Credit Policy highlights
The RBI governor Dr Y V Reddy fine tunes micro policies as follows:
• Reserve Bank reduces to 50 per cent, risk weightage for loans up to Rs one lakh against gold and silver ornaments.
• External Commercial Borrowings prepayment to be allowed up to $400 million
• Reserve Bank further liberalises individual foreign remittance, doubles present limit to $100,000 per financial year for capital account transactions
• Overseas investments ceiling for mutual funds increased to $4 billion from $3 billlion
• Price risk hedging may be allowed in commodities such as aluminium, copper, lead, zinc and nickel in international commodity exchanges
• Listed companies can invest up to 35% of net worth abroad as against 25% earlier
• Working group to be set up to look into the development of interest rate futures market
• Credit guarantee scheme for distressed farmers introduced
• Aviation turbine fuel users may be allowed to hedge their economic exposure international commodity exchanges
Tuesday, April 24, 2007 Source: PTI via economictimes.com
Credit policy to help moderate inflation, fuel growth: FM
Reserve Bank annual monetary policy will moderate inflation without hurting growth, while providing relief to small housing loan borrowers, Finance Minister P Chidambaram said on Tuesday.
"We must moderate inflation without affecting growth. Both are important - moderate inflation and high growth. And I think what RBI has done today is broadly in line with government's thinking. These steps would moderate inflation without affecting growth," he told reporters.
RBI projected India's economy to grow by 8.5 per cent in 2007-08 against expected 9.2 per cent for 2006-07. It also projected inflation to remain close to five per cent during 2007-08 and 4-4.5 per cent over the medium term.
Chidambaram said: "They (inflation) are aggressive targets. To keep inflation below 4.5 per cent is indeed an aggressive target. But that appears to be the tolerance level for inflation. So, RBI is aiming at inflation below 4.5 per cent. Certainly, government would welcome that stance and support that stance."
However, on RBI's projection of slower GDP growth, he said it was a cautious and conservative position.
If manufacturing rises by double digit numbers like services, 8.5 per cent GDP growth would be floor and not the ceiling, he said.
On RBI's measure to reduce risk weightage on housing loans up to Rs 20 lakh, he said the step would provide relief to small borrowers, who constitute 80 per cent of the total loan seekers.
"It's a good response, positive response from RBI. Bank chiefs had made an appeal to RBI in this respect. And I think as a result of that most small borrowers, that is who take a home loan between Rs 8-10 lakh, should get some relief,” said Chidambaram.
Tuesday, April 24, 2007 Source: PTI via economictimes.com
New policy for north-east cleared
The government on Thursday notified the 10-year excise holiday for new units and existing units undertaking substantial expansion under the new North East Industrial Policy.
However, industries including pan masala, cigarettes and other tobacco products, plastic carry bags of less than 20 microns and petroleum products produced by petroleum oil or gas refineries will not be able to avail the excise holiday. The excise holiday cannot be availed even by existing units of these industries.
With a view to prevent misuse of the tax holiday and also to ensure that the policy leads to actual economic development in the north east, the government has tightened certain provisions whereby the benefit will be restricted if a unit just carries peripheral activity like repackaging.
For example, if an oil manufacturer just repackages it in small bottles, it would not amount to incremental manufacturing activity and will not be eligible for exemption.
Africa set to blood diamond Opec
A group of 18 African nations producing diamonds have come together to form the African Countries Diamond Producers Association (ADPA) headquartered in Angola, on the lines of the Organisation of Petroleum Exporting Countries (OPEC) to organise the diamond business in the continent.
The association was set up in December 2006, and was to have its first general assembly meeting this week, said Alberto Fancony, director of planning and investment of Angolan mining company Endiama at a conference in Mumbai.
The association was expected to co-ordinate the legislation among African producer countries and encourage foreign investment in the industry. Nearly 60% of world diamond production takes place in Africa, but very little value addition is undertaken.
The leading executive members of the association are South Africa, Angola and Guinea. The focus of diamond mining is slowly shifting to central Africa from southern Africa. Angola is Africa’s fourth-largest diamond producer, with Botswana, South Africa and the Congo taking the lead.
Botswana produces around 34.3 million carats a year, followed by South Africa and the Congo which produce 15.2-million carats and 26-million carat a year, each. Production in South Africa was, however, expected to decrease over 10-15 years. India is also now looking at African countries to source rough diamonds.
The African nations are however, keen that diamond processing units also be established in the countries, as compared to exporting rough diamonds. India imported over $9-billion worth of diamonds last year.
Through a partnership with African countries, India is looking to provide them training in diamond processing, and establish a link to source rough diamonds from them in the process as a trade off.
ANALYSIS - Death knell sounding for India property boom?
"The grave dancer", U.S. tycoon Samuel Zell, was in a mood to spoil a two-year-long party when he told a gathering of Indian property executives this week they were "on the brink of excess" and their boom would end in tears.
The developers and fund managers could only agree.
The man who earned his nickname, and a $4.5 billion fortune, picking up cheap offices in the 1990s U.S. downturn and packaging them into a property trust sold last year for $39 billion, said it was "mental masturbation" to believe there were endless riches for investors in India's 1 billion person market.
Only a top sliver of the population can afford to buy the homes being built.
"India's greatest asset today is everyone's imagination," Zell said.
Many in the audience nodded in assent.
The only difference of opinion among some of India's leading property professionals at the conference in Mumbai was how far property prices would drop, probably at some point in the next year -- 10 percent or 40 percent?
The last time a property bubble burst in India prices slumped by as much as 70 percent between 1995 and 2001. But this time around, a raft of international funds raised by the likes of Citigroup, Morgan Stanley and Credit Suisse are likely to step in looking for bargains and cushion the fall.
"Our expectation is that sometime in the course of this year you'll see a 30 to 40 percent drop in prices," said Ajit Dayal, chief executive of fund manager Quantum Advisors.
An estimated $10 billion was raised internationally for Indian property funds last year.
But rising mortgage rates and a doubling of property prices in major cities in the past two years will lift home prices beyond the reach of even the 40 million richest Indians that developers are targetting, Dayal said.
Since 2004, 10-year bonds have risen around 300 basis points to 8 percent, as the central bank seeks to control inflation in an economy that is estimated to have grown by 9.2 percent in the year ended March 2007, its fastest pace in 18 years.
Sky High
Young software engineers earning between $700 and $2,000 a month in the country's outsourcing boom could stop buying homes.
The price of a 100-square-metre Bangalore flat has jumped 60 percent in two years to $100,000. Prime residential prices in Mumbai and New Delhi have doubled in that time to about 20 percent lower than Shanghai and 40 percent below Singapore and Hong Kong.
Dayal said that in some cities, such as Kolkata, new housing supply outstripped demand by 5 to 10 times.
"There's nothing culturally or socially in India to force 19-year-olds to leave home and buy a property," he said. "They'll just stay with their parents."
The property boom gathered pace quickly after the government eased rules on foreign investment in the construction industry in early 2005 to help revamp the country's crumbling infrastructure and fill an estimated shortfall of 20 million homes. About 90 percent of all property investment is in residential development.
"It's very scary, prices are sky-high," said Aditya Bhargava, an executive at fund manager Trikona Capital, which is raising a $400 million fund for Indian property.
"I don't know when the correction will happen, but there's significant overheating."
Nayan Shah, chief executive of township developer Mayfair Housing Ltd., agreed with Zell's outlook for the market, but said the U.S. billionaire's comments would shock many in the industry.
The demographic fundamentals for India's real estate boom touted by analysts appear compelling for many investors.
For example, according to CLSA, disposable income has grown 12 percent a year for the past five years, and the number of people per household has dropped to 5.1 from 5.52 in the past decade as young professionals move away from their parents.
"I think it's an ice-breaker for our country, it's like someone saying look east when everyone's looking west," Shah said of Zell's comments.
"I've seen three recessions and booms in my life, and he's seen more," he said. "But I think it will stay stable for now, and maybe from 2008 there'll be signs of distress."
Some fund managers are laying plans for when prices fall.
"We'll step up more in 9 to 12 months time when the liquidity crunch hits the market," said Sameer Nayar, the Asia head of Credit Suisse's real estate arm.
Zell said that he had no property investments in the country.
His company, Equity Group Investments, is pouring money into mass housing in Mexico and Brazil, selling units for around $20,000. But the model is unlikely to catch on soon in India.
An office delivery boy, employed to scooter through Mumbai's dusty streets lined with crumbling tenements and shacks, would earn about $70 per month, and keep $15 aside for housing. With land prices spiralling, developers do not build for him.
"We may occupy lots of slots on the Forbes billionaire list but we also occupy lots of slots on poverty lists," Quantum Capital's Dayal said. "If someone can make housing and sell it for $2,000, it would be a great market now, and for decades."
Textile units jittery as RIL, Grasim get TUFS support
The recently announced petrochemical policy sought to extend the benefit of the technology upgradation fund scheme (TUFS) for the textile industry to the synthetic fibre manufacturers, to the discomfiture of the huge-yet-fragmented downstream textile industry, which will now have to share the already scarce resources under the scheme with the likes of Reliance, Grasim Industries and IndoRama.
The Budget 2007-08 extended the TUFS for the entire 11th Plan period, buoyed by the fact that under the scheme launched in 1999, the banks and financial institutions sanctioned low-cost loans of Rs 31,921 crore till Feb 2007 to various segments of the textile industry, totalling capital investment of Rs 73,532 crore.
The lenders are encouraged by the interest subsidy, the burden of which is borne by the government, in addition to the high growth potential of the textile industry, especially the spinning, composite and garmenting units which were sanctioned Rs 10,374 crore, Rs 9,253 crore and Rs 1,556 crore, respectively.
But the Budget provided for just Rs 911 crore for TUFS in the current fiscal, which the industry says, is grossly insufficient, considering that the government is yet to allocate over Rs 1,000 crore to reimburse the lenders for loans sanctioned last year.
The lenders are therefore withholding disbursement of sanctioned loan amounts since the first quarter of last fiscal. Worse, the decision to extend the TUFS benefit to producers of raw materials like polyester and viscose fibres who can potentially gulp the TUFS-supported funds has left the downstream industry high and dry.
Shekhar Agarwal, chairman, Confederation of Indian Textile Industry says, ”We are extremely surprised that the cabinet gave approval for including synthetic fibre manufacturers within the coverage of TUFS. These manufactures are very few in number and the industry, by and large, consists of large and profit making units which have the strength to finance their investment requirements without any government assistance.
In any case, this industry comes under the ministry of chemicals and fertilisers and any assistance to it should come only from that ministry and not the textile ministry.” The textile industry claims that TUFS is a zero default scheme, as there is built-in incentive for repayment. With the abolition of quotas in US, EU and Canada, which happened as per schedule two years ago, the textile industry is on an investment binge.
This reflected in TUFS sanctions by banks and FIs which rose from Rs 2,990 crore for projects with total capital investment of Rs 7,349 crore in 2004-05 to Rs 6,776 crore (Rs 15,032 crore) in ‘05-06 and Rs 14,835 crore (Rs 35, 651 crore) in April-Feb 06-07.
Monday, April 23, 2007 Source: Times News network
Automobile Sector
Bosch to hike control in Indian arm
The world leading auto part company Bosch said on Friday that it would bid to increase its control of its Indian subsidiary Motor Industries Company (Mico) to strengthen its strategy in India.
Bosch said it would offer Rs 4,000 in cash per share in Mico to increase its holding from 60.55 per cent to about 80.0 per cent at a total cost of about $ 628.3 million.
The terms represent a premium of slightly more than 20 per cent on the average price of Mico shares during the last month and were Rs 550 higher than the closing price on Thursday.
Bosch chief executive Franz Fehrenbach said, "We want to increase our interest in Mico to about 80 per cent to strengthen further our long-term commitment on the Indian market."
Bosch has been active on the Indian market for 80 years and has made the Indian and Chinese markets a priority in the years ahead.
Mico, which employs more than 10,000 people, achieved sales last year of 37.8 billion rupees. The company makes various parts, including components for diesel engines, starters and generators.
Friday, April 27, 2007 Source: AFP
Season's flavour: Govt to exit Maruti next month.
The government hopes to decide a floor price for selling its remaining 10.27 per cent stake in the country's largest car maker Maruti Udyog Ltd. soon, an official said on Friday.
"It is likely to finalised by May," the official, who did not wish to be identified, told reporters after a meeting with finance ministry colleagues.
Another official said the government preferred a premium over the market price and had asked its advisers to set the price and the timing of the stake sale.
SBI Capital Markets and Kotak Mahindra Capital are advising the government on the stake sale.
Last month, Finance Minister Palaniappan Chidambaram said the sale would take place during the fiscal year ending March 2008.
Maruti, which is 54.2 percent owned by Japan's largest minicar maker Suzuki Motor Corp, competes mainly with South Korea's Hyundai Motor Co. and Tata Motors Ltd.
Maruti shares closed at 795 rupees in a weak Mumbai market.
Friday, April 27, 2007 Source: Reuters
Durable Sector
AC makers gear up for energy efficiency deadline
New technologies are being unleashed in the market as leading air conditioner manufacturers in the country gear up to meet the June deadline for energy-efficiency certification by the Bureau of Energy Efficiency (BEE).
As per the BEE certification, an AC should have a minimum of 2.3 Energy Efficiency Ratio (EER) and depending on the level of energy efficiency the products are star rated up to five stars.
For instance, a 1.5 tonne five star rated AC, if run on an average for eight hours in a day, can slash down expenditure on power by up to Rs 600 per month.
Korean consumer electronics major Samsung is taking the lead with its new range of ACs, equipped with advanced features such as Ultra Tropical Rotary Compressor (UTR) and 'Double Micro Plasma Ion' and the Good Sleep Mode, which the company claims saves up to 30 per cent energy as compared to conventional cooling.
"We are targeting a 50 per cent jump in our AC volumes with new 'health' oriented features introduced in our ACs. We are also planning to launch Star rated ACs before the deadline set by the BEE," Samsung India Deputy Managing Director R Zutshi said.
Following the trend, home-grown major Godrej has also introduced a new 'i-sense' technology, which it claims maintains coordination between the actual temperature in the room and the one selected by the user.
"We are getting ready for the BEE's mandate and getting the models approved," Godrej Sales and Marketing Vice President Kamal Nandi said, adding the company is eyeing 10 per cent market share this fiscal, up from 5 per last year.
Monday, April 23, 2007 Source: PTI via economictimes.com
Reliance plans consumer electronics brand
Reliance Retail, the subsidiary of petrochemicals giant Reliance Industries, will soon launch its own label of consumer electronics goods to complement its retail appliance stores - Reliance Digital - for tapping the country's $ 5.6 billion durables market.
The company would be investing over Rs 1,000 crore over the next 3-4 years for setting up 150 such stores, the first of which was unveiled in the National Capital Region on Tuesday.
"Reliance will come out with its private label of consumer durables products... that is definitely in the strategy after we open 4-5 stores," said Reliance Retail Ltd President and Chief Executive (Consumer Durables, IT and Telecom) Ajay Baijal.
Reliance Digital stores would sell everything from TV sets, home theatre, refrigerator, cooking range, dishwasher to computers and mobile phones from across brands.
"The stores, typically spread over 15,000-30,000 sq ft, will have a wide assortment of products to cater to the tastes and requirement of customers," Baijal said.
The domestic consumer electronics market, which is expanding by 10 per cent annually, is dominated by South Korean brands such LG and Samsung and Japan's Sony. But they have tough competition from homegrown names like Videocon and BPL.
The first store, located at Shipra Mall in Ghaziabad, would be followed by another pilot outlet in NCR and 3-4 more in the country's south in the coming days.
Baijal said the stores, which would be set up at an investment of Rs 4-7 crore each, would also offer post-sales services.
"The prices would be most competitive and if any customer finds a cheaper product in the market within 30 days of purchase, we would not hesitate to match that offer," Reliance Retail Mentor Kamal Nanawati said.
Reliance Digital store, which comes five months after the company unveiled its fresh food format outlets, would function as a one-stop-shop for all electronic and IT needs, Baijal said.
He, however, did not elaborate on the plans for the private label -- whether it would be manufactured or sourced.
Notably, Reliance Fresh that was launched last year stocks the shelves with its own label of groceries - Reliance Staple.
"We would offer a host of value-added services like software downloads for our IT customers and airtime and accessories for mobile users," Baijal said.
When fully rolled out, the stores would be spread across 70 cities and all of them would offer 'RelianceresQ' pre-sales and post-sales support services.
Reliance Digital will also be offering customers RelianceOne, a common membership and loyalty programme across all its formats, which means users would be able to redeem points earned on purchases.
Other formats of Reliance Retail like supermarkets and hypermarkets are due for launch in the April-June quarter.
Reliance Industries had last year announced an investment of Rs 25,000 crore for the retail business, which it hopes would help the company earn over Rs 90,000 crore revenues in the next five years.
Industry estimates suggest India's retail market is worth $ 320 billion, of which organised retail accounts for USD 7.5 billion and expected to grow to 21.5 billion by 2010.
Tuesday, April 24, 2007 Source: PTI via economictimes.com
Philips to spend Rs 80 cr on image makeover
As part of its global image makeover plans, Dutch consumer electronics maker Philips will be pumping in about Rs 80 crore for brand re-positioning in the Indian market to project itself as a lifestyle and healthcare firm.
"Philips is trying to be a lifestyle and healthcare company with technology as backbone. We want to position ourselves in these two areas, where the future lies worldwide," Philips India Director Consumer Electronics Gunjan Srivastava told media.
The mission will require a continuous investment for a couple of years but by December 2007, the company plans to invest around Rs 80 crore for brand positioning, he said.
As part of its strategy, the Dutch company had recently introduced new products such as GoGear range of MP3 players, priced at Rs 2,999 onwards, besides the ambilight and ambisound TVs.
"In next 6-9 months, at least 24 new products are in the offing which will strengthen position of the company in lifestyle business," he said.
In the healthcare segment, Philips already offers a range of clinical devices and instruments, but would soon make its foray into consumer healthcare as well. "We are going to focus on direct consumer healthcare for which announcements will be made soon," he said.
With the organised retail market on an upswing, Philips has tied-up with leading large format stores and aims at 10 per cent of revenues from this segment this year, Srivastava said.
"Presently 7-8 per cent of the revenues come from the organised retail market and rest from distributors and the company-owned 44 exclusive stores," he said.
After the launch of GoGear audio and video players here, Philips is eyeing India as one of the top seven countries in its target list including Germany, France, Italy and Brazil.
The pilot launch of GoGear was done in October 2006 in Bangalore followed by other big cities. By mid-May the product range would be available in top 100 cities across India, he said.
Wednesday, April 25, 2007 Source: PTI via economictimes.com
Food Sector
Govt plans to set up 30 food parks
The government on Thursday said it will set up 30 food parks involving private sector investment and Chindwara, Commerce and Industry Minister Kamal Nath’s Lok Sabha constituency, has been chosen among the initial beneficiaries of the scheme.
Each of the parks, eligible for a government subsidy of Rs 50 crore, will be set up by a special purpose vehicle with private sector participation, an official release said.
The Bharti group, which has announced its retail forays with global giant Wal-Mart and north India’s leading food chain Haldiram, has shown interest in becoming the ‘anchor investor’ for a food park in Chindwara in Madhya Pradesh.
Friday, April 27, 2007 Source: Agencies
Liquor Sector
Europe has gimlet eye on Indian spirits mkt
The World Trade Organisation agreed on Tuesday to take up the European Union's complaint on Indian import duties on wines and spirits, a trade source said.
A meeting of the WTO's Dispute Settlement Body here decided to set up a panel to examine and rule on the dispute following a second request from the EU, the source said.
India's blockage at a meeting nearly two weeks ago was automatically waived under WTO rules.
The European Union is challenging combined duties and taxes that reach up to 550 per cent on spirits imported into one of the world's fastest growing markets and up to 264 per cent on wine imported into India, according to Brussels.
Indian Commerce Minister Kamal Nath recognised last month that tariffs were high and said that his country remained committed to resolving the dispute through negotiations. An EU official has confirmed that more meetings were expected on the issue.
The Press Trust of India reported earlier this month that the Indian government expects to pass legislation cutting the high drinks duties before the WTO can complete its investigation into the levies.
WTO experts normally take about six months to produce a ruling. In 2004, EU wine and spirits exports to India amounted to just 27.3 million euros (36.7 million dollars), out of a total EU export market worth 9.5 billion euros, according to the EU statistics agency Eurostat.
But India's 1.1 billion strong population and fast-growing middle class, represent a potentially huge market for both European and US wine and spirits exporters.
The United States submitted a similar complaint over India's duties on wine and spirit imports in early March, requesting negotiations with Delhi.
Tuesday, April 24, 2007 Source: Agencies
FDI in tobacco will increase contraband trade: TII Expressing concern over the possibility of FDI in the Indian tobacco sector, Tobacco Institute of India (TII) has said such a move will not only increase contraband trade here but will also result in a loss of nearly Rs 2,000 crore per annum in terms of taxes and forex outflow.
Given the high taxes on cigarettes in India, smuggling provides an attractive tax arbitrage opportunity. Reports suggest that, currently, contraband cigarette sales cause a loss of Rs 1,500 crore to Rs 2,000 crore per annum to the Indian government in terms of taxes and forex outflow, TII said.
It said with declining volumes in their home markets, multinational tobacco companies have been making efforts to penetrate developing markets like India.
The modus operandi, as documented by the WHO, seems to be to set up operations in target markets, either through direct investments or imports, thereby creating a legitimate umbrella for distribution and demand creation activities, it said adding the increased demand is then met with contraband trade.
Citing the example of Taiwan, the institute said after Taiwan liberalised cigarette imports in 1987, smuggled cigarettes as a percentage of the legal market peaked at 22 per cent in 1990. Between 1988 and 1995, cigarette smuggling cost Taiwan an estimated 1.68 billion dollars in tax revenue.
The institute also pointed out that India's removal of quantitative restrictions (QR) on cigarette imports, which has led to the entry of foreign brands, coupled with FDI, might very well serve as an excellent cover to mask the thriving contraband market.
Commenting on the issue, ITC Ltd vice president Nazeeb Arif said as much as 50 per cent of the cigarette manufacturing capacity, which is regulated by compulsory licences under the I (DR) act of 1951, is unutilised and allowing FDI in the sector would further increase this underutilisation of capacity.
Allowing FDI in cigarette manufacturing will not only aggravate capacity underutilisation, but will also seriously undermine the government's efforts at tobacco control. International experience also reveals that FDI in the tobacco sector leads to large scale organised smuggling, which will adversely affect the offtake from Indian farmers and deprive the exchequer significantly, Arif said.
He said China specifically does not allow FDI in tobacco for similar reasons, despite the fact that they are open to foreign investment in almost all other sectors.
Since both imported and smuggled cigarettes do not use Indian tobaccos, their influx serves to erode the demand for Indian Flue Cured Virginia (FCV) tobacco, thereby negatively impacting the large farming community.
Monday, April 23, 2007 Source: PTI via economictimes.com
Govt plans regulator to scan tobacco law implementation
Health minister Anbumani Ramadoss said on Tuesday that a national regulatory authority (NRA) would be set up to ensure the effective implementation of tobacco control laws.
The minister said that a dedicated national tobacco control programme would be instituted under the 11th Five Year Plan. Besides, tobacco testing laboratories would be set up at state and district levels for content regulation, Mr Ramadoss said at a function organised here by the American Cancer Society.
In India, more than 40% of cancer cases are caused due to tobacco use. The relationship between oral cancer and tobacco can be assessed from WHO estimates, according to which 91% of oral cancers in South-East Asia are directly attributable to the use of tobacco, said the minister. In view of the high prevalence of oral and other cancers due to tobacco use, the health ministry has taken up very strong initiatives for tobacco control. Tobacco epidemic claims over 2,000 lives in India everyday, said Mr Ramadoss.
Plans to curb this epidemic include a prohibition on the sale of tobacco products through vending machines, ban on sale of tobacco products by minors and a ban on visible stacking of tobacco products at the point of sale. These have been proposed through an amendment to the rules framed under a comprehensive tobacco control law.
The measures already notified under this law include a ban on smoking in public places, prohibition on sale to minors and a ban on tobacco advertising, promotion and sponsorship. To prevent easy access of tobacco products to youth, the government has prohibited sale of tobacco products around educational institutions, he said.
“We have also moved for a ban on display of tobacco products or their use in movies and television programs in India. This announcement of the Ministry of Health and Family Welfare faced immense opposition from various fronts. However, we are firm on this stand and is committed in ensuring that films and television do not become a medium for promoting tobacco products to the vulnerable youth audience” said Mr Ramadoss.
Wednesday, April 25, 2007 Source: Times News Network
Oil Sector
India's March oil sales rise 7.1 pc
India's oil product exports climbed 21.4 per cent to 2.35 million tonnes in March on the previous year, taking exports for the 2006/2007 financial year up 44.8 per cent, government data showed on Wednesday.
India's domestic oil product sales rose 7.1 per cent to 10.95 million tonnes in March, pushing up sales for the 2006/2007 financial year up 5.9 per cent to 119.8 million tonnes.
Crude oil imports climbed 6.4 per cent to 9.6 million tonnes in March in Asia's third largest oil consumer, leaving imports for the financial year up 11.5 per cent to 110.8 million tonnes.
Wednesday, April 25, 2007 Source: economictimes.com
Software Sector
Genpact to set up IT SEZ; plans Rs 100 cr investment Business process outsourcing giant Genpact is setting up an IT SEZ in Andhra Pradesh. The state government has allocated 50 acres of land at Jawahar Nagar near Hyderabad and the company is planning to invest Rs 100 crore for setting up a new facility.
Addressing a press meet on Friday, state information minister Anam Ramanarayana Reddy said, the cabinet had cleared the proposal for land allocation. "The new facility will provide employment to over 5,000 people,'' he said.
When contacted, an official of Genpact said, in order to set up the facility, the company had to get a notification from the Union commerce ministry. "As we have received approval for land acquisition, we will soon be approaching the commerce ministry for getting SEZ status,'' he said.
According to the state government estimates, Genpact is one of the largest employers in the ITES sector. "The company had already invested Rs700 crore in the state and employs over 8,000 people,'' said the minister.
In an effort to spread the growth and usage of IT, the state government is also planning to set up 10 IT hubs in major towns. "We are in the process of setting up integrated satellite IT townships around Hyderabad and surrounding districts. The state will also house 29 IT SEZs with an estimated built up space of about 80 million square feet. This will create employment of over 8.45 lakh,'' said Mr Reddy.
IT sector currently employs over 1.5 lakh people and the government is targeting to generate over 2.3 lakh emplioyment opportunities in the sector by 2009.
The cabinet has also cleared a proposal to set up a sports hostel at Gachibowli near Hyderabad at an investment of over Rs 72 crore. "This is line with our preparation to host the 4th Military World Games in October this year. The hostel will provide accommodation to over 2,000 athletes,'' the minister said.
Farm loans to come cheap and easy
The banking sector regulator has addressed the issue of distressed farmers, with a slew of relief measures for them. The steps taken include a credit guarantee scheme, counselling centres and simplifying procedures for farm loans. For wider financial inclusion, the central bank has also told banks to beef up their IT initiatives to reduce transaction costs in unbanked areas.
These formed part of the report on relief measures for distressed farmers that was submitted in November 2006. It was suggested by the working group under SS Johl constituted by the Reserve Bank of India.
The measures include providing financial counselling services for increasing the viability of credit, and introduction of a specific credit guarantee scheme under the DICGC Act for such farmers, details of which will be announced by May 31, 2007.
RBI’s annual policy unveiled on Tuesday also dwells on easing procedures for obtaining agricultural loans by small and marginal farmers. A working group had proposed that banks ought to dispense with the requirement of “no due” certificate for small loans up to Rs 50,000 to small and marginal farmers, share-croppers and the like.
Instead, it suggested that the banks could obtain a self-declaration from the borrower. Banks must also accept certificates provided by local administration or panchayati raj institutions regarding the cultivation of crops in case of loans to landless labourers, share-croppers and oral lessees. The report of the working group constituted in December 2006 under CP Swarnkar, has been taken up for detailed examination.
In trying to establish linkages between money lenders and formal banking channels, the RBI had set up a Technical Group under SC Gupta. The annual statement has said that the group will submit its report on June 30, 2007.
According to the All India Debt and Investment Survey (Fifty-Ninth Round) the share of moneylenders in total dues of rural households rose from 17.5% in 1991 to 29.6% in 2002. This prompted the RBI to review the efficacy of the existing legislative framework governing money lending.
The group will make recommendations to the state governments to improve the legal and enforcement machinery for money lending and similar activity, in the interest of rural households.
The statement notes that while ‘no frills’ accounts has enabled the common man to open bank accounts providing banking facilities closer to the customer, especially in remote and unbanked areas, while keeping transaction costs low, remains a challenge.
To achieve greater financial inclusion, the RBI has urged banks to scale up IT initiatives for financial inclusion speedily. Banks need to ensure that solutions are highly secure, amenable to audit, and follow widely-accepted open standards to ensure eventual inter-operability among the different systems, the statement said.
Wednesday, April 25, 2007 Source: Times News Network
PPP projects in airports & ports gather momentum
Public-private-partnership (PPP) projects, that have been languishing in most infrastructure sectors despite supportive tools like viability gap funding (VGF), are likely to gather fresh momentum in the current fiscal which could be sustained next year also, thanks to speeding up of approvals for NHDP projects, concrete plans to set up 18 new port terminals and projects being lined up for city-side development of 24 airports, as per finance ministry sources.
The sources said the Jawahar Nehru Urban Renewal Mission for spurring investments in urban infrastructure could also see PPP model fructifying in a big way. If NHAI complies with the North Block directive to design larger projects involving road stretch of at least 100 km, the current problem in attracting FDI could be surmounted, they say.
In Budget 2007-08, finance minister P Chidambaram had said the PPP model had not acquired the pace it should have. There has virtually been no major disbursement under VGF. Many proposals have been vetted by the designated agencies but on the ground there has been comparatively less activity due to a slowdown in the NH sector.
The finance ministry is set to issue new guidelines for getting PPP projects approved. Although the idea is to ease the procedures and expedite the process, there are apprehensions over whether the new mechanism would help achieve the objectives.
In fact, the Cabinet had approved a diluted version of what the ministry had proposed in this regard. While the ministry’s proposal was to do away with the requirement of Cabinet approval for projects below Rs 500 crore for road projects and Rs 250 crore for other sectors, what has been approved is just waiving the PPP-appraisal committee’s scrutiny for such projects.
These projects would require the assent of two new committees comprising two members each—finance secretary and secretary of the administrative ministry concerned for all projects except roads and finance secretary and secretary, ministry of road transport and highways for road projects. This process, sources say, would be easier than the earlier one—the PPP-AC—which has much wider representation.
Even the Planning Commission require to meet to clear the projects while the two member committees would clear the projects sans sittings. Lack of unanimity among PPP-AC members and the delay in decision-making have been allegedly holding back approvals.
400 hospitals log onto telemedicine
The concept of telemedicine, started about eight years ago in India on a pilot basis, has matured onto the next level. Major hospital groups are now looking at significantly expanding their centres not just in India but also in neighbouring countries.
There are currently an estimated 350-400 hospitals connected by telemedicine. On the ISRO network alone, there are 170, of which around 35 are speciality hospitals and the rest remote centres. The first telemedicine project in the country was a centre set up by the Apollo Hospitals group in the village of Aragonda in Andhra Pradesh in 1999.
Apollo Hospitals, which now has close to 150 centres in India, Bangladesh, Maldives, Sri Lanka and Kazakhistan, is targetting to have 500-700 locations in the next 18-24 months.
“We are making investments in expanding our telemedicine network in three types of models — government partnership where we have already tied up with four states in India, with corporates as thier CSR initiatives and PPP model,’’ said Ashvani Srivastava, President - Strategic Initiatives, Apollo.
The telemedicine initiative of Manipal Hospitals is only about one and a half years old. It currently has 15 centres including centres in Mauritius and education links with South Africa. “We are in the process of consolidating links with ISRO. So far our telemedicine links have been over the ISDN network. So in the last three months, we have been aggressively promoting telemedicine,” says Dr Nagendra Swamy, director, medical services, Manipal Hospitals.
Now, the hospital is looking at interlinking all Manipal group institutions and affiliated clinics as well as setting up more centres in Bangladesh, Nepal, Sri Lanka and Mauritius. By the end of this year, the hospital would be adding 25 to 30 more remote centres, Dr Swamy says. “There still has to be more acceptance on part of the people. Unless that happens, telemedicine will not grow into a revenue generating model,” he adds.
Narayana Hrudayalaya, which has done a lot of pioneering work in telemedicine, now has 48 remote centres including two each in Malaysia and Pakistan, and one in Mauritius. Apart from these, the hospital also has 130 ECG centres, used by family physicians to get ECGs read by specialists at the main hub, and 18 coronary care units connected to the city hub.
“In the last one year, we added three telemedicine centres, two coronary care units and 66 ECG centres. The network has worked well for the hospital in terms of reach and thanks to telelmedicine, a lot more people know about the hospital and the services it has to offer,” says Dr Vijay Singh, administrative officer (telemedicine), Narayana Hrudayalaya.
Thursday, April 26, 2007 Source: Times News Network
Sony brings PS3 to India
Seeking to maintain its leadership position in the $32 billion global gaming market, consumer electronics major Sony launched its much awaited high definition gaming console 'Playstation 3' in India, priced at Rs 39,990.
The company is aiming to sell 10,000 units of the popular console in the current fiscal and looking to retain the lead in the 45 million dollar Indian gaming market as well.
The Indian gaming market, which includes computer games, mobile games and consoles, is expected to grow to $425 million by 2010 from $45 million (including grey market) today.
Sony is a leading player in this market and would work toward retaining its leadership position here, Sony Computer Entertainment Europe sales and marketing director Tim Stokes told reporters here.
Sony has initially shipped 1,200 units of the console for sale in India. The company plans to sell half of its new consoles through its own outlets 'Sony World', while the remaining half would be sold through retail chains and music stores.
Microsoft and Nintendo are the main competitors for Sony in the gaming business.
Friday, April 27, 2007 Source: PTI via economictimes.com
