The Tribune, Chandigarh, India

Fiscal sops for exporters; e-commerce to get boost
Tribune News Service

New Delhi, June 5
Acknowledging the difficulty in promoting exports in the face of a grim global economic situation, the government today announced sops to labour intensive industries in the annual supplement to India’s foreign trade policy to achieve 20% jump in exports to US $360 billion this year.

Commerce & Industry Minister Anand Sharma announced the 2 per cent interest subsidy scheme has been extended for another year till March 2013 and expanded its coverage to include other labour intensive sectors like toys, sports goods, processed agricultural products and ready-made garments.

He acknowledged it was a difficult task to present a policy which aims for rapid growth in exports in the face of weak global demand and the unabated persistence of the global economic crisis which erupted 4 years ago. “The difficult economic situation in the eurozone crisis poses a real risk of destabilizing the fragile recovery and sinking the world into yet another recession”, he said.

The policy has set a target of growing India’s exports by 20 per cent this fiscal which is a little more than the growth rate achieved last year.

The policy is based on a 7- point strategy which includes thrust to employment intensive industry, encourage domestic manufacturing for inputs to export industry and reduce the dependence on imports, promote technological upgradation of exports, persist with a strong market diversification strategy, encourage exports from the northeastern region, incentives for manufacturing of green goods and reduce transaction costs.

The government will soon come out with new guidelines to revamp special economic zones (SEZs) and export oriented units (EOUs) schemes to further boost shipments.

Industry has welcomed the policy initiatives with industry body Assocham saying that the import entitlement scripts against exports accumulated by the exporters could now be used for procurement of domestic product without paying excise duty. “This will also encourage domestic production at a time when industry is reeling under the slow down. Besides, the scope for EPCG has also been extended which is used by the textile sector”, said Assocham secretary general D.S. Rawat.

FIEP president M. Rafeeque Ahmed said in the wake of contraction of global demand and impending eurozone crisis, the incentives would help in imparting competitiveness to exports. He said the extension of interest subvention to include processed agricultural products, ready made garments and toys and sports goods besides carpets, handicrafts, handloom and small and medium enterprises till March 2013 is great relief to export sectors.

Falling scrap prices cheer Punjab steel furnaces
Ruchika M. Khanna/TNS

Chandigarh, June 5
Finally, there is some good news for the hundreds of steel furnaces in Punjab. The price of imported scrap — the basic raw material for these induction furnaces —have started receding. In the past one week the prices of scrap have gone down by almost US $40 per tonne.

With iron scrap dealers expecting the international prices of scrap to fall further, induction furnaces in the state feel the good times for the steel industry are to stay. Iron scrap dealers in the region estimate a sharp correction in prices of scrap in the international market, mainly because there are very few takers for this. Other than India and China, there is not much demand for the scrap, leading to a sharp fall in prices.

Over the past few months, prices of imported scrap had been rising, giving a tough time to the 250 odd induction furnaces in Punjab. The prices had peaked at $470 per tonne, thus forcing most induction furnaces to stop import of iron scrap, as it had become economically unviable. The sharp rupee fall, too, added to the woes of these induction furnaces as they had to pay more to buy the same amount of scrap.

“But now, the prices of scrap have come down to $425-$430 per tonne, thus making using of imported scrap viable for the induction furnaces,” said P.D. Sharma, a Ludhiana-based industrialist. It may be mentioned that the 250 odd induction furnaces in Punjab consume almost 45,000 tonnes of imported scrap per annum.

In fact, there has been a lot of volatility in the prices of steel goods, mainly because the cost of iron ore has gone up substantially. With the iron ore mining in the country slowing down because of environmental concerns, the primary steel producers have been importing iron ore. This has led to an increase in costs of iron ore, as also a hike in prices of sponge iron that these primary steelmakers produce and supply to the secondary steel manufacturers and induction furnaces.

“Since the rates of sponge iron have gone up by almost Rs 1,000- 1,500 per tonne, the dependence on imported scrap has risen. But now with the imported scrap rates showing some correction, the dependence of secondary steel producers and steel furnaces on sponge iron will reduce,” said Amarjit Goyal, chairman of Modern Steels.

Contingency plan for eurozone meltdown

New Delhi, June 5
India has prepared a contingency plan for Greece exiting the euro zone and even a collapse of the monetary union, Indian officials said on Tuesday.

The eurozone debt crisis has already put a damper on India's exports to Europe, the biggest destination for Indian goods, as well as capital inflows into equity and debt markets. Prime Minister Manmohan Singh's government blames Europe's woes for the slowdown in Asia's third-biggest economy, although economists say Indian policy inertia is also to blame.

Finance chiefs of the Group of Seven leading industrialised powers will hold emergency talks on the euro zone crisis on Tuesday in what was seen as a sign of growing global alarm over the threat posed by the strains within the 17-nation union.

"Yes, India does have a contingency plan. There are different crisis management groups within the government to deal with such a possible scenario," Kaushik Basu, the chief economic adviser to Finance Minister Pranab Mukherjee, told Reuters.

He declined to give details of the plan, but another senior official familiar with the planning said the finance ministry and the RBI were prepared to take monetary and fiscal measures if necessary to try to insulate India from the shockwaves of a eurozone collapse. — Reuters

Cash piles up at Reliance Ind; is its growth cycle slowing?

Mumbai, June 5
Billionaire Mukesh Ambani's Reliance Industries Ltd is piling up cash even as its profits shrink, fuelling investor disquiet over a tumbling share price and lack of clear vision at a company that was once India's most valuable.

Reliance generates up to $1 billion in free cash every quarter and held $13.8 billion at end-March, far more than it can put to work under existing investment plans or through an ongoing share buyback programme.

"Earlier, investors gave them the benefit of doubt that cash was being deployed in high-margin businesses, but people are questioning that now," said Michiel van Voorst, a portfolio manager for Asia-Pacific Equities at Robeco Hong Kong. Those questions are likely to get an airing at the company's annual shareholder's meeting on Thursday.

Reliance has cooled in its hunt for acquisitions in North American shale gas as US natural gas prices have plunged. At home, investment in its gas blocks has stalled as output slows and it battles the government over gas pricing. The company has so far acquired less than a quarter of the $2.1 billion of shares it plans to buy back from investors, even as it raises debt to take advantage of low borrowing costs.

Reliance makes much of its plans to spend $12 billion over the next few years to boost capacity at its petrochemicals plant and refinery complex, the world's largest, in western India. However, such projects are typically funded about 70 percent from debt, which leaves plenty of low-yielding cash left over.

Last year, Ambani outlined a big drive into consumer-focused businesses, looking to take advantage of rising spending power in Asia's third-largest economy. — Reuters

Railways hike parcel, luggage rates by 25%
Tribune News Service

New Delhi, June 5
Indian Railways has revised the the parcel and luggage rates by 25 per cent on all goods with immediate effect. The revision in parcel rates comes two months after it raised the freight rates.

After rolling back the hike in passenger fares, the hike in parcel rates is expected to give the railways additional Rs 370 crore as revenue, which would help it improve its finances to some extent. Indian Railways earned Rs 1,600 crore from parcel and luggage in fiscal 2011-12.

The move which could also prove to inflationary has been done with the idea of rationalizing the tariff structure and comes after six years. The new rates have been effective since June 1.

The last revision of parcel and luggage rates had taken place in 2006 and the new rates would be applicable on all goods. Tyres, newspapers and magazines, pharmaceuticals, pulses and flour are among the goods generally booked in the railway parcel service.

Indian Railways has also raised freight rates by 20 per cent in March. However, the hike will not be applicable on special parcel trains.

Goldman CEO testifies at Rajat Gupta insider trial

New York City, June 5
Lloyd Blankfein, the chief executive of Goldman Sachs Group Inc, told jurors at the insider-trading trial of one of the investment bank's former directors that "all parts" of a 2008 board meeting the two attended were confidential.

"If something is discussed in a board meeting, it’s confidential," Blankfein said, when asked about a June 2008 board meeting in St. Petersburg, Russia, that he and defendant Rajat Gupta both attended. "All parts of it were confidential."

Blankfein took the stand at the Manhattan federal court trial of Gupta, the second time in 14 months that the Goldman leader has been a star government witness at a major insider-trading trial.

The June 2008 board meeting is not directly connected to any of the charges in the case, but an FBI wiretap of Rajaratnam's phone begins with Rajaratnam telling Gupta he heard a rumor that "Goldman might look to buy a commercial bank." Gupta's response is that "this was a big discussion at the board meeting." — Reuters

All PSU banks set to join RuPay system by yearend
Tribune News Service

Manesar (Gurgaon), June 5
Corporate Affairs Minister M. Veerappa Moily said all state-owned banks are expected to join the RuPay system by the end of this year, adding RuPay-based debit cards can be used by the consumers on the Internet from September, 2012. He was speaking at a brainstorming meeting of the banking sector organized here by the Indian Institute of Corporate Affairs on Tuesday.

The government had launched India’s first domestic payment card network, RuPay, to compete with Visa Inc and Mastercard Inc.