New Delhi, February 3
Widening of the tax net by introducing a negative list for service tax and bringing more items under the tax regime to make tax evasion difficult are among the recommendations made by representatives of trade and industry to Finance Minister Pranab Mukherjee for the fiscal 2012-13 budget to be presented in March.

In the pre-budget meeting with Mukherjee, trade and industry representatives also suggested tiny and small sector units be treated at par with the agricultural sector and no service tax be charged from them. It was also demanded that duty on readymade garments be also reduced or withdrawn.

They also suggested infrastructure sector companies and SEZ (special export zone) units be exempted from minimum alternate tax (MAT). It was also recommended to revisit concept of dividend distribution tax.

Disinvestment should come back on the agenda of the government along with a roadmap. In order to improve health care, it was suggested that a benefit of tax deduction of Rs 10,000 be given to the citizens for preventive health checkup.

In order to improve the tax administration system and better generation of revenue, it was suggested to make tax evasion difficult and bring more items under tax net, move to the e-invoicing system, implement the Direct Taxes Code (DTC) in its entirety and clear funds held up in tax litigation and disputes among others.

In order to boost exports, it was suggested the interest rate for the MSME (micro, small & medium enterprises) sector be kept at 7 per cent and for others at 9 per cent or subvention should be provided to all sectors of exports at least till March, 2013. Also, it was mooted exports should be included in priority sector lending by banks.

It was also suggested that to achieve 8-9 GDP growth, the agricultural sector should also grow at 4-5% to feed more than 1.2 billion people of India. In order to achieve this, modern farming techniques, the Model Land Leasing Act, legalizing land leasing in all states, encouraging R&D and setting up a National Mission on Farm Mechanization in the PPP mode, among others, were suggested. It was also suggested that fruits, vegetables, milk and other perishables should be denotified from the APMC (agricultural produce market committee) list.

Some business leaders suggested that there is a need for amendment of the Fiscal Responsibility & Budget Management Act with a roadmap for reduction in fiscal deficit in the next five years which would help in infusing a sense of discipline in raising revenues and containing expenditure.

Those who attended Friday’s meeting included B. Muthuraman from the Confederation of Indian Industry (CII), R.V. Kanoria from the Federation of Indian Chambers of Commerce & Industry (FICCI), R.N. Doot from the Associated Chambers of Commerce & Industry of India (Assocham), Y.C. Deveshwar of ITC, Nitin Paranjpe of Hindustan Unilever, Tulsi R. Tanti of Suzlon Energy and Rafeeq Ahmed from the Federation of Indian Export Organizations (FIEO), among others.

Mumbai, February 3
The Reserve Bank on Friday hinted at more open market operations (OMOs) to ease tight liquidity conditions in the banking system.

RBI deputy governor Subir Gokarn, who is in charge of monetary policy at the Reserve Bank, also said the central bank’s choice of securities to buy in OMOs is not aimed at reducing the cost of borrowing for the government, but to ensure that there is adequate liquidity in the system.

“The aggregate objective of OMOs is to put in a certain amount of liquidity into the market and not help the government borrowings,” Gokarn said, talking to reporters at a global investor summit organised by HSBC here on Friday morning.

“The choice of securities is driven by the need to be reasonably certain about achieving the aggregate number. So these are two separate decisions. The reality of the situation is that open market operations are driven by liquidity shortage, not by the government borrowing,” he said.

“... These are really two separate discussions. You can call it private placement or quasi private placement, regardless of what the mix of securities is. It doesn’t matter, but that’s not the case,” he said in response to a query if open market operations are not a kind of quasi private placements aimed at helping government bond yields.

Speaking to a business channel separately, Gokarn also ruled out any room for aggressive rate cuts as in 2008 following the fall of the Lehman Brothers, given high commodity prices and sticky inflation, though he admitted that easing of interest rates is the next logical step for the central bank against the backdrop of a growth slowdown as well as lessening inflationary pressure.

The central bank has undertaken nearly Rs 78,000 crore worth of open market operations in the recent months as the system was quite starved of funds, with the banks’ daily borrowing from the central bank’s special borrowing window averaging nearly double the 1 per cent liquidity deficit that the bank is comfortable with. — PTI

Mumbai, February 3
The country's largest car-maker Maruti Suzuki will launch more diesel models to maintain its market share, which has been under pressure for months now, a top company executive has said.

"Our market share has slipped to 40 per cent in 2011. This was due to slowdown in the industry and lower sales of petrol models compared to diesel car production," Maruti Suzuki MD & chief executive Shinzo Nakanishi said here.

The company will now focus on producing more diesel models. The company will be able to produce 300,000 diesel engines a year through Suzuki Powertrain, a joint venture between Maruti and Suzuki Motor's Gurgaon unit.

Maruti will also buy up to 100,000 diesel engines annually for three years from Fiat India under a pact between the Italian carmaker and Maruti's parent Suzuki Motor Corp. This is expected to help the company produce more diesel cars, Nakanishi said.

Customer preference here is fast shifting to diesel cars as the fuel is cheaper than petrol. The shift has prompted automakers to introduce new diesel variants and increase production of existing variants. Players like Ford have also announced plans to invest on diesel engines.

Maruti's Swift, Ritz, Swift DZire and SX4 models are sold with 1.3-litre diesel engines.

Meanwhile, Maruti has witnessed a turnaround in monthly sales after seven consecutive months of decline with a 5.18% spike in sales to 115,433 units in January. It sold 109,743 units in the same month last year. Last December, its sales had declined by 7.1% to 92,161 units.

"Following the turnaround in the auto industry, our first target will be to quickly cover growth of 10-11 per cent as we have had a negative growth of 17 per cent during the April-December, 2011, period," Nakanishi added. — PTI

New Delhi, February 3
Fear creates insecurity and India’s richest man — Mukesh Ambani — has understood this well. And he’s now busy converting it for big-ticket business.

A Fortune 500 company, his Reliance Industries Ltd (RIL) group’s annual revenues are in excess of US $58 billion. So far, it deals in the businesses of energy and materials value chain. Ambani is now positioning himself as a defence, internal security and aerospace solutions vendor.

The senior Ambani’s new ventures’ revenues may overtake existing businesses in years to come. Global homeland security experts have predicted a $16 billion market in India in the next 10 years.

Ambani is eyeing the fast growing multibillion dollar homeland security business in India. Not only the central and state governments but also huge industrial houses, commercial and residential complexes are keen to secure their environment from terrorism and crime threats.

Ambani’s dream project —homeland security — is now fully ready to take off. To begin with, he has identified his home city, Mumbai, and the capital, New Delhi, for the launch of state-of-the-art homeland security solutions. Both the metropolitan cities have witnessed worst terrorism attacks.

The billionaire has made his first move by participating in the Maharashtra government’s Rs. 600 crore close circuit TV surveillance programme for Mumbai. The tender was released on January 23 and a decision is expected within this financial year. The state government has shortlisted seven vendors.

Reliance is likely to get tough competition from the Israeli firms which are well-embedded in the Indian security requirements. For the Mumbai project, the RIL has entered into a joint venture agreement with Siemens AG, a Germany-based engineering conglomerate. The RIL-Siemens initiative aims at securing Mumbai — India’s commercial capital — by installing homeland security systems, such as video surveillance cameras, command and control centers and data servers across the city. This JV will also look for similar business in other cities to develop intelligent electronic security solutions for safe, secure and smarter cities and highways in the country.

The Reliance Industries chairman has reportedly been keen to tie up this business with his ambitious mega roll out of fourth generation 4G broadband wireless due to technical synergies.

To launch the homeland security and aerospace mega business division, Ambani last year picked up the high-profile global business leader, Vivek Lall, 42, and designated him president and chief executive officer. An American of Indian origin, Lall earlier headed US aircraft manufacturer Boeing’s military aviation in India. During his stint in India, Boeing was able to rake in $10 billion in four years.

Son of a former Indian diplomat, Lall is an aerospace engineer and has earlier worked with NASA and at Raytheon, a major American defence contractor, and is an expert authority on aerospace and strategic security issues. Lall has been officially recognized at Cambridge, England, as one of the only 2000 outstanding scientists in the entire 20th century.

Lall has also been the chairman of the Indo-American strategic dialogue. The Indo-American Chamber of Commerce, which appointed Lall for this prestigious post, has said that he is uniquely positioned to drive both governments closer together on a host of strategic issues. India Inc icon Ratan Tata and Lall were two key Indian luminaries seen talking to global security giants at the Paris Air Show in June 2011.

Lall has apparently facilitated the RIL engagement with Raytheon and a host of other foreign original equipment manufacturers. The RIL and Raytheon have also reportedly agreed to set up a JV to develop homeland security solutions not only for India but for foreign markets also. Raytheon is a global technology and innovation leader. It recorded $25 billion sales in 2010.

Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing, effects, and command, control, communications and intelligence systems, as well as a broad range of mission support services.

With Raytheon partnership, the RIL is reported to be targeting business in providing high-end security products and electronics engineering solutions for creating a massive homeland security system.

Reliance Industries will get access to advanced resources to innovate and develop key security technologies for India and other countries. Raytheon will benefit by gaining entry to one of the fastest growing markets for homeland security solutions.

Last month the cabinet approved the National Counterterrorism Centre concept. The United States and India have also established a joint working group on counterterrorism to enhance security cooperation between the two countries.

It is learnt Lall is keen to bring state of the art technologies to India and create innovation capability in the field of aerospace and security. Many global giants in security and aerospace have lined up at the Reliance Industries ever since Lall entered the scene.

Sources say discussions are now on with a wide spectrum of global giants (both American and European) to determine how jointly the market can be addressed. Lall was unreachable for comment.

However, confirming Reliance Industries was entering the homeland security business, a company spokesman maintained: “With the traditional surveillance and security platforms being inadequate to address the new challenges of insurgency and global terrorism, there is an emerging need to move over to intelligent electronic security solutions.”

Acknowledging the RIL tieup with Siemens, Reliance claims it has designed and operates the world’s largest integrated security automation system consisting of over 12,000 cameras apart from tens of thousands of other advanced security sensors, radars, and video analytics among others. RIL has vast domain experience with hundreds of security and safety professionals having background in defence, paramilitary and police, as well as its own internally trained resources.

Reliance Industries is supportive of existing government efforts and to integrate legacy systems with latest global technologies. Jamnagar refinery (the world's largest owned by RIL) has been an example of high security given geographic location. The Central Industrial Security Force has an entire contingent there as this is a strategic asset for India.

There is a saying fear is the highest fence. It seems Mukesh Ambani has realized that the higher the fence the more money is there to be earned.