B U S I N E S S

Obama tries to rescue fiscal talks for post-Christmas deal
Washington, D.C., December 22
The White House on Friday tried to rescue stalled talks on a fiscal crisis after a Republican plan imploded in Congress, but there was little headway as lawmakers and President Barack Obama abandoned Washington for Christmas.

A trader works on the floor of the NYSE on Friday. US stocks finished lower on Friday after a Republican plan to avoid the "fiscal cliff" failed to gain sufficient support on Thursday night, draining hopes that a deal would be reached before 2013. — Reuters

Maruti acquires land for second plant in Gujarat
New Delhi, December 22
Maruti Suzuki India said Saturday it had started spadework to set up its second manufacturing facility in Gujarat with acquisition of another 600 acres, in addition to its existing plan to invest Rs 4,000 crore for setting up a plant in the state.

investor guidance
Repatriation of sale proceeds of assets held in India
We are naturalized US citizens and are now in the process of selling real estate in India that we had purchased 30 years ago when we were residing there. We have an NRO account in India and the proceeds from the sale of that lot will be deposited into this account. We want to repatriate the proceeds after paying capital gains tax in India.

Obama tries to rescue fiscal talks for post-Christmas deal

President Obama speaks about the fiscal cliff at the White House in Washington on Friday. He urged lawmakers to reach an agreement on averting tax hikes on the middle class, saying he was ready and willing to do what it took to get a deal by Jan 1. — Reuters

Washington, D.C., December 22
The White House on Friday tried to rescue stalled talks on a fiscal crisis after a Republican plan imploded in Congress, but there was little headway as lawmakers and President Barack Obama abandoned Washington for Christmas.

In remarks before flying to Hawaii for a break, Obama suggested reaching a short-term deal on taxes and extending unemployment insurance to avoid the worst effects of the "fiscal cliff" on ordinary Americans at the start of the New Year.

"We've only got 10 days to do it. So I hope every member of Congress is thinking about that," said Obama. He said he wanted to sign legislation extending Bush-era tax cuts for 98% of Americans in the coming days.

He appeared to be offering bickering lawmakers a way to fix the most pressing challenge — tax cuts that expire soon — while leaving thorny topics such as automatic spending cuts or extending the debt ceiling for later.

If there is no agreement, taxes would go up on all Americans and hundreds of billions of dollars in automatic government spending cuts would kick in next month — actions that could plunge the US economy back into recession. — Reuters

Maruti acquires land for second plant in Gujarat
TNS & Agencies

New Delhi, December 22
Maruti Suzuki India said Saturday it had started spadework to set up its second manufacturing facility in Gujarat with acquisition of another 600 acres, in addition to its existing plan to invest Rs 4,000 crore for setting up a plant in the state.

The country's largest car maker also said it would not enter the premium segment of passenger cars in India and will "protect" its image of a small car manufacturer.

"We have land at two locations in Gujarat. The first one has been offered by the government and the second one is private land that has been directly acquired by us with some negotiations by the government," Maruti Suzuki India chairman R.C. Bhargava told reporters.

The company has acquired about 600 acres, located about 40 km from the first site near Mehsana, he added. "The second location is for our future expansion. Once we exhaust the capacity at the first site, we will move to the second one," Bhargava said.

Talking about the company's performance in this fiscal, Bhargava said Maruti Suzuki was looking at 6% growth this year, which was quite in line with the 7% overall growth being projected for the auto industry.

He said there were signs of the market softening and, except for the brief Diwali festival season, there had not been much buoyancy in the industry. He said the next year would also be the same. “I don’t see double digit growth next year,” adding that selling even diesel cars had become difficult now.

Bhargava added the company was moving towards having no contractual employees by March 2013.

When asked if Maruti Suzuki was shifting its focus from Haryana, where it had recently witnessed severe labour unrest, Bhargava said: "We’re not moving away from Haryana. We have two plants in the state and going to Gujarat after utilizing the capacity completely at Gurgaon and Manesar. We’ll do the same once we exhaust the capacity in Gujarat also."

Maruti Suzuki had earlier this year announced to invest Rs 4,000 crore, its biggest ever outside Haryana, to set up a 700-acre new production facility in Gujarat by 2015-16. Besides, components suppliers of the company are also likely to make an equal amount of investment to set up their respective plants.

Maruti Suzuki India managing director & CEO Shinzo Nakanishi ruled out the possibility of the company diversifying into the commercial vehicles segment, saying it would continue to concentrate on the small and medium segment cars where it has attained market leadership.

Manesar back on track

Maruti Suzuki India said Saturday its Manesar facility in Haryana was back to normal with production higher than when violence broke out at the plant last July, killing a senior executive and injuring 97 other employees. Chairman R.C. Bhargava and MD & CEO Shinzo Nakanishi said the third unit at the facility would be commissioned by next September, after which production capacity would touch 250,000 a year. Bhargava said production at Manesar had crossed the earlier levels with about 1,900 units being produced every day. When violence hit the plant on July 18, the company was producing about 1,800 vehicles a day there.

Rating agencies won't cut US on fiscal cliff, yet

New York City, December 22
The stalled progress in the Washington budget battle may be rattling markets but the gridlock among policymakers will not move the rating agencies to downgrade the United States — yet.

The US credit rating is far from safe. All three major agencies have negative outlooks on the United States, which suffered its first downgrade in history last year when Standard & Poor's stripped it of its triple-A rating.

But the fiscal cliff is only one event in a series of issues that will see ratings agencies looming over Washington for months.

Investors sold off riskier assets such as stocks on Friday and scooped up safe-havens such as the dollar and US Treasuries after Republican Representative John Boehner failed to find enough support from his own party to push a measure raising taxes on millionaires through the House of Representatives.

Dysfunction in Washington was specifically cited as one of the reasons S&P cut the US debt rating to AA-plus in Aug 2011. — Reuters

investor guidance
Repatriation of sale proceeds of assets held in India
A.N. Shanbhag

We are naturalized US citizens and are now in the process of selling real estate in India that we had purchased 30 years ago when we were residing there. We have an NRO account in India and the proceeds from the sale of that lot will be deposited into this account. We want to repatriate the proceeds after paying capital gains tax in India. What are the steps we need to take to be fully compliant with the Indian tax laws and be able to repatriate the funds to the US in dollars? Also, how would the cost basis be estimated for capital gains tax calculations?

— Vijay

A nonresident Indian is allowed to remit up to US $1 million per financial year out of his NRO balances or sale proceeds of assets (inclusive of those acquired by way of inheritance or settlement) for all bona fide purposes, subject to the satisfaction of the AD bank. Get your property valuation as on April 1, 1981 from an official valuer operating in the city where the property is located. Multiply this valuation by the Cost Inflation Index, which is 852 for FY2012-13. Subtract the result from your net sale price — that would be your capital gain, on which the tax rate is 20 per cent. You can, if you so desire, save tax by taking some actions but that would lock your funds for some years.

I am a state government employee drawing an annual salary of Rs 4 lakh. Can I purchase taxfree bonds this year (FY13) instead of Rs 100,000 (u/s 80C), Rs 50,000 (RGESS) of 50 % rebate, and if yes, what is the maximum limit?

— Mohinder Kumar Garg

You will do well by investing in schemes that give you tax rebate and lower your taxable income. Taxfree bonds aren’t very useful since you are in the 10% tax bracket. The yield on taxfree bonds is quite low. Even if they pay 8% taxfree, this is equivalent to you earning 8.92% taxable. There are many safe avenues that offer more interest (taxable) than this.