New Delhi, March 30
Finance Minister Pranab Mukherjee brought some cheer to the stock markets on Friday when he clarified that participatory notes (P-notes) used by foreign investors in the Indian stock markets would not be taxed.

The stock markets reacted to the announcement with the BSE Sensex closing at 17,404.2, up by 350 points.

Mukherjee said P-Notes would not be taxed but only the tax liability of foreign institutional investors would be assessed. Though there is relief on the P-Notes front, this would mean FIIs and brokerages that issue P-Notes will be taxed, which may not provide full relief to foreign investors.

“The Indian tax authorities will not go beyond financial investors (FIIs) to check details about P-Notes holders. Accordingly, a question of liability for tax in India of the P-Note holders won’t arise. The necessary clarification will be issued”, Mukherjee said.

After the FY2013 budget was presented there have been apprehensions about the applicability of GAAR provisions on FIIs and investments routed through Mauritius in particular. P-Notes are instruments used by investors that are registered as FIIs through SEBI.

Referring to the provisions in the Finance Bill, Mukherjee said: “I’d like to categorically clarify the government’s intention is not to cause any harassment to genuine investors.”

Pointing out that P-Notes holders invest in stock market through FIIs, he said: “The income tax department would examine the tax liability of the FIIs.”

Kishor P. Ostwal, chairman & MD of CNI Research, said the market rose today due to a mixture of three reasons. As the settlement expiry happened on Thursday there was a lot of unwinding of positions as Friday was a NAV (net asset value) day, being the last day of the financial year and finally the finance minister's assurance that P-notes would not be taxed. 

Mumbai, March 30
The rupee suffered the worst fall in four months, shedding 3.68% in March, hammered by investor jitters over the impact of high global oil prices on an economy still licking the wounds of a fierce inflation battle that has crimped growth and widened deficits. On Friday, the rupee put on a good show aided by a surge in local stocks and dollar sales by exporters at the end of FY12.

"There’s nothing cheerful domestically, and oil prices react in a complex way with the Indian economy. It hurts fiscal deficit, while seeping directly into inflation," said a currency strategist at a foreign bank in Singapore. — Reuters

New Delhi, March 30
Mahindra & Mahindra on Friday announced formation of two separate joint ventures in defence sector targeting a minimum turnover of US $1 billion in the next ten years. The joint venture partners will invest Rs 200 crore in the two new entities.

The first JV is between M&M and government of Israel-owned Rafael Advanced Defense Systems and another one is with US-based Telephonics Corp. The Indian partner will own 74 % stake in each, and the remaining 26% will be with be the respective international entities.

"What we’re seeing Mahindra do is to focus on where India needs to go in future," M&M vice chairman & MD Anand Mahindra told reporters while announcing the new JVs.

The JV with Rafael will focus on development and manufacturing of products such as torpedo defence systems, electronic warfare systems, advanced armour solutions and remotely operated weapon stations for futuristic infantry combat vehicles (FICVs).

"Over a period of ten years, we are looking at a turnover of US $500 million from this JV and if we’re selected for supplying FICVs by the Indian government, then we expect the turnover would immediately become one billion dollars," Mahindra said.

“An initial investment of Rs 100 crore in the JV with Rafael will be made. The JV will also set up a facility in Poona where mostly naval systems will be made”, he said.

Mahindra is one of the four firms that have received expressions of interest (EOIs) to supply around 2,000 units.

The joint venture with Telephonics, has been set up primarily for surveillance radar systems, identification friend or foe (IFF) and communication systems. — PTI

Mumbai, March 30
Unitech Ltd said it has applied to a local court seeking to restrain Norway's Telenor from investing in any new telecoms venture in India that would compete with companies' existing joint venture.

Unitech, a property company, is also seeking an injunction against Telenor's plans to transfer the joint venture's business to a new company, it said in a statement on Friday, adding the move was aimed at protecting its investments in the telecom business.

Telenor owns 67.25% stake in the Indian telecoms JV, which operates under the Uninor brand, with the remainder held by Unitech.

The companies have been embroiled in a dispute after the JV's telecoms permits were ordered to be revoked by the Supreme Court, which ruled last month all permits awarded in a scandal-tainted 2008 sale be quashed in early June.

Telenor, which had bought into the venture after the permits had been granted, has accused Unitech of "fraud and misrepresentation" and is seeking to migrate the joint venture business to a new company to seek licences in an auction.

Unitech is opposing Telenor's move. Both sides have appealed to the Company Law Board. — Reuters

Chandigarh, March 30
The finance ministry on Friday released Rs 35,000 crore to the three state-run oil marketing companies — Indian Oil, HPCL and BPCL —on account of under-recoveries for providing LPG, kerosene and diesel at subsidized rates.

This was revealed by finance secretary R.S. Gujral on the sidelines of a session on “Implications of Budget”, organized by the PHD Chamber, here today. “We had paid Rs 20,000 crore towards the under recoveries in the first quarter of this financial year, while the remaining Rs 35,000 crore is being released today, which is the last working day of this fiscal,” Gujral said in answer to a question on the huge under-recoveries by the state run oil marketing firms.

He added after the government reduced the excise and customs duty on crude and petroleum in June last year, it has taken a hit of Rs 48,000 crore. “The under-recoveries have been huge this year, as the international prices of crude oil have remained at an all time high. Though we’ve decontrolled petrol prices, diesel, LPG and kerosene are still subsidized,” he said.

On being asked about the demand by jewellers across the country to withdraw the 1% excise duty on gold ornaments, Gujral said withdrawal of the duty was not being considered at the moment. “Excise duty is not leviable on jewelers having a manufacturing turnover of less than Rs 5 crore per annum. In addition, the normal excise cover is given to small jewelers having sales of less than Rs 1.50 crore. After getting 70% abatement the excise duty payable by a small jeweller is just 0.3%.

Rejecting the industry’s criticism of retrospective amendment to the income tax laws, Gujral said these were not amendments, but just retrospective clarifications to tax overseas mergers and acquisitions. “It’s the clarification of the intent and it’s from the day when the statute was passed,” he said, adding the government would initiate steps to recover tax from Vodafone only after Parliament passes the Finance Bill.

Earlier, while referring to the Vodafone case, he said the government was just asking 10% of withholding tax on the transaction that took place between Vodafone International Holdings and the Hutchison Group