Chandigarh, December 3
Realising huge business potential in agriculture and allied activities, business leaders from the UK are looking at investing in supply chain management, infrastructure for export of agriculture produce and providing sexed semen to ensure highly fertile female calves. Besides, these companies are looking at India to reduce the duty on export of food items and processed foods so that these can be exported to the UK.

Leading a delegation of business men from UK, Patricia Hewitt, chairperson of UK India Business Council, said that both Punjab and Haryana provided for excellent investment destinations. Having met the chief secretary, Punjab and the chief minister Haryana, earlier in the day today, she said that they were now working on signing MoUs with the two state governments for economic co-operation, not just in agriculture and allied activities, but also in skill development for those involved in agriculture in India.

Chandigarh, December 3
Recognising India as its biggest trading partner, Afghanistan today sought better road and air connectivity with India so that they could market more of their agriculture produce in India. They also sought Indian investment and technology in agriculture sector. Resurrecting from its war-ravaged history, Afghanistan is hoping that its transit trade treaty agreement with Pakistan, signed earlier this year, will allow it to market its produce, mainly dry fruits, apples, pomegranates and melons, into India via Wagah.

“This will help us in increasing our exports to India, which is a very important market for us. Our farmers get the best renumeration from trade with India, than through trade with Pakistan or even Dubai,” said farmers from Afganistan, who were here to participate in the Agro Tech 2010 organised by CII.

Afghanistan minister for agriculture, livestock and itrrigation, Mohammad Asif Rahimi said that he was here to invite Indian private companies for building the agriculture sector in his country. He said agriculture was high on agenda of his government and his country requires $4 billion worth of investments in the sector in three years. 

New Delhi, December 3
In a move that has major ramifications for the huge Mergers and Acquisitions (M&A) activity in the country, the finance ministry today officially said that it is examining five marquee cross-border M&A deals for their tax implications.

The information was given by the Minister of State for Finance, S S Palanimanickam in written reply to a question in Lok Sabha today.

The minister said a few cases relating to cross-border M&A deals have been identified for further examination by the Revenue Department. These deals are being examined for possible tax implications.

The bone of contention is that all these deals were done overseas, but involve Indian assets. Some of these cases involving acquisition of equity stakes are Vodafone deal with Hutchison

Telecommunication for acquiring Hutchison Essar, Sanofi Pasteur with Merieux Alliance and Groupe Industriel Marcel Dassault for acquiring Shantha Biotechnics, deal of New Cingular Wireless with AT&T Mauritius for acquiring Idea Cellular, deal of SKR BPO Services with Barclays (H&B) Mauritius for acquiring Intelnet Global Services and transfer of stake in GE Capital International Services/Genpact India.

This is a fallout of the recent controversy with the Income Tax Department putting up a notice to Vodafone for Rs 12,000 crore as tax liability over its acquisition of Hong Kong's Hutchison Telecommunications, involving its Indian telecom JV Hutch Essar, for over $11 billion in 2007.

The crux of the issue is that though the deal happened between two overseas entities, it involves Indian assets since the company acquired had operations in India. The Income Tax Department has contended that the buyer, Vodafone, was liable to pay capital gains tax even if it failed to deduct it at source, while making payment to Hutch.

The matter went to the the Bombay High Court, which ruled that the I-T Department had the jurisdiction to levy tax on Vodafone even though the deal was done outside the country. The matter is now being heard in the Supreme Court. Vodafone has argued that the transaction is not subject to tax in India as it being an acquiring company, has not made any capital gain on the sale.

The review of these transactions has raised concerns about the consistency of the tax regime on M&As especially concerning foreign investment in the country. The other deals are similar in nature and involve huge amounts. 

Chandigarh, December 3
Facing a serious threat from traders and middle men, who are adulterating high-quality aromatic Kashmiri saffron, causing a loss in business credibility, thousands of saffron cultivators in Kashmir valley have now joined hands market saffron on their own.

In town to participate in the Agro Tech 2010, organised by CII, Malik Nisar Ahmad from Pompore said that these traders were mixing Iranian saffron, husk of corn and also using artificial colour in pure saffron, and then marketing it as Kashmiri saffron. “Though we have taken up the issue with the Government of India and our state government on numerous occasions, it seems to have very little effect.

The government has announced that they will raise the import duty on Iranian saffron to 40 per cent so that less of it is imported and used to adulterate our produce, but so far this has not been done,” he said. He added that due to adulteration, 42,000 kg of Kashmiri saffron was sold, total production was only 12,000 kg.

Chandigarh, December 3
There is little for small and medium farmers from the region at Agro Tech 2010. Companies are showcasing expensive machinery, but there is no innovative or cost-effective idea aimed at Punjab’s small land holders.

Some of the machinery can rarely be used in the state. Foreign companies showcased sub-soilers, adjustable mulchers and straw reapers, which are beyond the scope of most low-powered tractors in Punjab. Indian tractor companies put up big stalls displaying air-conditioned heavy-duty tractors worth Rs 15 to 18 lakh. There was also a tractor for gardening worth Rs 16 lakh.

Omkar Singh, an agricultural leader, said the fair could have concentrated on what was needed by the Punjab farmer. He said an average farmer would find it almost impossible to adopt most of the machinery on offer. Other farmers echoed the same views. Sukhdev Singh from Jagadhri said low cost technology interventions were missing and that most of the offerings from abroad were very expensive.

“Farmers can only use such machinery or even buffalo and cow semen stalks being offered by foreign companies if they are subsidized or purchased in bulk by Punjab or some other agency”, he added.

Social activist and Magsaysay award winner Rajendra Singh from Rajasthan, who was a guest of the CII, which organized the fair, said methods as well as technology which could help in reducing water consumption in rearing of agricultural crops should have got due space in the fair.

The Kisan Goshtis held as part of the fair were a washout. The goshtis did not attract farmers and lacked an interactive spirit.

Among the positives were ironically some home-grown companies stressing on home-grown companies stressing on horticulture, mushroom cultivation, fisheries, poultry and even Emu farms. Display of clonal eucalyptus and poplar plants, which have uniform and faster growth, also attracted the attention of progressive farmers. Farmers said these new vocations would get a fillip if farmers were offered free insurance as well as given adequate subsidy keeping in view the high risk involved.

Ludhiana, December 3
The central government has suspended registration of Cotton yarn for export, following pressure from the garment makers and cotton knitwear industry. The move is expected to check the rise in the prices of cotton yarn, which had doubled during the past two weeks compared with last year’s prices.

The textile industry (spinning) has been clamouring for regularisation of export of raw cotton as it had resulted in steep hike in the price raw cotton in the mandis of the country and the cotton growing mandis of Punjab circle.

The Textile Commissioner has already registered cotton yarn demand for exports to the tune of 780 million kg. Of this, as many as 457 million kg has already been shipped to various destinations. The shipment of the permitted export authorisation has to be done within 45 days and after the export, the Textile commissioner has to be informed about the same within 24 days.

The government has not suspended the export of raw cotton and the government has allowed cotton to be exported by December 15.

Ajit Lakra, President, Ludhiana Knitwears Association, welcoming the decision of the government to suspend the export of cotton yarn said today that this has resulted in the fall in the prices of cotton yarn in the domestic market. Cotton yarn was being quoted at Rs 250 a kg. This was double last year’s rate, which was Rs 105 a kg.

Lakra said that the fall in the prices of cotton yarn would help in stabilishing the export of garments. He hoped that the cotton yarn prices would fall further to Rs 170 per kg if the Government stopped the shipment of the yarn immediately.

Cotton prices in the mandis of Punjab circle comprising Punjab, Haryana and Rajasthan continue to rule high - between Rs 4,600 to Rs 4,800 per quintal. These had touched all time high at more than Rs 5,000 per quintal last month. The mandis of Punjab have received as many as 14 lakh bales of cotton so far and the total arrivals of cotton in the country have touched 55 lakh bales.

Textile industry sources said that recent rains in the states of Madhya Pradesh, Maharashtra, Gujrat and Andhra have caused damage to the standing cotton crop and quality of the crop has been adversely affected.

Mumbai, December 3
Reserve Bank Governor D Subbarao on Friday asked banks to hike deposit rates and lower the lending interest to improve their efficiency to the level of their global peers.

“We need to raise the level of national savings and channel those savings into investment. This means banks need to raise the interest rates offered to depositors and reduce the lending rates charged on borrowers,” said Subbarao in his address to the Banking conference 2010 in Mumbai today.

The governor said the net interest margins of the banks, which though have came down by 0.5 per cent in the last decade to 2.5 per cent now, continue to be higher than their peers in other emerging markets even after accounting for their mandatory social sector spends.

Banks can maintain profitability by optimising operating costs like non-interest expenses, which include wages and salaries, transaction costs and provisioning expenses.

“The task for our banks clearly is to press on with efforts for sustainable reduction in operating costs through productivity improvement and skill enhancement and by leveraging of technology,” he said.

Nurturing asset quality, diligent loan restructuring of viable assets and reducing non-performing assets through recovery or upgrade can be the other streams for non-interest costs reduction, he said.

Flagging the financial inclusion agenda, Mr Subbarao said he is “troubled” that Indian banks see it as an obligation rather than as an opportunity.

“Financial inclusion will provide banks access to sizeable low-cost funds as also opportunities for lending in the small volume segment,” he said, and added that instead of looking at it as an obligation, banks should embrace it as an opportunity that ca n help them increase their asset base. — PTI