New Delhi, February 13
India posted its second highest ever monthly trade deficit of $20 billion in January, worsening from a US $17.7 billion deficit in December, piling pressure on a widening current account deficit and limiting scope for the RBI to cut interest rates.

Exports growth after a gap of eight months returned to positive territory and grew by 0.8 per cent in January to $ 25.58 billion. Exports have been contracting since May 2012. The country's exports had stood at $25.37 billion in January, 2012.

According to Crisil Research, imports clocked a growth of 6.1% and reached an all-time high of $45.6 billion in January 2013 due to higher oil import bill. As a consequence, India’s trade deficit, after narrowing to $17.7 billion in December 2012, again swelled to $20 billion in January 2013, an increase of 13.8%.

Federation of Indian Export Organizations (FIEO) president M. Rafeeque Ahmed said exports have bounced back in positive territory after many months, adding he hoped the trend would continue as the US economy was recovering and so were the emerging economies. He said the soaring trade deficit was a cause of serious concern as it had already touched $167 billion in the first ten months of the fiscal and was likely to cross $200 billion in April-March 2013.

“The trade deficit has already increased from 2.3% of GDP in 2004 to over 10% in 2012. This will put pressure on the current account deficit and will add to volatility in exchange rates”, he added.

Struggling to turn around an economy that is slowing to its lowest growth rate in a decade, the Reserve Bank of India cut interest rates by 0.25 percentage points last month, but warned that future rate cuts would depend upon declines in both the current account deficit and inflation.

But there was little sign of any respite on the external front for Asia's third largest economy in December as a surge in imports dwarfed a slight improvement in exports.

"The oil import bill is definitely a challenge, but for a growing economy, energy needs have to be met," Commerce and Industry Minister Anand Sharma said at an industry conference in Mumbai.

The December trade deficit was the worst on record after the $20.9 billion gap posted in October. Current account data for the October-December quarter will be released at the end of next month, but the deficit touched a record high in September at 5.4% of GDP due to slowing exports and heavy oil and gold imports.

The central bank is worried that India's ability to fund its rising current account deficit is becoming increasingly stretched, and could lead to fresh pressure on the rupee.

The Indian rupee struck its weakest in over a month in early January at 55.38 to the dollar, but has since recovered on capital inflows. The rupee strengthened marginally to 53.84 to the dollar after the data, as some traders had priced in an even wider trade deficit.

New Delhi, February 13
The government is likely to target Rs 400 billion in proceeds from stake sales in state-run companies in the next fiscal year, a finance ministry official with direct knowledge of budget talks told Reuters on Wednesday.

The official also said the government is likely to allocate Rs 200 billion for capital infusions into state-run banks in the next financial year, up from Rs 150 billion set aside for bank recapitalization in the current year.

The revenue target from a partial privatisation of state-run companies is higher than the Rs 300 billion New Delhi is aiming for in the current fiscal year that ends in March.

With less than two months to go before the year closes, the government has managed to raise 70 percent of the targeted amount, and officials in the government concede that the final figures for this year could fall shy of the target.

The struggle to meet the current year's target had made many investment bankers believe that the government would likely budget at least Rs 300 billion for next fiscal year as well.

But a resource crunch has forced the government to aim higher, said the official, who declined to be identified because he was not authorised to speak about the budget, to be released on February 28.

"The aim is to maximise your revenue options. Low growth has constrained our resources," the official said. The government is still to finalise the target, he said.

India needs to augment its revenues to help lower the fiscal deficit to its targeted 4.8 percent of gross domestic product in the financial year that begins on April 1. A swollen deficit has put the country's investment grade credit rating in peril.

The planned capital injection into state banks, while higher than in the current year, still falls short of their capital requirements. The central bank said in September that the government needed to infuse Rs 900 billion into state-run banks to meet upcoming Basel III requirements. — Reuters

New Delhi, February 13
Tata Motors-owned Jaguar Land Rover reported a 32 per cent jump in global sales for last month at 34,877 units even though the Tata Motors Ltd’s global vehicle sales in January fell 16% to 1,01,112 vehicles, the third consecutive monthly slide.

In a statement issued here, JLR said: "January sales were up across every major market with sales up 74% in China, 46% in Asia Pacific, 33% in the UK, 24% in North America and 10% in Europe".

Overall passenger car sales stood at 53,881 vehicles during the month, the company said, representing a fall of 19% from the same month a year earlier.

"With one of the best month's sales performances ever, both Jaguar and Land Rover brands have had a very strong start to the year. This reflects the introduction of the all-new Range Rover as well as the 2013 Model Year Jaguar XF and XJ models," JLR director of group sales operations, Phil Popham said.

In January, Land Rover brand sold 29,118 vehicles, up 31%, with increased sales of Freelander (up 57%), Range Rover (up 52%), including prior model, Range Rover Evoque (32%), Range Rover Sport (17%) and Land Rover Discovery (14%).

Land Rover sales were up in all major markets with record January sales in several geographies, including the UK, United States and Germany, the company said.

The Jaguar brand sold 5,759 vehicles in January, up by 40%, with sales of the XJ up 70% and the XF up 37%.

Chandigarh, February 13
With the 2013-14 budget round the corner, small-scale pharmaceuticals industry in the region is looking up to Finance Minister, P. Chidambaram for initiating drastic policy changes to make small pharma companies financially viable and, at the same time, help in curtailing the high cost of medicines for the common man.

Claiming that the pharma industry is one of the few regulated industries in the world, the pharma industry wants that either it should be deregulated or it should not be bracketed with the other non regulated industry in terms of stipulating excise exemption limit. The SME Pharma Industries Confederation, an apex body of small pharma units, has now written to the prime minister, seeking his intervention in removing anomalies in the pharma policy.

Jagdeep Singh, secretary general of the confederation, said that not only is the pharma industry regulated at production level by adhering to good medical practices of the Drugs Act, but 40,000 samples are lifted for quality all over the country. “If found to be at fault, we can be sentenced to ten years imprisonment and liable to pay a fine of Rs 10 lakh. We want that the SSI exemption limit of small pharma units be delinked from other SSIs and hiked to Rs 5 crore in view of these facts. Secondly, units in export free zones may be subject to excise in case of contract manufacturing as approved by the PM in 2006, as shopkeepers and nursing homes who are fleecing the patients are not allowed advantage over bona fide SMEs,” he said.

The confederation claims about 5,000 pharma SMEs have been targeted in the last eight years for elimination because, even when policies framed with certain objectives were found to be counterproductive, they have not been amended despite the PM’s intervention. “The pharma policy is dictated by MNCs in third world countries including India; it becomes increasingly clear why it happened,” he said.

Singh said in 2005 pharma SMEs were mandated to upgrade to international standards as per an amendment in Schedule M of the Drugs Act so as to improve quality. Thousands of pharma SMEs closed down.

“But this improved quality wasn’t verified because the reliability of the annual drugs data in India isn’t improving. Again, in January 2005, excise duty on MRP was levied in place of ex-factory excise on medicines with the twin objectives of higher revenues and to bring down prices. The change was replete with anomalies which increased the excise burden on industry fivefold, and rendered 5,000 pharma SMEs unviable on the one hand, while they were mandated to upgrade at a huge cost on the other hand. The unviability was in comparison with EFZs in Himachal and Uttarakhand. luring 70% of the pharma units right away, but responsibility for various ills including huge revenue losses was never fixed, as in most cases production takes place outside the EFZs but invoicing is shown from them,” he said.

Mumbai, February 13
The Kingfisher Airlines stock hit the lower circuit limits on the BSE at Rs 10.58 on Wednesday with sellers outnumbering buyers in the latter half of trading.

On Tuesday, the consortium of banks which had pumped in nearly Rs 8,000 crore to the cash-strapped venture owned by liquor baron Vijay Mallya announced that they were recalling their loans.

"We have decided to recall (initiating the recovery process) the loans given to Kingfisher Airlines. However, each bank board will decide the future course of action," Shymal Acharya, deputy MD (mid-corporates) of SBI, leader of consortium of lenders to the airline, said yesterday after a two-hour meeting of bankers and the company's representatives.

Kingfisher Airline's stock had risen from its 52-week low of Rs 7.01 per share after Mallya announced a stake sale in his flagship liquor business to Diageo. Investors were hoping that Mallya would use the proceeds to rescue the airline.

However with the banks recalling the loans, investors fear that Mallya may not be interested in investing further in the airline. "The stock will touch new 52-week lows if there is no good news from the management," stock broker Abhishek Sanghvi said.

At today's closing price of Rs 10.58 on the BSE, Kingfisher is valued at Rs 855 crore. With its flying license suspended and no aircraft to call its own and the huge debt burden the company has no real value left, say analysts.

The carrier, whose planes have been grounded since October, has never made a profit since it began flying in 2005, while it owes vast sums to banks, airports, fuel suppliers and its staff.

Kingfisher has a number of real estate assets that it put up as collateral against its loans, including its office in financial hub Mumbai, but analysts said most of its planes were on lease and lessors have taken them back.

"It’s over for Kingfisher —it was over one year back," Sharan Lillaney, aviation analyst at Mumbai's Angel Broking, said.