Mumbai, December 22
The Government today opened up the country's stock exchanges for foreign investment, with a cap of 49 per cent.

The RBI and SEBI issued separate notifications in this regard which said 49 per cent foreign investment would be allowed in infrastructure companies in the securities market like stock exchanges, depositories and clearing corporations.

Within the overall foreign investment cap of 49 per cent, FDI would be permitted up to 26 per cent and FII 23 per cent.

However, no foreign investor will be allowed to hold more than 5 per cent of the equity in the stock exchanges

The notifications said that necessary amendments would be carried out in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000.

Clearance from the Foreign Investment Promotion Board (FIPB) will be mandatory for foreign direct investment in these companies.

While foreign institutional investments will be allowed only through purchases in the secondary market, they will not be allowed to hold representation on the Board of Directors of such companies.

The move is widely expected to benefit demutualisation of stock exchanges beginning with the Bombay Stock Exchange (BSE). The BSE had been waiting for these guidelines as it has to demutualise by May next year.

There were reports that Nasdaq and NYSE, among other overseas bourses and funds, were interested in picking a stake in the BSE.

In August, Nasdaq officials met their counterparts in the BSE, giving rise to speculation that the tech exchange would pick up a stake in it.

The BSE has appointed Kotak Mahindra Capital Company as its financial advisor for the demutualisation process, which refers to bringing down the brokers’ stake below 51 per cent.

The move to allow foreign investment in stock exchanges was delayed as the Government had to take a decision on whether it had to be through a Cabinet clearance or by an executive order amending the Foreign Exchange Management Regulations. — PTI

London, December 22
British telecom giant Vodafone, which today announced its intention to acquire a controlling stake in India's fourth-largest mobile operator Hutch-Essar, has mandated Swiss banking major UBS to advise on the deal.

"UBS are our advisers (on this deal) and have been advisers on a substantial number of transactions for Vodafone," a company spokesperson said.

Although the spokesperson did not divulge details, investment banking sources close to the development said that UBS is involved in the evaluation of Hutch-Essar as well as other financial aspects of the deal. Vodafone is also believed to be in talks with various other banks to help in raising funds for a possible acquisition of Hutch-Essar.

However, no final outcome is expected very soon, since there are various potential bidders from across the world, as was confirmed by Hutchison Telecom International Ltd. Hong Kong-based HTIL today said it has been approached by various parties for acquisition of its Indian venture. Vodafone also declined to comment on whether it has approached the Indian partner Essar in the target company for taking them into confidence.

"We are at an early stage in this process and cannot speculate on timing (of the deal)," the spokesperson added.

UBS, the world's largest wealth manager, is also believed to be involved in fund raising for another potential bidder Reliance Communications. The Indian firm is yet to formally announce its approach for Hutch-Essar, whose valuation is being estimated at up to $17 billion (Rs 76,500 crore).

The daily also said that any bid is believed to be dependent on whether Vodafone manages to convince Bharti Airtel, India's largest mobile operator where it already has 10 per cent stake, to waive a one-year non-compete clause.

Vodafone's 10 per cent stake in Bharti Airtel is worth around £1.4 billion, it said.

Hong Kong-based Hutchison Telecom International Ltd has 67 per cent stake in the joint venture, while India's Essar has the remaining 33 per cent.

New Delhi: Meanwhile, Bharti Airtel said today its equity partner Vodafone has informed the company about its interest to acquire Hutch-Essar. — PTI

New Delhi, December 22
With an eye to strengthen its portfolio in India, one of the world's fastest-growing auto markets, General Motors plans to launch a slew of products across price points, ranging from compact car 'Spark' to ultra-luxurious 'Cadillac'.

General Motors Indian President and Managing Director Rajeev Chaba said the company had launched three models on the Aveo platform in 2006 itself. "This itself is an indication of our commitment to the market and where we plant to go," he said, after launching a hatchback version of Aveo.

The world's biggest carmaker, which sold a minuscule 30,000 units in India in 2005, is eyeing to increase this to 2,00,000 units by 2010, on the back of new launches.

"Work on Spark is progressing as scheduled and the car will be out by the second quarter of next year," Mr Chaba said.

Besides Spark, the company also plans to launch the 'Captiva' SUV. "It is in the plan and we will launch it for sure. But it will not come at least till the third quarter of next year," he said.

The company is also looking at launching the premium sedan 'Epica', which would be pitted against the likes of Toyota 'Camry' and Honda 'Accord'.

On the GM's ultra-luxury badges like Hummer and Cadillac, he said they were "on the horizon" though not in the near or short term.

General Motors, which is increasing capacity at its Halol plant in Gujarat to 85,000 units, is setting up a second facility at Talegaon in Mahasrashtra, which is expected to be operational by 2008 and have a capacity of about 1,40,000 units. — PTI

Brussels, December 22
India's Tata Steel Ltd today won approval from the European Commission to buy Anglo-Dutch firm Corus Group, paving the way for the creation of the world's fifth-largest steelmaker.

"The commission's investigation has found that the proposed transaction would not impede effective competition in the European Economic Area ... as the parties' activities only overlap to a limited extent," the EU executive said.

The deal, India's largest-ever foreign takeover and worth £4.3 billion ($8.45 billion), extends a wave of consolidation in the fragmented steel sector and follows Mittal Steel's $32 billion acquisition of Arcelor this year.

The deal gives Tata, India's largest private steelmaker, access to Corus' plants in Britain, the Netherlands, France and Belgium and propels it to the world No.5 position from 56 currently.

The deal, which gives the combined group a 2005 proforma steel production of 23.5 million tonnes, values Corus' output at $440 per tonne compared to $690 per tonne for Mittal's acquisition of Arcelor.

Tata Steel is in the middle of a takeover battle for Corus with Brazilian steelmaker CSN, which had made a higher bid of 515 pence per Corus share as against 500 pence by the Indian company. While CSN's bid values Corus at £4.9 billion, Tata's offer is slightly lower at £4.7 billion.

The Commission is also expected to announce its decision on a rival bid for Corus by CSN by February 5, 2007.

Earlier this week, British takeover regulators set a deadline of January 30 for the two companies to place their final offers on the table.

The Indian steel major has already won the approval from US anti-trust authorities for the Corus acquisition. — Agencies

Hyderabad, December 22
The Rajasekhara Reddy government has finally come out openly against media baron Ramoji Rao, by initiating proceedings against Margadarsi Financiers.

The Chief Secretary, Mr J Harinarayana, issued a government order appointing Financial Adviser N Rangachari to examine all relevant papers and submit a report on whether Margadarsi raised deposits from public in violation of provisions of the RBI Act or under provisions of the AP Protection of Depositors of Financial Establishments Act, 1999.

Another government order authorised Mr Krishna Raju, IG, CID, to file applications in courts of jurisdiction and to take action as enjoined under the provisions of the RBI Act 1934, and in particular under Sections 45 T and 58 E of the Act.

The two orders were dated December 19, but were released to the media yesterday.

The Reddy government has been openly accusing Eenadu newspaper and ETV, owned by Rao, as being TDP's pamphlets, and hence tarnishing the image of the government.

The Chief Minister himself complained to the Union Finance Ministry against Margadarsi. The RBI, which looked into the complaint made by a Congress MP U Arun Kumar, asked Margadarsi to stop mobilising deposits.

The RBI's reaction was calculated to ensure there was no run on the deposits of Margadarsi, said to be around 2,000 crore.

Bhubaneswar, December 22
The Orissa Government today signed MOUs with private players for establishment three steel projects with a combined investment of Rs 666.11 crore.

The three companies are Crackers India (Alloys) Ltd, MGM Steels Ltd and Surendra Mining Industries Private Ltd.

Official sources said the companies would have to fulfil their iron ore requirement without any government assistance.

While Crackers India (Alloys) Ltd would set up the project at Gobardhanpur in Keonjhar district at a cost of Rs 236.39 crore, MGM steels would locate its plant at Nimidiha in Dhenkanal district with an investment of Rs 208.10 crore.

Surendra Mining Industries Pvt Ltd would up its plant at Barahamusa in Sundargarh district with an investment of Rs 221.62 crore.

All three projects would have captive power plants of 16 MW capacity each.

The projects would be provided land measuring between 150 acres to 200 acres.

Minister for Steel and Mines Padmanava Behera said with the signing of the three MOUs the number of proposed steel projects in Orissa had increased to 45.

The 45 projects would have a total steel output of 74.66 million tonnes for which an investment of Rs 1,95,540 crore would be made. — PTI

New Delhi, December 22
In a setback to GSM mobile operators, telecom tribunal TDSAT today rejected their petition challenging sector regulator TRAI's directions to remove differential tariffs for calls ending in the networks of state-owned telecom companies BSNL and MTNL.

The Telecom Disputes Settlement and Appellate Tribunal Bench, headed by Justice Arun Kumar, held there was no merit in charging higher tariffs.

"We do not agree with the arguments put by the COAI for charging a higher tariff," the tribunal said in its judgement.

However, the tribunal directed BSNL and MTNL to provide leased lines for interconnection between the operators in a time-bound manner.

The Cellular Operators Association of India (COAI), the GSM body, had contended since there was no direct connectivity between their networks, calls had to be routed like STD calls. This necessitated higher tariffs, it said.

The association argued their cost was much higher due to absence of direct connectivity in intra-circle calls. The COAI had challenged TRAI’s directive on February 26 to private cell operators to stop charging differential tariffs for calls terminating on the BSNL CellOne network in four states.

In these four states, the government has permitted direct connectivity between Mumbai and the rest of Maharashtra, Kolkata and West Bengal and similarly between Chennai and the rest of Tamil Nadu and two parts of UP (East and West) — PTI

Washington, December 22
Six countries, including Brazil, India and Venezuela — could lose duty-free access to the US market in 2007 for some of their key exports under a revamped U.S. trade programme signed into law on Wednesday by President George W. Bush, U.S. trade officials said.

Thailand, Ivory Coast and the Philippines could also lose trade benefits because of recent changes Congress made to the US Generalised System of Preferences programme for developing countries, the U.S. Trade Representative's (USTR) office said.

Under previous law, the six countries received a waiver to continue exporting certain goods to the US on a duty-free basis despite exceeding thresholds that otherwise would have ended those benefits.

But motivated in large part by US frustration with India and Brazil in world trade talks, the revamped GSP programme allows the Bush Administration to revoke such waivers when one of two conditions are met: imports of a certain item from one country exceed an annual cap of about $187.5 million, or comprise 75 per cent of the total U.S. imports of that item.

The USTR said its preliminary assessment indicated India would lose duty-free access for gold jewellery and brass lamps. India shipped $1.6 billion in gold jewellery and $20 million in brass lamps to the US under the GSP programme in the first 10 months of 2006, the USTR said.

The 32-year-old GSP program provides duty-free treatment for thousands of goods from 133 developing countries. — Reuters

New Delhi, December 22
In spite of the government's claims to take pre-emptive action to contain rising prices, the annual inflation rate rose to 5.32 per cent for the week ended December 9 from 5.16 per cent the previous week due to an increase in food prices. The inflation rate calculated on a point-to-point basis, stood at 4.39 per cent during the corresponding week of the previous year, according to official figures released here today.

The Wholesale Price Index (WPI) for all commodities for the week ended December 9, declined by 0.05 per cent to 207.7 from 207.8 for the previous week. — UNI

Mumbai, December 22
The Indian Navy, which controls Goa's Dabolim Airport, and the Airports Authority of India (AAI) have joined hands to improve the facility so that it can operate international flights round the year.

The Navy, which insists on keeping Dabolim with itself, has come up with an idea of increased civilian use of the airport. It recently handed over nine acres of land in Goa to the AAI, which it swapped for equivalent amount of land in Port Blair from the Authority.

AAI has announced that it would build a modern passenger terminal and facilities for civilian airlines. The runway would be expanded to accommodate bigger aircraft. In addition, seven aero bridges would be constructed to allow simultaneous handling of that many aircraft.

These facilities are scheduled to be completed by 2008.

Due to pressure from the Goa Government to upgrade facilities at Dabolim, the AAI has set up an Instrument Landing System (ILS) here.
This would allow more aircraft to land during bad weather, especially during the monsoons. The commissioning of the night-landing facility at Dabolim would allow flights to be operated round the clock. At present, Dabolim is shut at night, forcing international passengers taking regular flights to via Mumbai.