The Tribune, Chandigarh, India

	Union Budget to focus on fiscal consolidation, say brokerages Vision, rather than numbers, to dictate market direction Sanjeev Sharma Tribune News Service New Delhi, July 7 Foreign brokerages expect the Union Budget, to be presented on Thursday, to focus on promoting investment, infrastructure, manufacturing, cut subsidies, stress on fiscal consolidation and encourage financial savings. The markets are eagerly awaiting the Modi government's first Budget and the prelude to that has been a massive pre-Budget rally in the stock which took the BSE Sensex past the 26,000 mark for the first time today. FIIs have pumped in a meaty $20 billion in the stock markets in the past six months. HSBC says the markets will focus on the vision in the Budget rather than the numbers to gauge the policy direction. It says the markets will keenly await the areas of reduction in social spending to create resources for fiscal consolidation and investment spending. It says that apart from fiscal consolidation, manufacturing recovery and inducing foreign flows for growth capital will be the focus areas. The note adds that market attention will be focused on areas of subsidy reduction (energy pricing, additional cess on diesel, fertiliser pricing) to add to initiatives such as the rail fare hike. Augmenting resources by spectrum sale, coal block auctions, privatisation and divestments will be key to fiscal consolidation, it adds. HSBC says that beyond rationalisation of subsidies, broadening of the tax base and improving tax administration are necessary steps to raise public capital expenditure and reduce the size of public debt. On indirect taxes, transition to GST and pruning of the negative list in services will help broaden the tax base. Barclays expects the Budget to offer more support for manufacturing activity to bolster job creation, potentially for labour-intensive sectors such as gems and jewellery and real estate. In addition, the government may outline a systematic and time-bound process to approve infrastructure projects to promote investments. Also, it believes the government will lay out a timeline on tax reforms to broaden the government's tax revenue and a timetable on GST. The brokerage also expects opening up of FDI in more sectors such as defence manufacturing, e-commerce, railways and insurance although they might be sequenced. It expects some movement on liberalising labour laws as has been done by the Rajasthan Government. DBS expects a farm sector package, lower import duties on gold, clarification on retrospective tax, review of the Land Acquisition Bill and a gradual hike in fuel prices. Deutsche Bank in a research note says that despite the burden of expectations, it expects the Modi government's first Budget to surprise positively. The note adds that the Budget document will offer a sharp shift in government policy biases, including a shift from consumption in the economy to investment. To revive growth, it expects promotion of labour-intensive manufacturing and infrastructure investment, address fiscal imbalances through subsidy rationalisation and raising non-tax revenues and promote savings through tax cuts by raising basic exemption income tax limit to Rs 3-4 lakh and hiking deduction under Section 80C from Rs 1 lakh to Rs 2 lakh. Foreign brokerages’ expectations n Fiscal consolidation, manufacturing recovery and inducing foreign flows for growth capital will be the focus areas n Augmenting resources by spectrum sale, coal block auctions, privatisation and divestments n Besides rationalisation of subsidies, broadening of the tax base and improving tax administration.
	Govt proposes 49% FDI in insurance New Delhi, July 7 The government plans to increase foreign direct investment (FDI) in the insurance sector to 49% with a rider that voting right of overseas partner will remain capped at 26%. The Insurance Laws (Amendment) Bill, 2008, proposes an increase in foreign holding in insurance joint ventures to 49% from the existing 26% with corresponding voting rights. The Finance Ministry now proposes an amendment to the the Bill, pending since 2008, by capping voting rights of the foreign partner to 26% even as FDI is raised to 49%, sources said. This is being done in the interest of meeting the growing capital requirement of insurance companies which are highly capital-intensive. Sources said the proposal says that equity shares of foreign company should not exceed 49% of total paid-up equity capital of an insurance company provided voting rights of such foreign shareholders are not exceeding 26% in aggregate. Besides, the CEO of the insurance joint venture should be appointed by Indian shareholders subject to regulatory approvals, according to the proposal. The proposal also stipulates that the majority of company’s directors should be Indian nationals. Sources said a draft Cabinet note by the Department of Financial Services to this effect has been circulated. A proposal to hike the FDI cap in the sector was first mooted by the previous UPA government. It has been pending in the Rajya Sabha since 2008. — PTI
	Sensex mounts 26K peak, Nifty at new high Mumbai, July 7 The benchmark Sensex crossed the 26,000-mark for the first time in its history and extended gains for the second consecutive day today surging 138 points on hopes that the Narendra Modi government will announce growth-oriented policies in its maiden Budget on Thursday. Persistent capital inflows were also another factor behind the spurt in share values, traders said. The 30-share BSE index, after commencing the session above the historic 26,000-mark, climbed to touch a new intra-day record high of 26,123.55. It finally ended 138.02 points, or 0.53% up, at a new closing peak of 26,100.08. The wide-based 50-issue CNX Nifty of the NSE rose 35.55 points, or 0.46%, to end at a new closing peak of 7,787.15. It logged an intra-day high of 7,792. — PTI
	Cipla to invest £100m in UK New Delhi, July 7 Pharma major Cipla will invest up to £100 million (nearly Rs 1,030 crore) in the UK over the next few years for launch and development of new drugs as part of its global footprint expansion plans. The company will provide high quality affordable medicines to British National Health Service (NHS). “I am happy to be able to announce that Indian pharmaceutical company Cipla will invest up to £100 million in the UK,” a company statement said quoting UK Chancellor of the Exchequer George Osborne. He said the investment will fund the launch of a range of drugs in the areas of respiratory, oncology and anti-retroviral segments. — PTI
	BIZ TALK JBM Group eyes turnover of Rs 10,000 crore in two years Nishant Arya Executive Director, JBM Group talks to Girja Shankar Kaura JBM Group, a $1.2-billion conglomerate engaged in manufacturing auto components, has embarked on a road map to achieve a turnover of Rs 10,000 crore in the next two years. The group is also expanding its business and graduating to a full-fledged Original Equipment Manufacturer (OEM). The company recently launched India’s first true low-floor luxurious intra-city bus ‘CityLife’ at the Auto Expo this year, which it plans to sell to state transport undertakings, airlines, airport operators and schools. Nishant Arya, executive director, JBM Group, talks about the company’s plans. Q. How did JBM Group get into the field of auto components? A. JBM Group commenced its journey in 1983 with the manufacturing of LPG cylinders. Most oil and gas companies were clients of the company. In the early 80s, Maruti Suzuki India Ltd entered into Indian market and was looking for competent vendors to cater to their growth plans. Seeing our expertise, they partnered with us for the manufacturing of sheet metal components. MSIL and Jay Bharat Maruti Limited jointly worked towards creation of quality sheet metal products. As the economy opened up and with new automobile manufacturers entering the Indian markets, JBM Group sensed their requirements well in time and was able to tap them. We have now grown into a $1.2 billion conglomerate with business interests in automotive, engineering & design and education services. Q. How many manufacturing units do you have and where are they located? Do you have any plant outside India also? A. JBM Group has set up its manufacturing base in all major auto hubs within the country i.e. North, Central, West and South. At present, we have 35 manufacturing plants and four engineering and design centres across 18 locations globally. In India, we have plants across 14 locations — Indore, Pune, Chennai, Nasik, Bangalore (Hosur), Faridabad, Gurgaon, Haridwar, Pantnagar, Nalagarh, Greater Noida, Sanand, Pathredi and Kosi. Some of the manufacturing plants are located in the suppliers’ park to minimise transportation costs and time. Our international design centres are located at Detroit, London, Turin and Shanghai. Q. Which are the key customers of your group? A. JBM Group today supplies to almost all OEMs in the domestic and global markets in the four-wheeler, two-wheeler, three-wheeler, commercial vehicle and farm & construction equipment domains. Q. Tell us about the products that you manufacture. A. The products are customised in-house as per the customer’s requirements. Our ‘art to part’ philosophy starts with the drawing board designing of the product and ends with the product being manufactured under the guidelines given by the customer. This is our USP to suit the needs of the customers. Some of the products that we manufacture are air tanks, body-in-white parts, corner module, cross car beam, cross members, chassis & suspension systems, door impact beam, exhaust systems, fuel tanks, fuel fillers, high tensile fasteners, heat shields, skin panels, tooling, jigs and fixtures, tailor welded blanks, tubes & tubular parts, wheel assemblies, welded modules and pressure die casting. The group is also involved in the manufacturing of CNG/LPG cylinders and railway coaches and locomotive accessories. Q. Why did JBM Group decide to enter into commercial segment with intra-city bus segment and why not trucks/earth movers etc.? A. Our latest foray into bus manufacturing focuses on creating a niche segment in the intra-city public transportation domain and aims at providing luxury, comfort and safety. We have extensively worked towards understanding the requirements of this product category and have also studied similar products that are being used globally. We feel that a big opportunity lies in this segment and can be catered to with the introduction of the right kind of product. Q. What are your expectations from the upcoming Union Budget? A. In the past few months, the automobile industry has seen some revival. For this momentum to continue, we expect a reduction in customs duty imposed on raw material such as alloy steel, mild steel, aluminium alloy & secondary aluminium alloy; increase in Cenvat credit to 100% from the current 50% in the purchase of capital goods in the first year itself rather than the current practice of 50% in the first year and remaining in subsequent years and increase in the depreciation rate of capital goods to about 25-30% that shall give the right spurt for capital investments in the country. The most important issue with the industry is the multiple tax structures across the states. Hence, GST should be implemented at the earliest to eliminate multiplicity. The government has already extended the deadline for excise duty benefits on cars till the end of this year. This is one of the initial positive measures taken by the government towards pulling growth to the auto sector.