The Tribune, Chandigarh, India

Big, bold and market-driven
Opening up retail a game changer
Sanjeev Sharma/TNS

New Delhi, September 14
Brushing aside political opposition, the Manmohan Singh government is going full throttle on big ticket reforms. Accused of being in policy paralysis, the government which has donned a new, daring avatar in the last two days on Friday operationalized the decision to allowed foreign supermarkets like American retail giant Walmart to enter India’s vast and expanding US $450 billion retail sector.

Coming on the heels of the bold and audacious move to hike diesel prices and cap cooking gas subsidy, the cabinet today allowed 51% in multibrand retail but left the decision whether to implement the policy to the states.

The policy moves by the government have been welcomed by markets and industry with the Bombay Stock Exchange Sensex shooting up by 440 points today and will seek to attract investments and reduce the impending threat of a ratings downgrade by foreign rating agencies.

While the decision on allowing FDI in multibrand retail had been taken in November last year, it had been put on hold due to political opposition from the UPA allies like the Trinamool Congress party.

Today, the government said the suspension of the decision has been lifted and states will decide whether such stores will be allowed or not. While Congress ruled states have expressed support for the move some other large non-Congress party ruled states have opposed it.

Stores can only be set up in cities with a population of more than one million, which will be around 53 in the whole country. 50% of the total foreign direct investments to be brought in should be invested in backend infrastructure within three years which includes storage, logistics, warehousing among the activities.

For single brand retail, the cabinet decided that any firm seeking waiver of the mandatory 30% local sourcing norms would have to set up a manufacturing facility in the country.

Cable TV to see qualitative change soon
Tribune News Service

New Delhi, September 14
In a major decision to open up the broadcast sector, the government has decided to raise the FDI cap to 74 % in various services except TV news channels and FM radio where the 26% cap will apply.

This will bring in new technology, content management with information flow and a wider audience reach. The decision was taken at Friday’s CCEA meeting chaired by PM Manmohan Singh.

The move will apply to broadcast carriage services providers, including DTH, Headend In The Sky (HITS), Multiservice Operators (MSOs) and cable TV to bring about uniformity.

Till now 49% FDI was allowed in cable TV and DTH while it is 74% in HITS, a satellite multiplex service that provides TV channels for cable operations. Among other segments, 74% FDI was allowed in mobile TV.

Stocks zoom to 14-mth high on Fed boost, diesel hike
Sensex posts biggest 1-day gain in 10 mths at 443 pts

Mumbai, September 14
Logging its best single-day gain this year, the Bombay Stock Exchange Sensex on Friday vaulted 443 points to a 14-month high of 18,464.27 as investors cheered government's decision to hike diesel prices and US Federal Reserve approved a new economic stimulus plan to spur growth.

In all nearly 1,500 stocks rose on the BSE taking investor wealth up by Rs 1 lakh crore to Rs 63.63 lakh crore.

The 30-share Sensex opened 260 points higher tracking overnight gains in US market.

Reports of a new 'Quantitative Easing' plan by the Federal Reserve and hopes India will take more bold steps on economic reforms after hiking diesel price by Rs 5.63 per litre, set the day's trend.

The positive sentiment prevailed despite inflation rising by a higher-than-expected 7.55% in August, which may restrain RBI from cutting interest rates at its monetary policy review next week, said dealers.

As the session progressed, stocks built on the momentum as 24 shares of the 30-share Sensex closed with gains, led by Jindal Steel and Hindalco which rose over 8% each.

RIL, SBI and ICICI Bank rose around 5% each helping the Sensex gain 443.11 points.

Friday's closing of 18,464.27 points is a 14-month high since Sensex closed at 18,518.22 on July 26, 2011.

The 50-share National Stock Exchange index Nifty today rose by 142.30 points, or 2.62% to 5,577.65. — PTI

Inflation jumps to 7.55%, little scope for rate cuts
Tribune News Service

New Delhi, September 14
Inflation rose to 7.55% in August after having fallen to 6.9% in July on the back of rise in electricity prices, food articles and manufactured articles leaving observers guessing on whether the the RBI will cut interest rates on Monday.

Crisil Research said in a report that the resurgence in inflation was largely due to a revision in electricity tariffs, which raised administered fuel inflation to 7% in August from 4% a month earlier. Overall fuel Inflation, which rose to 8.3% in August, is expected to rise further over September-October due to higher crude oil prices and the diesel price hike.

According to Crisil the direct one-time impact of the revision in diesel prices on WPI inflation is expected to be around 60 basis points. As prices have been revised in mid-September, only a partial impact is likely to be seen next month while full impact will play out in October.

FICCI said that although there has been a decline in prices of food articles prices from 10.1% last month (July 2012) to 9.1% in August 2012, there has been an increase in prices of certain commodities like cereals and pulses.

Booster for ailing aviation
Vibha Sharma/TNS

New Delhi, September 14
Striking a big ticket move, the UPA government today allowed foreign investments up to 49% stake in private scheduled operations in the country. The CCEA meeting, chaired by Prime Minister Manmohan Singh, gave the go-ahead to the proposal permitting foreign airlines to make investment of up to 49% of their paidup capital in scheduled and nonscheduled air transport services. The 49% limit will subsume FDI and FII investment

The removal of existing restrictions on investment by foreign players is expected to assist in bringing in strategic investors into the beleaguered civil aviation sector. The Indian aviation sector, in particularly private carrier Kingfisher Airlines, has been suffering from considerable financial duress since long.

The decision is expected to provide a potential lifeline to the debt-laden airlines by opening up a fresh source of funding and also improving their prospects with banks here.

A visibly relieved Civil Aviation Minister Ajit Singh hoped with international technical and management expertise, Indian banks would now look at the sector favourably.

The government is also promoting regional airlines to improve connectivity in the country, particularly in northeastern and western sectors. Singh said the move would now put the industry on a growth trajectory. The opposition BJP maintained that the move was for “individuals” (read Kingfisher-promoter Vijay Mallya) and not for the betterment for the country. Skeptics also believe that with worldwide aviation in doldrums, there may not be many takers for stake in the Indian market.

Now that foreign shareholdings will be allowed in India, safeguards have been included to ensure that country’s strategic concerns are looked after. It will be ensured that substantial ownership and control remains with Indian nationals and that the country’s rules and regulations are followed. The company will have to be registered in India and its chairman and at least two-thirds of the directors on the board will have to be Indian citizens.

KINGFISHER HAILS MOVE: Welcoming the decision to relax FDI in aviation, ailing Kingfisher Airlines said the carrier would “now be able to re-engage with prospective airline investors in a more meaningful manner and move towards recapitalization.

strict Norms

The Scheduled Operator’s Permit can be granted only to:
* A company registered and with principal place of business in India
* Chairman & at least two-thirds of firm’s directors must be Indian citizens
* Substantial ownership and effective control of which is vested in Indians

FDI cap in broadcast services hiked to 74%
Tribune News Service

This will bring in new technology, content management with information flow and a wider audience reach. The decision was taken at Friday’s CCEA meeting chaired by PM Manmohan Singh.

The move will apply to broadcast carriage services providers, including DTH, Headend In The Sky (HITS), Multiservice Operators (MSOs) and cable TV to bring about uniformity.

Commerce Minister Anand Sharma said of the 74% FDI, 49% will be through the automatic channel while the rest will be allowed through FIPB clearance. However, for news channels, current affairs, FM radio and content providers the FDI limit will stay at 26%.

49% FDI in power trading exchanges okayed
Tribune News Service

New Delhi, September 14
The Cabinet Committee on Economic Affairs on Friday approved a proposal for permitting the foreign investment up to 49% in power trading exchanges.

Foreign investment to the limit of 49% would be through 26% of FDI and 23% FII limit of the paid-up capital of the power trading exchanges.

The exchanges would be set up in compliance with the SEBI regulations, Central Electricity Regulatory Commission (Power Market) Regulations, 2010, and other applicable laws.

FII investments would be permitted under the automatic route and FDI would be permitted under the government approved channel.

It would subject to the conditions that the FII purchases shall be restricted to the secondary market only, and no non-resident investor or entity, including persons acting in concert, holding more than 5% of the equity in these companies would be allowed.

The approval is expected to strengthen the power trading exchanges and to enhance the availability of power and to improve its distribution. Introduction of global best practices, concomitant with the induction of FDI, is expected to lead to higher service standards in power trading exchanges.

Presently, FDI up to 100%, under the automatic route, is permitted in the power sector (except atomic energy).

This includes generation, transmission and distribution of electricity as well as power trading, subject to the provisions of the Electricity Act, 2003.

There is, however, no specific dispensation, under the FDI policy, for power trading exchanges.

Power trading is the purchase of electricity for resale thereof, while a power trading exchange provides an organized platform for fair, efficient and robust price discovery, extensive price dissemination, and price risk management for the generators, distributors, traders, and consumers.

Bharti Infratel files for $1 bn IPO

Mumbai/New Delhi, Sept 14
Bharti Airtel's mobile phone tower unit has filed for an initial public offering which sources said on Friday could raise nearly $1 billion in the country's biggest IPO in more than two years.

Bharti Infratel is likely to launch the IPO in January and is offering a 10% stake, according to sources who declined to be named as the information is not public yet.

Bharti Airtel, which owns 86% of the Bharti Infratel unit, said it had decided not to sell any shares in the public offering. Bharti Infratel will issue shares, and investors including investment arms of Temasek and Goldman Sachs will sell shares in the IPO, it said. — Reuters

Gold hits record peak of Rs 32,900

New Delhi, September 14
Gold prices touched new all-time high of Rs 32,900 per 10 grams here today, tracking the metal's rally overseas after the US Federal Reserve decided to add further stimulus to boost the world's biggest economy.

While gold added Rs 310 to hit the record level, silver rose by Rs 800 to Rs 62,000 per kg.

Traders said sentiment buoyed on strong cues from global markets where gold climbed to a six-month high after the Fed unveiled a fresh stimulus plan to help spur the US economy, lifting the metal's demand as a store of value.

Gold rose 0.6% to US $1,778 an ounce in Singapore — the highest level since February 29. In addition, some local buying by jewellers and stockists ahead of marriage season also boosted the sentiment, they added.

On the domestic front, gold of 99.9 and 99.5 per cent soared by Rs 310 each to Rs 32,900 and Rs 32,700 per 10 grams, respectively. Sovereign also rose by Rs 100 to Rs 25,600 per piece of 8 grams.

Silver ready spurted by Rs 800 to Rs 62,000/ kg and weekly-based delivery by Rs 1,880 to Rs 65,265/kg. — PTI