New York City, August 7
Outsourcing of key oversight jobs by global banks to India has come under the scanner for the second time in less than a month for exposing the United States financial system to terrorists and money laundering risks.

On the heels of a probe by the US Senate's permanent committee on investigations pointing out major lapses in the work of HSBC's India staff, another UK-based banking giant Standard Chartered's outsourcing of key banking jobs to Indian shores have come under the scanner in the United States.

A probe by the New York State's key banking regulator, the Department of Financial Services (DFS), has found deficient money laundering controls in outsourcing of work by Standard Chartered to India, thus exposing the US financial system to terror financing and other risks.

The findings in these two separate probes have come at a time when the voices against outsourcing of jobs to India and other locations are gaining momentum in the US, ahead of the presidential elections in November.

In an order last night, the DFS accused StanChart of hiding secret transactions involving US $250 billion with Iran. The bank, which has been in talks with US authorities since early 2010 over the matter, had exposed the US banking system to terrorists, drug traffickers and corrupt states, the DFS said.

The DFS probe found that SCB had assured the New York state in May 2010 that it would take immediate steps to comply with the US Office of Foreign Assets Control (OFAC) sanctions.

However, another regulatory examination in 2011 found continuing and significant Anti-Money Laundering failures. Among these, the bank was outsourcing its "entire OFAC compliance process for the New York City branch to Chennai, India, with no evidence of any oversight or communication between the Chennai and the New York offices."

The OFAC is the designated US government agency for preparing list of entities with whom American citizens and entities are barred from doing any business. — PTI

New Delhi, August 7
The markets gained for the second consecutive day enthused by the economic revival plan announced by Finance Minister P. Chidambaram. The BSE Sensex was up by more than 189 points to close at 17601 points. This is the second of the markets gaining more than 1 per cent following Monday’s gain of 215 points.

Nomura Securities in a research note said Chidambaram had struck the right note with the investor community, with a focus on the key areas that need attention like fiscal consolidation, reinvigorating reforms and easing supply-side constraints by focusing on infrastructure.

It added some decisions such as cutting subsidies (by hiking fuel prices) lie at the heart of fiscal consolidation and require co-operation from all coalition partners. Moreover, previous paths laid out for fiscal consolidation have not been binding on the government. “As such, we will await concrete actions to tackle the fiscal deficit”, the note said.

Fast-tracking execution of infrastructure projects currently under construction is positive and, if implemented, may help revive some of the downbeat sentiment regarding investment. Chidambaram’s statement on interest rates suggests there will be political pressure on the RBI to cut interest rates.

“Overall, we view the FM’s statements as positive and a promise that decision-making is set to accelerate. However, it is too early to rejoice. The government now has to walk the walk”, the report added.

Industry is also enthused by the new finance minister’s announcements. FICCI president R.V. Kanoria said it was quite obvious he meant business and had immediately put himself in the task of reigniting the growth triggers. “There’s a sense of urgency that we could see in Chidambaram’s address”, he added.

Sanjeev Zarbade, vice president of PCG research, Kotak Securities, said the Sensex rallied over 1% for the second consecutive session on Tuesday as traders continued to add long positions ahead of monsoon parliament session.

Chidambaram’s statements on Monday were among the main reasons for the rally. Sectorwise, the rally was led by banks, technology, FMCG and auto stocks.

Crisil today lowered India’s GDP forecast for the year to 5.5% from its earlier estimate of 6.5%on concerns around poor monsoon, Eurozone crisis and the rising fiscal pressures which will limit the government’s ability to provide a stimulus.

New Delhi, August 7
Global single brand retailers like IKEA may find it tough to get easing of norms for compulsory sourcing from the Indian tiny and small units, with the ministry of micro, small & medium enterprises strongly opposing the move of the commerce & industry ministry.

"I’m opposed (to it) if you’ll say you’ll not procure 30% from India and will procure everything from abroad," additional secretary in the ministry Amarendra Sinha said on the sidelines of a function jointly organised by software provider INTUIT and the ministry here.

The government has eliminated the 51% cap on foreign direct investment for single brand retailers like IKEA, Adidas, Louis Vuitton and Gucci. However, those opting for taking FDI beyond 51% will have to source at least 30% of their merchandise from the domestic micro and small units.

While Swedish furniture firm IKEA has moved its application for raising FDI up to 100%, it has sought from the government easing of norms for compulsory procurement from micro and small enterprises (MSEs). At present, a company up to investment of Rs 5 crore qualifies to be called an MSE.

The IKEA arguement is that once big time orders are placed on domestic entities, they will have to expand capacity and pump in more investment and thus would not remain the MSEs eligible for sourcing by global firms.

While the commerce & industry ministry has indicated willingness to accommodate IKEA demand, Sinha said the MSME ministry had not been consulted on the issue. "It (department of industrial policy & promotion) is supposed to consult us. How can I assume role of DIPP?” — PTI

New Delhi, August 7
With the Land Acquisition and Rehabilitation & Resettlement (LARR) Bill 2011 likely to come up in Parliament’s monsoon session, Indian industry has raised concerns over some provisions.

The Confederation of Indian Industry has called for streamlining land acquisition to promote job creation in industry. It had welcomed the LARR Bill, 2011 since it takes a holistic approach towards land acquisition and rehabilitation and resettlement and provides a prominent role for the government in land acquisition so as to make the process more equitable, fair and transparent.

“Agglomerating land from numerous owners is not a task which the corporate sector can do effectively, especially in the absence of proper land records and with small, scattered land-holdings. Therefore, government intervention becomes necessary in assisting such land acquisition,” said CII in a statement.

The apex industry body said there are serious concerns in the Indian Industry on some of the recommendations of the recently released report of the parliamentary standing committee on rural development.

The panel’s recommendation prohibiting the government from acquiring land for PPP projects, private use or private firms will make land acquisition in India more complex and difficult, leading to slower growth in industry and, therefore, the economy.

Another committee recommendation pertaining to imposing restrictions on acquiring ‘any land under agriculture’ by the private sector is also an issue of major concern — this could effectively render a significant portion of land out of the purview of acquisition for industry or infrastructure.

Further, the panel’s recommendation of “return of unutilized land merely after 5 years” will effectively stall the future expansion of many industries which expand in phases, have a greater gestation period and generate returns over a longer period of time.

CII has expressed some concerns about certain provisions in the LARR Bill, 2011. On the compensation package it has said as per the provisions stipulated in the LARR Bill 2011, cost of land acquisition in the country is likely to increase by 3-3.5 times, severely affecting the viability of industrial projects across the board and this may erode competitiveness of the Indian manufacturing sector.

CII has said that relief and rehabilitation costs are likely to go up by about 3 times compared to the prevailing practice as per the proposed package, which, to a large extent compensates different categories of affected families at par and not aligned to their losses.

With reference to special provisions to safeguard food security, certain restrictions have been imposed in the LARR Bill, 2011 on acquisition of irrigated multicropped land.

As this may hamper the industrial development of states which predominantly have multicropped land and would also severely affect Industries based on nature, the LARR Bill, 2011 stipulates return of the acquired land if not utilized for a period of ten years, which may affect the future expansion plans of industries which grow over a period of more than ten years due to their nature of activities.

CII has said the provision of consent of 80% affected families being made mandatory only on land acquisition for private sector appears discriminatory in nature.

Chandigarh, August 7
The Haryana government has signed a memorandum of understanding with four independent power producers for setting up five biomass power projects of 51 megawatts capacity at an investment of Rs 230 crore. Of these, two are likely to be commissioned soon.

The state government had also increased the renewable energy department’s annual budget from Rs 3.9 crore in FY2004-2005 to Rs 42.43 crore in FY2013 as a part of its programme to promote renewable energy in Haryana.

To produce electricity from the distillery waste, a project of one MW capacity at Ashoka Distillery & Chemicals, Hathin, Palwal district, and a 3 MW project at Globus Spirit, Samalkha, Panipat district, have been set up. For generation of power from agricultural waste, 11 projects of 2,495 MW capacity through the cogeneration route have been set up, an official said.

Eight projects of 7.8 MW capacity have already been commissioned in the state under the National Solar Mission, which include seven projects of one MW each. Solar power projects of 541.45 kW capacity had been set up in 30 private sector and government offices.