New Delhi, April 30
The government on Monday permitted fresh cotton exports following a review by a group of ministers headed by Finance Minister Pranab Mukherjee. The informal group of ministers’ review of the cotton export situation was attended by Agriculture Minister Sharad Pawar, Commerce & Textile Minister Anand Sharma and chairman of the PM’s Economic Advisory Council C. Rangarajan.

The group of ministers considered the estimates of the Cotton Advisory Board and the third estimates of the agriculture ministry. After a comprehensive review it was decided that suspension of new registrations for cotton exports be revoked and exports be permitted.

The Cotton Corp of India has been asked to build a buffer stock of one million bales to meet any exigency during the months of June, July and August 2012.

The group of ministers will make an assessment of the situation in three weeks’ time.

Sharma said the government has lifted the suspension of fresh registrations for exports and the Director General of Foreign Trade will take the necessary steps.

Last month, the government had lifted the ban on exports but decided not to issue fresh registration of certificates. It only allowed shipments for which the certificates had already been issued before the blanket ban on cotton exports was imposed on March 5.

Congress party MPs from Gujarat led by Ahmed Patel, political secretary to UPA chairperson Sonia Gandhi, and state Pradesh Congress party chief Arjun Modhwadia recently met Prime Minister Manmohan Singh, Mukherjee and Sharma and sought the removal of restrictions on cotton exports. The move to ban cotton exports had been criticized by Gujarat Chief Minister Narendra Modi.

Pawar had also written to the prime minister objecting to the government's export policies towards cotton.

"We’ve accepted agriculture ministry's data on cotton production. Based on revised estimates of the Cotton Advisory Board as well as the agriculture ministry, we have decided to remove suspension on registration of cotton exports," Sharma added.

Earlier this month, the Cotton Advisory Board had revised production estimates upwards to 3.47 million bales from 3.45 million for the current season.

The board has also revised domestic consumption estimates downwards to about 2.5 million bales from 2.6 million earlier.

The agriculture ministry too has revised upwards cotton output to 3.52 million bales from 3,408,000 bales. Before the ban was imposed, the government had issued registration of certificates for about 1.3 million bales.

Sharma said a balanced view had to be taken to ensure cotton availability for meeting the needs of domestic industry as the textile sector directly or indirectly provides employment to 105 million people in this country. The handloom sector also employs a large number of people, particularly, the weaker section of the society, he added.

Mumbai, April 30
The Reserve Bank of India's battle to contain a falling rupee just got tougher. The current account deficit is widening and a weak global investment climate coupled with policy paralysis in New Delhi, sticky inflation and slowing growth have increased the aversion of foreign investors to India, pushing the capital account into the red.

Last week's move by rating agency Standard & Poor's to cut the country's credit rating outlook to "negative" has complicated matters further for the RBI, which has few options other than intervention and tinkering with rules on export credit to encourage inflows, RBI officials say.

"The main problem now is lack of confidence among investors and this is getting reinforced every time by either data or events like S&P cutting rating outlook," said a senior RBI official who is not authorised to speak on record to the media.

"When risk aversion is high, the success rate of intervention is low and that is why we are seeing rupee at such low levels despite intervention," he added.

The rupee fell as much as 0.5 percent immediately after S&P's move but has recovered much of that loss.

Still, it is down nearly 6 percent since February, recording most of the drop in March and April as foreign investment dried up. It had touched a record low of 54.30 to the dollar in December.

India's balance of payments slipped into the red for the first time in three years in the December quarter as dollar inflows shrunk and imports soared. It could worsen given India's need to import 80% of its oil, high crude prices, and unhappy foreign investors.

Foreign investments into Indian stocks have swung into negative with an $545 million outflow in April from a robust $7.1 billion net inflow in February. Foreign direct investments fell to $2.2 billion in February from $5.7 billion in May 2011.

‘SYMBOLIC SIGNIFICANCE’: These are some of the concerns that UBS took into account when it said it expects the rupee to test 56 per dollar this year.

"If we’re right that the exchange rate takes its cues more from the capital account side till better fundamentals emerge then regulatory risk must rise in importance," UBS wrote in the note.

"In this respect (the) negative outlook on India sovereign credit by S&P may not have much immediate impact, but has great symbolic significance."

That leaves RBI in a bind. Selling dollars to defend the rupee without policy reforms provides only temporary respite and further reduces its reserves.

India's foreign reserves fell to around $295 billion on April 20 from about $321 billion on September 2, after the RBI sold dollars to prop up the currency.

The RBI is officially agnostic about the level of the currency but steps in to smooth volatility and took several administrative and market moves to defend it in late 2011.

The RBI has sold $20.14 billion in the spot market from September to February besides intervening in the forwards. The country's foreign exchange cushion is dwindling. S&P figures India has reserves to cover about six months of current account payments, down from eight months in 2008 and 2009.

"We work only reactively when it comes to the currency. The proactive measures are to be taken by the government. Surely it’ll be a problem for us to control the currency if they (government) don't do so," said a second RBI official. — Reuters

New Delhi/Oslo, April 30
Facing strong negative business environment following the cancellation of telecom licences issued in 2008 on a first-come-first-serve basis by the Supreme Court, Norwegian telecom operator Telenor has written down its remaining fixed and intangible assets in India amounting to 3.9 billion Norwegian kroner, or about Rs 3,580.2 crore. The company warned it would exit the market if current plans for a mobile telephone spectrum auction go ahead.

State-controlled Telenor had already written down 4.2 billion crowns related to its Indian assets in February after the Supreme Court ordered 122 permits granted to eight operators revoked because the original 2008 sale was tainted by corruption.

The court said the government must hold a new sale for the spectrum and the telecoms regulator proposed a near tenfold increase in the price, drawing howls of protest from companies hoping to win them back.

"If the recommendation (for the spectrum auction) in its current form should be approved by the department of telecommunications, it will be almost impossible to participate in the auction for Telenor," the firm said in a statement on Monday. "If these recommendations become policy, then the government of India will be forcing Telenor Group to exit," it added.

Telenor, which has over 30 million subscriptions in India among 140 million worldwide, has committed to invest a total of $3 billion in Asia's third-largest economy and two thirds of that has already been spent.

The new auction price is so high, it would easily push Telenor above its own self-prescribed investment cap for India, the world's second-biggest mobile market by users with over 900 million subscribers.

Analysts have welcomed Telenor's tough stance on India, saying the low-margin market is only draining the firm's cash and an exit would lift its near term earnings.

At 0940 GMT, Telenor shares were 3.9 percent higher at 103.9 crowns, outperforming a 0.62% gain in the OBX index as investor see an Indian exit as a short-term positive for the stock. 

New Delhi, April 30
Negotiations are on for Japan to acquire a 26% equity stake in the company that will develop the Delhi-Mumbai Industrial Corridor (DMIC). Commerce & Industry Minister, Anand Sharma met Japan’s Minister of Economy, Trade & Industry Yukio Edano on Monday to discuss economic and trade ties between the two countries.

There has been progress of discussion on the equity participation by Japan in DMIC Development Corp to the extent of 26%. Sharma said the government would initiate required procedures for necessary approvals. In this context, the two ministers shared the importance of the relaxation of capital regulations in the course of implementation of the DMIC project.

The discussion also dwelt upon the infrastructure development in the areas along the Chennai-Bangalore Industrial Corridor including the preparation of a comprehensive integrated master plan of this region which was decided between the two prime ministers in December 2011. Japan will participate in promoting investments and supporting industries in the region through improving infrastructure such as ports, industrial parks and their surrounding facilities in Ennore, Chennai and the adjoining areas and stable power supply.

With the coming in force of the bilateral trade agreement, CEPA, trade increased by 38% during 2011-12 as compared to 2010-11. Sharma mentioned that if this trend continues the bilateral trade will cross US $24 billion by March, 2013 and as such the target of $25 billion will be achieved in 2013 itself.

New Delhi, April 30
Vodafone India has said a shift in the airwaves frequencies allotted to it to a higher band will put an additional cost burden of around Rs 10,000 crore on the company which will then be passed on to consumers, leading to tariff hike.

"Vodafone estimates that apart from the writeoff of existing investments, it will cost around Rs 10,000 crore to replace its 900MHz with an 1800MHz network," Vodafone India’s resident director for regulatory affairs & government relations T.V. Ramachandran, said in a letter to Telecom Minister Kapil Sibal.

The government has in-principle approved refarming (shifting) of spectrum and was waiting for TRAI’s recommendations in this regard to start the process and formalize it as part of the new telecom policy.

TRAI, in its latest recommendation on auction of spectrum has recommended that service provider using 800 and 900 Mhz spectrum band (being used for 2G CDMA and GSM service, respectively) to transmit signals for mobile and other wireless services should be shifted to higher frequency band of 1800 Mhz after the licences come up for renewal.

Ramachandran said this investment in the firm's network could have been utilized for providing coverage to about 50,000 additional villages. "The investment to replace the existing 900MHz network will mean added cost burden for the operator, which will translate into higher tariffs for consumers," he said.

Another GSM service provider, Idea Cellular, at the time of TRAI's consultation process has said that it will have to write off Rs 17,000 crore investment the firm has made in its network, if spectrum refarming takes place.

Vodafone's licences in 10 circles are due for renewal in 2014 and 2015 and in each of these circles, the company was given initial spectrum of 4.4 Mhz to start its services.

According to the latest TRAI proposal, the minimum price per Mhz of spectrum across India in 1800 Mhz, being used by most of the new players for 2G services, will be Rs 3,622 crore. The spectrum price will be double of this in 800 and 900 Mhz band. — PTI

London, April 30
Cellphone maker Nokia is in talks to sell its UK luxury subsidiary Vertu, which hand makes some of the world's most expensive mobile phones, a source familiar with the company's strategy said Monday.

Earlier the Financial Times reported talks with private equity group Permira were at an advanced stage on a possible sale which would raise about 200 million euros.

Vertu's cellphones can feature crystal displays and sapphire keys, costing more than 200,000 pounds due to the precious metal components.

Nokia, which had its credit rating cut to "junk" status by Standard & Poor's last week, first signalled its intention to sell Vertu in December, and recently said it plans to dispose of "noncore assets".

Nokia, once the world's dominant mobile phone provider, declined to comment, while Vertu and Permira were not available for comment.

The FT report, cited people familiar with the talks as saying Goldman Sachs was advising on the possible sale, but said the outcome was not yet certain. EQT, the Northern European private equity group, has also been in talks about buying the firm, although those close to the process, cited by the FT, say these are not progressing at this stage. — Reuters