The Tribune, Chandigarh, India

Vodafone to buy out Essar stake in India JV
Tribune News Service

Vodafone paid $11.1 billion in 2007 for control of Essar in what remains the largest FDI to be completed in India.

New Delhi, March 31
Vodafone, the world's largest mobile operator by revenue, is to pay $5 billion in cash to buy out Essar Group from their Indian joint venture and bring an end to their increasingly fractious relationship.

Vodafone, which has faced a host of problems since entering the fiercely competitive market in 2007, will take over Essar's 33 per cent of the Vodafone Essar Ltd company, giving it direct ownership of 75 per cent of the Indian operator.

The move will however put Vodafone above the 74 per cent limit that foreign companies are allowed to own in India, meaning it will have to sell just over 1 per cent. A spokesman for the British firm said it could also consider an IPO in the future.

The announcement brings to an end a difficult relationship that had become increasingly strained and public in recent months. Vodafone paid $11.1 billion in 2007 for control of the carrier in what remains the largest foreign direct investment to be completed in India.

With 771 million mobile subscribers as of January, India is the world's second-biggest market for mobile services and it is also the fastest-growing with the industry's monthly additions averaging 19 million in 2010.

But Vodafone has faced many challenges, from high spectrum costs, an ongoing dispute over tax and an increasingly difficult relationship with its main partner, meaning its experience is often cited as a cautionary tale for foreign players in Asia's third-largest economy.

Meanwhile, Essar may be asked to pay tax on 10.97 per cent equity held by its Indian subsidiary in Vodafone-Essar.

Of this 22.93 per cent is off-shore (held by entities registered outside India) and no tax may be payable on this. The remaining 10.97 per cent is held by Essar Communications Private Limited (an Indian entity) and there will be a tax liability on this portion.

Sources said that 22.03 per cent stake (off-shore) is valued at $3.8 billion and the remaining 10.97 per cent is valued at $1.2 billion.

Tata Teleservices to get Rs 800 cr

Japan’s NTT DoCoMo has said that it would invest about Rs 800 ($179 million) in Tata Teleservice Ltd in which it owns 26 per cent. Tata Tele is expected to use the capital to expand its coverage as well as strengthen the quality of the 3G network it launched in November last year. TTSL also had plans to raise Rs 3,000 crore through a rights-issue that would be subscribed to by major shareholders, including DoCoMo.— TNS

Cheque payments may get costlier from today

New Delhi, March 31
Making payments through cheques may become a costlier affair from tomorrow, as RBI has allowed banks to levy higher service charges for their clearing, especially of high-value and outstation cheques.

According to a RBI circular coming into effect from April 1, 2011, banks would be free to fix service charges on speed clearing of cheques of value above Rs 1 lakh. Currently, RBI does not allow banks to charge more than Rs 150 per cheque for speed clearing of cheques worth over Rs 1 lakh, while there are no charges for value up to Rs 1 lakh. However, speed clearing of cheques with value up to Rs 1 lakh would continue to remain exempt of any service charges.

Speed clearing refers to processing of outstation cheques electronically and without movement of cheques from the presentation centre (city where the cheque is presented) to drawee centre (city where the cheque is payable).

For normal local clearing also, drawee bank can charge up to Rs 1.50 per cheque from tomorrow, as against Re 1 at present. For local clearing through cheque truncation system, which works electronically by processing the scanned image of the cheque, drawee bank can levy a service charge of Re 1 from tomorrow, up from 50 paise at present.

Besides, RBI has also given a free hand to the banks to decide on the service charge on outstation cheques of over Rs one lakh, as against a maximum limit of Rs 150 per cheque allowed currently.

However, RBI has decided to lower the service charge for outstation cheques up to Rs 5,000 by allowing a levy of Rs 25, as against Rs 50 currently.

The outstation cheques between Rs 5,000 and Rs 10,000 would continue to attract a fee of Rs 50, while those between Rs 10,000 and Rs 1 lakh would also continue to be levied a charge of Rs 100.

While fixing service charges not mandated herein, banks have been told to get approval from their boards for service charge structure.

“Charges fixed should be reasonable and computed on a cost-plus-basis and not as an arbitrary percentage of the value of the instrument. The service charges-structure should not be open ended and should clearly specify the maximum charges that would be levied on customers including charges if any, payable to other banks," RBI has told the banks.

The service charges by banks should be inclusive of all charges (postal, courier, handling, etc.) other than service tax, RBI said. — PTI

60% import duty likely on sugar

New Delhi, March 31
With India’s sugar production set to exceed domestic demand, the government is likely to re-impose 60 per cent import duty on sugar from tomorrow. "The duty free notification lapses on today and from April 1 it automatically reverts back to the old duty structure," the official source said.

Import duty on sugar was abolished in early 2009 to boost domestic supply in view of production dip in the 2008-09 sugar year (October-September). Before that, the import duty on sugar was 60 per cent. The duty-free regime was valid till today.

India had imported about six million tonnes of sugar since February 2009 to meet domestic demand.

Sugar production of India, the world's second largest producer, had fallen to 14.7 million tonnes (MT) in 2008-09 against the annual domestic demand of 22 MT.

In 2009-10, the output improved to 19 MT, but was still short of demand.

However, in the current sugar year, the production is expected to outstrip demand at 24.5 MT and the country has started exporting the sweetener.

Domestic Prices have also softened to Rs 30-32 per kg in the national capital from nearly Rs 50 per kg in mid-January 2010.

Recently, the government allowed export of 5,00,000 tonnes of sugar under the open general licence (OGL) scheme. The Food Ministry is yet to notify the procedures for export. — PTI

Tax exemption for World Cup
Tribune News Service

New Delhi , March 31
The government has exempted the ongoing ICC Cricket World Cup from tax, in respect to the income arising in India. The Finance Ministry proposal was approved by the Union Cabinet under section 10(39) of the Income Tax Act 1961, in respect of income which is arising in India from the ICC World Cup, 2011, to the subsidiaries of the ICC and only where the contractual obligation to bear the income-tax liability is on these entities.

The government also approved setting up of a National Mission for Electric Mobility (NCEM) to promote electric mobility and manufacturing of electric vehicles in India. The setting up of a National Board for Electric Mobility (NBEM) by the Department of Heavy Industry was also approved.

The NCEM will be the apex body in the Indian government for making recommendations in these matters.

The decision has been taken in wake of dwindling petroleum resources, growing concerns on the impact of vehicles on the environment and climate change.

The automobile industry worldwide is gradually shifting to more efficient drive technologies and alternative fuels including electric vehicles. Accordingly, world over major investments, incentives and policies are being introduced to propagate the development, adoption of electric vehicles (EV) and their manufacturing.

The Cabinet also gave approval for creation of seven posts of Indirect Tax Ombudsman to be located at Delhi , Mumbai, Chennai, Calcutta , Bangalore , Ahmedabad and Lucknow . The Indirect Tax Ombudsman Guidelines, 2011 has also been approved.

The Indirect Tax Ombudsman shall have powers to receive complaints from tax payers on indirect tax matters.

OTHER CABINET DECISIONS

l Setting up of a National Mission for Electric Mobility to promote electric mobility and manufacturing of electric vehicles in India

l A National Board for Electric Mobility by the Department of Heavy Industry to be set up

l Approval for 7 posts of Indirect Tax Ombudsman

PM assures industry of graft-free environment

New Delhi, March 31
Amidst corporate honchos being questioned in connection with 2G scam case by agencies, Prime Minister Manmohan Singh today assured a ‘nervous industry’ that the government is committed to creating a corruption-free environment to ensure the industry moved ahead without fear.

“I am aware of the nervousness in some sections of the corporate sector arising out of some recent unfortunate developments. We stand committed to ensuring that our industry moves ahead with confidence and without fear or apprehensions,” Singh said addressing a meeting of the Council on Industry and Trade.

The government is mulling all measures, administrative and legislative, to tackle corruption and better transparency, he said at the meeting which was attended by Ratan Tata, Rahul Bajaj, Azim Premji, Sunil Bharti Mittal, Deepak Parekh, Swati Piramal and Kumarmangalam Birla, among others. CBI has recently questioned various industry leaders in connection with the 2G spectrum allocation scam.

The Public Accounts Committee of Parliament has also called them for questioning on the issue. In January this year, a group of prominent personalities, including industrialists Azim Premji, Keshub Mahindra and Deepak Parekh, had expressed concern over a series of scams leading to "governance deficit". — PTI

Moratorium lifted on 8 industrial clusters

New Delhi, March 31
The Environment Ministry today lifted moratorium imposed on eight industrial clusters located in critically polluted areas in different parts of the country for considering projects for environmental clearance. The Ministry, in view of the recommendations of the Central Pollution Control Board (CPCB), lifted moratorium on the clusters Angul Talchar (Orissa), Faridabad and Panipat (Haryana), Gaziabad and Noida (UP), Indore (MP) and Junagadh (Gujarat) subject to certain conditions.

The moratorium had been imposed last year on consideration of projects for environmental clearance to be located in critically polluted areas identified by the CPCB.

Based on the initiation of implementation of action plans as reported by the respective State Pollution Control Boards (SPCBs) and taking into account the recommendation of CPCB, the Ministry lifted the moratorium.

According to the conditions, the moratorium will be reimposed if the respective SPCBs, which will monitor the pollution levels in these areas on regular basis, find that the pollution levels are increasing.

The Ministry will support independent third party periodic monitoring on the implementation of action plans, to be approved by the CPCB and SPCBs. — PTI

Idea rolls out 3G services in Haryana

Chandigarh, March 31
Idea Cellular today announced the launch of its 3G services in Haryana."We are happy to flag off Gold Standard 3G services in select locations in Haryana today, and will continue to expand 3G services in centres of learning, and high potential rural hinterlands where broadband is yet to make a breakthrough," Rajat Mukarji, Chief Corporate Affairs Officer, Idea Cellular said in a press release.

The company has rolled out 3G services in Haryana, covering Ambala, Hisar, Rewari, Rohtak, Panipat, Bhiwani, Jhajjar and Hansi.

"Idea's 3G services will progressively grow to cover 24 towns by April '11, and over 230 towns by the end of next fiscal," he said.— PTI