Mumbai, August 25
The Reserve Bank of India (RBI) warned on Thursday against accepting high inflation as the "new normal," adding that the outlook for the country's industrial sector remained uncertain amid high input costs and weak global conditions.

In its annual report for 2010-11, the RBI added that despite the recent correction in global oil and commodity prices, inflation remained high and could hurt growth.

The RBI, which has raised interest rates 11 times since March 2010 but still faces inflation above 9 per cent, said becoming resigned to high inflation could push up inflationary expectations in the long term and ultimately lead to a hard landing for Asia's third-largest economy.

The RBI expects inflation to remain high in the near term but start easing in the October-December period, although its inflation forecasts have consistently proven to be optimistic over the past year.

"As inflation starts going down and remains within a negative trajectory, which is what we are anticipating post-November-December, that changes the overall perspective on the growth-inflation balance," Subir Gokarn, the bank's deputy governor, said, commenting on the report.

While a US credit rating downgrade this month has raised global growth worries, RBI Governor Duvvuri Subbarao has warned that upside risks to India’s inflation were more pressing concerns for the short term, and it was too soon to change the central bank’s anti-inflationary policy stance.

Still, the RBI report said a further slowdown in global growth could put downward pressure on India’s growth projection, which the RBI estimates at 8 per cent for the fiscal year that ends in March.

"The outlook for the industrial sector in 2011-12 remains uncertain, with the downside risks outweighing the upside risks," the RBI said.— Reuters

New Delhi, August 25
Telecom sector regulator Telecom Regulatory Authority of India (TRAI) has sought a reply from the leading telecom service providers, including Bharti Airtel, Vodafone and Idea, on the hike in mobile tariff effected by them.

Speaking to reporters on the sidelines of a function here TRAI Chairman JS Sarma said, "We have sent letters to all the companies which have recently hiked tariffs seeking justifications for the reasons as to why they have hiked the tariffs and the reasons for the same. The last one has gone to Reliance Communications".

Private telecom operators had recently hike their mobile tariffs by almost 20 per cent. The trend was started by Bharti Airtel and some of the others followed suit. Most of the companies cited inflationary pressure in the country as being responsible for the tariff hike.

Airtel had raised the tariffs for its 'Advantage' and 'Freedom' pre-paid tariff packages, which are based on per minute billing, to 60 paise per minute for local and STD mobile-to-mobile calls. Earlier, it was 50 paise per minute in this category.

"Telecom is probably the only industry where, despite increasing inflation, tariffs have been falling unabated. Continuously declining margins, high 3G and BWA auction prices, constrained spectrum and rural roll-out aspirations leave us with little choice but to make some price corrections," Bharti airtel had said in a statement while justifying the hike.— PTI

New Delhi, August 25
The Competition Commission of India today cleared the proposed merger of media and entertainment firm UTV Software Communications with Walt Disney (South East Asia) at about Rs 2,000 crore.

The regulator approved the proposed combination as "it is not likely to have any appreciable adverse effect on competition", said an order.

UTV Software had last month announced that Walt Disney would buy the stake of promoter as well as public in the software company.

"Based on the facts on record and the notice of the proposed combination filed by the acquirer (Walt Disney) under sub-section (2) of Section 6 of the Competition Act, and the examination of the businesses involved .... the Commission, hereby, approves the proposed combination," the CCI order said.— PTI

Seoul, August 25
Samsung Electronics Co reiterated on Thursday it is not interested in buying Hewlett-Packard Co's PC business, shooting down persistent market talk the South Korean firm may snap up the unit to become the world's top PC maker.

Samsung's rare and strong denial comes as its component customers fret over its potential conversion into a serious competitor. Samsung is the world's biggest maker of computer memory chips and also a top maker of flat screens used in computers and laptops.

"I would like to definitively state that Samsung Electronics will not acquire Hewlett-Packard’s PC Business," Samsung chief executive Choi Gee-sung said in a statement. "Hewlett-Packard is the global leader in the PC business, while Samsung is an emerging player in the category. Based on the significant disparity in scale with Samsung's own PC business and lack of synergies, Samsung is not interested in the acquisition."

Samsung sold only about 10 million units of PCs last year, one fourth of HP's sales. The South Korean firm counts HP and its rival Dell Inc among its core clients of chips and flat screens.

HP said last week that it may spin off the world's largest PC business, part of a wrenching series of moves away from the consumer market, including killing its new tablet.

The announcement stoked expectations that its Asian rivals including Lenovo Group Ltd and Taiwan's Acer Inc might be interested in the unit, which analysts value at $10-12 billion.— Reuters

Mumbai, August 25
The Securities & Exchange Board of India (SEBI) today directed stock brokers and sub-brokers to redress investor complaints within a month of receiving them, saying that failure to do so would make them liable for penal action. 

The direction comes a day after it announced that all investor complaints should be forwarded to it electronically through recently established, centralised database system, SEBI Complaints Redressal System (SCORES), which was operationalised in June to fast track redressal of complaints against listed companies.— PTI

Mumbai, August 25
The National Stock Exchange (NSE) will launch derivative contracts on the Standard & Poor’s 500 and the Dow Jones Industrial Average on Monday, it said in a statement, allowing Indian investors access to global indices.

"Derivative contracts on these global indices will provide Indian investors easy access to U.S. markets in Indian market hours, without taking any currency risk," Ravi Narain, chief executive of the NSE, said in a statement.

The 50-share NSE is the second largest derivatives exchange in Asia and the fifth largest derivatives exchange in the world, the exchange said in a statement.

The Dow Jones Industrial Average, an index of 30 largest publicly-traded U.S. firms, and the S&P 500, which tracks 500 firms across the New York Stock Exchange and the NASDAQ, are the two most widely followed indices of large-cap US stocks.— Reuters

Pune, August 25
German luxury car maker BMW today said it has increased annual output from its Chennai plant to 11,000 units with the start of second shift from June.

The company, present in India through a wholly owned subsidiary, today launched its sports utility vehicle X3 between Rs 41.2 lakh and Rs 47.9 lakh (ex-showroom, across India).

"We have expanded our production facility by starting the second shift of production. The production has been expanded to 11,000 units annually from 10,000 units," BMW India President Andreas Schaaf said.

In March, the company had ramped up production capacity from 8,000 to 10,000 units per year in single shift operations. — PTI

New Delhi, August 25
India has freed Indian promoters of insurance companies to cut equity stakes to 26 per cent within less than the decade previously required, a senior finance ministry official said on Thursday, marking a step set to hasten industry consolidation.

“An Indian promoter can scale down its equity up to a level of 26 per cent at any time after registration under the Act,” SK Mohanty, an official of the finance ministry's department of financial services, said in a letter, a copy of which was obtained by Reuters.

When contacted, Mohanty confirmed the letter, but declined further comment.

The move, long sought by industry, could clear the way for a deal by Reliance Life Insurance, a unit of Reliance Capital, to sell a stake of 26 per cent to Japan’s Nippon Life Insurance Company for $680 million.

The deal had hit a hurdle as Reliance Life had not yet completed the 10 years necessary for its promoters to dilute their stake.

Current rules allow insurers to offer a stake of 26 per cent to a foreign partner at the time a joint venture is incorporated. But an insurance firm wholly-owned by an Indian promoter had to wait 10 years to induct a foreign partner.

The foreign direct investment limit would remain at 26 per cent in Indian insurance firms, the ministry circular said, adding that the decision was made after talks with the Ministry of Law and the insurance regulator.

“The Indian promoter shall reduce its equity to a level of 26 per cent after 10 years, if not done earlier, in a phased manner, for which rules are being issued,” it added.— Reuters

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