The RBI decision is aimed at limiting the exposure of commercial banks to SEZs and could also lead to an increase in interest rates for such projects as real estate funding carry a higher risk weight.

Exposure to real estate includes lending to office buildings, retail space, residential buildings, commercial premises, industries and hotels.

The RBI’s views lend support to apprehensions expressed by the Finance Ministry that SEZs would lead to a massive revenue loss to the exchequer due to various sops given to 150 SEZs already cleared and 225 others that are pending.

According to Finance Ministry’s estimates, SEZs could lead to a revenue loss of Rs 175,000 crore in direct taxes, customs and excise duties over the next five years while the Commerce Ministry says the zones will lead to Rs 44,000 crore revenue gain for the government in a year.

UNI adds from Mumbai: A day after the RBI dealt a blow to the corporate India’s rush for setting up SEZs by treating lending to SEZs or acquisition of units in SEZs as exposure to commercial real estate, the CPM on Thursday called for a halt to the creation of SEZs across the country until a comprehensive review of the SEZ policy by the Centre.

Pointing to the differences on the SEZ policy between the Finance and Commerce Ministries, party Rajya Sabha MP Sitaram Yechuri said that Leftist parties would present a memorandum on the issue to the UPA during its coordination meeting with the Left in New Delhi on September 28.

Addressing a party-supported farmers’ rally at Belapur in Navi Mumbai to protest the acquisition of farmland for the proposed Navi Mumbai SEZ by the Mukesh Ambani-led Reliance Group, the Marxist leader warned that if the Central government did not make suitable amendments in the SEZ policy for safeguarding the farmers’ interests, the CPM would launch a nationwide agitation against the current SEZ policy, adding that the protest movement would start from Maharashtra. 

New Delhi, September 21
The government today gave its ex-post facto approval for modifying the Banking Companies (Acquisition and Transfer of Undertakings) and Financial Institutions Laws (Amendment Bill) that has already been passed by Parliament.

The Bill, which was placed in Parliament in August, allows state-owned banks to issue preference shares in accordance with the guidelines framed by the RBI.

It also provides for appointment of RBI nominee Directors on the Boards of nationalised banks. Official sources maintained that the Bill was required as the representation of the RBI, which is a regulator, on the banking Boards has been questioned.

This is expected to enable public sector banks to raise capital to strengthen their capital adequacy ratio and carry on with their expansion plans. However, the government’s share in public sector banks would at no point be less than 51 per cent

The Centre in consultation with the RBI would also have the power to supersede the bank Boards if they function in a manner detrimental to public interest only for a maximum period of six months.

The sources said since the Bill was to be taken up for consideration and passage during the monsoon session of Parliament, due to paucity of time, the government decided to take approval of the Prime Minister for moving an official amendment to the Bill before the Cabinet approval.

New Delhi, September 21
Finance Minister P Chidambaram today outlined to the South Korean business community in Seoul the unique opportunity that India offers to investors and the red carpet that the government holds out for foreign investors.

The Finance Minister, who is on a visit to Seoul, spoke of the advantages of small and medium businessmen of the two countries collaborating with each to achieve synergies.

Mr Chidambaram held meetings with representatives of Korean business and industry on the second day of his visit.

Speaking about India as an investment destination, he said the country could boast of stability of the polity, rule of law, and large and educated manpower.

Some concrete suggestions were made by him to target specific SMEs who were looking to invest overseas and linking them with suitable financial agencies in India, including SIDBI and Exim Bank.

Mr Chidambaram also met members of the Seoul Financial Forum which included senior representatives of financial institutions and academics from leading management and business schools in Korea.

Mr Chidambaram also met Indian nationals holding senior positions in different companies and businesses in South Korea and had a wide ranging discussion on the comparative advantages of doing business in India and South Korea.

He had a round table meeting with a group of top level representatives of business and industry, including Mr Joo-Hee Han, President and CEO of Daelim Industrial Co, Mr Kyung-Shik Sohn, Chairman of Korea Chamber of Commerce and Industry, Mr Kihwan Kim, Chairman of Seoul Financial Forum and International Adviser of Goldman Sachs, Mr Joo-ahn Kang, President of Asiana Airlines which is a part of the KUMHO group, Mr Yung Ku Ha, CEO, Citigroup, Korea, Mr Ko Chae and President of Tata Daewoo Commercial Vehicle Co. — UNI

New Delhi, September 21
A high-level panel headed by Cabinet Secretary has rejected Anil Dhirubhai Ambani Group's (ADAG's) contention of "unfair" evaluation in deciding on bids for coal-bed methane (CBM) blocks.

After two rounds of deliberations this week, the panel of Secretaries, including those of petroleum, finance, law and coal, concluded that the evaluation of bids for 10 CBM blocks was done in fair and transparent manner and there was no bias against ADAG, official sources said.

The recommendation for award of four blocks to ADAG's Reliance Natural Resources Ltd (RNRL) and three to Australia's Arrow Energy, is likely to come up for approval at the meeting of Cabinet Committee of Economic Affairs (CCEA) next week.

Sources said the CCEA had on August 31 asked the four-member Empowered Committee of Secretaries to re-examine the technical evaluation of bids after ADAG staked claim on two of the three blocks awarded to Arrow Energy which it narrowly missed because of discretionary marking by oil regulator DGH.

The Cabinet Secretary was asked to chair the four-member secretaries panel, they said, adding that the elite panel considered all points raised by Anil Ambani Group but found no substance in the allegations.

Sources said the Empowered Committee of Secretaries had rejected RNRL's contention of discretionary marking in two points for technical assessment and one point for any other work programme. — PTI

Mumbai, September 21
The Bombay High Court today began hearing arguments on whether it has the jurisdiction to adjudicate on a dispute between Jet Airways and Lucknow-based Air Sahara over a collapsed takeover deal.

The Jet Airways’ counsel contended before Mr Justice D.K. Deshmukh that since the agreements for the deal, escrow account and pledging of shares were signed here, the High Court indeed had the jurisdiction to hear the matter.

The Supreme Court had in August transferred all petitions relating to the Jet-Sahara dispute to the Bombay High Court.

“With respect to various clauses of the escrow, pledge and guarantee agreement, we are of the view that the ends of justice will be met at one court, namely the Bombay High Court.

This is subject to the Bombay High Court having inherent jurisdiction to entertain the disputes,” a Supreme Court Bench had said.

Arguments were still on before the High Court.

The dispute relates to the failed deal for takeover of Air Sahara by Jet Airways.

As part of the deal, reached in January, Jet had deposited Rs 1,500 crore in the escrow account opened for the purpose. After the deal fell through over the absence of regulatory clearances on June 21, Sahara moved a court in Lucknow seeking to bar Jet from operating the escrow account.

In all, four petitions (two by Sahara Group and as many by Jet) are pending in connection with the matter. — PTI

Hyderabad, September 21
The recent Volkswagen fiasco notwithstanding, Andhra Pradesh may finally get its long-cherished car project.

And the man steering this project is Mr B.V.R. Subbu, credited with the success story of the Korean auto major Hyundai in India as the head of its operations.

After quitting the company early this year, Mr Subbu is now partnering with Hyderabad-based Lokesh Machines Limited (LML) to set up a Rs 1,400-crore automobile plant in the state.

The new plant will have Italian automobile major Fiat as its technology partner. The focus of the project will be on passenger cars, to be priced in the range of Rs 2.5 lakh-Rs 3 lakh, under 1,400 cc engine capacity.

The new plant will have a capacity to manufacture 60,000-65,000 small passenger cars, 40,000 units of light commercial vehicles with 1-2 tonne capacity range, and 40,000 units of three-wheeler cabs per annum.

The Andhra Pradesh Government is likely to allot 200 acres of land for the purpose in the neighbouring Ranga Reddy or Medak district.

Sources said the project was expected to start in 18 months. The project will be taken up through MLR Motors Ltd, a sister concern of LML, promoted by Mr Lokeshwara Rao. 

New Delhi, September 21
“Although I have taken three mutual fund policies from the UTI, yet I am not aware whether any of this is UTI retirement benefit pension scheme. But if my agent is saying then it might be true,” said Mr A.K. Dey, retired Deputy General Manager of the RBI, who had taken pension scheme from the country’s well known mutual fund.

This shocking statement illustrates the fact that why in spite of launch of the scheme in 1994, aimed at crores of self-employed persons and people working in the unorganised sector, the UTI has succeeded only to sell only 1,38,764 policies by August this year.

Finance Minister P. Chidambaram had recently re-launched the scheme for women cooperatives in South through Self-Employed Women’s Association (SEWA).

The scheme, however, enables any individual or a member of a working group to get pension benefits by investing as low as Rs 500 per month or Rs 10,000 by the age of 52 years.

“In this, up to 40 per cent of the funds are invested in equity and 60 per cent in relatively risk-free debt instruments, thus offering regular income to the investors during retirement life. The scheme has given 16.24 per cent returns during the year ending August 31, and an average of 19.89 per cent returns over the past three years and 12.12 per cent since its inception,” said Mr Surender Atwal, Relationship Manager, UTI MF.

UTI officials admitted that due to poor demand among investors and their tendency for looking for high returns in the short-term, they were not pushing it in the market.

It also offers an option of lumpsum withdrawal at the age of 60 or systematic withdrawal, after contributing till the age of 58 years. So far UTI MF has raised Rs 438 crore under the scheme.

According to UTI Asset Management CMD UK Sinha, over 50,000 dairy farmers of the state co-operative milk federation in Bihar are set to join UTI Mutual Fund’s Retirement Benefit Pension Fund, besides thousands of SEWA workers.

Mumbai, September 21
Real estate developer Ansal Properties & Infrastructure (API) said today it would further dilute the promoters' stake in the company from the current level of 74 per cent to fund expansion. Ansal API Chairman Sushil Ansal said the company might revisit the capital market with a follow-on public offer (FPO) but refused to divulge much on the matter as of now.

The promoters could also offload their stake in the company by offering equity to private entities or to Qualified Institutional Bidders (QIBs), he told reporters. — PTI