The Tribune, Chandigarh, India

	Imposition of 10 per cent excise duty Textile industry to observe bandh tomorrow Manav Mander Tribune News Service Ludhiana, March 2 Upset over Finance Minister Pranab Mukherjee’s proposal to impose 10 per cent Excise duty on branded readymade garments and textiles, manufacturers have decided to observe a nation-wide bandh on March 4. Makers of such garments have also stopped the dispatch of orders from March 1. Ludhiana’s Rs 25,000-crore textile industry will also join in the bandh, which is expected to cause a loss of nearly Rs 50 crore. The Budget has converted the optional Excise duty regime for readymade garments into a mandatory requirement at a uniform 10 per cent rate for branded garments. “The proposal is going to prove detrimental to garment industry as it is already passing through a rough phase due to high fibre and yarn prices. We are unable to sell our material due to these fluctuations and hoarding,” said Dinesh Lakra, president of Laghu Udyog Baharti. He added the local industry was trying hard to compete in the international market. The tax could sound the death knell for the industry. Vinod K Thapar, president, Knitwear Club, said the industry was shocked at the imposition of 10 per cent Excise duty on branded readymade garments and textile. “Soaring yarn prices have rendered the industry uncompetitive. We are under pressure to survive. Input costs have already doubled. Under these circumstances, the industry cannot bear the burden of Excise duty. We will be joining in the bandh call for March 4,” said Thapar. Tarun Jain, president, Bahaduk-ke Textiles and the Knitwear Association, said the Finance Minister’s move has come as a huge setback for the apparel industry. “The industry has been under cost pressure over the last year due to rise in raw material prices. It has already resulted in price increases ranging from 15-20 per cent in this period. Global cotton prices have continued to show an upward trend, and may result in further cost increases in the coming season. This is going to hurt consumers. If the Excise duty is not rolled back we will go on indefinite strike,” said Jain. Prices of readymade garments may go up following the Finance Minister’s proposal to make Excise duty of 10 per cent mandatory on readymade garments, dresses bearing a brand name or sold under a brand name.
	March auto sales may dip on higher inventory Sanjeev Sharma Tribune News Service New Delhi, March 2 The auto sector escaped Excise duty hike in the Budget. Analysts say that there has been a build-up of inventory levels which could reflect in slight softness in March volumes. According to a Citigroup research report, February has seen healthy volumes for the auto sector. The report adds Maruti Suzuki posted 20 per cent growth in domestic sales and 16 per cent volume growth on account of lacklustre performance in exports, down 15 per cent year-on-year. Citigroup says it expected Maruti’s volumes to be higher against the backdrop of expected Pre-Budget push as there was expected pre-buy in the run-up to the Budget on anticipation of a price hike on account of the Excise duty hike and high discounts on the Alto of around Rs 20,000. “With increasing discounts on the Alto, we are concerned about the demand growth scenario,” the report says and expects the competitive environment to continue to have a downward impact on the company’s margins. On exports, the report adds that the scenario appears challenging against the backdrop of the current situation in West Asia and North Africa. The company management says Egypt, West Asia and Israel contribute 3% each to Maruti’s overall sales volume. The report says that Tata Motors February sales growth was sedate at 12% year-on-year and continues to reflect a strong Q4 base effect. Passenger car volumes were a positive surprise, especially the Nano, which had domestic volumes of 8,200 units, close to its July 2009 peak-levels. Indica remains a concern, with 5 per cent month-on-month slippage in volumes. For Mahindra & Mahindra, the year-on-year 25 per cent growth was driven by tractors and three-wheelers. Utility vehicles grew modestly. Two wheelers posted a healthy 23 per cent year on year growth with Hero Honda and TVS posting robust numbers.
	Minimum Export Price of onions slashed New Delhi, March 2 In a major relief for exporters, the government has slashed the minimum export price (MEP) on onions by 25 per cent to $450 per tonne from $600. "Minimum Export Price (MEP) of onions other than Bangalore Rose Onions and Krishnapuram will be $450 per tonne freight on board," the Directorate General of Foreign Trade said in a notification. Last month, the government had lifted a ban on onion exports after farmers' protested a crash in domestic prices, but restricted overseas sales by capping the MEP at $600 per tonne as a precautionary measure to control local prices, which had shot up to Rs 70-80 per kg in December last year. However, Agriculture Minister Sharad Pawar had subsequently indicated that the MEP of $600 per tonne was almost double the prevailing rate in international markets, rendering them uncompetitive. The MEP for Bangalore Rose and Krishnapuram onions was $1,400 per tonne. In this regard, the DGFT notification appears to be aimed at rectifying the situation. Onion production in the country is likely to be around 10.5 million tonnes in 2010-11, down from 12 million tonnes last year. Furthermore, the DGFT - the arm of the Commerce Ministry that deals with export and import-related matters - also said three varieties of rice (Sona Masuri, Ponni Samba and Matta), whose exports were allowed last month, would be subject to port restrictions. — PTI
	India, ASEAN hope to conclude FTA in services by year-end New Delhi, March 2 India and ASEAN (Association of South-East Asian Nations) today exuded confidence that their bilateral free trade agreement, presently limited to merchandise, will be enlarged to cover services and investment sectors by 2011-end. The two sides are engaged in hectic negotiations to expand the ambit of FTA in goods, which was operationalised from January last year, to include trade in services and investments, a key area of interest for India. “We are in an advanced stage of concluding negotiations for free trade agreement in services and investments,” Commerce and Industry Minister Anand Sharma told reporters here in the presence of trade ministers of ASEAN. Trade Ministers of ASEAN are here to attend the India-ASEAN Business Fair and Conclave. FICCI is the lead coordinator of the event. Malaysian International Trade and Industry Minister Dato Seri Mustapa Mohamed said further progress is expected when negotiators would meet later this month in Brunei Darussalam. Regarding concerns on including services, Mohamed said: “On the movement of natural persons, there are some concerns within the ASEAN countries that whether this might have an impact on our own people and professionals in the Asean region.” Movement of natural persons means professionals would be able to move more easily between India and ASEAN, once the pact comes into operation. However, he added the relationship is not complete without the conclusion of an agreement in services and investments. Philippines Department of Trade and Industry (DTI) Secretary Gregoryl Domingo too said they have some constitutional constraints regarding services agreement, but hoped negotiators would find a way out for this. “We hope it can be concluded by end of this year. This was also the subject which we raised with your PM Manmohan Singh, when we met this morning,” Mohamed said. India-ASEAN trade in 2010 stands at $50.33 billion. Both sides aimed to touch $$70 billion by 2012. Sharma and all ASEAN ministers made a courtesy call on Prime Minister Manmohan Singh and apprised him of the progress of the negotiations. Sharma has informed the Prime Minister and has invited all the Heads of ASEAN countries to India for the first Summit to be held soon in Delhi. More than 500 exhibitors are participating in the fair. — PTI
	IT industry gears up to face MAT Girja Shankar Kaura Tribune News Service New Delhi, March 2 The Budget has proposed higher Minimum Alternate Tax (MAT) for Information Technology (IT) units operating in Special Economic Zones (SEZs). The government has also withdrawn tax exemptions. Earlier, SEZs enjoyed 100 per cent tax exemption for five years and 50 per cent exemption for another five years. Industry body Nasscom has criticized the proposed MAT. The fastest growing services industry, the IT-BPO faced double negatives — imposition of MAT on SEZ and withdrawal of tax exemption under Section 10A/10B, Nasscom said. Under the Software Technology Parks scheme, IT firms had been given a 10-year tax break scheduled to end in 2010. Last year’s Budget had extended the scheme to March 31, 2011. The IT industry had been asking for an extension of one more year until the Direct Taxes Code is implemented in 2012. Companies operating in these software parks had been provided 100 per cent tax deduction on profits. These companies could now be paying 30 per cent tax on profits. The SEZ Scheme was announced as an act of Parliament and only last year it was clarified that under Direct Taxes Code (DTC), SEZ units set up till 2014 will continue to get profit-linked tax exemptions. Imposition of MAT at 18.5 per cent with an effective rate of nearly 20 per cent, nullifies the impact of any such incentive. This will be a deterrent for small companies and Tier II-III cities that were looking at expanding in the SEZ scheme, Nasscom said. Experts said that both SEZ developers as well as the units operating in SEZs will be negatively impacted. Earlier companies enjoyed 30 per cent tax break, imposing 20 per cent MAT will reduce the saving of companies to 10 per cent. The attractiveness of SEZ units will drop significantly. Large IT players such as TCS, Wipro and Infosys have moved a large part of their operations to SEZs. “To claim MAT on SEZs is conceptually wrong, this will have a cash flow impact. There is now MAT on development of SEZs and this will discourage the development of these zones,” said an expert.
	Sports industry upset over imposition of excise duty Dharmendra Joshi Tribune News Service Jalandhar, March 2 The sports industry of Punjab, which is already suffering from value-added tax (VAT), has got yet another jolt in the form of 1 per cent central excise duty that has been imposed on sports goods in the Budget. Taking a strong exception to the proposal of imposing 1 per cent duty on sports goods, state president of Vyapar Sena Ravinder Dhir said the sports industrialists were expecting some relief but the FM rubbed salt on their injury by imposing the duty. Dhir, accompanied by several other representatives of sports industrialists, including the convener of Khel Udyog Sangh, Vijay Dhir, said the 1-per cent duty had been imposed on 130 items, including cycle parts and sewing machines. The Vyapar Sena president said they would try to make a common state-level platform after discussing the issue with Ludhiana-based cycle and sewing machine manufacturers before finalising their future course of action. Dhir said they would also meet Jalandhar and Ludhiana Congress MPs Mohinder Singh Kaypee and Manish Tiwari in this regard. Dhir said nearly 400 sports industrialists of Punjab had already been suffering a lot for the past several years as Parkash Singh Badal-led government did not fulfil their genuine demands of abolishing VAT and central sales tax (CST) on the lines of Mayawati-led BSP government in UP. Sports industrialists of Punjab had to pay 4 per cent VAT, 2 per cent CST with form C and 4 per cent CST without form C whereas those of UP had been given full relaxation from VAT and CST. According to information, sports goods are manufactured mainly in two cities, Jalandhar in Punjab and Meerut in UP. While 90 per cent of the sports goods are manufactured in Jalandhar, only 10 per cent are manufactured in Meerut till past few years. Sports goods manufacturing in Jalandhar suffered a major setback due to “anti-sports industry policy” of Punjab and now 55 or 60 per cent sports goods are manufactured in Meerut, Dhir added.
	SAIL plans Rs 14,337-cr expansion New Delhi, March 2 State-run Steel Authority of India plans to invest Rs 14,337 crore for its capacity expansion in its existing five major plants next fiscal. The proposed outlay is 17 per cent more than Rs 12,254 crore it had estimated to spend on enhancing capacity in the current fiscal. Out of the proposed capex, a good part (Rs 5,730 crore) would be spent on modernaisation and expansion of Bhilai Steel plant. — PTI
	IndiGo to hire 1,500 New Delhi, March 2 Low-cost carrier IndiGo today said it plans to hire up to 1,500 people this year to support its major expansion drive. "IndiGo will hire 1,200-1,500 people in the calendar year 2011, of which 400-500 would be cabin crew staff, 200-300 pilots, besides some engineers and ground staff," IndiGo president Aditya Ghosh told PTI. At present, IndiGo has about 3,400 employees and by the end of this year the number is expected to go up to 4,500-5,000. In January this year, the no-frills carrier made news by announcing acquisition of 180 A-320s, worth an estimated $15.6 billion, from European plane manufacturer Airbus - the single largest aircraft deal in global aviation history. This is the second time IndiGo has placed such a massive aircraft order. The company had first entered into an agreement with Airbus in 2005, to buy 100 A-320s. — PTI