New Delhi, September 16
The passenger car industry, already facing falling sales, has been hit further by the latest hike in petrol prices and interest rates. It is now now not hopeful of good festival season demand.

Car manufacturers said that all these hikes coming just before the festival season will hit demand further.

Arvind Saxena, Director, Marketing and Sales, Hyundai Motor India , “The petrol price hike will hit demand further. The potential automobile buyer is getting hit from many sides, home loans are up and inflation is hovering at 10%. Demand is bound to be affected.”

The petrol price hike of Rs 3 announced yesterday and the RBI increasing repo rate by 25 basis points has created more problems for the industry.

P Balendran, Vice President, General Motors India, said the industry was already passing through a tough period. Recent developments will be a big dampener for the growth of the sector, he added.

A Tata Motors spokesperson said fuel price hikes coupled with high interest rates could create some resistance for the industry in the market place.

The industry’s hope that it will get some buoyancy in the festival season, when consumers traditionally buy the maximum number of cars also seems to have been dashed.

Sandeep Singh, Deputy Managing Director Marketing, Toyota Kirloskar Motor said the price hike has come at the wrong time - the festival season.

Balendran of General Motors India echoes the worry over the timing. “Given that the car industry was facing pressure, we were expecting the market to show some improvement during the festival season, but the hikes will now adversely impact growth even during the festival period.”

With continuous hikes in petrol, but with diesel still being regulated, the price differential is widening drastically. With diesel being sold in Delhi at around Rs 41, the gap is around Rs 25, which is driving consumers to buy more diesel cars.

The rising gap between diesel and petrol has been criticised by some manufacturers like Toyota.

Says Singh of Toyota, “This is the third substantial hike in petrol price this year, this will further increase the gap between petrol and diesel prices and polarise the market towards diesel. This is not healthy for the growth of the industry. This is being seen in recent figures where the demand has moved dramatically towards diesel cars.”

Balendran said: “The demand for diesel is now 80 per cent and petrol accounts only for 20 per cent of sales. Since the price differential is more than Rs 25 per litre, customers are inclined towards diesel options. As long as the price difference remains, demand for diesel vehicles will continue to grow as diesel vehicles now come with the latest technology, besides being envrionmentally friendly and fuel efficient”.

Some manufacturers concur that consumers will opt for higher fuel efficiency. A Tata Motors spokesperson consumers will opt for more fuel efficiency in both petrol and diesel cars. 

New Delhi, September 16
Shipments of 1,100 items will be entitled to lower tax refunds from October 1, when the popular Duty Entitlement Pass Book (DEPB) scheme is wihdrawn, the government announced today.

The refunds would be reduced 1-3 per cent, Finance Secretary R S Gujral said, while unveiling the transitory scheme for the (DEPB) scheme.

“As a transitory arrangement, these items will suffer a modest reduction in the existing DEPB rate to the extent of 1-3 per cent...” he said.

Industry sources said the reduction amounted to withdrawal of the stimulus package given in 2008-09 after the global financial crisis. The DEPB rates were revised upward as a stimulus, they said.

Since tax incentives for these goods will now be available under the Duty Drawback Scheme (DDS), the number of items under the DDS would increase to about 4,000.

Different avenues are available to exporters for refund of the duties, the DEPB is the most preferred route for its flexibility and attractive rates which average about 8 per cent.

The government had spent Rs 8,700 crore last year on DEPB refunds and engineering, chemical, pharma, textile and marine products have been the major beneficiaries.

The government’s revenue forgone will be less, Central Board of Excise and Customs SD Majumdar said. Since the DEPB scheme will not continue beyond September 30, it has been decided to provide a smooth transition for these items (mainly engineering, chemical, pharma, textile and marine), while incorporating these in the Drawback schedule.— PTI

Washington, September 16
The US has expressed concern over India’s lack of transparency in its trade policy, as a result of which small and medium-sized enterprises (SMEs) have difficulties in investing and doing business in the country.

“The US continues to be concerned about the lack of transparency in many aspects of India’s trade policy,” Michael Punke, US Ambassador to World Trade Organisation said at the Trade Policy Review of India in Geneva on Wednesday, according to transcripts.

This contributes greatly to the difficulties of firms, particularly SMEs trying to invest in and trade with India, and helps explain India’s ranking of 165 out of 183 countries in the World Bank’s 2011 “Doing Business” report, he said.

“In addition to India's failure to submit required notifications to the WTO, particularly in the areas of agriculture, subsidies, India does not regularly issue draft regulations or engage in the timely public consultations that would ensure the development of sound policies in matters affecting trade and investment,” he said.

Traders often face difficulties in areas like customs valuation, tariffs and other charges, taxation, etc. — PTI

Poland, Septemberber 16
US Treasury Secretary Timothy Geithner went into exceptional talks with European finance ministers on the debt crisis today, but Finland held to its objections to a new bailout for Greece.

After the world's main central banks joined forces by pumping in liquidity for cash-strapped lenders in a bid to douse the eurozone debt fire, Europe is under growing pressure to end months of bickering over a second financial rescue for the near-bankrupt government in Athens.

As EU nations began crunch talks in Poland, Austria said default for Greece could eventually prove to be the least costly outcome.

"I am very confident, that the next tranche can be disbursed in October," Austrian Finance Minister Maria Fekter said of eight billion euros in blocked existing loans.

But she added: "Should there be a situation, that this way suddenly becomes more expensive than an alternative, we do have to think about this alternative." Despite Geithner's rare presence at EU talks, at the invitation of the current EU president Poland, European counterparts were quick to underscore that the United States itself is carrying the world's biggest sovereign debt pile

There are problems in Europe and in the United States," said German Finance Minister Wolfgang Schaeuble. "We have to solve our problems on both sides of the Atlantic, to get more stability in the financial markets," he added. — PTI

Chennai, September 16
Two-wheeler manufacturer TVS Motor Company has launched limited edition of its bike 'StaR City', bearing the signature of brand ambassador and Indian cricket team captain Mahendra Singh Dhoni.

The limited edition bike is equipped with new graphics, contemporary design, and is being launched along with a new, festival-based advertisement featuring Dhoni and his wife Sakshi for the first time..

"It is the first time that they have been cast together in any advertisement. We needed to bring in the element of toughness while portraying festivity, which is so much a part of our culture," TVS Motor Company President (Marketing) H S Goindi said.

The bike comes with a five-year warranty, the statement added.— PTI

Chandigarh, September 16
Despite rising gold prices, investors are still bullish on gold. With equity markets shunned by retail investors and gold investments giving high returns, most gold exchange traded funds have done well.

Sundeep Sikka, president and CEO, Reliance Capital Asset Management, said that since its launch in April this year, the Reliance Gold Savings Fund has reached a size of Rs 2,500 crore.

“We have attracted 4 lakh investors in this fund, and we are holding eight tonnes of gold for them. In fact, this fund is now getting 60 per cent of all investments that are being made in gold exchange traded funds,” he said.

The fund was launched four months ago, which allowed investors to invest in physical gold (rather than paper gold as in case of gold ETFs).

Unlike ETFs, investors can invest in this fund even if they do not have a demat account. This also allows investors to invest in gold via systematic investment plan (SIP) in small amounts, starting at Rs 100 per month.

“It is because of the ease in gold investment offered by this product that it has become the leading gold investment product now. Of the four lakh investors for this fund, almost 2.50 lakh investors have invested through a SIP plan. We hope that that the fund size would reach Rs 5,000 crore in the next six months,” Sikka added.

On Mutual Funds, he said that the growth in the industry as a whole, and for their mutual fund business was flat (taking into account the assets under management).

“In SIPs, we have 21 lakh investors , who are committed to us for Rs 5,000 crore per annum for the next five years. We will launch several new products with focus on retail,” he said. 

London, September 16
An alleged renegade trader accused of losing Swiss banking giant UBS about $2 billion in unauthorised trading was charged today with fraud and false accounting. The 31-year-old Kweku Adoboli would appear at a magistrates' court in the British capital today.

“He remains in police custody and is due to appear at City of London Magistrates this afternoon,” the police department said.

It said an investigation involving financial regulator the Financial Services Authority, the Serious Fraud Office and the Prosecution Service was continuing.— PTI